tvtx-20210630
000143853312/31false2021Q2http://fasb.org/us-gaap/2021-01-31#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrent.02577390.85100014385332021-01-012021-06-30xbrli:shares00014385332021-07-27iso4217:USD00014385332021-06-3000014385332020-12-31iso4217:USDxbrli:shares00014385332021-04-012021-06-3000014385332020-04-012020-06-3000014385332020-01-012020-06-300001438533tvtx:AtTheMarketOfferingMember2021-01-012021-06-300001438533tvtx:AtTheMarketOfferingMember2020-01-012020-06-300001438533tvtx:UnderwrittenEquityOfferingMember2021-01-012021-06-300001438533tvtx:UnderwrittenEquityOfferingMember2020-01-012020-06-3000014385332019-12-3100014385332020-06-300001438533us-gaap:CommonStockMember2021-03-310001438533us-gaap:AdditionalPaidInCapitalMember2021-03-310001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001438533us-gaap:RetainedEarningsMember2021-03-3100014385332021-03-310001438533us-gaap:CommonStockMember2020-03-310001438533us-gaap:AdditionalPaidInCapitalMember2020-03-310001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001438533us-gaap:RetainedEarningsMember2020-03-3100014385332020-03-310001438533us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001438533us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001438533us-gaap:CommonStockMember2021-04-012021-06-300001438533us-gaap:CommonStockMember2020-04-012020-06-300001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001438533us-gaap:RetainedEarningsMember2021-04-012021-06-300001438533us-gaap:RetainedEarningsMember2020-04-012020-06-300001438533us-gaap:CommonStockMember2021-06-300001438533us-gaap:AdditionalPaidInCapitalMember2021-06-300001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001438533us-gaap:RetainedEarningsMember2021-06-300001438533us-gaap:CommonStockMember2020-06-300001438533us-gaap:AdditionalPaidInCapitalMember2020-06-300001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001438533us-gaap:RetainedEarningsMember2020-06-300001438533us-gaap:CommonStockMember2020-12-310001438533us-gaap:AdditionalPaidInCapitalMember2020-12-310001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001438533us-gaap:RetainedEarningsMember2020-12-310001438533us-gaap:CommonStockMember2019-12-310001438533us-gaap:AdditionalPaidInCapitalMember2019-12-310001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001438533us-gaap:RetainedEarningsMember2019-12-310001438533us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-300001438533us-gaap:AdditionalPaidInCapitalMember2020-01-012020-06-300001438533us-gaap:CommonStockMember2021-01-012021-06-300001438533us-gaap:CommonStockMember2020-01-012020-06-300001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-300001438533us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-06-300001438533us-gaap:RetainedEarningsMember2021-01-012021-06-300001438533us-gaap:RetainedEarningsMember2020-01-012020-06-30xbrli:pure0001438533us-gaap:GeographicConcentrationRiskMembersrt:NorthAmericaMemberus-gaap:RevenueFromContractWithCustomerMember2021-01-012021-06-300001438533tvtx:BileAcidProductsMember2021-04-012021-06-300001438533tvtx:BileAcidProductsMember2020-04-012020-06-300001438533tvtx:BileAcidProductsMember2021-01-012021-06-300001438533tvtx:BileAcidProductsMember2020-01-012020-06-300001438533tvtx:TioproninProductsMember2021-04-012021-06-300001438533tvtx:TioproninProductsMember2020-04-012020-06-300001438533tvtx:TioproninProductsMember2021-01-012021-06-300001438533tvtx:TioproninProductsMember2020-01-012020-06-300001438533us-gaap:CommercialPaperMember2021-06-300001438533us-gaap:CommercialPaperMember2020-12-310001438533us-gaap:CorporateDebtSecuritiesMember2021-06-300001438533us-gaap:CorporateDebtSecuritiesMember2020-12-310001438533us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2021-06-300001438533us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2020-12-310001438533tvtx:OrphanTechnologiesLimitedMember2020-11-012020-11-300001438533tvtx:OrphanTechnologiesLimitedMember2020-11-30tvtx:lease00014385332019-04-30tvtx:business0001438533us-gaap:MeasurementInputRevenueMultipleMembertvtx:CholbamMember2021-06-300001438533us-gaap:MeasurementInputRevenueMultipleMembertvtx:ChenodalMember2021-06-300001438533us-gaap:MeasurementInputDiscountRateMember2021-06-300001438533us-gaap:MeasurementInputRevenueMultipleMembertvtx:CholbamMember2020-12-310001438533us-gaap:MeasurementInputRevenueMultipleMembertvtx:ChenodalMember2020-12-310001438533us-gaap:MeasurementInputDiscountRateMember2020-12-310001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2021-06-300001438533us-gaap:FairValueInputsLevel1Member2021-06-300001438533us-gaap:FairValueInputsLevel2Member2021-06-300001438533us-gaap:FairValueInputsLevel3Member2021-06-300001438533us-gaap:FairValueInputsLevel1Member2020-12-310001438533us-gaap:FairValueInputsLevel2Member2020-12-310001438533us-gaap:FairValueInputsLevel3Member2020-12-310001438533us-gaap:FairValueInputsLevel3Member2021-01-012021-06-300001438533us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300001438533us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-300001438533us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-06-300001438533us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-06-300001438533us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-04-012021-06-300001438533us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-04-012020-06-300001438533us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-06-300001438533us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-06-300001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2018-09-100001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2020-12-310001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2018-09-102018-09-100001438533us-gaap:SeniorNotesMembertvtx:ConvertibleNotesDue2019Member2018-09-10tvtx:day0001438533us-gaap:SeniorNotesMembertvtx:ConvertibleNotesDue2019Membertvtx:DebtConversionScenarioOneMember2021-01-012021-06-300001438533us-gaap:SeniorNotesMembertvtx:ConvertibleNotesDue2019Membertvtx:DebtConversionScenarioTwoMember2021-01-012021-06-300001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2021-01-012021-06-300001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2021-04-012021-06-300001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2020-04-012020-06-300001438533us-gaap:SeniorNotesMembertvtx:SeniorNotesDue2025Member2020-01-012020-06-300001438533us-gaap:RestrictedStockMember2021-04-012021-06-300001438533us-gaap:RestrictedStockMember2020-04-012020-06-300001438533us-gaap:RestrictedStockMember2021-01-012021-06-300001438533us-gaap:RestrictedStockMember2020-01-012020-06-300001438533us-gaap:ConvertibleDebtSecuritiesMember2021-04-012021-06-300001438533us-gaap:ConvertibleDebtSecuritiesMember2020-04-012020-06-300001438533us-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-06-300001438533us-gaap:ConvertibleDebtSecuritiesMember2020-01-012020-06-300001438533us-gaap:EmployeeStockOptionMember2021-04-012021-06-300001438533us-gaap:EmployeeStockOptionMember2020-04-012020-06-300001438533us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001438533us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001438533us-gaap:RestrictedStockUnitsRSUMember2020-12-310001438533us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001438533us-gaap:RestrictedStockUnitsRSUMember2021-06-300001438533us-gaap:PerformanceSharesMember2020-12-310001438533us-gaap:PerformanceSharesMember2021-01-012021-06-300001438533us-gaap:PerformanceSharesMember2021-06-300001438533us-gaap:EmployeeStockOptionMember2020-12-310001438533us-gaap:EmployeeStockOptionMember2020-01-012020-12-310001438533us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001438533us-gaap:EmployeeStockOptionMember2021-06-300001438533tvtx:UnderwrittenEquityOfferingMember2020-06-012020-06-300001438533tvtx:UnderwrittenEquityOfferingMember2020-06-300001438533tvtx:UnderwrittenEquityOfferingMember2021-02-012021-02-280001438533tvtx:UnderwrittenEquityOfferingMember2021-02-280001438533tvtx:AtTheMarketOfferingMember2020-02-290001438533tvtx:AtTheMarketOfferingMember2020-02-012021-06-300001438533tvtx:AtTheMarketOfferingMember2021-01-012021-03-310001438533tvtx:AtTheMarketOfferingMember2021-06-3000014385332021-05-1700014385332021-05-18

