Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Registrant Name | 'CORNERSTONE THERAPEUTICS INC | ' |
Entity Central Index Key | '0001145404 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 26,902,898 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $69,612 | $56,250 |
Accounts receivable, net | 29,804 | 14,368 |
Inventories, net | 14,459 | 11,384 |
Prepaid expenses | 6,771 | 3,343 |
Income tax receivable | ' | 4,094 |
Deferred tax asset | 3,079 | 1,614 |
Acquisition-related current assets | 1,578 | 11,134 |
Other current assets | 783 | 379 |
Total current assets | 126,086 | 102,566 |
Property and equipment, net | 1,548 | 1,310 |
Product rights, net | 229,248 | 232,111 |
Goodwill | 33,151 | 33,356 |
Other assets | 32 | 32 |
Total assets | 390,065 | 369,375 |
Current liabilities: | ' | ' |
Accounts payable | 7,534 | 12,439 |
Accrued expenses | 48,129 | 37,379 |
Acquisition-related contingent payments | 8,511 | 6,846 |
Acquisition-related current liabilities | 1,587 | 9,636 |
Income tax payable | 2,683 | ' |
Other current liabilities | 777 | 525 |
Total current liabilities | 69,221 | 66,825 |
Acquisition-related contingent payments, less current portion | 25,935 | 26,362 |
Long-term debt | 89,618 | 89,540 |
Deferred tax liability | 14,274 | 15,683 |
Other long-term liabilities | 4,306 | 4,792 |
Total liabilities | 203,354 | 203,202 |
Commitments and contingencies, Note 11 | ' | ' |
Stockholders' equity | ' | ' |
Preferred stock-$0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding | ' | ' |
Common stock-$0.001 par value, 90,000,000 shares authorized; 26,544,266 and 26,348,470 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | 27 | 26 |
Additional paid-in capital | 170,243 | 167,461 |
Retained earnings (accumulated deficit) | 16,441 | -1,314 |
Total stockholders' equity | 186,711 | 166,173 |
Total liabilities and stockholders' equity | $390,065 | $369,375 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Statement Of Financial Position [Abstract] | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ' | ' |
Preferred stock, shares outstanding | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 26,544,266 | 26,348,470 |
Common stock, shares outstanding | 26,544,266 | 26,348,470 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Income Statement [Abstract] | ' | ' | ' | ' |
Net revenues | $53,697 | $37,525 | $132,083 | $81,157 |
Costs and expenses: | ' | ' | ' | ' |
Cost of product sales (exclusive of amortization of product rights) | 12,642 | 14,397 | 34,904 | 31,984 |
Selling, general and administrative | 16,371 | 12,933 | 43,288 | 32,745 |
Research and development | 594 | 1,998 | 2,036 | 3,729 |
Amortization of product rights | 4,408 | 5,284 | 12,863 | 13,774 |
Change in acquisition-related contingent payments | 2,298 | -1,574 | 6,080 | -1,574 |
Transaction-related expenses | 1,458 | 1,764 | 2,595 | 7,944 |
Other operating expenses, net | -113 | ' | -1,101 | -1,492 |
Total costs and expenses | 37,658 | 34,802 | 100,665 | 87,110 |
Income (loss) from operations | 16,039 | 2,723 | 31,418 | -5,953 |
Other expenses, net: | ' | ' | ' | ' |
Interest expense, net | -1,683 | -1,684 | -5,007 | -1,799 |
Other income, net | -103 | -215 | 426 | -215 |
Total other expenses | -1,786 | -1,899 | -4,581 | -2,014 |
Income (loss) before income taxes | 14,253 | 824 | 26,837 | -7,967 |
(Provision for) benefit from income taxes | -4,676 | 425 | -9,082 | 3,038 |
Net income (loss) | 9,577 | 1,249 | 17,755 | -4,929 |
Comprehensive income (loss) | $9,577 | $1,249 | $17,755 | ($4,929) |
Net income (loss) per share, basic | $0.36 | $0.05 | $0.67 | ($0.19) |
Net income (loss) per share, diluted | $0.31 | $0.05 | $0.60 | ($0.19) |
Weighted-average common shares, basic | 26,515,190 | 26,245,765 | 26,446,783 | 26,040,695 |
Weighted-average common shares, diluted | 31,495,632 | 26,603,258 | 31,274,715 | 26,040,695 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities | ' | ' |
Net income (loss) | $17,755 | ($4,929) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' |
Amortization and depreciation | 13,416 | 14,267 |
Amortization of debt costs | 78 | 26 |
Provision for prompt payment discounts | 3,777 | 2,390 |
Provision for other receivables | 83 | ' |
Provision for inventory allowances | 1,373 | 847 |
Acquisition accounting adjustment on inventory sold | 98 | 3,061 |
Gain on sale of product rights | ' | -1,492 |
Loss on disposal of property and equipment | 53 | 215 |
Change in acquisition-related contingent payments | 6,080 | -1,574 |
Stock-based compensation | 2,005 | 2,027 |
Deferred revenue | ' | -1,428 |
Deferred income taxes | 884 | 177 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -19,167 | -7,654 |
Inventories | -4,546 | -1,001 |
Prepaid expenses and other assets | -4,050 | -356 |
Accounts payable, accrued expenses, and other liabilities | 5,753 | -5,543 |
Acquisition-related current assets and liabilities | 1,514 | -1,477 |
Income taxes | 3,293 | -2,341 |
Net cash provided by (used in) operating activities | 28,399 | -4,785 |
Cash flows from investing activities | ' | ' |
Acquisition of businesses, net of cash acquired | 13 | -126,921 |
Purchase of product rights | -10,000 | ' |
Purchase of property and equipment | -844 | -265 |
Proceeds from sale of product rights | ' | 3,000 |
Net cash used in investing activities | -10,831 | -124,186 |
Cash flows from financing activities | ' | ' |
Proceeds from term loans | ' | 90,000 |
Proceeds of debt financing costs | ' | -511 |
Proceeds from exercise of common stock options | 773 | 1,157 |
Excess tax benefit from stock-based compensation | 12 | 284 |
Payments related to net settlement of restricted stock | -7 | -122 |
Acquisition-related contingent payments | -4,909 | -1,603 |
Principal payments on capital lease obligation | -75 | -23 |
Net cash (used in) provided by financing activities | -4,206 | 89,182 |
Net increase (decrease) in cash and cash equivalents | 13,362 | -39,789 |
Cash and cash equivalents as of beginning of period | 56,250 | 73,968 |
Cash and cash equivalents as of end of period | $69,612 | $34,179 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' |
Organization and Basis of Presentation | ' |
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION | |
Nature of Operations | |
Cornerstone Therapeutics Inc., together with its subsidiaries (collectively, the “Company”), is a specialty pharmaceutical company focused on commercializing products for the hospital and adjacent specialty markets. Key elements of the Company’s strategy are to focus its commercial and development efforts in the hospital and adjacent specialty markets within the U.S. pharmaceutical marketplace; continue to seek out opportunities to acquire companies, marketed or registration-stage products and late-stage development products that fit within the Company’s focus areas; and generate revenues by marketing approved generic products through the Company’s wholly owned subsidiary, Aristos Pharmaceuticals, Inc. | |
Principles of Consolidation | |
The Company’s consolidated financial statements include the accounts of Cornerstone Therapeutics Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | |
Reclassifications | |
The gain on divestiture of product rights previously classified separately is included in other operating expenses, net in the accompanying consolidated statements of comprehensive income (loss). This reclassification had no effect on net loss as previously reported. | |
Chiesi Merger | |
On February 18, 2013, the Company’s Board of Directors received a proposal from Chiesi Farmaceutici S.p.A., the owner of approximately 58% of the outstanding shares of the Company’s common stock (“Chiesi”), to acquire the shares of the Company’s common stock that it does not already own for a cash purchase price of between $6.40 and $6.70 per share. Following its receipt of Chiesi’s proposal, the Company’s Board of Directors formed a special committee comprised of five independent and disinterested directors (the “Special Committee”). The Board of Directors granted the Special Committee the authority to, among other things, review, evaluate, reject or negotiate the terms of Chiesi’s proposal (including any revised proposal Chiesi might make) and to consider and explore alternatives. | |
Following negotiations between Chiesi and the Special Committee, on September 15, 2013, the Company entered into an agreement and plan of merger (the “Chiesi Merger Agreement”) with Chiesi and Chiesi U.S. Corporation (“Merger Sub”), a Delaware corporation that is a wholly owned subsidiary of Chiesi. The Chiesi Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Chiesi Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving the merger as a direct wholly owned subsidiary of Chiesi (the “Chiesi Merger”). In the Chiesi Merger, each share of the Company’s common stock that is issued and outstanding as of the effective time of the Chiesi Merger, except for treasury stock, dissenting shares and shares held by Chiesi or its subsidiaries, will be converted into the right to receive $9.50 in cash, without interest and subject to deduction for any required withholding taxes. The Chiesi Merger Agreement also provides that all outstanding unvested options and shares of restricted stock will become fully vested upon completion of the Chiesi Merger. Before the Company entered into the Chiesi Merger Agreement, the Special Committee unanimously determined that the Chiesi Merger Agreement and the transactions contemplated thereby, including the Chiesi Merger, were fair to, and in the best interests of, the stockholders of the Company other than Chiesi and its affiliates, and that it was advisable for the Company to enter into the Chiesi Merger Agreement. Based on the Special Committee’s recommendation, the Board of Directors (i) determined that the Chiesi Merger Agreement and the transactions contemplated thereby, including the Chiesi Merger, are fair to, and in the best interests of, the Company’s stockholders, (ii) approved and declared advisable the Chiesi Merger Agreement and the transactions contemplated thereby, including the Chiesi Merger, and (iii) resolved to recommend that the Company’s stockholders vote to adopt the Chiesi Merger Agreement. | |
At the same time that the Company entered into the Chiesi Merger Agreement, Craig A. Collard, the Company’s Chairman, Chief Executive Officer and beneficial owner of 8.1% of the Company’s shares, and Cornerstone Biopharma Holdings, Ltd., an entity controlled by him, entered into a voting agreement with the Company, Chiesi and Merger Sub under which Mr. Collard and Cornerstone Biopharma Holdings, Ltd. agreed to vote their shares of the Company’s common stock in favor of the Chiesi Merger. | |
Consummation of the Chiesi Merger will require approval by the holders of (i) at least a majority of all shares of the Company’s common stock outstanding and entitled to vote on the matter and (ii) a majority of the Company’s outstanding shares of common stock that are not owned, directly or indirectly, by Chiesi, Merger Sub or any of their affiliates, by any officer or director of the Company or by any other person or entity having any equity interest in, or any right to acquire any equity interest in, Merger Sub or any person or entity of which Merger Sub is a direct or indirect subsidiary. | |
The Chiesi Merger Agreement places limitations on the Company’s ability to engage in certain types of transactions without Chiesi’s consent during the period between the signing of the Chiesi Merger Agreement and the effective time of the Chiesi Merger. During this period, with limited exceptions and among other things, the Company may not (i) issue, sell, pledge, grant, transfer, encumber or otherwise dispose of any shares of capital stock of the Company or any of its subsidiaries; (ii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iii) purchase, redeem or otherwise acquire any shares of its capital stock; (iv) make any acquisition (by merger, consolidation or acquisition of stock or assets) of any interest in any company or any division or assets thereof with a value or purchase price in the aggregate in excess of $5.0 million for all such acquisitions; or (v) incur or assume any indebtedness. | |
The Company expects the Chiesi Merger will be completed during the first quarter of 2014, subject to receipt of the requisite stockholder approvals described above and to the satisfaction of the other conditions specified in the Chiesi Merger Agreement. | |
Other than expenses associated with the Chiesi Merger, which include fees for advisors and other transaction costs, the terms of the Chiesi Merger Agreement did not impact the Company’s consolidated financial statements as of and for the nine months ended September 30, 2013. The transaction-related expenses related to costs associated with the Chiesi Merger during the three and nine months ended September 30, 2013 were $1.5 million and $2.5 million, respectively. | |
Since the announcement of the execution of the Chiesi Merger Agreement, four lawsuits challenging the Chiesi Merger have been filed in the Delaware Court of Chancery. Each of the Delaware lawsuits is a putative class action filed on behalf of the stockholders of the Company other than the defendants and their affiliates. In each case the complaint names as defendants the Company, its directors, Chiesi and Chiesi US and alleges that the Cornerstone directors and Chiesi breached their fiduciary duties in connection with their approval of the Merger Agreement and that either the Company, Chiesi or Chiesi US aided and abetted those breaches. Each complaint seeks, among other relief, declaratory and injunctive relief enjoining the Merger and/or compensatory damages in an unspecified amount. The four complaints have been consolidated into a single action by court order, but the plaintiffs have not yet filed a consolidated amended complaint. | |
The outcome of these lawsuits is uncertain. An adverse judgment for money damages against the Company could have an adverse effect on the operations and liquidity of the Company. A preliminary injunction could delay or jeopardize the completion of the Merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin completion of the Chiesi Merger. The Company and its directors believe that the claims asserted against them in the lawsuits are without merit. | |
Interim Financial Statements | |
The accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these financial statements. The consolidated balance sheet at December 31, 2012 has been derived from the Company’s audited consolidated financial statements included in its annual report on Form 10-K for the year ended December 31, 2012. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012. | |
Operating results for the three and nine month periods ended September 30, 2013 are not necessarily indicative of the results for the full year. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||||||||||||
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||
Use of Estimates | |||||||||||||||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The more significant estimates reflected in the Company’s consolidated financial statements include certain judgments regarding revenue recognition and related accruals, goodwill and intangible assets, inventory, stock-based compensation and income taxes. Actual results could differ from those estimates or assumptions. | |||||||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||||||
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash deposits with federally insured banks, however, as of September 30, 2013, the majority of the Company’s cash deposits were not federally insured. | |||||||||||||||||||||
Accounts Receivable | |||||||||||||||||||||
The Company typically requires its customers to remit payments within the first 30 to 80 days after the invoice date, depending on the customer and the products purchased. In addition, the Company offers wholesale distributors a prompt payment discount if they make payments within these deadlines. This discount is generally 2% to 3%, but may be higher in some instances due to product launches or customer and/or industry expectations. Because the Company’s wholesale distributors typically take the prompt payment discount, the Company accrues 100% of the prompt payment discounts, based on the gross amount of each invoice, at the time of sale, and the Company applies earned discounts at the time of payment. The Company adjusts the accrual periodically to reflect actual experience. Historically, these adjustments have not been material. The allowance for prompt payment discounts was $626,000 and $320,000 as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||||||||
