Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2013 |
Accounting Policies [Abstract] | ' |
Basis of Accounting, Policy [Policy Text Block] | ' |
Basis of Presentation |
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The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP, and the rules and regulations of the Securities and Exchange Commission, or SEC, for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 18, 2013. The financial information as of September 30, 2013 and for the three and nine months ended September 30, 2013 and 2012 is unaudited. In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments or accruals, considered necessary for a fair statement of the results of these interim periods have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year. |
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The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions have been eliminated. |
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The preparation of financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Cash and Cash Equivalents |
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For the purpose of the Condensed Consolidated Balance Sheets and Statements of Cash Flows, cash equivalents include all highly liquid investments with a maturity at the time of purchase |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Restricted Cash |
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Restricted cash primarily represents collateral pledged to support a loan agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (the Tokyo-Mitsubishi Bank); a loan agreement with the Mizuho Bank, Ltd. (the Mizuho Bank); a loan agreement between Numab AG (Numab) and Zurcher Kantonalbank, which we serve as guarantor; and operating leases with certain financial institutions. Restricted cash totaled approximately $28.5 million and $18.9 million at September 30, 2013 and December 31, 2012, respectively. |
Investment, Policy [Policy Text Block] | ' |
Current and Non-current Investments |
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Current and non-current investments consist primarily of United States government agency securities, certificates of deposit, and variable rate demand notes, and are classified as current or non-current based on their maturity dates. The Company classifies all investments as available for-sale-securities and reports unrealized gains or losses, net of related tax effects, in other comprehensive income. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' |
Fair Value of Financial Instruments |
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The carrying amounts of the Company’s financial instruments approximate their fair values based on their short maturities, independent valuations or internal assessments. The Company’s financial instruments include cash and cash equivalents, restricted cash, current and non-current investments, receivables, accounts payable and accrued expenses. The Company’s debt is subject to the fair value disclosure requirements as discussed in Note 4 below, and is classified as a Level 2 security. |
Accounts Receivable Allowance [Policy Text Block] | ' |
Accounts Receivable and Unbilled Accounts Receivable |
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Accounts receivable primarily represent amounts due under the Takeda Agreement and the Abbott Agreement. Unbilled accounts receivable consist of research and development expenses that are reimbursable by Takeda, but as of the balance sheet date have not been billed to Takeda. The Company recorded an allowance for doubtful accounts of approximately $426,000 and $280,000 at September 30, 2013 and December 31, 2012, respectively, related to certain disputed Takeda invoices. |
Royalty Recognition Policy [Policy Text Block] | ' |
Product Royalties Receivable |
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Product royalties receivable represent amounts due from Takeda for the Company’s royalties on net sales of AMITIZA, which are based on reports of net sales obtained directly from Takeda. |
Inventory, Policy [Policy Text Block] | ' |
Inventory |
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Inventory is stated at cost or market, whichever is lower. Cost is determined on a first-in, first-out basis. Inventory is reviewed periodically for potential excess, dated or obsolete status. The Company’s management evaluates the carrying value of inventory on a regular basis, taking into account such factors as historical and anticipated future sales compared to quantities on hand, the prices the Company expects to obtain for products in their respective markets compared to historical costs, and the remaining shelf life of goods on hand. During the third quarter of 2013, the Company recorded a $4.5 million non-cash write-off of its RESCULA inventory to reflect anticipated excess quantities of dated product consisting of $3.0 million of product for sale and $1.5 million of sample inventory, compared to nil during the third quarter of 2012. The anticipated excess inventory was largely a result of the necessity to pre-order product in advance of FDA approval due to a planned change in manufacturing facility, and lower than anticipated sales within the useful life of the dated product. In addition to initial sales falling below their forecast, the Company has recently decided to eliminate its in-house sales force and deploy a contract sales force to detail only current RESCULA prescribers at a much reduced level, which will further impact sales of RESCULA going forward |
Revenue Recognition, Policy [Policy Text Block] | ' |
Revenue Recognition |
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The Company’s revenues are derived primarily from product royalties, development milestone payments, clinical development activities and product sales. |
Research and Development Revenue [Policy Text Block] | ' |
Research and Development Revenue |
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The Company evaluated the multiple deliverables within the collaboration and license agreements in accordance with the guidance of multiple deliverables to determine whether the delivered elements that are the obligation of the Company have value to other parties to the agreement on a stand-alone basis and whether objective reliable evidence of fair value of the undelivered items exists. Deliverables that meet these criteria are considered a separate unit of accounting. Deliverables that do not meet these criteria are combined and accounted for as a single unit of accounting. The appropriate recognition of revenue is then applied to each separate unit of accounting. The Company’s deliverables under the Takeda Agreement and the Abbott Agreement, including the related rights and obligations, contractual cash flows and performance periods, are more fully described in Note 10 below. |
Product Royalty Revenue [Policy Text Block] | ' |
Product Royalty Revenue |
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Royalty revenues are based on net sales of licensed products and are recorded on an accrual basis when earned in accordance with contractual terms if third-party results are reliably measurable, collectability is reasonably assured and all other revenue recognition criteria are met. |
Revenue Recognition, Sales of Goods [Policy Text Block] | ' |
Product Sales Revenue |
