10-Q

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 001-37569

Strongbridge Biopharma plc

(Exact name of Registrant as specified in its charter)

Ireland	98-1275166
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

900 Northbrook Drive

Suite 200

Trevose, PA 19053

(Address of principal executive offices)

Registrant’s Telephone Number, Including Area Code: +1 610-254-9200

Securities Registered Pursuant to Section 12(b) of the Exchange Act:

Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Ordinary shares, par value $0.01 per share	SBBP	The Nasdaq Global Select 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 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 ☒

As of August 2, 2021, there were 67,828,952 ordinary shares of the registrant issued and outstanding.  

TABLE OF CONTENTS

		Page
PART I.	Financial Information	1
Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020	1
	Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020	2
	Consolidated Statements of Shareholders’ Equity	3
	Consolidated Statements of Cash Flow for the Six Months Ended June 30, 2021 and 2020	4
	Notes to the Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	Other Information	26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
SIGNATURES		28

Solely for convenience, the trademarks and trade names in this Quarterly Report on Form 10-Q (this “Quarterly Report”) are referred to without the ^® and ^™ symbols, but absence of such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. The trademarks, trade names and service marks appearing in this Quarterly Report are the property of their respective owners.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STRONGBRIDGE BIOPHARMA plc

Consolidated Balance Sheets

(In thousands, except share and per share data)

(unaudited)

	June 30,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	63,774	$	87,522
Accounts receivable		3,581		2,801
Inventory		1,101		1,103
Prepaid expenses and other current assets		1,666		926
Total current assets		70,122		92,352
Property and equipment, net		183		216
Right-of-use asset, net		489		597
Intangible asset, net		17,577		20,088
Goodwill		7,256		7,256
Other assets		1,193		591
Total assets	$	96,820	$	121,100
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	635	$	1,483
Accrued and other current liabilities		22,039		19,648
Current portion of long-term debt, net		708		—
Total current liabilities		23,382		21,131
Long-term debt, net		17,002		17,114
Warrant liability		5,036		4,941
Supply agreement liability, noncurrent		6,471		11,556
Other long-term liabilities		538		753
Total liabilities		52,429		55,495
Commitments and contingencies (Note 8)
Shareholders’ equity:
Deferred shares, $1.098 par value, 40,000 shares authorized, issued and outstanding at June 30, 2021 and December 31, 2020		—		44
Ordinary shares, $0.01 par value, 600,000,000 shares authorized; 67,722,319 and 67,243,772 shares issued and outstanding at June 30, 2021 and December 31, 2020		677		672
Additional paid-in capital		374,327		370,447
Accumulated deficit		(330,613)		(305,558)
Total shareholders’ equity		44,391		65,605
Total liabilities and shareholders’ equity	$	96,820	$	121,100

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

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STRONGBRIDGE BIOPHARMA plc

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(unaudited)

	Three Months Ended				Six Months Ended
	June 30				June 30,
	2021		2020		2021		2020
Total revenues	$	10,042	$	7,760	$	18,424	$	14,434
Cost and expenses:
Cost of sales (excluding amortization of intangible asset)		467		393		878		1,362
Selling, general and administrative		15,988		9,638		26,934		20,041
Research and development		5,397		6,152		11,235		13,704
Amortization of intangible asset		1,255		1,255		2,511		2,511
Total cost and expenses		23,107		17,438		41,558		37,618
Operating loss		(13,065)		(9,678)		(23,134)		(23,184)
Other expense, net:
Interest expense		(810)		(253)		(1,592)		(253)
Unrealized gain (loss) on fair value of warrants		680		(7,367)		(95)		(6,787)
Other (expense) income, net		(45)		26		(233)		254
Total other expense, net		(175)		(7,594)		(1,920)		(6,786)
Loss before income taxes		(13,240)		(17,272)		(25,054)		(29,970)
Income tax expense		(1)		—		(1)		—
Net loss	$	(13,241)	$	(17,272)		(25,055)		(29,970)
Other comprehensive loss:
Unrealized loss on marketable securities		—		(6)		—		(3)
Comprehensive loss	$	(13,241)	$	(17,278)	$	(25,055)	$	(29,973)
Net loss attributable to ordinary shareholders:
Basic	$	(13,241)	$	(17,272)	$	(25,055)	$	(29,970)
Diluted	$	(13,921)	$	(17,272)	$	(25,055)	$	(29,970)
Net loss per share attributable to ordinary shareholders:
Basic	$	(0.20)	$	(0.32)	$	(0.37)	$	(0.55)
Diluted	$	(0.21)	$	(0.32)	$	(0.37)	$	(0.55)
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders:
Basic		67,653,659		54,302,325		67,569,136		54,266,675
Diluted		67,921,260		54,302,325		67,569,136		54,266,675

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

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STRONGBRIDGE BIOPHARMA plc

Consolidated Statement of Shareholders’ Equity

(In thousands, except share amounts)

(unaudited)

							Additional				Accumulated Other		Total
	Deferred Shares			Ordinary Shares			Paid-In		Accumulated		Comprehensive		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Income (Loss)		Equity
Balance—March 31, 2020	40,000	$	44	54,247,501	$	542	$	333,768	$	(273,181)		6	$	61,179
Net loss	—		—	—		—		—		(17,272)		—		(17,272)
Stock-based compensation	—		—	—		—		1,773		—		—		1,773
Issuance of warrants and beneficial conversion feature related to the Loan Agreement	—		—	—		—		2,457		—		—		2,457
Ordinary shares issued, net of shares withheld for employee taxes	—		—	108,456		2		(264)		—		—		(262)
Unrealized loss on marketable securities	—		—	—		—		—		—		(6)		(6)
Balance—June 30, 2020	40,000	$	44	54,355,957	$	544	$	337,734	$	(290,453)		—	$	47,869
Balance—December 31, 2019	40,000	$	44	54,205,852	$	542	$	332,085	$	(260,483)		3	$	72,191
Net loss	—		—	—		—		—		(29,970)		—		(29,970)
Stock-based compensation	—		—	—		—		3,524		—		—		3,524
Issuance of warrants and beneficial conversion feature related to the Loan Agreement	—		—	—		—		2,457		—		—		2,457
Ordinary shares issued, net of shares withheld for employee taxes	—		—	150,105		2		(332)		—		—		(330)
Unrealized loss on marketable securities	—		—	—		—		—		—		(3)		(3)
Balance—June 30, 2020	40,000	$	44	54,355,957	$	544	$	337,734	$	(290,453)		—	$	47,869
Balance—March 31, 2021	40,000	$	44	67,545,369	$	675	$	372,500	$	(317,372)		—	$	55,847
Net loss	—		—	—		—		—		(13,241)		—		(13,241)
Stock-based compensation	—		—	—		—		2,082		—		—		2,082
Ordinary shares issued, net of shares withheld for employee taxes	—		—	176,950		2		(299)		—		—		(297)
Cancellation of deferred shares	(40,000)		(44)	—		—		44		—		—		—
Balance—June 30, 2021	—	$	—	67,722,319	$	677	$	374,327	$	(330,613)		—	$	44,391
Balance—December 31, 2020	40,000	$	44	67,243,772	$	672	$	370,447	$	(305,558)		—	$	65,605
Net loss	—		—	—		—		—		(25,055)		—		(25,055)
Stock-based compensation	—		—	—		—		4,359		—		—		4,359
Ordinary shares issued, net of shares withheld for employee taxes	—		—	419,079		5		(699)		—		—		(694)
Exercise of stock options	—		—	48,157		*		138		—		—		138
Issuance of shares, net of expenses	—		—	11,311		*		38		—		—		38
Cancellation of deferred shares	(40,000)		(44)	—		—		44		—		—		—
Balance—June 30, 2021	—	$	—	67,722,319	$	677	$	374,327	$	(330,613)		—	$	44,391

* Represents an amount less than $1.

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

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STRONGBRIDGE BIOPHARMA plc

Consolidated Statements of Cash Flow

(In thousands)

(unaudited)

	Six Months Ended
	June 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(25,055)	$	(29,970)
Adjustments to reconcile net loss income to net cash used in operating activities:
Stock-based compensation		4,359		3,524
Amortization of intangible asset		2,511		2,511
Change in fair value of warrant liability		95		6,787
Amortization of debt discounts and debt issuance costs		596		—
Accretion of discounts on marketable securities		—		(53)
Depreciation		43		43
Changes in operating assets and liabilities:
Accounts receivable		(780)		(596)
Inventory		(601)		294
Prepaid expenses and other current assets		(740)		(757)
Other assets		109		314
Accounts payable		(848)		(1,374)
Accrued and other liabilities		(2,909)		(8,098)
Net cash used in operating activities		(23,220)		(27,375)
Cash flows from investing activities:
Sales and maturities of marketable securities		—		21,122
Purchases of property and equipment		(10)		—
Net cash (used in) provided by investing activities		(10)		21,122
Cash flows from financing activities:
Payments related to tax withholding for net-share settled equity awards		(694)		(330)
Proceeds from long-term debt, net		—		9,460
Proceeds from exercise of stock options		138		—
Proceed from issuance of ordinary shares in connection with at-the-market offering, net		38		—
Net cash (used in) provided by financing activities		(518)		9,130
Net (decrease) increase in cash and cash equivalents		(23,748)		2,877
Cash and cash equivalents—beginning of period		87,522		57,032
Cash and cash equivalents—end of period	$	63,774	$	59,909
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	997	$	118
Income taxes other, net of refunds	$	1,301	$	531

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

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STRONGBRIDGE BIOPHARMA plc

Notes to Unaudited Consolidated Financial Statements

1. Organization

We are a global, commercial-stage biopharmaceutical company focused on the development and commercialization of therapies for rare diseases with significant unmet needs.

Our first commercial product is Keveyis (dichlorphenamide), the first and only treatment approved by the U.S. Food and Drug Administration (the “FDA”) for hyperkalemic, hypokalemic, and related variants of primary periodic paralysis (“PPP”), a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis.

We have two clinical-stage product candidates for rare endocrine diseases, Recorlev and veldoreotide. Recorlev (levoketoconazole), the pure 2S,4R enantiomer of the enantiomeric pair comprising ketoconazole, is a next-generation steroidogenesis inhibitor being investigated as a chronic therapy for adults with endogenous Cushing’s syndrome. Veldoreotide is a next-generation somatostatin analog being investigated for potential applications in conditions amenable to somatostatin receptor activation. Both levoketoconazole and veldoreotide have received orphan designation from the FDA and the European Medicines Agency (“EMA”)

Liquidity

We believe that our cash and cash equivalents of $63.8 million at June 30, 2021, will be sufficient to allow us to fund planned operations for at least 12 months beyond the issuance date of these unaudited consolidated financial statements.

We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital. We plan to continue to fund our operations and capital funding needs through equity or debt financing along with revenues from Keveyis. There can be no assurances, however, that additional funding will be available on terms acceptable to us.

Transaction Agreement with Xeris Pharmaceuticals, Inc.

On May 24, 2021, we announced that we had signed an agreement to be acquired by Xeris Pharmaceuticals, Inc. (“Xeris”). Upon close of the transaction, the businesses of Xeris and Strongbridge Biopharma plc (“Strongbridge”) will be combined under a new entity to be called Xeris Biopharma Holdings, Inc The agreement, including the maximum aggregate amount payable under the contingent value rights (the “CVRs”), values Strongbridge at approximately $267 million based on the closing price of Xeris common stock of $3.47 on May 21, 2021, and Strongbridge’s fully diluted share capital.

Under the terms of the agreement, at closing, Strongbridge shareholders will receive a fixed exchange ratio of 0.7840 shares of Xeris Biopharma Holdings common stock for each Strongbridge ordinary share they own. Based on the closing price of Xeris common stock on May 21, 2021, this represents approximately $2.72 per Strongbridge ordinary share and a 12.9% premium to the closing price of Strongbridge ordinary shares on May 21, 2021. Strongbridge shareholders will also receive 1 non-tradeable CVR for each Strongbridge ordinary share they own, worth up to an additional $1.00 payable in cash or Xeris Biopharma Holdings common stock, or a combination of cash and additional Xeris Biopharma Holdings common stock (at Xeris Biopharma Holdings’ sole election) upon achievement of the following milestones: (i) $0.25 per CVR upon the first listing of at least one issued patent for Keveyis in the U.S. Food and Drug Administration’s Orange Book by the end of 2023 or the first achievement of at least $40 million in Keveyis annual net sales in 2023, (ii) $0.25 per CVR upon the first achievement of at least $40 million in Recorlev annual net sales in 2023, and (iii) $0.50 per CVR upon the first achievement of at least $80 million in Recorlev annual net sales in 2024. The minimum payment on the CVR per Strongbridge ordinary share is zero and the maximum payment is $1.00 in cash or Xeris Biopharma Holdings common stock, or a combination of cash and

5

additional Xeris Biopharma Holdings common stock at Xeris Biopharma Holdings’ sole election. The transaction is expected to close early in the fourth quarter of 2021, subject to the satisfaction of closing conditions.

The transaction, which has been unanimously approved by the boards of directors of both companies is expected to close early in the fourth quarter of 2021, subject to the satisfaction of closing conditions. Upon close of the transaction, the current Xeris stockholders are expected to own approximately 60% of the combined company, while current Strongbridge shareholders are expected to own approximately 40%.

On July 2, 2021, Xeris Biopharma Holdings filed with the SEC a registration statement on Form S-4, to register the Xeris Biopharma Holdings common stock to be issued in connection with the transaction, which also constitutes the joint proxy statement of Strongbridge and Xeris under Section 14(a) of the Securities Exchange Act of 1934. Upon the effectiveness of the Form S-4, we intend to solicit shareholders for their approval of the merger with Xeris.

In connection with this transaction, we have incurred, and will continue to incur, transaction-related costs. A portion of those costs are contingent on the transaction closing, such as investment banking fees, and employee related costs. For the six months ended June 30, 2021, we have incurred $5.8 million of expenses, which are recorded in our selling, general and administrative expense within the Consolidated Statements of Operations and Comprehensive Loss.

In addition, all of our outstanding restricted stock units will vest immediately prior to the closing of this transaction, and all of our outstanding stock options will vest immediately prior to the closing of this transaction and be converted into options to purchase Xeris Biopharma Holdings common stock.

2. Summary of significant accounting policies and basis of presentation

Basis of presentation

These unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The unaudited consolidated financial statements reflect all adjustments, which include only normal recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the operating results and financial position for the periods presented.

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates. Results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

These unaudited consolidated financial statements should be read in conjunction with the accounting policies and notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission on March 3, 2021 (the “2020 Annual Report”). Our significant accounting policies are described in Note 2 of the notes to the audited consolidated financial statements included in our 2020 Annual Report. Since the date of those financial statements, there have been no changes to our significant accounting policies.

Leases

We account for leases in accordance with Accounting Standards Codification Topic 842, Leases (“ASC 842”). We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to us the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) we have the right to control the use of the identified asset.

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Operating leases where we are the lessee are included in Right of use (“ROU”) assets and Accrued and other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how we determined (1) the discount rate we use to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Because our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for all of our leases includes the noncancellable period of the lease. Lease payments included in the measurement of the lease asset or liability are comprised of our fixed payments.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We monitor for events or changes in circumstances that require a reassessment of a lease. If a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

We have elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all of our other leases.

Cash, cash equivalents and marketable securities

We consider all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively.

