Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-35518 | |
Entity Registrant Name | SUPERNUS PHARMACEUTICALS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-2590184 | |
Entity Address, Address Line One | 9715 Key West Avenue | |
Entity Address, City or Town | Rockville | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 20850 | |
City Area Code | 301 | |
Local Phone Number | 838-2500 | |
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 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Entity Common Stock, Shares Outstanding | 52,685,121 | |
Trading Symbol | SUPN | |
Security Exchange Name | NASDAQ | |
Entity Central Index Key | 0001356576 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 204,293 | $ 181,381 |
Marketable securities | 147,657 | 165,692 |
Accounts receivable, net | 133,107 | 87,332 |
Inventories, net | 42,465 | 26,628 |
Prepaid expenses and other current assets | 24,493 | 11,611 |
Total current assets | 552,015 | 472,644 |
Long term marketable securities | 388,185 | 591,773 |
Property and equipment, net | 17,395 | 17,068 |
Operating lease assets | 21,019 | 21,279 |
Finance lease asset | 21,676 | 0 |
Intangible assets, net | 402,265 | 24,840 |
Goodwill | 89,143 | 0 |
Deferred income tax assets | 0 | 32,063 |
Other assets | 18,324 | 615 |
Total assets | 1,510,022 | 1,160,282 |
Current liabilities | ||
Accounts payable | 11,193 | 10,141 |
Accrued product returns and rebates | 136,973 | 107,629 |
Accrued expenses and other current liabilities | 56,289 | 34,305 |
Contingent consideration, current portion | 82,900 | 0 |
Income taxes payable | 0 | 2,443 |
Operating lease liabilities, current portion | 3,741 | 2,825 |
Finance lease liability, current portion | 3,612 | 0 |
Nonrecourse liability related to sale of future royalties, current portion | 4,898 | 3,244 |
Total current liabilities | 299,606 | 160,587 |
Convertible notes, net | 357,521 | 345,170 |
Contingent consideration, long term | 33,000 | 0 |
Nonrecourse liability related to sale of future royalties, long term | 14,960 | 19,248 |
Operating lease liabilities, long term | 29,522 | 30,440 |
Finance lease liability, long term | 19,289 | 0 |
Deferred income tax liabilities | 37,941 | 0 |
Other liabilities | 9,304 | 9,409 |
Total liabilities | 801,143 | 564,854 |
Stockholders’ equity | ||
Common stock, $0.001 par value; 130,000,000 shares authorized; 52,670,121 and 52,533,348 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 53 | 53 |
Additional paid-in capital | 403,396 | 388,410 |
Accumulated other comprehensive earnings, net of tax | 9,700 | 7,417 |
Retained earnings | 295,730 | 199,548 |
Total stockholders’ equity | 708,879 | 595,428 |
Total liabilities and stockholders’ equity | $ 1,510,022 | $ 1,160,282 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized (in shares) | 130,000,000 | 130,000,000 |
Common stock shares issued (in shares) | 52,670,121 | 52,533,348 |
Common stock shares outstanding (in shares) | 52,670,121 | 52,533,348 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Revenues | |||||
Total revenues | $ 155,135 | $ 102,140 | $ 376,840 | $ 292,309 | |
Costs and expenses | |||||
Cost of goods sold | [1] | 21,388 | 4,819 | 33,926 | 12,547 |
Research and development | 16,839 | 16,943 | 58,023 | 49,307 | |
Selling, general and administrative | 54,660 | 39,343 | 144,377 | 118,782 | |
Amortization of intangible assets | 6,108 | 1,306 | 9,814 | 3,918 | |
Total costs and expenses | 98,995 | 62,411 | 246,140 | 184,554 | |
Operating earnings | 56,140 | 39,729 | 130,700 | 107,755 | |
Other income (expense) | |||||
Interest income | 3,262 | 5,559 | 12,988 | 15,696 | |
Interest expense | (6,088) | (5,662) | (17,658) | (16,930) | |
Other income (expense), net | (603) | (36) | 2,925 | 54 | |
Total other expense | (3,429) | (139) | (1,745) | (1,180) | |
Earnings before income taxes | 52,711 | 39,590 | 128,955 | 106,575 | |
Income tax expense | 12,714 | 10,730 | 32,773 | 26,648 | |
Net earnings | $ 39,997 | $ 28,860 | $ 96,182 | $ 79,927 | |
Earnings per share | |||||
Basic (in dollars per share) | $ 0.76 | $ 0.55 | $ 1.83 | $ 1.53 | |
Diluted (in dollars per share) | $ 0.74 | $ 0.54 | $ 1.79 | $ 1.48 | |
Weighted-average shares outstanding | |||||
Basic (in shares) | 52,658,850 | 52,453,384 | 52,583,891 | 52,392,232 | |
Diluted (in shares) | 53,762,642 | 53,805,838 | 53,663,273 | 53,898,486 | |
Net product sales | |||||
Revenues | |||||
Total revenues | $ 152,133 | $ 100,034 | $ 368,607 | $ 285,491 | |
Royalty revenues | |||||
Revenues | |||||
Total revenues | $ 3,002 | $ 2,106 | $ 8,233 | $ 6,818 | |
[1] | Excludes amortization of acquired intangible assets |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Earnings - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 39,997 | $ 28,860 | $ 96,182 | $ 79,927 |
Other comprehensive earnings | ||||
Unrealized gain (loss) on marketable securities, net of tax | (1,659) | 1,337 | 2,283 | 10,419 |
Other comprehensive earnings (loss) | (1,659) | 1,337 | 2,283 | 10,419 |
Comprehensive earnings | $ 38,338 | $ 30,197 | $ 98,465 | $ 90,346 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholder's Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Earnings (Loss) | Retained Earnings |
Balance (in shares) at Dec. 31, 2018 | 52,316,583 | ||||
Balance at Dec. 31, 2018 | $ 453,023 | $ 52 | $ 369,637 | $ (3,158) | $ 86,492 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 3,287 | 3,287 | |||
Issuance of common stock in connection with the Company’s equity award plans (in shares) | 57,665 | ||||
Issuance of common stock in connection with the Company’s equity award plans | 783 | 783 | |||
Net earnings | 18,340 | 18,340 | |||
Unrealized gain (loss) on marketable securities, net of tax | 4,585 | 4,585 | |||
Balance (in shares) at Mar. 31, 2019 | 52,374,248 | ||||
Balance at Mar. 31, 2019 | 480,018 | $ 52 | 373,707 | 1,427 | 104,832 |
Balance (in shares) at Dec. 31, 2018 | 52,316,583 | ||||
Balance at Dec. 31, 2018 | 453,023 | $ 52 | 369,637 | (3,158) | 86,492 |
Increase (Decrease) in Stockholders' Equity | |||||
Net earnings | 79,927 | ||||
Unrealized gain (loss) on marketable securities, net of tax | 10,419 | ||||
Balance (in shares) at Sep. 30, 2019 | 52,462,936 | ||||
Balance at Sep. 30, 2019 | 557,257 | $ 52 | 383,525 | 7,261 | 166,419 |
Balance (in shares) at Mar. 31, 2019 | 52,374,248 | ||||
Balance at Mar. 31, 2019 | 480,018 | $ 52 | 373,707 | 1,427 | 104,832 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 4,022 | 4,022 | |||
Issuance of common stock in connection with the Company’s equity award plans (in shares) | 74,788 | ||||
Issuance of common stock in connection with the Company’s equity award plans | 1,640 | 1,640 | |||
Net earnings | 32,727 | 32,727 | |||
Unrealized gain (loss) on marketable securities, net of tax | 4,497 | 4,497 | |||
Balance (in shares) at Jun. 30, 2019 | 52,449,036 | ||||
Balance at Jun. 30, 2019 | 522,904 | $ 52 | 379,369 | 5,924 | 137,559 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 3,914 | 3,914 | |||
Issuance of common stock in connection with the Company’s equity award plans (in shares) | 13,900 | ||||
Issuance of common stock in connection with the Company’s equity award plans | 242 | 242 | |||
Net earnings | 28,860 | 28,860 | |||
Unrealized gain (loss) on marketable securities, net of tax | 1,337 | 1,337 | |||
Balance (in shares) at Sep. 30, 2019 | 52,462,936 | ||||
Balance at Sep. 30, 2019 | 557,257 | $ 52 | 383,525 | 7,261 | 166,419 |
Balance (in shares) at Dec. 31, 2019 | 52,533,348 | ||||
Balance at Dec. 31, 2019 | 595,428 | $ 53 | 388,410 | 7,417 | 199,548 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 3,988 | 3,988 | |||
Issuance of common stock in connection with the Company’s equity award plans (in shares) | 3,811 | ||||
Issuance of common stock in connection with the Company’s equity award plans | 32 | 32 | |||
Net earnings | 21,518 | 21,518 | |||
Unrealized gain (loss) on marketable securities, net of tax | (7,583) | (7,583) | |||
Balance (in shares) at Mar. 31, 2020 | 52,537,159 | ||||
Balance at Mar. 31, 2020 | 613,383 | $ 53 | 392,430 | (166) | 221,066 |
Balance (in shares) at Dec. 31, 2019 | 52,533,348 | ||||
Balance at Dec. 31, 2019 | 595,428 | $ 53 | 388,410 | 7,417 | 199,548 |
Increase (Decrease) in Stockholders' Equity | |||||
Net earnings | 96,182 | ||||
Unrealized gain (loss) on marketable securities, net of tax | 2,283 | ||||
Balance (in shares) at Sep. 30, 2020 | 52,670,121 | ||||
Balance at Sep. 30, 2020 | 708,879 | $ 53 | 403,396 | 9,700 | 295,730 |
Balance (in shares) at Mar. 31, 2020 | 52,537,159 | ||||
Balance at Mar. 31, 2020 | 613,383 | $ 53 | 392,430 | (166) | 221,066 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 4,962 | 4,962 | |||
Issuance of common stock in connection with the Company’s equity award plans (in shares) | 86,925 | ||||
Issuance of common stock in connection with the Company’s equity award plans | 1,437 | 1,437 | |||
Net earnings | 34,667 | 34,667 | |||
Unrealized gain (loss) on marketable securities, net of tax | 11,525 | 11,525 | |||
Balance (in shares) at Jun. 30, 2020 | 52,624,084 | ||||
Balance at Jun. 30, 2020 | 665,974 | $ 53 | 398,829 | 11,359 | 255,733 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 4,490 | 4,490 | |||
Issuance of common stock in connection with the Company’s equity award plans (in shares) | 46,037 | ||||
Issuance of common stock in connection with the Company’s equity award plans | 77 | 77 | |||
Net earnings | 39,997 | 39,997 | |||
Unrealized gain (loss) on marketable securities, net of tax | (1,659) | (1,659) | |||
Balance (in shares) at Sep. 30, 2020 | 52,670,121 | ||||
Balance at Sep. 30, 2020 | $ 708,879 | $ 53 | $ 403,396 | $ 9,700 | $ 295,730 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net earnings | $ 96,182 | $ 79,927 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Share-based compensation expense | 13,440 | 11,223 |
Depreciation and amortization | 12,621 | 5,029 |
Amortization of premium/discount on marketable securities | (3,217) | (3,058) |
Amortization of deferred financing costs and debt discount | 12,351 | 11,701 |
Realized gains from sales of marketable securities | (3,636) | (131) |
Change in fair value of contingent consideration | 200 | 0 |
Noncash interest expense | 4,515 | 4,331 |
Noncash royalty revenue | (6,320) | (5,028) |
Noncash operating lease cost | 2,599 | 2,600 |
Deferred income tax benefit | (280) | (1,689) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (26,840) | 16,344 |
Inventories | (5,437) | 155 |
Prepaid expenses and other current assets | (9,318) | (4,236) |
Other noncurrent assets | (2,416) | (141) |
Accounts payable | (1,527) | (334) |
Accrued product returns and rebates | 21,166 | (9,013) |
Accrued expenses and other current liabilities | 8,410 | 1,120 |
Income taxes payable | (2,538) | (7,559) |
Other liabilities | (3,489) | (1,903) |
Net cash provided by operating activities | 106,466 | 99,338 |
Cash flows from investing activities | ||
Acquisition of USWM, net of cash acquired | (297,200) | 0 |
Investment in Navitor Pharmaceuticals, Inc. | (15,000) | 0 |
Purchases of marketable securities | (87,890) | (361,121) |
Sales and maturities of marketable securities | 319,421 | 184,467 |
Purchases of property and equipment | (3,234) | (707) |
Deferred legal fees | (141) | (1) |
Net cash used in investing activities | (84,044) | (177,362) |
Cash flows from financing activities | ||
Payments on finance lease liability | (1,056) | 0 |
Proceeds from issuance of common stock | 1,546 | 2,665 |
Net cash provided by financing activities | 490 | 2,665 |
Net change in cash and cash equivalents | 22,912 | (75,359) |
Cash and cash equivalents at beginning of year | 181,381 | 192,248 |
Cash and cash equivalents at end of period | 204,293 | 116,889 |
Supplemental cash flow information | ||
Cash paid for interest on convertible notes | 2,516 | 2,516 |
Cash paid for income taxes | 42,284 | 35,933 |
Noncash investing and financing activities | ||
Contingent consideration liability accrued in USWM Acquisition | 115,900 | 0 |
Deferred legal fees and fixed assets included in accounts payable and accrued expenses | 352 | 495 |
Property and equipment additions from utilization of tenant improvement allowance | 0 | 387 |
Lease assets and tenant receivable obtained for new leases | $ 25,225 | $ 31,856 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Supernus Pharmaceuticals, Inc. (the Company) was incorporated in Delaware, commencing operations in 2005. The Company is a pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, marketing five products, including: Oxtellar XR for the treatment of epilepsy; Trokendi XR for the prophylaxis of migraine headache and the treatment of epilepsy; APOKYN and XADAGO for the treatment of Parkinson's disease; and MYOBLOC for the treatment of cervical dystonia and sialorrhea. The Company is also developing multiple proprietary CNS product candidates to address significant unmet medical needs and market opportunities. The Company launched Oxtellar XR and Trokendi XR for the treatment of epilepsy in 2013, followed by the launch of Trokendi XR for the prophylaxis of migraine headache in adolescents and adults in 2017. The Company launched Oxtellar XR with an expanded indication, including monotherapy for partial seizures in January 2019. On June 9, 2020, the Company completed the acquisition of the CNS portfolio of US WorldMeds Partners, LLC (USWM Acquisition). With the acquisition, the Company acquired the right to further develop and commercialize three marketed products, as well as a product candidate in late-stage development. Refer to Note 3 for further discussion on the USWM Acquisition. COVID-19 Impact The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business operations, and has assessed the impact of the COVID-19 pandemic on its condensed consolidated financial statements as of September 30, 2020. Through the first nine months of 2020, the pandemic has had limited effect on the Company's business operations, and no material impact on its condensed consolidated financial statements. Since the situation surrounding the COVID-19 pandemic remains fluid and the duration uncertain, the long-term nature and extent of the impacts of the pandemic on the Company's business operations and financial position cannot be reasonably estimated at this time. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The Company’s unaudited condensed 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 condensed 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 most recent Annual Report on Form 10-K, for the year ended December 31, 2019, filed with the SEC. In management’s opinion, the condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows. The results of operations for any interim period are not necessarily indicative of the Company’s future quarterly or annual results. The Company, which is primarily located in the United States (U.S.), operates in one operating segment. Reclassifications Certain prior year amounts in the condensed consolidated statements of earnings have been reclassified to conform to the current year presentation, including a reclassification made to separately present amortization of intangible assets. This was previously included in Selling, general and administrative expenses , and now is recorded as a component of Amortization of intangible assets on the condensed consolidated statements of earnings. These reclassifications had no effect on operating earnings or on our other condensed consolidated financial statements for the three and nine months ended September 30, 2020 and 2019. Consolidation The Company’s condensed consolidated financial statements include the accounts of: Supernus Pharmaceuticals, Inc.; Supernus Europe Ltd.; Biscayne Neurotherapeutics, Inc. and its wholly owned subsidiary; MDD US Enterprises, LLC (formerly USWM Enterprises, LLC); and MDD US Enterprises, LLC's wholly owned subsidiaries. These are collectively referred to herein as “Supernus” or “the Company.” All significant intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements reflect the consolidation of entities in which the Company has a controlling financial interest. In determining whether there is a controlling financial interest, the Company considers if it has a majority of the voting interests of the entity, or if the entity is a variable interest entity (VIE) and if the Company is the primary beneficiary. In determining the primary beneficiary of a VIE, the Company evaluates whether it has both: the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to that VIE. The Company's judgment with respect to its level of influence or control of an entity involves the consideration of various factors, including: the form of ownership interest; representation in the entity’s governance; the size of the investment; estimates of future cash flows; the ability to participate in policy making decisions; and the rights of the other investors to participate in the decision making process, including the right to liquidate the entity, if applicable. If the Company is not the primary beneficiary of the VIE, and an ownership interest is maintained in the entity, the interest is accounted for under the equity or cost methods of accounting, as appropriate. The Company continuously assesses whether it is the primary beneficiary of a VIE, as changes to existing relationships or future transactions may affect its conclusions. Use of Estimates The Company bases its estimates on: historical experience; forecasts; information received from its service providers; information from other sources, including public and proprietary sources; and other assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from the Company’s estimates. The Company periodically evaluates the methodologies employed in making its estimates. Business Combinations and Contingent Considerations To determine whether an acquisition should be accounted for as a business combination or as an asset acquisition, the Company makes certain judgments regarding whether the acquired set of activities and assets meets the definition of a business. Significant judgment is required in assessing whether the acquired processes or activities, along with their inputs, would be substantive so as to constitute a business, as defined by U.S. GAAP. If the acquired set of activities and assets meets the definition of a business, the Company applies the acquisition method of accounting to that transaction. Otherwise, the transaction is recorded as an asset acquisition rather than a business combination. In an asset acquisition, any acquired in-process research and development (IPR&D) that does not have an alternative future use is charged to expense as of the acquisition date, and no goodwill is recorded. Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date. The excess of the purchase price over the fair value of the acquired net assets, if applicable, is recorded as goodwill. The operating results of the acquired business are included in the Company’s condensed consolidated statement of earnings, beginning on the effective acquisition date. Acquisition-related expenses are recognized separately from the business combination, and are expensed as incurred. Significant judgment is involved in the determination of the fair value assigned to assets acquired and liabilities assumed in a business combination, as well as the estimated useful lives of assets. These estimates can materially affect our consolidated results of operations. The fair value of intangible assets, including acquired IPR&D, are determined using information available as of the acquisition date, and are based on estimates and assumptions that are deemed reasonable by management. Significant estimates and assumptions include, but are not limited to: probability of technical success; revenue growth; and appropriate discount rate. Depending on the facts and circumstances, the Company may deem it necessary to engage an independent valuation expert to assist in valuing significant assets and liabilities. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed as of the acquisition date, estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information and evaluate these estimates and assumptions on a quarterly basis. The Company records any adjustments to the Company’s preliminary estimates to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to our condensed consolidated statements of earnings in the period that these adjustments are identified. Contingent Considerations Certain of the Company’s business combinations involve the potential for future payments that are contingent upon the achievement of certain milestones related to the development or commercial sale of its products, including product development milestones or royalty payments on future product sales. The fair value of these contingent consideration liabilities is determined as of the acquisition date using estimated or forecast inputs. These inputs include: the estimated amount and timing of projected cash flows; volatility of projected cash flows; the probability of milestone achievement (i.e., achievement of the contingent event); and the estimated discount rates and risk-free rate used to present value the probability-weighted cash flows. Subsequent to the acquisition date, at each reporting period prior to resolution of the contingency, the contingent consideration liability is remeasured at current fair value, with changes recorded in earnings in the period of remeasurement. Similarly, the determination of the initial and subsequent fair value of the contingent consideration liability requires significant judgment by management. Changes in any of the inputs may result in a significantly different fair value adjustment, which can impact the results of operations in the period in which the adjustment is made. These changes are reported on the condensed consolidated statement of earnings in Selling, general and administrative expenses . Additional information regarding the Company's recent business combination and its assessment of contingent consideration is included in Note 3, USWM Acquisition . Revenue from Product Sales The Company’s customers are primarily pharmaceutical wholesalers, specialty pharmacies, and pharmaceutical distributors. Customers purchase product to fulfill orders from retail pharmacy chains and independent pharmacies of varying size and purchasing power. The Company recognizes gross revenue when its products are shipped from a third party fulfillment center and physically received by its customers. The Company's customers take control of its products, including title and ownership, upon physical receipt of its products at their facilities. Customer orders are generally fulfilled within a few days of order receipt, resulting in minimal order backlog. The Company does not adjust revenue for any financing effects as the Company expects the period between the transfer of the goods and collection of payment to be less than one year. There are no minimum product purchase requirements with our customers. The Company recognizes revenue from product sales in an amount that reflects the consideration the Company expects to ultimately receive in exchange for those goods. Product sales are recorded net of various forms of variable consideration, including: provision for estimated rebates; provision for estimated future product returns; and an estimated provision for discounts. These are collectively considered "sales deductions." As described below, variability in the net transaction price for the Company’s products arises primarily from the aforementioned sales deductions. Significant judgment is required in estimating certain sales deductions. In making these estimates, the Company considers: historical experience; product price increases; current contractual arrangements under applicable payor programs; unbilled claims; processing time lags for claims; inventory levels in the wholesale, specialty pharmacy, and retail distribution channel; and product life cycle. The Company adjusts its estimates of revenue either when the most likely amount of consideration it expects to receive changes, or when the consideration becomes fixed. Variable consideration on product sales is only recognized when it is probable that a significant reversal will not occur. If actual results in the future vary from our estimates, the Company adjusts its estimates in that calendar period. These adjustments could materially affect net product sales and earnings in the period in which the adjustment(s) is recorded. Sales Deductions The Company records product sales net of the following sales deductions: • Rebates: Rebates are discounts which the Company pays under either public sector or private sector health care programs. Rebates paid under public sector programs are generally mandated under law, whereas private sector rebates are generally contractually negotiated by the Company with managed care providers. Both types of rebates vary over time. Public sector rebate programs encompass: various Medicaid drug rebate programs; Medicare gap coverage programs; programs covering public health service institutions; and programs covering government entities. All federal employees and agencies purchase drugs under the Federal Supply Schedule. Private sector rebate programs include: contractual agreements with managed care providers, under which the Company pays fees to gain access to that provider’s patient drug formulary; and Company-sponsored programs, under which the Company defrays or eliminates patient co-payment charges that the patient would otherwise be obligated to pay to their managed care provider in order to fill their prescription. Rebates are owed upon dispensing our product to a patient; i.e., filling a prescription. The accrual balance for rebates consists of the following three components. First, because rebates are generally invoiced and paid quarterly in arrears, the accrual balance consists of an estimate of the amount expected to be incurred for prescriptions dispensed in the current quarter. Second, the accrual balance also includes an estimate for known or estimated prior quarters’ unpaid rebates, covering those prescriptions dispensed in past quarters but for which no invoice has yet been received. Third, the accrual balance includes an estimate for rebates that will be prospectively owed for prescriptions filled in future quarters. This estimate pertains to product that has been sold by the Company to wholesalers or distributors, and which resides either as wholesaler/distributor inventory or as inventory held at pharmacies. As of the end of the reporting period, this product has not been dispensed to a patient. The Company’s estimates of expected rebate claims vary by program and by type of customer because the period between the date at which the prescription is filled and the date at which the Company receives and pays the invoice varies substantially. For each of its products, the Company bases its estimates of expected rebate claims on multiple factors, including: historical levels of deductions; contractual terms with managed care providers; actual and anticipated changes in product price; prospective changes in managed care fee for service contracts; prospective changes in co-payment assistance programs; and anticipated changes in program utilization rates; i.e., patient participation rates under each specific program. The Company records an estimated liability for rebates at the time the customer takes title to the product (i.e., at the time of sale to wholesalers/distributors). This liability is recorded as a reduction to gross product sales, and an increase in Accrued product returns and rebates. The liability is recorded as a component of current liabilities on the condensed consolidated balance sheets. The sensitivity of the Company’s estimates to subsequent adjustment varies by program and by type of customer. If actual rebates vary from estimated amounts, the Company will adjust the balances of such accrued rebates to reflect actual experience. These adjustments could materially affect the estimated liability balance, net product sales, and earnings in the period in which the adjustment(s) is made. • Returns : Sales of the Company’s products are not subject to a general right of return. Product that has been used to fill patient prescriptions is no longer subject to any right of return. However, the Company will accept return of product that is damaged or defective when shipped from its third party fulfillment center. The Company will also accept return of expired product six months prior to and up to 12 months subsequent to the product’s expiry date. Expired or defective returned product cannot be re-sold, and is therefore destroyed. The Company records an estimated liability for product returns at the time the customer takes title to the product (i.e., at time of sale). The liability is reflected as a reduction to gross product sales, and an increase in Accrued product returns and rebates. This liability is recorded as a component of current liabilities on the condensed consolidated balance sheets. The Company estimates the liability for returns primarily based on the actual returns experience for its five commercial products. Because the Company’s products have a shelf life up to 60 months from date of manufacture, and because the Company accepts return of product up to 12 months post its expiry date, there is a time lag of several years between the time when the product is sold and the time when the Company issues credit on expired product. The Company’s returns policy generally permits product returns to be processed at current wholesaler price rather than at historical acquisition price; hence, the Company’s estimated liability for product returns is affected by price increases taken subsequent to the date of sale and prior to its return. At the time the Company adjusts its estimates for product returns, such adjustment affects the estimated liability, product sales and earnings in the period of adjustment. Those adjustments may be material to our financial results. • Sales discounts : Distributors and wholesalers of the Company's pharmaceutical products are generally offered various forms of consideration, including allowances, service fees and prompt payment discounts, for distributing our products. Distributor and wholesaler allowances and service fees arise from contractual agreements, and are estimated as a percentage of the price at which the Company sells product to them. In addition, distributors and wholesalers are offered a prompt pay discount for payment within a specified period. Prompt pay discounts are estimated as a percentage of the price at which the Company sells product. The Company accounts for these discounts at the time of sale, as a reduction to gross product sales, and records these discounts as a valuation allowance against Accounts receivable on the condensed consolidated balance sheets. Royalty Revenues The Company recognizes noncash royalty revenue for amounts earned pursuant to its royalty agreement with United Therapeutics Corporation (United Therapeutics), based on estimated product sales of Orenitram by United Therapeutics (see Note 4). This agreement includes the right to use the Company’s intellectual property as a functional license. In 2014, the Company sold certain of these royalty rights to Healthcare Royalty Partners III, L.P. (HC Royalty) (see Note 19). Consequent to this agreement, the Company recorded a nonrecourse liability related to this transaction, and amortizes this liability as noncash royalty revenue. Sales of Orenitram by United Therapeutics result in payments from United Therapeutics to HC Royalty, in accordance with this agreement. The Company also recognizes noncash interest expense related to the nonrecourse liability and accrues interest expense at an estimated effective interest rate (see Note 18). This interest rate is determined based on projections of HC Royalty’s rate of return. Royalty revenue also includes cash royalty amounts received from other collaboration partners, including from Takeda Pharmaceutical Company Ltd, based on net product sales of Takeda's product, Mydayis, in the current period. Royalty revenue is only recognized when the underlying product sale by Takeda has occurred. The Takeda arrangement also includes Takeda's right to use the Company’s intellectual property as a functional license. There are no guaranteed minimum amounts owed to the Company related to any of these royalty revenue agreements. Research and Development Expenses and Related Accrued Research and Development Expenses Research and development expenditures are expensed as incurred. These expenses include: employee salaries, benefits, and share-based compensation; cost of contract research and development services provided by third parties; costs for conducting preclinical and clinical studies; cost of acquiring or manufacturing clinical trial materials; regulatory costs; research facilities costs; depreciation expense and allocated occupancy expenses; and license fees and milestone payments related to in-licensed products and technologies. Assets that are used for research and development and that have no future alternative use are expensed as incurred in-process research and development. The Company estimates preclinical and clinical trial expenses based on services performed pursuant to contracts with research institutions, clinical investigators, clinical research organizations (CROs) and other service providers that work on the Company’s behalf. In recording service fees, the Company estimates the cost of those services which have been performed on behalf of the Company during the current period, and compares those costs with the cumulative expenses recorded and cumulative payments made, for such services. As appropriate, the Company accrues additional expense for services that have been delivered, or defers nonrefundable advance payments until the related services are performed. If the actual timing of the performance of services or the level of effort varies from our estimate, the Company adjusts its accrued expenses or its deferred advance payments, accordingly. If the Company subsequently determines that it no longer expects the services associated with a nonrefundable advance payment to be rendered, the remaining portion of that advance payment is charged to expense in the period in which such a determination is made. Marketable Securities Marketable securities consist of investments in: U.S. Treasury bills and notes; bank certificates of deposit; various U.S. governmental agency debt securities; corporate and municipal debt securities; and other fixed income securities. The Company places all investments with governmental, industrial, or financial institutions whose debt is rated as investment grade. The Company's investments are classified as available-for-sale and are carried at fair value. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. Any unrealized holding gains or losses on debt securities are reported, net of any tax effects, as a component of other comprehensive earnings (loss) in the condensed consolidated statement of comprehensive earnings. Realized gains and losses, included in Other income (expense), net in the condensed consolidated statement of earnings, are determined using the specific identification method for determining the cost of securities sold. The Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) on January 1, 2020, using the allowance approach. Declines in fair value below amortized cost related to credit losses (i.e., impairment due to credit losses), are included in the condensed consolidated statement of earnings, with a corresponding allowance established. If the estimate of expected credit losses decreases in subsequent periods, the Company will reverse the credit losses through current period earnings, and accordingly adjust the allowance (see Recently Issued Accounting Pronouncements). Inventories Inventories, which are recorded at the lower of cost or net realizable value, include materials, labor, direct costs and indirect costs. These are valued using the first-in, first-out method. The Company writes down inventory that has become obsolete, or has a cost basis in excess of its expected net realizable value. Expired inventory is destroyed, and the related costs are recognized as Cost of goods sold in the condensed consolidated statement of earnings. Inventories Produced in Preparation of Product Launches The Company capitalizes inventories produced in preparation for product launches when future commercialization of a product is probable, and when a future economic benefit is expected to be realized. The determination to capitalize is based on the particular facts and circumstances relating to the product. Capitalization of such inventory begins when the Company determines that (i) positive clinical trial results have been obtained in order to support regulatory approval; (ii) uncertainties regarding regulatory approval have been significantly reduced; and (iii) it is probable that these capitalized costs will provide future economic benefit, in excess of capitalized costs. In evaluating whether these conditions are met, the Company considers the following factors: the product candidate’s current status in the regulatory approval process; results from the related pivotal and supportive clinical trials; results from meetings with relevant regulatory agencies prior to the filing of regulatory applications; completion of the regulatory applications; consequent acceptance by the regulatory agency; potential impediments to the approval process, such as product safety or efficacy concerns, potential labeling restrictions, and other impediments; historical experience with manufacturing and commercializing similar products as well as manufacture of the relevant product candidate; and the resilience of the Company’s manufacturing environment, and supply chain, in determining logistical constraints that could hamper approval or commercialization. In assessing the economic benefit that the Company is likely to realize, the Company considers: the shelf life of the product in relation to the expected timeline for approval; patent related or contractual issues that may prevent or delay commercialization; product stability data of all pre-approval production to assess adequacy of expected shelf life; viability of commercialization, taking into account competitive dynamics in the marketplace and market acceptance; anticipated future sales; and anticipated reimbursement strategies that may prevail with respect to the product, to determine product profit margin. In applying the lower of cost or net realizable value to pre-launch inventory, the Company estimates a range of likely commercial prices based on pricing of competitive commercial products, and pre-launch discussions with managed care providers. The Company could be required to write down previously capitalized costs related to pre-launch inventories upon a change in facts and circumstances, including among other potential factors, a denial or significant delay of approval by regulatory bodies, a delay in commercialization, or other adverse factors. Intangible Assets Intangible assets consist of definite-lived intangible assets, including: acquired developed technology; product rights; and patent defense costs. They also consist of indefinite-lived intangible assets, such as acquired IPR&D. Patent defense costs are legal fees that have been incurred in connection with legal proceedings related to the defense of patents for Oxtellar XR and Trokendi XR. Patent defense costs are charged to expense in the event of an unsuccessful litigation outcome. Definite-lived intangible assets are carried at cost less accumulated amortization, with amortization calculated on a straight line basis over the estimated useful lives of the assets. The Company evaluates the estimated remaining useful life of its intangible assets annually, or when events or changes in circumstances warrant a revision to the remaining periods of amortization. Indefinite-lived intangible assets are not amortized but are tested for impairment annually. Acquired IPR&D in a business combination is