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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2016	Mar. 01, 2017	Jun. 30, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	Albireo Pharma, Inc.
Entity Central Index Key	0001322505
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-K
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Trading Symbol	ALBO
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 19.9
Entity Common Stock, Shares Outstanding		6,292,644

Consolidated Balance Sheets - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 29,931,000	$ 5,120,000
Trade receivables	26,000	1,272,000
Prepaid expenses and other assets	560,000	346,000
Other receivables	344,000	202,000
Total current assets	30,861,000	6,940,000
Equipment, net	21,000	34,000
Intangible assets	150,000
Goodwill	18,110,000
Other noncurrent assets	518,000
Total assets	49,660,000	6,974,000
Current liabilities:
Trade payables	972,000	1,929,000
Accrued expenses	7,548,000	2,576,000
Advances from licensees	37,000	37,000
Long-term debt, current portion	3,075,000	2,514,000
Common stock warrant liability	25,000
Warrants liability	844,000	1,163,000
Other liabilities	207,000	63,000
Total current liabilities	12,708,000	8,282,000
Long-term debt		4,866,000
Derivative liabilities		2,047,000
Total liabilities	12,708,000	15,195,000
Temporary Equity:
Convertible preference shares, $0.013 par value per share — 0 and 44,945,080 shares authorized at December 31, 2016 and December 31, 2015; 0 and 39,354,000 shares issued and outstanding at December 31, 2016 and December 31, 2015	0	520,000
Stockholders’ equity (deficit):
Ordinary shares, $0.013 par value per share — 0 and 265,650 authorized and issued and outstanding at December 31, 2016 and December 31, 2015		50,000
Common stock, $0.01 par value per share — 200,000,000 and 0 authorized at December 31, 2016 and December 31, 2015; 6,292,644 and 0 issued and outstanding at December 31, 2016 and December 31, 2015	63,000
Additional paid in capital	61,338,000
Accumulated other comprehensive income	1,496,000	804,000
Accumulated deficit	(25,945,000)	(9,595,000)
Total stockholders’ equity (deficit)	36,952,000	(8,741,000)
Total liabilities, convertible preference shares and stockholders’ equity (deficit)	$ 49,660,000	$ 6,974,000

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Convertible preference shares, par value	$ 0.013	$ 0.013
Convertible preference shares, shares authorized	0	44,945,080
Convertible preference shares, shares issued	0	39,354,000
Convertible preference shares, shares outstanding	0	39,354,000
Ordinary share, par value	$ 0.013	$ 0.013
Ordinary shares, authorized	0	265,650
Ordinary shares, issued	0	265,650
Ordinary shares, outstanding	0	265,650
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	0
Common stock, shares issued	6,292,644	0
Common stock, shares outstanding	6,292,644	0

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Statement [Abstract]
Revenue	$ 11,364	$ 5,099
Operating expenses:
Research and development	8,077	5,634
General and administrative	15,786	4,462
Other (income) expense, net	(205)	(271)
Total operating expenses	23,658	9,825
Operating loss	(12,294)	(4,726)
Interest expense, net	(1,319)	(1,722)
Non-operating expense, net	(2,675)	(320)
Net loss before income taxes	(16,288)	(6,768)
Income tax	62	0
Net loss	$ (16,350)	$ (6,768)
Net loss per share attributable to holders of common stock:
Basic and diluted	$ (13.19)	$ (25.49)
Weighted-average shares outstanding:
Basic and diluted	1,239,694	265,560

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (16,350)	$ (6,768)
Other comprehensive income:
Foreign currency translation adjustment	692	353
Total other comprehensive (loss) income	692	353
Total comprehensive loss	$ (15,658)	$ (6,415)

Consolidated Statements of Convertible Preference Shares and Shareholders' Equity (Deficit) - USD ($)	Total	Convertible Preference Shares	Ordinary Shares	Common Stock	Common Stock Convertible Preference Shares	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Convertible Preference Shares at Dec. 31, 2014		$ 520,000
Convertible Preference Shares (in shares) at Dec. 31, 2014		39,354,000
Balance at Dec. 31, 2014	$ (2,326,000)		$ 50,000				$ 451,000	$ (2,827,000)
Balance (in shares) at Dec. 31, 2014			265,560
Other comprehensive income (loss)	353,000						353,000
Net loss	(6,768,000)			$ (6,768,000)				(6,768,000)
Convertible Preference Shares at Dec. 31, 2015	$ 520,000	$ 520,000
Convertible Preference Shares (in shares) at Dec. 31, 2015	39,354,000	39,354,000
Balance at Dec. 31, 2015	$ (8,741,000)		$ 50,000				804,000	(9,595,000)
Balance (in shares) at Dec. 31, 2015			265,560
Issuance of Ordinary A shares	40,000		$ 6,000			$ 34,000
Issuance of Ordinary A shares (in shares)			42,726
Issuance of warrants	39,000					39,000
Issuance of Series C preference shares		$ 9,655,000
Issuance of Series C preference shares (in Shares)		9,708,740
Conversion of 2014 and 2015 conversion loans		$ 8,074,000
Conversion of 2014 and 2015 conversion loans, shares		5,918,777
Conversion of convertible preference shares and the 2014 and 2015 Convertible Notes to common stock	18,248,000	$ (18,249,000)		38,000		18,210,000
Conversion of convertible preference shares and the 2014 and 2015 Convertible Notes to common stock, shares		(54,981,517)			3,846,083
Share exchange and adjustment for reverse acquisition	41,886,000		$ (56,000)	$ 25,000		41,917,000
Share exchange and adjustment for reverse acquisition, shares			(308,286)	2,446,561
Share based compensation expense	1,138,000					1,138,000
Other comprehensive income (loss)	692,000						692,000
Net loss	(16,350,000)			$ (16,350,000)				(16,350,000)
Convertible Preference Shares at Dec. 31, 2016	$ 0
Convertible Preference Shares (in shares) at Dec. 31, 2016	0
Balance at Dec. 31, 2016	$ 36,952,000			$ 63,000		$ 61,338,000	$ 1,496,000	$ (25,945,000)
Balance (in shares) at Dec. 31, 2016				6,292,644