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________
FORM 10-Q
_________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 001-36257
 TRAVERE THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware27-4842691
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3611 Valley Centre Drive, Suite 300
San Diego, CA 92130
(Address of Principal Executive Offices)
(888) 969-7879
(Registrant's Telephone number including area code)
N/A
Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareTVTXThe Nasdaq Global Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   No
 The number of shares of outstanding common stock, par value $0.0001 per share, of the Registrant as of July 27, 2021 was 60,717,176.


Table of Contents
TRAVERE THERAPEUTICS, INC.
Form 10-Q
For the Fiscal Quarter Ended June 30, 2021

TABLE OF CONTENTS
  Page No.
 
 
 
 
 
1

Table of Contents
FORWARD-LOOKING STATEMENTS 
This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.
Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the "2020 10-K"), and in this Quarterly Report on Form 10-Q. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. 
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned to not unduly rely upon these statements.
We file reports with the Securities and Exchange Commission ("SEC"). The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Risk Factor Summary
Below is a summary of material factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found under the heading “Risk Factors” in Item 1A of Part II of this Quarterly Report on Form 10-Q and should be carefully considered, together with other information in this Quarterly Report on Form 10-Q and our other filings with the SEC before making investment decisions regarding our common stock.
Our clinical trials may fail to demonstrate the safety and efficacy of our product candidates, including sparsentan and pegtibatinase (TVT-058), which could prevent or significantly delay their regulatory approval.
We may not be able to reach alignment with the FDA regarding a pathway for potential accelerated approval submissions in the U.S.
Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful.
An extended delay in the rate of enrollment in our ongoing Phase 1/2 Study of pegtibatinase (TVT-058), as a result of the COVID-19 pandemic or otherwise, may delay our timelines for analyzing preliminary data from the study.
Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
The commercial success of Chenodal, Cholbam and Thiola depends on them being considered to be effective drugs with advantages over other therapies.
We are subject to generic competition, and recent developments relating to generic competition for pharmaceutical products could cause our product sales and business to be negatively impacted.
Changes in reimbursement practices of third-party payers, or patients' access to insurance coverage, could affect the demand for our products and/or the prices at which they are sold.
We are dependent on third parties to manufacture and distribute our pharmaceutical products who may not fulfill their obligations.
If we are unable to maintain an effective and specialized sales force, we will not be able to commercialize our products successfully.
Our products may not achieve or maintain expected levels of market acceptance or commercial success.
If the market opportunities for our products and product candidates are smaller than we believe they are, our revenues may be adversely affected and our business may suffer.
Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval or commercialization.
We do not currently have patent protection for our commercial products. If we are unable to obtain and maintain protection for the intellectual property relating to our technology and products, the value of our technology and products will be adversely affected.
We expect to rely on orphan drug status to develop and commercialize certain of our product candidates, but our orphan drug designations may not confer marketing exclusivity or other expected commercial benefits.
Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business.
2

Table of Contents
We face potential product liability exposure far in excess of our limited insurance coverage.
We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do. Our operating results will suffer if we fail to compete effectively.
The COVID-19 pandemic could materially adversely affect our business, results of operations and financial condition.
Our limited operating history makes it difficult to evaluate our future prospects, and our profitability in the future is uncertain.
We will likely experience fluctuations in operating results and could incur substantial losses.
Negative publicity regarding any of our products could impair our ability to market any such product and may require us to spend time and money to address these issues.
We may need substantial funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts.
The market price for shares of our common stock may be volatile and purchasers of our common stock could incur substantial losses.
We may be unable to successfully integrate new products or businesses we may acquire.
We may become involved in certain litigation matters, any of which could result in substantial costs, divert management's attention and otherwise have a material adverse effect on our business, operating results or financial condition.
We are subject to significant ongoing regulatory obligations and oversight, which may result in significant additional expense and may limit our commercial success.
Our ability to use net operating loss carryforwards and certain other tax attributes to offset future taxable income and taxes may be subject to limitations.
We are dependent on information technology systems, infrastructure and data, which exposes us to data security risks.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our indebtedness could adversely affect our financial condition.
We may be unable to raise the funds necessary to repurchase the $276.0 million aggregate principal amount of 2.50% Convertible Senior Notes due 2025 ("2025 Notes") for cash following a fundamental change, or to pay any cash amounts due upon conversion, and our future indebtedness may limit our ability to repurchase the 2025 Notes or pay cash upon their conversion.
3

Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
 June 30, 2021December 31, 2020
Assets(unaudited) 
Current assets:  
Cash and cash equivalents$83,288 $84,772 
Available-for-sale debt securities, at fair value (amortized cost $439,411, allowance for credit losses of $0 as of June 30, 2021; amortized cost $276,111, allowance for credit losses of $0 as of December 31, 2020)
439,502 276,817 
Accounts receivable, net11,860 15,925 
Inventory, net7,409 7,608 
Prepaid expenses and other current assets7,339 8,143 
Tax receivable400 17,142 
Total current assets549,798 410,407 
Property and equipment, net11,720 9,418 
Other non-current assets34,361 33,489 
Intangible assets, net149,951 153,189 
Goodwill936 936 
Total assets$746,766 $607,439 
Liabilities and Stockholders' Equity   
Current liabilities:  
Accounts payable$8,343 $12,133 
Accrued expenses62,465 56,793 
Other current liabilities8,869 6,334 
Business combination-related contingent consideration, current portion17,300 17,400 
Total current liabilities96,977 92,660 
Convertible debt220,861 215,339 
Other non-current liabilities43,725 40,527 
Business combination-related contingent consideration, less current portion52,900 47,700 
Total liabilities414,463 396,226 
Stockholders' Equity:  
Preferred stock $0.0001 par value; 20,000,000 shares authorized; 0 issued and outstanding as of June 30, 2021 and December 31, 2020
  