The Company performs ongoing credit evaluations and does not require collateral. As appropriate, the Company establishes provisions for potential credit losses. In the opinion of management, no allowance for doubtful accounts was necessary as of September 30, 2013 or December 31, 2012. The Company writes off accounts receivable when management determines they are uncollectible and credits payments subsequently received on such receivables to bad debt expense in the period received. There were no write-offs during the three or nine months ended September 30, 2013 or 2012. | |||||||||||||||||||||
Inventories | |||||||||||||||||||||
Inventories are stated at the lower of cost or market value with cost determined under the first-in, first-out method and consist of raw materials, work in process and finished goods. Raw materials include the active pharmaceutical ingredient (“API”) for a product to be manufactured, work in process includes the bulk inventory of tablets or liquids that are in the process of being coated and/or packaged for sale, and finished goods include pharmaceutical products ready for commercial sale or distribution as samples. | |||||||||||||||||||||
Pre-approval inventory is expensed until it is probable that the inventory will be saleable. The Company capitalizes inventory costs associated with marketed products prior to product launch and certain products prior to regulatory approval, based on management’s judgment of probable future commercial use and net realizable value. Capitalization of pre-approval inventory does not begin until the product candidate is considered to have a high probability of regulatory approval, which is generally after the Company has submitted a filing with the U.S. Food and Drug Administration (the “FDA”). If the Company is aware of any specific risks or contingencies that are likely to impact the expected regulatory approval process or if there are any specific issues identified during the research process relating to safety, efficacy, manufacturing, marketing or labeling of the product candidate, the Company does not capitalize the related inventory. Once the Company capitalizes inventory for a product candidate that is not yet approved, the Company monitors, on a quarterly basis, the status of this candidate within the regulatory approval process, its projected sales volume and estimated selling price. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in its judgment of future commercial use and net realizable value, including due to a denial or delay of approval by regulatory bodies, a delay in the timeline for commercialization or other potential factors. At September 30, 2013, inventories included $3.5 million of costs capitalized as raw materials prior to regulatory approval of the Supplemental Biologics License Application (“sBLA”) for RETAVASE® (reteplase, recombinant). This inventory will be used in manufacturing saleable product after approval and will not be used in the remaining testing required for the sBLA approval. The sBLA is intended to qualify SCIL Proteins Production in Germany as a new supplier of reteplase, the API for RETAVASE, and to modify the existing approved Biologics License Application to include an intermediate step between the API and finished good manufacturing processes. | |||||||||||||||||||||
On a quarterly basis, the Company analyzes its inventory levels and records allowances for inventory that has become obsolete, inventory that has a cost basis in excess of the expected net realizable value and inventory that is in excess of expected demand based upon projected product sales. | |||||||||||||||||||||
Goodwill and Intangible Assets | |||||||||||||||||||||
Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Other intangibles including product rights and acquired in-process research and development (“IPR&D”) are capitalized and recorded at fair value. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. | |||||||||||||||||||||
Product rights are amortized over the estimated useful life of the product or the remaining trademark or patent life on a straight-line or other basis to match the economic benefit received. Amortization begins once FDA approval has been obtained and commercialization of the product begins, which the Company targets launching shortly following regulatory approval. The Company evaluates its product rights on an ongoing basis to determine whether a revision to their useful lives should be made. This evaluation is based on management’s projection of the future cash flows associated with the products. | |||||||||||||||||||||
Acquired IPR&D resulting from a business combination is initially characterized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset will be assigned a useful life and amortized. Acquired IPR&D is classified as product rights on the accompanying consolidated balance sheets. | |||||||||||||||||||||
The Company evaluates the recoverability of its long-lived assets, including property and equipment and identifiable intangible assets on an exception basis whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets is not recoverable. The Company measures the recoverability of assets to be held and used by comparing the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment equals the amount by which the carrying amount of the assets exceeds the fair value of the assets. Any write-downs are recorded as permanent reductions in the carrying amount of the assets. | |||||||||||||||||||||
Goodwill and indefinite-lived intangible assets including acquired IPR&D are reviewed for impairment on an annual basis or more frequently if events or circumstances indicate that goodwill or indefinite-lived intangible assets may be impaired. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, then the Company would calculate the potential impairment loss by comparing the implied fair value of goodwill with the carrying value. If the implied fair value of goodwill is less than the carrying value, then an impairment charge would be recorded. The Company performs its annual evaluation of goodwill as of October 1 of each fiscal year. | |||||||||||||||||||||
Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability test. | |||||||||||||||||||||
Revenue Recognition | |||||||||||||||||||||
The Company’s consolidated net revenues represent the Company’s net product sales and other revenues. The following table sets forth the categories of the Company’s net revenues (in thousands): | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Gross product sales | $ | 76,255 | $ | 57,793 | $ | 191,567 | $ | 122,267 | |||||||||||||
Sales allowances | (23,092 | ) | (20,268 | ) | (60,196 | ) | (41,114 | ) | |||||||||||||
Net product sales | 53,163 | 37,525 | 131,371 | 81,153 | |||||||||||||||||
Other revenues | 534 | — | 712 | 4 | |||||||||||||||||
Net revenues | $ | 53,697 | $ | 37,525 | $ | 132,083 | $ | 81,157 | |||||||||||||
The Company records all of its revenue from product sales and other revenues when realized or realizable and earned. Revenue is realized or realizable and earned when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. | |||||||||||||||||||||
Net Product Sales | |||||||||||||||||||||
Product Sales. The Company recognizes revenue from its product sales upon transfer of title, which occurs when product is received by its customers. The Company sells its products primarily to large national wholesalers and specialty pharmacies, which have the right to return the products they purchase. The Company is required to reasonably estimate the amount of future returns at the time of revenue recognition. The Company recognizes product sales net of estimated allowances for product returns, rebates, price adjustments, chargebacks, and prompt payment and other discounts. When the Company cannot reasonably estimate the amount of future product returns, it records revenues when the risk of product return has been substantially eliminated. | |||||||||||||||||||||
Product Returns. Consistent with industry practice, the Company offers contractual return rights that allow its customers to return the majority of its products within an 18-month period that begins six months prior to and ends twelve months subsequent to expiration of the products. The Company’s products have an 18- to 24-month expiration period from the date of manufacture. The Company adjusts its estimate of product returns if it becomes aware of other factors that it believes could significantly impact its expected returns. These factors include actual and historical return rates for expired lots, historical and forecasted product sales and consumer consumption data reported by external information management companies, estimated expiration dates or remaining shelf life of inventory in the distribution channel, estimates of inventory levels of its products in the distribution channel and any significant changes to these levels, and competitive issues such as new product entrants and other known changes in sales trends. The Company evaluates this reserve on a quarterly basis, assessing each of the factors described above, and adjusts the reserve through charges to income in the period in which the information that gives rise to the adjustment becomes known. | |||||||||||||||||||||
Rebates. The liability for government program rebates is calculated based on historical and current rebate redemption and utilization rates contractually submitted by each program’s administrator. | |||||||||||||||||||||
Price Adjustments and Chargebacks. The Company’s estimates of price adjustments and chargebacks are based on its estimated mix of sales to various third-party payers, which are entitled either contractually or statutorily to discounts from the Company’s listed prices of its products. These estimates are also based on the contract fees the Company pays to certain group purchasing organizations (“GPOs”). In the event that the sales mix to third-party payers or the contract fees paid to GPOs are different from the Company’s estimates, the Company may be required to pay higher or lower total price adjustments and/or chargebacks than it has estimated. | |||||||||||||||||||||
The Company, from time to time, offers certain promotional product-related incentives to its customers. These programs include certain product incentives to pharmacy customers and other sales stocking allowances. The Company has voucher programs for ZYFLO CR® (zileuton) and PERTZYE® (pancrelipase) whereby the Company offers a point-of-sale subsidy to retail consumers. The Company estimates its liabilities for these voucher programs based on the historical redemption rates for similar completed programs used by other pharmaceutical companies as reported to the Company by a third-party claims processing organization and actual redemption rates for the Company’s completed programs. In addition, the Company offers a customer loyalty program for CARDENE® I.V. (nicardipine hydrochloride). The Company estimates its liability for this program based on historical participation and redemption rates as well as projected sales for individual customers during the program evaluation period. The Company accounts for the costs of these special promotional programs as price adjustments, which are a reduction of gross revenue. | |||||||||||||||||||||
Prompt Payment Discounts. The Company typically offers its wholesale customers a prompt payment discount of 2% to 3% as an incentive to remit payments within the first 30 to 80 days after the invoice date depending on the customer and the products purchased. | |||||||||||||||||||||
Other Revenues | |||||||||||||||||||||
Other revenues include revenues from copromotion, license and royalty agreements. We record copromotion, license and royalty revenues from third parties based on the nature of the agreement (including its contractual terms), the nature of the payments and applicable accounting guidance. Copromotion and royalty revenues are typically based on net sales, as defined in the respective agreements, which may include estimates of sales discounts and other deductions. Any adjustments related to estimated sales discounts and other deductions are recognized in the period the third-party partner reports the amounts to the Company, which is typically the following quarter. Historically, these adjustments have not been significant. Other revenues for the three and nine months ended September 30, 2013 consisted solely of copromotion revenue related to PERTZYE, which the Company began actively marketing in July 2013. | |||||||||||||||||||||
Non-refundable fees where the Company has no continuing performance obligations are recognized as revenue when there is persuasive evidence of an arrangement and collection is reasonably assured. If the Company has continuing performance obligations, nonrefundable fees are deferred and recognized ratably over the estimated performance period. At-risk milestone payments, which are typically related to regulatory, commercial or other achievements by the Company’s licensees, are recognized as revenues when the milestone is accomplished and collection is reasonably assured. Refundable fees are deferred and recognized as revenues upon the later of when they become nonrefundable or when performance obligations are completed. | |||||||||||||||||||||
Stock-Based Compensation | |||||||||||||||||||||
The Company measures compensation cost for share-based payment awards granted, including grants of stock options and restricted stock, to employees and non-employee directors at fair value. The fair value of stock options is determined by using the Black-Scholes-Merton option-pricing model. The Company determines the fair value of restricted stock based on the market price of its common stock on the date of grant. Compensation expense is recognized on a straight-line basis over the service period for awards expected to vest. Stock-based compensation cost related to share-based payment awards granted to non-employees is adjusted each reporting period for changes in the fair value of the Company’s stock until the measurement date. The measurement date is generally considered to be the date when all services have been rendered or the date that options are fully vested. | |||||||||||||||||||||
Income Taxes | |||||||||||||||||||||
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and the tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. | |||||||||||||||||||||
Net deferred tax assets are recognized to the extent the Company’s management believes these assets will more likely than not be realized. In making such determination, management considers all positive and negative evidence, including reversals of existing temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management periodically reviews its deferred tax assets for recoverability and its estimates and judgments in assessing the need for a valuation allowance. | |||||||||||||||||||||
The Company recognizes a tax benefit from uncertain positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. | |||||||||||||||||||||
Net Income (Loss) Per Share | |||||||||||||||||||||
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during each period. Diluted net income (loss) per share is computed by dividing net income (loss) by the sum of the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. In periods for which the convertible term loan is determined to be dilutive to earnings per share, net income is adjusted for interest expense related to the convertible term loan, net of tax effects. Dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and warrants, the impact of non-vested restricted stock and the impact of the convertible debt. | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
The carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated their fair values as of September 30, 2013 and December 31, 2012 due to the short-term nature of these financial items. | |||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | |||||||||||||||||||||
The fair value for contingent consideration potentially payable related to the acquisition of EKR Holdings, Inc. and its wholly owned subsidiary, EKR Therapeutics, Inc. (collectively “EKR”), at June 26, 2012 was $37.8 million, of which $23.9 million related to a contingent consideration arrangement that existed prior to the acquisition date. The fair value of these liabilities is a Level 3 measurement in the fair value hierarchy which is defined as one with unobservable inputs. The Company uses a discounted cash flow analysis incorporating the probability of estimated future cash flows from potential milestones and royalty payments using risk-adjusted discount rates. Changes to the discount rate would have an inverse effect on the liability’s fair value. Contingent consideration includes the following potential payments for RETAVASE: (1) $4.0 million payable after relaunch approval, (2) $2.0 million payable on or before the first anniversary of the relaunch approval, and (3) three years of annual royalty payments based on a percentage of revenue. Contingent consideration also includes quarterly payments for CARDENE I.V. that are based on a percentage of CARDENE I.V. net revenue through July 2017. The liabilities are evaluated for remeasurement at the end of each reporting period and any changes are recorded in the Company’s consolidated statements of comprehensive income (loss). The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the carrying value of the liability. | |||||||||||||||||||||
The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2013 (in thousands): | |||||||||||||||||||||
December 31, 2012 | Issuances | Payments (1) | Adjustments (2) | September 30, 2013 | |||||||||||||||||
Acquisition-related contingent consideration (3) | $ | 33,208 | $ | — | $ | (4,908 | ) | $ | 6,146 | $ | 34,446 | ||||||||||
-1 | Relates to payments of acquisition-related contingent consideration with respect to CARDENE I.V. | ||||||||||||||||||||
-2 | This amount includes fair value adjustments to the acquisition-related contingent consideration for CARDENE I.V. and RETAVASE. The adjustment is recognized as change in acquisition-related contingent payments in the consolidated statements of comprehensive income (loss). | ||||||||||||||||||||
-3 | Acquisition-related contingent consideration is classified as acquisition-related contingent payments in the accompanying consolidated balance sheets. | ||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis | |||||||||||||||||||||
There were no significant assets or liabilities that were re-measured at fair value on a non-recurring basis in the nine month period ended September 30, 2013. |
Business_Combinations
Business Combinations | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||||||
Business Combinations | ' | ||||||||||||||||
NOTE 3: BUSINESS COMBINATIONS | |||||||||||||||||
Acquisition of EKR | |||||||||||||||||
Description of Transaction | |||||||||||||||||
On June 26, 2012, the Company completed its acquisition of EKR, a specialty pharmaceutical company focused on serving the acute-care hospital setting, for an estimated consideration of approximately $164.2 million. As part of the transaction, the Company acquired the product rights to the cardiovascular products CARDENE I.V. and RETAVASE. The Company made an upfront payment of $126.4 million and may pay a series of contingent consideration payments related to CARDENE I.V. and RETAVASE if certain milestones are achieved. The fair value for contingent consideration was determined to be $37.8 million. | |||||||||||||||||
Basis of Presentation | |||||||||||||||||
The transaction has been accounted for as a business combination under the acquisition method of accounting, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The results of operations of EKR were consolidated beginning on the date of the merger. Acquisition-related costs are not included as a component of the acquisition accounting, but are recognized as expenses in the periods in which the costs are incurred. Any changes within the measurement period resulting from facts and circumstances that existed as of the acquisition date may result in retrospective adjustments to the provisional amounts recorded at the acquisition date. | |||||||||||||||||
Fair Value of Consideration Transferred | |||||||||||||||||
A summary of the purchase price is as follows (in thousands): | |||||||||||||||||
Cash paid for EKR’s outstanding shares | $ | 126,424 | |||||||||||||||
Acquisition-related contingent consideration | 37,788 | ||||||||||||||||
Total fair value of consideration | $ | 164,212 | |||||||||||||||
Assets Acquired and Liabilities Assumed | |||||||||||||||||
The total purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of EKR based on their estimated fair values as of June 26, 2012. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill. | |||||||||||||||||
The following table presents the preliminary allocation of the total fair value of consideration transferred to the acquired tangible and intangible assets and assumed liabilities of EKR based on their estimated fair values as of the closing date of the transaction, measurement period adjustments recorded during the first six months of 2013, in which our measurement period concluded, and the as adjusted allocations of the total fair value of consideration transferred, as shown above (in thousands): | |||||||||||||||||
June 26, 2012(1) | Measurement Period | June 26, 2012 | |||||||||||||||
Adjustments (2) | (As adjusted) | ||||||||||||||||
Cash | $ | 516 | $ | — | $ | 516 | |||||||||||
Accounts receivable, net | 7,401 | 46 | 7,447 | ||||||||||||||
Inventory, net | 32,226 | — | 32,226 | ||||||||||||||
Prepaid expenses and other assets | 14,682 | (121 | ) | 14,561 | |||||||||||||
Identifiable intangibles | 154,123 | — | 154,123 | ||||||||||||||
Deferred tax assets | 35,079 | 274 | 35,353 | ||||||||||||||
Accounts payable | (2,690 | ) | — | (2,690 | ) | ||||||||||||
Accrued liabilities | (29,515 | ) | (7 | ) | (29,522 | ) | |||||||||||
Deferred tax liability related to intangibles acquired | (65,735 | ) | — | (65,735 | ) | ||||||||||||
Total identifiable net assets | $ | 146,087 | $ | 192 | $ | 146,279 | |||||||||||
Goodwill | 18,138 | (205 | ) | 17,933 | |||||||||||||
Total fair value of consideration | $ | 164,225 | $ | (13 | ) | $ | 164,212 | ||||||||||
-1 | As reported previously in the Company’s annual report on Form 10-K for the year ended December 31, 2012. | ||||||||||||||||
-2 | The measurement period adjustments during the first six months of 2013, in which our measurement period concluded, primarily reflect changes in accounts receivables, net, indemnified assets and liabilities and the related impact on deferred taxes. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These measurement period adjustments did not have a material impact on the Company’s December 31, 2012 consolidated financial statements. Accordingly, the Company has not retrospectively adjusted those financial statements. | ||||||||||||||||
The Company recorded $154.1 million in identifiable intangibles at fair value, consisting of $158.4 million in acquired product rights, partially offset by $4.3 million related to an unfavorable contract liability. The fair value of the product rights was allocated as $131.6 million for CARDENE I.V. and $26.9 million for RETAVASE. CARDENE I.V. product rights are being amortized over 15 years. RETAVASE product rights will be amortized over approximately 12 years beginning upon commercial launch. The unfavorable contract liability resulted from an existing supply contract that was determined to have terms that were less favorable than market. The liability was recorded at fair value based on the discounted cash flows resulting from the Company’s estimated loss that will be incurred on the manufacturing of RETAVASE inventory for the provider of RETAVASE in the European market. The fair value of the unfavorable contract liability as of June 30, 2012 was $4.3 million and is classified in other long-term liabilities on the consolidated balance sheet as of September 30, 2013. The value of the contract will be amortized and recorded as an offset to cost of product sales based on inventory movement over the life of the contract. | |||||||||||||||||
Acquired inventory was recorded at fair value and includes an acquisition accounting adjustment of approximately $19.4 million to increase inventory to its fair value. | |||||||||||||||||
The Company recorded indemnification assets of $4.5 million and indemnification liabilities of $8.8 million, which are offset by corresponding liabilities and assets, respectively. The indemnification balances relate to (i) certain litigation and contractual liabilities included in accrued expenses and (ii) anticipated income tax refunds related to federal net operating loss (“NOL”) carryback claims and EKR’s 2012 short period tax return. EKR’s former shareholders are responsible for specified litigation and contractual liabilities included in acquisition-related current liabilities and for tax liabilities related to pre-closing periods and are obligated to fully indemnify the Company against losses related to these matters. EKR’s former shareholders are also generally entitled to the benefit of tax refunds associated with pre-closing periods. These indemnification assets and liabilities are classified in acquisition-related current assets and liabilities. The remaining balances are reflected on the accompanying consolidated balance sheet as of September 30, 2013. The Company expects the full amount of the indemnification assets and liabilities related to these matters to be realized or covered by the EKR shareholders. | |||||||||||||||||
At the closing of the acquisition, the fair value for contingent consideration potentially payable was $37.8 million, of which $23.9 million related to a contingent consideration arrangement related to the ready-to-use formulation of CARDENE I.V. that existed prior to the acquisition date. The fair value of these liabilities was determined using a discounted cash flow analysis incorporating the estimated future cash flows from potential milestones and royalty payments. The liabilities were evaluated as of September 30, 2013 as discussed above in Note 2. The Company will continue to evaluate these liabilities for remeasurement at the end of each reporting period and any change will be recorded in the Company’s consolidated statement of comprehensive income (loss). The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the carrying value of the liability. | |||||||||||||||||
Goodwill was calculated as the difference between the fair value of the consideration and the values assigned to the assets acquired and liabilities assumed. None of the goodwill will be deductible for tax purposes. | |||||||||||||||||
In connection with the acquisition, during the nine months ended September 30, 2013 and 2012, the Company incurred $35,000 and $7.3 million, respectively, of transaction-related costs, which include severance expenses and the costs of advisory, legal, valuation and accounting services. These costs were expensed as incurred and are included in transaction-related expenses on the accompanying consolidated statements of comprehensive income (loss). | |||||||||||||||||
During the second quarter of 2013, the Company settled certain liabilities acquired in connection with the EKR acquisition resulting in a gain of approximately $700,000, which is included in other operating expenses, net on the accompanying consolidated statements of comprehensive income (loss) for the nine months ended September 30, 2013. | |||||||||||||||||
Net revenues and net income for EKR of $13.5 million and $2.1 million, respectively, are included in the Company’s consolidated statements of comprehensive income (loss) from the acquisition date, June 26, 2012, through September 30, 2012. | |||||||||||||||||
Pro Forma Impact of the Acquisition of EKR (Unaudited) | |||||||||||||||||
The following table presents pro forma results of operations and gives effect to the transaction as if the transaction had been consummated on January 1, 2011. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or of the results that may occur in the future. Furthermore, the pro forma financial information does not reflect the impact of any reorganization or restructuring expenses or operating efficiencies resulting from combining the two companies (in thousands, except per share data). | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Net revenues | $ | 37,525 | $ | 40,645 | $ | 107,428 | $ | 125,434 | |||||||||
Net income (loss) | $ | 2,068 | $ | (3,628 | ) | $ | (4,048 | ) | $ | (2,648 | ) | ||||||
Basic income (loss) per share | $ | 0.08 | $ | (0.14 | ) | $ | (0.16 | ) | $ | (0.10 | ) | ||||||
Diluted income (loss) per share | $ | 0.08 | $ | (0.14 | ) | $ | (0.16 | ) | $ | (0.10 | ) | ||||||
The unaudited pro forma consolidated results were prepared using the acquisition method of accounting and are based on the historical financial information of the Company and EKR, reflecting the Company’s and EKR’s results of operations for the three and nine month periods ending September 30, 2012 and 2011. The historical financial information has been adjusted to give effect to the pro forma events that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The unaudited pro forma consolidated results reflect primarily the following pro forma adjustments: | |||||||||||||||||
• | Additional interest expense related to the Company’s long-term debt used to fund the acquisition; | ||||||||||||||||
• | Additional amortization expense related to the fair value of identifiable intangible assets acquired; and | ||||||||||||||||
• | Removal of acquisition-related transaction costs. |
Inventory
Inventory | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
NOTE 4: INVENTORY | |||||||||
The following table represents inventories, net as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 6,580 | $ | 3,561 | |||||
Work in process | 3,029 | 2,920 | |||||||
Finished goods | 7,386 | 7,016 | |||||||
Total | 16,995 | 13,497 | |||||||
Inventory allowances | (2,536 | ) | (2,113 | ) | |||||
Inventories, net | $ | 14,459 | $ | 11,384 | |||||
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||
Goodwill and Intangible Assets | ' | ||||||||||||||||
NOTE 5: GOODWILL AND INTANGIBLE ASSETS | |||||||||||||||||
Goodwill | |||||||||||||||||
The Company’s goodwill balance was $33.2 million and $33.4 million as of September 30, 2013 and December 31, 2012, respectively. The change in goodwill is described in Note 3. No amount of the goodwill balance at September 30, 2013 will be deductible for income tax purposes. | |||||||||||||||||
Product Rights | |||||||||||||||||
The following tables represent product rights, net as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||||||||||
September 30, 2013 | |||||||||||||||||
Gross | Accumulated | Net | Weighted- | ||||||||||||||
Carrying | Amortization | Amount | Average | ||||||||||||||
Amount | Amortization | ||||||||||||||||
Period (yrs.) | |||||||||||||||||
CUROSURF® | $ | 107,606 | $ | 39,424 | $ | 68,182 | 15 | ||||||||||
ZYFLO® | 11,500 | 7,890 | 3,610 | 7.1 | |||||||||||||
CARDENE I.V. | 131,556 | 11,061 | 120,495 | 15 | |||||||||||||
PERTZYE | 10,000 | 395 | 9,605 | 10 | |||||||||||||
RETAVASE | 26,858 | — | 26,858 | n/a | |||||||||||||
Other | 575 | 77 | 498 | 5 | |||||||||||||
Total | $ | 288,095 | $ | 58,847 | $ | 229,248 | 14.4 | ||||||||||
December 31, 2012 | |||||||||||||||||
Gross | Accumulated | Net | Weighted- | ||||||||||||||
Carrying | Amortization | Amount | Average | ||||||||||||||
Amount | Amortization | ||||||||||||||||
Period (yrs.) | |||||||||||||||||
CUROSURF | $ | 107,606 | $ | 34,740 | $ | 72,866 | 15 | ||||||||||
ZYFLO | 11,500 | 6,686 | 4,814 | 7.1 | |||||||||||||
CARDENE I.V. | 131,556 | 4,483 | 127,073 | 15 | |||||||||||||
RETAVASE | 26,858 | — | 26,858 | n/a | |||||||||||||
Other | 575 | 75 | 500 | n/a | |||||||||||||