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net loss	$ (16,350)	$ (6,768)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of debt discount and amortization of issuance costs	1,065	777
Depreciation and amortization	14	15
Loss on settlement of 2014 Convertible Loans and 2015 Convertible Loans	2,095
Change in fair value of financial instruments	(13)	320
Stock-based compensation expense	1,138
Changes in operating assets and liabilities:
Trade receivables	1,246	(1,258)
Prepaid expenses and other current assets	(214)	(282)
Other receivables	(142)	(80)
Other non current assets	183
Trade payables	(1,164)	1,319
Accrued expenses	3,214	1,196
Other liabilities	144	13
Net cash used in operating activities	(8,784)	(4,748)
Cash flows from investing activities:
Purchase of property, plant and equipment	(3)
Cash acquired in business combinations	25,483
Net cash provided by investing activities	25,480
Cash flows from financing activities:
Proceeds from issuance of Ordinary A shares	40
Proceeds from issuance of warrants, net of issuance costs	39
Proceeds from issuance of convertible loan notes, net		3,429
Payments of principal on borrowings	(2,157)	(1,223)
Net cash provided by in financing activities	7,612	2,206
Effect of exchange rate changes on cash and cash equivalents	503	(513)
Net increase (decrease) in cash and cash equivalents	24,811	(3,055)
Cash and cash equivalents—beginning of period	5,120	8,175
Cash and cash equivalents—end of period	29,931	5,120
Supplemental disclosures of cash flow information:
Cash paid for interest	450	$ 761
Settlement of derivative liabilities	2,343
Series C Preference Shares
Cash flows from financing activities:
Proceeds from issuance of Series C preference shares	9,690
2014 and 2015 Convertible Notes
Supplemental disclosures of cash flow information:
Conversion of convertible preference shares and the 2014 and 2015 Convertible Notes to common stock	8,563
Biodel
Supplemental disclosures of cash flow information:
Value of shares issued to acquire Biodel	$ 41,886

Summary of Significant Accounting Policies and Basis of Presentation

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Basis of Presentation

1. Summary of significant accounting policies and basis of presentation

Organization and Share Exchange

Albireo Pharma, Inc. (Parent), together with its direct and indirect subsidiaries (the Company), is a clinical-stage biopharmaceutical company focused on the development and commercialization of novel bile acid modulators to treat orphan pediatric liver diseases and other liver and gastrointestinal diseases and disorders. The Company’s clinical pipeline includes two Phase 2 product candidates, plus a third product candidate for which an application for regulatory approval has been filed in Japan. A4250, the Company’s lead product candidate, is in development initially for the treatment of progressive familial intrahepatic cholestasis (PFIC), a rare, life-threatening genetic disorder affecting young children. A4250 is currently being evaluated in a Phase 2 clinical trial in children with chronic cholestasis.

Prior to November 3, 2016, Parent’s name was Biodel Inc. (Biodel). On that date, Biodel effected a 1-for-30 reverse stock split of its common stock (Reverse Stock Split) and completed a share exchange transaction with Albireo Limited, a limited company domiciled in London, United Kingdom, in accordance with the terms of an Amended and Restated Share Exchange Agreement (the Agreement), dated as of July 13, 2016, by and among Biodel, Albireo Limited and the shareholders and noteholders of Albireo Limited. Pursuant to the Agreement, each holder of shares or notes convertible into shares of Albireo Limited received newly issued shares of Biodel common stock and Albireo Limited became a wholly owned subsidiary of Biodel (the Transaction). Following completion of the Transaction, the business of Albireo Limited became the business of Parent and Parent changed its name to Albireo Pharma, Inc.

For accounting purposes, the Transaction was treated as a “reverse acquisition” and Albireo Limited was considered the accounting acquirer. Accordingly, these Consolidated Financial Statements reflect the historical results of Albireo Limited and its direct and indirect subsidiaries prior to completion of the Transaction and do not include the historical results of Biodel prior to completion of the Transaction. See Note 6. Except as provided in Note 10, all 2016 and 2015 share and per share information has been retroactively adjusted to reflect the exchange of shares in the Transaction based on an exchange ratio of 0.06999 and, where applicable, the Reverse Stock Split.

Basis of presentation

These audited Consolidated Financial Statements have been prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). Any reference in these Consolidated Financial Statements to common stock or options or warrants to purchase shares of common stock of the Company means the common stock or options or warrants to purchase shares of common stock of Parent. Any reference in these Consolidated Financial Statements to common stock means, for periods prior to November 3, 2016, Ordinary shares of Albireo Limited.

Principles of consolidation

The accompanying Consolidated Financial Statements include the accounts of Parent and its direct or indirect wholly owned subsidiaries, Albireo Limited, Albireo AB, Elobix AB and Albireo, Inc. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for fair presentation have been included in the Consolidated Financial Statements.

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each entity comprising the Company are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency for Parent and Albireo, Inc. is the U.S. Dollar (USD), the functional currency for Albireo Limited and Elobix AB is the Euro, and the functional currency for Albireo AB is the Swedish Krona (SEK). The Company consolidates its financial statements in USD.

Transactions and balances

Foreign currency transactions in each entity comprising the Company are translated into the functional currency of the entity using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized within Other income (expense), net in the Consolidated Statements of Operations.

The results and financial position of the Company and its subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities presented are translated at the closing exchange rate as of December 31, 2016 and 2015;

income and expenses for each statement of comprehensive loss are translated at annual average exchange rates that are relevant for the respective period reported;

significant transactions use the exchange rate on the date of the transaction; and

all resulting exchange differences arising from such translation are recognized directly in other comprehensive loss and presented as a separate component of equity.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management must apply significant judgment in this process. Actual results could materially differ from those estimates.

Segment information

The Company’s entire business is managed by a single management team, which reports to the Chief Executive Officer. No separate lines of business or separate business entities have been identified with respect to any product candidate or geographical market and one operating segment is currently disclosed in the Company’s internal reporting.

Accordingly, the Company has one reporting segment which is the research and development of novel treatments for liver and gastrointestinal diseases and disorders.

Cash and cash equivalents

The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.

Concentration of risk

Credit risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. For banks and financial institutions, only independent financial institutions with high credit ratings are engaged. The Company’s license agreements are with established and reputable pharmaceutical companies and, historically, the Company has not needed to impair accounts receivable.

Concentration of revenue and accounts receivable

The Company generally does not require collateral or other security in support of accounts receivable. Allowances are provided for individual accounts receivable when the Company becomes aware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy, deterioration in the customer’s operating results or change in financial position. If circumstances related to a customer change, estimates of the recoverability of receivables would be further adjusted. The Company also considers broad factors in evaluating the sufficiency of its allowances for doubtful accounts, including the length of time receivables are past due, significant one-time events, creditworthiness of customers and historical experience. There is no allowance for doubtful accounts as of December 31, 2016 or 2015.

