What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-09 compared with 2020-03-12 · 368 added, 1523 removed, 661 unchanged (74% of the section changed)

2 unchanged sentences

Our pipeline consists of two clinical-stage product candidates with mechanisms of action that have potential utility across a wide range of orphan cholestatic liver diseases.

We are initially developing maralixibat for the treatment of pediatric patients with Alagille syndrome (“ALGS”) and progressive familial intrahepatic cholestasis (“PFIC”).

Based on improvements in pruritus, or itching, and other outcomes and disease markers observed in Phase 2 clinical trials, we are planning to initiate a rolling submission of a New Drug Application (“NDA”), for the treatment of cholestatic pruritus associated with ALGS in the third quarter of 2020.

We expect to complete the rolling submission of our NDA in the first quarter of 2021, and pending a successful submission, we will plan for a potential launch in ALGS in the second half of 2021.

We are also conducting the Phase 3 MARCH clinical trial in PFIC, from which we expect to complete enrollment in the second quarter of 2020 and announce topline Phase 3 data in late-2020.

Further, we are also conducting an analysis of our long-term treatment data in PFIC against a natural history control group in conjunction with the NAtural course and Prognosis of PFIC and Effect of biliary Diversion (“NAPPED”) Consortium and plan to share these results with regulators in 2020.

We are developing volixibat for the treatment of adult patients with cholestatic liver diseases and expect to initiate our first clinical trial in these indications in late 2020.

Our initial focus is on rare cholestatic liver diseases, including ALGS, PFIC, biliary atresia (“BA”), primary sclerosing cholangitis (“PSC”), and intrahepatic cholestasis of pregnancy (“ICP”).

Cholestasis is characterized by impaired flow of bile resulting in accumulation of toxic bile acids in the liver.

This leads to liver injury, progressive liver disease and, if left untreated, can result in fibrosis, cirrhosis, liver failure and death.

The expected transplant-free survival rate in ALGS at age 18 is approximately 25% and approximately half of PFIC patients will need a transplant by the age of ten.

Patients with cholestatic liver disease typically experience debilitating pruritus, which dramatically impacts quality of life and can lead to scarring, sleep deprivation, significant fatigue and psycho-social effects.

In some patients, intractable pruritus alone can justify liver transplantation.

In ALGS, it has been reported that the majority of transplants are due to cholestatic symptoms.

Other general manifestations of cholestatic liver diseases include jaundice, progressive liver disease and growth delay.

Cholestatic liver diseases represent a significant unmet medical need, with no therapies approved by the U.S.

Food and Drug Administration (“FDA”), for treatment of the indications we are currently pursuing.

Cholestasis is characterized by impaired flow of bile resulting in accumulation of toxic bile acids both in the liver and systemically.

This can lead to severe pruritus, or itching, high symptomatic burden, liver injury, progressive liver disease and, if left untreated, can result in fibrosis, cirrhosis, liver failure and death.

Most cholestatic liver diseases have no approved medicines and often the only option is to resort to liver transplant to address the related symptoms and progressive liver disease.

We are developing maralixibat for the treatment of pediatric patients with Alagille syndrome (“ALGS”), progressive familial intrahepatic cholestasis (“PFIC”) and biliary atresia (“BA”).

Across all three settings, the majority of diagnosed children are estimated to receive a liver transplant before adulthood.

In particular, in patients with ALGS and PFIC, the severe pruritus can be the leading driver for a transplant.

In the third quarter of 2020, we initiated a rolling submission of a New Drug Application (“NDA”), for the treatment of cholestatic pruritus in patients with ALGS to the U.S.

Food and Drug Administration (“FDA”) and subsequently completed our NDA submission in January 2021.

We are planning for a potential launch in ALGS in the second half of 2021.

We have also submitted a marketing authorization application (“MAA”) to the European Medicines Agency (“EMA”) for maralixibat for the treatment of PFIC2, which has been accepted for review.

In parallel, we are also conducting the Phase 3 MARCH clinical trial in PFIC evaluating higher doses of maralixibat in a broader population of PFIC subtypes, for which we expect to complete enrollment in the second quarter of 2021 and announce topline data in early 2022.

Additionally, we have initiated recruitment for the EMBARK Phase 2 clinical trial for BA.

We are developing volixibat for the treatment of adult patients with cholestatic liver diseases, including primary sclerosing cholangitis (“PSC”), intrahepatic cholestasis of pregnancy (“ICP”) and primary biliary cholangitis (“PBC”).

PSC and PBC are progressive immuno-inflammatory driven cholestatic conditions that cause debilitating pruritus and progressive liver damage related to disruption in bile acid transit.

ICP is a cholestatic liver disorder which occurs during pregnancy that results in high symptomatic burden for the mother and can be fatal for the fetus.

In all of these indications, we believe the elevated bile acid pool drives symptomatic burden and life-threatening progression and ASBT inhibition has the potential to reduce these elevated bile acid levels.

We dosed the first patient in the VISTAS Phase 2b clinical trial of volixibat in PSC in January 2021, and we have initiated recruitment for the OHANA clinical trial of volixibat in ICP.

We expect to dose the first patient in the clinical trial of volixibat in PBC in the second half of 2021.

We believe we have incorporated material regulatory feedback for these three studies such that, if successful, their results may support filing for regulatory approval for their respective indications.

Our Product Pipeline

4 unchanged sentences

Abbreviations:

LPI, Last Patient In;

FPI, First Patient In;

BTD, Breakthrough Therapy Designation;

FDA, Food and Drug Administration;

Food and Drug Administration;

EMA, European Medicines Agency

Our lead product candidate, maralixibat, is a novel, oral, minimally-absorbed agent designed to selectively inhibit ASBT, also known as ileal bile acid transporter.

Our lead product candidate, maralixibat, is a novel, oral, minimally-absorbed agent designed to selectively inhibit ASBT, also known as ileal bile acid transporter (“IBAT”).

ASBT is primarily responsible for recycling bile acids from the intestine back to the liver.

2 unchanged sentences

Maralixibat possesses an extensive safety dataset, having been evaluated in more than 1,600 human subjects.

Maralixibat has been studied in a number of completed and ongoing clinical trials in ALGS and PFIC with over 100 children treated and some on study for up to six years.

Based on the results of our Phase 2 programs, we received breakthrough therapy designation for maralixibat for the treatment of pruritus associated with ALGS in patients one year of age and older and for the treatment of PFIC2.

We also have orphan designation granted for ALGS and PFIC and rare pediatric disease designation for ALGS.

Although maralixibat may be eligible as a breakthrough therapy for priority review and accelerated approval by the FDA, breakthrough therapy designation may not lead to a faster development, regulatory review or approval process, and it does not increase the likelihood that maralixibat will receive marketing approval.

Maralixibat has been studied in a number of completed and ongoing clinical trials in ALGS and PFIC with over 120 children treated and some on study for over seven years.

We received breakthrough therapy designation for maralixibat for the treatment of pruritus associated with ALGS in patients one year of age and older and for the treatment of PFIC2.

We also have orphan designation for ALGS, PFIC and BA, and rare pediatric disease designation granted for ALGS and PFIC.

Maralixibat in ALGS

ALGS is a multi-organ disease that affects approximately 23,000 people in the United States and Europe, and patients are typically diagnosed in infancy.

ALGS is a multi-organ disease that affects approximately one in 30,000 births in the United States and Europe, and patients typically present in infancy or early childhood.

Based on primary market research we believe that in the United States there are approximately 2,000 to 2,500 children with ALGS who are eligible for treatment with maralixibat.

There are no approved therapies for the treatment of ALGS.

Partial External Biliary Diversion (“PEBD”) surgery is associated with significant complications, and liver transplantation is the only definitive treatment for cholestasis due to ALGS, but is expensive, requires long-term administration of immuno-suppressants, and only a portion of the patients who require a liver transplant are able to match with a suitable donor organ or can tolerate the surgery.

In the Phase 2b ICONIC clinical trial with a placebo-controlled drug withdrawal period, there was a statistically significant difference in pruritus between the treatment group and placebo group as measured by ItchRO(Obs) score (p<0.0001).

In ICONIC, a Phase 2b placebo-controlled randomized drug withdrawal clinical trial, there was a clinically and statistically significant difference in pruritus between the treatment group and placebo group as measured by ItchRO(Obs) score (p<0.0001).

The ItchRO(Obs) score is a caregiver-reported outcome assessment developed for use in cholestatic liver diseases, which measures severity of itch on a 0-4 scale.

3 unchanged sentences

and quality of life scores improved by a mean of 9.5 points.

Maralixibat has been granted orphan drug designation for ALGS by the FDA and European Medicines Agency (“EMA”) and breakthrough designation for the treatment of pruritus associated with ALGS in patients one year of age and older by the FDA.

Further, long-term analysis of the ICONIC clinical trial has shown durable response.

In November 2019 at the American Association for the Study of Liver Disease annual Liver Meeting, four-year data from the ICONIC clinical trial were presented.

This analysis showed persistent significant improvements from baseline in sBA, pruritus, xanthomas and growth in patients remaining on study at week 191.

Over the course of 2019 we had a number of interactions with the FDA to discuss the adequacy of the ICONIC data set to support an NDA submission.

These interactions culminated in a pre-NDA meeting in November 2019 and the receipt of breakthrough therapy designation for maralixibat for the treatment of pruritus associated with ALGS in patients one year of age and older.

During this meeting, we and the FDA reached consensus on the components required and the timeline for initiating a rolling submission of an NDA in the third quarter of 2020.

Pending a successful submission, we are preparing to commercialize maralixibat for ALGS in the second half of 2021.

In addition, in November 2019, we were granted Rare Pediatric Disease Designation for maralixibat for ALGS, and as a result, we may qualify for the receipt of a priority review voucher if our NDA is approved before October 1, 2022.

Maralixibat has been granted orphan drug designation for ALGS by the FDA and EMA and breakthrough designation for the treatment of pruritus associated with ALGS in patients one year of age

and older by the FDA.

Further, long-term analysis of the ICONIC clinical trial has shown durable response in sBA , pruritus, xanthomas and growth in patients remaining on study at week 191.

We have completed our NDA submission for maralixibat for the treatment of cholestatic pruritus in patients with ALGS.

If our application is accepted for filing by the FDA, we expect a review decision in the second half of 2021 and, as a result, are preparing for a potential commercial launch of maralixibat in this indication in the United States.

Maralixibat in PFIC

We are advancing maralixibat for the treatment of PFIC in the Phase 3 MARCH trial.

PFIC affects approximately 8,000 people in the United States and Europe and is typically diagnosed within the first three to six months of life.

Currently, there are no approved therapeutics for the treatment of PFIC.

PEBD is associated with significant complications, and liver transplantation is the only definitive treatment but is expensive, requires life-long administration of immuno-suppressants and has potential for significant comorbidities.

PFIC affects approximately one in 50,000 to 100,000 births in the United States and Europe and typically presents within the first three to six months of life.

Currently, there are no approved therapies for the treatment of PFIC.

Surgical options such as PEBD and liver transplantation can be effective, but are expensive, may require life-long administration of immuno-suppressants and have potential for significant comorbidities.

Only a portion of the patients who require a liver transplant are able to match with a suitable donor organ, and there can be serious complications, for example, rapid re-occurrence of disease and steatosis.

In the Phase 2 INDIGO clinical trial, a multi-parameter response on pruritus, sBA, and growth was observed in patients with nt-PFIC2, a genetically distinct subtype of PFIC that accounts for approximately 50% of the PFIC patient population.

At week 48, 55% of the PFIC2 patients treated with maralixibat experienced a clinically meaningful reduction in pruritus, defined as a reduction of at least 1.0 point in the ItchRO(Obs) score.

In addition, patients treated with maralixibat experienced normalization or significant reductions in sBA levels from baseline, increases in quality of life and, in those patients with elevated baseline values, a normalization of alanine aminotransferase (“ALT”), and bilirubin levels.

This multi-parameter response supported maralixibat’s breakthrough therapy designation from the FDA for the treatment of PFIC2.

The disease-modifying potential of maralixibat is further supported by data from a long-term analysis of the INDIGO clinical trial, which showed an improvement in growth for those patients who experienced significant improvements in sBA levels and pruritus.

We have submitted an MAA for maralixibat for the treatment of PFIC2 with the EMA which is currently under review.

This submission is based on five-year results from the Phase 2 INDIGO clinical trial of maralixibat in PFIC.

An analysis of response as determined by a 75% reduction in sBA showed that maralixibat responders had a significant improvement in transplant free survival.

In addition, maralixibat responders exhibited significant improvements in pruritus and growth.

Our MAA also included a five-year analysis of PFIC2 patients treated with maralixibat compared to a natural history control cohort showing an improvement in event free survival with maralixibat.

Maralixibat has been granted orphan drug designation for PFIC by the FDA and the EMA.

We commenced enrollment in the Phase 3 MARCH trial in the second quarter of 2019 with a primary endpoint focused on pruritus in patients with nt-PFIC2, and we expect to complete enrollment in the second quarter of 2020 and report topline Phase 3 data in late-2020.

In addition to the MARCH clinical trial, we are conducting comparisons on long-term outcomes from our ongoing Phase 2 program with natural history datasets.

In addition, we are conducting the MARCH-PFIC Phase 3 clinical trial of maralixibat in PFIC.

The MARCH-PFIC clinical trial and long-term extension MARCH-ON is evaluating maralixibat at higher doses in multiple PFIC subtypes.

We expect to complete enrollment in MARCH-PFIC in the second quarter of 2021 and report topline data in early 2022.

Maralixibat in BA

We also plan to advance maralixibat for the treatment of BA in a clinical program based on its mechanism, the high unmet medical need, maralixibat clinical experience in other cholestatic liver disease settings and results from a non-clinical efficacy model.

BA is a rare liver disorder in which there is a blockage or absence of large bile ducts that leads to bile accumulation in the liver and ultimately results in progressive cholestasis and liver damage.

BA is a rare liver disorder in which there is a blockage or absence of large bile ducts that leads to bile accumulation in the liver and results in progressive cholestasis and liver damage.

BA occurs in infants and is estimated to affect one in every 10,000 to 15,000 live births in the United States.

BA is the most common reason for liver transplantation in children.

There remains a substantial unmet medical need for therapeutic interventions as invasive surgery is often unsuccessful.

There remains a substantial unmet medical need for therapeutic interventions as initial surgical treatment is often unsuccessful.

The standard of care for BA is the Kasai procedure, a surgery in which a segment of the small intestine is used to attach the small intestine directly to the liver where bile is expected to drain and is most successful if conducted in the first eight weeks of life.

The success rate for the Kasai procedure is approximately 30% to 40%, while the remaining patients are at risk of progressive liver disease requiring liver transplantation.

We believe ASBT inhibition has therapeutic potential in this patient population, and our clinical development pathway will be informed by further discussions with the FDA regarding our clinical trial design for BA.

Prognosis after Kasai procedure has been shown to be most promising in patients with lower levels of bilirubin.

Further, a strong association between sBA control post-Kasai procedure with long-term outcomes has been observed, supporting the hypothesis that pharmacologically reducing sBA may improve outcomes in BA.

We believe ASBT inhibition has therapeutic potential in this patient population through its impact on sBA.

We initiated recruitment for the EMBARK Phase 2b clinical trial of maralixibat in BA in the first quarter of 2021.

Maralixibat has been granted orphan drug designation for BA by the FDA and the EMA.

We are advancing our second product candidate, volixibat, a novel, oral, minimally-absorbed agent designed to inhibit ASBT, for the treatment of adult patients with cholestatic liver diseases.

We intend to initially develop volixibat for the treatment of PSC and ICP.

We are developing volixibat for the treatment of ICP, PSC and PBC.

Volixibat has been studied in over 400 adults for up to 48 weeks.

Clinical trials of volixibat have shown significant activity on ASBT and bile acid markers such as 7αC4, fecal bile acids and cholesterol, demonstrating potent biological activity.

ICP is diagnosed in pregnant women typically during the second or third trimester and increases the risk of stillbirth, preterm labor and neonatal complications.

Additionally, ICP is associated with severe pruritus.

In ICP, sBA levels have been shown to correlate with worsened risk of pre-term labor and stillbirth.

We estimate that each

year there are approximately 40,000 cases of ICP in the United States and approximately 100,000 cases of ICP in Europe.

We have initiated recruitment for the OHANA clinical trial of volixibat in ICP.

OHANA is an adaptive, randomized Phase 2b clinical trial evaluating the effect of volixibat on sBA , pruritus and perinatal outcomes in patients with ICP.

PSC is a serious, idiopathic chronic cholestatic liver disease characterized by the progressive inflammation and destruction of bile ducts, which can lead to life-threatening complications.

2 unchanged sentences

Liver transplantation is the only treatment shown to improve clinical outcomes in PSC but is expensive, requires long-term administration of immuno-suppressants and only a portion of the patients who require a liver transplant are able to match with a suitable donor organ.

Ursodeoxycholic acid (“UDCA”), is used off-label in PSC but has been shown to be minimally effective.

ICP is typically diagnosed in pregnant women during the second or third trimester and increases the risk of stillbirth and preterm labor.

Additionally, ICP is associated with severe pruritus.

We estimate that each year there are approximately 40,000 cases of ICP in the United States and approximately 100,000 cases of ICP in Europe.

Ursodeoxycholic acid (“UDCA”), is used off-label in PSC with conflicting evidence.

We dosed the first patient in the VISTAS Phase 2b clinical trial of volixibat in PSC in January 2021.

VISTAS is an adaptive, randomized Phase 2b clinical trial evaluating the effect of volixibat on pruritus, sBA and fibrosis markers in patients with PSC and pruritus.

PBC is a chronic, rare, cholestatic liver disease characterized by progressive liver bile flow impairment caused by immune-mediated destruction of intrahepatic bile ducts.

This results in increased hepatic bile acid concentrations, which leads to a local inflammatory response in the liver that progresses to hepatic fibrosis, cirrhosis, and hepatic decompensation.

The incidence rates for PBC in Europe, North America, Asia, and Australia are reported as ranging from 0.33 to 5.8 per 100,000 people, with a prevalence ranging from 1.91 to 40.2 per 100,000 people.

We plan to initiate the Phase 2b clinical trial of volixibat in PBC in the second half of 2021.

There are no approved therapies for PSC or ICP in the United States.

Volixibat has been extensively studied in adults, with data from several clinical trials showing target engagement.

Previously conducted clinical trials have shown that volixibat increased bile acid excretion and positively affected related bile acid measures.

In a Phase 2 clinical trial in non-alcoholic steatohepatitis (“NASH”), volixibat-treated patients showed reductions in cholesterol levels and increases in 7αC4 levels, a marker of bile synthesis, which are indicative of ASBT inhibition.

Proof-of-concept data from a Phase 2 clinical trial of maralixibat in PSC provides evidence of the benefits of ASBT inhibition.

In the Phase 2 CAMEO trial in PSC patients, treatment with maralixibat resulted in a statistically significant reduction from baseline in ItchRO score and sBA levels.

We are conducting a Phase 1 dose ranging bile acid excretion clinical trial to determine dose levels for our planned efficacy studies.

We expect to initiate clinical trials of volixibat in PSC and ICP in 2020 and early 2021, respectively.

Our History and Team

A variety of licensed and off-label therapies are currently used to reduce the impact of the progressive nature of PBC.

These include UDCA, obeticholic acid, peroxisome proliferator activator receptors like bezafibrate and fenofibrate, and others.

However, the few therapeutic options available to manage PBC associated pruritus are temporary and/or suboptimal.

Our mission is to develop life-changing therapies for patients suffering from debilitating liver diseases.

Our management team has significant experience in progressing liver and orphan diseases therapies from early stage research to clinical trials and ultimately to regulatory approval and commercialization.

Michael Grey, our co-founder and Chairman of our board of directors, was the Chief Executive Officer of Lumena Pharmaceuticals, Inc.

(“Lumena”), where he led the development of maralixibat and volixibat prior to Lumena’s acquisition by Shire plc in June 2014.

Christopher Peetz, our President, Chief Executive Officer and co-founder, as well as several other members of our management team, previously held leadership positions at Tobira Therapeutics, Inc., a liver disease company, prior to its acquisition by Allergan plc in November 2016.

As part of our strategy to acquire and advance therapeutic candidates for debilitating liver diseases, we acquired maralixibat and volixibat in November 2018 from Shire plc and are continuing to advance these product candidates for rare cholestatic liver diseases with the assistance of key program leaders from Shire plc who joined us following the acquisition.

In May 2018 we were incorporated in Delaware and began operations in November 2018.

In July 2019, we completed our initial public offering (“IPO”).

Our team has extensive experience developing and commercializing medicines, including in hepatology settings.

Our goal is to be a leader in the treatment of liver diseases for which the unmet medical need is high.

1 unchanged sentence

Advance maralixibat through clinical development and seek regulatory approvals for the treatment of ALGS, PFIC and BA.

Results from our Phase 2b ICONIC trial and Phase 2 INDIGO trial demonstrated maralixibat’s potential to provide benefits in patients with ALGS and nt-PFIC2, respectively.

Based on these data, we are planning to initiate a rolling submission of an NDA for the treatment of cholestatic pruritus associated with ALGS in the third quarter of 2020, are enrolling the Phase 3 MARCH clinical trial in PFIC and are planning a clinical program in BA in 2020.

We expect to announce topline Phase 3 data for maralixibat in PFIC in late-2020.

Advance volixibat for the treatment of adults with PSC and ICP.

Data from prior clinical trials of volixibat in adult subjects showed target engagement.

Based on this data, we plan to initiate clinical trials in PSC and ICP in 2020 and early 2021, respectively.

Results from our Phase 2b ICONIC trial demonstrated maralixibat’s potential to provide benefits in patients with ALGS.

Based on these data, we completed a submission of an NDA for the treatment of cholestatic pruritus in patients with ALGS in January 2021 and if accepted we anticipate approval and subsequent launch in the second half of 2021.

We have also submitted an MAA for maralixibat for PFIC2 in Europe and, if approved, plan to commercialize maralixibat in Europe in early 2022.

We are also conducting the MARCH-PFIC Phase 3 clinical trial to evaluate maralixibat at a higher dose and in additional PFIC subtypes.

We are also evaluating the potential of maralixibat in the EMBARK Phase 2b clinical trial in BA.

Advance volixibat for the treatment of adults with PSC, ICP and PBC.

We plan to further leverage our understanding of cholestatic liver disease with volixibat in adult settings.

We initiated clinical trials in ICP and PSC in the first quarter of 2021 and plan to initiate a clinical trial in PBC in the second half of 2021.

Commercialize our product candidates, if approved, in North America and Europe.

We have retained all worldwide commercial rights for maralixibat and volixibat.

Given the targeted prescribing nature of the indications we are currently pursuing, we believe we will be able to independently commercialize maralixibat and volixibat in North America and Europe with a modest specialty sales force.

We plan to seek strategic collaborations or partnerships with larger biopharmaceutical companies or those specialized in the relevant areas for territories outside North America and Europe.

10 unchanged sentences

Accumulation of bile acids in the liver leads to liver injury, progressive liver disease and, if left untreated, results in fibrosis, cirrhosis, liver failure and death.

Patients often experience debilitating pruritus, which dramatically impacts quality of life and can lead to scarring, sleep deprivation, significant fatigue and psycho-social effects.

Patients often experience debilitating pruritus, which dramatically impacts quality of life and can lead to epidermal scarring, sleep deprivation, significant fatigue and psycho-social effects.

In some patients, intractable pruritus can be severe enough to be an indication for liver transplantation.

Caregivers, particularly parents of children with cholestatic liver diseases, also suffer from impaired sleep and anxiety as they struggle to help their loved ones manage this debilitating symptom.

