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Item 9A. Controls and Procedures

2023-02-23 compared with 2022-02-24 · 679 added, 342 removed, 956 unchanged (52% of the section changed)

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As required by Rule 13a-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a–15(e) and 15d-15(e)), as of the end of the year covered by this report.

Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness in internal control over financial reporting described below.

Management’s Annual Report on Internal Control Over Financial Reporting

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Management has used the framework set forth in the report entitled Internal Control-Integrated Framework (2013 framework) published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting.

Based on this assessment, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was effective as of December 31, 2021.

Based on this assessment, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective as of December 31, 2022 due to the following material weakness:

We did not design effective controls and procedures to evaluate the accounting for a certain pre-launch inventory contract affecting the timing of recognition of research and development expense.

BDO USA, LLP, our independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting as of December 31, 2022, which is included herein.

As a result of the material weakness described above, such report includes an adverse audit report on the effectiveness of internal control over financial reporting as of December 31, 2022.

The material weakness described above did not result in a restatement of previously issued annual consolidated financial statements or condensed interim consolidated financial statements.

Management is actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness.

The remediation plan includes adding controls to ensure timely accounting evaluation of research and development expense recognition of certain pre-launch inventory.

The remediation actions will be monitored by the Audit Committee of our Board of Directors.

The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

Changes in Internal Control Over Financial Reporting

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We have audited Travere Therapeutics, Inc.

and its subsidiaries’ (the “Company’s”) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

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

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company and subsidiaries as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 24, 2022, expressed an unqualified opinion thereon.

(the “Company’s”) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria .

We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment.

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, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as “the financial statements”) and our report dated February 23, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audit provides a reasonable basis for our opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

A material weakness regarding management’s failure to design and maintain effective controls over the accounting for the timing of recognition of research and development expense for certain pre-launch inventory, has been identified and described in management’s assessment.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report dated February 23, 2023 on those consolidated financial statements.

Definition and Limitations of Internal Control over Financial Reporting

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this item will be contained under the captions "Election of Directors," "Information Regarding the Board of Directors and Corporate Governance," in our Definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A with the Securities and Exchange Commission within 120 days of December 31, 2021 (the "Proxy Statement").

Information required by this item and not included below will be contained under the captions "Election of Directors" and "Information Regarding the Board of Directors and Corporate Governance", in our Definitive Proxy Statement for our 2023 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A with the Securities and Exchange Commission within 120 days of December 31, 2022 (the "Proxy Statement").

Such information is incorporated herein by reference.

Our Board of Directors consists of the following members:

Baynes, M.D., Ph.D., has served as a director of the Company since June 2016.

Since July 2022, Dr.

Baynes has served as Executive Vice President and Chief Medical Officer of Eikon Therapeutics, Inc., a privately-held biotechnology company.

Prior to Eikon Therapeutics, Inc.

he served as Senior Vice President and Head of Global Clinical Development at Merck Research Laboratories, the research division of Merck and Co., Inc., since December 2013 and as Chief Medical Officer of Merck and Co, Inc., a global healthcare company, since July 2016.

Prior to his roles at Merck, Dr.

Baynes served as Senior Vice President of Oncology, Inflammation and Respiratory Therapeutics at Gilead Sciences, Inc., a biopharmaceutical company, from January 2012 to December 2013.

Prior to Gilead, Dr.

Baynes held positions of increasing responsibility at Amgen Inc., a biotechnology company, from August 2002 to January 2012, including Vice President of Global Clinical Development and Therapeutic Area Head for Hematology/Oncology.

Before joining Amgen, Dr.

Baynes was the Charles Martin Professor of Cancer Research at the Barbara Ann Karmanos Cancer Institute, a National Cancer Institute-designated Comprehensive Cancer Center, at Wayne State University.

Baynes has authored more than 150 publications and is a member or fellow of several international medical societies.

Baynes is on the Board of Directors of Natera, Inc., a genetic testing and diagnostics company, and previously served on the Board of Directors of Atara Biotherapeutics, Inc., a T-cell immunotherapy company.

Baynes received his medical degree and doctorate in philosophy from the University of the Witwatersrand in South Africa, and completed his medical training in the Department of Hematology and Oncology at Johannesburg Hospital.

Suzanne Bruhn, Ph.D., has served as a director of the Company since April 2020.

Since May 2019, Dr.

Bruhn has served as the President and Chief Executive Officer of Tiaki Therapeutics Inc., a biotechnology company.

Bruhn served as President and Chief Executive Officer of Proclara Biosciences, Inc., a biotechnology company, from April 2017 to September 2018, and as President and Chief Executive Officer of Promedior, Inc., a biotechnology company, from May 2012 to November 2015.

Currently, Dr.

Bruhn serves on the Boards of Directors of Pliant Therapeutics, Inc., Vigil Neuroscience, Inc., and Mind Medicine (MindMed) Inc.

Previously, Dr.

Bruhn served as a member of the Board of Directors of Raptor Pharmaceuticals Corp., a pharmaceutical company, from April 2011 until it was acquired by Horizon Pharma plc in October 2016, as a member of the Board of Directors of Novelion Therapeutics, Inc., a biopharmaceutical company, from October 2017 to January 2020, as a member of the Board of Directors of Aeglea BioTherapeutics, Inc., a clinical stage biotechnology company, from February 2017 to August 2020, and on the Board of Directors of Avalo Therapeutics, Inc.

(formerly Cerecor, Inc.), a biopharmaceutical company focused on the development of therapies within the fields of rare pediatric and orphan diseases from April 2020 to November 2021.

Earlier in her career Dr.

Bruhn served in roles of increasing responsibility at Shire Human Genetic Therapies (formerly Transkaryotic Therapies), including Senior Vice President, Strategic Planning and Program Management.

Bruhn received her B.S.

degree in Chemistry from Iowa State University and her Ph.D.

in Chemistry from Massachusetts Institute of Technology.

Timothy Coughlin has served as a director of the Company since March 2015.

Coughlin is the former Chief Financial Officer of Neurocrine Biosciences, Inc.

("Neurocrine"), a biopharmaceutical company that received FDA approval for INGREZZA® (valbenazine) and ORILISSA® (elagolix), both of which were discovered and developed during his tenure at Neurocrine from 2002 to 2018.

Coughlin currently serves on the board of directors of Fate Therapeutics, Inc., and aTyr Pharma, Inc., both biotechnology companies, and previously served on the Board of Directors of Peloton Therapeutics, Inc.

prior to its sale to Merck in 2019.

Prior to joining Neurocrine, he was with Catholic Health Initiatives, a nationwide integrated healthcare delivery system, where he served as Vice President, Financial Services.

Coughlin also served as a Senior Manager in the Health Sciences practice of Ernst & Young LLP and its predecessors from 1989 to 1999.

Coughlin holds a master's degree in international business from San Diego State University and a bachelor’s degree in accounting from Temple University.

Coughlin is a certified public accountant in both California and Pennsylvania.

Eric Dube, Ph.D.

has served as President and Chief Executive Officer of the Company and as a member of our board of directors since January 2019.

Previously, Dr.

Dube served as the Head of North America of Viiv Healthcare Limited, a pharmaceuticals company, since January 2018.

From June 2015 to December 2017, Dr.

Dube served as Sr.

Vice President and Head, Global Respiratory Franchise, of GlaxoSmithKline Pharmaceuticals plc (“GSK”), a pharmaceutical company.

From February 2013 to May 2015, Dr.

Dube served as Senior Vice President and Business Unit Head, Respiratory Japan of GSK.

Earlier in his career, Dr.

Dube held positions of increasing responsibility at GSK including senior leadership roles in Strategy, Planning & Operations, Oncology, Managed Markets and Marketing.

Dube currently serves on the Board of Directors for the Biotechnology Innovation Organization (BIO), and for Reneo Pharmaceuticals, Inc., a clinical stage pharmaceutical company focused on the development and commercialization of therapies for patients with rare genetic mitochondrial diseases.

Previously, Dr.

on the Board of Trustees for AIDS United, and on the Board of Directors for Biocom California.

Dube holds a B.S.

from Santa Clara University and a M.A.

from Cornell University.

Gary Lyons has served as a director of the Company since October 2014 and Chair of the Company since May 2016.

Previously, Mr.

Lyons was the founding President and Chief Executive Officer of Neurocrine Biosciences from 1993 to 2008 and remains a member of its Board of Directors.

Prior to joining Neurocrine, Mr.

Lyons held a number of senior management positions at Genentech, Inc., including Vice President of Business Development and Vice President of Sales.

Lyons currently serves on the Board of Directors of Rigel Pharmaceuticals, Inc., a biotechnology company focused on developing drugs for the treatment of inflammatory/autoimmune and metabolic diseases;

Eledon Pharmaceuticals, Inc.

(formerly Novus Therapeutics, Inc.), a company focused on therapeutics for immune disorders;

and Fresh Tracks Therapeutics, Inc.

(formerly known as Brickell Biotech, Inc.), a clinical-stage pharmaceutical company focused on developing prescription therapeutics for the treatment of autoimmune, inflammatory, and other debilitating diseases.

Lyons is also a Senior Advisor for HealthCare Royalty Partners.

Lyons holds a B.A.

in Marine Biology from the University of New Hampshire and an M.B.A.

from Northwestern University’s J.L.

Kellogg Graduate School of Management.

Jeffrey Meckler has served as a director of the Company since October 2014.

Since August 2021, Mr.

Meckler has served as Chief Executive Officer of Indaptus Therapeutics, Inc.

(formerly Intec Inc.), a biopharmaceutical company.

From April 2017 to August 2021, Mr.

Meckler served as Chief Executive Officer and Vice Chair of the Board of Intec Pharma, Ltd.

He served as Chief Executive Officer and a director of CoCrystal Pharma, Inc., a pharmaceutical company, from April 2015 to July 2016, as a director of QLT, Inc., an ultra-orphan ophthalmic biotechnology company based in Canada, from June 2012 to November 2016, as well as the Managing Director of The Andra Group, a life sciences consulting firm.

Previously, Mr.

Meckler acted as a director of several biopharmaceutical companies and medical device companies.

Earlier in his career, Mr.

Meckler held a series of positions at Pfizer Inc.

in Manufacturing Systems, Market Research, Business Development, Strategic Planning and Corporate Finance, which included playing a significant role in acquisitions and divestitures.

Meckler is the past President and continues to serve on the board of Children of Bellevue, a non-profit organization focused on advocating and developing pediatric programs at Bellevue Hospital Center.

Meckler holds a B.S.

in Industrial Management and M.S.

in Industrial Administration from Carnegie Mellon University.

In addition, Mr.

Meckler received a J.D.

from Fordham University School of Law.

Orwin has served as a director of the Company since March 2017.

Since April 2018, Mr.

Orwin has served as the President and Chief Executive Officer of Atreca, Inc., a biopharmaceutical company.

From June 2013 through June 2017, Mr.

Orwin served as Chief Executive Officer of Relypsa, Inc.

and from June 2013 through March 2017 also served as President of Relypsa and served on its board of directors from June 2013 until Relypsa’s acquisition by the Galenica Group in September 2016.

Prior to Relypsa, Mr.

Orwin served as President and Chief Operating Officer of Affymax, Inc., a biotechnology company, from April 2010 to January 2011, and as Affymax’s Chief Executive Officer and a member of the board of directors from February 2011 to May 2013.

Previously, Mr.

Orwin served as Vice President and then Senior Vice President of the BioOncology Business Unit at Genentech, Inc.

(now a member of the Roche Group), a biotechnology company, and served in various executive-level positions at Johnson & Johnson, a life sciences company.

Prior to such roles, Mr.

Orwin held senior marketing and sales positions at various life sciences and pharmaceutical companies, including Alza Corporation (acquired by Johnson & Johnson), Sangstat Medical Corporation (acquired by Genzyme), Rhone-Poulenc Rorer Pharmaceuticals, Inc.

(merged with Sanofi-Aventis) and Schering-Plough Corporation (merged with Merck).

Orwin currently serves as a member of the Board of Directors of Seagen Inc., a biotechnology company, and as the Chair of the Board of Directors of the privately-held biotechnology company CARGO Therapeutics (formerly Syncopation Life Sciences).

Previously he served as a member of the board of directors of Relypsa and Affymax, served on the board of directors of NeurogesX, Inc., and on the board of directors of Array BioPharma Inc.

from November 2012 until its acquisition by Pfizer in July of 2019.

Orwin received a B.A.

in Economics from Rutgers University and an M.B.A.

from New York University.

Sandra Poole has served as a director of the Company since May 2019.

Since July 2020, Ms.

Poole has served as the Chief Operating Officer of Mythic Therapeutics, an early-stage biotechnology company focused on the development of novel antibody-drug conjugates (ADCs) for cancer therapy.

Prior to Mythic, Ms.

Poole served as the Chief Operating Officer of LogicBio Therapeutics, Inc., a genome editing company from April 2018 to March 2019, and of Candel Therapeutics, a biotechnology company, from January 2020 to March 2020.

Prior to LogicBio, Ms.

Poole held executive roles of increasing responsibility at ImmunoGen, Inc., a company developing antibody-drug conjugates (ADCs) to treat cancer, including serving as Senior Vice President of Technical Operations from September 2014 to July 2015, Executive Vice President, Technical Operations from July 2015 to October 2016 and Executive Vice President, Technical Operations and Commercial Development from October 2016 to January 2017.

From February 2017 to March 2018 Ms.

Poole served as managing director of S.E.P.

Life Sciences Consulting LLL (formerly S.

Poole Consulting LLC), a biopharmaceutical consulting company.

Before joining ImmunoGen, Ms.

Poole spent more than 15 years in global operations, manufacturing and development leadership positions at Genzyme (now Sanofi Genzyme).

Previously, Ms.

Poole served on the Supervisory Board for Valneva, SE a France based vaccine company, and on the Board of Directors of ViaCyte, a privately held biotechnology until its acquisition by Vertex Pharmaceuticals Incorporated in July of 2022.

Poole holds an M.A.Sc.

and a B.A.Sc.

in chemical engineering from the University of Waterloo (Canada).

Ron Squarer has served as a director of the Company since April 2017.

Since March 2020, Mr.

Squarer has served as Chair of the Board of Directors of ADC Therapeutics SA, a clinical stage biopharmaceutical company, and since December 2019, has served for the Board of Directors of Deciphera Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company.

Squarer has extensive commercial, development and executive leadership expertise from a greater than 25-year career in the pharmaceutical industry.

Previously, Mr.

Squarer served as the Chief Executive Officer and a member of the Board of Directors of Array BioPharma, Inc., an oncology focused biopharmaceutical company from April 2012 to July

2019, when Array BioPharma, Inc.

was acquired by Pfizer, Inc.

at a total enterprise value of approximately $11.4 billion.

Prior to this, Mr.

Squarer held positions of increasing responsibility with Hospira Inc., a global pharmaceutical and medical device company, most recently serving as Senior Vice President, Chief Commercial Officer, where he was responsible for delivering $4 billion in annual revenue and leading more than 2,000 employees worldwide.

Squarer joined Hospira from Mayne Pharma, an oncology-focused, global pharmaceutical company, where he served as Senior Vice President, Global Corporate and Business Development when Mayne was sold to Hospira for $2 billion in 2007.

Prior to Mayne Pharma, Mr.

Squarer held senior management roles at both Pfizer, Inc., focused on global oncology commercial development, and at SmithKline Beecham Pharmaceuticals (now GlaxoSmithKline) in the U.S.

Squarer holds an MBA from the Kellogg School of Management, Northwestern University and a bachelor’s degree in biochemistry from the University of California, Berkeley.

Ruth Williams-Brinkley has served as a director of the Company since September 2021.

Since June 2020, Ms.

Williams-Brinkley has served as President of the Kaiser Foundation Health Plan of the Mid-Atlantic States, overseeing all of Kaiser Permanente’s care delivery and health plan operations in Washington, D.C., suburban Maryland, Baltimore, and Northern Virginia.

She joined Kaiser Permanente in 2017 as President of Kaiser Foundation Health Plan and Hospitals of the Northwest, in Portland, Oregon.

Prior to joining Kaiser, Ms.

