Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 2-May-14 | |
Document and Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Trading Symbol | 'ZGNX | ' |
Entity Registrant Name | 'ZOGENIX, INC. | ' |
Entity Central Index Key | '0001375151 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 139,539,151 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $50,684 | $72,021 |
Trade accounts receivable, net | 11,680 | 6,665 |
Inventory, net | 14,854 | 9,936 |
Prepaid expenses and other current assets | 3,767 | 4,257 |
Total current assets | 80,985 | 92,879 |
Property and equipment, net | 12,310 | 13,011 |
Other assets | 6,685 | 6,614 |
Total assets | 99,980 | 112,504 |
Current liabilities: | ' | ' |
Accounts payable | 10,569 | 4,622 |
Accrued expenses | 18,726 | 18,865 |
Common stock warrant liabilities | 22,156 | 31,341 |
Long-term Debt, Current Maturities | 9,579 | 0 |
Deferred Revenue, Current | 5,963 | 0 |
Accrued compensation | 3,789 | 3,952 |
Total current liabilities | 70,782 | 58,780 |
Long-term debt, less current portion | 19,313 | 28,802 |
Other long-term liabilities | 7,466 | 6,496 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock | 140 | 139 |
Additional paid-in capital | 433,458 | 428,534 |
Accumulated deficit | -431,179 | -410,247 |
Total stockholders’ equity | 2,419 | 18,426 |
Total liabilities and stockholders’ equity | $99,980 | $112,504 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Common Stock, Par or Stated Value Per Share | $0.00 | $0.00 |
Common Stock, Shares Authorized | 200,000 | 200,000 |
Common Stock, Shares, Issued | 139,539 | 100,809 |
Common Stock, Shares, Outstanding | 139,539 | 100,809 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations and Comprehensive Loss (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue: | ' | ' |
Net product revenue | $6,770 | $6,893 |
Contract revenue | 904 | 88 |
Total revenue | 7,674 | 6,981 |
Operating expenses: | ' | ' |
Cost of sales | 3,382 | 4,158 |
Royalty expense | 363 | 282 |
Research and development | 3,538 | 3,236 |
Selling, general and administrative | 27,651 | 14,482 |
Total operating expenses | 34,934 | 22,158 |
Loss from operations | -27,260 | -15,177 |
Other income (expense): | ' | ' |
Interest income | 6 | 8 |
Interest expense | -1,886 | -1,613 |
Fair Value, Option, Changes in Fair Value, Gain (Loss) | 8,269 | -4,258 |
Change in fair value of embedded derivatives | -14 | -81 |
Other income (expense) | -47 | 66 |
Total other income (expense) | 6,328 | -5,878 |
Net loss before income taxes | -20,932 | -21,055 |
Provision for income taxes | 0 | 0 |
Net loss | -20,932 | -21,055 |
Earnings Per Share, Basic, usd per share | ($0.15) | ($0.21) |
Earnings Per Share, Diluted, usd per share | ($0.20) | ($0.21) |
Weighted average common shares outstanding, basic | 139,309 | 100,809 |
Weighted average common shares outstanding, diluted | 145,323 | 100,809 |
Comprehensive loss | ($20,932) | ($21,055) |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Operating activities: | ' | ' |
Net loss for basic EPS | ($20,932) | ($21,055) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Stock-based compensation | 2,507 | 1,586 |
Depreciation and amortization | 406 | 479 |
Amortization of debt issuance costs and non-cash interest | 161 | 133 |
Change in fair value of warrant liabilities | -8,269 | 4,258 |
Change in fair value of embedded derivatives | 14 | 81 |
Changes in operating assets and liabilities: | ' | ' |
Trade accounts receivable | -5,015 | -112 |
Inventory, net | -4,918 | 223 |
Prepaid expenses and other current assets | 882 | -1,027 |
Other assets | -534 | 421 |
Accounts payable and accrued expenses | 6,911 | -61 |
Deferred revenue | 5,963 | 0 |
Net cash used in operating activities | -22,824 | -15,074 |
Investing activities: | ' | ' |
Purchases of property and equipment | -15 | -830 |
Net cash used in investing activities | -15 | -830 |
Financing activities: | ' | ' |
Proceeds from exercise of common stock options | 1,502 | 0 |
Net cash provided by financing activities | 1,502 | 0 |
Net (decrease) increase in cash and cash equivalents | -21,337 | -15,904 |
Cash and cash equivalents at beginning of period | 72,021 | 41,228 |
Cash and cash equivalents at end of period | 50,684 | 25,324 |
Noncash investing and financing activities: | ' | ' |
Change in purchases of property and equipment in accounts payable | ($310) | $0 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization and Basis of Presentation | ' |
Organization and Basis of Presentation | |
Zogenix, Inc.(the Company) is a pharmaceutical company committed to developing and commercializing therapies that address specific clinical needs for people living with pain-related conditions and central nervous system disorders who need innovative treatment alternatives to help them return to normal daily functioning. On October 25, 2013, the Company received marketing approval from the U.S. Food and Drug Administration (FDA) for Zohydro™ ER (hydrocodone bitartrate) extended-release capsules, the first extended-release oral formulation of hydrocodone without acetaminophen. Zohydro ER is an opioid agonist for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. The Company launched Zohydro ER in March 2014. | |
