Mirum Pharmaceuticals, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 102 Consolidated Balance Sheets 105 Consolidated Statements of Operations 106 Consolidated Statements of Comprehensive Loss 107 Consolidated Statements of Stockholders’ Equity 108 Consolidated Statements of Cash Flows 109 Notes to Consolidated Financial Statements 110 101 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Mirum Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Mirum Pharmaceuticals, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 102 Table of Contents Inventory Description of the Matter As described in Notes 2 and 5 to the consolidated financial statements, inventory, which totaled $22.4 million as of December 31, 2024, is comprised of raw materials, work-in-progress and finished goods for Livmarli, Chenodal and Cholbam (“the Products”). Inventory is valued at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Auditing the inventory costing was complex because the nature of the process for inventory costing for the Products involves the use of a variety of inputs such as third-party material costs and allocated internal labor, all of which are tracked in manually-prepared spreadsheets. How We Addressed the Matter in Our Audit To test the completeness and accuracy of the inventory balance, our substantive audit procedures included, among others, agreeing a sample of production costs and purchases used in the spreadsheets to actual costs incurred, agreeing a sample of capitalized labor costs to payroll records, confirming certain quantities of on-hand inventory directly with third-party service providers, and confirming amounts owed to certain third-party service providers. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2019. San Mateo, California February 26, 2025 103 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Mirum Pharmaceuticals, Inc. Opinion on Internal Control Over Financial Reporting We have audited Mirum Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Mirum Pharmaceuticals, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 26, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Mateo, California February 26, 2025 104 Table of Contents Mirum Pharmaceuticals, Inc. Consolidated Balance Sheets (In thousands, except share and per share data) December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 222,503 $ 286,326 Short-term investments 57,812 — Accounts receivable 78,286 67,968 Inventory 22,403 22,312 Prepaid expenses and other current assets 11,784 10,935 Total current assets 392,788 387,541 Restricted cash 425 — Long-term investments 12,526 — Property and equipment, net 1,139 706 Operating lease right-of-use assets 8,675 1,284 Intangible assets, net 249,819 252,925 Other assets 5,382 4,165 Total assets $ 670,754 $ 646,621 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 14,618 $ 7,416 Accrued expenses 110,224 78,544 Operating lease liabilities, current 1,709 1,104 Total current liabilities 126,551 87,064 Operating lease liabilities, noncurrent 7,972 617 Convertible notes payable, net, noncurrent 308,082 306,421 Other liabilities 2,509 3,849 Total liabilities 445,114 397,951 Commitments and contingencies Stockholders’ equity: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized, and no shares issued and outstanding as of December 31, 2024 and 2023 — — Common stock, $ 0.0001 par value; 200,000,000 shares authorized; 48,338,096 and 46,723,143 shares issued and outstanding as of December 31, 2024 and 2023 5 5 Additional paid-in capital 870,189 803,260 Accumulated deficit ( 644,181 ) ( 556,239 ) Accumulated other comprehensive (loss) income ( 373 ) 1,644 Total stockholders’ equity 225,640 248,670 Total liabilities and stockholders’ equity $ 670,754 $ 646,621 The accompanying notes are an integral part of these consolidated financial statements. 105 Table of Contents Mirum Pharmaceuticals, Inc. Consolidated Statements of Operations (In thousands, except share and per share data) Year Ended December 31, 2024 2023 2022 Revenue: Product sales, net $ 336,409 $ 178,874 $ 75,062 License and other revenue 479 7,500 2,000 Total revenue 336,888 186,374 77,062 Operating expenses: Cost of sales 81,643 47,039 12,374 Research and development 140,630 102,609 106,842 Selling, general and administrative 202,221 145,880 89,066 Total operating expenses 424,494 295,528 208,282 Loss from operations ( 87,606 ) ( 109,154 ) ( 131,220 ) Other income (expense): Interest income 13,792 13,735 3,857 Interest expense ( 14,311 ) ( 15,105 ) ( 15,979 ) Change in fair value of derivative liability — — 906 Loss from termination of revenue interest purchase agreement — ( 49,076 ) — Other income (expense), net 1,213 ( 2,824 ) 365 Loss before provision for income taxes ( 86,912 ) ( 162,424 ) ( 142,071 ) Provision for (benefit from) income taxes 1,030 991 ( 6,406 ) Net loss $ ( 87,942 ) $ ( 163,415 ) $ ( 135,665 ) Net loss per share: Basic $ ( 1.85 ) $ ( 4.00 ) $ ( 4.01 ) Diluted $ ( 1.85 ) $ ( 4.00 ) $ ( 4.02 ) Weighted-average shares of common stock outstanding Basic 47,522,594 40,885,124 33,839,072 Diluted 47,522,594 40,885,124 33,982,493 The accompanying notes are an integral part of these consolidated financial statements. 106 Table of Contents Mirum Pharmaceuticals, Inc. Consolidated Statements of Comprehensive Loss (In thousands) Year Ended December 31, 2024 2023 2022 Net loss $ ( 87,942 ) $ ( 163,415 ) $ ( 135,665 ) Other comprehensive income (loss): Unrealized gain (loss) on available-for-sale investments 130 230 ( 194 ) Cumulative translation adjustments ( 2,147 ) 1,631 12 Comprehensive loss $ ( 89,959 ) $ ( 161,554 ) $ ( 135,847 ) The accompanying notes are an integral part of these consolidated financial statements. 107 Table of Contents Mirum Pharmaceuticals, Inc. Consolidated Statements of Stockholders’ Equity (In thousands, except share and per share data) Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance as of December 31, 2021 30,582,596 $ 3 $ 377,403 $ ( 257,159 ) $ ( 35 ) $ 120,212 Issuance of common stock in connection with asset acquisition 609,305 — 15,585 — — 15,585 Issuance of common stock in connection with equity incentive plans 357,934 — 5,438 — — 5,438 Issuance of common stock in at-the-market offerings, net of issuance costs of $ 785 1,160,915 — 21,289 — — 21,289 Issuance of common stock in connection with public offering, net of issuance costs $ 5,922 4,000,000 1 86,077 — — 86,078 Restricted common stock vested in the period 122,464 — — — — — Issuance of common stock in connection with Employee Stock Purchase Plan 123,131 — 1,834 — — 1,834 Stock-based compensation — — 27,448 — — 27,448 Net loss — — — ( 135,665 ) — ( 135,665 ) Other comprehensive loss — — — — ( 182 ) ( 182 ) Balance as of December 31, 2022 36,956,345 $ 4 $ 535,074 $ ( 392,824 ) $ ( 217 ) $ 142,037 Issuance of common stock in private placement, net of issuance costs of $ 7,796 8,000,000 1 202,203 — — 202,204 Issuance of common stock in at-the-market offerings, net of issuance costs of $ 518 658,206 — 14,480 — — 14,480 Issuance of common stock in connection with asset acquisition 231,624 — 5,188 — — 5,188 Issuance of common stock in connection with equity award plans 760,226 — 8,279 — — 8,279 Issuance of common stock in connection with employee stock purchase plan 116,742 — 2,191 — — 2,191 Stock-based compensation — — 35,845 — — 35,845 Net loss — — — ( 163,415 ) — ( 163,415 ) Other comprehensive income — — — — 1,861 1,861 Balance as of December 31, 2023 46,723,143 $ 5 $ 803,260 $ ( 556,239 ) $ 1,644 $ 248,670 Issuance of common stock in connection with equity award plans 1,489,510 — 15,059 — — 15,059 Issuance of common stock in connection with employee stock purchase plan 125,443 2,640 2,640 Stock-based compensation — — 49,230 — — 49,230 Net loss — — — ( 87,942 ) — ( 87,942 ) Other comprehensive loss — — — — ( 2,017 ) ( 2,017 ) Balance as of December 31, 2024 48,338,096 $ 5 $ 870,189 $ ( 644,181 ) $ ( 373 ) $ 225,640 The accompanying notes are an integral part of these consolidated financial statements. 108 Table of Contents Mirum Pharmaceuticals, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2024 2023 2022 Operating activities Net loss $ ( 87,942 ) $ ( 163,415 ) $ ( 135,665 ) Reconciliation of net loss to net cash provided by (used in) operating activities: Stock-based compensation 48,444 35,023 27,007 Depreciation and amortization 23,629 10,829 3,238 Inventory reserves and firm commitment losses 2,614 9,257 — Amortization of debt discount and offering costs 1,661 1,117 — Loss from termination of revenue interest purchase agreement — 49,076 — Non-cash interest expense related to the revenue interest liability — 5,060 15,979 Deferred income taxes associated with an acquisition — — ( 6,580 ) Unrealized foreign exchange (gain) loss ( 1,231 ) 1,764 — Non-cash lease expense 1,354 620 443 Other ( 795 ) ( 1,054 ) ( 3,508 ) Change in operating assets and liabilities: Accounts receivable ( 11,426 ) ( 43,974 ) ( 20,727 ) Prepaid and other current assets ( 849 ) ( 3,600 ) ( 3,676 ) Inventory ( 3,166 ) ( 974 ) ( 3,448 ) Other assets ( 1,498 ) ( 511 ) ( 127 ) Accounts payable, accrued expenses and other liabilities 40,312 30,778 7,639 Operating lease liabilities ( 782 ) ( 940 ) ( 711 ) Net cash provided by (used in) operating activities 10,325 ( 70,944 ) ( 120,136 ) Investing activities Purchase of investments ( 89,026 ) ( 27,329 ) ( 132,322 ) Proceeds from maturities of investments 19,894 153,000 140,300 Purchase of property and equipment ( 993 ) ( 109 ) ( 278 ) Cash paid for acquisition — ( 212,762 ) — Payments made for additions to intangible assets ( 20,000 ) ( 20,000 ) — Net cash (used in) provided by investing activities ( 90,125 ) ( 107,200 ) 7,700 Financing activities Proceeds from issuance of common stock in private placement, net of issuance costs — 202,204 — Proceeds from issuance of common stock in at-the-market offerings, net of issuance costs — 14,480 21,289 Proceeds from issuance of common stock in public offerings, net of issuance costs — — 86,078 Proceeds from issuance of convertible notes, net — 305,304 — Proceeds from issuance of common stock pursuant to equity plans 17,699 10,470 7,272 Payments of deferred offering costs — ( 281 ) — Payments on revenue interest liability — ( 195,577 ) ( 5,552 ) Net cash provided by financing activities 17,699 336,600 109,087 Effect of exchange rate on cash, cash equivalents and restricted cash ( 1,297 ) ( 133 ) 12 Net (decrease) increase in cash, cash equivalents and restricted cash ( 63,398 ) 158,323 ( 3,337 ) Cash, cash equivalents and restricted cash equivalents at beginning of period 286,326 128,003 131,340 Cash, cash equivalents and restricted cash at end of period $ 222,928 $ 286,326 $ 128,003 Supplemental disclosure of cash flow information: Operating cash flows paid for operating lease $ 1,274 $ 1,079 $ 911 Cash paid for interest $ 12,650 $ 6,817 $ — Cash paid for income taxes $ 1,004 $ 125 $ — Non-cash operating, investing and financing activities: Accrued milestone payments classified as intangible assets, net $ — $ — $ 15,000 Right-of-use assets obtained in exchange for lease liabilities $ 9,633 $ 473 $ 285 Decrease in ROU assets and lease liabilities due to lease modification $ 723 $ — $ — Stock-based compensation capitalized to inventory $ 1,122 $ 822 $ 441 Issuance of common stock in connection with settlement of Contingent Milestone and Indemnification Holdback liabilities $ — $ 5,188 $ — Contingent Milestone and Indemnification Holdback liabilities for common stock issuance in exchange for acquired intangible assets $ — $ — $ 5,431 Issuance of common stock in exchange for acquired intangible $ — $ — $ 15,585 Deferred tax liability incurred from acquired intangible $ — $ — $ 6,580 The accompanying notes are an integral part of these consolidated financial statements. 