Williams-Brinkley served as CEO of KentuckyOne Health, Kentucky’s largest integrated health system from 2011 to 2017, as President and CEO of Carondelet Health Network in Tucson, Arizona, an affiliate of Ascension Health, from 2008 to 2011 and as President and CEO of Memorial Health Care System of Chattanooga, Tennessee, an affiliate of Catholic Health Initiatives, from 2002 to 2008.

Currently Ms.

Williams-Brinkley serves on the Board of Directors of University of Phoenix, and on the not for profit Boards of DePaul University in Chicago, Illinois, Connected DMV, United Way of the National Capital Area, and the Leverage Network which is an organization dedicated to promoting the advancement of Black executives on board and in senior leadership roles in all sectors of the healthcare industry.

Previously, she served as a member of the Board of Directors of Results Physiotherapy, a private care delivery company until it was acquired by Upstream Rehabilitation in 2021 and Chattem, Inc.

until it was acquired by Sanofi in 2009.

Earlier in her career, Ms.

Williams-Brinkley held various nursing staff and management roles of increasing responsibility.

Williams-Brinkley received her B.S.

and Master’s of Science in Nursing from DePaul University and is a Fellow of the American College of Healthcare Executives.

In addition to Dr.

Dube, our executive officers are as follows:

Christopher Cline has served as the Chief Financial Officer of the Company since August 2022.

Cline brings more than 15 years of industry experience in investor relations, corporate communications, and financial strategy, planning and analysis to the chief financial officer position.

Previously, Mr.

Cline served as senior vice president, investor relations and corporate communications at the Company.

Since joining the Company in 2014, Mr.

Cline has been responsible for leading engagement with the investment community, as well as building a developed corporate communications infrastructure and strategy.

Prior to the Company, Mr.

Cline was a member of the global investor relations group at Elan Corporation, plc, and the financial planning and analysis group at Phase Forward.

Cline is a CFA charter holder and holds a degree in finance from the Williams College of Business at Xavier University.

Peter Heerma has served as Chief Commercial Officer of the Company since October 2019.

Previously, Mr.

Heerma served as Global Product General Manager for oncology and cardiovascular products at Amgen Inc., a biotechnology company, from December 2015 to September 2019.

From December 2003 until November 2015, Mr.

Heerma held roles of increasing responsibility at Abbott Laboratories (“Abbott”), and following Abbott’s spin-off of AbbVie, Inc., a biopharmaceutical company, at AbbVie.

These roles included Senior Director of Portfolio Strategy for hepatology and nephrology, Senior Director and Asset Team Lead for HCV, diabetic nephropathy, and neuroscience development projects (all AbbVie), Director of Commercial Strategy Renal Care, International Marketing Director, Business Unit Manager of hospital products, and Product Manager for obesity and cardiovascular products (all Abbott).

Heerma holds a Master of Science in European business administration and business law from the Lund University in Sweden and a Bachelor of Science in retail management and marketing from Stenden University in the Netherlands.

Jula Inrig has served as Chief Medical Officer of the Company since January 2022.

Previously, Dr.

Inrig served as Global Head of the Renal Center of Excellence at IQVIA, a global provider of analytics, technology solutions, and clinical research services to the life sciences industry, from September 2017 to December 2021, where she helped develop the design, execution and strategy of clinical trials leading to U.S.

Food and Drug Administration (FDA) and European Medicines Agency (EMA) approvals in autosomal dominant polycystic kidney disease (ADPKD), and diabetic kidney disease.

From August 2012 to March 2015 Dr.

Inrig served as Medical Director, and then as Senior Medical Director from April 2015 to December 2021 and was responsible for the execution of numerous global clinical trials, including pivotal phase 3 trials in FSGS, IgAN and lupus nephritis.

From March 2013 to January 2018 Dr.

Inrig served on the board of directors for the Kidney Health Initiative, a public-private partnership with the FDA, working to improve the development of therapies for patients with kidney disease.

Inrig has authored or co-authored over 50 peer-reviewed publications and editorials and is currently a member of several professional medical societies.

Inrig is board certified in nephrology and internal medicine and has served on the faculty at the University of California, Irvine, and as an adjunct in the Department of Medicine at the Duke University School of Medicine.

Inrig holds a B.A.

from California State University, Sacramento, and received her M.D.

from Loma Linda University and completed her internal medicine residency, her nephrology fellowship and Masters of Health Science at Duke University.

Reed has served as Senior Vice President, General Counsel and Corporate Secretary of the Company since January 2017.

Previously, Ms.

Reed served as Vice President, General Counsel and Secretary of Celladon Corporation, a publicly traded biotechnology company, from June 2014 to March 2016 and served as a legal consultant for companies in the life sciences industry from 2013 to June 2014 and again during 2016.

From 2001 to 2012, Ms.

Reed led the legal function at Anadys Pharmaceuticals, Inc., a publicly traded biopharmaceutical company, including serving as Senior Vice President, Legal Affairs, General Counsel and Corporate Secretary until Anadys’ acquisition by Roche.

Prior to Anadys, Ms.

Reed was an attorney with the law firms Cooley LLP and Brobeck, Phleger & Harrison LLP.

Reed is a member of the State Bar of California and

received her B.S.

in Business Administration from the Haas School of Business at the University of California, Berkeley and holds a J.D., cum laude, from Harvard Law School.

Rote has served as Senior Vice President of Research & Development of the Company since February 2017.

Previously, Dr.

Rote led clinical development at Ardea Biosciences, a wholly owned subsidiary of AstraZeneca, serving as Vice President, Clinical Development from September 2014 to July 2016.

From 2003 to 2014, Dr.

Rote held numerous positions of increasing responsibility at Amylin Pharmaceuticals, Inc., a biopharmaceutical company, including Vice President, Site Head for Research & Development from September 2012 to July 2014, Vice President, Research & Product Development from January 2010 to September 2012, and Vice President, Corporate Development, New Ventures, from 2007 to 2010, among others.

Prior to Amylin, Dr.

Rote served as Executive Director, Development of Corvas International, a biopharmaceutical company.

He earned both his Ph.D.

in Pharmacology and B.S.

in Pre-Medicine from Pennsylvania State University, and received postdoctoral training from the University of Michigan.

We have adopted a Code of Business Conduct that applies to our directors and employees (including our principal executive officer, principal financial officer, principal accounting officer and controller), and have posted the text of the policy on our website (https://ir.travere.com/governance-documents).

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3.6 Certificate of Amendment of Bylaws of the Company, effective June 9, 2021 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on June 10, 2021).

4.1 Reference is made to Exhibits to 3.1 , 3.2 , 3.3 , 3.4 , 3.

4.2 Description of Common Stock.

4.1 Reference is made to Exhibits to 3.1 , 3.2 , 3.3 , 3.4 , 3.5 and 3.6 .

4.2 Description of Common Stock (incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021 , filed with the SEC on February 24, 2022) .

4.3 Base Indenture, dated September 10, 2018, between the Company and U.S.

2 unchanged sentences

Bank National Association, as Trustee (including the form of 2.50% Convertible Senior Note due 2025) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on September 10, 2018).

4.5 Second Supplemental Indenture, dated March 11, 2022, between the Company and U.S.

Bank Trust Company, National Association, as Trustee (including the form of 2.25% Convertible Senior Note due 2029) (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed with the SEC on March 11, 2022).

10.1 Form of Indemnity Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 1, 2018).

5 unchanged sentences

Clague (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 5, 2017).

10.5† Retirement and Transition Agreement dated April 19, 2022, between the Company and Laura Clague (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on April 20, 2022).

10.6† Employment Agreement, effective September 1, 2022, between the Company and Christopher Cline (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K/A, filed with the SEC on August 17, 2022).

10.7† Employment Agreement, dated February 13, 2017, and Amendment to Employment Agreement, dated April 11, 2017, by and between the Company and William Rote (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 1, 2018)

2 unchanged sentences

10.9† Employment Agreement, dated October 1, 2019, by and between the Company and Peter Heerma (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 5, 2020).

10.8† Employment Agreement, dated July 26, 2018, by and between the Company and Noah Rosenberg, M.D.

(incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K, filed with the SEC on February 26, 2019).

10.9† Transition Agreement, dated October 12, 2021, between the Company and Noah Rosenberg, M.D.

(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on October 12, 2021.

10.10† Consulting Services Agreement dated January 1, 2022, between the Company and Noah Rosenberg, M.D.

(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on January 6 , 2022).

10.11† Retirement Agreement, dated January 4, 2019, by and between the Company and Stephen Aselage (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K, filed with the SEC on February 26, 2019).

10.12† Non-Employee Director Compensation Program (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2020).

10.13† The Company's 2021 Executive Officer Annual Bonus Plan (incorporated by reference to Exhibit 10.38 to the Company's Annual Report on Form 10-K, filed with the SEC on March 1, 2021).

10.10† Non-Employee Director Compensation Program, as amended (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 5, 2022).

10.11† The Company’s 2022 Executive Officer Annual Bonus Plan (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K, filed with the SEC on February 24, 2022).

10.12† The Company's 2023 Executive Officer Annual Bonus Plan.

10.13† The Company's 2014 Incentive Compensation Plan as amended (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 9, 2015).

10.16† The Company's 2015 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Company's C urrent R eport on Form 8-K, filed with the SEC on May 18, 2017).

10.14† The Company's 2015 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K, filed with the SEC on May 18, 2017).

10.15† Form of Stock Option Grant Notice, Option Agreement and Notice of Exercise for Inducement Grant Outside of 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.3 to the Company's current report on Form S-8, filed with the SEC on June 8, 2017).

10.16† Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement for Inducement Grant Outside of 2015 Equity Incentive Plan(incorporated by reference to Exhibit 99.4 to the Company's current report on Form S-8, filed with the SEC on June 8, 2017).

10.19† The Company's 2017 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.2 to the Company's C urrent report on Form 8-K, filed with the SEC on May 18, 2017 ) .

10.17† The Company's 2017 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.2 to the Company's Current report on Form 8-K, filed with the SEC on May 18, 2017).

10.18† The Company's 2018 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K, filed with the SEC on May 12, 2022).

10.21† Form of Stock Option Grant Notice, Option Agreement and Exercise Notice for use under the Company's 2018 Equity Incentive Plan, as amended.

10.22† Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement for use under the Company's 2018 Equity Incentive Plan, as amended.

10.19† Form of Stock Option Grant Notice, Option Agreement and Exercise Notice for use under the Company's 2018 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022).

10.20† Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement for use under the Company's 2018 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022).

10.21† Form of Stock Option Grant Notice, Option Agreement and Notice of Exercise for Inducement Grant Outside of 2018 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8 (File No.

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333-232857), filed with the SEC on July 26, 2019).

10.25+¥ Sublicense Agreement, dated February 16, 2012, by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation, Pharmacopeia, Inc., a Delaware limited liability company, and the Company, a Delaware limited liability company .

10.23+↡ Sublicense Agreement, dated February 16, 2012, by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation, Pharmacopeia, Inc., a Delaware limited liability company, and the Company, a Delaware limited liability company (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022).

10.24* Amendment No.

3 to Sublicense Agreement dated as of February 27, 2015, between the Company and Ligand Pharmaceuticals Incorporated .

3 to Sublicense Agreement dated as of February 27, 2015, between the Company and Ligand Pharmaceuticals Incorporated (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022).

10.25* Amendment No.

4 to Sublicense Agreement dated as of September 17, 2015, between the Company and Ligand Pharmaceuticals Incorporated .

4 to Sublicense Agreement dated as of September 17, 2015, between the Company and Ligand Pharmaceuticals Incorporated (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022).

10.26 Amendment No.

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10.36↡* Master Manufacturing Supply Agreement, dated September 30, 2020, between the Company and STA Pharmaceutical Hong Kong Limited, a subsidiary of WuXi AppTec (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 5, 2020).

10.37↡* First Amendment to Master Manufacturing Supply Agreement, effective as of November 14, 2022, between the Company and STA Pharmaceutical Hong Kong Limited, a subsidiary of WuXi AppTec.

10.38↡* License and Collaboration Agreement, dated September 15, 2021, by and among Orphan Technologies and Vifor (International) Ltd., and, solely with respect to Article 15, the Company (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on October 29, 2021).

10.40¥* Commercial Supply Agreement, dated December 21, 2021, between the Company and Catalent Pharma Solutions, LLC.

10.39↡* Amendment No.

1 to the License and Collaboration Agreement, effective as of October 5, 2022, by and between Travere Therapeutics Switzerland GmbH (formerly known as Orphan Technologies Limited) and Vifor (International) Ltd.

10.40↡* Commercial Supply Agreement, dated December 21, 2021, between the Company and Catalent Pharma Solutions, LLC (incorporated by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021 , filed with the SEC on February 24, 2022).

10.41 Office Lease, effective April 12, 2019, between the Company and Kilroy Realty, L.P.

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POWER OF ATTORNEY

Know all persons by these presents, that each person whose signature appears below constitutes and appoints Eric Dube and Laura Clague, and each of them, as his attorneys-in-fact and agents, each with power of substitution in any and all capacities, to sign any amendments to this annual report on Form 10-K, and to file the same with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that the attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.

Know all persons by these presents, that each person whose signature appears below constitutes and appoints Eric Dube and Christopher Cline, and each of them, as his attorneys-in-fact and agents, each with power of substitution in any and all capacities, to sign any amendments to this annual report on Form 10-K, and to file the same with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that the attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

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Dube February 23, 2023

/s/ Laura Clague Chief Financial Officer (Principal Financial Officer)

Laura Clague February 24, 2022

/s/ Sandra Calvin Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)

/s/ Christopher Cline Chief Financial Officer (Principal Financial Officer)

Christopher Cline February 23, 2023

/s/ Sandra Calvin Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

Sandra Calvin February 23, 2023

/s/ Stephen Aselage Director

Stephen Aselage February 24, 2022

Baynes Director

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In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 , in conformity with accounting principles generally accepted in the United States of America.

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, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 24, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 23, 2023 expressed an adverse opinion thereon.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) No.

2020-06, Debt — Debt with Conversion and Other Options (“Subtopic 470-20”) and Derivatives and Hedging — Contracts in Entity’s Own Equity (“Subtopic 815-40”):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated 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 consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a 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.

Business Combination-Related Contingent Consideration

As described in Note 8 to the consolidated financial statements, the Company acquired two businesses, related to the Cholbam and Chenodal products, whose purchase price included potential future payments that are contingent on the achievement of certain milestones and percentages of future net sales derived from the products acquired.

As described in Note 8 to the consolidated financial statements, the Company previously acquired two businesses, related to the Cholbam and Chenodal products, whose purchase price included potential future payments that are contingent on the achievement of certain milestones and percentages of future net sales derived from the products acquired.

The Company recorded business combination-related contingent consideration liabilities at their fair value on the acquisition date and revalues them at the end of each reporting period.

We identified the determination of the fair value of business combination-related contingent consideration as a critical audit matter.

The determination of the fair value of business combination-related contingent consideration requires management to make significant judgments including the appropriateness of the valuation model selected, the reasonableness of estimates and assumptions utilized in forecasts of future net sales and the discount rates applied to such forecasts.

Changes in these judgments could have a significant impact on the fair value of the business combination-

related contingent consideration.

We have identified the determination of the fair value of business combination-related contingent consideration as a critical audit matter.

The determination of the fair value of business combination-related contingent consideration liabilities requires management to make significant judgments including the assumptions used in the forecast of future net sales, the discount rates and the long-term growth rates.

Changes in these assumptions could have a material impact on the fair value of the business combination-related contingent consideration.

Auditing these elements involved especially challenging auditor judgment due to the subjectivity, nature and extent of auditor effort required to address the matter, including the extent of specialized skills and knowledge needed.

The primary procedures we performed to address this critical audit matter included:

• Testing the design and operating effectiveness of certain controls over the development of the significant assumptions used in the valuation model selected, including controls over assumptions related to:

(i) forecasts of future net sales and (ii) discount rates applied to the forecasts.

• Assessing the reasonableness of certain significant assumptions used in the valuation model, by:

(i) reviewing the products’ historical performance, (ii) evaluating the reasonableness of significant assumptions (including net sales projections) against budgets and the current performance of the Company, and (iii) performing sensitivity analyses to test the potential effect of changes in certain assumptions on the valuation.