The Company’s first commercial product, Sumavel® DosePro® (sumatriptan injection) Needle-free Delivery System, was launched in January 2010. Sumavel DosePro offers fast-acting, easy-to-use, needle-free subcutaneous administration of sumatriptan for the acute treatment of migraine and cluster headache in a pre-filled, single-use delivery system. Sumavel DosePro is the first drug product approved by the FDA that allows for the needle-free, subcutaneous delivery of medication. | |
The Company was incorporated in the state of Delaware on May 11, 2006 as SJ2 Therapeutics, Inc. and commenced operations on August 25, 2006. On August 28, 2006, the Company changed its name to Zogenix, Inc. | |
The Company has incurred significant net losses since inception and has relied on its ability to fund its operations through equity financings, debt financings, revenues from the sale of Sumavel DosePro and proceeds from business collaborations. As the Company continues to incur losses, successful transition to profitability is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. This may not occur and, unless and until it does, the Company will continue to need to raise additional cash. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. | |
On April 23, 2014, the Company entered into an asset purchase agreement (Asset Purchase Agreement) with Endo Ventures Bermuda Limited (Endo Ventures Bermuda) and Endo Ventures Limited (Endo Ventures and, together with Endo Ventures Bermuda, the Buyers), pursuant to which, and on the terms and subject to the conditions thereof, among other things, the Company agreed to sell its Sumavel DosePro product line to the Buyers, including the registered trademarks, certain contracts, the New Drug Application (NDA) and other regulatory approvals, the books and records, marketing materials and product data relating to Sumavel DosePro. Under the terms of the Asset Purchase Agreement, the Buyers will pay the Company $85,000,000 in cash upon closing (Closing) of the transaction, $8,500,000 of which will be deposited into escrow to fund potential indemnification claims for a period of 12 months. In addition to the upfront cash payment, the Company is eligible to receive additional cash payments of up to $20,000,000 based on the achievement of pre-determined sales and manufacturing milestones. Furthermore, Endo Ventures will assume responsibility for the Company’s royalty obligation to Aradigm Corporation on sales of Sumavel DosePro and assume other liabilities relating to Sumavel DosePro after the Closing. The Company expects the Closing to occur during the second quarter of 2014, subject to the satisfaction of the closing conditions (see Note 7), but there can be no assurance that the Closing will occur on that time frame, or at all. | |
Management expects operating losses and negative cash flows to continue for at least the next year as the Company continues to incur costs related to the continued development of its product candidates, including an abuse deterrent formulation of Zohydro ER, and commercialization of its approved products. In addition to the Asset Purchase Agreement, management may pursue additional opportunities to raise further capital, if required, through public or private equity offerings, including through debt financings, receivables financings or through collaborations or partnerships with other companies to further support its planned operations. There can be no assurance that the Closing under the Asset Purchase Agreement will occur or that the Company will be able to obtain any source of financing on acceptable terms, or at all. If the Company is unsuccessful in raising additional required funds, it may be required to significantly delay, reduce the scope of or eliminate one or more of its development programs or its commercialization efforts, or cease operating as a going concern. The Company also may be required to relinquish, license or otherwise dispose of rights to product candidates or products that it would otherwise seek to develop or commercialize itself on terms that are less favorable than might otherwise be available. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||
Financial Statement Preparation and Use of Estimates | ||||||||||||||
The unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared by Zogenix, Inc. according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted. | ||||||||||||||
In the opinion of management, the accompanying unaudited consolidated financial statements for the periods presented reflect all adjustments, which are normal and recurring, necessary to fairly state the financial position, results of operations and cash flows. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the SEC on March 7, 2014. | ||||||||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. | ||||||||||||||
Principles of Consolidation | ||||||||||||||
The unaudited interim consolidated financial statements include the accounts of Zogenix, Inc. and its wholly owned subsidiary Zogenix Europe Limited, which was incorporated under the laws of England and Wales in June 2010. All intercompany transactions and investments have been eliminated in consolidation. Zogenix Europe Limited’s functional currency is the U.S. dollar, the reporting currency of its parent. | ||||||||||||||
Fair Value Measurements | ||||||||||||||