We occasionally invest our excess cash balances in marketable debt securities of highly rated financial institutions. We seek to diversify our investments and limit the amount of investment concentrations for individual institutions, maturities and investment types. We classify marketable debt securities as available-for-sale and, accordingly, record such securities at fair value. We classify these securities as current assets as these investments are available to us for use in funding current operations. There were no marketable securities as of June 30, 2021 or December 31, 2020.

Unrealized gains and losses on marketable debt securities are recorded as a separate component of Accumulated other comprehensive income (loss) included in shareholders’ equity.

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Segment information

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in one operating segment.

Net loss per share

Basic net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted-average number of ordinary shares outstanding for the period, including any dilutive effect from outstanding stock options or other equity-based instruments. Shares used in the diluted net loss per share calculations exclude anti-dilutive ordinary share equivalents, which currently consist of outstanding stock options, unvested restricted stock units (“RSUs”), equity-classified warrants and the conversion feature of our outstanding term loan agreement.

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding for the six months ending June 30, 2021 and 2020, as they would be anti-dilutive:

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding for the six months ending June 30, 2021 and 2020, as they would be anti-dilutive:
	June 30,
	2021		2020
Warrants		7,368,033		7,100,643
Stock options issued and outstanding		8,260,473		10,499,222
Unvested RSUs		2,800,425		1,090,300
Conversion feature of our outstanding term loan agreement		1,339,285		1,339,285

Recent accounting pronouncements – not yet adopted

June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded through net income instead of directly reducing the amortized cost of the investment under the current other-than-temporary impairment model. For smaller reporting companies, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

3. Revenue recognition

Product sales, net

We sell Keveyis to one specialty pharmacy provider (the “Customer”), who is the exclusive distributor of Keveyis in the United States. The Customer subsequently resells Keveyis to patients, most of whom are covered by payors that may provide for government-mandated or privately negotiated rebates with respect to the purchase of Keveyis.

Revenues from sales of Keveyis are recognized when we satisfy a performance obligation by transferring control of the product to the Customer. Transfer of control occurs upon receipt of the product by the Customer. We expense incremental costs related to the set-up of contracts with the Customer when incurred, as these costs do not meet the criteria for capitalization.

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Reserves for variable consideration

Revenues from sales of Keveyis are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that result from rebates, co-pay assistance and other allowances that are offered between us and the patients’ payors. There is no variable consideration reserve for returns as we do not accept returns of Keveyis. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than the Customer). Where appropriate, these estimates may take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted buying and payment patterns of the Customer. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. We reassess our estimates on an ongoing basis. If actual results in the future vary from our estimates, we will adjust our estimates. Any such adjustments would affect net product revenue and earnings in the period such variances become known.

Trade Discount: We provide the Customer with a discount that is explicitly stated in our contract and is recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, we receive sales order management, data and distribution services from the Customer. To the extent the services received are distinct from our sale of Keveyis to the Customer, these payments are classified in selling, general and administrative expenses in our consolidated statement of operations and comprehensive loss.

Funded Co-pay Assistance Program: We contract with a third-party to manage the co-pay assistance program intended to provide financial assistance to qualified insured patients. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with Keveyis that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. These payments are consideration payable to the Customer and the related reserve is recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheet.

Government Rebates: We are subject to discount obligations under state Medicaid programs and Medicare. We estimate our Medicaid and Medicare rebates for the estimated patient mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included in accrued expenses on the consolidated balance sheet. For Medicaid, accruals are based on estimates of future Medicaid beneficiary utilization applied to the Medicaid unit rebate formula established by the Center for Medicaid and Medicare Services. Manufacturers of pharmaceutical products are responsible for 70% of the patient’s cost of branded prescription drugs related to the Medicare Part D Coverage Gap. In order to estimate the cost to us of this Medicare coverage gap responsibility, we estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. Our liability for these rebates consists of estimates of claims for the current quarter and estimated future claims that will be made for Keveyis transactions that have been recognized as revenue but remain in the Customer’s inventory at the end of each reporting period.

Temporary Supply and Patient Assistance Programs: We provide free Keveyis to uninsured patients who satisfy pre-established criteria for either the Temporary Supply Program or the Patient Assistance Program. Patients who meet the Temporary Supply Program eligibility criteria may receive a temporary supply of free Keveyis for no more than 60 days while there is a determination of the patient’s third-party insurance, prescription drug benefit or other third-party coverage for Keveyis. The Patient Assistance Program provides free Keveyis for up to 12 months to uninsured patients who satisfy pre-established criteria for financial need. We do not recognize any revenue related to these free products and the associated costs are classified in selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss.

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4. Fair value measurements

We record financial assets and liabilities at fair value. Because of their short-term nature, the amounts reported in the balance sheet for cash, accounts receivable and accounts payable approximate fair value.

The guidance requires fair value measurements to maximize the use of “observable inputs.” The three-level hierarchy of inputs to measure fair value are as follows: 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Because of their short-term nature, the amounts reported in the balance sheet for cash and accounts payable approximate fair value.

Level 2: Significant observable inputs other than Level 1 prices such as quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The fair values of the outstanding warrants were measured using the Black-Scholes option-pricing model. Inputs used to determine estimated fair value of the warrant liabilities include the estimated term of the warrants, risk-free interest rates, and the expected volatility of the underlying stock. The significant unobservable inputs used in the fair value measurement of the warrant liabilities were the volatility rate and the estimated term of the warrants. Generally, increases and decreases in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.

We did not have any transfers between the different levels.

The following table presents our assets and liabilities that are measured at fair value on a recurring basis for the periods presented (in thousands):

	As of June 30, 2021
	Level I		Level II		Level III		Total
Cash equivalents		62,668		—		—		62,668
Total assets	$	62,668	$	—	$	—	$	62,668
Warrant liability		—		—		5,036		5,036
Total liabilities	$	—	$	—	$	5,036	$	5,036

	As of December 31, 2020
	Level I		Level II		Level III		Total
Cash equivalents		86,775		—		—		86,775
Total assets	$	86,775	$	—	$	—	$	86,775
Warrant liability		—		—		4,941		4,941
Total liabilities	$	—	$	—	$	4,941	$	4,941

The following table presents a reconciliation of our level 3 warrant liability (in thousands):

	As of June 30, 2021
Balance as of December 31, 2020	$	4,941
Unrealized loss on fair value of warrants for six months ended June 30, 2021		95
Balance as of June 30,2021	$	5,036

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5. Intangible asset and goodwill

The following represents the balance of our intangible asset and goodwill as follows (in thousands):

	As of June 30, 2021
	Beginning of Period		Amortization		End of Period
Keveyis	$	20,088	$	(2,511)	$	17,577
Goodwill		7,256		—		7,256
Total	$	27,344	$	(2,511)	$	24,833

Our finite-lived intangible asset consists of acquired developed product rights obtained from our acquisition of Keveyis (dichlorphenamide) from a subsidiary of Taro Pharmaceutical Industries Ltd. (“Taro”).

Pursuant to the terms of the Asset Purchase Agreement and Supply Agreement that we entered into with Taro in December 2016, we paid Taro an upfront payment in two installments of $1 million in December 2016 and $7.5 million in March 2017, and will pay an aggregate of $7.5 million in potential milestone payments upon the achievement of certain product sales targets.  Taro has agreed to continue to manufacture Keveyis for us under an exclusive supply agreement through the orphan exclusivity period. We are obligated to purchase from Taro certain annual minimum amounts of product totaling approximately $29 million over a six-year period. We have concluded that the supply price payable by us exceeds fair value and, therefore, have used a discounted cash flow method with a probability assumption to value the payments in excess of fair value at $29.3 million, for which we have recorded an intangible asset and corresponding liability. This liability is being reduced as we purchase inventory over the term of the Supply Agreement that we entered into with Taro.  In addition, we incurred transaction costs of $2.4 million. The transaction resulted in the recording of an intangible asset of $40.2 million. This asset is being amortized over an eight-year period using the straight-line method.

We recorded amortization expense of $1.3 million and $2.5 million for the three and six months ended June 30, 2021, and 2020.

6. Long-term debt

On May 19, 2020, we entered into a $30 million Term Loan Agreement (the “Loan Agreement”) with Avenue Venture Opportunities Fund L.P. (“Avenue”), as administrative agent and collateral agent, and the lenders named therein and from time to time a party thereto (the “Lenders”). Pursuant to the terms of the Loan Agreement, our wholly-owned subsidiary, Strongbridge U.S. Inc. (the “Borrower”) borrowed $10 million (the “Initial Loan”) from the Lenders at closing.  As a result of achieving positive top-line data for Recorlev in our Phase 3 LOGICS clinical trial in September 2020, we borrowed an additional $10 million under the Loan Agreement (the “Second Loan”) on December 30, 2020. The remaining $10 million tranche (the “Third Loan”) will become available to us between October 1, 2021 and March 31, 2022 if we achieve FDA approval of Recorlev and subject to Avenue’s investment committee approval.  

The Loan Agreement has a four-year term, no minimum revenue or cash balance financial covenants and an interest-only period for 24 months that can increase to 36 months assuming we receive FDA approval of Recorlev. Amounts borrowed under the Loan Agreement accrue interest at a floating rate per annum (based on a year of 365 days) equal to the sum of (a) the greater of (x) the Prime Rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, and (y) 3.25%, plus (b) 6.75%. The interest rate as of June 30, 2021 was 10%.

We paid a commitment fee of $200,000 (1% of the amounts of the Initial Loan and the Second Loan) at closing. We are also required to pay the Lenders a final payment fee upon repayment or prepayment of any loans made under the Loan Agreement in accordance with the terms and conditions of the Loan Agreement.

Under the terms of the Loan Agreement, we may prepay all or a portion of the outstanding principal amount of any loans outstanding under the Loan Agreement at any time upon prior notice to the Lenders subject to a prepayment

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premium (which reduces after the first year) and the payment of the pro rata portion of the final payment fee (to the extent not already paid) based on the amount of loans being prepaid. In certain circumstances, including a change of control and certain asset sales or licensing transactions, we may be required to prepay all or a portion of loans outstanding, and, to the extent required under the terms of the Loan Agreement, the applicable prepayment premium and final payment fee.

As security for our obligations under the Loan Agreement, we entered into a security agreement with Avenue, pursuant to which we granted a lien on substantially all of our assets, including intellectual property, to the Secured Parties (as such term is defined in the Loan Agreement).

Avenue has the right to convert up to $3 million of the aggregate principal amount of any loans outstanding under the Loan Agreement into ordinary shares at a price per share of $2.24. We have accounted for this term as a beneficial conversion feature, and the fair value is recorded in Additional paid-in capital. This amount is recorded as a debt discount and classified as a contra-liability on the consolidated balance sheet and amortized to interest expense over the term of the loan.

In connection with the execution of both the Loan Agreement and the Second Loan, we issued to Avenue warrants to purchase up to an aggregate of 267,390 ordinary shares at an exercise price (the “Exercise Price”) of $1.87 (which is equal to the five-day volume weighted average price as of the trading day immediately prior to execution of the financing agreement) for each of the tranches of debt, respectively. The warrants are exercisable, in full or in part, at any time prior to five years following the issue date for both tranches of the loan. We have accounted for these warrants as equity, and the fair value is recorded into Additional paid-in capital. This amount is recorded as a debt discount and classified as a contra-liability on the consolidated balance sheet and amortized to interest expense over the term of the loan. If we borrow the Third Loan, we will be required to issue to the Lenders or their designees additional warrants to purchase ordinary shares equal to an aggregate of 5% of the Third Loan divided by the Exercise Price, rounded down to the nearest whole share.

Loan Amendment

On July 23, 2021, Strongbridge, the Borrower and Avenue entered into an amendment (the “Loan Amendment”) to the Loan Agreement.

Under the Term Loan Agreement, Strongbridge granted to Avenue an option to convert up to $3 million of the aggregate principal amount of any loans outstanding under the Loan Agreement into Strongbridge ordinary shares (the “Conversion Option”). The Loan Amendment amends the Conversion Option such that $10 million of the aggregate principal amount of any loans outstanding under the Loan Agreement will automatically convert into Strongbridge ordinary shares immediately prior to the completion of the acquisition of Strongbridge by Xeris Pharmaceuticals, Inc. The conversion price remains unchanged at $2.24 per share.

Future principal payments due under the Loan Agreement, if the interest payment only period is not extended beyond the current 24-month period, are as follows (in thousands):

	Principal
	Payments
2021	$	—
2022		5,833
2023		10,000
2024		4,167
Total future payments	$	20,000

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7. Accrued and other current liabilities

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

	June 30,		December 31,
	2021		2020
Consulting and professional fees	$	7,311	$	2,754
Accrued sales allowances		5,588		4,312
Supply agreement - current portion		5,085		4,391
Employee compensation		2,972		5,749
Accrued royalties		499		301
Lease liability - current portion		437		415
Other		139		72
Accrued taxes		8		1,161
Severance		—		493
Total accrued and other current liabilities	$	22,039	$	19,648

8. Commitments and contingencies

(a) Commitments to Taro Pharmaceuticals Industries Ltd.

As of June 30, 2021, our remaining obligation under the Supply Agreement (see Note 5) was $14.1 million. The agreement with Taro may extend beyond the orphan exclusivity period unless terminated by either party pursuant to the terms of the agreement. If terminated by Taro at the conclusion of the orphan exclusivity period, we have the right to manufacture the product on our own or have the product manufactured by a third party on our behalf. We are also required to reimburse Taro for its royalty obligation resulting from its sale of Keveyis to us.

(b) Indemnifications

In the ordinary course of business and in connection with the sale of assets and businesses and other transactions, we often agree to indemnify our counterparties against certain liabilities that may arise in connection with a transaction or that are related to events and activities prior to or following a transaction, such as breaches of contracts, unfavorable tax consequences and employee liabilities. If a counterparty were to make a successful indemnification claim against us, we may be required to reimburse the loss and such amount could be material to our consolidated financial statements. Where appropriate, the obligation for such indemnifications is recorded as a liability. Because these agreements generally do not specify the maximum amount of indemnification a counterparty may be entitled to, the overall maximum amount of our potential indemnification liability under these agreements cannot be reasonably estimated. However, we believe that the likelihood of a material liability being triggered under these indemnification obligations is not probable at this time.

9. Taxes

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts and tax bases of assets and liabilities and operating loss carryforwards and other attributes using enacted rates expected to be in effect when those differences reverse. Valuation allowances are provided against deferred tax assets that are not more likely than not to be realized.

We assess our ability to realize deferred tax assets. Changes in future earnings projections, among other factors, may cause us to adjust our valuation allowance on deferred tax assets. Any such adjustments would impact our income tax expense in the period in which it is determined that these factors have changed.

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We recorded income tax expense of $1,000 for the three and six months ended June 30, 2021 and did not record an expense for the three and six months ended June 30, 2020.

10. Ordinary Shares

Equity transactions

We entered into an equity distribution agreement with JMP Securities LLC (“JMP”) on April 28, 2017, pursuant to which we could sell, at our option, from time to time, up to an aggregate of $40 million of our ordinary shares through JMP, as sales agent. The agreement provided for a commission to JMP equal to 3% of the gross proceeds from the sale of our ordinary shares under this at-the-market (“ATM”) facility. Pursuant to the terms of the equity distribution agreement, we reimbursed JMP for certain out-of-pocket expenses, including the fees and disbursements of counsel to JMP, incurred in connection with establishing the ATM facility and provided JMP with customary indemnification rights. During the three months ended March 31, 2021, we sold an aggregate of 11,311 ordinary shares under the ATM facility at an average selling price of $3.36 per share, resulting in net proceeds of approximately $38,000 after payment of fees to JMP of $1,100. This equity distribution agreement was terminated on March 24, 2021.