• Utilizing professionals with specialized skills and knowledge in valuation to assist in evaluating the appropriateness of the valuation models utilized by management and to assess the reasonableness of certain estimates and assumptions used by management to develop the discount rates applied to the net sales forecasts.

License and Collaboration Agreement with Vifor

As discussed in Note 4 to the consolidated financial statements, in September 2021, the Company entered into a license and collaboration agreement with Vifor (International) Ltd.

(“Vifor Pharma”).

Under the terms of the agreement, the Company granted Vifor Pharma an exclusive license to commercialize sparsentan in Europe, Australia, and New Zealand.

In exchange for the license, the Company received an upfront payment of $55.0 million during 2021 and is eligible to receive additional regulatory and market access related milestones and sales-based milestones and royalties.

We have identified the identification of performance obligations under the Vifor license and collaboration agreement as a critical audit matter.

Determining the distinct performance obligations included in the agreement required management to make judgements with respect to the appropriate application of relevant authoritative accounting guidance.

Auditing management’s judgments and the resulting impacts on the accounting and revenue recognition for the Vifor license and collaboration agreement required increased auditor effort.

The primary procedures we performed to address this critical audit matter included:

Assessing the key terms in the license and collaboration agreement under the relevant authoritative accounting guidance to evaluate management’s conclusion that the license and collaboration agreement contains two distinct performance obligations.

Utilizing professionals with increased experience and expertise in technical accounting for license and collaboration agreements to assist in evaluation of management’s conclusions with respect to the performance obligations identified.

• Testing the design and operating effectiveness of certain controls over the development of the significant judgment and assumptions used in the determination of fair value, including controls related to:

(i) assumptions used in the forecast of future net sales, (ii) discount rates applied to the forecasts and (iii) the long-term growth rates.

• Testing management’s process for developing fair value estimates including testing the completeness, accuracy, relevance and reliability of underlying data and evaluating the reasonableness of significant assumptions within management’s forecast of future net sales and long-term growth rates by comparing against the products’ historical and current performance, budgets, and market participant data.

• Utilizing professionals with specialized skills and knowledge in valuation to assist in evaluating the reasonableness of certain assumptions used by management, including the discount rates by developing independent estimates and comparing estimates to those utilized by management.

/s/ BDO USA, LLP

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Inventory, net 6,922 7,313

Tax receivable 247 17,142

Prepaid expenses and other current assets 12,624 6,718

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Deferred revenue, current portion 11,976 16,268

Business combination-related contingent consideration 7,400 17,400

Business combination-related contingent consideration, current portion 7,000 7,400

Operating lease liabilities, current portion 4,433 3,908

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20,000,000 shares authorized;

0 issued and outstanding as of December 31, 2021 and 2020

no shares issued and outstanding as of December 31, 2022 and 2021

Common stock $ 0.0001 par value;

200,000,000 and 100,000,000 shares authorized;

200,000,000 shares authorized;

64,290,570 and 62,491,498 issued and outstanding as of December 31, 2022 and 2021, respectively

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(In thousands, except share and per share amounts)

Years Ended December 31,

Year Ended December 31,

2022 2021 2020

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Change in fair value of contingent consideration 15,006 22,260 3,655

Impairment of L-UDCA IPR&D intangible asset — — 25,500

Write off of L-UDCA contingent consideration — — ( 18,000 )

Acquired IPR&D expense — — 97,131

Impairment of long-term investment — — 15,000

Total operating expenses 478,584 389,255 374,484

Operating loss ( 266,566 ) ( 161,765 ) ( 176,163 )

Other Income (expense), net:

Other income (expenses), net:

Interest income 6,276 1,993 5,003

Interest expense ( 11,275 ) ( 20,141 ) ( 19,050 )

Other income (expense), net 231 1,420 ( 314 )

Other income, net 974 231 1,420

Loss on extinguishment of debt ( 7,578 ) — —

Total other expense, net ( 11,603 ) ( 17,917 ) ( 12,627 )

Loss before (provision) benefit for income taxes ( 179,682 ) ( 188,790 ) ( 146,448 )

Loss before income tax (provision) benefit ( 278,169 ) ( 179,682 ) ( 188,790 )

Income tax (provision) benefit ( 313 ) ( 409 ) 19,359

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Net loss $ ( 278,482 ) $ ( 180,091 ) $ ( 169,431 )

Unrealized loss on defined benefit pension plan ( 368 ) — —

Foreign currency translation gain (loss) 507 1,515 ( 1,452 )

Unrealized (loss) gain on debt securities ( 1,175 ) ( 176 ) 2,163

Unrealized loss on marketable debt securities ( 2,484 ) ( 1,175 ) ( 176 )

Comprehensive loss $ ( 280,827 ) $ ( 179,751 ) $ ( 171,059 )

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Share based compensation — — 22,733 — — 22,733

Unrealized gain/(loss) on marketable debt securities — — — 2,163 — 2,163

Foreign currency translation adjustments — — — 92 — 92

Issuance of common shares under the equity incentive plan and proceeds from exercise.

272,730 — 1,618 — — 1,618

Issuance of common stock under the equity incentive plan and proceeds from exercise 649,075 — 3,895 — — 3,895

Employee stock purchase program stock purchase and expense 167,629 — 2,928 — — 2,928

Convertible debt issue 1,297,343 — 22,590 — — 22,590

Equity offering, net of issuance costs of $ 7.2 million

7,475,000 1 108,691 — — 108,692

Issuance of common stock under At-The-Market offering, net of issuance costs of $ 0.7 million.

867,806 — 22,828 — — 22,828

Foreign currency translation adjustments — — — ( 1,452 ) — ( 1,452 )

Unrealized loss on marketable debt securities — — — ( 176 ) — ( 176 )

Net loss — — — — ( 169,431 ) ( 169,431 )

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Issuance of common stock under the equity incentive plan and proceeds from exercise 1,302,966 — 12,841 — — 12,841

Employee stock purchase program stock purchase and expense 166,961 — 3,012 — — 3,012

Equity offering, net of issuance costs of $ 12.2 million

7,532,500 1 189,278 — — 189,279

Issuance of common stock under At-The-Market offering, net of offering costs 867,806 — 22,828 22,828

Unrealized gain/(loss) on marketable debt securities — — — ( 176 ) — ( 176 )

Issuance of common stock under At-The-Market offering, net of issuance costs of $ 1.1 million.

1,240,640 — 35,656 — — 35,656

Foreign currency translation adjustments — — — 1,515 — 1,515

Employee stock purchase program stock purchase and expense 167,629 — 2,928 — — 2,928

Unrealized loss on marketable debt securities — — — ( 1,175 ) — ( 1,175 )

Net loss — — — — ( 180,091 ) ( 180,091 )

BALANCE - DECEMBER 31, 2021 62,491,498 $ 6 $ 1,068,634 $ ( 562 ) $ ( 765,966 ) $ 302,112

Cumulative-effect adjustment from adoption of ASU 2020-06 — — ( 74,945 ) — 30,225 ( 44,720 )

Share based compensation — — 37,897 — — 37,897

Issuance of common stock under the equity incentive plan and proceeds from exercise 935,598 — 4,585 — — 4,585

Equity offering, net of issuance costs of $ 12.2 million

Employee stock purchase program purchase and expense 161,874 — 4,259 — — 4,259

Issuance of common stock under At-The-Market offering, net of issuance costs of $ 0.6 million.

701,600 — 19,545 — — 19,545

Issuance of common stock under At-The-Market offering, net of offering costs 1,240,640 — 35,656 — — 35,656

Unrealized gain/(loss) on marketable debt securities — — — ( 1,175 ) — ( 1,175 )

Unrealized loss on defined benefit pension plan — — — ( 368 ) — ( 368 )

Foreign currency translation adjustments — — — 507 — 507

Employee stock purchase program stock purchase and expense 166,961 — 3,012 — — 3,012

Unrealized loss on marketable debt securities — — — ( 2,484 ) — ( 2,484 )

Net loss — — — — ( 278,482 ) ( 278,482 )

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Adjustments to reconcile net loss to net cash used in operating activities:

Share based compensation 30,766 23,614 21,105

Depreciation and amortization 33,079 26,617 24,579

Share based compensation 39,177 30,766 23,614

Change in estimated fair value of contingent consideration 15,006 22,260 3,655

Payments from change in fair value of contingent consideration ( 8,602 ) ( 14,375 ) ( 12,407 )

Amortization of debt discount and deferred financing costs 11,242 10,478 9,903

Loss on extinguishment of debt 7,578 — —

Loss on allowance for inventory 2,455 2,110 2,225

Amortization of premiums (discounts) on investments 2,008 703 ( 788 )

Amortization of debt discount and issuance costs 1,622 11,242 10,478

Acquired IPR&D expense — — 97,131

Impairment of intangible assets — — 25,500

Loss on impairment of long-term investment — — 15,000

Other 972 6,700 3,455

Changes in operating assets and liabilities, net of asset acquisition:

Changes in operating assets and liabilities:

Accounts receivable ( 682 ) ( 59 ) 2,301

Inventory ( 2,064 ) ( 1,815 ) ( 5,067 )

Prepaid expenses and other current assets ( 1,438 ) ( 4,314 ) 208

Tax receivable ( 374 ) 17,099 ( 15,746 )

Prepaid expenses and other current and non-current assets ( 4,908 ) ( 1,438 ) ( 4,314 )

Change in lease assets and liabilities, net ( 984 ) 5,577 ( 1,203 )

Accounts payable 2,307 2,770 ( 6,036 )

Accrued expenses and other current liabilities 19,545 4,023 4,602

Accrued expenses 22,261 18,308 4,417

Deferred revenue, current and non-current ( 12,929 ) 38,300 —

Other current and non-current liabilities ( 1,723 ) 1,237 ( 394 )

Net cash used in operating activities ( 186,291 ) ( 14,792 ) ( 42,743 )

Cash Flows From Investing Activities:

Purchase of fixed assets ( 5,101 ) ( 6,767 ) ( 195 )

Purchase of intangible assets ( 19,050 ) ( 17,799 ) ( 15,370 )

Proceeds from the sale/maturity of marketable debt securities 381,993 433,604 273,482

Purchase of marketable debt securities ( 385,389 ) ( 547,076 ) ( 214,964 )

Purchased IPR&D, net of cash acquired — ( 95,279 ) —

Net cash (used in) provided by investing activities ( 137,623 ) ( 61,327 ) 19,863

Purchase of fixed assets ( 191 ) ( 5,101 ) ( 6,767 )

Purchase of intangible assets ( 28,366 ) ( 19,050 ) ( 17,799 )

Purchase of IPR&D, net of cash acquired — — ( 95,279 )

Other ( 600 ) — —

Net cash used in investing activities ( 32,553 ) ( 137,623 ) ( 61,327 )

Cash Flows From Financing Activities:

Payment of acquisition-related contingent consideration ( 6,104 ) ( 7,648 ) ( 3,388 )

Payment of guaranteed minimum royalty ( 2,100 ) ( 2,100 ) ( 2,100 )

Payment of business combination-related contingent consideration ( 2,479 ) ( 6,104 ) ( 7,648 )

Proceeds from issuance of 2029 convertible senior notes 316,250 — —

Payment of debt issuance costs ( 9,882 ) — —

Repurchase of 2025 convertible senior notes including premium ( 211,324 ) — —

Proceeds from exercise of stock options 4,585 12,841 3,895

Proceeds from the issuance of common stock in At-the-Market equity offering 35,656 22,828 —

Proceeds from the issuances under the employee stock purchase program 2,978 2,112 2,046

Proceeds from the issuance of common stock, net of issuance costs — 189,278 108,692

Proceeds from the issuance of common stock under the employee stock purchase program 2,112 2,046 1,777

Net cash provided by (used in) financing activities 231,683 127,713 ( 2,077 )

Proceeds from the issuance of common stock in At-the-Market equity offering 19,545 35,656 22,828

Net cash provided by financing activities 117,573 231,683 127,713

Effect of exchange rate changes on cash ( 2,794 ) 1,713 ( 1,307 )

Net increase (decrease) in cash and cash equivalents 80,981 22,336 ( 40,437 )

Net (decrease) increase in cash and cash equivalents ( 104,065 ) 80,981 22,336

Cash and cash equivalents, beginning of year 165,753 84,772 62,436

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Supplemental Disclosure of Cash Flow Information:

Operating cash flows used for operating leases $ 6,020 $ 2,205 $ 2,537

Cash paid for interest $ 10,159 $ 7,327 $ 6,901

Cash refunded (paid) for income taxes $ 16,420 $ 3,373 $ ( 656 )

Cash (paid) refunded for income taxes $ ( 996 ) $ 16,420 $ 3,373

Non-cash investing and financing activities:

Accrued capital expenditures $ — $ 100 $ 1,900

Accrued royalty in excess of minimum payable to the sellers of Thiola $ 16,067 $ 19,362 $ 18,168

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(“we”, “our”, “us”, “Travere” and the “Company”) refers to Travere Therapeutics, Inc., a Delaware corporation, as well as our direct and indirect subsidiaries.

Travere is a fully integrated biopharmaceutical company headquartered in San Diego, California focused on identifying, developing and delivering life-changing therapies to people with rare diseases.

We regularly evaluate and, where appropriate, act on opportunities to expand our product pipeline through licenses and acquisitions of products in areas that will serve patients with serious or rare diseases and that we believe offer attractive growth characteristics.

The ongoing novel coronavirus (COVID-19) pandemic has resulted in travel restrictions, quarantines, “stay-at-home” and “shelter-in-place” orders and extended shutdown of certain businesses around the world.

While the impact of the COVID-19 pandemic did not have a material adverse effect on our financial position or results of operations for the twelve months ended December 31, 2021, these governmental actions and similar actions that may be enacted in the future, and the widespread economic disruption arising from the pandemic, have the potential to materially impact our business and influence our business decisions.

The extent and duration of the pandemic is unknown, and the future effects on our business are uncertain and difficult to predict.

The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company’s estimates and assumptions in the future.

Clinical Programs:

Sparsentan is a novel investigational product candidate and has been granted Orphan Drug Designation for the treatment of focal segmental glomerulosclerois (FSGS) and immunoglobulin A nephropathy (IgAN) in the U.S.

Sparsentan is currently being evaluated in two pivotal Phase 3 clinical studies in rare kidney diseases.

Travere is a fully integrated biopharmaceutical company headquartered in San Diego, California focused on identifying, developing and delivering life-changing therapies to people living with rare kidney, liver, and metabolic diseases.

We regularly evaluate and, where appropriate, act on opportunities to expand our product pipeline through licenses and acquisitions of products in areas that will serve patients with serious unmet medical need and that we believe offer attractive growth characteristics.

FILSPARI™ (sparsentan)

On February 17, 2023, the FDA granted accelerated approval of FILSPARI™ (sparsentan) to reduce proteinuria in adults with primary IgAN at risk of rapid disease progression, generally at UPCR ≥1.5 gram/gram.

FILSPARI, a once-daily, oral medication is designed to selectively target two critical pathways in the disease progression of IgAN (endothelin 1 and angiotensin-II).

Clinical-Stage Programs:

Sparsentan remains a novel investigational product candidate which has been granted Orphan Drug Designation for the treatment of focal segmental glomerulosclerosis (FSGS) in the U.S.

Evaluation of sparsentan is ongoing in two pivotal Phase 3 clinical studies in rare kidney diseases.

Pegtibatinase ( TVT-058) is a novel investigational human enzyme replacement candidate being evaluated for the treatment of classical homocystinuria (HCU).

Pegtibatinase has been granted Rare Pediatric Disease and Fast Track designations by the FDA, as well as orphan drug designation in the United States and European Union.

Pegtibatinase has been granted Rare Pediatric Disease, Fast Track and Breakthrough Therapy designations by the FDA, as well as orphan drug designation in the United States and European Union.

Pegtibatinase is currently being evaluated in the Phase 1/2 COMPOSE Study to assess its safety, tolerability, pharmacokinetics, pharmacodynamics and clinical effects in patients with classical HCU.

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Chenodal (chenodeoxycholic acid or CDCA) is a naturally occurring bile acid that is approved for the treatment of people with radiolucent stones in the gallbladder.