Caregivers, particularly parents of children with cholestatic liver diseases, also suffer from impaired sleep and anxiety as they struggle to help their loved ones manage these debilitating symptoms.

Other general manifestations of cholestatic liver diseases include jaundice, progressive liver disease and growth delay.

1 unchanged sentence

ALGS is a rare genetic disorder in which bile ducts are abnormally narrow, malformed and reduced in number, which leads to bile accumulation in the liver and ultimately progressive liver disease.

The estimated incidence of ALGS is one in every 30,000 to 50,000 births in the United States and Europe, and we estimate that there are approximately 9,000 patients with ALGS in the United States and approximately 14,000 in Europe.

The estimated incidence of ALGS is one in every 30,000 births in the United States and Europe.

Based on primary research conducted with pediatric hepatologists and gastroenterologists, the specialist physicians who typically treat ALGS, we believe the initial addressable patient population in the United States will be a subset of these patients, comprising approximately 2,000-2,500 pediatric ALGS patients.

We believe this addressable number may grow with the availability of an oral therapy as an alternative to transplant for the treatment of pruritus due to ALGS.

We believe this addressable number may grow with the availability of an oral therapy as an alternative to transplant for the treatment of pruritus due to ALGS as well as increased disease awareness and diagnosis.

In patients with ALGS, multiple organ systems may be affected by the mutation, including the liver, heart, kidneys and central nervous system.

11 unchanged sentences

The disease is inherited in an autosomal recessive pattern, meaning mutations in both copies of the gene are necessary to cause the disorder.

PFIC is estimated to affect one in every 50,000 to 100,000 births in the United States and Europe, and we estimate that there are approximately 3,000 patients with PFIC in the United States and approximately 5,000 in Europe.

Based on primary research conducted with pediatric hepatologists and gastroenterologists, the specialist physicians who typically treat PFIC, we believe the initial addressable patient population in the United States is approximately 500-750 PFIC2 children with nt-PFIC2.

PFIC is estimated to affect one in every 50,000 to 100,000 births in the United States and Europe.

In patients with PFIC, liver cells have a diminished ability to secrete bile due to mutations in proteins that control bile flow.

12 unchanged sentences

Children with nt-PFIC2 are our initial target patient population for treatment with maralixibat.

We believe the opportunity exists to broaden beyond this initial patient population, and we plan to evaluate the effectiveness of maralixibat in patients with other types of PFIC, such as PFIC1 and PFIC3, in a supplemental cohort in our Phase 3 MARCH trial.

We believe the opportunity exists to broaden beyond this initial patient population, and we are evaluating the effectiveness of maralixibat in patients with other types of PFIC, such as PFIC1 and PFIC3, in a supplemental cohort in our Phase 3 MARCH trial.

Benign recurrent intrahepatic cholestasis (“BRIC”), consists of two types, BRIC1 and BRIC2, which have the same underlying genetic mutations as PFIC1 and PFIC2, respectively.

14 unchanged sentences

The success rate of the Kasai procedure is approximately 30% to 40%.

The remaining patients are at risk of progressive liver disease requiring liver transplantation.

We believe ASBT inhibition has therapeutic potential in this patient population.

This is based on analogous disease models, including rat partial bile duct ligation, that replicate the extra-hepatic cholestasis and liver injury associated with BA.

As shown below, maralixibat alleviated BA biochemical and histological pathology.

Supportive data includes seven days of maralixibat 1mg/kg and 10mg/kg treatment versus vehicle in partial bile duct ligated rats, leading to significant and dose-dependent changes in sBA and liver transaminases.

Maralixibat treatment reduces sBAs and liver injury at day 7 in bile duct ligated rats

The remaining patients are at risk of progressive liver disease requiring liver transplantation, often before two years of age.

Recent analyses of outcomes in post-Kasai procedure BA have shown that the risk of progression to transplant is higher in patients with elevated sBAs or bilirubin.

Intrahepatic Cholestasis of Pregnancy

ICP is a liver disorder that occurs in pregnant women, often during the third trimester, which impairs the normal release of bile from liver cells and leads to impaired liver function.

We estimate that each year there are approximately 40,000 cases of ICP in the United States and approximately 100,000 cases of ICP in Europe.

ICP can contribute to serious complications, including preterm labor, stillbirth and neonatal complications.

The underlying cause of ICP is not completely understood, but it is thought that the increase in pregnancy hormones during the second and third trimesters impairs liver function and the flow of bile.

Also, some women have a genetic profile similar to that seen in PFIC.

The disease can result in intense pruritus, typically of the hands and feet.

It resolves rapidly following birth but can cause serious complications for childbirth, including meconium-stained amniotic fluid, preterm labor, neo-natal asphyxia and stillbirth.

The rates of these events increase with increasing levels of maternal sBA.

Induction of early delivery, i.e.

before 36 gestational weeks, is an option for high risk pregnancies but bear the risk of long-term consequences for the child.

Due to the acute nature of the disease and potential for complications during pregnancy, there remains an unmet medical need for a safe and effective treatment option for ICP.

There is no approved therapy for ICP in the United States, but UDCA is used off-label to decrease the concentration of harmful bile acids.

However, reports suggest that UDCA offers minimal improvement for patients.

Therefore, patients with ICP may benefit from treatment with an ASBTi.

Primary Sclerosing Cholangitis

16 unchanged sentences

We believe an ASBTi offers a substantial opportunity to address many of the symptoms and associated complications of PSC, as well as potentially delay or eliminate the need for liver transplantation.

Intrahepatic Cholestasis of Pregnancy

ICP is a liver disorder that occurs in pregnant women, often during the third trimester, which impairs the normal release of bile from liver cells and leads to impaired liver function.

We estimate that each year there are approximately 40,000 cases of ICP in the United States and approximately 100,000 cases of ICP in Europe.

ICP can contribute to serious complications, including preterm labor and stillbirth.

The underlying cause of ICP is not completely understood, but it is thought that the increase in pregnancy hormones during the second and third trimesters impairs liver function and the flow of bile.

Also, some women have a genetic profile similar to that seen in PFIC.

The disease can result in intense pruritus, typically of the hands and feet.

It resolves rapidly following birth but can cause serious complications for childbirth, including meconium-stained amniotic fluid, preterm labor, neo-natal asphyxia and stillbirth.

The rates of these events increase with increasing levels of maternal sBA.

Induction of early delivery, i.e.

before 36 gestational weeks, is an option for high risk pregnancies but bear the risk of long-term consequences for the child.

Due to the acute nature of the disease and potential for complications during pregnancy, there remains an unmet medical need for a safe and effective treatment option for ICP.

There is no approved therapy for ICP in the United States, but UDCA is used off-label to decrease the concentration of harmful bile acids.

However, reports suggest that UDCA offers minimal improvement for patients.

Therefore, patients with ICP may benefit from treatment with an ASBTi.

Primary Biliary Cholangitis

PBC is a chronic, rare, cholestatic liver disease characterized by progressive liver bile flow impairment caused by immune-mediated destruction of intrahepatic bile ducts.

This results in increased hepatic bile acid concentrations, which leads to a local inflammatory response in the liver that progresses to hepatic fibrosis, cirrhosis, and hepatic decompensation.

Patients with PBC progress at varying rates, some becoming decompensated over a period of several years while others progress over more than a decade.

If left untreated or not optimally treated, chronic cholestasis and bile-duct destruction from PBC can cause liver failure and result in ultimately liver transplantation or death.

The pathogenesis of PBC is unknown, though the breakdown of immune self-tolerance is proposed as the disease is characterized by a T-lymphocyte mediated attack on intralobular bile ducts.

It is believed that genetic susceptibility and environmental factors may cause PBC.

PBC disproportionately affects women at a ratio of 10:1.

The incidence rates for PBC in Europe, North America, Asia, and Australia are reported as ranging from 0.33 to 5.8 per 100,000 inhabitants, with a prevalence ranging from 1.91 to 40.2 per 100,000 inhabitants.

PBC is typically diagnosed in patients between 40 to 60 years of age, with those who are younger at onset or male having a worse prognosis.

The estimated average time from first appearance of the hallmark serologic signature, antimitochondrial antibodies (“AMA”), to death is approximately 20 years to 22 years without treatment.

Patients with pruritic PBC often experience a significant reduction in quality of life and impairment of sleep.

Severe pruritus limits daily activities, causes fatigue, depression, and, in some cases, suicidal ideation.

Studies report that up to 70% of patients with PBC experience pruritus and about 75% of patients experience pruritus before diagnosis.

A variety of licensed and off-label therapies are currently used to reduce the impact of the progressive nature of PBC.

These include UDCA, obeticholic acid, peroxisome proliferator activator receptors like bezafibrate and fenofibrate, and others.

However, the few therapeutic options available to manage PBC associated pruritus are temporary and/or suboptimal.

First-line (bile-acid sequestrants) and second-line (rifampicin, opiates, SSRIs) therapies have demonstrated partial efficacy but are associated with tolerability issues, side-effect concerns or have drug-drug interactions.

Lastly, antihistamines are widely used but provide only temporary pruritic relief.

In severe cases of pruritus refractory to medical treatments, biliary drainage can be used to alleviate pruritus and can be an indication for liver transplantation as a last resort.

Our Solutions

7 unchanged sentences

The first two ALGS clinical trials of maralixibat, at low doses, showed signs of activity;

however, their primary endpoints were not met.

however, their primary endpoints were not met, although long term analysis showed sustained control of pruritus and sBA.

In the Phase 2b ICONIC clinical trial of maralixibat in ALGS, patients taking maralixibat had statistically significant reductions in pruritus and sBA compared to placebo.

At the 48-week measurement, pruritus and sBA reductions were maintained and improvements in xanthomas and quality of life were also observed.

We are planning to pursue full approval for the indication of cholestatic pruritus associated with ALGS based on feedback from the FDA and the results from the ICONIC study of maralixibat in children with ALGS.

As a result of discussions with the FDA, we are planning a rolling NDA submission, which will be initiated in the third quarter of 2020, and are planning to submit the chemistry, manufacturing and controls (“CMC”) data section in the first quarter of 2021.

We are pursuing full approval from the FDA for the indication of cholestatic pruritus in patients with ALGS.

In addition to the ongoing Phase 3 MARCH clinical trial, maralixibat has been studied in 33 pediatric patients with PFIC in one open-label Phase 2 clinical trial.

Results from the Phase 2 INDIGO clinical trial of maralixibat in PFIC showed multi-parameter response in patients with nt-PFIC2 on pruritus, sBA, normalization of liver enzymes if abnormal at baseline and quality of life scores, which was the basis for maralixibat’s breakthrough therapy designation for the treatment of PFIC2.

While the primary endpoint of sBA change from baseline to week 13 did not reach statistical significance for the overall group, the pre-specified 48-week analysis of the study demonstrated a profound treatment response in a subset of PFIC2 patients.

A long-term analysis of the INDIGO clinical trial showed an improvement in growth compared to a normalized growth curve for those patients who had a response in sBA and pruritus.

While the primary endpoint of sBA change from baseline to week 13 did not reach statistical significance for the overall group, the pre-specified 48-week analysis of the clinical trial demonstrated a profound treatment response in a subset of PFIC2 patients.

A long-term analysis of the INDIGO clinical trial showed control of sBA with maralixibat in patients with PFIC2 led to transplant free survival in line with literature stating that sBA control with surgical biliary diversion has demonstrated 15-year transplant free survival.

In addition, an improvement in growth compared to a normalized growth curve for those patients who had a response in sBA and pruritus.

In a natural history comparison between INDIGO and a PFIC2 natural history cohort showed improved event free survival with maralixibat.

We commenced enrollment in the Phase 3 MARCH clinical trial of maralixibat in PFIC in the second quarter of 2019, with a primary endpoint focused on pruritus in patients with nt-PFIC2.

Historical Clinical Development of Maralixibat

The table below summarizes the key objectives and observations of our clinical trials of pediatric patients.

ICONIC (N=31)

Phase 2b trial with a 4-week randomized, placebo-controlled withdrawal period

Open-label extension ongoing

Evaluate reduction in pruritus in patients with ALGS

Primary Endpoint:

Change from baseline to week 13 in pruritus

Statistically significant difference in ItchRO(Obs) with maralixibat versus placebo during randomized drug withdrawal period (p<0.0001)

Maralixibat significantly reduced pruritus from baseline to week 48 (p<0.0001)

Serum Bile Acids

Primary endpoint met (p<0.05)

Statistically significant difference in sBA levels with maralixibat versus placebo during the randomized drug withdrawal period (p<0.05)

Maralixibat significantly reduced sBA levels from baseline to week 48 (p<0.01)

Statistically significant 44% (p<0.01) reduction from baseline on Clinician Xanthoma Scale at week 48

Well tolerated with over three years of duration in some patients.

Most frequent adverse events gastrointestinal-related

Long-term data:

Reductions in sBA and pruritus were statistically significant and further improved in the participants who remained on maralixibat through 191 weeks of treatment compared to baseline

Phase 2 randomized, placebo-controlled dose escalation trial

Evaluate reduction in pruritus in patients with ALGS

Primary Endpoint:

Change from baseline to week 13 in pruritus

Significant reductions observed in pruritus at 70 µg/kg/d and 140 µg/kg/d

Reductions observed in overall treatment group in ItchRO(Obs) that did not reach statistical significance

Serum Bile Acids

Overall reductions in sBA observed across maralixibat treatment groups that did not reach statistical significance

IMAGINE II , Open-label extension trial of the ITCH trial (N=34)

Fully-enrolled

Evaluate long-term safety and efficacy

Long-term data analysis pending

Phase 2 randomized placebo-controlled dose escalation trial

Evaluate safety and efficacy and impact on biochemical markers and pruritus

Primary Endpoint:

Change from baseline to week 13 in fasting sBA level

Serum Bile Acids

Reductions in sBA in maralixibat treated groups that were not statistically significant

Significant improvement in quality of life, as measured by the PedsQL scale

IMAGINE I , Open-label extension trial of the IMAGO trial (N=19)

Fully-enrolled

Evaluate safety and efficacy and impact on biochemical markers and pruritus

Interim data showed continued improvement trends in ItchRO(Obs)

Long-term data analysis pending

INDIGO (N=33)

Phase 2 open-label, dose escalation trial

Fully-enrolled

Open-label extension on-going

Evaluate safety and efficacy in PFIC

Safety, pruritus and sBA

Disappearance or substantial reduction in pruritus in PFIC2 patients;

see “ —Our Clinical Trials of Maralixibat in PFIC—Phase 2 INDIGO Trial” below

55% of PFIC2 patients experienced a ≥1 point ItchRO(Obs) reduction at week 48

Serum Bile Acids

Normalization or substantial reduction observed in sBA levels in PFIC2 patients

Primary efficacy analysis of the change from baseline to week 13 in fasting sBA level did not reach statistical significance for the overall group

Improvement in height and weight

Normalization of bilirubin and liver enzymes, if elevated at baseline

Improvements observed in health-related quality of life scores

Well tolerated.

Many patients on treatment for approximately 4 years.

Most frequent adverse events gastrointestinal-related

Statistical Significance

In the description of our trials above and elsewhere in this Annual Report, n represents the number of patients in a particular group and p or p-values represent the probability that random chance caused the result (e.g., a p-value of 0.001 means that there is a 0.1% probability that the difference between the placebo group and the treatment group is purely due to random chance).

A p-value of less than or equal to 0.05 is a commonly used criterion for statistical significance, and may be supportive of a finding of efficacy by regulatory authorities.

Maralixibat has been studied in a number of pediatric clinical trials.

Our Clinical Trials of Maralixibat in ALGS

1 unchanged sentence

The multicenter Phase 2b ICONIC clinical trial has a four-week double-blind, randomized, placebo-controlled drug withdrawal period with the following design:

The ICONIC clinical trial enrolled 31 ALGS patients with sBA greater than three times the upper limit of normal and moderate to severe pruritus and includes an open-label extension period and is currently ongoing after approximately four years.

In a 48-week analysis, the ICONIC clinical trial met its primary endpoint of a mean change in sBA between placebo and maralixibat during the randomized drug withdrawal period in responders, as defined in the graph below.

The ICONIC clinical trial met its primary endpoint of a mean change in sBA between placebo and maralixibat during the

randomized drug withdrawal period in responders, as defined in the graph below.

A statistically significant difference in sBA was observed between the treatment groups (p<0.05).

2 unchanged sentences

The ICONIC trial demonstrated statistical significance on efficacy measures at multiple timepoints.

In addition to the primary endpoint, the 48-week analysis of the ICONIC clinical trial evaluated measures of pruritus, sBA and xanthomas.

The ICONIC trial 48-week analysis further evaluated sBA changes as a measure of the bile acid reduction activity of maralixibat.

In addition to the primary endpoint, the ICONIC clinical trial evaluated measures of pruritus, sBA and xanthomas.

In the ICONIC trial, sBA changes were evaluated in the full study population over time as a measure of the bile acid reduction activity of maralixibat.

As depicted in the figure below, at week 18, patients treated with maralixibat experienced an approximately 31% mean reduction from baseline in sBA levels in the overall study population.

2 unchanged sentences

At week 48, placebo patients experienced a 36% mean sBA reduction compared to sBA levels at week 22.

Reductions in sBA were sustained through week 204.

Mean reductions from baseline in sBA levels

As depicted in the figure below, patients treated with maralixibat experienced an approximately 60% mean reduction from baseline to week 18 in pruritus, as measured by ItchRO(Obs) score (p<0.0001).

The predefined 48-week analysis to assess changes in pruritus during the randomized drug withdrawal period showed that patients who were randomized to placebo experienced a recurrence of their pruritus, whereas those who continued on maralixibat maintained their reduction in pruritus (p<0.0001).

The predefined analysis to assess changes in pruritus during the randomized drug withdrawal period showed that patients who were randomized to placebo experienced a recurrence of their pruritus, whereas those who continued on maralixibat

maintained their reduction in pruritus (p<0.0001).

After the randomized drug withdrawal phase during which placebo patients received maralixibat for a second time, a decrease in ItchRO ( Obs ) score similar to those who had received continuous maralixibat treatment was observed.

The results during the randomized drug withdrawal period demonstrate a treatment effect with maralixibat .

Pruritus improvements were maintained through week 48 and were statistically significant as compared to baseline (p<0.0001).

Pruritus improvements were maintained through week 48 and were statistically significant as compared to baseline (p<0.0001) and were sustained through week 204.

The ItchRO(Obs) score is a caregiver-reported outcome assessment developed for use in cholestatic liver diseases, which measures severity of itch on a 0-4 scale.

4 unchanged sentences

Observer-reported pruritus severity ItchRO(Obs) weekly average morning score change from baseline

The figures below further depict the observer reported pruritus severity weekly average morning score change from baseline by patient in the group that stayed on maralixibat for the entire trial period and the placebo-controlled withdrawal group.

Observer-reported pruritus severity ItchRO(Obs) weekly average morning score change from baseline in MRX-MRX-MRX group

Observer-reported pruritus severity ItchRO(Obs) weekly average morning score change from baseline in MRX-PBO-MRX group

The ICONIC trial 48-week analysis evaluated additional measures of pruritus to further characterize the potential treatment effects of maralixibat.

The ICONIC trial analysis evaluated additional measures of pruritus to further characterize the potential treatment effects of maralixibat.

The clinician scratch score (“CSS”), is a measure of itch evaluated by the treating physician.

2 unchanged sentences

The proportion of patients with the maximum CSS score of 4 decreased from 51.6% at baseline to 6.9% at week 18 and remained stable at 7.1% at week 48.

Statistically significant mean reductions from baseline were noted in the overall study population from baseline to week 204, indicating durable improvement in pruritus.

The results are shown below and provide further evidence of a treatment effect with maralixibat.

Improvements from baseline in Clinician Scratch Scale scores

The ICONIC trial 48-week analysis also evaluated xanthomas on the Clinician Xanthoma Scale, which uses a 5-point scale that ranges from 0 (none) to 4 (disabling).

The ICONIC trial also evaluated xanthomas on the Clinician Xanthoma Scale, which uses a 5-point scale that ranges from 0 (none) to 4 (disabling).

Xanthomas are cholesterol deposits underneath the skin that occur as a result of retained bile acids and cholesterol in some ALGS patients and can be very disfiguring and debilitating.

The chart below shows the change over time in the mean xanthoma score in patients in the ICONIC clinical trial.

As depicted in the figure below, maralixibat led to a mean reduction of 44% in xanthoma score at week 48 as compared to baseline (p<0.01).

In the ICONIC clinical trial, maralixibat led to a mean reduction of 44% in xanthoma score at week 48 as compared to baseline (p<0.01).

Additionally, of the patients who had xanthomas at baseline, 43% had no xanthomas at week 48.

Mean reductions from baseline in Clinician Xanthoma Scale scores

Recent Presentations of New Data of Maralixibat in ALGS

At the American Association for the Study of Liver Diseases (AASLD) meeting in November 2019, additional data from the long-term extension of the Phase 2b ICONIC clinical trial were presented regarding the durability of treatment effect on cholestasis and cholestatic symptoms of maralixibat in children with ALGS.

At the conclusion of the 48-week treatment period of the placebo-controlled Phase 2b ICONIC clinical trial of maralixibat in children with ALGS, 23 participants entered into the long-term extension.

At the time of this new analysis, 15 participants remained on study with a duration of up to four years.

The chart below shows how, consistent with results reported after 48 weeks of treatment with maralixibat, reductions in sBA and pruritus were statistically significant and further improved in the patients who remained on maralixibat through 191 weeks of treatment compared to baseline (p<0.005 and p<0.0001, respectively).

Significant and sustained improvements in pruritus with long-term maralixibat treatment

In addition, clinician scratch scale scores (p<0.0001) and xanthomas (p<0.05) remained significantly reduced compared to baseline with long-term treatment.

In addition, xanthomas (p<0.05) remained significantly reduced compared to baseline with long-term treatment.

Improvements were also seen in the PedsQL Multidimensional Fatigue Scale score (p<0.01).

As depicted in the figure below, children taking maralixibat exhibited a clinically meaningful and statistically significant acceleration in height growth as measured by height z-score (p≤0.01).

In ICONIC, the mean height percentile for patients followed to week 191 increased from the 9 th percentile to the 16 th percentile.

Maralixibat was generally well tolerated at doses of up to 760 µg/kg/day.

1 unchanged sentence

Additional Phase 2 Trials in ALGS

Two additional clinical trials have been conducted for maralixibat for the treatment of ALGS and associated long-term extension clinical trials are ongoing.

Two additional clinical trials have been conducted for maralixibat for the treatment of ALGS.

These clinical trials included dose-ranging randomized assessments of maralixibat compared to placebo at week 13 on measures of sBA and pruritus.

5 unchanged sentences

% Change from Baseline ItchRO(Obs)

The image below shows how the increased dose of maralixibat improves pruritus response as measured by ItchRO(Obs).

Long-term analysis from IMAGINE, the extension of the IMAGO clinical trial, showed that despite there not being a significant difference from placebo at week 13, pruritus relief sustained over the long-term open label treatment with maralixibat.

Registrational Plans for Maralixibat in ALGS

We believe that the statistically significant treatment effect observed with maralixibat treatment on sBA as well as the statistically significant difference on pruritus measures observed in the ICONIC clinical trial represent a clinically meaningful benefit for patients with ALGS.

Based on these data, in May 2019, we had an end-of-Phase 2 meeting with the FDA to discuss the adequacy of the current data set of maralixibat to support an NDA submission for the treatment of cholestatic pruritus associated with ALGS.

At the request of the FDA, we prepared various analyses of the maralixibat data set, in particular the ICONIC clinical trial as the potential pivotal study, and requested an additional meeting with the FDA.

In the third quarter of 2019, we performed a number of analyses and profiling of response.

