Supernus Pharmaceuticals (SUPN) 10-Q 10 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 29, 2016
Document and Entity Information
Entity Registrant Name	SUPERNUS PHARMACEUTICALS INC
Entity Central Index Key	1,356,576
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		49,421,236
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 19,830	$ 34,152
Marketable securities	25,427	28,038
Accounts receivable, net	30,651	25,908
Inventories, net	13,044	12,587
Prepaid expenses and other current assets	5,003	5,261
Total current assets	93,955	105,946
Long term marketable securities	68,790	55,009
Property and equipment, net	3,866	3,874
Deferred legal fees	11,444	22,503
Intangible assets, net	16,108	976
Other non-current assets	311	318
Total assets	194,474	188,626
Current liabilities:
Accounts payable	2,646	4,314
Accrued sales deductions	28,697	26,794
Accrued expenses	22,573	24,813
Deferred licensing revenue	208	176
Total current liabilities	54,124	56,097
Deferred licensing revenue, net of current portion	1,658	1,390
Convertible notes, net	5,627	7,085
Other non-current liabilities	4,391	4,325
Derivative liabilities	535	854
Total liabilities	66,335	69,751
Stockholders' equity:
Common stock, $0.001 par value, 130,000,000 shares authorized at March 31, 2016 and December 31, 2015; 49,421,236 and 49,004,674 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	49	49
Additional paid-in capital	267,576	263,955
Accumulated other comprehensive income (loss)	168	(488)
Accumulated deficit	(139,654)	(144,641)
Total stockholders' equity	128,139	118,875
Total liabilities and stockholders' equity	$ 194,474	$ 188,626

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	130,000,000	130,000,000
Common stock, shares issued	49,421,236	49,004,674
Common stock, shares outstanding	49,421,236	49,004,674

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue
Net product sales	$ 43,025	$ 28,097
Licensing revenue	50	36
Total revenue	43,075	28,133
Costs and expenses
Cost of product sales	2,035	1,618
Research and development	10,562	3,683
Selling, general and administrative	25,160	19,402
Total costs and expenses	37,757	24,703
Operating income	5,318	3,430
Other income (expense)
Interest income	331	113
Interest expense	(179)	(381)
Changes in fair value of derivative liabilities	101	(49)
Loss on extinguishment of debt	(382)	(2,134)
Other expense	(4)
Total other expense	(133)	(2,451)
Earnings before income taxes	5,185	979
Income tax expense	198	62
Net income	$ 4,987	$ 917
Income per common share:
Basic (in dollars per share)	$ 0.10	$ 0.02
Diluted (in dollars per share)	$ 0.08	$ 0.02
Weighted-average number of common shares outstanding:
Basic (in shares)	49,240,099	44,563,299
Diluted (in shares)	51,152,072	44,901,298

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Consolidated Statements of Comprehensive Income
Net income	$ 4,987	$ 917
Other comprehensive income:
Unrealized net gain on marketable securities	656	89
Other comprehensive income:	656	89
Comprehensive income	$ 5,643	$ 1,006

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities
Net income	$ 4,987	$ 917
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Loss on extinguishment of debt	382	2,134
Change in fair value of derivative liability	(101)	49
Depreciation and amortization	429	214
Non cash interest expense, net/interest income, net	155	374
Share-based compensation expense	1,359	901
Changes in operating assets and liabilities:
Accounts receivable	(4,744)	(2,001)
Inventories	(457)	(261)
Prepaid expenses and other assets	260	38
Accounts payable	(1,691)	(1,004)
Accrued sales deduction	1,903	1,505
Accrued expenses	(5,997)	(1,139)
Deferred licensing revenue	300	(36)
Other non-current liabilities	73	(1,277)
Net cash (used in) provided by operating activities	(3,142)	414
Cash flows from investing activities
Purchases of marketable securities	(17,989)	(17,315)
Sales and maturities of marketable securities	7,400	8,820
Purchases of property and equipment	(279)	(189)
Deferred legal fees	(436)	(2,463)
Net cash used in investing activities	(11,304)	(11,147)
Cash flows from financing activities
Proceeds from issuance of common stock	124	147
Net cash provided by financing activities	124	147
Net change in cash and cash equivalents	(14,322)	(10,586)
Cash and cash equivalents at beginning of period	34,152	36,396
Cash and cash equivalents at end of period	19,830	25,810
Noncash financial activity:
Conversion of convertible notes and interest make-whole	2,138	$ 21,176
Deferred legal fees included in accounts payable and accrued expenses	$ 3,779