Equipment, net

Equipment is stated at historical cost less depreciation and consists of computers, furniture and fixtures, and other equipment. Depreciation is computed using a straight-line method over the estimated useful lives, determined to be five years. Computers and other equipment purchased for less than $2,000 or the equivalent thereof are expensed immediately.

Gains and losses on disposals of equipment are determined by comparing the proceeds with the carrying amount and are recognized within Other income (expense), net in the Consolidated Statements of Operations.

Impairment of long-lived assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. In such instances, the recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, an impairment loss would be recognized if the carrying amount of the asset exceeds the fair value of the asset. There were no impairments recorded for the years ended December 31, 2016 and 2015.

Research and development expenses

Research and development costs are expensed as incurred and include primarily salaries, benefits and other staff-related costs; clinical trial and related clinical manufacturing costs; contract services and other outside costs.

The Company’s preclinical studies and clinical trials are performed by third-party contract research organizations (CROs). Some of these expenses are billed monthly for services performed, while others are billed based upon milestones achieved. For preclinical studies, the significant factors used in estimating accruals include the percentage of work completed to date and contract milestones achieved. For clinical trial expenses, the significant factors used in estimating accruals include the number of patients enrolled and percentage of work completed to date or contract milestones achieved. The Company’s estimates are highly dependent upon the timeliness and accuracy of the data provided by the respective CROs regarding the status of the contracted activity, with adjustments made when deemed necessary.

Revenue recognition

Revenue is generated from the receipt of upfront or license fees, milestone payments and payments for procurement services that are made pursuant to out-licensing or related supply agreements.

Where an out-licensing arrangement of the Company involves the provision of multiple elements that may contain different remuneration arrangements such as upfront payments, milestone payments or product sales, the arrangement is assessed to determine whether separate delivery of the individual elements of such arrangement comprises more than one unit of accounting. The delivered elements are separated if (a) they have value to the licensee on a stand-alone basis, (b) there is objective and reliable evidence of the fair value of the undelivered element(s) and (c) if the arrangement includes a general right of return relative to the delivered element(s), delivery or performance of the undelivered element(s) is considered probable and is substantially in the control of the Company. Allocation of revenue to the different elements that require separate accounting is based on the separate selling prices determined for each component, and total consideration is then allocated pro rata across the components of the arrangement. If separate selling prices are not available, the Company will use its best estimate of such selling prices, consistent with the overall pricing strategy and relevant market factors.

The Company has determined that each element of its out-licensing agreements is a separate and distinct unit of accounting, and, as such, the fair value of each element has been subscribed and recognized as follows:

•

Nonrefundable upfront payments received from the Company’s out-licensing agreements relating to technical expertise and intellectual property are recognized in income if all rights relating to the intellectual property and all obligations resulting from them have been relinquished under the contract terms and the Company has no continuing material obligation to perform under the agreement. However, if rights to the intellectual property continue to exist or obligations resulting from them have yet to be fulfilled, the payments received would be deferred until all rights and obligations have been fulfilled.

•

Nonrefundable payments that are linked to the achievement of significant and substantive development or regulatory milestones in the research and development process are recognized as revenue upon the achievement of the specified milestone.

•

Revenue and costs associated with procurement services associated with pharmaceutical ingredients are recognized net in revenue when title and risk of loss of the pharmaceutical ingredients have passed to the licensee as the Company is not the primary obligor.

As of December 31, 2016, the Company had a license agreement with EA Pharma Co., Ltd. (EA Pharma, formerly Ajinomoto Pharmaceuticals Co., Ltd.), entered into in 2012, to develop a select product candidate (elobixibat) for registration and subsequent commercialization in select markets. The Company satisfied its material performance obligations under the agreement in 2012, upon the delivery of technical expertise and intellectual property rights to EA Pharma.

In March 2015, a second licensee of the Company (Ferring International Center S.A., or Ferring) gave notice of termination of its license agreement with the Company. The termination eliminated any prospect of future contingent income under that license agreement. There was no refund of the upfront license fee or milestone fees received by the Company through the date of termination, in accordance with the agreement.

Payments resulting from procurement services are recognized as revenue as the activities are performed and are presented on a net basis. Revenue is recorded on a net basis because the Company acts as an agent, as it does not have discretion to change suppliers and does not perform any part of the services or manufacture of the subject pharmaceutical ingredients. The costs associated with these activities are netted against the related revenue in the Consolidated Statements of Operations.

For certain contingent payments under research and development arrangements, the Company recognizes revenue using the milestone method. Under the milestone method, a payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is an event: (i) that can be achieved based in whole or in part on either the Company’s performance or on the occurrence of a specific outcome resulting from the Company’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company. The determination that a milestone is substantive requires estimation and judgment and is made at the inception of the arrangement. Milestones are considered substantive when the consideration earned from the achievement of the milestone is: (i) commensurate with either the Company’s performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome resulting from the Company’s performance to achieve the milestone, (ii) related solely to past performance and (iii) reasonable relative to all deliverables and payment terms in the arrangement. In making the determination as to whether a milestone is substantive or not, management of the Company considers all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the milestone, the level of effort and investment required to achieve the milestone and whether any portion of the milestone consideration is related to future performance or deliverables. The Company has evaluated each milestone specified under its license agreement with EA Pharma and its now-terminated license agreement with Ferring and determined the milestone to be substantive.

For the year ended December 31, 2016, the Company recognized in full into revenue nonrefundable payments of (a) $8.0 million received in April 2016 in connection with a renegotiated payment stream with EA Pharma linked to know-how and intellectual property delivered by the Company upon inception of the license agreement in 2012 and (b) $3.6 million triggered by the decision of EA Pharma to proceed with the preparation of a new drug application for elobixibat in Japan. The renegotiated payment stream was implemented via an amendment to the license agreement that did not change the contingent nature of the remaining deliverables or the parties’ respective obligations under the agreement.

