Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 02, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | JAZZ | |
Entity Registrant Name | Jazz Pharmaceuticals plc | |
Entity Central Index Key | 1,232,524 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 60,028,816 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 346,995 | $ 365,963 |
Investments | 60,000 | 60,000 |
Accounts receivable, net of allowances | 243,035 | 234,244 |
Inventories | 37,653 | 34,051 |
Prepaid expenses | 38,118 | 24,501 |
Other current assets | 27,052 | 29,310 |
Total current assets | 752,853 | 748,069 |
Property and equipment, net | 119,913 | 107,490 |
Intangible assets, net | 2,998,780 | 3,012,001 |
Goodwill | 899,290 | 893,810 |
Deferred tax assets, net, non-current | 18,038 | 15,060 |
Deferred financing costs | 9,325 | 9,737 |
Other non-current assets | 17,625 | 14,060 |
Total assets | 4,815,824 | 4,800,227 |
Current liabilities: | ||
Accounts payable | 29,144 | 22,415 |
Accrued liabilities | 183,645 | 193,268 |
Current portion of long-term debt | 136,094 | 36,094 |
Income taxes payable | 35,300 | 4,506 |
Deferred revenue | 8,590 | 1,123 |
Total current liabilities | 392,773 | 257,406 |
Deferred revenue, non-current | 22,624 | 2,601 |
Long-term debt, less current portion | 1,739,594 | 1,993,531 |
Deferred tax liability, net, non-current | 548,038 | 556,733 |
Other non-current liabilities | 128,809 | 112,617 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Ordinary shares | 6 | 6 |
Non-voting euro deferred shares | 55 | 55 |
Capital redemption reserve | 472 | 472 |
Additional paid-in capital | 1,681,774 | 1,665,232 |
Accumulated other comprehensive loss | (299,843) | (317,333) |
Retained earnings | 601,522 | 528,907 |
Total shareholders’ equity | 1,983,986 | 1,877,339 |
Total liabilities and shareholders’ equity | $ 4,815,824 | $ 4,800,227 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues: | ||
Product sales, net | $ 373,678 | $ 333,916 |
Royalties and contract revenues | 2,375 | 2,094 |
Total revenues | 376,053 | 336,010 |
Operating expenses: | ||
Cost of product sales (excluding amortization of intangible assets) | 25,065 | 23,439 |
Selling, general and administrative | 144,255 | 128,765 |
Research and development | 44,928 | 31,252 |
Acquired in-process research and development | 0 | 8,750 |
Intangible asset amortization | 25,665 | 22,642 |
Total operating expenses | 239,913 | 214,848 |
Income from operations | 136,140 | 121,162 |
Interest expense, net | (18,844) | (12,192) |
Foreign exchange loss | (1,464) | (819) |
Income before income tax provision and equity in loss of investee | 115,832 | 108,151 |
Income tax provision | 29,160 | 32,339 |
Equity in loss of investee | 161 | 0 |
Net income | $ 86,511 | $ 75,812 |
Net income per ordinary share: | ||
Basic (in dollars per share) | $ 1.44 | $ 1.24 |
Diluted (in dollars per share) | $ 1.41 | $ 1.21 |
Weighted-average ordinary shares used in per share calculations - basic (in shares) | 59,880 | 61,142 |
Weighted-average ordinary shares used in per share calculations - diluted (in shares) | 61,178 | 62,616 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 86,511 | $ 75,812 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 18,112 | 45,188 |
Unrealized loss on hedging activities, net of tax benefit of $89 | (622) | 0 |
Other comprehensive income | 17,490 | 45,188 |
Total comprehensive income | $ 104,001 | $ 121,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements Of Comprehensive Income (Parenthetical) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Statement of Comprehensive Income [Abstract] | |
Tax benefit on hedging activities | $ 89 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating activities | ||
Net income | $ 86,511 | $ 75,812 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Intangible asset amortization | 25,665 | 22,642 |
Share-based compensation | 25,193 | 24,183 |
Depreciation | 3,130 | 2,527 |
Acquired in-process research and development | 0 | 8,750 |
Loss on disposal of property and equipment | 82 | 37 |
Deferred income taxes | (15,000) | (5,742) |
Provision for losses on accounts receivable and inventory | 948 | 898 |
Amortization of debt discount and deferred financing costs | 5,615 | 5,362 |
Other non-cash transactions | 1,405 | 1,579 |
Changes in assets and liabilities: | ||
Accounts receivable | (8,483) | (13,802) |
Inventories | (4,258) | (6,307) |
Prepaid expenses and other current assets | (10,637) | (1,231) |
Other long-term assets | (2,170) | 104 |
Accounts payable | 5,865 | 10,664 |
Accrued liabilities | (15,743) | (6,706) |
Income taxes payable | 30,753 | 25,758 |
Deferred revenue | 27,490 | (266) |
Other non-current liabilities | 8,174 | 7,392 |
Net cash provided by operating activities | 164,540 | 151,654 |
Investing activities | ||
Purchases of property and equipment | (3,574) | (2,472) |
Acquisition of in-process research and development | 0 | (8,750) |
Acquisition of investments | 0 | (773) |
Net cash used in investing activities | (3,574) | (11,995) |
Financing activities | ||
Proceeds from employee equity incentive and purchase plans and exercise of warrants | 5,676 | 3,780 |
Repayments of long-term debt | (9,023) | (9,397) |
Payment of employee withholding taxes related to share-based awards | (14,431) | (12,476) |
Share repurchases | (13,896) | (134,365) |
Repayments under revolving credit facility | 150,000 | 0 |
Net cash used in financing activities | (181,674) | (152,458) |
Effect of exchange rates on cash and cash equivalents | 1,740 | 3,794 |
Net decrease in cash and cash equivalents | (18,968) | (9,005) |
Cash and cash equivalents, at beginning of period | 365,963 | 988,785 |
Cash and cash equivalents, at end of period | $ 346,995 | $ 979,780 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
The Company and Summary of Significant Accounting Policies | The Company and Summary of Significant Accounting Policies Jazz Pharmaceuticals plc is an international biopharmaceutical company focused on improving patients’ lives by identifying, developing and commercializing meaningful products that address unmet medical needs. We have a diverse portfolio of products and product candidates, with a focus in the areas of sleep and hematology/oncology. Our lead marketed products are: • Xyrem ® (sodium oxybate) oral solution , the only product approved by the U.S. Food and Drug Administration, or FDA, and marketed in the U.S. for the treatment of both cataplexy and excessive daytime sleepiness, or EDS, in patients with narcolepsy; • Erwinaze ® (asparaginase Erwinia chrysanthemi ) , a treatment approved in the U.S. and in certain markets in Europe (where it is marketed as Erwinase ® ) for patients with acute lymphoblastic leukemia, or ALL, who have developed hypersensitivity to E. coli -derived asparaginase; and • Defitelio ® (defibrotide sodium) , a product approved in the U.S. for the treatment of adult and pediatric patients with hepatic veno-occlusive disease, or VOD, also known as sinusoidal obstruction syndrome, or SOS, with renal or pulmonary dysfunction following hematopoietic stem cell transplantation, or HSCT, and in Europe (where it is marketed as Defitelio ® (defibrotide)) for the treatment of severe VOD in adults and children undergoing HSCT therapy. Our strategy is to create shareholder value by: • Growing sales of the existing products in our portfolio, including by identifying and investing in growth opportunities such as new treatment indications and new geographic markets; • Acquiring or licensing rights to clinically meaningful and differentiated products that are on the market or product candidates that are in late-stage development; and • Pursuing targeted development of post-discovery differentiated product candidates. We apply a disciplined approach to allocating our resources between investments in our current commercial and development portfolio and acquisitions or in-licensing of new assets. Throughout this report, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “the registrant,” “we,” “us,” and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries. Throughout this report, all references to “ordinary shares” refer to Jazz Pharmaceuticals plc’s ordinary shares. Basis of Presentation These unaudited condensed consolidated financial statements have been prepared following the requirements of the U.S. Securities and Exchange Commission, or SEC, for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles, or U.S. GAAP, can be condensed or omitted. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 . In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 , for any other interim period or for any future period. These condensed consolidated financial statements include the accounts of Jazz Pharmaceuticals plc and our subsidiaries, and intercompany transactions and balances have been eliminated. Significant Risks and Uncertainties Our financial results remain significantly influenced by sales of Xyrem. In the three months ended March 31, 2017 , net product sales of Xyrem were $272.3 million , which represented 73% of total net product sales. Our ability to maintain or increase product sales of Xyrem is subject to risks and uncertainties, including the potential U.S. introduction of a generic version of Xyrem before the entry dates specified in our settlements with certain companies that had filed abbreviated new drug applications, or ANDAs with the FDA seeking approval to market a generic version of Xyrem or on terms that are different from those contemplated by the settlements; the potential U.S. introduction of an alternative product to Xyrem for treating cataplexy and/or EDS, in narcolepsy; changes to, increases in or uncertainties around regulatory restrictions, including changes to our Xyrem risk evaluation and mitigation strategy, or REMS, particularly in light of the FDA’s waiver of the single shared REMS requirement for sodium oxybate and approval of a separate generic sodium oxybate REMS; any increase in pricing pressure from, or restrictions on reimbursement imposed by, third party payors; changes in healthcare laws and policy, including changes in requirements for patient assistance programs, rebates, reimbursement and coverage by federal healthcare programs, and changes resulting from increased scrutiny on pharmaceutical pricing by government entities; operational disruptions at the Xyrem central pharmacy or any failure to comply with our REMS obligations to the satisfaction of the FDA; any supply or manufacturing problems, including any problems with our sole source sodium oxybate provider; continued acceptance of Xyrem by physicians and patients, even in the face of negative publicity that surfaces from time to time; changes to our label, including new safety warnings or changes to our boxed warning, that further restrict how we market and sell Xyrem; and our U.S.-based sodium oxybate and Xyrem suppliers’ ability to obtain sufficient quotas from the U.S. Drug Enforcement Administration, or DEA, to satisfy our needs for Xyrem. Although Xyrem is protected by patents covering its manufacture, formulation, distribution system and method of use, seven companies have filed ANDAs with the FDA seeking approval to market a generic version of Xyrem. In addition, we are aware of a third party that has stated that it intends to file a new drug application, or NDA, to market a once nightly formulation of sodium oxybate for treatment of cataplexy and/or EDS in narcolepsy. We filed patent lawsuits against each of the ANDA filers in the U.S. District Court for the District of New Jersey, or the District Court. On April 5, 2017, we settled all lawsuits against the first ANDA filer, West-Ward Pharmaceuticals Corp. (a wholly owned subsidiary of Hikma Pharmaceuticals PLC), which acquired Roxane Laboratories, Inc., or West-Ward, granting West-Ward the right to sell an authorized generic version of Xyrem, or the West-Ward AG Product, commencing on January 1, 2023, or earlier under certain circumstances, and granting West-Ward a license to launch its generic sodium oxybate product as early as six months thereafter. In the second quarter of 2016, we had settled lawsuits with two of the other ANDA filers, granting those filers a license to manufacture, market and sell their generic versions of Xyrem on or after December 31, 2025, or earlier depending on the occurrence of certain events. For a description of our settlements with West-Ward and two of the other ANDA filers, see “Overview—Significant Developments Affecting Our Business” in Part I, Item 2 of this Quarterly Report on Form 10-Q. Lawsuits with the four remaining companies that have filed ANDAs with the FDA seeking approval to market a generic version of Xyrem remain pending in the District Court. Although no trial date has been set, the trial in this case could occur as early as the first quarter of 2018. For a description of these legal proceedings, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q. We cannot predict the timing or outcome of the ANDA litigation proceedings against the remaining non-settling ANDA filers, which have been consolidated as one case in the District Court. In July 2016, the Patent Trial and Appeal Board, or PTAB, of the U.S. Patent and Trademark Office issued final decisions that the claims of six patents listed in the Orange Book as covering the Xyrem REMS are unpatentable. We filed a notice of appeal of these decisions on February 22, 2017. If the United States Court of Appeals for the Federal Circuit upholds those decisions on appeal, these claims will be canceled, and we will not be able to enforce these patents. In March 2016, the PTAB partially instituted an inter partes review, or IPR, on three claims of a seventh REMS patent, declining to review 25 of 28 claims. The PTAB issued a final decision in March 2017 that the three claims they reviewed were unpatentable. We have not yet decided whether to appeal that ruling. For a description of these legal proceedings, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q. On January 17, 2017, the FDA announced approval of the West-Ward ANDA, and on January 19, 2017, the FDA tentatively approved two additional ANDAs for generic versions of Xyrem, one for Amneal Pharmaceuticals, or Amneal, and one for Ohm Laboratories Inc., formerly known as Ranbaxy, Inc., or Ohm. West-Ward’s ANDA approval includes a waiver that permits West-Ward to use a separate REMS program from the Xyrem REMS, or the generic sodium oxybate REMS, on the condition that the generic sodium oxybate REMS be open to all future sponsors of ANDAs or NDAs for sodium oxybate products. We were not involved in the development of the generic sodium oxybate REMS. We continue to evaluate whether the FDA’s waiver of the requirement for a single, shared system REMS in connection with approval of the ANDAs meets the conditions for such a waiver under applicable law and, to the extent that we determine that the waiver was not permissible under applicable law, will evaluate potential challenges to the FDA’s waiver decision. We cannot predict whether or when we may pursue any such challenges or whether any such challenges would be successful. The actual timing of any commercial launch of an authorized generic or generic version of Xyrem is uncertain. We do not believe a launch by an ANDA filer is likely to occur prior to either a date agreed in a settlement agreement between us and such ANDA filer or a District Court, or potentially an appellate court, decision in our ongoing patent litigation. However, notwithstanding our patents, and settlement agreements licensing those patents as of future dates, it is possible that West-Ward or any other company that receives FDA approval of an ANDA for a generic version of Xyrem or an NDA for another sodium oxybate product could introduce a generic version of Xyrem or other sodium oxybate product before the entry dates specified in our settlement agreements or before our patents expire, including if it is determined that the introduction of the competing product does not infringe our patents, or that our patents are invalid or unenforceable, or if a non-settling ANDA filer that has received approval for its product decides, before applicable ongoing patent litigation is concluded, to launch a sodium oxybate product at risk of being held liable for damages for patent infringement. In addition, even if we prevail in our ongoing litigation at trial or on appeal, we cannot guarantee that the court will grant an injunction that prevents the ANDA filers from marketing their generic versions of Xyrem. Instead the court may order an ANDA filer that is found to infringe to pay damages in the form of lost profits or a reasonable royalty, which could be significant. We expect that the launch of any generic version of Xyrem, including the West-Ward AG Product or other authorized generic version of Xyrem, or the approval and launch of other products that compete with Xyrem, could have a material adverse effect on our sales of Xyrem and on our business, financial condition, results of operations and growth prospects. For further discussion regarding the risks associated with the West-Ward settlement agreement, the tentative approval of the Amneal and Ohm ANDAs, potential approval or tentative approval of additional ANDAs, the potential launch of a generic version of Xyrem, or the approval and launch of other sodium oxybate products that compete with Xyrem, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q and the risk factors under the headings “Risks Related to Xyrem and the Significant Impact of Xyrem Sales,” “ We face substantial competition from other companies, including companies with greater resources, including larger sales organizations and more experience working with large and diverse product portfolios, than we have ,” and “Risks Related to Our Intellectual Property” in Part II, Item 1A of this Quarterly Report on Form 10-Q. In August 2015, we implemented the current Xyrem REMS, and we have submitted and expect to continue to submit ongoing assessments as set forth in the FDA’s Xyrem REMS approval letter. However, we cannot guarantee that our implementation and ongoing assessments will be satisfactory to the FDA or that the Xyrem REMS will satisfy the FDA’s expectations in its evaluation of the Xyrem REMS on an ongoing basis. Any failure to comply with the REMS obligations could result in enforcement action by the FDA; lead to changes in our Xyrem REMS obligations; negatively affect sales of Xyrem; result in additional costs and expenses for us; and/or take a significant amount of time, any of which could materially and adversely affect our business, financial condition, results of operations and growth prospects. Further, we cannot predict whether the FDA will request, seek to require or ultimately require modifications to, or impose additional requirements on, the Xyrem REMS in connection with the anticipated distribution of the West-Ward AG Product, the approval of the generic sodium oxybate or otherwise or the potential timing, terms or propriety thereof. Any such modifications or additional requirements could make it more difficult or expensive for us to distribute Xyrem, make distribution easier for sodium oxybate competitors, impair the safety profile of Xyrem and/or negatively affect sales of Xyrem. We may face pressure to modify the Xyrem REMS, or to license or share intellectual property pertinent to the Xyrem REMS, including proprietary data required for safe distribution of sodium oxybate, in connection with the FDA’s approval of the generic sodium oxybate REMS. We cannot predict the outcome or impact on our business of any future action that we may take with respect to the approval of the generic sodium oxybate REMS, or licensing or sharing intellectual property pertinent to our Xyrem REMS or elements of the Xyrem REMS. For more information, see the risk factors under the headings “ The launch of