These analyses were submitted to the FDA in advance of the meeting in November 2019.

In parallel, in October 2019, we received a breakthrough therapy designation for maralixibat for the treatment of pruritus associated with ALGS in patients one year of age and older.

In October 2019, the FDA requested that we convert the meeting to a pre-NDA meeting and discuss the components and timeline of an NDA submission.

During this meeting, we and the FDA reached consensus on a timeline for initiating a rolling submission of an NDA in the third quarter of 2020 and the details of various routine datasets to generate for the submission.

We also met with the FDA to discuss CMC plans and our commercial supply chain strategy.

We have initiated production of registration batches, and believe we will be in a position to provide the stability data required for NDA submission by the first quarter of 2021.

Through the FDA interactions, we have an agreed plan for the components and timing of a rolling NDA submission.

We expect the NDA submission to be complete in the first quarter of 2021, which will include the submission of the FDA requested CMC and stability data.

Based on the data from our ALGS clinical trials, we are planning to initiate a rolling submission of an NDA for the treatment of pruritus associated with ALGS in the third quarter of 2020.

Long-term analysis from IMAGINE I, the extension of the IMAGO clinical trial, showed that despite there not being a significant difference from placebo at week 13, pruritus relief was sustained over the long-term open label treatment with maralixibat.

Similarly, in the long-term extension of ITCH, IMAGINE II, reductions in ItchRO(Obs) and CSS were observed at week 48 and sustained for up to 216 weeks.

Registrational Path for Maralixibat in ALGS

We completed our submission of an NDA for the treatment of cholestatic pruritus in patients with ALGS in January 2021.

We have received breakthrough therapy designation for maralixibat for the treatment of pruritus associated with ALGS in patients one year of age and older.

In November 2019, we were granted Rare Pediatric Disease Designation for maralixibat for ALGS, and as a result, we may qualify for the receipt of a priority review voucher if our NDA is approved.

In addition, we plan to further discuss our submission plans with the EMA after further analysis of our long-term extension treatment data compared to natural history data.

1 unchanged sentence

Phase 2 INDIGO Trial

The Phase 2 INDIGO clinical trial is an ongoing, long-term, open-label trial designed to evaluate the safety and efficacy of maralixibat in 25 pediatric patients with PFIC2 and eight pediatric patients with PFIC1.

The Phase 2 INDIGO clinical trial is a long-term, open-label trial designed to evaluate the safety and efficacy of maralixibat in 25 pediatric patients with PFIC2 and eight pediatric patients with PFIC1.

Treatment response on sBA, pruritus and growth paired with 5-year transplant free and event free survival improvements from INDIGO served as the basis of our MAA submission to EMA for maralixibat for PFIC2.

INDIGO evaluated measures of sBA and pruritus at various time points.

The primary endpoint of the change from baseline to week 13 in fasting sBA level did not reach statistical significance for the overall group, but profound and durable reductions in sBA were seen in patients with PFIC2 at 48 weeks and maintained through at least 72 weeks.

The secondary endpoint of a reduction from baseline to week 13 in pruritus as measured by the ItchRO(Obs) scale did reach statistical significance for the overall group.

Moreover, in the 48-week analysis, 55% of PFIC2 patients had a clinically meaningful pruritus reduction as measured by the ItchRO(Obs) scale.

Patients are currently being followed in a long-term extension of the trial.

Maralixibat has been administered to 22 patients for at least 72 weeks at doses up to 280 µg/kg daily (“QD”).

Patients are currently being followed in a long-term extension trial.

During the INDIGO clinical trial, maralixibat was administered at doses up to 266 µg/kg daily (“QD”).

Patients without response or with partial treatment response could escalate to 266 µg/kg twice daily (“BID”).

The chart below show the ItchRO(Obs) response profiles for the patients with PFIC1 and PFIC2.

Significant and sustained improvements in pruritus with long-term maralixibat treatment

The responses observed in the PFIC2 patient group provided the basis for breakthrough therapy designation for the treatment of PFIC2 patients.

At the 48-week time point, maralixibat treatment in PFIC2 responders led to normalization (8.5 µmol/L) or significant reduction (>70%) in sBA levels from baseline and disappearance of pruritus (1.0 point reduction from baseline on the ItchRO(Obs) scale).

At the 48-week time point, maralixibat treatment in PFIC2 responders led to normalization (<8.5 µmol/L) or significant reduction (>70%) in sBA levels from baseline and control of pruritus (1.0 point reduction from baseline on the ItchRO(Obs) scale).

This pattern of improvement has not been observed in the natural history of the disease.

These responders have been treated for approximately four years in INDIGO and have maintained the above response pattern throughout, except during transient episodes of intercurrent illnesses (e.g., gastroenteritis or upper respiratory tract infections).

An analysis of PFIC2 patients with complete absence of BSEP function, that is, patients with a truncating mutation in the PFIC2 gene (“truncating PFIC2”), showed that these patients were unlikely to respond to treatment, whereas those patients with residual BSEP function, that is, patients with nt-PFIC2 had the greatest reductions in both sBA and pruritus.

The charts below show the sBA response profiles for the patients with nt-PFIC2, truncating PFIC2 and PFIC1 and the robust and durable pruritus response in the patients with nt-PFIC2.

sBA response in patients with nt-PFIC2

The black filled circles refer to termination.

The black empty circles refer to the start of BID dosing.

sBA response in patients with truncating PFIC2

The black filled circles refer to termination.

sBA response in patients with PFIC1

The black filled circles refer to termination.

The black empty circles refer to the start of BID dosing.

ItchRO(Obs) response in patients with nt-PFIC2

The black filled circles refer to termination.

The black empty circles refer to the start of BID dosing.

A long-term analysis of these responders showed a sustained growth benefit.

This difference was statistically significant at every timepoint after six months of treatment and reached clinically relevant z-score differences of up to 1.20 and 0.75 for height and weight, respectively, at the end of the 72-week analysis period.

A z-score represents the number of standard deviations between the mean and a given data point.

Change from baseline in height z-scores for the 25 INDIGO clinical trial participants with PFIC2, of which six were responders in this analysis

Based on n=6 responders and n=19 non-responders.

Increased variability at weeks 48-72 reflects the fact that not all patients had progressed that far in the clinical trials at the time the data was analyzed;

despite this, differences at weeks 24, 36, 48, 60, and 72 reached statistical significance.

In patients with a negative baseline z-score, a positive change from baseline means “catch-up growth” and a negative change from baseline means further growth delay, i.e., height difference compared to the normal population decreases and increases, respectively.

The observed improvements in growth represented a durable effect.

Furthermore, a seventh treatment responder achieved the above treatment response criteria, similar to the six patients represented above, after BID dose increase.

As shown in the chart below, this seventh responder exhibited similar growth benefits after this dose escalation.

Collectively, this evidence suggests that lowering sBA with maralixibat may lead to improved outcomes, including growth and pruritus.

Change in height and weight z-scores for the seventh responder to maralixibat treatment

Other Clinical Trials of Maralixibat in Cholestatic Liver Diseases

CLARITY was a 13-week, randomized, double-blind, placebo-controlled, multi-center trial, to evaluate maralixibat in primary biliary cholangitis (“PBC”), patients with pruritus who had inadequate response to UDCA.

A significant decrease from baseline in pruritus scores at week 13 was observed in both the treatment and placebo groups, with no significant difference between the groups.

However, there was a statistically significant decrease in sBA in maralixibat treated patients compared to placebo (p<0.05).

CAMEO was a 14-week open-label clinical trial to evaluate the safety, tolerability and efficacy of maralixibat in 27 patients with PSC.

The primary efficacy endpoint of a change from baseline in the fasting sBA level at week 14 showed a 38% reduction (p<0.01).

The clinical trial also showed a significant reduction in pruritus of 51% in the overall treatment group (p<0.05).

We believe these data support further development of an ASBTi for PSC pruritus and plan to evaluate volixibat for PSC pruritus.

Prior to the cholestatic liver disease program, maralixibat was evaluated as a treatment for elevated cholesterol levels in a clinical development program in which over 1,400 subjects received maralixibat.

In this program, maralixibat was generally well-tolerated and showed reductions in low-density lipoprotein (“LDL”) cholesterol, as well as a consistent tolerability and safety profile.

Safety and Tolerability Data for Maralixibat

Maralixibat was generally well tolerated at all doses tested.

The maralixibat safety database includes 33 pediatric patients with PFIC and 86 pediatric patients with ALGS who have been treated with maralixibat for up to approximately six years, as well as over 1,400 adult subjects from previous studies including healthy subjects and patients with PSC, PBC and hypercholesterolemia.

The most commonly reported adverse events (“AEs”) and serious adverse events (“SAEs”), have been those of gastrointestinal (“GI”) disorders such as diarrhea, abdominal pain and vomiting, and were mostly mild to moderate in severity and transient in nature.

Reported treatment-related SAEs have consisted of abdominal pain, upper abdominal pain, diarrhea, cholangitis, increase in blood bilirubin, increase in international normalized ratio, increase in pancreatitis, ALT, autoimmune hepatitis, hematochezia, pure red cell aplasia, myelodysplastic syndrome and anemia.

The frequency of observed AEs and SAEs has not increased over time.

In patients who have been on drug for up to approximately four years, maralixibat has not shown any long-term safety signals at doses up to 400 µg/kg BID.

No deaths have been reported.

The natural history of the underlying cholestatic liver disease in patients with PFIC and ALGS is characterized by frequent abnormalities in liver-related blood tests, especially bilirubin and transaminases, such as ALT, but sometimes without obvious clinical explanations.

A systematic review of all liver parameters across the pediatric maralixibat studies was conducted and included an adjudication of selected cases by independent pediatric cholestasis experts.

During this review the only noted changes were isolated, asymptomatic ALT increases in some ALGS patients and 1.7% were assessed as probably related to drug treatment.

We believe these are due to secondary or compensatory mechanisms in line with published literature of transaminase increase after PEBD and the minimally absorbed nature of maralixibat.

None of the events were serious or resulted in liver-related mortality or morbidity.

No PFIC patients reviewed had developed liver abnormalities resulting from drug treatment.

Of the 19 nt-PFIC2 patients in the clinical trial, seven had a durable sBA response, with a mean reduction to 44.2 µmol/L (from a baseline of 299.6 µmol/L).

A corresponding reduction in ItchRO was observed along with durable improvements in growth as outlined in the graphics below.

sBA response is associated with multi-parameter improvements

sBA response has also been shown to predict transplant-free survival in a retrospective natural history analysis.

The analysis included 264 PFIC2 pediatric patients with homozygous or compound heterozygous pathogenic ABCB11mutations.

sBAs were established as a predictive marker of long-term transplant-free survival after interruption of enterohepatic circulation.

This clinical trial demonstrates nt-PFIC2 patients who had a significant reduction and control of sBAs (defined as sBA threshold of less than 102 μmol/L or a 75% reduction) after

interruption of the enterohepatic circulation via PEBD remained transplant-free out to 15 years post-SBD.

Patients in whom SBD did not lead to such control of sBA levels had significantly worse native liver survival with approximately 50% and 70% of the group under-going liver transplant or death within five and 15 years, respectively.

Akin to these effects observed in NAPPED, the same sBA response profile was observed after pharmacological interruption of the enterohepatic circulation with maralixibat treatment responders (see figure below).

The data from a five year analysis of INDIGO below indicate that 100% of maralixibat patients who achieved the established NAPPED sBA response threshold remained transplant free, whereas those who did not achieve the sBA response criteria went on to eventually receive a liver transplant.

The difference between the groups was statistically significant (p=0.0006).

We believe that the INDIGO data show a clear pattern of response in patients with PFIC2 leading to long-term transplant free survival.

In addition to the INDIGO data, through an academic collaboration, a comparison of event free survival of maralixibat to a natural history cohort of patients was conducted showing an advantage in event free survival for the maralixibat group.

Registrational Program for Maralixibat in PFIC

Based on the responses seen in the INDIGO clinical trial and the extensive safety data, we are conducting the Phase 3 MARCH clinical trial, a randomized, placebo-controlled clinical trial of maralixibat in PFIC.

As depicted in the figure below, the clinical trial is evaluating maralixibat at a dose of up to 600 µg/kg BID compared to placebo for six months followed by a long-term open label extension in which all patients will receive maralixibat.

We have submitted the results of the INDIGO clinical trial and natural history comparisons as part of an MAA to the EMA for maralixibat for the treatment of PFIC2.

The MAA submission has been validated as of November 2020 and is under review as of the date of this Annual Report.

We are also conducting the Phase 3 MARCH clinical trial to evaluate higher doses of maralixibat and additional PFIC sub-types.

MARCH is a randomized, placebo-controlled clinical trial of maralixibat in PFIC.

depicted in the figure below, the clinical trial is evaluating maralixibat at a dose of up to 570 µg/kg BID compared to placebo for six months followed by a long-term open label extension in which all patients will receive maralixibat .

The primary endpoint is a reduction in severity of pruritus as measured by the ItchRO ( Obs ) scale and will include up to 30 patients with nt-PFIC2 aged one to 17 years.

2 unchanged sentences

These additional endpoints include the mean change in pruritus frequency, the mean change in sBA , mean change in quality of life as measured by the PedsQL and the proportion of patients who experience an improvement from baseline in height z-score.

We expect to report topline data from the Phase 3 MARCH clinical trial in late-2020.

We expect to report topline data from the Phase 3 MARCH clinical trial in early 2022 .

We expect that the data from our Phase 3 MARCH clinical trial, if positive, together with natural history data set comparisons and the data from the Phase 2 INDIGO clinical trial, will form the basis for our planned NDA submission to the FDA for maralixibat in PFIC.

In parallel, we plan to discuss the ability of long-term outcomes analysis against natural history controls to support a potential registration application with the EMA.

Safety and Tolerability Data for Maralixibat

In the ALGS clinical development program, which includes five clinical trials comprising 86 patients up to 21 years of age, patients received doses of maralixibat up to 760 µg/kg per day.

In a pooled analysis, the most common (≥ 5%) adverse reactions of any grade were diarrhea and abdominal pain, which were mostly mild to moderate in severity and resolved during continued maralixibat treatment.

No patients discontinued maralixibat due to these adverse reactions.

A summary of placebo comparisons from the ICONIC clinical trial and a pooled analysis of ITCH and IMAGO clinical trials in ALGS are provided below.

L iver-related events were assessed in two maralixibat program-wide safety reviews, including two adjudications by independent groups of pediatric hepatologists and drug-induced liver injury experts in cholestatic indications.

The independent expert group concluded that there was no serious concern for significant general or sporadic drug-induced liver injury.

The analyses showed that maralixibat may cause isolated, asymptomatic and reversible ALT elevations in some participants with ALGS.

However, there has been no serious adverse event (“SAE”) associated with these isolated ALT increases in participants with ALGS and no case of drug-induced liver injury or liver-related morbidity or mortality has been reported to date in over 1600 adult and pediatric study participants.

There is evidence that these effects of ALT elevations are likely due to a mechanism related to the underlying disease rather than a direct hepatotoxic effect, as a similar degree of isolated ALT/AST increases are seen after PBD in patients with ALGS.

In addition, these ALT/AST increases have not been observed in participants with PFIC exposed to maralixibat.

Maralixibat in BA

We believe ASBT inhibition has therapeutic potential in this patient population.

This is based on analogous disease models, including rat partial bile duct ligation, that replicate the extra-hepatic cholestasis and liver injury associated with BA.

As shown below, maralixibat alleviated BA biochemical and histological pathology.

Maralixibat treatment reduces sBAs and liver injury at day 7 in bile duct ligated rats

Bilirubin and sBA levels post-Kasai procedure have been associated with risk of progression to transplant as shown in the figures below:

Bilirubin levels post-Kasai procedure may predict future transplant

The figure above shows a Kaplan-Meier analysis of outcome based on total bilirubin levels three months after a Kasai procedure.

At three months after the Kasai procedure, total bilirubin levels were < 2mg/dL in 38 children, between 2 and 6 mg/dL in 30 children and > 6mg/dL in 19 children.

sBA post-Kasai procedure may predict future transplant

The above Kaplan-Meier curve demonstrates a significantly improved transplant survival rate in patients with sBA levels ≤ 40 µ mol/L at 6 months.

Only 1 of 43 patients, with sBAs ≤ 40 µ mol/L (as depicted by the blue line) required a liver transplant as compared to 31 of 96 infants requiring a transplant in those infants with sBAs > 40 µ mol/L (as depicted by the red line).

Based on these data, we designed the Phase 2 EMBARK clinical trial.

The primary objective of the EMBARK clinical trial is to assess the safety and efficacy of maralixibat in infants with BA.

The clinical trial will evaluate maralixibat’s ability to reduce the amount of bile acids in the blood, helping to prevent liver damage and the need for future liver transplantation.

As depicted in the figure below, EMBARK is a randomized, placebo-controlled clinical trial that will evaluate approximately 72 patients who have previously undergone a Kasai procedure.

Patients will be randomized to receive maralixibat 570 µg/kg BID or placebo for six months.

The primary endpoint in the clinical trial is change in total serum bilirubin.

Secondary endpoints include reduction in sBA, bilirubin normalization, biomarkers of liver injury, transplant-free survival, and safety.

After the first six months of evaluation, all patients will receive maralixibat in an open-label long-term extension with the goal of assessing transplant-free survival and key liver events.

Overview of Volixibat

5 unchanged sentences

In Phase 1 clinical trials in 92 healthy volunteers, volixibat was generally well tolerated.

The most common AEs reported were mild to moderate GI events observed in the volixibat groups.

The most common adverse events reported were mild to moderate GI events observed in the volixibat groups.

The only treatment-related SAE reported was one event of elevated ALT.

2 unchanged sentences

This clinical trial indicated volixibat increased fecal bile acid levels in a dose dependent manner, but without appreciable change in GI tolerability at higher doses.

We believe these results provide evidence of volixibat’s potential utility for the treatment of cholestatic liver diseases given its activity on ASBT inhibition.

Phase 2 NASH Clinical Trial

Volixibat was studied in a multicenter, Phase 2, double-blind, randomized, placebo-controlled NASH clinical trial.

Volixibat was also studied in a multicenter, Phase 2, double-blind, randomized, placebo-controlled NASH clinical trial.

196 participants were randomized to receive oral placebo or volixibat in doses of 5 mg, 10 mg or 20 mg QD for 48 weeks.

4 unchanged sentences

Based on these results, we plan to pursue the development of volixibat for the treatment of adult cholestatic liver diseases.

Future Clinical Development of Volixibat

We are evaluating the utility of volixibat in adult cholestatic liver diseases and plan to initiate clinical trials in PSC and ICP in 2020 and early 2021, respectively.

We are conducting a Phase 1 dose ranging bile acid excretion study to determine dose levels for our planned efficacy studies.

In PSC, based on the reductions in pruritus observed in PSC patients receiving maralixibat, we plan to conduct a Phase 2 clinical trial of volixibat in PSC patients with pruritus.

In ICP, we plan to evaluate the potential of volixibat to lower sBA levels in patients with elevated sBA levels, who are considered at high risk of preterm labor, stillbirth or other perinatal complications.

License Agreements

Assignment and License Agreement with Shire International GmbH

In November 2018, we entered into an assignment and license agreement (“Shire License Agreement”) with Shire.

Phase 1 Dose Ranging Clinical Trial

A single-center, placebo-controlled, single-blind, multiple-dose/regimen, parallel-group, dose-finding clinical trial in healthy adults was completed in 2020.

This clinical trial was designed to evaluate the effect of a range of volixibat QD or BID dose regimens versus placebo on fecal bile acid excretion.

Participants were randomized to one of five cohort groups to receive either volixibat 5 mg twice daily (BID), volixibat 20 mg QD, volixibat 20 mg BID, volixibat 40 mg BID, or volixibat 80 mg BID, and each cohort underwent four treatment periods.

Volixibat was well tolerated and all BID doses increased fecal bile acid excretion versus QD, and higher doses increased bile acid synthesis as demonstrated by increased 7αC4.

Based on the 7αC4 and fBA activity levels shown in these results, doses of 20 mg and 80 mg BID are being evaluated in our registrational programs.

On-going and Future Clinical Development of Volixibat

We are evaluating the utility of volixibat in adult cholestatic liver diseases and initiated clinical trials in PSC and ICP in the first quarter of 2021.

Additionally, we plan to start a clinical trial in PBC in the second half of 2021.

Phase 2a/2b OHANA Trial in ICP

In ICP, we are evaluating the potential of volixibat to lower sBA levels in patients with elevated sBA levels, who are considered at high risk of preterm labor, stillbirth or other perinatal complications.

As depicted in the figure below, the OHANA phase 2a/2b clinical trial is evaluating two doses of volixibat compared to placebo.

The OHANA clinical trial primary cohort will evaluate approximately 260 patients who have been diagnosed with ICP and have elevated sBA levels consistent with at least moderate ICP.

Additionally, up to 30 participants with a lower threshold, yet still elevated, sBA levels, consistent with mild ICP will be enrolled into an open-label supplemental cohort.

Patients in the clinical trial are randomized to receive either volixibat 80 mg BID or 20 mg BID, or placebo BID up to delivery of their baby.

The primary endpoint will assess the mean change from baseline in total sBA

concentration as compared to placebo.

Secondary endpoints will assess pruritus improvements, adverse perinatal outcomes, safety, tolerability, and other measures.

Phase 2b VISTAS Trial in PSC

In PSC, based on the reductions in pruritus observed in PSC patients receiving maralixibat, we are conducting a Phase 2b clinical trial of volixibat in PSC patients with pruritus.

The VISTAS clinical trial will evaluate approximately 120 patients with pruritus due to PSC and will include an adaptive interim analysis.

After the interim analysis, the confirmatory phase of VISTAS will evaluate a single dose of volixibat compared to placebo.

In addition to the 28-week primary analysis, patients will be eligible to continue on open label volixibat treatment and will be evaluated for durability of response and changes in fibrosis markers.

Phase 2b Clinical Trial in PBC

We are currently planning to initiate a Phase 2b clinical trial of volixibat in PBC in the second half of 2021.

We are designing the program to focus on the treatment of cholestatic pruritus with elevated or normal alkaline phosphatase.

License, Finance and Royalty Agreements

Assignment and License Agreement with Shire International GmbH (Takeda)

In November 2018, we entered into an assignment and license agreement (“Shire License Agreement”) with Shire International GmbH (“Shire”), which was subsequently acquired by Takeda Pharmaceutical Company Limited.

Pursuant to the Shire License Agreement, Shire assigned, transferred and conveyed all of its right, title and interest in and to the Pfizer Agreement, Satiogen Agreement and Sanofi Agreement, each of which is defined below.

11 unchanged sentences

In July 2019, we achieved a development milestone under the Shire License Agreement related to the initiation of the Phase 3 MARCH clinical trial and made a $2.5 million payment to Shire and a $0.5 million payment to Satiogen accordingly.

In December 2020, we achieved a further development milestone related to the submission of the MAA for maralixibat for the treatment of PFIC2 and made a $10.0 million payment to Shire.

In January 2021 we achieved a development milestone related to volixibat and made a $2.0 million payment to Shire.

Upon achievement of certain thresholds for aggregate worldwide net sales for all Shire Licensed Products, we are required to pay Shire, on a one-time, non-refundable and non-creditable basis, up to an aggregate of $30.0 million in tiered sales milestone payments.

Lastly, upon certain annual worldwide net sales of all Shire Licensed Products, we are required to pay Shire, on a non-refundable and non-creditable basis, tiered royalties with rates ranging from low double-digits to mid-teens (“Shire royalties”).

If we actually make royalty payments to Sanofi, which is defined below, under the Sanofi Agreement, the Shire royalties will be reduced by low to high single digit percentages of certain net sales thresholds.