We entered into an equity distribution agreement with Jefferies LLC (“Jefferies”) on March 25, 2021, pursuant to which we may sell, at our option, from time to time, up to an aggregate of $50 million of our ordinary shares through Jefferies, as sales agent. We will pay Jefferies a commission equal to 3% of the gross proceeds from the sale of our ordinary shares under the ATM facility. Pursuant to the terms of the equity distribution agreement, we reimbursed Jefferies for certain out-of-pocket expenses, including the fees and disbursements of counsel to Jefferies, incurred in connection with establishing the ATM facility and have provided Jefferies with customary indemnification rights. For the period ended June 30, 2021, we did not sell any shares under this agreement.

Warrants

Our outstanding warrants as of June 30, 2021, are as follows:

							Warrants
							Outstanding
		Exercise		Expiration	Warrants	Warrants	June 30,
	Classification	Price		Date	Issued	Exercised	2021
Warrants in connection with private equity placement	Liability	$	2.50	6/28/2022	7,000,000	(1,970,000)	5,030,000
Warrants in connection with Horizon and Oxford loan agreement	Equity	$	2.45	12/28/2026	428,571	(267,857)	160,714
Warrants in connection with CRG loan agreement	Equity	$	7.37	7/14/2024	394,289	—	394,289
Warrants in connection with CRG loan amendment in January 2018	Equity	$	10.00	1/16/2025	1,248,250	—	1,248,250
Warrants in connection with Avenue Capital loan agreement	Equity	$	1.87	5/19/2025	267,390	—	267,390
Warrants in connection with Avenue Capital loan agreement	Equity	$	1.87	12/30/2025	267,390	—	267,390
					9,605,890		7,368,033

11. Stock-based compensation

Our board of directors has adopted the 2017 Inducement Plan (the “Inducement Plan”). The Inducement Plan provides for the grant of equity-based awards to new employees. The purpose of the Inducement Plan is to attract valued employees by offering them a greater stake in our success and a closer identity with us, and to encourage ownership of our ordinary shares by such employees. The Inducement Plan became effective on February 23, 2017. As of June 30, 2021, 1,297,353 shares are available for issuance pursuant to the Inducement Plan.

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Our board of directors has adopted, and our shareholders have approved, the 2015 Equity Compensation Plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options to our employees and any parent or subsidiary corporation’s employees, and for the grant of nonstatutory stock options, stock awards, and RSUs to our employees, directors and consultants and our parent or subsidiary corporations’ employees and consultants. The 2015 Plan became effective on September 3, 2015. As of June 30, 2021, 2,531,458 shares are available for issuance pursuant to the 2015 Plan.

Our board of directors has adopted, and our shareholders have approved, the Non-Employee Director Equity Compensation Plan (the “Non-Employee Director Plan”). The Non-Employee Director Plan provides for the grant of nonstatutory stock options, stock awards, and RSUs to our non-employee directors. The Non-Employee Director Plan became effective on September 3, 2015. As of June 30, 2021, 207,247 shares are available for issuance pursuant to the Non-Employee Director Plan.

A summary of our outstanding stock options as of June 30, 2021, is as follows:

	Options Outstanding
				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual
	Number of	Exercise		Term	Aggregate
	Shares	Price		(Years)	Intrinsic Value
					(in thousands)
Outstanding—January 1, 2021	8,989,306	$	4.81	6.58	$	350
Granted	168,300	$	2.90
Exercised	(48,157)
Forfeited, cancelled and expired	(848,976)	$	4.31
Outstanding—June 30, 2021	8,260,473	$	4.82	7.03	$	847
Vested and exercisable—June 30, 2021	5,472,762	$	5.50	6.40	$	358

The weighted average grant date fair value of stock options granted during the six months ended June 30, 2021 and 2020 was $2.16 and $2.00, respectively.

Restricted stock units

We grant RSUs to employees and to members of our board of directors. RSUs that are granted to employees vest one, two or three years from the date of issuance, provided that the employee is employed by us on such vesting date. RSUs that are granted to directors’ vest on the one-year anniversary of the grant date, provided that the director continues to serve as a member of the board of directors continuously from the grant date through such one-year anniversary. All RSUs will fully vest upon a change of control of our company. If and when the RSUs vest, we will issue one ordinary share for each whole RSU that has vested, subject to satisfaction of the employee’s or director’s tax withholding obligations. The RSUs will cease to be outstanding upon the issuance of ordinary shares upon vesting. We recorded expense related to RSUs, which is included in the stock-based compensation table below, of $2.8 million and $1 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, the total unrecognized compensation expense related to unvested RSUs is $5.8 million, which we expect to recognize over an estimated weighted-average period of 1.37 years.

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A summary of our unvested RSUs as of June 30, 2021 is as follows:

	Number of
	Shares
Outstanding—January 1, 2021	1,350,300
Granted	2,404,525
Forfeited	(176,750)
Vested	(777,650)
Unvested—June 30, 2021	2,800,425

Stock-based compensation expense

We recognized stock-based compensation expense for employees and directors for stock options and RSUs as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Selling, general and administrative	$	1,586	$	1,280	$	3,305	$	2,550
Research and development		496		493		1,054		974
Total stock-based compensation	$	2,082	$	1,773	$	4,359	$	3,524

As of June 30, 2021, the total unrecognized compensation expense related to unvested stock options is $5.3 million, which we expect to recognize over an estimated weighted-average period of 1.94 years.

In determining the estimated fair value of our service-based awards, we use the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment. The fair value of our service-based awards that were granted during the six months period ending June 30, 2021 and 2020 was estimated with the following assumptions:

	Six Months Ended
	June 30,
	2021	2020
Expected term (in years)	6.25	6.08
Risk-free interest rate	0.59%-1.06%	0.45%-1.48%
Expected volatility	80.87%-82.21%	78.15%-80.74%
Dividend rate	—%	—%

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our interim unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on 10-Q (this “Quarterly Report”) and the audited financial statements and related notes for the year ended December 31, 2020 and related Management’s Discussion and Analysis of Financial Condition and Results of Operations that are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on March 3, 2021. As used in this Quarterly Report, unless the context suggests otherwise, “we,” “us,” “our,” or “Strongbridge” refer to Strongbridge Biopharma plc.

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Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, prospective products, size of market or patient population, plans, objectives of management, expected market growth and the anticipated effects of the coronavirus (COVID-19) pandemic (and any COVID-19 variants) on our business, operating results and financial condition are forward-looking statements. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics, and healthcare, regulatory and scientific developments and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2020 Annual Report and Part II, Item 1A of this Quarterly Report, in each case under the heading “Risk Factors.” In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods.

Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report except as required by law. You should read carefully the factors described in the “Risk Factors” section of our 2020 Annual Report and this Quarterly Report to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

Overview

We are a global, commercial-stage biopharmaceutical company focused on the development and commercialization of therapies for rare diseases with significant unmet needs.

Our first commercial product is Keveyis (dichlorphenamide), the first and only treatment approved by the U.S. Food and Drug Administration (the “FDA”) for hyperkalemic, hypokalemic, and related variants of primary periodic paralysis (“PPP”), a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis.

We have two clinical-stage product candidates for rare endocrine diseases, Recorlev and veldoreotide. Recorlev (levoketoconazole), the pure 2S,4R enantiomer of the enantiomeric pair comprising ketoconazole, is a next-generation steroidogenesis inhibitor being investigated as a chronic therapy for adults with endogenous Cushing’s syndrome. Veldoreotide is a next-generation somatostatin analog being investigated for potential applications in conditions amenable to somatostatin receptor activation. Both levoketoconazole and veldoreotide have received orphan designation from the FDA and the European Medicines Agency (“EMA”).

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Recent Developments

Transaction Agreement with Xeris Pharmaceuticals, Inc.

On May 24, 2021, we announced that we had signed an agreement to be acquired by Xeris. Upon close of the transaction, the businesses of Xeris and Strongbridge will be combined under a new entity to be called Xeris Biopharma Holdings, Inc. The agreement, including the maximum aggregate amount payable under the CVRs, values Strongbridge at approximately $267 million based on the closing price of Xeris common stock of $3.47 on May 21, 2021, and Strongbridge’s fully diluted share capital.

Under the terms of the agreement, at closing, Strongbridge shareholders will receive a fixed exchange ratio of 0.7840 shares of Xeris Biopharma Holdings common stock for each Strongbridge ordinary share they own. Based on the closing price of Xeris common stock on May 21, 2021, this represents approximately $2.72 per Strongbridge ordinary share and a 12.9% premium to the closing price of Strongbridge ordinary shares on May 21, 2021. Strongbridge shareholders will also receive 1 non-tradeable CVR for each Strongbridge ordinary share they own, worth up to an additional $1.00 payable in cash or Xeris Biopharma Holdings common stock, or a combination of cash and additional Xeris Biopharma Holdings common stock (at Xeris Biopharma Holdings’ sole election) upon achievement of the following milestones: (i) $0.25 per CVR upon the first listing of at least one issued patent for Keveyis in the U.S. Food & Drug Administration’s Orange Book by the end of 2023 or the first achievement of at least $40 million in Keveyis annual net sales in 2023, (ii) $0.25 per CVR upon the first achievement of at least $40 million in Recorlev annual net sales in 2023, and (iii) $0.50 per CVR upon the first achievement of at least $80 million in Recorlev annual net sales in 2024. The minimum payment on the CVR per Strongbridge ordinary share is zero and the maximum payment is $1.00 in cash or Xeris Biopharma Holdings common stock, or a combination of cash and additional Xeris Biopharma Holdings common stock at Xeris Biopharma Holdings’ sole election. The transaction is expected to close early in the fourth quarter of 2021, subject to the satisfaction of closing conditions.

In connection with this transaction, we have incurred, and will continue to incur, transaction-related costs. For the six months ended June 30, 2021, we have incurred $5.8 million of expenses, which are recorded in our selling, general and administrative expense within the Consolidated Statements of Operations and Comprehensive Loss. In addition, all of our outstanding restricted stock units will vest immediately prior to the closing of this transaction, and all of our outstanding stock options will vest immediately prior to the closing of this transaction and be converted into options to purchase Xeris Biopharma Holdings common stock.

Intellectual Property and Regulatory Developments

On June 3, 2021, The United States Patent and Trademark Office (USPTO) has issued to Strongbridge for Recorlev U.S. Patent No. 11,020,393 entitled, “Methods of Treating Disease with Levoketoconazole” which covers a method of treating Cushing’s syndrome patients with RECORLEV® (levoketoconazole) who also take metformin for Type 2 diabetes. The term of the U.S. patent will expire on March 2, 2040.

On May 12, 2021, we received the official Day 74 letter from the FDA for Recorlev. Within the Day 74 letter, the FDA set a Prescription Drug User Fee Act (PDUFA) target action date of January 1, 2022, which reflects a projected 10-month standard review period.

Loan Amendment

On July 23, 2021, Strongbridge , its subsidiary, Strongbridge U.S. Inc., and Avenue Venture Opportunities Fund, L.P. (“Avenue”) entered into an amendment (the “Loan Amendment”) to the Term Loan Agreement, dated May 19, 2020 (the “Loan Agreement”), among Strongbridge, certain of its subsidiaries and Avenue.

Under the Loan Agreement, Strongbridge granted to Avenue an option to convert up to $3 million of the aggregate principal amount of any loans outstanding under the Loan Agreement into Strongbridge ordinary shares (the “Conversion Option”). The Loan Amendment amends the Conversion Option such that $10 million of the aggregate

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principal amount of any loans outstanding under the Loan Agreement will automatically convert into Strongbridge ordinary shares immediately prior to the completion of the acquisition of Strongbridge by Xeris Pharmaceuticals, Inc. The conversion price remains unchanged at $2.24 per share.

COVID-19 (and related variants)

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption in the financial markets. Although we are seeing the number of COVID-19 cases decline in certain regions, other regions are experiencing a resurgence of COVID-19 cases. In addition, the emergence of COVID-19 variants, the variable and gradual process of vaccine distribution in some countries, and the concern over further waves of infections are causing continued unpredictability and uncertainty.

While the COVID-19 pandemic did not have a material impact on our business, financial condition, or results of operations for the six months ended June 30, 2021, we have experienced operational business disruptions as a result of the pandemic. For example, most of our corporate employees are currently working remotely from home, and we did suspend all commercial air and train travel for business for a period of time. In addition, our field teams have had limited access to physicians. As of June 1, 2021, we allowed commercial air and train travel for business and as of July 1, 2021, we have re-opened the office for those employees who choose to work from the office.

We continue to monitor the impacts of COVID-19 (including the new COVID-19 variants) on the global economy and on our business operations. However, at this time, it is difficult to predict how long the potential operational impacts of the pandemic will last or to what degree further disruption might impact our operations and financial results. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition, as well as our ability to execute our business strategies and initiatives in their respective expected time frames.

Financial Operations Overview

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

Product Sales, net

We sell Keveyis to one specialty pharmacy provider (the “Customer”), who is the exclusive specialty pharmacy for Keveyis in the United States. The Customer subsequently dispenses Keveyis to patients, most of whom are covered by payors that may provide for government-mandated or privately negotiated rebates with respect to the purchase of Keveyis. Revenues from sales of Keveyis are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that result from rebates, co-pay assistance and other allowances that are offered by us and the patients’ payors.

Cost of Sales

Cost of sales includes third-party acquisition costs, third-party warehousing and product distribution charges.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include personnel costs, costs for outside professional services and other allocated expenses. Personnel costs consist of salaries, bonuses, benefits, travel and stock-based compensation. Outside professional services consist of legal, accounting and audit services, commercial evaluation and strategy services, sales, market access, marketing, investor relations, public relations, recruiting and other consulting services.

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Research and Development Expenses

We expense all research and development costs as incurred. Our research and development expenses consist primarily of costs incurred in connection with the development of our product candidates, including:

● personnel-related costs, such as salaries, bonuses, benefits, travel and other related expenses, including stock-based compensation;

● expenses incurred under our agreements with contract research organizations (CROs), clinical sites, contract laboratories, medical institutions and consultants that plan and conduct our preclinical studies and clinical trials. We recognize costs for each grant project, preclinical study or clinical trial that we conduct based on our evaluation of the progress to completion, including the use of information and data provided to us by our external research and development vendors and clinical sites;

● costs associated with regulatory filings; and

● costs of acquiring preclinical study and clinical trial materials, and costs associated with formulation, process development and statistical analysis.

We do not allocate personnel-related research and development costs, including stock-based compensation or other indirect costs, to specific programs, as they are deployed across multiple projects under development.

We do track our external research and development cost by project, and currently over 99% of the costs are related to our development of Recorlev.

Amortization of Intangible Asset

Amortization of intangible asset relates to the amortization of our product rights to Keveyis. This intangible asset is being amortized over an eight-year period using the straight-line method.

Interest Expense

Interest expense represents interest paid to our lender, amortization of our debt discount, and issuance costs associated with loan and security agreements.

Other Expense, Net

Other expense, net, consists of unrealized loss or gain on the remeasurement of the fair value of the warrant liability, interest income generated from our cash, cash equivalents and marketable securities, foreign exchange gains and losses and gains and losses on investments.

Critical Accounting Policies and Significant Judgments and Estimates

This management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.  

We believe there have been no significant changes in our critical accounting policies and significant judgments and estimates as discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2020 Annual Report.

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2021 and 2020.

The following table sets forth our results of operations for the three and six months ended June 30, 2021 and 2020.