Common stock $0.0001 par value; 200,000,000 and 100,000,000 shares authorized; 60,710,876 and 52,248,431 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
6 5 
Additional paid-in capital1,011,692 797,985 
Accumulated deficit(678,754)(585,875)
Accumulated other comprehensive loss(641)(902)
Total stockholders' equity 332,303 211,213 
Total liabilities and stockholders' equity $746,766 $607,439 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents
TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net product sales$54,617 $48,430 $102,024 $96,199 
Operating expenses:  
Cost of goods sold1,651 1,494 3,296 2,864 
Research and development51,807 30,790 99,753 61,038 
Selling, general and administrative34,965 34,971 71,743 68,110 
Change in fair value of contingent consideration1,509 4,286 10,096 2,363 
Total operating expenses89,932 71,541 184,888 134,375 
Operating loss(35,315)(23,111)(82,864)(38,176)
Other income (expenses), net:  
Other income (expense), net216 426 (877)235 
Interest income988 1,316 1,397 3,291 
Interest expense(4,852)(4,634)(10,173)(9,521)
Total other expense, net(3,648)(2,892)(9,653)(5,995)
Loss before income taxes(38,963)(26,003)(92,517)(44,171)
Income tax (expense) benefit(49)(65)(362)18,911 
Net loss$(39,012)$(26,068)$(92,879)$(25,260)
Basic and diluted net loss per common share$(0.64)$(0.58)$(1.59)$(0.57)
Basic and diluted weighted average common shares outstanding60,571,259 44,763,843 58,431,770 43,943,370 
Comprehensive loss:  
Net loss$(39,012)$(26,068)$(92,879)$(25,260)
Foreign currency translation(227)(247)875 (56)
Unrealized gain (loss) on debt securities(152)3,146 (614)729 
Comprehensive loss$(39,391)$(23,169)$(92,618)$(24,587)
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Table of Contents
TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 For the Six Months Ended June 30,
 20212020
Cash Flows From Operating Activities:
Net loss$(92,879)$(25,260)
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization12,694 11,507 
Non-cash interest expense759 893 
Amortization of discounts/premiums on investments, net660 337 
Amortization of debt discount and issuance costs5,522 5,147 
Provision for inventory962 662 
Share-based compensation14,767 11,474 
ESPP expense437 390 
Change in fair value of contingent consideration10,096 2,363 
Payments related to change in fair value of contingent consideration(3,602)(8,674)
Other1,807 274 
Changes in operating assets and liabilities:  
Accounts receivable4,056 3,979 
Inventory(764)(875)
Tax receivable 17,011 (18,714)
Other current and non-current operating assets(1,224)(2,508)
Change in lease assets and liabilities, net5,492  
Accounts payable and accrued expenses4,681 (16,407)
Other current and non-current operating liabilities(453)(196)
Net cash used in operating activities(19,978)(35,608)
Cash Flows From Investing Activities:  
Purchase of fixed assets(4,598)(518)
Cash paid for intangible assets(8,979)(8,532)
Proceeds from the sale/maturity of debt securities242,064 153,146 
Purchase of debt securities(406,000)(36,743)
Net cash provided by (used in) investing activities(177,513)107,353 
Cash Flows From Financing Activities:  
Payment of acquisition-related contingent consideration(1,399)(6,101)
Payment of guaranteed minimum royalty(1,050)(1,050)
Proceeds from exercise of stock options3,074 431 
Proceeds from the issuance of common stock in At-the-Market equity offering4,878  
Proceeds from the issuance of common stock, net of issuance costs189,278 108,644 
Proceeds from issuances under employee stock purchase plan1,275 1,098 
Net cash provided by financing activities196,056 103,022 
Effect of exchange rate changes on cash(49)(33)
Net change in cash and cash equivalents(1,484)174,734 
Cash and cash equivalents, beginning of year84,772 62,436 
Cash and cash equivalents, end of period$83,288 $237,170 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Table of Contents
TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited, in thousands, except share amounts)
Three Months Ended June 30, 2021Three Months Ended June 30, 2020
 Common StockAdditional Paid in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total
Stockholders'
Equity
Common StockAdditional Paid in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total
Stockholders'
Equity
 SharesAmountSharesAmount
Balance - March 3160,435,730 $6 $1,002,687 $(262)$(639,742)$362,689 43,153,215 $4 $642,880 $(1,500)$(415,636)$225,748 
Share based compensation7,288 7,288 5,760 5,760 
Issuance of common stock under the equity incentive plan and proceeds from exercise176,259 319 319 177,115 371 371 
Equity offering, net of issuance costs(98)(98)7,475,000 1108,643108,644 
Unrealized gain (loss) on debt securities(152)(152)3,146 3,146 
Foreign currency translation adjustments(227)(227)(247)(247)
ESPP stock purchase and expense98,887 1,496 1,496 97,544 1,291 1,291 
Net loss(39,012)(39,012)(26,068)(26,068)
Balance - June 3060,710,876 $6 $1,011,692 $(641)$(678,754)$332,303 50,902,874 $5 $758,945 $1,399 $(441,704)$318,645 
Six Months Ended June 30, 2021Six Months Ended June 30, 2020
Common StockAdditional Paid in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total
Stockholders'
Equity
Common StockAdditional Paid in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmountSharesAmount
Balance - December 3152,248,431 $5 $797,985 $(902)$(585,875)$211,213 43,088,921 $4 $636,910 $726 $(416,444)$221,196 
Share based compensation14,767 14,767 11,474 11,474 
Issuance of common stock under the equity incentive plan and proceeds from exercise646,872 3,074 3,074 241,409 431 431 
Equity offering, net of issuance costs7,716,686 1194,156 194,157 7,475,000 1108,643 108,644 
Unrealized gain (loss) on debt securities(614)(614)729 729 
Foreign currency translation adjustments875 875 (56)(56)
ESPP stock purchase and expense98,887 1,710 1,710 97,544 1,487 1,487 
Net loss(92,879)(92,879)(25,260)(25,260)
Balance - June 3060,710,876 $6 $1,011,692 $(641)$(678,754)$332,303 50,902,874 $5 $758,945 $1,399 $(441,704)$318,645 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Table of Contents
TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.  DESCRIPTION OF BUSINESS
Organization and Description of Business
Travere Therapeutics, Inc. (“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 six months ended June 30, 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, also known as RE-021, is an investigational product candidate with a dual mechanism of action, selective endothelin receptor antagonist (“ERA”), with in vitro selectivity toward endothelin receptor type A, and a potent angiotensin receptor blocker (“ARB”). Sparsentan is currently being evaluated in two pivotal Phase 3 clinical studies in the following indications:
Focal segmental glomerulosclerosis ("FSGS") is a rare kidney disease characterized by proteinuria where the glomeruli become progressively scarred. FSGS is a leading cause of end-stage renal disease.
Immunoglobulin A nephropathy ("IgAN") is an immune-complex-mediated glomerulonephritis characterized by hematuria, proteinuria, and variable rates of progressive renal failure. IgAN is the most common primary glomerular disease.
Pegtibatinase (TVT-058) is a novel investigational human enzyme replacement candidate being evaluated for the treatment of classical homocystinuria (HCU). Classical HCU is a rare metabolic disorder characterized by elevated levels of plasma homocysteine that can lead to vision, skeletal, circulatory and central nervous system issues. Pegtibatinase (TVT-058) is currently being tested in a Phase 1/2 double blind, randomized, placebo-controlled dose escalation study to assess its safety, tolerability, pharmacokinetics, pharmacodynamics and clinical effects in patients with classical HCU. Pegtibatinase (TVT-058) has been granted Rare Pediatric Disease and Fast Track designations by the FDA, as well as orphan drug designation in the United States and Europe. We acquired pegtibatinase (TVT-058) as part of the November 2020 acquisition of Orphan Technologies Limited.
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. CTX is a rare, progressive and underdiagnosed bile acid synthesis disorder affecting many parts of the body. 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:
The Company is 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, 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.
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.