If we actually make royalty payments to

Sanofi, which is defined below, under the Sanofi Agreement, the Shire royalties will be reduced by low to high single digit percentages of certain net sales thresholds.

Similarly, if we actually make royalty payments to Satiogen , which is defined below, under the Satiogen Agreement, the Shire royalties will be reduced by a low single digit percentage of net sales.

26 unchanged sentences

In addition, Sanofi granted to us, under certain conditions, an exclusive option to obtain an exclusive license to manufacture volixibat during the term of the Sanofi Agreement.

Unless and until we exercise such option, Sanofi has the exclusive right to supply volixibat to us to develop and commercialize products utilizing the Sanofi Technology.

We exercised this option in May 2020 and are transferring manufacturing of volixibat to a third-party contract manufacturer.

Sanofi retained the right to practice the Sanofi Technology outside the scope of the license granted to us under the Sanofi Agreement and to make and use for internal research purposes, provided that upon our request, Sanofi is obligated to provide us with a written summary of the results of any such research to the extent such results relate to the use of volixibat as an ASBTi.

10 unchanged sentences

We may unilaterally terminate the Sanofi Agreement for any reason or no reason upon 60 days’ written notice to Sanofi after the second anniversary of the Sanofi Agreement.

We may also terminate the Sanofi Agreement on a country-by-country or licensed product-by-licensed product basis upon written notice to Sanofi (1) if we reasonably determine that we are precluded from proceeding with the first Phase 2b clinical trial for a product utilizing the Sanofi Technology in certain major markets due to certain safety failures or (2) after using diligent efforts, we reasonably determine that we are precluded from proceeding with a Phase 3 clinical trial for a product utilizing the Sanofi Technology in certain major markets due to certain safety or efficacy failures.

Sanofi Technology in certain major markets due to certain safety failures or (2) after using diligent efforts, we reasonably determine that we are precluded from proceeding with a Phase 3 clinical trial for a product utilizing the Sanofi Technology in certain major markets due to certain safety or efficacy failures.

Either party may terminate the Sanofi Agreement in the event of the other party’s insolvency or for the other party’s material breach of the Sanofi Agreement which remains uncured after 90 days of receiving written notice of such breach, or ten business days in the case of a payment breach.

8 unchanged sentences

Satiogen will be responsible for filing, prosecuting and maintaining patents related to the ASBTi Technology and TGR5 Technology controlled by Satiogen as of the effective date or during the term of the Satiogen Agreement.

Additionally, prior to certain events specified in the Satiogen

Agreement, Satiogen will have the sole right, but not the obligation, to enforce patents related to the ASBTi Technology and the TGR5 Technology;

Additionally, prior to certain events specified in the Satiogen Agreement, Satiogen will have the sole right, but not the obligation, to enforce patents related to the ASBTi Technology and the TGR5 Technology;

after which, we will have the sole right, but not the obligation, to enforce patents related to the ASBTi Technology and the TGR5 Technology.

11 unchanged sentences

Absent early termination, the Satiogen Agreement will automatically terminate upon the expiration of our royalty obligations.

Revenue Interest Purchase Agreement with Oberland

In December 2020, we entered into a Revenue Interest Purchase Agreement (“RIPA”) with Mulholland SA LLC, an affiliate of Oberland Capital LLC, as agent for the purchasers party thereto (the “Purchasers”), and the Purchasers.

Pursuant to the RIPA, the Purchasers paid us $50.0 million on closing, less certain issuance costs.

We may also be entitled to receive up to approximately $150.0 million in subsequent installments as follows:

(i) $65.0 million if the FDA has accepted for review our NDA for maralixibat as a treatment for cholestatic pruritus in patients with ALGS on or prior to a specified date;

(ii) $35.0 million if the FDA has approved maralixibat as a treatment for ALGS on or prior to a specified date;

and (iii) up to $50.0 million at the option of the Purchasers to finance in-licenses or other acquisitions.

As consideration for such payments, the Purchasers will have a right to receive certain revenue interests (the “Revenue Interests”) from us based on annual net sales of maralixibat, if approved, which will be tiered payments (the “Revenue Interest Payments”) based on whether such annual net sales are (i) less than or equal to $350.0 million (“Tier 1”), (ii) exceeding $350.0 million and less than or equal to $1.1 billion (“Tier 2”), or (iii) exceeding $1.1 billion (“Tier 3”).

The Revenue Interest Payments will initially be 9.75% (at Tier 1) and 2.00% (at Tier 2 and Tier 3) of such annual net sales in a specified territory (the “Covered Territory”);

provided that (i) if the Purchasers have received Revenue Interest Payments in an amount equal to or greater than 110.0% of the total payments actually made by the Purchasers to us, exclusive of transaction expenses (the “Cumulative Purchaser Payments”), on or prior to December 31, 2026, the Revenue Interests shall be reduced to 2.00% at Tier 1 and 0.00% at Tier 3 for all subsequent calendar years beginning on January 1, 2027 and (ii) if the Purchasers have not received Revenue Interest Payments in an amount equal to or greater than 110.0% of the Cumulative Purchaser Payments on or prior to December 31, 2026, the Revenue Interests shall be increased for all subsequent calendar years beginning on January 1, 2027 to a single defined rate (with no separate tiers) that would have provided the Purchasers with an amount equal to 110.0% of the Cumulative Purchaser Payments on or prior to December 31, 2026 had such rate applied to Tier 1 of initial Revenue Interest Payments.

The Purchasers’ rights to receive the Revenue Interest Payments shall terminate on the date on which the Purchasers have received Revenue Interest Payments of 195.0% of the Cumulative Purchaser Payments, unless the RIPA is terminated earlier.

Intellectual Property

3 unchanged sentences

We have developed and continue to develop patent portfolios around our product candidates, maralixibat and volixibat.

We have pending patent applications in the United States, Europe, South Korea, Israel, Brazil, Canada, Hong Kong and Singapore covering the methods of treating cholestasis using ASBTis that have limited systemic exposure, which, if issued, would expire in October 2032, absent any patent term adjustments or extensions.

We have an issued patent in the United Stated directed to treating or ameliorating PFIC2 in a pediatric subject comprising administering maralixibat, which expires in October 2032.

We have granted and/or issued patents in Australia, China, Japan, Mexico, South Korea, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan, South Africa and Macau covering the methods of treating cholestasis using ASBTis that have limited systemic exposure, which expire in October 2032.

We also have pending patent applications in United States, Brazil, Canada, South Korea, Mexico, Hong Kong, Singapore and South Africa, covering methods of treating pediatric cholestatic liver diseases using ASBTis that have limited systemic exposure, which, if issued, would expire in October 2032, absent any patent term adjustments or extensions.

We have granted and/or issued patents in Australia, China, Israel, Japan, South Korea, South Africa, Singapore, Austria, Belgium, Czech Republic, Denmark,

Estonia, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, United Kingdom, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Macau and Turkmenistan covering methods of treating pediatric cholestatic liver diseases using ASBTis that have limited systemic exposure, which expire in October 2032.

We also have pending patent applications in Europe, Australia, China, Israel, South Africa and Eurasia covering pediatric dosage forms of ASBTis that have limited systemic exposure, which, if issued, would expire in October 2032, absent any patent term adjustments or extensions.

We have a pending Patent Cooperation Treaty (“P CT ”) application directed to methods for modulating a dosage of an ASBTi and to methods for using patient genotype to predict response to ASBTi administration in patients with BSEP deficiency.

We have a pending PCT application directed to methods for treating cholestatic liver disease comprising administering higher dosages of ASBTis .

We have a pending PCT application directed to methods of increasing growth in pediatric subjects having cholestatic liver disease by administering ASBTis .

Any patents issuing from these PCT applications would expire in 2040, absent any patent term adjustments or extensions.

We have rights to pending patent applications in the United States, Europe, South Korea, Israel, Hong Kong and Singapore covering the methods of treating cholestasis using ASBTis that have limited systemic exposure, which, if issued, would expire in October 2032, absent any patent term adjustments or extensions.

We have rights to an issued patent in the United Stated directed to treating or ameliorating PFIC2 in a pediatric subject comprising administering maralixibat, which expires in October 2032.

We have rights to granted and/or issued patents in Australia, Brazil, Canada, China, Japan, Mexico, South Korea, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan, South Africa and Macau covering the methods of treating cholestasis using ASBTis that have limited systemic exposure, which expire in October 2032.

We also have rights to pending

patent applications in United States, Europe, Australia, Japan, Eurasia, South Korea, Mexico, Hong Kong, Singapore and South Africa, covering methods of treating pediatric cholestatic liver diseases using ASBTis that have limited systemic exposure, which, if issued, would expire in October 2032, absent any patent term adjustments or extensions.

We have rights to granted and/or issued patents in Australia, Brazil, Canada, China, Israel, Japan, Mexico, South Korea, South Africa, Singapore, Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, United Kingdom, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Macau and Turkmenistan covering methods of treating pediatric cholestatic liver diseases using ASBTis that have limited systemic exposure, which expire in October 2032.

We also have rights to a granted patent in South Africa covering pediatric dosage forms of ASBTis that have limited systemic exposure, which expires in October 2032.

We also have rights to a pending patent application in China covering pediatric dosage forms of ASBTIs that have limited systemic exposure, which, if issued, would expire in October 2032, absent any patent term adjustments or extensions.

We have rights to a pending Patent Cooperation Treaty (“PCT”) application directed to methods for modulating a dosage of an ASBTi and to methods for using patient genotype to predict response to ASBTi administration in patients with BSEP deficiency.

We have rights to a pending PCT application and pending United States applications directed to methods for treating cholestatic liver disease comprising administering higher dosages of ASBTis .

We have rights to a pending PCT application directed to methods of increasing growth in pediatric subjects having cholestatic liver disease by administering ASBTis .

Any patents issuing from these PCT or United States applications would expire in 2040, absent any patent term adjustments or extensions.

We have licensed patent applications in the United States and Europe from Satiogen covering therapeutic uses of ASBTis that have limited systemic exposure for treating inflammatory intestinal conditions, which, if issued, would expire in May 2031, absent any patent term adjustments or extensions.

15 unchanged sentences

Sales and Marketing

We currently do not have a commercial organization for the marketing, sales and distribution of pharmaceutical products.

We are planning to build the commercial infrastructure necessary to effectively support the commercialization of maralixibat and volixibat, if approved, in North America and Europe and we may decide to use strategic partners, distributors, or contract management organizations to assist in the commercialization of maralixibat and volixibat in other markets.

We believe that our commercial organization can be modest in size and targeted to the relatively small number of specialists who treat patients with pediatric cholestasis, such as ALGS, PFIC and BA.

We currently have a limited commercial organization.

We are in the process of building the commercial infrastructure necessary to effectively support the commercialization of maralixibat and volixibat, if approved, in North America and Europe and we may decide to use strategic partners, distributors, or contract management organizations to assist in the commercialization of maralixibat and volixibat in other markets.

We believe that our commercial organization can be targeted to the relatively small number of specialists who treat patients with pediatric cholestasis, such as ALGS, PFIC and BA.

The commercial infrastructure for orphan products typically consists of a targeted, specialty sales force that calls on a limited and focused group of physicians supported by sales management, internal sales support, an internal marketing group and distribution support.

Additional capabilities important to the marketplace include the management of key accounts such as managed care organizations, group-purchasing organizations, specialty pharmacies, government accounts and reimbursement support.

Based on the number of physicians that treat cholestatic liver diseases, we believe that we can effectively target the relevant audience for maralixibat and volixibat in North America and Europe by establishing a sales force either internally or through a contract sales force.

To develop the appropriate commercial infrastructure, we will have to invest significant amounts of financial and management resources, some of which will be committed prior to any confirmation that maralixibat or volixibat will be approved.

1 unchanged sentence

Medical affairs is comprised of medical information, patient advocacy, patient diagnosis, medical science liaisons, research and educational grants.

In October 2020, we entered into a services agreement with Eversana, a leading provider of commercial support services to the life science industry, to provide integrated nationwide distribution, specialty pharmacy, medical information, patient services and hub support for maralixibat in the United States, if approved.

Manufacturing

We do not own or operate manufacturing facilities for the production of maralixibat and volixibat or other product candidates that we may develop, nor do we have plans to develop our own manufacturing operations in the foreseeable future.

We currently depend on third-party contract manufacturers for all of our required raw materials, active pharmaceutical ingredient and finished products for our clinical trials.

We currently depend on third-party contract manufacturers for all of our required raw materials, active pharmaceutical ingredient and finished products.

Over the course of the development of our ASBTis we have used and continue to use multiple third-party contract manufacturers.

2 unchanged sentences

We currently employ internal resources and third-party consultants to manage our manufacturing contractors.

The biotechnology and pharmaceutical industries are subject to rapid and intense technological change.

We face, and will continue to face, competition in the development and marketing of our products and product candidates from academic institutions, government agencies, research institutions and biotechnology and

pharmaceutical companies.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approval and marketing than we do.

Competition may also arise from, among other things, new drug development technologies, new or improved treatment options for preventing or reducing the incidence of disease in diseases our products treat and new small molecule or other classes of therapeutic agents.

Such developments by competitors could reduce or eliminate the use of our products or may limit the utility and application of ongoing clinical trials for our product candidates.

There are no FDA-approved therapies for the treatment of ALGS, PFIC, BA, PSC or ICP in the United States.

Symptomatic treatment with antipruritics, such as cholestyramine, typically provides only modest relief.

Bristol Myers Squibb Company has discontinued its brand name cholestyramine, but generic versions of the drug are marketed by Upsher-Smith Laboratories, Inc., Par Pharmaceutical Companies, Inc.

and Sandoz Inc., the generic pharmaceuticals division of Novartis AG.

UDCA is marketed by a number of generic pharmaceutical companies such as Mylan Inc., Actavis Inc., Lannett Company, Inc.

Bristol Myers Squibb Company has discontinued its brand name cholestyramine, but generic versions of the drug are marketed by Upsher-Smith Laboratories, Inc., Par Pharmaceutical Companies, Inc., Sandoz Inc., the generic pharmaceuticals division of Novartis AG and others.

UDCA, as ursodiol, is marketed by a number of generic pharmaceutical companies such as Mylan Inc., Actavis Inc., Lannett Company, Inc.

and Par Pharmaceutical Companies, Inc.

3 unchanged sentences

GlaxoSmithKline plc and Albireo Pharma, Inc.(“Albireo”) have ASBTis in clinical development for cholestatic liver diseases.

We are aware that Albireo has almost completed enrollment of a Phase 3 trial for PFIC1 and PFIC2 patients for A4250 (“odevixibat”) and has an extension study enrolling PFIC patients.

Albireo has announced plans to pursue development in BA, ALGS and other cholestatic liver diseases.

Albireo has announced plans to release PFIC Phase 3 topline data in mid-2020.

We are aware that GlaxoSmithKline plc is conducting a Phase 2 trial of its ASBTi in PBC patients.

We are aware that Albireo has announced topline results from a Phase 3 trial for PFIC1 and PFIC2 patients for odevixibat and has an extension study and an expanded access program enrolling PFIC patients.

Albireo’s NDA for odevixibat for the treatment of pruritus in patients with PFIC has been accepted by the FDA.

Additionally, we are aware that Albireo has submitted an MAA for odevixibat.

Albireo has also announced the initiation of studies of odevixibat in BA and ALGS and plans to pursue other cholestatic liver diseases.

We are aware that GlaxoSmithKline plc has completed a Phase 2 trial of its ASBTi in PBC patients and has announced its intention to conduct a Phase 3 trial in PBC.

We are also aware that Intercept Pharmaceuticals, Inc.

2 unchanged sentences

In adult settings of cholestasis, similar to pediatric settings, cholestyramine, UDCA, rifampin and naltrexone are commonly used agents.

We are not aware of FDA approved therapeutics for the treatment of PSC or ICP.

We are aware of several agents in clinical development for the treatment of PSC, including Allergan plc’s cenicriviroc, DURECT Corporation’s DUR928, Gilead Sciences, Inc.’s GS-9674, HighTide Therapeutics Inc.’s HTD1801, Intercept Pharmaceuticals, Inc.’s Ocaliva, or obeticholic acid and NGM Biopharmaceuticals, Inc.’s NGM282.

Furthermore, one of our own product candidates may be used off-label in the market for another of our product candidates, adversely affecting the sales of that product candidate.

We are not aware of FDA approved therapeutics for the treatment of ICP or PSC.

We are aware of several agents in clinical development for the treatment of PSC, including Cymabay’s seladelpar, DURECT Corporation’s DUR928, Gilead Sciences Inc.’s GS-9674, HighTide Biopharmaceutical Inc.’s HTD1801, Immunic Therapeutics’ IMU-838, Intercept’s Ocaliva, or obeticholic acid, NGM Biopharmaceuticals Inc.’s NGM282 and Pliant Therapeutics’ PLN-74809.

Intercept Pharmaceuticals, Inc.’s Ocaliva is approved as a second-line treatment for PBC.

We are aware of several agents in clinical development for the treatment of PBC including Cymabay’s seladelpar, Genfit’s elafibranor and NGM Biopharmaceuticals, Inc.’s NGM282.

Furthermore, if approved, one of our own product candidates may be used off-label in the market for another of our product candidates, adversely affecting the sales of that product candidate.

Government Regulation and Product Approval

90 unchanged sentences

A Complete Response Letter usually describes all of the specific deficiencies in the NDA identified by the FDA.

The Complete Response Letter may require additional clinical data and/or (an) additional pivotal Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing.

manufacturing.

If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application.

31 unchanged sentences

In addition, sponsors who choose not to submit a Rare Pediatric Disease Designation request may nonetheless receive a priority review voucher if they request such a voucher in their original marketing application and meet all of the eligibility criteria.

Congress has only authorized the Rare Pediatric Disease Priority Review Voucher program until September 30, 2020.

However, if a drug candidate receives Rare Pediatric Disease Designation before October 1, 2020, it is eligible to receive a voucher if it is approved before October 1, 2022.

Expedited Development and Review Programs

57 unchanged sentences

Although we currently do not have any products on the market, we are and, upon approval and commercialization, will be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.

In the United States, such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security, price reporting, and physician sunshine laws and regulations.

In the United States, such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security, price reporting, and health care provider sunshine laws and regulations.

The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.

7 unchanged sentences

Additionally, the intent standard under the Anti-Kickback Statute and the criminal healthcare fraud statutes (discussed below) was amended by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “Affordable Care Act”), to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act (discussed below).

In addition, the Affordable Care Act codified case law that a claim including items or

services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act (discussed below).

The federal False Claims Act, as well as the civil monetary penalty law, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to, or approval by, the federal government or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

4 unchanged sentences

Also, many states have similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

Additionally, the federal Physician Payments Sunshine Act within the Affordable Care Act, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) annually report information related to certain payments or other transfers of value made or distributed to physicians, as defined by such law, and teaching hospitals, certain ownership and investment interests held by physicians and their immediate family members.

Beginning in 2022, applicable manufacturers will also be required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives.

Additionally, the federal Physician Payments Sunshine Act within the Affordable Care Act, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) annually report information related to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, certain ownership and investment interests held by physicians and their immediate family members.

Beginning in 2022, applicable manufacturers will also be required to report such information regarding payments and transfers of value provided during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists and certified nurse-midwives.

We may also be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business.

4 unchanged sentences

We also are or will become subject to privacy laws in the jurisdictions in which we are established or in which we sell or market our products or run clinical trials.

For example, in relation to our European Union-based clinical trials, we are subject to Regulation (EU) 2016/679, the General Data Protection Regulation (“GDPR”), in relation to our collection, control, processing and other use of personal data (i.e.

For example, in relation to clinical trials in Europe, we are subject to Regulation (EU) 2016/679, the General Data Protection Regulation and similar laws in European countries outside of the EU (collectively, the “GDPR”), in relation to our collection, control, processing and other use of personal data (i.e.

data relating to an identifiable living individual).

We process personal data in relation to participants in our clinical trials in the European Economic Area, including the health and medical information of these participants.

The GDPR is directly applicable in each European Union Member State, however, it provides that European Union Member States may introduce further conditions, including limitations which could limit our ability to collect, use and share personal data (including health and medical information), or could cause our compliance costs to increase, ultimately having an adverse impact on our business.

The GDPR imposes onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework.

The GDPR also provides that European Union Member States may introduce further conditions, including limitations which could limit our ability to collect, use and share personal data (including health and medical information), or could cause our compliance costs to increase, ultimately having an adverse impact on our business.

The GDPR imposes onerous accountability obligations requiring data controllers and processors to

maintain a record of their data processing and implement policies as part of its mandated privacy governance framework.

It also requires data controllers to be transparent and disclose to data subjects (in a concise, intelligible and easily accessible form) how their personal information is to be used, imposes limitations on retention of personal data;

3 unchanged sentences

We are also subject to European Union rules with respect to cross-border transfers of personal data out of the European Union and European Economic Area.

We are subject to the supervision of local data protection authorities in those European Union jurisdictions where we are established or otherwise subject to the GDPR, and we maintain an office in Switzerland, which has its own set of stringent privacy and data protection laws and regulations.

We are subject to the supervision of local data protection authorities in those European Union jurisdictions where we are established or otherwise subject to the GDPR, and we maintain an office in Switzerland, which has similar privacy and data protection laws and regulations.

Fines for certain breaches of the GDPR are significant:

1 unchanged sentence

In addition to the foregoing, a breach of the GDPR or other applicable privacy and data protection laws and regulations could result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, or potential civil claims including class action type litigation.

In addition, California recently enacted the California Consumer Privacy Act (“CPPA”), which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling certain personal data of consumers or households.

The CCPA will require covered companies to provide new disclosure to consumers about such companies’ data collection, use and sharing practices, provide such consumers new ways to opt-out of certain sales or transfers of personal information, and provide consumers with additional causes of action.

The CCPA became effective January 1, 2020, and the California Attorney General may bring enforcement actions for violations beginning July 1, 2020.

The CCPA was amended on September 23, 2018, and it remains unclear what, if any, further modifications will be made to this legislation or how it will be interpreted.

As currently written, the CCPA may impact our business activities and exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.

In addition, California recently enacted the California Consumer Privacy Act (“CCPA”), which requires covered companies to provide new disclosures to California residents and honor their requests to access, delete and opt-out of certain sharing of their personal data.

The CCPA, which took effect on January 1, 2020, provides for civil penalties for violations and statutory damages for certain data breaches.

The CCPA will expand substantially as a result of California voters approving a November 2020 ballot measure that adopted the California Privacy Rights Act of 2020, which will, among other things, create a new administrative agency to implement and enforce California’s privacy laws effective January 1, 2023.

While certain clinical trial activities are exempt from the CCPA’s requirements, other personal information that we handle may be subject to the CCPA, which may increase our compliance costs, exposure to regulatory enforcement action and other liabilities.

In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of pharmaceutical products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state.

48 unchanged sentences

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

There remain judicial and Congressional challenges to certain aspects of the Affordable Care Act, as well as recent efforts by the Trump administration to repeal or replace certain aspects of the Affordable Care Act.

For example, the Tax Act was enacted, which includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a U.S.

There have been executive, judicial and Congressional challenges to certain aspects of the Affordable Care Act.

For example, the Tax Act was enacted, which included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a U.S.

District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the Affordable Care Act are invalid as well.

1 unchanged sentence

Court of Appeals for the 5th Circuit ruled that that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

It is unclear how these decisions, future decisions and subsequent appeals, if any, and other efforts to repeal and replace the Affordable Care Act will impact the Affordable Care Act and our business.

Supreme Court is currently reviewing this case, but it is unknown when a decision will be reached.

Although the Supreme Court has not yet ruled on the constitutionality of the Affordable Care Act, on January 28, 2021, the current administration issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the Affordable Care Act.