considered to be an indefinite-lived asset until the completion or abandonment of the associated research and development efforts. Upon successful completion of the project, the Company will make a determination as to the then-useful life of the intangible asset. This is generally determined by the period over which the substantial majority of the cash flows are expected to be generated. The capitalized amount is then amortized over its estimated useful life. If a project is abandoned, all remaining capitalized amounts are written off immediately. During the period prior to completion or abandonment, the IPR&D asset will not be amortized but will be tested for impairment on an annual basis or when potential indicators of impairment are identified. Goodwill and Goodwill Impairment Assessment Goodwill is calculated as the excess of the consideration paid consequent to completing an acquisition compared to the net assets recognized in a business combination. Goodwill represents the future economic benefits arising from the other acquired assets that could not be individually identified and separately quantified. The Company evaluates goodwill for possible impairment at least annually (during the fourth quarter of each fiscal year), or more often, if and when circumstances indicate that goodwill may be impaired. This includes but is not limited to significant adverse changes in the business climate, market conditions, or other events that indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying value. In performing its goodwill assessment, the Company first performs a qualitative test. If necessary, the Company then performs a quantitative test. To conduct the quantitative impairment test of goodwill, the Company compares the fair value of a reporting unit to its carrying value. Evaluating for impairment requires judgment, including estimating future cashflows. The Company estimates the fair values of its reporting unit using discounted cash flow models or other valuation models, such as comparative transactions or market multiples. If the reporting unit’s carrying value exceeds its fair value, the Company records an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. Impairment of Long Lived Assets Long-lived assets consist primarily of property and equipment, operating lease assets and intangible assets. The carrying value of intangible assets is assessed for impairment annually (during the fourth quarter of each year), or more frequently if impairment indicators exist. Impairment indicators include but are not limited to adverse changes in circumstances, or other events that indicate that the carrying amount of an asset may not be recoverable. Evaluating for impairment requires judgment, including estimating future cash flows, future growth rates, future profitability, and the expected life over which projected cash flows will occur. For IPR&D assets, the Company also considers various factors and risks for potential impairment, including the current legal and regulatory environment, and the competitive landscape. Adverse clinical trial results, significant trial delays, inability to obtain governmental approval, inability to commercialize a product candidate, and the introduction or advancement of competitive products and product candidates, could result in partial or full impairment of the related intangible asset. In these circumstances, the eventual realized value of the IPR&D asset may vary from its fair value as of the date of acquisition, and impairment charges may be recorded in future periods. Changes in the Company's business strategy or adverse changes in market conditions could likewise adversely affect impairment analyses. If indications of impairment exist, projected future undiscounted cash flows associated with the asset would be compared to the carrying value of the asset, to determine whether the asset's value is recoverable. If impairment is determined, the Company writes down the asset to its estimated fair value; i.e., the Company recognizes an impairment charge equal to the excess of the carrying value of the long-lived asset over its estimated fair value, as of the time at which such a determination is made. Share-Based Compensation Stock Options The Company recognizes share-based compensation expense over the service period, using the straight-line method. Employee share-based compensation for stock options is determined using the Black-Scholes option-pricing model to compute the fair value of option grants as of their grant date. Forfeitures are accounted for as incurred. The Company uses the following assumptions for estimating the fair value of option grants: Fair Value of Common Stock —The fair value of the common stock underlying the option grants is determined based on observable market prices of the Company’s common stock. Expected Volatility —Volati |
USWM Acquisition
USWM Acquisition | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
USWM Acquisition | USWM Acquisition On June 9, 2020 (the Closing Date), the Company completed its acquisition of all of the outstanding equity of USWM Enterprises, LLC (USWM Enterprises), a privately-held biopharmaceutical company, pursuant to a Sale and Purchase Agreement with US WorldMeds Partners, LLC (Seller), dated April 28, 2020 (the Agreement). Under the terms of the Agreement, the Company acquired the right to further develop and commercialize APOKYN, XADAGO and the Apomorphine Infusion Pump in the U.S., and MYOBLOC worldwide (the Products). The Company paid the Seller $297.2 million in cash at the Closing Date. As of September 30, 2020, the Company recorded an additional payable to the Seller of $1.0 million as a result of the resolution of contingencies that increased the original cash consideration paid to the Seller. For the nine months ended September 30, 2020, the Company incurred transaction costs of $8.3 million in completing the acquisition. These costs were included in Selling, general and administrative expense, in the condensed consolidated statements of earnings. Contingent payments of up to $230.0 million are due to the Seller upon the achievement of certain milestones related to the development and sale of the Products. The possible outcomes for the contingent consideration range from $0 to $230.0 million on, an undiscounted basis. In connection therewith, the Company recorded a contingent consideration liability of $115.7 million, as of the date of acquisition, to reflect the estimated fair value of the contingent consideration. The estimated fair value of the contingent consideration was determined using a Monte Carlo simulation for the sales-based milestones, and the income approach for the other milestones. The key assumptions considered in estimating the value of contingent consideration include: the estimated amount and timing of projected cash flows; probability of milestone achievement; volatility of prospective cash flows; the discount rates and risk-free interest rate. In each reporting period after the acquisition, the Company will revalue the contingent consideration liability, and will record increases or decreases in the fair value of the liability in its consolidated statements of earnings. Changes in fair value can result from changes in actual and projected milestone achievement, as well as changes to forecasts. The inputs and assumptions may or may not be observable in the market, and reflect assumptions the Company believes would be made by a market participant. During the three months ended September 30, 2020, the Company recorded an increase to the contingent consideration liabilities of $0.2 million. The acquisition is being accounted for as a business combination under the acquisition method of accounting, in accordance with ASC 805, Business Combinations . The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information. The allocation of the purchase price is subject to change during the measurement period (up to one year from the Closing Date), as additional information concerning final asset and liability valuations is obtained. During the measurement period, if the Company obtains new information regarding facts and circumstances that existed as of the Closing Date that, if known, would have resulted in revised estimated values of those assets or liabilities, the Company will accordingly revise the preliminary purchase price allocation. The effect of measurement period adjustments on the estimated fair value elements will be reflected as if the adjustments had been made as of the Closing Date. Residual amounts will be allocated to goodwill. The impact of all changes that do not qualify as measurement period adjustments will be included in current period earnings. The Company expects to finalize its purchase price allocation within one year of the Closing Date. In addition, The Company continues to analyze and assess relevant information necessary to determine, recognize and record at fair value the assets acquired and liabilities assumed in the following areas: intangible assets; lease assets and liabilities; tax assets and tax liabilities; and certain existing or potential reserves, including those for legal or contract-related matters. The activities the Company is currently undertaking include, but are not limited to, the following: review of acquired contracts and other contract-related and legal matters; review and evaluation of the accounting policies, tax positions, and other tax-related matters. Further, the Company is in the process of obtaining input from third party valuation firms with respect to the fair value of the acquired tangible and intangible assets, and other information necessary to record and measure the assets acquired and liabilities assumed. Accordingly, the preliminary recognition and measurement of assets acquired and liabilities assumed as of Closing Date are subject to change. The following table presents the Company’s preliminary estimates of the fair value of the assets acquired and liabilities assumed as of the Closing Date, and subsequent measurement period adjustments recorded during the third quarter of 2020 (dollars in thousands): As Initially Reported Measurement Period Adjustments As Adjusted Cash and cash equivalents $ 6,994 $ — $ 6,994 Accounts receivable 18,474 — 18,474 Inventories 10,400 — 10,400 Prepaid expenses and other current assets 3,564 — 3,564 Property and equipment 454 — 454 Finance lease asset (1) 22,747 — 22,747 Intangible assets 387,000 — 387,000 Other assets 340 — 340 Total fair value of assets acquired 449,973 — 449,973 Accounts payable (2,573) — (2,573) Accrued expenses and other current liabilities (23,339) — (23,339) Finance lease liability (1) (22,747) — (22,747) Deferred income tax liabilities, net (2) (69,515) — (69,515) Total fair value of liabilities assumed (118,174) — (118,174) Total identifiable net assets $ 331,799 $ — $ 331,799 Goodwill 88,095 1,048 89,143 Total purchase price $ 419,894 $ 1,048 $ 420,942 Cash consideration to Seller (3) $ 297,200 $ 1,048 $ 298,248 ______________________________________________________________ (1) Refer to Note 10 for further discussion of the acquired finance lease asset and assumed lease liability. (2) Includes tax attributes that are subject to tax limitations. (3) Represents total purchase price, less cash and cash equivalents acquired and contingent consideration liabilities, recorded at the Closing Date. The Company determined the fair value of the inventory using the comparative sales method, which estimated the expected sales price of the product, reduced by all costs expected to be incurred to complete or to dispose of the inventory, with a profit on sale. The acquired intangible assets include an intangible asset associated with the IPR&D related to the infusion pump product candidate, as well as intangible assets associated with the acquired developed technology and product rights. The Company determined the estimated fair value of the acquired intangible assets as of the Closing Date using the income approach. This is a valuation technique that is based on the market participant's expectations of the cash flows that the intangible assets are forecasted to generate. The projected cash flows from these intangible assets were based on various assumptions, including: estimates of revenues, expenses, and operating profit; and risks related to the viability of and commercial potential for alternative treatments. The cash flows were discounted at a rate commensurate with the level of risk associated with the projected cash flows. In addition to the aforementioned factors, the Company also considered the following factors specific to the valuation of the acquired IPR&D intangible asset: the stage of development as of the Closing Date; the time and resources needed to complete the development and regulatory approval of the product candidate; the inherent difficulties and uncertainties in developing a product candidate, such as obtaining marketing approval from the U.S. Food and Drug Administration and other regulatory agencies; the economic life of the potential commercialized product; and associated commercialization risks. The Company believes the assumptions are representative of those a market participant would use in estimating fair value. Acquired intangible assets, excluding the acquired IPR&D, will be amortized over their estimated useful lives on a straight-line basis. IPR&D assets are considered to be indefinite-lived, until the successful completion or abandonment of the associated research and development efforts. The following table summarizes the preliminary purchase price allocation, and the preliminary average remaining useful lives for identifiable intangible assets (dollars in thousands): Estimated Fair Value Estimated Useful Lives as of Closing Date Acquired In-process Research & Development $ 150,000 n/a Acquired Developed Technology and Product Rights 237,000 10.5 - 12.5 Total intangible assets $ 387,000 Goodwill was calculated as the excess of the consideration paid consequent to completing the acquisition, compared to the net assets recognized. Goodwill represents the future economic benefits arising from the other acquired assets, and which could not be individually identified and separately valued. Goodwill is primarily attributable to the additional acquired growth platforms and an expanded revenue base. Goodwill is not expected to be deductible for tax purposes. The operations of MDD US Enterprises, LLC and its subsidiaries have been included in the Company's condensed consolidated statements of earnings for the period subsequent to the Closing Date and through September 30, 2020. Total revenues of $40.9 million and $51.5 million and net earnings of $5.1 million and $6.8 million were recorded for the three and nine months ended September 30, 2020, respectively. The following table presents the unaudited pro forma combined financial information for each of the periods presented, as if the USWM Acquisition had occurred on January 1, 2019 (dollars in thousands): Three Months ended September 30, Nine Months ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Pro forma total revenues $ 155,135 $ 140,791 $ 440,100 $ 401,332 Pro forma net earnings 39,984 31,599 102,226 76,540 The unaudited pro forma combined financial information is based on historical financial information as well as the Company's preliminary allocation of purchase price; therefore, it is subject to subsequent adjustment upon finalization of the purchase price allocation. In order to reflect the occurrence of the acquisition as if it occurred on January 1, 2019, the unaudited pro forma combined financial information reflects the adoption of ASC 842, Leases; the recognition of additional amortization expense on intangible assets, the removal of historical amortization charges and the elimination of non-recurring acquisition-related transaction costs. Approximately $10.1 million of acquisition-related transaction costs were incurred from the fourth quarter of 2019 through the second quarter of 2020. The unaudited pro forma combined financial information should not be considered indicative of the results that would have occurred if the acquisition had been consummated on the assumed completion date, nor are they indicative of future results. |
Disaggregated Revenues
Disaggregated Revenues | 9 Months Ended |
Sep. 30, 2020 | |
Disaggregation of Revenue [Abstract] | |
Disaggregated Revenues | Disaggregated Revenues The following table summarizes the disaggregation of revenues by product or source, (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Net product sales Trokendi XR $ 82,906 $ 77,332 $ 241,131 $ 219,989 Oxtellar XR 28,364 22,702 75,983 65,502 APOKYN 34,482 — 43,082 — XADAGO 2,331 — 3,132 — MYOBLOC 4,050 — 5,279 — Total net product sales $ 152,133 $ 100,034 $ 368,607 $ 285,491 Royalty revenues 3,002 2,106 8,233 6,818 Total revenues $ 155,135 $ 102,140 $ 376,840 $ 292,309 Trokendi XR accounted for 65% and 77% of the Company’s total net product sales for the nine months ended September 30, 2020 and 2019, respectively. The Company recognized noncash royalty revenue of $2.4 million and $6.3 million, for the three and nine months ended September 30, 2020, respectively. The Company recognized noncash royalty revenue of $1.6 million and $5.0 million, for the three and nine months ended September 30, 2019, respectively. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of an asset or liability represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between unrelated market participants. The Company reports the fair value of assets and liabilities using a three level measurement hierarchy that prioritizes the inputs used to measure fair value. 