	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2021		2020		$		2021		2020		$
	(in thousands)						(in thousands)
Revenues:
Net product sales	$	10,042	$	7,760	$	2,282	$	18,424	$	14,434	$	3,990
Cost and operating expenses:
Cost of sales (excluding amortization of intangible asset)		467		393		74		878		1,362		(484)
Selling, general and administrative		15,988		9,638		6,350		26,934		20,041		6,893
Research and development		5,397		6,152		(755)		11,235		13,704		(2,469)
Amortization of intangible asset		1,255		1,255		—		2,511		2,511		—
Total cost and expenses		23,107		17,438		5,669		41,558		37,618		3,940
Operating loss		(13,065)		(9,678)		(3,387)		(23,134)		(23,184)		50
Other expense, net		(175)		(7,594)		7,419		(1,920)		(6,786)		4,866
Loss before income taxes		(13,240)		(17,272)		4,032		(25,054)		(29,970)		4,916
Income tax expense		(1)		—		(1)		(1)		—		(1)
Net loss	$	(13,241)	$	(17,272)	$	4,031	$	(25,055)	$	(29,970)	$	4,915

Revenues and cost of sales

Net product sales were $10.0 million for the three months ended June 30, 2021, an increase of $2.3 million compared to the three months ended June 30, 2020. Product sales from Keveyis increased primarily due to an increase in the number of patients on Keveyis and an increase in the price of Keveyis. Of the total increase in product sales, $1.9 million was due to the increase in the number of patients on Keveyis and $0.8 million from an increase in the price of Keveyis, which were offset by an increase of $0.4 million in our sales allowances. Cost of sales increased due to the increase in sales volume for the three months ended June 30, 2021.

Net product sales were $18.4 million for the six months ended June 30, 2021, an increase of $4.0 million compared to the six months ended June 30, 2020. Product sales from Keveyis increased primarily due to an increase in the number of patients on Keveyis and an increase in the price of Keveyis. Of the total increase in product sales, $2.9 million was due to the increase in the number of patients on Keveyis and $1.4 million from an increase in the price of Keveyis, which were offset by an increase of $0.3 million in our sales allowances. Cost of sales decreased due to changes in the assumptions underlying our purchase forecast which affects the allocation of cost between the purchase price of our inventory and the supply agreement. As a result of our ongoing efforts to evaluate and update our sales forecast for Keveyis based on actual sales, we reduced our inventory purchase forecast to better align with this updated sales forecast and inventory on-hand. This adjustment to the purchase forecast has resulted in a lower amount of the cost of each inventory batch being allocated to inventory and correspondingly a higher amount of the cost of each inventory batch being allocated to reduce the supply agreement liability. As a result of the reduction in the allocated cost to inventory, our cost of sales has correspondingly decreased on a per unit level.

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Selling, General and Administrative Expenses

The following table summarizes our selling, general and administrative expenses during the three and six months ended June 30, 2021 and 2020:

	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2021		2020		$		2021		2020		$
	(in thousands)						(in thousands)
Compensation and other personnel costs	$	5,468	$	3,669	$	1,799	$	10,674	$	7,448	$	3,226
Outside professional and consulting services		8,775		4,516		4,259		12,623		9,701		2,922
Stock-based compensation expense		1,586		1,280		306		3,305		2,550		755
Facility costs		159		173		(14)		332		342		(10)
Total selling, general and administrative expenses	$	15,988	$	9,638	$	6,350	$	26,934	$	20,041	$	6,893

Selling, general and administrative expenses were $16.0 million for the three months ended June 30, 2021, an increase of $6.4 million compared to the three months ended June 30, 2020. The increase is primarily due to an increase in compensation costs and an increase in our outside professional fees, mostly due to investment banking fees and legal expenses related to our proposed business combination transaction with Xeris.

Selling, general and administrative expenses were $26.9 million for the six months ended June 30, 2021, an increase of $6.9 million compared to the six months ended June 30, 2020. The increase is primarily due to an increase in compensation costs and an increase in our outside professional fees, mostly due to investment banking fees and legal expenses related to our proposed business combination transaction with Xeris.

Research and Development Expenses

The following table summarizes our research and development expenses during the three and six months ended June 30, 2021 and 2020:

	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2021		2020		$		2021		2020		$
	(in thousands)						(in thousands)
Product development and supporting activities	$	3,471	$	4,195	$	(724)	$	7,343	$	9,732	$	(2,389)
Compensation and other personnel costs		1,430		1,464		(34)		2,838		2,998		(160)
Stock-based compensation expense		496		493		3		1,054		974		80
Total research and development expenses	$	5,397	$	6,152	$	(755)	$	11,235	$	13,704	$	(2,469)

Research and development expenses were $5.4 million for the three months ended June 30, 2021, a decrease of $0.8 million compared to the three months ended June 30, 2020. The decrease was primarily due to decreases in the costs associated with our LOGICS and OPTICS trials during the three months ended June 30, 2021.

Research and development expenses were $11.2 million for the six months ended June 30, 2021, a decrease of $2.5 million compared to the six months ended June 30, 2020. The decrease was primarily due to decreases in the costs associated with our LOGICS and OPTICS trials partially offset by increases in regulatory costs associated with our NDA submission during the six months ended June 30, 2021.

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Amortization of Intangible Asset

Amortization of intangible asset was $1.3 million and $2.5 million for the three and six months ended June 30, 2021 and 2020, respectively.

Other Expense, Net

The following table summarizes our other income, net, during the three and six months ended June 30, 2021 and 2020:

	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2021		2020		$		2021		2020		$
	(in thousands)						(in thousands)
Unrealized gain (loss) on fair value of warrants	$	680	$	(7,367)		8,047	$	(95)	$	(6,787)	$	6,692
Interest expense		(810)		(253)		(557)		(1,592)		(253)		(1,339)
Other (expense) income, net		(45)		26		(71)		(233)		254		(487)
Total other expense, net	$	(175)	$	(7,594)	$	7,419	$	(1,920)	$	(6,786)	$	4,866

Total other expense, net was $0.2 million in for the three months ended June 30, 2021, compared to other expense, net of $7.6 million in 2020. This $7.4 million decrease was largely due to the net $8.0 million impact from the revaluation of the fair value of our warrant liability mostly due to the change in our volatility and stock price and an additional $0.6 million in interest expense on our Term Loan Agreement which we entered into in May 2020.

Total other expense, net was $1.9 million in for the six months ended June 30, 2021, compared to other expense, net of $6.8 million in 2020. This $4.9 million decrease was largely due to the net $6.7 million impact from the revaluation of the fair value of our warrant liability mostly due to the change in our volatility and stock price and an additional $1.3 million in interest expense on our Term Loan Agreement which we entered into in May 2020.

Income Tax

We recorded income tax expense of $1,000 for the three and six months ended June 30, 2021 and did not record an expense for the three and six months ended June 30, 2020

Cash Flows

Comparison for the Six Months Ended June 30, 2021 and 2020:

	Six Months Ended
	June 30
	2021		2020
	(in thousands)
Net cash (used in) provided by:
Operating activities	$	(23,220)	$	(27,375)
Investing activities		(10)		21,122
Financing activities		(518)		9,130
Net (decrease) increase in cash and cash equivalents	$	(23,748)	$	2,877

Operating Activities

Net cash used in operating activities was $23.2 million for the six months ended June 30, 2021, compared to $27.4 million for the six months ended June 30, 2020. The decrease in net cash used in operating activities resulted primarily from an increase of $4.0 million in net revenues.

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Investing Activities

Net cash used in investing activities was insignificant for the six months ended June 30, 2021 compared to proceeds of $21.1 million for the six months ended June 30, 2020. The decrease is due to the sale of marketable securities during the 2020 period. We did not hold marketable securities during the 2021 period.

Financing Activities

The change in net cash used in financing activities was due to payments related to tax withholding of net share settled equity awards offset by stock option exercises and sales of shares under our ATM facility. In addition, the prior period had $9.5 million provided by financing activities due to the proceeds received under our Term Loan Agreement with Avenue Venture Opportunities Fund L.P.

Liquidity and Capital Resources

We continuously and critically review our liquidity and anticipated capital requirements in light of our clinical trial activities and the significant uncertainty created by the COVID-19 global pandemic and the recent emergence of COVID-19 variants.

We believe that our cash and cash equivalents of $63.8 million at June 30, 2021, will be sufficient to allow us to fund planned operations for at least 12 months beyond the issuance date of the unaudited consolidated financial statements.

Cash used to fund operating expenses is affected by the timing of when we make payments to our vendors, as reflected in the change in our outstanding accounts payable and accrued expenses set forth in the consolidated financial statements, included in this Quarterly Report.

Our future funding requirements will depend on many factors, including the following:

● the amount of revenue that we receive from sales of Keveyis;

● the cost and timing of establishing sales, marketing, distribution and administrative capabilities;

● the scope, rate of progress, results and cost of our clinical trials testing and other related activities for Recorlev and veldoreotide and our ability to obtain the necessary regulatory approval of our Recorlev NDA;

● the number and characteristics of product candidates that we pursue, including any additional product candidates we may in-license or acquire;

● the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

● the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates;

● the cost, timing and outcomes of regulatory approvals, including product labeling;

● adequate reimbursement from payors for Keveyis and Recorlev (if approved) on a timely basis;

● the terms and timing of any collaborative, licensing and other arrangements that we may establish, including any required milestone and royalty payments thereunder;

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● the emergence of competing technologies and their achieving commercial success before we do or other adverse market developments;

● the cost, timing and outcome of our anticipated business combination transaction with Xeris Pharmaceuticals, Inc.; and

● any extended impact of COVID-19 (and related variants).

We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital. We plan to continue to fund our operations and capital funding needs through equity or debt financing along with revenues from Keveyis. There can be no assurances, however, that additional funding will be available on terms acceptable to us.

Long-term Debt

On May 19, 2020, we entered into the $30 million Loan Agreement with Avenue Venture Opportunities Fund L.P. (“Avenue”), as administrative agent and collateral agent, and the lenders named therein and from time to time a party thereto (the “Lenders”). Pursuant to the terms of the Loan Agreement, our wholly-owned subsidiary, Strongbridge U.S. Inc., borrowed $10 million from the Lenders at closing.  As a result of achieving positive top-line data for Recorlev in our Phase 3 LOGICS clinical trial in September 2020, we were eligible to and did borrow an additional $10 million under the Loan Agreement on December 30, 2020. The remaining $10 million tranche will become available to us between October 1, 2021, and March 31, 2022, if we achieve FDA approval of Recorlev and subject to Avenue’s investment committee approval.  

At-The-Market Facility

We entered into an equity distribution agreement with Jefferies LLC (“Jefferies”) on March 25, 2021, pursuant to which we may sell, at our option, from time to time, up to an aggregate of $50 million of our ordinary shares through Jefferies, as sales agent. We will pay Jefferies a commission equal to 3% of the gross proceeds from the sale of our ordinary shares under this at-the-market (“ATM”) facility. Pursuant to the terms of the equity distribution agreement, we reimbursed Jefferies for certain out-of-pocket expenses, including the fees and disbursements of counsel to Jefferies, incurred in connection with establishing the ATM facility and have provided Jefferies with customary indemnification rights. For the period ended June 30, 2021, we did not sell any shares under this agreement.

Off-Balance Sheet Arrangements

We do not have variable interests in variable interest entities or any off-balance sheet arrangements.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to our market risk exposures since December 31, 2020.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the

25

desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2021, the end of the period covered by this Quarterly Report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of June 30, 2021 were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company is not currently involved in any legal matters arising in the normal course of business. From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters.

ITEM 1A. Risk Factors

In addition to the other information disclosed elsewhere in this Quarterly Report, we have identified the following additional risks and uncertainties that may have a material adverse effect on our business prospects, financial condition, or results of operations. Investors should carefully consider the risks described below, as well as the other risks that were discussed in our 2020 Annual Report. The risk factors discussed below and in our 2020 Annual Report do not identify all risks that we face. Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations.

Our pending business combination transaction with Xeris creates incremental business, regulatory and reputational risks.

On May 24, 2021, we announced that we had entered into a transaction agreement with Xeris. The proposed transaction with Xeris entails important risks, including, among others: the risk that either company is unable to obtain the requisite shareholder or regulatory approvals, or to satisfy all of the other conditions required to consummate the proposed transaction on the proposed terms and schedule, if at all; the risk that a failure to complete the transaction has an adverse effect on the market price of Strongbridge ordinary shares and on Strongbridge’s operating results; the risk that we are unable to realize the expected benefits of the transaction; the risk that we and Xeris are unable to promptly and effectively integrate our combined operations; the risk of negative effects relating to the announcement of the transaction or any further announcements relating to the transaction or the consummation of the transaction on the market price of Strongbridge ordinary shares; the risk that we incur significant transaction costs and/or unknown or inestimable liabilities; the risk that any potential payment of the proceeds pursuant to the CVR Agreement may not be distributed at all or result in any value to Strongbridge shareholders; the risk of potential litigation associated with the transaction; the risk of adverse effects from general economic and business conditions that affect the combined companies following the consummation of the transaction; the risks posed by the COVID-19 pandemic on Strongbridge’s business or the combined businesses following the consummation of the transaction; the risks posed by

26

changes in global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax laws, regulations, rates and policies, future business acquisitions or disposals and competitive developments; and other risks described in our SEC filings, including definitive additional materials, the joint proxy statement and other filings generally applicable to significant transactions and related integrations that are or will be filed with the SEC.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

EXHIBIT INDEX

2.1	Transaction Agreement, dated as of May 24, 2021, by and among Xeris Pharmaceuticals, Inc., Strongbridge Biopharma plc, Xeris Biopharma Holdings, Inc., and Wells MergerSub, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-37569) filed with the SEC on May 24, 2021).
2.2	Appendix III to the Rule 2.5 Announcement (Conditions Appendix) (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K (File No. 001-37569) filed with the SEC on May 24, 2021).
2.3	Expenses Reimbursement Agreement, dated as of May 24, 2021, by and between Xeris Pharmaceuticals, Inc. and Strongbridge Biopharma plc (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-K (File No. 001-37569) filed with the SEC on May 24, 2021).
10.1	Form of Irrevocable Undertaking (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-37569) filed with the SEC on May 24, 2021).
31.1	Certificate of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certificate of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STRONGBRIDGE BIOPHARMA PLC
By:	/s/    Richard S. Kollender
Name:	Richard S. Kollender
Title:	President & Chief Financial Officer

Date: August 5, 2021

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EX-31.1

Exhibit 31.1

 CERTIFICATIONS

I, John Johnson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Strongbridge Biopharma plc;

2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2021
	By:	/s/ John Johnson
		John Johnson
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

 CERTIFICATIONS

I, Richard S. Kollender, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Strongbridge Biopharma plc;

2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2021
	By:	/s/Richard S. Kollender
		Richard S. Kollender
		President & Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO 18 U.S.C. 1350

Pursuant to the requirement set forth in Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. § 1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, John Johnson, the Chief Executive Officer (principal executive officer) of Strongbridge Biopharma plc (the “Company”), and Richard S. Kollender, the President and Chief Financial Officer (principal financial officer) of the Company, each hereby certifies that, to his knowledge on the date hereof:

(a) The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2021 filed on the date hereof with the Securities and Exchange Commission (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Quarterly Report.