Total | $ | 278,095 | $ | 45,984 | $ | 232,111 | 14.6 | ||||||||||
The Company amortizes the product rights related to its currently marketed products over their estimated useful lives, which range from five to fifteen years. As of September 30, 2013, the Company had $26.9 million of product rights related to RETAVASE, which is expected to be launched in the future. The Company expects to begin amortization upon the commercial launch of the product. The rights will be amortized over the product candidate’s estimated useful life. | |||||||||||||||||
On May 9, 2013, the Company entered into a license and distribution agreement with Digestive Care, Inc. (“DCI”) pursuant to which it acquired exclusive U.S. rights to market DCI’s PERTZYE for the treatment of Exocrine Pancreatic Insufficiency due to cystic fibrosis. PERTZYE is an FDA approved unique pancreatic enzyme replacement therapy drug product containing bicarbonate-buffered, enteric-coated microspheres. In consideration for marketing rights, the Company made an initial payment of $10 million. The Company is required to make certain minimum investments in promotion and make payments based on a percentage of net sales. In addition, the Company is required to make certain milestone payments upon achievement of net sales targets. The initial payment was, and potential future payments of milestones met will be, capitalized and amortized over the remaining useful life of the asset, which is currently estimated to be ten years. The initial term of the agreement is ten years with an automatic renewal provision for successive two-year terms unless either party provides written notice six months before the end of the current term. | |||||||||||||||||
Aggregate annual amortization expense of product rights (excluding the rights related to products expected to be launched) for each of the five succeeding fiscal years is estimated as follows (in thousands): | |||||||||||||||||
2013 | $ | 17,293 | |||||||||||||||
2014 | 17,721 | ||||||||||||||||
2015 | 17,721 | ||||||||||||||||
2016 | 16,116 | ||||||||||||||||
2017 | 16,116 | ||||||||||||||||
Thereafter | 130,287 | ||||||||||||||||
$ | 215,254 | ||||||||||||||||
Divestiture of Anti-infective Product Rights | |||||||||||||||||
In March 2012, the Company entered into asset purchase agreements with each of Merus Labs International Inc. (“Merus”) and Vansen Pharma Inc. (“Vansen”) pursuant to which the Company sold all of its rights to the anti-infective drugs Factive (gemifloxacin mesylate) and Spectracef (cefditoren pivoxil). In connection with the transaction, the Company divested approximately $3.8 million in product rights, net of accumulated amortization, $2.5 million in inventory and product samples, and other assets of $1.4 million. In addition, Merus and Vansen assumed product-related liabilities of approximately $4.1 million. Total cash consideration for the divestiture was $6.2 million, of which $1.2 million was recorded as a receivable from the buyers. Under the asset purchase agreement for Factive, the Company retained certain royalty obligations to LG Life Sciences, Ltd. and Oscient Pharmaceuticals Corporation through the end of September 30, 2014. The Company calculated the fair value of the expected royalty payments and recorded a contingent liability of $1.1 million, which is included in other current and other long-term liabilities. The Company also recognized a gain on the divestiture of $1.5 million which is included in other operating expenses, net in the accompanying consolidated statements of comprehensive income (loss). | |||||||||||||||||
Accrued_Expenses
Accrued Expenses | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Payables And Accruals [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
NOTE 6: ACCRUED EXPENSES | |||||||||
The components of accrued expenses are as follows (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Accrued product returns | $ | 15,373 | $ | 13,629 | |||||
Accrued rebates | 2,325 | 1,766 | |||||||
Accrued price adjustments and chargebacks | 14,699 | 9,651 | |||||||
Accrued compensation and benefits | 3,264 | 3,022 | |||||||
Accrued royalties | 3,560 | 3,487 | |||||||
Accrued research and development | 1,899 | 1,300 | |||||||
Accrued co-promotion | 2,244 | 2,330 | |||||||
Accrued expenses, other | 4,765 | 2,194 | |||||||
Total accrued expenses | $ | 48,129 | $ | 37,379 | |||||
Long_Term_Debt
Long Term Debt | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long Term Debt | ' | ||||||||
NOTE 7: LONG TERM DEBT | |||||||||
On June 21, 2012, the Company entered into a credit agreement with Chiesi (the “Credit Agreement”) in order to finance a portion of the costs of its acquisition of EKR. Pursuant to the Credit Agreement, Chiesi made two loans to the Company: (i) a loan of $60.0 million (“Term Loan A”), and (ii) a loan of $30.0 million (“Term Loan B,” and together with Term Loan A, the “Term Loans”). All of the obligations owed by the Company under the Credit Agreement are guaranteed by the Company’s domestic subsidiaries and are secured by a security interest in substantially all of the assets of the Company and its domestic subsidiaries. Chiesi is the administrative agent and collateral agent under the Credit Agreement. | |||||||||
Term Loan A and Term Loan B bear interest at rates of 7.5% and 6.5% per year, respectively, payable quarterly in arrears. Term Loan A requires quarterly principal payments of $3.5 million commencing in the fiscal quarter ending December 31, 2014 with any remaining balance being due at maturity. The Term Loans are due and payable in full on June 23, 2017, unless previously prepaid or, in the case of Term Loan B, unless previously converted into shares of common stock pursuant to the conversion right described below. | |||||||||
The Company has the right to prepay the Term Loans, in whole or in part, without any premium or penalty. Any partial prepayment must be in the amount of $5.0 million or, if more than $5.0 million, in whole multiples of $1.0 million, in each case plus any accrued and unpaid interest. | |||||||||
The Company is required to prepay all or a portion of the Term Loans (i) if the Company’s ratio of consolidated secured debt to Consolidated EBITDA (as defined in the Credit Agreement) is at least 2 to 1 for any fiscal year ending on or after December 31, 2013, by using 50% of the Company’s Consolidated Excess Cash (as defined in the Credit Agreement), or (ii) if the Company undertakes certain asset sales or sales of capital stock and does not reinvest the proceeds according to the terms of the Credit Agreement. The Company will evaluate its compliance with the ratio of consolidated secured debt to Consolidated EBITDA as of and for the year ending on December 31, 2013 and does not anticipate any prepayment for 2013. | |||||||||
Until June 21, 2014, Chiesi has the option to convert all or a portion of the Term Loan B principal balance into shares of common stock at a conversion price of $7.098 per share, subject to adjustment under certain conditions. Any such conversion must be in a minimum amount of $5.0 million unless the outstanding balance is less than $5.0 million. At September 30, 2013, the outstanding balance of Term Loan B was $30.0 million, which was convertible into 4,226,542 shares of common stock. | |||||||||
The Credit Agreement contains customary representations, covenants and events of default. Upon an Event of Default (as defined in the Credit Agreement), (i) the interest rates for Term Loan A and Term Loan B will each increase by 2% and (ii) Chiesi may declare all outstanding principal and accrued but unpaid interest under the Credit Agreement to be immediately due and payable. In addition, the Company is subject to covenants prohibiting the payment of any dividends (other than stock dividends) and restricting or limiting other restricted payments, certain corporate activities, transactions with affiliates, incurrence of debt (which debt limit expressly permits, among other things, a secured working capital facility of up to $25 million), liens on properties and asset dispositions. The Company is not subject to any financial covenants other than the mandatory prepayment provisions discussed above. | |||||||||
In connection with the Term Loans, the Company incurred an estimated $511,000 of debt financing costs, which primarily consisted of legal and other professional fees. These costs are being amortized and are recorded as additional interest expense through the maturity of the loans. | |||||||||
The following table summarizes information on the Term Loans as of September 30, 2013 (in thousands): | |||||||||
Maturity Date | September 30, 2013 | ||||||||
Term Loan A (7.5% interest payable quarterly and principal payable in quarterly installments of $3.5 million starting on December 31, 2014) | June 2017 | ||||||||
Principal amount | $ | 60,000 | |||||||
Unamortized debt financing costs | (249 | ) | |||||||
Net carrying amount | 59,751 | ||||||||
Term Loan B (6.5% interest payable quarterly and principal payable upon maturity, with conversion option through June 21, 2014) | Jun-17 | ||||||||
Principal amount | 30,000 | ||||||||
Unamortized debt financing costs | (133 | ) | |||||||
Net carrying amount | 29,867 | ||||||||
Total debt, carrying amount | 89,618 | ||||||||
Less: current portion | — | ||||||||
Total long-term debt, carrying amount | $ | 89,618 | |||||||
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | ||
Sep. 30, 2013 | |||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||
Stock-Based Compensation | ' | ||
NOTE 8: STOCK-BASED COMPENSATION | |||
Stock Options | |||
The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of its stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option pricing model is affected by the Company’s stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility over the term of the awards, actual employee exercise behaviors, risk-free interest rate and expected dividends. | |||
There were 145,000 and 136,773 stock options granted and exercised, respectively, during the nine months ended September 30, 2013. | |||
The following table shows the assumptions used to value stock options on the date of grant, as follows: | |||
Nine Months Ended | |||
September 30, | |||
2013 | |||
Estimated dividend yield | 0.00% | ||
Expected stock price volatility | 74-77% | ||
Risk-free interest rate | 0.97-1.71% | ||
Expected life of option (in years) | 5.82-5.84 | ||
Weighted-average grant date fair value per share of options granted | $5.45 | ||
The Company has not paid and does not anticipate paying cash dividends; therefore, the expected dividend rate was assumed to be 0%. The expected stock price volatility was based on the Company’s historical volatility for the approximate five year period preceding September 30, 2013. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected life assumption. The expected life was estimated based on historical exercise patterns for previous grants, taking into account employee exercise strategy and cancellation behavior. | |||
As of September 30, 2013, the aggregate intrinsic value of options outstanding and exercisable was $9.4 million and $7.6 million, respectively. | |||
As of September 30, 2013, there was $2.0 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.71 years. | |||
Restricted Stock | |||
During the nine months ended September 30, 2013, 289,672 shares of restricted stock were issued and 60,240 shares vested. As of September 30, 2013, there were 338,197 restricted common shares outstanding and approximately $2.0 million of total unrecognized compensation cost related to unvested restricted stock, which is expected to be recognized over a weighted-average period of 2.92 years. | |||
Stock-Based Compensation Expense | |||
Total stock-based compensation expense recognized based on the total grant date fair value of shares vested was approximately $615,000 and $684,000 for the three months ended September 30, 2013 and 2012, respectively, and $2.0 million for both of the nine months ended September 30, 2013 and 2012. | |||
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
NOTE 9: INCOME TAXES | |
The Company computes an estimated annual effective tax rate for interim financial reporting purposes. The estimated annual effective tax rate is used to compute the tax expense or benefit related to ordinary income or loss. Tax expense or benefit related to all other items is individually computed and recognized when the items occur. The Company’s effective tax rate for the three and nine months ended September 30, 2013 was 32.8% and 33.8%, respectively. The Company’s effective tax rate for the three and nine months ended September 30, 2012 was (51.6)% and (38.1)%, respectively. The change in the effective tax rate for the three and nine months ended September 30, 2013 compared to the three and nine months ended September 30, 2012 was due primarily to the tax impact of projected income for 2013 as compared to losses for 2012. | |
As of September 30, 2013 and December 31, 2012, the Company had provided a valuation allowance related to federal NOLs and federal tax credits due to uncertainty regarding the Company’s ability to fully realize these assets. This determination considered the limitations on the utilization of NOLs and tax credits imposed by Section 382 and 383, respectively, of the Internal Revenue Code. The Company has reassessed its need for a valuation allowance related to its charitable contribution carryforwards. The Company believes the valuation allowance recorded at December 31, 2012 for charitable contributions carryforward is no longer required as of September 30, 2013. Accordingly, the Company has recorded a tax benefit of $656,000 as a result of this change. The Company has not established any other valuation allowances and it will continue to assess the realizability of its deferred tax assets and the corresponding impact on the valuation allowance. | |
The 2010 through 2012 tax years of the Company are open to examination by federal and state tax authorities. Currently EKR is under audit by the federal authorities and in the state of New Jersey. The Company is fully indemnified by the former shareholders and participating equityholders of EKR for any losses related to audits by federal and state tax authorities for pre-acquisition periods. | |
There were no changes in unrecognized tax positions for the nine months ended September 30, 2013. As of September 30, 2013, the Company has no unrecognized tax benefits. The Company does not reasonably expect any change to the amount of unrecognized tax benefits within the next 12 months. | |
Net_Income_Loss_Per_Share
Net Income (Loss) Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Net Income (Loss) Per Share | ' | ||||||||||||||||
NOTE 10: NET INCOME (LOSS) PER SHARE | |||||||||||||||||
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except share and per share data): | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 9,577 | $ | 1,249 | $ | 17,755 | $ | (4,929 | ) | ||||||||
Interest on convertible debt, net of tax effects | 340 | — | 993 | — | |||||||||||||
Net income (loss) used to calculate diluted earnings per share | $ | 9,917 | $ | 1,249 | $ | 18,748 | $ | (4,929 | ) | ||||||||
Denominator: | |||||||||||||||||
Weighted-average common shares, basic | 26,515,190 | 26,245,765 | 26,446,783 | 26,040,695 | |||||||||||||
Dilutive effect of stock options and restricted stock | 753,900 | 357,493 | 601,390 | — | |||||||||||||
Dilutive effect of convertible debt | 4,226,542 | — | 4,226,542 | — | |||||||||||||
Weighted-average common shares, diluted | 31,495,632 | 26,603,258 | 31,274,715 | 26,040,695 | |||||||||||||
Net income (loss) per share, basic | $ | 0.36 | $ | 0.05 | $ | 0.67 | $ | (0.19 | ) | ||||||||
Net income (loss) per share, diluted | $ | 0.31 | $ | 0.05 | $ | 0.6 | $ | (0.19 | ) | ||||||||
Anti-dilutive weighted-average shares | 419,691 | 1,520,234 | 558,762 | 2,845,845 | |||||||||||||