In January 2020, we randomized the first patients in our Phase 3 RESTORE Study to evaluate the effects of Chenodal in adult and pediatric patients with cerebrotendinous xanthomatosis (CTX), and the study enrollment remains open.

In September 2022, we were granted Fast Track Designation by the FDA for the investigation of Chenodal for cerebrotendinous xanthomatosis (CTX).

In January 2020, we randomized the first patients in our Phase 3 RESTORE Study to evaluate the effects of Chenodal in adult and pediatric patients with CTX, and the study enrollment remains open.

The pivotal study is intended to support an NDA submission for marketing authorization of Chenodal for CTX in the United States.

Preclinical Programs:

We are a participant in two Cooperative Research and Development Agreements ("CRADAs"), which form a multi-stakeholder approach to pool resources with leading experts, and incorporate the patient perspective early in the therapeutic identification and development process.

We have partnered with the National Institutes of Health’s National Center for Advancing Translational Sciences ("NCATS") and leading patient advocacy organizations, CDG Care and Alagille Syndrome Alliance, aimed at the identification of potential small molecule therapeutics for NGLY1 deficiency and Alagille syndrome ("ALGS"), respectively.

There are no treatment options currently approved for these diseases.

Approved products:

• Chenodal (chenodiol tablets) is approved in the United States for the treatment of patients suffering from gallstones in whom surgery poses an unacceptable health risk due to disease or advanced age.

• Cholbam ® (cholic acid capsules) is approved in the United States for the treatment of bile acid synthesis disorders due to single enzyme defects and is further indicated for adjunctive treatment of patients with peroxisomal disorders.

The Company is a participant in a Cooperative Research and Development Agreement ("CRADA"), which forms a multi-stakeholder approach to pool resources with leading experts, and incorporate the patient perspective early in the therapeutic identification and development process.

The Company is partnering with the National Institutes of Health’s National Center for Advancing Translational Sciences ("NCATS") and a leading patient advocacy organization, Alagille Syndrome Alliance, aimed at the identification of potential small molecule therapeutics for Alagille syndrome ("ALGS").

There are no treatment options currently approved for ALGS.

Other Commercial Products:

• Thiola ® and Thiola EC ® (tiopronin tablets) are approved in the United States for the prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Principles of Consolidation

The consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States ("U.S.

The consolidated financial statements represent the consolidation of the accounts of the Company, its subsidiaries and variable interest entities for which the Company has been determined to be the primary beneficiary, in conformity with accounting principles generally accepted in the United States ("U.S.

All intercompany accounts and transactions have been eliminated in consolidation.

See Note 5 for further discussion of variable interest entities (“VIE”) that the Company consolidates.

Use of Estimates

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On an ongoing basis, the Company evaluates its estimates and assumptions.

These estimates and assumptions include revenue recognition, forecasting probability-weighted cash flows based upon estimates of forecasted revenues, clinical and regulatory timelines and discount rates, valuing equity securities in share-based payments, estimating expenses of contracted research organizations, estimating the useful lives of depreciable and amortizable assets, goodwill impairment, estimating the fair value of contingent consideration, estimating of valuation allowances and uncertain tax positions, and estimates associated with the assessment of impairment for long-lived assets.

These estimates and assumptions include revenue recognition, forecasting probability-weighted cash flows based upon estimates of forecasted revenues, clinical and regulatory timelines and discount rates, valuing equity securities in share-based payments, estimating expenses of contracted research organizations, estimating reserves for inventory, estimating the useful lives of depreciable and amortizable assets, goodwill impairment, estimating the fair value of contingent consideration, estimating of valuation allowances and uncertain tax positions, and estimates associated with the assessment of impairment for long-lived assets.

Revenue Recognition

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If it is probable that a significant revenue reversal will not occur, the estimated amount is included in the transaction price.

Milestone payments that are not within the Company or the licensee’s control, such as regulatory approvals are not included in the transaction price until those approvals are received.

Milestone payments that are not within the Company or the licensee’s control, such as regulatory approvals, are considered to be constrained due to a high degree of uncertainty and are not included in the transaction price until such uncertainty is resolved.

At the end of each reporting period, the Company re-evaluates the probability of achievement of development milestones and any related constraint and adjusts the estimate of the overall transaction price, if necessary.

The Company recognizes aggregate sales-based milestones and royalty payments from product sales at the later of when the related sales occur or when the performance obligation to which the sales-based milestone or royalty has been allocated has been satisfied.

If it is probable that a significant revenue reversal will not occur, the Company estimates the sales-based milestone and royalty payments using the most likely amount method.

The Company recognizes aggregate sales-based milestones and royalty payments from product sales of which the license is deemed to be the predominant item to which the royalties relate, at the later of when the related sales occur or when the performance obligation to which the sales-based milestone or royalty has been allocated has been satisfied.

The Company utilizes significant judgement to develop estimates of the stand-alone selling price for each distinct performance obligation based upon the relative stand-alone selling price.

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Revenue is recorded proportionally as costs are incurred.

The Company generally utilizes the cost-to-cost method of progress because it

best measures the transfer of control to the customer which occurs as the Company incurs costs.

The Company generally utilizes the cost-to-cost method of progress because it best measures the transfer of control to the customer which occurs as the Company incurs costs.

Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

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The Company evaluates these cost estimates and the progress each reporting period and adjusts the measure of progress, if necessary.

Research and Development Costs

Research and Development Expenses

Research and development includes expenses related to sparsentan, pegtibatinase, and the Company's other pipeline programs.

The Company expenses all research and development costs as they are incurred.

The Company's research and development costs are comprised of salaries and bonuses, benefits, share-based compensation, license fees, milestones under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, and develop drug materials and delivery devices, and associated overhead expenses and facilities costs.

The Company's research and development costs are composed of salaries and bonuses, benefits, share-based compensation, license fees, milestones under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, develop drug materials and delivery devices, manufacture drug product supplies to support clinical development, and associated overhead expenses and facilities costs.

The Company charges direct internal and external program costs to the respective development programs.

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These consist of internal shared resources related to the development and maintenance of systems and processes applicable to all of our programs.

Nonrefundable advance payments for goods and services to be received in the future for use in research and development activities are recorded as prepaid expenses.

The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered.

During the three months ended December 31, 2022, the Company recorded an out of period adjustment that decreased research and development expenses and related accrued expenses by $ 7.7 million, $ 1.5 million of which was previously recorded in fiscal year 2022 and $ 6.2 million that was originally recorded in fiscal year 2021.

The adjustment was the result of a certain pre-launch inventory contract that was not properly evaluated for accounting implications at inception.

The Company evaluated the impact of the adjustment and concluded it is not material, individually and in the aggregate, to the current or any prior period financial statements.

Clinical Trial Expenses

The Company records expenses in connection with clinical trials under contracts with contract research organizations (CROs) that support conducting and managing clinical trials.

The Company records expenses in connection with its clinical trials under contracts with contract research organizations ("CROs") that support conducting and managing clinical trials, as well as contract manufacturing organizations ("CMOs") for the manufacture of drug product supplies to support clinical development.

The financial terms and activities of these agreements vary from contract to contract and may result in uneven expense levels.

Generally, these agreements set forth activities that drive the recording of expenses such as start-up and initiation activities, enrollment and treatment of patients, or the completion of other clinical trial activities.

Expenses related to clinical trials are accrued based on our estimates and/or representations from service providers regarding work performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials.

Generally, these agreements set forth activities that drive the recording of expenses such as start-up, initiation activities, enrollment, treatment of patients, or the completion of other clinical trial activities, and in the case of CMOs, costs associated with the production of drug product supplied and the procurement of raw materials to be consumed in the manufacturing process.

Expenses related to clinical trials are accrued based on our estimates of the progress of services performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials or the delivery of goods.

Other incidental costs related to patient enrollment or treatment are accrued when reasonably certain.

If the amounts we are obligated to pay under our clinical trial agreements are modified (for instance, as a result of changes in the clinical trial protocol or scope of work to be performed), the Company adjusts its accruals accordingly on a prospective basis.

Revisions to the Company's contractual payment obligations are charged to expense in the period in which the facts that give rise to the revision become reasonably certain.

The Company currently has three Phase 3 clinical trials in process that are in varying stages of activity, with ongoing non-clinical support trials.

As such, clinical trial expenses will vary depending on the all the factors set forth above and may fluctuate significantly from quarter to quarter.

The Company currently has one Phase 1/2 clinical trial and three Phase 3 clinical trials in process that are in varying stages of activity, with ongoing non-clinical support trials.

As such, clinical trial expenses will vary depending on all the factors set forth above and may fluctuate significantly from quarter to quarter.

Share-Based Compensation

The Company recognizes all employee share-based compensation as a cost in the financial statements.

The Company recognizes all employee share-based compensation as a cost within research and development expenses and selling, general, and administrative expenses.

Equity-classified awards principally related to stock options, restricted stock units (“RSUs”) and performance stock units ("PSUs"), are measured at the grant date fair value of the award.

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Marketable Debt Securities

The Company accounts for marketable debt securities held as “available-for-sale” in accordance with ASC 320, “Investments - Debt Securities” (“ASC 320”).

The Company classifies these investments as current assets and carries them at fair value.

The Company classified marketable debt securities held as “available-for-sale” and carries them at fair value.

The Company classifies these investments as current assets, even if the maturity when acquired by the Company is greater than one year due to the ability to liquidate within the next 12 months.

The amortized cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity.

Such amortization and accretion, as well as interest and dividends, is included in interest income.

Unrealized gains and losses on marketable debt securities are recorded as a separate component of stockholders’ equity as accumulated other comprehensive loss, unless an impairment is determined to be the result of credit-related factors or the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery.

Realized gains or losses on debt security transactions and declines in value that are determined to be the result of credit losses, if any, are reported in the Consolidated Statements of Operations and Comprehensive Loss.

Unrealized losses that are determined to be credit-related are recorded as an allowance against the amortized cost basis.

Realized gains or losses on debt security transactions and declines in value that are determined to be the result of credit losses, if any, are reported in other income or expense in the Consolidated Statements of Operations and Comprehensive Loss.

The cost of securities sold is based on the specific identification method.

Marketable debt securities are maintained at one financial institution and are governed by the Company’s investment policy.

See Note 6 for further discussion.

Trade Receivables, Net

Accounts Receivables, Net

Trade accounts receivable are recorded net of reserves for prompt pay discounts and expected credit losses.

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Our evaluation of past events, current conditions, and reasonable and supportable forecasts about the future resulted in an expectation of immaterial credit losses.

Supplier Concentration Risk

The Company has no manufacturing capabilities and relies on third party manufacturers who are sole source suppliers for manufacturing of its products.

The Company intends to rely on third-party manufacturers for the long-term commercial supply of FILSPARI and for its development stage product candidates, including sparsentan for the treatment of FSGS and pegtibatinase (TVT-058).

The Company expects the manufacturers of each product or product candidate to, at least initially and potentially for a significant period of time, be single source suppliers to the Company.

Inventory, Related Reserves and Cost of Goods Sold

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The inventory reserve was $ 3.5 million and $ 4.1 million at December 31, 2022 and 2021, respectively.

Inventory, net of reserve, consisted of the following at December 31, 2021 and 2020 ( in thousands ):

Inventory, net of reserves, consisted of the following at December 31, 2022 and 2021 ( in thousands ):

December 31, 2022 December 31, 2021

Raw material $ 5,205 $ 3,219

Raw materials $ 3,627 $ 5,205

Finished goods 3,295 2,108

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Cost of goods sold includes the cost of inventory sold, third party manufacturing and supply chain costs, product shipping and handling costs, and provisions for excess and obsolete inventory.

Capitalization of Inventory Costs

Prior to the regulatory approval of the Company's drug candidates, the Company incurs expenses for the manufacture of drug product supplies to support clinical development that could potentially be available to support the commercial launch of those drugs.

The Company capitalizes inventory costs associated with its products after regulatory approval, when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized.

Until the date at which regulatory approval has been received, costs related to the production of inventory are recorded as research and development expenses as incurred.

Any eventual sale of previously expensed ("zero-cost") inventories may impact future margins, for any periods in which those inventories are sold.

As of December 31, 2022, we have recognized approximately $ 7.5 million in research and development expenses related to the production of active pharmaceutical ingredient that could potentially support the commercial launch of FILSPARI.

Segment Information

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A single management team reports to the chief operating decision maker who comprehensively manages the entire business.

Company does not operate any separate lines of business or separate business entities with respect to its products.

The Company does not operate any separate lines of business or separate business entities with respect to its products.

Accordingly, the Company does not accumulate discrete financial information with respect to separate products, other than revenues, and does not have separately reportable segments.

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The Company classifies each of its leases as operating or financing considering factors such as the length of the lease term, the present value of the lease payments, the nature of the asset being leased, and the potential for ownership of the asset to transfer during the lease term.

Leases with terms greater than one year are recognized on the Consolidated Balance Sheets as Right-of-use assets and Lease liabilities and are measured at the present value of the fixed payments due over the expected lease term minus the present value of any incentives, rebates or abatements expected to be received from the lessor.

Options to extend a lease are typically excluded from the expected lease term as the exercise of the option is typically not reasonably certain.

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As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis an amount equal to the lease payments over a similar term and in a similar economic environment.

The Company records expense to recognize fixed lease payments on a straight-line basis over the expected lease term.

In addition to rent, the leases may require the Company to pay additional amounts for taxes, insurance, maintenance, and other expenses, which are generally referred to as non-lease components.

The Company has elected to not separate lease and non-lease components.

Only the fixed costs for lease components and their associated non-lease components are accounted for as a single lease component and recognized as part of the Right-of-use assets and Lease liabilities.

The Company records expense to recognize fixed lease payments, including payment escalation, on a straight-line basis over the expected lease term.

Costs determined to be variable and not based on an index or rate are not included in the measurement of the lease liability and are expensed as incurred.

The Company has made an accounting policy election to not recognize short-term leases, or leases that have a lease term of 12 months or less at commencement date, within its Consolidated Balance Sheets and to recognize those lease payments in the Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the lease term.

Acquired IPR&D

The Company assesses whether IPR&D assets acquired from others in an asset acquisition have alternative future use (in research and development projects or otherwise) at the acquisition date.

If such assets have alternative future use, they are capitalized and recognized as an intangible asset.

If such assets do not have alternative use, nor is there an alternative indication that the Company plans to pursue, the upfront consideration transferred, including any contingent consideration that is probable and reasonably estimable, is charged to expense at the acquisition date.

The Company expensed the acquired IPR&D associated with the acquisition of Orphan Technologies in 2020, which included the developmental product candidate for the treatment of classical homocystinuria (HCU), pegtibatinase (TVT-058).

Intangible Assets, Net

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The additional cost basis is subsequently amortized over the remaining life of the license agreement.

Consistent with all prior periods since Thiola was acquired, the Company has not accrued any liability for royalties in excess of the annual contractual minimum at December 31, 2021 as such royalties are not yet probable and estimable.

Consistent with all prior periods since Thiola was acquired, the Company has not accrued any liability for future royalties in excess of the annual contractual minimum at December 31, 2022 as such royalties are not yet probable and estimable.

Variable Interest Entity

The Company reviews each investment and collaboration agreement to determine if it has a variable interest in the entity.

In assessing whether the Company has a variable interest in the entity as a whole, the Company considers and makes judgements regarding the purpose and design of the

entity, the value of the licensed assets to the entity, the value of the entity’s total assets and the significant activities of the entity.

If the Company has a variable interest in the entity as a whole, the Company assesses whether or not the Company is a primary beneficiary of that VIE, based on a number of factors, including:

(i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to the collaboration agreement, and (iii) which party has the obligation to absorb losses of or the right to receive benefits from the VIE that could be significant to the VIE.

If the Company determines that it is the primary beneficiary of a VIE at the onset of the collaboration, the collaboration is treated as a business combination and the Company consolidates the financial statements of the VIE into the Company’s consolidated financial statements.

On a quarterly basis, the Company evaluates whether it continues to be the primary beneficiary of the consolidated VIE.

If the Company determines that it is no longer the primary beneficiary of a consolidated VIE, it deconsolidates the VIE in the period in which the determination is made.

