Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 31, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37372 | |
Entity Registrant Name | Collegium Pharmaceutical, Inc. | |
Entity Incorporation, State or Country Code | VA | |
Entity Tax Identification Number | 03-0416362 | |
Entity Address, Address Line One | 100 Technology Center Drive | |
Entity Address, City or Town | Stoughton | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02072 | |
City Area Code | 781 | |
Local Phone Number | 713-3699 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | COLL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 32,610,873 | |
Entity Central Index Key | 0001267565 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 258,532 | $ 173,688 |
Marketable securities | 46,033 | 0 |
Accounts receivable, net | 181,851 | 183,119 |
Inventory | 34,125 | 46,501 |
Prepaid expenses and other current assets | 16,545 | 16,681 |
Total current assets | 537,086 | 419,989 |
Property and equipment, net | 16,645 | 19,521 |
Operating lease assets | 6,243 | 6,861 |
Intangible assets, net | 456,222 | 567,468 |
Restricted cash | 1,047 | 2,547 |
Deferred tax assets | 25,738 | 23,950 |
Other noncurrent assets | 740 | 100 |
Goodwill | 133,857 | 133,695 |
Total assets | 1,177,578 | 1,174,131 |
Current liabilities | ||
Accounts payable | 3,653 | 3,494 |
Accrued liabilities | 31,651 | 36,129 |
Accrued rebates, returns and discounts | 245,012 | 230,491 |
Current portion of term notes payable | 183,333 | 162,500 |
Current portion of operating lease liabilities | 963 | 1,112 |
Total current liabilities | 464,612 | 433,726 |
Term notes payable, net of current portion | 265,886 | 397,578 |
Convertible senior notes | 261,823 | 140,873 |
Operating lease liabilities, net of current portion | 6,384 | 7,112 |
Total liabilities | 998,705 | 979,289 |
Commitments and contingencies (refer to Note 16) | ||
Shareholders' equity: | ||
Preferred stock, $0.001 par value; authorized shares - 5,000,000 | ||
Common stock, $0.001 par value; authorized shares - 100,000,000; 38,000,607 issued and 33,061,932 outstanding shares as of September 30, 2023 and 37,084,759 issued and 33,848,936 outstanding shares as of December 31, 2022 | 38 | 37 |
Additional paid-in capital | 545,940 | 538,073 |
Treasury stock, at cost; 4,938,675 shares as of September 30, 2023 and 3,235,823 shares as of December 31, 2022 | (101,924) | (61,924) |
Accumulated other comprehensive loss | (52) | |
Accumulated deficit | (265,129) | (281,344) |
Total shareholders' equity | 178,873 | 194,842 |
Total liabilities and shareholders' equity | $ 1,177,578 | $ 1,174,131 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 38,000,607 | 37,084,759 |
Common stock, outstanding shares | 33,061,932 | 33,848,936 |
Treasury stock, shares | 4,938,675 | 3,235,823 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | ||||
Product revenues, net | $ 136,709 | $ 127,013 | $ 417,022 | $ 334,313 |
Revenue from Contract with Customer, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Cost of product revenues | ||||
Cost of product revenues (excluding intangible asset amortization) | $ 20,081 | $ 30,622 | $ 74,237 | $ 80,638 |
Intangible asset amortization | $ 36,317 | $ 37,552 | $ 111,246 | $ 93,976 |
Cost, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Total cost of product revenues | $ 56,398 | $ 68,174 | $ 185,483 | $ 174,614 |
Gross profit | 80,311 | 58,839 | 231,539 | 159,699 |
Operating expenses | ||||
Research and development | 3,983 | |||
Selling, general and administrative | 35,298 | 38,372 | 126,266 | 134,154 |
Total operating expenses | 35,298 | 38,372 | 126,266 | 138,137 |
Income from operations | 45,013 | 20,467 | 105,273 | 21,562 |
Interest expense | (20,768) | (19,046) | (64,058) | (42,638) |
Interest income | 4,538 | 11 | 11,312 | 20 |
Loss on extinguishment of debt | (23,504) | |||
Income (loss) before income taxes | 28,783 | 1,432 | 29,023 | (21,056) |
Provision for (benefit from) income taxes | 8,149 | 975 | 12,808 | (3,253) |
Net income (loss) | $ 20,634 | $ 457 | $ 16,215 | $ (17,803) |
Earnings (loss) per share - basic (in dollars per share) | $ 0.61 | $ 0.01 | $ 0.47 | $ (0.52) |
Weighted-average shares - basic (in shares) | 33,744,209 | 34,058,802 | 34,226,488 | 33,912,832 |
Earnings (loss) per share - diluted (in dollars per share) | $ 0.53 | $ 0.01 | $ 0.46 | $ (0.52) |
Weighted-average shares - diluted (in shares) | 42,058,821 | 34,570,319 | 35,149,154 | 33,912,832 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net Income (Loss) | $ 20,634 | $ 457 | $ 16,215 | $ (17,803) |
Other comprehensive loss: | ||||
Unrealized losses on marketable securities | (14) | (52) | ||
Total other comprehensive loss | (14) | (52) | ||
Comprehensive income (loss) | $ 20,620 | $ 457 | $ 16,163 | $ (17,803) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 17 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Operating activities | |||||
Net income (loss) | $ 16,215 | $ (17,803) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||
Amortization expense | $ 36,317 | $ 37,552 | 111,246 | 93,976 | |
Depreciation expense | 2,547 | 1,859 | |||
Deferred income taxes | (1,815) | (7,313) | |||
Stock-based compensation expense | 20,134 | 17,204 | |||
Non-cash lease (benefit) expense | (258) | 341 | |||
Non-cash interest expense for amortization of debt discount and issuance costs | 6,672 | 5,902 | |||
Loss on extinguishment of debt | 23,504 | ||||
Net amortization of premiums and discounts on investments | (667) | ||||
Changes in operating assets and liabilities: | |||||
Accounts receivable | 1,268 | (34,063) | |||
Inventory | 12,376 | 30,124 | |||
Prepaid expenses and other assets | 42 | 998 | |||
Accounts payable | 106 | 3,436 | |||
Accrued liabilities | (4,479) | (24,719) | |||
Accrued rebates, returns and discounts | 14,520 | (12,040) | |||
Operating lease assets and liabilities | 3 | ||||
Net cash provided by operating activities | 201,411 | 57,905 | |||
Investing activities | |||||
Purchases of property and equipment | (297) | (682) | |||
Acquisition of BDSI (net of cash acquired) | (572,069) | ||||
Purchases of marketable securities | (51,418) | ||||
Maturities of marketable securities | 6,000 | ||||
Net cash used in investing activities | (45,715) | (572,751) | |||
Financing activities | |||||
Proceeds from issuances of common stock from employee stock purchase plan | 460 | 337 | |||
Proceeds from the exercise of stock options | 5,401 | 4,948 | |||
Payments made for employee stock tax withholdings | (8,128) | (3,999) | |||
Repurchases of common stock, including the ASR agreement | (50,000) | (6,422) | |||
Repayment of term notes | (116,667) | (50,000) | |||
Proceeds from term note modification | 517,682 | ||||
Proceeds from issuances of 2029 Convertible Notes, net of issuance costs of $6,280 | 235,220 | ||||
Repurchase of 2026 Convertible Notes, including premium | (138,638) | ||||
Net cash (used in) provided by financing activities | (72,352) | 462,546 | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | 83,344 | (52,300) | |||
Cash, cash equivalents and restricted cash at beginning of period | 176,235 | 188,973 | |||
Cash, cash equivalents and restricted cash at end of period | 259,579 | 136,673 | 259,579 | 136,673 | $ 176,235 |
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets: | |||||
Cash and cash equivalents | 258,532 | 134,126 | 258,532 | 134,126 | 173,688 |
Restricted cash | 1,047 | 2,547 | 1,047 | 2,547 | 2,547 |
Total cash, cash equivalents and restricted cash | $ 259,579 | $ 136,673 | 259,579 | 136,673 | $ 176,235 |
Supplemental disclosure of cash flow information | |||||
Cash paid for interest | 57,679 | 35,280 | |||
Cash paid for income taxes | 17,293 | 10,037 | |||
Supplemental disclosure of non-cash activities | |||||
Acquisition of property and equipment in accounts payable and accrued liabilities | $ 53 | $ 260 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Issuance costs | $ 6,280 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2023 | |
Nature of Business | |
Nature of Business | 1. Nature of Business Collegium Pharmaceutical, Inc. (the “Company” or “Collegium”) was incorporated in Delaware in April 2002 and then reincorporated in Virginia in July 2014. The Company has its principal operations in Stoughton, Massachusetts. The Company’s mission is to build a leading, diversified specialty pharmaceutical company committed to improving the lives of people living with serious medical conditions. The Company’s portfolio includes Xtampza ER, Nucynta ER and Nucynta IR (collectively the “Nucynta Products”), Belbuca, and Symproic. Xtampza ER, an abuse-deterrent, oral formulation of oxycodone, was approved by the U.S. Food and Drug Administration (“FDA”) in April 2016 for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. The Company commercially launched Xtampza ER in June 2016. The Nucynta Products are extended-release (“ER”) and immediate-release (“IR”) formulations of tapentadol. Nucynta ER is indicated for the management of pain severe enough to require daily, around the clock, long-term opioid treatment, including neuropathic pain associated with diabetic peripheral neuropathy in adults, and for which alternate treatment options are inadequate. Nucynta IR is indicated for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate in adults. The Company began shipping and recognizing product sales on the Nucynta Products in January 2018 and began marketing the Nucynta Products in February 2018. On March 22, 2022 (the “Acquisition Date”), the Company acquired BioDelivery Sciences International, Inc. (“BDSI”), a specialty pharmaceutical company working to deliver innovative therapies for individuals living with serious and debilitating chronic conditions, pursuant to an Agreement and Plan of Merger, dated as of February 14, 2022, by and among the Company, Bristol Acquisition Company Inc., the Company’s wholly owned subsidiary, and BDSI (the “BDSI Acquisition”). Upon closing, the Company acquired the Belbuca and Symproic products. Belbuca is a buccal film that contains buprenorphine, a Schedule III opioid, and was approved by the FDA in October 2015 for use in patients with pain severe enough to require daily, around-the-clock, long-term opioid treatment for which alternative options are inadequate. Symproic was approved by the FDA in March 2017 for the treatment of opioid-induced constipation (“OIC”) in adult patients with chronic non-cancer pain, including patients with chronic pain related to prior cancer or its treatment who do not require frequent (e.g., weekly) opioid dosage escalation. The Company began shipping and recognizing product sales related to Belbuca and Symproic in March 2022. The Company’s operations are subject to certain risks and uncertainties. The principal risks include inability to continue successfully commercializing products, changing market conditions for products and development or introduction of competing products, changing regulatory environment and reimbursement landscape, product-related litigation, manufacture of adequate commercial inventory, inability to secure adequate supplies of active pharmaceutical ingredients, key personnel retention, protection of intellectual property, and patent infringement litigation. The Company believes that its cash and cash equivalents as of September 30, 2023, together with expected cash inflows from the commercialization of its products, will enable the Company to fund its operating expenses, debt service and capital expenditure requirements under its current business plan for at least one year from the date the consolidated financial statements were issued. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Collegium Pharmaceutical, Inc. (a Virginia corporation) and its subsidiaries. The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of the Company’s management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to fairly present the financial position of the Company as of September 30, 2023, the results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year. The preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Estimates in the Company’s consolidated financial statements include revenue recognition, including the estimates of product returns, discounts and allowances related to commercial sales of products, estimates related to the fair value of assets acquired and liabilities assumed, including acquired intangible assets and the fair value of inventory acquired, estimates utilized in the ongoing valuation of inventory related to potential unsaleable product, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, impairment of intangible assets and deferred tax valuation allowances. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. The consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s most recently filed annual report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report”). Marketable Securities As of September 30, 2023, the Company’s marketable securities consisted of investments in available-for-sale corporate debt, U.S. Treasury, and government-sponsored securities with readily determinable fair values. The Company classifies available-for-sale marketable securities as current assets on its consolidated balance sheets. The fair value of these securities is based on quoted prices for identical assets or inputs other than quoted prices that are observable for similar assets, either directly or indirectly. The Company records interest earned and net amortization of premiums and discounts on investments within interest income on its consolidated statements of operations. The Company records unrealized gains (losses) on available-for-sale debt securities as a component of Accumulated other comprehensive (loss) income, For available-for-sale debt securities in unrealized loss positions, the Company is required to assess whether to record an allowance for credit losses using an expected loss model. A credit loss is limited to the amount by which the amortized cost of an investment exceeds its fair value. A previously recognized credit loss may be decreased in subsequent periods if the Company’s estimate of fair value for the investment increases. To determine whether to record a credit loss, the Company considers issuer specific credit ratings and historical losses as well as current economic conditions and expectations for future economic conditions. There were no other changes in the Company’s significant accounting policies from those described in the Company’s Annual Report. Subsequent Events In November 2023, the Company’s Board of Directors authorized an accelerated share repurchase program to repurchase $25,000 of the Company’s common stock, as part of the $100,000 repurchase program authorized in January 2023. Recently Adopted Accounting Pronouncements New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as required by the specified effective dates. Following the cessation of the London Interbank Offered Rate (“LIBOR”) in the United States on June 30, 2023, the Company elected to apply the optional expedient provided in FASB Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Recently Issued Accounting Pronouncements Not Yet Adopted Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the consolidated financial statements upon future adoption. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | 3. Revenue from Contracts with Customers The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to wholesalers (“customers”), which in turn sell the product to pharmacies for the treatment of patients. Revenue Recognition The Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements with a customer, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the assets is one year or less. Performance Obligations The Company determined that performance obligations are satisfied, and revenue is recognized when a customer takes control of the Company’s product, which occurs at a point in time. This generally occurs upon delivery of the products to customers, at which point the Company recognizes revenue and records accounts receivable. Payment is typically received 30 to 90 days after satisfaction of the Company’s performance obligations. Transaction Price and Variable Consideration Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). The transaction price for product sales includes variable consideration related to sales deductions, including: (i) rebates and incentives, including managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances; (ii) product returns, including return estimates; and, (iii) trade allowances and chargebacks, including fees for distribution services, prompt pay discounts, and chargebacks. The Company will estimate the amount of variable consideration that should be included in the transaction price under the expected value method for all sales deductions other than trade allowances, which are estimated under the most likely amount method. These provisions reflect the expected amount of consideration to which the Company is entitled based on the terms of the contract. In addition, the Company made a policy election to exclude from the measurement of the transaction price all taxes that are assessed by a governmental authority that are imposed on revenue-producing transactions. The Company bases its estimates of variable consideration, which could include estimates of future rebates, returns, and other adjustments, on historical data and other information. Estimates include: (i) timing of the rebates and returns incurred; (ii) pricing adjustments related to rebates and returns; and (iii) the quantity of product that will be rebated or returned in the future. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period. Provisions for rebates and incentives are based on the estimated amount of rebates and incentives to be claimed on the related sales. As the Company’s rebates and incentives are based on products dispensed to patients, the Company is required to estimate the expected value of claims at the time of product delivery to wholesalers. Given that wholesalers sell the product to pharmacies, which in turn dispense the product to patients, claims can be submitted significantly after the related sales are recognized. The Company’s estimates of these claims are based on the historical experience of existing or similar programs, including current contractual and statutory requirements, specific known market events and trends, industry data, and estimated distribution channel inventory levels. Accruals and related reserves required for rebates and incentives are adjusted as new information becomes available, including actual claims. If actual results vary, the Company may need to adjust future estimates, which could have an effect on earnings in the period of the adjustment. Provisions for product returns, including returns for Xtampza, the Nucynta Products, Belbuca and Symproic, are based on product-level returns rates, including processed as well as unprocessed return claims, in addition to relevant market events and other factors. Estimates of the future product returns are made at the time of revenue recognition to determine the amount of consideration to which the Company expects to be entitled (that is, excluding the products expected to be returned). At the end of each reporting period, the Company analyzes trends in returns rates and updates its assessment of variable consideration for returns to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. To the extent the Company receives amounts in excess of what it expects to be entitled to receive due to a product return, the Company does not recognize revenue when it transfers products to customers but instead recognizes those excess amounts received as a refund liability. The Company updates the measurement of the refund liability at the end of each reporting period for changes in expectations about the amount of refunds with the corresponding adjustments recognized as revenue (or reductions of revenue). The Company provides the right of return to its customers for an 18-month window beginning six months prior to expiration and up until twelve months after expiration. The Company’s customers short-pay an existing invoice upon notice of a product return claim. Adjustments to the preliminary short-paid claims are processed when the return claim is validated and finalized. The Company’s return policy requires that product is returned and that the return is claimed within the 18-month window. Provisions for trade allowances and chargebacks are primarily based on customer-level contractual terms. Accruals and related reserves are adjusted as new information becomes available, which generally consists of actual trade allowances and chargebacks processed relating to sales recognized. At the end of each reporting period, the Company updates the estimated transaction price (including updating its assessment of whether an estimate of variable consideration is constrained) to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. Variable consideration, including the risk of customer concessions, is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is subsequently resolved. In particular, resolution of the unprocessed return claims includes the risk of concession for those that are outside of the Company’s return policy. Significant judgment is required to determine the variable consideration included in the transaction price as described above. Adjustments to the estimated variable consideration included in the transaction price occur when new information indicates that the estimate should be revised. If the value of accepted and processed claims is different than the amount estimated and included in variable consideration, then adjustments would impact product revenues, net and earnings in the period such revisions become known. The amount of variable consideration ultimately received and included in the transaction price may materially differ from the Company’s estimates, resulting in additional adjustments recorded to increase or decrease product revenues, net. The following tables summarize activity in each of the Company’s product revenue provision and allowance categories for the nine months ended September 30, 2023 and 2022: Trade Rebates and Product Allowances and Incentives (1) Returns (2) Chargebacks (3) Balance as of December 31, 2022 $ 156,937 $ 73,554 $ 22,058 Provision related to current period sales 325,725 31,904 112,550 Changes in estimate related to prior period sales 2 3,722 589 Credits/payments made (315,170) (31,662) (113,263) Balance as of September 30, 2023 $ 167,494 $ 77,518 $ 21,934 Trade Rebates and Product Allowances and Incentives (1) Returns (2) Chargebacks (3) Balance as of December 31, 2021 $ 142,379 $ 54,617 $ 13,226 Acquired from BDSI 38,074 18,187 7,575 Provision related to current period sales 368,880 26,508 94,859 Changes in estimate related to prior period sales (304) (838) (580) Credits/payments made (385,298) (20,987) (93,946) Balance as of September 30, 2022 $ 163,731 $ 77,487 $ 21,134 (1) Provisions for rebates and incentives includes managed care rebates, government rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s consolidated balance sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s consolidated balance sheets. (3) Provisions for trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s consolidated balance sheets. As of September 30, 2023, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial. Disaggregation of Revenue The Company discloses disaggregated revenue from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. When selecting the type of category to use to disaggregate revenue, the Company considers how information about the Company’s revenue has been presented for other purposes as well as what information is regularly reviewed and used for evaluating financial performance. As such, the Company disaggregates its product revenues, net from contracts with customers by product, as disclosed in the table below. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Belbuca $ 45,447 $ 38,802 $ 132,795 $ 84,413 Xtampza ER 39,800 38,859 128,914 103,567 Nucynta IR 24,906 27,274 80,963 83,163 Nucynta ER 22,634 17,133 62,941 53,473 Symproic 3,922 3,580 11,409 7,740 Other — 1,365 — 1,957 Total product revenues, net $ 136,709 $ 127,013 $ 417,022 $ 334,313 The Company began recognizing product revenues, net from sales of Belbuca and Symproic following the Acquisition Date (refer to Note 4, Acquisitions |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2023 | |
Acquisitions | |
Acquisitions | 4. Acquisitions On March 22, 2022, the Company closed the BDSI Acquisition, with BDSI surviving as a wholly owned subsidiary of the Company. The BDSI Acquisition was completed to leverage the Company’s existing sales force and other operations to commercialize additional products that are typically marketed to similar physicians and to develop other synergies. The Company obtained control through the acquisition of shares in an all-cash transaction which closed on March 22, 2022. The total consideration paid for the BDSI acquisition was approximately $669,431 consisting of the following (in thousands, except per share amounts): Fair Value of Purchase Price Consideration Amount Fair value of purchase price consideration paid at closing: Cash consideration for all outstanding shares of BDSI's common and preferred stock (103,235,298 shares acquired at $5.60 per share) $ 578,118 Cash consideration paid to settle RSUs and in-the-money options 28,309 Cash paid to settle BDSI debt 63,004 Total purchase consideration $ 669,431 The Company has accounted for the BDSI Acquisition as a business combination and, accordingly, has included the assets acquired, liabilities assumed and results of operations in its financial statements following the Acquisition Date. The final allocation of the consideration transferred to the assets acquired and liabilities assumed has been completed. During the three months ended March 31, 2023, the Company recorded measurement period adjustments to increase accrued expenses by $134 and deferred tax liabilities by $28, with a corresponding increase to goodwill of $162. The following tables set forth the final allocation of the BDSI Acquisition purchase price to the estimated fair value of the net assets acquired at the Acquisition Date: Amounts Recognized at the Acquisition Date Assets Acquired Cash and cash equivalents $ 97,362 Accounts receivable 55,495 Inventory 77,382 Prepaid expenses and other current assets 6,125 Property and equipment 1,242 Operating lease assets 481 Intangible assets 435,000 Total assets $ 673,087 Liabilities Assumed Accounts payable $ 12 Accrued expenses 18,249 Accrued rebates, returns and discounts 56,261 Operating lease liabilities 481 Deferred tax liabilities 62,510 Total liabilities $ 137,513 Total identifiable net assets acquired 535,574 Goodwill 133,857 Total consideration transferred $ 669,431 The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the $435,000 of intangible assets. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with risk. The Company amortizes the identifiable intangible assets on a straight-line basis over their respective useful lives (refer to Note 10, Goodwill and Intangible Assets The excess of the purchase price over the fair value of identifiable net assets acquired represents goodwill. This goodwill is primarily attributable to synergies of merging operations. The acquired goodwill is not deductible for tax purposes. |
License Agreements
License Agreements | 9 Months Ended |
Sep. 30, 2023 | |
License Agreements | |
License Agreements | 5. License Agreements Shionogi license and supply agreement Prior to the BDSI Acquisition, BDSI and Shionogi Inc. (“Shionogi”) entered into an exclusive license agreement (the “Shionogi License Agreement”) for the commercialization of Symproic in the United States including Puerto Rico (the “Shionogi Territory”) for opioid-induced constipation in adult patients with chronic non-cancer pain (the “Shionogi Field”). Pursuant to the terms of the Shionogi License Agreement, tiered royalty payments on net sales of Symproic in the Shionogi Territory are payable quarterly based on a royalty rate that ranges from 8.5% to 17.5% (plus an additional 1% of net sales on a pass-through basis to a third-party licensor of Shionogi) based on volume of net sales and whether Symproic is being sold as an authorized generic. Unless earlier terminated, the Shionogi License Agreement will continue in effect until the expiration of the royalty obligations, as defined therein. Upon expiration of the Shionogi License Agreement, all licenses granted for Symproic in the Shionogi Field and in the Shionogi Territory survive and become fully-paid, royalty-free, perpetual and irrevocable. BDSI and Shionogi also had entered into a supply agreement under which Shionogi will supply Symproic at cost plus an agreed upon markup. In the event that Symproic is sourced from a third-party supplier, Shionogi would continue to supply naldemedine tosylate for use in Symproic manufacturing at cost plus such agreed upon markup for the duration of the Shionogi License Agreement. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share | |
Earnings Per Share | 6. Earnings Per Share Basic earnings per share is calculated by dividing the net income or loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted earnings per share is computed by dividing the net income or loss by the weighted-average number of shares of common stock, plus potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock, if-converted, or contingently issuable accounting methods, depending on the nature of the security. For purposes of the diluted earnings per share calculation, stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), and shares potentially issuable in connection with the Company’s employee stock purchase plan and convertible senior notes are considered potentially dilutive securities and included to the extent that their addition is not anti-dilutive. The following table presents the computations of basic and dilutive earnings per common share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ 20,634 $ 457 $ 16,215 $ (17,803) Adjustment for interest expense recognized on convertible senior notes 1,645 — — — Net income (loss) - diluted $ 22,279 $ 457 $ 16,215 $ (17,803) Denominator: Weighted-average shares outstanding — basic 33,744,209 34,058,802 34,226,488 33,912,832 Effect of dilutive securities: Stock options 222,355 191,454 263,513 — Restricted stock units 583,153 320,063 659,153 — Convertible senior notes 7,509,104 — — — Weighted average shares outstanding — diluted 42,058,821 34,570,319 35,149,154 33,912,832 Earnings (loss) per share — basic $ 0.61 $ 0.01 $ 0.47 $ (0.52) Earnings (loss) per share — diluted $ 0.53 $ 0.01 $ 0.46 $ (0.52) The Company has the option to settle the conversion obligation for its convertible senior notes due in 2026 and 2029 in cash, shares or a combination of the two. The Company uses the if-converted method for the convertible senior notes. The following table presents dilutive securities excluded from the calculation of diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock options 749,443 1,061,235 395,405 2,156,501 Restricted stock units 979,200 523,991 977,250 1,960,160 Performance share units 503,880 447,770 503,880 447,770 Employee stock purchase plan 19,094 11,553 19,094 — Warrants — 1,041,667 — 1,041,667 Convertible senior notes — 4,925,134 7,509,104 4,925,134 For PSUs, these securities were excluded from the calculation of diluted earnings per share as the performance-based or market-based vesting conditions were not met as of the end of the reporting period. All other securities presented in the table above were excluded from the calculation of diluted earnings per share as their inclusion would have had an antidilutive effect. As discussed in Note 14, Equity antidilutive. Therefore, no adjustments were made in the computation of earnings per share for the period the forward contract was outstanding. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 7. Fair Value of Financial Instruments Disclosures of fair value information about financial instruments are required, whether or not recognized in the consolidated balance sheets, for financial instruments with respect to which it is practicable to estimate that value. Fair value measurements and disclosures describe the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows: Level 1 inputs: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 inputs: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 inputs: Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2, and 3 during the nine months ended September 30, 2023 and 2022. The following table presents the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument as of September 30, 2023 and December 31, 2022: Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs Total (Level 1) (Level 2) (Level 3) September 30, 2023 Cash equivalents: Money market funds $ 104,250 $ 104,250 $ — $ — Marketable securities: Corporate debt securities 17,813 — 17,813 — U.S. Treasury securities 23,740 — 23,740 — Government-sponsored securities 4,480 — 4,480 — Total assets measured at fair value $ 150,283 $ 104,250 $ 46,033 $ — December 31, 2022 Cash equivalents: Money market funds $ 172,590 $ 172,590 $ — $ — Total assets measured at fair value $ 172,590 $ 172,590 $ — $ — The Company’s cash equivalents and marketable securities are measured at fair value on a recurring basis using quoted market prices. Assets and Liabilities Not Carried at Fair Value As of September 30, 2023, the fair value of the Company's 2.625% convertible senior notes due in 2026 was $25,033 and the fair value of the Company's 2.875% convertible senior notes due in 2029 was $212,602, which were estimated utilizing market quotations, and are considered Level 2. The Company’s term notes fall into the Level 2 category within the fair value level hierarchy and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals. As of September 30, 2023, the outstanding principal balance of the term notes of $458,334 reasonably approximated the estimated fair value. As of September 30, 2023, and December 31, 2022, the carrying amounts of cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, accrued liabilities, and accrued rebates, returns and discounts reasonably approximated their estimated fair values. |
Marketable securities
Marketable securities | 9 Months Ended |
Sep. 30, 2023 | |
Marketable Securities | |
Marketable Securities | 8. Marketable Securities Available-for-sale debt securities were classified on the condensed consolidated balance sheets at fair value as follows: September 30, 2023 Cash and cash equivalents $ — Marketable securities 46,033 Total $ 46,033 The following table summarizes the available-for-sale securities held as of September 30, 2023: Amortized Cost Gross Unrealized (Losses) Gains Fair Value Corporate debt securities $ 17,858 $ (45) $ 17,813 U.S. Treasury securities 23,741 (1) 23,740 Government-sponsored securities 4,486 (6) 4,480 Total $ 46,085 $ (52) $ 46,033 The following table summarizes the contractual maturities of available-for-sale securities other than investments in money market funds as of September 30, 2023: September 30, 2023 Matures within one year $ 40,116 Matures after one year through five years 5,917 Total $ 46,033 The Company did not record any allowances for credit losses to adjust the fair value of available-for-sale debt securities during the three and nine months ended September 30, 2023. The Company reviews its investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. The Company generally does not intend to sell any investments prior to recovery of their amortized cost basis for any investment in an unrealized loss position. As such, the Company did not hold any securities with other-than-temporary impairment as of September 30, 2023. The Company did not hold marketable securities as of December 31, 2022. There were no sales of marketable securities during the three and nine months ended September 30, 2023. Net unrealized holding gains or losses for the period that have been included in accumulated other comprehensive loss were not material to the Company’s condensed consolidated results of operations. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2023 | |
Inventory | |
Inventory | 9. Inventory Inventory as of September 30, 2023 and December 31, 2022 consisted of the following: September 30, December 31, 2023 2022 Raw materials $ 14,393 $ 5,600 Work in process 9,186 24,672 Finished goods 10,546 16,229 Total inventory $ 34,125 $ 46,501 The aggregate charges related to excess and obsolete inventory for the three and nine months ended September 30, 2023 were $563 and $1,624 , respectively. These expenses were recorded as a component of cost of product revenues. The aggregate charges related to excess and obsolete inventory for the three and nine months ended September 30, 2022 were immaterial. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 10. Goodwill and Intangible Assets The following tables summarizes the changes in the carrying amount of goodwill: Amount Balance as of December 31, 2022 $ 133,695 Measurement period adjustments from BDSI Acquisition 162 Balance as of September 30, 2023 $ 133,857 The Company’s goodwill resulted from the BDSI Acquisition. Refer to Note 4, Acquisitions . The following table sets forth the cost, accumulated amortization, and carrying amount of intangible assets as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Amortization Period (Years) Cost Accumulated Amortization Carrying Amount Cost Accumulated Amortization Carrying Amount Belbuca 4.8 $ 360,000 $ (114,973) $ 245,027 $ 360,000 $ (58,428) $ 301,572 Nucynta Products (1) 8.5 521,170 (368,865) 152,305 521,170 (319,628) 201,542 Symproic 9.6 70,000 (11,110) 58,890 70,000 (5,646) 64,354 Elyxyb — — — — 5,000 (5,000) — Total intangibles $ 951,170 $ (494,948) $ 456,222 $ 956,170 $ (388,702) $ 567,468 The following table presents amortization expense recognized in cost of product revenues for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Belbuca $ 18,850 $ 18,848 $ 56,545 $ 39,581 Nucynta Products (1) 15,646 16,795 49,237 50,385 Symproic 1,821 1,821 5,464 3,825 Elyxyb — 88 — 185 Total amortization expense $ 36,317 $ 37,552 $ 111,246 $ 93,976 As of September 30, 2023, the remaining amortization expense expected to be recognized is as follows: Years ended December 31, Belbuca Nucynta Products (1) Symproic Total 2023 $ 18,848 $ 13,845 $ 1,821 $ 34,514 2024 75,393 55,384 7,285 138,062 2025 75,393 55,384 7,285 138,062 2026 75,393 27,692 7,285 110,370 2027 — — 7,285 7,285 Thereafter — — 27,929 27,929 Remaining amortization expense $ 245,027 $ 152,305 $ 58,890 $ 456,222 (1) During the three months ended September 30, 2023, the FDA granted New Patient Population exclusivity for Nucynta IR which extends the period of U.S. exclusivity for Nucynta IR to July 3, 2026, resulting in an extension of the estimated useful life of the underlying intangible asset from 8.0 years to 8.5 years. This change in estimate resulted in a decrease of amortization expense of $1,149 and an increase in net income of $855 during the three months ended September 30, 2023. The impact to earnings per share — basic and earnings per share — diluted was $0.03 and $0.02 , respectively, during the three months ended September 30, 2023. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Liabilities | |