a generic version of Xyrem or other sodium oxybate products that compete with Xyrem would adversely affect sales of Xyrem ” and “ We have incurred and expect to continue to incur substantial costs as a result of litigation or other proceedings relating to patents, other intellectual property rights and related matters, and we may be unable to protect our rights to, or commercialize, our products ” in Part II, Item 1A of this Quarterly Report on Form 10-Q. In September 2016, Jazz Pharmaceuticals, Inc., our wholly owned subsidiary, submitted a Citizen Petition to the FDA requesting that, for safety reasons, the FDA refuse to approve any sodium oxybate ANDA with a proposed package insert or REMS that omits the portions of the Xyrem package insert and the Xyrem REMS that instruct prescribers on adjusting the dose of the product when it is co-administered with divalproex sodium (also known as valproate or valproic acid). On January 17, 2017, the FDA granted the Citizen Petition with respect to the Xyrem package insert. The FDA concluded that it will not approve any sodium oxybate ANDA referencing Xyrem that does not include in its package insert the portions of the currently approved Xyrem package insert related to the drug-drug interaction with divalproex sodium. The FDA stated that it did not need to reach the question of whether the drug-drug interaction, or DDI, information could have been excluded from the generic sodium oxybate REMS materials because it was approving a REMS in connection with a sodium oxybate ANDA including that information. Our Xyrem patents include three DDI patents covering these instructions on the Xyrem package insert and Xyrem REMS. We cannot predict whether or when one or more of the ANDA filers may pursue a challenge to the FDA’s response to the Citizen Petition or whether any such challenges would be successful. Likewise, we cannot predict whether we will be able to maintain the validity of, or will otherwise obtain a judicial determination that the generic sodium oxybate package insert or the generic sodium oxybate REMS will infringe, any of our patents or, if we prevail in proving infringement, whether a court will grant an injunction that prevents any non-settling ANDA filers or other company introducing a different sodium oxybate product from marketing its product. For a description of these matters, including risks and uncertainties related to our REMS, our REMS patents and our DDI patents, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q, and the risk factors under the headings “Risks Related to Xyrem and the Significant Impact of Xyrem Sales” and “Risks Related to Our Intellectual Property” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Obtaining and maintaining appropriate reimbursement for Xyrem in the U.S. is increasingly challenging due to, among other things, the attention being paid to healthcare cost containment and prescription drug pricing, pricing pressure from third party payors and increasingly restrictive reimbursement conditions being imposed by third party payors. In this regard, we have experienced and expect to continue to experience increasing pressure from third party payors to agree to discounts, rebates or other pricing terms for Xyrem. Any such restrictive pricing terms or additional reimbursement conditions could have a material adverse effect on our Xyrem revenues. In addition, drug pricing by pharmaceutical companies has recently come under close scrutiny, particularly with respect to companies that have increased the price of products after acquiring those products from other companies. We expect that healthcare policies and reforms intended to curb healthcare costs will continue to be proposed, which could limit the prices that we charge for our products, including Xyrem, limit our commercial opportunity and/or negatively impact revenues from sales of our products. Also, price increases on Xyrem and our other products, and negative publicity regarding pricing and price increases generally, whether with respect to our products or products distributed by other pharmaceutical companies, could negatively affect market acceptance of Xyrem and our other products. In the three months ended March 31, 2017 , net product sales of our second largest product, Erwinaze/Erwinase (which we refer to in this report as Erwinaze unless otherwise indicated or the context otherwise requires), were $51.4 million , which represented 14% of total net product sales. We seek to maintain and increase sales of Erwinaze, as well as to make Erwinaze more widely available, through ongoing sales and marketing and research and development activities. However, our ability to successfully and sustainably maintain or grow sales of Erwinaze is subject to a number of risks and uncertainties, including the limited population of patients with ALL and the incidence of hypersensitivity reactions to E. coli -derived asparaginase within that population, our need to apply for and receive marketing authorizations, through the European Union’s mutual recognition procedure or otherwise, in certain additional countries so we can launch promotional efforts in those countries, as well as those other risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Erwinaze is licensed from and manufactured by a single source, Porton Biopharma Limited, or PBL. Our agreement with PBL, including our license, expires in December 2020, subject to five -year extensions unless terminated by either party in writing by December 2018. We cannot predict whether the term of the agreement will be extended or, if extended, the terms of any such extension. Erwinaze was approved by the FDA under a biologics license application, or BLA, and was launched in the U.S. in November 2011. The Erwinaze BLA includes a number of post-marketing commitments related to the manufacture of Erwinaze by PBL. We cannot predict if or when PBL will comply with its manufacturing-related post-marketing commitments that are part of the BLA approval. In March 2016, the FDA conducted an inspection of the PBL manufacturing facility and issued an FDA Form 483 to PBL that included observations related to a range of operational systems and processes. In April 2016 and September 2016, PBL responded to the FDA Form 483 with its plan, including required remediation activities, to address the observations, and subsequently provided additional information in response to another FDA request. In January 2017, the FDA issued a warning letter to PBL indicating that it was not satisfied with PBL’s response to the FDA Form 483, citing significant violations of current Good Manufacturing Practices, or cGMP for finished pharmaceuticals and significant deviations from cGMP for active pharmaceutical ingredients, or APIs. In March 2017, PBL responded to the warning letter issued by the FDA. We cannot predict if or when PBL will correct the violations and deviations to the satisfaction of the FDA or whether the FDA will be satisfied with PBL’s response to the warning letter. Any failure to do so to the satisfaction of the FDA could result in the FDA refusing admission of Erwinaze into the U.S., as well as additional enforcement actions by the FDA and other regulatory entities. In addition, a significant challenge to our ability to maintain current sales levels and to increase sales is our need to avoid supply disruptions of Erwinaze due to capacity constraints, production delays, quality or regulatory challenges or other manufacturing difficulties. The current manufacturing capacity for Erwinaze is completely absorbed by demand for the product. We are working with PBL to evaluate potential expansion of its production capacity to increase the supply of Erwinaze over the longer term and to address the production delays, quality challenges and related regulatory scrutiny. As a consequence of constrained manufacturing capacity, we have had an extremely limited or no ability to build product inventory levels that can be used to absorb disruptions to supply resulting from quality, regulatory or other issues. We have experienced product quality, manufacturing and inventory challenges that have resulted, and may continue to result, in disruptions in our ability to supply certain markets, including the U.S., from time to time and have caused, and may in the future cause, us to implement batch-specific, modified product use instructions. Most recently, we experienced supply disruptions in the first quarter of 2017 in most of the countries outside the U.S. where we market Erwinaze, and we expect additional supply disruptions of Erwinaze in the U.S. and other countries in 2017. As capacity constraints and supply disruptions continue, whether as a result of continued quality or other manufacturing issues, regulatory issues or otherwise, we will be unable to build a desired excess level of product inventory, our ability to supply the market may continue to be compromised and physicians’ decisions to use Erwinaze have been, and in the future may continue to be, negatively impacted. Additional Erwinaze supply disruptions and/or our inability to expand production capacity could materially adversely affect our sales of and revenues from Erwinaze and our potential future maintenance and growth of the market for this product. In the three months ended March 31, 2017 , net product sales of Defitelio/defibrotide represented 10% of total net product sales. We acquired this product in January 2014 in connection with our acquisition of Gentium S.r.l., or Gentium, which we refer to as the Gentium Acquisition, and secured worldwide rights to the product by acquiring rights to defibrotide in the Americas in August 2014. We launched Defitelio in certain European countries in 2014 and continued to launch in additional European countries on a rolling basis through 2016. We are in the process of making pricing and reimbursement submissions with respect to Defitelio in those European countries where Defitelio is not yet launched, including in countries where pricing and reimbursement approvals are required for launch. Our ability to realize the anticipated benefits from our investment in Defitelio/defibrotide is subject to risks and uncertainties, including those discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. In particular, we may not be able to successfully maintain or grow sales of Defitelio in Europe, or obtain marketing approval in other countries, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. A key challenge to our success in maintaining or growing sales of Defitelio in Europe is our ability to obtain appropriate pricing and reimbursement approvals in those European countries where Defitelio is not yet launched. If we experience delays or unforeseen difficulties in obtaining favorable pricing and reimbursement approvals, planned launches in the affected countries would be delayed, or, if we are unable to ultimately obtain favorable pricing and reimbursement approvals in countries that represent significant markets, especially where a country’s reimbursed price influences other countries, our growth prospects in Europe could be negatively affected. In March 2016, the FDA approved our NDA for Defitelio for the treatment of adult and pediatric patients with VOD with renal or pulmonary dysfunction following HSCT. We promote Defitelio along with Erwinase to many hematology and oncology specialists who operate in the same hospitals, and we believe that we benefit from operational synergies from this overlap. We launched Defitelio in the U.S. shortly after FDA approval, and our U.S. commercial launch is still at an early stage. Our ability to realize the anticipated benefits from our investment in Defitelio is subject to risks and uncertainties, including the continued acceptance of Defitelio in the U.S. by hospital pharmacy and therapeutics committees and the continued availability of adequate coverage and reimbursement by government programs and third party payors; the lack of experience of U.S. physicians in diagnosing and treating VOD, particularly in adults, and the possibility that physicians may delay initiation of treatment or terminate treatment before the end of the recommended dosing schedule; our ability to successfully maintain or grow sales of Defitelio in Europe; delays or problems in the supply or manufacture of the product; the limited size of the population of VOD patients who are indicated for treatment with Defitelio (particularly if changes in HSCT treatment protocols reduce the incidence of VOD diagnosis); our ability to meet the post-marketing commitments and requirements imposed by the FDA in connection with its approval of our NDA for Defitelio; and our ability to obtain marketing approval in other countries and to develop the product for additional indications, as well as those other risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. If sales of Defitelio do not reach the levels we expect, our anticipated revenue from the product will be negatively affected, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, in 2016, we made a significant investment in Vyxeos TM , an investigational product in development as a treatment for high-risk acute myeloid leukemia, through the acquisition of Celator Pharmaceuticals Inc., or Celator, in July 2016, or the Celator Acquisition. Our ability to realize the anticipated benefits from this investment is subject to a number of risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. If we are unable to obtain regulatory approval for Vyxeos in the U.S. or in Europe in a timely manner, or at all, or if sales of an approved Vyxeos product do not reach the levels we expect, our anticipated revenue from Vyxeos would be negatively affected, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition to risks specifically related to Xyrem, Erwinaze, Defitelio/defibrotide and Vyxeos, we are subject to other challenges and risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations. These risks and uncertainties include: • the challenges of protecting and enhancing our intellectual property rights; • the challenges of achieving and maintaining commercial success of our products; • delays or problems in the supply or manufacture of our products and product candidates, particularly with respect to certain products as to which we maintain limited inventories, our dependence on single source suppliers for most of our products, product candidates and APIs, and the requirement that we and our product suppliers be qualified by the FDA to manufacture product and comply with applicable manufacturing regulations; • the need to obtain and maintain appropriate pricing and reimbursement for our products in an increasingly challenging environment due to, among other things, the attention being paid to healthcare cost containment and other austerity measures and pharmaceutical pricing in the U.S. and worldwide, including the need to obtain and maintain reimbursement for Xyrem in the U.S. in an environment in which we are subject to increasingly restrictive conditions for reimbursement required by government programs and third party payors; • our ability to identify and acquire, in-license or develop additional products or product candidates to grow our business; • the challenges of compliance with the requirements of the FDA, the DEA, and comparable non-U.S. regulatory agencies, including with respect to product labeling, requirements for distribution, obtaining sufficient DEA quotas where needed, marketing and promotional activities, patient assistance programs, adverse event reporting and product recalls or withdrawals; • the difficulty and uncertainty of pharmaceutical product development, including the timing thereof, and the uncertainty of clinical success, such as the risk that results from preclinical studies and/or early clinical trials may not be predictive of results obtained in later and larger clinical trials planned or anticipated to be conducted for our product candidates; • the inherent uncertainty associated with the regulatory approval process, especially as we continue to increase investment in our product pipeline development projects and undertake multiple planned NDA submissions for our product candidates; • the risks associated with business combination or product or product candidate acquisition transactions, including risks associated with the Celator Acquisition, such as the challenges inherent in the integration of acquired businesses with our historical business, the increase in geographic dispersion among our centers of operation and the risks that we may acquire unanticipated liabilities along with acquired businesses or otherwise fail to realize the anticipated benefits (commercial or otherwise) from such transactions; and • possible restrictions on our ability and flexibility to pursue certain future opportunities as a result of our substantial outstanding debt obligations. Derivative Instruments and Hedging Activities We record the fair value of derivative instrume |
Cash and Available-for-Sale Sec
Cash and Available-for-Sale Securities | 3 Months Ended |
Mar. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Cash and Available-for-Sale Securities | Cash and Available-for-Sale Securities Cash, cash equivalents and investments consisted of the following (in thousands): March 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and Cash Equivalents Investments Cash $ 136,990 $ — $ — $ 136,990 $ 136,990 $ — Time deposits 185,000 — — 185,000 125,000 60,000 Money market funds 85,005 — — 85,005 85,005 — Totals $ 406,995 $ — $ — $ 406,995 $ 346,995 $ 60,000 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and Cash Equivalents Investments Cash $ 215,963 $ — $ — $ 215,963 $ 215,963 $ — Time deposits 210,000 — — 210,000 150,000 60,000 Totals $ 425,963 $ — $ — $ 425,963 $ 365,963 $ 60,000 Cash equivalents and investments are considered available-for-sale securities. We use the specific-identification method for calculating realized gains and losses on securities sold and include them in interest expense, net in the condensed consolidated statements of income. Our investments balance represents time deposits with original maturities of greater than three months. |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of March 31, 2017 and December 31, 2016 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands): March 31, 2017 December 31, 2016 Quoted Significant Total Significant Total Assets: Available-for-sale securities: Time deposits $ — $ 185,000 $ 185,000 $ 210,000 $ 210,000 Money market funds 85,005 — 85,005 — — Interest rate contracts — 1,181 1,181 — — Foreign exchange forward contracts — 490 490 — — Totals $ 85,005 $ 186,671 $ 271,676 $ 210,000 $ 210,000 Liabilities: Interest rate contracts $ — $ 1,989 $ 1,989 $ — $ — Foreign exchange forward contracts — 482 482 — — Totals $ — $ 2,471 $ 2,471 $ — $ — As of March 31, 2017 , our available-for-sale securities included time deposits and money market funds and their carrying values were approximately equal to their fair values. Time deposits were measured at fair value using Level 2 inputs and money market funds were measured using quoted prices in active markets, which represent Level 1 inputs. Level 2 inputs, obtained from various third party data providers, represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data. Our derivative assets and liabilities include interest rate and foreign exchange derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk as well as an evaluation of our counterparties’ credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the fair value hierarchy. There were no transfers between the different levels of the fair value hierarchy in 2017 or in 2016. As of March 31, 2017 , the estimated fair value of our 2021 Notes was approximately $615 million . The fair value of the 2021 Notes was estimated using quoted market prices obtained from brokers (Level 2). The estimated fair value of our borrowings under our term loan and revolving credit facilities were approximately equal to their respective book values based on the borrowing rates currently available for variable rate loans (Level 2). |
