What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-18 compared with 2021-02-17 · 410 added, 551 removed, 1372 unchanged (41% of the section changed)

2 unchanged sentences

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, or Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation as of the end of the period covered by this Annual Report on Form 10-K of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Based on that evaluation, our principal executive officer and principal financial officer

concluded that our disclosure controls and procedures are effective at the reasonable assurance level in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

10 unchanged sentences

As required by Rule 13a-15(d) of the Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation of the internal control over financial reporting to determine whether any changes occurred during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Based on that evaluation, our principal executive officer and principal financial officer concluded no changes during the quarter ended December 31, 2020 materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

Based on management’s evaluation, our principal executive officer and principal financial officer concluded no changes during the quarter ended December 31, 2021 materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Ironwood Pharmaceuticals, Inc.

To the Stockholders and the Board of Directors of Ironwood Pharmaceuticals, Inc.

Opinion on Internal Control over Financial Reporting

2 unchanged sentences

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income (loss), shareholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated February 17, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income and comprehensive income, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

19 unchanged sentences

Directors, Executive Officers and Corporate Governance

We have adopted a code of business conduct and ethics applicable to our directors, executive officers and all other employees.

We have adopted a code of business conduct and ethics applicable to our directors, officers, employees, consultants and all their immediate family or other household members.

A copy of that code is available on our corporate website at http://www.ironwoodpharma.com.

Any amendments to the code of business conduct and ethics, and any waivers thereto involving our executive officers, also will be available on our corporate website.

Any amendments to the code of business conduct and ethics, and any waivers thereto involving any of our directors or executive officers, will be also available on our corporate website.

A printed copy of these documents will be made available upon request.

72 unchanged sentences

Description of Securities of Ironwood Pharmaceuticals, Inc.

Annual Report on Form 10-K (File No.

February 17, 2021

Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan

30 unchanged sentences

February 25, 2019

Form of Executive Severance Agreement

Current Report on Form 8-K (File No.

December 1, 2021

Second Amended and Restated Executive Severance Agreement, June 22, 2021 between Ironwood Pharmaceuticals, Inc.

and Thomas McCourt

Current Report on Form 8-K/A (File No.

June 24, 2021

Non-employee Director Compensation Policy, effective May 20, 2019

44 unchanged sentences

and Astellas Pharma Inc.

Annual Report on Form 10-K (File No.

February 17, 2021

Amended and Restated License and Collaboration Agreement, dated as of September 16, 2019, by and between AstraZeneca AB and Ironwood Pharmaceuticals, Inc.

112 unchanged sentences

XBRL Taxonomy Extension Label Linkbase Database

XBRL Taxonomy ExtensionPresentation Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

10 unchanged sentences

Ironwood Pharmaceuticals, Inc.

/s/ Mark Mallon

/s/ Thomas Mccourt

Thomas McCourt

Chief Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

/s/ Mark Mallon

/s/ Thomas McCourt

Chief Executive Officer and Director (Principal Executive Officer)

February 17, 2022

/s/ Gina Consylman

Thomas McCourt

/s/ Sravan k.

Senior Vice President, Chief Financial Officer (Principal Financial Officer)

February 17, 2022

Gina Consylman

/s/ Kelly MacDonald

Vice President, Finance and Chief Accounting Officer (Principal Accounting Officer)

/s/ Ronald Silver

Senior Director, Corporate Controller (Principal Accounting Officer)

February 17, 2022

Kelly MacDonald

Ronald Silver

Chair of the Board

2 unchanged sentences

February 17, 2022

/s/ Alexander Denner

February 17, 2022

Alexander Denner

17 unchanged sentences

Ironwood Pharmaceuticals, Inc.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 42 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019, and 2018

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2020, 2019, and 2018

Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2021, 2020, and 2019

Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2021, 2020, and 2019

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Ironwood Pharmaceuticals, Inc.

To the Stockholders and the Board of Directors of Ironwood Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ironwood Pharmaceuticals, Inc.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of income and comprehensive income, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

23 unchanged sentences

The Company records its share of the net profits or net losses from the sales of LINZESS in the U.S., less commercial expenses, and presents the settlement payments to and from AbbVie as collaboration expense or collaborative arrangements revenue, as applicable.

Auditing revenue recognition under the AbbVie collaboration is especially challenging and requires significant auditor judgment because complete and accurate information regarding net profits realized from sales of LINZESS in the U.S.

Auditing revenue recognition under the AbbVie collaboration was especially challenging and required significant auditor judgment because complete and accurate information regarding net profits realized from sales of LINZESS in the U.S.

and the costs incurred in selling it may not be available at the time the financial statements are prepared.

1 unchanged sentence

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s internal controls over its collaboration revenue process.

The Company maintains and operates a suite of controls over the Company’s evaluation of the completeness and accuracy of its quarterly reporting from AbbVie.

The Company maintained and operated a suite of controls over the Company’s evaluation of the completeness and accuracy of its quarterly reporting from AbbVie.

Our audit procedures included, among others, reviewing the Company’s contract with AbbVie, reviewing information provided by AbbVie, performing auditing procedures over gross sales and adjustments to arrive at net sales, cost of goods sold, and selling and marketing costs contributing to Ironwood’s share of net profits, and obtaining confirmation directly from AbbVie.

9 unchanged sentences

Accounts receivable, net

Related party accounts receivable, net

Inventory, net

Prepaid expenses and other current assets

Restricted cash

Convertible note hedges

Total current assets

4 unchanged sentences

Convertible note hedges

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Deferred tax assets

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

Related party accounts payable, net

Accrued research and development costs

1 unchanged sentence

Current portion of operating lease liabilities

Deferred revenue

Current portion of convertible senior notes

Note hedge warrants

Total current liabilities

Note hedge warrants

Convertible senior notes

Convertible senior notes, net of current portion

Operating lease obligations, net of current portion

1 unchanged sentence

Commitments and contingencies

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock, $ 0.001 par value, 75,000,000 shares authorized, no shares issued and outstanding

3 unchanged sentences

( 1,466,056 )

( 1,572,232 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these consolidated financial statements.

Ironwood Pharmaceuticals, Inc.

Consolidated Statements of Operations

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share amounts)

Years Ended December 31,

Year Ended December 31,

Collaborative arrangements revenue

Product revenue, net

Sale of active pharmaceutical ingredient

1 unchanged sentence

Cost and expenses:

Cost of revenues, excluding amortization of acquired intangible assets

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

Cost of revenues

Settlement on non-cancellable purchase commitments

Research and development

Selling, general and administrative

Amortization of acquired intangible assets

Gain on fair value remeasurement of contingent consideration

Gain on lease modification

Restructuring expenses

Impairment of intangible assets

Total cost and expenses

Income (loss) from operations

Income from operations

Other (expense) income:

4 unchanged sentences

Other expense, net

Income (loss) from continuing operations, before income taxes

Income tax expense

Income (loss) from continuing operations

Income from continuing operations, before income taxes

Income tax (expense) benefit

Income from continuing operations

Loss from discontinued operations, net of income taxes

Net income (loss)

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

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

Net income and comprehensive income

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

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

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

Net income (loss) per share—basic

Net income (loss) per share—diluted

Net income per share—basic

Net income per share—diluted

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

2 unchanged sentences

Ironwood Pharmaceuticals, Inc.

Consolidated Statements of Comprehensive Income (Los s)

(In thousands)

Years Ended December 31,

Net income (loss)

Other comprehensive income:

Unrealized gains on available-for-sale securities

Total other comprehensive income

Comprehensive income (loss)

The accompanying notes are an integral part of these consolidated financial statements.

Ironwood Pharmaceuticals, Inc.

Consolidated Statements of Stockholders’ Equit y (Deficit)

(In thousands, except share amounts)

comprehensive

stockholders’

income (loss)

equity (deficit)

1 unchanged sentence

( 1,591,128 )

Issuance of common stock related to share-based awards and employee stock purchase plan

Conversion of Class B Common Stock to Class A Common Stock

( 14,748,123 )

Share-based compensation expense related to share-based awards to non-employees

Share-based compensation expense related to share-based awards to employees and employee stock purchase plan

Unrealized gains on available-for-sale securities

Balance at December 31, 2018

( 1,591,128 )

Issuance of common stock related to share-based awards and employee stock purchase plan, net of cancellations

7 unchanged sentences

( 1,572,232 )

The accompanying notes are an integral part of these consolidated financial statements.

Ironwood Pharmaceuticals, Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except share amounts)

Stockholders’

equity (deficit)

Issuance of common stock related to share-based awards and employee stock purchase plan

Share-based compensation expense related to share-based awards and employee stock purchase plan

Balance at December 31, 2020

2 unchanged sentences

Share-based compensation expense related to share-based awards and employee stock purchase plan

Balance at December 31, 2020

Repurchases of common stock

( 2,357,000 )

Balance at December 31, 2021

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of acquired intangible assets

Impairment of intangible assets

Loss (gain) on disposal of property and equipment

Loss on disposal of property and equipment

Share-based compensation expense

2 unchanged sentences

Change in fair value of convertible note hedges

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

Write-down of excess non-cancellable ZURAMPIC and DUZALLO sample purchase commitments

Accretion of discount/premium on investment securities

Settlement on non-cancellable purchase commitments

Non-cash interest expense

Non-cash change in fair value of contingent consideration

Deferred income taxes (including benefit from valuation allowance release)

Loss on extinguishment of debt

1 unchanged sentence

Accounts receivable and related party accounts receivable, net

Inventory, net

Prepaid expenses and other current assets

Inventory, net

Operating lease right-of-use assets

3 unchanged sentences

Deferred revenue

Deferred rent

Other liabilities

1 unchanged sentence

Net cash provided by discontinued operating activities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of available-for-sale securities

Sales and maturities of available-for-sale securities

Purchases of property and equipment

Proceeds from sale of property and equipment

Net cash (used in) provided by continuing investing activities

Net cash (used in) continuing investing activities

Net cash (used in) discontinued investing activities

Net cash (used in) provided by investing activities

Net cash (used in) investing activities

Cash flows from financing activities:

4 unchanged sentences

Proceeds from exercise of stock options and employee stock purchase plan

Payments on capital lease obligations

Repurchases of common stock

Payments for partial repurchase of 2022 Convertible Notes

Payments on 8.375% Notes due 2026

Payments on contingent purchase price consideration

Net cash provided by (used in) continuing financing activities

Net cash used in discontinued financing activities

Net cash provided by (used in) financing activities

2 unchanged sentences

Cash, cash equivalents and restricted cash, end of period

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets

Cash and cash equivalents

5 unchanged sentences

Non-cash investing and financing activities

Purchases under capital leases

Extinguishment of capital leases

Recognition of asset retirement obligation

Fixed asset purchases in accounts payable and accrued expenses

Stock repurchases payable in accrued expenses

The accompanying notes are an integral part of these consolidated financial statements.

11 unchanged sentences

The Company and its partner, AbbVie Inc.

(together with its affiliates, “AbbVie”) (successor to Allergan plc (together with its affiliates), “Allergan”), began commercializing LINZESS in the U.S.

(together with its affiliates, “AbbVie”), began commercializing LINZESS in the U.S.

in December 2012.

Under the Company’s collaboration with AbbVie for North America, 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.

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”).

12 unchanged sentences

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.

The Company and AbbVie were developing MD-7246, a delayed release formulation of linaclotide.

In May 2020, the Company and AbbVie announced top-line data from a Phase II trial evaluating MD-7246 in adult patients with

abdominal pain associated with irritable bowel syndrome with diarrhea.

The Phase II trial did not meet its primary or key secondary endpoints.

Based on these findings, the Company and AbbVie discontinued the development of MD-7246.

The Company was developing IW-3718, a gastric retentive formulation of a bile acid sequestrant, in a Phase III program.

In September 2020, the Company announced that one of its two identical Phase III trials for the potential treatment of refractory gastroesophageal reflux disease (“refractory GERD”) did not meet the pre-specified criteria associated with a planned early efficacy assessment.

Based on these findings, the Company is discontinuing 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.

The Company substantially completed the reduction in its workforce in the fourth quarter of 2020 (Note 18).

Additionally, the Company periodically enters into co-promotion 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) for the treatment of acute hepatic porphyria (“AHP”).

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 6, Collaboration, License, Co-Promotion and Other Commercial Agreements, to these consolidated financial statements.

On April 1, 2019, Ironwood completed the separation (the “Separation”) of its soluble guanylate cyclase (“sGC”) 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 (Note 3).

In August 2021, the U.S.

FDA approved a revised label for LINZESS based on clinical safety data that has been generated thus far in pediatric studies.

The updated label modifies the boxed warning for risk of serious dehydration and contraindication against use in children to those less than two years of age.

The boxed warning and contraindication previously applied to all children less than 18 years of age and less than six years of age, respectively.

The safety and effectiveness of LINZESS in patients less than 18 years of age have not been established.

In November 2021, the Company entered into a collaboration and license option agreement (the “COUR Collaboration Agreement”) with COUR Pharmaceutical Development Company, Inc.

(“COUR”), a biotechnology company developing novel immune-modifying nanoparticles to treat autoimmune diseases.

