Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'AUXILIUM PHARMACEUTICALS INC | ' |
Entity Central Index Key | '0001182129 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 49,578,201 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $91,007 | $35,857 |
Short-term investments | 30,375 | 121,573 |
Accounts receivable, trade, net | 73,832 | 55,859 |
Accounts receivable, other | 5,049 | 1,685 |
Inventories, current | 44,749 | 22,134 |
Prepaid expenses and other current assets | 10,109 | 3,762 |
Total current assets | 255,121 | 240,870 |
Inventories, non-current | 53,709 | 49,697 |
Property and equipment, net | 36,247 | 29,220 |
Intangible assets, net | 641,020 | 0 |
Goodwill | 123,234 | 0 |
Other assets | 18,896 | 7,605 |
Total assets | 1,128,227 | 327,392 |
Current liabilities: | ' | ' |
Accounts payable | 9,835 | 3,565 |
Accrued expenses | 119,733 | 80,740 |
Deferred revenue, current portion | 2,067 | 11,835 |
Deferred rent, current portion | 1,007 | 936 |
Current portion of term loan | 14,513 | 0 |
Contingent consideration, current | 27,965 | 0 |
Total current liabilities | 175,120 | 97,076 |
Term loan, long-term portion | 243,267 | 0 |
Senior Convertible Notes | 290,962 | 0 |
Deferred revenue, long-term portion | 25,192 | 26,288 |
Deferred rent, long-term portion | 7,576 | 4,140 |
Contingent consideration, long-term portion | 92,279 | 0 |
Deferred tax liability | 10,693 | 0 |
Total liabilities | 845,089 | 127,504 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued or outstanding | 0 | 0 |
Common stock, $0.01 par value per share; authorized 120,000,000 shares; issued 49,571,310 and 49,419,104 shares at September 30, 2013 and December 31, 2012, respectively | 496 | 494 |
Additional paid-in capital | 588,559 | 525,354 |
Accumulated deficit | -302,077 | -322,115 |
Treasury stock at cost: 144,245 and 136,405 shares at September 30, 2013 and December 31, 2012, respectively | -3,476 | -3,337 |
Accumulated other comprehensive loss | -364 | -508 |
Total stockholders' equity | 283,138 | 199,888 |
Total liabilities and stockholders' equity | $1,128,227 | $327,392 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Consolidated Balance Sheets | ' | ' |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 49,571,310 | 49,419,104 |
Treasury stock at cost, shares | 144,245 | 136,405 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (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 |
Net revenues | $108,140 | $71,043 | $274,831 | $222,819 |
Operating expenses*: | ' | ' | ' | ' |
Cost of goods sold | 33,553 | 15,849 | 75,858 | 50,256 |
Research and development | 11,816 | 10,591 | 37,300 | 32,771 |
Selling, general and administrative | 62,809 | 55,344 | 182,013 | 144,874 |
Amortization of purchased intangibles | 15,085 | 0 | 25,980 | 0 |
Contingent consideration | 4,671 | 0 | 6,929 | 0 |
Total operating expenses | 127,934 | 81,784 | 328,080 | 227,901 |
Income (loss) from operations | -19,794 | -10,741 | -53,249 | -5,082 |
Interest expense | -8,912 | ' | -19,050 | ' |
Other income, net | 104 | 253 | 268 | 570 |
Income (loss) before income taxes | -28,602 | -10,488 | -72,031 | -4,512 |
Income tax benefit (expense) | -289 | 0 | 92,069 | 0 |
Net income (loss) | -28,891 | -10,488 | 20,038 | -4,512 |
Net income (loss) per common share: | ' | ' | ' | ' |
Basic (in dollars per share) | ($0.59) | ($0.21) | $0.41 | ($0.09) |
Diluted (in dollars per share) | ($0.59) | ($0.21) | $0.40 | ($0.09) |
Shares used to compute net income per common share: | ' | ' | ' | ' |
Basic (in shares) | 49,384,637 | 49,078,321 | 49,304,543 | 48,636,444 |
Diluted (in shares) | 49,384,637 | 49,078,321 | 49,611,260 | 48,636,444 |
*includes the following amounts of stock-based compensation expense: | ' | ' | ' | ' |
Stock-based compensation expense | ' | ' | 11,346 | 11,112 |
Cost of goods sold | ' | ' | ' | ' |
*includes the following amounts of stock-based compensation expense: | ' | ' | ' | ' |
Stock-based compensation expense | 39 | 20 | 107 | 57 |
Research and development | ' | ' | ' | ' |
*includes the following amounts of stock-based compensation expense: | ' | ' | ' | ' |
Stock-based compensation expense | 675 | 801 | 2,077 | 2,045 |
Selling, general and administrative | ' | ' | ' | ' |
*includes the following amounts of stock-based compensation expense: | ' | ' | ' | ' |
Stock-based compensation expense | $2,656 | $2,719 | $9,162 | $9,010 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Consolidated Statements of Comprehensive Income (Loss) | ' | ' | ' | ' |
Net income (loss) | ($28,891) | ($10,488) | $20,038 | ($4,512) |
Other comprehensive income (loss): | ' | ' | ' | ' |
Unrealized gains (losses) on investments | 41 | -38 | 171 | -12 |
Foreign currency translation adjustment | 14 | 4 | -27 | -7 |
Total | 55 | -34 | 144 | -19 |
Comprehensive income (loss) | ($28,836) | ($10,522) | $20,182 | ($4,531) |
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) | $20,038 | ($4,512) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Stock-based compensation | 11,346 | 11,112 |
Depreciation and amortization | 7,943 | 7,100 |
Amortization of purchased intangibles | 25,980 | 0 |
Amortization of debt discount and issuance costs | 9,657 | 0 |
Contingent consideration | 6,929 | 0 |
Release of valuation allowance for deferred tax assets | -92,607 | 0 |
Changes in operating assets and liabilities, net of acquisition: | ' | ' |
Decrease (increase) in accounts receivable, trade and other | 4,198 | -4,624 |
Increase in inventories | -3,611 | -13,110 |
Decrease (increase) in prepaid expenses and other assets | 5,121 | -1,790 |
Increase in accounts payable and accrued expenses | 15,306 | 13,702 |
Increase (decrease) in deferred revenue | -10,864 | 4,295 |
Increase (decrease) in deferred rent | 303 | -849 |
Net cash provided by (used in) operating activities | -261 | 11,324 |
Cash flows from investing activities: | ' | ' |
Business acquisition, net of cash acquired | -588,349 | 0 |
Purchases of short-term investments | -73,218 | -154,001 |
Redemptions of short-term investments | 164,428 | 138,490 |
Purchases of property and equipment | -7,786 | -4,073 |
Sales and redemptions of long-term investments | 1,600 | 100 |
Net cash used in investing activities | -503,325 | -19,484 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of term loan, net of issuance costs | 262,852 | 0 |
Repayment of term loan | -6,215 | 0 |
Proceeds from issuance of convertible debt, net of issuance costs | 338,921 | 0 |
Payments of contingent consideration | -9,339 | 0 |
Purchase of convertible note hedge | -70,000 | 0 |
Proceeds from sale of warrants | 41,475 | 0 |
Proceeds from exercise of common stock options | 409 | 10,227 |
Employee Stock Purchase Plan purchases | 962 | 1,720 |
Treasury stock acquisition | -139 | -81 |
Payments from Board of Director stock purchases | 47 | 87 |
Net cash provided by financing activities | 558,973 | 11,953 |
Effect of exchange rate changes on cash | -237 | 14 |
Increase in cash and cash equivalents | 55,150 | 3,807 |
Cash and cash equivalents, beginning of period | 35,857 | 37,535 |
Cash and cash equivalents, end of period | 91,007 | 41,342 |
Business acquisition: | ' | ' |
Fair value of assets acquired, net of cash acquired | 841,547 | 0 |
Purchase consideration representing compensation | 8,309 | 0 |
Fair value of liabilities assumed and contingent consideration | -249,507 | 0 |
Fair value of warrants issued | -12,000 | 0 |
Net cash paid for acquisition | 588,349 | 0 |
Interest paid | $8,289 | $0 |
Consolidated_Statement_of_Stoc
Consolidated Statement of Stockholders' Equity (USD $) | Total | Common stock | Additional paid-in capital | Accumulated deficit | Treasury Stock | Accumulated other comprehensive loss |
In Thousands, except Share data, unless otherwise specified | ||||||
Balance at Dec. 31, 2012 | $199,888 | $494 | $525,354 | ($322,115) | ($3,337) | ($508) |
Balance (in shares) at Dec. 31, 2012 | ' | 49,419,104 | ' | ' | 136,405 | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Equity component of Senior Convertible Notes | 64,361 | 0 | 64,361 | 0 | 0 | 0 |
Deferred tax benefit related to issuance of Senior Convertible Notes | 1,295 | 0 | 1,295 | 0 | 0 | 0 |
Convertible Note Hedge | -70,000 | 0 | -70,000 | 0 | 0 | 0 |
Sale of warrants | 41,475 | 0 | 41,475 | 0 | 0 | 0 |
Issuance of warrants in business acquisition | 12,000 | 0 | 12,000 | 0 | 0 | 0 |
Exercise of common stock options | 409 | 0 | 409 | 0 | 0 | 0 |
Exercise of common stock options (in shares) | ' | 40,112 | ' | ' | 0 | ' |
Employee Stock Plan Purchases | 962 | 1 | 961 | 0 | 0 | 0 |
Employee Stock Plan Purchases (in shares) | ' | 66,458 | ' | ' | 0 | ' |
Issuance of restricted stock | ' | 0 | 0 | 0 | 0 | 0 |
Issuance of restricted stock (in shares) | ' | 10,000 | ' | ' | 0 | ' |
Cancellation of restricted stock | ' | 0 | 0 | 0 | 0 | 0 |
Cancellation of restricted stock (in shares) | ' | -250 | ' | ' | 0 | ' |
Stock-based compensation | 12,657 | 0 | 12,657 | 0 | 0 | 0 |
Stock-based compensation (in shares) | ' | 33,190 | ' | ' | 0 | ' |
Proceeds from Board of Directors stock purchases | 47 | 0 | 47 | 0 | 0 | 0 |
Proceeds from Board of Directors stock purchases (in shares) | ' | 2,696 | ' | ' | 0 | ' |
Treasury stock acquisition | -139 | 0 | 0 | 0 | -139 | 0 |
Treasury stock acquisition (in shares) | ' | 0 | ' | ' | 7,840 | ' |
Comprehensive income | 144 | 0 | 0 | 0 | 0 | 144 |
Net income | 20,038 | 0 | 0 | 20,038 | 0 | 0 |
Balance at Sep. 30, 2013 | $283,138 | $496 | $588,559 | ($302,077) | ($3,476) | ($364) |
Balance (in shares) at Sep. 30, 2013 | ' | 49,571,310 | ' | ' | 144,245 | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||
(a) Basis of Presentation | ||||||||||||||
The accompanying unaudited consolidated financial statements include the accounts of Auxilium Pharmaceuticals, Inc. and its wholly owned subsidiaries (the “Company”), and have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to Form 10-Q. Certain disclosures required for complete annual financial statements are not included herein. All significant intercompany accounts and transactions have been eliminated in consolidation. The information at September 30, 2013 and for the respective three and nine month periods ended September 30, 2013 and 2012 is unaudited but includes all adjustments (consisting only of normal recurring adjustments) which, in the opinion of the Company’s management, are necessary to state fairly the financial information set forth herein. The December 31, 2012 balance sheet amounts and disclosures included herein have been derived from the Company’s December 31, 2012 audited consolidated financial statements. The interim results are not necessarily indicative of results to be expected for the full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K filed with the SEC. | ||||||||||||||
(b) Revenue Recognition | ||||||||||||||
Net revenues for the three and nine months ended September 30, 2013 and 2012 comprise the following: | ||||||||||||||
Three months ended | Nine months ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Testim revenues- | ||||||||||||||
Net U.S. revenues | $ | 50,701 | $ | 54,642 | $ | 149,165 | $ | 175,004 | ||||||
International revenues | 1,604 | 710 | 2,987 | 2,760 | ||||||||||
52,305 | 55,352 | 152,152 | 177,764 | |||||||||||
XIAFLEX revenues- | ||||||||||||||
Net U.S. revenues | 15,882 | 13,216 | 42,800 | 37,706 | ||||||||||
International revenues | 1,676 | 2,475 | 14,344 | 7,349 | ||||||||||
17,558 | 15,691 | 57,144 | 45,055 | |||||||||||
Other net U.S. revenues- | ||||||||||||||
TESTOPEL | 20,636 | 0 | 35,017 | 0 | ||||||||||
Edex | 7,958 | 0 | 12,991 | 0 | ||||||||||
Other | 9,683 | 0 | 17,527 | 0 | ||||||||||
38,277 | 0 | 65,535 | 0 | |||||||||||
Total net revenues | $ | 108,140 | $ | 71,043 | $ | 274,831 | $ | 222,819 | ||||||
Net U.S. revenues shown in the above table represent the product sales of the Company within the U.S., net of allowances provided on such sales. International revenues represent the amortization of deferred up-front and milestone payments the Company has received on its out-licensing agreements, together with royalties earned on product sales by the licensees. | ||||||||||||||
As discussed in Note (2), on April 26, 2013, the Company acquired Actient Holdings LLC (“Actient”), a privately-held urology specialty pharmaceutical company with a diversified product offering of four marketed products in the urology space and two marketed products in the respiratory space. TESTOPEL is a product used for the treatment of testosterone deficiency in aging men as well as androgen deficiency caused by other conditions. Edex is an injectable used for the treatment of erectile dysfunction. Other U.S. net revenues, as shown in the above table, for the three and nine months ended September 30, 2013 are sales of additional products the Company acquired in this acquisition. TESTOPEL and Edex and certain other of the Actient products do not currently have any patent protection. Therefore, the Company must rely on trade secrets and other unpatented proprietary information in order to obtain a competitive advantage with respect to such products. | ||||||||||||||
TESTOPEL is sold under a buy-and-bill model. Under this model, the Company’s customers are health care providers who maintain a stock of TESTOPEL for future patient procedures. Revenue is recognized for this product upon the delivery, whereupon title passes, all obligations have been fulfilled, and collection of the related receivable is fixed, determinable, probable, and reasonably assured. The Company offers volume discounts and discounts for credit card payments when customer orders are received, and these discounts are recognized when the related product sales are recorded. | ||||||||||||||
The Company recognizes revenue for Edex and other Actient branded pharmaceutical products upon the delivery of goods, whereupon title passes, all obligations have been fulfilled, and collection of the related receivable is fixed, determinable, probable, and reasonably assured. The Company provides for chargebacks (primarily related to its sales to government entities, such as the U.S. Veterans Administration), rebates, returns, and other adjustments in the same period the related product sales are recorded. Reserves for these government chargebacks, rebates, returns, and other adjustments are based upon analysis of historical data. Each period, the Company reviews its reserves for government chargebacks, rebates, returns, and other adjustments based on data available at that time. Any adjustment to these reserves results in charges to revenue. | ||||||||||||||
For Actient non-drug medical devices, revenue is recognized upon the shipment of goods or upon the delivery of goods, whereupon title passes, all obligations have been fulfilled, and collection of the related receivable is fixed, determinable, probable, and reasonably assured. The Company records estimated sales returns and discounts as a reduction of net sales in the period revenue is recognized. The Company maintains an allowance for these returns and reduces reported revenue for expected returns from shipments each reporting period. This allowance is not significant and is based on historical and current trends in product returns. | ||||||||||||||
Shipping and handling fees for Actient products are billed to customers, and are recognized in net revenues. Other shipping and handling costs are included in the cost of sales. | ||||||||||||||
In the first quarter of 2012, the Company recorded a correction of an error in its financial statements for the year ended December 31, 2011 that resulted from an understatement of the accrual for government health plan charge-backs. This correction reduced Net revenues and Net income reported for the nine months ended September 30, 2012 in the amount of $820. Management believes this adjustment is not material to the Company’s results of operations for 2012. | ||||||||||||||
(c) Net Income (Loss) Per Common Share | ||||||||||||||
Basic income (loss) per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding and, if there is net income during the period, the dilutive impact of common stock equivalents outstanding during the period. Common stock equivalents are measured under the treasury stock method. | ||||||||||||||
The following is a reconciliation of net income and weighted average common shares outstanding for purposes of calculating basic and diluted income per common share. | ||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Basic income (loss) per share: | 2013 | 2012 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||||
Net income (loss) | $ | (28,891 | ) | $ | (10,488 | ) | $ | 20,038 | $ | (4,512 | ) | |||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 | ||||||||||
Weighted-average unvested restricted common shares subject to forfeiture | (23,960 | ) | (51,200 | ) | (34,906 | ) | (27,030 | ) | ||||||
Shares used in calculating basic net income (loss) per common share | 49,384,637 | 49,078,321 | 49,304,543 | 48,636,444 | ||||||||||
Basic net income (loss) per common share | $ | (0.59 | ) | $ | (0.21 | ) | $ | 0.41 | $ | (0.09 | ) | |||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Diluted income (loss) per share: | 2013 | 2012 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||||
Net income (loss) | $ | (28,891 | ) | $ | (10,488 | ) | $ | 20,038 | $ | (4,512 | ) | |||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 | ||||||||||
Weighted-average unvested restricted common shares subject to forfeiture | (23,960 | ) | (51,200 | ) | (34,906 | ) | (27,030 | ) | ||||||
Incremental shares from assumed conversions of stock compensation plans | 0 | 0 | 306,717 | 0 | ||||||||||
Shares used in calculating diluted net income (loss) per common share | 49,384,637 | 49,078,321 | 49,611,260 | 48,636,444 | ||||||||||
Diluted net income (loss) per common share | $ | (0.59 | ) | $ | (0.21 | ) | $ | 0.4 | $ | (0.09 | ) | |||