Accrued Liabilities | 11. Accrued Liabilities Accrued liabilities as of September 30, 2023 and December 31, 2022 consisted of the following: September 30, December 31, 2023 2022 Accrued royalties $ 7,483 $ 13,770 Accrued inventory 6,446 — Accrued product taxes and fees 5,128 4,352 Accrued bonuses 4,103 6,347 Accrued sales and marketing 1,621 2,130 Accrued incentive compensation 1,290 1,507 Accrued interest 1,112 1,410 Accrued audit and legal 1,062 1,957 Accrued payroll and related benefits 941 1,208 Accrued other operating costs 2,465 3,448 Total accrued liabilities $ 31,651 $ 36,129 |
Term Notes Payable
Term Notes Payable | 9 Months Ended |
Sep. 30, 2023 | |
Term Notes Payable | |
Term Notes Payable | 12. Term Notes Payable 2022 Term Loan On March 22, 2022, in connection with the closing of the BDSI Acquisition, the Company entered into an Amended and Restated Loan Agreement by and among the Company, and BioPharma Credit PLC, as collateral agent and lender, and BioPharma Credit Investments V (Master) LP, as lender (collectively “Pharmakon”), as amended (the “2022 Loan Agreement”). The 2022 Loan Agreement provided for a $650,000 secured term loan (the “2022 Term Loan”), the proceeds of which were used to repay the Company’s existing term notes and fund a portion of the consideration to be paid to complete the BDSI Acquisition. The 2022 Loan Agreement was accounted for as a debt modification and transaction fees of $173 were expensed. In connection with the 2022 Loan Agreement, the Company paid loan commitment and other fees to the lender of $19,818 , which together with preexisting debt issuance costs and note discounts of $2,049 will be amortized over the term of the loan using the effective interest rate. The 2022 Term Loan will mature on the 48-month Loan bore interest at a rate based upon LIBOR (subject to a LIBOR floor of 1.20%), plus a margin of 7.5% per annum. On June 23, 2023, the Company entered into an amendment to the 2022 Loan Agreement to adjust the interest terms of the 2022 Term Loan to transition from LIBOR to SOFR in anticipation of the cessation of LIBOR. Effective July 1, 2023, the 2022 Term Loan bears interest at a rate based upon SOFR plus a spread adjustment of 0.26% (subject to a floor of 1.20%), plus a margin of 7.5% per annum. As of September 30, 2023, the interest rate was 13.2%. The Company paid $100,000 in principal payments under the 2022 Term Loan during the first year and the remaining $550,000 balance is required to be paid in equal quarterly installments over the remaining three years. The 2022 Loan Agreement permits voluntary prepayment at any time, subject to a prepayment premium. The prepayment premium is equal to 2.00% of the principal amount being prepaid prior to the second-year anniversary of the closing date, or 1.00% of the principal amount being prepaid on or after the second-year anniversary of the closing date. The 2022 Loan Agreement also includes a make-whole premium in the event of a voluntary prepayment, a prepayment due to a change in control or acceleration following an Event of Default (as defined in the 2022 Loan Agreement) on or prior to the second-year anniversary of the closing date, in each case in an amount equal to foregone interest from the date of prepayment through the second-year anniversary of the closing date. A change of control also triggers a mandatory prepayment of the 2022 Term Loan. The 2022 Loan Agreement contains certain covenants and obligations of the parties, including, without limitation, covenants that limit the Company’s ability to incur additional indebtedness or liens, make acquisitions or other investments or dispose of assets outside the ordinary course of business. Failure to comply with these covenants would constitute an Event of Default under the 2022 Loan Agreement, notwithstanding the Company’s ability to meet its debt service obligations. The 2022 Loan Agreement also includes various customary remedies for the lenders following an Event of Default, including the acceleration of repayment of outstanding amounts under the 2022 Loan Agreement and execution upon the collateral securing obligations under the 2022 Loan Agreement. During the three and nine months ended September 30, 2023, the Company recognized interest expense of $18,567 and $57,897, respectively, related to the 2022 Term Loan. During the three and nine months ended September 30, 2022, the Company recognized interest expense of $17,879 and $36,293 , respectively, related to the 2022 Term Loan. As of September 30, 2023, future required principal repayments under the 2022 Term Loan are as follows: Years ended December 31, Principal Payments 2023 $ 45,834 2024 183,333 2025 183,333 2026 45,834 Total before unamortized discount and issuance costs $ 458,334 Less: unamortized discount and issuance costs (9,115) Term notes carrying value $ 449,219 |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2023 | |
Convertible Senior Notes. | |
Convertible Senior Notes | 13. Convertible Senior Notes 2026 Convertible Notes On February 13, 2020, the Company issued 2.625% convertible senior notes due in 2026 (the “2026 Convertible Notes”) in the aggregate principal amount of $143,750, in a public offering registered under the Securities Act of 1933, as amended. The 2026 Convertible Notes were issued in connection with funding the acquisition of the Nucynta Products. Some of the Company’s existing investors participated in the 2026 Convertible Notes offering. In connection with the issuance of the 2026 Convertible Notes, the Company incurred approximately $5,473 of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees. The 2026 Convertible Notes are senior, unsecured obligations and bear interest at a rate of 2.625% per year payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. Before August 15, 2025, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after August 15, 2025, noteholders may convert their notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The 2026 Convertible Notes will mature on February 15, 2026, unless earlier repurchased, redeemed or converted. The initial conversion rate is 34.2618 shares of common stock per $1 principal amount of 2026 Convertible Notes, which represents an initial conversion price of approximately $29.19 per share of common stock. The conversion rate and conversion price are subject to adjustment upon the occurrence of certain events. Holders of the 2026 Convertible Notes may convert all or any portion of their 2026 Convertible Notes, in multiples of $1 principal amount, at their option only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2020, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the “trading price” per $1 principal amount of the 2026 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls the 2026 Convertible Notes for redemption; or (5) at any time from, and including, August 15, 2025 until the close of business on the scheduled trading day immediately before the maturity date. As of September 30, 2023, none of the above circumstances had occurred and as such, the 2026 Convertible Notes could not have been converted. The Company did not have the right to redeem the 2026 Convertible Notes prior to February 15, 2023. On or after February 15, 2023, the Company may redeem the 2026 Convertible Notes, in whole and not in part, at a cash redemption price equal to the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on: (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. Calling any 2026 Convertible Notes for redemption will constitute a make-whole fundamental change, in which case the conversion rate applicable to the conversion of any 2026 Convertible Notes, if converted in connection with the redemption, will be increased in certain circumstances for a specified period of time. The 2026 Convertible Notes have customary default provisions, including: (i) a default in the payment when due (whether at maturity, upon redemption or repurchase upon fundamental change or otherwise) of the principal of, or the redemption price or fundamental change repurchase price for, any note; (ii) a default for 30 days in the payment when due of interest on any note; (iii) a default in the Company’s obligation to convert a note in accordance with the indenture, if such default is not cured within 3 calendar days after its occurrence; (iv) a default with respect to the Company’s obligations under the indenture related to consolidations, mergers and asset sales; (v) a default in any of the Company’s other obligations or agreements under the indenture that are not cured or waived within 60 days after notice to the Company; (vi) certain payment defaults by the Company or certain subsidiaries with respect to mortgages, agreements or other instruments for indebtedness for money borrowed of at least $20,000 or other defaults by the Company or certain subsidiaries with respect to such indebtedness that result in the acceleration of such indebtedness; (vii) default upon the occurrence of one or more final judgments being rendered against the Company or any of the Company’s significant subsidiaries for the payment of at least $20,000 ; and (viii) certain events of bankruptcy, insolvency and reorganization with respect to the Company or any of its significant subsidiaries. Repurchase of a Portion of the 2026 Convertible Notes Contemporaneously with the offering of the 2029 Convertible Notes (as defined below), the Company entered into separate privately negotiated transactions with certain holders of the 2026 Convertible Notes to repurchase $117,400 aggregate principal amount of the 2026 Convertible Notes for an aggregate of $140,100 of cash, which includes accrued and unpaid interest on the 2026 Convertible Notes to be repurchased. This transaction involved a contemporaneous exchange of cash between the Company and holders of the 2026 Convertible Notes participating in the issuance of the 2029 Convertible Notes. Accordingly, the Company evaluated the transaction for modification or extinguishment accounting in accordance with Accounting Standards Codification (“ASC”) 470-50 , Debt – Modifications and Extinguishments 2029 Convertible Notes On February 10, 2023, the Company issued 2.875% convertible senior notes due in 2029 (the “2029 Convertible Notes”) in the aggregate principal amount of $241,500, in a private offering to qualified institutional buyers pursuant to Section 4(a)(2) and Rule 144A under the Securities Act of 1933, as amended. The 2029 Convertible Notes were issued to finance the concurrent repurchase of a portion of the 2026 Convertible Notes, and the remainder of the net proceeds may be used for general corporate purposes. In connection with the issuance of the 2029 Convertible Notes, the Company incurred approximately $6,280 of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees. The 2029 Convertible Notes are senior, unsecured obligations and bear interest at a rate of 2.875% per year payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2023. The 2029 Convertible Notes will mature on February 15, 2029, unless earlier repurchased, redeemed or converted. Before November 15, 2028, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after November 15, 2028, noteholders may convert their notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The initial conversion rate is 27.3553 shares of common stock per $1 principal amount of 2029 Convertible Notes, which represents an initial conversion price of approximately $36.56 per share of common stock. The conversion rate and conversion price are subject to adjustment upon the occurrence of certain events. Holders of the 2029 Convertible Notes may convert all or any portion of their 2029 Convertible Notes, in multiples of $1 principal amount, at their option only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2023, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the “trading price” per $1 principal amount of the 2029 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls any or all of the 2029 Convertible Notes for redemption, but only with respect to the 2029 Convertible Notes called for redemption; or (5) at any time from, and including, November 15, 2028 until the close of business on the scheduled trading day immediately before the maturity date. As of September 30, 2023, none of the above circumstances had occurred and as such, the 2029 Convertible Notes could not have been converted. The Company may not redeem the 2029 Convertible Notes prior to February 17, 2026. On or after February 17, 2026 and on or before the 40 th (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. However, the Company may not redeem less than all of the outstanding 2029 Convertible Notes unless at least $75,000 aggregate principal amount of the 2029 Convertible Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. Calling any 2029 Convertible Note for redemption will constitute a make-whole fundamental change with respect to that 2029 Convertible Note, in which case the conversion rate applicable to the conversion of that 2029 Convertible Note, if it is converted in connection with the redemption, will be increased in certain circumstances for a specified period of time. The 2029 Convertible Notes have customary default provisions, including: (i) a default in the payment when due (whether at maturity, upon redemption or repurchase upon fundamental change or otherwise) of the principal of, or the redemption price or fundamental change repurchase price for, any note; (ii) a default for 30 days in the payment when due of interest on any note; (iii) a default in the Company’s obligation to convert a note in accordance with the indenture, if such default is not cured within 3 business days after its occurrence; (iv) a default with respect to the Company’s obligations under the indenture related to consolidations, mergers and asset sales; (v) a default in any of the Company’s other obligations or agreements under the indenture that are not cured or waived within 60 days after notice to the Company; (vi) certain payment defaults by the Company or certain subsidiaries with respect to mortgages, agreements or other instruments for indebtedness for money borrowed of at least $30,000 or other defaults by the Company or certain subsidiaries with respect to such indebtedness that result in the acceleration of such indebtedness; (vii) default upon the occurrence of one or more final judgments being rendered against the Company or any of the Company’s significant subsidiaries for the payment of at least $30,000; and (xiii) upon the occurrence of certain events of bankruptcy, insolvency and reorganization with respect to the Company or any of its significant subsidiaries. The 2026 Convertible Notes and 2029 Convertible Notes (together, the “Convertible Notes”) are classified on the condensed consolidated balance sheets as of September 30, 2023 as convertible senior notes. As of September 30, 2023, the outstanding balance of the Convertible Notes consisted of the following: 2026 Convertible Notes 2029 Convertible Notes Total Convertible Notes Principal $ 26,350 $ 241,500 $ 267,850 Less: unamortized issuance costs (401) (5,626) (6,027) Net carrying amount $ 25,949 $ 235,874 $ 261,823 The Company determined the expected life of the 2026 Convertible Notes and 2029 Convertible Notes was equal to the six-year term of each. The effective interest rate on the 2026 Convertible Notes and 2029 Convertible Notes is 3.34% and 3.28%, respectively. As of September 30, 2023, the if-converted value did not exceed the remaining principal amount of the Convertible Notes. The following table presents the total interest expense recognized related to the Convertible Notes during the three and nine months ended September 30, 2023, and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Contractual interest expense $ 1,909 $ 943 $ 5,297 $ 2,830 Amortization of debt issuance costs 302 228 863 678 Total interest expense $ 2,211 $ 1,171 $ 6,160 $ 3,508 As of September 30, 2023, the future minimum payments on the Convertible Notes were as follows: Years ended December 31, 2026 Convertible Notes 2029 Convertible Notes Total Convertible Notes 2023 $ — $ — $ — 2024 692 6,943 7,635 2025 692 6,943 7,635 2026 26,696 6,943 33,639 2027 — 6,943 6,943 Thereafter — 251,915 251,915 Total minimum payments $ 28,080 $ 279,687 $ 307,767 Less: interest (1,730) (38,187) (39,917) Less: unamortized issuance costs (401) (5,626) (6,027) Convertible Notes carrying value $ 25,949 $ 235,874 $ 261,823 |
Equity
Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity | |
Equity | 14. Equity The changes in shareholders’ equity for the three and nine months ended September 30, 2023 were as follows: Additional Accumulated Other Total Common Stock Paid- In Treasury Stock Accumulated Comprehensive Shareholders’ Shares Amount Capital Shares Amount Deficit Loss Equity Balance, December 31, 2022 37,084,759 $ 37 $ 538,073 (3,235,823) $ (61,924) $ (281,344) $ — $ 194,842 Exercise of common stock options 234,132 — 3,848 — — — — 3,848 Issuance for employee stock purchase plan 11,329 — 169 — — — — 169 Vesting of RSUs and PSUs 775,904 1 — — — — — 1 Shares withheld for employee taxes upon vesting of RSUs and PSUs (289,281) — (7,736) — — — — (7,736) Stock-based compensation — — 6,035 — — — — 6,035 Net loss — — — — — (17,426) — (17,426) Balance, March 31, 2023 37,816,843 $ 38 $ 540,389 (3,235,823) $ (61,924) $ (298,770) $ — $ 179,733 Exercise of common stock options 72,405 — 1,251 — — — — 1,251 Vesting of RSUs and PSUs 73,805 — — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (9,655) — (220) — — — — (220) Stock-based compensation — — 7,072 — — — — 7,072 Other comprehensive loss, net of tax — — — — — — (38) (38) Net income — — — — — 13,007 — 13,007 Balance, June 30, 2023 37,953,398 $ 38 $ 548,492 (3,235,823) $ (61,924) $ (285,763) $ (38) $ 200,805 Exercise of common stock options 21,185 — 302 — — — — 302 Issuance for employee stock purchase plan 15,176 — 291 — — — — 291 Vesting of RSUs and PSUs 18,207 — — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (7,359) — (172) — — — — (172) Share repurchases from Accelerated Share Repurchase ("ASR") agreement — — — (1,702,852) (40,000) — — (40,000) Forward contract on ASR agreement — — (10,000) — — — — (10,000) Stock-based compensation — — 7,027 — — — — 7,027 Other comprehensive loss, net of tax — — — — — — (14) (14) Net income — — — — — 20,634 — 20,634 Balance, September 30, 2023 38,000,607 $ 38 $ 545,940 (4,938,675) $ (101,924) $ (265,129) $ (52) $ 178,873 The changes in shareholders’ equity for the three and nine months ended September 30, 2022 were as follows: Additional Total Common Stock Paid- In Treasury Stock Accumulated Shareholders’ Shares Amount Capital Shares Amount Deficit Equity Balance, December 31, 2021 35,806,119 $ 36 $ 502,095 (2,150,717) $ (42,861) $ (256,342) $ 202,928 Exercise of common stock options 190,074 — 3,261 — — — 3,261 Issuance for employee stock purchase plan 13,421 — 203 — — — 203 Vesting of RSUs and PSUs 563,050 — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (191,667) — (3,382) — — — (3,382) Share repurchases — — 5,000 (307,132) (5,000) — — Stock-based compensation — — 6,135 — — — 6,135 Net loss — — — — — (13,069) (13,069) Balance, March 31, 2022 36,380,997 $ 36 $ 513,312 (2,457,849) $ (47,861) $ (269,411) $ 196,076 Exercise of common stock options 102,283 — 1,545 — — — 1,545 Vesting of RSUs and PSUs 111,056 1 — — — — 1 Shares withheld for employee taxes upon vesting of RSUs and PSUs (26,506) — (511) — — — (511) Stock-based compensation — — 5,692 — — — 5,692 Net loss — — — — — (5,191) (5,191) Balance, June 30, 2022 36,567,830 $ 37 $ 520,038 (2,457,849) $ (47,861) $ (274,602) $ 197,612 Exercise of common stock options 10,395 — 142 — — — 142 Issuance for employee stock purchase plan 9,206 — 134 — — — 134 Vesting of RSUs and PSUs 17,644 — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (5,777) — (106) — — — (106) Share repurchases — — — (366,213) (6,422) — (6,422) Stock-based compensation — — 5,377 — — — 5,377 Net income — — — — — 457 457 Balance, September 30, 2022 36,599,298 $ 37 $ 525,585 (2,824,062) $ (54,283) $ (274,145) $ 197,194 Common Stock In May 2015, the Company adopted the Amended and Restated 2014 Stock Incentive Plan (the “Plan”), under which an aggregate of 2,700,000 shares of common stock were authorized for issuance to employees, officers, directors, consultants and advisors of the Company, plus an annual increase on the first day of each fiscal year until the expiration of the Plan equal to 4% of the total number of outstanding shares of common stock on December 31 st st Stock-based Compensation Share Repurchases In August 2021, the Board of Directors authorized a share repurchase program to repurchase up to $100,000 of outstanding shares of the Company’s common stock at any time or times through December 31, 2022 (the “Prior Repurchase Program”). The Prior Repurchase Program permitted the Company to effect repurchases through a variety of methods, including open-market purchases (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, or otherwise in compliance with Rule 10b-18 of the Exchange Act. Shares repurchased under the Prior Repurchase Program were returned to the Company’s pool of authorized but unissued shares available for reissuance. The timing and amount of any such repurchases were determined based on share price, market conditions, legal requirements, and other relevant factors. Through December 31, 2022, the Company repurchased 3,235,823 shares at a weighted-average price of $19.14 per share for a total of $61,924 under the Prior Repurchase Program and the cost of repurchased shares were recorded as treasury stock in the consolidated balance sheet. The Prior Repurchase Program expired on December 31, 2022. In January 2023, the Board of Directors authorized a share repurchase program to repurchase up to $100,000 of the Company’s common stock through December 31, 2023 (the “2023 Repurchase Program”). The 2023 Repurchase Program permits the Company to effect repurchases through a variety of methods, including open-market purchases (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, or otherwise in compliance with Rule 10b-18 of the Exchange Act. The timing and amount of any shares repurchased on the open market will be determined based on the Company’s evaluation of the market conditions, share price and other factors. In July 2023, the Company’s board of directors authorized an accelerated share repurchase program (the “ASR Program”) to repurchase $50,000 of the Company’s common stock, as part of the Company’s existing 2023 Repurchase Program. Under the terms of the Company's ASR agreement with an investment bank (the “ASR Agreement”), the Company paid $50,000 on August 7, 2023, and received 1,702,852 shares, representing 80% of the upfront payment on a price per share of $23.49, the closing price on the date the ASR Agreement was executed. The remaining shares repurchased by the Company were based on the volume-weighted average price of its common stock through October 31, 2023, minus an agreed upon discount between the parties. In October 2023, the Company received an additional 462,442 shares in settlement of the ASR Agreement, bringing the total shares pursuant to the ASR Agreement to 2,165,294. The ASR Agreement was accounted for as two separate transactions: (1) a repurchase of common stock in a treasury stock transaction recorded on August 7, 2023, and (2) a forward contract indexed to the Company’s own common stock which settled in the fourth quarter of 2023. The forward contract for the purchase of the remaining $10,000, representing remaining shares to be delivered by the investment bank under the ASR Agreement, was recorded as a reduction to stockholders’ equity as of September 30, 2023. Forward contracts to repurchase a variable number of the Company’s equity shares that require physical settlement are accounted for in conformity with guidance in ASC 815-10-15. Under ASC 815-10-15-74, contracts issued or held by a company that are both (1) indexed to its own stock and (2) classified in stockholders’ equity in its statement of financial position are not considered to be derivative instruments. Based on the transaction structure, the Company concluded that the forward purchase contract portion of the Company’s ASR Agreement satisfied these criteria and accordingly was classified as an equity instrument. In accordance with ASC 260-10-55-88, the above-noted treasury stock acquisition resulted in an immediate reduction of 1,702,852 shares from the outstanding shares used to calculate the weighted-average common shares outstanding for both basic and diluted earnings per share. The forward contract was outstanding as of September 30, 2023. As the Company was entitled to receive additional shares of its common stock in connection with the outstanding forward contract as of September 30, 2023, the receipt of additional shares of common stock would be antidilutive. Therefore, no adjustments were made in the computation of earnings per share for the period the forward was outstanding. As of September 30, 2023, the Company repurchased 1,702,852 shares at a weighted-average price of $23.49 per share for a total of $40,000 under the 2023 Repurchase Program and the cost of repurchased shares was recorded as treasury stock in the condensed consolidated balance sheet. As of September 30, 2023, $60,000 remained available for share repurchases under the 2023 Repurchase Program, which reflects the $10,000 forward contract that was not yet settled as of September 30, 2023. The Company has utilized, and plans to continue to utilize, existing cash on hand to fund the 2023 Repurchase Program. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Stock-based Compensation | |
Stock-based Compensation | 15. Stock-based Compensation Performance Share Units The Company periodically grants PSUs to certain members of the Company's senior management team. PSUs vest subject to the satisfaction of annual and cumulative performance and/or market conditions established by the Company’s Compensation Committee. A summary of the Company’s PSU activity for the nine months ended September 30, 2023 and related information is as follows: Weighted-Average Shares Grant Date Fair Value Outstanding as of December 31, 2022 447,770 $ 28.71 Granted 216,500 38.71 Vested (223,170) 27.99 Forfeited — — Performance adjustment 62,780 27.14 Outstanding as of September 30, 2023 503,880 $ 33.13 The number of PSUs granted represents the target number of shares of common stock that may be earned. However, the actual number of shares earned may vary based on the satisfaction of performance criteria. The weighted-average grant date fair value of PSUs granted for the nine months ended September 30, 2023, and 2022 was $38.71 and $24.12, respectively. Restricted Stock Units The Company granted RSUs to employees during the nine months ended September 30, 2023. The Company’s RSUs generally vest ratably over a four-year period of service. A summary of the Company’s RSU activity for the nine months ended September 30, 2023 and related information is as follows: Weighted-Average Shares Grant Date Fair Value Outstanding as of December 31, 2022 2,047,571 $ 19.67 Granted 1,268,907 26.27 Vested (644,746) 19.90 Forfeited (179,711) 21.85 Outstanding as of September 30, 2023 2,492,021 $ 22.81 The weighted-average grant date fair value per share of RSUs granted for the nine months ended September 30, 2023 and 2022 was $26.27 and $17.48, respectively. The total fair value of RSUs vested (measured on the date of vesting) for the nine months ended September 30, 2023, and 2022 was $16,906 and $10,020, respectively. Stock Options A summary of the Company’s stock option activity for the nine months ended September 30, 2023 and related information is as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Price Contractual Intrinsic Shares per Share Term (in years) Value Outstanding as of December 31, 2022 1,683,805 $ 18.84 5.5 $ 7,953 Exercised (327,722) 16.43 Cancelled (8,923) 18.87 Outstanding as of September 30, 2023 1,347,160 $ 19.43 4.7 $ 4,952 Exercisable as of September 30, 2023 1,310,344 $ 19.38 4.6 $ 4,910 There were no stock options granted during the nine months ended September 30, 2023 and 2022. Employee Stock Purchase Plan The Company’s 2015 Employee Stock Purchase Plan allows employees to purchase shares of the Company’s common stock. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on (1) the first day of the purchase period or (2) the last day of the purchase period. During the nine months ended September 30, 2023, 26,505 shares of common stock were purchased for total proceeds of $460. The expense for the three months ended September 30, 2023 and 2022 was $55 and $28, respectively. The expense for the nine months ended September 30, 2023 and 2022 was $155 and $88, respectively. Stock-based Compensation Expense A summary of the allocation of the Company’s stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Research and development $ — $ — $ — $ 1,591 Selling, general and administrative 7,027 5,377 20,134 15,613 Total stock-based compensation expense $ 7,027 $ 5,377 $ 20,134 $ 17,204 As of September 30, 2023, there was approximately $50,041 of unrecognized compensation expense related to unvested options, restricted stock units and performance stock units, which is expected to be recognized as expense over a weighted average period of approximately 2.6 years. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 16. Commitments and Contingencies Legal Proceedings From time to time, the Company may face legal claims or actions in the normal course of business. Except as disclosed below, the Company is not currently a party to any material litigation and, accordingly, does not have any other amounts recorded for any litigation related matters. Xtampza ER Litigation The Company filed the New Drug Application (“NDA”) for Xtampza ER as a 505(b)(2) application, which allows the Company to reference data from an approved drug listed in the FDA’s Orange Book, in this case OxyContin. The 505(b)(2) process requires that the Company certify to the FDA that the Company does not infringe any of the patents listed for OxyContin in the Orange Book, or that the patents are invalid. The process also requires that the Company notify Purdue Pharma, L.P (“Purdue”), as the holder of the NDA, and any other Orange Book-listed patent owners that it has made such a certification. On February 11, 2015, the Company made the required certification documenting why Xtampza ER does not infringe any of the 11 Orange Book-listed patents for OxyContin, five of which have been invalidated in court proceedings, and provided the required notice to Purdue. Under the Drug Price Competition and Patent Term Restoration Act of 1984, Purdue had the option to sue the Company for infringement and receive a stay of up to 30 months before the FDA could issue a final approval for Xtampza ER, unless the stay was earlier terminated. In response to these actions, Purdue sued the Company for infringement in the District of Delaware on March 24, 2015 asserting infringement of three of Purdue’s Orange Book-listed patents (Patent Nos. 7,674,799, 7,674,800, and 7,683,072) and a non-Orange Book-listed patent (Patent No. 8,652,497), and accordingly, received a 30-month stay of FDA approval. The Delaware court transferred the case to the District of Massachusetts. After the Company filed a partial motion for judgment on the pleadings relating to the Orange Book-listed patents, the District Court of Massachusetts ordered judgment in the Company’s favor on those three patents, and dismissed the claims asserting infringement of those patents with prejudice. Upon dismissal of those claims, the 30-month stay of FDA approval was lifted. As a result, the Company was able to obtain final approval for Xtampza ER and launch the product commercially. Purdue subsequently filed two follow-on lawsuits asserting infringement of two patents that had been late-listed in the Orange Book and therefore, could not trigger any stay of FDA approval: Purdue filed suit asserting infringement of Patent No. 9,073,933 in November 2015, and asserted infringement of Patent No. 9,522,919 in April 2017. In addition, Purdue filed suit on two patents that had not been listed in the Orange Book, filing suit in June 2016 asserting infringement of Patent No. 9,155,717 and in September 2017, asserting infringement of Patent No. 9,693,961. On March 13, 2018, the Company filed a Petition for Post-Grant Review (“PGR”) of the ʼ961 patent with the Patent Trial and Appeal Board (“PTAB”). The PGR argues that the ʼ961 patent is invalid for lack of a written description, for lack of enablement, for indefiniteness, and as being anticipated by prior art. The PTAB held oral argument on the proceedings on July 10, 2019 and was scheduled to issue a decision on the patentability of the ʼ961 patent by no later than October 4, 2019. On September 15, 2019, Purdue commenced a voluntary case under chapter 11 of title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. On September 24, 2019, Purdue gave the PTAB notice of its bankruptcy filing and sought the imposition of an automatic stay of the PGR proceedings. On October 2, 2019, the PTAB extended the one-year period for issuing its decision by up to six months. In October 2017, and in response to the filing of the Company’s supplemental New Drug Application (“sNDA”) seeking to update the drug abuse and dependence section of the Xtampza ER label, Purdue filed another suit asserting infringement of the ʼ933 and ʼ919 patent. The Company filed a motion to dismiss that action, and the Court granted its motion on January 16, 2018. A claim construction hearing was held on June 1, 2017. On November 21, 2017, the Court issued its claim construction ruling, construing certain claims of the ʼ933, ʼ497, and ʼ717 patents. The Court issued an order on September 28, 2018 in which it granted in part a motion for summary judgment that the Company filed. Specifically, the Court ruled that the Xtampza ER formulation does not infringe the ʼ497 and ʼ717 patents. On September 18, 2019, Purdue gave the Court notice of its bankruptcy filing and sought the imposition of an automatic stay of the proceedings. On September 20, 2019, the matter was stayed pending further order of the Court. On September 1, 2020, the Bankruptcy Court entered an Order Granting Motions for Relief from the Automatic Stay, lifting the automatic stays in both the District of Massachusetts and PTAB proceedings. The Company appealed the Bankruptcy Court’s Order, in part, and that appeal is stayed, on consent by Purdue, pending the outcome of any appeal of the PTAB proceedings. On September 11, 2020, Purdue filed a motion to terminate the PTAB action on the basis that those proceedings had gone beyond the 18-month statutory period. The Company opposed Purdue’s motion. On November 19, 2021, the PTAB (i) denied Purdue’s motion to terminate the PGR and (ii) issued its Final Written Decision, finding that claims 1-17 of the ʼ961 patent were invalid for lack of written description and anticipation. On December 17, 2021, Purdue filed a Request for Director Review. That request was denied on February 7, 2022. On February 16, 2022, Purdue filed a Federal Circuit notice of appeal. On April 12, 2022, the Company filed a Motion to Dismiss the Appeal as Untimely. On May 20, 2022, the Federal Circuit denied the Motion to Dismiss and directed the parties to address jurisdiction during merits briefing. Oral arguments in the appeal were heard on September 5, 2023. On April 2, 2021, the Court granted Purdue’s Motion to Lift the Stay in the District of Massachusetts that was entered following Purdue’s Notice of Bankruptcy. On April 9, 2021, Purdue filed another follow-on lawsuit asserting infringement of U.S. Patent No. 10,407,434, which was late-listed in the Orange Book and therefore could not trigger any stay of FDA approval. The Company responded to Purdue’s complaint asserting the ’434 patent with a motion to dismiss. On May 21, 2021, and in response to the Company’s motion to dismiss, Purdue filed an amended complaint asserting the ’434 patent. The Company renewed its motion to dismiss on June 4, 2021, arguing: (i) Purdue cannot, as a matter of law, state a claim for infringement under § 271(e)(2)(A); (ii) Purdue cannot, as a matter of law, state a claim for product-by-process infringement under §271(g); and (iii) Purdue has not alleged facts sufficient to support any indirect infringement theory under §271(b) or (c). The Court held a hearing on the Company’s motion to dismiss on October 13, 2021, and the motion is pending before the Court. Like the prior follow-on lawsuits, the ’434 patent litigation was consolidated into the lead case and a scheduling order was entered. On October 5, 2021, the Court held a claim construction hearing for the ʼ961 patent and the ʼ434 patent. On May 15, 2023, the Court issued an order that (i) vacated the existing deadlines with respect to the ʼ933, ʼ919, and ʼ434 patents and stayed the case pending the Federal Circuit’s decision in a different litigation that invalidated certain claims of the ʼ933 and ʼ919 patents and (ii) continued the existing stay concerning the ʼ961 patent pending Purdue’s appeal of the PTAB’s order invalidating that patent. The Court has not set a deadline for dispositive motions or trial. The remaining patents-in-suit in the lead consolidated action in the District of Massachusetts are the ʼ933, ʼ919, ʼ434, and ʼ961 patents. The parties agreed, however, that litigation concerning the ʼ961 patent is stayed pending resolution of Purdue’s Federal Circuit appeal of the PTAB decision invalidating the claims of the ʼ961 patent. Purdue has made a demand for monetary relief, and requested a judgment of infringement, an adjustment of the effective date of FDA approval, and an injunction on the sale of the Company’s products accused of infringement. The Company has denied all claims and has requested a judgment that the remaining asserted patents are invalid and/or not infringed; the Company is also seeking a judgment that the case is exceptional and has requested an award of the Company’s attorneys’ fees for defending the case. The Company plans to defend this case vigorously. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any. Nucynta Litigation On February 7, 2018, Purdue filed a patent infringement suit against the Company in the District of Delaware. Specifically, Purdue argues that the Company’s sale of immediate-release and extended-release Nucynta infringes U.S. Patent Nos. 9,861,583, 9,867,784, and 9,872,836. Purdue has made a demand for monetary relief in its complaint but has not quantified its alleged damages. On December 6, 2018, the Company filed an Amended Answer asserting an affirmative defense for patent exhaustion. On December 10, 2018, the Court granted the parties’ stipulation for resolution of the Company’s affirmative defense of patent exhaustion and stayed the action, with the exception of briefing on and resolution of the Company’s Motion for Judgment on the Pleadings related to patent exhaustion and any discovery related to that Motion. Also, on December 10, 2018, the Company filed a Rule 12(c) Motion for Judgment on the Pleadings, arguing that the Purdue’s claims were barred by the doctrine of patent exhaustion. On June 18, 2019, the Court heard oral argument on the Company’s Rule 12(c) Motion for Judgment on the Pleadings. On June 19, 2019, the Court issued an order stating that “judgment in Collegium’s favor is warranted under the doctrine of patent exhaustion to the extent Collegium’s alleged infringing activities resulted from sales that fall within the scope of that covenant.” The Court explained, however, that based on the current record, it was not possible “to determine whether title of the Nucynta Products was transferred to Collegium” from sales authorized by Purdue’s covenant not to sue. The Court ordered discovery on this issue and the case remained “stayed with the exception of discovery and briefing on and resolution of the Company’s anticipated motion for summary judgment based on patent exhaustion.” On September 19, 2019, Purdue gave the Court notice of its bankruptcy filing and sought the imposition of an automatic stay of the proceedings. The Nucynta litigation is subject to the automatic bankruptcy stay. Pending resolution of the bankruptcy action, the Company plans to defend this case vigorously. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any. Litigation Related to the BDSI Acquisition On February 25, 2022, in connection with the BDSI Acquisition, a purported individual stockholder of BDSI filed a complaint in the United States District Court for the Southern District of New York, captioned Stein v. BioDelivery Sciences International, Inc., et al. Stein Sanford v. BioDelivery Sciences International, Inc., et al Sanford Higley v. BioDelivery Sciences International, Inc., et al. Higley Justice II v. BioDelivery Sciences International, Inc., et al. Justice Zomber v. BioDelivery Sciences International, Inc., et al. Zomber Stein Sanford Higley Justice The Merger Litigations filed to date generally allege that the Schedule 14D-9 is materially incomplete and misleading by allegedly failing to disclose purportedly material information relating to the sale process leading to the Merger, BDSI’s financial projections, and the analyses performed by Moelis & Company LLC in connection with the Merger. The Merger Litigations assert violations of Section 14(e) of the Exchange Act and violations of Section 20(a) of the Exchange Act against BDSI’s Board of Directors. Additionally, the Stein, Higley, Justice Zomber In addition, on February 24, 2022, February 28, 2022, and March 7, 2022, BDSI received demand letters from three purported stockholders of BDSI seeking to inspect certain books and records of BDSI related to the Merger (collectively, the “Inspection Letters”). On March 4, 2022, March 9, 2022, and March 11, 2022, BDSI received demand letters from four purported stockholders alleging that the Schedule 14D-9 omits purportedly material information relating to the Merger (collectively, the “Demand Letters”). On April 14, 2022, plaintiff in the Higley Zomber Justice Stein Sanford Sanford Sanford Stein While the Company believes that the remaining Merger Litigations, Inspection Letters, and Demand Letters are without merit and that the disclosures in the Schedule 14D-9 comply fully with applicable law, solely in order to avoid the expense and distraction of litigation, BDSI previously determined to voluntarily supplement the Schedule 14D-9 with certain supplemental disclosures set forth in BDSI’s Schedule 14D-9 filed with the SEC on March 11, 2022 (the “Supplemental Disclosures”). The Company and BDSI believe that the Supplemental Disclosures mooted all allegations or concerns raised in the Merger Litigations, Inspection Letters, and Demand Letters. As set forth in the Supplemental Disclosures, nothing therein shall be deemed an admission of the legal necessity or materiality under applicable law of the Supplemental Disclosures. To the contrary, the Company and BDSI specifically deny all allegations that any of the Supplemental Disclosures, or any other additional disclosures, were or are required. The Company intends to defend the Merger Litigations vigorously. In connection with the Supplemental Disclosures, however, the Company has agreed to pay certain fees based on the purported benefit that the stockholders brought to the Company and its other stockholders through the Actions, Inspection Letters, and Demand Letters. Opioid Litigation As a result of the opioid epidemic, numerous state and local governments, healthcare providers, and other entities brought suit against manufacturers, wholesale distributors, and pharmacies alleging a variety of claims related to opioid marketing and distribution practices. In late 2017, the U.S. Judicial Panel on Multidistrict Litigation ordered the consolidation of cases pending around the country in federal court against opioid manufacturers and distributors into a Multi-District Litigation (“MDL”) in the Northern District of Ohio. Of the 21 MDL cases that named the Company as a defendant, the allegations against it were previously dismissed or withdrawn in 13 cases as of December 31, 2021. The remaining eight MDL cases that named the Company were dismissed as of April 19, 2022. In addition, the Company had been previously dismissed from three non-MDL cases filed in Pennsylvania and Arkansas state courts. Outside of the MDL, there were several cases filed against the Company in state courts in Pennsylvania and Massachusetts: ● In Pennsylvania, six lawsuits naming the Company were consolidated for discovery purposes in the Delaware County Court of Common Pleas as part of a consolidated proceeding of similar lawsuits brought by numerous Pennsylvania counties against other pharmaceutical manufacturers and distributors. These included lawsuits filed between May 2018 and July 2019, alleging claims related to opioid marketing and distribution, including negligence, fraud, unjust enrichment, public nuisance, and violations of state consumer protections laws. ● In Massachusetts, there were lawsuits by 13 municipalities, all of which were consolidated before the Business Litigation Session of the Superior Court. The actions alleged a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, violations of Mass Gen. Laws ch. 93A, Section 11, unjust enrichment and civil conspiracy. On December 24, 2021, the Company entered into a settlement framework with Scott+Scott Attorneys at Law, LLP, the law firm representing plaintiffs in each of the 27 cases, including the 8 remaining MDL cases and 19 state court cases described above. Pursuant to the terms of the settlement framework, which were later memorialized in a final settlement agreement, the Company agreed to pay $2,750 in exchange for the dismissal, with prejudice, of each plaintiff’s lawsuit against the Company and a release of claims related to such lawsuits. The settlement agreement was executed by the Company and all 27 plaintiffs, and the amounts subject to the settlement agreement were paid. As of April 19, 2022, the Company was dismissed, with prejudice, from each of the 27 cases. The Company entered into this settlement to efficiently resolve this litigation and does not admit any liability or acknowledge any wrongdoing in connection with the settlement agreement. Aquestive Litigation On October 29, 2013, Reckitt Benckiser, Inc., Indivior PLC (formerly RB Pharmaceuticals Limited, “Indivior”), and Aquestive Therapeutics, Inc. (formerly MonoSol Rx, “Aquestive”) (collectively, the “RB Plaintiffs”) filed an action against BDSI relating to its Bunavail product in the United States District Court for the Eastern District of North Carolina (“EDNC”) for alleged patent infringement. Bunavail is a drug approved for the maintenance treatment of opioid dependence. This case was dismissed, but the RB Plaintiffs subsequently filed an action against BDSI, on September 22, 2014, relating to Bunavail product in the United States District Court for the District of New Jersey for alleged patent infringement. The RB Plaintiffs claimed that Bunavail, whose formulation and manufacturing processes have never been disclosed publicly, infringes its U.S. Patent No. 8,765,167 (the “’167 Patent”). On January 13, 2017, Aquestive filed a complaint in the United States District Court for the District of New Jersey alleging Belbuca infringes the ’167 Patent. On March 8, 2023, the parties filed a stipulation of dismissal. The RB Plaintiffs dismissed their claims with prejudice, and BDSI dismissed its counterclaims without prejudice. Under the terms of the settlement agreement, BDSI resolved both the Bunavail and Belbuca litigations in exchange for a one-time, lump-sum payment of $8,500 to Aquestive. Chemo Research, S.L On March 1, 2019, BDSI filed a complaint for patent infringement in Delaware against Chemo Research, S.L., Insud Pharma S.L., IntelGenx Corp., and IntelGenx Technologies Corp. (collectively, the “Chemo Defendants”), asserting that the Chemo Defendants infringe its Orange Book-listed patents for BELBUCA, including U.S. Patent Nos. 8,147,866 (“’866 patent”) and 9,655,843, (“’843 patent”) both expiring in July of 2027, and U.S. Patent No. 9,901,539 (“’539 patent”) expiring December of 2032 (collectively, “the BEMA patents”). This complaint follows a receipt by BDSI on January 31, 2019, of a Notice Letter from Chemo Research S.L. stating that it has filed with the FDA an abbreviated New Drug Application (“ANDA”) containing a Paragraph IV Patent Certification, for a generic version of BELBUCA Buccal Film in strengths 75 mcg, 150 mcg, 300 mcg, 450 mcg, and 900 mcg. Because BDSI initiated a patent infringement suit asserting the patents identified in the Notice Letter within 45 days after receipt, the FDA is prevented from approving the ANDA until the earlier of 30 months or a decision in the case that each of the patents is not infringed or invalid. On March 15, 2019, BDSI filed a complaint against the Chemo Defendants in the Federal District Court for the District of New Jersey asserting the same claims for patent infringement made in the Delaware lawsuit. On April 19, 2019, Defendants filed an answer to the Delaware complaint wherein they denied infringement of the ’866, ’843 and ’539 patents and asserted counterclaims seeking declaratory relief concerning the alleged invalidity and non-infringement of such patents. On April 25, 2019, BDSI voluntarily dismissed the New Jersey lawsuit given Defendants’ consent to jurisdiction in Delaware. The trial to adjudicate issues concerning the validity of the Orange Book-listed patents covering BELBUCA was held from March 1-3, 2021. Chemo did not participate in the bench trial. Instead, on February 26, 2021, Chemo agreed to be bound by the decision of the Court with respect to the validity of the BEMA patents from the March 1-3, 2021 trial with Alvogen. On December 20, 2021, the Court issued an opinion upholding the validity of certain claims in BDSI’s ʼ866 patent, which expires in 2027, and certain claims in the ’539 patent, which expires in 2032, to which Chemo is bound. This holding was affirmed on appeal by the Federal Circuit on December 21, 2022. The bench trial to adjudicate issues concerning the Chemo Defendants’ infringement of the Orange Book patents was set to commence on April 25, 2022. On March 30, 2022, the Court vacated the trial and has not yet set a new trial date. On August 1, 2022, BDSI received a second Paragraph IV certification notice letter from Chemo indicating that Chemo has amended its ANDA to (i) withdraw its generic version of the 75 mcg and 150 mcg strengths of BELBUCA; and (ii) include its generic version of the 600 mcg and 750 mcg strengths of BELBUCA, in addition to the 300 mcg, 450 mcg, and 900 mcg strengths identified in the first Chemo Paragraph IV certification notice letter. In response, BDSI filed a complaint for patent infringement in Federal District Court for the District of Delaware. Chemo answered the complaint on December 1, 2022. The Court has not set a schedule for this litigation. On August 24, 2022, the Court instructed the parties to update the Court at such time as the FDA addresses Chemo's July 29, 2022 response to the FDA. On February 8, 2023, the district court denied Chemo’s request for a trial date in the spring, and again instructed the parties to update the Court at such time as the FDA addresses Chemo’s July 29, 2022 response to the FDA. Chemo received a complete response letter with respect to its July 29, 2022 ANDA in April 2023. The Company plans to litigate these cases vigorously. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any. Alvogen On September 7, 2018, BDSI filed a complaint for patent infringement in United States District Court for the District of Delaware against Alvogen Pb Research & Development LLC, Alvogen Malta Operations Ltd., Alvogen Pine Brook LLC, Alvogen, Incorporated, and Alvogen Group, Incorporated (collectively, “Alvogen”), asserting that Alvogen infringes BDSI’s Orange Book-listed patents for BELBUCA, including U.S. Patent Nos. 8,147,866 and 9,655,843, both expiring in July of 2027, and U.S. Patent No. 9,901,539, expiring in December of 2032 (collectively, “the BEMA patents”) the FDA is prevented from approving the ANDA until the earlier of 30 months or a decision in the case that each of the patents is not infringed or invalid. The Court scheduled a bench trial to adjudicate issues concerning the validity of the BEMA patents. A three-day bench trial against Alvogen was conducted commencing on March 1, 2021. On December 20, 2021, the Court issued an opinion upholding the validity of certain claims in BDSI’s ʼ866 patent, which expires in 2027, and certain claims in the ’539 patent, which expires in 2032. Alvogen conceded infringement of those claims prior to the trial. The Court entered final judgment on January 21, 2022. The final judgment entered in this case upholding the validity of claims of the ’866 and ’539 Orange Book-listed patents extends the effective date of any final approval by the FDA of Alvogen’s ANDA until December 21, 2032, which is the expiration date of the ’539 patent, and enjoins Alvogen and those acting in concert with Alvogen from commercially manufacturing, using, selling, or offering for sale Alvogen’s ANDA products until December 21, 2032. Alvogen filed a motion to stay certain provisions of the final judgment in the Court. BDSI filed an opposition to Alvogen’s request for a stay. The Court retained jurisdiction to decide BDSI’s motion for contempt, which was filed on September 21, 2021. Alvogen filed a notice of appeal to the Federal Circuit seeking to reverse the Court’s final judgment entered on January 21, 2022. Separately, BDSI filed a cross-appeal to the Federal Circuit seeking to reverse the Court’s opinion that claims 3 and 10 of the ʼ866 patent and claims 8, 9 and 20 of the ’843 patent are invalid and thus Alvogen is not liable for infringement of those claims, as well as any other ruling decided adversely to BDSI. On November 1, 2022, the Federal Circuit held oral argument on the parties’ appeal and issued its decision on December 21, 2022. In that decision, the Federal Circuit affirmed the district court judgment that certain claims of the ʼ866 and ʼ539 patent were not invalid as obvious. The Federal Circuit also vacated the district court’s judgment that certain claims of the ʼ866 and ʼ843 patent were invalid as obvious and remanded to the district court for further proceedings. The mandate issued on February 10, 2023. As it has done in the past, the Company intends to vigorously defend its intellectual property against assertions of invalidity or non-infringement. Opioid-Related Request and Subpoenas The Company, like a number of other pharmaceutical companies, has received subpoenas or civil investigative demands related to opioid sales and marketing. The Company has received such subpoenas or civil investigative demands from the Offices of the Attorney General of each of Washington, New Hampshire, Maryland and Massachusetts. On December 16, 2021, the Company entered into an Assurance of Discontinuance with the Massachusetts Attorney General (the “AoD”). The Company is currently cooperating with each of the remaining states in their respective investigations. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | 17. Income Taxes The Company is subject to U.S. federal and state income taxes. The income tax provision for interim periods reflects the Company’s estimate of the annual effective tax rate expected to be applicable for the full fiscal year, adjusted for any discrete events which are recorded in the period in which they occur. The following table presents information regarding the Company’s income tax expense (benefit) recognized for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Provision for (benefit from) income taxes $ 8,149 $ 975 $ 12,808 $ (3,253) Effective tax rate 28.3 % 68.1 % 44.1 % 15.4 % The provision for income taxes for the three months ended September 30, 2023 reflects the estimated annual effective tax rate as adjusted for discrete tax benefits from excess tax benefits from equity compensation awards. The provision for income taxes for the nine months ended September 30, 2023 was impacted by discrete nondeductible costs associated with the debt extinguishment that occurred in the three months ended March 31, 2023, partially offset by excess tax benefits related to stock compensation. The nondeductible costs from the debt extinguishment were $21,238. The Company provides a valuation allowance when it is more likely than not that deferred tax assets will not be realized. In determining the extent to which a valuation allowance for deferred tax assets is required, the Company evaluates all available evidence including projections of future taxable income, carry back opportunities, reversal of certain deferred tax liabilities, and other tax planning strategies. The Company has maintained a valuation allowance on the portion of its deferred tax assets that are not more likely than not to be realized due to tax limitation or other conditions as of September 30, 2023. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Collegium Pharmaceutical, Inc. (a Virginia corporation) and its subsidiaries. The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of the Company’s management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to fairly present the financial position of the Company as of September 30, 2023, the results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year. The preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Estimates in the Company’s consolidated financial statements include revenue recognition, including the estimates of product returns, discounts and allowances related to commercial sales of products, estimates related to the fair value of assets acquired and liabilities assumed, including acquired intangible assets and the fair value of inventory acquired, estimates utilized in the ongoing valuation of inventory related to potential unsaleable product, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, impairment of intangible assets and deferred tax valuation allowances. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. The consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s most recently filed annual report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report”). |