Organization and Business

Organization and Business	3 Months Ended
	Mar. 31, 2016
Organization and Business
Organization and Business	1. Organization and Business Supernus Pharmaceuticals, Inc. (the Company) was incorporated in Delaware on March 30, 2005, and commenced operations on December 22, 2005. The Company is a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, including neurological and psychiatric disorders. The Company markets two epilepsy products, Oxtellar XR and Trokendi XR, and has several proprietary product candidates in clinical development that address the psychiatry market. The Company commenced the commercialization of Oxtellar XR and Trokendi XR in 2013.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The Company’s consolidated financial statements include the accounts of Supernus Pharmaceuticals, Inc. and Supernus Europe Ltd., collectively referred to herein as “Supernus” or “the Company.” All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s unaudited consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) for interim financial information. As permitted under Generally Accepted Accounting Principles in the United States (U.S. GAAP), certain notes and other information have been omitted from the interim unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. In the opinion of management, the consolidated financial statements reflect all adjustments necessary to fairly present the Company’s financial position, results of operations, and cash flows for the periods presented. These adjustments are of a normal recurring nature. The Company currently operates in one business segment. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the Company’s future financial results. Marketable Securities Marketable securities consist of investments in U.S. Treasuries, various U.S. governmental agency debt securities, corporate bonds and other fixed income securities. The Company’s investments are classified as available for sale. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income, which is a separate component of stockholders’ equity. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government, industrial, or financial institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. The Company established the Supernus Supplemental Executive Retirement Plan (SERP) for the sole purpose of receiving funds for executives from a previous SERP and providing a continuing deferral program under the Supernus SERP. As of March 31, 2016 and December 31, 2015, the fair value of the SERP was $255,000 and $263,000, respectively. These were held in mutual fund investments. The fair value of these assets is included within other non-current assets on the consolidated balance sheets. A corresponding noncurrent liability is also included in the consolidated balance sheets to reflect the Company’s obligation for the SERP. The Company has not made, and has no plans to make, contributions to the SERP. The securities are restricted in nature and can only be used for purposes of paying benefits under the SERP. Accounts Receivable, net Accounts receivable are reported on the consolidated balance sheets at outstanding amounts, less an allowance for doubtful accounts and discounts. The Company extends credit without requiring collateral. The Company writes off uncollectible receivables when the likelihood of collection is remote. The Company evaluates the collectability of accounts receivable on a regular basis. An allowance, when needed, is based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. No accounts have been written off as of March 31, 2016 and December 31, 2015. The Company recorded an allowance of approximately $4.0 million and $3.8 million for expected sales discounts as of March 31, 2016 and December 31, 2015, respectively. Deferred Financing Costs Deferred financing costs consist of financing costs incurred by the Company in connection with the closing of the Company’s 7.50% Convertible Senior Secured Notes and Secured Notes Payable (see Note 8). The Company amortizes deferred financing costs over the term of the related debt using the effective interest method. When extinguishing debt, the related deferred financing costs are written off. Revenue Recognition Revenue from product sales is recognized when persuasive evidence of an arrangement exists; delivery has occurred and title to the product and associated risk of loss has passed to the customer; the price is fixed or determinable; collection from the customer has been reasonably assured; all performance obligations have been met; and returns and allowances can be reasonably estimated. Product sales are recorded net of estimated rebates, chargebacks, discounts, co-pay assistance and other deductions as well as estimated product returns (collectively, “sales deductions”). Our products are distributed through wholesalers and pharmaceutical distributors. Each of these wholesalers and distributors will take title and ownership to the product upon physical receipt of the product and then distribute our products to pharmacies. Sales Deductions Allowances for estimated sales deductions are provided for the following: · Rebates. Rebates include mandated discounts under the Medicaid Drug Rebate Program, the Medicare coverage gap program, as well as negotiated discounts with commercial healthcare providers. Rebates are amounts owed after the final dispensing of products to a benefit plan participant and are based upon contractual agreements or legal requirements with the public sector (e.g. Medicaid) and with private sector benefit providers. The allowance for rebates is based on statutory and contractual discount rates and expected claimed rebates paid based on a plan provider’s utilization. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust balances of such rebates to reflect the actual expenditures of the Company with respect to these programs, which would affect revenue in the period of adjustment. · Chargebacks. Chargebacks are discounts that occur when contracted customers purchase directly from an intermediary distributor or wholesaler. Contracted customers, which currently consist primarily of Public Health Service institutions and federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The distributor or wholesaler, in turn, charges back the difference between the price initially paid by the distributor or wholesaler and the discounted price paid to the distributor or wholesaler by the customer. The allowance for distributor/wholesaler chargebacks is based on known sales to contracted customers. · Distributor/Wholesaler deductions and discounts. U.S. specialty distributors and wholesalers are offered various forms of consideration including allowances, service fees and prompt payment discounts as consideration for distributing our products. Distributor allowances and service fees arise from contractual agreements with distributors and are generally a percentage of the purchase price paid by the distributors and wholesalers. Wholesale customers are offered a prompt pay discount for payment within a specified period. · Co-pay assistance. Patients who pay in cash or have commercial insurance and meet certain eligibility requirements may receive co-pay assistance from the Company. The intent of this program is to reduce the patient’s out of pocket costs. Liabilities for co-pay assistance are based on actual program participation and estimates of program redemption using data provided by third-party administrators. · Returns. Sales of our products are not subject to a general right of return; however, the Company will accept product that is damaged or defective when shipped directly from our warehouse. The Company will accept expired product six months prior and up to 12 months subsequent to its expiry date. Product that has been used to fill patient prescriptions is no longer subject to any right of return. Milestone Payments Milestone payments on licensing agreements are recognized as revenue when the collaborative partner acknowledges completion of the milestone and substantive effort (i.e., effort consistent with amount of the milestone) was necessary to achieve the milestone. Management may recognize revenue contingent upon the achievement of a milestone in its entirety in the period in which the milestone is achieved only if the milestone meets all the criteria to be considered substantive. The Company recorded no milestone revenue during the three months ended March 31, 2016 and March 31, 2015. Cost of Product Sales The cost of product sales consists primarily of materials, third-party manufacturing costs, freight and distribution costs, allocation of labor, quality control and assurance, and other manufacturing overhead costs. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertain tax positions in its consolidated financial statements when it is more-likely-than-not that the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company’s policy is to recognize any interest and penalties related to income taxes in income tax expense. Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Lease (Topic 842)”. The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU more closely aligns the treatment of debt issuance costs with debt discounts and premiums and requires debt issuance costs be presented as a direct deduction from the carrying amount of the related debt. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. This guidance was applied on a retrospective basis and the Company was required to comply with the applicable disclosures for a change in accounting principle. The adoption of ASU 2015-03 resulted in a reclassification of deferred financing costs of $104,000 from asset to liability classification on the Company’s consolidated December 31, 2015 financial statements.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2016
Fair Value of Financial Instruments
Fair Value of Financial Instruments	3. Fair Value of Financial Instruments The fair value of an asset or liability should represent the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Such transactions to sell an asset or transfer a liability are assumed to occur in the principal or most advantageous market for the asset or liability. Accordingly, fair value is determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant rather than from a reporting entity’s perspective. The Company reports assets and liabilities that are measured at fair value using a three tier or level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1—Inputs are unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. · Level 2—Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). · Level 3—Unobservable inputs that reflect the Company’s own assumptions, based on the best information available, including the Company’s own data. In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value, in thousands: Fair Value Measurements at March 31, 2016 (unaudited) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable March 31, Markets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ Fair Value Measurements at December 31, 2015 Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable December 31, Markets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ The fair value of the restricted marketable securities is included within other non-current assets in the consolidated balance sheets. The Company’s Level 1 assets include cash held with banks and money market funds. Level 2 assets include the SERP assets, commercial paper and investment grade corporate bonds and other fixed income securities. Level 2 securities are valued using third-party pricing sources that apply applicable inputs and other relevant data into their models to estimate fair value. Level 3 liabilities include the estimated fair value of the interest make-whole liability associated with the Company’s 7.50% Convertible Senior Secured Notes due 2019 (the Notes), which are recorded as derivative liabilities. The fair value of the interest make-whole liability of the Notes was calculated using a binomial-lattice model with the following key assumptions as of March 31, 2016, unaudited: Volatility 45% Stock Price as of March 31, 2016 $15.21 per share Credit Spread 900 bps Term 1.1 years Dividend Yield 0.0% Significant changes to these assumptions could result in increases/decreases to the fair value of the derivative liabilities. Changes in the fair value of the interest make-whole liability are recognized as a component of Other Income (Expense) in the Consolidated Statements of Operations. The following table presents information about the Company’s Level 3 liabilities as of December 31, 2015 and March 31, 2016 that are included in the Non-Current Liabilities section of the Consolidated Balance Sheets, in thousands: Three Months ended March 31, 2016 (unaudited) Balance at December 31, 2015 $ Changes in fair value of derivative liabilities included in earnings ) Reduction due to conversion of debt to equity ) Balance at March 31, 2016 $ The carrying value, face value and estimated fair value of the Notes was approximately $5.6 million, $6.6 million and $20.0 million, respectively, as of March 31, 2016. The fair value was estimated based on actual trade information as well as quoted prices provided by bond traders, which would be characterized within Level 2 of the fair value hierarchy. This fair value amount gives recognition to the value of the interest make-whole liability and the value of the conversion option. Upon issuance these were accounted for as derivative liabilities and additional paid-in-capital, respectively. The carrying amounts of other financial instruments, including accounts receivable, accounts payable and accrued expenses approximate fair value due to their short-term maturities. Unrestricted marketable securities held by the Company were as follows, in thousands: At March 31, 2016 (unaudited): Available for Sale Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ ) $ At December 31, 2015: Available for Sale Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ ) $ The contractual maturities of the unrestricted available for sale marketable securities held by the Company were as follows, in thousands: March 31, 2016 (unaudited) Less Than 1 Year $ 1-5 years Greater Than 5 Years — Total $ The Company has not experienced any other-than-temporary losses on its marketable securities and restricted marketable securities. The cost of securities sold is calculated using the specific identification method.