109 Table of Contents Mirum Pharmaceuticals, Inc. Notes to Consolidated Financial Statements 1. Organization and Description of Business Mirum Pharmaceuticals, Inc. (the “Company”) was incorporated in the State of Delaware on May 2, 2018 , and is headquartered in Foster City, California. The Company is a biopharmaceutical company dedicated to transforming the treatment of rare diseases. As of December 31, 2024, the Company had three approved medicines: LIVMARLI® (maralixibat) oral solution (“Livmarli”), CHOLBAM® (cholic acid) capsules (“Cholbam”), and CHENODAL® (chenodiol) tablets (“Chenodal”). Livmarli is approved for the treatment of cholestatic pruritus in patients with Alagille syndrome (“ALGS”) in the United States (“U.S.”) and various other countries around the world and for cholestatic pruritus in patients with progressive familial intrahepatic cholestasis (“PFIC”) in the U.S. and for the treatment of PFIC in the European Union (“EU”). On August 31, 2023, the Company completed the acquisition of assets of Travere Therapeutics, Inc. (“Travere”) that are primarily related to the development, manufacture (including synthesis, formulation, finishing or packaging) and commercialization of chenodiol and Cholbam (also known as Kolbam, and together with chenodiol, the “Bile Acid Medicines”), two therapies addressing rare diseases in high-need settings (such acquisition, the “Bile Acid Portfolio Acquisition”) (Note 7). Cholbam is FDA-approved for the treatment of bile acid synthesis disorders due to single enzyme deficiencies and adjunctive treatment of peroxisomal disorders in patients who show signs or symptoms of liver disease. Chenodal at the time of acquisition was approved for the treatment of radiolucent stones in the gallbladder and had received medical necessity recognition by the FDA for the treatment of cerebrotendinous xanthomatosis (“CTX”). Subsequently, in February 2025, the Company received FDA approval for chenodiol tablets for the treatment of CTX in adults, which will be commercialized under the brand name Ctexli. The Company’s development pipeline consists of the clinical-stage product candidate volixibat, MRM-3379 and indication expansion opportunities for Livmarli. The Company commenced significant operations in November 2018. The Company views its operations and manages its business as one operating segment. The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. See Note 14 Segment Reporting for further details. Liquidity The Company has a limited operating history, has incurred significant operating losses since its inception, and the revenue and income potential of the Company’s business and market are unproven. As of December 31, 2024, the Company had an accumulated deficit of $ 644.2 million and unrestricted cash, cash equivalents and investments of $ 292.8 million. The Company’s convertible notes are convertible at the option of the holders during the first quarter of 2025. If holders of the convertible notes elect to convert, the Company may elect to settle such conversions in cash, common stock or a combination of the two.The Company believes that its unrestricted cash, cash equivalents and investments of $ 292.8 million as of December 31, 2024 provide sufficient capital resources to continue its operations for at least twelve months from the issuance date of the accompanying consolidated financial statements. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. All intercompany balances and transactions among the consolidated entities have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the financial statements and accompanying notes. These estimates and assumptions are based upon historical experience, knowledge of current events and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities 110 Table of Contents and the recording of expenses that are not readily apparent from other sources. Actual results could differ materially from those estimates. The Company’s consolidated financial statements as of and for the year ended December 31, 2024 reflect the Company’s estimates of the impact of the geopolitical and macroeconomic environment, including the impact of inflation, tariffs and trade tensions, bank failures, high interest rates and foreign exchange rate fluctuations. The duration and the scope of these conditions cannot be predicted; therefore, the extent to which these conditions will directly or indirectly impact the Company’s business, results of operations and financial condition, is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates, judgments and assumptions or a revision of the carrying value of the Company’s assets or liabilities as of the date of this filing. Reclassifications Amounts related to the cost recognized on sale of acquired inventory in the statement of cash flows for the year ended December 31, 2023 have been reclassified to conform to the current presentation. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments that are readily convertible into cash without penalty and with original maturities of three months or less at the date of purchase to be cash equivalents. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents are valued at cost, which approximate their fair value. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that together reflect the same amounts shown in the consolidated statements of cash flows (in thousands): As of December 31, 2024 2023 Cash and cash equivalents $ 222,503 $ 286,326 Restricted cash 425 — Total cash, cash equivalents, and restricted cash $ 222,928 $ 286,326 Concentrations of Credit Risk and Off-Balance Sheet Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, accounts receivable and investments. The Company limits the amount of credit exposure by investing cash that is not required for immediate operating needs in money market funds, government obligations, corporate debt securities and/or commercial paper. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. To date, the Company has not experienced any losses associated with this credit risk and continues to believe that this exposure is not significant. The Company relies on a single third-party logistics provider (“3PL”) in each major market and a single specialty pharmacy for all of the Company’s sales of its approved medicines in the United States. The Company sources materials and services through several vendors. Certain materials are sourced from a single vendor. The loss of certain vendors could result in a temporary disruption of the Company’s commercialization efforts. As of December 31, 2024 and as of December 31, 2023, the Company did not have any customers that individually accounted for more than 10 % of accounts receivable. For the years ended December 31, 2024, 2023 and 2022, the Company did not have revenue attributable to any one customer in excess of 10 % of sales. Investments The Company classifies all investments in securities as available-for-sale. Management determines the appropriate classification of its investments in securities at the time of purchase. Investments with original maturities beyond three months at the date of purchase and which mature at, or less than twelve months from the balance sheet date, are classified as a current asset. Investments are recorded at fair value, with unrealized gains and losses reported as accumulated other comprehensive income (loss) until realized, with the exception of any declines in fair value below the cost basis that are a result of a credit loss, which, if any, are reported in other income (expense), net in the current period through an allowance 111 Table of Contents for credit losses. Each reporting period, the Company evaluates whether declines in fair values of its available-for-sale securities below their cost basis are a result of credit loss or other factors and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss, the creditworthiness of the security issuers, as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any available-for-sale securities before recovery of its amortized cost basis. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, as well as interest and dividends, are included in interest income. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis and are also included in other income (expense). To date, the Company has not identified any declines in fair value of its investments related to credit loss. Fair Value of Financial Instruments Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement determined based on assumptions that market participants would use in pricing an asset or liability. The following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1: Observable inputs (unadjusted) such as quoted prices in active markets for identical assets or liabilities; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly for similar assets or liabilities; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Accounts Receivable The Company has accounts receivable amounts due from product sales. The Company also has accounts receivable amounts due from license agreements for milestones achieved, but not yet paid. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company estimates the allowance for credit losses using the current expected credit loss model. Under this model, the allowance for credit losses reflects the Company’s estimate of lifetime expected credit losses. The Company evaluates the collectability of the cash flows based on the risk of loss over the contractual life, even when that risk is remote, based on judgments about the creditworthiness of its customers, historical experience and other relevant information that is available to the Company. There was no allowance for credit losses as of December 31, 2024. There was no bad debt expense for the years ended December 31, 2024, 2023 and 2022. Inventory Inventory is valued at the lower of cost or net realizable value, with cost determined on a first-in, first-out (FIFO) basis. The Company periodically reviews the composition of inventory to identify excess, obsolete, slow-moving or otherwise unsaleable items. If unsaleable items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the decline in value is recognized through a charge to cost of sales. Furthermore, the Company periodically reviews its firm commitments for the purchase of minimum order quantities. If the minimum order quantities exceed the Company’s future demand, a net loss is accrued in cost of sales for such future inventory purchases. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. Accruals for firm purchase commitments amounted to $ 4.4 million and $ 5.2 million as of December 31, 2024 and December 31, 2023, respectively, of which $ 2.5 million and $ 3.8 million was included in other liabilities on the consolidated balance sheets as of December 31, 2024 and December 31, 2023, respectively. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from three to five years . Leasehold improvements are amortized over the shorter of their useful lives or the related lease term. As of December 31, 2024, property and equipment consisted primarily of leasehold improvements of $ 0.2 million and furniture and equipment of $ 1.6 million. As of December 31, 2023, property and equipment consisted primarily of leasehold improvements of $ 1.3 million 112 Table of Contents and furniture and equipment of $ 0.9 million. Accumulated depreciation as of December 31, 2024 and 2023 was $ 0.7 million and $ 1.5 million, respectively. Depreciation expense was $ 0.5 million for the year ended December 31, 2024, and $ 0.3 million for each of the years ended December 31, 2023 and 2022. Impairment of Long-Lived Assets Long-lived assets are reviewed for indications of possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amounts to the future undiscounted cash flows attributable to these assets. An impairment loss is recognized to the extent an asset group is not recoverable, and the carrying amount exceeds the projected discounted future cash flows arising from these assets. There were no impairments of long-lived assets for any of the periods presented. Intangible Assets, Net The Company accounts for asset acquisitions that do not meet the definition of a business using the cost accumulation method, whereby the cost of the acquisition, including certain transaction costs, is allocated to the asset (or assets) acquired on the basis of its (or their) relative fair value(s) on the measurement date. No goodwill is recognized in an asset acquisition. Intangible assets are measured at their fair values as of the acquisition date or, in the case of commercial milestone payments, the date they become due. The evaluation of intangible assets includes assessing the amortization period for which the asset is expected to contribute to the future cash flows of the Company. Intangible assets with finite useful lives are amortized over their estimated useful lives on a straight-line basis. The Company tests its finite lived intangible assets for impairment annually or if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If it is determined that the asset is impaired, the carrying value is written down to its estimated fair value, with the related impairment charge recognized in the consolidated statements of operations in the period in which the impairment occurs. The Company has not recorded any impairments to its intangible assets for any of the periods presented. The components of the Company’s intangible assets were as follows (in thousands, except for weighted-average remaining amortization period): December 31, 2024 Gross Carrying Value Accumulated Amortization Net Carrying Amount Weighted-Average Remaining Amortization Period (Years) Commercial milestones $ 59,000 $ ( 7,092 ) $ 51,908 12.6 Developed technology 226,620 ( 29,248 ) 197,372 10.7 Assembled workforce 970 ( 431 ) 539 1.7 Total intangible assets $ 286,590 $ ( 36,771 ) $ 249,819 11.1 December 31, 2023 Gross Carrying Value Accumulated Amortization Net Carrying Amount Weighted-Average Remaining Amortization Period (Years) Commercial milestones $ 39,000 $ ( 3,318 ) $ 35,682 16.2 Developed technology 226,620 ( 10,239 ) 216,381 11.7 Assembled workforce 970 ( 108 ) 862 2.7 Total intangible assets $ 266,590 $ ( 13,665 ) $ 252,925 12.3 Amortization expense was $ 23.1 million, $ 10.5 million and $ 2.9 million for the years ended December 31, 2024, 2023 and 2022, respectively, and was included in cost of sales on the accompanying consolidated statements of operations. 113 Table of Contents The following table summarizes the estimated future amortization expense associated with the Company’s intangible assets as of December 31, 2024 (in thousands): Amount 2025 $ 23,898 2026 23,791 2027 23,575 2028 23,575 2029 23,575 Thereafter 131,405 $ 249,819 Leases The Company determines if a contractual arrangement is or contains a lease at inception. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating leases are included in ROU assets, current operating lease liabilities, and long-term operating lease liabilities on the accompanying consolidated balance sheets. Operating lease ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using the Company’s incremental borrowing rate applicable to the leased asset, unless the implicit rate is readily determinable. Operating lease ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. The Company determines the lease term as the noncancelable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the consolidated balance sheets. The Company’s leases do not contain any residual value guarantees. Lease expense for minimum lease payments is recognized as rent expense on a straight-line basis over the lease term. Variable lease payments include lease operating expenses. Accrued Research and Development Expenses The Company accrues and expenses clinical trial activities performed by third parties based upon estimates of the proportion of work completed over the life of the individual study and patient enrollment rates in accordance with agreements established with clinical research organizations and clinical trial sites. The Company determines the estimates by reviewing contracts, vendor agreements and purchase orders and through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. The Company makes estimates of accrued expenses as of each balance sheet date based on facts and circumstances known to the Company at that time. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. The Company has not experienced any material differences between accrued costs and actual costs incurred for the periods presented. Nonrefundable advance payments for goods and services are deferred and recognized as expense in the period that the related goods are consumed or services are performed. Convertible Notes The Company evaluates all conversion, repurchase and redemption features contained in a debt instrument to determine if there are any embedded features that require bifurcation as a derivative. The Company accounts for its convertible notes (refer to Note 10) as a liability equal to the proceeds received from issuance, including any embedded conversion features, net of the unamortized debt discount and offering costs in the accompanying consolidated balance sheets. The debt issuance and offering costs are amortized over the contractual term of the convertible notes, using the effective interest method, as interest expense in the accompanying consolidated statements of operations. Revenue Interest Liability, Net In relation to the revenue interest liability, net, associated with the 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 that the Company entered into in December 2020, as amended in September 2021, the Company imputed interest expense using the effective interest rate method. The effective interest rate was calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on 114 Table of Contents the liability varied during the term of the agreement depending on a number of factors, including the level of actual and forecasted product sales, net. The Company evaluated the interest rate quarterly based on actual product sales, net and forecast product sales, net, utilizing the prospective method. In April 2023, the Company repurchased all future revenue interests (the “Revenue Interests”) and as a result, the RIPA was terminated in accordance with its terms (refer to Note 6). Derivative Liability The RIPA contained certain features that met the definition of being an embedded derivative requiring bifurcation as a separate compound financial instrument apart from the RIPA. The derivative liability was initially measured at fair value on issuance and was subject to remeasurement at each reporting period with changes in fair value recognized as other income (expense) in the accompanying consolidated statements of operations as the change in fair value of derivative liability. In April 2023, the derivative liability was extinguished in connection with the termination of the RIPA (refer to Note 6). Revenue Recognition The Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Product Sales, Net The Company recognizes product sales, net when the customer obtains control of its product, which occurs at a point in time, typically upon delivery of the Company’s product to the customer. Revenues from product sales are recorded at the net sales price, or the transaction price, which may include fixed or variable consideration for discounts, government rebates, co-pay assistance, returns and other allowances that are offered within contracts with a customer relating to the sale of the Company's approved medicines. Estimates of variable consideration are calculated based on the actual product sales each reporting period and the nature of the variable consideration related to those sales. Overall, these estimates reflect the Company’s best estimate of the amount of consideration to which the Company expects to be entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in product sales, net only to the extent that it is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimates are reviewed and updated quarterly as additional information becomes known. Actual amounts of consideration ultimately received may differ materially from estimates. If actual results in the future vary from estimates, the Company will adjust these estimates, which would affect product sales, net and earnings in the period such variances are adjusted. Significant categories of sales discounts and allowances are as follows: Government Rebates : The Company records rebates payable under Medicaid and other government programs as a reduction of revenue at the time product revenues are generated. The Company’s rebate calculations may require estimates, including estimates of customer mix, to determine which sales will be subject to rebates and the amount of such rebates. The Company updates its estimates and assumptions on a quarterly basis and records any necessary adjustments to revenue in the period identified. The liability for unpaid rebates is included in accrued expenses on the accompanying consolidated balance sheets. To date, actual government rebates have not differed materially from the Company’s estimates. Other Incentives: Other incentives include a branded co-pay assistance program for eligible patients with commercial insurance in the United States. The branded co-pay assistance program assists commercially insured patients who have coverage for the Company's approved medicines and is intended to reduce each participating patient’s portion of the financial responsibility of the purchase price up to a specified dollar amount of assistance. The calculation of the accrual for co-pay assistance is based upon an identification of claims and the cost per claims associated with product that has been recognized as revenue. The Company records amounts paid under the brand specific co-pay assistance program for each patient as a reduction of revenue from product sales. To date, actual other incentives have not differed materially from the Company’s estimates. Product Returns: The Company records revenue for product sales, net of estimated product returns. Customers have limited return rights related only to the product’s damage or defect identified upon delivery of the product. The Company estimates the amount of product sales that may be returned and records the estimate as a reduction of revenue and a refund liability in the period the related product revenue is recognized. To date, actual returns have not differed materially from the Company’s estimates. 115 Table of Contents The following table represents total revenues and disaggregates Product sales, net by approved medicine (in thousands): Year Ended December 31, 2024 2023 2022 Product sales, net: Livmarli $ 213,295 $ 141,795 $ 75,062 Bile Acid Medicines 123,114 37,079 — Total product sales, net 336,409 178,874 75,062 License and other revenue 479 7,500 2,000 Total revenues $ 336,888 $ 186,374 $ 77,062 The following table sets forth Product sales, net by geographic area based on the ship-to location (in thousands): Year Ended December 31, 2024 2023 2022 United States $ 274,173 $ 146,699 $ 67,920 Rest of the world 62,236 32,175 7,142 Total product sales, net $ 336,409 $ 178,874 $ 75,062 License and Collaboration Arrangements The Company enters into collaborative arrangements with partners and analyzes the collaboration arrangements to assess whether they are within the scope of Collaborative Arrangements (Topic 808) ("Topic 808") and determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. The accounting for some of the activities under collaboration arrangements may be subject to Revenue from Contracts with Customers (Topic 606) (“Topic 606”) for distinct units of account that are reflective of a vendor-customer relationship. For other elements of collaboration arrangements, such as reimbursements of certain development costs, the Company generally records reimbursements received as a reduction of research and development expenses. In determining the appropriate amount of revenue to be recognized under Topic 606 as the Company fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the contracts with customers; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) determination and measurement of the transaction price, including any constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The terms of the Company’s license and collaborative research and development agreements include upfront license fees, research, development and other funding or reimbursements, milestone and other contingent payments for the achievement of defined collaboration objectives and certain development, regulatory and sales-based events, as well as royalties on sales of commercialized products. Arrangements that include upfront payments may require deferral of revenue recognition to a future period until the Company satisfies performance obligations under these arrangements. A performance obligation is a promise in a contract to transfer a distinct good or service and is the unit of accounting in Topic 606. A contract’s transaction price is allocated among each distinct performance obligation based on relative standalone selling price and recognized as revenue when, or as, the applicable performance obligation is satisfied. If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues attributed to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price as variable consideration using the most likely amount method or expected value method, depending on the nature of the contingency and the variable payments. If it is probable that a significant reversal of cumulative revenue recognized for the contract would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not generally 116 Table of Contents considered probable of being achieved until those approvals are received. Given the high degree of uncertainty around the occurrence of these events, the Company generally determines the milestone and other contingent amounts to be fully constrained until the uncertainty associated with these payments is resolved. At the end of each reporting period, the Company re-evaluates the probability of achievement of any development milestones, and if necessary, adjusts its estimate of the transaction price. Any such adjustments would be recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, the Company recognizes revenue at the later of (i) when or as the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Accounting for these arrangements requires the Company to develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. The Company has never sold the performance obligations in its collaborative arrangements separately; therefore, an observable stand-alone selling price does not exist. Accordingly, the Company estimates a stand-alone selling price through maximizing the use of observable inputs such as market data, project cost estimates, and targeted margins. Cost of Product Sales Prior to receiving approval from the U.S. Food and Drug Administration ("FDA") or other foreign regulatory authorities for a new medicine or new formulation, the Company expenses all costs incurred related to the manufacture of such medicines as research and development expense because of the inherent risks associated with the development of a drug candidate, the uncertainty about the regulatory approval process and the lack of history for the Company of regulatory approval of drug candidates. Subsequent to receiving FDA or other foreign regulatory authority approval, when commercialization is considered probable and the future economic benefit is expected to be realized, the Company begins capitalizing inventory costs incurred. Cost of product sales consist of manufacturing costs, transportation and freight, amortization of capitalized intangible assets, royalties and indirect overhead costs associated with the manufacturing and distribution of the Company's approved products. Cost of product sales may also include period costs related to certain manufacturing services and inventory adjustment charges. Research and Development Expenses Research and development expenses consists primarily of fees paid to contract research organizations and other vendors for clinical, non-clinical and manufacturing services, salaries and employee benefits, including stock-based compensation, consultant expenses, costs related to acquiring manufacturing materials, costs related to compliance with regulatory requirements and license payments related to acquiring intellectual property rights for the Company’s product candidates. Research and development expenses are expensed as incurred. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses relate to sales and marketing, finance, human resources, legal and other administrative activities. SG&A expenses consist primarily of personnel costs, facilities and overhead costs, outside marketing, advertising and legal expenses, and other general and administrative costs. The Company expenses the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $ 11.5 million, $ 6.3 million and $ 4.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. Stock-Based Compensation The Company recognizes stock-based compensation for all stock-based awards based on the grant date fair value of the award granted to employees and nonemployees, including members of its board of directors. For stock-based awards with service conditions, the fair value of the awards is recognized on a straight-line basis over the requisite service period in which the awards are expected to vest. For stock-based awards with performance vesting conditions, stock-based compensation is recognized when it is considered probable that the performance conditions will be satisfied. At each reporting period, the Company reassesses the probability of the achievement of the performance vesting conditions. Any change in stock-based compensation resulting from an adjustment in the vesting is treated as a cumulative catch-up in the period of adjustment. For stock-based awards with market conditions, stock-based compensation is recognized over the appropriate requisite service period. The Company accounts for forfeitures as they occur. 117 Table of Contents The Company evaluates the grant date fair value of awards granted for impacts of any potential material non-public information at the time of grant. Foreign Currency The consolidated financial statements are presented in U.S. dollars. The functional currency for most of the Company’s foreign subsidiaries is their local currency. Balance sheet accounts of international subsidiaries are translated at the current exchange rates as of the end of each accounting period. Income statement items are translated at average exchange rates for the period. The resulting translation adjustments are recorded as a separate component of stockholders’ equity. Foreign currency transaction gains and losses are included in other income (expense), net in the consolidated statements of operations. Transaction gains and losses result primarily from fluctuations in exchange rates when intercompany receivables and payables are denominated in currencies other than the functional currency of its subsidiary that recorded the transaction. Unrealized foreign exchange gains and losses amounted to a $ 1.2 million gain for the year ended December 31, 2024, a $ 1.8 million loss for the year ended December 31, 2023, and were insignificant for the year ended December 31, 2022. Realized foreign exchange gains and losses were insignificant for the years ended December 31, 2024, 2023 and 2022. Income Taxes Income taxes are recorded using the liability method, under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are recorded against deferred tax assets, including net operating losses and tax credits, when it is determined it is more-likely-than-not that some or all of the tax benefits will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No. 740, Income Taxes (“ASC 740”). When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. Interest and penalties related to unrecognized tax benefits, if any, are recorded as a component of income tax expense. Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. Diluted net loss per share excludes the potential impact of the Company’s common stock subject to repurchase, common stock options, restricted stock units, contingently issuable employee stock purchase plan shares and common stock issuable upon conversion of convertible notes because their effect would be anti-dilutive due to the Company’s net loss. 118 Table of Contents The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2024, 2023 and 2022 (in thousands, except share and per share data): Year Ended December 31, 2024 2023 2022 Numerator: Net loss, basic $ ( 87,942 ) $ ( 163,415 ) $ ( 135,665 ) Add: Change in fair value of Holdback Indemnification liability — — ( 214 ) Add: Change in fair value of Contingent Milestone liability — — ( 700 ) Net loss, diluted $ ( 87,942 ) $ ( 163,415 ) $ ( 136,579 ) Denominator: Weighted-average shares of common stock outstanding, basic 47,522,594 40,885,124 33,839,072 Effect of dilutive securities: Weighted-average Holdback-Indemnification shares issuable — — 19,590 Weighted-average contingent milestone shares — — 123,831 Weighted-average shares of common stock outstanding, diluted 47,522,594 40,885,124 33,982,493 Net loss per share, basic $ ( 1.85 ) $ ( 4.00 ) $ ( 4.01 ) Net loss per share, diluted $ ( 1.85 ) $ ( 4.00 ) $ ( 4.02 ) The following outstanding potential dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect: As of December 31, 2024 2023 2022 Options to purchase common stock and restricted stock units 11,709,003 10,909,831 8,955,557 Common stock issuable upon conversion of convertible notes 9,964,247 9,964,247 — Employee stock purchase plan contingently issuable 19,580 23,054 26,305 Total 21,692,830 20,897,132 8,981,862 Recently Adopted Accounting Pronouncements On January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This new guidance is designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and is effective for public business entities for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company adopted ASU 2023-07 in 2024 using a retrospective method for all periods presented. For further information, refer to Note 14 Segment Reporting . Recent Accounting Pronouncements Not Yet Adopted From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the accompanying consolidated financial statements and disclosures. In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure of disaggregated information about specific categories underlying certain income statement 119 Table of Contents expense line items in the footnotes to the financial statements for both annual and interim periods. Subsequently in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”) to clarify the effective date of ASU 2024-03. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. 3. Fair Value Measurements Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type are presented in the following table (in thousands): December 31, 2024 Level 1 Level 2 Level 3 Total Financial assets: Money market funds $ 202,965 $ — $ — $ 202,965 U.S. treasury bills 2,964 — — 2,964 Corporate debt securities — 37,978 — 37,978 U.S. government bonds — 26,904 — 26,904 Agency bonds — 2,492 — 2,492 Total financial assets $ 205,929 $ 67,374 $ — $ 273,303 December 31, 2023 Level 1 Level 2 Level 3 Total Financial assets: Money market funds $ 278,116 $ — $ — $ 278,116 Total financial assets $ 278,116 $ — $ — $ 278,116 The carrying amounts of certain financial instruments such as cash and cash equivalents, restricted cash , accounts receivable, prepaid expenses, other current assets, accounts payable and accrued expenses as of December 31, 2024 and 2023 approximate their related fair values due to their short-term nature. Money market funds and U.S. treasury bills are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. Certain financial instruments classified within Level 2 of the fair value hierarchy include the types of instruments that trade in markets that are not considered to be active, but are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The Company reviews trading activity and pricing for these investments as of each measurement date. Derivative Liability The debt pursuant to the RIPA (refer to Note 6 “Revenue Interest Purchase Agreement” for further information) contained an embedded derivative requiring bifurcation as a single compound derivative instrument. The Company estimated the fair value of the derivative liability using a “with-and-without” method. The “with-and-without” methodology involves valuing the whole instrument on an as-is basis and then valuing the instrument without the individual embedded derivative. In 2023, there was no change in the fair value of the derivative liability prior to its extinguishment in connection with the termination of the RIPA in April 2023. Indemnification Holdback and Contingent Milestone Liabilities In May 2022, in connection with the acquisition of Satiogen Pharmaceuticals, Inc. (“Satiogen”) (refer to Note 7 “Asset Acquisitions” for further information), the Company recorded at fair value liabilities related to the Company’s common stock issuable upon satisfaction of certain purchase price adjustments and indemnification obligations and contingent consideration upon achievement of a certain milestone. The fair value of the liabilities was classified within 120 Table of Contents Level 3 of the fair value hierarchy and was estimated based upon the value of the Company’s common stock price, management’s estimate of the probability of indemnification obligations being incurred during the one year following the acquisition date, and management’s estimate of the probability of the milestone being met. The fair value of the liabilities was initially measured on May 20, 2022, the date on which the Company completed the acquisition of Satiogen. The Company assessed the fair value of the liabilities each reporting period until resolution of the related contingency, and changes in fair value were recorded in other income (expense), net in the accompanying consolidated statements of operations. The contingencies were resolved in December 2022 and June 2023 and the Company issued 199,993 and 31,631 shares of common stock, respectively. The change in fair value of the liabilities was insignificant for the years ended December 31, 2023 and 2022. There was no outstanding balance related to the liabilities as of December 31, 2023. 4. Financial Instruments The fair value and amortized cost of cash equivalents and available-for-sale investments by major security type are presented in the following table (in thousands): December 31, 2024 Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Cash equivalents and investments: Money market funds $ 202,965 $ — $ — $ 202,965 U.S. treasury bills 2,957 7 — 2,964 Corporate debt securities 37,942 50 ( 14 ) 37,978 U.S. government bonds 26,819 90 ( 5 ) 26,904 Agency bonds 2,490 2 — 2,492 Total cash equivalents and investments $ 273,173 $ 149 $ ( 19 ) $ 273,303 Classified as: Cash equivalents $ 202,965 Short-term investments 57,812 Long-term investments 12,526 Total cash equivalents and investments $ 273,303 December 31, 2023 Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Cash equivalents: Money market funds $ 278,116 $ — $ — $ 278,116 Total cash equivalents $ 278,116 $ — $ — $ 278,116 Classified as: Cash equivalents $ 278,116 Total cash equivalents $ 278,116 As of December 31, 2024, the remaining contractual maturities of available-for-sale debt securities were as follows (in thousands): Estimated Fair Value Due within one year $ 57,812 One to two years 12,526 Total $ 70,338 121 Table of Contents During the years ended December 31, 2024 and 2023, there have been no significant realized gains or losses on available-for-sale investments, no investments have been in a continuous unrealized loss position for more than 12 months, and the Company did not recognize any credit losses on these securities. 5. Balance Sheet Components Inventory Inventory consists of the following (in thousands): December 31, 2024 2023 Raw materials $ 3,030 $ 2,998 Work in progress 16,089 9,873 Finished goods 3,284 9,441 Total inventory $ 22,403 $ 22,312 Accrued Expenses Accrued expenses consist of the following (in thousands): December 31, 2024 2023 Accrued sales deductions $ 37,361 $ 23,650 Accrued compensation and related benefits 32,248 20,939 Accrued professional service fees 12,545 7,941 Accrued contract manufacturing and non-clinical costs 9,453 9,922 Accrued royalties payable 9,361 6,716 Accrued clinical trials 7,148 7,268 Accrued interest 2,108 2,108 Total accrued expenses $ 110,224 $ 78,544 6. Revenue Interest Purchase Agreement In December 2020, the Company entered into the RIPA, as amended in September 2021, with Oberland as agent for the Purchasers, and the Purchasers to obtain financing for the commercialization and further development of Livmarli and other working capital needs. Pursuant to the RIPA, the Company received $ 115.0 million consisting of an upfront payment of $ 50.0 million in December 2020 and $ 65.0 million in April 2021 associated with the acceptance for filing by the FDA of a New Drug Application for Livmarli for the treatment of cholestatic pruritus in patients with ALGS, less certain transaction expenses. Under the RIPA, the Company was entitled to receive an additional $ 35.0 million upon FDA approval of Livmarli, which it elected to forgo. The Company was also entitled to receive up to approximately $ 50.0 million at the option of the Purchasers to finance in-licenses or other acquisitions on or prior to December 31, 2022, which the Company did not request. As consideration for such payments, the Purchasers had the right to receive the Revenue Interests from the Company based on annual product sales, net of Livmarli, in tiered payments (the “Revenue Interest Payments”) based on whether annual product sales, net were (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 were initially 9.75 % (at Tier 1) and 2.0 % (at Tier 2 and Tier 3) of such annual net sales. Under the RIPA, the Company had an option (the “Call Option”) to terminate the RIPA and repurchase future Revenue Interests at any time upon advance written notice. If the Call Option was exercised, the required repurchase price is 175.0 % of the Cumulative Purchaser Payments (minus all payments the Company has made to the Purchasers in connection with the Revenue Interests), if such option was exercised prior to the third anniversary of the closing date, and 195.0 % of the Cumulative Purchaser Payments (minus all payments Company has made to the Purchasers in connection with the Revenue Interests) if such option was exercised thereafter. 