Derivative and Hedging Activiti
Derivative and Hedging Activities | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative and Hedging Activities | Derivative and Hedging Activities We are exposed to certain risks arising from operating internationally, including fluctuations in interest rates on our outstanding revolving credit facility and term loan borrowings and fluctuations in foreign exchange rates primarily related to the translation of euro-denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S. dollar functional currency. We manage these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes. To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in March 2017 which are effective from March 3, 2017 until July 12, 2021. These agreements hedge contractual term loan interest rates. As of March 31, 2017 , the interest rate swap agreements had a notional amount of $300.0 million . As a result of these agreements, the interest rate on a portion of our term loan borrowings was fixed at 1.895% , plus the borrowing spread, until July 12, 2021 . The effective portion of changes in the fair value of derivatives designated as and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value is recognized directly in earnings. The impact on accumulated other comprehensive loss and earnings from derivative instruments that qualified as cash flow hedges for the three months ended March 31, 2017 was as follows (in thousands): Interest Rate Contracts: Three Months Ended Loss recognized in accumulated other comprehensive loss, net of tax $ 855 Loss reclassified from accumulated other comprehensive loss to interest expense, net of tax $ (233 ) A ssuming no change in LIBOR-based interest rates from market rates as of March 31, 2017 , $2.0 million of losses recognized in accumulated other comprehensive loss will be reclassified to earnings over the next 12 months. The ineffective portion from derivative instruments that qualified as cash flow hedges for the three months ended March 31, 2017 was $0.1 million . We enter into foreign exchange forward contracts, with durations of up to 365 days, designed to limit the exposure to fluctuations in foreign exchange rates related to the translation of certain euro-denominated intercompany loans. Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures. As of March 31, 2017 , the notional amount of foreign exchange contracts where hedge accounting is not applied was $148.9 million . We recognized a minimal gain in other income and expense for the three months ended March 31, 2017 associated with the foreign exchange contracts not designated as hedging instruments. The cash flow effects of our derivative contracts for the three months ended March 31, 2017 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows. The following table summarizes the fair value of outstanding derivatives as of March 31, 2017 (in thousands): March 31, 2017 Asset Derivatives Liability Derivatives Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate contracts Other non-current assets $ 1,181 Accrued liabilities $ 1,989 Derivatives not designated as hedging instruments: Foreign exchange forward contracts Other current assets 490 Accrued liabilities 482 Total fair value of derivative instruments $ 1,671 $ 2,471 There were no outstanding derivatives as of December 31, 2016 . |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): March 31, December 31, Raw materials $ 2,798 $ 1,547 Work in process 17,437 18,689 Finished goods 17,418 13,815 Total inventories $ 37,653 $ 34,051 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The gross carrying amount of goodwill was as follows (in thousands): Balance at December 31, 2016 $ 893,810 Foreign exchange 5,480 Balance at March 31, 2017 $ 899,290 The gross carrying amounts and net book values of our intangible assets were as follows (in thousands): March 31, 2017 December 31, 2016 Remaining Gross Accumulated Net Book Gross Accumulated Net Book Acquired developed technologies 11.1 $ 1,491,720 $ (438,983 ) $ 1,052,737 $ 1,477,618 $ (410,523 ) $ 1,067,095 Manufacturing contracts 0.8 11,434 (9,121 ) 2,313 11,278 (8,292 ) 2,986 Trademarks — 2,876 (2,876 ) — 2,872 (2,872 ) — Total finite-lived intangible assets 1,506,030 (450,980 ) 1,055,050 1,491,768 (421,687 ) 1,070,081 Acquired in-process research and development assets 1,943,730 — 1,943,730 1,941,920 — 1,941,920 Total intangible assets $ 3,449,760 $ (450,980 ) $ 2,998,780 $ 3,433,688 $ (421,687 ) $ 3,012,001 The assumptions and estimates used to determine future cash flows and remaining useful lives of our intangible and other long-lived assets are complex and subjective. They can be affected by various factors, including external factors, such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines. Based on finite-lived intangible assets recorded as of March 31, 2017 , and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands): Year Ending December 31, Estimated Amortization Expense 2017 (remainder) $ 77,309 2018 100,336 2019 100,123 2020 98,980 2021 98,044 Thereafter 580,258 Total $ 1,055,050 |
Certain Balance Sheet Items
Certain Balance Sheet Items | 3 Months Ended |
Mar. 31, 2017 | |
Certain Balance Sheet Items [Abstract] | |
Certain Balance Sheet Items | Certain Balance Sheet Items Property and equipment consisted of the following (in thousands): March 31, December 31, Land and buildings $ 46,067 $ 46,033 Construction-in-progress 42,653 33,427 Manufacturing equipment and machinery 19,722 19,596 Computer software 18,548 17,832 Leasehold improvements 13,126 9,328 Computer equipment 11,234 10,980 Furniture and fixtures 3,385 2,436 Subtotal 154,735 139,632 Less accumulated depreciation and amortization (34,822 ) (32,142 ) Property and equipment, net $ 119,913 $ 107,490 Accrued liabilities consisted of the following (in thousands): March 31, December 31, Rebates and other sales deductions $ 73,949 $ 72,344 Employee compensation and benefits 35,914 43,363 Clinical trial accruals 10,897 10,139 Royalties 7,486 11,643 Professional fees 6,192 4,596 Selling and marketing accruals 4,467 3,924 Sales returns reserve 4,145 4,366 Inventory-related accruals 4,003 3,350 Accrued construction-in-progress 3,484 1,597 Accrued interest 2,356 5,179 Accrued contract termination fees — 11,612 Other 30,752 21,155 Total accrued liabilities $ 183,645 $ 193,268 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following table summarizes the carrying amount of our indebtedness (in thousands): March 31, December 31, 1.875% exchangeable senior notes due 2021 $ 575,000 $ 575,000 Unamortized discount on 1.875% exchangeable senior notes due 2021 (96,436 ) (101,094 ) 1.875% exchangeable senior notes due 2021, net 478,564 473,906 Borrowings under revolving credit facility 700,000 850,000 Term loan 697,124 705,719 Total debt 1,875,688 2,029,625 Less current portion 136,094 36,094 Total long-term debt $ 1,739,594 $ 1,993,531 Exchangeable Senior Notes The 2021 Notes were issued by Jazz Investments I Limited, or the Issuer, a 100% -owned finance subsidiary of Jazz Pharmaceuticals plc. The Issuer’s obligations under the 2021 Notes are fully and unconditionally guaranteed on a senior unsecured basis by Jazz Pharmaceuticals plc. No subsidiary of Jazz Pharmaceuticals plc guaranteed the 2021 Notes. Subject to certain local law restrictions on payment of dividends, among other things, and potential negative tax consequences, we are not aware of any significant restrictions on the ability of Jazz Pharmaceuticals plc to obtain funds from the Issuer or Jazz Pharmaceuticals plc’s other subsidiaries by dividend or loan, or any legal or economic restrictions on the ability of the Issuer or Jazz Pharmaceuticals plc’s other subsidiaries to transfer funds to Jazz Pharmaceuticals plc in the form of cash dividends, loans or advances. There is no assurance that in the future such restrictions will not be adopted. As of March 31, 2017 , the carrying value of the equity component of the 2021 Notes, net of equity issuance costs, was $126.9 million . Maturities Scheduled maturities with respect to our long-term debt principal balances outstanding as of March 31, 2017 were as follows (in thousands): Year Ending December 31, Scheduled Long-Term Debt Maturities 2017 (remainder) $ 27,070 2018 40,605 2019 58,652 2020 76,700 2021 1,775,801 Total $ 1,978,828 As of March 31, 2017 , we recorded $100.0 million of outstanding borrowings under our revolving credit facility in current liabilities based on our intent to repay this amount. The repayment was made in April 2017. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Indemnification In the normal course of business, we enter into agreements that contain a variety of representations and warranties and provide for general indemnification, including indemnification associated with product liability or infringement of intellectual property rights. Our exposure under these agreements is unknown because it involves future claims that may be made but have not yet been made against us. To date, we have not paid any claims or been required to defend any action related to these indemnification obligations. We have agreed to indemnify our executive officers, directors and certain other employees for losses and costs incurred in connection with certain events or occurrences, including advancing money to cover certain costs, subject to certain limitations. The maximum potential amount of future payments we could be required to make under the indemnification obligations is unlimited; however, we maintain insurance policies that may limit our exposure and may enable us to recover a portion of any future amounts paid. Assuming the applicability of coverage and the willingness of the insurer to assume coverage, and subject to certain retention, loss limits and other policy provisions, we believe the fair value of these indemnification obligations is not significant. Accordingly, we did not recognize any liabilities relating to these obligations as of March 31, 2017 and December 31, 2016 . No assurances can be given that the covering insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive litigation against these insurers, in which case we may incur substantial liabilities as a result of these indemnification obligations. Lease and Other Commitments We have noncancelable operating leases for our office buildings and we are obligated to make payments under noncancelable operating leases for automobiles used by our sales force. Future minimum lease payments under our noncancelable operating and facility leases as of March 31, 2017 were as follows (in thousands): Year Ending December 31, Lease Payments 2017 (remainder) $ 11,973 2018 12,243 2019 10,825 2020 9,556 2021 9,464 Thereafter 68,028 Total $ 122,089 In January 2015, we entered into an agreement to lease office space located in Palo Alto, California in a building to be constructed by the landlord. We expect to occupy this office space by the end of 2017. In connection with this lease, the landlord is providing a tenant improvement allowance for the costs associated with the design, development and construction of tenant improvements for the leased facility. We are obligated to fund all costs incurred in excess of the tenant improvement allowance. The scope of the planned tenant improvements do not qualify as “normal tenant improvements” under the lease accounting guidance. Accordingly, for accounting purposes, we have concluded we are the deemed owner of the building during the construction period. As of March 31, 2017 , we recorded project construction costs of $34.6 million incurred by the landlord as construction-in-progress in property and equipment, net and a corresponding financing obligation in other non-current liabilities in our condensed consolidated balance sheets. We will increase the asset and financing obligation as additional building costs are incurred by the landlord during the construction period. In the three months ended March 31, 2017, we recorded rent expense associated with the ground lease of $0.5 million in our condensed consolidated statement of income. As of March 31, 2017 , we had $31.9 million of noncancelable purchase commitments due within one year, primarily related to agreements with third party manufacturers. Legal Proceedings We are involved in legal proceedings, including the following matters: Xyrem ANDA Matters Relating to the First ANDA Filer. On October 18, 2010, we received a notice of Paragraph IV Patent Certification, or Paragraph IV Certification, from West-Ward that it had submitted an ANDA to the FDA requesting approval to market a generic version of Xyrem. West-Ward’s initial notice alleged that three patents then listed for Xyrem in the Orange Book on the date of the notice are invalid, unenforceable or not infringed by West-Ward’s proposed generic product. On November 22, 2010, we filed a lawsuit against West-Ward in response to West-Ward’s initial notice in the District Court, in which we sought a permanent injunction to prevent West-Ward from introducing a generic version of Xyrem that would infringe our patents. Additional patents covering Xyrem have been issued both before and since December 2010, and after receiving Paragraph IV Certification notices from West-Ward with respect to those patents, we filed additional lawsuits against West-Ward to include these additional patents in the litigation. All of the lawsuits filed against West-Ward between 2010 and 2012 were consolidated by the District Court into a single case, which we refer to as the first West-Ward consolidated case. In the first West-Ward consolidated case, we alleged that 10 of our patents covering Xyrem are or will be infringed by West-Ward’s ANDA and sought a permanent injunction to prevent West-Ward from launching a generic version of Xyrem that would infringe these patents. After receiving additional Paragraph IV Certification notices from West-Ward, we filed three actions against West-Ward in the District Court on February 20, 2015, June 1, 2015 and January 27, 2016 that were consolidated by the District Court into a second case, which we refer to as the second West-Ward consolidated case. In the second West-Ward consolidated case, we alleged that five of our patents covering Xyrem are or will be infringed by West-Ward’s ANDA and sought a permanent injunction to prevent West-Ward from introducing a generic version of Xyrem that would infringe those patents. In December 2013, the District Court permitted West-Ward to amend its answer in the first West-Ward consolidated case to allege certain equitable defenses, and the parties were given additional time for discovery on those new defenses. In addition, in March 2014, the District Court granted our motion to bifurcate and stay the portion of the first West-Ward consolidated case regarding REMS patents. In July 2016, the District Court determined that it would try all of the patents at issue in the first and second West-Ward consolidated cases together, including the REMS patents that were previously bifurcated and stayed, and set trial in this combined consolidated case for the second quarter of 2017. In the first quarter of 2017, the District Court bifurcated and stayed the part of the combined consolidated case involving the REMS patents. Also in the first quarter of 2017, the FDA approved West-Ward’s ANDA with a REMS that is separate from the Xyrem REMS. On August 12, 2016, we filed a lawsuit against West-Ward in the District Court in which we alleged that an additional later-issued REMS patent is or will be infringed by West-Ward’s ANDA and sought a permanent injunction to prevent West-Ward from introducing a generic version of Xyrem that would infringe that patent. In September 2016, West-Ward moved to dismiss the lawsuit. On April 5, 2017, we entered into a settlement agreement and related agreements resolving our patent infringement litigation against West-Ward in the District Court. On April 10, 2017, the District Court approved an order dismissing the litigation. We have released West-Ward from all claims asserting that patents covering Xyrem are or would be infringed by the West-Ward ANDA, and West-Ward has released us from all claims asserting that the patents covering Xyrem are unenforceable, unpatentable, invalid or not infringed by the generic version of Xyrem covered by West-Ward’s ANDA. In accordance with legal requirements, we and West-Ward have submitted the settlement agreement to the U.S. Federal Trade Commission and the U.S. Department of Justice for review. For more information regarding the settlement agreement with West-Ward, see “Overview—Significant Developments Affecting Our Business” in Part I, Item 2 of this Quarterly Report on Form 10-Q. Xyrem ANDA Matters Relating to Second Filers . On December 10, 2012, we received notice of Paragraph IV Certification from Amneal that it had submitted an ANDA to the FDA requesting approval to market a generic version of Xyrem. On January 18, 2013, we filed a lawsuit against Amneal in the District Court alleging that our patents covering Xyrem are infringed or will be infringed by Amneal’s ANDA and seeking a permanent injunction to prevent Amneal from introducing a generic version of Xyrem that would infringe these patents. On November 21, 2013, we received notice of Paragraph IV Certification from Par Pharmaceutical, Inc., or Par, that it had submitted an ANDA to the FDA requesting approval to market a generic version of Xyrem. On December 27, 2013, we filed a lawsuit against Par in the District Court alleging that our patents covering Xyrem are infringed or will be infringed by Par’s ANDA and seeking a permanent injunction to prevent Par from introducing a generic version of Xyrem that would infringe these patents. In April 2014, Amneal asked the District Court to consolidate its case with the Par case, stating that both cases would proceed on the schedule for the Par case. The District Court granted this request in May 2014. The order consolidating the cases extended Amneal’s 30 -month stay period to coincide with the date of Par’s 30 -month stay period. The stay expired on May 20, 2016. Additional patents covering Xyrem have been issued since April 2014 and have been listed in the Orange Book for Xyrem. Amneal and Par have given us additional notices of Paragraph IV Certifications regarding such patents, and we have filed additional lawsuits against Amneal and Par in the District Court alleging that our patents covering Xyrem are infringed or will be infringed by Amneal’s and Par’s ANDAs and seeking a permanent injunction to prevent Amneal and Par from introducing a generic version of Xyrem that will infringe these patents. In March 2016, Par moved to dismiss claims involving our patents covering a part of the Xyrem label that instructs prescribers on adjusting the dose of Xyrem when it is being co-administered with divalproex sodium (also known as valproate or valproic acid), or our DDI patents. In August 2016, we and Par stipulated to dismiss claims relating to our patents covering the formulation of Xyrem on the grounds that Par had notified FDA that it had converted its Paragraph IV Certifications to a Paragraph III Certification. On June 4, 2014, we received a notice of Paragraph IV Certification from Ohm that it had submitted an ANDA to the FDA requesting approval to market a generic version of Xyrem. On July 15, 2014, we filed a lawsuit against Ohm in the District Court alleging that our patents covering Xyrem are infringed or will be infringed by Ohm’s ANDA and seeking a permanent injunction to prevent Ohm from introducing a generic version of Xyrem that will infringe these patents. Since June 2014, we have received additional notices of Paragraph IV