8

Table of Contents
NOTE 2.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2020 10-K filed with the SEC on March 1, 2021. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions for Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for any future periods. The December 31, 2020 balance sheet information was derived from the audited financial statements as of that date. 
A summary of the significant accounting policies applied in the preparation of the accompanying condensed consolidated financial statements follows:
Principles of Consolidation
The unaudited condensed consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiaries in conformity with GAAP. All intercompany accounts and transactions have been eliminated in consolidation.
Revenue Recognition
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect substantially all the consideration it is entitled to in exchange for the goods or services it transfers to the customer. See Note 3 for further discussion.
Research and Development Expenses
Research and development expenses are comprised of salaries and bonuses, benefits, non-cash share-based compensation, license fees, costs paid to third-party contractors to perform research, conduct clinical trials and pre/non-clinical trials, develop drug materials, and associated overhead expenses and facilities. We also incur indirect costs that are not allocated to specific programs because such costs benefit multiple development programs and allow us to increase our pharmaceutical development capabilities. These consist of internal shared resources related to the development and maintenance of systems and processes applicable to all of our programs.
Clinical Trial Expenses
Our clinical trials are conducted pursuant to contracts with contract research organizations ("CROs") that support conducting and managing clinical trials. 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, initiation activities, enrollment, 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. 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), we adjust our accruals accordingly on a prospective basis. Revisions to our contractual payment obligations are charged to expense in the period in which the facts that give rise to the revision become reasonably certain.
We currently have 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.
Intangible Assets with Cost Accumulation Model
In 2014, the Company entered into a license agreement with Mission Pharmacal in which the Company obtained the exclusive right to license the trademark of Thiola. The acquisition of the Thiola license qualified as an asset acquisition under the principles of ASC 805 in effect at the time of acquisition. The license agreement requires the Company to make royalty payments based on net sales of Thiola. The liability for royalties in excess of the annual contractual minimum is recognized in the period in which the royalties become probable and estimable, which is typically in the period corresponding with the respective sales. The Company records an offsetting increase to the cost basis of the asset under the cost accumulation model. 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 June 30, 2021, as such royalties are not yet probable and estimable.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the 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.
9