The COUR Collaboration Agreement grants the Company an option to acquire an exclusive license to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104, a potential treatment for primary biliary cholangitis, a rare autoimmune disease targeting the liver.

These and other agreements are more fully described in Note 5, Collaboration, License, and Other Agreements, to these consolidated financial statements.

The Company is also advancing IW-3300, a guanylate cyclase type C agonist, for the potential treatment of visceral pain conditions, including interstitial cystitis / bladder pain syndrome (IC/BPS) and endometriosis.

In December 2021, the U.S.

FDA accepted our Investigational New Drug Application, and the Phase I clinical program has commenced in the first quarter of 2022 to evaluate the safety and tolerability of IW-3300 in healthy volunteers.

The Company was incorporated in Delaware on January 5, 1998 as Microbia, Inc.

1 unchanged sentence

To date, the Company has dedicated a majority of its activities to the research, development and commercialization of linaclotide, as well as to the research and development of its other product candidates.

Prior to the year ended December 31, 2019, the Company incurred net losses in each year since its inception in 1998.

For the years ended December 31, 2020 and 2019, the Company recorded net income of approximately $ 106.2 million and approximately $ 21.5 million, respectively.

As of December 31, 2020, the Company had an accumulated deficit of approximately $ 1.5 billion.

Summary of Significant Accounting Policies

1 unchanged sentence

The accompanying consolidated financial statements include the accounts of Ironwood and its wholly-owned subsidiaries, as of December 31, 2021, Ironwood Pharmaceuticals Securities Corporation and Ironwood Pharmaceuticals GmbH.

Cyclerion was a wholly-owned subsidiary until it became an independent publicly-traded company on April 1, 2019.

Cyclerion Therapeutics, Inc.

(“Cyclerion”) was a wholly-owned subsidiary until it became an independent publicly-traded company on April 1, 2019 (Note 3).

All intercompany transactions and balances are eliminated in consolidation.

5 unchanged sentences

Discontinued Operations

The Company determined that its sGC business, which was disposed on April 1, 2019, met the criteria for classification as a discontinued operation in accordance with Accounting Standards Codification (“ASC”) Subtopic 205-20, Discontinued Operations (“ASC 205-20”).

Accordingly, the accompanying consolidated financial statements as of and for the year ended December 31, 2019 and all prior periods present the balance sheet, operations, and cash flows associated with the sGC business as discontinued operations.

The Company determined that its soluble guanylate cyclase (“sGC”) business, which was disposed on April 1, 2019, met the criteria for classification as a discontinued operation in accordance with Accounting Standards Codification (“ASC”) Subtopic 205-20, Discontinued Operations (“ASC 205-20”).

Accordingly, the accompanying consolidated financial statements for the year ended December 31, 2019 present the operations and cash flows associated with the sGC business as discontinued operations.

For additional information related to discontinued operations, refer to Note 3, Cyclerion Separation , to these consolidated financial statements.

3 unchanged sentences

On an ongoing basis, the Company’s management evaluates its estimates, judgments and methodologies.

Significant estimates and assumptions in the consolidated financial statements include those related to revenue recognition;

Significant estimates and assumptions in the

consolidated financial statements include those related to revenue recognition;

accounts receivable;

inventory valuation and related reserves;

useful lives of long-lived assets, impairment of long-lived assets, including its acquired intangible assets and goodwill;

useful lives of long-lived assets, impairment of long-lived assets, including goodwill;

valuation procedures for right-of-use assets and operating lease liabilities;

1 unchanged sentence

balance sheet classification of convertible notes;

valuation of assets and liabilities held for disposition and losses related to discontinued operations;

fair value of derivatives;

10 unchanged sentences

The carrying amount of cash equivalents approximates fair value.

The amount of cash equivalents included in cash and cash equivalents was approximately $ 349.0 million and approximately $ 177.0 million at December 31, 2020 and 2019, respectively.

The amount of cash equivalents included in cash and cash equivalents was $ 595.2 million and $ 349.0 million at December 31, 2021 and 2020, respectively.

Restricted Cash

The Company is contingently liable under unused letters of credit with a bank, related to the Company’s facility lease and vehicle lease agreements, in the amount of approximately $ 2.2 million as of December 31, 2020 and 2019.

The Company is contingently liable under unused letters of credit with a bank, related to the Company’s facility lease and vehicle lease agreements, in the amount of $ 1.7 million and $ 2.2 million as of December 31, 2021 and 2020, respectively.

The Company records as restricted cash the collateral used to secure these letters of credit.

The amount of restricted cash included in current assets and non-current assets was approximately $ 1.7 million and $ 0.5 million at December 31, 2020, respectively.

The amount of restricted cash in current assets and non-current assets was approximately $1.2 million and $ 1.0 million at December 31, 2019, respectively.

The amount of restricted cash included in current assets and non-current assets was $ 1.3 million and $ 0.5 million, respectively, at December 31, 2021.

The amount of restricted cash in current assets and non-current assets was $ 1.7 million and $ 0.5 million, respectively, at December 31, 2020.

Concentrations of Suppliers

The Company relies on its collaboration partners and their suppliers to manufacture linaclotide API, linaclotide finished drug product, and finished goods.

If any of the Company’s collaboration partners and their suppliers were to limit or terminate production or otherwise fail to meet the quality or delivery requirements needed to satisfy the supply commitments, the process of locating and qualifying alternate sources could require up to several months, during which time production could be

Such delays could have a material adverse effect on the Company’s business, financial position and results of operations.

19 unchanged sentences

Astellas (Japan)

For the years ended December 31, 2020, 2019 and 2018, no additional customers accounted for more than 10% of the Company’s revenue.

Property and Equipment

7 unchanged sentences

Costs incurred during the preliminary project stage are expensed as incurred, while costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software.

The Company also capitalizes costs

related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality.

The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality.

Maintenance and training costs related to software obtained for internal use are expensed as incurred.

2 unchanged sentences

Maintenance and repair costs are expensed as incurred.

Finite Lived Intangible Assets

The Company records the fair value of purchased intangible assets with finite useful lives as of the transaction date of a business combination.

Purchased intangible assets with finite useful lives are amortized to their estimated residual values over their estimated useful lives.

The value of the Company’s finite-lived intangible assets was based on the future expected net cash flows related to ZURAMPIC and DUZALLO (the “Lesinurad Products”), which included significant assumptions around future net sales and the respective investment to support these products.

During the year ended December 31, 2018, the Company recorded an impairment charge of approximately $ 151.8 million to fully write-off its ZURAMPIC and DUZALLO intangible assets.

Impairment of Long-Lived Assets

10 unchanged sentences

Any changes to these estimates, based on the actual results obtained and/or a change in assumptions, could impact the Company’s income tax provision in future periods.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as a provision for income tax in the Company’s consolidated statement of operations.

Interest and penalty charges, if any, related to unrecognized tax benefits are classified as income tax expense in the Company’s consolidated statements of income.

Financing Costs

21 unchanged sentences

Right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the lease inception date.

Existing leases in the Company’s lease portfolio as of the adoption date were valued as of January 1, 2019.

Existing leases in the Company’s lease portfolio as of the adoption date

were valued as of January 1, 2019.

The Company uses an incremental borrowing rate based on the information available at lease inception in determining the present value of lease payments, if an implicit rate of return is not provided with the lease contract.

5 unchanged sentences

Derivative Assets and Liabilities

In June 2015, the Company issued 2.25 % Convertible Senior Notes due June 15, 2022 (the “2022 Convertible Notes”) and in August 2019, the Company issued 0.75 % Convertible Senior Notes due 2024 (the “2024 Convertible Notes”) and 1.50 % Convertible Senior Notes due 2026 (the “2026 Convertible Notes”) (together with the “2022 Convertible Notes” and the “2024 Convertible Notes”, the “Convertible Senior Notes”).

In June 2015, in connection with the issuance of the 2022 Convertible Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedges”).

Concurrently with entering into the Convertible Note Hedges, the Company also entered into certain warrant transactions in which it sold note hedge warrants (the “Note Hedge Warrants”) to the Convertible

Note Hedge counterparties to acquire shares of the Company’s Class A Common Stock, subject to customary anti-dilution adjustments (Note 11).

In June 2015, the Company issued 2.25 % Convertible Senior Notes due June 15, 2022 (the “2022 Convertible Notes”), and in August 2019, the Company issued 0.75 % Convertible Senior Notes due 2024 (the “2024 Convertible Notes”), and 1.50 % Convertible Senior Notes due 2026 (the “2026 Convertible Notes”, and together with the 2022 Convertible Notes and the 2024 Convertible Notes, the “Convertible Senior Notes”).

I n connection with the issuance of the 2022 Convertible Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedges” and separate note hedge warrant transactions (the “Note Hedge Warrants”), with certain financial institutions (Note 10).

In connection with the partial repurchase of the 2022 Convertible Notes in August 2019, the Company terminated its Convertible Note Hedges and Note Hedge Warrants proportionately.

1 unchanged sentence

These derivatives are recorded as assets or liabilities at fair value each reporting date and the fair value is determined using the Black-Scholes option-pricing model.

The changes in fair value are recorded as a component of other (expense) income in the consolidated statements of operations.

Significant inputs used to determine the fair value include the price per share of the Company’s Class A Common Stock on the date of valuation, expected term of the derivative instruments, strike prices of the derivative instruments, risk-free interest rate, 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 in future periods.

The changes in fair value are recorded as a component of other (expense) income in the consolidated statements of income.

Significant inputs used to determine the fair value as of December 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.

In August 2019, in connection with the issuance of the 2024 Convertible Notes and the 2026 Convertible Notes, the Company entered into the Capped Calls.

1 unchanged sentence

These instruments meet the conditions outlined in ASC 815 to be classified in stockholders’ equity (deficit) and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

Share Repurchases

The Company accounts for repurchases of its Class A Common Stock on the trade date by recording the excess of the repurchase price over the par value entirely to additional paid-in capital.

All repurchased shares are retired or constructively retired.

Issued and outstanding shares are reduced by shares repurchased.

Revenue Recognition

1 unchanged sentence

The terms of the collaborative research and development, license, co-promotion and other agreements contain multiple performance obligations which may include (i) licenses, (ii) research and development activities, including participation on joint steering committees, (iii) the manufacture of finished drug product, API, or development materials for a partner, which are reimbursed at a contractually determined rate, and (iv) education or co-promotion activities by the Company’s clinical sales specialists.

Non-refundable payments to the Company under these agreements may include (i) up-front license fees, (ii) payments for research and development activities, (iii) payments for the manufacture of finished drug product, API, or development materials, (iv) payments based upon the achievement of certain milestones, (v) payments for sales detailing, promotional support services and medical education initiatives, and (vi) royalties on product sales.

(v) payments for sales detailing, promotional support services and medical education initiatives, and (vi) royalties on product sales.

The Company receives its share of the net profits or bears its share of the net losses from the sale of linaclotide in the U.S.

26 unchanged sentences

The Company is highly dependent on AbbVie for timely and accurate information regarding net revenues from sales of LINZESS in the U.S.

in accordance with both ASC 808 and ASC 606, and the related costs, in order to accurately report its results of operations.

in accordance with both ASC 808 and ASC 606, and the related costs, in order to accurately report

its results of operations.

If the Company does not receive timely and accurate information or incorrectly estimates activity levels associated with the collaboration at a given point in time, the Company could be required to record adjustments in future periods.

In accordance with ASC 606-10-55, Principal Agent Considerations , the Company records revenue transactions as net product revenue in its consolidated statements of operations if it is deemed the principal in the transaction, which includes being the primary obligor, retaining inventory risk, and control over pricing.

In accordance with ASC 606-10-55, Principal Agent Considerations , the Company records revenue transactions as net product revenue in its consolidated statements of income if it is deemed the principal in the transaction, which includes being the primary obligor, retaining inventory risk, and control over pricing.

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, it records its share of the net profits or net losses from the sales of LINZESS in the U.S.

on a net basis and presents the settlement payments to and from AbbVie as collaboration expense or collaborative arrangements revenue, as applicable.

The Company and AbbVie settle the cost sharing quarterly such that the Company’s statements of operations reflect 50 % of the pre-tax net profit or loss generated from sales of LINZESS in the U.S.

Product Revenue, Net

Product revenue consisted of sales of the Lesinurad Products, in the U.S.

until the termination of the exclusive license to develop, manufacture, and commercialize in the U.S.

products containing lesinurad as an active ingredient (the “Lesinurad License”) in January 2019.

The Company sold the Lesinurad Products principally to a limited number of national wholesalers and selected regional wholesalers (the “Distributors”).

The Distributors resold the Lesinurad Products to retail pharmacies and healthcare providers, who then sold to patients.

Net product revenue was recognized when the Distributor obtained control of the Company’s product, which occurred at a point in time, typically upon shipment of Lesinurad Products to the Distributor.

When the Company performed shipping and handling activities after the transfer of control to the Distributor (e.g., when control transfers prior to delivery), they were considered fulfillment activities, and accordingly, the costs were accrued for when the related revenue was recognized.

The Company expensed incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that the Company would have recognized was one year or less.

The Company evaluated the creditworthiness of each of its Distributors to determine whether it was probable that a significant reversal in the amount of the cumulative revenue recognized would not occur.