Under the terms of the license agreement with EA Pharma, the Company was eligible as of December 31, 2016 to receive up to approximately (a) €13.3 million ($14.0 million based on the Euro to USD exchange rate at December 31, 2016) if specified regulatory events are achieved for elobixibat in Japan and (b) ¥3.5 billion ($29.9 million based on the Japanese Yen to USD exchange rate at December 31, 2016) if specified sales milestones are achieved for elobixibat following regulatory approval in any country in EA Pharma’s licensed territory. The likelihood that the Company will achieve any particular milestone event with respect to elobixibat in any particular period, or at all, is uncertain, and the Company may not earn any future milestone payment with respect to elobixibat in any particular period, or ever. In addition, the Company is eligible to receive stepped royalties beginning in the high single digits on any future elobixibat product sales. The Company will recognize royalty revenue in the period of sale of elobixibat, based on the underlying contract terms, provided that the reported sales are reliably measurable and the Company has no remaining performance obligations, assuming all other revenue recognition criteria are met.

Stock-based compensation

The Company accounts for stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock-based payments, including grants of stock options, to be recognized in the consolidated statements of operations based on their respective fair values.

The fair value of the Company’s stock options has been determined using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. For the year ended December 31, 2016, due to the lack of historical and implied volatility data of the Company’s common stock and, prior to completion of the Transaction, the Ordinary shares and Ordinary A shares of Albireo Limited, the expected volatility has been estimated based on the historical volatilities of peer companies in the Company’s industry that are publicly traded. The Company selected companies that it considers to have comparable characteristics to the Company, including enterprise value, risk profiles and position within the industry and with historical share price information sufficient to meet the expected term of the stock options. The historical volatility data has been computed using the daily closing prices for the selected companies.

Due to the lack of sufficient historical trade data, the Company used the “simplified” method, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the award, to determine the expected term of stock options. For periods prior to completion of the Transaction, the risk-free interest rate for periods within the expected term of the option were based on the United Kingdom Government Bond rate with a maturity date commensurate with the expected term of the associated award. For the periods after completion of the Transaction, the risk-free interest rate for periods within the expected term of the option is based on the United States Government Bond rate with a maturity date commensurate with the expected term of the associated award. In addition, it is assumed that the Company will not pay dividends in the near future.

The Company’s stock-based awards are subject to either service-based or service and performance-based vesting conditions. Prior to the Transaction, the Company issued certain stock options with exercise prices denominated in a foreign currency (Euro) that were required to be accounted for as liabilities. The Company accounted for liability-classified stock-based awards based on the then-current fair values at each financial reporting date. Changes in the amounts attributed to these awards between the reporting dates were included in the Consolidated Statement of Operations. On November 3, 2016, these stock options were replaced with stock options denominated in USD. The replacement was accounted for as a modification and the awards are included in equity.

The Company records compensation expense for service-based awards over the vesting period of the award on a straight-line basis. For awards with service and performance based conditions, compensation related to the performance-based vesting conditions is recognized when achievement of the performance condition is considered probable and the compensation expense related to the service condition is recorded using the accelerated method.

Modifications to stock-based awards are treated as an exchange of the original award for a new award with total compensation equal to the grant-date fair value of the original award plus any incremental value of the modification. The incremental value is based on the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

Temporary equity

The Series A and B preference shares of Albireo Limited prior to completion of the Transaction are classified outside of Stockholders’ Equity (Deficit) on the basis that the shares were redeemable upon a liquidation event that could be forced by the holders of preference shares through their voting rights on the Albireo Limited Board of Directors. Any undeclared dividends are not recognized until the time it becomes probable that the preference shares will be redeemable. No dividends were recognized for either of the years ended December 31, 2016 or 2015. All preference shares of Albireo Limited were converted into Ordinary shares that were exchanged for shares of common stock of the Company as part of the Transaction.

Employee benefits

Pension obligations

The Company has defined contribution plans for its Sweden-based employees whereby the Company pays contributions to employee benefit or insurance plans on a mandatory, contractual or voluntary basis. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

401(k)

The Company has a 401(k) retirement plan in which all U.S.-based employees are eligible to participate. The Company contributed $33,000 and $3,000 to the plan for the years ended December 31, 2016 and 2015, respectively. The Company matches employee contributions to the plan, on a per employee basis, up to 4% of each employee’s wages for the years ended December 31, 2016 and 2015.

Loss contingencies

Loss contingencies are recorded as liabilities when it is probable that a liability has occurred and the amount of loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that an ultimate loss will be material. Contingent liabilities are often resolved over long periods of time. Estimating probable losses requires analysis that often depends on judgments about potential actions by third parties, such as regulators.

Income taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (ASC 740). Deferred income taxes are recorded for the expected tax consequences of temporary differences between the tax basis of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. The Company records a valuation allowance to reduce its deferred tax assets to the amount of future tax benefit that is more likely than not to be realized.

Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax loss carry forwards. A deferred tax asset is recognized only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilized.

Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to income tax expense in the period in which such determination is made.

The amount of deferred tax provided is calculated using tax rates in effect at the balance sheet date. The impact of tax law changes is recognized in periods when the change is enacted.

A two-step approach is applied pursuant to ASC 740 in the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

The Company’s policy is to recognize interest and penalty expenses associated with uncertain tax positions as a component of income tax expense in the Consolidated Statements of Operations. As of the years ended December 31, 2016 and 2015, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Consolidated Statements of Operations.

Net loss per share

Basic net loss per share is calculated by dividing the net loss attributable to holders of common stock by the weighted average number of shares of common stock outstanding. Diluted net loss per share is calculated by dividing the net loss attributable to holders of common stock by the weighted-average number of shares of common stock outstanding. If the Company were in a net income position, diluted net income per share would be calculated by dividing the net income attributable to holders of common stock by the weighted-average number of shares of common stock plus dilutive common stock equivalents outstanding, including any dilutive effect from such shares.

For the years ended December 31, 2016 and 2015, common stock equivalents included convertible preference shares, stock options and warrants. The Company’s Convertible Loan Notes (see Note 13) were not included in common stock equivalents, as they were not readily convertible at the option of the respective holders.

Goodwill and long-lived assets

Goodwill is the excess of the purchase price in a business combination over the fair value of identifiable net assets acquired. Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment.

Goodwill and indefinite-lived intangible assets are assessed at least annually, but also whenever events or changes in circumstances indicate the carrying values may not be recoverable. Factors that could trigger an impairment review, include: (a) significant underperformance relative to historical or projected future operating results; (b) significant changes in the manner of or use of the acquired assets or the strategy for the Company’s overall business; (c) significant negative industry or economic trends; (d) significant decline in the Company’s stock price for a sustained period; and (e) a decline in the Company’s market capitalization below net book value.