It is unclear how the Supreme Court ruling, other such litigation and the healthcare reform measures of the current administration will impact the Affordable Care Act and our business.

Other legislative changes have also been proposed and adopted in the United States since the Affordable Care Act was enacted.

On August 2, 2011, the Budget Control Act of 2011, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030 unless additional Congressional action is taken.

However, COVID-19 relief legislation suspended the 2% Medicare sequester from

May 1, 2020 through March 31, 2021.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years .

There has been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which has resulted in several Congressional inquiries and proposed federal legislation, as well as state efforts, designed to, among other things, bring more transparency to product pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products

At the federal level, the Trump administration’s budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients and increase patient access to lower-cost generic and biosimilar drugs .

Additionally, on May 11, 2018, President Trump laid out his administration’s “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

Department of Health and Human Services has solicited feedback on some of these measures and, at the same time, has implemented others under its existing authority.

For example, in May 2019, Centers for Medicare & Medicaid Services (“CMS”), issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

Although some of these and other proposals may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

At the federal level, the previous administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives.

For example, on July 24, 2020 and September 13, 2020, the previous administration announced several executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals.

The FDA also released a final rule, effective November 30, 2020, implementing a portion of the importation executive order providing guidance for states to build and submit importation plans for drugs from Canada.

Further, on November 20, 2020, the U.S.

Department of Health and Human Services finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The implementation of the rule has been delayed by the current administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed pending review by the current administration until March 22, 2021.

On November 20, 2020, Centers for Medicare & Medicaid Services issued an interim final rule implementing the previous administration’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

I t is unclear what additional reform measures, if any, will be taken by the current administration related to drug pricing reform on a federal level .

At the state level, individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

5 unchanged sentences

In addition, it is possible that there will be further legislation or regulation that could harm our business, financial condition, and results of operations.

Further, it is possible that additional governmental action will be taken in response to the COVID-19 pandemic.

Foreign Corrupt Practices Act

1 unchanged sentence

individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.

The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Europe / Rest of World Government Regulation

6 unchanged sentences

In all cases, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

To obtain regulatory approval of an investigational drug or biological product under European Union regulatory systems, we must submit a marketing authorization application either under the so-called centralized or national authorization procedures.

To obtain regulatory approval of an investigational drug or biological product under European Union regulatory systems, we must submit an MAA either under the so-called centralized or national authorization procedures.

Centralized procedure.

11 unchanged sentences

In addition, orphan drug designation can be granted if the drug is intended for a life threatening or chronically debilitating condition in the European Union and without incentives it is unlikely that sales of the drug in the European Union would be sufficient to justify the investment required to develop the drug.

Orphan drug designation is only available if there is no other satisfactory method approved in the European Union of diagnosing, preventing or treating the condition, or if such a method exists, the proposed orphan drug will be of significant benefit to patients.

Orphan drug designation provides opportunities for free or reduced-fee protocol assistance, fee reductions for marketing authorization applications and other post-authorization activities and ten years of market exclusivity following drug approval, which can be extended to 12 years if trials are conducted in accordance with an agreed-upon pediatric investigational plan.

Orphan drug designation is only available if there is no other satisfactory method approved in the European

Union of diagnosing, preventing or treating the condition, or if such a method exists, the proposed orphan drug will be of significant benefit to patients.

Orphan drug designation provides opportunities for free or reduced-fee protocol assistance, fee reductions for MAAs and other post-authorization activities and ten years of market exclusivity following drug approval, which can be extended to 12 years if trials are conducted in accordance with an agreed-upon pediatric investigational plan.

The exclusivity period may be reduced to six years if the designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

2 unchanged sentences

If we or our potential collaborators fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Human Capital Management

As of December 31, 2020, we employed 68 employees, all of whom are full-time, consisting of clinical, research, operations, finance and business development personnel.

Eight of our employees hold Ph.D.

Seventeen of our employees hold Ph.D.

Further, 61 of our employees are located in the United Sates, and seven are located in Switzerland.

None of our employees is subject to a collective bargaining agreement.

We consider our relationship with our employees to be good.

We expect to continue to add employees in 2021, with a focus on clinical, research and development and commercialization activities.

We continually evaluate the business need and opportunity to expand our team and balance in-house expertise and capacity with outsourced expertise and capacity.

Currently, we outsource substantial clinical trial work to clinical research organizations and drug manufacturing to contract manufacturers.

We maintain a safety culture grounded on the premise of eliminating workplace incidents, risks and hazards.

In response to COVID-19, we have implemented and continue to enhance safety measures in all our facilities, including:

Making work-from-home the default for all employees.

Establishing clear and regular COVID-19 policies, safety protocols and updates to all employees.

If employees are required to work from an office location:

implementing daily health attestations and capacity management;

providing additional personal protective equipment and cleaning supplies;

increasing cleaning and sanitization protocols across all locations;

requiring face coverings to be worn in all locations.

Prohibiting all work-related domestic and international non-essential travel for all employees.

We believe our success depends on our ability to attract, develop and retain key personnel.

We invest in the growth and development of our employees through various training and development programs that build and strengthen employees’ leadership and professional skills.

We also have processes in place to conduct activities like performance management, succession and workforce planning in order to support our employees in their growth and development and ensure we provide learning opportunities.

To continually assess and improve our employee retention and engagement, we conduct an engagement survey on a regular basis, the results of which are discussed with our board of directors, at all-hands employee meetings and

in individual functions.

We take actions to address areas of employment concern and follow up routinely to share with employees what we are doing.

We strive toward having a diverse team of employees and are committed to equality, inclusion and workplace diversity.

To accomplish this, we have included questions in our engagement survey to measure employee perception of inclusive culture.

In 2020, we established a Culture Team consisting of four employees across a representative cross-section of departments.

Amongst other initiatives, our Culture Team engages in continual discussions across the various business functions to identify potential actions to address areas of improvement and is focused on building accountability across the organization to ensure we meet our diversity objectives.

Corporate Information

15 unchanged sentences

We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Ris k Factors.

An investment in shares of our common stock involves a high degree of risk.

You should carefully consider the following risk factors, as well as the other information in this Annual Report, before deciding whether to purchase, hold or sell shares of our common stock.

The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this Annual Report and those we may make from time to time.

You should consider all of the risk factors described when evaluating our business.

Risks Related to Our Business and Industry

We have a very limited operating history, and we have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

We were incorporated in May 2018 and commenced operations in November 2018, and we have a very limited operating history upon which you can evaluate our business and prospects.

Our operations to date have been primarily focused on acquiring and in-licensing our product candidates, maralixibat and volixibat, organizing and staffing our company, business planning, raising capital, and preparing for advancement of our product candidates into clinical development.

As we build our capabilities and expand our organization, we have not yet demonstrated an ability to overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area.

We have not yet demonstrated an ability to obtain regulatory approval for, or to commercialize, a product candidate.

In particular, because we acquired each of our product candidates from third-parties, we have not yet completed a clinical trial as a company.

Consequently, any predictions about our future performance may not be as accurate as they would be if we had a history of successfully developing and commercializing biopharmaceutical products.

Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effectiveness in the targeted indication or an acceptable safety profile, gain regulatory approval and become commercially viable.

We have no products approved for commercial sale and have not generated any revenue to date, and we continue to incur significant research and development and other expenses related to our ongoing operations.

As a result, we are not profitable and have incurred significant losses since our inception in May 2018.

For the year ended December 31, 2019 and for the period from May 2, 2018 to December 31, 2018, we reported a net loss of $52.6 million and $17.3 million, respectively.

As of December 31, 2019, we had an accumulated deficit of $69.9 million.

We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our clinical development of, and seek regulatory approvals for, our product candidates.

We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues.

Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

Because of the numerous risks and uncertainties associated with drug development, we are unable to accurately predict the timing or amount of increased expenses, or when, if at all, we will be able to achieve profitability.

Our business is dependent on the success of our product candidates, each of which require significant clinical testing before we can seek regulatory approval and potentially launch commercial sales.

Our business and future success depends on our ability to obtain regulatory approval for, and then successfully commercialize, maralixibat, which is currently in clinical development for the treatment of PFIC and ALGS, both of which are rare pediatric cholestatic liver diseases, and volixibat, which we are planning to develop for the treatment of adult cholestatic liver diseases.

We currently generate no revenues from sales of any of our product candidates, and we may never be able to develop a marketable product.

Our product candidates will require clinical development, regulatory review and approval in multiple jurisdictions, substantial investment, access to sufficient manufacturing capacity and significant marketing efforts before we can generate any revenues from product sales.

Further, we are not permitted to market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approvals.

Our clinical trials may not be successful and may not be completed on time or at all, and the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials.

For example, in certain of our planned and ongoing clinical trials, the primary efficacy endpoint is a patient-reported outcome or a caregiver-reported outcome measuring the decrease in severity of pruritus.

The FDA or comparable foreign regulatory authority may not accept such patient-reported outcomes or caregiver-reported outcomes as validated.

If modifications are needed for our study design to support the submission of an application for marketing approval, incorporating such modifications may be costly and could lead to delays in obtaining approval from the FDA or comparable foreign regulatory authorities, which may significantly, adversely and materially affect our ability to successfully commercialize our product candidates.

Further, even if we make changes to the study design to address these considerations, the FDA or comparable foreign regulatory authorities may not approve our product candidates.

Even if such regulatory authorities agree with the design and implementation of our clinical trials, such regulatory authorities may change their requirements in the future.

In addition, even if the clinical trials are successfully completed, the FDA or foreign regulatory authorities may not interpret the results as we do, and more clinical trials could be required before we submit our product candidates for approval.

For example, the FDA typically requires results from two well controlled Phase 3 clinical trials to support an NDA submission seeking approval to market a new drug.

Based on interactions with the FDA, we believe that the results from a single Phase 3 clinical trial, if successful, would be sufficient to support an NDA submission seeking approval for maralixibat for the treatment of PFIC;

however, the FDA may not agree to this approach.

Even if we believe the results from our Phase 3 clinical trials are positive, the FDA may require us to conduct additional Phase 3 trials before we are able to submit one or more NDAs.

Moreover, based on interactions with the FDA, we believe that clinical data of maralixibat in PFIC paired with adequate natural history data may be adequate to support an NDA filing for a general PFIC indication rather than the treatment of pruritus associated with PFIC;

however, the FDA has not agreed to this approach but has indicated that efficacy data of the Phase 3 MARCH clinical trial, if positive, may be adequate to support an NDA submission for the treatment of pruritus associated with nt-PFIC2.

If we are unable to obtain adequate natural history data or the FDA does not view such data as sufficient to support approval for a general PFIC indication, the NDA submission for maralixibat may be limited to the treatment of pruritus associated with nt-PFIC2.

Further, we are also conducting an analysis of our long-term treatment data in PFIC against a natural history control group in conjunction with the NAPPED Consortium and plan to share these results with regulators in 2020.

Regulatory authorities may not view such analysis as sufficient to support approval.

In May 2019, we had an end-of-Phase 2 meeting with the FDA to discuss the adequacy of the current data set of maralixibat to support an NDA submission for the treatment of pruritus associated with ALGS.

In October 2019, the FDA requested that we convert the meeting to a pre-NDA meeting and discuss the components and timeline of an NDA submission.

We expect the NDA submission to be complete in the first quarter of 2021, which will include the submission of the FDA requested CMC data, including requested stability data.

These projected timings are dependent on successful completion of various non-clinical and clinical activities, availability and analysis of clinical data and completion of registration batches by manufacturers, as well as generating acceptable stability data.

In addition, an NDA must be supported by extensive clinical and preclinical data, as well as extensive information regarding pharmacology and CMC.

The FDA may disagree with our interpretation of such data and information, which may require us to complete additional activities.

As a result, FDA approval of maralixibat for pruritus associated with ALGS may be delayed and we may be required to expend significant additional resources seeking such approval.

Moreover, although we are in the process of discussing our planned ALGS registrational program with the European Medicines Agency, or EMA, we have not reached agreement, and the EMA may not accept our currently proposed ALGS registrational program.

To the extent that the results of our clinical trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, approval for our product candidates may be significantly delayed or prevented, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional clinical trials in support of potential approval for our product candidates.

Even if we are able to obtain approval for any product candidate, the approved label may be limited to a symptom of the target disease, such as pruritus, or subset of the patient population, such as patients with nt-PFIC2.

If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.

For example, each indication for which we are evaluating maralixibat and volixibat is a rare cholestatic liver disease with limited patient populations from which to draw participants in clinical trials.

We will be required to identify and enroll a sufficient number of patients with the disease under investigation for each of our ongoing and planned clinical trials of maralixibat and volixibat.

Potential patients may not be adequately diagnosed or identified with the diseases which we are targeting or may not meet the entry criteria for our studies.

For example, many patients with PFIC seek liver transplants early and as a result become ineligible for our treatment.

In addition, for example, in PFIC, we intend to conduct clinical trials in countries that have not yet had maralixibat trials conducted and we have not yet worked with such foreign regulatory authorities.

As a result, we could face patient recruitment issues in certain countries where such foreign regulatory authorities are not familiar with maralixibat.

Additionally, other pharmaceutical companies targeting these same cholestatic liver diseases are recruiting clinical trial patients from these patient populations, which may delay or make it more difficult to fully enroll our clinical trials.

Our inability to enroll a sufficient number of patients for any of our current or future clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

We believe we have appropriately accounted for the above factors in our trials when determining expected clinical trial timelines, but our assumptions may not be correct and we may experience delays in enrollment, which would result in the delay of completion of such trials beyond our expected timelines.

Our clinical trials may fail to adequately demonstrate the safety and efficacy of our product candidates, which could prevent or delay regulatory approval and commercialization.

Before obtaining regulatory approvals for the commercial sale of a product candidate, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that a product candidate is both safe and effective for use in each target indication.

Clinical trials often fail to demonstrate safety and efficacy of the product candidate studied for the target indication.

Most product candidates that commence clinical trials are never approved by regulatory authorities for commercialization.

In the case of maralixibat and volixibat, we are seeking to develop treatments for rare cholestatic liver diseases for which there is limited clinical experience, and our planned clinical trials use novel end points and measurement methodologies, which add complexity to the conduct of and analysis of data from our clinical trials and may delay or prevent regulatory approval.

Importantly, because the measure of pruritus relies on subjective patient feedback, it is inherently difficult to evaluate, and is subject to placebo effect.

It can be influenced by factors outside of our control and can vary widely from day to day for a particular patient, and from patient to patient and site to site within a clinical trial.

The placebo effect may also have a significant impact on pruritus trials.

Clinical drug development involves a lengthy and expensive process with uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.

Failure can occur at any time during the clinical trial process.

The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials.

Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials.

For example, volixibat has been evaluated primarily for the treatment of non-alcoholic steatohepatitis and has not been evaluated in PSC or ICP, and our clinical development strategy is predicated on observations of ASBT inhibition in cholestatic settings.

Similarly, maralixibat has not yet been evaluated in BA or in subjects under 12 months of age.

As such, our hypothesis of efficacy in these diseases will be evaluated in these target patient populations and may not show the desired clinical results.

A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to

lack of efficacy or safety profiles, notwithstanding promising results in earlier trials.

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses.

For example, in the Phase 2 INDIGO clinical trial evaluating maralixibat in PFIC patients, the primary efficacy analysis of sBA change from baseline to week 13 did not reach statistical significance for the overall group;

however, a 48-week analysis of the clinical trial demonstrated a profound treatment response in a subset of patients with nt-PFIC2.

In addition, we do not have experience in conducting placebo-controlled studies for PFIC, and we expect to administer higher doses of maralixibat than we previously have administered in this setting.

We may face significant setbacks as we initiate and conduct our placebo-controlled Phase 3 clinical trial in PFIC, which may delay or prevent regulatory approval of maralixibat.

Our planned clinical trials may not be successful, and any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in other indications.

Any delays in the commencement or completion, or termination or suspension, of our clinical trials could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

Before we can initiate clinical trials for our product candidates, we must submit the results of preclinical studies to the FDA or comparable foreign regulatory authorities along with other information, including information about product candidate CMC and our proposed clinical trial protocol, as part of an IND application or similar regulatory filing.

Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate the safety and efficacy of the product candidates in humans.

Clinical testing is expensive, time consuming and uncertain as to outcome.

In addition, we may rely in part on preclinical, clinical and quality data generated by clinical research organizations (“CROs”), and other third parties for regulatory submissions for our product candidates.

While we have or will have agreements governing these third parties’ services, we have limited influence over their actual performance.

If these third parties do not make data available to us, or, if applicable, do not make regulatory submissions in a timely manner, in each case pursuant to our agreements with them, our development programs may be significantly delayed, and we may need to conduct additional studies or collect additional data independently.

In either case, our development costs would increase.

We do not know whether our planned clinical trials will begin on time or be completed on schedule, if at all.

The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials or agreement to commence our clinical trials;

the FDA or comparable foreign regulatory authorities’ failure to accept our proposed manufacturing processes and suppliers and/or requirement to provide additional information regarding our manufacturing processes before providing marketing authorization;

any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

obtaining approval from one or more IRBs;

IRBs refusing to approve, suspending or terminating the clinical trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the clinical trial;

changes to clinical trial protocol;

selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data;

sites deviating from clinical trial protocol or dropping out of a clinical trial;

manufacturing sufficient quantities of product candidate or obtaining sufficient quantities of combination therapies for use in clinical trials;

subjects failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up;

subjects choosing an alternative treatment for the indication for which we are developing our product candidates, or participating in competing clinical trials;

lack of adequate funding to continue the clinical trial;

subjects experiencing severe or unexpected drug-related adverse effects;

occurrence of SAEs in clinical trials of the same class of agents conducted by other companies;

a facility manufacturing our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process;

any changes to our manufacturing process, suppliers or formulation that may be necessary or desired;

third-party vendors not performing manufacturing and distribution services in a timely manner or to sufficient quality standards;

third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, GCP, or other regulatory requirements;

third-party contractors not performing data collection or analysis in a timely or accurate manner;

third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.

In addition, we plan to advance maralixibat for the treatment of BA and initiate a clinical program in 2020.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or comparable foreign regulatory authorities.

Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes.

Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Further, conducting clinical trials in foreign countries, as we may do for our product candidates, presents additional risks that may delay completion of our clinical trials.

These risks include the failure of enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services.

Under certain circumstances, we may be required to report some of these relationships to the FDA or comparable foreign regulatory authorities.

The FDA or comparable foreign regulatory authority may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study.

The FDA or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.

This could result in a delay in approval, or rejection, of our marketing applications by the FDA or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.

If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed.

Moreover, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues.

In addition, many of the factors that cause, or lead to, termination or suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate.

Any delays to our clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced.

Any of these occurrences may harm our business, financial condition and prospects significantly.

Our product candidates are subject to extensive regulation and compliance, which is costly and time consuming, and such regulation may cause unanticipated delays or prevent the receipt of the required approvals to commercialize our product candidates.

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our product candidates are subject to extensive regulation by the FDA in the United States and by comparable foreign regulatory authorities in foreign markets.

In the United States, we are not permitted to market our product candidates until we receive regulatory approval from the FDA.

The process of obtaining regulatory approval is expensive, often takes many years following the commencement of clinical trials and can vary substantially based upon the type, complexity and novelty of the product candidates involved, as well as the target indications and patient population.

Approval policies or regulations may change, and the FDA has substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons.

Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.

Neither we nor any future collaborator is permitted to market any of our product candidates in the United States until we receive approval of an NDA from the FDA.

We have not previously submitted an NDA to the FDA, or similar drug approval filings to comparable foreign authorities.

Prior to obtaining approval to commercialize a product candidate in the United States or internationally, we must demonstrate with substantial evidence from adequate and well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidates are safe and effective for their intended uses.

Results from non-clinical studies and clinical trials can be interpreted in different ways.

Even if we believe the non-clinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and comparable foreign regulatory authorities.

The FDA or comparable foreign regulatory authorities, as the case may be, may also require us to conduct additional preclinical studies or clinical trials for our product candidates either prior to or post-approval, or may object to elements of our clinical development program.

Our product candidates could fail to receive regulatory approval for many reasons, including the following:

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials or the validation of our caregiver and patient reported outcome instruments;

serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates;

the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval;

the FDA or comparable foreign regulatory authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States;

we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for any of its proposed indications;

the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

the data collected from clinical trials of our product candidates may not be sufficient to satisfy the FDA or comparable foreign regulatory authorities to support the submission of an NDA or other comparable submissions in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;

the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies;

the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

Any of the above events could prevent us from achieving market approval of our product candidates and could substantially increase the costs of commercializing our product candidates.

The demand for our product candidates could also be negatively impacted by any adverse effects of a competitor’s product or treatment.

Of the large number of drugs in development, only a small percentage successfully complete the FDA or foreign regulatory approval processes and are commercialized.

The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects.

Even if we eventually complete clinical trials and receive approval of an NDA or foreign marketing application for our product candidates, the FDA or comparable foreign regulatory authority may grant approval contingent on the performance of costly additional clinical trials, including Phase 4 clinical trials, and/or the implementation of a REMS, which may be required to ensure safe use of the drug after approval.

The FDA or the comparable foreign regulatory authority also may approve a product candidate for a more limited indication or patient population than we originally requested, and the FDA or comparable foreign regulatory authority may not approve the labeling that we believe is necessary or desirable for the successful commercialization of a product.

Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of that product candidate and would materially adversely impact our business and prospects.

If the market opportunities for our product candidates are smaller than we believe they are, our future revenue may be adversely affected, and our business may suffer.

If the size of the market opportunities in each of our target indications is smaller than we anticipate, we may not be able to achieve profitability and growth.

We focus our clinical development of maralixibat on treatments for rare pediatric cholestatic liver diseases with relatively small patient populations.

Given the small number of patients who have the diseases that we are targeting with maralixibat, it is critical to our ability to grow and become profitable that we continue to successfully identify patients with these rare pediatric cholestatic liver diseases.

We also plan to focus our clinical development of volixibat as a treatment for PSC or ICP with a relatively small patient population.

In addition, our estimates of the patient populations for our target indications have been derived from a variety of sources, including the scientific literature, surveys of clinics, patient foundations, and market research, and may prove to be incorrect.

Further, new studies may change the estimated incidence or prevalence of these diseases.

The number of patients may turn out to be lower than expected.

For example, while we are evaluating maralixibat in patients with different types of PFIC in our Phase 3 MARCH clinical trial, in prior studies of maralixibat, the Phase 2 INDIGO clinical trial in particular, all of the multi-parameter responders were in the nt-PFIC2 subpopulation.

Further, the primary endpoint in our Phase 3 MARCH clinical trial is designed to evaluate maralixibat’s effect on pruritus associated with nt-PFIC2.

As such, even if our Phase 3 MARCH clinical trial shows positive results in other PFIC subgroups, the design of our clinical trial may limit the ability of our NDA to be approved beyond the nt-PFIC2 population, if at all.

The effort to identify patients with diseases we seek to treat is in early stages, and we cannot accurately predict the number of patients for whom treatment might be possible.

Additionally, the potentially addressable patient population for each of our product candidates may be limited or may not be amenable to treatment with our product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business.

Further, even if we obtain significant market share for our product candidates, because the potential target populations are very small, we may never achieve profitability despite obtaining such significant market share.

Lastly, the potentially addressable patient population for PFIC and ALGS may even be further reduced as gene therapy products become more widely accepted and approved.

Obtaining and maintaining regulatory approval for a product candidate in one jurisdiction does not mean that we will be successful in obtaining regulatory approval for that product candidate in other jurisdictions.

Obtaining and maintaining regulatory approval for a product candidate in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others.

For example, even if the FDA grants marketing approval for a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries.

Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.

In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction.

In some cases, the price that we intend to charge for our product candidates is also subject to approval.

We expect to submit a Marketing Authorization Application (“MAA”) to the EMA for approval for maralixibat and volixibat in the European Union.

As with the FDA, obtaining approval of an MAA from the EMA is a similarly lengthy and expensive process and the EMA has its own procedures for approval for product candidates.

Regulatory authorities in jurisdictions outside of the United States and the European Union also have requirements for approval for product candidates with which we must comply prior to marketing in those jurisdictions.

Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our product candidates in certain countries.

If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of any of our product candidates will be harmed, which would adversely affect our business, prospects, financial condition and results of operations.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval or result in significant negative consequences following marketing approval, if any.

As is the case with biopharmaceuticals generally, it is likely that there may be side effects and adverse events associated with our product candidates’ use.

Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities.

For example, we have observed increases in ALT levels in certain patients being treated with maralixibat with ALGS.

In addition, we intend to use higher doses of maralixibat and volixibat in future clinical trials.

The use of higher doses could result in more frequent or more severe side effects.

Furthermore, only patients 12 months of age and older have been treated with maralixibat, and the safety profile in patients under 12 months of age is unknown and may be different than that observed in previous clinical trials.

Results of our trials could reveal a high and unacceptable severity and prevalence of these or other side effects.

In prior clinical studies of maralixibat, the most commonly reported AEs and SAEs have been those of GI disorders such as diarrhea, abdominal pain and vomiting, and were mostly mild to moderate in severity and transient in nature.

Reported treatment-related SAEs have consisted of abdominal pain, upper abdominal pain, diarrhea, cholangitis, increase in blood bilirubin, increase in international normalized ratio, increase in pancreatitis, elevated ALT, autoimmune hepatitis, hematochezia, pure red cell aplasia, myelodysplastic syndrome and anemia.

The frequency of observed AEs and SAEs has not increased over time.

In Phase 1 clinical trials of volixibat, the most common AEs reported were mild to moderate GI events observed in the volixibat groups.

The only treatment-related SAE reported was one event of elevated ALT.

In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval for our product candidates for any or all targeted indications.

The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims.

Any of these occurrences may harm our business, financial condition and prospects significantly.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such product candidates, a number of potentially significant negative consequences could result, including:

regulatory authorities may withdraw approvals of such product;

regulatory authorities may require additional warnings on the label;

we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;

we could be sued and held liable for harm caused to patients;

our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.

If we receive regulatory approval for a product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with any product.

Any regulatory approvals that we receive may be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including post-market studies or clinical trials, and surveillance to monitor safety and effectiveness.

The FDA may also require a REMS in order to approve a product candidate, which could entail requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

In addition, if the FDA or a comparable foreign regulatory authority approves a product candidate, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for the approved product will be subject to extensive and ongoing regulatory requirements.

For example, the FDA strictly regulates the promotional claims that may be made about drug products.

In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling.

The FDA also requires submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP requirements and GCP for any clinical trials that we conduct post-approval.

Later discovery of previously unknown problems with a product candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;

fines, warning letters or holds on clinical trials;

refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals;

product seizure or detention, or refusal to permit the import or export of a product;

injunctions or the imposition of civil or criminal penalties.

The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity.

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval for our product candidates.

If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

We may pursue approval in the United States or Europe using accelerated approval or conditional approval pathways, which typically require commitments to complete additional clinical trials.

The additional clinical trials may not confirm the treatment effect, which may result in the loss of marketing authorization under accelerated approval or conditional approval.

Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes.

Average review times at the agency have fluctuated in recent years as a result.

In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.

If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Even if we obtain regulatory approval for our product candidates, our product candidates may not gain market acceptance among physicians, patients, tertiary care centers, transplant centers and others in the medical community.

If any one of our product candidates is approved for commercialization, its acceptance will depend on a number of factors, including:

the clinical indications for which the product candidate is approved;

physicians, major operators of tertiary care centers and transplant centers and patients considering the product as a safe and effective treatment;

the potential and perceived advantages of the product over alternative treatments;

the prevalence and severity of any side effects;

product labeling or product insert requirements of the FDA or other regulatory authorities, including, in particular, whether the approved label is limited to the treatment of symptoms, such as pruritus, as compared to the treatment of the underlying disease;

limitations or warnings contained in the labeling approved by the FDA or other regulatory authorities;

the timing of market introduction of the product as well as competitive products;

the cost of treatment in relation to alternative treatments;

the availability of coverage and adequate reimbursement by third-party payors and government authorities;

the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities;

relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies;

the effectiveness of our sales and marketing efforts.

If any of our product candidates are approved but fail to achieve market acceptance among physicians, patients or others in the medical community, we will not be able to generate significant revenues, which would have a material adverse effect on our business, prospects, financial condition and results of operations.

In addition, even if any of our product candidates gain acceptance, the markets for the treatment of patients with our target indications for maralixibat may not be as significant as we estimate.

If our product candidates are approved for marketing, and we are found to have improperly promoted off-label uses, or if physicians prescribe our products or use our products off-label, we may become subject to prohibitions on the sale or marketing of our products, significant fines, penalties, sanctions, or product liability claims, and our image and reputation within the industry and marketplace could be harmed.

The FDA and comparable foreign authorities strictly regulate the marketing and promotional claims that are made about pharmaceutical products, such as our product candidates, if approved.

In particular, a product may not be promoted for uses or indications that are not approved by the FDA or comparable foreign authorities as reflected in the product’s approved labeling.

If we receive marketing approval for maralixibat, physicians could prescribe maralixibat to their patients in a manner that is inconsistent with the approved label.

If we are found to have promoted such off-label uses, we may receive warning letters from the FDA and comparable foreign authorities and become subject to significant liability, which would materially harm our business.

The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion.

If we become the target of such an investigation or prosecution based on our marketing and promotional practices, we could face similar sanctions, which would materially harm our business.

In addition, management’s attention could be diverted from our business operations, significant legal expenses could be incurred, and our reputation could be damaged.

The FDA has also required that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed in order to resolve FDA enforcement actions.

If we are deemed by the FDA to have engaged in the promotion of our products for off-label use, we could be subject to FDA prohibitions or other restrictions on the sale or marketing of our products and other operations or significant fines and penalties, and the imposition of these sanctions could also affect our reputation and position within the industry.

Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates which could make it difficult for us to sell our product candidates profitably.

Successful sales of our product candidates, if approved, depend on the availability of coverage and adequate reimbursement from third-party payors.

Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs.

Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance, and we may not obtain such coverage or adequate reimbursement.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs they will cover and the amount of reimbursement they will provide.

Reimbursement by a third-party payor may depend upon a number of factors, including, but not limited to, the third-party payor’s determination that use of a product is:

a covered benefit under its health plan;

safe, effective and medically necessary;

appropriate for the specific patient;

cost-effective;

neither experimental nor investigational.

Obtaining coverage and reimbursement approval for a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data for the use of our products.

We may not be able to provide data sufficient to obtain coverage and adequate reimbursement.

Assuming we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high.

Patients are unlikely to use our product candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our product candidates.

Additionally, the reimbursement rates and coverage amounts may be affected by the approved label for our product candidates, including, in particular, whether the approved label is limited to the treatment of symptoms, such as pruritus, as compared to the treatment of the underlying disease.

If coverage and reimbursement of our future products are unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability.

In addition, the market for our products will depend significantly on access to third-party payors’ drug formularies or lists of medications for which third-party payors provide coverage and reimbursement.

The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies.

Also, third-party payors may refuse to include a particular branded drug in their formularies or otherwise restrict patient access through formulary controls or otherwise to a branded drug when a less costly generic equivalent or other alternative is available.

In the United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors.

Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations.

Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

We intend to seek approval to market our product candidates in both the United States and in selected foreign jurisdictions.

If we obtain approval in one or more foreign jurisdictions for a product candidate, we will be subject to rules and regulations in those jurisdictions.

In some foreign countries, particularly those in the European Union, the pricing of prescription pharmaceuticals and biologics is subject to governmental control.

In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval for a drug candidate.

In addition, market acceptance and sales of a product will depend significantly on the availability of coverage and adequate reimbursement from third-party payors for a product and may be affected by existing and future health care reform measures.

Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to obtain marketing approval for and commercialize our product candidates and may affect the prices we may set.

In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

In particular, there have been and continue to be a number of initiatives at the U.S.

federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.

For example, in March 2010, the Affordable Care Act, was enacted in the United States.

Among the provisions of the Affordable Care Act of importance to our potential product candidates, the Affordable Care Act:

established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents;

expanded eligibility criteria for Medicaid programs;

increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;

creates a new Medicare Part D coverage gap discount program;

established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research;

and established a Center for Medicare & Medicaid Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.

At this time, we are unsure of the full impact that Affordable Care Act will have on our business.

There remain judicial and Congressional challenges to certain aspects of the Affordable Care Act, as well as efforts by the Trump administration to repeal or replace certain aspects of the Affordable Care Act and we expect such challenges and amendments to continue.

The Tax Cuts and Jobs Act of 2017 (“Tax Act”) was signed into law, which included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a Texas U.S.

District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act.

Additionally, on December 18, 2019, the U.S.

Court of Appeals for the 5 th Circuit ruled that that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

It is unclear how these decisions, future decisions, subsequent appeals, and other efforts to repeal and replace the Affordable Care Act will impact the Affordable Care Act and our business.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, including the Bipartisan Budget Act of 2018, will remain in effect through 2029 unless additional Congressional action is taken.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs.

Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

Department of Health and Human Services has solicited feedback on some of these measures and has implemented others under its existing authority.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.

This could reduce the ultimate demand for our product candidates, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.

We expect that the Affordable Care Act, these new laws and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from third-party payors.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates, if approved.

We currently have no marketing and sales organization and have no experience in marketing products.

If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to generate product revenues.

We currently do not have a commercial organization for the marketing, sales and distribution of pharmaceutical products.

To commercialize our product candidates we must build our marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services.

We expect that the majority of all PFIC and ALGS patients will be treated at tertiary care centers and transplant centers and therefore can be addressed with a targeted sales force.

We intend to build our own commercial infrastructure in North America and in major European markets to target these centers, but will evaluate opportunities to partner with pharmaceutical companies that have established sales and marketing capabilities to commercialize our product candidates, if approved, outside of these geographies.

The establishment and development of our own sales force or the establishment of a contract sales force to market our product candidates will be expensive and time-consuming and could delay any commercial launch.

Moreover, we may not be able to successfully develop this capability.

We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.

We also face competition in our search for third parties to assist us with the sales and marketing efforts of our product candidates.

To the extent we rely on third parties to commercialize our product candidates, if approved, we may have little or no control over the marketing and sales efforts of such third parties and our revenues from product sales may be lower than if we had commercialized our product candidates ourselves.

In the event we are unable to develop our own marketing and sales force or collaborate with a third-party marketing and sales organization, we would not be able to commercialize our product candidates.

A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business.

We plan to seek regulatory approval for our product candidates internationally and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including:

differing regulatory requirements in foreign countries, including differing reimbursement, pricing and insurance regimes;

the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts to import goods from a foreign market (with low or lower prices) rather than buying them locally;

unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;

economic weakness, including inflation, or political instability in particular foreign economies and markets;

compliance with tax, employment, immigration and labor laws for employees living or traveling internationally;

foreign taxes, including withholding of payroll taxes;

foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;

difficulties staffing and managing foreign operations;

workforce uncertainty in countries where labor unrest is more common than in the United States;

potential liability under the FCPA or comparable foreign regulations;

challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;

production shortages resulting from any events affecting raw material supply or manufacturing capabilities internationally;

business interruptions resulting from geo-political actions, including war and terrorism.

In addition, some countries, such as Brazil, require that clinical trial participants receive the product at no cost even after the clinical trial has ended.

We would not be able to recover any profit for these patients and depending on the number of patients, duration of the treatment and numerous other factors, such regulations could harm our business, prospects, financial condition and results of operations significantly.

These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations.

If we fail to develop and commercialize additional product candidates, we may be unable to grow our business.

Although we currently have no specific plans to do so, we may seek to develop and commercialize product candidates in addition to maralixibat and volixibat.

If we decide to pursue the development and commercialization of any additional product candidates, we may be required to invest significant resources to acquire or in-license the rights to such product candidates or to conduct drug discovery activities.

We do not currently have the necessary drug discovery personnel or expertise adequate to discover and develop an additional product candidate on our own.

Any other product candidates will require additional, time-consuming development efforts, and significant financial resources, prior to commercial sale, including preclinical studies, extensive clinical trials and approval by the FDA and applicable foreign regulatory authorities.

All product candidates are prone to the risks of failure that are inherent in pharmaceutical product development, including the possibility that the product candidate will not be shown to be sufficiently safe and/or effective for approval by regulatory authorities.

In addition, we may not be able to acquire, discover or develop any additional product candidates, and any additional product candidates we may develop may not be approved, manufactured or produced economically, successfully commercialized or widely accepted in the marketplace or be more effective than other commercially available alternatives.

Research programs to identify new product candidates require substantial technical, financial and human resources whether or not we ultimately identify any candidates.

If we are unable to develop or commercialize any other product candidates, our business and prospects will suffer.

If we fail to develop maralixibat and potentially other of our product candidates for additional indications, our commercial opportunity will be limited.

One of our strategies is to pursue clinical development of maralixibat in additional cholestatic disease conditions such as BA, post-liver transplant cholestasis, benign recurrent intrahepatic cholestasis and drug-induced cholestasis.

In addition, we plan to develop volixibat for the treatment of PSC and ICP.

The pediatric cholestatic liver diseases we are targeting are all rare diseases and, as a result, the market size for the treatment of patients with ALGS and PFIC is limited.

Due to these factors, our ability to grow revenues may be dependent on our ability to successfully develop and commercialize maralixibat for the treatment of additional indications.

Developing, obtaining regulatory approval and commercializing maralixibat for additional indications will require substantial additional funding and is prone to the risks of failure inherent in drug development.

We may not be able to successfully advance any of these indications through the development process.

Even if we receive regulatory approval to market maralixibat for the treatment of any of these additional indications, any such additional indications may not be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives.

If we are unable to successfully develop and commercialize maralixibat for these additional indications, our commercial opportunity will be limited.

We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.

The biopharmaceutical industry is characterized by intense competition and rapid innovation.

Although we believe that we hold a leading position in our focus on rare pediatric cholestatic liver diseases, our competitors may be able to develop other compounds or drugs that are able to achieve similar or better results.

Our potential competitors include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and universities and other research institutions.

Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations and well-established sales forces.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.

Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors.

Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries.

Our competitors may succeed in developing, acquiring or licensing on an exclusive basis drug products that are more effective or less costly than our product candidates.

We believe the key competitive factors that will affect the development and commercial success of our product candidates are efficacy, safety and tolerability profile, reliability, convenience of dosing, price and reimbursement.

Outside of surgery, there are no approved therapies for the treatment of ALGS or PFIC in the United States.

UDCA, which is approved for the treatment of PBC, is sometimes used to treat patients with other cholestatic liver diseases.

Cholestyramine and other bile salt resins, rifampin, and naltrexone are sometimes used to treat patients suffering from pruritus, and a number of drugs, including UDCA, rifampin and naltrexone are used off-label to treat patients suffering from cholestatic liver disease.

In addition, there are product candidates in development for some of these indications.

We are aware of two other companies pursuing clinical development of therapies that reduce sBA levels via the ASBT pathway.

GlaxoSmithKline plc and Albireo have ASBTis in clinical development for cholestatic liver diseases.

We are aware that Albireo has almost completed enrollment of a Phase 3 trial for PFIC1 and PFIC2 patients for odevixibat, and has an extension study enrolling PFIC patients.

Albireo has announced plans to pursue development in BA, ALGS and other cholestatic liver diseases.

We are aware that GlaxoSmithKline plc is conducting a Phase 2 trial of its ASBTi in PBC patients.

We are also aware that Intercept is exploring BA as an indication for obeticholic acid.

Further, we may compete with companies that are developing gene therapy for the treatment of PFIC.

In adult settings of cholestasis, similar to pediatric settings, cholestyramine, UDCA, rifampin and naltrexone are commonly used agents.

We are not aware of FDA approved therapeutics for the treatment of PSC or ICP.

We are aware of several agents in clinical development for the treatment of PSC, including Allergan plc’s cenicriviroc, DURECT Corporation’s DUR928, Gilead Sciences Inc.’s GS-9674, HighTide Biopharmaceutical Inc.’s HTD1801, Intercept’s Ocaliva, or obeticholic acid and NGM Biopharmaceuticals Inc.’s NGM282.

Furthermore, one of our own products, if approved, may be used off-label in the market for another of our products, if approved, adversely affecting the sales of such product.

Even though we have obtained orphan drug designation for maralixibat in PFIC and ALGS, we may not be able to obtain or maintain the benefits associated with orphan drug status, including market exclusivity.

Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs.

Under the Orphan Drug Act, the FDA may designate a drug as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population of greater than 200,000 individuals in the United States, but for which there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.

In the European Union, the EMA Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the European Union.

In September 2013, the FDA granted orphan drug status to maralixibat for the treatment of patients with PFIC and ALGS in the United States.

We also received orphan drug status for maralixibat for PFIC and ALGS in the European Union in January 2014.

Generally, if a drug with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such

designation, the drug may be entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing application for the same drug for that time period.

Another drug may receive marketing approval prior to our product candidates.

The applicable period is seven years in the United States and ten years in the European Union, which may be extended by six months and two years, respectively, in the case of product candidates that have complied with the respective regulatory agency’s agreed upon pediatric investigation plan.

The exclusivity period in the European Union can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified.

Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

In addition, even after a drug is granted orphan exclusivity and approved, the FDA can subsequently approve another drug for the same condition before the expiration of the seven-year exclusivity period if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

In the European Union, the EMA may deny marketing approval for a product candidate if it determines such product candidate is structurally similar to an approved product for the same indication.

For example, if a competing product is approved for ALGS or PFIC before maralixibat and is determined to be structurally similar by the EMA, maralixibat may be denied marketing authorization by EMA for that indication.

In addition, if an orphan designated product receives marketing approval for an indication broader than or different from what is designated, such product may not be entitled to orphan exclusivity.

Even though the FDA has granted orphan drug designation to maralixibat for the treatment of PFIC and ALGS, if we receive approval for maralixibat for a modified or different indication, our current orphan designations may not provide us with exclusivity.

Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

Also, regulatory approval for any product candidate may be withdrawn, and other product candidates may obtain approval before us and receive orphan drug exclusivity, which could block us from entering the market.

Even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the candidate from competition because different drugs can be approved for the same condition before the expiration of the orphan drug exclusivity period.

Although we have received a breakthrough therapy designation for maralixibat, this may not lead to a faster development, regulatory review or approval process, and it does not increase the likelihood that maralixibat will receive marketing approval in the United States.

We have received a breakthrough therapy designation for maralixibat for the treatment of PFIC2 and for the treatment of pruritus associated with ALGS in patients one year of age and older.

A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

For therapies that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens.

Therapies designated as breakthrough therapies by the FDA may also be eligible for priority review and accelerated approval.

The breakthrough therapy designation for maralixibat may not result in a faster development process, review or approval compared to therapies considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.

In addition, the FDA may later decide that maralixibat no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Although the FDA has granted Rare Pediatric Disease Designation for maralixibat for ALGS, an NDA for maralixibat, if approved, may not meet the eligibility criteria for a priority review voucher.

Rare Pediatric Disease Designation has been granted for maralixibat for ALGS.

In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications.

This provision is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases.

Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.

The sponsor of a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor.

The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application.

The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the U.S.

within one year following the date of approval.

For the purposes of this program, a “rare pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents;

and (b) rare disease or conditions within the meaning of the Orphan Drug Act.

Congress has only authorized the Rare Pediatric Disease Priority Review Voucher program until September 30, 2020.

However, if a drug candidate receives Rare Pediatric Disease Designation before October 1, 2020, it is eligible to receive a voucher if it is approved before October 1, 2022.

However, maralixibat for ALGS may not be approved by that date, or at all, and, therefore, we may not be in a position to obtain a priority review voucher prior to expiration of the program, unless Congress further reauthorizes the program.

Additionally, designation of a drug for a rare pediatric disease does not guarantee that an NDA will meet the eligibility criteria for a rare pediatric disease priority review voucher at the time the application is approved.

Finally, a Rare Pediatric Disease Designation does not lead to faster development or regulatory review of the product, or increase the likelihood that it will receive marketing approval.

We may or may not realize any benefit from receiving a voucher.

We may form or seek strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such alliances or licensing arrangements.

We may form or seek strategic alliances, create joint ventures or collaborations or enter into additional licensing arrangements with third parties that we believe will complement or augment our development and commercialization efforts with respect to maralixibat, volixibat and any future product candidates that we may develop.

We intend to establish commercial partnerships outside of North America and in major European markets.

Any of these relationships may require us to incur non-recurring and other charges, increase our near-and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business.

In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.

Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for volixibat because it may be deemed to be at too early of a stage of development for collaborative effort, and third parties may not view volixibat as having the requisite potential to demonstrate safety and efficacy.

If we license products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture.

Following a strategic transaction or license, we may not achieve the revenues or specific net income that justifies such transaction.

Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, which would harm our business prospects, financial condition and results of operations.

Our failure to successfully in-license, acquire, develop and market additional product candidates or approved products would impair our ability to grow our business.

Although a substantial amount of our efforts are focused on the clinical development, potential regulatory approval and commercialization of our product candidates, a key element of our long-term strategy is to in-license, acquire, develop, market and commercialize a portfolio of products to treat patients with liver disease.

Because we do not have the necessary internal research and development capabilities, unless we build such capabilities internally, we will be dependent upon pharmaceutical companies, academic scientists and other researchers to sell or license products or technology to us.

The success of this strategy depends partly upon our ability to identify and select promising biopharmaceutical product candidates and products, negotiate licensing or acquisition agreements with their current owners and finance these arrangements.

The process of proposing, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex.

Other companies, including some with substantially greater financial, marketing, sales and other resources, may compete with us for the license or acquisition of product candidates and approved products.

We have limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into our current infrastructure.

Moreover, we may devote resources to potential acquisitions or licensing opportunities that are never completed, or we may fail to realize the anticipated benefits of such efforts.

We may not be able to acquire the rights to additional product candidates on terms that we find acceptable, or at all.

Further, any product candidate that we acquire may require additional development efforts prior to commercial sale, including preclinical or clinical testing and approval by the FDA, the EMA and other similar regulatory authorities.

All product candidates are prone to risks of failure during biopharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities.

In addition, any approved products that we acquire may not be manufactured or sold profitably or achieve market acceptance.

We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

Our ability to compete in the highly competitive biotechnology and pharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel.

We are highly dependent on our management, scientific and medical personnel.

The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements could potentially harm our business, prospects, financial condition or results of operations.

We conduct our operations at our facility in Foster City, California.

This region serves as the headquarters to many other biopharmaceutical companies and many academic and research institutions.

Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all.

To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided stock options that vest over time.

The value to employees of stock options that vest over time may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies.

Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice.

Although we have offer letters with our key employees, these offer letters provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without notice.

We do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees.

Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level, and senior managers as well as junior, mid-level, and senior scientific and medical personnel.

Many of the other biotechnology and pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do.

They may also provide more diverse opportunities and better chances for career advancement.

Some of these characteristics are more appealing to high quality candidates than what we can offer.

If we are unable to continue to attract and retain high quality personnel, the rate and success at which we can discover, develop and commercialize product candidates will be limited.

We will need to grow the size of our organization, and we may experience difficulties in managing this growth.

As of December 31, 2019, we had 33 employees, all of whom are full-time.