The Company calculated its net product revenue based on the wholesale acquisition cost that the Company charged its Distributors for the Lesinurad Products less variable consideration.

The product revenue variable consideration consisted of estimates relating to (i) trade discounts and allowances, such as invoice discounts for prompt payment and distributor fees, (ii) estimated government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (iii) reserves for expected product returns and (iv) estimated costs of incentives offered to certain indirect customers including patients.

These estimates would be adjusted based on actual results in the period such variances became known.

Product revenue was recorded net of the trade discounts, allowances, rebates, chargebacks, discounts, product returns, and other incentives.

Certain of these adjustments were recorded as an accounts receivable reserve, while certain of these adjustments were recorded as accrued expenses.

The Company and AbbVie settle the cost sharing quarterly such that the Company’s statements of income reflect 50 % of the pre-tax net profit or loss generated from sales of LINZESS in the U.S.

Sale of Active Pharmaceutical Ingredient

During the years ended December 31, 2020, and 2019, the Company produced linaclotide API, finished drug product, finished goods, and/or development materials for certain of its partners.

As of December 31, 2020, the Company is no longer responsible for the supply of linaclotide API, finished drug product, finished goods or development materials to its partners.

As it relates to development materials and API produced for Astellas, the Company was reimbursed at a contracted rate.

Such reimbursements were considered as part of revenue generated pursuant to the Astellas license agreement and are presented as collaborative arrangements revenue.

Any linaclotide API, finished drug product, finished goods, and development materials AbbVie is responsible for producing for the U.S.

are recognized in accordance with the cost-sharing provisions of the collaboration agreement with AbbVie for North America.

As of December 31, 2020, the Company was no longer responsible for the supply of linaclotide API, finished drug product, finished goods or development materials to its partners, though the Company may provide development materials to certain of our partners on a periodic basis.

Sales of such development materials have been and are expected to continue to be immaterial.

The Company recognizes revenue on linaclotide API, finished drug product, finished goods, and development materials when control has transferred to the partner, which generally occurs upon shipment after the material passed all quality testing required for acceptance by the partner.

Prior to the execution of the Amended AstraZeneca Agreement in September 2019, any linaclotide API, finished drug product, and development materials produced for AstraZeneca for China (including Hong Kong and Macau) were recognized in accordance with the cost-sharing provisions of the AstraZeneca collaboration agreement.

The Company recognized revenue on linaclotide API, finished drug product, finished goods, and development materials when control has transferred to the partner, which generally occurs upon shipment after the material passed all quality testing required for acceptance by the partner.

The Company’s deferred revenue balance consists of advance billings and payments received from customers in excess of revenue recognized.

Cost of Revenues

Cost of revenues includes cost related to the sales of linaclotide API and finished drug product, as well as the cost of product revenue related to sales of the Lesinurad Products in the U.S.

Cost related to the sales of linaclotide API, finished drug product, and finished goods are generally recognized upon shipment to certain of the Company’s partners outside of the U.S.

The Company’s cost of revenues for linaclotide consists of the internal and external costs of producing such API and finished drug product.

Cost of product revenue related to the sales of the Lesinurad Products in the U.S.

includes the cost of producing finished goods that correspond with product revenue for the reporting period, such as third-party supply and overhead costs, as well as certain period costs related to freight, packaging, stability and quality testing, and customer acquisition.

Cost of revenues includes cost related to the sales of linaclotide API, finished drug product, and finished goods and are generally recognized upon shipment to certain of the Company’s partners outside of the U.S.

The Company’s cost of revenues for linaclotide consists of the internal and external costs of producing such API, finished drug product, and finished goods.

Research and Development Costs

10 unchanged sentences

The Company records expenses incurred under such linaclotide collaboration arrangements as research and development expense.

Prior to the execution of the Amended AstraZeneca Agreement in September 2019, under the Company’s collaboration agreement with AstraZeneca for China (including Hong Kong and Macau), the Company was reimbursed for certain research and development expenses and it netted these reimbursements against its research and development expenses as incurred.

Prior to the execution of the Amended AstraZeneca

Agreement in September 2019, under the Company’s collaboration agreement with AstraZeneca for China (including Hong Kong and Macau), the Company was reimbursed for certain research and development expenses and it netted these reimbursements against its research and development expenses as incurred.

In connection with the execution of the Amended AstraZeneca Agreement, AstraZeneca is fully responsible for all research and development costs incurred related to the development, manufacture, and commercialization of linaclotide in China (including Hong Kong and Macau).

Under the Company’s collaboration agreement with AbbVie for North America, the Company is reimbursed for certain research and development expenses and nets these reimbursements against its research and development expenses as incurred.

Amounts owed to AbbVie or AstraZeneca under the Company’s respective collaboration agreements were recorded as incremental research and development expense.

Research and development expense includes up-front payment, non-contingent payment, and milestone payment obligations under the COUR Collaboration Agreement (Note 5).

Expense is recognized when the obligation is determined to be probable.

Restructuring Expenses

4 unchanged sentences

The Company expenses selling, general and administrative costs to operations as incurred.

Selling, general and administrative expenses consist primarily of compensation, benefits and other employee-related expenses for personnel in the Company’s administrative, finance, legal, information technology, business development, commercial, sales, marketing, communications and human resource functions.

Other costs include the legal costs of pursuing patent protection of the Company’s intellectual property, general and administrative related facility costs, insurance costs and professional fees for accounting, tax, consulting, legal and other services.

Prior to the execution of the Amended AstraZeneca Agreement, the Company was reimbursed for certain selling, general and administrative expenses and the Company netted these reimbursements against the Company’s selling, general and administrative expenses as incurred.

In connection with the Amended AstraZeneca Agreement, effective in September 2019, AstraZeneca will be fully responsible for all costs related to the development, manufacture, and commercialization of linaclotide in China (including Hong Kong and Macau).

In connection with the Amended AstraZeneca Agreement, effective in September 2019, AstraZeneca is fully responsible for all costs related to the development, manufacture, and commercialization of linaclotide in China (including Hong Kong and Macau).

The Company includes AbbVie’s selling, general and administrative cost-sharing payments in the calculation of the net profits and net losses from the sale of LINZESS in the U.S.

2 unchanged sentences

The Company grants awards under its share-based compensation programs, including stock awards, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) (including both time-based and performance-based RSUs), stock options, and shares issued under the Company’s employee stock purchase plan (“ESPP”).

Share-based compensation is recognized as expense in the consolidated statements of operations based on the grant date fair value over the requisite service period, net of estimated forfeitures.

Share-based compensation is recognized as expense in the consolidated statements of income based on the grant date fair value over the requisite service period, net of estimated forfeitures.

The Company estimates forfeitures over the requisite service period using historical forfeiture activity and records share-based compensation expense only for those awards that are expected to vest.

The Company estimates the fair value of stock options using the Black-Scholes option-pricing model, which requires the use of subjective assumptions including volatility and expected term, among others.

The fair value of stock

awards, RSAs, and RSUs is based on the market value of the Company’s Class A Common Stock on the date of grant, with the exception of performance-based RSUs with market conditions, which are measured using the Monte Carlo simulation method on the date of grant (Note 14).

The fair value of stock awards, RSAs, and RSUs is based on the market value of the Company’s Class A Common Stock on the date of grant, with the exception of performance-based RSUs with market conditions, which are measured using the Monte Carlo simulation method on the date of grant (Note 13).

Discounted stock purchases under the Company’s ESPP are valued on the first date of the offering period using the Black-Scholes option-pricing model to compute the fair value of the lookback provision plus the purchase discount.

8 unchanged sentences

As a result, if revisions are made to the Company’s underlying assumptions and estimates, the Company’s share-based compensation expense could vary significantly from period to period.

The Company incurred and recorded as operating expense legal and other fees related to patents of approximately $ 2.3 million, approximately $ 7.8 million, and approximately $ 5.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company incurred and recorded as operating expense legal and other fees related to patents of $ 1.7 million, $ 2.3 million, and $ 7.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

These costs were charged to selling, general and administrative expenses as incurred.

Net Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per common share is computed by dividing net income (loss) by the diluted number of shares outstanding during the period.

Except where the result would be antidilutive to net income (loss), diluted net income (loss) per common share is computed assuming the conversion of the 2022 Convertible Notes, the 2024 Convertible Notes and the 2026 Convertible Notes, the exercise of outstanding common stock options and the vesting of RSUs and RSAs (using the treasury stock method), as well as their related income tax effects.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances from non-owner sources and consists of net income (loss) and changes in unrealized gains and losses on available-for-sale debt securities in the periods presented in the Company’s consolidated statements of comprehensive income (loss).

Net Income Per Share

Basic net income per common share is computed by dividing the net income by the weighted average number of common shares outstanding during the period.

Diluted net income per common share is computed by dividing net income by the diluted number of shares outstanding during the period.

Except where the result would be antidilutive to net income, diluted net income per common share is computed assuming the conversion of the 2022 Convertible Notes, the 2024 Convertible Notes and the 2026 Convertible Notes, the exercise of outstanding common stock options and the vesting of RSUs and RSAs (using the treasury stock method), as well as their related income tax effects.

Subsequent Events

4 unchanged sentences

Except as set forth below, the Company did not adopt any new accounting pronouncements during the year ended December 31, 2021 that had a material effect on its consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No.

2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

ASU 2016-13 changed how companies account for credit losses for most financial assets and certain other instruments.

For trade receivables, loans and held-to-maturity debt securities, companies are required to recognize an allowance for credit losses rather than reducing the carrying value of the asset.

Subsequent to the issuance of ASU 2016-13, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses , Topic 815, Derivatives and Hedging , and Topic 825, Financial Instruments , ASU No.

2019-05, Financial Instruments—Credit Losses (Topic 326) :

Targeted Transition Relief (“ASU 2019-05”), ASU No.

2019-10, Financial Instruments—Credit Losses (Topic 326) , Derivatives and Hedging (Topic 815) , and Leases (Topic 842):

Effective Date , ASU No.

2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses , ASU No.

2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842) :

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016-02, Leases (Topic 842) to provide additional guidance on the adoption of ASU 2016-13.

Early adoption was permitted.

The Company adopted these ASUs during the three months ended March 31, 2020 .

The adoption of these ASUs did not have a material impact on the Company’s financial position and results of operations.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350) (“ASU 2017-04”) to simplify the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test and to eliminate the required quantitative analysis for reporting units with negative carrying value.

ASU 2017-04 is effective for fiscal years beginning after December 15, 2019.

Early adoption was permitted.

The Company adopted ASU 2017-04 during the three months ended March 31, 2020 .

The adoption of ASU 2017-04 did not have a material impact on the Company’s financial position and results of operations.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework— Changes to the Disclosure Requirement for Fair Value Measurement (“ASU 2018-13”) which amends the disclosure requirements for fair value measurements.

The amendments in ASU 2018-13 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

The Company adopted ASU 2018-13 during the three months ended March 31, 2020 .

The adoption of ASU 2018-13 did not have a material impact on the Company’s financial statement disclosures.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles—Goodwill and Other—Internal Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (a consensus of the FASB Emerging Issues Task Force) (“ASU 2018-15”) which provides guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract.

ASU 2015-18 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred.

The internal-use software guidance requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred.

A customer’s accounting for the hosting component of the arrangement is not affected by this guidance.

The amendments in ASU 2018-15 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

The Company adopted ASU 2018-15 using the prospective transition method during the three months ended March 31, 2020 .

The adoption of ASU 2018-15 did not have a material impact on the Company’s financial position and results of operations.

In October 2018, the FASB issued ASU No.

2018-17, Consolidation (Topic 810):

Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”).

The update is intended to improve general purpose financial reporting by considering indirect interests held through related parties in common control arrangements on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.

The amendments in ASU 2018-17 will be effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

The Company adopted ASU 2018-17 during the three months ended

March 31, 2020 .

The adoption of ASU 2018-17 did not have a material impact on the Company’s financial position and results of operations.

In December 2019, the FASB issued ASU No.

2 unchanged sentences

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 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 , with early adoption permitted.

The Company is currently evaluating the potential impact that the adoption of ASU 2019-12 may have on the Company’s financial position and results of operations.

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.

7 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the impact that the adoption of ASU 2020-06 may have on the Company’s financial position and results of operation.

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.

The Company’s analysis includes, but is not limited to, reviewing existing convertible debt agreements, assessing potential disclosures, and evaluating the impact of adoption on the Company’s consolidated financial statements.

The Company is in the process of finalizing the quantitative impact that the ASU 2020-06 will have on the financial statements, as well as its plan for implementation.

In May 2021, the FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”).

The guidance in ASU 2021-04 clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange.

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.

The Company is currently evaluating the impact that the adoption of ASU 2021-04 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 consolidated financial statements upon future adoption.

Cyclerion Separation

On April 1, 2019, Ironwood completed the separation of its sGC business, and certain other assets and liabilities, into 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 Cyclerion’s common stock, to Ironwood’s stockholders of record as of the close of business on March 19, 2019.

Prior to the Separation on April 1, 2019, as described in Note 1, Nature of Business , Cyclerion was a wholly owned subsidiary of the Company.