As of September 30, 2013 and 2012, there were 338,197 and 135,810 shares of unvested restricted stock outstanding that contain non-forfeitable rights to dividends. These securities are considered to be participating securities under the two-class method for determining basic and fully diluted net income (loss) per share. Because the treasury stock method and the two-class method yield the same result for both basic and diluted net income (loss) in each of the periods presented, only the treasury stock method has been disclosed. | |||||||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments And Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
NOTE 11: COMMITMENTS AND CONTINGENCIES | |
Lease Obligations | |
The Company leases its facilities, certain equipment and automobiles under non-cancelable operating leases expiring at various dates through 2016. The Company recognizes lease expense on a straight-line basis over the term of the lease, excluding renewal periods, unless renewal of the lease is reasonably assured. Lease expense was approximately $134,000 and $894,000 for the three months ended September 30, 2013 and 2012, respectively, and approximately $421,000 and $1.3 million for the nine months ended September 30, 2013 and 2012, respectively. | |
In connection with the acquisition of EKR in June 2012, the Company assumed the lease for office space in Bedminster, New Jersey that was scheduled to extend through December 15, 2015. The lease was subsequently terminated in August 2012, effective September 30, 2012. The Company paid lease termination fees, of which $541,000 was recorded as lease expense during the third quarter of 2012. | |
Supply Agreements | |
The Company has entered into various supply agreements with certain vendors and pharmaceutical manufacturers. Financial commitments related to these agreements totaled approximately $52.0 million as of September 30, 2013, which includes any minimum amounts payable and penalties for failure to satisfy purchase commitments that the Company has determined to be probable and that are reasonably estimable. Since many of these commitment amounts are dependent on variable components of the agreements, actual payments and the timing of those payments may differ from management’s estimates. As of September 30, 2013, the Company had outstanding purchase orders related to inventory, excluding commitments under supply agreements, totaling approximately $21.2 million. | |
Royalty Agreements | |
The Company has contractual obligations to pay royalties to the former owners or current licensors of certain product rights that have been acquired by or licensed to the Company. These royalties are typically based on a percentage of net sales of the particular licensed product and are included in cost of product sales in the consolidated statements of comprehensive income (loss). For the three months ended September 30, 2013 and 2012, total royalty expenses were $2.4 million and $684,000, respectively, and for the nine months ended September 30, 2013 and 2012, total royalty expenses were $4.9 million and $3.5 million, respectively. | |
Other Licensing Agreements | |
The Company is committed to make potential future milestone payments to third parties as part of licensing, distribution and development agreements. Payments under these agreements generally become due and payable only upon achievement of certain development, regulatory and/or commercial milestones. The Company may be required to make $30.9 million in additional payments to various parties if all milestones under the agreements are met. Because the achievement of milestones is neither probable nor reasonably estimable, such contingent payments have not been recorded on the accompanying consolidated balance sheets. The Company is also obligated to pay royalties on net sales or gross profit, if any, of certain products and product candidates currently in its portfolio following their commercialization. | |
As of September 30, 2013, the Company had outstanding financial commitments related to ongoing research and development contracts totaling approximately $769,000. | |
Additional Consideration for the Cardiokine, Inc. (“Cardiokine”) Merger | |
In addition, in connection with its acquisition of Cardiokine in December 2011, the Company recorded an $8.8 million contingent liability for additional consideration potentially payable under the merger agreement. The Company agreed to pay potential consideration consisting of each of the following: (i) either $7.0 million or $8.5 million if Cardiokine’s pending new drug application for its lixivaptan compound, LIXAR® (lixivaptan), is approved for sale by the FDA; (ii) up to $147.5 million based on the achievement of certain sales related milestones ($7.5 million at $75 million, $15 million at $150 million, $25 million at $250 million and $100 million at $500 million, each payable at the first time the annual sales reach the relevant milestone); (iii) quarterly earnout payments of 8% or 12% of net sales of the approved product, with such rate being dependent upon the scope of the labeling which the FDA may approve for the product; and (iv) one-half of any proceeds realized from the license of the approved product outside the United States (collectively, the “Purchase Consideration”). The Purchase Consideration will be paid first to a subsidiary of Pfizer Inc. (“Pfizer”), the licensor of certain rights to the lixivaptan compound, in satisfaction of Cardiokine’s payment obligations to Pfizer, until Pfizer has been paid a total of $20 million. Thereafter, any further Purchase Consideration will be paid in accordance with the merger agreement to certain other parties for which obligations existed and then directly to Cardiokine’s former stockholders. | |
The initial fair value of this liability is a level 3 measurement and was determined using a probability-weighted discounted cash flow analysis incorporating the estimated future cash flows from potential milestones and royalty payments discounted to present value using a discount rate of 21.5%. The liability will be periodically assessed based on events and circumstances related to the underlying milestones, and any change in fair value will be recorded in the Company’s consolidated statement of comprehensive income (loss). The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the carrying value of the liability. At December 31, 2012, the Company determined the fair value of the contingent liability was zero. During the nine months ended September 30, 2013, there were no events or circumstances that would have required a revaluation of the liability. | |
Co-Promotion and Marketing Services Agreements | |
The Company entered into, but has now terminated, a co-promotion agreement that granted a third party the exclusive right to promote and sell ZYFLO CR and ZYFLO (zileuton) in conjunction with the Company. Under this agreement, the Company pays the third party co-promotion fees equal to the ratio of total prescriptions written by pulmonary specialists to total prescriptions during the applicable period multiplied by a percentage of quarterly net sales of the products covered by the agreement, after third-party royalties. Under this agreement, the Company is obligated to make these payments for a “sunset” period that lasts until the fourth quarter of 2013. | |
The Company also entered into a license and distribution agreement with DCI, as discussed above in Note 5. Under this agreement, each of the Company and DCI is required to make payments to the other party based on a percentage of such party’s net sales of PERTZYE attributable to the cystic fibrosis market in the territory covered by the agreement. | |
As of September 30, 2013, the Company had outstanding financial commitments related to various marketing and analytical service agreements totaling approximately $4.5 million. | |
Severance | |
Selected executive employees of the Company have employment agreements which provide for severance payments of up to two times base salary, bonuses and benefits upon termination, depending on the reasons for the termination. These executives would also be required to execute a release and settlement agreement. As of September 30, 2013, the Company had no amounts recorded as accrued severance for executives under such agreements. | |
Legal Proceedings | |
The Company is involved in lawsuits, claims, investigations and proceedings related to its business. There are no matters pending that the Company currently believes are reasonably possible of having a material impact to its business, consolidated financial condition, results of operations or cash flows except as described above in Note 1 and as discussed below. | |
Louisiana Litigation | |
On September 11, 2013, the State of Louisiana (the “State”) filed suit against the Company and 53 other defendants (the “Louisiana Litigation”), alleging that the defendants submitted incorrect data and other information to the federal Medicaid program’s electronic product database. The State’s petition alleges that this conduct caused the Louisiana Medicaid program to pay for products that were not covered by the program. The State alleges that this conduct resulted in violations of the State’s Unfair Trade Practices and Consumer Protection Law and Medical Assistance Program Integrity Law; constituted actionable fraud, negligent misrepresentation, and redhibition; and resulted in unjust enrichment. | |
The Louisiana Litigation was originally filed in Louisiana’s 19th Judicial District; the defendants on October 15, 2013, removed the case to the United States District Court for the Middle District of Louisiana, where it is currently pending. It is not possible at this time to predict the schedule, jurisdiction, or procedural context in which the Louisiana Litigation will ultimately be resolved. As the case is at an early stage, the Company cannot at this time estimate its ultimate exposure to loss or liability, if any, related to this lawsuit. | |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
NOTE 12: RELATED PARTY TRANSACTIONS | |
Chiesi, the Company’s majority stockholder, manufactures all of the Company’s requirements for CUROSURF (poractant alfa) pursuant to a license and distribution agreement that became effective on July 28, 2009, as amended on September 28, 2010 and December 14, 2012. The Company began promoting and selling CUROSURF in September 2009. Inventory purchases from Chiesi aggregated $6.3 million and $20.1 million for the three and nine months ended September 30, 2013, respectively, compared to $6.4 million and $18.5 million for the three and nine months ended September 30, 2012, respectively. As of September 30, 2013, the Company had accounts payable of $2.8 million due to Chiesi. | |
As discussed in Note 7, on June 21, 2012, the Company entered into the Credit Agreement with Chiesi in connection with its acquisition of EKR. The Credit Agreement includes a Term Loan A of $60.0 million and Term Loan B of $30.0 million. The Term Loans were funded on June 25, 2012 and the acquisition of EKR closed on June 26, 2012. As of September 30, 2013, the net carrying value of the Term Loans was $89.6 million, net of capitalized unamortized debt financing costs. During the three and nine months ended September 30, 2013, the Company paid $1.5 million and $4.4 million, respectively, of interest expense less withholding tax to Chiesi related to the Term Loans. There was no accrued interest payable due to Chiesi as of September 30, 2013. | |
On November 6, 2012, the Company and Chiesi entered into a License and Distribution Agreement pursuant to which Chiesi granted the Company an exclusive license to market and sell Chiesi’s BETHKIS® (tobramycin inhalation solution) product in the United States. BETHKIS is an FDA-approved, inhaled, aminoglycoside antibacterial product indicated for the management of cystic fibrosis patients with Pseudomonas aeruginosa. Safety and efficacy have not been demonstrated in patients under the age of six years, patients with a forced expiratory volume in less than one second (FEV1) less than 40% or greater than 80% predicted, or patients colonized with Burkholderia cepacia. In consideration for the grant of the license, the Company made an initial payment of $1.0 million and will make a milestone payment of $2.5 million upon the first commercial sale of the product in the United States. The Company will also be required to pay certain costs related to a Phase IV clinical trial with respect to the product and quarterly royalties based on a percentage of net sales. | |
The BETHKIS license transfer between the Company and Chiesi was recorded by the Company as an equity transaction between entities under common control. As such, the Company did not record an asset for the license acquired, since there were no historical carrying amounts recorded by Chiesi. No liabilities were transferred. | |
On September 15, 2013, the Company entered into the Chiesi Merger Agreement with Chiesi and the Merger Sub. The Chiesi Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Chiesi Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving the merger as a direct wholly owned subsidiary of Chiesi. At the same time that the Company entered into the Chiesi Merger Agreement, Craig A. Collard, the Company’s Chairman, Chief Executive Officer and beneficial owner of 8.1% of the Company’s shares, and an entity controlled by him, entered into a voting agreement with the Company, Chiesi and Merger Sub under which Mr. Collard and Cornerstone Biopharma Holdings, Ltd. agreed to vote their shares of the Company’s common stock in favor of the Chiesi Merger. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
NOTE 13: SUBSEQUENT EVENTS | |
The Company has evaluated all events and transactions that occurred after September 30, 2013. The Company did not have any material subsequent events that require adjustment or disclosure in these financial statements. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Changes And Error Corrections [Abstract] | ' |
Recent Accounting Pronouncements | ' |
NOTE 14: RECENT ACCOUNTING PRONOUNCEMENTS | |
There were no recent accounting pronouncements that have not yet been adopted by the Company that are expected to have a material impact on the Company’s consolidated financial statements. |
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Nature of Operations | ' | ||||||||||||||||
Nature of Operations | |||||||||||||||||
Cornerstone Therapeutics Inc., together with its subsidiaries (collectively, the “Company”), is a specialty pharmaceutical company focused on commercializing products for the hospital and adjacent specialty markets. Key elements of the Company’s strategy are to focus its commercial and development efforts in the hospital and adjacent specialty markets within the U.S. pharmaceutical marketplace; continue to seek out opportunities to acquire companies, marketed or registration-stage products and late-stage development products that fit within the Company’s focus areas; and generate revenues by marketing approved generic products through the Company’s wholly owned subsidiary, Aristos Pharmaceuticals, Inc. | |||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The Company’s consolidated financial statements include the accounts of Cornerstone Therapeutics Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||||||
Reclassifications | ' | ||||||||||||||||
Reclassifications | |||||||||||||||||
The gain on divestiture of product rights previously classified separately is included in other operating expenses, net in the accompanying consolidated statements of comprehensive income (loss). This reclassification had no effect on net loss as previously reported. | |||||||||||||||||
Interim Financial Statements | ' | ||||||||||||||||
Interim Financial Statements | |||||||||||||||||
The accompanying unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these financial statements. The consolidated balance sheet at December 31, 2012 has been derived from the Company’s audited consolidated financial statements included in its annual report on Form 10-K for the year ended December 31, 2012. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012. | |||||||||||||||||