As our development and commercialization plans and strategies develop, and as we transition into operating as a public company, we expect to need additional development, managerial, operational, financial, sales, marketing and other personnel.

Future growth would impose significant added responsibilities on members of management, including:

identifying, recruiting, integrating, maintaining and motivating additional employees;

managing our internal development efforts effectively, including the clinical and regulatory review process for maralixibat and volixibat, while complying with our contractual obligations to contractors and other third parties;

improving our operational, financial and management controls, reporting systems and procedures.

In addition, for maralixibat, we commenced enrollment in the Phase 3 MARCH clinical trial in the second quarter of 2019 and plan to initiate a rolling submission of an NDA for the treatment of pruritus associated with ALGS in the third quarter of 2020.

Further, for volixibat for the treatment of adult patients with cholestatic liver diseases, we expect to initiate our first clinical trial in late 2020.

Our future financial performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.

To date, we have used the services of outside vendors to perform tasks including clinical trial management, statistics and analysis, regulatory affairs, formulation development and other drug development functions.

Our growth strategy may also entail expanding our group of contractors or consultants to implement these tasks going forward.

Because we rely on numerous consultants, effectively outsourcing many key functions of our business, we will need to be able to effectively manage these consultants to ensure that they successfully carry out their contractual obligations and meet expected deadlines.

However, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for our product candidates or otherwise advance our business.

We may not be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.

If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.

Our internal computer systems, or those used by our CROs or other contractors or consultants, may fail or suffer security breaches and other disruptions, including the theft of our intellectual property.

Despite the implementation of security measures, our internal computer systems and those of our current and future CROs and other contractors and consultants are vulnerable to damage from computer viruses and unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

While we have not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations.

For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Moreover, a security breach that exposes our confidential intellectual property could compromise our patent portfolio.

Additionally, theft of our intellectual property or proprietary business information could require substantial expenditures to remedy.

Likewise, we rely on third parties to manufacture our product candidates and conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business.

To the extent that any disruption, security breach or theft were to result in a loss of, or damage to, our data, applications or other intellectual property, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed.

Business disruptions , such as health epidemics, could seriously harm our future revenues and financial condition and increase our costs and expenses.

Our operations, and those of our CROs and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions, for which we are predominantly self-insured.

The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

We rely on third-party manufacturers to produce maralixibat and volixibat.

Our ability to obtain clinical supplies of maralixibat and volixibat could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption.

Our corporate headquarters is located in California near major earthquake faults and fire zones.

The ultimate impact on us, our significant suppliers and our general infrastructure of being located near major earthquake faults and fire zones and being consolidated in certain geographical areas is unknown, but our operations and financial condition could suffer in the event of a major earthquake, fire or other natural disaster.

Further, our business could be adversely affected by health epidemics in regions where we have significant concentrations of clinical trial sites or other business operations.

As the recent COVID-19 outbreak continues to spread, we have limited some of our operations and implemented contingency plans, including a limited work from home policy and limitations on employee travel.

We may need to extend the duration of our work from home policy or further limit existing limitations on employee travel.

In addition, our clinical trials may be affected by the COVID-19 outbreak.

Site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 outbreak.

COVID-19 may delay enrollment in our global clinical trials, and some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, and we may be unable to obtain blood samples for testing.

There is a risk that other countries or regions may be less effective at containing COVID-19, or it may be more difficult to contain if the outbreak reaches a larger population or broader geography, in which case the risks described herein could be elevated significantly.

The ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole.

However, these effects could have a material impact on our operations.

Our employees, independent contractors, principal investigators, CROs, consultants, strategic partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk that employees, independent contractors, principal investigators, CROs, consultants and vendors may engage in fraudulent or other illegal activity.

Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates:

(1) the laws of the FDA and other similar foreign regulatory bodies, including those laws that require the reporting of true, complete and accurate information to the FDA and other similar foreign regulatory bodies;

(2) manufacturing standards;

(3) healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws or (4) laws that require the true, complete and accurate reporting of our financial information or data.

These laws may impact, among other things, our current activities with principal investigators and research subjects, as well as proposed and future sales, marketing and education programs.

In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices.

These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally.

Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.

If we obtain regulatory approval for any of our product candidates and begin commercializing those products in the United States and in the European Union, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase.

If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these

laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations.

Our relationships with customers, physicians and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws and other healthcare laws and regulations.

If we or our employees, independent contractors, consultants, commercial partners or vendors violate these laws, we could face substantial penalties.

These laws may impact, among other things, our clinical research program, as well as our proposed and future sales, marketing and education programs.

In particular, the promotion, sales and marketing of healthcare items and services is subject to extensive laws and regulations designed to prevent fraud, kickbacks, self-dealing and other abusive practices.

These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive and other business arrangements.

We may also be subject to federal, state and foreign laws governing the privacy and security of identifiable patient information.

healthcare laws and regulations that may affect our ability to operate include, but are not limited to:

the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully, offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchasing, leasing, ordering or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.

The term “remuneration” has been broadly interpreted to include anything of value.

Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.

Practices that may be alleged to be intended to induce prescribing, purchases or recommendations, include any payments of more than fair market value, and may be subject to scrutiny if they do not qualify for an exception or safe harbor.

In addition, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation.

In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act and the civil monetary penalties statute;

federal civil and criminal false claims laws, including the federal civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal healthcare programs;

HIPAA, which created new federal civil and criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by any trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services.

Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

HIPAA, as amended by the HITECH Act, and their respective implementing regulations, which impose requirements on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;

the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians, as defined by such law, and teaching

hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

We may also be subject to state and foreign equivalents of each of the healthcare laws described above, among others, some of which may be broader in scope.

For example, we may be subject to the following:

state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers, or that apply regardless of payor;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government;

state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or drug pricing;

state and local laws requiring the registration of pharmaceutical sales representatives;

and state and foreign laws, such as the GDPR governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Additionally, we may be subject to federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of our business activities, or our arrangements with physicians, could be subject to challenge under one or more of such laws.

If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we may be subject to investigations, enforcement actions and/or significant penalties.

We have adopted a code of conduct, but it is not always possible to identify and deter employee misconduct or business noncompliance, and the precautions we take to detect and prevent inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

Efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial costs.

It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations.

If any such actions are instituted against us, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

In addition, the approval and commercialization of any of our product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.

We are subject to restrictive regulations governing the use, processing and cross-border transfer of personal information.

The collection and use of personal data in the European Union are governed by the GDPR.

The GDPR imposes stringent requirements for controllers and processors of personal data, including, for example, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention of information, increased requirements pertaining to special categories of data, such as health data, and additional obligations when we contract with third-party processors in connection with the processing of the personal data.

The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States and other third countries.

In addition, the GDPR provides that European Union member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data.

The GDPR applies extraterritorially, and we may be subject to the GDPR because of our data processing activities that involve the personal data of individuals residing in the European Union, such as in connection with our clinical trials in France.

In addition, we maintain an office in Switzerland, which has its own set of stringent

privacy and data protection laws and regulations.

Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the European Union member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.

GDPR regulations may impose additional responsibility and liability in relation to the personal data that we process and we may be required to put in place additional mechanisms to ensure compliance with the new data protection rules.

This may be onerous and may interrupt or delay our development activities, and adversely affect our business, financial condition, results of operations and prospects.

In addition, California recently enacted the CCPA, which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling certain personal data of consumers or households.

The CCPA requires covered companies to provide new disclosure to consumers about such companies’ data collection, use and sharing practices, provide such consumers new ways to opt-out of certain sales or transfers of personal information, and provide consumers with additional causes of action.

The CCPA became effective January 1, 2020, and the California Attorney General may bring enforcement actions for violations beginning July 1, 2020.

The CCPA was amended on September 23, 2018, and it remains unclear what, if any, further modifications will be made to this legislation or how it will be interpreted.

The withdrawal of the United Kingdom (the “UK”) from the European Union, commonly referred to as “Brexit,” may adversely impact our ability to obtain regulatory approvals of our product candidates in the European Union, result in restrictions or imposition of taxes and duties for importing our product candidates into the European Union, and may require us to incur additional expenses in order to develop, manufacture and commercialize our product candidates in the European Union.

Following the result of a referendum in 2016, the UK left the European Union on January 31, 2020, commonly referred to as Brexit.

Pursuant to the formal withdrawal arrangements agreed between the UK and the European Union, the UK will be subject to a transition period until December 31, 2020 (“Transition Period”), during which European Union rules will continue to apply.

Negotiations between the UK and the European Union are expected to continue in relation to the customs and trading relationship between the UK and the European Union following the expiry of the Transition Period.

Since a significant proportion of the regulatory framework in the UK applicable to our business and our product candidates is derived from European Union directives and regulations, Brexit, following the Transition Period, could materially impact the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the UK or the European Union.

For example, as a result of the uncertainty surrounding Brexit, the EMA relocated to Amsterdam from London.

Following the Transition Period, the UK will no longer be covered by the centralized procedures for obtaining European Union-wide marketing authorization from the EMA and, unless a specific agreement is entered into, a separate process for authorization of drug products, including our product candidates, will be required in the UK, the potential process for which is currently unclear.

Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the UK or the European Union and restrict our ability to generate revenue and achieve and sustain profitability.

In addition, we may be required to pay taxes or duties or be subjected to other hurdles in connection with the importation of our product candidates into the European Union, or we may incur expenses in establishing a manufacturing facility in the European Union in order to circumvent such hurdles.

If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the UK or the European Union for our product candidates, or incur significant additional expenses to operate our business, which could significantly and materially harm or delay our ability to generate revenues or achieve profitability of our business.

Any further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on us.

These developments, or the perception that any of them could occur, may significantly reduce global trade and, in particular, trade between the impacted nations and the UK It is also possible that Brexit may negatively affect our ability to attract and retain employees, particularly those from the European Union.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.

We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk if we commercialize any products.

For example, we may be sued if any of our product candidates causes or is perceived to cause injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties.

Claims could also be asserted under state consumer protection acts.

If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates.

Even successful defense would require significant financial and management resources.

Regardless of the merits or eventual outcome, liability claims may result in:

decreased demand for our product candidates;

injury to our reputation;

withdrawal of clinical trial participants;

initiation of investigations by regulators;

costs to defend the related litigation;

a diversion of management’s time and our resources;

substantial monetary awards to trial participants or patients;

product recalls, withdrawals or labeling, marketing or promotional restrictions;

loss of revenue;

exhaustion of any available insurance and our capital resources;

the inability to commercialize any product candidate;

a decline in our share price.

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop.

We currently carry an aggregate of up to $10 million of product liability insurance covering our clinical trials.

Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage.

If we determine that it is prudent to increase our product liability coverage due to the commercial launch of any approved product, we may be unable to obtain such increased coverage on acceptable terms, or at all.

Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage.

We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

We are subject to U.S.

and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations.

Compliance with these legal standards could impair our ability to compete in domestic and international markets.

We can face criminal liability and other serious consequences for violations, which can harm our business.

We are subject to export control and import laws and regulations, including the U.S.

Export Administration Regulations, U.S.

Customs regulations, and various economic and trade sanctions regulations administered by the U.S.

Treasury Department’s Office of Foreign Assets Controls, and anti-corruption and anti-money laundering laws and regulations, including the FCPA, the U.S.

domestic bribery statute contained in 18 U.S.C.

§ 201, the U.S.

Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the

countries in which we conduct activities.

Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, clinical research organizations, contractors and other collaborators and partners from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector.

We may engage third parties for clinical trials outside of the United States, to sell our products internationally once we enter a commercialization phase, and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals.

We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations.

We can be held liable for the corrupt or other illegal activities of our employees, agents, clinical research organizations, contractors and other collaborators and partners, even if we do not explicitly authorize or have actual knowledge of such activities.

Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.

Risks Related to Our Reliance on Third Parties

We depend on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business.

We are dependent on patents, know-how and proprietary technology, both our own and licensed from others.

We entered into an assignment and license agreement with Shire pursuant to which we were assigned exclusive global rights to license intellectual property and know-how related to maralixibat and volixibat, rights to license know-how related to maralixibat from Pfizer and certain patents and know-how related to maralixibat and volixibat from Satiogen.

We have in-licensed certain patents and know-how related to volixibat from Shire and Sanofi.

We are required to use commercially reasonable efforts or diligent efforts to commercialize products based on the licensed rights and to pay certain royalties based off our net sales and, in the case of Satiogen, our sublicensing revenues.

We may not meet these requirements which could result in a loss or termination of any rights under such agreements.

Any termination of these licenses will result in the loss of significant rights and will restrict our ability to commercialize our product candidates.

We are generally also subject to all of the same risks with respect to protection of intellectual property that we license, as we are for intellectual property that we own, which are described below under “Risks Related to Our Intellectual Property.” If we or our licensors fail to adequately protect this intellectual property, our ability to commercialize products could suffer.

We rely on third parties to conduct our clinical trials.

If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates.

We currently rely on, and intend to continue relying on, third-party CROs in connection with our clinical trials for maralixibat and volixibat.

We control or will control only certain aspects of their activities.

Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with applicable protocol, legal, regulatory and scientific standards, and our reliance on our CROs does not relieve us of our regulatory responsibilities.

We and our CROs are required to comply with GCPs, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical development.

Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites.

If we or any of these CROs fail to comply with applicable GCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.

We cannot assure you that, upon inspection, such regulatory authorities will determine that any of our clinical trials comply with the GCP regulations.

In addition, our clinical trials must be conducted with drug product produced under cGMP regulations and will require a large number of test subjects.

Our failure or any failure by our CROs to comply with these regulations or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory approval process.

Moreover, our business may be implicated if any of our CROs violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

Our CROs are not our employees and, except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing preclinical, clinical and non-clinical programs.

These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug development activities, which could affect their performance on our behalf.

If our CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval for or successfully commercialize our product candidates.

As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

Switching or adding CROs involves substantial cost and requires extensive management time and focus.

In addition, there is a natural transition period when a new CRO commences work.

As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines.

Although we carefully manage our relationships with our CROs, we may encounter challenges or delays in the future and these delays or challenges may have a material adverse impact on our business, prospects, financial condition and results of operations.

We rely completely on third parties to manufacture our preclinical and clinical drug supplies and we intend to rely on third parties to produce commercial supplies of each of our product candidates, if approved, and these third parties may fail to obtain and maintain regulatory approval for their facilities, fail to provide us with sufficient quantities of drug product or fail to do so at acceptable quality levels or prices.

We do not currently have nor do we plan to acquire the infrastructure or capability internally to manufacture our clinical drug supplies for use in the conduct of our clinical trials, and we lack the resources and the capability to manufacture our product candidates on a clinical or commercial scale.

Instead, we rely on contract manufacturers for such production.

In particular, we rely on a number of different manufacturers to obtain our supply of maralixibat to support our clinical trial program, including different manufacturers for adult and pediatric formulations of maralixibat.

We do not currently have any long-term agreement with a manufacturer to produce raw materials, active pharmaceutical ingredients, or APIs, and the finished products of our product candidates or the associated packaging and administration syringes used in our current product format.

We will need to identify and qualify a third-party manufacturer prior to commercialization of our product candidates, and we intend to enter into agreements for commercial production with third-party suppliers.

As our product candidates are intended to treat rare liver diseases, we will only require a low-volume of raw materials and APIs, and in the case of maralixibat and volixibat, in some cases with single-source suppliers and manufacturers.

Our reliance on third-party suppliers and manufacturers, including single-source suppliers, could harm our ability to develop our product candidates or to commercialize any product candidates that are approved.

Further, any delay in identifying and qualifying a manufacturer for commercial production could delay the potential commercialization of our product candidates, and, in the event that we do not have sufficient product to complete our planned clinical trials, it could delay such trials.

The facilities used by our contract manufacturers to manufacture our product candidates must be approved by the applicable regulatory authorities, including the FDA, pursuant to inspections that will be conducted after an NDA or comparable foreign regulatory marketing application is submitted.

We do not control the manufacturing process of our product candidates and are completely dependent on our contract manufacturing partners for compliance with the FDA’s cGMP requirements for manufacture of both the active drug substances and finished drug product.

If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the FDA’s strict regulatory requirements, they will not be able to secure or maintain FDA approval for the manufacturing facilities.

In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel.

If the FDA or any other applicable regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture for us, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, or at all, which would significantly impact our ability to develop, obtain regulatory approval for or market maralixibat and volixibat.

In addition, the manufacture of pharmaceutical products is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.

Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up and validating initial production and absence of contamination.

These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations.

Furthermore, if contaminants are discovered in our supply of maralixibat or volixibat or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

Any stability or other issues relating to the manufacture of our product candidates may occur in the future.

Additionally, our manufacturers may experience manufacturing difficulties due to resource constraints or as a result of labor disputes or unstable political environments.

If our manufacturers were to encounter any of these difficulties, or otherwise fail to comply with their contractual obligations, our ability to provide our product candidate to patients in clinical trials would be jeopardized.

Any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely.

If we or our third-party manufacturers use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be liable for damages.

Our research and development activities involve the controlled use of potentially hazardous substances, including chemical and biological materials, by our third-party manufacturers.

Our manufacturers are subject to federal, state and local laws and regulations in the United States governing the use, manufacture, storage, handling and disposal of medical, radioactive and hazardous materials.

Although we believe that our manufacturers’ procedures for using, handling, storing and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of contamination or injury resulting from medical, radioactive or hazardous materials.

As a result of any such contamination or injury, we may incur liability or local, city, state or federal authorities may curtail the use of these materials and interrupt our business operations.

In the event of an accident, we could be held liable for damages or penalized with fines, and the liability could exceed our resources.

We do not have any insurance for liabilities arising from medical radioactive or hazardous materials.

Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations may impair our research, development and production efforts, which could harm our business, prospects, financial condition or results of operations.

Risks Related to Our Financial Position and Capital Requirements

We will need substantial additional financing to develop our product candidates and implement our operating plans.

If we fail to obtain additional financing, we may be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

Our operations have consumed substantial amounts of cash since inception.

We expect to continue to spend substantial amounts to continue the clinical development and seek regulatory approval of our product candidates.

We will require significant additional amounts in order to prepare for commercialization, and, if approved, to launch and commercialize our product candidates.

Based on our current and anticipated level of operations, we believe our existing cash, cash equivalents and investments, together with the proceeds from our follow-on public offering on January 13, 2020, will be sufficient to fund current operations through at least the next 12 months.

However, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.

We will require additional capital for the further development and commercialization of our product candidates and may need to raise additional funds sooner if we choose to expand more rapidly than we presently anticipate.

Additional funding may not be available on acceptable terms, or at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of maralixibat or volixibat or other research and development initiatives.

We also could be required to seek collaborators for our product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.

Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder.

The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms unfavorable to us.

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may never achieve profitability.

To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire (if at all).

At December 31, 2019, after reducing net operating losses (“NOLs”), and research and development credits for amounts not expected to be utilized, we had federal and state NOL carryforwards of approximately $44.4 million and $2.2 million, respectively.

The federal NOL carryforwards do not expire, and the state NOL carryforwards will begin to expire in 2038, unless previously utilized.

We also have federal and state research and development credit carryforwards totaling $5.6 million and $0.3 million, respectively.

The federal research and development credit carryforwards will begin to expire in 2038, unless previously utilized.

The state research and development credits will not expire.

Under recently enacted U.S.

tax legislation, federal NOL carryforwards generated in periods after December 31, 2017 may be carried forward indefinitely but may only be used to offset 80% of our taxable income annually.

Our NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percentage points (by value), as defined under Section 382 of the Internal Revenue Code of 1986, as amended.

Our ability to utilize our NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes.

Similar rules may apply under state tax laws.

We have not yet determined the amount of the cumulative change in our ownership resulting from past ownership changes or any resulting tax loss limitations.

Such limitations could result in the expiration of our carryforwards before they can be utilized and, if we are profitable, our future cash flows could be adversely affected due to our increased taxable income or tax liability.

We have recorded a full valuation allowance related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

tax legislation may materially adversely affect our financial condition, results of operations and cash flows.

The recently enacted Tax Act has significantly changed the U.S.

federal income taxation of U.S.

corporations, including by reducing the U.S.

corporate income tax rate and revising the rules governing NOLs.

Many of these changes are effective immediately, without any transition periods or grandfathering for existing transactions.

The legislation is unclear in many respects and is subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and U.S.

Internal Revenue Service, any of which could lessen or increase certain adverse impacts of the legislation.

In addition, it is unclear how these U.S.

federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities.

Based on our current evaluation of this legislation, the reduction of the U.S.

corporate income tax rate required a provisional write-down of our deferred income tax assets (including the value of our NOL carryforwards and our tax credit carryforwards).

There may be other material adverse effects resulting from the legislation that we have not yet identified.

While some of the changes made by the tax legislation may adversely affect us in one or more reporting periods, other changes may be beneficial on a going forward basis.

We continue to work with our tax advisors to determine the full impact that the recent tax legislation as a whole will have on us.

We urge our investors to consult with their legal and tax advisors with respect to such legislation and the potential tax consequences of investing in our common stock.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates, if approved, may be adversely affected.

Our commercial success will depend in part on obtaining and maintaining a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our technologies.

Any unauthorized disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market.

The patent positions of biotechnology and pharmaceutical companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.

No consistent policy regarding the breadth of claims allowed in pharmaceutical patents has emerged to date in the United States or in many jurisdictions outside of the United States.

Changes in either the patent laws or interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property.

Accordingly, we cannot predict the breadth of claims that may be enforced in the patents that may be issued from the applications we currently or may in the future own or license from third parties.

Further, if any patents we obtain or license are deemed invalid and unenforceable, our ability to commercialize or license our technology could be adversely affected.

The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our actual or potential future collaborators will be successful in protecting our product candidates, proprietary technologies and their uses by obtaining and defending patents.

These risks and uncertainties include the following:

the United States Patent and Trademark Office (“USPTO”) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process, the noncompliance with which can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction;

patent applications may not result in any patents being issued;

patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable or otherwise may not provide any competitive advantage;

our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with or eliminate our ability to make, use and sell our potential product candidates;

other parties may have designed around our claims or developed technologies that may be related or competitive to our platform, may have filed or may file patent applications and may have received or may receive patents that overlap or conflict with our patent applications, either by claiming the same methods or devices or by claiming subject matter that could dominate our patent position;

any successful opposition to any patents owned by or licensed to us could deprive us of rights necessary for the practice of our technologies or the successful commercialization of any products or product candidates that we may develop;

because patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we or our licensors were the first to file any patent application related to our product candidates, proprietary technologies and their uses;

an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications for any application with an effective filing date before March 16, 2013;

there may be significant pressure on the U.S.

government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns;

countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S.

courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates.

The patent prosecution process is also expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.

Although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.

We may also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or feasible.

However, trade secrets are difficult to protect.

Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our information to competitors.

Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable.

In addition, courts outside the United States are sometimes

less willing to protect trade secrets.

Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.

Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage.

If we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use our product candidates and proprietary technologies and erode or negate any competitive advantage we may have, which could have a material adverse effect on our financial condition and results of operations.

others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of our patents;

we might not have been the first to make the inventions covered by our pending patent applications;

we might not have been the first to file patent applications for these inventions;

others may independently develop similar or alternative technologies or duplicate any of our technologies;

any patents that we obtain may not provide us with any competitive advantages;

we may not develop additional proprietary technologies that are patentable;

our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

we cannot ensure that any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our products;

we cannot ensure that we will be able to successfully commercialize our products on a substantial scale, if approved, before the relevant patents that we own or license expire;

the patents of others may have an adverse effect on our business.

Others have filed, and in the future are likely to file, patent applications covering products and technologies that are similar, identical or competitive to ours or important to our business.