This certification shall not be deemed to be filed with the Securities and Exchange Commission and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report), irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

By:	/s/ John Johnson
	John Johnson
	Chief Executive Officer (Principal Executive Officer)
	August 5, 2021

By:	/s/ Richard S. Kollender
	Richard S. Kollender
	President & Chief Financial Officer (Principal Financial Officer)
	August 5, 2021

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 02, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-37569
Entity Registrant Name	Strongbridge Biopharma plc
Entity Incorporation, State or Country Code	L2
Entity Tax Identification Number	98-1275166
Entity Address, Address Line One	900 Northbrook Drive
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Trevose
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19053
City Area Code	610
Local Phone Number	254-9200
Title of 12(b) Security	Ordinary shares
Trading Symbol	SBBP
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		67,828,952
Entity Central Index Key	0001634432
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 63,774	$ 87,522
Accounts receivable	3,581	2,801
Inventory	1,101	1,103
Prepaid expenses and other current assets	1,666	926
Total current assets	70,122	92,352
Property and equipment, net	183	216
Right-of-use asset, net	489	597
Intangible asset, net	17,577	20,088
Goodwill	7,256	7,256
Other assets	1,193	591
Total assets	96,820	121,100
Current liabilities:
Accounts payable	635	1,483
Accrued and other current liabilities	22,039	19,648
Current portion of long-term debt, net	708
Total current liabilities	23,382	21,131
Long-term debt, net	17,002	17,114
Warrant liability	5,036	4,941
Supply agreement liability, noncurrent	6,471	11,556
Other long-term liabilities	538	753
Total liabilities	52,429	55,495
Commitments and contingencies (Note 8)
Shareholders' equity:
Deferred shares, $1.098 par value, 40,000 shares authorized, issued and outstanding at June 30, 2021 and December 31, 2020		44
Ordinary shares, $0.01 par value, 600,000,000 shares authorized; 67,722,319 and 67,243,772 shares issued and outstanding at June 30, 2021 and December 31, 2020	677	672
Additional paid-in capital	374,327	370,447
Accumulated deficit	(330,613)	(305,558)
Total shareholders' equity	44,391	65,605
Total liabilities and shareholders' equity	$ 96,820	$ 121,100

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Consolidated Balance Sheets
Deferred shares, par value (in dollars per share)	$ 1.098	$ 1.098
Deferred shares, shares authorized	40,000	40,000
Deferred shares, shares issued	40,000	40,000
Deferred shares, shares outstanding	40,000	40,000
Ordinary shares, par value (in dollars per share)	$ 0.01	$ 0.01
Ordinary shares, shares authorized	600,000,000	600,000,000
Ordinary shares, shares issued	67,722,319	67,243,772
Ordinary shares, shares outstanding	67,722,319	67,243,772

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Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues:
Total revenues	$ 10,042	$ 7,760	$ 18,424	$ 14,434
Cost and expenses:
Cost of sales (excluding amortization of intangible asset)	467	393	878	1,362
Selling, general and administrative	15,988	9,638	26,934	20,041
Research and development	5,397	6,152	11,235	13,704
Amortization of intangible asset	1,255	1,255	2,511	2,511
Total cost and expenses	23,107	17,438	41,558	37,618
Operating loss	(13,065)	(9,678)	(23,134)	(23,184)
Other expense, net:
Interest expense	(810)	(253)	(1,592)	(253)
Unrealized gain (loss) on fair value of warrants	680	(7,367)	(95)	(6,787)
Other (expense) income, net	(45)	26	(233)	254
Total other expense, net	(175)	(7,594)	(1,920)	(6,786)
Loss before income taxes	(13,240)	(17,272)	(25,054)	(29,970)
Income tax expense	(1)	0	(1)	0
Net loss	(13,241)	(17,272)	(25,055)	(29,970)
Other comprehensive loss:
Unrealized loss on marketable securities		(6)		(3)
Comprehensive loss	(13,241)	(17,278)	(25,055)	(29,973)
Net loss attributable to ordinary shareholders:
Basic	(13,241)	(17,272)	(25,055)	(29,970)
Diluted	$ (13,921)	$ (17,272)	$ (25,055)	$ (29,970)
Net loss per share attributable to ordinary shareholders:
Basic (in dollars per share)	$ (0.20)	$ (0.32)	$ (0.37)	$ (0.55)
Diluted (in dollars per share)	$ (0.21)	$ (0.32)	$ (0.37)	$ (0.55)
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders:
Basic (in shares)	67,653,659	54,302,325	67,569,136	54,266,675
Diluted (in shares)	67,921,260	54,302,325	67,569,136	54,266,675

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Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands	Deferred Shares	Ordinary Shares Maximum	Ordinary Shares	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Total
Balance at beginning of period at Dec. 31, 2019	$ 44		$ 542	$ 332,085	$ (260,483)	$ 3	$ 72,191
Balance (in shares) at Dec. 31, 2019	40,000		54,205,852
Increase (Decrease) in Stockholders' Equity
Net loss					(29,970)		(29,970)
Stock-based compensation				3,524			3,524
Issuance of warrants and beneficial conversion feature related to the Loan Agreement				2,457			2,457
Ordinary shares issued, net of shares withheld for employee taxes			$ 2	(332)			(330)
Ordinary shares issued, net of shares withheld for employee taxes (in shares)			150,105
Unrealized loss on marketable securities						(3)	(3)
Balance at end of period at Jun. 30, 2020	$ 44		$ 544	337,734	(290,453)		47,869
Balance (in shares) at Jun. 30, 2020	40,000		54,355,957
Balance at beginning of period at Mar. 31, 2020	$ 44		$ 542	333,768	(273,181)	6	61,179
Balance (in shares) at Mar. 31, 2020	40,000		54,247,501
Increase (Decrease) in Stockholders' Equity
Net loss					(17,272)		(17,272)
Stock-based compensation				1,773			1,773
Issuance of warrants and beneficial conversion feature related to the Loan Agreement				2,457			2,457
Ordinary shares issued, net of shares withheld for employee taxes			$ 2	(264)			(262)
Ordinary shares issued, net of shares withheld for employee taxes (in shares)			108,456
Unrealized loss on marketable securities						$ (6)	(6)
Balance at end of period at Jun. 30, 2020	$ 44		$ 544	337,734	(290,453)		47,869
Balance (in shares) at Jun. 30, 2020	40,000		54,355,957
Balance at beginning of period at Dec. 31, 2020	$ 44		$ 672	370,447	(305,558)		65,605
Balance (in shares) at Dec. 31, 2020	40,000		67,243,772
Balance at end of period at Mar. 31, 2021	$ 44		$ 675	372,500	(317,372)		55,847
Balance (in shares) at Mar. 31, 2021	40,000		67,545,369
Balance at beginning of period at Dec. 31, 2020	$ 44		$ 672	370,447	(305,558)		65,605
Balance (in shares) at Dec. 31, 2020	40,000		67,243,772
Increase (Decrease) in Stockholders' Equity
Net loss					(25,055)		(25,055)
Stock-based compensation				4,359			4,359
Ordinary shares issued, net of shares withheld for employee taxes			$ 5	(699)			(694)
Ordinary shares issued, net of shares withheld for employee taxes (in shares)			419,079
Cancellation of deferred shares	$ (44)			44
Cancellation of deferred shares (in shares)	(40,000)
Exercise of stock options		$ 1		138			$ 138
Exercise of stock options (in shares)			48,157				48,157
Issuance of shares, net of expenses		$ 1		38			$ 38
Issuance of shares, net of expenses (in shares)			11,311
Balance at end of period at Jun. 30, 2021			$ 677	374,327	(330,613)		44,391
Balance (in shares) at Jun. 30, 2021			67,722,319
Balance at beginning of period at Mar. 31, 2021	$ 44		$ 675	372,500	(317,372)		55,847
Balance (in shares) at Mar. 31, 2021	40,000		67,545,369
Increase (Decrease) in Stockholders' Equity
Net loss					(13,241)		(13,241)
Stock-based compensation				2,082			2,082
Ordinary shares issued, net of shares withheld for employee taxes			$ 2	(299)			(297)
Ordinary shares issued, net of shares withheld for employee taxes (in shares)			176,950
Cancellation of deferred shares	$ (44)			44
Cancellation of deferred shares (in shares)	(40,000)
Balance at end of period at Jun. 30, 2021			$ 677	$ 374,327	$ (330,613)		$ 44,391
Balance (in shares) at Jun. 30, 2021			67,722,319

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Consolidated Statements of Cash Flow - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net loss	$ (25,055)	$ (29,970)
Adjustments to reconcile net loss income to net cash used in operating activities:
Stock-based compensation	4,359	3,524
Amortization of intangible asset	2,511	2,511
Change in fair value of warrant liability	95	6,787
Amortization of debt discounts and debt issuance costs	596
Accretion of discounts on marketable securities		(53)
Depreciation	43	43
Changes in operating assets and liabilities:
Accounts receivable	(780)	(596)
Inventory	(601)	294
Prepaid expenses and other current assets	(740)	(757)
Other assets	109	314
Accounts payable	(848)	(1,374)
Accrued and other liabilities	(2,909)	(8,098)
Net cash used in operating activities	(23,220)	(27,375)
Cash flows from investing activities:
Sales and maturities of marketable securities		21,122
Purchases of property and equipment	(10)
Net cash (used in) provided by investing activities	(10)	21,122
Cash flows from financing activities:
Payments related to tax withholding for net-share settled equity awards	(694)	(330)
Proceeds from long-term debt, net		9,460
Proceeds from exercise of stock options	138
Proceed from issuance of ordinary shares in connection with at-the-market offering, net	38
Net cash (used in) provided by financing activities	(518)	9,130
Net (decrease) increase in cash and cash equivalents	(23,748)	2,877
Cash and cash equivalents-beginning of period	87,522	57,032
Cash and cash equivalents-end of period	63,774	59,909
Supplemental disclosures of cash flow information: Cash paid during the year for:
Interest	997	118
Income taxes other, net of refunds	$ 1,301	$ 531

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Organization

6 Months Ended

Jun. 30, 2021

Organization

Organization

1. Organization

We are a global, commercial-stage biopharmaceutical company focused on the development and commercialization of therapies for rare diseases with significant unmet needs.

Our first commercial product is Keveyis (dichlorphenamide), the first and only treatment approved by the U.S. Food and Drug Administration (the “FDA”) for hyperkalemic, hypokalemic, and related variants of primary periodic paralysis (“PPP”), a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis.

We have two clinical-stage product candidates for rare endocrine diseases, Recorlev and veldoreotide. Recorlev (levoketoconazole), the pure 2S,4R enantiomer of the enantiomeric pair comprising ketoconazole, is a next-generation steroidogenesis inhibitor being investigated as a chronic therapy for adults with endogenous Cushing’s syndrome. Veldoreotide is a next-generation somatostatin analog being investigated for potential applications in conditions amenable to somatostatin receptor activation. Both levoketoconazole and veldoreotide have received orphan designation from the FDA and the European Medicines Agency (“EMA”)

Liquidity

We believe that our cash and cash equivalents of $63.8 million at June 30, 2021, will be sufficient to allow us to fund planned operations for at least 12 months beyond the issuance date of these unaudited consolidated financial statements.

We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital. We plan to continue to fund our operations and capital funding needs through equity or debt financing along with revenues from Keveyis. There can be no assurances, however, that additional funding will be available on terms acceptable to us.

Transaction Agreement with Xeris Pharmaceuticals, Inc.

On May 24, 2021, we announced that we had signed an agreement to be acquired by Xeris Pharmaceuticals, Inc. (“Xeris”). Upon close of the transaction, the businesses of Xeris and Strongbridge Biopharma plc (“Strongbridge”) will be combined under a new entity to be called Xeris Biopharma Holdings, Inc The agreement, including the maximum aggregate amount payable under the contingent value rights (the “CVRs”), values Strongbridge at approximately $267 million based on the closing price of Xeris common stock of $3.47 on May 21, 2021, and Strongbridge’s fully diluted share capital.

Under the terms of the agreement, at closing, Strongbridge shareholders will receive a fixed exchange ratio of 0.7840 shares of Xeris Biopharma Holdings common stock for each Strongbridge ordinary share they own. Based on the closing price of Xeris common stock on May 21, 2021, this represents approximately $2.72 per Strongbridge ordinary share and a 12.9% premium to the closing price of Strongbridge ordinary shares on May 21, 2021. Strongbridge shareholders will also receive 1 non-tradeable CVR for each Strongbridge ordinary share they own, worth up to an additional $1.00 payable in cash or Xeris Biopharma Holdings common stock, or a combination of cash and additional Xeris Biopharma Holdings common stock (at Xeris Biopharma Holdings’ sole election) upon achievement of the following milestones: (i) $0.25 per CVR upon the first listing of at least one issued patent for Keveyis in the U.S. Food and Drug Administration’s Orange Book by the end of 2023 or the first achievement of at least $40 million in Keveyis annual net sales in 2023, (ii) $0.25 per CVR upon the first achievement of at least $40 million in Recorlev annual net sales in 2023, and (iii) $0.50 per CVR upon the first achievement of at least $80 million in Recorlev annual net sales in 2024. The minimum payment on the CVR per Strongbridge ordinary share is zero and the maximum payment is $1.00 in cash or Xeris Biopharma Holdings common stock, or a combination of cash and

additional Xeris Biopharma Holdings common stock at Xeris Biopharma Holdings’ sole election. The transaction is expected to close early in the fourth quarter of 2021, subject to the satisfaction of closing conditions.

The transaction, which has been unanimously approved by the boards of directors of both companies is expected to close early in the fourth quarter of 2021, subject to the satisfaction of closing conditions. Upon close of the transaction, the current Xeris stockholders are expected to own approximately 60% of the combined company, while current Strongbridge shareholders are expected to own approximately 40%.

On July 2, 2021, Xeris Biopharma Holdings filed with the SEC a registration statement on Form S-4, to register the Xeris Biopharma Holdings common stock to be issued in connection with the transaction, which also constitutes the joint proxy statement of Strongbridge and Xeris under Section 14(a) of the Securities Exchange Act of 1934. Upon the effectiveness of the Form S-4, we intend to solicit shareholders for their approval of the merger with Xeris.

In connection with this transaction, we have incurred, and will continue to incur, transaction-related costs. A portion of those costs are contingent on the transaction closing, such as investment banking fees, and employee related costs. For the six months ended June 30, 2021, we have incurred $5.8 million of expenses, which are recorded in our selling, general and administrative expense within the Consolidated Statements of Operations and Comprehensive Loss.

In addition, all of our outstanding restricted stock units will vest immediately prior to the closing of this transaction, and all of our outstanding stock options will vest immediately prior to the closing of this transaction and be converted into options to purchase Xeris Biopharma Holdings common stock.

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Summary of significant accounting policies and basis of presentation

6 Months Ended

Jun. 30, 2021

Summary of significant accounting policies and basis of presentation

Summary of significant accounting policies and basis of presentation

2. Summary of significant accounting policies and basis of presentation

Basis of presentation

These unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The unaudited consolidated financial statements reflect all adjustments, which include only normal recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the operating results and financial position for the periods presented.

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates. Results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

These unaudited consolidated financial statements should be read in conjunction with the accounting policies and notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission on March 3, 2021 (the “2020 Annual Report”). Our significant accounting policies are described in Note 2 of the notes to the audited consolidated financial statements included in our 2020 Annual Report. Since the date of those financial statements, there have been no changes to our significant accounting policies.

Leases

We account for leases in accordance with Accounting Standards Codification Topic 842, Leases (“ASC 842”). We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to us the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) we have the right to control the use of the identified asset.

Operating leases where we are the lessee are included in Right of use (“ROU”) assets and Accrued and other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how we determined (1) the discount rate we use to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Because our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for all of our leases includes the noncancellable period of the lease. Lease payments included in the measurement of the lease asset or liability are comprised of our fixed payments.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We monitor for events or changes in circumstances that require a reassessment of a lease. If a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

We have elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all of our other leases.