Diluted net income per common share is computed giving effect to all potentially dilutive securities. The potentially dilutive shares include outstanding stock options and awards, outstanding warrants, and incremental shares issuable upon conversion of 1.5% Convertible Senior Notes due 2018 (“2018 Convertible Notes”) (See Note 9, Senior Convertible Notes). The following weighted-average number of stock options and restricted stock units were antidilutive and, therefore, excluded from the computation of diluted net income per common share for the three and nine month periods ended September 30, 2013: 6,920,292 and 6,444,978, respectively. | ||||||||||||||
The Company has 1,250,000 warrants outstanding issued in connection with the acquisition of Actient as discussed in Note (2) and 14,481,950 warrants sold in connection with the issuance of convertible debt as discussed in Note (9). The warrants will not be considered in calculating the total dilutive weighted average shares outstanding until the price of the Company’s common stock exceeds the strike price of the warrants. When the market price of the Company’s common stock exceeds the strike price of the warrants, the effect of the additional shares that may be issued upon exercise of the warrants will be included in total dilutive weighted average shares outstanding using the treasury stock method. | ||||||||||||||
It is the current intent and policy of the Company to settle conversions of the 2018 Convertible Notes through combination settlement, which involves repayment of the principal amount in cash and any excess of the conversion value over the principle amount (the “conversion spread”) in shares of common stock. Therefore, only the impact of the conversion spread will be included in total dilutive weighted average shares outstanding using the treasury stock method. As such, the 2018 Convertible Notes will have no impact on diluted per share results until the price of the Company’s common stock exceeds the conversion price. | ||||||||||||||
The call options to purchase the Company’s common stock, which were purchased to hedge against potential dilution upon conversion of the 2018 Convertible Notes, as discussed in Note 9, are not considered in calculating the total dilutive weighted average shares outstanding, as their effect would be anti-dilutive. Upon exercise, the call options will mitigate the dilutive effect of the 2018 Convertible Notes. | ||||||||||||||
(d) New Accounting Pronouncements | ||||||||||||||
In February 2013, the Financial Accounting Standards Board issued an Accounting Standards Update on reporting of amounts reclassified out of accumulated other comprehensive income. This guidance, which is effective for fiscal years beginning after December 15, 2012, requires companies to provide information about amounts reclassified out of accumulated other comprehensive income by component (the respective line items of the income statement). The Company adopted this guidance as of January 1, 2013 and its adoption did not have a material effect on the Company’s consolidated financial statements. | ||||||||||||||
(e) Revision to previously issued financial statements | ||||||||||||||
In connection with the preparation of the consolidated financial statements for the third quarter of 2013, an incorrect classification was identified with respect to the manner in which the Company classified the tenant improvement allowance of $3,204 provided by the lessor in the lease for its new corporate headquarters which commenced on January 1, 2013. At recognition of the tenant improvement allowance provided, the Company properly recorded on its Consolidated Balance Sheets the cost of the improvements as a fixed asset and the tenant improvement allowance as a deferred rent credit. In the Company’s Consolidated Statement of Cash Flows provided in its Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2013 and June 30, 2013, the tenant improvements were incorrectly classified as cash used in investing activities and the offsetting increase in deferred rent was incorrectly classified as an adjustment of cash flows provided by operating activities. The Company has now determined that the tenant improvement allowance should have been netted against the Purchases of property and equipment to reflect the non-cash nature of these transactions in the periods presented. The effect of the misclassification in the Consolidated Statement of Cash Flows for the three months ended March 31, 2013 and the six months ended June 30, 2013 was a $3,204 overstatement of both net cash provided by operating activities and net cash used in investing activities. The Company assessed this misclassification and concluded that it was not material to the Company’s previously issued financial statements. The Company has properly presented the tenant improvement transaction in the Consolidated Statement of Cash Flows for the nine months ended September 30, 2013. The revision of the three month period ended March 31, 2013 and six month period ended June 30, 2013 will be reflected in the Company’s first and second quarter filings of fiscal 2014, respectively. The Company’s Consolidated Statements of Operations for first and second quarters of 2013 and the Consolidated Balance Sheets as of March 31, 2013 and June 30, 2013 were not affected by this misclassification and remain unchanged. |
ACQUISITION_OF_ACTIENT
ACQUISITION OF ACTIENT | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
ACQUISITION OF ACTIENT | ' | |||||||||||||
ACQUISITION OF ACTIENT | ' | |||||||||||||
2. ACQUISITION OF ACTIENT | ||||||||||||||
The Company executed the acquisition of Actient on April 26, 2013 to expand its specialty therapeutic offerings and expects to benefit from greater leverage in its commercial infrastructure and significant cross-selling opportunities. The total consideration for Actient included base cash consideration of $585,000 plus adjustments for working capital and cash acquired, contingent consideration based on future sales of certain acquired products, and the issuance of 1,250,000 warrants to purchase the Company common stock. The Company funded the cash payments with cash on hand and a $225,000 senior secured term loan (the “Term Loan”) (see Note 8). | ||||||||||||||
The following table summarizes the fair value of the total consideration at April 26, 2013: | ||||||||||||||
Total | ||||||||||||||
Acquisition- | ||||||||||||||
Date | ||||||||||||||
Fair value | ||||||||||||||
Base cash consideration | $ | 585,000 | ||||||||||||
Cash and working capital adjustment | 14,863 | |||||||||||||
Contingent consideration | 40,969 | |||||||||||||
Warrants | 12,000 | |||||||||||||
Total consideration | 652,832 | |||||||||||||
Consideration representing compensation | (8,309 | ) | ||||||||||||
Consideration allocated to net assets acquired | $ | 644,523 | ||||||||||||
The above consideration representing compensation is the amount payable to former management of Actient upon completion of their retention period with the Company. This amount was amortized to expense by the Company as compensation cost over such retention period which ended during the third quarter of 2013. | ||||||||||||||
The above contingent consideration represents a risk adjusted net present value relating to the following cash payments on achievement of the following sales milestones for Actient urology products as defined in the purchase agreement: | ||||||||||||||
· $15 million if cumulative net sales of Actient’s urology products from and after the Closing equal $150 million; | ||||||||||||||
· $10 million if cumulative net sales of Actient’s urology products during the twelve-month period commencing May 1, 2013 exceed $150 million; and | ||||||||||||||
· $25 million if cumulative net sales of Actient’s urology products during the twenty four month-period commencing May 1, 2013 exceed $300 million. | ||||||||||||||
The warrants issued in the acquisition have a strike price of $17.80 and a ten year life. The fair value assigned to the warrants was determined using the Black-Scholes valuation model, applying an expected term of ten years equal to the life of the warrants, the Company’s historical volatility of 50% as the expected volatility, a ten year risk-free interest of 1.70% and an expected zero percent dividend yield. In accordance with governing accounting guidance, the Company concluded that the warrants were indexed to our stock and therefore they have been classified as an equity instrument. | ||||||||||||||
The transaction was accounted for as a business combination under the acquisition method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded at fair value, with the remaining purchase price recorded as goodwill. | ||||||||||||||
The Company has preliminarily valued the acquired assets and liabilities based on their estimated fair value. These estimates are subject to change as additional information becomes available, including finalization of certain tax matters. The preliminary fair values included in the balance sheet as of September 30, 2013 are based on the best estimates of management. The completion of the valuation may result in adjustments to the carrying value of Actient’s assets and liabilities, revision of useful lives of intangibles assets, the determination of any residual amount that will be allocated to goodwill and the related tax effects. The related amortization of acquired assets is also subject to revision based on the final valuation. Any adjustments to the preliminary fair values will be made as soon as practicable but no later than one year from the April 26, 2013 acquisition date. | ||||||||||||||
The following table summarizes the estimated fair values of the net assets acquired. | ||||||||||||||
April 26, | ||||||||||||||
2013 | ||||||||||||||
Cash | $ | 11,514 | ||||||||||||
Accounts recievable, trade | 25,344 | |||||||||||||
Inventory | 21,704 | |||||||||||||
Prepaid expenses and other current assets | 3,735 | |||||||||||||
Property and equipment | 3,028 | |||||||||||||
Purchased intangibles | 667,000 | |||||||||||||
Goodwill | 123,234 | |||||||||||||
Other long-term assets | 5,202 | |||||||||||||
Total assets acquired | 860,761 | |||||||||||||
Contingent consideration assumed | (81,685 | ) | ||||||||||||
Other liabilities assumed | (30,016 | ) | ||||||||||||
Deferred tax liabilities | (104,537 | ) | ||||||||||||
Total net assets acquired | $ | 644,523 | ||||||||||||
The purchased intangibles represent acquired product rights. The costs of these purchased product rights are being amortized to income on a straight-line basis over the below disclosed estimated lives and are tested for impairment whenever events or circumstances indicate that the carrying amount may not be recovered. The following is a summary of the fair value assigned to the product rights acquired and the amortization period assigned to these rights. | ||||||||||||||
Fair value | Estimated | |||||||||||||
life in | ||||||||||||||
years | ||||||||||||||
TESTOPEL | $ | 491,000 | 12 | |||||||||||
Edex | 70,000 | 11 | ||||||||||||
Timm Medical | 23,000 | 10 | ||||||||||||
Striant | 8,000 | 10 | ||||||||||||
Theo-24 | 39,000 | 9 | ||||||||||||
Semprex-D | 32,000 | 10 | ||||||||||||
Other products | 4,000 | 2 | ||||||||||||
Total | $ | 667,000 | ||||||||||||
The contingent consideration assumed is earn-out consideration relating to acquisitions that were previously undertaken by Actient and principally represent royalties on future sales of certain Actient products. Of the amount shown in the above summary of net assets, $60,848 and $15,752 represent royalties payable on future sales of TESTOPEL and Edex, respectively. The TESTOPEL obligation is a 12% royalty payable on net sales of TESTOPEL through December 31, 2017, at which time such royalty obligation ceases. The Edex obligation is a 15% royalty payable on annual net sales in excess of $20,000. The Edex obligation will cease upon a generic market launch of a competitive product. The remaining amount of contingent consideration represent 6% to 15% royalty obligations on various Actient products, of which approximately $4,000 of such royalty obligation ceased in July 2013, and certain milestone obligations associated with the Company launch of implantable TRT products defined in Actient’s purchase agreements. | ||||||||||||||
The difference between the total consideration and the fair value of the net assets acquired was recorded to Goodwill in the Consolidated balance sheet. This goodwill represents the excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed, principally representing the tax attributes of the acquisition and certain operational synergies. Approximately $400,000 of the intangibles and Goodwill are expected to be deductible for tax purposes. | ||||||||||||||
In accordance with the relevant accounting guidance, goodwill is not amortized. However, it must be assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstances warrant such a review. The balance of Goodwill has been assigned to the Company’s single reporting unit, which is the single operating segment by which the chief decision maker manages the Company. For purposes of assessing the impairment of goodwill, the Company uses its market capitalization as an input to its determination of fair value. If the carrying amount of the net assets of the Company exceeds the fair value, then a goodwill impairment test is performed to measure the amount of the impairment loss, if any. | ||||||||||||||
The operating results of Actient are reported in the Company’s financial statements beginning on April 26, 2013. The following table provides pro forma results of operations for the three and nine month periods ended September 30, 2013 and 2012, as if Actient had been acquired as of January 1, 2012, and both the initial Term Loan borrowing of $225,000, and the 2018 Convertible Notes, used to fund the Transaction had also occurred on January 1, 2012. The pro forma results include certain purchase accounting adjustments such as the estimated changes in depreciation and amortization expense on the acquired tangible and intangible assets. However, pro forma results do not include any anticipated cost savings or other effects of the integration of Actient. Accordingly, such amounts are not necessarily indicative of the results if the acquisition had occurred on the dates indicated or which may occur in the future. | ||||||||||||||
Unaudited pro forma consolidated results | ||||||||||||||
Three months ended | Nine months ended | |||||||||||||
September 30, | Septemebr 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Net revenues | $ | 108,140 | $ | 103,031 | $ | 323,970 | $ | 315,158 | ||||||
Net income (loss) attributable to the Company | $ | (18,187 | ) | $ | (46,944 | ) | $ | (52,603 | ) | $ | (5,885 | ) | ||
Net income (loss) per common share- | ||||||||||||||
Basic | $ | (0.37 | ) | $ | (0.96 | ) | $ | (1.07 | ) | $ | (0.12 | ) | ||
Diluted | $ | (0.37 | ) | $ | (0.96 | ) | $ | (1.07 | ) | $ | (0.12 | ) |
MERGER_TRANSITION_AND_RESTRUCT
MERGER TRANSITION AND RESTRUCTURING ACTIVITIES | 9 Months Ended |
Sep. 30, 2013 | |
MERGER TRANSITION AND RESTRUCTURING ACTIVITIES | ' |
MERGER TRANSITION AND RESTRUCTURING ACTIVITIES | ' |
3. MERGER TRANSITION AND RESTRUCTURING ACTIVITIES | |
As discussed in Note (2), $8,309 of the Actient purchase consideration represents compensation payable to former Actient management upon completion of their retention period with the Company. This amount was recorded as a prepaid asset as of the date of the acquisition and was being amortized to expense as compensation cost over such retention period which ended during the third quarter of 2013. As of September 30, 2013, all of this merger consideration has been expensed. | |
In connection with the acquisition of Actient, the Company undertook actions to realign its sales, sales support, and management activities and staffing which included severance benefits to former Actient employees. For former Actient employees that have agreed to continue employment with the Company for a merger transition period, the severance payable upon completion of their retention period is being expensed over their respective retention period. All severance obligations are expected to amount to $6,060, of which during the three and nine months ended September 30, 2013 $1,850 and $4,973, respectively, has been expensed and $1,189 had been paid. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
4. FAIR VALUE MEASUREMENTS | ||||||||||||||
The authoritative literature for fair value measurements established a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. These tiers are as follows: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than the quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as significant unobservable inputs (entity developed assumptions) in which little or no market data exists. | ||||||||||||||
The following tables present the Company’s fair value hierarchy for the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012: | ||||||||||||||
September 30 ,2013 | ||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | 91,007 | $ | 91,007 | $ | 0 | $ | 0 | ||||||
Short-term investments | 30,375 | 7,148 | 23,227 | 0 | ||||||||||
Total financial assets | $ | 121,382 | $ | 98,155 | $ | 23,227 | $ | 0 | ||||||
Liabilities | ||||||||||||||
Contingent consideration | $ | 120,244 | $ | 0 | $ | 0 | $ | 120,244 | ||||||
December 31, 2012 | ||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | 35,857 | $ | 35,857 | $ | 0 | $ | 0 | ||||||
Short-term investments | 121,573 | 31,459 | 90,114 | 0 | ||||||||||
Long-term investments: | ||||||||||||||
Auction rate securities | 1,442 | 0 | 0 | 1,442 | ||||||||||
Total financial assets | $ | 158,872 | $ | 67,316 | $ | 90,114 | $ | 1,442 | ||||||
Liabilities | ||||||||||||||
Contingent consideration | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||