Certification from Ohm regarding newly issued patents for Xyrem listed in the Orange Book, and we have filed additional lawsuits against Ohm in the District Court alleging that our patents covering Xyrem are infringed or will be infringed by Ohm’s ANDA and seeking a permanent injunction to prevent Ohm from introducing a generic version of Xyrem that will infringe these patents. In May 2016, the Ohm litigation was settled as described below. In the first quarter of 2017, the FDA tentatively approved the ANDAs of Amneal and Ohm. On October 30, 2014, we received a notice of Paragraph IV Certification from Teva Pharmaceutical Industries Ltd., formerly known as Watson Laboratories, Inc., or Teva, that it had submitted an ANDA to the FDA requesting approval to market a generic version of Xyrem. On December 11, 2014, we filed a lawsuit against Teva in the District Court alleging that our patents covering Xyrem are or will be infringed by Teva’s ANDA and seeking a permanent injunction to prevent Teva from introducing a generic version of Xyrem that would infringe these patents. In March 2015, Teva moved to dismiss the portion of the case based on our Orange Book-listed REMS patents on the grounds that these patents do not cover patentable subject matter. In November 2015, the District Court administratively terminated this motion to dismiss (without prejudice) pending the outcome of IPR proceedings before the PTAB relating to the patents that were the subject of Teva’s motion. Since March 2015, we have received an additional notice of Paragraph IV Certification from Teva regarding newly issued patents for Xyrem listed in the Orange Book, and we have filed an additional lawsuit against Teva in the District Court alleging that our patents covering Xyrem are or will be infringed by Teva’s ANDA and seeking a permanent injunction to prevent Teva from introducing a generic version of Xyrem that would infringe these patents. In April 2015, the District Court issued an order that consolidated all then-pending lawsuits against Amneal, Par, Ohm and Teva into one case. On June 8, 2015, we received a Paragraph IV Certification from Wockhardt Bio AG, or Wockhardt, that it had submitted an ANDA to the FDA requesting approval to market a generic version of Xyrem. On July 17, 2015, we filed a lawsuit in the District Court alleging that our patents covering Xyrem were or would be infringed by Wockhardt’s ANDA and seeking a permanent injunction to prevent Wockhardt from introducing a generic version of Xyrem that would infringe our patents. On November 26, 2015, we received an additional notice of Paragraph IV Certification from Wockhardt regarding newly issued patents listed in the Orange Book, and we filed an additional lawsuit against Wockhardt in the District Court alleging that our patents covering Xyrem were or would be infringed by Wockhardt’s ANDA and seeking a permanent injunction to prevent Wockhardt from introducing a generic version of Xyrem that would infringe these patents. In April 2016, the Wockhardt litigation was settled as set forth below. On July 23, 2015, we received a Paragraph IV Certification from Lupin Inc., or Lupin, that it had submitted an ANDA to the FDA requesting approval to market a generic version of Xyrem. On September 2, 2015, we filed a lawsuit in the District Court alleging that our patents covering Xyrem are or will be infringed by Lupin’s ANDA and seeking a permanent injunction to prevent Lupin from introducing a generic version of Xyrem that would infringe our patents. In January, April and June 2016, the District Court issued orders consolidating all of the cases then pending against Amneal, Par, Ohm, Teva, Wockhardt and Lupin into a single case for all purposes. No trial date has been set in that consolidated case. Additional patents covering Xyrem have been issued since June 2016 and have been listed in the Orange Book for Xyrem. We have received additional Paragraph IV notices from Amneal regarding such patents and have filed new lawsuits in the District Court, alleging that our additional patents covering Xyrem are or will be infringed by Amneal’s ANDA and seeking a permanent injunction to prevent Amneal from introducing a generic version of Xyrem that would infringe our patents. We entered into settlement agreements with Wockhardt and Ohm on April 18, 2016 and May 9, 2016, respectively, that resolved our patent litigation against Wockhardt and Ohm. Under the settlement agreements, we granted each of Wockhardt and Ohm a license to manufacture, market, and sell its generic version of Xyrem on or after December 31, 2025, or earlier depending on the occurrence of certain events. The specific terms of the settlement agreements are confidential. The settlements with Wockhardt and Ohm do not resolve the litigation against Amneal, Par, Teva and Lupin, which is ongoing. We cannot predict the specific timing or outcome of events in this matter with respect to the remaining defendants or the impact of developments involving any specific parties or patents on other ongoing proceedings with any ANDA filer. Xyrem Post-Grant Patent Review Matters . In January 2015, certain of the ANDA filers filed petitions for IPR with respect to the validity of the six REMS patents. In July 2016, the PTAB issued final decisions that the claims of these six patents are unpatentable; as a result, if the United States Court of Appeals for the Federal Circuit upholds those decisions on appeal, these claims will be canceled. We have filed notices of appeal with respect to these IPR decisions to the United States Court of Appeals for the Federal Circuit. In September 2015, certain of the ANDA filers filed a petition for IPR with respect to the validity of an additional REMS patent. In March 2016, the PTAB partially instituted an IPR on three claims of a seventh REMS patent, declining to review 25 of 28 claims. In March 2017, the PTAB issued a final decision that the three claims that were reviewed by the PTAB are unpatentable. We have not yet decided whether to appeal that ruling. In October 2015, Ohm and Par filed petitions for IPR with respect to the validity of one of our DDI patents, and Amneal filed an IPR petition on the same patent in February 2016. In April 2016, the PTAB denied Par’s petition in its entirety and issued a decision on Ohm’s petition, instituting an IPR trial with respect to 16 of the claims under the patent subject to this petition and denying the petition with respect to the other 18 claims. In July 2016, the PTAB denied Amneal’s petition in its entirety. In March 2016, Ohm filed a petition for IPR with respect to the validity of the second of our DDI patents. In connection with settlement of our litigation with Ohm, both of the IPR petitions filed by Ohm were terminated. In December 2015, Wockhardt filed a petition for IPR with respect to the validity of one of our patents covering the formulation of Xyrem. In connection with settlement of our patent litigation with Wockhardt, this IPR petition was terminated. We cannot predict whether additional post-grant patent review challenges will be filed by any of the ANDA filers or any other entity, the outcome of any pending IPR or other proceeding, the outcome of any appeal of the July 2016 IPR decisions with respect to the six REMS patents or the impact any IPR or other proceeding might have on ongoing ANDA litigation proceedings or other aspects of our Xyrem business. Shareholder Litigation Matters Relating to Celator Acquisition. On June 21, 2016, a putative class-action lawsuit challenging our Celator Acquisition, captioned Dunbar v. Celator Pharmaceuticals, Inc., or the Dunbar action, was filed in the Superior Court of New Jersey. We refer to our acquisition of Celator in this report as the Celator Acquisition. The complaint was filed against Celator, each member of the Celator board of directors, Jazz Pharmaceuticals plc and our wholly owned subsidiary Plex Merger Sub, Inc., or Plex. The complaint generally alleges that the Celator directors breached their fiduciary duties in connection with the Celator Acquisition, and that Jazz Pharmaceuticals plc and Plex aided and abetted these alleged breaches of fiduciary duty. The complaint also generally asserts that the Celator directors breached their fiduciary duties to Celator’s public stockholders by, among other things, (i) agreeing to sell Celator to us at an inadequate price, (ii) implementing an unfair process, (iii) agreeing to certain provisions of the merger agreement for the Celator Acquisition that allegedly favored us and deterred alternative bids, and (iv) failing to disclose purportedly material information in Celator’s Schedule 14D-9 filing with the U.S. Securities and Exchange Commission, or SEC. The plaintiff sought, among other things, an injunction against the consummation of the Celator Acquisition and an award of costs and expenses, including a reasonable allowance for attorneys’ and experts’ fees. Between June 27, 2016 and June 29, 2016, two putative class-action lawsuits challenging the Celator Acquisition, captioned Palmisciano v. Celator Pharmaceuticals, Inc., or the Palmisciano action, and Barreto v. Celator Pharmaceuticals, Inc. , or the Barreto action , were filed in the District Court. The complaints were filed against Celator and each member of the Celator board of directors. The complaints assert causes of action under sections 14 and 20 of the Securities Exchange Act of 1934, as amended, predicated on Celator’s and the Celator directors’ alleged failure to disclose purportedly material information in Celator’s Schedule 14D-9 filing with the SEC. The plaintiffs sought, among other things, an injunction against the consummation of the Celator Acquisition and an award of costs and expenses, including a reasonable allowance for attorneys’ and experts’ fees. Neither Jazz Pharmaceuticals plc nor Plex were named defendants in these actions. On July 6, 2016, the defendants to the Dunbar action, the Palmisciano action and the Barreto action entered into a memorandum of understanding, or MOU, regarding settlement of these actions with the plaintiffs. The MOU outlines the terms of the parties’ agreement in principle to settle and release all claims which were or could have been asserted in these actions. In consideration for such settlement and release, the parties to these actions agreed, among other things, that Celator would amend its Schedule 14D-9 to include certain supplemental disclosures. The Schedule 14D-9 was amended by Celator on July 6, 2016, and the Celator Acquisition was completed on July 12, 2016. The settlement remains subject to, among other items, confirmatory discovery, the execution of a stipulation of settlement by the parties, final approval of the settlement by the District Court in the Barreto action and dismissal with prejudice of the Dunbar action and the Palmisciano action. From time to time we are involved in legal proceedings arising in the ordinary course of business. We believe there is no other litigation pending that could have, individually or in the aggregate, a material adverse effect on our results of operations or financial condition. Other Contingencies In May 2016, we received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts requesting documents related to our support of 501(c)(3) organizations that provide financial assistance to Medicare patients, and, for Xyrem, documents concerning the provision of financial assistance to Medicare patients. In October 2016, we received a second subpoena updating and further specifying document requests regarding support to 501(c)(3) organizations that provide financial assistance to Medicare patients and the provision of financial assistance for Medicare patients taking drugs sold by us. In February 2017, we received a third subpoena requesting documents regarding our support to a specific 501(c)(3) organization that established a fund for narcolepsy patients in January 2017. Other companies have disclosed similar subpoenas and continuing inquiries. We are cooperating with this investigation. We are unable to predict how long this investigation will continue, whether we will receive additional subpoenas in connection with this investigation, or its outcome, but we expect that we will continue to incur significant costs in connection with the investigation, regardless of the outcome. For more information, see the risk factor under the heading “ We are subject to significant ongoing regulatory obligations and oversight, which may result in significant additional expense and limit our ability to commercialize our products” in Part II, Item 1A of this Quarterly Report on Form 10-Q. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity The following tables present a reconciliation of our beginning and ending balances in shareholders’ equity for the three months ended March 31, 2017 and 2016, respectively (in thousands): Total Shareholders' Equity Shareholders' equity at January 1, 2017 $ 1,877,339 Issuance of ordinary shares in conjunction with employee equity incentive and purchase plans 5,676 Employee withholding taxes related to share-based awards (14,431 ) Share-based compensation 25,297 Shares repurchased (13,896 ) Other comprehensive income 17,490 Net income 86,511 Shareholders' equity at March 31, 2017 $ 1,983,986 Total Shareholders' Equity Shareholders' equity at January 1, 2016 $ 1,706,333 Issuance of ordinary shares in conjunction with employee equity incentive and purchase plans 3,780 Employee withholding taxes related to share-based awards (12,476 ) Share-based compensation 24,608 Shares repurchased (134,365 ) Other comprehensive income 45,188 Net income 75,812 Shareholders' equity at March 31, 2016 $ 1,708,880 Share Repurchase Program In November 2016, our board of directors authorized a new share repurchase program pursuant to which we are authorized to repurchase a number of ordinary shares having an aggregate purchase price of up to $300.0 million , exclusive of any brokerage commissions. In the three months ended March 31, 2017 , we spent a total of $13.9 million to purchase 0.1 million of our ordinary shares under the share repurchase program at an average total purchase price, including commissions, of $117.65 per share. As of March 31, 2017 , the remaining amount authorized under the share repurchase program was $267.6 million . Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss as of March 31, 2017 and December 31, 2016 were as follows (in thousands): Net Unrealized Foreign Total Balance at December 31, 2016 $ — $ (317,333 ) $ (317,333 ) Other comprehensive income (loss) (622 ) 18,112 17,490 Balance at March 31, 2017 $ (622 ) $ (299,221 ) $ (299,843 ) During the three months ended March 31, 2017 , other comprehensive income (loss) reflects foreign currency translation adjustments, primarily due to the strengthening of the euro against the U.S. dollar, and the net unrealized losses on derivatives that qualify as cash flow hedges. |
Segment and Other Information
Segment and Other Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment and Other Information | Segment and Other Information Our operating segment is reported in a manner consistent with the internal reporting provided to the chief operating decision maker, or CODM. Our CODM has been identified as our chief executive officer. We have determined that we operate in one business segment, which is the identification, development and commercialization of meaningful pharmaceutical products that address unmet medical needs. The following table presents a summary of total revenues (in thousands): Three Months Ended 2017 2016 Xyrem $ 272,326 $ 249,537 Erwinaze/Erwinase 51,388 51,173 Defitelio/defibrotide 35,900 17,897 Prialt ® (ziconotide) intrathecal infusion 7,717 6,209 Other 6,347 9,100 Product sales, net 373,678 333,916 Royalties and contract revenues 2,375 2,094 Total revenues $ 376,053 $ 336,010 The following table presents a summary of total revenues attributed to geographic sources (in thousands): Three Months Ended 2017 2016 United States $ 339,183 $ 305,879 Europe 31,352 25,020 All other 5,518 5,111 Total revenues $ 376,053 $ 336,010 The following table presents a summary of the percentage of total revenues from customers that represented more than 10% of our total revenues: Three Months Ended 2017 2016 Express Scripts 72 % 74 % McKesson Corporation and affiliates 17 % 13 % The following table presents total long-lived assets, consisting of property and equipment, by location (in thousands): March 31, December 31, Ireland $ 64,862 $ 62,453 United States 45,943 35,791 Italy 7,107 7,000 Other 2,001 2,246 Total long-lived assets $ 119,913 $ 107,490 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation Share-based compensation expense related to share options, RSUs and grants under our ESPP was as follows (in thousands): Three Months Ended 2017 2016 Selling, general and administrative $ 19,805 $ 20,204 Research and development 4,142 3,290 Cost of product sales 1,246 689 Total share-based compensation expense, pre-tax 25,193 24,183 Income tax benefit from share-based compensation expense (7,624 ) (6,933 ) Total share-based compensation expense, net of tax $ 17,569 $ 17,250 Share Options The table below shows the number of shares underlying options granted to purchase our ordinary shares, the weighted-average assumptions used in the Black-Scholes option pricing model and the resulting weighted-average grant date fair value of share options granted: Three Months Ended 2017 2016 Shares underlying options granted (in thousands) 1,171 1,009 Grant date fair value $ 42.19 $ 40.17 Black-Scholes option pricing model assumption information: Volatility 35 % 39 % Expected term (years) 4.3 4.2 Range of risk-free rates 1.7-1.8% 1.0-1.5% Expected dividend yield — % — % Restricted Stock Units The table below shows the number of RSUs granted covering an equal number of our ordinary shares and the weighted-average grant date fair value of RSUs granted: Three Months Ended 2017 2016 RSUs granted (in thousands) 468 400 Grant date fair value $ 135.46 $ 123.46 The fair value of RSUs is determined on the date of grant based on the market price of our ordinary shares on that date. The fair value of RSUs is expensed ratably over the vesting period, generally over four years . As of March 31, 2017 , compensation cost not yet recognized related to unvested share options and RSUs was $117.5 million and $147.4 million , respectively, which is expected to be recognized over a weighted-average period of 3.0 years. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our income tax provision was $29.2 million in the three months ended March 31, 2017 compared to $32.3 million for the same period in 2016 . The effective tax rate was 25.2% in the three months ended March 31, 2017 compared to 29.9% for the same period in 2016 . The decrease in the effective tax rate for the three months ended March 31, 2017 compared to the same period in 2016 was primarily due to changes in income mix among the various jurisdictions in which we operate. The effective tax rate for the three months ended March 31, 2017 was higher than the Irish statutory rate of 12.5% primarily due to income taxable at a rate higher than the Irish statutory rate, uncertain tax positions, and various expenses not deductible for tax purposes, partially offset by originating tax credits and deductions available in relation to subsidiary equity. We do not provide for Irish income taxes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries. Our net deferred tax liability primarily arose due to the Celator Acquisition. The balance is net of deferred tax assets which are comprised primarily of U.S. federal and state net operating loss carryforwards, foreign net operating loss carryforwards and other temporary differences. We maintain a valuation allowance against certain foreign and U.S. federal and state deferred tax assets. Each reporting period, we evaluate the need for a valuation allowance on our deferred tax assets by jurisdiction and adjust our estimates as more information becomes available. We are required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. As a result, we have established a liability for certain tax benefits which we judge may not be sustained upon examination. Our most significant tax jurisdictions are Ireland, the U.S. (both at the federal level and in various state jurisdictions), Italy and France. Because of our net operating loss carryforwards and tax credit carryforwards, substantially all of our tax years remain open to federal, state, and foreign tax examination. Certain of our subsidiaries are currently under examination by the French tax authorities for the years ended December 31, 2012 and 2013. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes. In December 2015, we received proposed tax assessment notices from the French tax authorities for 2012 and 2013 relating to certain transfer pricing adjustments. The notices propose additional French tax of approximately $40.9 million , including interest and penalties through the date of the assessment, translated at the foreign exchange rate at March 31, 2017 . We disagree with the proposed assessment and intend to contest it vigorously. |