On April 1, 2019, Ironwood completed the separation (the “Separation”) of its sGC business, and certain other assets and liabilities, into 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 Cyclerion’s common stock, to the Ironwood’s stockholders of record as of the close of business on March 19, 2019.

Prior to the Separation on April 1, 2019, Cyclerion was a wholly owned subsidiary of the Company.

On March 30, 2019, the Company entered into certain agreements with Cyclerion relating to the Separation, including a separation agreement, a tax matters agreement, and an employee matters agreement.

Agreements with Cyclerion

The separation agreement with Cyclerion, dated as of March 30, 2019, sets forth, among other things, the Company’s agreements with Cyclerion regarding the principal actions to be taken in connection with the Separation, including the dividend, which was effective as of April 1, 2019.

The separation agreement with Cyclerion sets forth, among other things, the Company’s agreements with Cyclerion regarding the principal actions to be taken in connection with the Separation, including the dividend, which was effective as of April 1, 2019.

The separation agreement identifies assets transferred, liabilities assumed by and contracts assigned to each of Cyclerion and Ironwood as part of the Separation, and provides for when and how these transfers, assumptions and assignments occur.

7 unchanged sentences

Net Assets Transferred to Cyclerion

In addition, the Company received approximately $ 1.3 million during the year ended December 31, 2019 associated with tenant improvement reimbursement provisions related to the Cyclerion lease in accordance with the separation agreement.

The tax matters agreement, dated as of March 30, 2019, governs each party’s rights, responsibilities and obligations with respect to taxes, including taxes, if any, incurred as a result of any failure of the Separation to qualify as tax-free.

In addition, the Company received $ 1.3 million during the year ended December 31, 2019 associated with tenant improvement reimbursement provisions related to the Cyclerion lease in accordance with the separation agreement.

The tax matters agreement governs each party’s rights, responsibilities and obligations with respect to taxes, including taxes, if any, incurred as a result of any failure of the Separation to qualify as tax-free.

In general, if the parties incur tax liabilities in the event that the Separation is not tax-free, each party is expected to be responsible for any taxes imposed on Ironwood or Cyclerion that arise from the failure of the Separation to qualify as a transaction that is generally tax-free for U.S.

4 unchanged sentences

Cyclerion agreed to certain covenants that contain restrictions intended to preserve the tax-free status of the distribution and certain related transactions.

The employee matters agreement, dated as of March 30, 2019, allocates assets, liabilities and responsibilities relating to the employment, compensation, and employee benefits of Ironwood and Cyclerion employees, and other related matters in connection with the Separation, including the treatment of outstanding Ironwood incentive equity awards.

The employee matters agreement allocates assets, liabilities and responsibilities relating to the employment, compensation, and employee benefits of Ironwood and Cyclerion employees, and other related matters in connection with the Separation, including the treatment of outstanding Ironwood incentive equity awards.

Pursuant to the employee matters agreement, the outstanding Ironwood equity awards held by Cyclerion and Ironwood employees were adjusted in connection with the Separation, with the intent to maintain, immediately following the Separation, the economic value of the awards.

4 unchanged sentences

Amounts received for services provided to Cyclerion were recorded as other income and amounts paid for services provided by Cyclerion were recorded as selling, general and administrative expense and research and development expense, as applicable.

During the years ended December 31, 2020 and 2019, the Company recorded an insignificant amount and approximately $ 0.3 million, respectively, as other income for services provided to Cyclerion.

During the years ended December 31, 2020 and 2019, the Company recorded an insignificant amount and $ 0.3 million, respectively, as other income for services provided to Cyclerion.

During each of the years ended December 31, 2020 and 2019, the Company recorded an insignificant amount in both selling, general and administrative expense and research and development expense for services provided by Cyclerion, respectively.

Pursuant to the development agreement, Cyclerion is obligated to provide the Company with certain research and development services with respect to certain of Ironwood’s products and product candidates for an initial period of two years, unless earlier terminated or extended.

Such research and development activities are governed by a joint steering committee comprised of representatives from both Cyclerion and Ironwood.

Services received are paid at a mutually agreed upon rate.

The Company recorded approximately $ 2.3 million and $ 4.5 million in research and development expenses under the development agreement during the years ended December 31, 2020 and 2019, respectively.

The Company had an insignificant amount and approximately $ 1.5 million of accounts payable due to Cyclerion as of December 31, 2020 and 2019, respectively.

Pursuant to the development agreement, Cyclerion was obligated to provide the Company with certain research and development services with respect to certain of Ironwood’s products and product candidates for an initial period of two years, unless earlier terminated or extended.

As of December 31, 2021, the development agreement had been terminated.

Services received were paid at a mutually agreed upon rate and development activities were governed by a joint steering committee comprised of representatives from both Cyclerion and Ironwood.

The Company recorded an insignificant amount, $ 2.3 million and $ 4.5 million in research and development expenses under the development agreement during the years ended December 31, 2021, 2020 and 2019, respectively.

The Company had an insignificant amount of accounts payable due to Cyclerion as of December 31, 2020.

Discontinued Operations

Upon the Separation, the Company determined its sGC business qualified for discontinued operations accounting treatment in accordance with ASC 205-20.

There were no discontinued operations during year ended December 31, 2020.

The following is a summary of expenses of Cyclerion classified as discontinued operations for years ended December 31, 2019 and 2018 (in thousands):

There were no discontinued operations during the years ended December 31, 2021 and 2020.

The following is a summary of expenses of Cyclerion classified as discontinued operations for year ended December 31, 2019 (in thousands):

Year Ended December 31,

2 unchanged sentences

Selling, general and administrative

Restructuring expenses

Net loss from discontinued operations

There were no assets or liabilities related to discontinued operations as of either December 31, 2021 or December 31, 2020, as all balances were transferred to Cyclerion upon Separation.

Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per common share (in thousands, except per share amounts):

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):

Year Ended December 31,

Net income (loss)

Weighted average number of common shares outstanding used in net income (loss) per share — basic

Weighted average number of common shares outstanding used in computing net income per share — basic

Effect of dilutive securities:

4 unchanged sentences

Dilutive potential common shares

Weighted average number of common shares outstanding used in net income (loss) per share — diluted

Net income (loss) per share — basic

Net income (loss) per share — diluted

Weighted average number of common shares outstanding used in computing net income per share — diluted

Net income per share — basic

Net income per share — diluted

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):

10 unchanged sentences

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 (loss) 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 (loss) 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.

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 the years ended December 31, 2021, 2020, or 2019.

Goodwill and Intangible Assets

The Company closed a transaction with AstraZeneca (the “Lesinurad Transaction”) on June 2, 2016 (the “Acquisition Date”) pursuant to which the Company received an exclusive license to develop, manufacture and commercialize the Lesinurad Products in the U.S.

In August 2018, the Company delivered to AstraZeneca a notice of termination of the lesinurad license agreement, which termination was made with respect to all products under the lesinurad license agreement.

The value of the developed technology – ZURAMPIC and developed technology – DUZALLO intangible assets as of the Acquisition Date was approximately $ 22.0 million and approximately $ 145.1 million, respectively.

As of July 31, 2018, the accumulated amortization for developed technology – ZURAMPIC and developed technology – DUZALLO intangible assets was approximately $ 3.6 million and approximately $ 11.7 million, respectively.

During the year ended December 31, 2018, the Company completed its initiative to evaluate the optimal mix of investments for the lesinurad franchise for uncontrolled gout using a comprehensive marketing mix in select test markets (with paired controls).

Data from the test markets did not meet expectations.

As a result, during the year ended December 31, 2018, the Company reduced its projected revenue and net cash flow assumptions associated with the value of its developed technology – ZURAMPIC and developed technology – DUZALLO intangible assets.

Accordingly, the Company evaluated its developed technology – ZURAMPIC and developed technology – DUZALLO intangible assets for impairment and recorded an approximately $ 151.8 million impairment charge during the year ended December 31, 2018.

The impairment assessment performed utilized the revised projected revenue and net cash flows assumed through the termination of the lesinurad license agreement, resulting in an impairment of the full carrying value of the intangible assets.

The impairment charge was recorded as impairment of intangible assets in the Company’s consolidated statement of operations.

The Company tests its goodwill for impairment annually as of October 1 st , or more frequently if events or changes in circumstances indicate an impairment may have occurred (Note 2).

There were no impairments of goodwill during the years ended December 31, 2020, 2019, and 2018.

Collaboration, License, Co-Promotion and Other Commercial Agreements

Collaboration, License, and Other Agreements

For the year ended December 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 operations as collaborative arrangements revenue and sale of API primarily attributable to transactions from these arrangements (in thousands):

The Company also had an agreement with Alnylam Pharmaceuticals, Inc (“Alnylam”) to perform disease awareness activities for acute hepatic porphyria (“AHP”) and sales detailing activities for GIVLAARI ® (givosiran).

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):

Year Ended December 31,

14 unchanged sentences

(1) The Company had an agreement with AbbVie to perform sales detailing activities for VIBERZI® (eluxadoline) which terminated as of December 31, 2019.

Accounts receivable, net, included approximately $ 145.8 million primarily related to collaborative arrangements revenue and sale of API, collectively, as of December 31, 2020, including approximately $ 110.9 million of accounts receivable, net, which includes approximately $ 4.3 million of accounts payable from the Company’s partner, AbbVie.

Accounts receivable, net, included approximately $ 43.9 million related to collaborative arrangements revenue and sale of API, collectively, as of December 31, 2019.

The Company previously reflected amounts due from Allergan prior to its acquisition by AbbVie in May 2020 as related party accounts receivable.

As of December 31, 2019, related party accounts receivable, net, included approximately $ 110.1 million related to collaborative arrangements revenue, net of approximately $ 4.1 million of related party accounts payable.

Following acquisition of Allergan by AbbVie, the Company determined that AbbVie is not a related party to the Company (Note 17).

At December 31, 2019, deferred revenue was approximately $ 0.9 million related to the disease education and promotional agreement with Alnylam.

At December 31, 2020, no deferred revenue was recorded.

Accounts receivable, net, included $ 138.0 million and $ 145.8 primarily related to collaborative arrangements revenue and sale of API, collectively, as of December 31, 2021 and 2020, respectively.

Accounts receivable, net, included $ 112.2 million and $ 110.9 million due from the Company’s partner, AbbVie, net of $ 5.0 million and $ 4.3 million of accounts payable at December 31, 2021 and 2020, respectively.

The Company routinely assesses the creditworthiness of its license and collaboration partners.

7 unchanged sentences

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.

At December 31, 2019, $ 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.

During the years ended December 31, 2020, 2019 and 2018, the Company incurred approximately $ 20.1 million, approximately $ 37.6 million, and approximately $ 39.2 million 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 approximately $ 5.6 million during the year ended December 31, 2020, and offset approximately $ 7.2 million and approximately $ 9.0 million in research and development costs during the years ended December 31, 2019 and 2018, respectively, to reflect the obligations of each party under the collaboration to bear 50 % of the development costs incurred.

As of December 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 when the related sales occur.

During the years ended December 31, 2021, 2020 and 2019, the Company incurred $ 8.2 million, $ 20.1 million, and $ 37.6 million 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 $ 11.5 million and $ 5.6 million during the years ended December 31, 2021 and December 31, 2020, respectively, and offset $ 7.2 million in research and development costs during the year ended December 31, 2019, 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.

14 unchanged sentences

The Company records its share of the net profits or net losses from the sales of LINZESS in the U.S.

on a net basis less commercial expenses, and presents the settlement payments to and from AbbVie as collaboration expense or collaborative arrangements revenue, as applicable.

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.

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.

From time to time, in accordance with the terms of the collaboration with AbbVie for North America, the Company engages an independent certified public accounting firm to review the accuracy of the financial reporting from AbbVie to the Company.

In connection with such a review during the three months ended September 30, 2018, AbbVie reported to the Company an approximately $ 59.3 million negative adjustment to LINZESS net sales.

The adjustment related to the cumulative difference between certain previously estimated LINZESS gross-to-net sales reserves and allowances made by AbbVie during the years ended December 31, 2015, 2016 and 2017, and subsequent actual payments made.

This adjustment was primarily associated with estimated governmental and contractual rebates, as reported by AbbVie.

Upon receiving this information from AbbVie, the Company recorded a change in accounting estimate to reduce collaborative arrangements revenue by approximately $ 29.7 million during the three months ended September 30, 2018 related to the Company’s share of this adjustment.

In addition, during the three months ended December 31, 2018, AbbVie reported to the Company a true-up of approximately $ 0.2 million related to the previously reported adjustment for the cumulative difference between certain previously estimated LINZESS gross-to-net sales reserves and allowances.

The Company recognized collaborative arrangements revenue from the AbbVie collaboration agreement for North America during the years ended December 31, 2021, 2020, and 2019 as follows (in thousands):

4 unchanged sentences

The collaborative arrangements revenue recognized in the years ended December 31, 2021, 2020, and 2019 primarily represents the Company’s share of the net profits and net losses on the sale of LINZESS in the U.S.

The following table presents the amounts recorded by the Company for commercial efforts related to LINZESS in the U.S.

in the years ended December 31, 2020, 2019, and 2018 (in thousands):

Year Ended December 31,

Ironwood's collaborative arrangement revenue

Selling, general and administrative costs incurred by the Company (1)

Ironwood's share of net profits (2)

(1) Includes Ironwood’s selling, general and administrative expenses attributable to the cost-sharing arrangement with AbbVie.