Table of Contents
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. 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 Company's assessment of the impact of the new standard on the Company's financial statements is ongoing.

NOTE 3. REVENUE RECOGNITION
Product Revenue, Net
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 more than 99% of the revenue generated in North America.
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.
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 customers, health care providers, payors and other indirect customers relating to the Company’s sales of its products. These 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 a customer) or as a current liability (if the amount is payable to a party other than a customer). 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.
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. 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 other current liabilities in the accompanying consolidated balance sheets.
Commercial Rebates: We calculate the rebates that we incur due to contracts with certain commercial payors and deduct these amounts from our 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 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.
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. 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 payors. 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 revenues for the three and six months ended June 30, 2021 and 2020 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Bile acid products$24,974 $21,573 $46,938 $43,854 
Tiopronin products29,643 26,857 55,086 52,345 
Total net product revenue$54,617 $48,430 $102,024 $96,199 

NOTE 4. DEBT SECURITIES
The Company's debt securities as of June 30, 2021 and December 31, 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 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
10

Table of Contents
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.
During the six months ended June 30, 2021, investment activity for the Company included $242.1 million in maturities and $406.0 million in purchases, all relating to debt based marketable securities.
Debt securities consisted of the following (in thousands):
June 30, 2021December 31, 2020
Commercial paper$178,837 $135,145 
Corporate debt securities226,351 98,646 
Securities of government sponsored entities34,314 43,026 
Total debt securities$439,502 $276,817 

The following is a summary of short-term debt securities classified as available-for-sale as of June 30, 2021 (in thousands):
Remaining Contractual Maturity
(in years)
Amortized CostUnrealized GainsUnrealized LossesAggregate Estimated Fair Value
Commercial paperLess than 1$178,865 $3 $(31)$178,837 
Corporate debt securitiesLess than 1117,411 212 (29)117,594 
Securities of government-sponsored entitiesLess than 131,824  (5)31,819 
Total maturity less than 1 year328,100 215 (65)328,250 
Corporate debt securities1 to 2108,811 6 (60)108,757 
Securities of government-sponsored entities1 to 22,500  (5)2,495 
Total maturity 1 to 2 years111,311 6 (65)111,252 
Total available-for-sale securities$439,411 $221 $(130)$439,502 

The following is a summary of short-term debt securities classified as available-for-sale as of December 31, 2020 (in thousands):
Remaining Contractual Maturity
(in years)
Amortized CostUnrealized GainsUnrealized LossesAggregate Estimated Fair Value
Commercial paperLess than 1$135,161 $1 $(17)$135,145 
Corporate debt securitiesLess than 192,906 723  93,629 
Securities of government-sponsored entitiesLess than 143,031  (5)43,026 
Total maturity less than 1 year271,098 724 (22)271,800 
Corporate debt securities1 to 25,013 4  5,017 
Total available-for-sale securities$276,111 $728 $(22)$276,817 

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.
The Company reviews the available-for-sale debt securities for declines in fair value below the cost basis each quarter. For any security whose fair value is below its amortized cost basis, the Company first evaluates whether it intends to sell the impaired security, or will otherwise be more likely than not required to sell the security before recovery. If either are true, the amortized cost basis of the security is written down to its fair value at the reporting date. If neither circumstance holds true, the Company assesses whether any portion of the unrealized loss is a result of a credit loss. Any amount deemed to be attributable to credit loss is recognized in the income statement, with the amount of the loss limited to the difference between fair value and amortized cost and recorded as an allowance for credit losses. The portion of the unrealized loss related to factors other than credit losses is recognized in other comprehensive income (loss).
The following is a summary of available-for-sale debt securities in an unrealized loss position with no credit losses reported as of June 30, 2021 (in thousands):
11