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. The Company has the ability to access these prices as of the measurement date. Level 1 assets include: cash held at banks; certificates of deposit; money market funds; investment grade corporate debt securities; and U.S. government agency and municipal debt securities. • Level 2—Level 2 securities are valued using third-party pricing sources that apply relevant inputs and data in their models to estimate fair value. Inputs are quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; inputs other than quoted prices but that are observable for the asset or liability (e.g., interest rates; yield curves); and inputs that are derived principally from or corroborated by observable market data, by correlation, or by other means (i.e., market corroborated inputs). Level 2 assets include: investment grade corporate debt securities; U.S. government agency and municipal debt securities; other fixed income securities; and SERP (Supplemental Executive Retirement Plan) assets. The fair value of the restricted marketable securities is recorded in Other assets on the condensed consolidated balance sheets. • Level 3—Unobservable inputs that reflect the Company’s own assumptions. These are based on the best information available, including the Company’s own data. There were no level 3 assets as of September 30, 2020 or December 31, 2019. Financial Assets Recorded at Fair Value The Company’s financial assets that are required to be measured at fair value on a recurring basis are as follows (dollars in thousands): Fair Value Measurements at September 30, 2020 (unaudited) Total Fair Value at September 30, Quoted Prices Significant Assets: Cash and cash equivalents Cash $ 188,974 $ 188,974 $ — Money market funds 15,319 15,319 — Marketable securities Corporate debt securities 147,657 — 147,657 Long term marketable securities Corporate debt securities 388,185 258 387,927 Other noncurrent assets Marketable securities - restricted (SERP) 464 2 462 Total assets at fair value $ 740,599 $ 204,553 $ 536,046 Fair Value Measurements at December 31, 2019 Total Fair Value at December 31, Quoted Prices Significant Assets: Cash and cash equivalents Cash $ 78,912 $ 78,912 $ — Money market funds 102,469 102,469 — Marketable securities Corporate debt securities 165,527 — 165,527 Municipal debt securities 165 — 165 Long term marketable securities Corporate debt securities 571,828 254 571,574 U.S. government agency and municipal debt securities 19,945 — 19,945 Other noncurrent assets Marketable securities - restricted (SERP) 418 3 415 Total assets at fair value $ 939,264 $ 181,638 $ 757,626 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 available-for-sale marketable securities held by the Company are as follows, (dollars in thousands): September 30, December 31, 2019 (unaudited) Corporate and U.S. government agency and municipal debt securities Amortized cost $ 522,920 $ 747,598 Gross unrealized gains 13,835 10,031 Gross unrealized losses (913) (164) Total fair value $ 535,842 $ 757,465 The contractual maturities of the unrestricted available-for-sale marketable securities held by the Company are as follows, (dollars in thousands): September 30, (unaudited) Less than 1 year $ 147,657 1 year to 2 years 142,272 2 years to 3 years 136,095 3 years to 4 years 109,818 Greater than 4 years — Total $ 535,842 As of September 30, 2020, there was no impairment due to credit loss on any available-for-sale marketable securities. Financial Liabilities Recorded at Fair Value As of September 30, 2020, the Company had Level 3 liabilities related to the contingent consideration from the USWM Acquisition. The contingent consideration liabilities are measured at fair value on a recurring basis, using the same methodology as of the acquisition date; i.e., using the Monte Carlo simulation for the sales-based milestones, and the income approach for the other milestones. Refer to Note 3 for further discussion of significant inputs and assumptions used for the valuation of the contingent consideration as of the acquisition date. The inputs and assumptions may not be observable in the market. These reflect the assumptions the Company believes would be made by a market participant. Changes in any of those inputs together, or in isolation, may result in significantly lower or higher fair value measurement. The following table provides a reconciliation of the beginning and ending balances related to the contingent consideration from the USWM Acquisition (dollars in thousands): September 30, (unaudited) Balance at December 31, 2019 $ — Initial estimate of contingent consideration 115,700 Change in fair value recognized in earnings 200 Balance at September 30, 2020 $ 115,900 The change in estimated fair value of contingent consideration related to the USWM Acquisition during the three months ended September 30, 2020 is primarily due to changes in estimates associated with the amount and timing of projected cash flows. Financial Liabilities Recorded at Carrying Value The following table sets forth the carrying value and fair value of the Company’s financial liabilities that are not carried at fair value (dollars in thousands): September 30, 2020 December 31, 2019 (unaudited) Carrying Value Fair Value (Level 2) Carrying Value Fair Value (Level 2) Convertible notes, net $ 357,521 $ 372,816 $ 345,170 $ 366,023 The fair value has been estimated based on actual trading information as well as quoted prices, both provided by bond traders. |
Convertible Senior Notes Due 20
Convertible Senior Notes Due 2023 | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes Due 2023 | Convertible Senior Notes Due 2023 The 0.625% Convertible Senior Notes Due 2023 (2023 Notes), which were issued in March 2018, bear interest at an annual rate of 0.625%, payable semi-annually in arrears on April 1 and October 1 of each year. The 2023 Notes will mature on April 1, 2023, unless earlier converted or repurchased by the Company. The Notes are being amortized to interest expense at an effective interest rate of 5.41% over the contractual term of the 2023 Notes. The Company may not redeem the 2023 Notes at its option before maturity. The total principal amount of 2023 Notes is $402.5 million. The 2023 Notes were issued pursuant to an Indenture between the Company and Wilmington Trust, National Association, as trustee. The Indenture includes customary terms and covenants, including certain events of default upon which the 2023 Notes may be due and payable immediately. The Indenture does not contain any financial or operating covenants, or any restrictions on the payment of dividends, the issuance of other indebtedness, or the issuance or repurchase of securities by the Company. At its election 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, based on the applicable conversion rate. The initial conversion rate is 16.8545 shares per $1,000 principal amount of the 2023 Notes, which represents an initial conversion price of approximately $59.33 per share, and is subject to adjustment as specified in the Indenture. In the event of conversion, if converted in cash, the holders would forgo all future interest payments, any unpaid accrued interest, and the possibility of further stock price appreciation. If a “make-whole fundamental change,” as defined in the Indenture occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. If a “fundamental change,” as defined in the Indenture occurs, then noteholders may require the Company to repurchase their 2023 Notes at a cash repurchase price equal to the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest, if any. Contemporaneous with the issuance of the 2023 Notes, the Company also entered into separate privately negotiated convertible note hedge transactions (collectively, the Convertible Note Hedge Transactions) with each of the call spread counterparties. The Company issued 402,500 convertible note hedge options. In the event that shares or cash are deliverable to holders of the 2023 Notes upon conversion at limits defined in the Indenture, counterparties to the convertible note hedges will be required to deliver up to approximately 6.8 million shares of the Company’s common stock, or to pay cash to the Company in a similar amount as the value that the Company delivers to the holders of the 2023 Notes, based on a conversion price of $59.33 per share. Concurrently with entering into the Convertible Note Hedge Transactions, the Company also entered into separate privately negotiated warrant transactions (collectively, the Warrant Transactions) with each of the call spread counterparties. The Company issued a total of 6,783,939 warrants. The warrants entitle the holder to one share per warrant. The strike price of the Warrant Transactions will initially be $80.9063 per share of the Company’s common stock, and is subject to adjustment. The Convertible Note Hedge Transactions are expected to reduce the potential dilution of the Company’s common stock upon conversion of the 2023 Notes, and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2023 Notes, as the case may be. The Warrant Transactions were intended to partially offset the cost to the Company of the purchased Convertible Note Hedge Transactions; however, the Warrant Transactions could have a dilutive effect with respect to the Company’s common stock, to the extent that the market price per share of the Company’s common stock, as measured under the terms of the Warrant Transactions, exceeds the strike price of the warrants. The liability component of the 2023 Notes consists of the following, (dollars in thousands): September 30, December 31, (unaudited) 2023 Notes $ 402,500 $ 402,500 Unamortized debt discount and deferred financing costs (44,979) (57,330) Total carrying value $ 357,521 $ 345,170 No 2023 Notes were converted as of September 30, 2020 or December 31, 2019. |
Share-Based Payments
Share-Based Payments | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Payments | Share-Based Payments Share-based compensation expense is as follows (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Research and development $ 777 $ 680 $ 2,276 $ 1,954 Selling, general and administrative 3,713 3,234 11,164 9,269 Total $ 4,490 $ 3,914 $ 13,440 $ 11,223 Stock Option and Stock Appreciation Rights The following table summarizes stock option and stock appreciation rights (SAR) activities: Number of Weighted- Weighted- Outstanding, December 31, 2019 4,606,559 $ 23.05 6.66 Granted 1,210,025 $ 23.86 Exercised (56,873) $ 9.93 Forfeited (50,875) $ 26.51 Outstanding, September 30, 2020 (unaudited) 5,708,836 $ 23.32 6.67 As of December 31, 2019: Vested and expected to vest 4,606,559 $ 23.05 6.66 Exercisable 2,598,112 $ 15.68 5.48 As of September 30, 2020: Vested and expected to vest 5,708,836 $ 23.32 6.86 Exercisable 3,347,884 $ 18.96 5.31 Restricted Stock Units During the nine months ended September 30, 2020, the Company granted 26,055 RSUs, with a weighted average grant date fair value per share of $23.99. These RSUs generally vest one year from the date of grant. Performance Stock Units Performance-Based Awards During the nine months ended September 30, 2020, the Company granted 31,250 performance-based awards, with a weighted average grant date fair value per share of $21.35. These awards require certain performance targets to be achieved in order to vest . Vesting is also subject to continued service requirements through the date that the achievement of the performance target is certified. As of September 30, 2020, all of the performance-based awards were vested and issued as shares outstanding. Market-Based Awards |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic earnings per share (EPS) is calculated using the weighted-average number of common shares outstanding. Diluted EPS is calculated using the weighted-average number of common shares outstanding, including the dilutive effect of the Company’s stock option grants, SARs, RSUs, warrants, employee stock purchase plan (ESPP) awards, and the 2023 Notes, as determined per the treasury stock method. Effect of Convertible Notes and Related Convertible Note Hedges and Warrants In connection with the issuance of the 2023 Notes, the Company entered into Convertible Note Hedge and Warrant Transactions as described further in Note 6, Convertible Senior Notes Due 2023 . The expected collective impact of the Convertible Note Hedge and Warrant Transactions is to reduce the potential dilution that would occur if the price of the Company's common stock was between the conversion price of $59.33 per share and the strike price of the warrants of $80.9063 per share. The 2023 Notes and related Convertible Note Hedge and Warrant Transactions are excluded in the calculation of diluted EPS because inclusion would be anti-dilutive. Specifically, the denominator of the diluted EPS calculation excludes the additional shares related to the 2023 Notes and warrants because the average price of the Company's common stock was less than the conversion price of the 2023 Notes, $59.33 per share, as well as less than the strike price of the warrants, $80.9063 per share. Prior to actual conversion, the Convertible Note Hedge Transactions are not considered in calculating diluted earnings per share, as their impact would be anti-dilutive. In addition to the above described effect of the 2023 Notes and the related Convertible Note Hedge and Warrant Transactions, the Company also excluded the common stock equivalents of the following outstanding stock-based awards in the calculation of diluted EPS, because their inclusion would be anti-dilutive: Three Months ended Nine Months ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Stock options, RSUs, PSUs 2,677,770 1,395,138 2,905,469 961,605 The following table sets forth the computation of basic and diluted net earnings per share for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands, except share and per share amounts): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Numerator, dollars in thousands: Net earnings $ 39,997 $ 28,860 $ 96,182 $ 79,927 Denominator: Weighted average shares outstanding, basic 52,658,850 52,453,384 52,583,891 52,392,232 Effect of dilutive securities: Stock options, RSUs and SARs 1,103,792 1,352,454 1,079,382 1,506,254 Weighted average shares outstanding, diluted 53,762,642 53,805,838 53,663,273 53,898,486 Earnings per share, basic $ 0.76 $ 0.55 $ 1.83 $ 1.53 Earnings per share, diluted $ 0.74 $ 0.54 $ 1.79 $ 1.48 |
Income Tax Expense
Income Tax Expense | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | Income Tax Expense The following table provides information regarding the Company’s income tax expense for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Income tax expense $ 12,714 $ 10,730 $ 32,773 $ 26,648 Effective tax rate 24.1 % 27.1 % 25.4 % 25.0 % Income tax expense for the three and nine months ended September 30, 2020, as compared to same period in the prior year, increased due to higher income before taxes, increased number of states in which the Company owes taxes and an increase in non-deductible expenses consequent to the USWM Acquisition. Accordingly, the effective income tax rate for the nine months ended September 30, 2020 also increased, as compared to the same period in prior year. The effective income tax rate for the three months ended September 30, 2020 decreased due to greater research and development tax credits recognized in the quarter. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The CARES Act is an emergency economic stimulus package that includes spending and tax incentives to strengthen the U.S. economy and to fund a nationwide effort to curtail the effect of the COVID-19 pandemic. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions which are expected to impact the Company’s financial statements include removal of certain limitations on utilization of net operating losses, increasing the ability to deduct interest expense, and amending certain provisions of the previously enacted Tax Cuts and Jobs Act. As of September 30, 2020, the Company expects that these provisions will not have a material impact, as the Company does not have net operating losses that would fall under the provisions of this legislation, nor does it expect interest expense to be limited. The ultimate impact of the CARES Act may differ from this estimate due to changes in interpretations and assumptions, additional guidance that may be issued, and actions the Company may take in response to the CARES Act. The CARES Act is highly technical and complex. The Company will continue to assess the impact that various provisions may have on its business. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | LeasesThe Company has entered into operating leases for its new headquarters office, at 9715 Key West Ave, Rockville, MD, and for its fleet vehicles. With respect to the fleet vehicle leases, given the volume of individual leases involved in the overall arrangement, the Company applies a portfolio approach to effectively account for the operating lease assets and liabilities. Contemporaneous with the USWM Acquisition, USWM Enterprises adopted ASC 842, Leases. USWM Enterprises had an existing contract manufacturing agreement with Merz Pharma GmbH & Co. KGaA (Merz), for the manufacture and supply of MYOBLOC (Merz Agreement). Pursuant to the Merz Agreement, Merz agreed to provide a dedicated manufacturing facility that included a stand-alone building, dedicated clean room suites, dedicated manufacturing and purification equipment, and filling and packaging production lines (collectively, the manufacturing facility) to manufacture MYOBLOC. The Merz Agreement will expire in July 2027, unless the Company and Merz mutually agree to extend the terms. The Merz Agreement may not be terminated for convenience. Under the terms of the agreement, the Company is required to purchase a minimum quantity of MYOBLOC on an annual basis. This minimum purchase requirement represents the in-substance fixed contract consideration associated with the dedicated manufacturing facility. The in-substance fixed contract consideration was allocated to the lease component, since the Company has elected not to separate lease and non-lease components. As of the Closing Date, the finance right of use (ROU) lease asset and corresponding ROU lease liability relating to the dedicated manufacturing facility was $22.7 million. The finance ROU lease asset and ROU lease liability represent the present value of estimated future payments; i.e., the minimum purchase obligations as of the Closing Date. The present value was computed by using an incremental borrowing rate of 2.5%. The embedded lease is preliminarily classified as a finance lease. |
Leases | LeasesThe Company has entered into operating leases for its new headquarters office, at 9715 Key West Ave, Rockville, MD, and for its fleet vehicles. With respect to the fleet vehicle leases, given the volume of individual leases involved in the overall arrangement, the Company applies a portfolio approach to effectively account for the operating lease assets and liabilities. Contemporaneous with the USWM Acquisition, USWM Enterprises adopted ASC 842, Leases. USWM Enterprises had an existing contract manufacturing agreement with Merz Pharma GmbH & Co. KGaA (Merz), for the manufacture and supply of MYOBLOC (Merz Agreement). Pursuant to the Merz Agreement, Merz agreed to provide a dedicated manufacturing facility that included a stand-alone building, dedicated clean room suites, dedicated manufacturing and purification equipment, and filling and packaging production lines (collectively, the manufacturing facility) to manufacture MYOBLOC. The Merz Agreement will expire in July 2027, unless the Company and Merz mutually agree to extend the terms. The Merz Agreement may not be terminated for convenience. Under the terms of the agreement, the Company is required to purchase a minimum quantity of MYOBLOC on an annual basis. This minimum purchase requirement represents the in-substance fixed contract consideration associated with the dedicated manufacturing facility. The in-substance fixed contract consideration was allocated to the lease component, since the Company has elected not to separate lease and non-lease components. As of the Closing Date, the finance right of use (ROU) lease asset and corresponding ROU lease liability relating to the dedicated manufacturing facility was $22.7 million. The finance ROU lease asset and ROU lease liability represent the present value of estimated future payments; i.e., the minimum purchase obligations as of the Closing Date. The present value was computed by using an incremental borrowing rate of 2.5%. The embedded lease is preliminarily classified as a finance lease. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts ReceivableAs of September 30, 2020 and December 31, 2019, the Company recorded allowances of approximately $11.1 million and $11.0 million, respectively, for prompt pay discounts and contractual service fees paid to the Company’s customers. The Company's customers are primarily pharmaceutical wholesalers and distributors and specialty pharmacies. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (dollars in thousands): September 30, December 31, (unaudited) Raw materials $ 9,528 $ 4,582 Work in process 17,571 11,428 Finished goods 15,366 10,618 Total $ 42,465 $ 26,628 As of September 30, 2020, the Company capitalized $11.3 million of pre-launch inventory costs for SPN-812. As of December 31, 2019, the Company had not capitalized any pre-launch inventory costs. Refer to Note 2 for discussion of the Company's accounting policy. |
Investments in Unconsolidated V