Cash, cash equivalents and marketable securities

We consider all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively.

We occasionally invest our excess cash balances in marketable debt securities of highly rated financial institutions. We seek to diversify our investments and limit the amount of investment concentrations for individual institutions, maturities and investment types. We classify marketable debt securities as available-for-sale and, accordingly, record such securities at fair value. We classify these securities as current assets as these investments are available to us for use in funding current operations. There were no marketable securities as of June 30, 2021 or December 31, 2020.

Unrealized gains and losses on marketable debt securities are recorded as a separate component of Accumulated other comprehensive income (loss) included in shareholders’ equity.

Segment information

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in one operating segment.

Net loss per share

Basic net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted-average number of ordinary shares outstanding for the period, including any dilutive effect from outstanding stock options or other equity-based instruments. Shares used in the diluted net loss per share calculations exclude anti-dilutive ordinary share equivalents, which currently consist of outstanding stock options, unvested restricted stock units (“RSUs”), equity-classified warrants and the conversion feature of our outstanding term loan agreement.

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding for the six months ending June 30, 2021 and 2020, as they would be anti-dilutive:

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding for the six months ending June 30, 2021 and 2020, as they would be anti-dilutive:
	June 30,
	2021		2020
Warrants		7,368,033		7,100,643
Stock options issued and outstanding		8,260,473		10,499,222
Unvested RSUs		2,800,425		1,090,300
Conversion feature of our outstanding term loan agreement		1,339,285		1,339,285

Recent accounting pronouncements – not yet adopted

June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded through net income instead of directly reducing the amortized cost of the investment under the current other-than-temporary impairment model. For smaller reporting companies, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

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Revenue recognition

6 Months Ended

Jun. 30, 2021

Revenue recognition

Revenue recognition

3. Revenue recognition

Product sales, net

We sell Keveyis to one specialty pharmacy provider (the “Customer”), who is the exclusive distributor of Keveyis in the United States. The Customer subsequently resells Keveyis to patients, most of whom are covered by payors that may provide for government-mandated or privately negotiated rebates with respect to the purchase of Keveyis.

Revenues from sales of Keveyis are recognized when we satisfy a performance obligation by transferring control of the product to the Customer. Transfer of control occurs upon receipt of the product by the Customer. We expense incremental costs related to the set-up of contracts with the Customer when incurred, as these costs do not meet the criteria for capitalization.

Reserves for variable consideration

Revenues from sales of Keveyis are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that result from rebates, co-pay assistance and other allowances that are offered between us and the patients’ payors. There is no variable consideration reserve for returns as we do not accept returns of Keveyis. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than the Customer). Where appropriate, these estimates may take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted buying and payment patterns of the Customer. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. We reassess our estimates on an ongoing basis. If actual results in the future vary from our estimates, we will adjust our estimates. Any such adjustments would affect net product revenue and earnings in the period such variances become known.

Trade Discount: We provide the Customer with a discount that is explicitly stated in our contract and is recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, we receive sales order management, data and distribution services from the Customer. To the extent the services received are distinct from our sale of Keveyis to the Customer, these payments are classified in selling, general and administrative expenses in our consolidated statement of operations and comprehensive loss.

Funded Co-pay Assistance Program: We contract with a third-party to manage the co-pay assistance program intended to provide financial assistance to qualified insured patients. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with Keveyis that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. These payments are consideration payable to the Customer and the related reserve is recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheet.

Government Rebates: We are subject to discount obligations under state Medicaid programs and Medicare. We estimate our Medicaid and Medicare rebates for the estimated patient mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included in accrued expenses on the consolidated balance sheet. For Medicaid, accruals are based on estimates of future Medicaid beneficiary utilization applied to the Medicaid unit rebate formula established by the Center for Medicaid and Medicare Services. Manufacturers of pharmaceutical products are responsible for 70% of the patient’s cost of branded prescription drugs related to the Medicare Part D Coverage Gap. In order to estimate the cost to us of this Medicare coverage gap responsibility, we estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. Our liability for these rebates consists of estimates of claims for the current quarter and estimated future claims that will be made for Keveyis transactions that have been recognized as revenue but remain in the Customer’s inventory at the end of each reporting period.

Temporary Supply and Patient Assistance Programs: We provide free Keveyis to uninsured patients who satisfy pre-established criteria for either the Temporary Supply Program or the Patient Assistance Program. Patients who meet the Temporary Supply Program eligibility criteria may receive a temporary supply of free Keveyis for no more than 60 days while there is a determination of the patient’s third-party insurance, prescription drug benefit or other third-party coverage for Keveyis. The Patient Assistance Program provides free Keveyis for up to 12 months to uninsured patients who satisfy pre-established criteria for financial need. We do not recognize any revenue related to these free products and the associated costs are classified in selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss.

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Fair value measurements

6 Months Ended

Jun. 30, 2021

Fair value measurements

Fair value measurements

4. Fair value measurements

We record financial assets and liabilities at fair value. Because of their short-term nature, the amounts reported in the balance sheet for cash, accounts receivable and accounts payable approximate fair value.

The guidance requires fair value measurements to maximize the use of “observable inputs.” The three-level hierarchy of inputs to measure fair value are as follows: 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Because of their short-term nature, the amounts reported in the balance sheet for cash and accounts payable approximate fair value.

Level 2: Significant observable inputs other than Level 1 prices such as quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The fair values of the outstanding warrants were measured using the Black-Scholes option-pricing model. Inputs used to determine estimated fair value of the warrant liabilities include the estimated term of the warrants, risk-free interest rates, and the expected volatility of the underlying stock. The significant unobservable inputs used in the fair value measurement of the warrant liabilities were the volatility rate and the estimated term of the warrants. Generally, increases and decreases in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.

We did not have any transfers between the different levels.

The following table presents our assets and liabilities that are measured at fair value on a recurring basis for the periods presented (in thousands):

	As of June 30, 2021
	Level I		Level II		Level III		Total
Cash equivalents		62,668		—		—		62,668
Total assets	$	62,668	$	—	$	—	$	62,668
Warrant liability		—		—		5,036		5,036
Total liabilities	$	—	$	—	$	5,036	$	5,036

	As of December 31, 2020
	Level I		Level II		Level III		Total
Cash equivalents		86,775		—		—		86,775
Total assets	$	86,775	$	—	$	—	$	86,775
Warrant liability		—		—		4,941		4,941
Total liabilities	$	—	$	—	$	4,941	$	4,941

The following table presents a reconciliation of our level 3 warrant liability (in thousands):

	As of June 30, 2021
Balance as of December 31, 2020	$	4,941
Unrealized loss on fair value of warrants for six months ended June 30, 2021		95
Balance as of June 30,2021	$	5,036

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Intangible assets and goodwill

6 Months Ended

Jun. 30, 2021

Intangible asset and goodwill

Intangible assets and goodwill

5. Intangible asset and goodwill

The following represents the balance of our intangible asset and goodwill as follows (in thousands):

	As of June 30, 2021
	Beginning of Period		Amortization		End of Period
Keveyis	$	20,088	$	(2,511)	$	17,577
Goodwill		7,256		—		7,256
Total	$	27,344	$	(2,511)	$	24,833

Our finite-lived intangible asset consists of acquired developed product rights obtained from our acquisition of Keveyis (dichlorphenamide) from a subsidiary of Taro Pharmaceutical Industries Ltd. (“Taro”).

Pursuant to the terms of the Asset Purchase Agreement and Supply Agreement that we entered into with Taro in December 2016, we paid Taro an upfront payment in two installments of $1 million in December 2016 and $7.5 million in March 2017, and will pay an aggregate of $7.5 million in potential milestone payments upon the achievement of certain product sales targets.  Taro has agreed to continue to manufacture Keveyis for us under an exclusive supply agreement through the orphan exclusivity period. We are obligated to purchase from Taro certain annual minimum amounts of product totaling approximately $29 million over a six-year period. We have concluded that the supply price payable by us exceeds fair value and, therefore, have used a discounted cash flow method with a probability assumption to value the payments in excess of fair value at $29.3 million, for which we have recorded an intangible asset and corresponding liability. This liability is being reduced as we purchase inventory over the term of the Supply Agreement that we entered into with Taro.  In addition, we incurred transaction costs of $2.4 million. The transaction resulted in the recording of an intangible asset of $40.2 million. This asset is being amortized over an eight-year period using the straight-line method.

We recorded amortization expense of $1.3 million and $2.5 million for the three and six months ended June 30, 2021, and 2020.

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Long-term debt

6 Months Ended

Jun. 30, 2021

Long-term debt

Long-term debt

6. Long-term debt

On May 19, 2020, we entered into a $30 million Term Loan Agreement (the “Loan Agreement”) with Avenue Venture Opportunities Fund L.P. (“Avenue”), as administrative agent and collateral agent, and the lenders named therein and from time to time a party thereto (the “Lenders”). Pursuant to the terms of the Loan Agreement, our wholly-owned subsidiary, Strongbridge U.S. Inc. (the “Borrower”) borrowed $10 million (the “Initial Loan”) from the Lenders at closing.  As a result of achieving positive top-line data for Recorlev in our Phase 3 LOGICS clinical trial in September 2020, we borrowed an additional $10 million under the Loan Agreement (the “Second Loan”) on December 30, 2020. The remaining $10 million tranche (the “Third Loan”) will become available to us between October 1, 2021 and March 31, 2022 if we achieve FDA approval of Recorlev and subject to Avenue’s investment committee approval.  

The Loan Agreement has a four-year term, no minimum revenue or cash balance financial covenants and an interest-only period for 24 months that can increase to 36 months assuming we receive FDA approval of Recorlev. Amounts borrowed under the Loan Agreement accrue interest at a floating rate per annum (based on a year of 365 days) equal to the sum of (a) the greater of (x) the Prime Rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, and (y) 3.25%, plus (b) 6.75%. The interest rate as of June 30, 2021 was 10%.

We paid a commitment fee of $200,000 (1% of the amounts of the Initial Loan and the Second Loan) at closing. We are also required to pay the Lenders a final payment fee upon repayment or prepayment of any loans made under the Loan Agreement in accordance with the terms and conditions of the Loan Agreement.

Under the terms of the Loan Agreement, we may prepay all or a portion of the outstanding principal amount of any loans outstanding under the Loan Agreement at any time upon prior notice to the Lenders subject to a prepayment

premium (which reduces after the first year) and the payment of the pro rata portion of the final payment fee (to the extent not already paid) based on the amount of loans being prepaid. In certain circumstances, including a change of control and certain asset sales or licensing transactions, we may be required to prepay all or a portion of loans outstanding, and, to the extent required under the terms of the Loan Agreement, the applicable prepayment premium and final payment fee.

As security for our obligations under the Loan Agreement, we entered into a security agreement with Avenue, pursuant to which we granted a lien on substantially all of our assets, including intellectual property, to the Secured Parties (as such term is defined in the Loan Agreement).

Avenue has the right to convert up to $3 million of the aggregate principal amount of any loans outstanding under the Loan Agreement into ordinary shares at a price per share of $2.24. We have accounted for this term as a beneficial conversion feature, and the fair value is recorded in Additional paid-in capital. This amount is recorded as a debt discount and classified as a contra-liability on the consolidated balance sheet and amortized to interest expense over the term of the loan.

In connection with the execution of both the Loan Agreement and the Second Loan, we issued to Avenue warrants to purchase up to an aggregate of 267,390 ordinary shares at an exercise price (the “Exercise Price”) of $1.87 (which is equal to the five-day volume weighted average price as of the trading day immediately prior to execution of the financing agreement) for each of the tranches of debt, respectively. The warrants are exercisable, in full or in part, at any time prior to five years following the issue date for both tranches of the loan. We have accounted for these warrants as equity, and the fair value is recorded into Additional paid-in capital. This amount is recorded as a debt discount and classified as a contra-liability on the consolidated balance sheet and amortized to interest expense over the term of the loan. If we borrow the Third Loan, we will be required to issue to the Lenders or their designees additional warrants to purchase ordinary shares equal to an aggregate of 5% of the Third Loan divided by the Exercise Price, rounded down to the nearest whole share.

Loan Amendment

On July 23, 2021, Strongbridge, the Borrower and Avenue entered into an amendment (the “Loan Amendment”) to the Loan Agreement.

Under the Term Loan Agreement, Strongbridge granted to Avenue an option to convert up to $3 million of the aggregate principal amount of any loans outstanding under the Loan Agreement into Strongbridge ordinary shares (the “Conversion Option”). The Loan Amendment amends the Conversion Option such that $10 million of the aggregate principal amount of any loans outstanding under the Loan Agreement will automatically convert into Strongbridge ordinary shares immediately prior to the completion of the acquisition of Strongbridge by Xeris Pharmaceuticals, Inc. The conversion price remains unchanged at $2.24 per share.

Future principal payments due under the Loan Agreement, if the interest payment only period is not extended beyond the current 24-month period, are as follows (in thousands):

	Principal
	Payments
2021	$	—
2022		5,833
2023		10,000
2024		4,167
Total future payments	$	20,000

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Accrued and other current liabilities

6 Months Ended

Jun. 30, 2021

Accrued liabilities

Accrued and other current liabilities

7. Accrued and other current liabilities

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

	June 30,		December 31,
	2021		2020
Consulting and professional fees	$	7,311	$	2,754
Accrued sales allowances		5,588		4,312
Supply agreement - current portion		5,085		4,391
Employee compensation		2,972		5,749
Accrued royalties		499		301
Lease liability - current portion		437		415
Other		139		72
Accrued taxes		8		1,161
Severance		—		493
Total accrued and other current liabilities	$	22,039	$	19,648

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Commitments and contingencies

6 Months Ended

Jun. 30, 2021

Commitments and contingencies

Commitments and contingencies

8. Commitments and contingencies

(a) Commitments to Taro Pharmaceuticals Industries Ltd.

As of June 30, 2021, our remaining obligation under the Supply Agreement (see Note 5) was $14.1 million. The agreement with Taro may extend beyond the orphan exclusivity period unless terminated by either party pursuant to the terms of the agreement. If terminated by Taro at the conclusion of the orphan exclusivity period, we have the right to manufacture the product on our own or have the product manufactured by a third party on our behalf. We are also required to reimburse Taro for its royalty obligation resulting from its sale of Keveyis to us.

(b) Indemnifications

In the ordinary course of business and in connection with the sale of assets and businesses and other transactions, we often agree to indemnify our counterparties against certain liabilities that may arise in connection with a transaction or that are related to events and activities prior to or following a transaction, such as breaches of contracts, unfavorable tax consequences and employee liabilities. If a counterparty were to make a successful indemnification claim against us, we may be required to reimburse the loss and such amount could be material to our consolidated financial statements. Where appropriate, the obligation for such indemnifications is recorded as a liability. Because these agreements generally do not specify the maximum amount of indemnification a counterparty may be entitled to, the overall maximum amount of our potential indemnification liability under these agreements cannot be reasonably estimated. However, we believe that the likelihood of a material liability being triggered under these indemnification obligations is not probable at this time.

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Income taxes

6 Months Ended

Jun. 30, 2021

Income taxes

Income taxes

9. Taxes

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts and tax bases of assets and liabilities and operating loss carryforwards and other attributes using enacted rates expected to be in effect when those differences reverse. Valuation allowances are provided against deferred tax assets that are not more likely than not to be realized.