Excludes approximately $ 0.6 million, approximately $ 2.4 million, and approximately $ 2.2 million for the years ended December 31, 2020, 2019, and 2018 respectively, related to patent prosecution and patent litigation costs recognized in connection with the collaboration agreement with AbbVie.

(2) Ironwood has recalculated its share of net profit on sales of LINZESS in the U.S.

to conform with AbbVie’s recast of historically reported LINZESS U.S.

net sales (previously reported by Allergan).

The Company incurred $ 30.3 million, $ 39.9 million, and $ 40.5 million in total selling, general and administrative costs related to the sale of LINZESS in the U.S.

in accordance with the cost-sharing arrangement with AbbVie, which included $ 0.3 million, $ 0.6 million, and $ 2.4 million in patent prosecution and patent litigation costs, for the years ended December 31, 2021, 2020, and 2019, respectively.

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 approximately $ 2.3 million, approximately $ 2.2 million, and approximately $ 1.9 million of combined royalty revenues from Canada and Mexico during the years ended December 31, 2020, 2019, and 2018, respectively.

The Company recognized $ 2.7 million, $ 2.3 million, and $ 2.2 million of combined royalty revenues from Canada and Mexico during the years ended December 31, 2021, 2020, and 2019, respectively.

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”).

(“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.

5 unchanged sentences

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.

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.

1 unchanged sentence

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.

In evaluating the terms of the European License Agreement, as amended by the 2017 Amendment (the “Amended European License Agreement”), 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 commercial launch milestones, sales-based milestones and royalties under the Amended European License Agreement 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 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 approximately $ 2.2 million, approximately $ 1.7 million and approximately $ 1.1 million of royalty revenue from the Amended European License Agreement during the years ended December 31, 2020, 2019, and 2018, respectively.

The Company recognized $ 2.6 million, $ 2.2 million and $ 1.7 million of royalty revenue from the Amended European License Agreement during the years ended December 31, 2021, 2020, and 2019, respectively.

License Agreement for Japan with Astellas

1 unchanged sentence

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.

During the year ended December 31, 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 sells linaclotide API supply to Astellas at a contractually defined rate and recognizes related revenue as sale of API.

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.

Under the 2009 License Agreement with Astellas, the Company received an up-front licensing fee of $ 30.0 million and three development milestone payments that totaled $ 45.0 million, which were recognized as revenue prior to the adoption of ASC 606 on January 1, 2018.

The Company evaluated the terms of the 2009 License Agreement with Astellas and determined that there were no remaining performance obligations as of the adoption of ASC 606.

Additionally, under the terms of the Astellas Commercial Supply Agreement, the Company determined it had an ongoing performance obligation to supply API.

During the years ended December 31, 2019 and 2018, the Company recognized revenue of approximately $ 27.5 million and approximately $ 69.6 million, respectively, from the sale of API to Astellas under the 2009 License Agreement with Astellas and the Astellas Commercial Supply Agreement.

During the year ended December 31, 2019, the Company recognized revenue of $ 27.5 million from the sale of API to Astellas under the 2009 License Agreement with Astellas and the Astellas Commercial Supply Agreement.

The royalties on sales of LINZESS in Japan did not exceed the transfer price of API sold and other contractual deductions during each of the periods presented.

1 unchanged sentence

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, pays 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.

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.

5 unchanged sentences

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 approximately $ 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 is recognized over the performance period as linaclotide API is shipped to Astellas.

Consideration allocated to the adverse event reporting services is recognized as such services are provided over the performance period based on the amount to which the Company has a right to invoice.

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.

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 $ 10.0 million in collaborative arrangements revenue during the year ended December 31, 2019 related to the upfront fee associated with the execution of the Amended Astellas License Agreement.

The Company recognized approximately $ 2.0 million and approximately $ 18.3 million from the sale of API to Astellas under the Amended License Agreement during the years ended December 31, 2020 and 2019, respectively.

The Company recognized approximately $ 2.1 million of royalty revenue during the year ended December 31, 2020.

The Company recognized an insignificant amount of collaborative arrangements revenue related to adverse event reporting services in each of the years ended December 31, 2020 and 2019.

During the year ended December 31, 2021, the Company recognized $ 2.2 million in collaborative arrangements revenue related to royalties and $ 0.2 million related to the sale of API to Astellas under the Amended Astellas License Agreement.

During the year ended December 31, 2020, the Company recognized $ 2.1 million in collaborative arrangements revenue related to royalties, an insignificant amount of collaborative arrangements revenue related to adverse event reporting services, and $ 2.0 million from the sale of API to Astellas under the Amended Astellas License Agreement.

During the year ended December 31, 2019, the Company recognized $ 10.0 million in collaborative arrangements revenue related to the upfront fee associated with the execution of the Amended Astellas License Agreement, an insignificant amount of collaborative arrangements revenue related to adverse event reporting services, and $ 18.3 million from the sale of API to Astellas under the Amended License Agreement.

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”).

collaboration provided AstraZeneca with an exclusive nontransferable license to exploit the underlying technology in the AstraZeneca License Territory.

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.

9 unchanged sentences

Payments to AstraZeneca were recorded as incremental research and development expense.

During the years ended December 31, 2019 and 2018, the Company incurred approximately $ 1.2 million and approximately $ 0.9 million, respectively, related to pre-launch commercial services and supply chain services.

During the years ended December 31, 2019, the Company incurred $ 1.2 million related to pre-launch commercial services and supply chain services.

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.

1 unchanged sentence

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 TSA, the Company provided certain regulatory and administrative services through September 2021.

Services performed were paid at a mutually agreed upon rate.

Amounts for AstraZeneca TSA services were 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.

6 unchanged sentences

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 approximately $ 2.6 million.

Accordingly, the Company recognized approximately $ 32.4 million relating to the delivery of the AstraZeneca License as collaborative arrangements revenue at contract inception and will recognize the approximately $ 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.

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 was 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 year ended December 31, 2020, the Company recognized approximately $ 0.7 million in collaborative arrangements revenue related to the Amended AstraZeneca License, of which approximately $ 0.6 million related to the AstraZeneca TSA services and approximately $ 0.1 million related to royalties.

During the year ended December 31, 2020, the Company recognized approximately $ 5.5 million of sale of API on its consolidated statement of operations relating to the supply of linaclotide finished drug product and finished goods under the AstraZeneca CSA.

During the year ended December 31, 2019, the Company recognized approximately $ 32.6 million in collaborative arrangements revenue related to the Amended AstraZeneca License, of which approximately $ 32.4 million related to the delivery of the AstraZeneca License and approximately $ 0.2 million related to the AstraZeneca TSA services.

During the year ended December 31, 2019, the Company recognized approximately $ 3.0 million of sale of API on its consolidated statement of operations relating to the supply of linaclotide finished drug product and finished goods under the AstraZeneca CSA.

Co-Promotion and Other Agreements

During the year ended December 31, 2021, the Company recognized $ 0.7 million in collaborative arrangements revenue related to the Amended AstraZeneca Agreement, of which $ 0.5 million related to royalties and $ 0.2 million related to AstraZeneca TSA services, and recognized $ 0.6 million in sales of API relating to the supply of development material.

The Company recognized $ 0.6 million in interest income related to the significant financing component of the Amended AstraZeneca Agreement during the year ended December 31, 2021.

During the year ended December 31, 2020, the Company recognized $ 0.7 million in collaborative

arrangements revenue related to the Amended AstraZeneca License, of which $ 0.6 million related to the AstraZeneca TSA services and $ 0.1 million related to royalties, and recognized $ 5.5 million of sales of API relating to the supply of linaclotide finished drug product and finished goods under the AstraZeneca CSA.

The Company recognized $ 0.8 million

in interest income related to the significant financing component of the Amended AstraZeneca Agreement during the year ended December 31, 2020.

During the year ended December 31, 2019, the Company recognized $ 32.6 million in collaborative arrangements revenue related to the Amended AstraZeneca License, of which $ 32.4 million related to the delivery of the AstraZeneca License and $ 0.2 million related to the AstraZeneca TSA services, and recognized $ 3.0 million of sale of API relating to the supply of linaclotide finished drug product and finished goods under the AstraZeneca CSA.

The Company recognized $ 0.2 million in interest income related to the significant financing component of the Amended AstraZeneca Agreement during the year ended December 31, 2019.

Other Collaboration and License Agreements

Collaboration and License Option Agreement with Cour

In November 2021, the Company entered into the COUR Collaboration Agreement, pursuant to which the Company has been granted an option (the “Option”) to acquire an exclusive license to research, develop, manufacture and commercialize, in the U.S., products containing CNP-104, a tolerizing immune modifying nanoparticle (“CNP-104”) for the treatment of primary biliary cholangitis.

COUR has initiated a clinical study for CNP-104, evaluating the safety, tolerability, and pharmacodynamic effects and efficacy of CNP-104 (the “Initial Study”).

Pursuant to the terms of the COUR Collaboration Agreement, the Company made an upfront, non-refundable payment of $ 6.0 million to COUR during the year ended December 31, 2021, and will pay COUR non-contingent payments and milestone payments totaling $ 13.5 million in connection with certain development activities and regulatory milestones.

After reviewing the data from the Initial Study, if the Company exercises the Option, the Company will pay COUR $ 35.0 million in exchange for the license.

Upon commercialization, COUR will be eligible to receive commercial milestone payments of up to $ 440.0 million over the term of the agreement and royalties in the high single digits to low double digits percentage of the aggregated annual net sales in the U.S.

of products containing CNP-104.

During the year ended December 31, 2021, the Company recognized research and development expense totaling $ 19.5 million related to the up-front payment, non-contingent payment, and milestone payments for which payment is probable to occur.

At December 31, 2021, payment obligations of $ 13.5 million were included in accrued research and development costs related to the COUR Collaboration Agreement.

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 approximately $ 5.5 million for services rendered through December 31, 2020.

The Company also 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.

In August 2019, the Company and Alnylam entered into a disease education and promotional agreement (the “Alnylam Agreement”) for Alnylam’s GIVLAARI for the treatment of AHP.

The Alnylam Agreement, as amended, was terminated in June 2021 with an effective termination date of September 30, 2021.

Under the terms of the Alnylam Agreement, the Company’s sales force performed 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.

Pursuant to the terms of 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 received service fees.

The Company remains eligible to receive royalties based on a percentage of net sales of GIVLAARI that are directly attributable to the Company’s promotional efforts until September 30, 2022, which is one year following the termination of the agreement.

The Company identified the following performance obligation under the Alnylam Agreement:

1 unchanged sentence

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.

During the years ended December 31, 2020 and 2019, the Company recognized approximately $ 3.5 million and approximately $ 2.0 million, respectively, in collaborative arrangements revenue related to the service fees.

During the year ended December 31, 2020, the Company recognized approximately $ 0.8 million in royalty revenue related to the Alnylam Agreement.

The Company did not recognize any royalty revenue related to the Alnylam Agreement during the year ended December 31, 2019.

As of December 31, 2019, the Company had a deferred revenue balance of

approximately $ 0.9 million related to advance billings of service fees.

As of December 31, 2020, the Company had no deferred revenue.

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.

During the years ended December 31, 2021 and 2020, the Company recognized $ 2.4 million and $ 0.8 million, respectively, in collaborative arrangements revenue related to royalties.

During the years ended December 31, 2020 and 2019, the Company recognized $ 3.5 million and $ 2.0 million, respectively, in collaborative arrangements revenue related to the service fees.

Fair Value of Financial Instruments

9 unchanged sentences

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 periodically 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.

23 unchanged sentences

Money market funds

Repurchase agreements

Restricted cash:

4 unchanged sentences

Total liabilities measured at fair value

There were no transfers between fair value measurement levels during each of the years ended December 31, 2020 or 2019.

Cash equivalents, accounts receivable, related party accounts receivable, prepaid expenses and other current assets, accounts payable, related party accounts payable, accrued research and development costs, accrued expenses and other current liabilities, current portion of operating lease obligations, and deferred revenue at December 31, 2020 and 2019 are carried at amounts that approximate fair value due to their short-term maturities.

There were no transfers between fair value measurement levels during each of the years ended December 31, 2021, 2020, and 2019.

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 December 31, 2021 and 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

1 unchanged sentence

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 December 31, 2020 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 December 31, 2021 and 2020:

December 31, 2021

December 31, 2020

Risk-free interest rate (1)

11 unchanged sentences

therefore, the expected dividend yield is assumed to be zero .

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 consolidated statements of operations.

The following table reflects the change in the Company's Level 3 Convertible Note Hedges and Note Hedge Warrants from December 31, 2019 through December 31, 2021 (in thousands):

Balance at December 31, 2019

Cash settlement (received) paid upon early termination of derivatives (Note 11)

Change in fair value, recorded as a component of gain (loss) on derivatives

Change in fair value, recorded as a component of (loss) gain on derivatives

Balance at December 31, 2020

2 unchanged sentences

Convertible Senior Notes

In June 2015, the Company issued approximately $ 335.7 million aggregate principal amount of its 2022 Convertible 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.