The carrying amount of financial instruments consisting of cash, trade accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, accrued compensation and current portion of long-term debt included in the Company’s consolidated financial statements are reasonable estimates of fair value due to their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, management believes the fair value of long-term debt approximates its carrying value. The accrued liability for the annual tail payment due to Astellas Pharma US, Inc. (Astellas) (see Note 4) for the termination of the Company’s co-promotion agreement was measured at fair value in December 2011 using a present value technique, which incorporated the Company’s own credit risk as measured by the most recent round of debt financing with Healthcare Royalty Partners (Healthcare Royalty) (formerly Cowen Healthcare Royalty Partners II, L.P.). | ||||||||||||||
Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: | ||||||||||||||
Level 1: | Observable inputs such as quoted prices in active markets; | |||||||||||||
Level 2: | Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |||||||||||||
Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |||||||||||||
The Company classifies its cash equivalents within Level 1 of the fair value hierarchy because it values its cash equivalents using quoted market prices. The Company classifies its common stock warrant liabilities and embedded derivative liabilities within Level 3 of the fair value hierarchy because they are valued using valuation models with significant unobservable inputs. Assets and liabilities measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013 are as follows (in thousands): | ||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||
Quoted | Significant | Significant | Total | |||||||||||
Prices in | Other | Unobservable | ||||||||||||
Active | Observable | Inputs | ||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||
for | (Level 2) | |||||||||||||
Identical | ||||||||||||||
Assets | ||||||||||||||
(Level 1) | ||||||||||||||
At March 31, 2014 | ||||||||||||||
Assets | ||||||||||||||
Cash equivalents(1) | $ | 46,725 | — | — | $ | 46,725 | ||||||||
Liabilities | ||||||||||||||
Common stock warrant liabilities(2) | $ | — | — | 22,156 | $ | 22,156 | ||||||||
Embedded derivative liabilities(3) | $ | — | — | 247 | $ | 247 | ||||||||
At December 31, 2013 | ||||||||||||||
Assets | ||||||||||||||
Cash equivalents(1) | $ | 69,120 | — | — | $ | 69,120 | ||||||||
Liabilities | ||||||||||||||
Common stock warrant liabilities(2) | $ | — | — | 31,341 | $ | 31,341 | ||||||||
Embedded derivative liabilities(3) | $ | — | — | 233 | $ | 233 | ||||||||
-1 | Cash equivalents are comprised of money market fund shares and are included as a component of cash and cash equivalents on the consolidated balance sheets. | |||||||||||||
-2 | Common stock warrant liabilities include liabilities associated with warrants issued in connection with the Company's July 2012 public offering of common stock and warrants (see Note 5) and warrants issued in connection with the Healthcare Royalty financing agreement (see Note 4), which are measured at fair value using the Black-Scholes option pricing valuation model. The assumptions used in the Black-Scholes option pricing valuation model for both common stock warrant liabilities were: (a) a risk-free interest rate based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the remaining contractual term of the warrants; (b) an assumed dividend yield of zero based on the Company’s expectation that it will not pay dividends in the foreseeable future; (c) an expected term based on the remaining contractual term of the warrants; and (d) given the Company’s lack of relevant historical data due to the Company’s limited historical experience, an expected volatility based upon the Company's historical volatility, supplemented with historical volatility of comparable companies whose share prices have been publicly available for a sufficient period of time. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities associated with the Healthcare Royalty financing agreement is the expected volatility. Significant increases in volatility would result in a higher fair value measurement. The following additional assumptions were used in the Black-Scholes option pricing valuation model to measure the fair value of the warrants sold in the July 2012 public offering: (a) management's projections regarding the probability of the occurrence of an extraordinary event and the timing of such event; and for the valuation scenario in which an extraordinary event occurs that is not an all cash transaction or an event whereby a public acquirer would assume the warrants, (b) an expected volatility rate using the Company's historical volatility, supplemented with historical volatility of comparable companies, through the projected date of public announcement of an extraordinary transaction, blended with a rate equal to the lesser of 40% and the 180-day volatility rate obtained from the HVT function on Bloomberg as of the trading day immediately following the public announcement of an extraordinary transaction. The significant unobservable inputs used in measuring the fair value of the common stock warrant liabilities associated with the July 2012 public offering are the expected volatility and the probability of the occurrence of an extraordinary event. Significant increases in volatility would result in a higher fair value measurement and significant increases in the probability of an extraordinary event occurring would result in a significantly lower fair value measurement. The decrease in the fair value of the common stock warrant liabilities as of March 31, 2014 was primarily driven by the decrease in the Company's stock price at March 31, 2014 as compared against December 31, 2013 measurement dates. | |||||||||||||