We assess our ability to realize deferred tax assets. Changes in future earnings projections, among other factors, may cause us to adjust our valuation allowance on deferred tax assets. Any such adjustments would impact our income tax expense in the period in which it is determined that these factors have changed.

We recorded income tax expense of $1,000 for the three and six months ended June 30, 2021 and did not record an expense for the three and six months ended June 30, 2020.

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Ordinary shares

6 Months Ended

Jun. 30, 2021

Ordinary shares.

Ordinary shares

10. Ordinary Shares

Equity transactions

We entered into an equity distribution agreement with JMP Securities LLC (“JMP”) on April 28, 2017, pursuant to which we could sell, at our option, from time to time, up to an aggregate of $40 million of our ordinary shares through JMP, as sales agent. The agreement provided for a commission to JMP equal to 3% of the gross proceeds from the sale of our ordinary shares under this at-the-market (“ATM”) facility. Pursuant to the terms of the equity distribution agreement, we reimbursed JMP for certain out-of-pocket expenses, including the fees and disbursements of counsel to JMP, incurred in connection with establishing the ATM facility and provided JMP with customary indemnification rights. During the three months ended March 31, 2021, we sold an aggregate of 11,311 ordinary shares under the ATM facility at an average selling price of $3.36 per share, resulting in net proceeds of approximately $38,000 after payment of fees to JMP of $1,100. This equity distribution agreement was terminated on March 24, 2021.

We entered into an equity distribution agreement with Jefferies LLC (“Jefferies”) on March 25, 2021, pursuant to which we may sell, at our option, from time to time, up to an aggregate of $50 million of our ordinary shares through Jefferies, as sales agent. We will pay Jefferies a commission equal to 3% of the gross proceeds from the sale of our ordinary shares under the ATM facility. Pursuant to the terms of the equity distribution agreement, we reimbursed Jefferies for certain out-of-pocket expenses, including the fees and disbursements of counsel to Jefferies, incurred in connection with establishing the ATM facility and have provided Jefferies with customary indemnification rights. For the period ended June 30, 2021, we did not sell any shares under this agreement.

Warrants

Our outstanding warrants as of June 30, 2021, are as follows:

							Warrants
							Outstanding
		Exercise		Expiration	Warrants	Warrants	June 30,
	Classification	Price		Date	Issued	Exercised	2021
Warrants in connection with private equity placement	Liability	$	2.50	6/28/2022	7,000,000	(1,970,000)	5,030,000
Warrants in connection with Horizon and Oxford loan agreement	Equity	$	2.45	12/28/2026	428,571	(267,857)	160,714
Warrants in connection with CRG loan agreement	Equity	$	7.37	7/14/2024	394,289	—	394,289
Warrants in connection with CRG loan amendment in January 2018	Equity	$	10.00	1/16/2025	1,248,250	—	1,248,250
Warrants in connection with Avenue Capital loan agreement	Equity	$	1.87	5/19/2025	267,390	—	267,390
Warrants in connection with Avenue Capital loan agreement	Equity	$	1.87	12/30/2025	267,390	—	267,390
					9,605,890		7,368,033

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Stock-based compensation

6 Months Ended

Jun. 30, 2021

Stock-based compensation

Stock based compensation

11. Stock-based compensation

Our board of directors has adopted the 2017 Inducement Plan (the “Inducement Plan”). The Inducement Plan provides for the grant of equity-based awards to new employees. The purpose of the Inducement Plan is to attract valued employees by offering them a greater stake in our success and a closer identity with us, and to encourage ownership of our ordinary shares by such employees. The Inducement Plan became effective on February 23, 2017. As of June 30, 2021, 1,297,353 shares are available for issuance pursuant to the Inducement Plan.

Our board of directors has adopted, and our shareholders have approved, the 2015 Equity Compensation Plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options to our employees and any parent or subsidiary corporation’s employees, and for the grant of nonstatutory stock options, stock awards, and RSUs to our employees, directors and consultants and our parent or subsidiary corporations’ employees and consultants. The 2015 Plan became effective on September 3, 2015. As of June 30, 2021, 2,531,458 shares are available for issuance pursuant to the 2015 Plan.

Our board of directors has adopted, and our shareholders have approved, the Non-Employee Director Equity Compensation Plan (the “Non-Employee Director Plan”). The Non-Employee Director Plan provides for the grant of nonstatutory stock options, stock awards, and RSUs to our non-employee directors. The Non-Employee Director Plan became effective on September 3, 2015. As of June 30, 2021, 207,247 shares are available for issuance pursuant to the Non-Employee Director Plan.

A summary of our outstanding stock options as of June 30, 2021, is as follows:

	Options Outstanding
				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual
	Number of	Exercise		Term	Aggregate
	Shares	Price		(Years)	Intrinsic Value
					(in thousands)
Outstanding—January 1, 2021	8,989,306	$	4.81	6.58	$	350
Granted	168,300	$	2.90
Exercised	(48,157)
Forfeited, cancelled and expired	(848,976)	$	4.31
Outstanding—June 30, 2021	8,260,473	$	4.82	7.03	$	847
Vested and exercisable—June 30, 2021	5,472,762	$	5.50	6.40	$	358

The weighted average grant date fair value of stock options granted during the six months ended June 30, 2021 and 2020 was $2.16 and $2.00, respectively.

Restricted stock units

We grant RSUs to employees and to members of our board of directors. RSUs that are granted to employees vest one, two or three years from the date of issuance, provided that the employee is employed by us on such vesting date. RSUs that are granted to directors’ vest on the one-year anniversary of the grant date, provided that the director continues to serve as a member of the board of directors continuously from the grant date through such one-year anniversary. All RSUs will fully vest upon a change of control of our company. If and when the RSUs vest, we will issue one ordinary share for each whole RSU that has vested, subject to satisfaction of the employee’s or director’s tax withholding obligations. The RSUs will cease to be outstanding upon the issuance of ordinary shares upon vesting. We recorded expense related to RSUs, which is included in the stock-based compensation table below, of $2.8 million and $1 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, the total unrecognized compensation expense related to unvested RSUs is $5.8 million, which we expect to recognize over an estimated weighted-average period of 1.37 years.

A summary of our unvested RSUs as of June 30, 2021 is as follows:

	Number of
	Shares
Outstanding—January 1, 2021	1,350,300
Granted	2,404,525
Forfeited	(176,750)
Vested	(777,650)
Unvested—June 30, 2021	2,800,425

Stock-based compensation expense

We recognized stock-based compensation expense for employees and directors for stock options and RSUs as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Selling, general and administrative	$	1,586	$	1,280	$	3,305	$	2,550
Research and development		496		493		1,054		974
Total stock-based compensation	$	2,082	$	1,773	$	4,359	$	3,524

As of June 30, 2021, the total unrecognized compensation expense related to unvested stock options is $5.3 million, which we expect to recognize over an estimated weighted-average period of 1.94 years.

In determining the estimated fair value of our service-based awards, we use the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment. The fair value of our service-based awards that were granted during the six months period ending June 30, 2021 and 2020 was estimated with the following assumptions:

	Six Months Ended
	June 30,
	2021	2020
Expected term (in years)	6.25	6.08
Risk-free interest rate	0.59%-1.06%	0.45%-1.48%
Expected volatility	80.87%-82.21%	78.15%-80.74%
Dividend rate	—%	—%

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Summary of significant accounting policies and basis of presentation (Policies)

6 Months Ended

Jun. 30, 2021

Summary of significant accounting policies and basis of presentation

Basis of presentation

Basis of presentation

These unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The unaudited consolidated financial statements reflect all adjustments, which include only normal recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the operating results and financial position for the periods presented.

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates. Results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

These unaudited consolidated financial statements should be read in conjunction with the accounting policies and notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission on March 3, 2021 (the “2020 Annual Report”). Our significant accounting policies are described in Note 2 of the notes to the audited consolidated financial statements included in our 2020 Annual Report. Since the date of those financial statements, there have been no changes to our significant accounting policies.

Leases

Leases

We account for leases in accordance with Accounting Standards Codification Topic 842, Leases (“ASC 842”). We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to us the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) we have the right to control the use of the identified asset.

Operating leases where we are the lessee are included in Right of use (“ROU”) assets and Accrued and other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how we determined (1) the discount rate we use to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Because our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for all of our leases includes the noncancellable period of the lease. Lease payments included in the measurement of the lease asset or liability are comprised of our fixed payments.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We monitor for events or changes in circumstances that require a reassessment of a lease. If a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

We have elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all of our other leases.

Cash and cash equivalents

Cash, cash equivalents and marketable securities

We consider all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively.

Marketable securities

We occasionally invest our excess cash balances in marketable debt securities of highly rated financial institutions. We seek to diversify our investments and limit the amount of investment concentrations for individual institutions, maturities and investment types. We classify marketable debt securities as available-for-sale and, accordingly, record such securities at fair value. We classify these securities as current assets as these investments are available to us for use in funding current operations. There were no marketable securities as of June 30, 2021 or December 31, 2020.

Unrealized gains and losses on marketable debt securities are recorded as a separate component of Accumulated other comprehensive income (loss) included in shareholders’ equity.

Segment information

Segment information

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in one operating segment.

Net loss per share

Net loss per share

Basic net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted-average number of ordinary shares outstanding for the period, including any dilutive effect from outstanding stock options or other equity-based instruments. Shares used in the diluted net loss per share calculations exclude anti-dilutive ordinary share equivalents, which currently consist of outstanding stock options, unvested restricted stock units (“RSUs”), equity-classified warrants and the conversion feature of our outstanding term loan agreement.

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding for the six months ending June 30, 2021 and 2020, as they would be anti-dilutive:

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding for the six months ending June 30, 2021 and 2020, as they would be anti-dilutive:
	June 30,
	2021		2020
Warrants		7,368,033		7,100,643
Stock options issued and outstanding		8,260,473		10,499,222
Unvested RSUs		2,800,425		1,090,300
Conversion feature of our outstanding term loan agreement		1,339,285		1,339,285

Recent accounting pronouncements - not yet adopted

Recent accounting pronouncements – not yet adopted

June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded through net income instead of directly reducing the amortized cost of the investment under the current other-than-temporary impairment model. For smaller reporting companies, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

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Summary of significant accounting policies and basis of presentation (Tables)

6 Months Ended

Jun. 30, 2021

Summary of significant accounting policies and basis of presentation

Schedule of potentially dilutive securities excluded from computations of diluted weighted average shares outstanding

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding for the six months ending June 30, 2021 and 2020, as they would be anti-dilutive:
	June 30,
	2021		2020
Warrants		7,368,033		7,100,643
Stock options issued and outstanding		8,260,473		10,499,222
Unvested RSUs		2,800,425		1,090,300
Conversion feature of our outstanding term loan agreement		1,339,285		1,339,285

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Fair value measurements (Tables)

6 Months Ended

Jun. 30, 2021

Fair value measurements

Schedule of fair value of financial assets by level

The following table presents our assets and liabilities that are measured at fair value on a recurring basis for the periods presented (in thousands):

	As of June 30, 2021
	Level I		Level II		Level III		Total
Cash equivalents		62,668		—		—		62,668
Total assets	$	62,668	$	—	$	—	$	62,668
Warrant liability		—		—		5,036		5,036
Total liabilities	$	—	$	—	$	5,036	$	5,036

	As of December 31, 2020
	Level I		Level II		Level III		Total
Cash equivalents		86,775		—		—		86,775
Total assets	$	86,775	$	—	$	—	$	86,775
Warrant liability		—		—		4,941		4,941
Total liabilities	$	—	$	—	$	4,941	$	4,941

Schedule of reconciliation of level 3 Warrant liability

The following table presents a reconciliation of our level 3 warrant liability (in thousands):

	As of June 30, 2021
Balance as of December 31, 2020	$	4,941
Unrealized loss on fair value of warrants for six months ended June 30, 2021		95
Balance as of June 30,2021	$	5,036

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Intangible assets and goodwill (Tables)

6 Months Ended

Jun. 30, 2021

Intangible asset and goodwill

Schedule of gross carrying amount of acquired developed product rights and goodwill

The following represents the balance of our intangible asset and goodwill as follows (in thousands):

	As of June 30, 2021
	Beginning of Period		Amortization		End of Period
Keveyis	$	20,088	$	(2,511)	$	17,577
Goodwill		7,256		—		7,256
Total	$	27,344	$	(2,511)	$	24,833

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Long-term debt (Tables)

6 Months Ended

Jun. 30, 2021

Long-term debt

Future principal payments

Future principal payments due under the Loan Agreement, if the interest payment only period is not extended beyond the current 24-month period, are as follows (in thousands):

	Principal
	Payments
2021	$	—
2022		5,833
2023		10,000
2024		4,167
Total future payments	$	20,000

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Accrued and other current liabilities (Tables)

6 Months Ended

Jun. 30, 2021

Accrued liabilities

Schedule of accrued and other current liabilities

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

	June 30,		December 31,
	2021		2020
Consulting and professional fees	$	7,311	$	2,754
Accrued sales allowances		5,588		4,312
Supply agreement - current portion		5,085		4,391
Employee compensation		2,972		5,749
Accrued royalties		499		301
Lease liability - current portion		437		415
Other		139		72
Accrued taxes		8		1,161
Severance		—		493
Total accrued and other current liabilities	$	22,039	$	19,648

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Ordinary shares (Tables)

6 Months Ended

Jun. 30, 2021

Ordinary shares.