When performing the evaluation of goodwill for impairment, if the Company concludes qualitatively that it is more likely than not that the fair value of the reporting unit is not less than its carrying amount, then the two-step impairment test is not required. If the Company is unable to reach this conclusion, then it would perform the two-step impairment test. Initially, the fair value of the reporting unit is compared to its carrying amount. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, the Company is required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired. In this step, the Company compares the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognizes a charge for impairment to the extent the carrying value exceeds the implied fair value. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

There are inherent assumptions and estimates used in developing future cash flows requiring management judgment in applying these assumptions, including projecting revenues, interest rates and the cost of capital. Many of the factors used in assessing fair value are outside the Company’s control and it is reasonably likely that assumptions and estimates will change in future periods. These changes can result in future impairments. In the event the Company’s planning assumptions are modified and result in an impairment, the associated expense would be included in the Consolidated Statements of Operations, which could materially impact the Company’s results of operations.

In connection with the Transaction, the Company performed a valuation of the acquired goodwill and intangible assets and recorded $18.1 million of goodwill based on the fair values of the assets acquired and liabilities assumed. The Company will conduct an impairment assessment on October 1 each year taking a qualitative evaluation approach to determine if there are any adverse market factors or changes in circumstances indicating that the carrying value of goodwill as determined in connection with the Transaction may not be recoverable.

Assessment for possible impairment of long-lived assets is based on the Company’s ability to recover the carrying value of the long-lived asset from the expected future pre-tax cash flows. The expected future pre-tax cash flows are estimated based on historical experience, knowledge and market data. Estimates of future cash flows require the Company to make assumptions and to apply judgment, including forecasting future sales and expenses and estimating the useful lives of assets. If the expected future cash flows related to a long-lived asset are less than the asset’s carrying value, an impairment charge is recognized for the difference between estimated fair value and carrying value.

Recently adopted accounting pronouncements

In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which updated guidance to clarify the required presentation of debt issuance costs. The updated guidance requires that debt issuance costs be presented in the balance sheet as a direct reduction from the carrying amount of the recognized debt liability, consistent with the treatment of debt discounts. Amortization of debt issuance costs is to be reported as interest expense. The recognition and measurement guidance for debt issuance costs is not affected by the updated guidance. The update requires retrospective application and represents a change in accounting principles. The updated guidance is effective for reporting periods beginning after December 15, 2015, with early adoption permitted. The Company elected to early adopt the ASU during 2015 and has recorded $0 and $42,000 of transaction costs as reduction of long-term debt as of December 31, 2016 and 2015, respectively.

In September 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern” (ASU No. 2014-15). The guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. The Company early adopted this ASU during 2015 in its consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” (ASU 2015-17), which amends the accounting guidance related to balance sheet classification of deferred taxes. The amendment requires that deferred tax assets and liabilities be classified as noncurrent in the statement of financial position, thereby simplifying the current guidance that requires an entity to separate deferred tax assets and liabilities into current and noncurrent amounts. ASU 2015-17 will be effective beginning in the first quarter of fiscal year 2018. Early adoption is permitted. The amendment can be adopted either prospectively or retrospectively. The Company adopted this standard on a retrospective basis on December 31, 2016. There was no change or reclassification recorded to the prior year presentation as a result of adopting this standard.

Accounting pronouncements issued but not yet adopted

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers: (Topic 606).” This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of ASC Topic 360, “Property, Plant, and Equipment,” and intangible assets within the scope of ASC Topic 350, “Intangibles-Goodwill and Other”) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date of ASU 2014-09. This ASU will be effective for the Company on January 1, 2018 (for the Company’s 2018 fiscal year). The Company is currently evaluating the impact this ASU will have on its consolidated financial statements, including method of adoption. The Company will not be early-adopting this standard. The Company currently has one contract that generates revenue.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which changes the accounting for stock-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016 and for interim periods therein, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.

In September 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force),” which changes how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.

Fair Value Measurement

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial instruments

2. Fair value of financial instruments

In measuring fair value, the Company evaluates valuation techniques such as the market approach, the income approach and the cost approach. A three-level valuation hierarchy, which prioritizes the inputs to valuation techniques that are used to measure fair value, is based upon whether such inputs are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

Level 1—Observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

Level 2—Observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations whose significant inputs are observable for substantially the full term of the assets or liabilities; and

Level 3—Unobservable inputs that reflect the reporting entity’s estimate of assumptions that market participants would use in pricing the asset or liability.

The following tables present the fair values for the Company’s financial instruments as well as the input levels used to determine these fair values as of December 31, 2016 and 2015. The Company values its current assets, which include trade and other receivables, and liabilities, which include advances from licensees and accounts payable, at historical cost, which approximates fair value. The fair value of the Loan Facility (see Note 13) was $3.4 million as of December 31, 2016. The valuation method used to value the Loan Facility was the income approach.

On December 17, 2014, the Company executed a convertible loan instrument, which provided 1,251,000 €1.00 ($1.12) unsecured convertible loan notes (2014 Convertible Loans), denominated in Euros, and was subsequently amended on October 1, 2015. On October 1, 2015, the Company executed a convertible loan instrument which provided 5,000,000 $1.00, unsecured convertible loan notes (the 2015 Convertible Loans), denominated in USD. See Note 13 for a further understanding of these instruments. Immediately prior to completion of the Transaction on November 3, 2016, the conversion rights for the 2014 and 2015 Convertible Loans were exercised.

The fair value of the 2015 Convertible Loans was $2.1 million as of December 31, 2015. The fair value of the 2014 Convertible Loans was $954,000 (€874,000) as of December 31, 2015. The valuation methods used to value the 2014 Convertible Loans and the 2015 Convertible Loans were the income approach and Monte Carlo simulation analysis. The key assumptions are the same as those used to determine the fair value of derivative liabilities as described below.

			Total Carrying Value on the Consolidated Balance Sheet				Fair Value Measurements
	Fair Value Level		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
			(in thousands)
Financial Instruments Recorded at Fair Value on a Recurring Basis
Current liabilities:
Warrants		3	$	844	$	1,163	$	844	$	1,163
Noncurrent liabilities:
Derivative liabilities		3		—		2,047		—		2,047

	Derivative Liabilities						Warrants
	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015
	(in thousands)
Financial Instruments with a Level 3 measurement
Balance, beginning	$	2,047		$	486		$	1,163		$	1,141
(Income) loss recognized in earnings		261			172			(294	)		148
Purchases, sales, issues and settlements		(2,343	)		1,485			—			—
Foreign currency (gains) losses		35			(96	)		(25	)		(126	)
Transfers in (out)		—			—			—			—
Balance, ending	$	—		$	2,047		$	844		$	1,163

There were no transfers from one level to the other during the reporting periods.