Table of Contents
Less Than 12 Months12 Months or GreaterTotal
Description of SecuritiesFair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Commercial paper$132,356 $31 $ $ $132,356 $31 
Corporate debt securities142,673 89   142,673 89 
Securities of government-sponsored entities7,565 10   7,565 10 
   Total$282,594 $130 $ $ $282,594 $130 

The following is a summary of available-for-sale debt securities in an unrealized loss position with no credit losses reported as of December 31, 2020 (in thousands):
Less Than 12 Months12 Months or GreaterTotal
Description of SecuritiesFair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Commercial paper$112,148 $17 $ $ $112,148 $17 
Corporate debt securities      
Securities of government-sponsored entities43,026 5   43,026 5 
   Total$155,174 $22 $ $ $155,174 $22 

As of June 30, 2021 and December 31, 2020, 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 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 continued to ease and unrealized losses observed in early 2020 have been substantially recovered. The credit ratings of the securities held remain of the highest quality, and 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. 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.

NOTE 5. ACQUISITIONS AND DISPOSITIONS
Acquisition of Orphan Technologies Limited
In November 2020, the Company completed the acquisition of Orphan Technologies Limited (“Orphan”), including Orphan’s rare metabolic disorder drug OT-58, renamed pegtibatinase (TVT-058). The Company acquired Orphan by purchasing all of its outstanding shares. In exchange for the shares, the Company made an upfront cash payment at closing of $90.0 million plus closing adjustments, net liabilities assumed, and transaction expenses of $1.2 million, $1.8 million, and $4.2 million, respectively. 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 (TVT-058) 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 (TVT-058) product is granted.
The Company has applied the principles of ASC 805 in determining the proper accounting treatment for the acquisition. Substantially all of the value of the assets acquired is concentrated within pegtibatinase (TVT-058), and as of the acquisition date, the Company does not anticipate any economic benefit to be derived from pegtibatinase (TVT-058) other than the primary indication. Accordingly, the transaction is treated as an asset acquisition with amounts charged to expense for the acquired in-process research and development on the date of acquisition.
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 June 30, 2021, no contingent cash payments have been accrued.

12

Table of Contents
NOTE 6.  LEASES
As of June 30, 2021, the Company had 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. 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. 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.
Following is a schedule of the future minimum rental commitments for our operating leases reconciled to the lease liability and ROU asset as of June 30, 2021 (in thousands):
June 30, 2021
2021$1,842 
20226,020 
20236,200 
20246,386 
20256,578 
Thereafter18,535 
Total undiscounted future minimum payments45,561 
Lease incentives payable by lessor(566)
Present value discount(9,456)
Total lease liability35,539 
Unamortized lease incentives, less incentives payable by lessor(6,485)
Cash payments in excess of straight-line lease expense(4,638)
Total ROU asset$24,416 

As of June 30, 2021, the ROU asset of $24.4 million was recorded to the Condensed Consolidated Balance Sheets as non-current Other Assets.

As of June 30, 2021, the current and non-current portions of the lease liability were recorded to the Condensed Consolidated Balance Sheets as follows (in thousands):
June 30, 2021
Other current liabilities$2,623 
Other non-current liabilities32,916 
Total lease liabilities$35,539 

For the three and six months ended June 30, 2021, the Company recorded $1.2 million and $2.4 million in expense related to operating leases, including amortized tenant improvement allowances. For the three and six months ended June 30, 2020, the Company recorded a credit to expense of $0.2 million and zero in expense related to operating leases, including amortized tenant improvement allowances.

NOTE 7.  FAIR VALUE MEASUREMENTS
Financial Instruments and Fair Value
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 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:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
13

Table of Contents
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 judgements 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 June 30, 2021 and December 31, 2020 are as follows:
Revenue DiscountPayment Discount
Cholbam Chenodal
June 30, 20216.5%7.5%7.85%
December 31, 20206.5%8.5%7.45%

Based on the fair value hierarchy, the Company classified the fair value measurement of contingent consideration within Level 3 because valuation inputs are based on projected revenues discounted to a present value.
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 June 30, 2021, the fair value of the Company's 2.5% Convertible Senior Notes due 2025 was $234.7 million, which was estimated utilizing market quotations, and are considered Level 2.
The following table presents the Company’s assets and liabilities, measured and recognized at fair value on a recurring basis, classified under the appropriate level of the fair value hierarchy as of June 30, 2021 (in thousands):
As of June 30, 2021
Total carrying and estimated fair valueQuoted prices in active markets
(Level 1)
Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)
Assets:
Cash and Cash Equivalents$83,288 $83,288 $ $ 
Debt securities, available-for-sale439,502  439,502  
Total$522,790 $83,288 $439,502 $ 
Liabilities:
Business combination-related contingent consideration$70,200 $ $ $70,200 
Total$70,200 $ $ $70,200 