Assets and liabilities recorded as a result of consolidating the financial results of the VIE into the Company’s consolidated balance sheet do not represent additional assets that could be used to satisfy claims against the Company’s general assets or liabilities for which creditors have recourse to the Company’s general assets.

Goodwill represents the excess of purchase price over fair value of net assets acquired in a business combination and is not amortized.

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The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes,

accounting in interim periods and requires increased disclosures.

The Company’s policy is to record estimated interest and penalty related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision.

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Foreign currency transactions in each entity comprising the Company are remeasured into the functional currency of the entity using the exchange rates prevailing at the respective transaction dates.

Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized within Other operating expense, net except for changes related to the liability related to the sale of future royalties which are recorded in Other non-operating (income) expense, net in the Consolidated Statements of Operations and Comprehensive Loss.

The aggregate gain arising from foreign exchange transactions included in Other income (expense), net for the years ended December 31, 2022, 2021 and 2020 was $ 1.4 million, $ 0.3 million, and $ 1.2 million, respectively.

The results and financial position of the Company that have a functional currency different from the US dollar are translated as follows:

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All resulting exchange differences arising from such translations are recognized directly in comprehensive income and presented as a separate component of equity.

The following table summarizes the foreign currency translation adjustment included in accumulated other comprehensive loss for the year ended December 31, 2022, 2021 and 2020 ( in thousands ):

Foreign Currency Translation Adjustments included in Accumulated Other Comprehensive Loss

2022 2021 2020

Balance at January 1, $ ( 92 ) $ ( 1,607 ) $ ( 155 )

Foreign currency translation adjustments 507 1,515 ( 1,452 )

Balance at December 31, $ 415 $ ( 92 ) $ ( 1,607 )

Reclassifications

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See Note 11 for further discussion.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies.

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 its consolidated financial position or results of operations upon adoption.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.

The ASU includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity's own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20.

The ASU includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity's own equity in Subtopic 815-40 and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20.

Additionally, the ASU will require entities to use the "if-converted" method when calculating diluted earnings per share for convertible instruments.

The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The new standard will impact the Company's accounting for its Convertible Senior Notes Due 2025 (2025 Notes), discussed in Note 7, which are currently accounted for using the cash conversion model applied under ASC 470-20, Debt with Conversion and Other Options ("ASC 470-20").

Under the new guidance, the Company intends to apply the modified retrospective method as the transition approach at adoption, which will result in adjustments to the January 1, 2022 opening balances of convertible debt, additional paid-in capital, and accumulated deficit.

Additionally, from January 1, 2022, the Company will no longer incur non-cash interest expense for the amortization of debt discount resulting in lower interest expense for the 2025 Notes.

The adoption of the new standard impacted the Company's accounting for its Convertible Senior Notes Due 2025 (2025 Notes), discussed in Note 7, which were previously accounted for using the cash conversion model applied under ASC 470-20, Debt with Conversion and Other Options ("ASC 470-20").

The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method.

The cumulative effect of the accounting change as of January 1, 2022 increased the carrying amount of the 2025 Notes by $ 44.7 million, reduced additional paid-in capital by $ 74.9 million, and reduced accumulated deficit by $ 30.2 million.

The Company has not adjusted prior period comparative information and will continue to disclose prior period financial information in accordance with the previous accounting guidance.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies.

REVENUE RECOGNITION

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Product sales consist of bile acid products (Chenodal and Cholbam) and tiopronin products (Thiola and Thiola EC).

The Company sells its products through direct-to-patient distributors worldwide, with the United States and Canada representing 98 % and 2 % of net product sales, respectively, based on the product shipment destination.

Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs upon delivery to the customer.

The Company receives payments from its product sales based on terms that generally are within 30 days of delivery of product to the patient.

The Company sells its products through direct-to-patient distributors worldwide, with the United States and Canada representing 97 % and 2 % of net product sales, respectively, and rest of world representing less than 1 % of net product sales, based on the product shipment destination.

Revenues from product sales are recognized in satisfaction of a single performance obligation when the customer obtains control of the Company’s product, which occurs upon delivery to the customer.

The Company receives payments from its product sales, primarily through third party payers, based on terms that generally are within 30 days of delivery of product to the patient.

Contracts do not contain significant financing components based on the typical period of time between performance of services and collection of consideration.

Deductions from Revenue

Revenues from product sales are recorded at the net sales price, which includes provisions resulting from discounts, rebates and co-pay assistance that are offered to its customers, health care providers, payers and other indirect customers relating to the Company’s sales of its products.

provisions are based on the amounts earned or to be claimed on the related sales and are classified as a reduction of accounts receivable (if the amount is payable to the customer) or as a current liability (if the amount is payable to a party other than a customer).

Revenues from product sales are recorded at the net sales price, which includes provisions resulting from discounts, rebates and co-pay assistance that are offered to customers, health care providers, payers and other indirect customers relating to the Company’s sales of its products.

These provisions are based on the estimates of the amounts earned or to be claimed on the related sales.

These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale, using the most likely amount method, and are classified as a reduction of accounts receivable (if the amount is payable to a customer) or as a current liability (if the amount is payable to a party other than a customer).

The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transactions will not occur.

Where appropriate, these reserves take into consideration the Company’s historical experience, current contractual and statutory requirements and specific known market events and trends.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract.

If actual results in the future vary from the Company’s provisions, the Company will adjust the provision, which would affect net product revenue and earnings in the period such variances become known.

Our historical experience is that such adjustments have been immaterial.

If actual results in the future vary from the Company’s provisions, the Company will adjust the estimate, which would affect net product revenue and earnings in the period such variances become known.

For the years ended December 31, 2022, 2021 and 2020, the Company recorded a net product revenue increase of $ 0.8 million, $ 0.4 million, and $ 0.4 million, respectively, related to performance obligations satisfied in previous periods.

Government Rebates:

We calculate the rebates that we will be obligated to provide to government programs and deduct these estimated amounts from our gross product sales at the time the revenues are recognized.

The Company calculates the rebates that it will be obligated to provide to government programs and deducts these estimated amounts from its gross product sales at the time the revenues are recognized.

Allowances for government rebates and discounts are established based on actual payer information, which is reasonably estimated at the time of delivery, and the government-mandated discounts applicable to government-funded programs.

Rebate discounts are included in accrued expenses in the accompanying Consolidated Balance Sheets.

Rebate discounts are included in other current liabilities in the accompanying consolidated balance sheets.

Commercial Rebates:

We calculate the rebates that we incur due to contracts with certain commercial payers and deduct these amounts from our gross product sales at the time the revenues are recognized.

The Company calculates the rebates it incurs due to contracts with certain commercial payers and deducts these amounts from its gross product sales at the time the revenues are recognized.

Allowances for commercial rebates are established based on actual payer information, which is reasonably estimated at the time of delivery.

Rebate discounts are included in accrued expenses in the accompanying Consolidated Balance Sheets.

Rebate discounts are included in other current liabilities in the accompanying consolidated balance sheets.

Prompt Pay Discounts:

We offer discounts to certain customers for prompt payments.

We accrue for the calculated prompt pay discount based on the gross amount of each invoice for those customers at the time of sale.

The Company offers discounts to certain customers for prompt payments.

The Company accrues for the calculated prompt pay discount based on the gross amount of each invoice for those customers at the time of sale.

Product Returns:

Consistent with industry practice, we offer our customers a limited right to return product purchased directly from the Company, which is principally based upon the product’s expiration date.

Consistent with industry practice, the Company offers its customers a limited right to return product purchased directly from the Company, which is principally based upon the product’s expiration date.

Generally, shipments are only made upon a patient prescription thus returns are minimal.

Co-pay Assistance:

We offer a co-pay assistance program, which is intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers.

The Company offers a co-pay assistance program, which is intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers.

The calculation of the accrual for co-pay assistance is based on an identification of claims and the cost per claim associated with product that has been recognized as revenue.

The following table summarizes net product sales for the twelve months ended December 31, 2021, 2020 and 2019 ( in thousands ):

Twelve Months Ended December 31,

The following table summarizes net product sales for the year ended December 31, 2022, 2021 and 2020 ( in thousands ):

Year Ended December 31,

2022 2021 2020

Tiopronin products $ 115,122 $ 108,883 $ 95,638

Bile acid products $ 102,558 $ 95,654 $ 89,438

Total net product revenue $ 210,776 $ 198,321 $ 175,338

Tiopronin products 97,970 115,122 108,883

Total net product sales $ 200,528 $ 210,776 $ 198,321

COLLABORATION AND LICENSE AGREEMENTS

On September 15, 2021, the Company entered into a license and collaboration agreement (“License Agreement”) with Vifor (International) Ltd.

(“Vifor Pharma”), pursuant to which the Company granted an exclusive license to Vifor Pharma for the commercialization of sparsentan in Europe, Australia and New Zealand ("Licensed Territories").

Vifor Pharma also has first right of negotiation to expand the licensed territories into Canada, China, Brazil and/ or Mexico.

(“CSL Vifor”), pursuant to which the Company granted an exclusive license to CSL Vifor for the commercialization of sparsentan in Europe, Australia and New Zealand ("Licensed Territories").

CSL Vifor also has first right of negotiation to expand the licensed territories into Canada, China, Brazil and/ or Mexico.

Under the terms of the License Agreement, the Company received an upfront payment of $ 55.0 million and will be eligible for up to $ 135.0 million in aggregate regulatory and market access related milestone payments and up to $ 655.0 million in aggregate sales-based milestone payments for a total potential value of up to $ 845.0 million.

The Company is also entitled to receive tiered double-digit royalties of up to 40 percent of annual net sales of sparsentan in the Licensed Territories.

Under the License Agreement, Vifor Pharma will be responsible for all commercialization activities in the Licensed Territories.

Under the License Agreement, CSL Vifor will be responsible for all commercialization activities in the Licensed Territories.

The Company remains responsible for the worldwide clinical development of sparsentan through regulatory approval as defined and will retain all rights to sparsentan in the United States and rest of world outside of the Licensed Territories.

Development costs for any post regulatory approval development activities, subject to approval by both parties, will be borne by the Company and Vifor Pharma as defined, respectively.

Development costs for any post regulatory approval development activities, subject to approval by both parties, will be borne by the Company and CSL Vifor as defined, respectively.

The License Agreement will remain in effect, unless terminated earlier, until the expiration of all royalty terms for sparsentan in the licensed territories.

Each party has the right to terminate the License Agreement for the other party’s uncured material breach, insolvency or if the time required for performance under the License Agreement by the other party is extended due to a force majeure event that continues for six months or more.

The Company assessed the License Agreement and determined that it meets both criteria to be considered a collaborative agreement within the Scope of ASC 808, Collaborative Arrangements ("ASC 808") of active participation by both parties and exposures to significant risks and rewards dependent on the commercial success of the activities.

Both parties participate on joint steering and other committees overseeing the collaboration

The Company assessed the License Agreement and determined that it meets both criteria to be considered a collaborative agreement within the Scope of ASC 808, Collaborative Arrangements of active participation by both parties and exposures to significant risks and rewards dependent on the commercial success of the activities.

Both parties participate on joint steering and other committees overseeing the collaboration activities.

Also, both parties are exposed to significant risks and rewards based on the economic outcomes of regulatory approvals and commercialization of sparsentan.

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Sales-based milestone payments and royalties on net sales were excluded from the transaction price and will be recognized at the later of when the related sales occur or when the performance obligation to which the sales-based milestone or royalty has been allocated have been satisfied.

The Company concluded that Vifor Pharma represented a customer and applied relevant guidance from ASC 606 to evaluate the accounting under the License Agreement.

In accordance with this guidance, the Company concluded that the promise to grant the license is distinct from the promise to provide clinical development services resulting in two performance obligations as the license has stand-alone functionality due to sparsentan being a later stage asset and the clinical development services are primarily related to achieving regulatory approval.

As a result, the Company allocated $ 12.0 million of the transaction price, based on the performance obligations' relative standalone selling prices, to the license.

The Company concluded that CSL Vifor represented a customer and applied relevant guidance from ASC 606 to evaluate the accounting under the License Agreement.

As a result, the Company allocated $ 12.0 million of the transaction price, based on the performance obligations' relative standalone selling prices, to the license, which was recognized in full in 2021.

The remaining $ 43.0 million of the transaction price was allocated to the clinical development activities and recorded as deferred revenue, which will be recognized over the development period based upon the ratio of costs incurred to date to the total estimated costs.

The Company recognized a total of $ 16.7 million in license and collaboration revenue for the twelve months ended December 31, 2021, which consisted of $ 12.0 million from the license and $ 4.7 million from the clinical development activities, based upon the ratio of costs incurred to total estimated costs.

The Company recognized a total of $ 11.5 million in license and collaboration revenue for the year ended December 31, 2022, based upon the ratio of costs incurred to total estimated costs.

The Company recognized a total of $ 16.7 million in license and collaboration revenue for the year ended

December 31, 2021, which consisted of $ 12.0 million from the license and $ 4.7 million from the clinical development activities, based upon the ratio of costs incurred to total estimated costs.

Deferred revenue related to the clinical development activities as of December 31, 2022 was $ 22.9 million.

Of this amount, $ 12.0 million was classified as current as of December 31, 2022, based upon amount expected to be realized within the next year.

The Company estimates that the remainder of the deferred revenue balance will be fully realized by mid-2025.

The following table sets forth a summary of changes in deferred revenue for the years ended December 31, 2022 and 2021 (in thousands) :

Deferred Revenue

Balance at January 1, $ 36,647 $ —

New consideration resulting in deferred revenue — 55,000

License revenue — ( 12,000 )

Collaboration revenue ( 11,490 ) ( 4,714 )

Foreign currency impact ( 2,250 ) ( 1,639 )

Balance at December 31, $ 22,907 $ 36,647

In February 2021, the Company entered into a limited co-promotion agreement with Albireo Pharma, Inc.

("Albireo"), whereby the Company's Cholbam dedicated sales representatives will dedicate a portion of their efforts to promoting Albireo's product, Bylvay (odevixibat), in the United States.

The initial term of the arrangement is two years from the July 2021 launch of Bylvay, terminable at will by either party after one year following launch.

For the year ended December 31, 2021, the Company recognized $ 1.8 million, offset against selling, general, and administrative expenses.

("Albireo"), whereby the Company's Cholbam dedicated sales representatives devoted a portion of their efforts to promoting Albireo's product, Bylvay (odevixibat), in the United States following the July 2021 launch of the product.

The initial term of the arrangement was two years from the July 2021 launch of Bylvay, terminable at will by either party after one year following launch.

In June 2022, the Company and Albireo mutually agreed to terminate the co-promotion agreement upon the one year anniversary of the launch, with such termination effective July 20, 2022.

For the year ended December 31, 2022 and 2021, the Company recognized $ 1.7 million and $ 1.8 million, respectively, offset against selling, general, and administrative expenses.

ACQUISITIONS AND VARIABLE INTEREST ENTITIES

Acquisition of Orphan Technologies Limited

3 unchanged sentences

Under the Agreement, the Company has also agreed to make contingent cash payments up to an aggregate of $ 427.0 million based on the achievement of certain development, regulatory and commercialization events as set forth in the Agreement, as well as additional tiered mid-single digit royalty payments based upon future net sales of any pegtibatinase products in the US and Europe, subject to certain reductions as set forth in the Agreement, and a contingent payment in the event a pediatric rare disease voucher for any pegtibatinase product is granted.

The Company applied the principles of ASC 805 in determining the proper accounting treatment for the acquisition.

Substantially all of the value of the assets acquired was concentrated within pegtibatinase, and as of the acquisition date, the Company did not anticipate any economic benefit to be derived from pegtibatinase other than the primary indication.

Accordingly, the transaction was treated as an asset acquisition with amounts charged to expense for the acquired in-process research and development on the date of acquisition.

The Company incurred $ 97.1 million in expenses related to the Orphan acquisition, which was recognized in 2020.

The Company incurred $ 97.1 million in IPR&D expense related to the Orphan acquisition, which was recognized in 2020.

In accordance with ASC 450, contingent cash payments will be accrued for when it is probable that a liability has been incurred and the amount can be reasonably estimated.

As of December 31, 2022, no contingent cash payments have been accrued.