We cannot be certain that any patent application owned by a third party will not have priority over patent applications filed or in-licensed by us, or that we or our licensors will not be involved in interference, opposition or invalidity proceedings before U.S.

patent offices.

We cannot be certain that the claims in our issued patents and pending patent applications covering maralixibat or volixibat will be considered patentable by the USPTO, courts in the United States, or by patent offices and courts in foreign countries.

Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States.

As a result, we may encounter significant problems in protecting and defending our intellectual property internationally.

The strength of patents in the biotechnology and pharmaceutical fields involves complex legal and scientific questions and can be uncertain.

The patent applications that we own or in-license may fail to result in issued patents with claims that cover maralixibat or volixibat in the United States or in foreign countries.

Even if such patents do successfully issue, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.

Any successful opposition to our patents could deprive us of exclusive rights necessary for the successful commercialization of maralixibat or volixibat.

Furthermore, even if they are unchallenged, our patents may not adequately protect our intellectual property, provide exclusivity for maralixibat or volixibat or prevent others from designing around our claims.

If the breadth or strength of protection provided by the patents we hold with respect to maralixibat or volixibat is threatened, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize, maralixibat or volixibat.

Further, if we encounter delays in our development efforts, including our clinical trials, the period of time during which we could market maralixibat or volixibat under patent protection would be reduced.

In addition, patents have a limited lifespan.

In the United States, the natural expiration of a patent is generally 20 years after it is filed.

Various extensions may be available;

however the life of a patent, and the protection it affords, is limited.

A patent term extension of up to five years based on regulatory delay may be available in the United States under the Hatch-Waxman Act.

However, only a single patent can be extended for each marketing approval, and any patent can be extended only once, for a single product.

Moreover, the scope of protection during the period of the patent term extension does not extend to the full scope of the claim, but instead only to the scope of the product as approved.

Further, a patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended.

Laws governing analogous patent term extensions in foreign jurisdictions vary widely, as do laws governing the ability to obtain multiple patents from a single patent family.

Additionally, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements.

Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.

If we are unable to obtain patent term extension or restoration, or the term of any such extension is less than we request, the period during which we will have the right to exclusively market our product will be shortened and our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced.

patent applications in which claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our patents or patent applications.

An unfavorable outcome could require us to cease using the related technology or to attempt to license rights from the prevailing party.

Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms.

Our participation in an interference proceeding may fail and, even if successful, may result in substantial costs and distract our management and other employees.

patent applications containing a claim not entitled to priority before March 16, 2013, there is greater level of uncertainty in the patent law.

In September 2011, the Leahy-Smith America Invents Act, or America Invents Act, was signed into law.

The America Invents Act includes a number of significant changes to U.S.

patent law, including provisions that affect the way patent applications will be prosecuted and may also affect patent litigation.

The USPTO is developing regulations and procedures to govern the administration of the America Invents Act, and many of the substantive changes to patent law associated with the America Invents Act, and in particular, the “first to file” provisions, were enacted on March 16, 2013.

It remains unclear what impact the America Invents Act will have on the operation of our business.

Moreover, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidates and drug discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents.

However, trade secrets can be difficult to protect.

We require all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology, such as third parties involved in the manufacture of our product candidates, such as maralixibat and volixibat, and third parties involved in our clinical trials to enter into confidentiality agreements.

We cannot be certain that all such agreements have been duly executed, that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.

Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business.

Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret.

For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may change in the future, if at all.

If we are unable to prevent unauthorized material disclosure of our intellectual property to third parties, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, operating results and financial condition.

We currently rely on method-of-use and formulation patents to protect maralixibat and composition-of-matter and method-of-use patents to protect volixibat.

We currently own patent applications in the United States, Europe and other countries covering the methods of treating cholestasis using ASBTis, including maralixibat and volixibat, with limited systemic exposure.

We also own patent applications in Europe, and other countries covering the pediatric formulations of such ASBTis.

A patent based on any of these patent applications may never be issued.

We do not have patents or patent applications covering maralixibat as a composition-of-matter.

Therefore, the primary patent-based intellectual property protection for our maralixibat program will be any patents granted on the pending method-of-use and formulation patent applications.

Composition-of-matter patents on active pharmaceutical ingredients are generally considered to be the strongest form of intellectual property protection for pharmaceutical products, as such patents provide protection without regard to any method of use.

Method-of-use patents protect the use of a product for the specified method.

Method-of-use patents do not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method.

Moreover, even if competitors do not actively promote their products for our targeted indication(s), physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent process.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on any issued patents and/or applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patents and/or applications.

We have systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to foreign patent agencies.

While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

In such an event, our competitors might be able to enter the market earlier than should otherwise have been the case, which would have a material adverse effect on our business.

Changes in U.S.

patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly on obtaining and enforcing patents.

Our patent rights may be affected by developments or uncertainty in U.S.

or foreign patent statutes, patent case law, USPTO rules and regulations or the rules and regulations of foreign patent offices.

Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain.

In addition, the United States may, at any time, enact changes to U.S.

patent law and regulations, including by legislation, by regulatory rule-making, or by judicial precedent, that adversely affect the scope of patent protection available and weakened the rights of patent owners to obtain patents, enforce patent infringement and obtain injunctions and/or damages.

For example, the scope of patentable subject matter under 35 U.S.C.

101 has evolved significantly over the past several years as the Court of Appeals for the Federal Circuit and the Supreme Court issued various opinions, and the USPTO modified its guidance for practitioners on multiple occasions.

Other countries may likewise enact changes to their patent laws in ways that adversely diminish the scope of patent protection and weaken the rights of patent owners to obtain patents, enforce patent infringement and obtain injunctions and/or damages.

Further, the United States and other governments may, at any time, enact changes to law and regulation that create new avenues for challenging the invalidity of issued patents.

For example, the America Invents Act created new administrative post-grant proceedings, including post-grant review, inter partes

review, and derivation proceedings that allow third parties to challenge the validity of issued patents.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

Depending on decisions by the U.S.

Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

We may not be able to protect our intellectual property rights throughout the world.

Patents are of national or regional effect.

Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive.

In addition, the laws of some foreign countries do not protect intellectual property rights in the same manner and to the same extent as laws in the United States.

Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement of such patent protection is not as strong as that in the United States.

These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

The requirements for patentability may differ in certain countries.

For example, unlike other countries, China has a heightened requirement for patentability, and specifically requires a detailed description of medical uses of a claimed drug.

In India, unlike the United States, there is no link between regulatory approval for a drug and its patent status.

In addition to India, certain countries in Europe and developing countries, including China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.

In those countries, we may have limited remedies if patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those patents.

This could limit our potential revenue opportunities.

Accordingly, our efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology or pharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, and could provoke third parties to assert claims against us.

We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.

Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

We are a party to a number of license agreements under which we are granted intellectual property rights that are important to our business.

For example, certain trade secrets related to maralixibat are licensed from Pfizer, and patents, patent applications and trade secrets related to volixibat are licensed from Sanofi.

Our existing license agreements as related to maralixibat and volixibat impose various development, regulatory and/or commercial diligence obligations, payment of milestones and/or royalties and other obligations.

If we fail to comply with our obligations under a license agreement, or we are subject to a bankruptcy, the license agreement may be terminated, in which event we would not be able to develop, commercialize or market maralixibat or volixibat, as the case may be.

Licensing of intellectual property rights is of critical importance to our business and involves complex legal, business and scientific issues.

Disputes may arise between us and our licensors regarding intellectual property rights subject to a license agreement, including:

the scope of rights granted under the license agreement and other interpretation-related issues;

whether and the extent to which our technology and processes infringe on intellectual property rights of the licensor that are not subject to the licensing agreement;

our right to sublicense intellectual property rights to third parties under collaborative development relationships;

our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations;

the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.

If disputes over intellectual property rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, our business, results of operations, financial condition and prospects may be adversely affected.

We may enter into additional licenses in the future and if we fail to comply with obligations under those agreements, we could suffer adverse consequences.

We may become subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We may be subject to claims that former employees (including former employees of our licensors), collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor.

The failure to name the proper inventors on a patent application can result in the patents issuing thereon being unenforceable.

Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third parties involved in developing our product candidates or as a result of questions regarding co-ownership of potential joint inventions.

Litigation may be necessary to resolve these and other claims challenging inventorship and/or ownership.

Alternatively, or additionally, we may enter into agreements to clarify the scope of our rights in such intellectual property.

If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property.

Such an outcome could have a material adverse effect on our business.

Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

We may not be successful in obtaining or maintaining necessary rights to product components and processes for our development pipeline through acquisitions and in-licenses.

Presently we have intellectual property rights, through licenses from third parties including Shire, Pfizer, Satiogen and Sanofi, related to our product candidates.

For example, we have our license agreements with Shire and Satiogen for both maralixibat and volixibat.

We have our license agreement with Shire, Satiogen and Pfizer for our intellectual property rights covering maralixibat.

Further, we have our license agreement with Sanofi for our intellectual property rights covering volixibat.

Because our programs may require the use of additional proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights.

In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others.

We may be unable to acquire or in-license proprietary rights related to any compositions, formulations, methods of use, processes or other intellectual property rights from third parties that we identify as being necessary for our product candidates.

Even if we are able to obtain a license to such proprietary rights, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us.

In that event, we may be required to expend significant time and resources to develop or license replacement technology.

Where we obtain licenses from or collaborate with third parties, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties, or such activities, if controlled by us, may require the input of such third parties.

We may also require the cooperation of our licensors and collaborators to enforce any licensed patent rights, and such cooperation may not be provided.

Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business, in compliance with applicable laws and regulations, which may affect the validity and enforceability of such patents or any patents that may issue from such application.

Moreover, if we do obtain necessary licenses, we will likely have obligations under those licenses, including making royalty and milestone payments, and any failure to satisfy those obligations could give our licensor the right to terminate the license.

Termination of a necessary license, or expiration of licensed patents or patent applications, could have a material adverse impact on our business.

Our business would suffer if any such licenses terminate, if the licensors fail to abide by the terms of the license, if the licensors fail to enforce licensed patents against infringing third parties, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.

Furthermore, if any licenses terminate, or if the underlying patents fail to provide the intended exclusivity, competitors or other third parties may gain the freedom to seek regulatory approval of, and to market, products identical to ours.

Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating the licensor’s rights.

In addition, while we cannot currently determine the amount of the royalty obligations we would be required to pay on sales of future products, if any, the amounts may be significant.

The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we successfully develop and commercialize, if any.

Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability.

The licensing and acquisition of third-party proprietary rights is a competitive area, and companies, which may be more established, or have greater resources than we do, may also be pursuing strategies to license or acquire third-party proprietary rights that we may consider necessary or attractive in order to commercialize our product candidates.

More established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

For example, we may collaborate with U.S.

and foreign academic institutions to accelerate our preclinical research or development under written agreements with these institutions.

Typically, these institutions provide us with an option to negotiate an exclusive license to any of the institution’s proprietary rights in technology resulting from the collaboration.

Regardless of such option to negotiate a license, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us.

If we are unable to do so, the institution may offer, on an exclusive basis, their proprietary rights to other parties, potentially blocking our ability to pursue our program.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us, either on reasonable terms, or at all.

We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment, or at all.

If we are unable to successfully obtain rights to required third-party intellectual property rights on commercially reasonable terms, our ability to commercialize our products, and our business, financial condition and prospects for growth could suffer.

Third-party claims alleging intellectual property infringement may prevent or delay our drug discovery and development efforts.

Our success depends in part on our avoiding infringement of the patents and proprietary rights of third parties.

There is a substantial amount of litigation, both within and outside the United States, involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including inter partes review, interference and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions.

The America Invents Act introduced new procedures including inter partes review and post grant review.

The implementation of these procedures brings uncertainty to the possibility of challenges to our patents in the future and the outcome of such challenges.

Numerous U.S.

and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product candidates.

As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our activities related to our product candidates may give rise to claims of infringement of the patent rights of others.

The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use.

The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.

We cannot assure you that any of our current or future product candidates will not infringe existing or future patents.

We may not be aware of patents that have already issued that a third party might assert are infringed by one of our current or future product candidates.

Nevertheless, we are not aware of any issued patents that will prevent us from marketing our product candidates.

Third parties may assert that we are employing their proprietary technology without authorization.

There may be third-party patents of which we are currently unaware with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates.

Because patent applications can take many years to issue and may be confidential for 18 months or more after filing, there may be currently pending third-party patent applications which may later result in issued patents that our product candidates or our technologies may infringe, or which such third parties claim are infringed by the use of our technologies.

Parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates.

Defense of these claims, regardless of their merit, could involve substantial expenses and could be a substantial diversion of employee resources from our business.

If we collaborate with third parties in the development of technology in the future, our collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to litigation or potential liability.

Further, collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability.

In the future, we may agree to indemnify our commercial collaborators against certain intellectual property infringement claims brought by third parties.

Any claims of patent infringement asserted by third parties would be time consuming and could:

result in costly litigation;

divert the time and attention of our technical personnel and management;

cause development delays;

prevent us from commercializing maralixibat or our other product candidates until the asserted patent expires or is held finally invalid or not infringed in a court of law;

require us to develop non-infringing technology, which may not be possible on a cost-effective basis;

require us to pay damages to the party whose intellectual property rights we may be found to be infringing, which may include treble damages if we are found to have been willfully infringing such intellectual property;

require us to pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing;

require us to enter into royalty or licensing agreements, which may not be available on commercially reasonable terms, or at all.

If we are sued for patent infringement, we would need to demonstrate that our products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do either.

Proving invalidity is difficult.

For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.

Even if we are successful in these proceedings, we may incur substantial costs and divert management’s time and attention in pursuing these proceedings, which could have a material adverse effect on us.

If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, which may not be available, defend an infringement action or challenge the validity of the patents in court.

Patent litigation is costly and time consuming.

We may not have sufficient resources to bring these actions to a successful conclusion.

In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates.

We do not always conduct independent reviews of pending patent applications of and patents issued to third parties.

We cannot be certain that others have not filed patent applications for technology covered by our pending applications, or that we were the first to invent the technology, because:

some patent applications in the United States may be maintained in secrecy until the patents are issued;

patent applications in the United States and elsewhere can be pending for many years before issuance, or unintentionally abandoned patents or applications can be revived;

pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our product candidates or the use of our product candidates;

identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims;

patent applications in the United States are typically not published until 18 months after the priority date;

publications in the scientific literature often lag behind actual discoveries.

Furthermore, the scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history and can involve other factors such as expert opinion.

Our interpretation of the relevance or the scope of claims in a patent or a pending application may be incorrect, which may negatively impact our ability to market our products.

Further, we may incorrectly determine that our technologies, products, or product candidates are not covered by a third party patent or may incorrectly predict whether a third party’s pending patent application will issue with claims of relevant scope.

Our determination of the expiration date of any patent in the United States or internationally that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our products or product candidates.

Our competitors may have filed, and may in the future file, patent applications covering technology similar to ours, and others may have or obtain patents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import our product candidates and future approved products or impair our competitive position.

Numerous third-party U.S.

and foreign issued patents and pending patent applications exist in the fields in which we are developing product candidates.

There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates.

Any such patent application may have priority over our patent applications, which could further require us to obtain rights to issued patents covering such technologies.

If another party has filed a U.S.

patent application on inventions similar to ours, we may have to participate in an interference proceeding declared by the USPTO to determine priority of invention in the United States.

The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful if, unbeknownst to us, the other party had independently arrived at the same or similar invention prior to our own invention, resulting in a loss of our U.S.

patent position with respect to such inventions.

Other countries have similar laws that permit secrecy of patent applications and may be entitled to priority over our applications in such jurisdictions.

Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.

In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

If a third party prevails in a patent infringement lawsuit against us, we may have to stop making and selling the infringing product, pay substantial damages, including treble damages and attorneys’ fees if we are found to be willfully infringing a third party’s patents, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure.

We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms.

Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates.

We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all.

In that event, we would be unable to further develop and commercialize our product candidates, which could harm our business significantly.

Even if we were able to obtain a license, the rights may be nonexclusive, which may give our competitors access to the same intellectual property.

We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers.

As is common in the biotechnology and pharmaceutical industries, in addition to our employees, we engage the services of consultants to assist us in the development of our product candidates.

Many of these consultants, and many of our employees, were previously employed at, or may have previously provided or may be currently providing consulting services to, other pharmaceutical companies including our competitors or potential competitors.

We may become subject to claims that we, our employees or a consultant inadvertently or otherwise used or disclosed trade secrets or other information proprietary to their former employers or their former or current clients.

Litigation may be necessary to defend against these claims.

If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely affect our business.

Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team and other employees.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming, and unsuccessful.

Further, our issued patents could be found invalid or unenforceable if challenged in court, and we may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.

Third parties including competitors may infringe, misappropriate or otherwise violate our patents, patents that may issue to us in the future, or the patents of our licensors that are licensed to us.

To counter infringement or unauthorized use, we may need to or choose to file infringement claims, which can be expensive and time-consuming.

We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

If we choose to go to court to stop another party from using the inventions claimed in our patents, that individual or company has the right to ask the court to rule that such patents are invalid, unenforceable, or should not be enforced against that third party for any number of reasons.

In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.

Grounds for a validity challenge include an alleged failure to meet any of several statutory requirements for patentability, including lack of novelty, obviousness, lack of written description, indefiniteness, or non-enablement.

Grounds for an unenforceability assertion could include an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution, i.e.

committed inequitable conduct.

Third parties may also raise similar claims before the USPTO, even outside the context of litigation.

Similar mechanisms for challenging the validity and enforceability of a patent exist in foreign patent offices and courts and may result in the revocation, cancellation, or amendment of any foreign patents we or our licensors hold now or in the future.

The outcome following legal assertions of invalidity and unenforceability is unpredictable, and prior art could render our patents or those of our licensors invalid.

If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on such product candidate.

Such a loss of patent protection would have a material adverse impact on our business.

Interference or derivation proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors.

An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party.

Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access to the same technology.

Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.

In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties or enter into development or manufacturing partnerships that would help us bring our product candidates to market.

Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.

Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.

We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately.

Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

There could also be public announcements of the results of hearings, motions or other interim proceedings or developments.

If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.

Our ability to enforce our patent rights depends on our ability to detect infringement.

It may be difficult to detect infringers who do not advertise the components or methods that are used in connection with their products and services.

Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor’s or potential competitor’s product or service.

We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful.

Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties.

Because of the expense and uncertainty of litigation, we may conclude that even if a third party is infringing our issued patent, any patents that may be issued as a result of our pending or future patent applications or other intellectual property rights, the risk-adjusted cost of bringing and enforcing such a claim or action may be too high or not in the best interest of our company or our stockholders.

In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

We rely on trade secrets to protect our proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable.

However, trade secrets are difficult to protect.

We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors, and inventions agreements with employees, consultants and advisors, to protect our trade secrets and other proprietary information.

In addition to contractual measures, we try to protect the confidential nature of our proprietary information using commonly accepted physical and technological security measures.

Despite these efforts, we cannot provide any assurances that all such agreements have been duly executed, and these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information.

In addition, others may independently discover our trade secrets and proprietary information.

Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

In addition, such security measures may not provide adequate protection for our proprietary information, for example, in the case of misappropriation of a trade secret by an employee, consultant, customer or third party with authorized access.

Our security measures may not prevent an employee, consultant or customer from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully.

Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective.

Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.

Even though we use commonly accepted security measures, the criteria for protection of trade secrets can vary among different jurisdictions.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable.

In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.

Moreover, third parties may still obtain this information or may come upon this or similar information independently, and we would have no right to prevent them from using that technology or information to compete with us.

Trade secrets will over time be disseminated within the industry through independent development, the publication of journal articles and the movement of personnel skilled in the art from company to company or academic to industry scientific positions.

Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights.

If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

Because from time to time we expect to rely on third parties in the development, manufacture, and distribution of our products and provision of our services, we must, at times, share trade secrets with them.

Despite employing the contractual and other security precautions described above, the need to share trade secrets increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements.

If any of these events occurs or if we otherwise lose protection for our trade secrets, the value of this information may be greatly reduced and our competitive position would be harmed.

If we do not apply for patent protection prior to such publication or if we cannot otherwise maintain the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our current or future trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks.

We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest.

At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.

In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.

Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

We may license our trademarks and trade names to third parties, such as distributors.

Though these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and tradenames by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names.

Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our financial condition or results of operations.

Moreover, any name we have proposed to use with any of our product candidates in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark.

Similar requirements exist in Europe.

The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names.

If the FDA (or an equivalent administrative body in a foreign jurisdiction) objects to any of our proposed proprietary product names, it may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

Furthermore, in many countries, owning and maintaining a trademark registration may not provide an adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark.

At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.

In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.

If we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question.

In this case, we could ultimately be forced to cease use of such trademarks.

Any collaboration arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our products.

Any future collaborations that we enter into may not be successful.

The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators.

Collaborations are subject to numerous risks, which may include that:

collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations;

collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities;

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates;

a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities;

we could grant exclusive rights to our collaborators that would prevent us from collaborating with others;

collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability;

disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources;

collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products;

collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property;

a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.

Risks Related to Ownership of Our Common Stock

The trading price of our common stock may be volatile, and you could lose all or part of your investment.

The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume.

For example, the closing price of our common stock since its trading began on July 18, 2019 and to March 6, 2020 has ranged from a low of $6.84 to a high of $25.90.

In addition to the factors discussed in this “Risk Factors” section, these factors include:

the commencement, enrollment or results of our ongoing clinical trials of maralixibat and volixibat or any future clinical trials we may conduct, or changes in the development status of our product candidates;

any delay in our regulatory filings for maralixibat or volixibat and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information;

adverse results or delays in clinical trials;

our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;

adverse regulatory decisions, including failure to receive regulatory approval for our product candidates;

changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals;

changes in the structure of health care payment systems;

the failure to obtain coverage and adequate reimbursement of our product candidates, if approved;

adverse developments concerning our manufacturers;

our inability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices;

our inability to establish collaborations if needed;

our failure to commercialize our product candidates;

management transitions and additions or departures of key scientific or management personnel;

unanticipated serious safety concerns related to the use of our product candidates;

introduction of new products or services offered by us or our competitors;

announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

our ability to effectively manage our growth;

the size and growth, if any, of the markets for PFIC, ALGS and other cholestatic liver diseases that we may target;

our ability to successfully enter new markets or develop additional product candidates;

actual or anticipated variations in quarterly operating results;

our cash position;

our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;

publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts;

changes in the market valuations of similar companies;

overall performance of the equity markets;

issuances of debt or equity securities;

sales of our common stock by us or our stockholders in the future;

trading volume of our common stock;

changes in accounting practices;

ineffectiveness of our internal controls;

disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

significant lawsuits, including patent or stockholder litigation;

general political, health and economic conditions;

other events or factors, many of which are beyond our control.

In addition, the stock market in general, and Nasdaq-listed and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities.

This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results or financial condition.

We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.

We have never declared or paid any cash dividend on our common stock.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.

Any return to stockholders will therefore be limited to the appreciation of their stock.

Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval.

Our executive officers and directors, combined with our stockholders who own more than 5% of our outstanding capital stock, beneficially own shares representing a significant percentage of our common stock.

Therefore, these stockholders have the ability to influence us through this ownership position.

These stockholders may be able to determine all matters requiring stockholder approval.

For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.

We are an emerging growth company and a smaller reporting company, and the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act.

For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We could be an emerging growth company until December 31, 2024, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700.0 million as of any June 30 before that time or if we have total annual gross revenue of $1.07 billion or more during any fiscal year before that time, in which cases we would

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 1. Business