-3 | Embedded derivatives are measured at fair value using various discounted cash flow valuation models are included as a component of other long-term liabilities on the consolidated balance sheets. The assumptions used in the discounted cash flow valuation models include: (a) management's revenue projections and a revenue sensitivity analysis based on possible future outcomes; (b) probability weighted net cash flows based on the likelihood of Healthcare Royalty receiving interest payments over the term of the Healthcare Royalty financing agreement; (c) probability of bankruptcy; (d) weighted average cost of capital that included the addition of a company specific risk premium to account for uncertainty associated with the Company achieving future cash flows; (e) the probability of a change in control occurring during the term of the Healthcare Royalty financing agreement; and (f) the probability of an exercise of the embedded derivative instruments. The significant unobservable inputs used in measuring the fair value of the embedded derivatives are management’s revenue projections. Significant decreases in these significant inputs would result in a higher fair value measurement of the liability. | |||||||||||||
The following table provides a reconciliation of liabilities measured at fair value using significant observable inputs (Level 3) for the three months ended March 31, 2014 (in thousands): | ||||||||||||||
Common | Embedded | |||||||||||||
Stock | Derivative | |||||||||||||
Warrant | Liabilities | |||||||||||||
Liabilities | ||||||||||||||
Balance at December 31, 2013 | $ | 31,341 | $ | 233 | ||||||||||
Changes in fair value | (8,269 | ) | 14 | |||||||||||
Exercises | $ | (916 | ) | $ | — | |||||||||
Balance at March 31, 2014 | $ | 22,156 | $ | 247 | ||||||||||
Changes in fair value of the liabilities shown in the table above are recorded through change in fair value of warrant liabilities and change in fair value of embedded derivatives in other income (expense) in the consolidated statements of operations and comprehensive loss. | ||||||||||||||
Net Loss per Share | ||||||||||||||
Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period, reduced by weighted average shares subject to repurchase, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common share equivalents outstanding for the period determined using the treasury-stock method and as-if converted method, as applicable. For purposes of this calculation, stock options, restricted stock units and warrants are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. | ||||||||||||||
The following table presents the computation of basic and diluted net loss per share (in thousands, except per share amounts): | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Numerator | ||||||||||||||
Net loss for basic EPS | $ | (20,932 | ) | $ | (21,055 | ) | ||||||||
Effect of dilutive securities: | ||||||||||||||
Common stock warrants | $ | (8,269 | ) | $ | — | |||||||||
Non-employee stock options and restricted stock units | (132 | ) | — | |||||||||||
$ | (8,401 | ) | $ | — | ||||||||||
Net loss for diluted EPS | $ | (29,333 | ) | $ | (21,055 | ) | ||||||||
Denominator | ||||||||||||||
Weighted average common shares outstanding, basic | 139,309 | 100,809 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||
Common stock warrants | 5,870 | — | ||||||||||||
Non-employee stock options and restricted stock units | 144 | — | ||||||||||||
Dilutive potential shares of common stock | 6,014 | — | ||||||||||||
Weighted average common shares outstanding, diluted | 145,323 | 100,809 | ||||||||||||
Basic net loss per share | $ | (0.15 | ) | $ | (0.21 | ) | ||||||||
Diluted net loss per share | $ | (0.20 | ) | $ | (0.21 | ) | ||||||||
The following table presents potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive (in thousands, of common equivalent shares): | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Common stock options and restricted stock units | 11,246 | 123 | ||||||||||||
Common stock warrants | 508 | — | ||||||||||||
11,754 | 123 | |||||||||||||
Revenue Recognition | ||||||||||||||
The Company recognizes revenue from the sale of Sumavel DosePro, Zohydro ER and from license fees, milestones and service fees earned on collaborative arrangements. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred and title has passed, (iii) the price is fixed or determinable and (iv) collectability is reasonably assured. Revenue from sales transactions where the buyer has the right to return the product is recognized at the time of sale only if (a) the Company’s price to the buyer is substantially fixed or determinable at the date of sale, (b) the buyer has paid the Company, or the buyer is obligated to pay the Company and the obligation is not contingent on resale of the product, (c) the buyer’s obligation to the Company would not be changed in the event of theft or physical destruction or damage of the product, (d) the buyer acquiring the product for resale has economic substance apart from that provided by the Company, (e) the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (f) the amount of future returns can be reasonably estimated. The Company currently defers recognition of revenue on product shipments of Zohydro ER until the right of return no longer exists, as the Company currently cannot reliably estimate expected returns of the product at the time of shipment given the limited sales history of Zohydro ER. | ||||||||||||||