1 unchanged sentence

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 as of December 31, 2020 and 2019 was approximately $ 130.2 million and $ 141.3 million, respectively.

The estimated fair value of the 2024 Convertible Notes as of December 31, 2020 and 2019 was approximately $ 222.3 million and $ 235.7 million, respectively.

The estimated fair value of the 2026 Convertible Notes as of December 31, 2020 and 2019 was approximately $ 224.1 million and $ 240.1 million, respectively.

The estimated fair value of the 2022 Convertible Notes was $ 125.2 million and $ 130.2 million as of December 31, 2021 and 2020, respectively.

The estimated fair value of the 2024 Convertible Notes was $ 221.9 million and $ 222.3 million as of December 31, 2021 and 2020, respectively.

The estimated fair value of the 2026 Convertible Notes was $ 227.2 million and $ 224.1 million as of December 31, 2021 and 2020, respectively.

Capped Calls with Respect to 2024 Convertible Notes and 2026 Convertible Notes

6 unchanged sentences

The Company’s lease portfolio for the year ended December 31, 2021 includes:

a lease for its current headquarters location, a data center colocation lease, vehicle leases for its salesforce representatives, and leases for computer and office equipment.

an office lease for its current headquarters location, a data center colocation, 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 $ 1.7 million and $ 2.2 million and are collateralized by money market accounts recorded as restricted cash on the Company’s consolidated balance sheets as of December 31, 2021 and 2020, respectively.

Lease cost is recognized on a straight-line basis over the lease term.

The components of lease cost for the year ended December 31, 2020 and 2019 are as follows (in thousands):

The components of lease cost for the years ended December 31, 2021, 2020 and 2019 are as follows (in thousands):

Year Ended December 31,

Operating lease cost during period, net (1)

Operating lease cost (1)

Variable lease payments

1 unchanged sentence

Total lease cost

(1) Operating lease cost is presented net of approximately $ 0.3 million of sublease income for the year ended December 31, 2019 related to a sublease agreement between Ironwood and Cyclerion executed upon Separation.

(1) Operating lease cost is presented net of $ 0.3 million of sublease income for the year ended December 31, 2019 related to a sublease agreement between Ironwood and Cyclerion executed upon Separation.

The sublease agreement terminated in May 2019.

Supplemental cash flow information related to leases for the periods reported is as follows:

Supplemental information related to leases for the periods reported is as follows:

Year Ended December 31,

10 unchanged sentences

present value adjustment

Operating lease liabilities at December 31, 2020

Operating lease liabilities

current portion of operating lease liabilities

2 unchanged sentences

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 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.

Additionally, the Summer Street Lease requires a letter of credit to secure the Company’s obligations under the lease agreement of approximately $ 1.0 million, which is collateralized by a money market account recorded as restricted cash on the Company’s consolidated balance sheet as of December 31, 2020.

At lease inception, the Company recorded a right-of-use asset and a lease liability associated with the Summer Street Lease using an incremental borrowing rate of approximately 5.8 %.

At December 31, 2020, the balances of the right-of-use asset and operating lease liability were approximately $ 16.6 million and approximately $ 23.2 million, respectively.

At December 31, 2019, the balances of the right-of-use asset and operating lease liability were approximately $ 17.7 million and approximately $ 22.8 million, respectively.

Lease costs related to the Summer Street Lease recorded during the years ended December 31, 2020 and 2019 were approximately $ 2.5 million and approximately $ 1.5 million, respectively.

At lease inception, the Company recorded a right-of-use asset and a lease liability using an incremental borrowing rate of 5.8 %.

At December 31, 2021, the balances of the right-of-use asset and operating lease liability were $ 15.3 million and $ 21.5 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 related to the Summer Street Lease recorded during the years ended December 31, 2021, 2020 and 2019 were $ 2.5 million, $ 2.5 million and $ 1.5 million, respectively.

Binney Street Lease (prior headquarters)

9 unchanged sentences

Lease cost related to the Binney Street Lease recorded during the year ended December 31, 2019 was approximately $ 16.3 million, net of sublease income of approximately $ 0.3 million.

Under ASC 840, rent expense related to the Binney Street Lease recorded during the year ended December 31, 2018 was approximately $ 10.0 million.

Vehicle fleet leases

During April 2018, the Company entered into a master services agreement containing 12-month leases (the “2018 Vehicle Leases”) for vehicles within its fleet for its field-based sales force and medical science liaisons.

These leases are classified as short-term in accordance with the practical expedient in ASC 842.

The 2018 Vehicle Leases expire at varying times, with a monthly renewal provision.

In accordance with the terms of the 2018 Vehicle Leases, the Company maintains a letter of credit securing its obligation under the lease agreements of $ 1.3 million, which is collateralized by a money market account recorded as restricted cash on the Company’s consolidated balance sheets as of December 31, 2020 and 2019.

Lease cost related to the 2018 Vehicle Leases was approximately $ 1.4 million and approximately $ 1.5 million, respectively, for the years ended December 31, 2020 and 2019.

Under ASC 840, lease cost related to the 2018 Vehicle Leases was approximately $ 0.8 million for the year ended December 31, 2018.

Property and Equipment

4 unchanged sentences

Computer and office equipment

Construction in process

Total property and equipment

Less accumulated depreciation and amortization

Depreciation expense of property and equipment was approximately $ 2.3 million and $ 5.6 million for the years ended December 31, 2020 and 2019, respectively.

Depreciation and amortization expense of property and equipment, including amounts recorded under capital leases under ASC 840, was approximately $ 3.9 million for the year ended December 31, 2018.

During the year ended December 31, 2020, the Company recorded approximately $ 1.2 million in restructuring expenses in its consolidated statement of operations related to the impairment of certain fixed assets as a result of its decision to discontinue IW-3718 development.

Total property and equipment, net

Depreciation expense of property and equipment was $ 1.5 million, $ 2.3 million and $ 5.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

During the year ended December 31, 2020, the Company recorded $ 1.2 million, in restructuring expenses in its consolidated statement of income related to the impairment of certain fixed assets as a result of its decision to discontinue IW-3718 development.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

Accrued incentive compensation

Accrued vacation

Professional fees

Other employee benefits

Accrued compensation and benefits

Restructuring liabilities

As of December 31, 2020, other accrued expenses of approximately $ 2.0 million included approximately $ 1.6 million of uninvoiced vendor liabilities and approximately $ 0.3 million of accrued interest.

As of December 31, 2019, other accrued expenses of approximately $ 10.3 million included approximately $ 4.1 million related to API batches uninvoiced, approximately $ 0.9 million related to activities associated with the Company’s move to the 100 Summer Street headquarters, approximately $ 0.6 million related to unbilled inventory, approximately $ 0.3 million of accrued interest, and approximately $ 0.2 million related to equipment for clinical studies.

Stock repurchase

Total accrued expenses and other current liabilities

As of December 31, 2021, other accrued expenses of $ 3.4 million included $ 2.7 million of uninvoiced vendor liabilities, $ 0.3 million of accrued interest and $ 0.2 million of state income taxes payable.

As of December 31, 2020, other accrued expenses of $ 2.6 million included $ 2.1 million of uninvoiced vendor liabilities and $ 0.3 million of accrued interest.

Notes Payable

8.375 % Notes due 2026

On September 23, 2016, the Company closed a direct private placement, pursuant to which the Company issued $ 150.0 million in aggregate principal amount of 8.375 % Notes due 2026 (the “2026 Notes”) and received net proceeds of approximately $ 11.2 million.

The Company capitalized approximately $ 0.5 million of debt issuance costs, which were netted against the carrying value of the 2026 Notes.

Proceeds from the issuance of the 2024 Convertible Notes and the

2026 Convertible Notes were used, in part, to redeem the outstanding principal balance of the 2026 Notes in September 2019.

The Company retired the 2026 Notes, which had an outstanding aggregate principal balance of approximately $ 116.5 million, for a redemption price of approximately $ 123.0 million.

The redemption of the 2026 Notes resulted in a loss on extinguishment of debt of approximately $ 7.6 million related to the prepayment premium and write-off of the unamortized debt issuance costs and unamortized debt discount.

The 2026 Notes had an annual interest rate of 8.375 %, with interest payable March 15, June 15, September 15 and December 15 of each year (each an “ 8.375 % Payment Date”).

Principal of the 2026 Notes was payable on the 8.375 % Payment Dates beginning March 15, 2019.

From March 15, 2019, the Company made quarterly payments on the 2026 Notes equal to the greater of (i) 7.5 % of net sales of linaclotide in the U.S.

for the preceding quarter (the “ 8.375 % Synthetic Royalty Amount”) and (ii) accrued and unpaid interest on the 2026 Notes (the “ 8.375 % Required Interest Amount”).

Principal on the 2026 Notes was due to be repaid in an amount equal to the 8.375 % Synthetic Royalty Amount minus the 8.375 % Required Interest Amount, when this was a positive number, until the principal had been paid in full.

Convertible Senior Notes

2.25 % Convertible Senior Notes due 2022

In June 2015, the Company issued approximately $ 335.7 million aggregate principal amount of the 2022 Convertible Notes.

The Company received net proceeds of approximately $ 324.0 million from the sale of the 2022 Convertible Notes, after deducting fees and expenses of approximately $ 11.7 million.

The Company used approximately $ 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.

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.

2 unchanged sentences

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 Company held the option to determine settlement method 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 (subject to, and in accordance with, the settlement provisions of the 2022 Indenture).

The Company has elected to settle conversions of the 2022 Convertible Notes through cash payment equal to the principal value and shares of Class A Common Stock for the conversion premium, if any.

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 approximately $ 16.58 per share and 20,249,665 shares.

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 approximately $ 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;

● 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.

The Company may not redeem the 2022 Convertible Notes prior to the maturity date and no “sinking fund” is provided for by the 2022 Convertible Notes, which means that the Company is not required to periodically redeem or retire the 2022 Convertible Notes.

Upon the occurrence of certain fundamental changes involving the Company, 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.

Holders of the 2022 Convertible Notes had the right to 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 upon the occurrence of certain circumstances and no such conversions occurred.

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.

10 unchanged sentences

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 approximately $ 227.3 million.

The Company recognized a loss on extinguishment of debt of approximately $ 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 approximately $ 27.0 million during the year ended December 31, 2019 related to the equity component 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 approximately $ 391.0 million from the sale of the 2024 Convertible Notes and 2026 Convertible Notes, after deducting fees and expenses of approximately $ 9.0 million.

The Company used approximately $ 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.

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.

3 unchanged sentences

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 approximately $ 13.39 per share.

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 approximately $ 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:

3 unchanged sentences

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.

If the Company experiences a fundamental change, as described in the Indentures, prior to the maturity date of the respective Notes, holders of such Notes will, subject to specified conditions, have the right, at their option, to 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 interest, if any, to, but not including, the fundamental change repurchase date.

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 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.

21 unchanged sentences

Total equity component

In connection with the issuance of the 2022 Convertible Notes, the Company incurred approximately $ 11.7 million of debt issuance costs, which primarily consisted of initial purchasers’ discounts and legal and other professional fees.

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 approximately $ 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 approximately $ 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 approximately $ 23.4 million, of which approximately $ 2.8 million related to the initial debt issuance costs, during the year ended December 31, 2019.

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.

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 December 31, 2020, the effective interest rate on the liability component of the 2022 Convertible Notes was 9.7 %.

In connection with the issuance of the 2024 Convertible Notes and the 2026 Convertible Notes, the Company incurred approximately $ 9.0 million of debt issuance costs, which primarily consisted of initial purchaser’s discounts and legal and other professional fees.

The effective annual 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 December 31, 2021, the effective annual interest rate on the liability component of the 2022 Convertible Notes was 10.1 %.

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 approximately $ 2.1 million were recorded as a reduction to additional paid-in capital.

The portion of these costs allocated to the liability components totaling approximately $ 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 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 December 31, 2020 was 6.3 % and 6.6 %, respectively.

The effective annual 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 December 31, 2021 was 6.5 % and 6.8 %, respectively.

The following table sets forth total interest expense recognized related to convertible senior notes during the years ended December 31, 2021, 2020, and 2019 (in thousands):

10 unchanged sentences

Convertible senior notes balance

As of December 31, 2021, $ 120.7 million in aggregate principal amount of the 2022 Convertible Notes was due within the next 12 months and is classified as current liabilities on the Company’s consolidated balance sheets.

Convertible Note Hedge and Note Hedge Warrant Transactions with Respect to 2022 Convertible Notes

6 unchanged sentences

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 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 approximately $ 91.9 million for the Convertible Note Hedges and received approximately $ 70.8 million for the Note Hedge Warrants, resulting in a net cost to the Company of approximately $ 21.1 million.

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 approximately $ 3.2 million of termination payments from the counterparties 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 6).

As of December 31, 2021, the Convertible Note Hedges and Note Hedge Warrants were classified as current assets and current liabilities, respectively, on the Company’s consolidated balance sheets.

As of December 31, 2020, the Convertible Note Hedges and Note Hedge Warrants were classified as non-current assets and non-current liabilities, respectively, on the Company’s consolidated balance sheets.

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 approximately $ 25.2 million to enter into the Capped Calls.

The Company paid the counterparties $ 25.2 million to enter into the Capped Calls.