Schedule of warrants

							Warrants
							Outstanding
		Exercise		Expiration	Warrants	Warrants	June 30,
	Classification	Price		Date	Issued	Exercised	2021
Warrants in connection with private equity placement	Liability	$	2.50	6/28/2022	7,000,000	(1,970,000)	5,030,000
Warrants in connection with Horizon and Oxford loan agreement	Equity	$	2.45	12/28/2026	428,571	(267,857)	160,714
Warrants in connection with CRG loan agreement	Equity	$	7.37	7/14/2024	394,289	—	394,289
Warrants in connection with CRG loan amendment in January 2018	Equity	$	10.00	1/16/2025	1,248,250	—	1,248,250
Warrants in connection with Avenue Capital loan agreement	Equity	$	1.87	5/19/2025	267,390	—	267,390
Warrants in connection with Avenue Capital loan agreement	Equity	$	1.87	12/30/2025	267,390	—	267,390
					9,605,890		7,368,033

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Stock-based compensation (Tables)

6 Months Ended

Jun. 30, 2021

Stock-based compensation

Schedule of summary of outstanding stock options activity

	Options Outstanding
				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual
	Number of	Exercise		Term	Aggregate
	Shares	Price		(Years)	Intrinsic Value
					(in thousands)
Outstanding—January 1, 2021	8,989,306	$	4.81	6.58	$	350
Granted	168,300	$	2.90
Exercised	(48,157)
Forfeited, cancelled and expired	(848,976)	$	4.31
Outstanding—June 30, 2021	8,260,473	$	4.82	7.03	$	847
Vested and exercisable—June 30, 2021	5,472,762	$	5.50	6.40	$	358

Schedule of summary of unvested RSUs

	Number of
	Shares
Outstanding—January 1, 2021	1,350,300
Granted	2,404,525
Forfeited	(176,750)
Vested	(777,650)
Unvested—June 30, 2021	2,800,425

Schedule of stock-based compensation

We recognized stock-based compensation expense for employees and directors for stock options and RSUs as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Selling, general and administrative	$	1,586	$	1,280	$	3,305	$	2,550
Research and development		496		493		1,054		974
Total stock-based compensation	$	2,082	$	1,773	$	4,359	$	3,524

Schedule of assumptions for estimating fair value of stock option awards

	Six Months Ended
	June 30,
	2021	2020
Expected term (in years)	6.25	6.08
Risk-free interest rate	0.59%-1.06%	0.45%-1.48%
Expected volatility	80.87%-82.21%	78.15%-80.74%
Dividend rate	—%	—%

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Organization - Products (Details)	Jun. 30, 2021 product
Organization
Number of clinical-stage product candidates	2

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Organization - Liquidity (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Liquidity
Cash and cash equivalents	$ 63,774	$ 87,522
Substantial doubt about going concern, within one year	false

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Organization - Transaction Agreement with Xeris Pharmaceuticals, Inc (Details)			6 Months Ended
	May 24, 2021 USD ($) patent $ / shares	May 21, 2021 $ / shares	Jun. 30, 2021 USD ($)
Organization
Incurred expenses | $			$ 5,800,000
Xeris Pharmaceuticals, Inc. | Strongbridge Biopharma PLC
Organization
Closing price | $	$ 267,000,000
Share price (in dollars per share)		$ 3.47
Fixed exchange ratio	0.7840
Acquiree's per share value of consideration receivable (n dollars per share)		$ 2.72
Business acquisition premium (as percent)		12.90%
Number of contingent value rights | $	1
Value of contingent value rights (in dollars per share)	$ 1.00
Expected ownership of acquirer (as a percent)			60.00%
Expected ownership of acquiree (as a percent)			40.00%
Xeris Pharmaceuticals, Inc. | Strongbridge Biopharma PLC | Minimum
Organization
Value of contingent value rights (in dollars per share)	0
Xeris Pharmaceuticals, Inc. | Strongbridge Biopharma PLC | Maximum
Organization
Value of contingent value rights (in dollars per share)	1.00
Xeris Pharmaceuticals, Inc. | Strongbridge Biopharma PLC | Keveyis | Annual net sales in 2023
Organization
Value of contingent value rights (in dollars per share)	$ 0.25
Threshold number of patents issued | patent	1
Threshold annual net sale milestone | $	$ 40,000,000
Xeris Pharmaceuticals, Inc. | Strongbridge Biopharma PLC | Recorlev | Annual net sales in 2023
Organization
Value of contingent value rights (in dollars per share)	$ 0.25
Threshold annual net sale milestone | $	$ 40,000,000
Xeris Pharmaceuticals, Inc. | Strongbridge Biopharma PLC | Recorlev | Annual net sales in 2024
Organization
Value of contingent value rights (in dollars per share)	$ 0.50
Threshold annual net sale milestone | $	$ 80,000,000

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Summary of significant accounting policies and basis of presentation - Leases (Details)	Jun. 30, 2021
Summary of significant accounting policies and basis of presentation
Operating Lease, Liability, Current, Statement of Financial Position	Accrued and other current liabilities
Operating Lease, Liability, Noncurrent, Statement of Financial Position	Other long-term liabilities

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Summary of significant accounting policies and basis of presentation - Marketable securities and Segment information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2021 USD ($) segment	Dec. 31, 2020 USD ($)
Segment information
Marketable securities, noncurrent | $	$ 0.0	$ 0.0
Number of operating segments | segment	1

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Summary of significant accounting policies and basis of presentation - Anti-dilutive securities (Details) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Warrant liability
Net loss per share
Anti-dilutive shares of common stock (in shares)	7,368,033	7,100,643
Stock options
Net loss per share
Anti-dilutive shares of common stock (in shares)	8,260,473	10,499,222
RSUs
Net loss per share
Anti-dilutive shares of common stock (in shares)	2,800,425	1,090,300
Conversion feature of our outstanding term loan agreement
Net loss per share
Anti-dilutive shares of common stock (in shares)	1,339,285	1,339,285

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Revenue recognition - Product sales (Details)	Jun. 30, 2021 customer
Revenue recognition
Number of specialty provider	1

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Revenue recognition - Reserves (Details) $ in Millions	6 Months Ended
	Jun. 30, 2021 USD ($)
Reserve for returns	$ 0.0
Percentage of patient's cost of branded prescription drugs related to the Medicare Part D Coverage Gap for which manufacturers of pharmaceutical products are responsible	70.00%
Maximum
Temporary supply period	60 days
Financial need period	12 months

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Fair value measurements - Assets and liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Liabilities
Warrant liability	$ 5,036	$ 4,941
Recurring
Assets
Cash equivalents	62,668	86,775
Total Assets	62,668	86,775
Liabilities
Warrant liability	5,036	4,941
Total liabilities	5,036	4,941
Recurring | Level I
Assets
Cash equivalents	62,668	86,775
Total Assets	62,668	86,775
Recurring | Level III
Liabilities
Warrant liability	5,036	4,941
Total liabilities	$ 5,036	$ 4,941

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Fair value measurements - Level 3 (Details) - Warrant liability $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($)
Reconciliation of level 3:
Balance at beginning of period	$ 4,941
Unrealized loss on fair value of warrants	95
Balance at end of period	$ 5,036

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Intangible asset and goodwill - Components (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Intangible asset and goodwill
Finite-lived intangible assets, Amortization	$ (1,255)	$ (1,255)	$ (2,511)	$ (2,511)
Goodwill, Beginning of Period			7,256
Goodwill, End of Period	7,256		7,256
Total, Beginning of Period			27,344
Total, End of Period	24,833		24,833
Keveyis
Intangible asset and goodwill
Finite-lived intangible assets, Beginning of Period			20,088
Finite-lived intangible assets, Amortization			(2,511)
Finite-lived intangible assets, End of Period	$ 17,577		$ 17,577

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Intangible asset and goodwill - Asset purchase (Details) $ in Thousands	1 Months Ended		3 Months Ended		6 Months Ended
	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) installment	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)
In-process research and development and Goodwill
Amortization of intangible asset			$ 1,255	$ 1,255	$ 2,511	$ 2,511
Keveyis
In-process research and development and Goodwill
Amortization of intangible asset					$ 2,511
Acquired product rights | Keveyis
In-process research and development and Goodwill
Number of installment payments | installment		2
Installment payment	$ 7,500	$ 1,000
Potential milestone payments		7,500
Minimum amount of purchases obligated		$ 29,000
Purchase obligation period		6 years
Payments in excess of fair value		$ 29,300
Transaction costs		2,400
Acquired product rights		$ 40,200
Estimated life		8 years

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Long-term debt - Agreements (Details) - USD ($)	May 19, 2020	Jul. 23, 2021	Jun. 30, 2021	Sep. 30, 2020
Warrants in connection with Avenue Capital loan agreement, One
Loan agreement
Warrants issued (in shares)	267,390
Warrant exercise price (in dollars per share)	$ 1.87		$ 1.87
Number of days used for determining weighted average price	5 days
Warrant term	5 years
Term Loan Agreement
Loan agreement
Maximum borrowing capacity	$ 30,000,000
Loan agreement term	4 years
Minimum revenue or cash balance financial covenants	$ 0
Interest-only payment period	24 months
Number of days in a year used in calculating accrued interest	365 days
Interest rate (as a percent)			10.00%
Commitment fee	$ 200,000
Term Loan Agreement | Subsequent event
Loan agreement
Convertible portion of debt		$ 10,000,000
Conversion price (in dollars per share)		$ 2.24
Term Loan Agreement | Maximum
Loan agreement
Interest-only payment period	36 months
Convertible portion of debt	$ 3,000,000
Term Loan Agreement | Base Rate
Loan agreement
Fixed interest rate (as a percent)	3.25%
Spread on reference interest rate (as a percent)	6.75%
Term Loan Agreement, Initial Loan
Loan agreement
Term loan	$ 10,000,000
Commitment fee (as a percent)	1.00%
Term Loan Agreement, Second Loan
Loan agreement
Term loan				$ 10,000,000
Commitment fee (as a percent)	1.00%
Term Loan Agreement, Third Loan
Loan agreement
Maximum borrowing capacity	$ 10,000,000
Term Loan Agreement, Third Loan | Warrants in connection with Avenue Capital loan agreement, One
Loan agreement
Percentage of loan divided by exercise price	5.00%
Ordinary Shares | Term Loan Agreement
Loan agreement
Conversion price (in dollars per share)	$ 2.24

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Long-term debt - Future principal payments (Details) - USD ($) $ in Thousands	May 19, 2020	Jun. 30, 2021
Future principal payments
2022		$ 5,833
2023		10,000
2024		4,167
Total future payments		$ 20,000
Term Loan Agreement
Debt
Interest-only payment period	24 months

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Accrued and other current liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accrued liabilities
Consulting and professional fees	$ 7,311	$ 2,754
Accrued sales allowances	5,588	4,312
Supply agreement - current portion	5,085	4,391
Employee compensation	2,972	5,749
Accrued royalties	499	301
Lease liability - current portion	437	415
Other	139	72
Accrued taxes	8	1,161
Severance		493
Total accrued and other current liabilities	$ 22,039	$ 19,648
Operating Lease, Liability, Current, Statement of Financial Position	Total accrued and other current liabilities

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Commitments and contingencies - Commitments to Taro (Details) $ in Millions	Jun. 30, 2021 USD ($)
Acquired product rights | Keveyis
Other Commitments
Remaining obligation	$ 14.1

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Income taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Components of income tax expense (benefit)
Income tax expense	$ 1	$ 0	$ 1	$ 0

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Ordinary shares - Equity transactions (Details) - USD ($)			3 Months Ended	6 Months Ended
	Mar. 25, 2021	Apr. 28, 2017	Mar. 31, 2021	Jun. 30, 2021
ATM Facility, April 28, 2017
Equity transactions
Aggregate shares issuable (in dollars)		$ 40,000,000
Commission on gross proceeds from sale of shares (as a percent)		3.00%
Proceeds from issuance of ordinary shares, net			$ 38,000
Payment of fees on issuance of ordinary shares			$ 1,100
ATM Facility, March 25, 2021
Equity transactions
Aggregate shares issuable (in dollars)	$ 50,000,000
Commission on gross proceeds from sale of shares (as a percent)	3.00%
Ordinary Shares
Equity transactions
Issuance of shares, net of offering costs (in shares)				11,311
Ordinary Shares | ATM Facility, April 28, 2017
Equity transactions
Issuance of shares, net of offering costs (in shares)			11,311
Price per share (in dollars per share)			$ 3.36
Ordinary Shares | ATM Facility, March 25, 2021
Equity transactions
Issuance of shares, net of offering costs (in shares)				0

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Ordinary shares - Warrants (Details) - $ / shares	Jun. 30, 2021	May 19, 2020
Warrants
Warrants Issued (in shares)	9,605,890
Warrants Outstanding (in shares)	7,368,033
Warrants in connection with private equity placement
Warrants
Exercise Price (in dollars per share)	$ 2.50
Warrants Issued (in shares)	7,000,000
Warrants Exercised (in shares)	(1,970,000)
Warrants Outstanding (in shares)	5,030,000
Warrants in connection with Horizon and Oxford loan agreement
Warrants
Exercise Price (in dollars per share)	$ 2.45
Warrants Issued (in shares)	428,571
Warrants Exercised (in shares)	(267,857)
Warrants Outstanding (in shares)	160,714
Warrants in connection with CRG loan agreement
Warrants
Exercise Price (in dollars per share)	$ 7.37
Warrants Issued (in shares)	394,289
Warrants Outstanding (in shares)	394,289
Warrants in connection with CRG loan amendment in January 2018
Warrants
Exercise Price (in dollars per share)	$ 10.00
Warrants Issued (in shares)	1,248,250
Warrants Outstanding (in shares)	1,248,250
Warrants in connection with Avenue Capital loan agreement, One
Warrants
Exercise Price (in dollars per share)	$ 1.87	$ 1.87
Warrants Issued (in shares)	267,390
Warrants Outstanding (in shares)	267,390
Warrants Issued Avenue Capital Loan Agreement, Two
Warrants
Exercise Price (in dollars per share)	$ 1.87
Warrants Issued (in shares)	267,390
Warrants Outstanding (in shares)	267,390

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Stock-based compensation - General (Details)	Jun. 30, 2021 shares
Inducement Plan
Stock-based compensation
Number of shares available for issuance	1,297,353
2015 Plan
Stock-based compensation
Number of shares available for issuance	2,531,458
Non-Employee Director Plan
Stock-based compensation
Number of shares available for issuance	207,247

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Stock-based compensation - Stock options activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Summary of outstanding stock options
Outstanding at beginning of period (in shares)	8,989,306
Granted (in shares)	168,300
Exercised (in shares)	(48,157)
Forfeited, cancelled and expired (in shares)	(848,976)
Outstanding at end of period (in shares)	8,260,473		8,989,306
Vested and exercisable at end of period (in shares)	5,472,762
Weighted-Average Exercise Price
Granted (in dollars per share)	$ 2.90
Forfeited, cancelled and expired (in dollars per share)	4.31
Outstanding (in dollars per share)	4.82		$ 4.81
Vested and exercisable at end of period (in dollars per share)	$ 5.50
Additional Disclosures - Options
Weighted Average Remaining Contractual Term, Outstanding	7 years 10 days		6 years 6 months 29 days
Weighted Average Remaining Contractual Term, Vested and exercisable	6 years 4 months 24 days
Aggregate Intrinsic Value, Outstanding (in dollars)	$ 847		$ 350
Aggregate Intrinsic Value, Vested and exercisable at end of the period (in dollars)	$ 358
Weighted average grant date fair value of stock options granted (in dollars per share)	$ 2.16	$ 2.00

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Stock-based compensation - Restricted stock units (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Stock-based compensation
Stock-based compensation	$ 2,082	$ 1,773	$ 4,359	$ 3,524
RSUs
Stock-based compensation
Number of shares issued for each stock award vested			1
Stock-based compensation			$ 2,800	$ 1,000
Total unrecognized compensation expense	$ 5,800		$ 5,800
Estimated weighted average period over which expense is expected to be recognized			1 year 4 months 13 days
Summary of unvested RSUs
Unvested - Beginning of period (in shares)			1,350,300
Granted (in shares)			2,404,525
Forfeited (in shares)			(176,750)
Vested (in shares)			(777,650)
Unvested - End of period (in shares)	2,800,425		2,800,425
RSUs | Employee | Vesting period one
Stock-based compensation
Vesting period			1 year
RSUs | Employee | Vesting period two
Stock-based compensation
Vesting period			2 years
RSUs | Employee | Vesting period three
Stock-based compensation
Vesting period			3 years
RSUs | Director
Stock-based compensation
Vesting period			1 year
Service period			1 year

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Stock-based compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Stock-based compensation expense
Total stock-based compensation	$ 2,082	$ 1,773	$ 4,359	$ 3,524
Stock options
Stock-based compensation expense
Total unrecognized compensation expense	5,300		$ 5,300
Estimated weighted average period over which expense is expected to be recognized			1 year 11 months 8 days
Selling, general and administrative
Stock-based compensation expense
Total stock-based compensation	1,586	1,280	$ 3,305	2,550
Research and development
Stock-based compensation expense
Total stock-based compensation	$ 496	$ 493	$ 1,054	$ 974

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Stock-based compensation - Fair value assumptions (Details) - Stock options	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Fair value assumptions
Expected term (in years)	6 years 3 months	6 years 29 days
Minimum Risk-free interest rate (as a percent)	0.59%	0.45%
Maximum Risk-free interest rate (as a percent)	1.06%	1.48%
Minimum Expected volatility (as a percent)	80.87%	78.15%
Maximum Expected volatility (as a percent)	82.21%	80.74%