Investments in Unconsolidated VIEs | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Unconsolidated VIEs | Investments in Unconsolidated VIEs In April 2020, the Company entered into a Development and Option Agreement (Development Agreement) with Navitor Pharmaceuticals, Inc. (Navitor). The Company can terminate the Development Agreement upon 30 days’ notice. Under the terms of the Development Agreement, the Company and Navitor will jointly conduct a Phase II clinical program for NV-5138 (SPN-820) for treatment-resistant depression. The Company will bear all of the Phase I and Phase II development costs incurred by either party, up to a maximum of $50 million. In addition, the Company will incur certain other research and development support costs. There are certain additional payment amounts which could be incurred by the Company. These costs are contingent upon Navitor achieving defined development milestones. The Company has an option to acquire or license NV-5138 (SPN-820), for which additional payments would be required. The Company paid Navitor a one time, nonrefundable, and non-creditable fee of $10 million for the option to acquire or license NV-5138 (SPN-820). This expense is included in Research and development expense in the condensed consolidated statement of earnings for the nine months ended September 30, 2020. In addition to entering into the Development Agreement, the Company acquired Series D Preferred Shares of Navitor for $15 million, representing an approximately 13% ownership position in Navitor. The Company has determined that Navitor is a VIE. The Company has not consolidated this VIE because the Company lacks the power to direct the activities that most significantly impact Navitor’s economic performance. This investment is accounted for under the practical expedient allowed for equity securities without readily determinable fair value, which is cost minus impairment plus any changes in observable price changes from an orderly transaction of similar investments of Navitor. The investment is recorded in Other assets in the condensed consolidated balance sheets. As of September 30, 2020, the carrying value of our investment in Navitor was approximately $15 million. The maximum exposure to losses related to Navitor is limited to: the $15 million carrying value of the investment; a maximum of approximately $50 million in expense for Phase I and Phase II development of NV-5138 (SPN-820); and the cost of other development and formulation activities provided by the Company. We have provided no financing to Navitor other than amounts required under the Development Agreement. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consists of the following (dollars in thousands): September 30, December 31, (unaudited) Lab equipment and furniture $ 12,374 $ 11,053 Leasehold improvements 15,185 14,217 Software 2,225 2,225 Computer equipment 2,089 1,839 Construction-in-progress 34 433 31,907 29,767 Less accumulated depreciation and amortization (14,512) (12,699) Total $ 17,395 $ 17,068 Depreciation and amortization expense on property and equipment was approximately $0.7 million and $1.8 million for the three and nine months ended September 30, 2020, respectively, and approximately $0.4 million and $1.1 million for the three and nine months ended September 30, 2019. As of September 30, 2020, there were no identified indicators of impairment. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill represents the excess of the USWM Acquisition purchase price over the fair value of the tangible and identifiable intangible net assets acquired. In the third quarter of 2020, the Company recorded measurement period adjustments to goodwill of $1.0 million. Refer to Note 3 for further discussion of the USWM Acquisition. Intangible assets also includes: patent defense costs, which are deferred legal fees incurred in conjunction with defending patents for Oxtellar XR and Trokendi XR; an acquired IPR&D asset associated with the USWM acquisition; and acquired developed technology and product rights associated with the USWM acquisition. The Company amortizes intangible assets over their useful lives, except for the acquired IPR&D asset. The following table sets forth the gross carrying amounts and related accumulated amortization of goodwill and intangible assets (dollars in thousands): Weighted- September 30, December 31, (unaudited) Goodwill $ 89,143 $ — Acquired In-process Research & Development $ 150,000 $ — Intangible assets subject to amortization: Acquired Developed Technology and Product Rights 10.26 - 12.26 237,000 — Capitalized patent defense costs 2.25 - 6.50 43,613 43,375 Less accumulated amortization (28,348) (18,535) Total intangible assets, net $ 402,265 $ 24,840 U.S. patents covering Oxtellar XR and Trokendi XR will expire no earlier than 2027. As regards Trokendi XR, the Company entered into settlement agreements that allow third parties to enter the market by January 1, 2023, or earlier under certain circumstances. Amortization expense for intangible assets was approximately $6.1 million and $9.8 million, for the three and nine month periods ended September 30, 2020, respectively, and approximately $1.3 million and $3.9 million, for the three and nine month periods ended September 30, 2019. The increase in expense is due to amortization of the acquired developed technology and product rights from the USWM Acquisition. As of September 30, 2020, there were no identified indicators of impairment. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (dollars in thousands): September 30, December 31, (unaudited) Accrued clinical trial costs (1) $ 6,264 $ 13,285 Accrued compensation 14,892 11,223 Accrued professional fees 2,627 3,936 Accrued royalties 14,678 — Other accrued expenses 17,828 5,861 Total $ 56,289 $ 34,305 _____________________________________________________________________ (1) Includes preclinical and all clinical trial costs. |
Accrued Product Returns and Reb
Accrued Product Returns and Rebates | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Product Returns and Rebates | |
Accrued Product Returns and Rebates | Accrued Product Returns and Rebates Accrued product returns and rebates consist of the following (dollars in thousands): September 30, December 31, (unaudited) Accrued product rebates $ 110,543 $ 88,811 Accrued product returns 26,430 18,818 Total $ 136,973 $ 107,629 |
Interest Expense
Interest Expense | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Interest Expense | Interest Expense Interest expense consists of the following (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Interest expense $ (4,945) $ (4,546) $ (14,430) $ (13,518) Interest expense on nonrecourse liability related to sale of future royalties (1,143) (1,116) (3,228) (3,412) Total $ (6,088) $ (5,662) $ (17,658) $ (16,930) Interest expense includes noncash interest expense related to amortization of deferred financing costs, and amortization of the debt discount on the 2023 Notes. Expenses of $4.2 million and $12.4 million were incurred for the three and nine months ended September 30, 2020, respectively, and $4.0 million and $11.7 million for the three and nine months ended September 30, 2019, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Product Licenses The Company has obtained exclusive licenses from third parties for proprietary rights to support the product candidates in the Company’s neurology and psychiatry portfolio. Under these license agreements, the Company may be required to pay certain amounts upon the achievement of defined milestones. If these products are ultimately commercialized, the Company is also obligated to pay royalties to third parties, computed as a percentage of net product sales, for each respective product under a license agreement. Through the USWM Acquisition, the Company acquired licensing agreements with other pharmaceutical companies for APOKYN, XADAGO and MYOBLOC. The Company is obligated to pay royalties to third parties, computed as a percentage of net product sales, for each of the products under the respective license agreements. Royalty expense incurred is recognized as Cost of goods sold in the condensed consolidated statement of earnings. Royalty Agreement In the third quarter of 2014, the Company received $30.0 million pursuant to a Royalty Interest Acquisition Agreement related to the purchase, by HC Royalty, of certain of the Company’s rights under the Company’s agreement with United Therapeutics. These rights are related to the commercialization of Orenitram (treprostinil) Extended-Release Tablets. Per the terms of the agreement, full ownership of the royalty rights will revert to the Company if and when a certain cumulative payment threshold is reached (see Note 2, Note 4 and Note 18). USWM Enterprise Commitments Assumed As part of the USWM Acquisition, the Company assumed the remaining commitments of USWM Enterprises and its subsidiaries, which are discussed below. In addition to the annual minimum purchase quantity requirements of MYOBLOC, amounting to an estimated €3.0 million annually, under the contract manufacturing agreement with Merz for manufacture and supply, USWM Enterprises had an existing license and distribution agreement for XADAGO. This included an annual minimum promotional spend to support the marketing of XADAGO for the first five years of the agreement. As of September 30, 2020, the remaining contractual commitments were $4.1 million, of which $2.1 million is for the period October 2020 to June 2021. (See Note 3 for further discussion on the USWM Acquisition and Note 10 for further discussion on the Merz Agreement). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s unaudited condensed 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 condensed 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 most recent Annual Report on Form 10-K, for the year ended December 31, 2019, filed with the SEC. In management’s opinion, the condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows. The results of operations for any interim period are not necessarily indicative of the Company’s future quarterly or annual results. The Company, which is primarily located in the United States (U.S.), operates in one operating segment. Reclassifications Certain prior year amounts in the condensed consolidated statements of earnings have been reclassified to conform to the current year presentation, including a reclassification made to separately present amortization of intangible assets. This was previously included in Selling, general and administrative expenses , and now is recorded as a component of Amortization of intangible assets on the condensed consolidated statements of earnings. These reclassifications had no effect on operating earnings or on our other condensed consolidated financial statements for the three and nine months ended September 30, 2020 and 2019. |
Reclassifications | Reclassifications Certain prior year amounts in the condensed consolidated statements of earnings have been reclassified to conform to the current year presentation, including a reclassification made to separately present amortization of intangible assets. This was previously included in Selling, general and administrative expenses , and now is recorded as a component of Amortization of intangible assets on the condensed consolidated statements of earnings. These reclassifications had no effect on operating earnings or on our other condensed consolidated financial statements for the three and nine months ended September 30, 2020 and 2019. |
Consolidation | Consolidation The Company’s condensed consolidated financial statements include the accounts of: Supernus Pharmaceuticals, Inc.; Supernus Europe Ltd.; Biscayne Neurotherapeutics, Inc. and its wholly owned subsidiary; MDD US Enterprises, LLC (formerly USWM Enterprises, LLC); and MDD US Enterprises, LLC's wholly owned subsidiaries. These are collectively referred to herein as “Supernus” or “the Company.” All significant intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements reflect the consolidation of entities in which the Company has a controlling financial interest. In determining whether there is a controlling financial interest, the Company considers if it has a majority of the voting interests of the entity, or if the entity is a variable interest entity (VIE) and if the Company is the primary beneficiary. In determining the primary beneficiary of a VIE, the Company evaluates whether it has both: the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to that VIE. The Company's judgment with respect to its level of influence or control of an entity involves the consideration of various factors, including: the form of ownership interest; representation in the entity’s governance; the size of the investment; estimates of future cash flows; the ability to participate in policy making decisions; and the rights of the other investors to participate in the decision making process, including the right to liquidate the entity, if applicable. If the Company is not the primary beneficiary of the VIE, and an ownership interest is maintained in the entity, the interest is accounted for under the equity or cost methods of accounting, as appropriate. The Company continuously assesses whether it is the primary beneficiary of a VIE, as changes to existing relationships or future transactions may affect its conclusions. |
Use of Estimates | Use of Estimates The Company bases its estimates on: historical experience; forecasts; information received from its service providers; information from other sources, including public and proprietary sources; and other assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from the Company’s estimates. The Company periodically evaluates the methodologies employed in making its estimates. |
Business Combinations and Contingent Considerations | Business Combinations and Contingent Considerations To determine whether an acquisition should be accounted for as a business combination or as an asset acquisition, the Company makes certain judgments regarding whether the acquired set of activities and assets meets the definition of a business. Significant judgment is required in assessing whether the acquired processes or activities, along with their inputs, would be substantive so as to constitute a business, as defined by U.S. GAAP. If the acquired set of activities and assets meets the definition of a business, the Company applies the acquisition method of accounting to that transaction. Otherwise, the transaction is recorded as an asset acquisition rather than a business combination. In an asset acquisition, any acquired in-process research and development (IPR&D) that does not have an alternative future use is charged to expense as of the acquisition date, and no goodwill is recorded. Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date. The excess of the purchase price over the fair value of the acquired net assets, if applicable, is recorded as goodwill. The operating results of the acquired business are included in the Company’s condensed consolidated statement of earnings, beginning on the effective acquisition date. Acquisition-related expenses are recognized separately from the business combination, and are expensed as incurred. Significant judgment is involved in the determination of the fair value assigned to assets acquired and liabilities assumed in a business combination, as well as the estimated useful lives of assets. These estimates can materially affect our consolidated results of operations. The fair value of intangible assets, including acquired IPR&D, are determined using information available as of the acquisition date, and are based on estimates and assumptions that are deemed reasonable by management. Significant estimates and assumptions include, but are not limited to: probability of technical success; revenue growth; and appropriate discount rate. Depending on the facts and circumstances, the Company may deem it necessary to engage an independent valuation expert to assist in valuing significant assets and liabilities. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed as of the acquisition date, estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information and evaluate these estimates and assumptions on a quarterly basis. The Company records any adjustments to the Company’s preliminary estimates to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to our condensed consolidated statements of earnings in the period that these adjustments are identified. Contingent Considerations Certain of the Company’s business combinations involve the potential for future payments that are contingent upon the achievement of certain milestones related to the development or commercial sale of its products, including product development milestones or royalty payments on future product sales. The fair value of these contingent consideration liabilities is determined as of the acquisition date using estimated or forecast inputs. These inputs include: the estimated amount and timing of projected cash flows; volatility of projected cash flows; the probability of milestone achievement (i.e., achievement of the contingent event); and the estimated discount rates and risk-free rate used to present value the probability-weighted cash flows. Subsequent to the acquisition date, at each reporting period prior to resolution of the contingency, the contingent consideration liability is remeasured at current fair value, with changes recorded in earnings in the period of remeasurement. Similarly, the determination of the initial and subsequent fair value of the contingent consideration liability requires significant judgment by management. Changes in any of the inputs may result in a significantly different fair value adjustment, which can impact the results of operations in the period in which the adjustment is made. These changes are reported on the condensed consolidated statement of earnings in Selling, general and administrative expenses . Additional information regarding the Company's recent business combination and its assessment of contingent consideration is included in Note 3, USWM Acquisition . |