Derivative liabilities

As of December 31, 2015, the fair values of the derivative liabilities related to the convertible features associated with the 2014 Convertible Loans and 2015 Convertible Loans were determined using the income approach and Monte Carlo simulation analysis on inception. See Note 13 for a further understanding of these instruments. The income approach was used as the starting point to determine the Company’s equity value. The Monte Carlo simulation was then used to determine possible future values of the Company’s equity. Using the Monte Carlo simulation, the Company considered the following scenarios as of December 31, 2015:

•

Series C preference shares financing (Round C): In this scenario, the 2014 Convertible Loans and 2015 Convertible Loans would convert into a known number of Series C preference shares at a known price, which was based on the expected conversion price of Series C preference shares. It should be noted that this scenario would not have precluded the Company from filing for an initial public offering in the future. Convertible value was based on Series C preference shares conversion and accrued interests. The Company then used the estimated value of the total Series C preference shares and accrued interest and discounted the value using a risk-free interest rate of 0.39% per annum as of December 31, 2015.

•

IPO: In this scenario, the Company would file for an IPO without first raising equity financing. The 2014 Convertible Loans and 2015 Convertible Loans would convert into a known number of Series C preference shares at a known price, which was based on the expected conversion price of Series C preference shares. Convertible value was based on the higher of Series C preference shares conversion and accrued interests, or fixed income component value.

•

No IPO: In this scenario, the Company assumed that no conversion would take place. The Company valued the 2014 Convertible Loans and 2015 Convertible Loans using the income approach. The cash flows were based on principal and a contractual 8% annual interest rate. This amount was then discounted at the estimated market rate of 21.0% per annum as of December 31, 2015. Convertible value was based on the lower of equity value at exit or fixed income component value.

The scenarios were determined based on the amount of equity at the time of exit, which is driven by Monte Carlo simulation. The Company then used the convertible value and discounted the value using a risk-free interest rate of 0.65% per annum as of December 31, 2015.

Based upon these methodologies, the fair value of the derivative liabilities associated with the 2014 Convertible Loans was determined to be $566,000 (€519,000) as of December 31, 2015.

Using the same methods, the fair value of the derivative liabilities associated with the 2015 Convertible Loans was determined to be $1.5 million as of December 31, 2015.

The derivative liabilities were recorded for the year ended December 31, 2015 as a noncurrent liability, as the Company had an unconditional right to defer settlement for at least 12 months after December 31, 2015.

Significant unobservable inputs used in the measurement of the derivative liabilities associated with the 2014 Convertible Loans and 2015 Convertible Loans included the discount rate and the probability of the issuance and sale of Series C preference shares in Round C.

The Company performed a sensitivity analysis for the 2014 Convertible Loans regarding the discount rate. By varying the discount rate by 0.5%, the resulting values of the derivative liabilities that were bifurcated from the 2014 Convertible Loans were as follows (in thousands):

	December 31, 2015
		+0.5%		-0.5%
Assumptions:
Discount rate	$	697	$	445

By varying the probability of Round C by 25% at December 31, 2015, the resulting value of the 2014 Convertible Loans was as follows (in thousands):

	December 31, 2015
		+25%		-25%
Assumptions:
Probability of Round C	$	1,641	$	1,391

The Company also performed a sensitivity analysis for the 2015 Convertible Loans regarding the discount rate. By varying the discount rate by 0.5%, the resulting values of the derivative liabilities that were bifurcated from the 2015 Convertible Loans were as follows (in thousands):

	December 31, 2015
	+0.5%		-0.5%
Assumptions:
Discount rate	$	1,852	$	1,126

By varying the probability of the Round C by 25% at December 31, 2015, the resulting value of the 2015 Convertible Loans was as follows (in thousands):

	December 31, 2015
		+25%		-25%
Assumptions:
Probability of Round C	$	3,973	$	3,217

Warrants

In connection with the Loan Facility, the Company issued to Kreos Capital IV (Expert Fund) Limited (Kreos Capital) detachable warrants with a right to acquire shares at €720,000 (the Warrants). The Company recognized the Warrants at fair value at the time of execution of the Loan Facility and remeasured their fair value on a recurring basis thereafter. In connection with the Transaction, the Warrants were replaced with warrants to purchase 67,271 shares of the Company’s common stock at an exercise price of $11.78 per share (the Replacement Kreos Warrants). The Replacement Kreos Warrants were valued as of December 31, 2016 at $844,000. The exchange was accounted for as a modification whereby the fair value of the Replacement Kreos Warrants was compared to the fair value of the Warrants immediately before the terms were modified, measured based on the market price of the common stock of the Company and other pertinent factors on the date of the modification. See Note 13 for a further description of the Warrants and Loan Facility.

Beginning with the quarter ended June 30, 2016, the Company estimated the fair value of the Warrants, primarily using the binomial method. The revision from December 31, 2015 was due to the execution of the agreement for the Transaction in 2016. The binomial method used assumptions that were based on the Warrants being exchanged for warrants exercisable for shares of the Company’s common stock.

The key assumptions used in the binomial method as of December 31, 2016 included the following:

	December 31, 2016
Stock price	$		17.73
Exercise price	$		11.78
Term (in years)		1.00
Risk-free interest rate			0.85	%
Volatility			83.4	%

As of December 31, 2015, the Company calculated the Warrants’ fair value as follows:

•

The Company’s equity value was estimated using the income approach.

•

The Company’s equity value was then allocated among classes of its capital structure. The allocation was performed using the Option Pricing Methodology (OPM). This method treats securities as options with the Company. The allocation was used to determine the value of Series B preference shares. The Company assumed that any exercise of the Warrants would be to purchase Series B preference shares, as this class had the lowest exercise price, and also assumed scenarios where the Warrants would not be exercised.

As of December 31, 2015, a weighted average of the values derived using the OPM and a traditional Black-Scholes formula was used to calculate the fair value of the Warrants. The key assumptions used in the OPM as of December 31, 2015, included the following:

	December 31, 2015
Term (in years)		1.0
Risk-free interest rate		0.7	%
Volatility		85	%

A traditional Black-Scholes formula was then used to calculate the fair value of the Warrants with the strike price of €1 and stock price as calculated in the allocation. The assumptions used in applying the Black-Scholes formula include the following:

	December 31, 2015
Stock price	$	1.77
Exercise price	$	1.09
Term (in years)		7.50
Risk-free interest rate		2.12	%
Volatility		90	%
Dividend		0	%

Based on these different methods, the fair value of the Warrants was determined to be $1.2 million (€1.1 million) as of December 31, 2015 and the fair value of the Replacement Kreos Warrants was determined to be $844,000 (€762,000) as of December 31, 2016. Each of these fair values was classified as a current liability because the Warrants were, and the Replacement Kreos Warrants are, immediately exercisable.