Operating results for the three and nine month periods ended September 30, 2013 are not necessarily indicative of the results for the full year. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The more significant estimates reflected in the Company’s consolidated financial statements include certain judgments regarding revenue recognition and related accruals, goodwill and intangible assets, inventory, stock-based compensation and income taxes. Actual results could differ from those estimates or assumptions. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company maintains its cash deposits with federally insured banks, however, as of September 30, 2013, the majority of the Company’s cash deposits were not federally insured. | |||||||||||||||||
Accounts Receivable | ' | ||||||||||||||||
Accounts Receivable | |||||||||||||||||
The Company typically requires its customers to remit payments within the first 30 to 80 days after the invoice date, depending on the customer and the products purchased. In addition, the Company offers wholesale distributors a prompt payment discount if they make payments within these deadlines. This discount is generally 2% to 3%, but may be higher in some instances due to product launches or customer and/or industry expectations. Because the Company’s wholesale distributors typically take the prompt payment discount, the Company accrues 100% of the prompt payment discounts, based on the gross amount of each invoice, at the time of sale, and the Company applies earned discounts at the time of payment. The Company adjusts the accrual periodically to reflect actual experience. Historically, these adjustments have not been material. The allowance for prompt payment discounts was $626,000 and $320,000 as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||||
The Company performs ongoing credit evaluations and does not require collateral. As appropriate, the Company establishes provisions for potential credit losses. In the opinion of management, no allowance for doubtful accounts was necessary as of September 30, 2013 or December 31, 2012. The Company writes off accounts receivable when management determines they are uncollectible and credits payments subsequently received on such receivables to bad debt expense in the period received. There were no write-offs during the three or nine months ended September 30, 2013 or 2012. | |||||||||||||||||
Inventories | ' | ||||||||||||||||
Inventories | |||||||||||||||||
Inventories are stated at the lower of cost or market value with cost determined under the first-in, first-out method and consist of raw materials, work in process and finished goods. Raw materials include the active pharmaceutical ingredient (“API”) for a product to be manufactured, work in process includes the bulk inventory of tablets or liquids that are in the process of being coated and/or packaged for sale, and finished goods include pharmaceutical products ready for commercial sale or distribution as samples. | |||||||||||||||||
Pre-approval inventory is expensed until it is probable that the inventory will be saleable. The Company capitalizes inventory costs associated with marketed products prior to product launch and certain products prior to regulatory approval, based on management’s judgment of probable future commercial use and net realizable value. Capitalization of pre-approval inventory does not begin until the product candidate is considered to have a high probability of regulatory approval, which is generally after the Company has submitted a filing with the U.S. Food and Drug Administration (the “FDA”). If the Company is aware of any specific risks or contingencies that are likely to impact the expected regulatory approval process or if there are any specific issues identified during the research process relating to safety, efficacy, manufacturing, marketing or labeling of the product candidate, the Company does not capitalize the related inventory. Once the Company capitalizes inventory for a product candidate that is not yet approved, the Company monitors, on a quarterly basis, the status of this candidate within the regulatory approval process, its projected sales volume and estimated selling price. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in its judgment of future commercial use and net realizable value, including due to a denial or delay of approval by regulatory bodies, a delay in the timeline for commercialization or other potential factors. At September 30, 2013, inventories included $3.5 million of costs capitalized as raw materials prior to regulatory approval of the Supplemental Biologics License Application (“sBLA”) for RETAVASE® (reteplase, recombinant). This inventory will be used in manufacturing saleable product after approval and will not be used in the remaining testing required for the sBLA approval. The sBLA is intended to qualify SCIL Proteins Production in Germany as a new supplier of reteplase, the API for RETAVASE, and to modify the existing approved Biologics License Application to include an intermediate step between the API and finished good manufacturing processes. | |||||||||||||||||
On a quarterly basis, the Company analyzes its inventory levels and records allowances for inventory that has become obsolete, inventory that has a cost basis in excess of the expected net realizable value and inventory that is in excess of expected demand based upon projected product sales. | |||||||||||||||||
Goodwill and Intangible Assets | ' | ||||||||||||||||
Goodwill and Intangible Assets | |||||||||||||||||
Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Other intangibles including product rights and acquired in-process research and development (“IPR&D”) are capitalized and recorded at fair value. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. | |||||||||||||||||
Product rights are amortized over the estimated useful life of the product or the remaining trademark or patent life on a straight-line or other basis to match the economic benefit received. Amortization begins once FDA approval has been obtained and commercialization of the product begins, which the Company targets launching shortly following regulatory approval. The Company evaluates its product rights on an ongoing basis to determine whether a revision to their useful lives should be made. This evaluation is based on management’s projection of the future cash flows associated with the products. | |||||||||||||||||
Acquired IPR&D resulting from a business combination is initially characterized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset will be assigned a useful life and amortized. Acquired IPR&D is classified as product rights on the accompanying consolidated balance sheets. | |||||||||||||||||
The Company evaluates the recoverability of its long-lived assets, including property and equipment and identifiable intangible assets on an exception basis whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets is not recoverable. The Company measures the recoverability of assets to be held and used by comparing the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment equals the amount by which the carrying amount of the assets exceeds the fair value of the assets. Any write-downs are recorded as permanent reductions in the carrying amount of the assets. | |||||||||||||||||
Goodwill and indefinite-lived intangible assets including acquired IPR&D are reviewed for impairment on an annual basis or more frequently if events or circumstances indicate that goodwill or indefinite-lived intangible assets may be impaired. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, then the Company would calculate the potential impairment loss by comparing the implied fair value of goodwill with the carrying value. If the implied fair value of goodwill is less than the carrying value, then an impairment charge would be recorded. The Company performs its annual evaluation of goodwill as of October 1 of each fiscal year. | |||||||||||||||||
Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability test. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
The Company’s consolidated net revenues represent the Company’s net product sales and other revenues. The following table sets forth the categories of the Company’s net revenues (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Gross product sales | $ | 76,255 | $ | 57,793 | $ | 191,567 | $ | 122,267 | |||||||||
Sales allowances | (23,092 | ) | (20,268 | ) | (60,196 | ) | (41,114 | ) | |||||||||
Net product sales | 53,163 | 37,525 | 131,371 | 81,153 | |||||||||||||
Other revenues | 534 | — | 712 | 4 | |||||||||||||
Net revenues | $ | 53,697 | $ | 37,525 | $ | 132,083 | $ | 81,157 | |||||||||
The Company records all of its revenue from product sales and other revenues when realized or realizable and earned. Revenue is realized or realizable and earned when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. | |||||||||||||||||
Stock-Based Compensation | ' | ||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
The Company measures compensation cost for share-based payment awards granted, including grants of stock options and restricted stock, to employees and non-employee directors at fair value. The fair value of stock options is determined by using the Black-Scholes-Merton option-pricing model. The Company determines the fair value of restricted stock based on the market price of its common stock on the date of grant. Compensation expense is recognized on a straight-line basis over the service period for awards expected to vest. Stock-based compensation cost related to share-based payment awards granted to non-employees is adjusted each reporting period for changes in the fair value of the Company’s stock until the measurement date. The measurement date is generally considered to be the date when all services have been rendered or the date that options are fully vested. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and the tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. | |||||||||||||||||
Net deferred tax assets are recognized to the extent the Company’s management believes these assets will more likely than not be realized. In making such determination, management considers all positive and negative evidence, including reversals of existing temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management periodically reviews its deferred tax assets for recoverability and its estimates and judgments in assessing the need for a valuation allowance. | |||||||||||||||||
The Company recognizes a tax benefit from uncertain positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. | |||||||||||||||||
Net Income (Loss) Per Share | ' | ||||||||||||||||
Net Income (Loss) Per Share | |||||||||||||||||
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during each period. Diluted net income (loss) per share is computed by dividing net income (loss) by the sum of the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. In periods for which the convertible term loan is determined to be dilutive to earnings per share, net income is adjusted for interest expense related to the convertible term loan, net of tax effects. Dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and warrants, the impact of non-vested restricted stock and the impact of the convertible debt. | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
The carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated their fair values as of September 30, 2013 and December 31, 2012 due to the short-term nature of these financial items. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||||||
Net Revenues | ' | ||||||||||||||||||||
The Company’s consolidated net revenues represent the Company’s net product sales and other revenues. The following table sets forth the categories of the Company’s net revenues (in thousands): | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Gross product sales | $ | 76,255 | $ | 57,793 | $ | 191,567 | $ | 122,267 | |||||||||||||
Sales allowances | (23,092 | ) | (20,268 | ) | (60,196 | ) | (41,114 | ) | |||||||||||||
Net product sales | 53,163 | 37,525 | 131,371 | 81,153 | |||||||||||||||||
Other revenues | 534 | — | 712 | 4 | |||||||||||||||||
Net revenues | $ | 53,697 | $ | 37,525 | $ | 132,083 | $ | 81,157 | |||||||||||||
Contingent Consideration Obligations Measured on a Recurring Basis Using Significant Unobservable Inputs | ' | ||||||||||||||||||||
The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2013 (in thousands): | |||||||||||||||||||||
December 31, 2012 | Issuances | Payments (1) | Adjustments (2) | September 30, 2013 | |||||||||||||||||
Acquisition-related contingent consideration (3) | $ | 33,208 | $ | — | $ | (4,908 | ) | $ | 6,146 | $ | 34,446 | ||||||||||
-1 | Relates to payments of acquisition-related contingent consideration with respect to CARDENE I.V. | ||||||||||||||||||||
-2 | This amount includes fair value adjustments to the acquisition-related contingent consideration for CARDENE I.V. and RETAVASE. The adjustment is recognized as change in acquisition-related contingent payments in the consolidated statements of comprehensive income (loss). | ||||||||||||||||||||
-3 | Acquisition-related contingent consideration is classified as acquisition-related contingent payments in the accompanying consolidated balance sheets. |
Business_Combinations_Tables
Business Combinations (Tables) (EKR Therapeutics, Inc. [Member]) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
EKR Therapeutics, Inc. [Member] | ' | ||||||||||||||||
Summary of Purchase Price (Fair Value of Consideration Transferred) | ' | ||||||||||||||||
A summary of the purchase price is as follows (in thousands): | |||||||||||||||||
Cash paid for EKR’s outstanding shares | $ | 126,424 | |||||||||||||||
Acquisition-related contingent consideration | 37,788 | ||||||||||||||||
Total fair value of consideration | $ | 164,212 | |||||||||||||||
Summary of Assets Acquired and Liabilities Assumed | ' | ||||||||||||||||
The following table presents the preliminary allocation of the total fair value of consideration transferred to the acquired tangible and intangible assets and assumed liabilities of EKR based on their estimated fair values as of the closing date of the transaction, measurement period adjustments recorded during the first six months of 2013, in which our measurement period concluded, and the as adjusted allocations of the total fair value of consideration transferred, as shown above (in thousands): | |||||||||||||||||
June 26, 2012(1) | Measurement Period | June 26, 2012 | |||||||||||||||
Adjustments (2) | (As adjusted) | ||||||||||||||||
Cash | $ | 516 | $ | — | $ | 516 | |||||||||||
Accounts receivable, net | 7,401 | 46 | 7,447 | ||||||||||||||
Inventory, net | 32,226 | — | 32,226 | ||||||||||||||
Prepaid expenses and other assets | 14,682 | (121 | ) | 14,561 | |||||||||||||
Identifiable intangibles | 154,123 | — | 154,123 | ||||||||||||||
Deferred tax assets | 35,079 | 274 | 35,353 | ||||||||||||||
Accounts payable | (2,690 | ) | — | (2,690 | ) | ||||||||||||
Accrued liabilities | (29,515 | ) | (7 | ) | (29,522 | ) | |||||||||||
Deferred tax liability related to intangibles acquired | (65,735 | ) | — | (65,735 | ) | ||||||||||||
Total identifiable net assets | $ | 146,087 | $ | 192 | $ | 146,279 | |||||||||||
Goodwill | 18,138 | (205 | ) | 17,933 | |||||||||||||
Total fair value of consideration | $ | 164,225 | $ | (13 | ) | $ | 164,212 | ||||||||||
-1 | As reported previously in the Company’s annual report on Form 10-K for the year ended December 31, 2012. | ||||||||||||||||
-2 | The measurement period adjustments during the first six months of 2013, in which our measurement period concluded, primarily reflect changes in accounts receivables, net, indemnified assets and liabilities and the related impact on deferred taxes. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These measurement period adjustments did not have a material impact on the Company’s December 31, 2012 consolidated financial statements. Accordingly, the Company has not retrospectively adjusted those financial statements. | ||||||||||||||||
Pro Forma Results of Operations and Gives Effect to Transaction | ' | ||||||||||||||||
Furthermore, the pro forma financial information does not reflect the impact of any reorganization or restructuring expenses or operating efficiencies resulting from combining the two companies (in thousands, except per share data). | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Net revenues | $ | 37,525 | $ | 40,645 | $ | 107,428 | $ | 125,434 | |||||||||