Inventories

Inventories	3 Months Ended
	Mar. 31, 2016
Inventories
Inventories	4. Inventories Inventories consist of the following, in thousands: March 31, December 31, 2016 2015 (unaudited) Raw materials $ $ Work in process Finished goods $ $

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2016
Property and Equipment
Property and Equipment	5. Property and Equipment Property and equipment consist of the following, in thousands: March 31, December 31, 2016 2015 (unaudited) Computer equipment $ $ Software Lab equipment and furniture Leasehold improvements Construction in progress Less accumulated depreciation and amortization ) ) $ $ Depreciation and amortization expense on property and equipment was approximately $287,000 and $156,000 for the three months ended March 31, 2016 and March 31, 2015, respectively.

Deferred Legal Fees and Intangi

Deferred Legal Fees and Intangible Assets	3 Months Ended
	Mar. 31, 2016
Deferred Legal Fees and Intangible Assets
Deferred Legal Fees and Intangible Assets	6. Deferred Legal Fees and Intangible Assets Deferred legal fees have been incurred in connection with patents for Oxtellar XR and Trokendi XR. As of March 31, 2016 and December 31, 2015, the Company had deferred legal fees of $11.4 million and $22.5 million, respectively. The following sets forth the gross carrying amount and related accumulated amortization of the intangible asset, in thousands: March 31, 2016 (unaudited) December 31, 2015 Weighted- Gross Carrying Accumulated Gross Carrying Accumulated Average Life Amount Amortization Amount Amortization Capitalized patent defense costs $ $ $ $ The Company prevailed in a lawsuit related to Oxtellar XR in February 2016, at which time the Company began amortizing the costs associated with that litigation. The net book value of intangible assets was $16.1 million as of March 31, 2016 and was $1.0 million as of December 31, 2015. The increase in intangible assets reflects the successful outcome of the lawsuit related to Oxtellar XR in February 2016. There is an offsetting reduction in the amount carried as deferred legal fees, as described above. Amortization expense on intangible assets was approximately $142,000 and $57,000 for the three months ended March 31, 2016 and 2015, respectively. There were no indicators of impairment identified at March 31, 2016 or December 31, 2015.

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2016
Accrued Expenses
Accrued Expenses	7. Accrued Expenses Accrued expenses are comprised of the following, in thousands: March 31, December 31, 2016 2015 (unaudited) Accrued professional fees $ $ Accrued compensation Accrued clinical trial and clinical supply costs Accrued interest expense Accrued sales and marketing expenses Accrued product costs Other accrued expenses $ $

Convertible Senior Secured Note

Convertible Senior Secured Notes	3 Months Ended
	Mar. 31, 2016
Convertible Senior Secured Notes
Convertible Senior Secured Notes	8. Convertible Senior Secured Notes The table below summarizes activity related to the Notes from issuance on May 3, 2013 through March 31, 2016, in thousands: Gross proceeds $ Initial value of interest make-whole derivative reported as debt discount ) Conversion option reported as debt discount and APIC ) Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs December 31, 2015 carrying value Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs March 31, 2016 carrying value $ During the three month period ended March 31, 2016, approximately $2.0 million of the Notes were presented to the Company for conversion. Accordingly, the Company issued approximately 0.4 million shares of common stock in conversion of the principal amount of the Notes. The Company issued an additional 21,000 shares of common stock in settlement of the interest make-whole provision related to the converted Notes. As a result of the conversions, the Company incurred a loss of approximately $0.4 million on extinguishment of debt during the three months ended March 31, 2016, which is included as a separate component of other income (expense) on the consolidated statement of operations. During the three month period ended March 31, 2015, as a result of approximately $21.4 million in note conversions, the Company incurred a loss of approximately $2.1 million on extinguishment of debt.