Marketable Securities | Marketable Securities As of September 30, 2023, the Company’s marketable securities consisted of investments in available-for-sale corporate debt, U.S. Treasury, and government-sponsored securities with readily determinable fair values. The Company classifies available-for-sale marketable securities as current assets on its consolidated balance sheets. The fair value of these securities is based on quoted prices for identical assets or inputs other than quoted prices that are observable for similar assets, either directly or indirectly. The Company records interest earned and net amortization of premiums and discounts on investments within interest income on its consolidated statements of operations. The Company records unrealized gains (losses) on available-for-sale debt securities as a component of Accumulated other comprehensive (loss) income, For available-for-sale debt securities in unrealized loss positions, the Company is required to assess whether to record an allowance for credit losses using an expected loss model. A credit loss is limited to the amount by which the amortized cost of an investment exceeds its fair value. A previously recognized credit loss may be decreased in subsequent periods if the Company’s estimate of fair value for the investment increases. To determine whether to record a credit loss, the Company considers issuer specific credit ratings and historical losses as well as current economic conditions and expectations for future economic conditions. There were no other changes in the Company’s significant accounting policies from those described in the Company’s Annual Report. |
Subsequent Events | Subsequent Events In November 2023, the Company’s Board of Directors authorized an accelerated share repurchase program to repurchase $25,000 of the Company’s common stock, as part of the $100,000 repurchase program authorized in January 2023. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as required by the specified effective dates. Following the cessation of the London Interbank Offered Rate (“LIBOR”) in the United States on June 30, 2023, the Company elected to apply the optional expedient provided in FASB Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Recently Issued Accounting Pronouncements Not Yet Adopted Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the consolidated financial statements upon future adoption. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contracts with Customers | |
Summary of product revenue provision and allowance | Trade Rebates and Product Allowances and Incentives (1) Returns (2) Chargebacks (3) Balance as of December 31, 2022 $ 156,937 $ 73,554 $ 22,058 Provision related to current period sales 325,725 31,904 112,550 Changes in estimate related to prior period sales 2 3,722 589 Credits/payments made (315,170) (31,662) (113,263) Balance as of September 30, 2023 $ 167,494 $ 77,518 $ 21,934 Trade Rebates and Product Allowances and Incentives (1) Returns (2) Chargebacks (3) Balance as of December 31, 2021 $ 142,379 $ 54,617 $ 13,226 Acquired from BDSI 38,074 18,187 7,575 Provision related to current period sales 368,880 26,508 94,859 Changes in estimate related to prior period sales (304) (838) (580) Credits/payments made (385,298) (20,987) (93,946) Balance as of September 30, 2022 $ 163,731 $ 77,487 $ 21,134 (1) Provisions for rebates and incentives includes managed care rebates, government rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s consolidated balance sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s consolidated balance sheets. (3) Provisions for trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s consolidated balance sheets. |
Schedule of disaggregation of revenue | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Belbuca $ 45,447 $ 38,802 $ 132,795 $ 84,413 Xtampza ER 39,800 38,859 128,914 103,567 Nucynta IR 24,906 27,274 80,963 83,163 Nucynta ER 22,634 17,133 62,941 53,473 Symproic 3,922 3,580 11,409 7,740 Other — 1,365 — 1,957 Total product revenues, net $ 136,709 $ 127,013 $ 417,022 $ 334,313 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Acquisitions | |
Schedule of consideration paid for acquisition | The total consideration paid for the BDSI acquisition was approximately $669,431 consisting of the following (in thousands, except per share amounts): Fair Value of Purchase Price Consideration Amount Fair value of purchase price consideration paid at closing: Cash consideration for all outstanding shares of BDSI's common and preferred stock (103,235,298 shares acquired at $5.60 per share) $ 578,118 Cash consideration paid to settle RSUs and in-the-money options 28,309 Cash paid to settle BDSI debt 63,004 Total purchase consideration $ 669,431 |
Schedule of preliminary allocation of acquisition purchase price | The following tables set forth the final allocation of the BDSI Acquisition purchase price to the estimated fair value of the net assets acquired at the Acquisition Date: Amounts Recognized at the Acquisition Date Assets Acquired Cash and cash equivalents $ 97,362 Accounts receivable 55,495 Inventory 77,382 Prepaid expenses and other current assets 6,125 Property and equipment 1,242 Operating lease assets 481 Intangible assets 435,000 Total assets $ 673,087 Liabilities Assumed Accounts payable $ 12 Accrued expenses 18,249 Accrued rebates, returns and discounts 56,261 Operating lease liabilities 481 Deferred tax liabilities 62,510 Total liabilities $ 137,513 Total identifiable net assets acquired 535,574 Goodwill 133,857 Total consideration transferred $ 669,431 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share | |
Schedule of computations of basic and diluted net (loss) per share | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ 20,634 $ 457 $ 16,215 $ (17,803) Adjustment for interest expense recognized on convertible senior notes 1,645 — — — Net income (loss) - diluted $ 22,279 $ 457 $ 16,215 $ (17,803) Denominator: Weighted-average shares outstanding — basic 33,744,209 34,058,802 34,226,488 33,912,832 Effect of dilutive securities: Stock options 222,355 191,454 263,513 — Restricted stock units 583,153 320,063 659,153 — Convertible senior notes 7,509,104 — — — Weighted average shares outstanding — diluted 42,058,821 34,570,319 35,149,154 33,912,832 Earnings (loss) per share — basic $ 0.61 $ 0.01 $ 0.47 $ (0.52) Earnings (loss) per share — diluted $ 0.53 $ 0.01 $ 0.46 $ (0.52) |
Schedule of dilutive securities excluded from the calculation of diluted earnings per share | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock options 749,443 1,061,235 395,405 2,156,501 Restricted stock units 979,200 523,991 977,250 1,960,160 Performance share units 503,880 447,770 503,880 447,770 Employee stock purchase plan 19,094 11,553 19,094 — Warrants — 1,041,667 — 1,041,667 Convertible senior notes — 4,925,134 7,509,104 4,925,134 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value of Financial Instruments | |
Schedule of financial instruments measured at fair value by level within fair value hierarchy | Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs Total (Level 1) (Level 2) (Level 3) September 30, 2023 Cash equivalents: Money market funds $ 104,250 $ 104,250 $ — $ — Marketable securities: Corporate debt securities 17,813 — 17,813 — U.S. Treasury securities 23,740 — 23,740 — Government-sponsored securities 4,480 — 4,480 — Total assets measured at fair value $ 150,283 $ 104,250 $ 46,033 $ — December 31, 2022 Cash equivalents: Money market funds $ 172,590 $ 172,590 $ — $ — Total assets measured at fair value $ 172,590 $ 172,590 $ — $ — |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Marketable Securities | |
Schedule of available-for-sale securities | September 30, 2023 Cash and cash equivalents $ — Marketable securities 46,033 Total $ 46,033 The following table summarizes the available-for-sale securities held as of September 30, 2023: Amortized Cost Gross Unrealized (Losses) Gains Fair Value Corporate debt securities $ 17,858 $ (45) $ 17,813 U.S. Treasury securities 23,741 (1) 23,740 Government-sponsored securities 4,486 (6) 4,480 Total $ 46,085 $ (52) $ 46,033 |
Schedule of contractual maturities of available-for-sale securities other than investments in money market funds | September 30, 2023 Matures within one year $ 40,116 Matures after one year through five years 5,917 Total $ 46,033 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory | |
Schedule of Inventory | September 30, December 31, 2023 2022 Raw materials $ 14,393 $ 5,600 Work in process 9,186 24,672 Finished goods 10,546 16,229 Total inventory $ 34,125 $ 46,501 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets | |
Summary of changes in the carrying amount of goodwill | Amount Balance as of December 31, 2022 $ 133,695 Measurement period adjustments from BDSI Acquisition 162 Balance as of September 30, 2023 $ 133,857 |
Schedule of gross carrying amount and accumulated amortization of the Intangible Asset | September 30, 2023 December 31, 2022 Amortization Period (Years) Cost Accumulated Amortization Carrying Amount Cost Accumulated Amortization Carrying Amount Belbuca 4.8 $ 360,000 $ (114,973) $ 245,027 $ 360,000 $ (58,428) $ 301,572 Nucynta Products (1) 8.5 521,170 (368,865) 152,305 521,170 (319,628) 201,542 Symproic 9.6 70,000 (11,110) 58,890 70,000 (5,646) 64,354 Elyxyb — — — — 5,000 (5,000) — Total intangibles $ 951,170 $ (494,948) $ 456,222 $ 956,170 $ (388,702) $ 567,468 |
Summary of amortization expense | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Belbuca $ 18,850 $ 18,848 $ 56,545 $ 39,581 Nucynta Products (1) 15,646 16,795 49,237 50,385 Symproic 1,821 1,821 5,464 3,825 Elyxyb — 88 — 185 Total amortization expense $ 36,317 $ 37,552 $ 111,246 $ 93,976 |
Schedule of future amortization expenses | Years ended December 31, Belbuca Nucynta Products (1) Symproic Total 2023 $ 18,848 $ 13,845 $ 1,821 $ 34,514 2024 75,393 55,384 7,285 138,062 2025 75,393 55,384 7,285 138,062 2026 75,393 27,692 7,285 110,370 2027 — — 7,285 7,285 Thereafter — — 27,929 27,929 Remaining amortization expense $ 245,027 $ 152,305 $ 58,890 $ 456,222 (1) During the three months ended September 30, 2023, the FDA granted New Patient Population exclusivity for Nucynta IR which extends the period of U.S. exclusivity for Nucynta IR to July 3, 2026, resulting in an extension of the estimated useful life of the underlying intangible asset from 8.0 years to 8.5 years. This change in estimate resulted in a decrease of amortization expense of $1,149 and an increase in net income of $855 during the three months ended September 30, 2023. The impact to earnings per share — basic and earnings per share — diluted was $0.03 and $0.02 , respectively, during the three months ended September 30, 2023. |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Liabilities | |
Schedule of components of accrued liabilities | September 30, December 31, 2023 2022 Accrued royalties $ 7,483 $ 13,770 Accrued inventory 6,446 — Accrued product taxes and fees 5,128 4,352 Accrued bonuses 4,103 6,347 Accrued sales and marketing 1,621 2,130 Accrued incentive compensation 1,290 1,507 Accrued interest 1,112 1,410 Accrued audit and legal 1,062 1,957 Accrued payroll and related benefits 941 1,208 Accrued other operating costs 2,465 3,448 Total accrued liabilities $ 31,651 $ 36,129 |
Term Notes Payable (Tables)
Term Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
2022 Term Loan | |
Debt Instrument [Line Items] | |
Schedule of future payments under debt agreements | Years ended December 31, Principal Payments 2023 $ 45,834 2024 183,333 2025 183,333 2026 45,834 Total before unamortized discount and issuance costs $ 458,334 Less: unamortized discount and issuance costs (9,115) Term notes carrying value $ 449,219 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) - Convertible senior notes | 9 Months Ended |
Sep. 30, 2023 | |
Debt Instrument [Line Items] | |
Schedule of convertible notes outstanding | 2026 Convertible Notes 2029 Convertible Notes Total Convertible Notes Principal $ 26,350 $ 241,500 $ 267,850 Less: unamortized issuance costs (401) (5,626) (6,027) Net carrying amount $ 25,949 $ 235,874 $ 261,823 |
Schedule of total interest expense recognized related to the convertible notes | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Contractual interest expense $ 1,909 $ 943 $ 5,297 $ 2,830 Amortization of debt issuance costs 302 228 863 678 Total interest expense $ 2,211 $ 1,171 $ 6,160 $ 3,508 |
Schedule of future minimum payments | Years ended December 31, 2026 Convertible Notes 2029 Convertible Notes Total Convertible Notes 2023 $ — $ — $ — 2024 692 6,943 7,635 2025 692 6,943 7,635 2026 26,696 6,943 33,639 2027 — 6,943 6,943 Thereafter — 251,915 251,915 Total minimum payments $ 28,080 $ 279,687 $ 307,767 Less: interest (1,730) (38,187) (39,917) Less: unamortized issuance costs (401) (5,626) (6,027) Convertible Notes carrying value $ 25,949 $ 235,874 $ 261,823 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity | |
Summary of changes in Shareholders' Equity | The changes in shareholders’ equity for the three and nine months ended September 30, 2023 were as follows: Additional Accumulated Other Total Common Stock Paid- In Treasury Stock Accumulated Comprehensive Shareholders’ Shares Amount Capital Shares Amount Deficit Loss Equity Balance, December 31, 2022 37,084,759 $ 37 $ 538,073 (3,235,823) $ (61,924) $ (281,344) $ — $ 194,842 Exercise of common stock options 234,132 — 3,848 — — — — 3,848 Issuance for employee stock purchase plan 11,329 — 169 — — — — 169 Vesting of RSUs and PSUs 775,904 1 — — — — — 1 Shares withheld for employee taxes upon vesting of RSUs and PSUs (289,281) — (7,736) — — — — (7,736) Stock-based compensation — — 6,035 — — — — 6,035 Net loss — — — — — (17,426) — (17,426) Balance, March 31, 2023 37,816,843 $ 38 $ 540,389 (3,235,823) $ (61,924) $ (298,770) $ — $ 179,733 Exercise of common stock options 72,405 — 1,251 — — — — 1,251 Vesting of RSUs and PSUs 73,805 — — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (9,655) — (220) — — — — (220) Stock-based compensation — — 7,072 — — — — 7,072 Other comprehensive loss, net of tax — — — — — — (38) (38) Net income — — — — — 13,007 — 13,007 Balance, June 30, 2023 37,953,398 $ 38 $ 548,492 (3,235,823) $ (61,924) $ (285,763) $ (38) $ 200,805 Exercise of common stock options 21,185 — 302 — — — — 302 Issuance for employee stock purchase plan 15,176 — 291 — — — — 291 Vesting of RSUs and PSUs 18,207 — — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (7,359) — (172) — — — — (172) Share repurchases from Accelerated Share Repurchase ("ASR") agreement — — — (1,702,852) (40,000) — — (40,000) Forward contract on ASR agreement — — (10,000) — — — — (10,000) Stock-based compensation — — 7,027 — — — — 7,027 Other comprehensive loss, net of tax — — — — — — (14) (14) Net income — — — — — 20,634 — 20,634 Balance, September 30, 2023 38,000,607 $ 38 $ 545,940 (4,938,675) $ (101,924) $ (265,129) $ (52) $ 178,873 The changes in shareholders’ equity for the three and nine months ended September 30, 2022 were as follows: Additional Total Common Stock Paid- In Treasury Stock Accumulated Shareholders’ Shares Amount Capital Shares Amount Deficit Equity Balance, December 31, 2021 35,806,119 $ 36 $ 502,095 (2,150,717) $ (42,861) $ (256,342) $ 202,928 Exercise of common stock options 190,074 — 3,261 — — — 3,261 Issuance for employee stock purchase plan 13,421 — 203 — — — 203 Vesting of RSUs and PSUs 563,050 — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (191,667) — (3,382) — — — (3,382) Share repurchases — — 5,000 (307,132) (5,000) — — Stock-based compensation — — 6,135 — — — 6,135 Net loss — — — — — (13,069) (13,069) Balance, March 31, 2022 36,380,997 $ 36 $ 513,312 (2,457,849) $ (47,861) $ (269,411) $ 196,076 Exercise of common stock options 102,283 — 1,545 — — — 1,545 Vesting of RSUs and PSUs 111,056 1 — — — — 1 Shares withheld for employee taxes upon vesting of RSUs and PSUs (26,506) — (511) — — — (511) Stock-based compensation — — 5,692 — — — 5,692 Net loss — — — — — (5,191) (5,191) Balance, June 30, 2022 36,567,830 $ 37 $ 520,038 (2,457,849) $ (47,861) $ (274,602) $ 197,612 Exercise of common stock options 10,395 — 142 — — — 142 Issuance for employee stock purchase plan 9,206 — 134 — — — 134 Vesting of RSUs and PSUs 17,644 — — — — — — Shares withheld for employee taxes upon vesting of RSUs and PSUs (5,777) — (106) — — — (106) Share repurchases — — — (366,213) (6,422) — (6,422) Stock-based compensation — — 5,377 — — — 5,377 Net income — — — — — 457 457 Balance, September 30, 2022 36,599,298 $ 37 $ 525,585 (2,824,062) $ (54,283) $ (274,145) $ 197,194 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock-based Compensation | |