The following table presents the Company’s assets 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, 2020 (in thousands):
As of December 31, 2020
Total carrying and estimated fair valueQuoted prices in active markets
(Level 1)
Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)
Assets:
Cash and Cash Equivalents$84,772 $84,772 $ $ 
Debt securities, available-for-sale276,817  276,817  
Total$361,589 $84,772 $276,817 $ 
Liabilities:
Business combination-related contingent consideration65,100   65,100 
Total$65,100 $ $ $65,100 

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 six months ended June 30, 2021 (in thousands):
14

Table of Contents
Fair Value Measurements of Acquisition-Related Contingent Consideration
(Level 3)
Balance at January 1, 2021$65,100 
Changes in the fair value of contingent consideration10,096 
Contractual payments(2,276)
Contractual payments included in accrued liabilities at June 30, 2021(2,606)
Foreign currency impact(114)
Balance at June 30, 2021$70,200 

For the three and six months ended June 30, 2021, the Company incurred charges of $1.5 million and $10.1 million in operating expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the change in fair value of the contingent consideration liabilities.
For the three and six months ended June 30, 2021, the change in fair value of contingent consideration is due to the timing of future payments and changes in market driven discount rates.
For the three and six months ended June 30, 2020, the Company incurred charges of $4.3 million and $2.4 million in operating expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the change in fair value of the contingent consideration liabilities. The value changed due to the timing of future payments and changes in market driven discount rates.

NOTE 8. INTANGIBLE ASSETS
As of June 30, 2021, the net book value of amortizable intangible assets was approximately $150.0 million.
The following table sets forth amortizable intangible assets as of June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
Finite-lived intangible assets$273,332 $264,676 
Less: accumulated amortization(123,381)(111,487)
Net carrying value$149,951 $153,189 

The following table summarizes amortization expense for the three and six months ended June 30, 2021 and 2020 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Research and development$288 $289 $574 $578 
Selling, general and administrative5,848 4,996 11,514 9,881 
Total amortization expense$6,136 $5,285 $12,088 $10,459 

NOTE 9.  CONVERTIBLE NOTES PAYABLE
Convertible Senior Notes Due 2025
On September 10, 2018, the Company completed its 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 ("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.
15

Table of Contents
The composition of the Company’s 2025 Notes are as follows (in thousands):
 June 30, 2021 December 31, 2020
2.50% convertible senior notes due 2025
$276,000 $276,000 
Unamortized debt discount(51,314)(56,384)
Unamortized debt issuance costs(3,825)(4,277)
Total 2025 Notes, net of unamortized debt discount and debt issuance costs$220,861 $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 was used by the Company to repurchase $23.4 million aggregate principal amount of its then-outstanding 4.5% senior convertible notes due 2019 in privately-negotiated transactions.
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; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (“measurement period”) if the trading price per $1,000 principal amount of 2025 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 on the Company’s common stock; (4) if the Company calls the 2025 Notes for redemption; and (5) at any time from, and including, May 15, 2025 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 2025 Notes is 25.7739 shares of the Company’s common stock per $1,000 principal amount of 2025 Notes, which represents an initial conversion price of approximately $38.80 per share. If a “make-whole fundamental change” (as defined in the 2025 Indenture) occurs, then the Company will, in certain circumstances, increase the conversion rate for a specified period of time.
The 2025 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 September 15, 2022 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 2025 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 each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice. 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 June 30, 2021, the 2025 Notes had a market price of $851 per $1,000 or $234.7 million principal amount. 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 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 classified on the Company’s Condensed Consolidated Balance Sheets at June 30, 2021 as long-term convertible debt.
Under ASC 470-20, Debt with Conversion and Other Options, 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 sheet 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 period from the date of issuance through June 30, 2021 was 7.7%. The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands):
16

Table of Contents
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Contractual interest expense$1,725 $1,725 $3,450 $3,450 
Amortization of debt discount2,560 2,371 5,071 4,698 
Amortization of debt issuance costs226 225 451 449 
Total interest expense for the 2025 Notes$4,511 $4,321 $8,972 $8,597 

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.

NOTE 10. ACCRUED EXPENSES
Accrued expenses at June 30, 2021 and December 31, 2020 consisted of the following (in thousands):
June 30, 2021December 31, 2020
Government rebates payable$11,756 $10,707 
Compensation related costs12,656 17,912 
Accrued royalties and contingent consideration