Summary Stockholders' Equity

Summary Stockholders' Equity	3 Months Ended
	Mar. 31, 2016
Summary Stockholders' Equity
Summary Stockholders' Equity	9. Summary Stockholders’ Equity The following summary table provides details related to the activity in certain captions within Stockholders’ Equity for the three month period ended March 31, 2016, in thousands. Common Stock Additional Paid-in Capital (unaudited) Balance, December 31, 2015 $ $ Share-based compensation — Exercise of stock options — Equity issued on note conversion Balance, March 31, 2016 $ $

Share-Based Payments

Share-Based Payments	3 Months Ended
	Mar. 31, 2016
Share-Based Payments
Share-Based Payments	10. Share-Based Payments The Company has adopted the Supernus Pharmaceuticals, Inc. 2012 Equity Incentive Plan (the 2012 Plan), which is stockholder approved, and provides for the grant of stock options and certain other awards, including stock appreciation rights (SAR), restricted and unrestricted stock, stock units, performance awards, cash awards and other awards that are convertible into or otherwise based on the Company’s common stock, to the Company’s key employees, directors, and consultants and advisors. The 2012 Plan is administered by the Company’s Board of Directors and provides for the issuance of up to 4,000,000 shares of the Company’s common stock upon the exercise of stock awards. Option awards are granted with an exercise price equal to the estimated fair value of the Company’s common stock at the grant date. Those option awards generally vest in four annual installments, starting on the first anniversary of the date of grant and have ten year contractual terms. Share-based compensation recognized related to the grant of employee and non-employee stock options, SAR, potential Employee Stock Purchase Plan (ESPP) awards and non-vested stock was as follows, in thousands: March 31, 2016 2015 (unaudited) Research and development $ $ Selling, general and administrative Total $ $ The following table summarizes stock option and SAR activity: Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Outstanding, December 31, 2015 $ Granted (unaudited) $ Exercised (unaudited) ) $ Forfeited or expired (unaudited) ) $ Outstanding, March 31, 2016 (unaudited) $ As of December 31, 2015: Vested and expected to vest $ Exercisable $ As of March 31, 2016: Vested and expected to vest (unaudited) $ Exercisable (unaudited) $

Earnings per Share

Earnings per Share	3 Months Ended
	Mar. 31, 2016
Earnings per Share
Earnings per Share	11. Earnings per Share Basic income per common share is determined by dividing income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted income per share is computed by dividing the income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants, SARs, and potential ESPP awards, and the if-converted method is used to determine the dilutive effect of the Company’s Notes. The following common stock equivalents were excluded in the calculation of diluted income per share because their effect would be anti-dilutive as applied to the income from continuing operations applicable to common stockholders for the three months ended March 31, 2016 and March 31, 2015: Three Months ended March 31, 2016 2015 (unaudited) Shares underlying Convertible Senior Secured Notes — Warrants to purchase common stock — The following table sets forth the computation of basic and diluted net income per share for the three months ended March 31, 2016 and March 31, 2015 , in thousands, except share and per share amounts: Three Months ended March 31, 2016 2015 (unaudited) Numerator, in thousands: Net income used for calculation of basic EPS $ $ Interest expense on convertible debt — Changes in fair value of derivative liabilities ) — Loss on extinguishment of debt Loss on extinguishment of outstanding debt, as if converted ) — Total adjustments ) — Net income used for calculation of diluted EPS $ $ Denominator: Weighted average shares outstanding, basic Effect of dilutive potential common shares: Shares underlying Convertible Senior Secured Notes — Shares issuable to settle interest make-whole derivatives — Stock options, stock appreciation rights, and non-vested stock options Total potential dilutive common shares Weighted average shares outstanding, diluted Net income per share, basic $ $ Net income per share, diluted $ $

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2016
Income Taxes
Income Taxes	12. Income Taxes During the three months ended March 31, 2016, the Company had pre-tax income of $5.2 million. The provision for Federal and state income taxes related to the pre-tax income has been largely offset by the utilization of available net operating loss carryforwards (NOL’s). Accordingly, the Company reduced its valuation allowance against its deferred tax assets and recognized an income tax expense for the jurisdictions that did not have sufficient NOL’s to offset the expected tax expense. During the three months ended March 31, 2016, the Company recorded $0.2 million of current tax expense primarily related to an increase in our reserve for an uncertain tax position related to the Alternative Minimum Tax.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies
Commitments and Contingencies	13. Commitments and Contingencies The Company has concurrent leases for office and lab space that extend through April 2020. The Company may elect to extend the term of the leases for an additional five-year term. The leases provide for a tenant improvement allowance of approximately $2.1 million in aggregate. During the three months ended March 31, 2016 , none of the allowance was utilized. During the three months ended March 31, 2015 , none of the allowance was utilized. As of March 31, 2016 , $0.5 million remains available for tenant improvements. Rent expense for the leased facilities and leased vehicles for the three months ended March 31, 2016 and March 31, 2015 was approximately, $0.7 million in each period. Future minimum lease payments under non-cancelable operating leases as of March 31, 2016 are as follows, in thousands, unaudited: Year ending December 31: 2016 (remaining) $ 2017 2018 2019 Thereafter $ The Company has obtained exclusive licenses from third parties for proprietary rights to support the product candidates in the Company’s psychiatry portfolio. Under license agreements with Afecta Pharmaceuticals, Inc. (Afecta), the Company has obtained exclusive worldwide rights to selected product candidates, including an exclusive license to SPN-810 (molindone hydrochloride) . The Company does not owe any future milestone payments for SPN-810. The Company is obligated to pay royalties in the low-single digits to Afecta based on worldwide net sales of each of these products. The Company has also entered into a purchase and sale agreement with Rune Healthcare Limited (Rune), where the Company obtained the exclusive worldwide rights to a product concept from Rune. There are no future milestone payments due to Rune under this agreement. If the Company receives approval to market and sell any products based on the Rune product concept for SPN-809 (viloxazine hydrochloride), the Company is obligated to pay royalties to Rune based on net sales worldwide in the low single digits.