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 is subject to anti-dilution adjustments generally similar to those applicable to the 2024 Convertible Notes and the 2026 Convertible Notes.

5 unchanged sentences

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 approximately $ 25.0 million during the year ended December 31, 2019 related to the premium payments for the Capped Calls.

Additionally, the Company recorded an approximately $ 0.2 million reduction to equity related to transaction costs incurred in connection with the Capped Calls during the year ended December 31, 2019.

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 a $ 0.2 million reduction to equity related to transaction costs incurred in connection with the Capped Calls during the year ended December 31, 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.

Commitments and Contingencies

3 unchanged sentences

Under the collaboration agreement with AbbVie for North America, the Company shares all development and commercialization costs related to linaclotide in the U.S.

The actual amounts that the Company pays to AbbVie or that AbbVie pays to the Company will depend on numerous factors outside of the Company’s control, including the success of certain clinical development efforts with respect to linaclotide, the content and timing of decisions made by the regulators, the reimbursement and competitive landscape around linaclotide and the Company’s other product candidates, and other factors.

The actual amounts that the Company pays to

AbbVie or that AbbVie pays to the Company will depend on numerous factors outside of the Company’s control, including the success of certain clinical development efforts with respect to linaclotide, the content and timing of decisions made by the regulators, the reimbursement and competitive landscape around linaclotide and the Company’s other product candidates, and other factors.

Other Funding Commitments

As of December 31, 2020, the Company has on-going studies in various pre-clinical and clinical trial stages.

As of December 31, 2021, the Company has ongoing studies in various pre-clinical and clinical trial stages.

The Company’s most significant clinical trial expenditures are to contract research organizations.

15 unchanged sentences

and Teva Pharmaceuticals, USA resolving patent litigation brought in response to the last outstanding abbreviated new drug applications seeking approval to market generic versions of LINZESS prior to the expiration of the Company’s and AbbVie’s applicable patents.

In connection with litigation settlements the Company entered into in 2018, the Company agreed to pay an aggregate of $ 4.0 million in avoidance of litigation fees and expenses during the year ended December 31, 2018.

In May 2021, the Company and AbbVie entered into a settlement agreement with Teva, under which the Company and AbbVie will grant Teva a license to market a generic version of 72 mcg LINZESS beginning March 31, 2029 (subject to FDA approval), unless certain limited circumstances, customary for settlement agreements of this nature, occur.

With this settlement agreement, the Company and AbbVie have settled with the filers of all known ANDAs to date seeking approval to market generic versions of LINZESS.

Stockholders’ Equity

6 unchanged sentences

The Company’s shareholders are entitled to dividends if and when declared by the board of directors.

Share Repurchase Program

In May 2021, the Company’s Board of Directors authorized a program to repurchase up to $ 150.0 million of the

Company’s Class A Common Stock.

Unless it is terminated or suspended prior to its expiration, the share 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 share 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.

All share repurchases made under the share repurchase program will be retired.

During the year ended December 31, 2021, the Company repurchased 2.4 million shares of Class A common stock for an aggregate of $ 27.1 million.

The Company expects to fund further repurchases through a combination of cash on hand and cash generated by operations.

As of December 31, 2021, the aggregate remaining value of shares that may be repurchased under the repurchase program was $ 122.9 million.

Employee Stock Benefit Plans

7 unchanged sentences

Employee stock purchase plan

The following table summarizes the share-based compensation expense reflected in the consolidated statements of operations (in thousands):

Years Ended December 31,

Total share-based compensation expense

The following table summarizes the share-based compensation expense reflected in the consolidated statements of income (in thousands):

Year Ended December 31,

Share-based compensation expense:

Research and development

1 unchanged sentence

Restructuring expenses

Restructuring expenses include modifications to share-based awards held by employees impacted by the various workforce reductions (Note 18).

Total share-based compensation expense

Restructuring expenses include modifications to share-based awards held by employees impacted by various workforce reductions (Note 17).

In April 2019, in connection with the Separation, all outstanding share-based payment awards were modified in accordance with the equity conversion-related provisions of the employee matters agreement with Cyclerion.

1 unchanged sentence

Additionally, modifications with respect to the Company’s ESPP were made due to the change in share price as a result of the Separation.

As a result of the modification to the ESPP, the Company recorded approximately $ 0.3 million of share-based compensation expense for the year ended December 31, 2019.

In connection with certain other modifications of share-based payment awards for the years ended December 31, 2020 and 2019, the Company recognized an insignificant amount and approximately $ 3.0 million in share-based compensation expense, respectively.

As a result of the modification to the ESPP, the Company recorded $ 0.3 million of share-based compensation expense for the year ended December 31, 2019.

Stock Benefit Plans

20 unchanged sentences

RSAs are granted to non-employee members of the board of directors under restricted stock agreements in accordance with the terms of the 2019 Equity Plan and the Company’s non-employee director compensation policy, effective May 2019.

Annual restricted stock grants to each non-employee member of the board of directors vest ratably over the period of service from the grant date through the Company’s 2021 annual meeting of stockholders, provided the individual continues to serve on the Company’s board of directors through each vest date.

Annual restricted stock grants to each non-employee member of the board of directors vest in full on the date immediately preceding the next annual meeting of stockholders, provided the individual continues to serve on the Company’s board of directors through each vest date.

Initial restricted stock grants to new non-employee members of the board of directors vest annually over a three-year period from the date of grant provided the individual continues to serve on the Company’s board of directors through each vest date.

14 unchanged sentences

Vested and released

( 1,697,745 )

( 1,316,200 )

Outstanding as of December 31, 2021

2 unchanged sentences

Performance-based RSUs

Performance-based RSUs (“PSUs”) were granted to certain executives in 2020.

Performance-based RSUs (“PSUs”) were granted to certain executives in 2021 and 2020.

PSUs vest upon the achievement of specified performance criteria over a two to three-year performance period, generally subject to the executive remaining in continuous service with the Company through the applicable vesting dates.

The performance criteria applicable to the PSUs were (i) gaining the U.S.

The performance criteria applicable to the PSUs granted in 2020 were (i) gaining the U.S.

FDA’s acceptance of one or more additional New Drug Applications through internal development or acquisition of development-stage or commercial-stage programs (“Pipeline PSUs”), (ii) achieving certain profitability metrics (“Profitability PSUs”) and (iii) realizing relative total shareholder return goals (the “Relative TSR PSUs”).

PSUs granted in 2021 consisted entirely of Relative TSR PSUs.

The fair value of Pipeline PSUs and Profitability PSUs is based on the market value of the Company's Class A Common Stock on the date of grant.

8 unchanged sentences

A summary of PSU activity for the year ended December 31, 2021 is as follows:

Fair Value (1)

Outstanding as of December 31, 2020

1 unchanged sentence

Outstanding as of December 31, 2021

No PSUs were granted prior to the year ended December 31, 2020.

Stock Options

6 unchanged sentences

The weighted average assumptions used to estimate the fair value of the stock options using the Black-Scholes option-pricing model were as follows for the years ended December 31, 2020 and 2019:

Years Ended December 31,

Year Ended December 31,

Expected volatility

6 unchanged sentences

Treasury instrument with a remaining term similar to the expected term of the share-based award.

Company has not paid and does not anticipate paying cash dividends on its shares of common stock in the foreseeable future;

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 .

4 unchanged sentences

During the years ended December 31, 2021, 2020 and 2019, there were no shares that vested as a result of performance milestone achievements.

The Company recorded no share-based compensation expense related to these performance-based options during each of the years ended December 31, 2020, 2019, and 2018.

The Company recorded an insignificant amount of share-based compensation expense related to these performance-based options during the year ended December 31, 2021 and no share-based compensation expense related to these performance-based options during the years ended December 31, 2020 and 2019.

The following table summarizes stock option activity under the Company’s share-based compensation plans, including performance-based options:

7 unchanged sentences

(1) Exercise prices relating to stock options granted prior to the Separation have not been adjusted to reflect the effect of the Separation on the stock options.

The total intrinsic value of options exercised during the years ended December 31, 2020, 2019, and 2018 was approximately $ 3.5 million, approximately $ 5.1 million, and approximately $ 20.1 million, respectively.

The intrinsic value was calculated as the difference between the fair value of the Company’s Class A Common Stock and the exercise price of the option issued.

The total intrinsic value of options exercised during the years ended December 31, 2021, 2020, and 2019 was $ 2.7 million, $ 3.5 million, and $ 5.1 million, respectively.

The intrinsic value was calculated as the difference between the fair value of the Company’s Class A Common Stock at the date of exercise and the exercise price of the option issued.

The following table sets forth the Company's unrecognized share-based compensation expense, net of estimated forfeitures, as of December 31, 2021, by type of award and the weighted-average period over which that expense is expected to be recognized:

7 unchanged sentences

Stock options with time-based and performance-based vesting

(1) The weighted-average remaining recognition period cannot be determined for performance-based or time-accelerated options due to the nature of such awards, as detailed above.

The total unrecognized share-based compensation cost will be adjusted for future changes in estimated forfeitures.

During the year ended December 31, 2020, the Company recorded approximately $ 2.7 million in income tax expense related to state income tax, which primarily resulted from a change in California tax which temporarily disallows the use of net operating losses to offset taxable income.

The Company did not record a provision for federal income taxes for the period ended December 31, 2020, as it offset taxable income with federal net operating losses and continues to record a full valuation allowance against net deferred tax assets.

The Company did not record a provision for federal, state, or foreign income taxes for the period ended December 31, 2019 and 2018, respectively, because the Company incurred a tax loss during these years and offset the benefit of these tax losses with valuation allowance.

The components of the provision for (benefit from) income taxes during the three years ended December 31, 2021 consisted of the following (in thousands):

Year Ended December 31,

Total current

Total deferred

Total income tax (benefit) expense

During the year ended December 31, 2021, the Company recorded income tax benefit of $ 327.8 million, which primarily pertains to the income tax benefit of $ 333.3 million related to the release of the valuation allowance on the majority of the Company’s tax attributes and other deferred tax assets, partially offset by $ 5.5 million of state income taxes in certain states in which the Company is unable to utilize net operating losses to fully offset taxable income.

During the year ended December 31, 2020, the Company recorded $ 2.7 million in income tax expense related to state income taxes in certain states which had temporarily disallowed or only partially allow the use of net operating losses to offset taxable income.

The Company did not record a provision for federal income taxes for the period ended December 31, 2020, as it offset taxable income with federal net operating losses and recorded a full valuation allowance against net deferred tax assets.

The Company did not record a provision for federal, state , or foreign income taxes for the period ended December 31, 2019 because the Company incurred a tax loss during the year and offset the benefit of these tax losses with valuation allowance.

The Company has not recorded a foreign tax provision as it has had cumulative net operating losses outside of the United States since inception.

4 unchanged sentences

A reconciliation of income taxes computed using the U.S.

federal statutory rate of 21 % to that reflected in the consolidated statements of operations are as follows (in thousands):

federal statutory rate of 21 % to that reflected in the consolidated statements of income are as follows (in thousands):

Year Ended December 31,

Income tax benefit using U.S.

Income tax expense (benefit) using U.S.

federal statutory rate

10 unchanged sentences

Change in the valuation allowance

Income tax expense

Income tax expense (benefit)

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities.

These differences are measured using the enacted statutory tax rates that are expected to be in effect for the years in which differences are expected to reverse.

Deferred tax assets and liabilities were determined based on the difference between financial statement and tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse.

8 unchanged sentences

Basis difference on 2022 Convertible Notes

Intangible assets

Interest expense

10 unchanged sentences

On a periodic basis, the Company reassesses the valuation allowance on its deferred income tax assets weighing positive and negative evidence to assess the recoverability of the deferred tax assets.

Management evaluated the positive evidence, including income during the year ended December 31, 2020, and negative evidence, including its cumulative losses in recent years and its plan to build its innovative GI pipeline through potential acquisition or in-licensing externally development products, and concluded that it is more likely than not that the Company will not realize the benefit of its deferred tax assets for the year ended December 31, 2020.

Accordingly, the net deferred tax assets have been fully offset by a valuation allowance as of December 31, 2020 and 2019.

Management 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.

The Company’s total deferred tax asset balance subject to a valuation allowance was $ 395.0 million and approximately $ 430.2 million as of December 31, 2020 and 2019, respectively.

The valuation allowance decreased approximately $ 35.2 million during the year ended December 31, 2020 primarily due to the Company’s offsetting taxable income with previously disallowed interest expense and net operating losses, partially offset by an increase in deferred tax asset for the basis difference of the collaboration agreement for North America with AbbVie.

The valuation allowance decreased approximately $ 29.1 million during the year ended December 31, 2019 primarily due to establishment of a deferred tax liability for a basis difference in the 2024 Convertible Notes and 2026 Convertible Notes, partially offset by an increase in the deferred tax asset for temporarily disallowed interest expense.

Subject to the limitations described below, at December 31, 2020, the Company had federal net operating loss carryforwards of approximately $ 1.1 billion of which approximately $ 1.0 billion is subject to an expiration between 2021 and 2037 and $ 0.1 billion may be carried forward indefinitely.