Net income (loss) | $ | 2,068 | $ | (3,628 | ) | $ | (4,048 | ) | $ | (2,648 | ) | ||||||
Basic income (loss) per share | $ | 0.08 | $ | (0.14 | ) | $ | (0.16 | ) | $ | (0.10 | ) | ||||||
Diluted income (loss) per share | $ | 0.08 | $ | (0.14 | ) | $ | (0.16 | ) | $ | (0.10 | ) | ||||||
Inventory_Tables
Inventory (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories, Net | ' | ||||||||
The following table represents inventories, net as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 6,580 | $ | 3,561 | |||||
Work in process | 3,029 | 2,920 | |||||||
Finished goods | 7,386 | 7,016 | |||||||
Total | 16,995 | 13,497 | |||||||
Inventory allowances | (2,536 | ) | (2,113 | ) | |||||
Inventories, net | $ | 14,459 | $ | 11,384 | |||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||
Product Rights, Net | ' | ||||||||||||||||
The following tables represent product rights, net as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||||||||||
September 30, 2013 | |||||||||||||||||
Gross | Accumulated | Net | Weighted- | ||||||||||||||
Carrying | Amortization | Amount | Average | ||||||||||||||
Amount | Amortization | ||||||||||||||||
Period (yrs.) | |||||||||||||||||
CUROSURF® | $ | 107,606 | $ | 39,424 | $ | 68,182 | 15 | ||||||||||
ZYFLO® | 11,500 | 7,890 | 3,610 | 7.1 | |||||||||||||
CARDENE I.V. | 131,556 | 11,061 | 120,495 | 15 | |||||||||||||
PERTZYE | 10,000 | 395 | 9,605 | 10 | |||||||||||||
RETAVASE | 26,858 | — | 26,858 | n/a | |||||||||||||
Other | 575 | 77 | 498 | 5 | |||||||||||||
Total | $ | 288,095 | $ | 58,847 | $ | 229,248 | 14.4 | ||||||||||
December 31, 2012 | |||||||||||||||||
Gross | Accumulated | Net | Weighted- | ||||||||||||||
Carrying | Amortization | Amount | Average | ||||||||||||||
Amount | Amortization | ||||||||||||||||
Period (yrs.) | |||||||||||||||||
CUROSURF | $ | 107,606 | $ | 34,740 | $ | 72,866 | 15 | ||||||||||
ZYFLO | 11,500 | 6,686 | 4,814 | 7.1 | |||||||||||||
CARDENE I.V. | 131,556 | 4,483 | 127,073 | 15 | |||||||||||||
RETAVASE | 26,858 | — | 26,858 | n/a | |||||||||||||
Other | 575 | 75 | 500 | n/a | |||||||||||||
Total | $ | 278,095 | $ | 45,984 | $ | 232,111 | 14.6 | ||||||||||
Future Estimated Amortization Expense | ' | ||||||||||||||||
Aggregate annual amortization expense of product rights (excluding the rights related to products expected to be launched) for each of the five succeeding fiscal years is estimated as follows (in thousands): | |||||||||||||||||
2013 | $ | 17,293 | |||||||||||||||
2014 | 17,721 | ||||||||||||||||
2015 | 17,721 | ||||||||||||||||
2016 | 16,116 | ||||||||||||||||
2017 | 16,116 | ||||||||||||||||
Thereafter | 130,287 | ||||||||||||||||
$ | 215,254 | ||||||||||||||||
Accrued_Expenses_Tables
Accrued Expenses (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Payables And Accruals [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
The components of accrued expenses are as follows (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Accrued product returns | $ | 15,373 | $ | 13,629 | |||||
Accrued rebates | 2,325 | 1,766 | |||||||
Accrued price adjustments and chargebacks | 14,699 | 9,651 | |||||||
Accrued compensation and benefits | 3,264 | 3,022 | |||||||
Accrued royalties | 3,560 | 3,487 | |||||||
Accrued research and development | 1,899 | 1,300 | |||||||
Accrued co-promotion | 2,244 | 2,330 | |||||||
Accrued expenses, other | 4,765 | 2,194 | |||||||
Total accrued expenses | $ | 48,129 | $ | 37,379 | |||||
Long_Term_Debt_Tables
Long Term Debt (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Summary of Term Loans | ' | ||||||||
The following table summarizes information on the Term Loans as of September 30, 2013 (in thousands): | |||||||||
Maturity Date | September 30, 2013 | ||||||||
Term Loan A (7.5% interest payable quarterly and principal payable in quarterly installments of $3.5 million starting on December 31, 2014) | June 2017 | ||||||||
Principal amount | $ | 60,000 | |||||||
Unamortized debt financing costs | (249 | ) | |||||||
Net carrying amount | 59,751 | ||||||||
Term Loan B (6.5% interest payable quarterly and principal payable upon maturity, with conversion option through June 21, 2014) | Jun-17 | ||||||||
Principal amount | 30,000 | ||||||||
Unamortized debt financing costs | (133 | ) | |||||||
Net carrying amount | 29,867 | ||||||||
Total debt, carrying amount | 89,618 | ||||||||
Less: current portion | — | ||||||||
Total long-term debt, carrying amount | $ | 89,618 | |||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||
Assumptions Used to Value Stock Options | ' | ||
The following table shows the assumptions used to value stock options on the date of grant, as follows: | |||
Nine Months Ended | |||
September 30, | |||
2013 | |||
Estimated dividend yield | 0.00% | ||
Expected stock price volatility | 74-77% | ||
Risk-free interest rate | 0.97-1.71% | ||
Expected life of option (in years) | 5.82-5.84 | ||
Weighted-average grant date fair value per share of options granted | $5.45 |
Net_Income_Loss_Per_Share_Tabl
Net Income (Loss) Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Computation of Basic and Diluted Net Income (Loss) Per Share | ' | ||||||||||||||||
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except share and per share data): | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 9,577 | $ | 1,249 | $ | 17,755 | $ | (4,929 | ) | ||||||||
Interest on convertible debt, net of tax effects | 340 | — | 993 | — | |||||||||||||
Net income (loss) used to calculate diluted earnings per share | $ | 9,917 | $ | 1,249 | $ | 18,748 | $ | (4,929 | ) | ||||||||
Denominator: | |||||||||||||||||
Weighted-average common shares, basic | 26,515,190 | 26,245,765 | 26,446,783 | 26,040,695 | |||||||||||||
Dilutive effect of stock options and restricted stock | 753,900 | 357,493 | 601,390 | — | |||||||||||||
Dilutive effect of convertible debt | 4,226,542 | — | 4,226,542 | — | |||||||||||||
Weighted-average common shares, diluted | 31,495,632 | 26,603,258 | 31,274,715 | 26,040,695 | |||||||||||||
Net income (loss) per share, basic | $ | 0.36 | $ | 0.05 | $ | 0.67 | $ | (0.19 | ) | ||||||||
Net income (loss) per share, diluted | $ | 0.31 | $ | 0.05 | $ | 0.6 | $ | (0.19 | ) | ||||||||
Anti-dilutive weighted-average shares | 419,691 | 1,520,234 | 558,762 | 2,845,845 |
Organization_and_Basis_of_Pres2
Organization and Basis of Presentation - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Feb. 18, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Feb. 18, 2013 | Sep. 15, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 15, 2013 | Feb. 18, 2013 | Feb. 18, 2013 | |
Director | Chiesi [Member] | Chiesi Merger [Member] | Chiesi Merger [Member] | Chiesi Merger [Member] | Chiesi Merger [Member] | Minimum [Member] | Maximum [Member] | |||||
Lawsuits | Chairman, Chief Executive Officer and Beneficial Owner [Member] | |||||||||||
Organization And Basis Of Presentation [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of outstanding common shares owned | ' | ' | ' | ' | ' | 58.00% | ' | ' | ' | ' | ' | ' |
Proposed cash purchase price of common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $6.40 | $6.70 |
Number of independent directors in special committee | 5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Company common stock conversion price | ' | ' | ' | ' | ' | ' | $9.50 | ' | ' | ' | ' | ' |
Percentage of shares of common stock owned | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.10% | ' | ' |
Threshold limit of purchase price for all acquisitions under merger agreement | ' | ' | ' | ' | ' | ' | $5,000,000 | ' | ' | ' | ' | ' |
Transaction-related expenses | ' | $1,458,000 | $1,764,000 | $2,595,000 | $7,944,000 | ' | ' | $1,500,000 | $2,500,000 | ' | ' | ' |
Number of lawsuits | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Jun. 26, 2012 | |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' |
Maturity of highly liquid investments | ' | ' | 'Three months or less | ' | ' | ' |
Percentage of reserve for prompt payment discounts | ' | ' | 100.00% | ' | ' | ' |
Allowance for prompt payment discounts | $626,000 | ' | $626,000 | ' | $320,000 | ' |
Allowance for doubtful accounts | 0 | ' | 0 | ' | 0 | ' |
Account receivables write-offs during the period | 0 | 0 | 0 | 0 | ' | ' |
Costs capitalized as raw materials and work in process prior to regulatory approval of the sBLA for RETAVASE | 3,500,000 | ' | 3,500,000 | ' | ' | ' |
Fair value of contingent consideration payable | ' | ' | ' | ' | ' | 37,800,000 |
Fair value of acquired contingent consideration | ' | ' | ' | ' | ' | 23,900,000 |
Payable after Relaunch Approval [Member] | RETAVASE [Member] | ' | ' | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' |
Potential consideration | 4,000,000 | ' | 4,000,000 | ' | ' | ' |
Payable on or before First Anniversary of Relaunch Approval [Member] | RETAVASE [Member] | ' | ' | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' |
Potential consideration | $2,000,000 | ' | $2,000,000 | ' | ' | ' |
Annual Royalty Payments [Member] | RETAVASE [Member] | ' | ' | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' |
Potential consideration term | ' | ' | '3 years | ' | ' | ' |
Minimum [Member] | ' | ' | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' |
Customers' payments period | ' | ' | '30 days | ' | ' | ' |
Percentage of prompt payment discount | ' | ' | 2.00% | ' | ' | ' |
Contractual return rights period | ' | ' | '6 months | ' | ' | ' |
Expiration period from date of manufacturing | ' | ' | '18 months | ' | ' | ' |
Maximum [Member] | ' | ' | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' |
Customers' payments period | ' | ' | '80 days | ' | ' | ' |
Percentage of prompt payment discount | ' | ' | 3.00% | ' | ' | ' |
Contractual return rights period | ' | ' | '18 months | ' | ' | ' |
Expiration period from date of manufacturing | ' | ' | '24 months | ' | ' | ' |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Net Revenues (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Gross product sales | $76,255 | $57,793 | $191,567 | $122,267 |
Sales allowances | -23,092 | -20,268 | -60,196 | -41,114 |
Net product sales | 53,163 | 37,525 | 131,371 | 81,153 |
Other revenues | 534 | ' | 712 | 4 |
Net revenues | $53,697 | $37,525 | $132,083 | $81,157 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Contingent Consideration Obligations Measured on a Recurring Basis Using Significant Unobservable Inputs (Detail) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Business Acquisition [Line Items] | ' | ' |
Acquisition-related contingent consideration, Issuances | ' | ' |
Acquisition-related contingent consideration | 34,446 | 33,208 |
CARDENE I.V. [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Acquisition-related contingent consideration, Payments | -4,908 | ' |
CARDENE I.V. and RETAVASE [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Acquisition-related contingent consideration, Adjustments | $6,146 | ' |
Business_Combinations_Addition
Business Combinations - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | 3 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 26, 2012 | Jun. 26, 2012 | Jun. 26, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | |
CARDENE I.V. [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | EKR [Member] | |||||
CARDENE I.V. [Member] | RETAVASE [Member] | |||||||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated consideration | ' | ' | ' | ' | ' | $164,212,000 | ' | ' | ' | ' | ' | ' |
Date of acquisition | ' | ' | ' | ' | ' | ' | ' | 26-Jun-12 | ' | ' | ' | ' |
Cash paid for EKR's outstanding shares | ' | ' | ' | ' | ' | 126,424,000 | ' | ' | ' | ' | ' | ' |
Acquisition-related contingent consideration | ' | ' | ' | 37,800,000 | ' | 37,788,000 | ' | ' | ' | ' | ' | ' |
Identifiable intangible | ' | ' | ' | ' | ' | 154,123,000 | ' | 154,100,000 | ' | ' | ' | ' |
Fair value of products rights allocated | ' | ' | ' | ' | ' | ' | ' | 158,400,000 | ' | 131,600,000 | 26,900,000 | ' |
Unfavorable contract liability | ' | ' | ' | ' | ' | ' | ' | 4,300,000 | ' | ' | ' | ' |
Amortization period of product rights | ' | ' | ' | ' | ' | ' | ' | ' | ' | '15 years | '12 years | ' |
Other long-term liabilities fair value | ' | ' | ' | ' | ' | ' | ' | 4,300,000 | 4,300,000 | ' | ' | ' |
Business acquisition inventory adjustment to fair value | ' | ' | ' | ' | ' | 19,400,000 | ' | ' | ' | ' | ' | ' |
Initially recorded indemnification assets | ' | ' | ' | ' | ' | 4,500,000 | ' | ' | ' | ' | ' | ' |
Initially recorded indemnification liabilities | ' | ' | ' | ' | ' | 8,800,000 | ' | ' | ' | ' | ' | ' |
Fair value of acquired contingent consideration | ' | ' | ' | 23,900,000 | 23,900,000 | ' | ' | ' | ' | ' | ' | ' |
Transaction costs of acquisition | ' | ' | ' | ' | ' | ' | 7,300,000 | 35,000 | ' | ' | ' | ' |
Gain on settlement of liabilities | 113,000 | 1,101,000 | 1,492,000 | ' | ' | ' | ' | ' | ' | ' | ' | 700,000 |
Net revenues | ' | ' | ' | ' | ' | ' | 13,500,000 | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | $2,100,000 | ' | ' | ' | ' | ' |
Business_Combinations_Summary_
Business Combinations - Summary of Purchase Price (Fair Value of Consideration Transferred) (Detail) (USD $) | 1 Months Ended |
In Thousands, unless otherwise specified | Jun. 26, 2012 |
Business Acquisition [Line Items] | ' |
Acquisition-related contingent consideration | $37,800 |
EKR Therapeutics, Inc. [Member] | ' |
Business Acquisition [Line Items] | ' |
Cash paid for EKR's outstanding shares | 126,424 |
Acquisition-related contingent consideration | 37,788 |
Total fair value of consideration | $164,212 |
Business_Combinations_Summary_1
Business Combinations - Summary of Assets Acquired and Liabilities Assumed (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Jun. 26, 2012 | Jun. 26, 2012 | Jun. 26, 2012 |
In Thousands, unless otherwise specified | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | ||
Measurement Period Adjustments [Member] | As Adjusted [Member] | |||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' |
Cash | ' | ' | ' | $516 | ' | $516 |
Accounts receivable, net | ' | ' | ' | 7,401 | 46 | 7,447 |
Inventory, net | ' | ' | ' | 32,226 | ' | 32,226 |
Prepaid expenses and other assets | ' | ' | ' | 14,682 | -121 | 14,561 |
Identifiable intangibles | ' | ' | 154,100 | 154,123 | ' | 154,123 |
Deferred tax assets | ' | ' | ' | 35,079 | 274 | 35,353 |
Accounts payable | ' | ' | ' | -2,690 | ' | -2,690 |
Accrued liabilities | ' | ' | ' | -29,515 | -7 | -29,522 |
Deferred tax liability related to intangibles acquired | ' | ' | ' | -65,735 | ' | -65,735 |
Total identifiable net assets | ' | ' | ' | 146,087 | 192 | 146,279 |
Goodwill | 33,151 | 33,356 | ' | 18,138 | -205 | 17,933 |
Total fair value of consideration | ' | ' | ' | $164,225 | ($13) | $164,212 |
Business_Combinations_Pro_Form
Business Combinations - Pro Forma Results of Operations and Gives Effect to Transaction (Detail) (EKR Therapeutics, Inc. [Member], USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Sep. 30, 2011 |
EKR Therapeutics, Inc. [Member] | ' | ' | ' | ' |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ' | ' | ' | ' |
Net revenues | $37,525 | $40,645 | $107,428 | $125,434 |
Net income (loss) | $2,068 | ($3,628) | ($4,048) | ($2,648) |
Basic income (loss) per share | $0.08 | ($0.14) | ($0.16) | ($0.10) |
Diluted income (loss) per share | $0.08 | ($0.14) | ($0.16) | ($0.10) |
Inventory_Inventories_Net_Deta
Inventory - Inventories, Net (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ' | ' |
Raw materials | $6,580 | $3,561 |
Work in process | 3,029 | 2,920 |
Finished goods | 7,386 | 7,016 |
Total | 16,995 | 13,497 |
Inventory allowances | -2,536 | -2,113 |
Inventories, net | $14,459 | $11,384 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets - Additional Information (Detail) (USD $) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Product Rights [Line Items] | ' | ' | ' | ' |
Goodwill | ' | $33,151,000 | ' | $33,356,000 |
Goodwill deductible for income tax purposes | ' | 0 | ' | ' |
Estimated useful lives | ' | '14 years 4 months 24 days | ' | '14 years 7 months 6 days |
Product rights gross carrying amount | ' | 288,095,000 | ' | 278,095,000 |