Summary of performance share units activity | Weighted-Average Shares Grant Date Fair Value Outstanding as of December 31, 2022 447,770 $ 28.71 Granted 216,500 38.71 Vested (223,170) 27.99 Forfeited — — Performance adjustment 62,780 27.14 Outstanding as of September 30, 2023 503,880 $ 33.13 |
Summary of restricted stock units activity | Weighted-Average Shares Grant Date Fair Value Outstanding as of December 31, 2022 2,047,571 $ 19.67 Granted 1,268,907 26.27 Vested (644,746) 19.90 Forfeited (179,711) 21.85 Outstanding as of September 30, 2023 2,492,021 $ 22.81 |
Summary of stock option activity | Weighted- Weighted- Average Average Remaining Aggregate Exercise Price Contractual Intrinsic Shares per Share Term (in years) Value Outstanding as of December 31, 2022 1,683,805 $ 18.84 5.5 $ 7,953 Exercised (327,722) 16.43 Cancelled (8,923) 18.87 Outstanding as of September 30, 2023 1,347,160 $ 19.43 4.7 $ 4,952 Exercisable as of September 30, 2023 1,310,344 $ 19.38 4.6 $ 4,910 |
Summary of stock-based compensation | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Research and development $ — $ — $ — $ 1,591 Selling, general and administrative 7,027 5,377 20,134 15,613 Total stock-based compensation expense $ 7,027 $ 5,377 $ 20,134 $ 17,204 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Schedule of income tax benefit recognized | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Provision for (benefit from) income taxes $ 8,149 $ 975 $ 12,808 $ (3,253) Effective tax rate 28.3 % 68.1 % 44.1 % 15.4 % |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Nov. 30, 2023 | Jan. 31, 2023 | Jul. 31, 2022 |
2023 Share Repurchase Program | |||
Share repurchase program authorized amount | $ 100,000 | ||
ASR | |||
Share repurchase program authorized amount | $ 50,000 | ||
Subsequent Events | ASR | |||
Share repurchase program authorized amount | $ 25,000 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Disaggregation of Revenue [Line Items] | |
Practical expedient incremental cost | true |
Returns policy, threshold product return period | 18 months |
Returns policy, threshold product return period prior to expiration | 6 months |
Returns policy, threshold product return period after expiration | 12 months |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Term of payment received | 30 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Term of payment received | 90 days |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Product Revenue Provision and Allowance Categories (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Rebates and Incentives | ||
Allowance categories | ||
Balance as of beginning of the period | $ 156,937 | $ 142,379 |
Acquired from BDSI | 38,074 | |
Provision related to current period sales | 325,725 | 368,880 |
Changes in estimate related to prior period sales | 2 | (304) |
Credits/payments made | (315,170) | (385,298) |
Balance as of end of the period | 167,494 | 163,731 |
Product Returns | ||
Allowance categories | ||
Balance as of beginning of the period | 73,554 | 54,617 |
Acquired from BDSI | 18,187 | |
Provision related to current period sales | 31,904 | 26,508 |
Changes in estimate related to prior period sales | 3,722 | (838) |
Credits/payments made | (31,662) | (20,987) |
Balance as of end of the period | 77,518 | 77,487 |
Trade Allowances and Chargebacks | ||
Allowance categories | ||
Balance as of beginning of the period | 22,058 | 13,226 |
Acquired from BDSI | 7,575 | |
Provision related to current period sales | 112,550 | 94,859 |
Changes in estimate related to prior period sales | 589 | (580) |
Credits/payments made | (113,263) | (93,946) |
Balance as of end of the period | $ 21,934 | $ 21,134 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue | ||||
Product revenues, net | $ 136,709 | $ 127,013 | $ 417,022 | $ 334,313 |
Belbuca | ||||
Disaggregation of Revenue | ||||
Product revenues, net | 45,447 | 38,802 | 132,795 | 84,413 |
Xtampza ER | ||||
Disaggregation of Revenue | ||||
Product revenues, net | 39,800 | 38,859 | 128,914 | 103,567 |
Nucynta IR | ||||
Disaggregation of Revenue | ||||
Product revenues, net | 24,906 | 27,274 | 80,963 | 83,163 |
Nucynta ER | ||||
Disaggregation of Revenue | ||||
Product revenues, net | 22,634 | 17,133 | 62,941 | 53,473 |
Symproic | ||||
Disaggregation of Revenue | ||||
Product revenues, net | $ 3,922 | 3,580 | $ 11,409 | 7,740 |
Other | ||||
Disaggregation of Revenue | ||||
Product revenues, net | $ 1,365 | $ 1,957 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | Mar. 22, 2022 USD ($) |
BioDelivery Sciences International, Inc | |
Business Acquisition [Line Items] | |
Consideration paid | $ 669,431 |
Acquisitions - Fair Value of Pu
Acquisitions - Fair Value of Purchase Consideration and Measurement Period Adjustments (Details) - BioDelivery Sciences International, Inc - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 22, 2022 | Mar. 31, 2023 | |
Business Acquisition [Line Items] | ||
Cash consideration for all outstanding shares of BDSI's common and preferred stock (103,235,298 shares acquired at $5.60 per share) | $ 578,118 | |
Cash consideration paid to settle RSUs and in-the-money options | 28,309 | |
Cash paid to settle BDSI debt | 63,004 | |
Total purchase consideration | $ 669,431 | |
Shares of stock acquired | 103,235,298 | |
Share price (in dollars per share) | $ 5.60 | |
Accrued expenses | $ 134 | |
Deferred tax liabilities | 28 | |
Goodwill | $ 162 |
Acquisitions - Estimated Fair V
Acquisitions - Estimated Fair Value of Net Assets Acquired (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Mar. 22, 2022 |
Liabilities Assumed | |||
Goodwill | $ 133,857 | $ 133,695 | |
BioDelivery Sciences International, Inc | |||
Assets Acquired | |||
Cash and cash equivalents | $ 97,362 | ||
Accounts receivable | 55,495 | ||
Inventory | 77,382 | ||
Prepaid expenses and other current assets | 6,125 | ||
Property and equipment | 1,242 | ||
Operating lease assets | 481 | ||
Intangible assets | 435,000 | ||
Total assets | 673,087 | ||
Liabilities Assumed | |||
Accounts payable | 12 | ||
Accrued expenses | 18,249 | ||
Accrued rebates, returns and discounts | 56,261 | ||
Operating lease liabilities | 481 | ||
Deferred tax liabilities | 62,510 | ||
Total liabilities | 137,513 | ||
Total identifiable net assets acquired | 535,574 | ||
Goodwill | 133,857 | ||
Total consideration transferred | 669,431 | ||
Increase to inventory | $ 54,700 |
License Agreements - License an
License Agreements - License and supply agreement (Details) - Shionogi license and supply agreement | Apr. 04, 2019 |
License Agreements [Line Items] | |
Additional Percentage | 1% |
Minimum | |
License Agreements [Line Items] | |
Royalty Percentage | 8.50% |
Maximum | |
License Agreements [Line Items] | |
Royalty Percentage | 17.50% |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Net Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
EARNINGS PER SHARE | ||||||||
Net income (loss) | $ 20,634 | $ 13,007 | $ (17,426) | $ 457 | $ (5,191) | $ (13,069) | $ 16,215 | $ (17,803) |
Adjustment for interest expense recognized on convertible senior notes: | 1,645 | |||||||
Net income (loss) - diluted | $ 22,279 | $ 457 | $ 16,215 | $ (17,803) | ||||
Weighted-average shares outstanding - basic | 33,744,209 | 34,058,802 | 34,226,488 | 33,912,832 | ||||
Weighted-average shares outstanding - diluted (in shares) | 42,058,821 | 34,570,319 | 35,149,154 | 33,912,832 | ||||
Earnings (loss) per share - basic (in dollars per share) | $ 0.61 | $ 0.01 | $ 0.47 | $ (0.52) | ||||
Earnings (loss) per share - diluted (in dollars per share) | $ 0.53 | $ 0.01 | $ 0.46 | $ (0.52) | ||||
Employee Stock Option [Member] | ||||||||
EARNINGS PER SHARE | ||||||||
Effect of dilutive securities: | 222,355 | 191,454 | 263,513 | |||||
Restricted stock units | ||||||||
EARNINGS PER SHARE | ||||||||
Effect of dilutive securities: | 583,153 | 320,063 | 659,153 | |||||
Convertible senior notes | ||||||||
EARNINGS PER SHARE | ||||||||
Effect of dilutive securities: | 7,509,104 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Employee Stock Option [Member] | ||||
Anti-dilutive securities | ||||
Dilutive securities excluded from the calculation of diluted earnings per share (in shares) | 749,443 | 1,061,235 | 395,405 | 2,156,501 |
Restricted stock units | ||||
Anti-dilutive securities | ||||
Dilutive securities excluded from the calculation of diluted earnings per share (in shares) | 979,200 | 523,991 | 977,250 | 1,960,160 |
Performance share units | ||||
Anti-dilutive securities | ||||
Dilutive securities excluded from the calculation of diluted earnings per share (in shares) | 503,880 | 447,770 | 503,880 | 447,770 |
Employee stock purchase plan. | ||||
Anti-dilutive securities | ||||
Dilutive securities excluded from the calculation of diluted earnings per share (in shares) | 19,094 | 11,553 | 19,094 | |
Warrants | ||||
Anti-dilutive securities | ||||
Dilutive securities excluded from the calculation of diluted earnings per share (in shares) | 1,041,667 | 1,041,667 | ||
Convertible senior notes | ||||
Anti-dilutive securities | ||||
Dilutive securities excluded from the calculation of diluted earnings per share (in shares) | 4,925,134 | 7,509,104 | 4,925,134 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Feb. 10, 2023 | Dec. 31, 2022 | Feb. 13, 2020 | |
Marketable securities | $ 46,033 | $ 0 | |||
Total assets measured at fair value | 150,283 | 172,590 | |||
Transfer of Assets From Level 1 to Level 2 | 0 | $ 0 | |||
Transfer of Assets From Level 2 to Level 1 | 0 | 0 | |||
Transfer of Liabilities From Level 1 to Level 2 | 0 | 0 | |||
Transfer of Liabilities From Level 2 to Level 1 | 0 | 0 | |||
Transfer of Assets Into Level 3 | 0 | 0 | |||
Transfer of Assets Out of Level 3 | 0 | 0 | |||
Transfer of Liabilities Into Level 3 | 0 | 0 | |||
Transfer of Liabilities Out of Level 3 | 0 | $ 0 | |||
Term notes outstanding principal balance | 458,334 | ||||
Corporate debt securities | |||||
Marketable securities | 17,813 | ||||
U.S. Treasury securities | |||||
Marketable securities | 23,740 | ||||
Government-sponsored securities | |||||
Marketable securities | 4,480 | ||||
Money market funds | |||||
Cash equivalents | 104,250 | 172,590 | |||
Quoted Prices in active markets (Level 1) | |||||
Total assets measured at fair value | 104,250 | 172,590 | |||
Quoted Prices in active markets (Level 1) | Money market funds | |||||
Cash equivalents | 104,250 | $ 172,590 | |||
Significant other observable inputs (Level 2) | |||||
Total assets measured at fair value | 46,033 | ||||
Significant other observable inputs (Level 2) | Corporate debt securities | |||||
Marketable securities | 17,813 | ||||
Significant other observable inputs (Level 2) | U.S. Treasury securities | |||||
Marketable securities | 23,740 | ||||
Significant other observable inputs (Level 2) | Government-sponsored securities | |||||
Marketable securities | 4,480 | ||||
2026 Convertible Notes | |||||
Convertible senior notes, fair value | $ 25,033 | ||||
Interest rate (as a percent) | 2.625% | 2.625% | |||
2029 Convertible Notes | |||||
Convertible senior notes, fair value | $ 212,602 | ||||
Interest rate (as a percent) | 2.875% | 2.875% |
Marketable Securities (Details)
Marketable Securities (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Marketable Securities | |
Available-for-sale | $ 46,033 |
Marketable Securities | |
Marketable Securities | |
Available-for-sale | $ 46,033 |
Marketable securities - Compone
Marketable securities - Components (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Marketable securities | |
Amortized Cost | $ 46,085 |
Gross Unrealized (Losses) Gains | (52) |
Fair Value | 46,033 |
Corporate debt securities | |
Marketable securities | |
Amortized Cost | 17,858 |
Gross Unrealized (Losses) Gains | (45) |
Fair Value | 17,813 |
U.S. Treasury securities | |
Marketable securities | |
Amortized Cost | 23,741 |
Gross Unrealized (Losses) Gains | (1) |
Fair Value | 23,740 |
Government-sponsored securities | |
Marketable securities | |
Amortized Cost | 4,486 |
Gross Unrealized (Losses) Gains | (6) |
Fair Value | $ 4,480 |
Marketable Securities - Contrac
Marketable Securities - Contractual maturities of available-for-sale securities (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Marketable Securities | |
Matures within one year | $ 40,116 |
Matures after one year through five years | 5,917 |
Total | $ 46,033 |
Marketable Securities - Narrati
Marketable Securities - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Marketable Securities | |||
Marketable securities | $ 46,033 | $ 46,033 | $ 0 |
Proceeds from sale of marketable securities | $ 0 | $ 0 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Inventory | |||
Raw materials | $ 14,393 | $ 14,393 | $ 5,600 |
Work in process | 9,186 | 9,186 | 24,672 |
Finished goods | 10,546 | 10,546 | 16,229 |
Total inventory | 34,125 | 34,125 | $ 46,501 |
Excess and obsolete inventory | $ 563 | $ 1,624 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Roll Forward (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Balance as of beginning of the period | $ 133,695 |
Measurement period adjustments from BDSI Acquisition | 162 |
Balance as of ending of the period | $ 133,857 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Cost, accumulated amortization, and carrying amount of intangible assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 951,170 | $ 956,170 |
Accumulated Amortization | (494,948) | (388,702) |
Carrying Amount | $ 456,222 | 567,468 |
Belbuca | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period (Years) | 4 years 9 months 18 days | |
Cost | $ 360,000 | 360,000 |
Accumulated Amortization | (114,973) | (58,428) |
Carrying Amount | $ 245,027 | 301,572 |
Nucynta Products (1) | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period (Years) | 8 years 6 months | |
Cost | $ 521,170 | 521,170 |
Accumulated Amortization | (368,865) | (319,628) |
Carrying Amount | $ 152,305 | 201,542 |
Symproic | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period (Years) | 9 years 7 months 6 days | |
Cost | $ 70,000 | 70,000 |
Accumulated Amortization | (11,110) | (5,646) |
Carrying Amount | $ 58,890 | 64,354 |
Elyxyb | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 5,000 | |
Accumulated Amortization | $ (5,000) |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 36,317 | $ 37,552 | $ 111,246 | $ 93,976 |
Belbuca | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | 18,850 | 18,848 | 56,545 | 39,581 |
Nucynta Products (1) | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | 15,646 | 16,795 | 49,237 | 50,385 |
Symproic | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 1,821 | 1,821 | $ 5,464 | 3,825 |
Elyxyb | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 88 | $ 185 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||||||||
2023 | $ 34,514 | $ 34,514 | |||||||
2024 | 138,062 | 138,062 | |||||||
2025 | 138,062 | 138,062 | |||||||
2026 | 110,370 | 110,370 | |||||||
2027 | 7,285 | 7,285 | |||||||
Thereafter | 27,929 | 27,929 | |||||||
Remaining amortization expense | 456,222 | 456,222 | $ 567,468 | ||||||
Decrease of amortization expense | 36,317 | $ 37,552 | 111,246 | $ 93,976 | |||||
Increase in net income | $ 20,634 | $ 13,007 | $ (17,426) | $ 457 | $ (5,191) | $ (13,069) | $ 16,215 | $ (17,803) | |
Impact on Earnings per share - basic | $ 0.61 | $ 0.01 | $ 0.47 | $ (0.52) | |||||
Impact on Earnings per share - diluted | $ 0.53 | $ 0.01 | $ 0.46 | $ (0.52) | |||||
Belbuca | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
2023 | $ 18,848 | $ 18,848 | |||||||
2024 | 75,393 | 75,393 | |||||||
2025 | 75,393 | 75,393 | |||||||
2026 | 75,393 | 75,393 | |||||||
Remaining amortization expense | $ 245,027 | $ 245,027 | 301,572 | ||||||
Amortization Period (Years) | 4 years 9 months 18 days | 4 years 9 months 18 days | |||||||
Nucynta Products (1) | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
2023 | $ 13,845 | $ 13,845 | |||||||
2024 | 55,384 | 55,384 | |||||||
2025 | 55,384 | 55,384 | |||||||
2026 | 27,692 | 27,692 | |||||||
Remaining amortization expense | $ 152,305 | $ 152,305 | 201,542 | ||||||
Amortization Period (Years) | 8 years 6 months | 8 years 6 months | |||||||
Nucynta Products (1) | Change in estimated useful life of the underlying intangible asset | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
Amortization Period (Years) | 8 years 6 months | 8 years | 8 years 6 months | ||||||
Decrease of amortization expense | $ (1,149) | ||||||||
Increase in net income | $ 855 | ||||||||
Impact on Earnings per share - basic | $ 0.03 | ||||||||
Impact on Earnings per share - diluted | $ 0.02 | ||||||||
Symproic | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
2023 | $ 1,821 | $ 1,821 | |||||||
2024 | 7,285 | 7,285 | |||||||
2025 | 7,285 | 7,285 | |||||||
2026 | 7,285 | 7,285 | |||||||
2027 | 7,285 | 7,285 | |||||||
Thereafter | 27,929 | 27,929 | |||||||
Remaining amortization expense | $ 58,890 | $ 58,890 | $ 64,354 | ||||||
Amortization Period (Years) | 9 years 7 months 6 days | 9 years 7 months 6 days |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accrued Liabilities | ||
Accrued royalties | $ 7,483 | $ 13,770 |
Accrued inventory | 6,446 | |
Accrued product taxes and fees | 5,128 | 4,352 |
Accrued bonuses | 4,103 | 6,347 |
Accrued sales and marketing | 1,621 | 2,130 |
Accrued incentive compensation | 1,290 | 1,507 |
Accrued interest | 1,112 | 1,410 |
Accrued audit and legal | 1,062 | 1,957 |
Accrued payroll and related benefits | 941 | 1,208 |
Accrued other operating costs | 2,465 | 3,448 |
Total accrued liabilities | $ 31,651 | $ 36,129 |
Term Notes Payable - 2022 Term
Term Notes Payable - 2022 Term Loan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jul. 01, 2023 | Mar. 22, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt | ||||||
Margin | 7.50% | |||||
SOFR | ||||||
Debt | ||||||
Floor rate | 1.20% | |||||
Interest rate, basis spread | 0.26% | |||||
2022 Term Loan | ||||||
Debt | ||||||
Aggregate principal amount | $ 650,000 | |||||
Debt maturity | 48 months | |||||
Interest rate, basis spread | 13.20% | |||||
Principal repayments | $ 100,000 | |||||
Remaining three years | 550,000 | |||||
Debt modification and transaction fee | 173 | |||||
Commitment and other fees | 19,818 | |||||
Note discounts | $ 2,049 | |||||
Interest expense | $ 18,567 | $ 17,879 | $ 57,897 | $ 36,293 | ||
2022 Term Loan | Prepayment prior to the second-year anniversary | ||||||
Debt | ||||||
Prepayment premium percentage | 2% | |||||
2022 Term Loan | Prepayment on or after the second-year anniversary, but on or prior to the third-year anniversary | ||||||
Debt | ||||||
Prepayment premium percentage | 1% | |||||
2022 Term Loan | LIBOR | ||||||
Debt | ||||||
Floor rate | 1.20% | |||||
Margin | 7.50% |
Term Notes Payable - 2022 Ter_2
Term Notes Payable - 2022 Term Loan - Future Minimum Payments (Details) - Pharmakon Term Notes $ in Thousands | Sep. 30, 2023 USD ($) |
Principal repayments | |
2023 | $ 45,834 |
2024 | 183,333 |
2025 | 183,333 |
2026 | 45,834 |
Total before unamortized discount and issuance costs | 458,334 |
Less: unamortized discount and issuance costs | (9,115) |
Carrying value | $ 449,219 |
Convertible Senior Notes - 2026
Convertible Senior Notes - 2026 Convertible Notes (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 13, 2020 USD ($) D $ / shares | Sep. 30, 2023 USD ($) D | Mar. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Debt | ||||