Stock Purchase and Collaboration Agreement with PharmaKrysto

On March 8, 2022, the Company entered into a Collaboration Agreement with PharmaKrysto Limited (“PharmaKrysto”), a privately held pre-clinical stage company related to PharmaKrysto's early-stage cystinuria discovery program, and concurrently therewith entered into a Stock Purchase Agreement with PharmaKrysto (together, the "Agreements").

Pursuant to the terms of the Agreements, the Company paid PharmaKrysto's shareholders $ 0.6 million in cash to purchase 5 % of the outstanding common shares of PharmaKrysto and $ 0.4 million to PharmaKrysto as a one-time signing fee.

Under the Collaboration Agreement, the Company will fund all research and development expenses for the pre-clinical activities associated with the cystinuria program, which are estimated to be approximately $ 5.0 million.

The Agreements require the Company to purchase an additional 5 % of the outstanding common shares for $ 1.0 million upon the occurrence of a specified pre-clinical milestone, and grant an option to the Company to purchase the remaining outstanding shares of PharmaKrysto for $ 5.0 million upon the occurrence of a subsequent pre-clinical milestone prior to expiration of the option on March 8, 2025.

If the Company elects to exercise the option, it would be required to perform commercially

reasonable clinical diligence obligations.

In addition, it would be required to make cash milestone payments totaling up to an aggregate $ 16.0 million upon the achievement of certain development and regulatory milestones, plus tiered royalty payments of less than 4 % on future net sales of a product, if approved.

The Company has the right to terminate the Agreements and return the shares for a nominal price at any time upon 60 days’ notice, subject to survival of contingent obligations, if any.

The Company determined that PharmaKrysto is a VIE because it lacks the resources to conduct the cystinuria clinical program and the limitation on the residual returns through the Company's option to purchase the remaining outstanding shares.

The Company further concluded that it is the primary beneficiary of the VIE due to the Company's ultimate control over the research and development program, and its obligation, subject to continuation of the collaboration, to fund 100 % of research and development costs of the program pursuant to the terms of the Collaboration Agreement.

The upfront payments were expensed to research and development and other income (expense), net upon initial consolidation.

The Company consolidated other current assets and accrued liabilities of $ 0.3 million as of December 31, 2022.

The results of operations were not significant for the year ended December 31, 2022.

The Company is not required to provide additional funding other than the contractually required amounts disclosed above.

The creditors and beneficial holders of PharmaKrysto have no recourse to the general credit or assets of the Company.

MARKETABLE DEBT SECURITIES

The Company's marketable debt securities as of December 31, 2021 and 2020 were comprised of available-for-sale corporate and government debt securities.

These securities are carried at fair value, with the unrealized gains and losses reported in accumulated other comprehensive income (loss), unless an impairment is determined to be the result of credit-related factors or the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery.

The amortized cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity.

Such amortization and accretion is included in interest income.

Realized gains and losses and declines in value that are determined to be the result of credit losses, if any, on available-for-sale securities are included in other income or expense.

Unrealized losses that are determined to be credit-related are also recorded as an allowance against the amortized cost basis.

The cost of securities sold is based on the specific identification method.

Interest and dividends on securities classified as available-for-sale are included in interest income.

All available-for-sale securities are classified as current assets, even if the maturity when acquired by the Company is greater than one year due to the ability to liquidate within the next 12 months.

The Company's marketable debt securities as of December 31, 2022 and 2021 were composed of available-for-sale commercial paper and corporate and government debt securities.

The primary objective of the Company’s investment portfolio is to preserve capital and liquidity while enhancing overall returns.

The Company’s investment policy limits interest-bearing security investments to certain types of instruments issued by institutions with primarily investment grade credit ratings and places restrictions on maturities and concentration by asset class and issuer.

Marketable debt securities consist of the following ( in thousands ):

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Corporate debt securities 1 to 2 120,705 — ( 289 ) 120,416

Securities of government-sponsored entities 1 to 2 4,549 — ( 22 ) 4,527

Total maturity 1 to 2 years 125,254 — ( 311 ) 124,943

Total available-for-sale marketable debt securities $ 387,599 $ — $ ( 470 ) $ 387,129

During 2021, the Company had less than $ 0.1 million in realized gains on marketable debt securities.

During 2020, the Company had $ 0.1 million in realized gains on marketable debt securities.

During 2022 and 2021, the Company had less than $ 0.1 million in realized gains on marketable debt securities.

The Company received proceeds from the sale or maturity of marketable debt securities of $ 382.0 million, $ 433.6 million and $ 273.5 million for 2022, 2021 and 2020, respectively.

The primary objective of the Company’s investment portfolio is to preserve capital and liquidity while enhancing overall returns.

During 2022, 2021 and 2020, the Company had purchases of marketable debt securities of $ 385.4 million, $ 547.1 million, and $ 215.0 million, respectively.

As of December 31, 2022 and December 31, 2021, the accrued interest receivable related to the Company's marketable debt securities was $ 1.9 million and $ 0.9 million, respectively, and was recorded in prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company reviews the available-for-sale marketable debt securities for declines in fair value below the cost basis each quarter.

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Commercial paper $ 122,380 $ 56 $ — $ — $ 122,380 $ 56

Corporate debt securities 231,879 387 — — 231,879 387

Securities of government-sponsored entities 26,431 27 — — 26,431 27

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As of December 31, 2022 and December 31, 2021, the Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis.

The increase in unrealized losses for the year ended December 31, 2022 was primarily due to increases in short-term interest rates.

The Company does not believe the unrealized losses incurred during the period are due to credit-related factors.

Liquidity issues that arose from economic circumstances surrounding the COVID-19 pandemic have eased and the credit ratings of the securities held remain of the highest quality.

While certain securities in the portfolio may be downgraded momentarily, the Federal Reserve has allowed institutions to continue to issue debt where there is need, with the government itself purchasing such securities.

The credit ratings of the securities held remain of the highest quality.

Moreover, the Company continues to receive payments of interest and principal as they become due, and our expectation is that those payments will continue to be received timely.

Uncertainty surrounding the COVID-19 pandemic, as well as other factors unknown to us at this time, may cause actual results to differ and require adjustments to the Company’s estimates and assumptions in the future.

CONVERTIBLE SENIOR NOTES

Convertible Senior Notes Due 2025

On September 10, 2018, the Company completed its registered underwritten public offering of the "2025 Notes" and entered into a base indenture and supplemental indenture agreement ("2025 Indenture") with respect to the 2025 Notes.

The 2025 Notes will mature on September 15, 2025 ("Maturity Date”), unless earlier repurchased, redeemed, or converted.

The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 2.50 %, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2019.

The composition of the Company’s 2025 Notes are as follows ( in thousands ):

Factors unknown to us at this time may cause actual results to differ and require adjustments to the Company’s estimates and assumptions in the future.

CONVERTIBLE NOTES PAYABLE

The composition of the Company’s convertible senior notes are as follows ( in thousands ):

December 31, 2022 December 31, 2021

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$ 316,250 $ —

2.50 % convertible senior notes due 2025

68,904 276,000

Unamortized debt discount — ( 46,045 )

Unamortized debt issuance costs ( 3,374 ) ( 4,277 )

Total 2025 Notes, net of unamortized debt discount and debt issuance costs $ 226,581 $ 215,339

The net proceeds from the issuance of the 2025 Notes were approximately $ 267.2 million, after deducting commissions and the offering expenses payable by the Company.

A portion of the net proceeds from the 2025 Notes were used by the Company to repurchase $ 23.4 million aggregate principal amount of its 4.5 % senior convertible notes due in 2019 in privately-negotiated transactions.

Unamortized debt issuance costs - 2.25 % convertible senior notes due 2029

Unamortized debt issuance costs - 2.50 % convertible senior notes due 2025

( 859 ) ( 3,374 )

Total convertible senior notes, net of unamortized debt discount and debt issuance costs $ 375,545 $ 226,581

Convertible Senior Notes Due 2029

On March 11, 2022, the Company completed a registered underwritten public offering of $ 316.3 million aggregate principal amount of 2.25 % Convertible Senior Notes due 2029 (“2029 Notes”), which includes $ 41.3 million aggregate principal amount of 2029 Notes sold pursuant to the full exercise of the underwriters’ option to purchase additional 2029 Notes.

The Company issued the 2029 Notes under an indenture, dated as of September 10, 2018, as supplemented by the second supplemental indenture, dated as of March 11, 2022 (collectively, the “2029 Indenture”).

The 2029 Notes will mature on March 1, 2029, unless earlier repurchased, redeemed, or converted.

The 2029 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 2.25 %, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2022.

The Company received net proceeds from the issuance of the 2029 Notes of $ 306.4 million, after deducting commissions and offering expenses of $ 9.9 million.

At December 31, 2022, accrued interest on the 2029 Notes of $ 2.4 million is included in accrued expenses in the accompanying Consolidated Balance Sheets.

The 2029 Notes comprise the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness;

(ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2029 Notes;

(iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness;

and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables.

Holders may convert their 2029 Notes at their option only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2022 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock for each of at least 20 trading days, whether or not consecutive, during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter exceeds 130 % of the conversion price on the applicable trading day;

(2) 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 2029 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 Company’s common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions of the Company’s common stock;

(4) if the Company calls the 2029 Notes for redemption;

and (5) at any time from, and including, December 1, 2028 until the close of business on the scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, based on the applicable conversion rate.

The initial conversion rate for the 2029 Notes is 31.3740 shares of the Company’s common stock per $1,000 principal amount of 2029 Notes, which represents an initial conversion price of approximately $ 31.87 per share.

If a “make-whole fundamental change” (as defined in the 2029 Indenture) occurs, then the Company will, in certain circumstances, increase the conversion rate for a specified period of time.

The 2029 Notes will be redeemable, in whole or in part at the Company’s option at any time, and from time to time, on or after March 2, 2026 and, in the case of any partial redemption, on or before the 40th scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2029 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 (1) 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 (2) the trading day immediately before the date the Company sends such notice.

However, the Company may not redeem less than all of the outstanding 2029 Notes unless at least $ 100.0 million aggregate principal amount of 2029 Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.

In addition, calling any 2029 Note for redemption will constitute a make-whole fundamental change with respect to that 2029 Note, in which case the conversion rate applicable to the conversion of that 2029 Note will be increased in certain circumstances if it is converted after it is called for redemption.

If a fundamental change (as defined in the 2029 Indenture) occurs, then, except as described in the 2029 Indenture, holders may require the Company to repurchase their 2029 Notes at a cash repurchase price equal to the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation.

Upon the receipt of conversion requests, the settlement of the 2029 Notes will be paid pursuant to the terms of the 2029 Indenture.

In the event that all of the 2029 Notes are converted, the Company would be required to repay the principal amount and any conversion premium in any combination of cash and shares of its common stock at the Company’s option.

In addition, calling the 2029 Notes for redemption will constitute a “make-whole fundamental change."

The Company incurred approximately $ 9.9 million of debt issuance costs relating to the issuance of the 2029 Notes, which were recorded as a reduction to the 2029 Notes on the Consolidated Balance Sheets.

The debt issuance costs are being amortized and recognized as additional interest expense over the expected life of the 2029 Notes using the effective interest method.

We determined the expected life of the debt is equal to the seven-year term of the 2029 Notes.

The effective interest rate on the 2029 Notes is 2.74 %.

Convertible Senior Notes Due 2025

On September 10, 2018, the Company completed a registered underwritten public offering of $ 276.0 million aggregate principal amount of 2.50 % Convertible Senior Notes due 2025 ("2025 Notes"), and entered into a base indenture and supplemental indenture agreement ("2025 Indenture") with respect to the 2025 Notes.

The 2025 Notes will mature on September 15, 2025, unless earlier repurchased, redeemed, or converted.

The net proceeds from the issuance of the 2025 Notes were approximately $ 267.2 million, after deducting commissions and the offering expenses of $ 8.8 million payable by the Company.

At December 31, 2022, accrued interest of $ 0.5 million is included in accrued expenses in the accompanying Consolidated Balance Sheets.

The 2025 Notes comprise the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness;

(ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2025 Notes;

(iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness;

and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables.

Holders may convert their 2025 Notes at their option only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2018 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock for each of at least 20 trading days, whether or not consecutive, during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter exceeds 130 % of the conversion price on the applicable trading day;

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If a fundamental change (as defined in the 2025 Indenture) occurs, then, subject to certain exceptions, holders may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

As of December 31, 2021, the 2025 Notes had a market price of $ 1,089 per $1,000 principal amount, or $ 300.6 million.

In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation.

Upon the receipt of conversion requests, the settlement of the 2025 Notes will be paid pursuant to the terms of the 2025 Indenture.

In the event that all of the 2025

Notes are converted, the Company would be required to repay the $ 276.0 million in principal value and any conversion premium in any combination of cash and shares of its common stock at the Company’s option.

In the event that all of the 2025 Notes are converted, the

Company would be required to repay the principal amount and any conversion premium in any combination of cash and shares of its common stock at the Company’s option.

In addition, calling the 2025 Notes for redemption will constitute a “make-whole fundamental change."

The 2025 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2025 Notes, and equal in right of payment to the Company’s unsecured indebtedness.

The 2025 Notes are currently classified on the Company’s consolidated balance sheet at December 31, 2021 as long-term convertible debt.

Under ASC 470-20, an entity must separately account for the liability and equity components of convertible debt instruments (such as the 2025 Notes) that may be settled entirely or partially in cash upon conversion, in a manner that reflects the issuer’s economic interest cost.

The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance.

The initial carrying value of the liability component was $ 198.6 million.

The equity component of $ 77.4 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2025 Notes and was recorded in additional paid-in capital on the Consolidated Balance Sheets at the issuance date.

That equity component is treated as a discount on the liability component of the 2025 Notes, which is amortized over the seven-year term of the 2025 Notes using the effective interest rate method.

The equity component is not re-measured as long as it continues to meet the conditions for equity classification.

The Company allocated the total transaction costs of approximately $ 8.8 million related to the issuance of the 2025 Notes to the liability and equity components of the 2025 Notes based on their relative values.

Transaction costs attributable to the liability component are amortized to interest expense over the seven-year term of the 2025 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity.

The effective interest rate on the liability components of the 2025 Notes for the years ended December 31, 2021, 2020 and 2019 was 7.7 %.

The following table sets forth total interest expense recognized related to the 2025 Notes ( in thousands ):

Twelve Months Ended December 31,

The Company incurred approximately $ 8.8 million of debt issuance costs relating to the issuance of the 2025 Notes, which were recorded as a reduction to the 2025 Notes on the Consolidated Balance Sheets.

The debt issuance costs are being amortized and recognized as additional interest expense over the expected life of the 2025 Notes using the effective interest method.

The Company determined the expected life of the debt is equal to the seven-year term of the 2025 Notes.

The effective interest rate on the 2025 Notes is 2.98 %.

On March 11, 2022, the Company completed its repurchase of $ 207.1 million aggregate principal amount of 2025 Notes for cash, including accrued and unpaid interest, for a total of $ 213.8 million.

This transaction involved a contemporaneous exchange of cash between the Company and holders of the 2025 Notes participating in the issuance of the 2029 Notes.

Accordingly, we evaluated the transaction for modification or extinguishment accounting in accordance with ASC 470-50, Debt – Modifications and Extinguishments on a creditor-by creditor basis depending on whether the exchange was determined to have substantially different terms.

The repurchase of the 2025 Notes and issuance of the 2029 Notes were deemed to have substantially different terms based on the present value of the cash flows or significant difference between the value of the conversion option immediately prior to and after the exchange.

Therefore, the repurchase of the 2025 Notes was accounted for as a debt extinguishment.

The Company recorded a $ 7.6 million loss on extinguishment of debt on its Consolidated Statements of Operations for the year ended December 31, 2022, which includes the write-off of related deferred financing costs of $ 3.4 million.

After giving effect to the repurchase, the total remaining principal amount outstanding under the 2025 Notes as of December 31, 2022 was $ 68.9 million.

The 2025 and 2029 Notes are accounted for in accordance with ASC 470-20, Debt with conversion and Other Options (“ASC 470-20”) and ASC 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”).

Under ASC 815-40, to qualify for equity classification (or nonbifurcation, if embedded) the instrument (or embedded feature) must be both (1) indexed to the issuer’s stock and (2) meet the requirements of equity classification guidance.