Product rights, net of accumulated amortization divested by the company | 3,800,000 | ' | ' | ' |
Inventory and product samples, divested by the company | 2,500,000 | ' | ' | ' |
Other assets, divested by the company | 1,400,000 | ' | ' | ' |
Total cash consideration for the divestiture | 6,200,000 | ' | ' | ' |
Contingent liability included in other current and other long-term liabilities | 1,100,000 | ' | ' | ' |
Recognized a gain on divestiture included in other operating expenses, net, consolidated statements of comprehensive (loss) income | 1,500,000 | ' | 1,492,000 | ' |
RETAVASE [Member] | ' | ' | ' | ' |
Product Rights [Line Items] | ' | ' | ' | ' |
Estimated useful lives | ' | ' | ' | ' |
Product rights gross carrying amount | ' | 26,858,000 | ' | 26,858,000 |
Minimum [Member] | ' | ' | ' | ' |
Product Rights [Line Items] | ' | ' | ' | ' |
Estimated useful lives | ' | '5 years | ' | ' |
Maximum [Member] | ' | ' | ' | ' |
Product Rights [Line Items] | ' | ' | ' | ' |
Estimated useful lives | ' | '15 years | ' | ' |
Digestive Care Inc [Member] | ' | ' | ' | ' |
Product Rights [Line Items] | ' | ' | ' | ' |
Estimated useful lives | ' | '10 years | ' | ' |
Initial payment | ' | 10,000,000 | ' | ' |
Automatic renewal of agreement term | ' | '2 years | ' | ' |
Merus Labs International Inc. and Vansen Pharma Inc. [Member] | ' | ' | ' | ' |
Product Rights [Line Items] | ' | ' | ' | ' |
Product-related liabilities | 4,100,000 | ' | ' | ' |
Cash consideration recorded as receivable from the buyers | $1,200,000 | ' | ' | ' |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets - Product Rights, Net (Detail) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | $288,095 | $278,095 |
Accumulated Amortization | 58,847 | 45,984 |
Net Amount | 229,248 | 232,111 |
Weighted-Average Amortization Period (yrs.) | '14 years 4 months 24 days | '14 years 7 months 6 days |
CUROSURF [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 107,606 | 107,606 |
Accumulated Amortization | 39,424 | 34,740 |
Net Amount | 68,182 | 72,866 |
Weighted-Average Amortization Period (yrs.) | '15 years | '15 years |
ZYFLO [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 11,500 | 11,500 |
Accumulated Amortization | 7,890 | 6,686 |
Net Amount | 3,610 | 4,814 |
Weighted-Average Amortization Period (yrs.) | '7 years 1 month 6 days | '7 years 1 month 6 days |
CARDENE I.V. [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 131,556 | 131,556 |
Accumulated Amortization | 11,061 | 4,483 |
Net Amount | 120,495 | 127,073 |
Weighted-Average Amortization Period (yrs.) | '15 years | '15 years |
PERTZYE [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 10,000 | ' |
Accumulated Amortization | 395 | ' |
Net Amount | 9,605 | ' |
Weighted-Average Amortization Period (yrs.) | '10 years | ' |
RETAVASE [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 26,858 | 26,858 |
Accumulated Amortization | ' | ' |
Net Amount | 26,858 | 26,858 |
Weighted-Average Amortization Period (yrs.) | ' | ' |
Other [Member] | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 575 | 575 |
Accumulated Amortization | 77 | 75 |
Net Amount | $498 | $500 |
Weighted-Average Amortization Period (yrs.) | '5 years | ' |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets - Future Estimated Amortization Expense (Detail) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Goodwill And Intangible Assets Disclosure [Abstract] | ' |
2013 | $17,293 |
2014 | 17,721 |
2015 | 17,721 |
2016 | 16,116 |
2017 | 16,116 |
Thereafter | 130,287 |
Total | $215,254 |
Accrued_Expenses_Accrued_Expen
Accrued Expenses - Accrued Expenses (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Payables And Accruals [Abstract] | ' | ' |
Accrued product returns | $15,373 | $13,629 |
Accrued rebates | 2,325 | 1,766 |
Accrued price adjustments and chargebacks | 14,699 | 9,651 |
Accrued compensation and benefits | 3,264 | 3,022 |
Accrued royalties | 3,560 | 3,487 |
Accrued research and development | 1,899 | 1,300 |
Accrued co-promotion | 2,244 | 2,330 |
Accrued expenses, other | 4,765 | 2,194 |
Total accrued expenses | $48,129 | $37,379 |
Long_Term_Debt_Additional_Info
Long Term Debt - Additional Information (Detail) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Term_loan | |
Debt Instrument [Line Items] | ' |
Number of term loan | 2 |
Minimum prepayment of principal amount of term loan | $5,000,000 |
Minimum amount of multiple used for prepayment of principal amount of term loan under agreement | 1,000,000 |
Percentage of excess cash used to prepay term loan facility | 50.00% |
Minimum leverage ratio for mandatory prepayment | 2 |
Minimum amount of debt for conversion less than five million | 5,000,000 |
Increase in interest rate upon default in credit agreement | 2.00% |
Maximum amount of secured indebtedness outstanding any time | 25,000,000 |
Term loans incurred an estimated of issuance costs | 511,000 |
Term Loan A [Member] | ' |
Debt Instrument [Line Items] | ' |
Amount of term loan | 60,000,000 |
Loan bears interest which is payable quarterly | 7.50% |
Amortization payment of loans | 3,500,000 |
Maturity date | 23-Jun-17 |
Term Loan B [Member] | ' |
Debt Instrument [Line Items] | ' |
Amount of term loan | 30,000,000 |
Loan bears interest which is payable quarterly | 6.50% |
Maturity date | 23-Jun-17 |
Shares of common stock at a conversion price | $7.10 |
Minimum amount of conversion | 5,000,000 |
Expiration date of conversion option | 21-Jun-14 |
Outstanding balance of loan | $30,000,000 |
Convertible shares of common stock | 4,226,542 |
Long_Term_Debt_Summary_of_Term
Long Term Debt - Summary of Term Loans (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | Term Loan A [Member] | Term Loan B [Member] | ||
Debt Instrument [Line Items] | ' | ' | ' | ' |
Maturity date | ' | ' | 23-Jun-17 | 23-Jun-17 |
Principal amount | ' | ' | $60,000 | $30,000 |
Unamortized debt financing costs | ' | ' | -249 | -133 |
Net carrying amount | 89,618 | ' | 59,751 | 29,867 |
Less: current portion | ' | ' | ' | ' |
Total long-term debt, carrying amount | $89,618 | $89,540 | ' | ' |
Long_Term_Debt_Summary_of_Term1
Long Term Debt - Summary of Term Loans (Parenthetical) (Detail) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Debt Instrument [Line Items] | ' |
Frequency of periodic payment | 'Principal payable in quarterly installments |
Term Loan A [Member] | ' |
Debt Instrument [Line Items] | ' |
Interest payable | 7.50% |
Installment amount | 3.5 |
Starting date of payment | 31-Dec-14 |
Term Loan B [Member] | ' |
Debt Instrument [Line Items] | ' |
Interest payable | 6.50% |
Expiration date of conversion option | 21-Jun-14 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Stock options granted | ' | ' | 145,000 | ' |
Stock options exercised | ' | ' | 136,773 | ' |
Estimated dividend yield | ' | ' | 0.00% | ' |
Expected life of option (in years) | ' | ' | '5 years | ' |
Aggregate intrinsic value of options outstanding | $9,400,000 | ' | $9,400,000 | ' |
Aggregate intrinsic value of options exercisable | 7,600,000 | ' | 7,600,000 | ' |
Unrecognized compensation cost related to unvested stock options | 2,000,000 | ' | 2,000,000 | ' |
Stock-based compensation expense | 615,000 | 684,000 | 2,000,000 | 2,000,000 |
Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Unrecognized compensation cost expected to be recognized, weighted-average period | ' | ' | '1 year 8 months 16 days | ' |
Restricted Stock [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Unrecognized compensation cost expected to be recognized, weighted-average period | ' | ' | '2 years 11 months 1 day | ' |
Restricted stock vested | ' | ' | 60,240 | ' |
Restricted common shares outstanding | 338,197 | 135,810 | 338,197 | 135,810 |
Unrecognized compensation cost related to unvested restricted stock | $2,000,000 | ' | $2,000,000 | ' |
Restricted stock issued | ' | ' | 289,672 | ' |
StockBased_Compensation_Assump
Stock-Based Compensation - Assumptions Used to Value Stock Options (Detail) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Share Based Payment Award Stock Options Valuation Assumptions [Line Items] | ' |
Estimated dividend yield | 0.00% |
Risk-free interest rate, minimum | 0.97% |
Risk-free interest rate, maximum | 1.71% |
Expected life of option (in years) | '5 years |
Weighted-average grant date fair value per share of options granted | $5.45 |
Minimum [Member] | ' |
Share Based Payment Award Stock Options Valuation Assumptions [Line Items] | ' |
Expected stock price volatility | 74.00% |
Expected life of option (in years) | '5 years 9 months 26 days |
Maximum [Member] | ' |
Share Based Payment Award Stock Options Valuation Assumptions [Line Items] | ' |
Expected stock price volatility | 77.00% |
Expected life of option (in years) | '5 years 10 months 2 days |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Effective tax rate | 32.80% | -51.60% | 33.80% | -38.10% |
Income tax benefit | ' | ' | $656,000 | ' |
Income tax examination periods | ' | ' | '2010 through 2012 | ' |
Unrecognized tax benefits | $0 | ' | $0 | ' |
Net_Income_Loss_Per_Share_Comp
Net Income (Loss) Per Share - Computation of Basic and Diluted Net Income (Loss) Per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Numerator: | ' | ' | ' | ' |
Net income (loss) | $9,577 | $1,249 | $17,755 | ($4,929) |
Interest on convertible debt, net of tax effects | 340 | ' | 993 | ' |
Net income (loss) used to calculate diluted earnings per share | $9,917 | $1,249 | $18,748 | ($4,929) |
Denominator: | ' | ' | ' | ' |
Weighted-average common shares, basic | 26,515,190 | 26,245,765 | 26,446,783 | 26,040,695 |
Dilutive effect of stock options and restricted stock | 753,900 | 357,493 | 601,390 | ' |
Dilutive effect of convertible debt | 4,226,542 | ' | 4,226,542 | ' |
Weighted-average common shares, diluted | 31,495,632 | 26,603,258 | 31,274,715 | 26,040,695 |
Net income (loss) per share, basic | $0.36 | $0.05 | $0.67 | ($0.19) |
Net income (loss) per share, diluted | $0.31 | $0.05 | $0.60 | ($0.19) |
Anti-dilutive weighted-average shares | 419,691 | 1,520,234 | 558,762 | 2,845,845 |
Net_Income_Loss_Per_Share_Addi
Net Income (Loss) Per Share - Additional Information (Detail) (Restricted Stock [Member]) | Sep. 30, 2013 | Sep. 30, 2012 |
Restricted Stock [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Unvested restricted stock outstanding containing non-forfeitable rights to dividends | 338,197 | 135,810 |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | ||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2011 | |
Defendant | Executive Officers [Member] | EKR Therapeutics, Inc. [Member] | EKR Therapeutics, Inc. [Member] | Cardiokine, Inc. [Member] | Cardiokine, Inc. [Member] | Cardiokine, Inc. [Member] | Cardiokine, Inc. [Member] | Cardiokine, Inc. [Member] | Cardiokine, Inc. [Member] | Cardiokine, Inc. [Member] | Pfizer Obligation under Cardiokine Acquisition [Member] | ||||||
Minimum [Member] | Maximum [Member] | Milestone Payment One [Member] | Milestone Payment Two [Member] | Milestone Payment Three [Member] | Milestone Payment Four [Member] | ||||||||||||
Contingencies And Commitments [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lease expense | $134,000 | $894,000 | $421,000 | $1,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lease expiration date | ' | ' | ' | ' | ' | ' | ' | ' | 30-Aug-12 | ' | ' | ' | ' | ' | ' | ' | ' |
Lease termination fees | ' | ' | ' | ' | ' | ' | ' | 541,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financial commitments related to various supply agreements, amount | 52,000,000 | ' | 52,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding purchase orders related to inventory, excluding commitments under supply agreements, amounts | 21,200,000 | ' | 21,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Royalty expenses | 2,400,000 | 684,000 | 4,900,000 | 3,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional payments in other licensing agreements | ' | ' | 30,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding commitments related to ongoing research and development contracts | 769,000 | ' | 769,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent liability additional consideration amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,800,000 | ' | ' | ' | ' | ' | ' | ' |
Contingent liability additional consideration amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,000,000 | 8,500,000 | ' | ' | ' | ' | ' |
Potential consideration amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | 147,500,000 | ' | ' | ' | ' | ' | ' | ' |
Payable 1 when sales reach relevant milestone | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | ' | ' | ' | ' | ' | ' | ' |
Sales of relevant milestone | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000,000 | 150,000,000 | 250,000,000 | 500,000,000 | ' |
Payable 2 when sales reach relevant milestone | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' |
Payable 3 when sales reach relevant milestone | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' |
Payable 4 when sales reach relevant milestone | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000,000 | ' | ' | ' | ' | ' | ' | ' |
Earn out payment rate of net sales | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | 12.00% | ' | ' | ' | ' | ' |
Business acquisition portion of purchase consideration as potential consideration | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Obligation money paid | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,000,000 |
Discount rate to determine present value of cash flow | ' | ' | 21.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of the contingent liability | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding financial commitments related to various marketing and analytical service agreements, amount | 4,500,000 | ' | 4,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of accrued severance | ' | ' | ' | ' | ' | ' | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of defendants | ' | ' | 53 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Nov. 06, 2012 | Sep. 15, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Purchase of inventory | ' | ' | $6,300,000 | $6,400,000 | $20,100,000 | $18,500,000 | ' |
Accounts payable | ' | ' | 2,800,000 | ' | 2,800,000 | ' | ' |
Credit agreement term loans | ' | ' | 89,618,000 | ' | 89,618,000 | ' | 89,540,000 |
Interest expense related to the term loans | ' | ' | 1,500,000 | ' | 4,400,000 | ' | ' |
Initial payment | 1,000,000 | ' | ' | ' | ' | ' | ' |
Milestone payment | ' | ' | ' | ' | 2,500,000 | ' | ' |
Minimum age of patient on whom safety and efficacy have been demonstrated | ' | '6 years | ' | ' | ' | ' | ' |
Minimum predicted percentage of forced expiratory volume in patients on whom safety and efficacy have been demonstrated | ' | 40.00% | ' | ' | ' | ' | ' |
Maximum predicted percentage of forced expiratory volume in patients on whom safety and efficacy have been demonstrated | ' | 80.00% | ' | ' | ' | ' | ' |
Chiesi Merger [Member] | ' | ' | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Date of entered into the Merger agreement | ' | 15-Sep-13 | ' | ' | ' | ' | ' |
Chairman, Chief Executive Officer and Beneficial Owner [Member] | Chiesi Merger [Member] | ' | ' | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Percentage of shares of common stock owned | ' | 8.10% | ' | ' | ' | ' | ' |
Chiesi [Member] | ' | ' | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Credit agreement term loans | ' | ' | 89,600,000 | ' | 89,600,000 | ' | ' |
Accrued interest payable | ' | ' | 0 | ' | 0 | ' | ' |
Term Loan A [Member] | ' | ' | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Credit agreement term loans | ' | ' | 60,000,000 | ' | 60,000,000 | ' | ' |
Term Loan A [Member] | Chiesi [Member] | ' | ' | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Credit agreement term loans | ' | ' | 60,000,000 | ' | 60,000,000 | ' | ' |
Term Loan B [Member] | ' | ' | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Credit agreement term loans | ' | ' | 30,000,000 | ' | 30,000,000 | ' | ' |
Term Loan B [Member] | Chiesi [Member] | ' | ' | ' | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Credit agreement term loans | ' | ' | $30,000,000 | ' | $30,000,000 | ' | ' |