The Company and Summary of Si20
The Company and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These unaudited condensed consolidated financial statements have been prepared following the requirements of the U.S. Securities and Exchange Commission, or SEC, for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles, or U.S. GAAP, can be condensed or omitted. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 . In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 , for any other interim period or for any future period. These condensed consolidated financial statements include the accounts of Jazz Pharmaceuticals plc and our subsidiaries, and intercompany transactions and balances have been eliminated. |
Significant Risks and Uncertainties | Significant Risks and Uncertainties Our financial results remain significantly influenced by sales of Xyrem. In the three months ended March 31, 2017 , net product sales of Xyrem were $272.3 million , which represented 73% of total net product sales. Our ability to maintain or increase product sales of Xyrem is subject to risks and uncertainties, including the potential U.S. introduction of a generic version of Xyrem before the entry dates specified in our settlements with certain companies that had filed abbreviated new drug applications, or ANDAs with the FDA seeking approval to market a generic version of Xyrem or on terms that are different from those contemplated by the settlements; the potential U.S. introduction of an alternative product to Xyrem for treating cataplexy and/or EDS, in narcolepsy; changes to, increases in or uncertainties around regulatory restrictions, including changes to our Xyrem risk evaluation and mitigation strategy, or REMS, particularly in light of the FDA’s waiver of the single shared REMS requirement for sodium oxybate and approval of a separate generic sodium oxybate REMS; any increase in pricing pressure from, or restrictions on reimbursement imposed by, third party payors; changes in healthcare laws and policy, including changes in requirements for patient assistance programs, rebates, reimbursement and coverage by federal healthcare programs, and changes resulting from increased scrutiny on pharmaceutical pricing by government entities; operational disruptions at the Xyrem central pharmacy or any failure to comply with our REMS obligations to the satisfaction of the FDA; any supply or manufacturing problems, including any problems with our sole source sodium oxybate provider; continued acceptance of Xyrem by physicians and patients, even in the face of negative publicity that surfaces from time to time; changes to our label, including new safety warnings or changes to our boxed warning, that further restrict how we market and sell Xyrem; and our U.S.-based sodium oxybate and Xyrem suppliers’ ability to obtain sufficient quotas from the U.S. Drug Enforcement Administration, or DEA, to satisfy our needs for Xyrem. Although Xyrem is protected by patents covering its manufacture, formulation, distribution system and method of use, seven companies have filed ANDAs with the FDA seeking approval to market a generic version of Xyrem. In addition, we are aware of a third party that has stated that it intends to file a new drug application, or NDA, to market a once nightly formulation of sodium oxybate for treatment of cataplexy and/or EDS in narcolepsy. We filed patent lawsuits against each of the ANDA filers in the U.S. District Court for the District of New Jersey, or the District Court. On April 5, 2017, we settled all lawsuits against the first ANDA filer, West-Ward Pharmaceuticals Corp. (a wholly owned subsidiary of Hikma Pharmaceuticals PLC), which acquired Roxane Laboratories, Inc., or West-Ward, granting West-Ward the right to sell an authorized generic version of Xyrem, or the West-Ward AG Product, commencing on January 1, 2023, or earlier under certain circumstances, and granting West-Ward a license to launch its generic sodium oxybate product as early as six months thereafter. In the second quarter of 2016, we had settled lawsuits with two of the other ANDA filers, granting those filers a license to manufacture, market and sell their generic versions of Xyrem on or after December 31, 2025, or earlier depending on the occurrence of certain events. For a description of our settlements with West-Ward and two of the other ANDA filers, see “Overview—Significant Developments Affecting Our Business” in Part I, Item 2 of this Quarterly Report on Form 10-Q. Lawsuits with the four remaining companies that have filed ANDAs with the FDA seeking approval to market a generic version of Xyrem remain pending in the District Court. Although no trial date has been set, the trial in this case could occur as early as the first quarter of 2018. For a description of these legal proceedings, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q. We cannot predict the timing or outcome of the ANDA litigation proceedings against the remaining non-settling ANDA filers, which have been consolidated as one case in the District Court. In July 2016, the Patent Trial and Appeal Board, or PTAB, of the U.S. Patent and Trademark Office issued final decisions that the claims of six patents listed in the Orange Book as covering the Xyrem REMS are unpatentable. We filed a notice of appeal of these decisions on February 22, 2017. If the United States Court of Appeals for the Federal Circuit upholds those decisions on appeal, these claims will be canceled, and we will not be able to enforce these patents. In March 2016, the PTAB partially instituted an inter partes review, or IPR, on three claims of a seventh REMS patent, declining to review 25 of 28 claims. The PTAB issued a final decision in March 2017 that the three claims they reviewed were unpatentable. We have not yet decided whether to appeal that ruling. For a description of these legal proceedings, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q. On January 17, 2017, the FDA announced approval of the West-Ward ANDA, and on January 19, 2017, the FDA tentatively approved two additional ANDAs for generic versions of Xyrem, one for Amneal Pharmaceuticals, or Amneal, and one for Ohm Laboratories Inc., formerly known as Ranbaxy, Inc., or Ohm. West-Ward’s ANDA approval includes a waiver that permits West-Ward to use a separate REMS program from the Xyrem REMS, or the generic sodium oxybate REMS, on the condition that the generic sodium oxybate REMS be open to all future sponsors of ANDAs or NDAs for sodium oxybate products. We were not involved in the development of the generic sodium oxybate REMS. We continue to evaluate whether the FDA’s waiver of the requirement for a single, shared system REMS in connection with approval of the ANDAs meets the conditions for such a waiver under applicable law and, to the extent that we determine that the waiver was not permissible under applicable law, will evaluate potential challenges to the FDA’s waiver decision. We cannot predict whether or when we may pursue any such challenges or whether any such challenges would be successful. The actual timing of any commercial launch of an authorized generic or generic version of Xyrem is uncertain. We do not believe a launch by an ANDA filer is likely to occur prior to either a date agreed in a settlement agreement between us and such ANDA filer or a District Court, or potentially an appellate court, decision in our ongoing patent litigation. However, notwithstanding our patents, and settlement agreements licensing those patents as of future dates, it is possible that West-Ward or any other company that receives FDA approval of an ANDA for a generic version of Xyrem or an NDA for another sodium oxybate product could introduce a generic version of Xyrem or other sodium oxybate product before the entry dates specified in our settlement agreements or before our patents expire, including if it is determined that the introduction of the competing product does not infringe our patents, or that our patents are invalid or unenforceable, or if a non-settling ANDA filer that has received approval for its product decides, before applicable ongoing patent litigation is concluded, to launch a sodium oxybate product at risk of being held liable for damages for patent infringement. In addition, even if we prevail in our ongoing litigation at trial or on appeal, we cannot guarantee that the court will grant an injunction that prevents the ANDA filers from marketing their generic versions of Xyrem. Instead the court may order an ANDA filer that is found to infringe to pay damages in the form of lost profits or a reasonable royalty, which could be significant. We expect that the launch of any generic version of Xyrem, including the West-Ward AG Product or other authorized generic version of Xyrem, or the approval and launch of other products that compete with Xyrem, could have a material adverse effect on our sales of Xyrem and on our business, financial condition, results of operations and growth prospects. For further discussion regarding the risks associated with the West-Ward settlement agreement, the tentative approval of the Amneal and Ohm ANDAs, potential approval or tentative approval of additional ANDAs, the potential launch of a generic version of Xyrem, or the approval and launch of other sodium oxybate products that compete with Xyrem, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q and the risk factors under the headings “Risks Related to Xyrem and the Significant Impact of Xyrem Sales,” “ We face substantial competition from other companies, including companies with greater resources, including larger sales organizations and more experience working with large and diverse product portfolios, than we have ,” and “Risks Related to Our Intellectual Property” in Part II, Item 1A of this Quarterly Report on Form 10-Q. In August 2015, we implemented the current Xyrem REMS, and we have submitted and expect to continue to submit ongoing assessments as set forth in the FDA’s Xyrem REMS approval letter. However, we cannot guarantee that our implementation and ongoing assessments will be satisfactory to the FDA or that the Xyrem REMS will satisfy the FDA’s expectations in its evaluation of the Xyrem REMS on an ongoing basis. Any failure to comply with the REMS obligations could result in enforcement action by the FDA; lead to changes in our Xyrem REMS obligations; negatively affect sales of Xyrem; result in additional costs and expenses for us; and/or take a significant amount of time, any of which could materially and adversely affect our business, financial condition, results of operations and growth prospects. Further, we cannot predict whether the FDA will request, seek to require or ultimately require modifications to, or impose additional requirements on, the Xyrem REMS in connection with the anticipated distribution of the West-Ward AG Product, the approval of the generic sodium oxybate or otherwise or the potential timing, terms or propriety thereof. Any such modifications or additional requirements could make it more difficult or expensive for us to distribute Xyrem, make distribution easier for sodium oxybate competitors, impair the safety profile of Xyrem and/or negatively affect sales of Xyrem. We may face pressure to modify the Xyrem REMS, or to license or share intellectual property pertinent to the Xyrem REMS, including proprietary data required for safe distribution of sodium oxybate, in connection with the FDA’s approval of the generic sodium oxybate REMS. We cannot predict the outcome or impact on our business of any future action that we may take with respect to the approval of the generic sodium oxybate REMS, or licensing or sharing intellectual property pertinent to our Xyrem REMS or elements of the Xyrem REMS. For more information, see the risk factors under the headings “ The launch of a generic version of Xyrem or other sodium oxybate products that compete with Xyrem would adversely affect sales of Xyrem ” and “ We have incurred and expect to continue to incur substantial costs as a result of litigation or other proceedings relating to patents, other intellectual property rights and related matters, and we may be unable to protect our rights to, or commercialize, our products ” in Part II, Item 1A of this Quarterly Report on Form 10-Q. In September 2016, Jazz Pharmaceuticals, Inc., our wholly owned subsidiary, submitted a Citizen Petition to the FDA requesting that, for safety reasons, the FDA refuse to approve any sodium oxybate ANDA with a proposed package insert or REMS that omits the portions of the Xyrem package insert and the Xyrem REMS that instruct prescribers on adjusting the dose of the product when it is co-administered with divalproex sodium (also known as valproate or valproic acid). On January 17, 2017, the FDA granted the Citizen Petition with respect to the Xyrem package insert. The FDA concluded that it will not approve any sodium oxybate ANDA referencing Xyrem that does not include in its package insert the portions of the currently approved Xyrem package insert related to the drug-drug interaction with divalproex sodium. The FDA stated that it did not need to reach the question of whether the drug-drug interaction, or DDI, information could have been excluded from the generic sodium oxybate REMS materials because it was approving a REMS in connection with a sodium oxybate ANDA including that information. Our Xyrem patents include three DDI patents covering these instructions on the Xyrem package insert and Xyrem REMS. We cannot predict whether or when one or more of the ANDA filers may pursue a challenge to the FDA’s response to the Citizen Petition or whether any such challenges would be successful. Likewise, we cannot predict whether we will be able to maintain the validity of, or will otherwise obtain a judicial determination that the generic sodium oxybate package insert or the generic sodium oxybate REMS will infringe, any of our patents or, if we prevail in proving infringement, whether a court will grant an injunction that prevents any non-settling ANDA filers or other company introducing a different sodium oxybate product from marketing its product. For a description of these matters, including risks and uncertainties related to our REMS, our REMS patents and our DDI patents, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q, and the risk factors under the headings “Risks Related to Xyrem and the Significant Impact of Xyrem Sales” and “Risks Related to Our Intellectual Property” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Obtaining and maintaining appropriate reimbursement for Xyrem in the U.S. is increasingly challenging due to, among other things, the attention being paid to healthcare cost containment and prescription drug pricing, pricing pressure from third party payors and increasingly restrictive reimbursement conditions being imposed by third party payors. In this regard, we have experienced and expect to continue to experience increasing pressure from third party payors to agree to discounts, rebates or other pricing terms for Xyrem. Any such restrictive pricing terms or additional reimbursement conditions could have a material adverse effect on our Xyrem revenues. In addition, drug pricing by pharmaceutical companies has recently come under close scrutiny, particularly with respect to companies that have increased the price of products after acquiring those products from other companies. We expect that healthcare policies and reforms intended to curb healthcare costs will continue to be proposed, which could limit the prices that we charge for our products, including Xyrem, limit our commercial opportunity and/or negatively impact revenues from sales of our products. Also, price increases on Xyrem and our other products, and negative publicity regarding pricing and price increases generally, whether with respect to our products or products distributed by other pharmaceutical companies, could negatively affect market acceptance of Xyrem and our other products. In the three months ended March 31, 2017 , net product sales of our second largest product, Erwinaze/Erwinase (which we refer to in this report as Erwinaze unless otherwise indicated or the context otherwise requires), were $51.4 million , which represented 14% of total net product sales. We seek to maintain and increase sales of Erwinaze, as well as to make Erwinaze more widely available, through ongoing sales and marketing and research and development activities. However, our ability to successfully and sustainably maintain or grow sales of Erwinaze is subject to a number of risks and uncertainties, including the limited population of patients with ALL and the incidence of hypersensitivity reactions to E. coli -derived asparaginase within that population, our need to apply for and receive marketing authorizations, through the European Union’s mutual recognition procedure or otherwise, in certain additional countries so we can launch promotional efforts in those countries, as well as those other risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Erwinaze is licensed from and manufactured by a single source, Porton Biopharma Limited, or PBL. Our agreement with PBL, including our license, expires in December 2020, subject to five -year extensions unless terminated by either party in writing by December 2018. We cannot predict whether the term of the agreement will be extended or, if extended, the terms of any such extension. Erwinaze was approved by the FDA under a biologics license application, or BLA, and was launched in the U.S. in November 2011. The Erwinaze BLA includes a number of post-marketing commitments related to the manufacture of Erwinaze by PBL. We cannot predict if or when PBL will comply with its manufacturing-related post-marketing commitments that are part of the BLA approval. In March 2016, the FDA conducted an inspection of the PBL manufacturing facility and issued an FDA Form 483 to PBL that included observations related to a range of operational systems and processes. In April 2016 and September 2016, PBL responded to the FDA Form 483 with its plan, including required remediation activities, to address the observations, and subsequently provided additional information in response to another FDA request. In January 2017, the FDA issued a warning letter to PBL indicating that it was not satisfied with PBL’s response to the FDA Form 483, citing significant violations of current Good Manufacturing Practices, or cGMP for finished pharmaceuticals and significant deviations from cGMP for active pharmaceutical ingredients, or APIs. In March 2017, PBL responded to the