Financial assets | ||||||||||||||
The Company considers its short-term investments to be “available for sale” and accordingly classifies them as current, as management can sell these investments at any time at their option. The cost basis of short-term investments held at September 30, 2013 approximated the fair value of these securities. Related unrealized gains and losses are recorded as a component of accumulated other comprehensive income (loss) in the equity section of the accompanying balance sheet. The amount of unrealized loss on short-term investments amounted to $184 as of September 30, 2013. | ||||||||||||||
Fair value for Level 1 is based on quoted market prices. Fair value for Level 2 is based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Inputs are obtained from various sources including market participants, dealers and brokers. The securities classified as Level 3 are auction rate securities that are not actively traded. The Company determined the fair value of these securities based on a discounted cash flow model which incorporated a discount period, coupon rate, liquidity discount and coupon history. In determining the fair value, the Company also considered the rating of the securities by investment rating agencies and whether the securities were backed by the United States government. | ||||||||||||||
There was no Level 3 financial asset activity during the three months ended September 30, 2013. The following table summarizes the changes in the financial assets measured at fair value using Level 3 inputs for the nine months ended September 30, 2013: | ||||||||||||||
Long -term Investments | Nine months | |||||||||||||
ended | ||||||||||||||
September 30, | ||||||||||||||
2013 | ||||||||||||||
Beginning balance | $ | 1,442 | ||||||||||||
Transfers into Level 3 | 0 | |||||||||||||
Sales and redemptions of securities | (1,528 | ) | ||||||||||||
Unrealized gain- included in other comprehensive income | 86 | |||||||||||||
Ending balance | $ | 0 | ||||||||||||
Total realized loss on sale of securities included in Investment income (loss), net for the period | $ | (72 | ) | |||||||||||
There were no transfers between Level 1 and 2 during the nine months ended September 30, 2013. | ||||||||||||||
Contingent consideration | ||||||||||||||
The Level 3 liability is contingent consideration related to the acquisition of Actient described in Note 2. The range of the undiscounted amounts of contingent consideration ultimately payable is principally dependent on future sales of the products acquired. Fair value is determined based on assumptions and projections relevant to revenues and discounted cash flow model using a risk-adjusted discount rate of 14%. Assumptions include the expected value of royalties and milestone payments due on estimated settlement dates, volatility of product supply, demand and prices, and the Company’s cost of money. The Company assesses these assumptions on an ongoing basis as additional information impacting the assumptions is obtained. A 1% change in this discount rate would have a $1.7 million change in the contingent consideration liability. Changes in the fair value of contingent consideration related to the updated assumptions and estimates are recognized in the consolidated statements of operations. | ||||||||||||||
The table below provides a roll forward of the fair value of contingent consideration since the Actient acquisition date. | ||||||||||||||
Contingent consideration | ||||||||||||||
Fair value at date of Actient acquisition, April 26, 2013 | $ | 122,654 | ||||||||||||
Change in contingent consideration charged to operations | 6,929 | |||||||||||||
Payments of contingent consideration | (9,339 | ) | ||||||||||||
Ending balance, September 30, 2013 | $ | 120,244 | ||||||||||||
Debt outstanding | ||||||||||||||
Management estimates that the fair value of the Term Loan outstanding at September 30, 2013 approximates its principal value of $268,785 based upon market interest rates (a Level 2 fair value measurement). The fair value of the 2018 Convertible Notes at September 30, 2013 approximates its par value of $350,000 based on active trading activity in this security (a Level 1 fair value measurement). |
INVENTORIES
INVENTORIES | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
INVENTORIES | ' | |||||||
INVENTORIES | ' | |||||||
5. INVENTORIES | ||||||||
Inventories consist of the following: | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Raw materials | $ | 8,023 | $ | 8,183 | ||||
Work-in-process | 70,119 | 53,037 | ||||||
Finished goods | 20,316 | 10,611 | ||||||
98,458 | 71,831 | |||||||
Inventories, current | 44,749 | 22,134 | ||||||
Inventories, non-current | $ | 53,709 | $ | 49,697 | ||||
The Company recorded the acquired Actient inventories at their fair value, which required a step-up in value of $11,704 to record the acquired inventories at their net realizable value. As the acquired inventories are sold, this step-up in value is recorded as cost of goods sold in the Consolidated Statement of Operations. During the three and nine months ended September 30, 2013, $5,403 and $9,898, respectively, of the inventory step-up was recognized as Cost of goods sold. |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
ACCRUED EXPENSES | ' | |||||||
ACCRUED EXPENSES | ' | |||||||
6. ACCRUED EXPENSES | ||||||||
Accrued expenses consist of the following: | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Payroll and related expenses | $ | 18,775 | $ | 15,048 | ||||
Royalty expenses | 10,064 | 10,949 | ||||||
Research and development expenses | 3,607 | 2,972 | ||||||
Sales and marketing expenses | 14,873 | 8,017 | ||||||
Rebates, discounts and returns accrual | 46,918 | 38,066 | ||||||
Accrued interest | 1,094 | 0 | ||||||
Purchase option payable | 7,000 | 0 | ||||||
Other | 17,402 | 5,688 | ||||||
$ | 119,733 | $ | 80,740 |
COLLABORATION_AND_LICENSE_AGRE
COLLABORATION AND LICENSE AGREEMENTS | 9 Months Ended |
Sep. 30, 2013 | |
COLLABORATION AND LICENSE AGREEMENTS | ' |
COLLABORATION AND LICENSE AGREEMENTS | ' |
7. COLLABORATION AND LICENSE AGREEMENTS | |
(a) Sobi | |
On July 15, 2013, the Company and Swedish Orphan Biovitrum AB (publ) (“Sobi”) announced that they had entered into a collaboration agreement (the “Sobi Agreement”). Under the Sobi Agreement, Sobi was granted the right to develop and commercialize XIAPEX (the European Union tradename for XIAFLEX) for the treatment in humans of Peyronie’s disease (“Peyronie’s”), if approved, and Dupuytren’s contracture (“Dupuytren’s”) in 28 European Union member countries, Switzerland, Norway, Iceland, 18 Central Eastern Europe/Commonwealth of Independent countries, including Russia and Turkey, and 22 Middle Eastern & North African countries (the “Sobi Territory”). Under the Sobi Agreement, Sobi will be responsible for the all development costs specific to the Sobi Territory and the Company will be responsible for development costs not specific to the Sobi Territory. In addition, Sobi will be solely responsible for costs associated with obtaining and maintaining regulatory approval for XIAPEX in the Sobi Territory as well as post-regulatory approval filing date development activities. The Company will be responsible for all clinical and commercial manufacturing and supply of XIAPEX for the Sobi Territory. | |
Under the terms of the Sobi Agreement, the Company expects to receive significant tiered royalties, within the range of 55-65%, 50-60% and 45-55% based on sales of XIAPEX in the Sobi Territory, which include payment for product supply. The tiered royalty percentages will decrease by approximately 10% upon the occurrence of certain manufacturing milestones or July 1, 2016, whichever is earlier. Additionally, Sobi could make up to $40 million in potential sales milestone payments to the Company. | |
Subject to each party’s termination rights, the term of the Sobi Agreement extends on a product-by-product basis from the date of the Sobi Agreement until the 10th anniversary of the date of the Sobi Agreement. The term of the Sobi Agreement will be automatically extended for sequential two year periods unless a notice of non-renewal is provided in writing to the other party at least six months prior to expiration of the then current term. | |
For accounting purposes, the Company has determined that the Sobi Agreement includes multiple deliverables, including development and commercialization rights and manufacturing and product supply. In accordance with the accounting guidance on revenue recognition for multiple-element agreements, the product supply element of the Sobi Agreement meets the criteria for separation. Therefore, it is being treated as a single unit of accounting and, accordingly, the associated royalties on net sales of the product will be recognized as revenue when earned. All other deliverables under the contract are being accounted for as one unit of accounting since each of these elements does not have stand-alone value to Sobi. All potential future milestone payments are considered to relate to this one combined unit of accounting and will be amortized to revenue on a straight-line basis over the life of the Sobi Agreement. When future milestones are earned, the Company will record as revenue a cumulative catch-up adjustment on the date each milestone is earned for the period of time since contract commencement through the date of the milestone. | |
(b) Pfizer Agreement Transition | |
In December 2008, the Company entered into a development, commercialization and supply agreement with Pfizer, Inc. (“Pfizer”) (the “Pfizer Agreement”). Under the Pfizer Agreement, the Company granted to Pfizer the right to develop and commercialize, with the right to sublicense, XIAPEX for the treatment of Dupuytren’s contracture (“Dupuytren’s”) and, if approved, Peyronie’s in the European Union (the “EU”) and certain Eurasian countries listed therein (collectively, the “Territory”). On November 6, 2012, the Company and Pfizer entered into an amendment (the “Pfizer Amendment”) to the Pfizer Agreement in which they agreed to mutually terminate the Pfizer Agreement, effective April 24, 2013 (the “Termination Date”). Prior to the Termination Date, the Pfizer and the Company continued to perform all of their obligations as described in the Pfizer Agreement. After April 24, 2013, all rights held by Pfizer to commercialize XIAPEX and the responsibility for regulatory activities for XIAPEX in the Territory reverted, at no cost, to the Company. In addition, Pfizer maintained, as provided in the Pfizer Agreement, the right to sell its remaining XIAPEX inventory for the six month period following the Termination Date so long as Pfizer continued to make the commercialization and royalty payments on such sales that were established pursuant to the Pfizer Agreement. | |
On March 28, 2013, the Company and Pfizer entered into a transition services agreement (the “Transition Services Agreement”) relating to the transition from Pfizer to the Company of the development and commercialization activities related to XIAPEX for the treatment of Dupuytren’s and, if approved, for the treatment of Peyronie’s. Notwithstanding the Pfizer Amendment, the Transition Services Agreement provides, and sets out schedules, for, among other matters, an orderly transition of regulatory approvals and licenses, packaging and labeling responsibilities, distribution activities, pharmacovigilance obligations, recall obligations, product testing activities, ongoing clinical trial activities and redesign of packaging. | |
A summary of certain terms of the Transition Services Agreement is set forth below: | |
· Pfizer assigned to the Company the ongoing management and continued performance of certain clinical trials for XIAPEX, including the transfer of data, effective May 31, 2013. | |
· Until July 31, 2013, Pfizer continued to sell in the Territory any of its XIAPEX inventory that remained on hand and paid to the Company any commercialization payments due under the original Pfizer Agreement. | |
· Pfizer and the Company cooperated in working toward the transfer of the EU and the Swiss marketing authorizations to the Company The EU marketing authorization has now been transferred to the Company and the Swiss marketing authorization has now been transferred to Medius AG on our behalf. In addition to Pfizer’s selling of its own inventory, Pfizer distributed XIAPEX on behalf of the Company until July 31, 2013. | |
· Upon the transfer of the applicable marketing authorizations, the Company will submit registrations related to pharmacovigilance with respect to XIAPEX. Pfizer will continue to be responsible for the pharmacovigilance system until such registrations have been approved. | |
· Pfizer agreed to package and label XIAPEX bulk product, manufactured by the Company, for the Company’s distribution in the Territory to the extent ordered by the Company by April 5, 2013. (Such order was placed with Pfizer.) The Company has packaging and labeling responsibility for all subsequent production of XIAPEX. | |
· After February 28, 2014, Pfizer will not provide any further support to the Company with respect to the supply of XIAPEX. | |
· The term of the Transition Services Agreement commenced on March 28, 2013 and ends on April 24, 2014; provided that the rights and obligations of Pfizer and the Company that expressly terminate on a date prior to April 24, 2014, will terminate on such date. | |
(c) Co-promotion Agreement with GSK | |
On July 31, 2013, the Company and GlaxoSmithKline LLC (“GSK”) agreed to mutually terminate their co-promotion agreement for the sale of Testim. As a result, the Company reversed to income for the nine months ended September 30, 2013 the $1,015 accrual recorded in 2012 for post-expiration obligations to GSK. |
TERM_LOAN
TERM LOAN | 9 Months Ended |
Sep. 30, 2013 | |
TERM LOAN | ' |
TERM LOAN | ' |
8. TERM LOAN | |
In order to partially fund a portion of the costs and related expenses of the acquisition of Actient described in Note (2), the Company entered into a Term Loan agreement with a syndicate of banks to borrow $225,000 in principal value. In September 2013, the Company borrowed an additional $50,000 under the Term Loan agreement. The original issue discount together with issuance costs of the Term Loan, amounting to $12,148, is being accreted to Interest expense over the stated term of the Term Loan agreement and the unamortized balance has been deducted from the Term Loan balance shown in the Balance Sheet. | |
The Term Loan is collateralized by a first priority security interest on certain real and all personal property of the Company and certain of its subsidiaries including (i) a pledge of all of the equity interests held by the Company and such subsidiaries and (ii) a lien encumbering all intellectual property owned by the Company and such subsidiaries. The obligations of the Company and such subsidiaries under the Term Loan agreement are unconditionally cross guaranteed by the Company and such subsidiaries. | |
The Term Loan principal must be repaid in equal quarterly installments of 1.25% per quarter commencing on June 30, 2013, with the remainder of the borrowings to be paid on the maturity date of April 26, 2017, unless otherwise prepaid prior to such date in accordance with the terms of the Term Loan. The principal amount outstanding is subject to mandatory prepayment from excess positive cash flow and upon the happening of certain events including: (i) receipt of net cash proceeds from dispositions; (ii) receipt of net cash proceeds from the sale or issuance of debt or equity; and (iii) receipt of proceeds from casualty and condemnation events, in each case subject to certain limitations and conditions set forth in the Term Loan. The Company can elect loans to bear interest at a rate equal to either Base Rate (as defined in the agreement) or LIBOR, plus a margin. The Base Rate interest rate margin is 4.00% and the LIBOR interest rate margin is 5.00%. The Term Loan agreement also establishes a floor rate for both the Base Rate and LIBOR options. As of the date hereof, the Company has elected to base the interest rate of the borrowings on LIBOR. As of September 30, 2013, the total interest rate on the Term Loan principal was 6.25%. | |
The Term Loan contains no financial covenants but contains usual and customary operating and restrictive covenants for a facility of this type. Events of default under the Term Loan are also usual and customary for transactions of this type. As of September 30, 2013, the Company was in compliance with Term Loan covenants. |
SENIOR_CONVERTIBLE_NOTES
SENIOR CONVERTIBLE NOTES | 9 Months Ended |
Sep. 30, 2013 | |
SENIOR CONVERTIBLE NOTES | ' |
SENIOR CONVERTIBLE NOTES | ' |
9. SENIOR CONVERTIBLE NOTES | |
In January 2013, the Company issued $350 million aggregate principal amount of the 2018 Convertible Notes, in a registered public offering. Interest is payable semi-annually in arrears on January 15 and July 15, commencing on July 15, 2013. | |
The 2018 Convertible Notes are senior unsecured obligations that will rank senior in right of payment to any future indebtedness of the Company that is expressly subordinated in right of payment, will rank equal in right of payment to any unsecured indebtedness that is not so subordinated, will rank effectively junior in right of payment to any future secured indebtedness to the extent of the value of the assets securing such indebtedness, and will rank structurally junior to any indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries. Prior to July 15, 2018, the 2018 Convertible Notes are convertible only upon certain specified events. The initial conversion rate for the 2018 Convertible Notes is 41.3770 shares of common stock per $1,000 principal amount of the 2018 Convertible Notes, representing an initial effective conversion price of approximately $24.17 per share of common stock. The conversion rate is subject to adjustment for certain events as outlined in the indenture governing the 2018 Convertible Notes, but will not be adjusted for accrued and unpaid interest. | |