Revenue Recognition | Revenue from Product Sales The Company’s customers are primarily pharmaceutical wholesalers, specialty pharmacies, and pharmaceutical distributors. Customers purchase product to fulfill orders from retail pharmacy chains and independent pharmacies of varying size and purchasing power. The Company recognizes gross revenue when its products are shipped from a third party fulfillment center and physically received by its customers. The Company's customers take control of its products, including title and ownership, upon physical receipt of its products at their facilities. Customer orders are generally fulfilled within a few days of order receipt, resulting in minimal order backlog. The Company does not adjust revenue for any financing effects as the Company expects the period between the transfer of the goods and collection of payment to be less than one year. There are no minimum product purchase requirements with our customers. The Company recognizes revenue from product sales in an amount that reflects the consideration the Company expects to ultimately receive in exchange for those goods. Product sales are recorded net of various forms of variable consideration, including: provision for estimated rebates; provision for estimated future product returns; and an estimated provision for discounts. These are collectively considered "sales deductions." As described below, variability in the net transaction price for the Company’s products arises primarily from the aforementioned sales deductions. Significant judgment is required in estimating certain sales deductions. In making these estimates, the Company considers: historical experience; product price increases; current contractual arrangements under applicable payor programs; unbilled claims; processing time lags for claims; inventory levels in the wholesale, specialty pharmacy, and retail distribution channel; and product life cycle. The Company adjusts its estimates of revenue either when the most likely amount of consideration it expects to receive changes, or when the consideration becomes fixed. Variable consideration on product sales is only recognized when it is probable that a significant reversal will not occur. If actual results in the future vary from our estimates, the Company adjusts its estimates in that calendar period. These adjustments could materially affect net product sales and earnings in the period in which the adjustment(s) is recorded. Sales Deductions The Company records product sales net of the following sales deductions: • Rebates: Rebates are discounts which the Company pays under either public sector or private sector health care programs. Rebates paid under public sector programs are generally mandated under law, whereas private sector rebates are generally contractually negotiated by the Company with managed care providers. Both types of rebates vary over time. Public sector rebate programs encompass: various Medicaid drug rebate programs; Medicare gap coverage programs; programs covering public health service institutions; and programs covering government entities. All federal employees and agencies purchase drugs under the Federal Supply Schedule. Private sector rebate programs include: contractual agreements with managed care providers, under which the Company pays fees to gain access to that provider’s patient drug formulary; and Company-sponsored programs, under which the Company defrays or eliminates patient co-payment charges that the patient would otherwise be obligated to pay to their managed care provider in order to fill their prescription. Rebates are owed upon dispensing our product to a patient; i.e., filling a prescription. The accrual balance for rebates consists of the following three components. First, because rebates are generally invoiced and paid quarterly in arrears, the accrual balance consists of an estimate of the amount expected to be incurred for prescriptions dispensed in the current quarter. Second, the accrual balance also includes an estimate for known or estimated prior quarters’ unpaid rebates, covering those prescriptions dispensed in past quarters but for which no invoice has yet been received. Third, the accrual balance includes an estimate for rebates that will be prospectively owed for prescriptions filled in future quarters. This estimate pertains to product that has been sold by the Company to wholesalers or distributors, and which resides either as wholesaler/distributor inventory or as inventory held at pharmacies. As of the end of the reporting period, this product has not been dispensed to a patient. The Company’s estimates of expected rebate claims vary by program and by type of customer because the period between the date at which the prescription is filled and the date at which the Company receives and pays the invoice varies substantially. For each of its products, the Company bases its estimates of expected rebate claims on multiple factors, including: historical levels of deductions; contractual terms with managed care providers; actual and anticipated changes in product price; prospective changes in managed care fee for service contracts; prospective changes in co-payment assistance programs; and anticipated changes in program utilization rates; i.e., patient participation rates under each specific program. The Company records an estimated liability for rebates at the time the customer takes title to the product (i.e., at the time of sale to wholesalers/distributors). This liability is recorded as a reduction to gross product sales, and an increase in Accrued product returns and rebates. The liability is recorded as a component of current liabilities on the condensed consolidated balance sheets. The sensitivity of the Company’s estimates to subsequent adjustment varies by program and by type of customer. If actual rebates vary from estimated amounts, the Company will adjust the balances of such accrued rebates to reflect actual experience. These adjustments could materially affect the estimated liability balance, net product sales, and earnings in the period in which the adjustment(s) is made. • Returns : Sales of the Company’s products are not subject to a general right of return. Product that has been used to fill patient prescriptions is no longer subject to any right of return. However, the Company will accept return of product that is damaged or defective when shipped from its third party fulfillment center. The Company will also accept return of expired product six months prior to and up to 12 months subsequent to the product’s expiry date. Expired or defective returned product cannot be re-sold, and is therefore destroyed. The Company records an estimated liability for product returns at the time the customer takes title to the product (i.e., at time of sale). The liability is reflected as a reduction to gross product sales, and an increase in Accrued product returns and rebates. This liability is recorded as a component of current liabilities on the condensed consolidated balance sheets. The Company estimates the liability for returns primarily based on the actual returns experience for its five commercial products. Because the Company’s products have a shelf life up to 60 months from date of manufacture, and because the Company accepts return of product up to 12 months post its expiry date, there is a time lag of several years between the time when the product is sold and the time when the Company issues credit on expired product. The Company’s returns policy generally permits product returns to be processed at current wholesaler price rather than at historical acquisition price; hence, the Company’s estimated liability for product returns is affected by price increases taken subsequent to the date of sale and prior to its return. At the time the Company adjusts its estimates for product returns, such adjustment affects the estimated liability, product sales and earnings in the period of adjustment. Those adjustments may be material to our financial results. • Sales discounts : Distributors and wholesalers of the Company's pharmaceutical products are generally offered various forms of consideration, including allowances, service fees and prompt payment discounts, for distributing our products. Distributor and wholesaler allowances and service fees arise from contractual agreements, and are estimated as a percentage of the price at which the Company sells product to them. In addition, distributors and wholesalers are offered a prompt pay discount for payment within a specified period. Prompt pay discounts are estimated as a percentage of the price at which the Company sells product. The Company accounts for these discounts at the time of sale, as a reduction to gross product sales, and records these discounts as a valuation allowance against Accounts receivable on the condensed consolidated balance sheets. Royalty Revenues The Company recognizes noncash royalty revenue for amounts earned pursuant to its royalty agreement with United Therapeutics Corporation (United Therapeutics), based on estimated product sales of Orenitram by United Therapeutics (see Note 4). This agreement includes the right to use the Company’s intellectual property as a functional license. In 2014, the Company sold certain of these royalty rights to Healthcare Royalty Partners III, L.P. (HC Royalty) (see Note 19). Consequent to this agreement, the Company recorded a nonrecourse liability related to this transaction, and amortizes this liability as noncash royalty revenue. Sales of Orenitram by United Therapeutics result in payments from United Therapeutics to HC Royalty, in accordance with this agreement. The Company also recognizes noncash interest expense related to the nonrecourse liability and accrues interest expense at an estimated effective interest rate (see Note 18). This interest rate is determined based on projections of HC Royalty’s rate of return. Royalty revenue also includes cash royalty amounts received from other collaboration partners, including from Takeda Pharmaceutical Company Ltd, based on net product sales of Takeda's product, Mydayis, in the current period. Royalty revenue is only recognized when the underlying product sale by Takeda has occurred. The Takeda arrangement also includes Takeda's right to use the Company’s intellectual property as a functional license. There are no guaranteed minimum amounts owed to the Company related to any of these royalty revenue agreements. |
Research and Development Expense and Related Accrued Research and Development Expenses | Research and Development Expenses and Related Accrued Research and Development Expenses Research and development expenditures are expensed as incurred. These expenses include: employee salaries, benefits, and share-based compensation; cost of contract research and development services provided by third parties; costs for conducting preclinical and clinical studies; cost of acquiring or manufacturing clinical trial materials; regulatory costs; research facilities costs; depreciation expense and allocated occupancy expenses; and license fees and milestone payments related to in-licensed products and technologies. Assets that are used for research and development and that have no future alternative use are expensed as incurred in-process research and development. The Company estimates preclinical and clinical trial expenses based on services performed pursuant to contracts with research institutions, clinical investigators, clinical research organizations (CROs) and other service providers that work on the Company’s behalf. In recording service fees, the Company estimates the cost of those services which have been performed on behalf of the Company during the current period, and compares those costs with the cumulative expenses recorded and cumulative payments made, for such services. As appropriate, the Company accrues additional expense for services that have been delivered, or defers nonrefundable advance payments until the related services are performed. |
Marketable Securities | Marketable Securities Marketable securities consist of investments in: U.S. Treasury bills and notes; bank certificates of deposit; various U.S. governmental agency debt securities; corporate and municipal debt securities; and other fixed income securities. The Company places all investments with governmental, industrial, or financial institutions whose debt is rated as investment grade. The Company's investments are classified as available-for-sale and are carried at fair value. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. Any unrealized holding gains or losses on debt securities are reported, net of any tax effects, as a component of other comprehensive earnings (loss) in the condensed consolidated statement of comprehensive earnings. Realized gains and losses, included in Other income (expense), net in the condensed consolidated statement of earnings, are determined using the specific identification method for determining the cost of securities sold. The Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) on January 1, 2020, using the allowance approach. Declines in fair value below amortized cost related to credit losses (i.e., impairment due to credit losses), are included in the condensed consolidated statement of earnings, with a corresponding allowance established. If the estimate of expected credit losses decreases in subsequent periods, the Company will reverse the credit losses through current period earnings, and accordingly adjust the allowance (see Recently Issued Accounting Pronouncements). |
Inventories | Inventories Inventories, which are recorded at the lower of cost or net realizable value, include materials, labor, direct costs and indirect costs. These are valued using the first-in, first-out method. The Company writes down inventory that has become obsolete, or has a cost basis in excess of its expected net realizable value. Expired inventory is destroyed, and the related costs are recognized as Cost of goods sold in the condensed consolidated statement of earnings. Inventories Produced in Preparation of Product Launches The Company capitalizes inventories produced in preparation for product launches when future commercialization of a product is probable, and when a future economic benefit is expected to be realized. The determination to capitalize is based on the particular facts and circumstances relating to the product. Capitalization of such inventory begins when the Company determines that (i) positive clinical trial results have been obtained in order to support regulatory approval; (ii) uncertainties regarding regulatory approval have been significantly reduced; and (iii) it is probable that these capitalized costs will provide future economic benefit, in excess of capitalized costs. In evaluating whether these conditions are met, the Company considers the following factors: the product candidate’s current status in the regulatory approval process; results from the related pivotal and supportive clinical trials; results from meetings with relevant regulatory agencies prior to the filing of regulatory applications; completion of the regulatory applications; consequent acceptance by the regulatory agency; potential impediments to the approval process, such as product safety or efficacy concerns, potential labeling restrictions, and other impediments; historical experience with manufacturing and commercializing similar products as well as manufacture of the relevant product candidate; and the resilience of the Company’s manufacturing environment, and supply chain, in determining logistical constraints that could hamper approval or commercialization. In assessing the economic benefit that the Company is likely to realize, the Company considers: the shelf life of the product in relation to the expected timeline for approval; patent related or contractual issues that may prevent or delay commercialization; product stability data of all pre-approval production to assess adequacy of expected shelf life; viability of commercialization, taking into account competitive dynamics in the marketplace and market acceptance; anticipated future sales; and anticipated reimbursement strategies that may prevail with respect to the product, to determine product profit margin. In applying the lower of cost or net realizable value to pre-launch inventory, the Company estimates a range of likely commercial prices based on pricing of competitive commercial products, and pre-launch discussions with managed care providers. The Company could be required to write down previously capitalized costs related to pre-launch inventories upon a change in facts and circumstances, including among other potential factors, a denial or significant delay of approval by regulatory bodies, a delay in commercialization, or other adverse factors. |
Intangible Assets | Intangible Assets Intangible assets consist of definite-lived intangible assets, including: acquired developed technology; product rights; and patent defense costs. They also consist of indefinite-lived intangible assets, such as acquired IPR&D. Patent defense costs are legal fees that have been incurred in connection with legal proceedings related to the defense of patents for Oxtellar XR and Trokendi XR. Patent defense costs are charged to expense in the event of an unsuccessful litigation outcome. Definite-lived intangible assets are carried at cost less accumulated amortization, with amortization calculated on a straight line basis over the estimated useful lives of the assets. The Company evaluates the estimated remaining useful life of its intangible assets annually, or when events or changes in circumstances warrant a revision to the remaining periods of amortization. |
Goodwill and Goodwill Impairment Assessment | Goodwill and Goodwill Impairment Assessment Goodwill is calculated as the excess of the consideration paid consequent to completing an acquisition compared to the net assets recognized in a business combination. Goodwill represents the future economic benefits arising from the other acquired assets that could not be individually identified and separately quantified. The Company evaluates goodwill for possible impairment at least annually (during the fourth quarter of each fiscal year), or more often, if and when circumstances indicate that goodwill may be impaired. This includes but is not limited to significant adverse changes in the business climate, market conditions, or other events that indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying value. In performing its goodwill assessment, the Company first performs a qualitative test. If necessary, the Company then performs a quantitative test. To conduct the quantitative impairment test of goodwill, the Company compares the fair value of a reporting unit to its carrying value. Evaluating for impairment requires judgment, including estimating future cashflows. The Company estimates the fair values of its reporting unit using discounted cash flow models or other valuation models, such as comparative transactions or market multiples. If the reporting unit’s carrying value exceeds its fair value, the Company records an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. |
Impairment of Long Lived Assets | Impairment of Long Lived Assets Long-lived assets consist primarily of property and equipment, operating lease assets and intangible assets. The carrying value of intangible assets is assessed for impairment annually (during the fourth quarter of each year), or more frequently if impairment indicators exist. Impairment indicators include but are not limited to adverse changes in circumstances, or other events that indicate that the carrying amount of an asset may not be recoverable. Evaluating for impairment requires judgment, including estimating future cash flows, future growth rates, future profitability, and the expected life over which projected cash flows will occur. |
Share-Based Compensation | Share-Based Compensation Stock Options The Company recognizes share-based compensation expense over the service period, using the straight-line method. Employee share-based compensation for stock options is determined using the Black-Scholes option-pricing model to compute the fair value of option grants as of their grant date. Forfeitures are accounted for as incurred. The Company uses the following assumptions for estimating the fair value of option grants: Fair Value of Common Stock —The fair value of the common stock underlying the option grants is determined based on observable market prices of the Company’s common stock. Expected Volatility —Volatility is a measure of the amount by which the Company’s share price has historically fluctuated on a daily basis and is expected to fluctuate (i.e., expected volatility) in the future. Dividend Yield —The Company has never declared or paid dividends, and has no plans to do so in the foreseeable future. Dividend yield is therefore zero. Expected Term —This is the period of time during which options are expected to remain unexercised and is based on historical experience. Options have a maximum contractual term of ten years. Risk-Free Interest Rate —This is the observed U.S. Treasury Note rate, as of the week each option grant is issued, for a term that most closely resembles the expected term of the option. Restricted Stock Units (RSUs) Share-based compensation expense is recorded based on amortizing the fair market value of the RSU as of the date of the grant over the implied service period. RSUs generally vest one year from the date of the grant and are subject to continued service requirements. Performance Stock Units (PSUs) Performance-Based Awards Share-based compensation expense for performance-based awards is recognized based on amortizing the fair market value of the award as of the grant date over the periods during which the achievement of the performance-based award is probable . Performance-based awards require certain performance targets to be achieved in order for the award to vest . Vesting occurs on the date of achievement of the performance target. Market-Based Awards Share-based compensation expense for market-based awards is recognized on a straight-line basis over the requisite service period, regardless of whether the market condition has been satisfied. Market-based PSU awards vest upon achievement of the performance target. |