warning letter issued by the FDA. We cannot predict if or when PBL will correct the violations and deviations to the satisfaction of the FDA or whether the FDA will be satisfied with PBL’s response to the warning letter. Any failure to do so to the satisfaction of the FDA could result in the FDA refusing admission of Erwinaze into the U.S., as well as additional enforcement actions by the FDA and other regulatory entities. In addition, a significant challenge to our ability to maintain current sales levels and to increase sales is our need to avoid supply disruptions of Erwinaze due to capacity constraints, production delays, quality or regulatory challenges or other manufacturing difficulties. The current manufacturing capacity for Erwinaze is completely absorbed by demand for the product. We are working with PBL to evaluate potential expansion of its production capacity to increase the supply of Erwinaze over the longer term and to address the production delays, quality challenges and related regulatory scrutiny. As a consequence of constrained manufacturing capacity, we have had an extremely limited or no ability to build product inventory levels that can be used to absorb disruptions to supply resulting from quality, regulatory or other issues. We have experienced product quality, manufacturing and inventory challenges that have resulted, and may continue to result, in disruptions in our ability to supply certain markets, including the U.S., from time to time and have caused, and may in the future cause, us to implement batch-specific, modified product use instructions. Most recently, we experienced supply disruptions in the first quarter of 2017 in most of the countries outside the U.S. where we market Erwinaze, and we expect additional supply disruptions of Erwinaze in the U.S. and other countries in 2017. As capacity constraints and supply disruptions continue, whether as a result of continued quality or other manufacturing issues, regulatory issues or otherwise, we will be unable to build a desired excess level of product inventory, our ability to supply the market may continue to be compromised and physicians’ decisions to use Erwinaze have been, and in the future may continue to be, negatively impacted. Additional Erwinaze supply disruptions and/or our inability to expand production capacity could materially adversely affect our sales of and revenues from Erwinaze and our potential future maintenance and growth of the market for this product. In the three months ended March 31, 2017 , net product sales of Defitelio/defibrotide represented 10% of total net product sales. We acquired this product in January 2014 in connection with our acquisition of Gentium S.r.l., or Gentium, which we refer to as the Gentium Acquisition, and secured worldwide rights to the product by acquiring rights to defibrotide in the Americas in August 2014. We launched Defitelio in certain European countries in 2014 and continued to launch in additional European countries on a rolling basis through 2016. We are in the process of making pricing and reimbursement submissions with respect to Defitelio in those European countries where Defitelio is not yet launched, including in countries where pricing and reimbursement approvals are required for launch. Our ability to realize the anticipated benefits from our investment in Defitelio/defibrotide is subject to risks and uncertainties, including those discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. In particular, we may not be able to successfully maintain or grow sales of Defitelio in Europe, or obtain marketing approval in other countries, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. A key challenge to our success in maintaining or growing sales of Defitelio in Europe is our ability to obtain appropriate pricing and reimbursement approvals in those European countries where Defitelio is not yet launched. If we experience delays or unforeseen difficulties in obtaining favorable pricing and reimbursement approvals, planned launches in the affected countries would be delayed, or, if we are unable to ultimately obtain favorable pricing and reimbursement approvals in countries that represent significant markets, especially where a country’s reimbursed price influences other countries, our growth prospects in Europe could be negatively affected. In March 2016, the FDA approved our NDA for Defitelio for the treatment of adult and pediatric patients with VOD with renal or pulmonary dysfunction following HSCT. We promote Defitelio along with Erwinase to many hematology and oncology specialists who operate in the same hospitals, and we believe that we benefit from operational synergies from this overlap. We launched Defitelio in the U.S. shortly after FDA approval, and our U.S. commercial launch is still at an early stage. Our ability to realize the anticipated benefits from our investment in Defitelio is subject to risks and uncertainties, including the continued acceptance of Defitelio in the U.S. by hospital pharmacy and therapeutics committees and the continued availability of adequate coverage and reimbursement by government programs and third party payors; the lack of experience of U.S. physicians in diagnosing and treating VOD, particularly in adults, and the possibility that physicians may delay initiation of treatment or terminate treatment before the end of the recommended dosing schedule; our ability to successfully maintain or grow sales of Defitelio in Europe; delays or problems in the supply or manufacture of the product; the limited size of the population of VOD patients who are indicated for treatment with Defitelio (particularly if changes in HSCT treatment protocols reduce the incidence of VOD diagnosis); our ability to meet the post-marketing commitments and requirements imposed by the FDA in connection with its approval of our NDA for Defitelio; and our ability to obtain marketing approval in other countries and to develop the product for additional indications, as well as those other risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. If sales of Defitelio do not reach the levels we expect, our anticipated revenue from the product will be negatively affected, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, in 2016, we made a significant investment in Vyxeos TM , an investigational product in development as a treatment for high-risk acute myeloid leukemia, through the acquisition of Celator Pharmaceuticals Inc., or Celator, in July 2016, or the Celator Acquisition. Our ability to realize the anticipated benefits from this investment is subject to a number of risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. If we are unable to obtain regulatory approval for Vyxeos in the U.S. or in Europe in a timely manner, or at all, or if sales of an approved Vyxeos product do not reach the levels we expect, our anticipated revenue from Vyxeos would be negatively affected, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition to risks specifically related to Xyrem, Erwinaze, Defitelio/defibrotide and Vyxeos, we are subject to other challenges and risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations. These risks and uncertainties include: • the challenges of protecting and enhancing our intellectual property rights; • the challenges of achieving and maintaining commercial success of our products; • delays or problems in the supply or manufacture of our products and product candidates, particularly with respect to certain products as to which we maintain limited inventories, our dependence on single source suppliers for most of our products, product candidates and APIs, and the requirement that we and our product suppliers be qualified by the FDA to manufacture product and comply with applicable manufacturing regulations; • the need to obtain and maintain appropriate pricing and reimbursement for our products in an increasingly challenging environment due to, among other things, the attention being paid to healthcare cost containment and other austerity measures and pharmaceutical pricing in the U.S. and worldwide, including the need to obtain and maintain reimbursement for Xyrem in the U.S. in an environment in which we are subject to increasingly restrictive conditions for reimbursement required by government programs and third party payors; • our ability to identify and acquire, in-license or develop additional products or product candidates to grow our business; • the challenges of compliance with the requirements of the FDA, the DEA, and comparable non-U.S. regulatory agencies, including with respect to product labeling, requirements for distribution, obtaining sufficient DEA quotas where needed, marketing and promotional activities, patient assistance programs, adverse event reporting and product recalls or withdrawals; • the difficulty and uncertainty of pharmaceutical product development, including the timing thereof, and the uncertainty of clinical success, such as the risk that results from preclinical studies and/or early clinical trials may not be predictive of results obtained in later and larger clinical trials planned or anticipated to be conducted for our product candidates; • the inherent uncertainty associated with the regulatory approval process, especially as we continue to increase investment in our product pipeline development projects and undertake multiple planned NDA submissions for our product candidates; • the risks associated with business combination or product or product candidate acquisition transactions, including risks associated with the Celator Acquisition, such as the challenges inherent in the integration of acquired businesses with our historical business, the increase in geographic dispersion among our centers of operation and the risks that we may acquire unanticipated liabilities along with acquired businesses or otherwise fail to realize the anticipated benefits (commercial or otherwise) from such transactions; and • possible restrictions on our ability and flexibility to pursue certain future opportunities as a result of our substantial outstanding debt obligations. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We record the fair value of derivative instruments as either assets or liabilities on the balance sheet. Changes in the fair value of derivative instruments are recorded each period in current earnings or other comprehensive income (loss), depending on whether a derivative instrument is designated as part of a hedging transaction and, if it is, the type of hedging transaction. For a derivative to qualify as a hedge at inception and throughout the hedged period, we formally document the nature and relationships between the hedging instruments and hedged item. We assess, both at inception and on an on-going basis, whether the derivative instruments that are used in cash flow hedging transactions are highly effective in offsetting the changes in cash flows of hedged items. We assess hedge ineffectiveness on a quarterly basis and record the gain or loss related to the ineffective portion of derivative instruments, if any, to current earnings. If we determine that a forecasted transaction is no longer probable of occurring, we discontinue hedge accounting and any related unrealized gain or loss on the derivative instrument is recognized in current earnings. |
Concentrations of Risk | Concentrations of Risk Financial instruments that potentially subject us to concentrations of credit risk consist of cash, cash equivalents, investments and derivative contracts. Our investment policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper issued by U.S. corporations, money market instruments, certain qualifying money market mutual funds, certain repurchase agreements, and tax-exempt obligations of U.S. states, agencies and municipalities and places restrictions on credit ratings, maturities, and concentration by type and issuer. We are exposed to credit risk in the event of a default by the financial institutions holding our cash, cash equivalents and investments to the extent recorded on the balance sheet. We manage our foreign currency transaction risk and interest rate risk within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes. As of March 31, 2017 , we had foreign exchange forward contracts with notional amounts totaling $148.9 million . As of March 31, 2017 , the net fair value of outstanding foreign exchange forward contracts was not significant. As of March 31, 2017 , we had interest rate swap contracts with notional amounts totaling $300.0 million . These outstanding interest rate swap contracts had a net liability fair value of $0.8 million , of which $1.2 million was included in other non-current assets and $2.0 million was included in accrued liabilities as of March 31, 2017 . The counterparties to these contracts are large multinational commercial banks, and we believe the risk of nonperformance is not material. We are also subject to credit risk from our accounts receivable related to our product sales. We monitor our exposure within accounts receivable and record a reserve against uncollectible accounts receivable as necessary. We extend credit to pharmaceutical wholesale distributors and specialty pharmaceutical distribution companies, primarily in the U.S., and to other international distributors and hospitals. Customer creditworthiness is monitored and collateral is not required. We monitor deteriorating economic conditions in certain European countries which may result in variability of the timing of cash receipts and an increase in the average length of time that it takes to collect accounts receivable outstanding. Historically, we have not experienced significant credit losses on our accounts receivable, and we do not expect to have write-offs or adjustments to accounts receivable which would have a material adverse effect on our financial position, liquidity or results of operations. As of March 31, 2017 , five customers accounted for 88% of gross accounts receivable, including Express Scripts Specialty Distribution Services, Inc. and its affiliates, or Express Scripts, which accounted for 69% of gross accounts receivable, and McKesson Corporation and affiliates, which accounted for 15% of gross accounts receivable. As of December 31, 2016 , five customers accounted for 90% of gross accounts receivable, including Express Scripts, which accounted for 73% of gross accounts receivable, and McKesson Corporation and affiliates, which accounted for 13% of gross accounts receivable. We depend on single source suppliers for most of our products, product candidates and their APIs. We commenced manufacturing of Xyrem in our Ireland facility in the third quarter of 2016. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. |
Net Income per Ordinary Share | Net Income per Ordinary Share Basic net income per ordinary share is based on the weighted-average number of ordinary shares outstanding. Diluted net income per ordinary share is based on the weighted-average number of ordinary shares outstanding and potentially dilutive ordinary shares outstanding. Basic and diluted net income per ordinary share were computed as follows (in thousands, except per share amounts): Three Months Ended 2017 2016 Numerator: Net income $ 86,511 $ 75,812 Denominator: Weighted-average ordinary shares used in per share calculation - basic 59,880 61,142 Dilutive effect of employee equity incentive and purchase plans 1,298 1,474 Weighted-average ordinary shares used in per share calculation - diluted 61,178 62,616 Net income per ordinary share: Basic $ 1.44 $ 1.24 Diluted $ 1.41 $ 1.21 Potentially dilutive ordinary shares from our employee equity incentive and purchase plans and our 1.875% exchangeable senior notes due 2021, or the 2021 Notes, are determined by applying the treasury stock method to the assumed exercise of share options, the assumed vesting of outstanding restricted stock units, or RSUs, the assumed issuance of ordinary shares under our employee stock purchase plan, or ESPP, and the assumed issuance of ordinary shares upon exchange of the 2021 Notes. The potential issue of approximately 2.9 million ordinary shares issuable upon exchange of the 2021 Notes had no effect on diluted net income per ordinary share because the average price of our ordinary shares for the three months ended March 31, 2017 and 2016 did not exceed the effective exchange price of $199.77 per ordinary share. The following table represents the weighted-average ordinary shares that were excluded from the calculation of diluted net income per ordinary share for the periods presented because including them would have an anti-dilutive effect (in thousands): Three Months Ended 2017 2016 1.875% exchangeable senior notes due 2021 2,878 2,878 Options to purchase ordinary shares and RSUs 3,406 2,305 Ordinary shares under ESPP — 104 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board, or FASB, issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” which simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test. Goodwill impairment will now be the amount by which the reporting unit’s carrying value exceeds its fair value, limited to the carrying value of the goodwill. The standard is effective for us beginning January 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The new guidance is not expected to have a material impact on our results of operations and financial position. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” which provides clarification on the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard is effective for us beginning January 1, 2018. Early adoption is permitted. The future impact of ASU No. 2017-01 will be dependent upon the nature of our future acquisition or disposition transactions, if any. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” which requires an entity to recognize the income tax consequences of an intra-entity asset transfer, other than an intra-entity asset transfer of inventory, when the transfer occurs. The standard is effective for us beginning January 1, 2018. Early adoption is permitted. We are currently assessing our approach to the adoption of this standard and the impact on our results of operations and financial position. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for us beginning January 1, 2018. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. Under the new guidance, lessees will be required to recognize a right-of-use asset, which represents the lessee’s right to use, or control the use of, a specified asset for the lease term, and a corresponding lease liability, which represents the lessee’s obligation to make lease payments under a lease, measured on a discounted basis. ASU No. 2016-02 is effective beginning January 1, 2019 and early application is permitted. ASU No. 2016-02 must be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. The adoption of ASU No. 2016-02 will result in a significant increase in our consolidated balance sheet for right-of-use assets and lease liabilities. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to our accounting for the lease agreement we entered into in January 2015 to lease office space located in Palo Alto, California in a building to be constructed by the landlord, which is accounted for as a build-to-suit arrangement under existing accounting standards, and the lease agreement we entered into in August 2016 for office space in Dublin, Ireland. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. The standard states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this, an entity will need to identify the contract with a customer; identify the separate performance obligations in the contract; determine the transaction price; allocate the transaction price to the separate performance obligations in the contract; and recognize revenue when (or as) the entity satisfies each performance obligation. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date”, which deferred the effective date of ASU No. 2014-09. ASU No. 2014-09 will now be effective for us beginning January 1, 2018 and can be adopted on a full retrospective basis or on a modified retrospective basis. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations”, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. Presently, we plan to adopt ASU No. 2014-09 at its effective date, however we have not yet determined which transition method we will choose. We have substantially completed our review of existing revenue contracts and currently do not anticipate that the implementation of ASU No. 2014-09 will have a material impact on our results of operations and financial position. We are continuing to review the impact that the new standard will have on our financial statement disclosures. |