Summary of Significant Accoun20

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The Company’s consolidated financial statements include the accounts of Supernus Pharmaceuticals, Inc. and Supernus Europe Ltd., collectively referred to herein as “Supernus” or “the Company.” All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s unaudited consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) for interim financial information. As permitted under Generally Accepted Accounting Principles in the United States (U.S. GAAP), certain notes and other information have been omitted from the interim unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. In the opinion of management, the consolidated financial statements reflect all adjustments necessary to fairly present the Company’s financial position, results of operations, and cash flows for the periods presented. These adjustments are of a normal recurring nature. The Company currently operates in one business segment. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the Company’s future financial results.
Marketable Securities	Marketable Securities Marketable securities consist of investments in U.S. Treasuries, various U.S. governmental agency debt securities, corporate bonds and other fixed income securities. The Company’s investments are classified as available for sale. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income, which is a separate component of stockholders’ equity. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government, industrial, or financial institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. The Company established the Supernus Supplemental Executive Retirement Plan (SERP) for the sole purpose of receiving funds for executives from a previous SERP and providing a continuing deferral program under the Supernus SERP. As of March 31, 2016 and December 31, 2015, the fair value of the SERP was $255,000 and $263,000, respectively. These were held in mutual fund investments. The fair value of these assets is included within other non-current assets on the consolidated balance sheets. A corresponding noncurrent liability is also included in the consolidated balance sheets to reflect the Company’s obligation for the SERP. The Company has not made, and has no plans to make, contributions to the SERP. The securities are restricted in nature and can only be used for purposes of paying benefits under the SERP.
Accounts Receivable, net	Accounts Receivable, net Accounts receivable are reported on the consolidated balance sheets at outstanding amounts, less an allowance for doubtful accounts and discounts. The Company extends credit without requiring collateral. The Company writes off uncollectible receivables when the likelihood of collection is remote. The Company evaluates the collectability of accounts receivable on a regular basis. An allowance, when needed, is based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. No accounts have been written off as of March 31, 2016 and December 31, 2015. The Company recorded an allowance of approximately $4.0 million and $3.8 million for expected sales discounts as of March 31, 2016 and December 31, 2015, respectively.
Deferred Financing Costs	Deferred Financing Costs Deferred financing costs consist of financing costs incurred by the Company in connection with the closing of the Company’s 7.50% Convertible Senior Secured Notes and Secured Notes Payable (see Note 8). The Company amortizes deferred financing costs over the term of the related debt using the effective interest method. When extinguishing debt, the related deferred financing costs are written off.
Revenue Recognition	Revenue Recognition Revenue from product sales is recognized when persuasive evidence of an arrangement exists; delivery has occurred and title to the product and associated risk of loss has passed to the customer; the price is fixed or determinable; collection from the customer has been reasonably assured; all performance obligations have been met; and returns and allowances can be reasonably estimated. Product sales are recorded net of estimated rebates, chargebacks, discounts, co-pay assistance and other deductions as well as estimated product returns (collectively, “sales deductions”). Our products are distributed through wholesalers and pharmaceutical distributors. Each of these wholesalers and distributors will take title and ownership to the product upon physical receipt of the product and then distribute our products to pharmacies. Sales Deductions Allowances for estimated sales deductions are provided for the following: · Rebates. Rebates include mandated discounts under the Medicaid Drug Rebate Program, the Medicare coverage gap program, as well as negotiated discounts with commercial healthcare providers. Rebates are amounts owed after the final dispensing of products to a benefit plan participant and are based upon contractual agreements or legal requirements with the public sector (e.g. Medicaid) and with private sector benefit providers. The allowance for rebates is based on statutory and contractual discount rates and expected claimed rebates paid based on a plan provider’s utilization. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust balances of such rebates to reflect the actual expenditures of the Company with respect to these programs, which would affect revenue in the period of adjustment. · Chargebacks. Chargebacks are discounts that occur when contracted customers purchase directly from an intermediary distributor or wholesaler. Contracted customers, which currently consist primarily of Public Health Service institutions and federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The distributor or wholesaler, in turn, charges back the difference between the price initially paid by the distributor or wholesaler and the discounted price paid to the distributor or wholesaler by the customer. The allowance for distributor/wholesaler chargebacks is based on known sales to contracted customers. · Distributor/Wholesaler deductions and discounts. U.S. specialty distributors and wholesalers are offered various forms of consideration including allowances, service fees and prompt payment discounts as consideration for distributing our products. Distributor allowances and service fees arise from contractual agreements with distributors and are generally a percentage of the purchase price paid by the distributors and wholesalers. Wholesale customers are offered a prompt pay discount for payment within a specified period. · Co-pay assistance. Patients who pay in cash or have commercial insurance and meet certain eligibility requirements may receive co-pay assistance from the Company. The intent of this program is to reduce the patient’s out of pocket costs. Liabilities for co-pay assistance are based on actual program participation and estimates of program redemption using data provided by third-party administrators. · Returns. Sales of our products are not subject to a general right of return; however, the Company will accept product that is damaged or defective when shipped directly from our warehouse. The Company will accept expired product six months prior and up to 12 months subsequent to its expiry date. Product that has been used to fill patient prescriptions is no longer subject to any right of return. Milestone Payments Milestone payments on licensing agreements are recognized as revenue when the collaborative partner acknowledges completion of the milestone and substantive effort (i.e., effort consistent with amount of the milestone) was necessary to achieve the milestone. Management may recognize revenue contingent upon the achievement of a milestone in its entirety in the period in which the milestone is achieved only if the milestone meets all the criteria to be considered substantive. The Company recorded no milestone revenue during the three months ended March 31, 2016 and March 31, 2015.
Cost of Product Sales	Cost of Product Sales The cost of product sales consists primarily of materials, third-party manufacturing costs, freight and distribution costs, allocation of labor, quality control and assurance, and other manufacturing overhead costs.
Income Taxes	Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertain tax positions in its consolidated financial statements when it is more-likely-than-not that the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company’s policy is to recognize any interest and penalties related to income taxes in income tax expense.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Lease (Topic 842)”. The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU more closely aligns the treatment of debt issuance costs with debt discounts and premiums and requires debt issuance costs be presented as a direct deduction from the carrying amount of the related debt. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. This guidance was applied on a retrospective basis and the Company was required to comply with the applicable disclosures for a change in accounting principle. The adoption of ASU 2015-03 resulted in a reclassification of deferred financing costs of $104,000 from asset to liability classification on the Company’s consolidated December 31, 2015 financial statements.