Based upon the Company’s analysis, it was determined that the 2025 Notes and the 2029 Notes do not contain embedded features requiring recognition as derivatives and bifurcation, and therefore are measured at amortized cost and recorded as liabilities on the Consolidated Balance Sheets.

The 2025 and 2029 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company.

There were no events of default for the 2025 Notes or 2029 Notes at December 31, 2022.

The 2025 and 2029 Notes are classified on the Company's Consolidated Balance Sheets at December 31, 2022 as long-tern convertible debt.

Interest Expense

The following table sets forth total interest expense recognized related to the 2025 and 2029 Notes ( in thousands ):

Year Ended December 31,

2022 2021 2020

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Amortization of debt issuance costs 1,622 903 900

Total interest expense for the 2025 Notes $ 18,142 $ 17,378 $ 16,670

The 2025 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company.

The 2025 Indenture contains customary events of default with respect to the 2025 Notes, including that upon certain events of default, 100 % of the principal and accrued and unpaid interest on the 2025 Notes will automatically become due and payable.

Interest Expense

Total interest expense for the 2025 and 2029 Notes $ 10,055 $ 18,142 $ 17,378

Total interest expense recognized for the years ended December 31, 2022, 2021 and 2020 was $ 11.3 million, $ 20.1 million and $ 19.1 million, respectively.

FAIR VALUE MEASUREMENTS

The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”).

ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy under ASC 820 are described below:

The three levels of the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

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The valuation techniques used to measure the fair value of the Company’s debt securities and all other financial instruments, all of which have counter-parties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data.

Based on the fair value hierarchy, the Company classified debt securities within Level 2.

The Company acquired two businesses, related to the Cholbam and Chenodal products, whose purchase price included potential future payments that are contingent on the achievement of certain milestones and percentages of future net sales derived from the products acquired.

The Company recorded contingent consideration liabilities at their fair value on the acquisition date and revalues them at the end of each reporting period.

In estimating the fair value of the Company’s contingent consideration, the Company uses a Monte Carlo Simulation.

The determination of the contingent consideration liabilities requires significant judgments including the appropriateness of the valuation model and reasonableness of estimates and assumptions included in the forecasts of future net sales and the discount rates applied to such forecasts.

Changes in these estimates and assumptions could have a significant impact on the fair value of the contingent consideration liabilities.

Discount rates used to determine the fair value at December 31, 2021 and 2020 are as follows:

Revenue Discount Payment Discount

Cholbam Chenodal

December 31, 2021 6.25 % 7.25 % 6.48 %

December 31, 2020 6.50 % 8.50 % 7.45 %

Based on the fair value hierarchy, the Company classified the fair value of contingent consideration within Level 3 because valuation inputs are based on projected revenues discounted to a present value.

Based on the fair value hierarchy, the Company classified marketable debt securities within Level 2.

Financial instruments with carrying values approximating fair value include cash and cash equivalents, accounts receivable, and accounts payable, due to their short-term nature.

As of December 31, 2021, the fair value of the Company's 2.5 % Convertible Senior Notes due 2025 was $ 300.6 million, which was estimated utilizing market quotations, and are considered Level 2.

As of December 31, 2022 and 2021, the fair value of the Company's 2.50 % Convertible Senior Notes due 2025 was $ 62.9 million and $ 300.6 million, respectively.

As of December 31, 2022, the fair value of the Company's 2.25 % Convertible Senior Notes due 2029, which were issued in 2022, was $ 283.0 million.

The fair values were estimated utilizing market quotations, and are considered Level 2.

The following table presents the Company’s asset and liabilities, measured and recognized at fair value on a recurring basis, classified under the appropriate level of the fair value hierarchy as of December 31, 2022 (in thousands):

As of December 31, 2022 Fair Value Hierarchy at December 31, 2022

Total carrying and

estimated fair value

Quoted prices in

active markets

Significant other

observable inputs

inputs (Level 3)

Total carrying and estimated fair value Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)

Cash and Cash Equivalents $ 61,688 $ 61,688 $ — $ —

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As of December 31, 2021 Fair Value Hierarchy at December 31, 2021

Total carrying and

estimated fair value Quoted prices in

active markets

(Level 1) Significant other

observable inputs

(Level 2) Significant

inputs (Level 3)

Total carrying and estimated fair value Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)

Cash and Cash Equivalents $ 165,753 $ 165,753 $ — $ —

3 unchanged sentences

Total $ 67,100 $ — $ — $ 67,100

The Company recorded contingent consideration liabilities at their fair value on the acquisition date and revalues them at the end of each reporting period.

In estimating the fair value of the Company’s contingent consideration, the Company uses a Monte Carlo Simulation.

The determination of the contingent consideration liabilities requires significant judgements including the reasonableness of estimates and assumptions included in the forecasts of future net sales, long-term growth rates and the discount rates applied to such forecasts.

Changes in these estimates and assumptions could have a significant impact on the fair value of the contingent consideration liabilities.

Discount rates used to determine the fair value at December 31, 2022 and 2021 are as follows:

Revenue Discount Payment Discount

Cholbam Chenodal

December 31, 2022 7.75 % 8.00 % 8.10 %

December 31, 2021 6.25 % 7.25 % 6.48 %

The following table sets forth a summary of changes in the estimated fair value of the Company's Level 3 business combination-related contingent consideration for the years ended December 31, 2022 and 2021 (in thousands) :

Fair Value Measurements of Acquisition-Related Contingent Consideration (Level 3)

Fair Value Measurements of Acquisition-Related Contingent Consideration

Balance at January 1, $ 67,100 $ 65,100

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INTANGIBLE ASSETS

Amortizable Intangible Assets

Ligand License Agreement

In 2013, the Company entered into a $ 2.5 million agreement with Ligand for a worldwide sublicense to develop, manufacture and commercialize a drug technology compound including sparsentan (the “Ligand License Agreement”).

In 2012, the Company entered into an agreement with Ligand Pharmaceuticals, Inc.

("Ligand") for a worldwide sublicense to develop, manufacture and commercialize sparsentan (the “Ligand License Agreement”).

The cost of the Ligand License Agreement, which is presented net of amortization in the accompanying Consolidated Balance Sheets in intangible assets, net, is being amortized to research and development on a straight-line basis through September 30, 2023.

As consideration for the license, we are required to make substantial payments upon the achievement of certain milestones, totaling up to $ 114.1 million.

Through 2021, we have made milestone payments to Ligand of $ 7.2 million under the terms of the Ligand License Agreement.

Should we commercialize sparsentan or any products containing related compounds, we will be obligated to pay to Ligand an escalating annual royalty between 15 % and 17 % of net sales of all such products.

In September 2015, the Ligand License Agreement was amended to facilitate sub-licensing in Asia-Pacific.

As consideration for the amendment the Company paid $ 1.0 million.

In March 2018, the Ligand License Agreement was amended to update certain development milestones set forth in the Sublicense Agreement to comport with the current development timeline for sparsentan.

As consideration, the Company paid Ligand $ 4.6 million, which replaced the amount that would have been due upon initiation of the first Phase 3 trial for sparsentan.

As consideration for the license, the Company is required to make substantial payments upon the achievement of certain milestones, totaling up to $ 114.1 million, including a $ 23.0 million milestone payment to Ligand (and Bristol-Myers Squibb Company ("BMS")) we plan to make in the first quarter of 2023, which was triggered upon the accelerated approval of FILSPARI in February 2023.

Through December 31, 2022, the Company has capitalized $ 18.4 million for contractual milestone payments under the Ligand License Agreement.

Should the Company commercialize sparsentan or any products containing related compounds, the Company will be obligated to pay to Ligand (and BMS) an escalating annual royalty between 15 % and 17 % of net sales of all such products.

With the February 2023 approval of FILSPARI (sparsentan), the Company expects to begin incurring costs associated with these royalties in 2023.

Manchester Pharmaceuticals LLC

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The additional cost basis is subsequently amortized over the remaining life of the license agreement.

The Company paid Mission an up-front license fee of $ 3 million and will pay guaranteed minimum royalties during each calendar year the greater of $ 2 million or twenty percent ( 20 %) of the Company’s net sales of Thiola through May 28, 2024.

The Company paid Mission an up-front license fee of $ 3 million and during the term of the agreement will pay guaranteed minimum royalties during each calendar year the greater of $ 2 million or twenty percent ( 20 %) of the Company’s net sales of Thiola.

In November 2017, the Company amended its agreement with Mission to extend the term of the current exclusive U.S.

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Upon execution of the amendment, the Company capitalized an additional $ 1.0 million in intangible assets and recorded a guaranteed minimum liability of $ 0.7 million related to this amendment.

The present value of guaranteed minimum royalties payable using a discount rate of ranging from approximately 7 % to 11 % based on the Company’s then borrowing rate is $ 12.3 million and $ 13.4 million as of December 31, 2021 and 2020, respectively.

The present value of guaranteed minimum royalties payable using a discount rate ranging from approximately 7 % to 11 % based on the Company’s then borrowing rate is $ 11.1 million and $ 12.3 million as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, the guaranteed minimum royalty current and long-term liability was approximately $ 2.1 million and $ 9.0 million, respectively, and is recorded as Other Liability in the Consolidated Balance Sheet.

As of December 31, 2021, the guaranteed minimum royalty current and long-term liability was approximately $ 2.1 million and $ 10.2 million, respectively, and is recorded as Other Liability in the Consolidated Balance Sheet.

The Company has capitalized $ 123.3 million related to the Thiola intangible asset which consists of the up-front license fee, professional fees, present value of the guaranteed minimum royalties and any additional payments through 2021 in excess of minimum royalties.

In 2021 the Company added $ 19.4 million to the intangible asset related to the royalties in excess of the minimum.

The Company has capitalized $ 139.4 million related to the Thiola intangible asset which consists of the up-front license fee, professional fees, present value of the guaranteed minimum royalties and any additional payments through December 31, 2022 in excess of minimum royalties.

In 2022 the Company added $ 16.1 million to the intangible asset related to royalties in excess of the minimum.

Consistent with all prior periods since Thiola was acquired, the Company has not accrued any liability for royalties in excess of the annual contractual minimum at December 31, 2022, as such royalties are not yet probable and estimable.

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Amortizable intangible assets as of December 31, 2022 ( in thousands ):

Useful Life Gross Carrying

Amount Accumulated

Amortization Net Book Value

Useful Life Gross Carrying Amount Accumulated Amortization Net Book Value

Thiola license 15 $ 139,383 $ ( 50,324 ) $ 89,059

Chenodal product rights 16 67,849 ( 37,175 ) 30,674

Economic Interest - U.S.

revenue Cholbam 10 75,900 ( 51,258 ) 24,642

Economic interest - Cholbam revenue 10 75,900 ( 58,842 ) 17,058

Ligand license 11 19,400 ( 12,139 ) 7,261

Economic Interest - International revenue Cholbam 10 7,982 ( 7,483 ) 499

Manchester customer relationships 10 403 ( 353 ) 50

Internal use software 5 207 ( 199 ) 8

Total $ 283,557 $ ( 136,058 ) $ 147,499

Total amortizable intangible assets $ 302,935 $ ( 158,833 ) $ 144,102

Amortizable intangible assets as of December 31, 2021 ( in thousands ):

Useful Life Gross Carrying

Amount Accumulated

Amortization Net Book Value

Useful Life Gross Carrying Amount Accumulated Amortization Net Book Value

Thiola license 15 $ 123,316 $ ( 37,992 ) $ 85,324

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Internal use software 5 207 ( 199 ) 8

Manchester trade name 1 175 ( 175 ) —

Total $ 264,676 $ ( 111,487 ) $ 153,189

The following table summarizes amortization expense for the twelve months ended December 31, 2021, 2020 and 2019 ( in thousands ):

Total amortizable intangible assets $ 283,557 $ ( 136,058 ) $ 147,499

The following table summarizes amortization expense for the year ended December 31, 2022, 2021 and 2020 ( in thousands ):

2022 2021 2020

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Accrued expenses consist of the following at December 31, 2022 and 2021 ( in thousands ):

Research and development $ 26,841 $ 10,166

Compensation related costs $ 35,267 $ 25,998

Accrued royalties and contingent consideration 8,402 7,857

Government rebates payable 7,493 10,707

Miscellaneous accrued 3,302 6,207

Research and development 26,070 26,841

Sales discounts, rebates, and allowances 13,486 7,493

Selling, general and administrative 8,791 3,144

Accrued royalties 7,755 8,402

Miscellaneous accrued 4,373 3,302

Total accrued expenses $ 95,742 $ 75,180

COMMITMENTS AND CONTINGENCIES

Certain of the Company's contractual arrangements with contract manufacturing organizations ("CMOs") require binding forecasts or commitments to purchase minimum amounts for the manufacture of drug product supply, which may be material to the Company's financial statements.

As of December 31, 2022, we have a commitment to purchase $ 36.3 million in active pharmaceutical ingredient, to be delivered in 2023, which is planned to support the commercial launch of FILSPARI.

Contingencies

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The amendment provides for an additional 1.6 million new shares to be issued under the Amended 2015 Plan, in addition to 0.7 million unallocated shares remaining available for issuance.

The amendment also includes a provision that on or after March 21, 2016, the number of shares available for issuance under the Amended 2015 Plan will be reduced by one share for each share subject to a stock option or stock appreciation right and by 2.0 shares for each share subject to any other type of stock award issued pursuant to the Amended 2015 Plan, and any such shares will return to the share reserve at the same rates upon cancellation or other forfeiture of such awards or shares.

On May 17, 2017, the Company's stockholders approved an amendment to the Amended 2015 Plan.

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On May 14, 2021, the Company’s stockholders approved an amendment to the 2018 Plan that increased the number of authorized shares issuable under the 2018 Plan by 3.2 million shares.

On May 11, 2022, the Company’s stockholders approved an amendment to the 2018 Plan that increased the number of authorized shares issuable under the 2018 Plan by 2.0 million shares.

2017 Employee Stock Purchase Plan

The 2017 Employee Stock Purchase Plan ("2017 ESPP") originated with 380,000 shares of common stock available for issuance.

Beginning on January 1, 2018, and ending on (and including) January 1, 2026, the number of shares of common stock available for issuance under the 2017 ESPP shall increase by an amount equal to the lesser of (i) one percent ( 1 %) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year and (ii) 300,000 shares of common stock.

Beginning on January 1, 2018, and ending on (and including) January 1, 2026, the number of shares of common stock available for issuance under the 2017 ESPP may increase by an amount equal to the lesser of (i) one percent ( 1 %) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year or (ii) 300,000 shares of common stock.

Substantially all employees are eligible to participate and, through payroll deductions, can purchase shares on established dates semi-annually.

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The following weighted average assumptions were used in the Black-Scholes options pricing model to estimate the fair value of stock options for the specified reporting periods:

Twelve Months Ended December 31,

Year Ended December 31,

2022 2021 2020

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The risk-free interest rate was based on rates established by the Federal Reserve.

The Company’s expected volatility was based on analysis of the Company’s volatility.

In years prior to 2020, the assessment also took into account the volatilities of guideline companies due to limited history of the Company's own activity.

The Company’s expected volatility was based on analysis of the Company’s historical volatility.

The expected life of the Company’s options was determined using the Company's historical exercise activity.

In years prior to 2020, the Company applied the simplified method as a result of limited historical data regarding the Company’s exercise activity.

The dividend yield is based upon the fact that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

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Shares Underlying

Term (in years)

Options Exercise

Price Remaining

Term (in years) Aggregate

Intrinsic Value

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Outstanding at December 31, 2022 9,932,422 $ 21.56 5.79 $ 24,658

Vested and expected to vest at December 31, 2022 9,932,422 $ 21.56 5.79 $ 24,658

The aggregate intrinsic value of stock options exercised in the years ended December 31, 2022, 2021 and 2020 was $ 5.1 million, $ 7.5 million, and $ 1.8 million, respectively.