Advertising Expense | Advertising Expense Advertising expense includes the cost of promotional materials and activities, such as printed materials and digital marketing, marketing programs and speaker programs. The cost of the Company's advertising efforts are expensed as incurred. The Company incurred approximately $15.4 million and $37.9 million in advertising expense for the three and nine months ended September 30, 2020, respectively, and approximately $11.3 million and $32.5 million in advertising expense for the three and nine months ended September 30, 2019, respectively. These expenses are recorded as a component of Selling, general and administrative expenses in the condensed consolidated statements of earnings. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and deferred tax liabilities are determined based on differences between their financial reporting and tax reporting bases. These differences are measured using enacted tax rates and laws that are expected to be in effect when these differences are expected to reverse. When appropriate, valuation allowances are established to reduce deferred tax assets to the amounts expected to be ultimately 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 are initially and subsequently estimated as the largest amount of the tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authorities. These estimates are based on full knowledge of the position and relevant facts. The Company's policy is to recognize any interest and penalties related to income taxes as income tax expense in the relevant period. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Accounting Pronouncements Adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) - The new standard, issued in July 2016, requires credit losses on financial assets to be measured as the net amount expected to be collected, rather than based on actual incurred losses. For available-for-sale debt securities, the new standard did not revise the definition of impairment; i.e., the investment is impaired if the fair value of the investment is less than its cost. It also did not revise the requirement under ASC 320 for an entity to recognize, in net income, only the impairment amount related to credit risk, and to recognize, as a component of other comprehensive income, the noncredit impairment amount. The new standard made certain targeted changes to the impairment assessment of available-for-sale debt securities, to eliminate the concept of "other than temporary" from the impairment model. Changes to the impairment model include recognition of credit losses on available-for-sale debt securities using the allowance method, and limiting the allowance to the amount by which fair value is below amortized cost. The new standard also requires enhanced disclosure of credit risk associated with debt securities. The Company adopted the new standard effective January 1, 2020, using the modified retrospective approach. The adoption of the standard did not have a material impact on its condensed consolidated financial statements. ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract - The new standard, issued in August 2018, aligns the requirements for capitalizing implementation costs incurred under a service contract for a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or to obtain internal-use software. This includes hosting arrangements that include an internal-use software license. This ASU also requires that the implementation costs of a hosting arrangement under a service contract to be expensed over the term of the hosting arrangement, including reasonably certain renewals. The Company adopted the new standard effective January 1, 2020, using the prospective transition approach. The adoption of the standard did not have a material impact on its condensed consolidated financial statements. ASU 2018-18, Clarifying the Interaction Between Topic 808 and Topic 606 - The new standard, issued in November 2018, clarifies when transactions between participants in a collaborative arrangement are within the scope of Topic 606. The Company adopted the new standard effective January 1, 2020. The adoption of the standard did not have a material impact on its condensed consolidated financial statements. ASU 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820) - The new standard, issued in August 2018, improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies and adds certain disclosure requirements. The Company adopted the new standard effective January 1, 2020. The adoption of the standard did not have a material impact on its condensed consolidated financial statements. New Accounting Pronouncements Not Yet Adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes - The new standard, issued in December 2019, simplifies the accounting for income taxes. This guidance will be effective on January 1, 2021 on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. It will adopt the new standard effective January 1, 2021. ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity - The new standard, issued in August 2020, simplifies the accounting and disclosures for convertible instruments and contracts. This guidance will be effective on January 1, 2022, on a prospective basis, with early adoption permitted but not earlier than January 1, 2021. |
USWM Acquisition (Tables)
USWM Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents the Company’s preliminary estimates of the fair value of the assets acquired and liabilities assumed as of the Closing Date, and subsequent measurement period adjustments recorded during the third quarter of 2020 (dollars in thousands): As Initially Reported Measurement Period Adjustments As Adjusted Cash and cash equivalents $ 6,994 $ — $ 6,994 Accounts receivable 18,474 — 18,474 Inventories 10,400 — 10,400 Prepaid expenses and other current assets 3,564 — 3,564 Property and equipment 454 — 454 Finance lease asset (1) 22,747 — 22,747 Intangible assets 387,000 — 387,000 Other assets 340 — 340 Total fair value of assets acquired 449,973 — 449,973 Accounts payable (2,573) — (2,573) Accrued expenses and other current liabilities (23,339) — (23,339) Finance lease liability (1) (22,747) — (22,747) Deferred income tax liabilities, net (2) (69,515) — (69,515) Total fair value of liabilities assumed (118,174) — (118,174) Total identifiable net assets $ 331,799 $ — $ 331,799 Goodwill 88,095 1,048 89,143 Total purchase price $ 419,894 $ 1,048 $ 420,942 Cash consideration to Seller (3) $ 297,200 $ 1,048 $ 298,248 ______________________________________________________________ (1) Refer to Note 10 for further discussion of the acquired finance lease asset and assumed lease liability. (2) Includes tax attributes that are subject to tax limitations. (3) Represents total purchase price, less cash and cash equivalents acquired and contingent consideration liabilities, recorded at the Closing Date. |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The following table summarizes the preliminary purchase price allocation, and the preliminary average remaining useful lives for identifiable intangible assets (dollars in thousands): Estimated Fair Value Estimated Useful Lives as of Closing Date Acquired In-process Research & Development $ 150,000 n/a Acquired Developed Technology and Product Rights 237,000 10.5 - 12.5 Total intangible assets $ 387,000 |
Business Acquisition, Pro Forma Information | The following table presents the unaudited pro forma combined financial information for each of the periods presented, as if the USWM Acquisition had occurred on January 1, 2019 (dollars in thousands): Three Months ended September 30, Nine Months ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Pro forma total revenues $ 155,135 $ 140,791 $ 440,100 $ 401,332 Pro forma net earnings 39,984 31,599 102,226 76,540 |
Disaggregated Revenues (Tables)
Disaggregated Revenues (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Disaggregation of Revenue [Abstract] | |
Summary of disaggregation of revenues by nature | The following table summarizes the disaggregation of revenues by product or source, (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Net product sales Trokendi XR $ 82,906 $ 77,332 $ 241,131 $ 219,989 Oxtellar XR 28,364 22,702 75,983 65,502 APOKYN 34,482 — 43,082 — XADAGO 2,331 — 3,132 — MYOBLOC 4,050 — 5,279 — Total net product sales $ 152,133 $ 100,034 $ 368,607 $ 285,491 Royalty revenues 3,002 2,106 8,233 6,818 Total revenues $ 155,135 $ 102,140 $ 376,840 $ 292,309 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of the financial assets and liabilities | The Company’s financial assets that are required to be measured at fair value on a recurring basis are as follows (dollars in thousands): Fair Value Measurements at September 30, 2020 (unaudited) Total Fair Value at September 30, Quoted Prices Significant Assets: Cash and cash equivalents Cash $ 188,974 $ 188,974 $ — Money market funds 15,319 15,319 — Marketable securities Corporate debt securities 147,657 — 147,657 Long term marketable securities Corporate debt securities 388,185 258 387,927 Other noncurrent assets Marketable securities - restricted (SERP) 464 2 462 Total assets at fair value $ 740,599 $ 204,553 $ 536,046 Fair Value Measurements at December 31, 2019 Total Fair Value at December 31, Quoted Prices Significant Assets: Cash and cash equivalents Cash $ 78,912 $ 78,912 $ — Money market funds 102,469 102,469 — Marketable securities Corporate debt securities 165,527 — 165,527 Municipal debt securities 165 — 165 Long term marketable securities Corporate debt securities 571,828 254 571,574 U.S. government agency and municipal debt securities 19,945 — 19,945 Other noncurrent assets Marketable securities - restricted (SERP) 418 3 415 Total assets at fair value $ 939,264 $ 181,638 $ 757,626 |
Schedule of unrestricted available-for-sale marketable securities | Unrestricted available-for-sale marketable securities held by the Company are as follows, (dollars in thousands): September 30, December 31, 2019 (unaudited) Corporate and U.S. government agency and municipal debt securities Amortized cost $ 522,920 $ 747,598 Gross unrealized gains 13,835 10,031 Gross unrealized losses (913) (164) Total fair value $ 535,842 $ 757,465 |
Schedule of contractual maturities of the unrestricted available-for-sale marketable securities held | The contractual maturities of the unrestricted available-for-sale marketable securities held by the Company are as follows, (dollars in thousands): September 30, (unaudited) Less than 1 year $ 147,657 1 year to 2 years 142,272 2 years to 3 years 136,095 3 years to 4 years 109,818 Greater than 4 years — Total $ 535,842 |
Reconciliation of the Beginning and Ending Balances Related to the Contingent Consideration | The following table provides a reconciliation of the beginning and ending balances related to the contingent consideration from the USWM Acquisition (dollars in thousands): September 30, (unaudited) Balance at December 31, 2019 $ — Initial estimate of contingent consideration 115,700 Change in fair value recognized in earnings 200 Balance at September 30, 2020 $ 115,900 |
Schedule of financial liabilities that are not carried at fair value | The following table sets forth the carrying value and fair value of the Company’s financial liabilities that are not carried at fair value (dollars in thousands): September 30, 2020 December 31, 2019 (unaudited) Carrying Value Fair Value (Level 2) Carrying Value Fair Value (Level 2) Convertible notes, net $ 357,521 $ 372,816 $ 345,170 $ 366,023 |
Convertible Senior Notes Due _2
Convertible Senior Notes Due 2023 (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of liability component of 2023 Notes | The liability component of the 2023 Notes consists of the following, (dollars in thousands): September 30, December 31, (unaudited) 2023 Notes $ 402,500 $ 402,500 Unamortized debt discount and deferred financing costs (44,979) (57,330) Total carrying value $ 357,521 $ 345,170 |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of share-based compensation expense | Share-based compensation expense is as follows (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Research and development $ 777 $ 680 $ 2,276 $ 1,954 Selling, general and administrative 3,713 3,234 11,164 9,269 Total $ 4,490 $ 3,914 $ 13,440 $ 11,223 |
Summary of stock options and SAR activities | The following table summarizes stock option and stock appreciation rights (SAR) activities: Number of Weighted- Weighted- Outstanding, December 31, 2019 4,606,559 $ 23.05 6.66 Granted 1,210,025 $ 23.86 Exercised (56,873) $ 9.93 Forfeited (50,875) $ 26.51 Outstanding, September 30, 2020 (unaudited) 5,708,836 $ 23.32 6.67 As of December 31, 2019: Vested and expected to vest 4,606,559 $ 23.05 6.66 Exercisable 2,598,112 $ 15.68 5.48 As of September 30, 2020: Vested and expected to vest 5,708,836 $ 23.32 6.86 Exercisable 3,347,884 $ 18.96 5.31 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of common stock equivalents excluded in the calculation of diluted earnings per share | In addition to the above described effect of the 2023 Notes and the related Convertible Note Hedge and Warrant Transactions, the Company also excluded the common stock equivalents of the following outstanding stock-based awards in the calculation of diluted EPS, because their inclusion would be anti-dilutive: Three Months ended Nine Months ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Stock options, RSUs, PSUs 2,677,770 1,395,138 2,905,469 961,605 |
Schedule of computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted net earnings per share for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands, except share and per share amounts): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Numerator, dollars in thousands: Net earnings $ 39,997 $ 28,860 $ 96,182 $ 79,927 Denominator: Weighted average shares outstanding, basic 52,658,850 52,453,384 52,583,891 52,392,232 Effect of dilutive securities: Stock options, RSUs and SARs 1,103,792 1,352,454 1,079,382 1,506,254 Weighted average shares outstanding, diluted 53,762,642 53,805,838 53,663,273 53,898,486 Earnings per share, basic $ 0.76 $ 0.55 $ 1.83 $ 1.53 Earnings per share, diluted $ 0.74 $ 0.54 $ 1.79 $ 1.48 |
Income Tax Expense (Tables)
Income Tax Expense (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation of income tax expense at the U.S Federal statutory income tax rate to the entity's effective income tax rate | The following table provides information regarding the Company’s income tax expense for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Income tax expense $ 12,714 $ 10,730 $ 32,773 $ 26,648 Effective tax rate 24.1 % 27.1 % 25.4 % 25.0 % |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following (dollars in thousands): September 30, December 31, (unaudited) Raw materials $ 9,528 $ 4,582 Work in process 17,571 11,428 Finished goods 15,366 10,618 Total $ 42,465 $ 26,628 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following (dollars in thousands): September 30, December 31, (unaudited) Lab equipment and furniture $ 12,374 $ 11,053 Leasehold improvements 15,185 14,217 Software 2,225 2,225 Computer equipment 2,089 1,839 Construction-in-progress 34 433 31,907 29,767 Less accumulated depreciation and amortization (14,512) (12,699) Total $ 17,395 $ 17,068 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The following table sets forth the gross carrying amounts and related accumulated amortization of goodwill and intangible assets (dollars in thousands): Weighted- September 30, December 31, (unaudited) Goodwill $ 89,143 $ — Acquired In-process Research & Development $ 150,000 $ — Intangible assets subject to amortization: Acquired Developed Technology and Product Rights 10.26 - 12.26 237,000 — Capitalized patent defense costs 2.25 - 6.50 43,613 43,375 Less accumulated amortization (28,348) (18,535) Total intangible assets, net $ 402,265 $ 24,840 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following (dollars in thousands): September 30, December 31, (unaudited) Accrued clinical trial costs (1) $ 6,264 $ 13,285 Accrued compensation 14,892 11,223 Accrued professional fees 2,627 3,936 Accrued royalties 14,678 — Other accrued expenses 17,828 5,861 Total $ 56,289 $ 34,305 _____________________________________________________________________ (1) Includes preclinical and all clinical trial costs. |
Accrued Product Returns and R_2
Accrued Product Returns and Rebates (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Product Returns and Rebates | |
Schedule of accrued product returns and rebates | Accrued product returns and rebates consist of the following (dollars in thousands): September 30, December 31, (unaudited) Accrued product rebates $ 110,543 $ 88,811 Accrued product returns 26,430 18,818 Total $ 136,973 $ 107,629 |
Interest Expense (Tables)
Interest Expense (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of interest expense | Interest expense consists of the following (dollars in thousands): Three Months ended Nine Months ended 2020 2019 2020 2019 (unaudited) (unaudited) Interest expense $ (4,945) $ (4,546) $ (14,430) $ (13,518) Interest expense on nonrecourse liability related to sale of future royalties (1,143) (1,116) (3,228) (3,412) Total $ (6,088) $ (5,662) $ (17,658) $ (16,930) |
Organization and Business (Deta
Organization and Business (Details) | Jun. 09, 2020marketProduct | Sep. 30, 2020marketProduct | Sep. 30, 2020product |
Noncash or Part Noncash Acquisitions [Line Items] | |||
Number of commercial products | 5 | 5 | |
MDD US Enterprises LLC (Formerly USWM Enterprises) | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Number of established marketed products | 3 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2020segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($)marketProduct | Sep. 30, 2020USD ($)product | |
Revenue Recognition | |||
Sales return period prior to expiry date | 6 months | ||
Sales return period subsequent to expiry date | 12 months | ||
Number of commercial products | 5 | 5 | |
Maximum | |||
Revenue Recognition | |||
Product shelf life | 60 months | ||
Royalty revenue agreements | |||
Revenue Recognition | |||
Guaranteed minimum amounts | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Share-based Compensation (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Share-Based Payments | |
Dividend yield | 0.00% |
Maximum contractual term of share-based grants | 10 years |
RSUs | |
Share-Based Payments | |
Vesting period | 1 year |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Advertising Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Selling, general and administrative | ||||
Advertising Expense | ||||
Advertising costs | $ 15.4 | $ 11.3 | $ 37.9 | $ 32.5 |
USWM Acquisition - Narrative (D
USWM Acquisition - Narrative (Details) - USD ($) $ in Thousands | Jun. 09, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Business Acquisition [Line Items] | |||||
Cash consideration to seller | $ 297,200 | $ 0 | |||
Contingent consideration liability accrued in USWM Acquisition | 115,900 | 0 | |||
Change in fair value of contingent consideration | 200 | $ 0 | |||
Transaction costs adjustment | $ 10,100 | ||||
MDD US Enterprises LLC (Formerly USWM Enterprises) | |||||
Business Acquisition [Line Items] | |||||
Cash consideration to seller | $ 298,248 | ||||
Additional payable to seller | $ 1,000 | 1,000 | |||
Transaction costs | 8,300 | ||||
Additional cash payments upon milestone achievements maximum | 230,000 | ||||
Additional cash payments upon milestone achievements minimum | 0 | ||||
Contingent consideration liability accrued in USWM Acquisition | $ 115,700 | 115,700 | |||
Change in fair value of contingent consideration | 200 | 200 | |||
Operating earnings | 5,100 | 6,800 | |||
MDD US Enterprises LLC (Formerly USWM Enterprises) | Net product sales | |||||
Business Acquisition [Line Items] | |||||
Revenues | $ 40,900 | $ 51,500 |
USWM Acquisition - Schedule of
USWM Acquisition - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 09, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 89,143 | $ 0 | ||
Cash consideration to seller | $ 297,200 | $ 0 | ||
MDD US Enterprises LLC (Formerly USWM Enterprises) | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 6,994 | |||
Accounts receivable | 18,474 | |||
Inventories | 10,400 | |||
Prepaid expenses and other current assets | 3,564 | |||
Property and equipment | 454 | |||
Finance lease asset | 22,747 | |||
Intangible assets | 387,000 | |||
Other assets | 340 | |||
Total fair value of assets acquired | 449,973 | |||
Accounts payable | (2,573) | |||
Accrued expenses and other current liabilities | (23,339) | |||
Finance lease liability | (22,747) | |||
Deferred income tax liabilities, net | (69,515) | |||