Fair Value of Financial Instr21

Fair Value of Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2016
Fair Value of Financial Instruments
Schedule of fair value of the financial assets and liabilities	In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value, in thousands: Fair Value Measurements at March 31, 2016 (unaudited) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable March 31, Markets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ Fair Value Measurements at December 31, 2015 Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable December 31, Markets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $
Schedule of assumptions used to calculate fair value of make-whole liability	Volatility 45% Stock Price as of March 31, 2016 $15.21 per share Credit Spread 900 bps Term 1.1 years Dividend Yield 0.0%
Schedule of Level 3 liabilities included in Non-current Liabilities on the Balance Sheet	The following table presents information about the Company’s Level 3 liabilities as of December 31, 2015 and March 31, 2016 that are included in the Non-Current Liabilities section of the Consolidated Balance Sheets, in thousands: Three Months ended March 31, 2016 (unaudited) Balance at December 31, 2015 $ Changes in fair value of derivative liabilities included in earnings ) Reduction due to conversion of debt to equity ) Balance at March 31, 2016 $
Schedule of unrestricted marketable securities	Unrestricted marketable securities held by the Company were as follows, in thousands: At March 31, 2016 (unaudited): Available for Sale Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ ) $ At December 31, 2015: Available for Sale Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ ) $
Schedule of contractual maturities of the unrestricted marketable securities held	The contractual maturities of the unrestricted available for sale marketable securities held by the Company were as follows, in thousands: March 31, 2016 (unaudited) Less Than 1 Year $ 1-5 years Greater Than 5 Years — Total $

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Mar. 31, 2016
Inventories
Schedule of inventories	Inventories consist of the following, in thousands: March 31, December 31, 2016 2015 (unaudited) Raw materials $ $ Work in process Finished goods $ $

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2016
Property and Equipment
Schedule of property and equipment	Property and equipment consist of the following, in thousands: March 31, December 31, 2016 2015 (unaudited) Computer equipment $ $ Software Lab equipment and furniture Leasehold improvements Construction in progress Less accumulated depreciation and amortization ) ) $ $

Deferred Legal Fees and Intan24

Deferred Legal Fees and Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2016
Deferred Legal Fees and Intangible Assets
Schedule of gross carrying amount and related accumulated amortization of the intangible assets	The following sets forth the gross carrying amount and related accumulated amortization of the intangible asset, in thousands: March 31, 2016 (unaudited) December 31, 2015 Weighted- Gross Carrying Accumulated Gross Carrying Accumulated Average Life Amount Amortization Amount Amortization Capitalized patent defense costs $ $ $ $

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2016
Accrued Expenses
Schedule of accrued expenses	Accrued expenses are comprised of the following, in thousands: March 31, December 31, 2016 2015 (unaudited) Accrued professional fees $ $ Accrued compensation Accrued clinical trial and clinical supply costs Accrued interest expense Accrued sales and marketing expenses Accrued product costs Other accrued expenses $ $

Convertible Senior Secured No26

Convertible Senior Secured Notes (Tables)	3 Months Ended
	Mar. 31, 2016
Convertible Senior Secured Notes
Summary of issuance of Notes reflected in balance sheet	The table below summarizes activity related to the Notes from issuance on May 3, 2013 through March 31, 2016, in thousands: Gross proceeds $ Initial value of interest make-whole derivative reported as debt discount ) Conversion option reported as debt discount and APIC ) Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs December 31, 2015 carrying value Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs March 31, 2016 carrying value $

Summary Stockholders' Equity (T

Summary Stockholders' Equity (Tables)	3 Months Ended
	Mar. 31, 2016
Summary Stockholders' Equity
Schedule of activity in certain captions within Stockholders' Equity	The following summary table provides details related to the activity in certain captions within Stockholders’ Equity for the three month period ended March 31, 2016, in thousands. Common Stock Additional Paid-in Capital (unaudited) Balance, December 31, 2015 $ $ Share-based compensation — Exercise of stock options — Equity issued on note conversion Balance, March 31, 2016 $ $

Share-Based Payments (Tables)

Share-Based Payments (Tables)	3 Months Ended
	Mar. 31, 2016
Share-Based Payments
Schedule of share-based compensation recognized related to the grant of employee and non-employee stock options, SARS and non-vested stock	Share-based compensation recognized related to the grant of employee and non-employee stock options, SAR, potential Employee Stock Purchase Plan (ESPP) awards and non-vested stock was as follows, in thousands: March 31, 2016 2015 (unaudited) Research and development $ $ Selling, general and administrative Total $ $
Summary of stock option and SAR activity	Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Outstanding, December 31, 2015 $ Granted (unaudited) $ Exercised (unaudited) ) $ Forfeited or expired (unaudited) ) $ Outstanding, March 31, 2016 (unaudited) $ As of December 31, 2015: Vested and expected to vest $ Exercisable $ As of March 31, 2016: Vested and expected to vest (unaudited) $ Exercisable (unaudited) $

Earnings per Share (Tables)

Earnings per Share (Tables)	3 Months Ended
	Mar. 31, 2016
Earnings per Share
Schedule of common stock equivalents excluded in the calculation of diluted loss per share	Three Months ended March 31, 2016 2015 (unaudited) Shares underlying Convertible Senior Secured Notes — Warrants to purchase common stock —
Schedule of computation of basic and diluted net income per share	The following table sets forth the computation of basic and diluted net income per share for the three months ended March 31, 2016 and March 31, 2015 , in thousands, except share and per share amounts: Three Months ended March 31, 2016 2015 (unaudited) Numerator, in thousands: Net income used for calculation of basic EPS $ $ Interest expense on convertible debt — Changes in fair value of derivative liabilities ) — Loss on extinguishment of debt Loss on extinguishment of outstanding debt, as if converted ) — Total adjustments ) — Net income used for calculation of diluted EPS $ $ Denominator: Weighted average shares outstanding, basic Effect of dilutive potential common shares: Shares underlying Convertible Senior Secured Notes — Shares issuable to settle interest make-whole derivatives — Stock options, stock appreciation rights, and non-vested stock options Total potential dilutive common shares Weighted average shares outstanding, diluted Net income per share, basic $ $ Net income per share, diluted $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies
Schedule of future minimum lease payments under non-cancelable operating leases	Future minimum lease payments under non-cancelable operating leases as of March 31, 2016 are as follows, in thousands, unaudited: Year ending December 31: 2016 (remaining) $ 2017 2018 2019 Thereafter $