The Company received net proceeds of $310,396 from issuance of the 2018 Convertible Notes, net of $11,079 debt issuance costs and net payments of $28,525 related to our hedge transactions. The debt issuance costs have been allocated on a pro-rata basis to the debt ($8,975) and equity ($2,104) components of the transaction. The debt component of the issuance costs is included in Other assets and is being accreted to interest expense over the stated term of the 2018 Convertible Notes. The equity component was netted against the proceeds and included in additional paid-in capital. | |
The Company may not redeem the 2018 Convertible Notes prior to maturity. However, in the event of a fundamental change, as defined in the indenture, the holders of the 2018 Convertible Notes may require us to purchase all or a portion of their 2018 Convertible Notes at a purchase price equal to 100% of the principal amount of the 2018 Convertible Notes, plus accrued and unpaid interest, if any, to the repurchase date. Holders who convert their 2018 Convertible Notes in connection with a make-whole fundamental change, as defined in the indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate. | |
Prior to July 15, 2018, the 2018 Convertible Notes are convertible only under the following circumstances: (1) during any fiscal quarter commencing after March 31, 2013 (and only during such fiscal quarter), if the last reported sale price of the Company common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “ 2018 Convertible Notes Measurement Period”) in which, for each trading day of such 2018 Convertible Notes Measurement Period, the trading price per $1,000 principal amount of 2018 Convertible Notes on such trading day was less than 98% of the product of the last reported sale price of our common stock on such trading day and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified distributions and corporate events. As of September 30, 2013, none of the conditions allowing holders of the 2018 Convertible Notes to convert had been met. | |
In accordance with the governing accounting guidance, the Company determined that the embedded conversion option in the 2018 Convertible Notes is not required to be separately accounted for as a derivative. However, since the 2018 Convertible Notes are within the scope of the accounting guidance for debt with conversion and other options, the Company is required to separate the 2018 Convertible Notes into a liability component and equity component. The carrying amount of the liability component is calculated by measuring the fair value of a similar liability (including any embedded features other than the conversion option) that does not have an associated equity component. The carrying amount of the equity component representing the embedded conversion option is determined by deducting the fair value of the liability component from the initial proceeds ascribed to the 2018 Convertible Notes as a whole. The excess of the principal amount of the liability component over its carrying amount is amortized to interest cost over the expected life of a similar liability that does not have an associated equity component using the effective interest method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification in the accounting guidance for contracts in an entity’s own equity. | |
The Company has determined that a 5.0% effective interest rate is appropriate to calculate the accretion of the bond discount, which is being recorded as interest expense over the stated term of the 2018 Convertible Notes. (The amount by which interest expense, calculated using the effective interest rate of 5.0%, exceeds the interest expense related to the coupon rate of 1.5% is non-cash interest expense.) The effective rate is based on the interest rate for a similar instrument that does not have a conversion feature. The Company may be required to pay additional interest upon occurrence of certain events as outlined in the indenture governing the 2018 Convertible Notes. As of September 30, 2013, the remaining term of the 2018 Convertible Notes is 4.8 years. | |
Upon conversion of a note, holders of the 2018 Convertible Notes will receive up to the principal amount of the converted note in cash and any excess conversion value (conversion spread) in shares of our common stock. The amount of cash and the number of shares of our common stock, if any, will be based on a 60 trading day observation period as described in the indenture. As described in Note 1 Summary of Significant Accounting Policies, the conversion spread will be included in the denominator for the computation of diluted net income per common share, using the treasury stock method, if the effect is dilutive. | |
As discussed above, to hedge against potential dilution upon conversion of the 2018 Convertible Notes, the Company purchased call options on its common stock. The call options give the Company the right to purchase up to 14,481,950 shares of our common stock at $24.17 per share subject to certain adjustments that correspond to the potential adjustments to the conversion rate for the 2018 Convertible Notes. The Company paid an aggregate of $70,000 to purchase these call options. The call options will expire on July 15, 2018, unless earlier terminated or exercised. To reduce the cost of the hedge, in a separate transaction, the Company sold warrants. These warrants give the holder the right to purchase up to 14,481,950 shares of common stock of the Company at $27.36 per share, subject to certain adjustments. These warrants will be exercisable and will expire in equal installments for a period of 140 trading days beginning on October 15, 2018. The Company received an aggregate of $41,475 from the sale of these warrants. In accordance with governing accounting guidance, the Company concluded that the call options and warrants were indexed to our stock. Therefore, the call options and warrants were classified as equity instruments and will not be marked to market prospectively unless certain conditions occur. The net amount of $28,525 was recorded as a reduction to additional paid-in capital. The settlement terms of the call options provide for net share settlement and the settlement terms of the warrants provide for net share or cash settlement at the option of the Company. |
STOCK_OPTIONS_AND_STOCK_AWARDS
STOCK OPTIONS AND STOCK AWARDS | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
STOCK OPTIONS AND STOCK AWARDS | ' | |||||||||||
STOCK OPTIONS AND STOCK AWARDS | ' | |||||||||||
10. STOCK OPTIONS AND STOCK AWARDS | ||||||||||||
Under the Company’s 2004 Equity Compensation Plan, as amended (the “2004 Plan”), as approved by the stockholders of the Company, qualified and nonqualified stock options and stock awards may be granted to employees, non-employee directors, consultants and advisors who provide services. As of September 30, 2013, the Company had granted non-qualified stock options and stock awards under the 2004 Plan. At September 30, 2013, there were 2,971,412 shares available for future grants under the 2004 Plan. | ||||||||||||
(a) Stock Option Information | ||||||||||||
During the nine months ended September 30, 2013, the Company granted non-qualified stock options to purchase shares of the Company’s common stock pursuant to the 2004 Plan. These options expire ten years from date of grant. Their exercise prices represent the closing price of the common stock of the Company on the respective dates that the options were granted and they vest rateably over four years at one year intervals from the grant date, assuming continued employment of the grantee. | ||||||||||||
The following tables summarize stock option activity for the nine month period ended September 30, 2013: | ||||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||
Weighted | ||||||||||||
Weighted | average | |||||||||||
average | remaining | Aggregate | ||||||||||
exercise | contractual | intrinsic | ||||||||||
Stock options | Shares | price | life (in years) | value | ||||||||
Options outstanding: | ||||||||||||
Outstanding at December 31, 2012 | 6,626,176 | $ | 22.5 | |||||||||
Granted | 1,172,209 | 17.58 | ||||||||||
Exercised | (40,112 | ) | 10.2 | |||||||||
Forfeited | (316,562 | ) | 25.11 | |||||||||
Outstanding at September 30, 2013 | 7,441,711 | 21.68 | 6.94 | $ | 7,479 | |||||||
Exercisable at September 30, 2013 | 4,050,142 | 23.46 | 5.62 | 6,117 | ||||||||
The aggregate intrinsic values in the preceding table represent the total pre-tax intrinsic value, based on the Company’s stock closing price of $18.20 as of September 30, 2013, that would have been received by the option holders had all option holders exercised their options as of that date. During the three months ended September 30, 2013, total intrinsic value of options exercised was $336. As of September 30, 2013, exercisable options to purchase 948,561 shares of the Company’s common stock were in-the-money. | ||||||||||||
(b) Stock Awards | ||||||||||||
During the nine months ended September 30, 2013, the Company granted a total of 140,550 performance-based restricted stock unit awards to certain officers. The right to receive shares of common stock will be earned (subject to vesting) upon attainment of two performance goals, weighted as follows: 50% weighting on attaining a specified level of net income for the year ending December 31, 2013 and 50% weighting based upon the timing of approval, and labelling required, by the U.S. Food and Drug Administration (the “FDA”) for the supplemental Biologic License Application (“sBLA”) for XIAFLEX for Peyronie’s. The number of shares of restricted stock units earned will vest 33% on the date of determination that the performance goal is achieved with an additional 33% vesting on the first anniversary, and the remaining balance vesting on the second anniversary, of the date of determination for the performance goal achievement. As of September 30, 2013, management estimates that the issuance of approximately 24,000 shares of restricted stock is probable under these awards. | ||||||||||||
In addition to an annual grant of stock options, during the nine months ended September 30, 2013, the Company granted 318,474 restricted share units to employees. These restricted share units generally vest ratably over three years at one year intervals from the grant date. Upon vesting, each restricted share unit is converted into one share of the common stock of the Company. | ||||||||||||
(c) Restricted Stock | ||||||||||||
During the nine months ended September 30, 2013, the Company granted to members of the Board of Directors 10,000 restricted shares and 20,000 deferred stock units. These awards will vest on the date of the 2014 annual shareholders meeting, assuming continued service of the grantee. | ||||||||||||
The following table summarizes the restricted stock activity for the nine-month period ended September 30, 2013: | ||||||||||||
Weighted | ||||||||||||
average | ||||||||||||
grant-date | ||||||||||||
Shares | fair value | |||||||||||
Nonvested at December 31, 2012 | 48,700 | $ | 23.76 | |||||||||
Issued | 10,000 | 14.37 | ||||||||||
Vested | (34,490 | ) | 24.16 | |||||||||
Cancelled | (250 | ) | 24.62 | |||||||||
Nonvested at September 30, 2013 | 23,960 | 19.27 | ||||||||||
(d) Valuation Assumptions and Expense Information | ||||||||||||
Total stock-based compensation costs charged against income for the nine months ended September 30, 2013 and 2012 amounted to $11,346 and $11,112, respectively. Stock-based compensation costs capitalized as part of inventory amounted to $6,178 at September 30, 2013 and $4,866 at December 31, 2012, respectively. | ||||||||||||
The fair value of each stock option award was estimated on the date of grant using the Black-Scholes model and applying the assumptions in the following table. | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Weighted average assumptions: | ||||||||||||
Expected life of options (in years) | 6.25 | 6.25 | 6.27 | 6.26 | ||||||||
Risk-free interest rate | 1.9 | % | 1.17 | % | 1.2 | % | 1.05 | % | ||||
Expected volatility | 47.84 | % | 50.17 | % | 48.78 | % | 50.69 | % | ||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||
During the nine months ended September 30, 2013, the weighted-average grant-date fair value of options granted was $8.42. As of September 30, 2013, there was approximately $25,500 of total unrecognized stock-based compensation cost related to all share-based payments that will be recognized over the weighted-average period of 2.41 years. |
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2013 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
11. INCOME TAXES | |
The Company’s effective income tax rate benefits (expense) were (1.0 %) and 128.0% for the three months and nine months ended September 30, 2013, respectively. The income tax expense for the three months ended September 30, 2013 results from income taxes payable in certain state jurisdictions. The effective income tax rate benefits results from the reversal of a portion of the valuation allowance against the Company’s deferred tax assets, net of recognition of income taxes on current income in certain state jurisdictions and certain discrete items of tax. | |
The effective income tax rates were 0.0% and 0.0% for the three months and nine months ended September 30, 2012, respectively, as a result of the full valuation allowance. | |
Since inception through March 31, 2013, the Company has maintained a full valuation allowance equal to its cumulative net deferred tax assets given its history of operating losses. During the second quarter of 2013, in conjunction with the accounting associated with the Actient acquisition described in Note (2), the Company recorded deferred tax liabilities related to differences between the book basis and the tax basis of the Actient amortizable assets. These deferred tax liabilities will serve as reversible temporary differences that give rise to future taxable income and, therefore, they serve as a source of income that permits the recognition of certain existing deferred tax assets of the Company. Solely on this basis, management determined that it is more likely than not that a portion of its valuation allowance was no longer required. As a result of the release of the valuation allowance, the Company recorded a tax benefit of $92,607 in the consolidated statement of operations for the nine month period ended September 30, 2013 and an additional tax benefit of $1,295 in Additional paid-in capital related to the 2018 Convertible Notes. Offsetting the benefit of the release of the valuation allowance, the Company recorded for the three months and nine months ended September 30, 2013 a provision of $289 and $538, respectively, for income taxes on current income in certain state jurisdictions. | |
Additionally, as a result of the purchase accounting adjustments discussed above, the Company is establishing deferred tax liabilities of $10,635 for certain state jurisdictions. These deferred tax liabilities result from the differences between the book and tax basis of certain Actient amortizable assets in jurisdictions in which there are no offsetting deferred tax assets. | |
Because the Actient acquisition deferred tax liabilities are provisional amounts that are subject to the finalization of the purchase accounting, this tax benefit may be revised during the acquisition measurement period as explained in Note (2). Since the Company has only looked to reversible taxable differences and feasible tax-planning strategies in assessing the need for the valuation allowance, a portion of its deferred tax assets are not more likely than not to be utilized and remain offset by a valuation allowance. On a quarterly basis, management assesses whether it remains more likely than not that the deferred tax assets will not be realized. In the event the Company determines at a future time that it would realize additional deferred tax assets, the Company will decrease its deferred tax asset valuation allowance and record an income tax benefit in the period when the Company makes such determination. |
LITIGATION
LITIGATION | 9 Months Ended |
Sep. 30, 2013 | |
LITIGATION | ' |
LITIGATION | ' |
12. LITIGATION | |
Hatch-Waxman Litigation | |
Testim, XIAFLEX, TESTOPEL, Edex®, and the Company’s other marketed products are approved under the provisions of the U.S. Food, Drug and Cosmetic Act that renders each susceptible to potential competition from generic manufacturers via the Abbreviated New Drug Application (“ANDA”) procedure or the 505(b)(2) New Drug Application (“505(b)(2) NDA”) procedure. Generic manufacturers can sell their products at prices much lower than those charged by the innovative pharmaceutical companies who have incurred substantial expenses associated with the research and development of the drug product. | |
The ANDA procedure and the 505(b)(2) NDA procedure include provisions allowing generic manufacturers to challenge the effectiveness of the innovator’s patent protection long before the generic manufacturer actually commercializes their products through the paragraph IV certification procedure. In recent years, generic manufacturers have used paragraph IV certifications extensively to challenge patents on a wide array of innovative pharmaceuticals, and we expect this trend to continue and to implicate drug products with even relatively small total revenues. | |