122 Table of Contents In addition, the RIPA contained various representations and warranties, information rights, non-financial and financial covenants, indemnification obligations and other provisions that are customary for a transaction of this nature. The Purchasers’ obligations to fund the scheduled installments were subject to certain customary conditions as set forth in the RIPA. Concurrently with the RIPA, the Company entered into a Common Stock Purchase Agreement (“CSPA”) with certain affiliates of Oberland, pursuant to which the Company sold an aggregate of 509,164 shares of its common stock for an aggregate purchase price of $ 10.0 million. The $ 50.0 million upfront payment received pursuant to the RIPA and $ 10.0 million received pursuant to the CSPA was allocated between the resulting financial instruments on a relative fair value basis, with $ 49.2 million allocated to the debt under the RIPA and $ 10.8 million allocated to the common stock issued under the CSPA. The Company imputed interest expense associated with the revenue interest liability using the effective interest rate method. The effective interest rate was calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on this liability was variable during the term of the agreement depending on a number of factors, including the level of forecasted product sales, net. The Company evaluated the interest rate quarterly based on each period's product sales, net forecasts utilizing the prospective method. The Company recorded interest expense related to this arrangement of $ 5.1 million and $ 16.0 million for the years ended December 31, 2023 and 2022, respectively. No interest expense related to this arrangement was recorded for the year ended December 31, 2024. The Company incurred $ 0.9 million of issuance costs in connection with the RIPA, which were being amortized to interest expense over the estimated term of the debt. In April 2023, the Company exercised the Call Option and repurchased all future Revenue Interests. In connection with such repurchase, the Company made a payment of $ 192.7 million, or 175.0 % of the Cumulative Purchaser Payments (minus all payments that were made to the Purchasers in connection with the Revenue Interests). As a result, the RIPA terminated in accordance with its terms. The following table summarizes the revenue interest liability activity during the year ended December 31, 2023 (in thousands): Revenue Interest Liability Derivative Liability Balance at December 31, 2022 $ 140,351 $ 1,090 Interest expense recognized 5,060 — Revenue interest payments ( 2,883 ) — Revenue interest liability settlement ( 192,694 ) — Loss (gain) from termination of revenue interest purchase agreement 50,166 ( 1,090 ) Balance at December 31, 2023 $ — $ — The net loss from termination of the RIPA of $ 49.1 million, comprised of the $ 50.2 million loss related to the settlement of the revenue interest liability and the $ 1.1 million gain on the derecognition of the related derivative liability, was recorded in the accompanying consolidated statements of operations. As of December 31, 2023, there were no outstanding balances related to the revenue interest liability and the derivative liability. 7. Asset Acquisitions License Agreement with Enthorin Therapeutics, LLC In October 2024, the Company entered into a license agreement with Enthorin Therapeutics, LLC and Dart Neuroscience LLC (“License Agreement”), under which the Company acquired the worldwide rights to develop, manufacture and commercialize a compound designated as ENT-3379, renamed MRM-3379, in exchange for an upfront payment of $ 7.5 million and up to an additional $ 217.5 million upon the achievement of regulatory and sales-based milestones as well as mid-single digit percent royalties on any future sales of MRM-3379. The Company accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business and substantially all the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets, namely, the intellectual property related to MRM-3379. The Company determined that the intellectual property assets acquired did not have an alternate future use and were not deemed to be commercially viable. Therefore, 123 Table of Contents the upfront payment of $ 7.5 million was recorded as research and development expense in the year ended December 31, 2024. Asset Purchase Agreement with Travere Therapeutics, Inc. On August 31, 2023, the Company completed the Bile Acid Portfolio Acquisition. In accordance with the terms and conditions of the Asset Purchase Agreement entered into with Travere, the Company purchased from Travere substantially all of the assets related to its business of development, manufacturing (including synthesis, formulation, finishing or packaging) and commercialization of the Bile Acid Medicines. The Company paid $ 210.4 million upon closing of the transaction, and up to an additional $ 235.0 million is payable upon the achievement of certain milestones based on specified amounts of annual net sales of the Bile Acid Medicines. The Company assessed the fair value of this contingent consideration in its determination of whether the acquisition of the Bile Acid Portfolio should be accounted for as an asset acquisition. The Company estimated the fair value of the contingent consideration using a Monte Carlo simulation model, which includes the amount and timing of revenue projections subsequent to the acquisition date as a significant assumption. The Company and Travere concurrently entered into a transitional services agreement pursuant to which Travere was obligated to perform certain services for a period of time, not anticipated to last beyond 12 months post-close, with respect to the Company’s use and operation of the assets purchased. The transitional services agreement has since terminated according to its terms. The Company accounted for the transaction as an asset acquisition as substantially all the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets, namely, the developed technology related to the Bile Acid Medicines. The developed technology asset consists of certain processes and at-market contracts related to the manufacture and commercialization of the Bile Acid Medicines, regulatory approvals, and other assets, and are considered a single asset as they are interdependently linked. The Company estimated the fair value of the developed technology asset using the discounted cash flow method. This approach incorporates significant estimates and assumptions related to the forecasted results including, but not limited to, estimates and assumptions regarding revenues, expenses, and discount rates to estimate future cash flows. The Company determined that the developed technology asset acquired was commercially viable and the cost of the acquisition was recorded as an intangible asset in the accompanying consolidated balance sheet as of the acquisition date. The acquired assets are amortizable for tax purposes. The Company is obligated to pay tiered royalties, based on licensing agreements acquired with the Bile Acid Medicines, with rates ranging from high single digit to mid-teens based on net sales of the Bile Acid Medicines. Assignment and License Agreement with Shire International GmbH (Takeda) In November 2018, the Company entered into an Assignment and License Agreement (the “Shire Agreement”) with Shire International GmbH (“Shire”), which was subsequently acquired by Takeda Pharmaceutical Company Limited (“Takeda”). Under the terms of the Shire Agreement, Shire granted the Company an exclusive, royalty bearing worldwide license to develop and commercialize its two product candidates, Livmarli and volixibat. As part of the Shire Agreement, the Company was assigned license agreements held by Shire with Satiogen, Pfizer Inc. (“Pfizer”) and Sanofi-Aventis Deutschland GmbH (“Sanofi”). The Company has the right to sublicense under the Shire Agreement and additionally has the right to sublicense under the Satiogen, Pfizer and Sanofi licenses subject to the terms of those license agreements. The Company is obligated to pay Shire up to an aggregate of $ 109.5 million upon the achievement of certain clinical development and regulatory milestones for Livmarli in certain indications and an additional $ 25.0 million upon regulatory approval of Livmarli for each and every other indication. In addition, the Company is required to pay up to an aggregate of $ 30.0 million upon the achievement of certain clinical development and regulatory milestones for volixibat solely for the first indication sought. Upon commercialization, the Company is obligated to pay Shire product sales milestones on total licensed products up to an aggregate of $ 30.0 million. Through December 31, 2024 under this agreement, the Company paid $ 86.5 million for the achievement of various clinical development, regulatory and commercial milestones. The Company is also obligated to pay tiered royalties with rates ranging from low double-digits to mid-teens based upon annual worldwide net sales for all licensed products; however, these royalties are reduced in part by royalties due under the Satiogen and Sanofi licenses, as discussed below, related to Livmarli and volixibat, as applicable. The Company’s royalty obligations will continue on a licensed product-by-licensed product and country-by-country basis until the later to occur of the expiration of the last valid claim in a licensed patent covering the applicable licensed product in such country, expiration of any regulatory exclusivity for the licensed product in a country and ten years after the first commercial sale of a licensed product in such country. 124 Table of Contents In January 2023, the Company paid a regulatory milestone of $ 15.0 million associated with approval of Livmarli by the European Commission for the treatment of cholestatic pruritus in patients with ALGS two months of age and older. In December 2023, the Company paid a commercial milestone of $ 5.0 million associated with product sales. In April 2024, the Company paid a $ 10.0 million milestone associated with the approval of Livmarli for the treatment of cholestatic pruritus in patients with PFIC five years of age and older (now twelve months of age and older) by the FDA. In July 2024 , the Company paid a $ 10.0 million milestone associated with the approval of Livmarli for the treatment of PFIC in patients three months and older by the European Medicines Agency. There were no volixibat development and regulatory milestones achieved during the years ended December 31, 2024 and 2023. Satiogen License Through the Shire Agreement, the Company was assigned a license agreement with Satiogen pursuant to which the Company obtained an exclusive, worldwide license to certain patents and know-how, with the right to sublicense to a third party subject to certain financial considerations. Pursuant to the terms of the license agreement, the Company was obligated to pay to Satiogen up to an aggregate of $ 10.5 million upon the achievement of certain milestones, of which $ 0.5 million was for initiation of certain development activities, $ 5.0 million for the completion of regulatory approvals and $ 5.0 million for commercialization activities. Additionally, the Company was required to pay a low single-digit royalty on net sales. The Company’s royalty obligations continued on a licensed product-by-licensed product and country-by-country basis until the expiration of the last valid claim in a licensed patent covering the applicable licensed product in such country. Royalty obligations under the Satiogen license were creditable against the royalty obligations to Shire under the Shire Agreement. The Company has not paid milestone payments pursuant to this agreement for the periods presented. In May 2022, the Company completed the merger and acquisition of Satiogen for total consideration of approximately $ 24.2 million. At acquisition, Satiogen’s assets consisted of cash and intangible assets related to developed technology. The purchase consideration consisted of 609,305 shares of the Company’s common stock issued upon the closing of the acquisition and cash consideration of $ 2.6 million, excluding $ 0.2 million of stock option exercise prices deemed to have been paid immediately prior to the acquisition, in respect of an equivalent amount of cash on the books of Satiogen. In 2023, upon the resolution of the related contingencies, the Company issued an additional 231,624 shares of common stock as purchase consideration. Through the transaction, the Company obtained all Satiogen licensing payments and Satiogen-owned intellectual property relating to