Organization and Business (Deta

Organization and Business (Details)	3 Months Ended
	Mar. 31, 2016product
Organization and Business
Number of proprietary products in clinical development	2

Summary of Significant Accoun32

Summary of Significant Accounting Policies - Segments (Details)	3 Months Ended
	Mar. 31, 2016segment
Basis of Presentation
Number of operating segments	1

Summary of Significant Accoun33

Summary of Significant Accounting Policies - SERP (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
SERP
Marketable Securities - Restricted
Marketable securities - restricted	$ 255,000	$ 263,000

Summary of Significant Accoun34

Summary of Significant Accounting Policies - Accounts Receivable, net (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Accounts Receivable, net
Accounts receivable written off	$ 0	$ 0
Allowance for expected sales deductions	$ 4	$ 3.8
7.50% Convertible Senior Secured Notes due 2019
Deferred Financing Costs
Interest rate (as a percent)	7.50%

Summary of Significant Accoun35

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue Recognition
Sales return period prior to expiry date	6 months
Sales return period subsequent to expiry date	12 months
Milestone revenues recorded	$ 0	$ 0

Summary of Significant Accoun36

Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Simplifying the Presentation of Debt Issuance Costs
Assets	$ 194,474,000	$ 188,626,000
Liabilities	$ 66,335,000	69,751,000
Accounting Standards Update ("ASU") 2015-03 - Simplifying the Presentation of Debt Issuance Costs
Simplifying the Presentation of Debt Issuance Costs
Assets		(104,000)
Liabilities		$ (104,000)

Fair Value of Financial Instr37

Fair Value of Financial Instruments - Carrying Value (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Assets:
Marketable securities	$ 25,427	$ 28,038
Long term marketable securities	68,790	55,009
Liabilities:
Derivative liabilities	535	854
Total Carrying Value | Recurring
Assets:
Cash and cash equivalents	19,830	34,152
Marketable securities	25,427	28,038
Long term marketable securities	68,790	55,009
Marketable securities - restricted (SERP)	255	263
Total assets at fair value	114,302	117,462
Liabilities:
Derivative liabilities	535	854
Quoted Prices in Active Markets (Level 1) | Recurring
Assets:
Cash and cash equivalents	19,830	34,152
Total assets at fair value	19,830	34,152
Significant Other Observable Inputs (Level 2) | Recurring
Assets:
Marketable securities	25,427	28,038
Long term marketable securities	68,790	55,009
Marketable securities - restricted (SERP)	255	263
Total assets at fair value	94,472	83,310
Significant Unobservable Inputs (Level 3) | Recurring
Liabilities:
Derivative liabilities	$ 535	$ 854

Fair Value of Financial Instr38

Fair Value of Financial Instruments - Fair Value Assumptions (Details)	3 Months Ended
	Mar. 31, 2016$ / shares
Assumptions used to calculate fair value of interest make-whole liability using Monte-Carlo simulation with a Black-Scholes lattice model
Volatility (as a percent)	45.00%
Stock Price (in dollars per share)	$ 15.21
Credit Spread (as a percent)	9.00%
Term	1 year 1 month 6 days
Dividend Yield (as a percent)	0.00%
7.50% Convertible Senior Secured Notes due 2019
Assumptions used to calculate fair value of interest make-whole liability using Monte-Carlo simulation with a Black-Scholes lattice model
Interest rate (as a percent)	7.50%

Fair Value of Financial Instr39

Fair Value of Financial Instruments - Level 3 (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Interest Make-Whole Liability
Carrying value of the convertible notes	$ 5,627	$ 7,085
Face value of the convertible notes	6,600
Estimated fair value of the convertible notes	20,000
Significant Unobservable Inputs (Level 3) | Derivative Financial Instruments, Liabilities
Interest Make-Whole Liability
Balance at the beginning of the period	854
Changes in fair value of derivative liabilities included in earnings	(101)
Reduction due to conversion of debt to equity	(218)
Balance at the end of the period	$ 535

Fair Value of Financial Instr40

Fair Value of Financial Instruments - Unrestricted Marketable Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value of Financial Instruments
Corporate debt securities, Amortized Cost	$ 94,049	$ 83,535
Corporate debt securities, Gross Unrealized Gains	300	5
Corporate debt securities, Gross Unrealized Losses	(132)	(493)
Corporate debt securities, Fair Value	94,217	83,047
Contractual maturities of the unrestricted marketable securities held
Less Than 1 Year	25,427
1-5 years	68,790
Corporate debt securities, Fair Value	$ 94,217	$ 83,047

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Inventories
Raw materials	$ 2,371	$ 2,887
Work in process	4,264	3,946
Finished goods	6,409	5,754
Total inventories	$ 13,044	$ 12,587

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Property and equipment
Property and equipment, gross	$ 11,121,000		$ 10,842,000
Less accumulated depreciation and amortization	(7,255,000)		(6,968,000)
Property and equipment, net	3,866,000		3,874,000
Depreciation and amortization expense	287,000	$ 156,000
Computer Equipment
Property and equipment
Property and equipment, gross	1,130,000		1,112,000
Software
Property and equipment
Property and equipment, gross	1,463,000		307,000
Lab Equipment and Furniture
Property and equipment
Property and equipment, gross	5,878,000		5,667,000
Leasehold Improvements
Property and equipment
Property and equipment, gross	2,642,000		2,642,000
Construction in progress
Property and equipment
Property and equipment, gross	$ 8,000		$ 1,114,000