TESTOPEL and Edex and certain other of the Company’s products do not currently have any patent protection and, as a result, potential competitors face fewer barriers in introducing competing products. Therefore, the Company must rely on trade secrets and other unpatented proprietary information in order to obtain a competitive advantage, which it may be unable to do. While the Company attempts to protect its proprietary information as trade secrets effectively, the Company cannot guarantee that the measures it has taken will provide effective protection for its proprietary information. It is possible that the Company’s competitors will independently develop products that compete with TESTOPEL and Edex and certain other of its products. | |
Upsher-Smith Litigations | |
The Company is currently engaged in separate litigations with Upsher-Smith Pharmaceuticals, Inc. (“Upsher-Smith”) in Federal court in Delaware regarding Upsher-Smith’s attempts to bring a generic testosterone gel product to market via an ANDA or 505(b)(2) NDA using Testim as its reference listed drug. Upsher-Smith will not be able to lawfully launch a generic or branded generic version of Testim in the U.S. without the necessary approval from the FDA. On August 16, 2013, the FDA granted tentative approval of the Upsher-Smith NDA (as defined below) with the brand name VogelxoTM for the Upsher-Smith testosterone gel product. The previously pending ANDA litigation in Federal court in New Jersey was dismissed in March 2013, and, although Upsher-Smith initially appealed, the Company and Upsher-Smith have since jointly agreed to dismiss the appeal. We refer to the ANDA litigation in Delaware as the “Delaware Upsher-Smith ANDA Litigation”, the 505(b)(2) NDA litigation in Delaware as the “Delaware Upsher-Smith 505(b)(2) NDA Litigation”, the litigation in New Jersey as the “New Jersey Upsher-Smith ANDA Litigation”, and all three of them collectively as the “Upsher-Smith Litigations”. | |
Delaware ANDA | |
In October 2008, the Company and its licensor, CPEX Pharmaceuticals, Inc. (FCB I LLC’s (“FCB”) predecessor in interest to Testim), received notice that Upsher-Smith filed an ANDA containing a paragraph IV certification seeking approval from the FDA to market a generic version of Testim prior to the January 2025 expiration of the ‘968 Patent. Shortly after, the Company commenced the Delaware Upsher-Smith ANDA Litigation. Although it would seem unlikely based on (i) the FDA’s public statements in its responses to the Citizen’s Petitions submitted by each of the Company and AbbVie Inc. (“AbbVie”) and (ii) Upsher-Smith’s public stance that its generic product has different penetration enhancers than Testim, the FDA could approve the generic product proposed in Upsher-Smith’s ANDA. With FDA approval, even if the Delaware Upsher-Smith ANDA Litigation remains pending, Upsher-Smith may nevertheless choose to launch this generic product at risk of infringing the ‘968 patent. Although administratively closed in December 2011, the Delaware Upsher-Smith ANDA Litigation has not been dismissed or finally resolved and could also result in a finding that Upsher-Smith’s proposed testosterone product does not infringe the ‘968 Patent or that the ‘968 Patent is invalid and/or unenforceable. All discovery obligations of the parties continue to be in effect. In April 2012, the Company and FCB received a notice from Upsher-Smith in connection with its ANDA advising the Company and FCB of Upsher-Smith’s Paragraph IV certification relating to the eight additional patents listed in the Orange Book in addition to the ‘968 patent-in-suit, and asserting that Upsher-Smith does not believe that the product for which it is seeking approval infringes any of the Orange Book listed Testim patents and that those patents are invalid. A tenth U.S. patent issued to FCB on May 15, 2012 and was listed in the Orange Book. | |
New Jersey ANDA | |
On March 27, 2013, the Company and FCB learned that Judge Linares of the United States District Court for the District of New Jersey ruled in favor of Auxilium and FCB on their motion to dismiss the lawsuit previously filed by Upsher-Smith on September 10, 2012. On April 25, 2013, Upsher-Smith filed a Notice of Appeal, appealing the dismissal to the United States Court of Appeals for the Federal Circuit. On June 14, 2013, the Court dismissed the appeal pursuant to a joint motion filed by us and Upsher-Smith, thereby terminating the lawsuit. The lawsuit had sought a declaration of non-infringement and/or invalidity of FCB’s U.S. Patent Nos.: 7,608,605; 7,608,606; 7,608,607; 7,608,608; 7,608,609; 7,608,610; 7,935,690; and 8,063,029. All of the eight referenced patents cover our Testim® 1% testosterone gel, and the eight referenced patents are among the ten FCB patents covering Testim that are currently listed in the Orange Book. The referenced patents will expire between 2023 and 2025. | |
Delaware 505(b)(2) NDA | |
On or about December 28, 2012, the Company and FCB became aware of a notice from Upsher-Smith that advised the Company and FCB of Upsher-Smith’s filing of a 505(b)(2) NDA containing a Paragraph IV certification under 21 U.S.C. Section 314.52(c) for testosterone gel (the “Upsher-Smith NDA”). This Paragraph IV certification notice refers to the ten U.S. patents, covering Testim, that are listed in the Orange Book. These ten patents are owned by FCB and are exclusively licensed to Auxilium and will expire between 2023 and 2025. Upsher-Smith may seek to have any drug approved under the Upsher-Smith NDA as a generic or branded generic version of Testim. On January 28, 2013, the Company and FCB filed a lawsuit in the United States District Court for the District of Delaware against Upsher-Smith for infringement of FCB’s ten patents listed in the Orange Book as covering Testim® 1% testosterone gel. A hearing on Upsher-Smith’s previously filed motion for summary judgment was held on June 28, 2013, and by request of the Court, the parties submitted additional briefing in the weeks following the hearing. On August 16, 2013, the FDA granted tentative approval of the Upsher-Smith NDA with the brand name Vogelxo for the Upsher-Smith testosterone gel product. The Company is currently awaiting a ruling on the summary judgment motion from the Court which the Company believes could come at any time. If summary judgment is granted, Upsher-Smith could launch a 1% testosterone gel product using Testim as the reference drug immediately after such ruling, if it receives final approval by the FDA. If summary judgment is not granted, the trial is currently scheduled to commence in June 2014. | |
On March 26, 2013, the Company submitted a Citizen’s Petition to the FDA with respect to Upsher-Smith’s 505(b)(2) NDA referencing Testim. The Company requested that, in the event of FDA final approval of the Upsher-Smith 505(b)(2) NDA, the FDA: (i) refrain from designating Upsher-Smith’s testosterone gel as therapeutically equivalent to Testim and (ii) require that the label for the Upsher-Smith testosterone gel state that the product is not interchangeable with other testosterone transdermal gels. Since any such approval by the FDA would be pursuant to a 505(b)(2) NDA and not pursuant to an ANDA, it is unclear at this time whether such an Upsher-Smith product would receive a therapeutically equivalent rating to Testim or a different rating. Although the FDA has not yet substantively replied to this Citizen Petition, the FDA did recently communicate to the Company that it has not yet resolved the issues raised in the Citizen Petition. The therapeutic equivalence rating may determine whether the Upsher-Smith testosterone product, if launched, would be launched as a generic, a branded generic, or simply another branded competitor in the TRT gel market. It is unclear at this time when the FDA will substantively respond to the Company’s Citizen Petition. | |
Watson Litigation | |
ANDA Litigation with Watson | |
On May 24, 2012, the Company and FCB filed a lawsuit against Watson Pharmaceuticals, Inc. (now known as Actavis, Inc.) (“Watson”) for infringement of FCB’s ten patents listed in the Orange Book as covering Testim® 1% testosterone gel (the “Watson Litigation”). The lawsuit was filed in the United States District Court for the District of New Jersey on May 23, 2012 in response to a notice letter, dated April 12, 2012, sent by Watson Laboratories, Inc. (NV) regarding its filing with the FDA of an ANDA for a generic 1% testosterone gel product. This letter also stated that the ANDA contained Paragraph IV certifications with respect to the nine patents listed in the Orange Book on that date as covering Testim. The Company’s lawsuit filed against Watson involves those nine patents, as well as a tenth patent covering Testim that was issued on May 15, 2012 and is listed in the Orange Book. | |
Other Matters | |
The Company is also party to various other actions and claims arising in the normal course of business that it does not believe are material. The Company believes that amounts accrued for awards or assessments in connection with all such matters are adequate and that the ultimate resolution of these matters will not have a material adverse effect on the its financial position or the manner in which the Company conduct its business. However, there exists a reasonable possibility of loss in excess of the amounts accrued, the amount of which cannot currently be estimated. While the Company does not believe that the amount of such excess loss could be material to its financial position, any such loss could have a material adverse effect on its results of operations or the manner in which the Company conducts its business in the period(s) during which the underlying matters are resolved. |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Sep. 30, 2013 | |
SUBSEQUENT EVENT | ' |
SUBSEQUENT EVENT | ' |
13. SUBSEQUENT EVENT | |
On October 10, 2013, the Company and VIVUS, Inc. (“VIVUS,” and together with the Company, the “Parties”, and each individually, a “Party”) entered into a License and Commercialization Agreement (the “License Agreement”). Under the License Agreement, the Company was granted the exclusive right to commercialize VIVUS’s pharmaceutical product STENDRATM (avanafil) (the “Product”) for the treatment of any urological disease or condition in humans, including male erectile dysfunction (the “Field”), in the United States and Canada and their respective territories (the “Territory”). A summary of certain terms of the License Agreement is set forth below. | |
Upfront, Milestone and Royalty Payments: | |
· The Company paid to VIVUS a one-time license fee of $30,000. | |
· The Company will make a $15,000 regulatory milestone payment to VIVUS if the FDA approves the STENDRA label expansion described below. | |
· The Company may make up to an aggregate of $255,000 in potential milestone payments to VIVUS based on the achievement of certain net sales targets by the Company. | |
· The Company will make royalty payments to VIVUS based on tiered percentages of the aggregate annual net sales of the Product in the Territory on a quarterly basis. The percentage of the Company’s aggregate annual net sales to be paid to VIVUS increases in accordance with the achievement of specified thresholds of aggregate annual net sales of the Product in the Territory. At the lowest tier, the royalty payable is in the range of 5% to 10% and, at the highest tier, the royalty payable is in the range of 15% to 20%. | |
· If the Company’s net sales of the Product in a country are reduced by certain amounts following the entry of a generic product to the market, royalty payments will be reduced by an amount that will be a function of the degree to which the Parties agree the market for the Product has been reduced. | |
· The Company may also make royalty payments and, if a certain annual sales threshold is met, a milestone payment to VIVUS in satisfaction of VIVUS’s payment obligations to Mitsubishi Tanabe Pharma Corporation (“MTPC”) set forth in an agreement between MTPC and VIVUS, as amended, pursuant to which MTPC granted VIVUS certain intellectual property rights relating to the Product in exchange for certain royalty and milestone payments to MTPC. Should any royalties be payable to MTPC, they will be in a range of 4% to 7%. The maximum amount payable for the future milestone (assuming there are no sales anywhere outside of the United States) is $6,000 and is payable only if annual sales exceed a certain threshold. | |
Term of the License Agreement: | |
· Subject to each Party’s termination rights, the License Agreement will remain in effect until the later of, on a country by country basis, (i) ten years from the date the Product launches in such country, and (ii) the expiration of the last to expire patent covering the Product in such country. Upon the expiration of the term of the License Agreement, the license grant by VIVUS to the Company will become fully paid-up, royalty-free, perpetual and irrevocable. | |
Exclusivity: | |
· Neither of the Parties is permitted to directly or indirectly develop, commercialize, or in-license any product that competes with the Product in the Territory during a period of five years from the effective date of the License Agreement. | |
Licenses/Intellectual Property: | |
· VIVUS granted the Company an exclusive license (even as to VIVUS), with a right to sublicense, subject to certain limitations, under certain of VIVUS’s trademarks, including STENDRA, to market, sell and distribute the Product in the Territory. | |
· VIVUS granted the Company an exclusive license (even as to VIVUS), with a right to sublicense, subject to certain limitations, under certain of VIVUS’s patents and know-how (i) to use, distribute, import, promote, market, sell, offer for sale or otherwise commercialize Products in the Field in the Territory, (ii) to make and have made Products anywhere in the world, with certain exceptions, and (iii) to conduct certain development activities on the Product in the Field in support of obtaining regulatory approval in the Territory. | |
Manufacturing rights/supply obligations/pricing: | |
· The Company will obtain the Product exclusively from VIVUS pursuant to a Commercial Supply Agreement entered into between the Company and VIVUS, as further described below. At a time selected by the Company, but no later than the third anniversary of the effective date of the License Agreement, the Company may elect to transfer control of the supply chain for the Product to itself or its designee (the “Supply Chain Transfer”). | |
Development and commercialization responsibilities and costs: | |
· VIVUS shall be responsible for conducting any post-Regulatory Approval studies that are required by the FDA. The costs of conducting such studies shall be shared equally, up to a maximum aggregate payment by the Company of $4,000, and once such maximum is reached, VIVUS shall be solely responsible for such costs. VIVUS has billed the Company $2,100 of such costs. Any additional post-Regulatory Approval studies that the Company determines to conduct with respect to the Product shall be conducted by the Company at its sole expense. | |
· At VIVUS’s sole cost and expense, VIVUS shall be responsible for preparing and filing with the FDA the appropriate documents to obtain a label expansion for the Product referencing a specific time of onset. VIVUS shall use its commercially reasonable efforts to obtain approval of such label expansion filing. | |
· The Company will be solely responsible for commercializing the Product in the Field in the Territory during the term of the License Agreement, subject to its annual marketing plans, and will be solely responsible for all costs and expenses associated with such commercialization activities. | |
Right to terminate agreement/license: | |
· Either Party may terminate the License Agreement as a result of the other Party’s material breach or bankruptcy. | |
· VIVUS may terminate the License Agreement immediately upon written notice to the Company if it is excluded from participation in the United States federal healthcare programs. | |
· After the first anniversary of the Product launch in the United States, the Company may terminate the License Agreement for any reason upon 180 days written notice. | |
· The Company may terminate the License Agreement upon a generic entry into the market upon 30 days written notice. | |
Commercial Supply Agreement between the Company and VIVUS | |
On October 10, 2013, the Company and VIVUS entered into a Commercial Supply Agreement (the “Supply Agreement”). Under the Supply Agreement, VIVUS will be the exclusive supplier to the Company of the Product for commercialization by the Company in the Field in the Territory under the terms of the License Agreement. A summary of certain terms of the Supply Agreement is set forth below. | |
Supply of Product: | |
· VIVUS will manufacture the Product, directly or through one or more third party subcontractors. | |
· VIVUS currently obtains the Product solely from MTPC and will continue to obtain the Product solely from MTPC (who will have an obligation to supply VIVUS until June 30, 2015) unless and until VIVUS qualifies with the FDA a third party manufacturer who is able to manufacture the Product in accordance with required specifications and applicable laws. | |
Minimum Purchase Requirements: | |
· The Company will purchase all of its requirements for the Product from VIVUS, subject to the Supply Chain Transfer described above. | |
· For 2015 and each subsequent year during the term, should the Company fail to purchase an agreed minimum amount of the Product from VIVUS, it will reimburse VIVUS for the shortfall as it relates to VIVUS’s out-of-pocket costs to acquire certain raw materials needed to manufacture the Product. | |
Price of Product: | |
· The Company will pay to VIVUS its manufacturing cost plus a certain percentage mark up for each unit of Product. | |
Term: | |
· Subject to each Party’s termination rights, the term of the Supply Agreement will remain until December 31, 2018. | |
· Either Party may terminate the Supply Agreement as a result of the other Party’s material breach or bankruptcy. | |