The following table summarizes our stock options exercisable at December 31, 2022, 2021 and 2020:

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Shares Underlying

Term (in years)

Options Exercise

Price Remaining

Term (in years) Aggregate

Intrinsic Value

(in thousands)

2019 4,936,995 $ 18.93 5.62 $ 4,490

2020 5,488,207 $ 19.37 5.36 $ 46,626

2021 6,011,349 $ 19.34 5.16 $ 71,063

Exercisable at December 31, 2020 5,488,207 $ 19.37 5.36 $ 46,626

Exercisable at December 31, 2021 6,011,349 $ 19.34 5.16 $ 71,063

Exercisable at December 31, 2022 6,999,669 $ 20.22 4.62 $ 21,806

The weighted average grant date fair value of options granted was $ 13.45 , $ 14.00 , and $ 9.54 during the years ended December 31, 2022, 2021 and 2020, respectively.

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Unrecognized compensation cost associated with unvested stock options amounts to $ 31.9 million as of December 31, 2022, which will be expensed over a weighted average remaining vesting period of 2.5 years.

In connection with the retirement of a Board Member, formerly the Chief Executive Officer, the Board of Directors approved a modification to extend the deadline to exercise each stock option held to the earlier of five years or the expiration of the 10-year term of the option.

The modification resulted in incremental compensation cost of $ 3.2 million for the year ended December 31, 2022.

Restricted Stock Units

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The following table summarizes our restricted stock unit activity for the year ended December 31, 2022:

Weighted Average

RSUs Weighted Average

Grant Date Fair Value

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Unvested December 31, 2022 2,343,709 $ 24.65

The fair value of restricted stock units vested for the years ended December 31, 2022, 2021 and 2020 was $ 11.5 million, $ 7.4 million, and $ 5.3 million, respectively.

The weighted average grant date fair value for stock awards granted during the years ended December 31, 2022, 2021 and 2020 was $ 21.21 , $ 18.08 , and $ 18.43 , respectively.

Performance-based Stock Units

PSUs are subject to vest only if certain specified criteria are achieved.

As of December 31, 2021, there was less than $ 0.1 million of unrecognized compensation cost related to performance-based stock units ("PSUs") granted.

As of December 31, 2022, there was approximately $ 2.0 million of unrecognized compensation cost related to performance-based stock units ("PSUs") granted.

This amount is expected to be recognized over a weighted average period of 1.1 years.

The following table summarizes our performance-based stock unit activity for the year ended December 31, 2022:

Weighted Average

PSUs Weighted Average

Grant Date Fair Value

Unvested December 31, 2021 52,500 $ 18.73

Granted 127,048 27.54

Vested ( 17,500 ) 25.26

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Unvested December 31, 2022 157,048 $ 25.24

The fair value of performance-based stock units vested for the years ended December 31, 2022, 2021 and 2020 was $ 0.4 million, $ 1.8 million, and $ 2.3 million, respectively.

The weighted average grant date fair value for performance-based stock awards granted during the years ended December 31, 2022, 2021 and 2020 was $ 25.26 , $ 15.46 , and $ 21.58 , respectively.

Share Based Compensation

Total non-cash stock-based compensation expense consisted of the following for the years ended December 31, 2022, 2021 and 2020 ( in thousands ):

Twelve Months Ended December 31,

Year Ended December 31,

2022 2021 2020

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Research and development expenses 13,858 12,632 9,367

Total $ 30,766 $ 23,614 $ 21,105

Total stock-based compensation expense $ 39,177 $ 30,766 $ 23,614

NET LOSS PER COMMON SHARE

Basic and diluted net loss per common share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period.

The Company’s potentially dilutive shares, which include outstanding stock options, restricted stock units, and shares issuable upon conversion of the 2025 Notes, are considered to be common stock equivalents and are not included in the calculation of diluted net loss per share because their effect is anti-dilutive.

The Company’s potentially dilutive shares, which include outstanding stock options, restricted stock units, and shares issuable upon conversion of the 2025 Notes and 2029 Notes, are considered to be common stock equivalents and are not included in the calculation of diluted net loss per share because their effect is anti-dilutive.

Basic and diluted net loss per share is calculated as follows (net loss amounts are stated in thousands) :

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Convertible debt 10,869,000 7,113,402 7,113,402

Restricted stock 1,569,470 1,368,096 599,298

Options 10,041,249 9,214,188 8,349,310

Restricted stock 2,175,100 1,569,470 1,368,096

Total anti-dilutive shares 23,085,349 17,897,060 16,830,808

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CARES Act-Net operating loss carryback — % — % ( 9.58 ) %

Adoption of ASU 2020-06 ( 4.21 ) % — % — %

Other — % 0.20 % ( 0.10 ) %

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Research and development and other tax credits 91,052 69,213

Capitalized research and development 36,442 —

Contingent consideration 18,124 16,726

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Tax basis depreciation greater than book depreciation 105 13

Difference in basis of loan costs 15 —

300,268 215,106

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Convertible debt — ( 11,020 )

Prepaid assets ( 206 ) —

( 6,864 ) ( 16,802 )

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The Company increased its valuation allowance by $ 95.1 million and $ 50.5 million for the years ended December 31, 2022 and 2021, respectively.

At December 31, 2021, the Company had available unused U.S.

As of December 31, 2022, the Company had available unused U.S.

federal and state net operating loss (“NOL”) carryforwards of $ 90.2 million and $ 174.1 million, respectively, all of which are fully offset by a valuation allowance.

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The federal NOL and interest expense limitation carryforward have an indefinite life.

The state NOL carryforwards will begin to expire in 2022.

In addition, at December 31, 2021, the Company had federal orphan drug tax credit carryforwards of $ 61.7 million that begin to expire in 2035 unless utilized, federal research and development tax credit carryforwards of $ 5.4 million that begin to expire in 2033 unless utilized, state research and development tax credit carryforwards of $ 10.1 million that begin to expire in 2030 unless utilized, and California Competes tax credit carryforwards of $ 2.0 million that begin to expire in 2022.

The state NOL carryforwards will begin to expire in 2023 unless previously utilized, except for $ 26.2 million of the state net operating losses that have an indefinite carryforward period.

In addition, at December 31, 2022, the Company had federal orphan drug tax credit carryforwards of $ 82.0 million that begin to expire in 2033 unless utilized, federal research and development tax credit carryforwards of $ 5.4 million that begin to expire in 2033 unless utilized, state research and development tax credit carryforwards of $ 15.2 million, of which $ 1.4 million begin to expire in 2030 unless utilized and $ 13.8 million that have an indefinite carryforward period, and California Competes tax credit carryforwards of $ 2.0 million that begin to expire in 2024.

Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company’s federal net operating loss and credit carryforwards may be limited upon a cumulative change in ownership of more than 50% within a three-year period.

At December 31, 2021, the Company had Irish NOL carryforwards of $ 15.9 million which are fully offset by a valuation allowance and have an indefinite life.

The Company completed a study to analyze whether any ownership changes had occurred through December 31, 2021, and determined no ownership changes occurred.

The Company is in the process of updating its analysis of owner shifts to determine whether an ownership change occurred since December 31, 2021.

As of December 31, 2022, the Company had Irish NOL carryforwards of $ 15.1 million which are fully offset by a valuation allowance and have an indefinite life.

The Company also had Swiss NOL carryforwards of $ 148.2 million which are fully offset by a valuation allowance and begin to expire in 2023 as well as Federal Act on Tax Reform and AHV Financing (“TRAF”) cantonal tax benefits of $ 526.2 million which expire in 2029.

The Company accounts for uncertain tax benefits in accordance with the provisions of ASC 740-10 of the Accounting for Uncertainty in Income Taxes .

As of December 31, 2021, the Company had $ 7.8 million in unrecognized tax benefits of which $ 7.5 million related to orphan drug and research and development tax credits which was recorded as a reduction to the deferred tax assets with a corresponding reduction in the Company’s valuation allowance of $ 7.5 million.

As of December 31, 2022, the Company had $ 11.5 million in unrecognized tax benefits of which $ 9.9 million related to orphan drug and research and development tax credits and $ 1.6 million related to net operating loss carryforwards which were recorded as a reduction to the deferred tax assets with a corresponding reduction in the Company’s valuation allowance of $ 11.5 million.

To the extent unrecognized tax benefits are recognized at a time when a valuation allowance does not exist, the recognition of the $ 11.5 million tax benefit would reduce the effective tax rate.

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Increase in current period positions 2,056 2,255

Decrease in prior period positions — ( 235 )

Decrease due to settlements with tax authorities ( 310 ) —

Increase in prior period positions 1,919 377

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The Company recognizes interest and penalties as a component of income tax expense.

Interest and penalties for the year ended December 31, 2021 were less than $ 0.1 million.

The Company did no t recognize any interest or penalties for the years ended December 31, 2020 and 2019.

Interest and penalties for the years ended December 31, 2022 and 2021 were less than $ 0.1 million.

The Company did not recognize any interest or penalties for the year ended December 31, 2020.

EQUITY OFFERINGS

Underwritten Public Offerings of Common Stock

In February 2021, we sold an aggregate of 7.5 million shares of our common stock in an underwritten public offering, at a price to the public of $ 26.75 per share.

The net proceeds to us from the offering, after deducting the underwriting discounts and offering expenses, were $ 189.3 million.

In June 2020, the Company sold an aggregate of 7.5 million shares of its common stock in an underwritten public offering, at a price to the public of $ 15.50 per share.

Underwritten Public Offering of Common Stock

In February 2021, the Company sold an aggregate of 7.5 million shares of its common stock in an underwritten public offering, at a price of $ 26.75 per share.

The net proceeds to the Company from the offering, after deducting the underwriting discounts and offering expenses, were $ 189.3 million.

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In February 2020, the Company entered into an Open Market Sale Agreement ("ATM Agreement") with Jefferies LLC, as agent (“Jefferies”), pursuant to which the Company may offer and sell, from time to time through Jefferies, shares of its common stock having an aggregate offering price of up to $ 100.0 million.

Of the $ 100.0 million originally authorized for sale under the ATM Agreement, approximately $ 28.6 million were sold under our prior registration statement on Form S-3 (Registration Statement No.

An additional $ 31.7 million were sold under our effective registration statement on Form S-3 (Registration Statement No.

In 2020, the Company sold 867,806 shares under the ATM Agreement, resulting in gross proceeds of $ 23.5 million.

In 2021, the Company sold a combined 1,240,640 shares under the ATM Agreement, resulting in gross proceeds of $ 36.8 million.

Through December 31, 2021, the Company has sold a total of 2,108,446 shares under the ATM Agreement, resulting in gross proceeds of $ 60.3 million.

As of December 31, 2021, an aggregate amount of $ 39.7 million remained eligible for sale under the facility.

Of the $ 100.0 million originally authorized for sale under the ATM Agreement, approximately $ 28.6 million were sold under the Company's prior registration statement on Form S-3 (Registration Statement No.

An additional $ 51.9 million were sold under the Company's effective registration statement on Form S-3 (Registration Statement No.

333-259311), which included $ 20.1 million from the settlement of 701,600 shares under the ATM Agreement in the year ended December 31, 2022.

As of December 31, 2022, an aggregate amount of $ 19.5 million remained eligible for sale under the ATM Agreement.

Authorized Shares of Common Stock

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RETIREMENT PLAN

401(k) Savings Plan

The Company has a 401(k) defined contribution savings plan for the benefit of all eligible employees.

Employer matching contributions were $ 2.1 million, $ 1.3 million, and $ 1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Switzerland Defined Benefit Plan

The Company maintains a defined benefit pension plan covering employees of its Swiss subsidiary, Travere Therapeutics Switzerland GmbH (the "Swiss Plan").

The Swiss Plan is a government-mandated retirement fund that provides employees with a minimum benefit.

Employer and employee contributions are made to the Swiss Plan based on various percentages of participants' salaries and wages that vary according to the participants' age and other factors.

As of December 31, 2022, the projected benefit obligations under the Swiss Plan were approximately $ 1.8 million, and plan assets were approximately $ 1.4 million.

The funded status of the Swiss Plan is included in other long-term liabilities on the Company's Consolidated Balance Sheets.

PROPERTY AND EQUIPMENT

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The construction-in-process balance consists of costs related to the Company’s leasehold improvements at its facilities in San Diego, California.

Non-cash investing activities for the years ending December 31, 2021 and 2020 included accrued capital expenditures of $ 0.1 million and $ 1.9 million, respectively.

There were no accrued capital expenditures for the year ending December 31, 2019.

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $ 2.1 million, $ 1.7 million and $ 2.1 million, respectively.

As of December 31, 2021, the Company had one operating lease with Kilroy Realty, L.P.

As of December 31, 2022, the Company had two operating leases, including one operating lease with Kilroy Realty, L.P.

(the "Landlord") for office space located in San Diego, California, which was entered into in April 2019 and subsequently amended in May 2020.

Coinciding with our ability to direct the use of the office space, which occurred in phases over 2020, and utilizing a discount rate equal to our borrowing rate, the Company established ROU assets totaling $ 34.6 million and lease liabilities totaling $ 34.5 million.

Coinciding with the Company's ability to direct the use of the office space, which occurred in phases over 2020, and utilizing a discount rate equal to the Company's estimated incremental borrowing rate, the Company established ROU assets totaling $ 34.6 million and lease liabilities totaling $ 34.5 million.

The total ROU asset and lease liability at measurement were each offset by lease incentives associated with tenant improvement allowances totaling $ 7.9 million.

The initial term of the office lease ends in August 2028, and the Landlord has granted the Company an option to extend the term of the lease by a period of 5 years.

At this time, it is not reasonably certain that we will extend the term of the lease and therefore the renewal period has been excluded from the aforementioned ROU asset and lease liability measurements.

At this time, it is not reasonably certain that the Company will extend the term of the lease and therefore the renewal period has been excluded from the aforementioned ROU asset and lease liability measurements.

The measurement of the lease term occurs from the February 2021 occupancy date of the office space delivered in September 2020.

The aggregate base rent due over the initial term of the lease is approximately $ 49.5 million.

The Company also has one operating lease with Esprit Investments Limited for office space located in Dublin, Ireland, which was entered into in October 2022.

The initial term of the office lease ends in September 2027.

The lease provides the option to extend the term of the lease by a period of 5 years, although it is not reasonably certain that the Company will elect this option and therefore the renewal period has been excluded from the initial lease measurement.

The aggregate base rent due over the initial term of the lease is approximately $ 0.5 million.

Utilizing a discount rate equal to the Company's borrowing rate, the Company established an ROU asset and corresponding lease liability of $ 0.4 million.

Following is a schedule of the future minimum rental commitments for our operating leases reconciled to the lease liability and ROU asset as of December 31, 2022 ( in thousands ):

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Present value discount ( 6,279 )

Total operating lease liability 35,405

Total lease liability 31,943

Unamortized lease incentives ( 5,575 )

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Total ROU asset $ 21,000

For the twelve months ended December 31, 2021, 2020 and 2019 the Company recorded $ 4.9 million, $ 2.0 million, and $ 2.4 million, respectively, in expense related to operating leases, including amortized tenant improvement allowances.

Supplemental cash flow information related to leases is as follows ( in thousands ):

2021 2020 2019

Operating cash flows used for operating leases $ 2,205 $ 2,537 $ 2,639

The weighted-average remaining lease term and weighted-average discount rate of the Company's operating leases are as follows:

Weighted-average remaining lease term in years 5.7 6.7

Weighted-average discount rate 6.48 % 6.47 %

For the year ended December 31, 2022, 2021 and 2020 the Company recorded $ 5.0 million, $ 4.9 million, and $ 2.0 million, respectively, in expense related to operating leases, including amortized tenant improvement allowances.

SUBSEQUENT EVENTS

At-the-Market Equity Offering

From January 1, 2022 through February 22, 2022, the Company sold 701,600 shares of its common stock under the ATM Agreement, resulting in gross proceeds of $ 20.1 million.

After giving effect to such sales as of February 22, 2022, an aggregate amount of $ 19.6 million remained eligible for sale under the facility.

Ligand Milestone Payment

Pursuant to the Ligand License Agreement, the Company is obligated to make a $ 23.0 million milestone payment to Ligand (and BMS) in the first quarter of 2023, as a result of the accelerated approval granted to FILSPARI (sparsentan).

Upon payment, the $ 23.0 million will be capitalized as an intangible asset on the Consolidated Balance Sheets.

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

What changed 10-K

Item 9A. Controls and Procedures