Deferred Legal Fees and Intan43

Deferred Legal Fees and Intangible Assets (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Additional disclosures
Deferred legal fees	$ 11,444,000		$ 22,503,000
Net book value of intangible assets	16,108,000		$ 976,000
Amortization expense	$ 142,000	$ 57,000
Capitalized patent defense costs
Finite lived intangible assets disclosures
Weighted-Average Life	9 years 6 months		9 years 6 months
Gross Carrying Amount	$ 16,267,000		$ 994,000
Accumulated Amortization	$ 159,000		$ 18,000

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accrued Expenses
Accrued professional fees	$ 9,870	$ 10,057
Accrued compensation	5,523	7,519
Accrued clinical trial and clinical supply costs	2,498	3,677
Accrued interest expense	393	295
Accrued sales and marketing expenses	260	434
Accrued product costs	11	113
Other accrued expenses	4,018	2,718
Total	$ 22,573	$ 24,813

Convertible Senior Secured No45

Convertible Senior Secured Notes (Details) - USD ($)	3 Months Ended		32 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Details of Notes reflected in balance sheet
Remaining outstanding balance	$ 5,627,000		$ 7,085,000
Loss on extinguishment of debt	382,000	$ 2,134,000
7.50% Convertible Senior Secured Notes due 2019
Details of Notes reflected in balance sheet
Gross proceeds			90,000,000
Initial value of interest make-whole derivative reported as debt discount			(9,270,000)
Conversion option reported as debt discount and APIC			(22,336,000)
Conversion of debt to equity - principal	(1,962,000)	(21,400,000)	(81,463,000)
Conversion of debt to equity - accretion of debt discount and deferred financing costs	424,000		25,003,000
Accretion of debt discount and deferred financing costs	80,000		5,151,000
Remaining outstanding balance	$ 5,627,000		$ 7,085,000
Shares of common stock issued in conversion of Notes	400,000
Shares of common stock issued in settlement of the interest make-whole provision	21,000
Loss on extinguishment of debt	$ 400,000	$ 2,100,000

Summary Stockholders' Equity (D

Summary Stockholders' Equity (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)
Beginning balance	$ 118,875
Ending balance	128,139
Common Stock
Beginning balance	49
Ending balance	49
Additional Paid-in Capital
Beginning balance	263,955
Share-based compensation	1,359
Exercise of stock options	124
Equity issued on note conversion	2,138
Ending balance	$ 267,576

Share-Based Payments - 2012 Pla

Share-Based Payments - 2012 Plan (Details) - 2012 Plan	3 Months Ended
	Mar. 31, 2016installmentshares
Share-based payments
Maximum number of shares of common stock provided for issuance | shares	4,000,000
Stock Option
Share-based payments
Number of annual installments in which the awards would generally vest starting on the first anniversary of the date of grant | installment	4
Contractual term	10 years

Share-Based Payments - Share-ba

Share-Based Payments - Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Payments
Share-based compensation recognized	$ 1,359	$ 901
Research and development
Share-based Payments
Share-based compensation recognized	288	204
Selling, general and administrative
Share-based Payments
Share-based compensation recognized	$ 1,071	$ 697

Share-Based Payments - Activity

Share-Based Payments - Activity (Details) - Stock option and Stock Appreciation Rights - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Number of Options and SAR
Outstanding at the beginning of the period (in shares)	2,699,007
Granted (in shares)	1,016,750
Exercised (in shares)	(25,807)
Forfeited and expired (in shares)	(1,250)
Outstanding at the end of the period (in shares)	3,688,700	2,699,007
Vested and expected to vest (in shares)	3,605,090	2,654,381
Exercisable (in shares)	1,472,911	901,672
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 8.94
Granted (in dollars per share)	12.98
Exercised (in dollars per share)	4.79
Forfeited or expired (in dollars per share)	10.33
Outstanding at the end of the period (in dollars per share)	10.08	$ 8.94
Vested and expected to vest (in dollars per share)	10.05	8.93
Exercisable (in dollars per share)	$ 8.36	$ 7.95
Weighted-Average Remaining Contractual Term
Outstanding at the end of the period	8 years 3 months 22 days	7 years 11 months 1 day
Vested and expected to vest	8 years 3 months 11 days	7 years 10 months 24 days
Exercisable	7 years 2 months 19 days	6 years 10 months 10 days

Earnings per Share (Details)

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Numerator, in thousands:
Net income used for calculation of basic EPS	$ 4,987	$ 917
Interest expense on convertible debt	179
Changes in fair value of derivative liabilities	(101)
Loss on extinguishment of debt	382
Loss on extinguishment of outstanding debt, as if converted	(1,229)
Total adjustments	(769)
Net income used for calculation of diluted EPS	$ 4,218	$ 917
Denominator:
Weighted average shares outstanding, basic	49,240,099	44,563,299
Effect of dilutive potential common shares:
Shares underlying Convertible Senior Secured Notes	1,383,472
Shares issuable to settle interest make-whole derivatives	71,537
Stock options, stock appreciation rights, and non-vested stock options	456,964	337,999
Total potential dilutive common shares	1,911,973	337,999
Weighted average shares outstanding, diluted	51,152,072	44,901,298
Net income per share, basic	$ 0.10	$ 0.02
Net income per share, diluted	$ 0.08	$ 0.02
7.50% Convertible Senior Secured Notes due 2019
Loss Per Share
Common stock equivalents excluded in the calculation of diluted loss per share		6,071,894
Warrants to purchase common stock.
Loss Per Share
Common stock equivalents excluded in the calculation of diluted loss per share		21,800

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Taxes
Pre-tax income	$ 5,185	$ 979
Income tax expense	$ 198	$ 62

Commitments and Contingencies52

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Commitments and Contingencies
Additional period for which the entity may elect to extend the term of the lease	5 years
Additional tenant improvement allowance	$ 2,100
Tenant improvement allowance utilized and included in fixed assets and deferred rent	0	$ 0
Amount available for tenant improvements	500
Rent expense	700	$ 700
Future minimum lease payments under non-cancelable operating leases
2016 (remaining)	1,027
2,017	1,294
2,018	1,314
2,019	1,341
Thereafter	454
Total	$ 5,430