Livmarli and volixibat. The transaction resulted in a reduction of total licensing royalty obligations for Livmarli and volixibat. The Company accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business and substantially all the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets, namely, the Satiogen intangible assets consisted of intellectual property. The Company evaluated that the intellectual property assets acquired were deemed to be commercially viable and the cost of the acquisition was recorded as an intangible asset. There was no gain or loss recognized from settlement of the preexisting contractual relationship with Satiogen as the pre-existing contract was determined to be at fair value on the date of acquisition. Through the date of settlement in June 2023, there were no significant expenses incurred that were approved for settlement against the Indemnification Holdback. As the number of shares potentially issuable upon the resolution of the Indemnification Holdback and the Contingent Milestone was variable, they were recorded as liabilities at their respective fair values on the date of acquisition using the Company’s common stock price. The fair value of the Indemnification Holdback was additionally determined based on management’s estimate of the probability of indemnification obligations being incurred during the one year following the acquisition date, while the fair value of the Contingent Milestone was additionally determined based upon management’s estimate of the probability of the milestone being met until the contingency was resolved in December 2022. The fair value of the Indemnification Holdback liability and the Contingent Milestone liability were remeasured at each reporting period until settled, with resulting changes in the fair value recorded in other income (expense) in the accompanying consolidated statements of operations. Pfizer License Through the Shire Agreement, the Company was assigned a license agreement with Pfizer pursuant to which the Company obtained an exclusive, worldwide license to certain Pfizer know-how with a right to sublicense. Upon commercialization of any product utilizing the licensed product, the Company will be required to pay to Pfizer a low single-digit royalty on net sales of product sold by the Company, its affiliates or sublicensees. The Company’s royalty obligations continue on a licensed product-by-licensed product basis until the eighth anniversary of the first commercial sale of such licensed product anywhere in the world. 125 Table of Contents Sanofi License Through the Shire Agreement, the Company was assigned a license agreement with Sanofi pursuant to which the Company obtained an exclusive, worldwide license to certain patents and know-how with the right to sublicense to a third party subject to certain financial considerations. The Company is obligated to pay up to an aggregate of $ 36.0 million upon the achievement of certain regulatory, commercialization and product sales milestones. Additionally, upon commercialization, the Company is required to pay tiered royalties in the mid to high single-digit range based upon net sales of licensed products sold by the Company and sublicensees in a calendar year, subject to adjustments in certain circumstances. The Company’s royalty obligations continue on a licensed product-by-licensed product and country-by-country basis until the later to occur of the expiration of the last valid claim in a licensed patent covering the applicable licensed product in such country and ten years after the first commercial sale of a licensed product in such country. Royalty obligations under the Sanofi license are creditable against the royalty obligations to Shire under the Shire Agreement. The Company has not paid milestone payments pursuant to this agreement for the periods presented. As of December 31, 2024, no milestones had been accrued as there were no potential milestones considered probable. 8. Collaboration and License Agreements License and Collaboration Agreement with CANbridge In April 2021, the Company entered into an exclusive license and collaboration agreement with CANbridge Pharmaceuticals, Inc. (“CANbridge”), as amended in March 2024. Under the terms of the agreement, CANbridge has obtained the exclusive right to develop and commercialize Livmarli within the Greater China regions (China, Hong Kong, Macau and Taiwan). In connection with the agreement, the Company received an upfront payment of $ 11.0 million, which, upon satisfaction of the performance obligation and receipt by CANbridge of the right to use and benefit from the license in May 2021, was recorded as license revenue. Additionally, the Company is eligible to receive up to $ 5.0 million in research and development funding, and up to $ 109.0 million for the achievement of future regulatory and commercial milestones, with double-digit tiered royalties based on product net sales. Through December 31, 2024, the Company has received research funding of $ 5.0 million and regulatory milestone payments of $ 7.3 million. The Company concluded at inception of the agreement that the transaction price should not include the variable consideration related to unachieved developmental and regulatory milestones as this consideration was considered to be constrained as it is probable that the inclusion of such variable consideration could result in a significant reversal in cumulative revenue. The Company will recognize any consideration related to sales-based payments when the related sales occur, as the Company has determined that these amounts relate predominantly to the license granted and therefore will be recognized at the later of (i) when or as the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The Company re-evaluates the transaction price at each reporting period as uncertain events are resolved and other changes in circumstances occur. In January 2022 and June 2023, CANbridge achieved regulatory milestones, triggering milestone payments to the Company of $ 2.0 million and $ 5.0 million, respectively, which were recorded as license revenue in the accompanying consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively. Research and development funding payable by CANbridge to the Company, which is reflected as a reduction of research and development expense in the accompanying consolidated statements of operations for the year ended December 31, 2024, was insignificant. For the years ended December 31, 2023, and 2022 , the Company recorded research and development funding of $ 2.3 million and $ 0.9 million, respectively. As of December 31, 2024 and 2023, such research and development funding included in accounts receivable on the accompanying consolidated balance sheets was insignificant. License and Collaboration Agreement with GC Biopharma In July 2021, the Company entered into an exclusive license and collaboration agreement with GC Biopharma. Under the terms of the agreement, GC Biopharma has obtained the exclusive right to develop and commercialize Livmarli within South Korea for ALGS, PFIC, and biliary atresia (“BA”). In connection with the agreement, the Company received a $ 5.0 million upfront payment, which, upon satisfaction of the performance obligation and receipt by GC Biopharma of the right to use and benefit from the license, was recorded as license revenue. Additionally, the Company is entitled to certain research and development funding and up to $ 23.0 million for the achievement of future regulatory and commercial milestones, with double-digit tiered royalties based on product net sales. At inception of the agreement, the Company concluded that the transaction price should not include the variable consideration related to unachieved developmental and regulatory milestones as this consideration was considered to be constrained as it is probable that the inclusion of such variable consideration could result in a significant reversal in 126 Table of Contents cumulative revenue for this contract when the uncertainty is resolved in the future. The Company will recognize any consideration related to sales-based payments (including milestones and royalties) when the related sales occur, as the Company has determined that these amounts relate predominantly to the license granted and therefore will be recognized on the later to occur of satisfaction of the performance obligation or the occurrence of the related sales. The Company re-evaluates the transaction price at each reporting period as uncertain events are resolved and other changes in circumstances occur. In February 2023, GC Biopharma achieved a regulatory milestone under this agreement triggering a milestone payment to the Company of $ 2.5 million, which upon the release of the constraint was recognized as license revenue in the accompanying consolidated statements of operations for the year ended December 31, 2023. For the years ended December 31, 2024, 2023 and 2022, research and development funding payable by GC Biopharma to the Company was insignificant. As of December 31, 2024 and 2023, such research and development funding recorded as a receivable in accounts receivable on the accompanying consolidated balance sheets was insignificant. Licensing Agreement with Takeda In September 2021, the Company entered into an exclusive licensing agreement with Takeda for the development and commercialization of Livmarli in Japan for ALGS, PFIC, and BA. Under the terms of the agreement, Takeda will be responsible for regulatory approval and commercialization of Livmarli in Japan. Takeda will also be responsible for development, including conducting clinical studies in cholestatic indications. The Company is responsible for commercial supply to Takeda which was to be negotiated at a later date. Subsequently, in October 2024, the Company entered into a commercial supply agreement with Takeda. In accordance with the agreements, in exchange for the supply of goods, the Company is eligible to receive a percentage of Takeda’s annual net sales, which range from high double digits declining to mid double digits over the first four years from commercial launch and thereafter remains at mid double digits. The revenues related to the commercial supply will be recognized in product sales, net upon the transfer of control to Takeda. 9. Leases In January 2019, the Company entered into an operating lease agreement for office space which consisted of approximately 5,600 square feet (the “Initial Lease”). The lease term was approximately four years with an option to extend the term for one five -year term, which at the time was not reasonably assured of exercise and therefore, not included in the lease term. Rent payments commenced in August 2019. In November 2019, the Company amended the operating lease agreement (the “Amended Agreement”) to extend the term of the Initial Lease through March 2025. This extension was accounted for as a lease modification. Additionally, pursuant to the Amended Agreement, the Company expanded the office space by 5,555 square feet for a five -year term expiring in March 2025 (the “Expanded Space”). The Company accounted for the Expanded Space as a separate contract as there were material additional rights of use that were not included in the Initial Lease. The Amended Agreement contained a tenant improvement allowance of $ 0.8 million in connection with the expanded space, which has been recorded as leasehold improvements within property and equipment, net on the accompanying consolidated balance sheets with a corresponding reduction of the ROU asset at inception of the lease for the expanded space. In January 2024, the Company entered into an operating lease agreement for approximately 36,300 square feet of office space (the “New Lease”). The lease term is approximately five years . Concurrently with entering into the New Lease, the Company entered into an amendment of its existing Amended Agreement to accelerate the lease expiration date from March 2025 to shortly after the commencement date of the New Lease. The New Lease commenced and the Amended Agreement, as amended, terminated in May 2024. The following tables contain a summary of other information and the undiscounted future minimum payments pertaining to the Company’s operating leases that had commenced as of the end of the periods presented: As of December 31, 2024 2023 Weighted-average incremental borrowing rate 7.5 % 8.0 % Weighted-average remaining lease term (in years) 4.7 years 2.1 years 127 Table of Contents Years Ended December 31, Undiscounted Rent Payments (in thousands) 2025 $ 2,360 2026 2,422 2027 2,487 2028 2,496 2029 1,689 Total undiscounted lease payments 11,454 Less: imputed interest ( 1,773 ) Total lease liability $ 9,681 Rent expense was $ 1.8 million for the year ended December 31, 2024, and $ 0.8 million for each of the years ended December 31, 2023 and 2022. Variable lease payments for the years ended December 31, 2024, 2023 and 2022 were insignificant. 