Loss on extinguishment of debt | $ (23,504) | |||
2026 Convertible Notes | ||||
Debt | ||||
Interest rate (as a percent) | 2.625% | 2.625% | 2.625% | |
Aggregate principal amount | $ 143,750 | |||
Total debt issuance cost | $ 5,473 | |||
Initial conversion rate | 34.2618 | |||
Initial conversion price | $ / shares | $ 29.19 | |||
Conversion, threshold percentage of stock price trigger | 130% | |||
Conversion, threshold trading days | D | 20 | |||
Conversion, threshold consecutive trading days | D | 30 | |||
Consecutive business days | D | 5 | |||
Measurement period | D | 10 | |||
Threshold percentage to product of sale price of common stock and conversion rate | 98% | |||
Default period | 30 days | |||
Threshold amount of money borrowed | $ 20,000 | |||
Number of calendar days | D | 3 | |||
Term of notice to company | 60 days | |||
Provisions threshold amount of payment | $ 20,000 | |||
Aggregate principal amount of notes repurchased | 117,400 | |||
Repurchased amount in cash | $ 140,100 | |||
Loss on extinguishment of debt | $ (23,504) | |||
Recognition of deferred financing costs | $ 2,264 | |||
Principal | $ 26,350 | $ 26,350 | ||
2026 Convertible Notes | Conversion of convertible debt after the calendar quarter ending on March 31, 2020 | ||||
Debt | ||||
Conversion, threshold percentage of stock price trigger | 130% | |||
Conversion, threshold trading days | D | 20 | |||
Conversion, threshold consecutive trading days | D | 30 |
Convertible Senior Notes - 2029
Convertible Senior Notes - 2029 Convertible Notes (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Feb. 10, 2023 USD ($) D $ / shares | Sep. 30, 2023 USD ($) D | Jun. 30, 2023 D | |
2029 Convertible Notes | |||
Debt | |||
Interest rate (as a percent) | 2.875% | 2.875% | |
Original principal amount | $ 241,500 | ||
Total debt issuance cost | $ 6,280 | ||
Conversion, threshold percentage of stock price trigger | 130% | 130% | |
Conversion, threshold trading days | D | 20 | 20 | |
Principal | $ 241,500 | ||
Conversion, threshold consecutive trading days | D | 30 | 30 | |
Consecutive business days | D | 5 | ||
Measurement period | D | 10 | ||
Threshold percentage to product of sale price of common stock and conversion rate | 98% | ||
Number of calendar days | D | 3 | ||
Term of notice to company | 60 days | ||
Provisions threshold amount of payment | $ 30,000 | ||
Effective interest rate | 3.28% | ||
Threshold amount of money borrowed | $ 30,000 | ||
Default period | 30 days | ||
2029 Convertible Notes | Minimum | |||
Debt | |||
Principal | $ 75,000 | ||
Convertible senior notes | |||
Debt | |||
Interest rate (as a percent) | 2.875% | ||
Principal | $ 267,850 | ||
Initial conversion rate | 27.3553 | ||
Initial conversion price (in dollars per share) | $ / shares | $ 36.56 |
Convertible Senior Notes - Outs
Convertible Senior Notes - Outstanding (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Convertible senior notes | |
Debt | |
Principal | $ 267,850 |
Less: unamortized issuance costs | (6,027) |
Carrying value | $ 261,823 |
Debt instrument term | 6 years |
2026 Convertible Notes | |
Debt | |
Principal | $ 26,350 |
Less: unamortized issuance costs | (401) |
Carrying value | $ 25,949 |
Effective interest rate | 3.34% |
2029 Convertible Notes | |
Debt | |
Principal | $ 241,500 |
Less: unamortized issuance costs | (5,626) |
Carrying value | $ 235,874 |
Effective interest rate | 3.28% |
Convertible Senior Notes - Inte
Convertible Senior Notes - Interest Expenses (Details) - Convertible senior notes - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt | ||||
Contractual interest expense | $ 1,909 | $ 943 | $ 5,297 | $ 2,830 |
Amortization of debt issuance costs | 302 | 228 | 863 | 678 |
Total interest expense | $ 2,211 | $ 1,171 | $ 6,160 | $ 3,508 |
Convertible Senior Notes - Futu
Convertible Senior Notes - Future Minimum Payments (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Convertible senior notes | |
Principal repayments | |
2024 | $ 7,635 |
2025 | 7,635 |
2026 | 33,639 |
2027 | 6,943 |
Thereafter | 251,915 |
Total minimum payments | 307,767 |
Less: interest | (39,917) |
Less: unamortized issuance costs | (6,027) |
Carrying value | 261,823 |
2026 Convertible Notes | |
Principal repayments | |
2024 | 692 |
2025 | 692 |
2026 | 26,696 |
Total minimum payments | 28,080 |
Less: interest | (1,730) |
Less: unamortized issuance costs | (401) |
Carrying value | 25,949 |
2029 Convertible Notes | |
Principal repayments | |
2024 | 6,943 |
2025 | 6,943 |
2026 | 6,943 |
2027 | 6,943 |
Thereafter | 251,915 |
Total minimum payments | 279,687 |
Less: interest | (38,187) |
Less: unamortized issuance costs | (5,626) |
Carrying value | $ 235,874 |
Equity - Changes in Shareholder
Equity - Changes in Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Balance at beginning of period | $ 200,805 | $ 179,733 | $ 194,842 | $ 197,612 | $ 196,076 | $ 202,928 | $ 194,842 | $ 202,928 |
Balance at beginning of period, shares | 37,084,759 | 37,084,759 | ||||||
Balance at beginning of period, shares | (3,235,823) | (3,235,823) | ||||||
Exercise of common stock options | 302 | 1,251 | $ 3,848 | 142 | 1,545 | 3,261 | ||
Issuance for employee stock purchase plan | 291 | 169 | 134 | 203 | ||||
Vesting of RSUs and PSUs | 1 | 1 | ||||||
Shares withheld for employee taxes upon vesting of RSUs and PSUs | (172) | (220) | (7,736) | (106) | (511) | (3,382) | ||
Share repurchases from Accelerated Share Repurchase ("ASR") agreement. | (40,000) | (6,422) | ||||||
Forward contract on ASR agreement | (10,000) | |||||||
Stock-based compensation | 7,027 | 7,072 | 6,035 | 5,377 | 5,692 | 6,135 | ||
Other comprehensive loss, net of tax | (14) | (38) | ||||||
Net income (loss) | 20,634 | 13,007 | (17,426) | 457 | (5,191) | (13,069) | $ 16,215 | (17,803) |
Balance at end of period | $ 178,873 | 200,805 | 179,733 | 197,194 | 197,612 | 196,076 | $ 178,873 | 197,194 |
Balance at end of period, shares | 38,000,607 | 38,000,607 | ||||||
Balance at end of period, shares | (4,938,675) | (4,938,675) | ||||||
Common stock | ||||||||
Balance at beginning of period | $ 38 | $ 38 | $ 37 | $ 37 | $ 36 | $ 36 | $ 37 | $ 36 |
Balance at beginning of period, shares | 37,953,398 | 37,816,843 | 37,084,759 | 36,567,830 | 36,380,997 | 35,806,119 | 37,084,759 | 35,806,119 |
Exercise of common stock options, shares | 21,185 | 72,405 | 234,132 | 10,395 | 102,283 | 190,074 | ||
Issuance for employee stock purchase plan, shares | 15,176 | 11,329 | 9,206 | 13,421 | ||||
Vesting of RSUs and PSUs | $ 1 | $ 1 | ||||||
Vesting of RSUs and PSUs, shares | 18,207 | 73,805 | 775,904 | 17,644 | 111,056 | 563,050 | ||
Shares withheld for employee taxes upon vesting of RSUs and PSUs | (7,359) | (9,655) | (289,281) | (5,777) | (26,506) | (191,667) | ||
Balance at end of period | $ 38 | $ 38 | $ 38 | $ 37 | $ 37 | $ 36 | $ 38 | $ 37 |
Balance at end of period, shares | 38,000,607 | 37,953,398 | 37,816,843 | 36,599,298 | 36,567,830 | 36,380,997 | 38,000,607 | 36,599,298 |
Additional Paid-In Capital | ||||||||
Balance at beginning of period | $ 548,492 | $ 540,389 | $ 538,073 | $ 520,038 | $ 513,312 | $ 502,095 | $ 538,073 | $ 502,095 |
Exercise of common stock options | 302 | 1,251 | 3,848 | 142 | 1,545 | 3,261 | ||
Issuance for employee stock purchase plan | 291 | 169 | 134 | 203 | ||||
Shares withheld for employee taxes upon vesting of RSUs and PSUs | (172) | (220) | (7,736) | (106) | (511) | (3,382) | ||
Share repurchases from Accelerated Share Repurchase ("ASR") agreement. | 5,000 | |||||||
Forward contract on ASR agreement | (10,000) | |||||||
Stock-based compensation | 7,027 | 7,072 | 6,035 | 5,377 | 5,692 | 6,135 | ||
Balance at end of period | 545,940 | 548,492 | 540,389 | 525,585 | 520,038 | 513,312 | 545,940 | 525,585 |
Treasury Stock | ||||||||
Balance at beginning of period | $ (61,924) | $ (61,924) | $ (61,924) | $ (47,861) | $ (47,861) | $ (42,861) | $ (61,924) | $ (42,861) |
Balance at beginning of period, shares | (3,235,823) | (3,235,823) | (3,235,823) | (2,457,849) | (2,457,849) | (2,150,717) | (3,235,823) | (2,150,717) |
Share repurchases from Accelerated Share Repurchase ("ASR") agreement. | $ (40,000) | $ (6,422) | $ (5,000) | |||||
Share repurchases from Accelerated Share Repurchase ("ASR") agreement. (in shares) | (1,702,852) | (366,213) | (307,132) | |||||
Balance at end of period | $ (101,924) | $ (61,924) | $ (61,924) | $ (54,283) | $ (47,861) | $ (47,861) | $ (101,924) | $ (54,283) |
Balance at end of period, shares | (4,938,675) | (3,235,823) | (3,235,823) | (2,824,062) | (2,457,849) | (2,457,849) | (4,938,675) | (2,824,062) |
Accumulated Deficit | ||||||||
Balance at beginning of period | $ (285,763) | $ (298,770) | $ (281,344) | $ (274,602) | $ (269,411) | $ (256,342) | $ (281,344) | $ (256,342) |
Net income (loss) | 20,634 | 13,007 | (17,426) | 457 | (5,191) | (13,069) | ||
Balance at end of period | (265,129) | (285,763) | $ (298,770) | $ (274,145) | $ (274,602) | $ (269,411) | (265,129) | $ (274,145) |
Accumulated Other Comprehensive Loss | ||||||||
Balance at beginning of period | (38) | |||||||
Other comprehensive loss, net of tax | (14) | (38) | ||||||
Balance at end of period | $ (52) | $ (38) | $ (52) |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 17 Months Ended | ||||||||
Aug. 07, 2022 | Oct. 31, 2023 | Oct. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Nov. 30, 2023 | Jan. 31, 2023 | Jul. 31, 2022 | Aug. 31, 2021 | May 31, 2015 | |
Equity | ||||||||||||
Forward contract not setteled | $ 10,000 | |||||||||||
Reduction from outstanding shares | 1,702,852 | |||||||||||
Repurchases of common stock | $ 50,000 | $ 6,422 | ||||||||||
Prior Repurchase Program | ||||||||||||
Equity | ||||||||||||
Share repurchase program authorized amount | $ 100,000 | |||||||||||
Shares repurchased during the period | 3,235,823 | |||||||||||
Repurchases of common stock | $ 61,924 | |||||||||||
Shares repurchased, cost per share | $ 19.14 | |||||||||||
2023 Share Repurchase Program | ||||||||||||
Equity | ||||||||||||
Share repurchase program authorized amount | $ 100,000 | |||||||||||
Shares repurchased during the period | 1,702,852 | |||||||||||
Forward contract not setteled | $ 10,000 | |||||||||||
Repurchases of common stock | $ 40,000 | |||||||||||
Shares repurchased, cost per share | $ 23.49 | |||||||||||
ASR | ||||||||||||
Equity | ||||||||||||
Share repurchase program authorized amount | $ 50,000 | |||||||||||
Price per share | $ 23.49 | |||||||||||
Shares repurchased during the period | 1,702,852 | |||||||||||
Authorized repurchase amount settled | $ 10,000 | |||||||||||
Percentage of upfront payment on a price per share | 80% | |||||||||||
Repurchases of common stock | $ 50,000 | |||||||||||
2014 Stock Incentive Plan | ||||||||||||
Equity | ||||||||||||
Shares of common stock authorized for issuance (in shares) | 2,700,000 | |||||||||||
Increase in number of authorized shares on the first day of each fiscal year, as a percentage of outstanding common stock (as a percent) | 4% | |||||||||||
Shares of common stock remaining available for future grant (in shares) | 1,859,087 | 1,859,087 | ||||||||||
Vesting period (in years) | 4 years | |||||||||||
Contractual life (in years) | 10 years | |||||||||||
Period following termination date vested options are exercisable (in months) | 3 months | |||||||||||
Maximum | 2023 Share Repurchase Program | ||||||||||||
Equity | ||||||||||||
Amount available for share repurchases under the program | $ 60,000 | $ 60,000 | ||||||||||
Subsequent Events | ASR | ||||||||||||
Equity | ||||||||||||
Share repurchase program authorized amount | $ 25,000 | |||||||||||
Shares repurchased during the period | 462,442 | 2,165,294 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-based compensation | ||||
Proceeds from issuances of common stock from employee stock purchase plan | $ 460 | $ 337 | ||
Unrecognized compensation cost related to outstanding options | $ 50,041 | $ 50,041 | ||
Period over which unrecognized compensation cost is expected to be recognized as expense | 2 years 7 months 6 days | |||
Restricted stock units | ||||
Stock-based compensation | ||||
Vesting period (in years) | 4 years | |||
Total fair value of shares vested | $ 16,906 | 10,020 | ||
Employee stock purchase plan. | ||||
Stock-based compensation | ||||
Purchase price percentage | 85% | |||
Issuance for employee stock purchase plan, shares | 26,505 | |||
Proceeds from issuances of common stock from employee stock purchase plan | $ 460 | |||
Employee stock purchase plan compensation expenses | $ 55 | $ 28 | $ 155 | $ 88 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Restricted Stock and Performance Share Activity (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Performance share units | ||
Number of shares | ||
Balance | 447,770 | |
Granted | 216,500 | |
Vested | (223,170) | |
Performance adjustment | 62,780 | |
Balance | 503,880 | |
Weighted-average grant date fair value per share | ||
Balance | $ 28.71 | |
Granted | 38.71 | $ 24.12 |
Vested | 27.99 | |
Performance adjustment | 27.14 | |
Balance | $ 33.13 | |
Restricted stock units | ||
Number of shares | ||
Balance | 2,047,571 | |
Granted | 1,268,907 | |
Vested | (644,746) | |
Forfeited | (179,711) | |
Balance | 2,492,021 | |
Weighted-average grant date fair value per share | ||
Balance | $ 19.67 | |
Granted | 26.27 | $ 17.48 |
Vested | 19.90 | |
Forfeited | 21.85 | |
Balance | $ 22.81 |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Stock Option Activity (Details) - Employee Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Stock option activity | |||
Outstanding | 1,683,805 | ||
Granted | 0 | 0 | |
Exercised | (327,722) | ||
Cancelled | (8,923) | ||
Outstanding | 1,347,160 | 1,683,805 | |
Exercisable at end of period | 1,310,344 | ||
Weighted average exercise price per share | |||
Outstanding | $ 18.84 | ||
Exercised | 16.43 | ||
Cancelled | 18.87 | ||
Outstanding | 19.43 | $ 18.84 | |
Exercisable at end of period | $ 19.38 | ||
Stock option activity, additional information | |||
Outstanding Weighted-Average Remaining Contractual Term | 4 years 8 months 12 days | 5 years 6 months | |
Outstanding Aggregate Intrinsic Value | $ 4,952 | $ 7,953 | |
Exercisable at end of period, Weighted-Average Remaining Contractual Term | 4 years 7 months 6 days | ||
Exercisable at end of period, Aggregate Intrinsic Value | $ 4,910 |
Stock-based Compensation - Su_3
Stock-based Compensation - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-based compensation | ||||
Total stock-based compensation expense | $ 7,027 | $ 5,377 | $ 20,134 | $ 17,204 |
Research and development | ||||
Stock-based compensation | ||||
Total stock-based compensation expense | 1,591 | |||
Selling, general and administrative | ||||
Stock-based compensation | ||||
Total stock-based compensation expense | $ 7,027 | $ 5,377 | $ 20,134 | $ 15,613 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 9 Months Ended | 12 Months Ended | 16 Months Ended | ||||||||||||
Mar. 08, 2023 USD ($) | Apr. 19, 2022 case | Mar. 11, 2022 stockholder | Mar. 07, 2022 stockholder | Mar. 05, 2022 case | Feb. 28, 2022 case | Dec. 24, 2021 USD ($) case | Sep. 11, 2020 | Oct. 02, 2019 | Mar. 24, 2015 patent | Feb. 15, 2015 | Feb. 11, 2015 patent | Sep. 30, 2023 lawsuit | Dec. 31, 2021 case | Sep. 30, 2017 patent | |
Commitments and Contingencies | |||||||||||||||
Number of lawsuits dismissed | 13 | ||||||||||||||
Claims settled | 27 | ||||||||||||||
Xtampza ER Litigation | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of patents listed in FDA Orange Book | patent | 11 | ||||||||||||||
Stay period before FDA can issue a final approval unless it is terminated | 30 months | 30 months | |||||||||||||
Number of patents allegedly infringed | patent | 3 | 5 | 2 | ||||||||||||
Number of lawsuits filed | patent | 2 | ||||||||||||||
PTAB duration for issuing decision | 1 year | ||||||||||||||
Statutory period of proceedings | 18 months | ||||||||||||||
Xtampza ER Litigation | Maximum | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
PTAB extended duration for issuing decision | 6 months | ||||||||||||||
Xtampza ER Litigation, District of Massachusetts | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Stay period before FDA can issue a final approval unless it is terminated | 30 months | ||||||||||||||
Number of patents allegedly infringed | patent | 3 | ||||||||||||||
Opioid Litigation | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of lawsuits filed | lawsuit | 6 | ||||||||||||||
Number of lawsuits dismissed | 8 | ||||||||||||||
Litigation settlement, amount awarded to other party | $ | $ 2,750,000 | ||||||||||||||
Claims settled | 27 | ||||||||||||||
Opioid Litigation, Massachusetts state court | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of lawsuits by municipalities | lawsuit | 13 | ||||||||||||||
Multi-District Litigation (MDL) | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of lawsuits filed | 21 | ||||||||||||||
Number of lawsuits dismissed | 3 | ||||||||||||||
Claims settled | 8 | ||||||||||||||
State court | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Claims settled | 19 | ||||||||||||||
BDSI Acquisition Litigation | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of additional cases filed | 2 | 2 | |||||||||||||
Number of demand letters received from purported stockholders | stockholder | 4 | 3 | |||||||||||||
Aquestive Therapeutics, Inc Litigation | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Litigation settlement, amount awarded to other party | $ | $ 8,500 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||||
Provision for (benefit from) income taxes | $ 8,149 | $ 975 | $ 12,808 | $ (3,253) |
Effective tax rate | 28.30% | 68.10% | 44.10% | 15.40% |
Nondeductible costs from the debt extinguishment | $ 21,238 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net Income (Loss) | $ 20,634 | $ 13,007 | $ (17,426) | $ 457 | $ (5,191) | $ (13,069) | $ 16,215 | $ (17,803) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | The following table shows the “Rule 10b5-1 trading arrangements” or “non-Rule 10b5-1 trading arrangements” (as each term is defined in Item 408(a) of Regulation S-K) adopted, amended, or terminated by our directors and officers during the three months ended September 30, 2023: Trading Arrangement Name Title Action Effective Date Rule 10b5-1 Non-Rule 10b5-1 Scheduled Expiration Date of Trading Plan (1) Maximum Shares Subject to Trading Plan Scott Dreyer Executive Vice President and Chief Commercial Officer Adoption August 9, 2023 X August 8, 2024 33,560 (1) A trading arrangement may expire on an earlier date if all contemplated transactions are completed before such trading arrangement’s expiration date, upon termination by broker or the holder of the trading arrangement, or as otherwise provided in the trading arrangement. |
Scott Dreyer [Member] | |
Trading Arrangements, by Individual | |
Name | Scott Dreyer |
Title | Executive Vice President and Chief Commercial Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | August 9, 2023 |
Aggregate Available | 33,560 |
Trd Arr Expiration Date | August 8, 2024 |