Under the binomial method, the fair value of the Warrants or Replacement Kreos Warrants decreased by $294,000 for the year ended December 31, 2016.

The significant unobservable input used in the measurement of the Warrants’ or Replacement Kreos Warrants’ liability was the term used in the OPM. The Company performed sensitivity analysis regarding this input and the value of the Warrants was found to be as follows using a 0.5 year decrease or 0.5 year increase in the term (in thousands):

	December 31, 2016				December 31, 2015
	+0.5		-0.5			+0.5	-0.5
Term	$	833	$	829	$	1,253	$	1,251

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Equipment, Net

12 Months Ended

Dec. 31, 2016

Property Plant And Equipment [Abstract]

Equipment, Net

3. Equipment, net

Equipment, net consisted of the following (in thousands):

	December 31, 2016			December 31, 2015
Cost:
Equipment cost as of January 1,	$	142		$	152
Additions		3			—
Exchange differences		(2	)		(10	)
Equipment cost as of period end		143			142
Less:
Accumulated depreciation as of January 1		(108	)		(100	)
Amortization for the period		(12	)		(15	)
Exchange differences		(2	)		7
Accumulated depreciation as of period end		(122	)		(108	)
Total equipment, net	$	21			34

Depreciation expense for the years ended December 31, 2016 and 2015 was $14,000 and $15,000, respectively.

Accrued Expenses

12 Months Ended

Dec. 31, 2016

Payables And Accruals [Abstract]

Accrued Expenses

4. Accrued expenses

Accrued expenses consist of the following (in thousands):

	December 31, 2016		December 31, 2015
Accrued bonuses	$	849	$	392
Accrued vacation pay		318		368
Accrued social security pay		1,461		150
Accrued interest		—		243
Accrued professional fees		730		758
Accrued development costs		522		665
Accrued severance		2,864		—
Accrued other		804		—
Total accrued expenses	$	7,548	$	2,576

Commitments	12 Months Ended
Commitments	Dec. 31, 2016
Commitments And Contingencies Disclosure [Abstract]
Commitments and Contingencies	5. Commitments and contingencies Operating lease commitments In July 2015, the Company entered into a month-to-month lease agreement for office space in Boston, Massachusetts. In July 2014, the Company entered into a 36-month building lease for approximately 2,900 square feet of office space in Gothenburg, Sweden. The lease does not have stated escalating rent clauses, except for changes in the Swedish Consumer Price Index (CPI). The lease renews automatically for consecutive three-year terms, unless notice of nonrenewal is given by either party at least nine months prior to the end of the current term and subject to the Company’s right to terminate the lease at any time upon six months’ notice. As of December 31, 2016, future minimum commitments under facility operating leases were $57,000. Rent expense recognized under the Company’s operating leases was $122,000 and $93,000 for the years ended December 31, 2016 and 2015, respectively. Agreements with CROs As of December 31, 2016, the Company had various agreements with CROs for the conduct of specified research and development activities and, based on the terms of the respective agreements, may be required to make future payments of up to $3.5 million upon the completion of contracted work. Other Commitments In connection with the spin-off from AstraZeneca in 2008 and associated transfer agreements, the Company became party to an assignment agreement between AstraZeneca and a named inventor on a patent related to elobixibat. In connection with this agreement, the inventor is entitled upon the initial launch of a pharmaceutical product that constitutes an IBAT-inhibitor in specified countries to a one-time “launch fee” payment of SEK 4.0 million ($441,000, based on the SEK to USD exchange rate at December 31, 2016).

Business Combination

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Business Combination

6. Business Combination

On November 3, 2016, the Company completed the Transaction pursuant to the Agreement. Subsequent to the Transaction, the Company is under the leadership of the former management team of Albireo Limited and a board of directors comprised of two former directors of Biodel and five former directors of Albireo Limited.

In the Transaction, Biodel issued to the former holders of shares of Albireo Limited an aggregate of 4,154,369 shares of Biodel common stock, representing approximately two-thirds of the combined organization’s common stock outstanding at the completion of the Transaction. The number of shares of Biodel common stock issued was determined based on a negotiated exchange ratio of 0.06999. In addition, in accordance with the terms of the Agreement, all outstanding options or warrants to purchase Albireo Limited shares immediately prior to the Transaction were converted into options to purchase 351,550 shares of Biodel common stock.

The Transaction was accounted for as a “reverse acquisition” pursuant to which Albireo Limited was considered the accounting acquirer. As such, these Consolidated Financial Statements reflect the historical results of Albireo Limited prior to completion of the Transaction and do not include the historical results of Biodel prior to completion of the Transaction.

Transaction Costs

The Company incurred costs related to the Transaction, which were expensed in the period ended December 31, 2016. The expensed transaction costs include:

	(in thousands)
Legal fees		1,187
Accounting fees		653
Advisory fees		2,031
Termination and severance		1,749
Total Transaction Costs	$	5,620

In addition to the Transaction-related costs described above, the Company also recorded general and administrative expense of $1.2 million for the period ended December 31, 2016 associated with a lease termination payment obligation incurred for Biodel’s corporate offices in Danbury, Connecticut.

Purchase Consideration and Net Assets Acquired

The fair value of Biodel common stock used in determining the purchase price was $19.50 per share, the closing price on November 3, 2016. The acquisition-date fair value of the outstanding stock options of Biodel is included in the purchase consideration based on the amount attributable to services provided by the Biodel employees prior to the Transaction, calculated using the Black-Scholes option pricing model. In accordance with the change of control provisions, all Biodel options vested on November 3, 2016. Assumptions used in Black-Scholes calculations during such periods included: volatility ranging from 75.7% to 79.0%; risk-free interest rates ranging between 0.64% and 0.72%; and the expected terms ranging from 1.0 to 1.5 years.