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AMITIZA product sales consist of AMITIZA sales to Abbott in Japan and by the Company in Switzerland. Revenue from AMITIZA product sales is recognized when persuasive evidence of an arrangement exists, delivery has occurred, title to product and associated risk of loss have passed to the customer, the price is fixed or determinable, and collection from the customer is reasonably assured. The Company did not record sales deductions and returns for sales of AMITIZA due to the absence of discounts and rebates and the lack of right of return. |
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RESCULA product sales consist of RESCULA sales in the United States. The Company recognizes revenue from RESCULA product sales less deductions for estimated sales discounts and sales returns. Revenue from product sales of RESCULA is recognized when persuasive evidence of an arrangement exists, title passes, the price is fixed or determinable, and collectability is reasonably assured. The Company accounts for rebates to certain governmental agencies as a reduction of product sales. The Company allows customers to return product within a specified time period prior to and subsequent to the product’s labeled expiration date. As a result, the Company estimates an accrual for product returns, which is recorded as a reduction of product sales. Given the Company’s limited history of selling RESCULA and the return period, the Company cannot reasonably estimate product returns from the wholesale distribution channel. Therefore, the Company is deferring the recognition of revenue until there is confirmation of pull-through sales to pharmacies or other end user customers. The Company will continue to defer recognition until the point at which the Company has obtained sufficient sales history to reasonably estimate returns from the wholesalers. The Company’s three largest wholesale customers accounted for 98.2% and 95.5% of its RESCULA product sales for the three and nine months ended September 30, 2013, respectively. |
Copromotion Revenue Policy Text Block | ' |
Co-promotion Revenue |
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Co-promotion revenue relates to a limited reimbursement of co-promotion costs based on details to healthcare prescribers. |
Contract Revenue Policy Text Block [Policy Text Block] | ' |
Contract and Collaboration Revenue |
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Contract revenue relates to development and consulting activities and is accounted for under the time-based model. |
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The Company considers its participation in joint committees under its collaboration and license agreements as separate deliverables under the contracts and recognizes the fair value of such participation as collaboration revenue over the period of the participation per the terms of the contracts. |
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The Company has determined that it is acting as a principal under both the Takeda Agreement and the Abbott Agreement and, as such, records revenue on a gross basis in the Condensed Consolidated Statements of Comprehensive Income (Loss). |
Cost of Sales, Policy [Policy Text Block] | ' |
Cost of Goods Sold |
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Cost of goods sold relates to purchase and distribution costs of the products sold by the Company, including inventory write-offs for excess and obsolete inventory and amortization of marketing licenses. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' |
Certain Risks, Concentrations and Uncertainties |
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Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments and receivables. The Company places its cash, cash equivalents and restricted cash with highly rated financial institutions and invests its excess cash in highly rated investments. As of September 30, 2013 and December 31, 2012, approximately $15.7 million, or 17.3%, and $15.6 million, or 18.4%, respectively, of the Company’s cash, cash equivalents, restricted cash and investments were issued or insured by the United States government or United States government agencies. The Company has not experienced any losses on these accounts related to amounts in excess of insured limits. |
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The Company’s products and product candidates under development require approval from the FDA or other international regulatory agencies prior to commercial sales. For those product candidates or indications that have not yet been approved by the FDA or international regulatory agencies, there can be no assurance the products will receive the necessary approval. If the Company is denied approval or approval is delayed, it may have a material adverse impact on the Company. |
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The Company’s products, AMITIZA and RESCULA, compete in a rapidly changing, highly competitive market, which is characterized by advances in scientific discovery, changes in customer requirements, evolving regulatory requirements, downward pressure on reimbursement pricing, and developing industry standards. Any failure by the Company to anticipate or to respond adequately or timely to these market conditions, or any significant delays in the development or introduction of products could have a material adverse effect on the Company’s business, operating results and future cash flows. |
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The Company’s expected activities may necessitate significant uses of working capital. The Company’s working capital requirements will depend on many factors, including the successful sales of AMITIZA and RESCULA, research and development efforts to develop new products or indications, payments received under contractual agreements with other parties, the status of competitive products and market acceptance of the Company’s products by physicians and patients. The Company plans to continue financing operations with its existing cash and investments as well as with product royalty revenue and cash received from milestones and other revenue related to its joint collaboration, license and supply agreements. |
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Revenues from Takeda, an unrelated party, accounted for 73.9% and 98.7%, of the Company’s total revenues for the three months ended September 30, 2013 and 2012, respectively, and 82.9% and 98.0% for the nine months ended September 30, 2013 and 2012, respectively. Accounts receivable, unbilled accounts receivable and product royalties receivable from Takeda accounted for 90.9% and 98.0% of the Company’s total accounts receivable, unbilled accounts receivable and product royalties receivable at September 30, 2013 and December 31, 2012, respectively. Revenues from Abbott, another unrelated party, accounted for 24.5% and 0.1% of the Company’s total revenues for the three months ended September 30, 2013 and 2012, respectively, and 16.4% and 1.1% for the nine months ended September 30, 2013 and 2012, respectively. The Company’s revenues depend significantly upon the collaborations with Takeda and Abbott and these revenues may be adversely impacted if these relationships are disrupted. |
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The Company has an exclusive supply arrangement with R-Tech to provide the Company with commercial and clinical supplies of its product and product candidates. R-Tech also provides certain preclinical and other research and development services. Any difficulties or delays in performing the services under these arrangements may cause the Company to lose revenues, delay research and development activities or otherwise disrupt the Company’s operations (see Note 8 below). |