· Either Party may terminate the Supply Agreement if the License Agreement is terminated. The Supply Agreement will automatically terminate upon the completion of the Supply Chain Transfer. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
Basis of Presentation | ' | |||||||||||||
(a) Basis of Presentation | ||||||||||||||
The accompanying unaudited consolidated financial statements include the accounts of Auxilium Pharmaceuticals, Inc. and its wholly owned subsidiaries (the “Company”), and have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to Form 10-Q. Certain disclosures required for complete annual financial statements are not included herein. All significant intercompany accounts and transactions have been eliminated in consolidation. The information at September 30, 2013 and for the respective three and nine month periods ended September 30, 2013 and 2012 is unaudited but includes all adjustments (consisting only of normal recurring adjustments) which, in the opinion of the Company’s management, are necessary to state fairly the financial information set forth herein. The December 31, 2012 balance sheet amounts and disclosures included herein have been derived from the Company’s December 31, 2012 audited consolidated financial statements. The interim results are not necessarily indicative of results to be expected for the full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K filed with the SEC. | ||||||||||||||
Revenue Recognition | ' | |||||||||||||
(b) Revenue Recognition | ||||||||||||||
Net revenues for the three and nine months ended September 30, 2013 and 2012 comprise the following: | ||||||||||||||
Three months ended | Nine months ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Testim revenues- | ||||||||||||||
Net U.S. revenues | $ | 50,701 | $ | 54,642 | $ | 149,165 | $ | 175,004 | ||||||
International revenues | 1,604 | 710 | 2,987 | 2,760 | ||||||||||
52,305 | 55,352 | 152,152 | 177,764 | |||||||||||
XIAFLEX revenues- | ||||||||||||||
Net U.S. revenues | 15,882 | 13,216 | 42,800 | 37,706 | ||||||||||
International revenues | 1,676 | 2,475 | 14,344 | 7,349 | ||||||||||
17,558 | 15,691 | 57,144 | 45,055 | |||||||||||
Other net U.S. revenues- | ||||||||||||||
TESTOPEL | 20,636 | 0 | 35,017 | 0 | ||||||||||
Edex | 7,958 | 0 | 12,991 | 0 | ||||||||||
Other | 9,683 | 0 | 17,527 | 0 | ||||||||||
38,277 | 0 | 65,535 | 0 | |||||||||||
Total net revenues | $ | 108,140 | $ | 71,043 | $ | 274,831 | $ | 222,819 | ||||||
Net U.S. revenues shown in the above table represent the product sales of the Company within the U.S., net of allowances provided on such sales. International revenues represent the amortization of deferred up-front and milestone payments the Company has received on its out-licensing agreements, together with royalties earned on product sales by the licensees. | ||||||||||||||
As discussed in Note (2), on April 26, 2013, the Company acquired Actient Holdings LLC (“Actient”), a privately-held urology specialty pharmaceutical company with a diversified product offering of four marketed products in the urology space and two marketed products in the respiratory space. TESTOPEL is a product used for the treatment of testosterone deficiency in aging men as well as androgen deficiency caused by other conditions. Edex is an injectable used for the treatment of erectile dysfunction. Other U.S. net revenues, as shown in the above table, for the three and nine months ended September 30, 2013 are sales of additional products the Company acquired in this acquisition. TESTOPEL and Edex and certain other of the Actient products do not currently have any patent protection. Therefore, the Company must rely on trade secrets and other unpatented proprietary information in order to obtain a competitive advantage with respect to such products. | ||||||||||||||
TESTOPEL is sold under a buy-and-bill model. Under this model, the Company’s customers are health care providers who maintain a stock of TESTOPEL for future patient procedures. Revenue is recognized for this product upon the delivery, whereupon title passes, all obligations have been fulfilled, and collection of the related receivable is fixed, determinable, probable, and reasonably assured. The Company offers volume discounts and discounts for credit card payments when customer orders are received, and these discounts are recognized when the related product sales are recorded. | ||||||||||||||
The Company recognizes revenue for Edex and other Actient branded pharmaceutical products upon the delivery of goods, whereupon title passes, all obligations have been fulfilled, and collection of the related receivable is fixed, determinable, probable, and reasonably assured. The Company provides for chargebacks (primarily related to its sales to government entities, such as the U.S. Veterans Administration), rebates, returns, and other adjustments in the same period the related product sales are recorded. Reserves for these government chargebacks, rebates, returns, and other adjustments are based upon analysis of historical data. Each period, the Company reviews its reserves for government chargebacks, rebates, returns, and other adjustments based on data available at that time. Any adjustment to these reserves results in charges to revenue. | ||||||||||||||
For Actient non-drug medical devices, revenue is recognized upon the shipment of goods or upon the delivery of goods, whereupon title passes, all obligations have been fulfilled, and collection of the related receivable is fixed, determinable, probable, and reasonably assured. The Company records estimated sales returns and discounts as a reduction of net sales in the period revenue is recognized. The Company maintains an allowance for these returns and reduces reported revenue for expected returns from shipments each reporting period. This allowance is not significant and is based on historical and current trends in product returns. | ||||||||||||||
Shipping and handling fees for Actient products are billed to customers, and are recognized in net revenues. Other shipping and handling costs are included in the cost of sales. | ||||||||||||||
In the first quarter of 2012, the Company recorded a correction of an error in its financial statements for the year ended December 31, 2011 that resulted from an understatement of the accrual for government health plan charge-backs. This correction reduced Net revenues and Net income reported for the nine months ended September 30, 2012 in the amount of $820. Management believes this adjustment is not material to the Company’s results of operations for 2012. | ||||||||||||||
Net Income (Loss) Per Common Share | ' | |||||||||||||
(c) Net Income (Loss) Per Common Share | ||||||||||||||
Basic income (loss) per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding and, if there is net income during the period, the dilutive impact of common stock equivalents outstanding during the period. Common stock equivalents are measured under the treasury stock method. | ||||||||||||||
The following is a reconciliation of net income and weighted average common shares outstanding for purposes of calculating basic and diluted income per common share. | ||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Basic income (loss) per share: | 2013 | 2012 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||||
Net income (loss) | $ | (28,891 | ) | $ | (10,488 | ) | $ | 20,038 | $ | (4,512 | ) | |||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 | ||||||||||
Weighted-average unvested restricted common shares subject to forfeiture | (23,960 | ) | (51,200 | ) | (34,906 | ) | (27,030 | ) | ||||||
Shares used in calculating basic net income (loss) per common share | 49,384,637 | 49,078,321 | 49,304,543 | 48,636,444 | ||||||||||
Basic net income (loss) per common share | $ | (0.59 | ) | $ | (0.21 | ) | $ | 0.41 | $ | (0.09 | ) | |||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Diluted income (loss) per share: | 2013 | 2012 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||||
Net income (loss) | $ | (28,891 | ) | $ | (10,488 | ) | $ | 20,038 | $ | (4,512 | ) | |||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 | ||||||||||
Weighted-average unvested restricted common shares subject to forfeiture | (23,960 | ) | (51,200 | ) | (34,906 | ) | (27,030 | ) | ||||||
Incremental shares from assumed conversions of stock compensation plans | 0 | 0 | 306,717 | 0 | ||||||||||
Shares used in calculating diluted net income (loss) per common share | 49,384,637 | 49,078,321 | 49,611,260 | 48,636,444 | ||||||||||
Diluted net income (loss) per common share | $ | (0.59 | ) | $ | (0.21 | ) | $ | 0.4 | $ | (0.09 | ) | |||
Diluted net income per common share is computed giving effect to all potentially dilutive securities. The potentially dilutive shares include outstanding stock options and awards, outstanding warrants, and incremental shares issuable upon conversion of 1.5% Convertible Senior Notes due 2018 (“2018 Convertible Notes”) (See Note 9, Senior Convertible Notes). The following weighted-average number of stock options and restricted stock units were antidilutive and, therefore, excluded from the computation of diluted net income per common share for the three and nine month periods ended September 30, 2013: 6,920,292 and 6,444,978, respectively. | ||||||||||||||
The Company has 1,250,000 warrants outstanding issued in connection with the acquisition of Actient as discussed in Note (2) and 14,481,950 warrants sold in connection with the issuance of convertible debt as discussed in Note (9). The warrants will not be considered in calculating the total dilutive weighted average shares outstanding until the price of the Company’s common stock exceeds the strike price of the warrants. When the market price of the Company’s common stock exceeds the strike price of the warrants, the effect of the additional shares that may be issued upon exercise of the warrants will be included in total dilutive weighted average shares outstanding using the treasury stock method. | ||||||||||||||
It is the current intent and policy of the Company to settle conversions of the 2018 Convertible Notes through combination settlement, which involves repayment of the principal amount in cash and any excess of the conversion value over the principle amount (the “conversion spread”) in shares of common stock. Therefore, only the impact of the conversion spread will be included in total dilutive weighted average shares outstanding using the treasury stock method. As such, the 2018 Convertible Notes will have no impact on diluted per share results until the price of the Company’s common stock exceeds the conversion price. | ||||||||||||||
The call options to purchase the Company’s common stock, which were purchased to hedge against potential dilution upon conversion of the 2018 Convertible Notes, as discussed in Note 9, are not considered in calculating the total dilutive weighted average shares outstanding, as their effect would be anti-dilutive. Upon exercise, the call options will mitigate the dilutive effect of the 2018 Convertible Notes. | ||||||||||||||
New Accounting Pronouncements | ' | |||||||||||||
(d) New Accounting Pronouncements | ||||||||||||||
In February 2013, the Financial Accounting Standards Board issued an Accounting Standards Update on reporting of amounts reclassified out of accumulated other comprehensive income. This guidance, which is effective for fiscal years beginning after December 15, 2012, requires companies to provide information about amounts reclassified out of accumulated other comprehensive income by component (the respective line items of the income statement). The Company adopted this guidance as of January 1, 2013 and its adoption did not have a material effect on the Company’s consolidated financial statements. | ||||||||||||||
Revision to previously issued financial statements | ' | |||||||||||||
(e) Revision to previously issued financial statements | ||||||||||||||
In connection with the preparation of the consolidated financial statements for the third quarter of 2013, an incorrect classification was identified with respect to the manner in which the Company classified the tenant improvement allowance of $3,204 provided by the lessor in the lease for its new corporate headquarters which commenced on January 1, 2013. At recognition of the tenant improvement allowance provided, the Company properly recorded on its Consolidated Balance Sheets the cost of the improvements as a fixed asset and the tenant improvement allowance as a deferred rent credit. In the Company’s Consolidated Statement of Cash Flows provided in its Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2013 and June 30, 2013, the tenant improvements were incorrectly classified as cash used in investing activities and the offsetting increase in deferred rent was incorrectly classified as an adjustment of cash flows provided by operating activities. The Company has now determined that the tenant improvement allowance should have been netted against the Purchases of property and equipment to reflect the non-cash nature of these transactions in the periods presented. The effect of the misclassification in the Consolidated Statement of Cash Flows for the three months ended March 31, 2013 and the six months ended June 30, 2013 was a $3,204 overstatement of both net cash provided by operating activities and net cash used in investing activities. The Company assessed this misclassification and concluded that it was not material to the Company’s previously issued financial statements. The Company has properly presented the tenant improvement transaction in the Consolidated Statement of Cash Flows for the nine months ended September 30, 2013. The revision of the three month period ended March 31, 2013 and six month period ended June 30, 2013 will be reflected in the Company’s first and second quarter filings of fiscal 2014, respectively. The Company’s Consolidated Statements of Operations for first and second quarters of 2013 and the Consolidated Balance Sheets as of March 31, 2013 and June 30, 2013 were not affected by this misclassification and remain unchanged. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
Schedule of net revenues | ' | |||||||||||||
Three months ended | Nine months ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Testim revenues- | ||||||||||||||
Net U.S. revenues | $ | 50,701 | $ | 54,642 | $ | 149,165 | $ | 175,004 | ||||||
International revenues | 1,604 | 710 | 2,987 | 2,760 | ||||||||||
52,305 | 55,352 | 152,152 | 177,764 | |||||||||||
XIAFLEX revenues- | ||||||||||||||
Net U.S. revenues | 15,882 | 13,216 | 42,800 | 37,706 | ||||||||||
International revenues | 1,676 | 2,475 | 14,344 | 7,349 | ||||||||||
17,558 | 15,691 | 57,144 | 45,055 | |||||||||||
Other net U.S. revenues- | ||||||||||||||
TESTOPEL | 20,636 | 0 | 35,017 | 0 | ||||||||||
Edex | 7,958 | 0 | 12,991 | 0 | ||||||||||
Other | 9,683 | 0 | 17,527 | 0 | ||||||||||
38,277 | 0 | 65,535 | 0 | |||||||||||
Total net revenues | $ | 108,140 | $ | 71,043 | $ | 274,831 | $ | 222,819 | ||||||
Reconciliation of net income and weighted average common shares outstanding for purposes of calculating basic and diluted income per common share | ' | |||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Basic income (loss) per share: | 2013 | 2012 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||||
Net income (loss) | $ | (28,891 | ) | $ | (10,488 | ) | $ | 20,038 | $ | (4,512 | ) | |||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 | ||||||||||
Weighted-average unvested restricted common shares subject to forfeiture | (23,960 | ) | (51,200 | ) | (34,906 | ) | (27,030 | ) | ||||||
Shares used in calculating basic net income (loss) per common share | 49,384,637 | 49,078,321 | 49,304,543 | 48,636,444 | ||||||||||
Basic net income (loss) per common share | $ | (0.59 | ) | $ | (0.21 | ) | $ | 0.41 | $ | (0.09 | ) | |||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Diluted income (loss) per share: | 2013 | 2012 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||||
Net income (loss) | $ | (28,891 | ) | $ | (10,488 | ) | $ | 20,038 | $ | (4,512 | ) | |||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 | ||||||||||
Weighted-average unvested restricted common shares subject to forfeiture | (23,960 | ) | (51,200 | ) | (34,906 | ) | (27,030 | ) | ||||||
Incremental shares from assumed conversions of stock compensation plans | 0 | 0 | 306,717 | 0 | ||||||||||
Shares used in calculating diluted net income (loss) per common share | 49,384,637 | 49,078,321 | 49,611,260 | 48,636,444 | ||||||||||
Diluted net income (loss) per common share | $ | (0.59 | ) | $ | (0.21 | ) | $ | 0.4 | $ | (0.09 | ) |
ACQUISITION_OF_ACTIENT_Tables
ACQUISITION OF ACTIENT (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
ACQUISITION OF ACTIENT | ' | |||||||||||||
Summary of fair value of the total consideration | ' | |||||||||||||
Total | ||||||||||||||
Acquisition- | ||||||||||||||
Date | ||||||||||||||
Fair value | ||||||||||||||
Base cash consideration | $ | 585,000 | ||||||||||||
Cash and working capital adjustment | 14,863 | |||||||||||||
Contingent consideration | 40,969 | |||||||||||||
Warrants | 12,000 | |||||||||||||
Total consideration | 652,832 | |||||||||||||
Consideration representing compensation | (8,309 | ) | ||||||||||||
Consideration allocated to net assets acquired | $ | 644,523 | ||||||||||||
Summary of fair value of net assets acquired | ' | |||||||||||||
April 26, | ||||||||||||||
2013 | ||||||||||||||
Cash | $ | 11,514 | ||||||||||||
Accounts recievable, trade | 25,344 | |||||||||||||
Inventory | 21,704 | |||||||||||||
Prepaid expenses and other current assets | 3,735 | |||||||||||||
Property and equipment | 3,028 | |||||||||||||
Purchased intangibles | 667,000 | |||||||||||||
Goodwill | 123,234 | |||||||||||||