The purchase price is as follows:

	(in thousands)
Fair value of Biodel shares outstanding	$	41,696
Fair value of Biodel stock options		242
Purchase price	$	41,938

The following presents the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed on November 3, 2016:

	(in thousands)
Cash and cash equivalents	$	25,483
Other current assets		701
Intangible assets		150
Goodwill		18,110
Accounts payable and accrued liabilities		(2,215	)
Other current liabilities		(286	)
Warrant liabilities		(5	)
Total Net Assets Acquired	$	41,938

Any changes in the estimated fair values of the net assets recorded for this business combination upon the finalization of more detailed analyses of the facts and circumstances that existed at the date of the transaction will change the allocation of the purchase price. Any subsequent changes to the purchase allocation during the measurement period that are material will be adjusted retrospectively.

The amount allocated to in-process research and development represents an estimate of the fair value of purchased in-process technology for research projects (IPR&D), primarily related to Biodel’s glucagon emergency management product candidate and BIOD-531 concentrated prandial/basal insulin combination product candidate. IPR&D is considered an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. Accordingly, during the development period, the IPR&D is not amortized but subject to impairment review. No amortization of the IPR&D has been reflected in these Consolidated Financial Statements as the assets are considered indefinite-lived.

The excess purchase consideration over the fair values of assets acquired and liabilities assumed is recorded as goodwill. Goodwill is not amortized but tested for impairment on an annual basis or when an indicator for impairment exists. The goodwill recorded is not tax deductible since the Transaction was structured as a tax-free exchange.

Unaudited Pro Forma Information

Supplemental information on a pro forma basis assuming the Transaction occurred on January 1, 2015 is presented below for the years ended December 31, 2015 and 2016:

	Year Ended December 31, 2016			Year Ended December 31, 2015
	(in thousands)
Pro Forma Net Revenues	$	11,364		$	5,099
Pro Forma Loss	$	(32,609	)	$	(23,667	)

Pro forma results for the year ended December 31, 2016 include adjustments to accrued interest and accretion of the debt discounts associated with, the 2014 Convertible Loans and 2015 Convertible Loans upon their conversion into equity immediately prior to completion of the Transaction.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
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-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Employee Benefits Expense

12 Months Ended

Dec. 31, 2016

Compensation And Retirement Disclosure [Abstract]

Employee Benefits Expense

7. Employee benefits expense

The Company has defined contribution retirement benefit plans for its Sweden-based employees. The expenses for the Company’s employee benefits recognized in the Consolidated Statements of Operations were as follows (in thousands):

	Year Ended
	December 31,
	2016		2015
Wages and salaries	$	3,279	$	1,610
Social security expenses		575		169
Pension expenses – defined contribution plans		331		218
	$	4,185	$	1,997

The Company has a 401(k) retirement plan in which all U.S.-based employees are eligible to participate. The Company contributed $33,000 and $3,000 to the plan for the years ended December 31, 2016 and 2015, respectively. The Company matched employee contributions to the plan, on a per employee basis, up to 4% of each employee’s wages for the years ended December 31, 2016 and 2015.

Net Loss Per Share

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Net Loss Per Share

8. Net loss per share

Basic net loss per share, or Basic EPS, is calculated by dividing the net loss attributable to holders of common stock by the weighted average number of shares of common stock outstanding. Diluted net loss per share, or Diluted EPS, is calculated by dividing the net loss attributable to holders of common stock by the weighted-average number of common stock outstanding. If the Company were in a net income position, Diluted EPS would be calculated by dividing the net income attributable to holders of common stock by the weighted-average number of common stock plus dilutive common stock equivalents outstanding.

The following table sets forth the computation of Basic EPS and Diluted EPS (in thousands, except for share and per share data):

	Year Ended
	December 31,
	2016			2015
Basic and Diluted EPS:
Numerator
Net loss	$	(16,350	)	$	(6,768	)
Net loss attributable to holders of common stock	$	(16,350	)	$	(6,768	)
Denominator
Weighted average number of shares		1,239,694			265,560
Number of shares used for basic and diluted EPS computation		1,239,694			265,560
Basic and Diluted EPS	$	(13.19	)	$	(25.49	)

The following weighted-average outstanding common stock equivalents were excluded from the computation of Diluted EPS for the periods presented because including them would have been anti-dilutive:

	Year Ended
	December 31,
	2016		2015
Convertible preference shares (on an as-converted basis)		2,317,898		2,754,386
Warrants to purchase convertible preference shares (on an as-converted basis)		6,946		50,392
Warrants to purchase common stock		48,543		—

Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income taxes

9. Income taxes

The Company recorded income tax expense in relation to its U.S. operations in the year ended December 31, 2016. No income tax provision or benefit was recorded for the year ended December 31, 2015. The Company has had an overall net operating loss position since its inception.

For the years ended December 31, 2016 and 2015, the components of loss before income taxes were as follows (in thousands):

	Year Ended December 31,
	2016			2015
U.S.	$	(5,555	)	$	(69	)
Foreign		(10,733	)		(6,699	)
Total	$	(16,288	)	$	(6,768	)

The components of income tax (benefit) for the years ended December 31, 2016 and 2015 were as follows (in thousands):

	Year Ended December 31,
	2016			2015
Current tax expense:
Federal	$	50			—
State	$	12			—
Foreign		—			3
Total	$	62		$	3
Deferred tax benefit:
Federal	$	—		$	—
State		—			—
Foreign		—			(3)
Total	$	—		$	(3)
Total provision for income taxes	$	62		$	—
Effective tax rate		0	%		0	%

A reconciliation of the U.S. statutory income tax rate to the consolidated effective income tax rate was as follows:

	Year Ended December 31,
	2016			2015
U.K. statutory income tax rate		—			20 %
U.S. statutory income tax rate		34	%		—
Non-deductible interest expense		(6	%)		(2%)
Kreos warrant replacement		(2	%)		—
Other permanent differences		(1	%)		—
State taxes, net of federal tax effect		2	%		—
Increase in valuation allowance		(20	%)		(18	%)
Foreign tax rate differences		(7	%)		—
Effective income tax rate		0.0	%		0.0	%

Deferred taxes are recognized for temporary differences between the bases of assets and liabilities for financial statement and income tax purposes. The tax effect of temporary differences that give rise to significant portions of the deferred tax assets are as follows (in thousands):

	Year Ended December 31,
	2016			2015
Deferred tax assets:
Tax loss carryforwards	$	15,420		$	2,740
Capitalized expenses		36,254			—
Research and development credits		140			—
Accrued expenses		1,088			19
Stock compensation		383			—
Other		43			—
Total gross deferred tax assets		53,328			2,759
Valuation allowance		(53,257	)