The Company and Summary of Si21
The Company and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basic and Diluted Net Income per Ordinary Share Computation | Basic and diluted net income per ordinary share were computed as follows (in thousands, except per share amounts): Three Months Ended 2017 2016 Numerator: Net income $ 86,511 $ 75,812 Denominator: Weighted-average ordinary shares used in per share calculation - basic 59,880 61,142 Dilutive effect of employee equity incentive and purchase plans 1,298 1,474 Weighted-average ordinary shares used in per share calculation - diluted 61,178 62,616 Net income per ordinary share: Basic $ 1.44 $ 1.24 Diluted $ 1.41 $ 1.21 |
Weighted-Average Ordinary Shares Excluded from Computation of Diluted Net Income per Share | The following table represents the weighted-average ordinary shares that were excluded from the calculation of diluted net income per ordinary share for the periods presented because including them would have an anti-dilutive effect (in thousands): Three Months Ended 2017 2016 1.875% exchangeable senior notes due 2021 2,878 2,878 Options to purchase ordinary shares and RSUs 3,406 2,305 Ordinary shares under ESPP — 104 |
Cash and Available-for-Sale S22
Cash and Available-for-Sale Securities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Cash and Cash Equivalents and Investments | Cash, cash equivalents and investments consisted of the following (in thousands): March 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and Cash Equivalents Investments Cash $ 136,990 $ — $ — $ 136,990 $ 136,990 $ — Time deposits 185,000 — — 185,000 125,000 60,000 Money market funds 85,005 — — 85,005 85,005 — Totals $ 406,995 $ — $ — $ 406,995 $ 346,995 $ 60,000 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and Cash Equivalents Investments Cash $ 215,963 $ — $ — $ 215,963 $ 215,963 $ — Time deposits 210,000 — — 210,000 150,000 60,000 Totals $ 425,963 $ — $ — $ 425,963 $ 365,963 $ 60,000 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of March 31, 2017 and December 31, 2016 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands): March 31, 2017 December 31, 2016 Quoted Significant Total Significant Total Assets: Available-for-sale securities: Time deposits $ — $ 185,000 $ 185,000 $ 210,000 $ 210,000 Money market funds 85,005 — 85,005 — — Interest rate contracts — 1,181 1,181 — — Foreign exchange forward contracts — 490 490 — — Totals $ 85,005 $ 186,671 $ 271,676 $ 210,000 $ 210,000 Liabilities: Interest rate contracts $ — $ 1,989 $ 1,989 $ — $ — Foreign exchange forward contracts — 482 482 — — Totals $ — $ 2,471 $ 2,471 $ — $ — |
Derivative and Hedging Activi24
Derivative and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of gains (losses) on derivative instruments | The impact on accumulated other comprehensive loss and earnings from derivative instruments that qualified as cash flow hedges for the three months ended March 31, 2017 was as follows (in thousands): Interest Rate Contracts: Three Months Ended Loss recognized in accumulated other comprehensive loss, net of tax $ 855 Loss reclassified from accumulated other comprehensive loss to interest expense, net of tax $ (233 ) |
Schedule of the fair value of outstanding derivatives | The following table summarizes the fair value of outstanding derivatives as of March 31, 2017 (in thousands): March 31, 2017 Asset Derivatives Liability Derivatives Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate contracts Other non-current assets $ 1,181 Accrued liabilities $ 1,989 Derivatives not designated as hedging instruments: Foreign exchange forward contracts Other current assets 490 Accrued liabilities 482 Total fair value of derivative instruments $ 1,671 $ 2,471 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | Inventories consisted of the following (in thousands): March 31, December 31, Raw materials $ 2,798 $ 1,547 Work in process 17,437 18,689 Finished goods 17,418 13,815 Total inventories $ 37,653 $ 34,051 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Gross Carrying Amount of Goodwill | The gross carrying amount of goodwill was as follows (in thousands): Balance at December 31, 2016 $ 893,810 Foreign exchange 5,480 Balance at March 31, 2017 $ 899,290 |
Gross Carrying Amounts and Net Book Values of Intangible Assets | The gross carrying amounts and net book values of our intangible assets were as follows (in thousands): March 31, 2017 December 31, 2016 Remaining Gross Accumulated Net Book Gross Accumulated Net Book Acquired developed technologies 11.1 $ 1,491,720 $ (438,983 ) $ 1,052,737 $ 1,477,618 $ (410,523 ) $ 1,067,095 Manufacturing contracts 0.8 11,434 (9,121 ) 2,313 11,278 (8,292 ) 2,986 Trademarks — 2,876 (2,876 ) — 2,872 (2,872 ) — Total finite-lived intangible assets 1,506,030 (450,980 ) 1,055,050 1,491,768 (421,687 ) 1,070,081 Acquired in-process research and development assets 1,943,730 — 1,943,730 1,941,920 — 1,941,920 Total intangible assets $ 3,449,760 $ (450,980 ) $ 2,998,780 $ 3,433,688 $ (421,687 ) $ 3,012,001 |
Estimated Future Amortization Costs | Based on finite-lived intangible assets recorded as of March 31, 2017 , and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands): Year Ending December 31, Estimated Amortization Expense 2017 (remainder) $ 77,309 2018 100,336 2019 100,123 2020 98,980 2021 98,044 Thereafter 580,258 Total $ 1,055,050 |
Certain Balance Sheet Items (Ta
Certain Balance Sheet Items (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Certain Balance Sheet Items [Abstract] | |
Property and Equipment | Property and equipment consisted of the following (in thousands): March 31, December 31, Land and buildings $ 46,067 $ 46,033 Construction-in-progress 42,653 33,427 Manufacturing equipment and machinery 19,722 19,596 Computer software 18,548 17,832 Leasehold improvements 13,126 9,328 Computer equipment 11,234 10,980 Furniture and fixtures 3,385 2,436 Subtotal 154,735 139,632 Less accumulated depreciation and amortization (34,822 ) (32,142 ) Property and equipment, net $ 119,913 $ 107,490 |
Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): March 31, December 31, Rebates and other sales deductions $ 73,949 $ 72,344 Employee compensation and benefits 35,914 43,363 Clinical trial accruals 10,897 10,139 Royalties 7,486 11,643 Professional fees 6,192 4,596 Selling and marketing accruals 4,467 3,924 Sales returns reserve 4,145 4,366 Inventory-related accruals 4,003 3,350 Accrued construction-in-progress 3,484 1,597 Accrued interest 2,356 5,179 Accrued contract termination fees — 11,612 Other 30,752 21,155 Total accrued liabilities $ 183,645 $ 193,268 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | The following table summarizes the carrying amount of our indebtedness (in thousands): March 31, December 31, 1.875% exchangeable senior notes due 2021 $ 575,000 $ 575,000 Unamortized discount on 1.875% exchangeable senior notes due 2021 (96,436 ) (101,094 ) 1.875% exchangeable senior notes due 2021, net 478,564 473,906 Borrowings under revolving credit facility 700,000 850,000 Term loan 697,124 705,719 Total debt 1,875,688 2,029,625 Less current portion 136,094 36,094 Total long-term debt $ 1,739,594 $ 1,993,531 |
Schedule of Maturities of Long-Term Debt | Scheduled maturities with respect to our long-term debt principal balances outstanding as of March 31, 2017 were as follows (in thousands): Year Ending December 31, Scheduled Long-Term Debt Maturities 2017 (remainder) $ 27,070 2018 40,605 2019 58,652 2020 76,700 2021 1,775,801 Total $ 1,978,828 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Lease Payments under Noncancelable Operating Leases | Future minimum lease payments under our noncancelable operating and facility leases as of March 31, 2017 were as follows (in thousands): Year Ending December 31, Lease Payments 2017 (remainder) $ 11,973 2018 12,243 2019 10,825 2020 9,556 2021 9,464 Thereafter 68,028 Total $ 122,089 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Reconciliation of Shareholders' Equity | The following tables present a reconciliation of our beginning and ending balances in shareholders’ equity for the three months ended March 31, 2017 and 2016, respectively (in thousands): Total Shareholders' Equity Shareholders' equity at January 1, 2017 $ 1,877,339 Issuance of ordinary shares in conjunction with employee equity incentive and purchase plans 5,676 Employee withholding taxes related to share-based awards (14,431 ) Share-based compensation 25,297 Shares repurchased (13,896 ) Other comprehensive income 17,490 Net income 86,511 Shareholders' equity at March 31, 2017 $ 1,983,986 Total Shareholders' Equity Shareholders' equity at January 1, 2016 $ 1,706,333 Issuance of ordinary shares in conjunction with employee equity incentive and purchase plans 3,780 Employee withholding taxes related to share-based awards (12,476 ) Share-based compensation 24,608 Shares repurchased (134,365 ) Other comprehensive income 45,188 Net income 75,812 Shareholders' equity at March 31, 2016 $ 1,708,880 |
Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss as of March 31, 2017 and December 31, 2016 were as follows (in thousands): Net Unrealized Foreign Total Balance at December 31, 2016 $ — $ (317,333 ) $ (317,333 ) Other comprehensive income (loss) (622 ) 18,112 17,490 Balance at March 31, 2017 $ (622 ) $ (299,221 ) $ (299,843 ) |
Segment and Other Information (
Segment and Other Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Summary of Total Revenues | The following table presents a summary of total revenues (in thousands): Three Months Ended 2017 2016 Xyrem $ 272,326 $ 249,537 Erwinaze/Erwinase 51,388 51,173 Defitelio/defibrotide 35,900 17,897 Prialt ® (ziconotide) intrathecal infusion 7,717 6,209 Other 6,347 9,100 Product sales, net 373,678 333,916 Royalties and contract revenues 2,375 2,094 Total revenues $ 376,053 $ 336,010 |
Summary of Total Revenues Attributed to Geographic Sources | The following table presents a summary of total revenues attributed to geographic sources (in thousands): Three Months Ended 2017 2016 United States $ 339,183 $ 305,879 Europe 31,352 25,020 All other 5,518 5,111 Total revenues $ 376,053 $ 336,010 |
Summary of Revenues from Customers Representing More Than 10% of Total Revenues | The following table presents a summary of the percentage of total revenues from customers that represented more than 10% of our total revenues: Three Months Ended 2017 2016 Express Scripts 72 % 74 % McKesson Corporation and affiliates 17 % 13 % |
Total Long-Lived Assets by Location | The following table presents total long-lived assets, consisting of property and equipment, by location (in thousands): March 31, December 31, Ireland $ 64,862 $ 62,453 United States 45,943 35,791 Italy 7,107 7,000 Other 2,001 2,246 Total long-lived assets $ 119,913 $ 107,490 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation Expense Related to Share Options, RSUs and Grants Under ESPP | Share-based compensation expense related to share options, RSUs and grants under our ESPP was as follows (in thousands): Three Months Ended 2017 2016 Selling, general and administrative $ 19,805 $ 20,204 Research and development 4,142 3,290 Cost of product sales 1,246 689 Total share-based compensation expense, pre-tax 25,193 24,183 Income tax benefit from share-based compensation expense (7,624 ) (6,933 ) Total share-based compensation expense, net of tax $ 17,569 $ 17,250 |
Weighted-Average Assumptions Used in Black-Scholes Option Pricing Model which was Used to Estimate Grant Date Fair Value per Share | The table below shows the number of shares underlying options granted to purchase our ordinary shares, the weighted-average assumptions used in the Black-Scholes option pricing model and the resulting weighted-average grant date fair value of share options granted: Three Months Ended 2017 2016 Shares underlying options granted (in thousands) 1,171 1,009 Grant date fair value $ 42.19 $ 40.17 Black-Scholes option pricing model assumption information: Volatility 35 % 39 % Expected term (years) 4.3 4.2 Range of risk-free rates 1.7-1.8% 1.0-1.5% Expected dividend yield — % — % |
Schedule of Restricted Stock Unit activity | The table below shows the number of RSUs granted covering an equal number of our ordinary shares and the weighted-average grant date fair value of RSUs granted: Three Months Ended 2017 2016 RSUs granted (in thousands) 468 400 Grant date fair value $ 135.46 $ 123.46 |
The Company and Summary of Si33
The Company and Summary of Significant Accounting Policies - Significant Risks and Uncertainties Additional Information (Details) $ in Thousands | Apr. 05, 2017company | Mar. 31, 2017claim_under_petition | Jul. 31, 2016patent | Apr. 30, 2016claim_under_petition | Mar. 31, 2016companyclaim_under_petition | Mar. 31, 2017USD ($)patentclaim_under_petition | Jun. 30, 2016lawsuit | Mar. 31, 2016USD ($)company | Jan. 19, 2017application |
Concentration Risk [Line Items] | |||||||||
Product sales, net | $ | $ 373,678 | $ 333,916 | |||||||
Number of DDI patents covered in instructions | patent | 3 | ||||||||
Xyrem | |||||||||
Concentration Risk [Line Items] | |||||||||
Product sales, net | $ | $ 272,326 | $ 249,537 | |||||||
Number of ANDAs filed by third parties | company | 7 | 7 | |||||||
Number of claims settled | lawsuit | 2 | ||||||||
Number of claims under IPR review | 3 | ||||||||
Number of ANDAs approved | application | 2 | ||||||||
Xyrem | Subsequent Event | |||||||||
Concentration Risk [Line Items] | |||||||||
Number of ANDAs filed by third parties | company | 4 | ||||||||
Exclusivity grace period | 6 months | ||||||||
Xyrem | Pending Litigation | |||||||||
Concentration Risk [Line Items] | |||||||||
Number of patents deemed unenforceable by PTAB | patent | 6 | ||||||||
Number of petition claims PTAB denied | 18 | 25 | |||||||
Number of petition claims under patent review | 28 | ||||||||
Number of petition claims under patent review deemed unpatentable | 3 | 3 | |||||||
Xyrem | Amneal Pharmaceuticals | |||||||||
Concentration Risk [Line Items] | |||||||||
Number of ANDAs approved | application | 1 | ||||||||
Xyrem | Ohm Laboratories Inc. | |||||||||
Concentration Risk [Line Items] | |||||||||
Number of ANDAs approved | application | 1 | ||||||||
Xyrem | Product Concentration Risk | Sales Revenue, Product Line | |||||||||
Concentration Risk [Line Items] | |||||||||
Percentage of product sales, net (as a percent) | 73.00% | ||||||||
Erwinaze and Erwinase | |||||||||
Concentration Risk [Line Items] | |||||||||
Product sales, net | $ | $ 51,388 | $ 51,173 | |||||||
Licensing agreement extension term | 5 years | ||||||||
Erwinaze and Erwinase | Product Concentration Risk | Sales Revenue, Product Line | |||||||||
Concentration Risk [Line Items] | |||||||||
Percentage of product sales, net (as a percent) | 14.00% | ||||||||
Defitelio/Defibrotide | Product Concentration Risk | Sales Revenue, Product Line | |||||||||
Concentration Risk [Line Items] | |||||||||
Percentage of product sales, net (as a percent) | 10.00% |
The Company and Summary of Si34
The Company and Summary of Significant Accounting Policies - Concentrations of Risk Additional Information (Details) $ in Thousands | Mar. 31, 2017USD ($)Customer | Dec. 31, 2016Customer |
Concentration Risk [Line Items] | ||
Derivative asset | $ 1,671 | |
Derivative liabilities | $ 2,471 | |
Number of customers with significant accounts receivable | Customer | 5 | 5 |
Percentage of gross accounts receivable (as a percent) | 88.00% | 90.00% |
Express Scripts | ||
Concentration Risk [Line Items] | ||
Percentage of gross accounts receivable (as a percent) | 69.00% | 73.00% |
McKesson Corporation and affiliates | ||
Concentration Risk [Line Items] | ||
Percentage of gross accounts receivable (as a percent) | 15.00% | 13.00% |
Foreign exchange forward contracts | Derivatives not designated as hedging instruments | ||
Concentration Risk [Line Items] | ||
Notional amount | $ 148,900 | |
Foreign exchange forward contracts | Derivatives not designated as hedging instruments | Other current assets | ||
Concentration Risk [Line Items] | ||
Derivative asset | 490 | |
Foreign exchange forward contracts | Derivatives not designated as hedging instruments | Accrued liabilities | ||
Concentration Risk [Line Items] | ||
Derivative liabilities | 482 | |
Interest rate contracts | Derivatives not designated as hedging instruments | ||
Concentration Risk [Line Items] | ||
Notional amount | 300,000 | |
Interest rate contracts | Derivatives designated as hedging instruments | ||
Concentration Risk [Line Items] | ||
Net liability fair value | 800 | |
Interest rate contracts | Derivatives designated as hedging instruments | Accrued liabilities | ||
Concentration Risk [Line Items] | ||
Derivative liabilities | 1,989 | |
Interest rate contracts | Derivatives designated as hedging instruments | Other non-current assets | ||
Concentration Risk [Line Items] | ||
Derivative asset | $ 1,181 |
The Company and Summary of Si35
The Company and Summary of Significant Accounting Policies - Basic and Diluted Net Income (Loss) per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Numerator: | ||
Net income | $ 86,511 | $ 75,812 |
Denominator: | ||
Weighted-average ordinary shares used in per share calculation - basic (in shares) | 59,880 | 61,142 |
Dilutive effect of employee equity incentive and purchase plans (in shares) | 1,298 | 1,474 |
Weighted-average ordinary shares used in per share calculation - diluted (in shares) | 61,178 | 62,616 |
Net income per ordinary share: | ||
Basic (in dollars per share) | $ 1.44 | $ 1.24 |
Diluted (in dollars per share) | $ 1.41 | $ 1.21 |
The Company and Summary of Si36
The Company and Summary of Significant Accounting Policies - Net Income per Ordinary Share Additional Information (Details) - Convertible Debt shares in Millions | 3 Months Ended | |
Mar. 31, 2017shares$ / shares | Mar. 31, 2016$ / shares | |
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 1.875% | |
Number of shares issuable from exchangeable senior notes (in shares) | shares | 2.9 | |
Debt conversion price (in dollars per share) | $ / shares | $ 199.77 | $ 199.77 |
The Company and Summary of Si37
The Company and Summary of Significant Accounting Policies - Weighted-Average Ordinary Shares Excluded from Computation of Diluted Net Income per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Convertible Debt | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Interest rate (as a percent) | 1.875% | |
1.875% exchangeable senior notes due 2021 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Ordinary shares (in shares) | 2,878 | 2,878 |
Options to purchase ordinary shares and RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Ordinary shares (in shares) | 3,406 | 2,305 |
Ordinary shares under ESPP | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Ordinary shares (in shares) | 0 | 104 |
Cash and Available-for-Sale S38
Cash and Available-for-Sale Securities - Summary of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | $ 406,995 | $ 425,963 | ||
Gross Unrealized Gains | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | ||