As of December 31, 2020, the Company had state net operating loss carryforwards of approximately $ 0.9 billion to offset future state taxable income, which is subject to expiration between 2021 and 2039.

The Company also had tax credit carryforwards of approximately $ 65.3 million as of December 31, 2020 to offset future federal and state income taxes, which is subject to expiration at various times through 2040.

During the year ended December 31, 2021, the Company reassessed the valuation allowance noting the shift of positive evidence outweighing negative evidence, including:

continued strong prescription demand growth of LINZESS, continued profitability of a GI-focused business since completing the tax-free spin-off of Cyclerion, and expectations regarding future profitability.

After assessing both the positive evidence and negative evidence, management determined it was more likely than not that the Company will realize the majority of its deferred tax assets and during the year ended December 31, 2021, released the

majority of its valuation allowance for the deferred tax assets that are expected to be utilized in future years.

The Company will maintain a valuation allowance on deferred tax assets not expected to be realized, related primarily to certain tax credits that are expected to expire prior to utilization.

The Company’s total deferred tax asset balance subject to a valuation allowance analysis was $ 337.5 million and $ 395.0 million as of December 31, 2021 and 2020, respectively.

The net deferred tax assets were fully offset by a valuation allowance as of December 31, 2020.

The valuation allowance decreased by $ 390.8 million during the year ended December 31, 2021 primarily due to the Company’s release of the majority of its valuation allowance, as described above, as well as the use of net operating losses to offset taxable income.

The valuation allowance decreased $ 35.2 million during the year ended December 31, 2020 primarily due to the Company’s offsetting taxable income with previously disallowed interest expense and net operating losses, partially offset by an increase in deferred tax asset for the basis difference of the collaboration agreement for North America with AbbVie.

Subject to the limitations described below, at December 31, 2021, the Company had federal net operating loss carryforwards of $ 935.4 million, of which $ 805.8 million is subject to expiration between 2022 and 2037 and approximately $ 129.6 million may be carried forward indefinitely.

As of December 31, 2021, the Company had state net operating loss carryforwards of $ 718.9 million to offset future state taxable income, which is subject to expiration between 2022 and 2039.

The Company also had tax credit carryforwards of $ 64.7 million as of December 31, 2021 to offset future federal and state income taxes, which is subject to expiration at various times through 2040.

Utilization of net operating loss carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986 (“IRC Section 382”) and with Section 383 of the Internal Revenue Code of 1986, as well as similar state provisions.

8 unchanged sentences

Balance at the end of the period

The Company had gross unrecognized tax benefits of approximately $ 68.1 million, approximately $ 53.1 million, and approximately $ 38.6 million as of December 31, 2020, 2019 and 2018 , respectively .

Of the approximately $ 68.1 million of total unrecognized tax benefits at December 31, 2020, approximately $ 0.8 million would, if recognized, affect the Company’s effective tax rate, and the remaining amount would not affect the Company’s effective tax rate due to a valuation allowance against the Company’s net deferred tax assets.

A reserve for uncertain tax positions of approximately $ 0.8 million is recorded in other liabilities on the Company’s consolidated balance sheet as of December 31, 2020.

The Company had gross unrecognized tax benefits of $ 84.6 million, $ 68.1 million, and $ 53.1 million as of December 31, 2021, 2020 and 2019 , respectively .

Of the $ 84.6 million of total unrecognized tax benefits at December 31, 2021, $ 1.4 million would, if recognized, affect the Company’s effective tax rate, and the remaining amount would not affect the Company’s effective tax rate, as it relates to a temporary timing difference.

A reserve for uncertain tax positions of $ 2.9 million is recorded in other liabilities on the Company’s consolidated balance sheet as of December 31, 2021.

The Company will recognize interest and penalties, if any, related to uncertain tax positions in income tax expense.

As of December 31, 2020, no interest or penalties have been accrued.

The statute of limitations for assessment by the Internal Revenue Service (“IRS”) and state tax authorities is open for tax years ended December 31, 2017 through the present, although net operating losses generated from years prior to 2017 could be subject to examination and adjustments to the extent utilized in future years.

As of December 31, 2021, an insignificant amount of penalties have been accrued.

The statute of limitations for assessment by the Internal Revenue Service (“IRS”) and state tax authorities is open for tax years ended December 31, 2018 through the present, although net operating losses generated from years

prior to 2018 could be subject to examination and adjustments to the extent utilized in future years.

There are currently no federal or state income tax audits in progress.

3 unchanged sentences

Subject to certain IRS limits, eligible employees may elect to contribute from 1 % to 100 % of their compensation.

Company contributions to the plan are at the sole discretion of the Company’s board of directors.

Currently, the Company provides a matching contribution of 75 % of the employee’s contributions, up to $ 6,000 annually.

During the years ended December 31, 2020, 2019, and 2018, the Company recorded approximately $ 1.8 million, approximately $ 2.2 million, and approximately $ 3.2 million of expense related to its 401(k) company match, respectively.

Company contributions to the plan are at the sole discretion of the Company.

During the year ended December 31, 2021, the Company provided a matching contribution equal to the greater of:

(a) 100 % of employee contributions on the first 3 % of eligible compensation and 50 % of employee contributions on the next 3 % of eligible compensation;

or (b) 75 % of the first $ 10,000 of employee contributions, up to $ 7,500 .

During the years ended December 31, 2020 and 2019, the Company provided a matching contribution of 75 % of the employee’s contributions, up to $ 6,000 annually.

During the years ended December 31, 2021, 2020, and 2019, the Company recorded $ 2.2 million, $ 1.8 million, and $ 2.2 million of expense related to its 401(k) company match, respectively.

Related Party Transactions

The Company previously reflected amounts due to and due from Allergan prior to its acquisition by AbbVie as related party accounts payable and related party accounts receivable, respectively.

Following the acquisition of Allergan by AbbVie, the Company determined that AbbVie is not a related party to the Company.

As such, only historical amounts paid to and received from Allergan (prior to its acquisition by AbbVie) are considered related party accounts payable and related party accounts receivable, respectively.

Balances of related party accounts payable and related party accounts receivable, respectively, were reported net of any balances due to or from the related party.

The Company previously reflected amounts due from and due to 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 (Note 3).

As of December 31, 2020, Cyclerion was no longer considered a related party.

As of December 31, 2020, the Company determined that Cyclerion was no longer considered a related party.

Workforce Reductions and Restructuring

During the years ended December 31, 2020, 2019, and 2018 the Company recorded approximately $ 15.4 million, approximately $ 3.6 million, and approximately $ 14.7 million in restructuring expenses, respectively, in its consolidated statement of operations.

In January 2018, the Company commenced an initiative to evaluate the optimal mix of investments for the lesinurad franchise.

As part of this effort, the Company reduced its field-based workforce by approximately 60 employees, primarily consisting of field-based sales representatives that promoted DUZALLO or ZURAMPIC in the first position.

During the three months ended March 31, 2018, the Company substantially completed this reduction in field-based workforce and recorded approximately $ 2.4 million of severance, benefits and related costs as restructuring expenses during the year ended December 31, 2018 related to this reduction in workforce.

In June 2018, the Company determined the initial organizational designs of the two new businesses, including employees’ roles and responsibilities, in connection with the Separation.

As part of this process, the Company initiated a reduction in its headquarters-based workforce by approximately 40 employees and substantially completed the reduction in its workforce during the year ended December 31, 2018.

During the year ended December 31, 2018, the Company recorded approximately $ 4.0 million of severance, benefits and related costs as restructuring expenses related to this reduction in workforce.

In August 2018, the Company initiated a reduction in its workforce by approximately 100 employees, primarily consisting of field-based sales representatives in connection with the termination of the Lesinurad License and substantially completed the reduction in its workforce and recorded associated costs during the year ended December 31, 2018.

During the years ended December 31, 2021, 2020, and 2019 the Company recorded an insignificant amount, $ 15.4 million, and $ 3.6 million in restructuring expenses, respectively, in its consolidated statements of income.

In August 2018, the Company initiated a reduction in its workforce by approximately 100 employees, primarily consisting of field-based sales representatives in connection with the termination of the lesinurad license agreement and substantially completed the reduction in its workforce and recorded associated costs during the year ended December 31, 2018.

During the years ended December 31, 2020 and 2019, the Company recorded an insignificant amount of adjustments to restructuring costs related to this workforce reduction.

During the year ended December 31, 2018, the Company recorded approximately $ 8.3 million of restructuring expenses, including approximately $ 5.4 million of severance, benefits and related costs and approximately $ 2.9 million of contract-related costs, including the write-down of certain prepaid assets and deposits, in connection with this reduction in workforce.

In February 2019, following further analysis of the Company’s strategy and core business needs, and in an effort to further strengthen the operational efficiency of the organization, the Company commenced a reduction in workforce by approximately 35 employees, primarily based in the home office and substantially completed the reduction in its workforce and recorded associated costs during the year ended December 31, 2019.

During the year ended December 31, 2019, the Company recorded approximately $ 3.7 million of severance, benefits and related costs as restructuring expenses related to this reduction in workforce.

During the year ended December 31, 2019, the Company recorded $ 3.7 million of severance, benefits and related costs as restructuring expenses related to this reduction in workforce.

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 is discontinuing development of IW-3718.

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.

The Company substantially completed the reduction in its workforce in the fourth quarter of 2020.

The Company incurred approximately $ 15.5 million during the year ended December 31, 2020 in restructuring expenses, primarily for severance, benefits and related costs related to this reduction in force.

Restructuring expenses during the year ended December 31, 2020 also included approximately $ 1.2 million related to the impairment of certain fixed assets as a result of the Company’s decision to discontinue IW-3718 development.

The following table summarizes the accrued liabilities activity recorded in connection with the reductions in workforce and related restructuring activities during the year ended December 31, 2020 (in thousands):

The Company substantially completed the reduction in its workforce in the year ended December 31, 2020.

The Company incurred an insignificant amount and $ 15.5 million during the years ended December 31, 2021 and 2020, respectively, in restructuring expenses, primarily for severance, benefits and related costs related to this reduction in its workforce.

Restructuring expenses during the year ended December 31, 2020 also included $ 1.2 million related to the impairment of certain fixed assets as a result of the Company’s decision to discontinue IW-3718 development.

The following table summarizes the accrued liabilities activity recorded in connection with the reduction in workforce in September 2020 and related restructuring activities during the year ended December 31, 2021 (in thousands):

December 31, 2020

1 unchanged sentence

Employee severance, benefits and related costs

February 2019 Reduction

September 2020 Reduction

Contract related costs

August 2018 Reduction

September 2020 Reduction

2 unchanged sentences

Employee severance, benefits and related costs

June 2018 Reduction

August 2018 Reduction

February 2019 Reduction

September 2020 Reduction

Contract related costs

August 2018 Reduction

September 2020 Reduction

Selected Quarterly Financial Data (Unaudited)

13 unchanged sentences

Other expense, net

Net (loss) income from continuing operations

Net loss from discontinued operations (7)

Net income (loss) and comprehensive income (loss)

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

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

Net loss per share from discontinued operations—basic and diluted

Net income (loss) per share—basic

Net income (loss) per share—diluted

(1) Total revenues includes approximately $ 8.0 million of revenue from sales of linaclotide API to the Company’s linaclotide partners for the year ended December 31, 2020.

(2) Total costs and expenses includes approximately $ 15.4 million in restructuring expenses for the year ended December 31, 2020.

(3) Other expense, net includes approximately $ 6.1 million loss on fair value remeasurement of derivatives for the year ended December 31, 2020.

(4) Total revenues includes approximately $ 48.8 million of revenue from sales of linaclotide API to the Company’s linaclotide partners, primarily driven by the commercialization of linaclotide in Japan for the year ended December 31, 2019, as well as approximately $ 32.4 million related to the non-contingent payments from the Amended AstraZeneca Agreement and a $ 10.0 million upfront fee from the Amended Astellas License Agreement, both executed during the third quarter of 2019.

(5) Total costs and expenses includes approximately $ 3.6 million in restructuring expenses for the year ended December 31, 2019, as well as approximately $ 3.2 million related to the gain on lease modification in April 2019.

(6) Other expense, net includes approximately $ 31.0 million in loss on extinguishment of debt related to the partial repurchase of the 2022 Convertible Notes and the redemption of the 2026 Notes, and approximately $ 3.0 million gain on fair value remeasurement of derivatives for the year ended December 31, 2019.

(7) During the year ended December 31, 2019, the Company completed the Separation.

Certain amounts related to Cyclerion have been reclassified as discontinued operations for the year ended December 31, 2019.

Net income and comprehensive income

Net income per share—basic

Net income per share—diluted

Subsequent Events

On February 4, 2021, Mark Mallon notified the Company that he is resigning from his position as Chief Executive Officer of the Company and a member of the Company’s board of directors, in each case effective March 12, 2021 (the “Transition Date”).

Upon the Transition Date, Thomas McCourt, who is the President of the Company, also will become the Company’s interim Chief Executive Officer.

Mallon’s resignation is not due to any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.

Share Repurchases

From January 1, 2022 to February 15, 2022, the Company repurchased 4.5 million shares of its common stock at a weighted-average price of $ 11.27 per share for a total of $ 50.7 million.

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

What changed 10-K

Item 9A. Controls and Procedures