10. Convertible Notes In April 2023, the Company issued $ 316.3 million aggregate principal amount of its 4.00 % Convertible Senior Notes due 2029 (the "Notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Notes are subject to the terms and conditions of an Indenture (the “Indenture”) between the Company and U.S. Bank Trust Company, National Association, as trustee. The net proceeds from the issuance of the Notes were $ 305.3 million, after deducting the initial purchasers’ discounts and commissions and offering expenses. The Notes are the Company’s senior, unsecured obligations and are (i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated to the Notes in right of payment; (ii) equal in right of payment to any of the Company’s indebtedness that is not so subordinated; (iii) effectively subordinated to any of the Company’s secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. The Notes accrue interest at a rate of 4.00 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2023. The Notes will mature on May 1, 2029, unless earlier converted, redeemed or repurchased by the Company. Before January 2, 2029, noteholders will have the right to convert their Notes only in the following circumstances: (i) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on June 30, 2023, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for the Notes for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of the common stock on such trading day and the conversion rate on such trading day; (iii) upon the occurrence of certain corporate events or distributions on the common stock, as described in the Indenture; and (iv) if the Company calls such Notes for redemption. Additionally, noteholders will have the right to convert their Notes at any time from January 2, 2029 until the close of business on the scheduled trading day immediately before the maturity date. The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The initial conversion rate for the Notes is 31.5075 shares of common stock per $ 1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 31.74 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain 128 Table of Contents events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. During the fourth quarter of 2024, the last reported sale price of the Company’s common stock exceeded 130 % of the conversion price of the Notes for more than 20 trading days during the 30 consecutive trading days ended December 31, 2024. As a result, the Notes are convertible at the option of the holders of the Notes during the first quarter of 2025, the quarter immediately following the quarter when the conditions were met, as stated in the terms of the Notes. Through the date of this filing, none of the principal balance of the Notes has been converted. The Company may not redeem the Notes at its option at any time before May 5, 2026. The Notes are redeemable, in whole or in part (subject to the partial redemption limitation described below), at the Company’s option at any time, and from time to time, on or after May 5, 2026 and, in the case of a partial redemption, on or before the 50th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. Pursuant to the partial redemption limitation, the Company may not elect to redeem less than all of the outstanding Notes unless at least $ 75.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. If a “Fundamental Change” (as defined in the Indenture) occurs, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. The Indenture contains customary events of default with respect to the Notes and provides that upon certain events of default occurring and continuing, the Trustee may, and the Trustee at the request of holders of at least 25 % in principal amount of the Notes shall, declare all principal and accrued and unpaid interest, if any, of the Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company or a significant subsidiary, all of the principal of and accrued and unpaid interest on the Notes will automatically become due and payable. As of December 31, 2024 and 2023, the Notes consisted of the following (in thousands): December 31, 2024 2023 Principal amount $ 316,250 $ 316,250 Unamortized debt discount and issuance costs ( 8,168 ) ( 9,829 ) Net carrying amount $ 308,082 $ 306,421 The Company incurred $ 10.9 million of transaction costs related to the issuance of the Notes, which are being amortized to interest expense over the term of the Notes using the effective interest method. As of December 31, 2024, the remaining amortization period of the debt discount was approximately 4.3 years and the effective interest on the Notes was 4.6 %. The following table sets forth interest expense recognized related to the Notes (in thousands): Year Ended December 31, 2024 2023 Coupon interest expense $ 12,650 $ 8,925 Amortization of debt discount and issuance costs 1,661 1,120 Total interest expense on convertible notes $ 14,311 $ 10,045 As of December 31, 2024 and 2023, the estimated fair value of the Notes was $ 481.9 million and $ 387.3 million, respectively. The fair values were determined based on the quoted price of the convertible notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy. 129 Table of Contents 11. Stockholders’ Equity Common Stock In August 2020, the SEC declared effective a registration statement on Form S-3 (“2020 Shelf Registration”) covering the sale of up to $ 300.0 million of the Company’s securities. Also, in August 2020, the Company entered into a sales agreement (“2020 Sales Agreement”) with SVB Securities LLC, recently acquired by Leerink Partners LLC (“Leerink”) pursuant to which the Company could elect to issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $ 75.0 million under the 2020 Shelf Registration through Leerink acting as the sales agent and/or principal. During the year ended December 31, 2023, the Company issued and sold 658,206 shares of common stock pursuant to the 2020 Sales Agreement resulting in gross proceeds to the Company of $ 15.0 million. The net proceeds for the year ended December 31, 2023 to the Company after deducting sales commissions to SVB Securities and other issuance expenses were approximately $ 14.5 million. The 2020 Shelf Registration expired in August 2023, and no further sales may be made under the 2020 Sales Agreement. Through its expiration date, the Company issued and sold an aggregate of 2,125,090 shares of common stock pursuant to the 2020 Sales Agreement resulting in aggregate gross proceeds to the Company of $ 43.7 million. In August 2022, the Company completed an underwritten public offering of its common stock pursuant to the 2020 Shelf Registration. The Company issued and sold 3,478,261 shares of common stock at a public offering price of $ 23.00 per share. In addition, the Company granted the underwriters an option, exercisable for 30 days, to purchase up to 521,739 additional shares of its common stock at the public offering price, less the underwriting discounts, commissions and offering expenses, which the underwriters exercised in full. The underwritten public offering, including the underwriters’ exercise of their option, resulted in net proceeds to the Company of $ 86.1 million after deducting underwriting discounts, commissions and offering expenses. On September 9, 2022, the Company filed an automatic shelf registration statement on Form S-3 with the SEC (the “2022 Shelf Registration”), which became effective upon filing, pursuant to which the Company registered for sale from time to time in one or more offerings an unlimited amount of any combination of the Company’s common stock, preferred stock, debt securities and warrants, so long as the Company continues to satisfy the requirements of a “well-known seasoned issuer” under SEC rules. This automatic shelf registration statement will remain in effect for up to three years from the date it became effective. As of December 31, 2024, the Company had not issued any securities pursuant to the automatic shelf registration statement. On August 31, 2023, in connection with and immediately prior to the closing of the Bile Acid Portfolio Acquisition, the Company completed the private placement of 8,000,000 shares of the Company’s common stock at a price per share of $ 26.25 , resulting in net proceeds of approximately $ 202.2 million, which the Company used to finance the upfront payment at the closing of the Bile Acid Portfolio Acquisition. On November 2, 2023, the Company entered into a Sales Agreement (the “2023 Sales Agreement”) with Leerink and Cantor Fitzgerald & Co. (the “Sales Agents”), pursuant to which the Company may, from time to time, sell up to an aggregate amount of $ 200.0 million of its common stock through the Sales Agents in an “at-the-market” offering (the “ATM Offering”). The Company is not required to sell shares under the 2023 Sales Agreement. Sales of the Company’s common stock, if any, under the 2023 Sales Agreement may be made in any transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act. The Company will pay a given designated Sales Agent a commission of up to 3.0 % of the aggregate gross proceeds of any shares of common stock sold through such Sales Agent pursuant to the 2023 Sales Agreement. As of December 31, 2024, the Company had not issued any securities pursuant to the 2023 Sales Agreement. Common Stock Reserved for Issuance Common stock reserved for issuance is as follows: Year Ended December 31, 2024 2023 Stock options, restricted stock units and performance stock units issued and outstanding 11,709,003 10,909,831 Reserved for future stock awards or option grants 2,277,739 2,230,264 Reserved for employee stock purchase plan 1,382,616 1,040,828 Common stock issuable upon conversion of convertible notes 9,964,247 9,964,247 25,333,605 24,145,170 130 Table of Contents 12. Stock-Based Compensation Equity Incentive Plans In November 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”), which permits the granting of stock awards and incentive and nonstatutory stock options to employees, directors and consultants of the Company. In July 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan became effective on July 17, 2019. Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company. Shares subject to outstanding awards under the 2018 Plan as of the effective date of the 2019 Plan that are subsequently canceled, forfeited or repurchased by the Company will be added to the shares reserved under the 2019 Plan. In addition, the number of shares of common stock available for issuance under the 2019 Plan will be automatically increased on the first day of each calendar year during the ten -year term of the 2019 Plan, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to 5 % of the outstanding number of shares of the Company’s common stock on December 31st of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. As of December 31, 2024, 1,799,118 shares of common stock were available for issuance under the 2019 Plan. In March 2020, the compensation committee of the Company’s board of directors approved and adopted the 2020 Inducement Plan (the “2020 Inducement Plan”). Under the 2020 Inducement Plan, the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock and restricted stock units to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). Through December 31, 2024, the Company’s board of directors authorized 4,000,000 shares of the Company’s common stock for future issuance. As of December 31, 2024, 478,621 shares of common stock were available for issuance under the 2020 Inducement Plan. Stock Options The following table summarizes stock option activity during the year ended December 31, 2024 (in thousands, except share and per share data): Number of Awards Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value Outstanding as of December 31, 2023 9,632,504 $ 15.87 6.9 $ 131,785 Granted 1,891,071 $ 28.42 Exercised ( 1,066,976 ) $ 14.10 Canceled and forfeited ( 425,113 ) $ 22.94 Outstanding as of December 31, 2024 10,031,486 $ 18.12 6.5 $ 233,161 Vested and exercisable as of December 31, 2024 6,701,383 $ 14.30 5.5 $ 181,273 Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the per share fair value of the common stock on the date of exercise. The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2024, 2023 and 2022 was $ 20.02 , $ 18.25 and $ 12.73 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 23.1 million, $ 5.7 million and $ 3.0 million, respectively. As of December 31, 2024, the total unrecognized stock-based compensation related to unvested stock option awards granted was $ 52.7 million, which the Company expects to recognize over a weighted-average period of approximately 2.6 years. The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the expected stock price volatility was based upon the weighting of the Company’s historical volatility and the historical volatility of a peer group of publicly traded companies. The historical volatility data was computed using the daily closing prices for the Company’s and its peer companies’ shares during the equivalent period of the calculated expected term of the stock-based awards. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for 131 Table of Contents time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The following assumptions were used to estimate the fair value of stock option awards granted during the following periods: Year Ended December 31, 2024 2023 2022 Expected term (in years) 5.5 - 6.1 5.3 - 6.1 5.5 - 6.1 Expected volatility 71.79 %- 80.36 % 80.17 %- 85.24 % 80.86 %- 83.20 % Risk-free interest rate 3.48 %- 4.62 % 3.35 %- 4.67 % 1.46 %- 4.10 % Expected dividend yield — — — Restricted Stock Units The following table summarizes the activity under the Company’s restricted stock units for the year ended December 31, 2024: Number of Awards Weighted-Average Grant Date Fair Value per Award Unvested and outstanding as of December 31, 2023 1,129,492 $ 23.41 Granted 826,819 $ 28.72 Vested ( 418,889 ) $ 22.65 Cancelled/Forfeited ( 144,860 ) $ 24.94 Unvested and outstanding as of December 31, 2024 1,392,562 $ 26.63 The fair value of restricted stock unit (“RSU”) awards granted to employees and nonemployees is equal to the closing market price of the Company’s common stock on the grant date. As of December 31, 2024, the total unrecognized stock-based compensation related to restricted stock unit awards granted was $ 25.2 million, which the Company expects to recognize over a weighted-average period of approximately 1.9 years. Performance Stock Units The fair value of performance stock units (“PSUs”) granted to employees is equal to the closing market price of the Company’s common stock on the grant date. PSUs are subject to vest only if certain specified sales-based criteria are achieved and the employees’ continued service with the Company. As of December 31, 2024, certain specified sales-based criteria were deemed probable of achievement or already achieved. Stock-based compensation for PSUs is recognized over the service period beginning in the period the Company determines it is probable that the performance criteria will be 132 Table of Contents achieved. PSUs generally vest over a three-year service period. The number of shares earned is adjusted based on the specified sales-based criteria achievement. The following table summarizes the activity under the Company’s performance stock units in base units for the year ended December 31, 2024: Number of Awards in base units Weighted-Average Grant Date Fair Value per Award Unvested and outstanding as of December 31, 2023 147,835 $ 23.64 Granted 160,250 $ 26.49 Vested ( 3,645 ) $ 25.39 Cancelled/Forfeited ( 19,485 ) $ 24.60 Unvested and outstanding as of December 31, 2024 284,955 $ 25.15 As of December 31, 2024, the total unrecognized stock-based compensation related to performance stock units granted was $ 5.6 million, which the Company expects to recognize over a weighted-average period of approximately 1.5 years. 2019 Employee Stock Purchase Plan In July 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Employee Stock Purchase Plan (“ESPP”). The number of shares of common stock available for issuance under the ESPP will be automatically increased on the first day of each calendar year during the first ten years of the term of the ESPP, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to the lesser of (i) 1 % of the outstanding number of shares of common stock on December 31st of the preceding calendar year, (ii) 1,500,000 shares of common stock or (iii) such lesser amount as determined by the Company’s board of directors. The ESPP became effective on July 17, 2019 and generally provides for six-month consecutive offering periods beginning on May 11th and November 11th of each year. During the year ended December 31, 2024, 125,443 shares were issued under the ESPP. As of December 31, 2024, the Company had 1,382,616 shares available for future issuance under the ESPP. The stock-based compensation related to the ESPP for the years ended December 31, 2024, 2023 and 2022 was $ 1.0 million, $ 0.9 million and $ 0.7 million, respectively. Restricted Common Stock In November 2018, in connection with the issuance of Series A Preferred Stock, the Company’s founders agreed to modify their outstanding shares of common stock to include vesting provisions that require continued service to the Company in order to vest in those shares. As such, the 562,500 modified shares of common stock became compensatory upon such modification. During the year ended December 31, 2022, 122,464 shares vested. All restricted common stock was fully vested as of December 31, 2022. Stock-Based Compensation Expense Total stock-based compensation is reflected in the accompanying consolidated statements of operations as follows (in thousands): Year Ended December 31, 2024 2023 2022 Selling, general and administrative $ 32,308 $ 24,131 $ 16,957 Research and development 15,188 10,892 10,050 Cost of sales 948 — — Total $ 48,444 $ 35,023 $ 27,007 Stock-based compensation capitalized into inventory was $ 1.1 million, $ 0.8 million and $ 0.4 million for the years ended December 31, 2024, 2023, 2022, respectively. 133 Table of Contents 13. Income Taxes The provision for (benefit from) income taxes was based upon income (loss) before income taxes as follows (in thousands): Year Ended December 31, 2024 2023 2022 U.S. source $ ( 89,937 ) $ ( 164,953 ) $ ( 142,661 ) Non-U.S. source 3,025 2,529 590 Loss before income taxes $ ( 86,912 ) $ ( 162,424 ) $ ( 142,071 ) The components of the Company’s income tax provision for (benefit from) were as follows (in thousands): Year Ended December 31, 2024 2023 2022 Provision for income taxes: Federal $ 32 $ 37 $ — State 249 67 18 Foreign 749 887 157 1,030 991 175 Benefit from deferred income taxes: Federal — — ( 5,503 ) State — — ( 1,078 ) — — ( 6,581 ) Provision for (benefit from) income taxes $ 1,030 $ 991 $ ( 6,406 ) The Company acquired Satiogen in a tax-free reorganization, whereby the Company did not receive a step-up in tax basis of the acquired intangible assets, resulting in a deferred tax liability of $ 6.6 million. The deferred tax liability provided an additional source of taxable income to support the realization of the pre-existing deferred tax assets. As a result, a portion of the Company’s valuation allowance was released and a $ 6.6 million tax benefit was recorded for the year ended December 31, 2022. A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows: Year Ended December 31, 2024 2023 2022 Federal statutory income tax rate 21.00 % 21.00 % 21.00 % State tax 3.95 3.57 7.40 Permanent differences 0.03 ( 0.50 ) ( 0.65 ) Other ( 0.38 ) 1.12 ( 0.06 ) Section 162(m) limitation ( 3.29 ) ( 1.33 ) ( 2.99 ) Foreign source income subject to U.S. tax ( 0.45 ) ( 1.69 ) ( 1.43 ) Orphan Drug and General Business Credit 7.50 1.91 4.96 Change in valuation allowance ( 29.54 ) ( 24.69 ) ( 23.72 ) Total tax (provision) benefit ( 1.18 ) % ( 0.61 ) % 4.51 % 134 Table of Contents The significant components of the Company’s deferred taxes are as follows (in thousands): December 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 38,404 $ 40,455 Capitalized research and development expenses 51,694 38,065 Tax credit carryforwards 37,260 30,071 Interest limitation attributes 14,008 15,814 Stock-based compensation 9,949 8,419 Intangible assets 6,664 4,055 Accrued expenses 5,140 3,953 Inventory 4,097 2,316 Lease liabilities 2,144 269 Total deferred tax assets 169,360 143,417 Deferred tax liabilities: Operating lease right-of-use assets ( 1,885 ) ( 161 ) Fixed assets ( 83 ) ( 37 ) Total deferred tax liabilities ( 1,968 ) ( 198 ) Valuation allowance ( 167,392 ) ( 143,219 ) Net deferred tax assets $ — $ — The valuation allowance increased by $ 24.2 million, $ 40.2 million and $ 32.5 million for the years ended December 31, 2024, 2023, 2022, respectively. The tax benefit of deductible temporary differences or carryforwards is recorded as a deferred tax asset to the extent that management assesses the realization is “more likely than not.” Future realization of the tax benefit ultimately depends on the existence of sufficient taxable income within the period available under the tax law. At December 31, 2024 and 2023, the Company has set up valuation allowances against all federal and state net deferred tax assets, because based on all available evidence, these deferred tax assets are not more than likely to be realizable. As of December 31, 2024, The Company had the following net operating loss and tax credit carryforwards, which if not utilized, will expire as follows (in millions, except for expiry): Type Amount Year Federal net operating loss carryforwards $ 156.1 Indefinite Federal R&D and orphan drug credit carryforwards $ 44.8 2039 State net operating loss carryforwards $ 94.2 2032 - 2038 State R&D and orphan drug credit carryforwards $ 6.4 Indefinite In general, if the Company experiences a greater than 50 percentage point aggregate change in ownership of certain significant stockholders over a three-year period (a “Section 382 ownership change”), utilization of its pre-change NOL carryforwards and the research and development credit carryforwards is subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state laws. The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change, subject to certain adjustments, by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforwards and research and development credit carryforwards before utilization and may be material. As of December 31, 2024, the Company determined that it has not experienced an ownership change and determined that NOLs and tax credits are not subject to a limitation pursuant to Section 382. The Company recognizes the financial statements effects of a tax position when it is more likely than not, based on technical merits, that the position will be sustained upon examination. 135 Table of Contents A reconciliation of the Company’s unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2024 2023 Balance at beginning of year $ 10,454 $ 9,254 Increase related to prior year tax positions 337 — Increases related to current year tax positions 2,174 1,200 Balance at end of year $ 12,965 $ 10,454 The Company has considered the amounts and probabilities of the outcomes that can be realized upon ultimate settlement with the tax authorities and determined unrecognized tax benefits primarily related to credits should be established as noted in the summary roll-forward above. The Company does not expect that its uncertain tax positions will materially change in the next twelve months. The Company’s effective income tax rate would not be impacted if the unrecognized tax benefits were recognized in 2024 and 2023, as the Company is in a full valuation allowance position. The Company files federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. All of the Company’s tax returns in all jurisdictions remain open to examination since inception. The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. As of December 31, 2024 and 2023, there were no significant accruals for interest related to unrecognized tax benefits or tax penalties. The Company has not provided U.S. income or foreign withholding taxes on the undistributed earnings of its foreign subsidiaries as of December 31, 2024 and 2023, because it intends to permanently reinvest such earnings outside of the U.S. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability will be immaterial, due to the participation exemption put in place in the Tax Act. 14. Segment Reporting The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s operations and business as one operating segment and allocates resources to operations of the Company on an entity-wide basis. The CODM assesses performance of the Company and determines resource allocation primarily based on net product sales and loss from operations on a consolidated basis. The CODM uses loss from operations to monitor budget versus actual results and considers any adjustments and actions required for good fiscal management. The Company’s CODM is regularly provided with entity-wide expense categories similar to those found in the consolidated statements of operations, as well as the following (in thousands): Year Ended December 31, 2024 2023 2022 Revenue: Product sales, net $ 336,409 $ 178,874 $ 75,062 License and other revenue 479 7,500 2,000 Total revenue 336,888 186,374 77,062 Less: Cost of sales (excluding intangible amortization and other non-cash expenses) 50,672 33,215 9,481 General and administrative expenses (excluding stock-based compensation) 45,617 36,902 24,405 Commercialization and Medical Affairs expenses (excluding stock-based compensation) 124,296 84,847 47,704 Research and development expenses (excluding stock-based compensation) 125,442 91,717 96,792 Stock-based compensation 47,496 35,023 27,007 Intangible amortization and other non-cash expenses 30,971 13,824 2,893 Loss from operations $ ( 87,606 ) $ ( 109,154 ) $ ( 131,220 ) 136 Table of Contents 15. Commitments and Contingencies Certain of the Company’s contractual arrangements with contract manufacturing organizations require binding forecasts or commitments to purchase minimum amounts for the manufacture of drug product supply, which may be material to the Company's consolidated financial statements. The Company is subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted from time-to-time. These matters arise in the ordinary course and conduct of the Company’s business and may include, for example, commercial, intellectual property, and employment matters. The Company intends to defend itself vigorously in such matters and when warranted, take legal action against others. Furthermore, the Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its consolidated financial statements. An estimated loss contingency is accrued in the Company’s consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company does not accrue amounts for liabilities that it does not believe are probable. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. During the periods presented, the Company has not recorded any accrual for loss contingencies associated with government regulations, claims or legal actions, determined that an unfavorable outcome is probable or reasonably possible, or determined that the amount or range of any possible loss is reasonably estimable. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.