Other long-term assets | 5,202 | |||||||||||||
Total assets acquired | 860,761 | |||||||||||||
Contingent consideration assumed | (81,685 | ) | ||||||||||||
Other liabilities assumed | (30,016 | ) | ||||||||||||
Deferred tax liabilities | (104,537 | ) | ||||||||||||
Total net assets acquired | $ | 644,523 | ||||||||||||
Summary of fair value assigned to product rights acquired and the amortization period assigned to these rights | ' | |||||||||||||
Fair value | Estimated | |||||||||||||
life in | ||||||||||||||
years | ||||||||||||||
TESTOPEL | $ | 491,000 | 12 | |||||||||||
Edex | 70,000 | 11 | ||||||||||||
Timm Medical | 23,000 | 10 | ||||||||||||
Striant | 8,000 | 10 | ||||||||||||
Theo-24 | 39,000 | 9 | ||||||||||||
Semprex-D | 32,000 | 10 | ||||||||||||
Other products | 4,000 | 2 | ||||||||||||
Total | $ | 667,000 | ||||||||||||
Schedule of pro forma results of operations | ' | |||||||||||||
Unaudited pro forma consolidated results | ||||||||||||||
Three months ended | Nine months ended | |||||||||||||
September 30, | Septemebr 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Net revenues | $ | 108,140 | $ | 103,031 | $ | 323,970 | $ | 315,158 | ||||||
Net income (loss) attributable to the Company | $ | (18,187 | ) | $ | (46,944 | ) | $ | (52,603 | ) | $ | (5,885 | ) | ||
Net income (loss) per common share- | ||||||||||||||
Basic | $ | (0.37 | ) | $ | (0.96 | ) | $ | (1.07 | ) | $ | (0.12 | ) | ||
Diluted | $ | (0.37 | ) | $ | (0.96 | ) | $ | (1.07 | ) | $ | (0.12 | ) |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
Schedule of financial assets and liabilities measured at fair value on a recurring basis | ' | |||||||||||||
September 30 ,2013 | ||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | 91,007 | $ | 91,007 | $ | 0 | $ | 0 | ||||||
Short-term investments | 30,375 | 7,148 | 23,227 | 0 | ||||||||||
Total financial assets | $ | 121,382 | $ | 98,155 | $ | 23,227 | $ | 0 | ||||||
Liabilities | ||||||||||||||
Contingent consideration | $ | 120,244 | $ | 0 | $ | 0 | $ | 120,244 | ||||||
December 31, 2012 | ||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | 35,857 | $ | 35,857 | $ | 0 | $ | 0 | ||||||
Short-term investments | 121,573 | 31,459 | 90,114 | 0 | ||||||||||
Long-term investments: | ||||||||||||||
Auction rate securities | 1,442 | 0 | 0 | 1,442 | ||||||||||
Total financial assets | $ | 158,872 | $ | 67,316 | $ | 90,114 | $ | 1,442 | ||||||
Liabilities | ||||||||||||||
Contingent consideration | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||
Summary of changes in the financial assets measured at fair value using Level 3 inputs | ' | |||||||||||||
Long -term Investments | Nine months | |||||||||||||
ended | ||||||||||||||
September 30, | ||||||||||||||
2013 | ||||||||||||||
Beginning balance | $ | 1,442 | ||||||||||||
Transfers into Level 3 | 0 | |||||||||||||
Sales and redemptions of securities | (1,528 | ) | ||||||||||||
Unrealized gain- included in other comprehensive income | 86 | |||||||||||||
Ending balance | $ | 0 | ||||||||||||
Total realized loss on sale of securities included in Investment income (loss), net for the period | $ | (72 | ) | |||||||||||
Schedule of rollforward of the fair value of contingent consideration since the Actient acquisition date | ' | |||||||||||||
Contingent consideration | ||||||||||||||
Fair value at date of Actient acquisition, April 26, 2013 | $ | 122,654 | ||||||||||||
Change in contingent consideration charged to operations | 6,929 | |||||||||||||
Payments of contingent consideration | (9,339 | ) | ||||||||||||
Ending balance, September 30, 2013 | $ | 120,244 |
INVENTORIES_Tables
INVENTORIES (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
INVENTORIES | ' | |||||||
Schedule of inventories | ' | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Raw materials | $ | 8,023 | $ | 8,183 | ||||
Work-in-process | 70,119 | 53,037 | ||||||
Finished goods | 20,316 | 10,611 | ||||||
98,458 | 71,831 | |||||||
Inventories, current | 44,749 | 22,134 | ||||||
Inventories, non-current | $ | 53,709 | $ | 49,697 |
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
ACCRUED EXPENSES | ' | |||||||
Schedule of accrued expenses | ' | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Payroll and related expenses | $ | 18,775 | $ | 15,048 | ||||
Royalty expenses | 10,064 | 10,949 | ||||||
Research and development expenses | 3,607 | 2,972 | ||||||
Sales and marketing expenses | 14,873 | 8,017 | ||||||
Rebates, discounts and returns accrual | 46,918 | 38,066 | ||||||
Accrued interest | 1,094 | 0 | ||||||
Purchase option payable | 7,000 | 0 | ||||||
Other | 17,402 | 5,688 | ||||||
$ | 119,733 | $ | 80,740 |
STOCK_OPTIONS_AND_STOCK_AWARDS1
STOCK OPTIONS AND STOCK AWARDS (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
STOCK OPTIONS AND STOCK AWARDS | ' | |||||||||||
Summary of stock option activity | ' | |||||||||||
Nine Months Ended September 30, 2013 | ||||||||||||
Weighted | ||||||||||||
Weighted | average | |||||||||||
average | remaining | Aggregate | ||||||||||
exercise | contractual | intrinsic | ||||||||||
Stock options | Shares | price | life (in years) | value | ||||||||
Options outstanding: | ||||||||||||
Outstanding at December 31, 2012 | 6,626,176 | $ | 22.5 | |||||||||
Granted | 1,172,209 | 17.58 | ||||||||||
Exercised | (40,112 | ) | 10.2 | |||||||||
Forfeited | (316,562 | ) | 25.11 | |||||||||
Outstanding at September 30, 2013 | 7,441,711 | 21.68 | 6.94 | $ | 7,479 | |||||||
Exercisable at September 30, 2013 | 4,050,142 | 23.46 | 5.62 | 6,117 | ||||||||
Summary of restricted stock activity | ' | |||||||||||
Weighted | ||||||||||||
average | ||||||||||||
grant-date | ||||||||||||
Shares | fair value | |||||||||||
Nonvested at December 31, 2012 | 48,700 | $ | 23.76 | |||||||||
Issued | 10,000 | 14.37 | ||||||||||
Vested | (34,490 | ) | 24.16 | |||||||||
Cancelled | (250 | ) | 24.62 | |||||||||
Nonvested at September 30, 2013 | 23,960 | 19.27 | ||||||||||
Schedule of weighted-average assumptions used to estimate the fair value of options granted using the Black-Scholes model | ' | |||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Weighted average assumptions: | ||||||||||||
Expected life of options (in years) | 6.25 | 6.25 | 6.27 | 6.26 | ||||||||
Risk-free interest rate | 1.9 | % | 1.17 | % | 1.2 | % | 1.05 | % | ||||
Expected volatility | 47.84 | % | 50.17 | % | 48.78 | % | 50.69 | % | ||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||||||||||||||||||||||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Apr. 26, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Apr. 26, 2013 | Apr. 26, 2013 |
Actient | Actient | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Testim | Testim | Testim | Testim | Testim | Testim | Testim | Testim | Testim | Testim | Testim | Testim | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | TESTOPEL | TESTOPEL | TESTOPEL | TESTOPEL | Edex | Edex | Edex | Edex | Other products | Other products | Other products | Other products | Urology | Respiratory | |||||
Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | International revenues | International revenues | International revenues | International revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | International revenues | International revenues | International revenues | International revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Net U.S. revenues | Actient | Actient | |||||||||||||||||||
item | item | |||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total net revenues | $108,140 | $71,043 | $274,831 | $222,819 | ' | ' | $38,277 | $0 | $65,535 | $0 | $52,305 | $55,352 | $152,152 | $177,764 | $50,701 | $54,642 | $149,165 | $175,004 | $1,604 | $710 | $2,987 | $2,760 | $17,558 | $15,691 | $57,144 | $45,055 | $15,882 | $13,216 | $42,800 | $37,706 | $1,676 | $2,475 | $14,344 | $7,349 | $20,636 | $0 | $35,017 | $0 | $7,958 | $0 | $12,991 | $0 | $9,683 | $0 | $17,527 | $0 | ' | ' |
Acquisition of Actient | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of marketed products | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | 2 |
Warrants issued (in shares) | ' | ' | ' | ' | 1,250,000 | 1,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of warrants sold in connection with the issuance of convertible debt | ' | ' | 14,481,950 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Net revenues | $108,140 | $71,043 | $274,831 | $222,819 |
Net income | -28,891 | -10,488 | 20,038 | -4,512 |
Understatement of the accrual for government health plan charge-backs | Restatement adjustment | ' | ' | ' | ' |
Net revenues | ' | ' | ' | 820 |
Net income | ' | ' | ' | $820 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (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) | ($28,891) | ($10,488) | $20,038 | ($4,512) |
Denominator: | ' | ' | ' | ' |
Weighted-average common shares outstanding (in shares) | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 |
Weighted-average unvested restricted common shares subject to forfeiture (in shares) | -23,960 | -51,200 | -34,906 | -27,030 |
Shares used in calculating basic net (income) loss per common share (in shares) | 49,384,637 | 49,078,321 | 49,304,543 | 48,636,444 |
Basic net income (loss) per common share (in dollars per share) | ($0.59) | ($0.21) | $0.41 | ($0.09) |
Numerator: | ' | ' | ' | ' |
Net income (loss) | ($28,891) | ($10,488) | $20,038 | ($4,512) |
Denominator: | ' | ' | ' | ' |
Weighted-average common shares outstanding (in shares) | 49,408,597 | 49,129,521 | 49,339,449 | 48,663,474 |
Weighted-average unvested restricted common shares subject to forfeiture (in shares) | -23,960 | -51,200 | -34,906 | -27,030 |
Incremental shares from assumed conversion of stock compensation plans (in shares) | 0 | 0 | 306,717 | 0 |
Shares used in calculating diluted net income (loss) per common share (in shares) | 49,384,637 | 49,078,321 | 49,611,260 | 48,636,444 |
Diluted net income (loss) per common share (in dollars per share) | ($0.59) | ($0.21) | $0.40 | ($0.09) |
Stock options | ' | ' | ' | ' |
Anti-dilutive common shares not included in diluted net income per common share | ' | ' | ' | ' |
Anti-dilutive common shares not included in diluted net income per common share | 6,920,292 | ' | 6,444,978 | ' |
Restricted stock units | ' | ' | ' | ' |
Anti-dilutive common shares not included in diluted net income per common share | ' | ' | ' | ' |
Anti-dilutive common shares not included in diluted net income per common share | 6,920,292 | ' | 6,444,978 | ' |
2018 Convertible Notes | ' | ' | ' | ' |
Anti-dilutive common shares not included in diluted net income per common share | ' | ' | ' | ' |
Stated interest rate of debt issued (as a percent) | 1.50% | ' | 1.50% | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) | 9 Months Ended | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2013 |
Misclassification of tenant improvement allowance | Misclassification of tenant improvement allowance | Misclassification of tenant improvement allowance | |||
Previously reported | Previously reported | Previously reported | |||
Tenant improvement allowance | ' | ' | $3,204 | ' | ' |
Net cash provided by operating activities | -261 | 11,324 | ' | 3,204 | 3,204 |
Net cash used in investing activities | ($503,325) | ($19,484) | ' | $3,204 | $3,204 |
ACQUISITION_OF_ACTIENT_Details
ACQUISITION OF ACTIENT (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Apr. 26, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Apr. 26, 2013 | Apr. 26, 2013 | Apr. 26, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 26, 2013 | Apr. 26, 2013 | Apr. 26, 2013 | Apr. 26, 2013 | Apr. 26, 2013 | Apr. 26, 2013 | Apr. 26, 2013 |
Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | Actient | ||||
Minimum | Maximum | Warrant | Urology | Urology | Urology | TESTOPEL | Edex | Timm Medical | Striant | Theo-24 | Semprex-D | Other products | |||||||||
Sales milestone equal to $150 million | Sales milestone exceeding $150 million | Sales milestone exceeding $300 million | |||||||||||||||||||
ACQUISITION OF ACTIENT | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued (in shares) | ' | ' | ' | 1,250,000 | 1,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Strike price of warrants (in dollars per share) | $27.36 | ' | ' | $17.80 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of warrants | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected volatility (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Risk-free interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.70% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividend yield (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term loan | ' | ' | ' | $225,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of the total consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Base cash consideration | 588,349,000 | ' | 0 | 585,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and working capital adjustment | ' | ' | ' | 14,863,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration | ' | ' | ' | 40,969,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants | 12,000,000 | ' | 0 | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total consideration | ' | ' | ' | 652,832,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consideration representing compensation | -8,309,000 | ' | 0 | -8,309,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consideration allocated to net assets acquired | ' | ' | ' | 644,523,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Achievement of cumulative net sales thresholds | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15,000,000 | 10,000,000 | 25,000,000 | ' | ' | ' | ' | ' | ' | ' |
Cumulative net sales | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 150,000,000 | 150,000,000 | 300,000,000 | ' | ' | ' | ' | ' | ' | ' |
Maximum period for adjustments to purchase price allocation | ' | ' | ' | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated fair values of the net assets acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash | ' | ' | ' | 11,514,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts receivable, trade | ' | ' | ' | 25,344,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Inventory | ' | ' | ' | 21,704,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prepaid expenses and other current assets | ' | ' | ' | 3,735,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | 3,028,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchased intangibles | ' | ' | ' | 667,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 60,848,000 | 15,752,000 | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | 123,234,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other long-term assets | ' | ' | ' | 5,202,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets acquired | ' | ' | ' | 860,761,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration assumed | ' | ' | ' | -81,685,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other liabilities assumed | ' | ' | ' | -30,016,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred tax liabilities | ' | ' | ' | -104,537,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consideration allocated to net assets acquired | ' | ' | ' | 644,523,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value assigned to the product rights | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value | ' | ' | ' | 667,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 491,000,000 | 70,000,000 | 23,000,000 | 8,000,000 | 39,000,000 | 32,000,000 | 4,000,000 |
Estimated life in years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '12 years | '11 years | '10 years | '10 years | '9 years | '10 years | '2 years |
Purchased intangibles | ' | ' | ' | 667,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 60,848,000 | 15,752,000 | ' | ' | ' | ' | ' |
Royalties as percentage of net sales | ' | ' | ' | ' | ' | ' | ' | ' | 6.00% | 15.00% | ' | ' | ' | ' | 12.00% | ' | ' | ' | ' | ' | ' |
Royalties as percentage of net sales on crossing annual net sales of $20,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' |
Minimum annual net sales, above which royalty will be paid | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,000,000 | ' | ' | ' | ' | ' |
Royalty obligation that will cease | ' | ' | ' | 4,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | 123,234,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangibles and Goodwill are expected to be deductible for tax purposes | ' | ' | ' | 400,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma results of operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenues | ' | ' | ' | ' | 108,140,000 | 103,031,000 | 323,970,000 | 315,158,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) attributable to the Company | ' | ' | ' | ' | ($18,187,000) | ($46,944,000) | ($52,603,000) | ($5,885,000) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) per common share- | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic (in dollars per share) | ' | ' | ' | ' | ($0.37) | ($0.96) | ($1.07) | ($0.12) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Diluted (in dollars per share) | ' | ' | ' | ' | ($0.37) | ($0.96) | ($1.07) | ($0.12) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
MERGER_TRANSITION_AND_RESTRUCT1
MERGER TRANSITION AND RESTRUCTURING ACTIVITIES (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 | Apr. 26, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | Actient | Actient | Actient | ||
Employee severance | Employee severance | ||||
Merger transition and restructuring activities | ' | ' | ' | ' | ' |
Consideration representing compensation | $8,309 | $0 | $8,309 | ' | ' |
Severance obligations | ' | ' | ' | 6,060 | 6,060 |
Severance obligations expensed | ' | ' | ' | 1,850 | 4,973 |
Severance obligations paid | ' | ' | ' | $1,189 | $1,189 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Liabilities | ' | ' |
Unrealized loss on short-term investments | $184 | ' |