Total fair value of liabilities assumed | (118,174) | |||
Total identifiable net assets | 331,799 | |||
Goodwill | 89,143 | |||
Total purchase price | 420,942 | |||
Cash consideration to seller | 298,248 | |||
MDD US Enterprises LLC (Formerly USWM Enterprises) | As Initially Reported | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 6,994 | |||
Accounts receivable | 18,474 | |||
Inventories | 10,400 | |||
Prepaid expenses and other current assets | 3,564 | |||
Property and equipment | 454 | |||
Finance lease asset | 22,747 | |||
Intangible assets | 387,000 | |||
Other assets | 340 | |||
Total fair value of assets acquired | 449,973 | |||
Accounts payable | (2,573) | |||
Accrued expenses and other current liabilities | (23,339) | |||
Finance lease liability | (22,747) | |||
Deferred income tax liabilities, net | (69,515) | |||
Total fair value of liabilities assumed | (118,174) | |||
Total identifiable net assets | 331,799 | |||
Goodwill | 88,095 | |||
Total purchase price | 419,894 | |||
Cash consideration to seller | 297,200 | |||
MDD US Enterprises LLC (Formerly USWM Enterprises) | Measurement Period Adjustments | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 0 | |||
Accounts receivable | 0 | |||
Inventories | 0 | |||
Prepaid expenses and other current assets | 0 | |||
Property and equipment | 0 | |||
Finance lease asset | 0 | |||
Intangible assets | 0 | |||
Other assets | 0 | |||
Total fair value of assets acquired | 0 | |||
Accounts payable | 0 | |||
Accrued expenses and other current liabilities | 0 | |||
Finance lease liability | 0 | |||
Deferred income tax liabilities, net | 0 | |||
Total fair value of liabilities assumed | 0 | |||
Total identifiable net assets | 0 | |||
Goodwill | 1,048 | |||
Total purchase price | 1,048 | |||
Cash consideration to seller | $ 1,048 |
USWM Acquisition - Components o
USWM Acquisition - Components of Intangible Assets and Estimated Useful Lives (Details) - MDD US Enterprises LLC (Formerly USWM Enterprises) $ in Thousands | Jun. 09, 2020USD ($) |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 387,000 |
Acquired In-process Research & Development | |
Business Acquisition [Line Items] | |
Estimated Fair Value | 150,000 |
Acquired Developed Technology and Product Rights | |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 237,000 |
Acquired Developed Technology and Product Rights | Minimum | |
Business Acquisition [Line Items] | |
Estimated Useful Lives as of Closing Date (in years) | 10 years 6 months |
Acquired Developed Technology and Product Rights | Maximum | |
Business Acquisition [Line Items] | |
Estimated Useful Lives as of Closing Date (in years) | 12 years 6 months |
USWM Acquisition - Pro Forma In
USWM Acquisition - Pro Forma Information (Details) - MDD US Enterprises LLC (Formerly USWM Enterprises) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Acquisition [Line Items] | ||||
Pro forma total revenues | $ 155,135 | $ 140,791 | $ 440,100 | $ 401,332 |
Pro forma net earnings | $ 39,984 | $ 31,599 | $ 102,226 | $ 76,540 |
Disaggregated Revenues - Summar
Disaggregated Revenues - Summary of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 155,135 | $ 102,140 | $ 376,840 | $ 292,309 |
Trokendi XR | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 82,906 | 77,332 | 241,131 | 219,989 |
Oxtellar XR | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 28,364 | 22,702 | 75,983 | 65,502 |
APOKYN | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 34,482 | 0 | 43,082 | 0 |
XADAGO | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 2,331 | 0 | 3,132 | 0 |
MYOBLOC | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 4,050 | 0 | 5,279 | 0 |
Net product sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 152,133 | 100,034 | 368,607 | 285,491 |
Royalty revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 3,002 | $ 2,106 | $ 8,233 | $ 6,818 |
Disaggregated Revenues (Details
Disaggregated Revenues (Details) - USD ($) $ in Thousands | Jun. 09, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Revenue Recognition | |||||
Non-cash royalty revenue | $ 2,400 | $ 1,600 | $ 6,320 | $ 5,028 | |
Cash consideration to seller | $ 297,200 | $ 0 | |||
MDD US Enterprises LLC (Formerly USWM Enterprises) | |||||
Revenue Recognition | |||||
Cash consideration to seller | $ 298,248 | ||||
As Initially Reported | MDD US Enterprises LLC (Formerly USWM Enterprises) | |||||
Revenue Recognition | |||||
Cash consideration to seller | $ 297,200 | ||||
Revenues | Customer Concentration Risk | Trokendi XR | |||||
Revenue Recognition | |||||
Concentration risk percentage (more than) | 65.00% | 77.00% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Fair value of financial instruments | ||
Impairment due to credit losses | $ 0 | |
Recurring | Fair Value (Level 3) | ||
Fair value of financial instruments | ||
Total assets at fair value | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Carrying Value (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Other noncurrent assets | ||
Marketable securities - restricted (SERP) | $ 2 | $ 3 |
Total assets at fair value | 204,553 | 181,638 |
Significant Other Observable Inputs (Level 2) | ||
Other noncurrent assets | ||
Marketable securities - restricted (SERP) | 462 | 415 |
Total assets at fair value | 536,046 | 757,626 |
Total Fair Value | ||
Other noncurrent assets | ||
Marketable securities - restricted (SERP) | 464 | 418 |
Total assets at fair value | 740,599 | 939,264 |
Corporate debt securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Marketable securities | ||
Marketable securities | 0 | 0 |
Long term marketable securities | ||
Long term marketable securities | 258 | 254 |
Corporate debt securities | Significant Other Observable Inputs (Level 2) | ||
Marketable securities | ||
Marketable securities | 147,657 | 165,527 |
Long term marketable securities | ||
Long term marketable securities | 387,927 | 571,574 |
Corporate debt securities | Total Fair Value | ||
Marketable securities | ||
Marketable securities | 147,657 | 165,527 |
Long term marketable securities | ||
Long term marketable securities | 388,185 | 571,828 |
Municipal debt securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Marketable securities | ||
Marketable securities | 0 | |
Municipal debt securities | Significant Other Observable Inputs (Level 2) | ||
Marketable securities | ||
Marketable securities | 165 | |
Municipal debt securities | Total Fair Value | ||
Marketable securities | ||
Marketable securities | 165 | |
U.S. government agency and municipal debt securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Long term marketable securities | ||
Long term marketable securities | 0 | |
U.S. government agency and municipal debt securities | Significant Other Observable Inputs (Level 2) | ||
Long term marketable securities | ||
Long term marketable securities | 19,945 | |
U.S. government agency and municipal debt securities | Total Fair Value | ||
Long term marketable securities | ||
Long term marketable securities | 19,945 | |
Cash | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash and cash equivalents | 188,974 | 78,912 |
Cash | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Cash | Total Fair Value | ||
Assets: | ||
Cash and cash equivalents | 188,974 | 78,912 |
Money market funds | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash and cash equivalents | 15,319 | 102,469 |
Money market funds | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Money market funds | Total Fair Value | ||
Assets: | ||
Cash and cash equivalents | $ 15,319 | $ 102,469 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Unrestricted Marketable Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value Disclosures [Abstract] | ||
Amortized cost | $ 522,920 | $ 747,598 |
Gross unrealized gains | 13,835 | 10,031 |
Gross unrealized losses | (913) | (164) |
Total fair value | $ 535,842 | $ 757,465 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments Fair Value of Financial Instruments - Contractual Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value Disclosures [Abstract] | ||
Less than 1 year | $ 147,657 | |
1 year to 2 years | 142,272 | |
2 years to 3 years | 136,095 | |
3 years to 4 years | 109,818 | |
Greater than 4 years | 0 | |
Total | $ 535,842 | $ 757,465 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Reconciliation of the Beginning and Ending Balances Related to the Contingent Consideration (Details) - USD ($) $ in Thousands | Jun. 09, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Initial estimate of contingent consideration | $ 115,900 | $ 0 | ||
Change in fair value recognized in earnings | 200 | $ 0 | ||
MDD US Enterprises LLC (Formerly USWM Enterprises) | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Balance at December 31, 2019 | 0 | |||
Initial estimate of contingent consideration | $ 115,700 | 115,700 | ||
Change in fair value recognized in earnings | $ 200 | 200 | ||
Balance at September 30, 2020 | $ 115,900 | $ 115,900 |
Fair Value of Financial Instr_8
Fair Value of Financial Instruments - Financial Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair value of financial instruments | ||
Carrying Value | $ 357,521 | $ 345,170 |
Convertible Notes | Significant Other Observable Inputs (Level 2) | ||
Fair value of financial instruments | ||
Carrying Value | 357,521 | 345,170 |
Fair Value | $ 372,816 | $ 366,023 |
Convertible Senior Notes Due _3
Convertible Senior Notes Due 2023 - Narrative (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($) | |
Notes payable | ||
Strike price of the warrant transactions (in dollars per share) | $ / shares | $ 80.9063 | |
2023 Notes | ||
Notes payable | ||
Interest rate | 0.625% | |
Effective interest rate | 5.41% | |
2023 Notes | $ | $ 402,500,000 | $ 402,500,000 |
Conversion rate for the notes (in shares per $1,000 principal amount) | 0.0168545 | |
Conversion price, per share of common stock (in dollars per share) | $ / shares | $ 59.33 | |
Convertible note hedge options issued (in shares) | 402,500 | |
Common stock issued upon conversion of notes (in shares) | 6,800,000 | |
Warrants issued (in shares) | 6,783,939 | |
Number of shares per warrant entitled to holder (in shares) | 1 | |
Conversion of debt to equity | $ | $ 0 | $ 0 |
Convertible Senior Notes Due _4
Convertible Senior Notes Due 2023 - Summary of liability component of 2023 Notes (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total carrying value | $ 357,521,000 | $ 345,170,000 |
2023 Notes | ||
Debt Instrument [Line Items] | ||
2023 Notes | 402,500,000 | 402,500,000 |
Unamortized debt discount and deferred financing costs | (44,979,000) | (57,330,000) |
Total carrying value | $ 357,521,000 | $ 345,170,000 |
Share-Based Payments - Share-ba
Share-Based Payments - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based payments | ||||
Share-based compensation expense | $ 4,490 | $ 3,914 | $ 13,440 | $ 11,223 |
Research and development | ||||
Share-based payments | ||||
Share-based compensation expense | 777 | 680 | 2,276 | 1,954 |
Selling, general and administrative | ||||
Share-based payments | ||||
Share-based compensation expense | $ 3,713 | $ 3,234 | $ 11,164 | $ 9,269 |
Share-Based Payments - Activity
Share-Based Payments - Activity (Details) - Stock option and Stock Appreciation Rights - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Number of Options | ||
Outstanding at the beginning of the period (in shares) | 4,606,559 | |
Granted (in shares) | 1,210,025 | |
Exercised (in shares) | (56,873) | |
Forfeited (in shares) | (50,875) | |
Outstanding at the end of the period (in shares) | 5,708,836 | 4,606,559 |
Vested and expected to vest (in shares) | 5,708,836 | 4,606,559 |
Exercisable (in shares) | 3,347,884 | 2,598,112 |
Weighted- Average Exercise Price (per share) | ||
Outstanding at the beginning of the period (in dollars per share) | $ 23.05 | |
Granted (in dollars per share) | 23.86 | |
Exercised (in dollars per share) | 9.93 | |
Forfeited (in dollars per share) | 26.51 | |
Outstanding at the end of the period (in dollars per share) | 23.32 | $ 23.05 |
Vested and expected to vest (in dollars per share) | 23.32 | 23.05 |
Exercisable (in dollars per share) | $ 18.96 | $ 15.68 |
Weighted- Average Remaining Contractual Term (in years) | ||
Outstanding at the end of the period | 6 years 8 months 1 day | 6 years 7 months 28 days |
Vested and expected to vest | 6 years 10 months 9 days | 6 years 7 months 28 days |
Exercisable | 5 years 3 months 21 days | 5 years 5 months 23 days |
Share-Based Payments - Narrativ
Share-Based Payments - Narrative (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
RSUs | |
Share-Based Payments | |
Granted (in shares) | shares | 26,055 |
Weighted average fair value, grant date, (in dollars per share) | $ / shares | $ 23.99 |
Performance-Based Awards | |
Share-Based Payments | |
Granted (in shares) | shares | 31,250 |
Weighted average fair value, grant date, (in dollars per share) | $ / shares | $ 21.35 |
Market-Based Awards | |
Share-Based Payments | |
Granted options (in shares) | shares | 15,625 |
Weighted average fair value, grant date, options (in dollars per share) | $ / shares | $ 23.41 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income per share | ||||||||
Strike price of the warrant transactions (in dollars per share) | $ 80.9063 | $ 80.9063 | ||||||
Numerator, dollars in thousands: | ||||||||
Net earnings | $ 39,997 | $ 34,667 | $ 21,518 | $ 28,860 | $ 32,727 | $ 18,340 | $ 96,182 | $ 79,927 |
Denominator: | ||||||||
Weighted average shares outstanding, basic (in shares) | 52,658,850 | 52,453,384 | 52,583,891 | 52,392,232 | ||||
Effect of dilutive securities: | ||||||||
Stock options, RSU and SAR (in shares) | 1,103,792 | 1,352,454 | 1,079,382 | 1,506,254 | ||||
Weighted average shares outstanding, diluted (in shares) | 53,762,642 | 53,805,838 | 53,663,273 | 53,898,486 | ||||
Earnings per share, basic (in dollars per share) | $ 0.76 | $ 0.55 | $ 1.83 | $ 1.53 | ||||
Earnings per share, diluted (in dollars per share) | $ 0.74 | $ 0.54 | $ 1.79 | $ 1.48 | ||||
Stock options, RSUs, PSUs | ||||||||
Income per share | ||||||||
Common stock equivalents excluded in the calculation of diluted income per share (in shares) | 2,677,770 | 1,395,138 | 2,905,469 | 961,605 | ||||
2023 Notes | ||||||||
Income per share | ||||||||
Conversion price, per share of common stock (in dollars per share) | $ 59.33 | $ 59.33 |
Income Tax Expense (Details)
Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 12,714 | $ 10,730 | $ 32,773 | $ 26,648 |
Effective tax rate | 24.10% | 27.10% | 25.40% | 25.00% |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Jun. 09, 2020 | Dec. 31, 2019 | |
Leases | ||||
Finance lease asset | $ 21,676 | $ 21,676 | $ 0 | |
MDD US Enterprises LLC (Formerly USWM Enterprises) | ||||
Leases | ||||
Finance lease asset | $ 22,700 | |||
Finance lease liability | $ 22,700 | |||
Finance lease incremental borrowing rate | 2.50% | |||
Fixed lease cost | $ 800 | $ 1,100 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Allowance for expected sales discounts and allowances | $ 11.1 | $ 11 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 9,528 | $ 4,582 |
Work in process | 17,571 | 11,428 |
Finished goods | 15,366 | 10,618 |
Total inventories | $ 42,465 | $ 26,628 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory [Line Items] | ||
Pre-launch inventory, net | $ 9,528,000 | $ 4,582,000 |
Product Candidates | ||
Inventory [Line Items] | ||
Pre-launch inventory, net | $ 11,300,000 | $ 0 |
Investments in Unconsolidated_2
Investments in Unconsolidated VIEs (Details) - Variable Interest Entity, Not Primary Beneficiary - Navitor Pharmaceuticals, Inc. - USD ($) $ in Millions | 1 Months Ended | |
Apr. 30, 2020 | Sep. 30, 2020 | |
Variable Interest Entity [Line Items] | ||
Agreement termination notice period | 30 days | |
Threshold for development costs payments | $ 50 | |
Payment for option issue fee | 10 | |
Investments | $ 15 | $ 15 |
VIE, qualitative or quantitative information, ownership percentage | 13.00% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property and equipment | |||||
Property and equipment, gross | $ 31,907 | $ 31,907 | $ 29,767 | ||
Less accumulated depreciation and amortization | (14,512) | (14,512) | (12,699) | ||
Property and equipment, net | 17,395 | 17,395 | 17,068 | ||
Depreciation and amortization expense | 700 | $ 400 | 1,800 | $ 1,100 | |
Lab equipment and furniture | |||||
Property and equipment | |||||
Property and equipment, gross | 12,374 | 12,374 | 11,053 | ||
Leasehold improvements | |||||
Property and equipment | |||||
Property and equipment, gross | 15,185 | 15,185 | 14,217 | ||
Software | |||||
Property and equipment | |||||
Property and equipment, gross | 2,225 | 2,225 | 2,225 | ||
Computer equipment | |||||
Property and equipment | |||||
Property and equipment, gross | 2,089 | 2,089 | 1,839 | ||
Construction-in-progress | |||||
Property and equipment | |||||
Property and equipment, gross | $ 34 | $ 34 | $ 433 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Intangible Assets | |||||
Goodwill | $ 89,143 | $ 89,143 | $ 0 | ||
Less accumulated amortization | (28,348) | (28,348) | (18,535) | ||
Total intangible assets, net | 402,265 | 402,265 | 24,840 | ||
Additional disclosures | |||||
Goodwill adjustments | 1,000 | ||||
Amortization expense | 6,108 | $ 1,306 | 9,814 | $ 3,918 | |
Acquired Developed Technology and Product Rights | |||||
Intangible Assets | |||||
Intangible assets, gross | 237,000 | $ 237,000 | 0 | ||
Acquired Developed Technology and Product Rights | Minimum | |||||
Intangible Assets | |||||
Weighted- Average Life (Years) | 10 years 3 months 3 days | ||||
Acquired Developed Technology and Product Rights | Maximum | |||||
Intangible Assets | |||||
Weighted- Average Life (Years) | 12 years 3 months 3 days | ||||
Capitalized patent defense costs | |||||
Intangible Assets | |||||
Intangible assets, gross | 43,613 | $ 43,613 | 43,375 | ||
Capitalized patent defense costs | Minimum | |||||
Intangible Assets | |||||
Weighted- Average Life (Years) | 2 years 3 months | ||||
Capitalized patent defense costs | Maximum | |||||
Intangible Assets | |||||
Weighted- Average Life (Years) | 6 years 6 months | ||||
Acquired In-process Research & Development | |||||
Intangible Assets | |||||
Intangible assets, gross | $ 150,000 | $ 150,000 | $ 0 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued clinical trial costs | $ 6,264 | $ 13,285 |
Accrued compensation | 14,892 | 11,223 |
Accrued professional fees | 2,627 | 3,936 |
Accrued royalties | 14,678 | 0 |
Other accrued expenses | 17,828 | 5,861 |
Accrued expenses and other current liabilities | $ 56,289 | $ 34,305 |
Accrued Product Returns and R_3
Accrued Product Returns and Rebates (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accrued Product Returns and Rebates | ||
Accrued product rebates | $ 110,543 | $ 88,811 |
Accrued product returns | 26,430 | 18,818 |
Total | $ 136,973 | $ 107,629 |
Interest Expense (Details)
Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Income and Expenses [Abstract] | ||||
Interest expense | $ (4,945) | $ (4,546) | $ (14,430) | $ (13,518) |
Interest expense on nonrecourse liability related to sale of future royalties | (1,143) | (1,116) | (3,228) | (3,412) |
Total | (6,088) | (5,662) | (17,658) | (16,930) |
Non-cash interest expense | $ 4,200 | $ 4,000 | $ 12,351 | $ 11,701 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands, € in Millions | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Sep. 30, 2020EUR (€) | Dec. 31, 2019USD ($) | Sep. 30, 2014USD ($) | |
Long-term Purchase Commitment [Line Items] | |||||
Nonrecourse liability related to sale of future royalties, long term | $ 14,960 | $ 19,248 | $ 30,000 | ||
MDD US Enterprises LLC (Formerly USWM Enterprises) | |||||
Long-term Purchase Commitment [Line Items] | |||||
Annual minimum purchase quantity requirement amount | € | € 3 | ||||
Commitment period | 5 years | ||||
Spend commitment amount | $ 4,100 | ||||
MDD US Enterprises LLC (Formerly USWM Enterprises) | Forecast | |||||
Long-term Purchase Commitment [Line Items] | |||||
Spend commitment amount | $ 2,100 |