Estimated Fair Value | 406,995 | 425,963 | ||
Cash and cash equivalents | 346,995 | 365,963 | $ 979,780 | $ 988,785 |
Investments | 60,000 | 60,000 | ||
Cash | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 136,990 | 215,963 | ||
Gross Unrealized Gains | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | ||
Estimated Fair Value | 136,990 | 215,963 | ||
Cash and cash equivalents | 136,990 | 215,963 | ||
Investments | 0 | 0 | ||
Time deposits | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 185,000 | 210,000 | ||
Gross Unrealized Gains | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | ||
Estimated Fair Value | 185,000 | 210,000 | ||
Cash and cash equivalents | 125,000 | 150,000 | ||
Investments | 60,000 | $ 60,000 | ||
Money market funds | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 85,005 | |||
Gross Unrealized Gains | 0 | |||
Gross Unrealized Losses | 0 | |||
Estimated Fair Value | 85,005 | |||
Cash and cash equivalents | 85,005 | |||
Investments | $ 0 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Available-for-sale securities | $ 406,995 | $ 425,963 |
Time deposits | ||
Assets: | ||
Available-for-sale securities | 185,000 | 210,000 |
Money market funds | ||
Assets: | ||
Available-for-sale securities | 85,005 | |
Recurring | Total Estimated Fair Value | ||
Assets: | ||
Totals | 271,676 | 210,000 |
Liabilities: | ||
Totals | 2,471 | 0 |
Recurring | Total Estimated Fair Value | Interest rate contracts | ||
Assets: | ||
Derivative asset | 1,181 | 0 |
Liabilities: | ||
Derivative liability | 1,989 | 0 |
Recurring | Total Estimated Fair Value | Foreign exchange forward contracts | ||
Assets: | ||
Derivative asset | 490 | 0 |
Liabilities: | ||
Derivative liability | 482 | 0 |
Recurring | Total Estimated Fair Value | Time deposits | ||
Assets: | ||
Available-for-sale securities | 185,000 | 210,000 |
Recurring | Total Estimated Fair Value | Money market funds | ||
Assets: | ||
Available-for-sale securities | 85,005 | 0 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Totals | 85,005 | |
Liabilities: | ||
Totals | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate contracts | ||
Assets: | ||
Derivative asset | 0 | |
Liabilities: | ||
Derivative liability | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreign exchange forward contracts | ||
Assets: | ||
Derivative asset | 0 | |
Liabilities: | ||
Derivative liability | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Time deposits | ||
Assets: | ||
Available-for-sale securities | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds | ||
Assets: | ||
Available-for-sale securities | 85,005 | |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Totals | 186,671 | 210,000 |
Liabilities: | ||
Totals | 2,471 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | Interest rate contracts | ||
Assets: | ||
Derivative asset | 1,181 | 0 |
Liabilities: | ||
Derivative liability | 1,989 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | Foreign exchange forward contracts | ||
Assets: | ||
Derivative asset | 490 | 0 |
Liabilities: | ||
Derivative liability | 482 | 0 |
Recurring | Significant Other Observable Inputs (Level 2) | Time deposits | ||
Assets: | ||
Available-for-sale securities | 185,000 | 210,000 |
Recurring | Significant Other Observable Inputs (Level 2) | Money market funds | ||
Assets: | ||
Available-for-sale securities | $ 0 | $ 0 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Details) $ in Millions | Mar. 31, 2017USD ($) |
Convertible Debt | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Fair value of exchangeable senior notes | $ 615 |
Derivative and Hedging Activi41
Derivative and Hedging Activities - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Derivative [Line Items] | |
Gains (losses) recognized in AOCI to be reclassified over the next 12 months | $ 2 |
Gain on cash flow hedge ineffectiveness | 0.1 |
Interest rate contracts | Derivatives not designated as hedging instruments | |
Derivative [Line Items] | |
Notional amount | $ 300 |
Fixed interest rate | 1.895% |
Foreign exchange forward contracts | Derivatives not designated as hedging instruments | |
Derivative [Line Items] | |
Notional amount | $ 148.9 |
Contract term (up to 365 days) | 365 days |
Derivative and Hedging Activi42
Derivative and Hedging Activities - Gains on Derivative Instruments (Details) - Interest rate contracts - Cash Flow Hedges $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Loss recognized in accumulated other comprehensive loss, net of tax | $ 855 |
Loss reclassified from accumulated other comprehensive loss to interest expense, net of tax | $ (233) |
Derivative and Hedging Activi43
Derivative and Hedging Activities - Fair Value of Outstanding Derivatives (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Derivatives, Fair Value [Line Items] | |
Asset Derivatives | $ 1,671 |
Liability Derivatives | 2,471 |
Derivatives designated as hedging instruments | Interest rate contracts | Other non-current assets | |
Derivatives, Fair Value [Line Items] | |
Asset Derivatives | 1,181 |
Derivatives designated as hedging instruments | Interest rate contracts | Accrued liabilities | |
Derivatives, Fair Value [Line Items] | |
Liability Derivatives | 1,989 |
Derivatives not designated as hedging instruments | Foreign exchange forward contracts | Accrued liabilities | |
Derivatives, Fair Value [Line Items] | |
Liability Derivatives | 482 |
Derivatives not designated as hedging instruments | Foreign exchange forward contracts | Other current assets | |
Derivatives, Fair Value [Line Items] | |
Asset Derivatives | $ 490 |
Inventories - Components of Inv
Inventories - Components of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,798 | $ 1,547 |
Work in process | 17,437 | 18,689 |
Finished goods | 17,418 | 13,815 |
Total inventories | $ 37,653 | $ 34,051 |
Goodwill and Intangible Asset45
Goodwill and Intangible Assets - Goodwill Activity (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | $ 893,810 |
Foreign exchange | 5,480 |
Goodwill, end of period | $ 899,290 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets - Gross Carrying Amounts and Net Book Values of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,506,030 | $ 1,491,768 |
Accumulated Amortization | (450,980) | (421,687) |
Total | 1,055,050 | 1,070,081 |
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Amount - Total Intangible Assets | 3,449,760 | 3,433,688 |
Net Book Value - Total Intangible Assets | 2,998,780 | 3,012,001 |
Acquired in-process research and development assets | ||
Indefinite-lived Intangible Assets [Line Items] | ||
In-process research and development | $ 1,943,730 | 1,941,920 |
Acquired developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining Weighted-Average Useful Life (in years) | 11 years 1 month 6 days | |
Gross Carrying Amount | $ 1,491,720 | 1,477,618 |
Accumulated Amortization | (438,983) | (410,523) |
Total | $ 1,052,737 | 1,067,095 |
Manufacturing contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining Weighted-Average Useful Life (in years) | 9 months 18 days | |
Gross Carrying Amount | $ 11,434 | 11,278 |
Accumulated Amortization | (9,121) | (8,292) |
Total | $ 2,313 | 2,986 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining Weighted-Average Useful Life (in years) | 0 years | |
Gross Carrying Amount | $ 2,876 | 2,872 |
Accumulated Amortization | (2,876) | (2,872) |
Total | $ 0 | $ 0 |
Goodwill and Intangible Asset47
Goodwill and Intangible Assets - Estimated Future Amortization Costs (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Estimated Amortization Expense | ||
2017 (remainder) | $ 77,309 | |
2,018 | 100,336 | |
2,019 | 100,123 | |
2,020 | 98,980 | |
2,021 | 98,044 | |
Thereafter | 580,258 | |
Total | $ 1,055,050 | $ 1,070,081 |
Certain Balance Sheet Items - P
Certain Balance Sheet Items - Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 154,735 | $ 139,632 |
Less accumulated depreciation and amortization | (34,822) | (32,142) |
Property and equipment, net | 119,913 | 107,490 |
Land and buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 46,067 | 46,033 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 42,653 | 33,427 |
Manufacturing equipment and machinery | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 19,722 | 19,596 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 18,548 | 17,832 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 13,126 | 9,328 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 11,234 | 10,980 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,385 | $ 2,436 |
Certain Balance Sheet Items - A
Certain Balance Sheet Items - Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Certain Balance Sheet Items [Abstract] | ||
Rebates and other sales deductions | $ 73,949 | $ 72,344 |
Employee compensation and benefits | 35,914 | 43,363 |
Clinical trial accruals | 10,897 | 10,139 |
Royalties | 7,486 | 11,643 |
Professional fees | 6,192 | 4,596 |
Selling and marketing accruals | 4,467 | 3,924 |
Sales returns reserve | 4,145 | 4,366 |
Inventory-related accruals | 4,003 | 3,350 |
Accrued construction-in-progress | 3,484 | 1,597 |
Accrued interest | 2,356 | 5,179 |
Accrued contract termination fees | 0 | 11,612 |
Other | 30,752 | 21,155 |
Total accrued liabilities | $ 183,645 | $ 193,268 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long term debt outstanding | $ 1,978,828 | |
Total debt | 1,875,688 | $ 2,029,625 |
Less current portion | 136,094 | 36,094 |
Total long-term debt | 1,739,594 | 1,993,531 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt | $ 700,000 | 850,000 |
Convertible Debt 2021 Notes | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 1.875% | |
Long term debt outstanding | $ 575,000 | 575,000 |
Unamortized discount | (96,436) | (101,094) |
Total debt | 478,564 | 473,906 |
Term loan | ||
Debt Instrument [Line Items] | ||
Total debt | $ 697,124 | $ 705,719 |
Debt - Schedule of Maturities (
Debt - Schedule of Maturities (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2017 (remainder) | $ 27,070 |
2,018 | 40,605 |
2,019 | 58,652 |
2,020 | 76,700 |
2,021 | 1,775,801 |
Total debt | $ 1,978,828 |
Debt - Additional Information (
Debt - Additional Information (Details) $ in Millions | Mar. 31, 2017USD ($) |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Outstanding borrowings | $ 100 |
Convertible Debt 2021 Notes | |
Debt Instrument [Line Items] | |
Percentage of ownership (as a percent) | 100.00% |
Carrying value of the equity component | $ 126.9 |
Commitments and Contingencies -
Commitments and Contingencies - Future Minimum Lease Payments under Noncancelable Operating Leases (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Lease Payments | |
2017 (remainder) | $ 11,973 |
2,018 | 12,243 |
2,019 | 10,825 |
2,020 | 9,556 |
2,021 | 9,464 |
Thereafter | 68,028 |
Total | $ 122,089 |
Commitments and Contingencies54
Commitments and Contingencies - Lease and Other Commitments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Operating Leased Assets [Line Items] | ||
Other non-current liabilities | $ 128,809 | $ 112,617 |
Noncancelable purchase commitments, due within one year | 31,900 | |
Building | Palo Alto | ||
Operating Leased Assets [Line Items] | ||
Rent expense | 500 | |
Building | Palo Alto | Property and Equipment, Net | ||
Operating Leased Assets [Line Items] | ||
Construction-in-progress | 34,600 | |
Building | Palo Alto | Other Non-Current Liabilities | ||
Operating Leased Assets [Line Items] | ||
Other non-current liabilities | $ 34,600 |
Commitments and Contingencies55
Commitments and Contingencies - Legal Proceedings and Other Contingencies (Details) | Jun. 29, 2016lawsuit | Jan. 27, 2016lawsuitpatent | Oct. 18, 2010patent | Mar. 31, 2017claim_under_petition | Jul. 31, 2016patent | Apr. 30, 2016claim_under_petition | Mar. 31, 2016claim_under_petition | Apr. 30, 2015litigation_case | Jan. 31, 2015patent | Apr. 30, 2014 | Mar. 31, 2017claim_under_petition | Dec. 31, 2012patent |
Celator Acquisition | Celator Pharmaceuticals, Inc. | ||||||||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||||||||
Number of claims filed during the period | lawsuit | 2 | |||||||||||
Pending Litigation | Xyrem | ||||||||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||||||||
Number of patents named in review petitions | patent | 6 | |||||||||||
Number of patents deemed unenforceable by PTAB | patent | 6 | |||||||||||
Number of petition claims PTAB denied | 18 | 25 | ||||||||||
Number of petition claims under patent review | 28 | |||||||||||
Number of petition claims under patent review deemed unpatentable | 3 | 3 | ||||||||||
Number of petition claims accepted | 16 | |||||||||||
Pending Litigation | Xyrem ANDA Matters | ||||||||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||||||||
Number of patents allegedly infringed upon | patent | 5 | 3 | 10 | |||||||||
Number of claims filed | lawsuit | 3 | |||||||||||
Court ordered stay period | 30 months | |||||||||||
Number of litigation cases after consolidation | litigation_case | 1 |
Shareholders' Equity - Equity C
Shareholders' Equity - Equity Components (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | $ 1,877,339 | $ 1,706,333 |
Issuance of ordinary shares in conjunction with employee equity incentive and purchase plans | 5,676 | 3,780 |
Employee withholding taxes related to share-based awards | (14,431) | (12,476) |
Share-based compensation | 25,297 | 24,608 |
Shares repurchased | (13,896) | (134,365) |
Other comprehensive income | 17,490 | 45,188 |
Net income | 86,511 | 75,812 |
Ending balance | $ 1,983,986 | $ 1,708,880 |
Shareholders' Equity - Share Re
Shareholders' Equity - Share Repurchase Programs (Details) - USD ($) $ / shares in Units, shares in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Nov. 30, 2016 | |
Stock Activity [Line Items] | |||
Shares repurchased | $ 13,896,000 | $ 134,365,000 | |
Ordinary Options | |||
Stock Activity [Line Items] | |||
Shares repurchased | $ 13,900,000 | ||
Shares repurchased (in shares) | 0.1 | ||
Average price of shares repurchased (in dollars per share) | $ 117.65 | ||
Ordinary Options | November 2016 Share Repurchase Program | |||
Stock Activity [Line Items] | |||
Total amount authorized for repurchase of shares under share repurchase program | $ 300,000,000 | ||
Remaining amount authorized for repurchase of shares | $ 267,600,000 |
Shareholders' Equity - Componen
Shareholders' Equity - Component of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | $ 1,877,339 | $ 1,706,333 |
Other comprehensive income (loss) | 17,490 | 45,188 |
Ending balance | 1,983,986 | $ 1,708,880 |
Net Unrealized Losses From Hedging Activities | ||
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | 0 | |
Other comprehensive income (loss) | (622) | |
Ending balance | (622) | |
Foreign Currency Translation Adjustments | ||
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (317,333) | |
Other comprehensive income (loss) | 18,112 | |
Ending balance | (299,221) | |
Total Accumulated Other Comprehensive Loss | ||
Increase (Decrease) in Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (317,333) | |
Ending balance | $ (299,843) |
Segment and Other Information -
Segment and Other Information - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2017Segment | |
Segment Reporting [Abstract] | |
Number of operating business segment | 1 |
Segment and Other Information60
Segment and Other Information - Summary of Total Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenue from External Customer [Line Items] | ||
Product sales, net | $ 373,678 | $ 333,916 |
Royalties and contract revenues | 2,375 | 2,094 |
Total revenues | 376,053 | 336,010 |
Xyrem | ||
Revenue from External Customer [Line Items] | ||
Product sales, net | 272,326 | 249,537 |
Erwinaze/Erwinase | ||
Revenue from External Customer [Line Items] | ||
Product sales, net | 51,388 | 51,173 |
Defitelio/defibrotide | ||
Revenue from External Customer [Line Items] | ||
Product sales, net | 35,900 | 17,897 |
Prialt® (ziconotide) intrathecal infusion | ||
Revenue from External Customer [Line Items] | ||
Product sales, net | 7,717 | 6,209 |
Other | ||
Revenue from External Customer [Line Items] | ||
Product sales, net | $ 6,347 | $ 9,100 |
Segment and Other Information61
Segment and Other Information - Summary of Total Revenues Attributed to Geographic Sources (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenues | $ 376,053 | $ 336,010 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenues | 339,183 | 305,879 |
Europe | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenues | 31,352 | 25,020 |
All other | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenues | $ 5,518 | $ 5,111 |
Segment and Other Information62
Segment and Other Information - Summary of Revenues from Customers Representing at Least 10% of Total Revenues (Details) - Sales Revenue, Goods, Net - Customer Concentration Risk | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Express Scripts | ||
Revenue, Major Customer [Line Items] | ||
Percentage of total revenues (as a percent) | 72.00% | 74.00% |
McKesson Corporation and affiliates | ||
Revenue, Major Customer [Line Items] | ||
Percentage of total revenues (as a percent) | 17.00% | 13.00% |
Segment and Other Information63
Segment and Other Information - Total Long-Lived Assets by Location (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 119,913 | $ 107,490 |
Ireland | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | 64,862 | 62,453 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | 45,943 | 35,791 |
Italy | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | 7,107 | 7,000 |
All other | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 2,001 | $ 2,246 |
Share-Based Compensation - Expe
Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense, pre-tax | $ 25,193 | $ 24,183 |
Income tax benefit from share-based compensation expense | (7,624) | (6,933) |
Total share-based compensation expense, net of tax | 17,569 | 17,250 |
Selling, general and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense, pre-tax | 19,805 | 20,204 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense, pre-tax | 4,142 | 3,290 |
Cost of product sales | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense, pre-tax | $ 1,246 | $ 689 |
Share-Based Compensation - Weig
Share-Based Compensation - Weighted-Average Assumptions and Resulting Grant Date Fair Value (Details) - Employee Stock Option - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Schedule of Weighted Average Assumptions for Fair Values of Stock Options[Line Items] | ||
Shares underlying options granted (in shares) | 1,171 | 1,009 |
Weighted-average grant date fair value (in dollars per share) | $ 42.19 | $ 40.17 |
Weighted-average volatility (as a percent) | 35.00% | 39.00% |
Weighted-average expected term | 4 years 3 months | 4 years 2 months |
Range of risk-free rates, minimum (as a percent) | 1.70% | 1.00% |
Range of risk-free rates, maximum (as a percent) | 1.80% | 1.50% |
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Units (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 468 | 400 |
Weighted average grand date fair value (in dollars per share) | $ 135.46 | $ 123.46 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted-average period expected to be recognized | 3 years |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 4 years |
Unrecognized compensation cost related to unvested stock option and RSUs | $ 147.4 |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost related to unvested stock option and RSUs | $ 117.5 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Taxes [Line Items] | ||
Income tax provision | $ 29,160 | $ 32,339 |
Effective income tax rate (as a percent) | 25.20% | 29.90% |
Ireland | ||
Income Taxes [Line Items] | ||
Effective statutory income tax rate (as a percent) | 12.50% | |
France | ||
Income Taxes [Line Items] | ||
Proposed additional tax including interest and penalties | $ 40,900 |