Fair value on a recurring basis | Fair Value | ' | ' |
Assets | ' | ' |
Cash and cash equivalents | 91,007 | 35,857 |
Short-term investments | 30,375 | 121,573 |
Auction rate securities | ' | 1,442 |
Total financial assets | 121,382 | 158,872 |
Liabilities | ' | ' |
Contingent consideration | 120,244 | 0 |
Fair value on a recurring basis | Level 1 | ' | ' |
Assets | ' | ' |
Cash and cash equivalents | 91,007 | 35,857 |
Short-term investments | 7,148 | 31,459 |
Auction rate securities | ' | 0 |
Total financial assets | 98,155 | 67,316 |
Liabilities | ' | ' |
Contingent consideration | 0 | 0 |
Fair value on a recurring basis | Level 2 | ' | ' |
Assets | ' | ' |
Cash and cash equivalents | 0 | 0 |
Short-term investments | 23,227 | 90,114 |
Auction rate securities | ' | 0 |
Total financial assets | 23,227 | 90,114 |
Liabilities | ' | ' |
Contingent consideration | 0 | 0 |
Fair value on a recurring basis | Level 3 | ' | ' |
Assets | ' | ' |
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Auction rate securities | ' | 1,442 |
Total financial assets | 0 | 1,442 |
Liabilities | ' | ' |
Contingent consideration | $120,244 | $0 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Changes in the financial assets measured at fair value using Level 3 inputs | ' |
Beginning balance | $1,442 |
Transfers into Level 3 | 0 |
Sales and redemptions of securities | -1,528 |
Unrealized gain- included in other comprehensive income | 86 |
Ending balance | 0 |
Total realized loss on sale of securities included in Investment income (loss), net for the period | -72 |
Transfers from Level 1 to Level 2 | 0 |
Transfers from Level 2 to Level 1 | $0 |
FAIR_VALUE_MEASUREMENTS_Detail2
FAIR VALUE MEASUREMENTS (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | 5 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 26, 2012 | |
Contingent consideration | Contingent consideration | Contingent consideration | |||||
Actient | Actient | ||||||
Contingent consideration | ' | ' | ' | ' | ' | ' | ' |
Risk-adjusted discount rate (as a percent) | ' | ' | ' | ' | ' | 14.00% | ' |
Change in discount rate (as a percent) | ' | ' | ' | ' | 1.00% | ' | ' |
Change in the contingent consideration liability | ' | ' | ' | ' | $1,700,000 | ' | ' |
Rollforward of the fair value of contingent consideration since the Actient acquisition date | ' | ' | ' | ' | ' | ' | ' |
Fair value at date of acquisition | ' | ' | ' | ' | ' | ' | 122,654,000 |
Change in contingent consideration charged to operations | -4,671,000 | 0 | -6,929,000 | 0 | ' | 6,929,000 | ' |
Payments of contingent consideration | ' | ' | ' | ' | ' | -9,339,000 | ' |
Fair value at the end of the period | ' | ' | ' | ' | ' | $120,244,000 | $122,654,000 |
FAIR_VALUE_MEASUREMENTS_Detail3
FAIR VALUE MEASUREMENTS (Details 4) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Level 1 | 2018 Convertible Notes | ' |
Fair value measurements | ' |
Fair value of debt | $350,000 |
Level 2 | Term Loan | ' |
Fair value measurements | ' |
Fair value of debt | $268,785 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | Actient | Actient | ||
Inventories | ' | ' | ' | ' |
Raw materials | $8,023 | $8,183 | ' | ' |
Work-in-process | 70,119 | 53,037 | ' | ' |
Finished goods | 20,316 | 10,611 | ' | ' |
Total inventories | 98,458 | 71,831 | ' | ' |
Inventories, current | 44,749 | 22,134 | ' | ' |
Inventories, non-current | 53,709 | 49,697 | ' | ' |
Step-up in value of inventory to record the acquired inventories at their net realizable value | ' | ' | 11,704 | 11,704 |
Inventory step-up recognized as cost of goods sold | ' | ' | $5,403 | $9,898 |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
ACCRUED EXPENSES | ' | ' |
Payroll and related expenses | $18,775 | $15,048 |
Royalty expenses | 10,064 | 10,949 |
Research and development expenses | 3,607 | 2,972 |
Sales and marketing expenses | 14,873 | 8,017 |
Rebates, discounts and returns accrual | 46,918 | 38,066 |
Accrued interest | 1,094 | 0 |
Purchase option payable | 7,000 | 0 |
Other | 17,402 | 5,688 |
Total accrued expenses | $119,733 | $80,740 |
COLLABORATION_AND_LICENSE_AGRE1
COLLABORATION AND LICENSE AGREEMENTS (Details) (USD $) | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | |||||
Jul. 15, 2013 | Jul. 15, 2013 | Jul. 15, 2013 | Jul. 15, 2013 | Jul. 15, 2013 | Jul. 15, 2013 | Sep. 30, 2013 | Nov. 06, 2012 | Sep. 30, 2013 | |
Sobi | Sobi | Sobi | Sobi | Sobi | Sobi | GlaxoSmithKline LLC (GSK) | Pfizer | Pfizer | |
XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | XIAFLEX | ProForma | XIAFLEX | XIAFLEX | |
Minimum | Maximum | European Union member countries | Central Eastern Europe/Commonwealth of Independent countries | Middle Eastern & North African countries | |||||
item | item | item | |||||||
Collaborations and license agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of countries granted to collaborative partner for right to develop and commercialize a product | ' | ' | ' | 28 | 18 | 22 | ' | ' | ' |
Royalty payments based on sales for first tier (as a percent) | ' | 55.00% | 65.00% | ' | ' | ' | ' | ' | ' |
Royalty payments based on sales for second tier (as a percent) | ' | 50.00% | 60.00% | ' | ' | ' | ' | ' | ' |
Royalty payments based on sales for third tier (as a percent) | ' | 45.00% | 55.00% | ' | ' | ' | ' | ' | ' |
Percentage of decrease in royalty (as a percent) | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum amount of potential sales milestone payments receivable | $40,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Extension period | '2 years | ' | ' | ' | ' | ' | ' | ' | ' |
Notice period for non-renewal of agreement | '6 months | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of reversion of rights held and responsibility for regulatory activities | ' | ' | ' | ' | ' | ' | ' | ' | 0 |
Period for sell of remaining inventory after agreement termination date | ' | ' | ' | ' | ' | ' | ' | '6 months | ' |
Reversal of accrued post-expiration obligations | ' | ' | ' | ' | ' | ' | $1,015,000 | ' | ' |
TERM_LOAN_Details
TERM LOAN (Details) (Term loan, USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
TERM LOAN | ' |
Principal value | $225,000 |
Additional borrowing | 50,000 |
Original issue discount together with issuance costs | $12,148 |
Percentage of principal repayment | 1.25% |
Interest rate (as a percent) | 6.25% |
Base rate | ' |
TERM LOAN | ' |
Variable rate basis | 'Base Rate |
Margin on variable rate basis (as a percent) | 4.00% |
LIBOR | ' |
TERM LOAN | ' |
Variable rate basis | 'LIBOR |
Margin on variable rate basis (as a percent) | 5.00% |
SENIOR_CONVERTIBLE_NOTES_Detai
SENIOR CONVERTIBLE NOTES (Details) (USD $) | 9 Months Ended | 1 Months Ended | 9 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Jan. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Maximum | 2018 Convertible Notes | 2018 Convertible Notes | 2018 Convertible Notes | |||
Minimum | ||||||
SENIOR CONVERTIBLE NOTES | ' | ' | ' | ' | ' | ' |
Aggregate principal amount of debt issued in public offering | ' | ' | ' | $350,000 | ' | ' |
Initial conversion rate | ' | ' | ' | ' | 0.041377 | ' |
Effective conversion price (in dollars per share) | ' | ' | ' | ' | $24.17 | ' |
Net proceeds from issuance of debt, net of debt issuance costs and payments related to hedge transactions | ' | ' | ' | 310,396 | ' | ' |
Debt issuance costs | ' | ' | ' | 11,079 | ' | ' |
Net payments related to hedge transactions | 70,000 | 0 | ' | 28,525 | ' | ' |
Debt issuance costs allocated to debt | ' | ' | ' | ' | -8,975 | ' |
Debt issuance costs allocated to equity | ' | ' | ' | ' | -2,104 | ' |
Purchase price as a percentage of debt, plus accrued and unpaid interest | ' | ' | ' | ' | 100.00% | ' |
Trading period when last reported sales price of common stock meets required criteria as a condition for conversion of debt | ' | ' | ' | ' | ' | '20 days |
Consecutive trading period when last reported sales price of common stock meets required criteria as a condition for conversion of debt | ' | ' | ' | ' | '30 days | ' |
Percentage of conversion price on each applicable trading day as a condition for conversion of debt | ' | ' | ' | ' | ' | 130.00% |
Business trading period when trading price meets required criteria as a condition for conversion of debt | ' | ' | ' | ' | '5 days | ' |
Consecutive business trading period when trading price meets required criteria as a condition for conversion of debt | ' | ' | ' | ' | '10 days | ' |
Trading price percentage of product of last reported sales price as a condition for conversion of debt | ' | ' | 98.00% | ' | ' | ' |
Effective interest rate (as a percent) | ' | ' | ' | ' | 5.00% | ' |
Stated interest rate of debt issued (as a percent) | ' | ' | ' | ' | 1.50% | ' |
Remaining term of debt | ' | ' | ' | ' | '4 years 9 months 18 days | ' |
Observation period as a basis to determine amount of cash and the number of shares to be received on conversion | ' | ' | ' | ' | '60 days | ' |
Number of call options purchased to hedge against potential dilution upon conversion of debt (in shares) | ' | ' | 14,481,950 | ' | ' | ' |
Share price (in dollars per share) | $24.17 | ' | ' | ' | ' | ' |
Payment to purchase call options | 70,000 | ' | ' | ' | ' | ' |
Number of warrants issued for partially offsetting the cost of the note hedge transactions | ' | ' | 14,481,950 | ' | ' | ' |
Strike price of warrants (in dollars per share) | $27.36 | ' | ' | ' | ' | ' |
Trading period during which warrants will be exercisable and will expire in equal installments | '140 days | ' | ' | ' | ' | ' |
Proceeds from sale of warrants | 41,475 | 0 | ' | ' | ' | ' |
Reduction to additional paid-in capital | $28,525 | ' | ' | ' | ' | ' |
STOCK_OPTIONS_AND_STOCK_AWARDS2
STOCK OPTIONS AND STOCK AWARDS (Details) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Common stock options | ' | ' |
Stock Option Information | ' | ' |
Expiration period of shares granted | ' | '10 years |
Vesting period | ' | '4 years |
Interval period for vesting of granted awards | ' | '1 year |
Stock options, Shares | ' | ' |
Options outstanding at the beginning of the period (in shares) | ' | 6,626,176 |
Granted (in shares) | ' | 1,172,209 |
Exercised (in shares) | ' | -40,112 |
Forfeited (in shares) | ' | -316,562 |
Outstanding at the end of the period (in shares) | 7,441,711 | 7,441,711 |
Exercisable at end of the period (in shares) | 4,050,142 | 4,050,142 |
Stock options, Weighted average exercise price | ' | ' |
Options outstanding at the beginning of the period (in dollars per share) | ' | $22.50 |
Granted (in dollars per share) | ' | $17.58 |
Exercised (in dollars per share) | ' | $10.20 |
Forfeited (in dollars per share) | ' | $25.11 |
Outstanding at the end of the period (in dollars per share) | $21.68 | $21.68 |
Exercisable at the end of the period (in dollars per share) | $23.46 | $23.46 |
Stock options, Weighted average remaining contractual life (in years) | ' | ' |
Outstanding at end of the period | ' | '6 years 11 months 8 days |
Exercisable at the end of the period | ' | '5 years 7 months 13 days |
Stock options, Aggregate intrinsic value | ' | ' |
Outstanding at the end of the period | $7,479 | $7,479 |
Exercisable at the end of the period | 6,117 | 6,117 |
Additional disclosure | ' | ' |
Stock closing price (in dollars per share) | $18.20 | $18.20 |
Total intrinsic value of options exercised | $336 | ' |
Number of exercisable shares of common stock in-the-money | 948,561 | 948,561 |
2004 Plan | ' | ' |
Stock Option Information | ' | ' |
Number of shares available for future grants | 2,971,412 | 2,971,412 |
STOCK_OPTIONS_AND_STOCK_AWARDS3
STOCK OPTIONS AND STOCK AWARDS (Details 2) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Performance-based restricted stock units | ' |
Stock Awards | ' |
Additional percentage of restricted stock units vested on the date the performance goal is achieved | 33.00% |
Performance-based restricted stock units | Estimates | ' |
Stock Awards | ' |
Issuance of shares under awards (in shares) | 24,000 |
Performance-based restricted stock units | Certain officers | ' |
Stock Awards | ' |
Number of awards granted (in shares) | 140,550 |
Number of performance goals to be attained | 2 |
Performance-based restricted stock units | Certain officers | XIAFLEX | ' |
Stock Awards | ' |
Weighting on attaining a specified level of U.S. net income of XIAFLEX (as a percent) | 50.00% |
Weighting based upon timing of approval, and labeling required, by the U.S. Food and Drug Administration (as a percent) | 50.00% |
Restricted stock | ' |
Stock Awards | ' |
Granted (in shares) | 10,000 |
Nonvested shares | ' |
Nonvested at the beginning of the period (in shares) | 48,700 |
Issued (in shares) | 10,000 |
Vested (in shares) | -34,490 |
Cancelled (in shares) | -250 |
Nonvested at the end of the period (in shares) | 23,960 |
Restricted stock, Weighted average grant-date value | ' |
Nonvested at the beginning of the period (in dollars per share) | 23.76 |
Issued (in dollars per share) | 14.37 |
Vested (in dollars per share) | 24.16 |
Cancelled (in dollars per share) | 24.62 |
Nonvested at the end of the period (in dollars per share) | 19.27 |
Restricted stock units | ' |
Stock Awards | ' |
Percentage of restricted stock units vested on the date the performance goal is achieved | 33.00% |
Nonvested shares | ' |
Vesting period | '3 years |
Interval period for vesting of granted awards | '1 year |
Restricted stock units | Employee | ' |
Stock Awards | ' |
Granted (in shares) | 318,474 |
Nonvested shares | ' |
Issued (in shares) | 318,474 |
Board of directors restricted shares | ' |
Stock Awards | ' |
Granted (in shares) | 10,000 |
Nonvested shares | ' |
Issued (in shares) | 10,000 |
Board of directors deferred stock units | ' |
Stock Awards | ' |
Granted (in shares) | 20,000 |
Nonvested shares | ' |
Issued (in shares) | 20,000 |
STOCK_OPTIONS_AND_STOCK_AWARDS4
STOCK OPTIONS AND STOCK AWARDS (Details 3) (USD $) | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Common stock options | Common stock options | Common stock options | Common stock options | ||||
Valuation Assumptions and Expense Information | ' | ' | ' | ' | ' | ' | ' |
Stock-based compensation costs | $11,346 | $11,112 | ' | ' | ' | ' | ' |
Stock-based compensation costs capitalized as part of inventory | 6,178 | ' | 4,866 | ' | ' | ' | ' |
Weighted average assumptions: | ' | ' | ' | ' | ' | ' | ' |
Expected life of options | ' | ' | ' | '6 years 3 months | '6 years 3 months | '6 years 3 months 7 days | '6 years 3 months 4 days |
Risk-free interest rate (as a percent) | ' | ' | ' | 1.90% | 1.17% | 1.20% | 1.05% |
Expected volatility (as a percent) | ' | ' | ' | 47.84% | 50.17% | 48.78% | 50.69% |
Expected dividend yield (as a percent) | ' | ' | ' | 0.00% | 0.00% | 0.00% | 0.00% |
Additional disclosure | ' | ' | ' | ' | ' | ' | ' |
Weighted-average grant-date fair value of options granted (in dollars per share) | ' | ' | ' | ' | ' | $8.42 | ' |
Total unrecognized stock-based compensation cost related to all share-based payments | $25,500 | ' | ' | ' | ' | ' | ' |
Weighted-average period over which unrecognized compensation cost will be recognized | '2 years 4 months 28 days | ' | ' | ' | ' | ' | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
INCOME TAXES | ' | ' | ' | ' |
Effective tax rate benefit (expense) (as a percent) | 1.00% | 0.00% | 128.00% | 0.00% |
Income tax benefit | ($289) | $0 | $92,069 | $0 |
Additional tax benefit | ' | ' | 1,295 | ' |
Provision for income taxes | 289 | ' | 538 | ' |
Deferred Tax Assets resulting from certain Actient amortizable assets | 0 | ' | 0 | ' |
Deferred tax liability | $10,635 | ' | $10,635 | ' |
LITIGATION_Details
LITIGATION (Details) (FCB) | 12 Months Ended | 1 Months Ended | 0 Months Ended |
Dec. 31, 2012 | Apr. 30, 2012 | 24-May-12 | |
item | Infringement of patent | Infringement of patent | |
Upsher-Smith litigation | Watson litigation | ||
item | item | ||
LITIGATION | ' | ' | ' |
Number of additional patents in the suit | ' | 8 | ' |
Number of patents listed in the Orange Book | 10 | ' | ' |
Number of patents against which lawsuit was filed | ' | ' | 10 |
SUBSEQUENT_EVENT_Details
SUBSEQUENT EVENT (Details) (Subsequent event, VIVUS, USD $) | 0 Months Ended |
In Thousands, unless otherwise specified | Oct. 10, 2013 |
Sales milestone | Maximum | MTPC | ' |
SUBSEQUENT EVENT | ' |
Amount of milestone payable | $6,000 |
STENDRATM (avanafil) | ' |
SUBSEQUENT EVENT | ' |
Amount of one-time license fee paid | 30,000 |
Amount billed for post-regulatory approval studies costs | 2,100 |
Period of product launches for termination rights under the term of license agreement | '10 years |
Restricted period to develop, commercialize, or in-license any competitive product within specified territory | '5 years |
Notice period for termination of agreement | '180 days |
Notice period for termination of agreement | '30 days |
STENDRATM (avanafil) | MTPC | ' |
SUBSEQUENT EVENT | ' |
Sales anywhere outside of the United States | 0 |
STENDRATM (avanafil) | Maximum | ' |
SUBSEQUENT EVENT | ' |
Maximum aggregate payment for post-regulatory approval studies | 4,000 |
Royalty payable based on sales at lowest tier (as a percent) | 10.00% |
Royalty payable based on sales at highest tier (as a percent) | 20.00% |
STENDRATM (avanafil) | Maximum | MTPC | ' |
SUBSEQUENT EVENT | ' |
Royalty payable based on sales (as a percent) | 7.00% |
STENDRATM (avanafil) | Minimum | ' |
SUBSEQUENT EVENT | ' |
Royalty payable based on sales at lowest tier (as a percent) | 5.00% |
Royalty payable based on sales at highest tier (as a percent) | 15.00% |
STENDRATM (avanafil) | Minimum | MTPC | ' |
SUBSEQUENT EVENT | ' |
Royalty payable based on sales (as a percent) | 4.00% |
STENDRATM (avanafil) | Regulatory milestone | ' |
SUBSEQUENT EVENT | ' |
Amount of milestone payable | 15,000 |
STENDRATM (avanafil) | Sales milestone | Maximum | ' |
SUBSEQUENT EVENT | ' |
Potential milestone payments | $255,000 |