Product Revenue, Net | ||||||||||||||
The Company sells Sumavel DosePro and Zohydro ER in the United States to wholesale pharmaceutical distributors and retail pharmacies, or collectively the Company's customers, subject to rights of return within a period beginning six months prior to, and ending 12 months following, product expiration. The Company recognizes Sumavel DosePro product sales at the time title transfers to its customer, and reduces product sales for estimated future product returns and sales allowances in the same period the related revenue is recognized. | ||||||||||||||
Given the limited sales history of Zohydro ER, the Company cannot reliably estimate expected returns of the product at the time of shipment. Accordingly, the Company defers recognition of revenue on Zohydro ER product shipments until the right of return no longer exists, which occurs at the earlier of the time Zohydro ER is dispensed through patient prescriptions or expiration of the right of return. The Company estimates Zohydro ER patient prescriptions dispensed using an analysis of third-party syndicated data. Zohydro ER was launched in March 2014 and, accordingly, the Company does not have significant history estimating the number of patient prescriptions dispensed. If the Company underestimates or overestimates patient prescriptions dispensed for a given period, adjustments to revenue may be necessary in future periods. The deferred revenue balance does not have a direct correlation with future revenue recognition as the Company will record sales deductions at the time the prescription unit is dispensed. | ||||||||||||||
The Company will continue to recognize Zohydro ER revenue upon the earlier to occur of prescription units dispensed or expiration of the right of return until it can reliably estimate product returns, at which time the Company will record a one-time increase in revenue related to the recognition of revenue previously deferred, net of estimated future product returns and sales allowances. In addition, the costs of Zohydro ER associated with the deferred revenue are recorded as deferred costs, which are included in inventory, until such time the related deferred revenue is recognized. | ||||||||||||||
Product sales allowances for Sumavel DosePro and Zohydro ER include wholesaler and retail pharmacy distribution fees, prompt pay discounts, chargebacks, rebates and patient discount programs, and are based on amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of the Company's agreements with its customers and third-party payors and the levels of inventory within the distribution and retail channels that may result in future rebates or discounts taken. In certain cases, such as patient support programs, the Company recognizes the cost of patient discounts as a reduction of revenue based on estimated utilization. If actual future results vary, the Company may need to adjust these estimates, which could have an effect on product revenue in the period of adjustment. The Company records product sales deductions in the statement of operations at the time product revenue is recognized. | ||||||||||||||
Segment Reporting | ||||||||||||||
Management has determined that the Company operates in one business segment, which is the development and commercialization of pharmaceutical products for people living with pain-related conditions and central nervous system disorders. | ||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
In April 2014, the Financial Accounting Standards Board issued an accounting update that raises the threshold for disposals to qualify as discontinued operations and allows companies to have significant continuing involvement with and continuing cash flows from or to the discontinued operations. This accounting update also requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. This guidance will be effective for fiscal years beginning after December 15, 2014, with early adoption permitted. The Company does not expect that the adoption of the guidance will have a material impact on the Company's financial statements. |
Inventory_net
Inventory, net | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Disclosure Inventory Net [Abstract] | ' | |||||||
Inventory, net | ' | |||||||
Inventory (in thousands) | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Raw materials | $ | 2,980 | $ | 2,770 | ||||
Work in process | 5,385 | 6,054 | ||||||
Finished goods | 5,659 | 1,112 | ||||||
Deferred cost of sales | 830 | — | ||||||
$ | 14,854 | $ | 9,936 | |||||
Deferred cost of sales consists of the costs of Zohydro ER associated with the deferred revenue, which are included in inventory, until such time the related deferred revenue is recognized. |
Collaboration_and_Financing_Ag
Collaboration and Financing Agreements | 3 Months Ended | |
Mar. 31, 2014 | ||
Collaborative and Financing Agreements [Abstract] | ' | |
Collaboration and Financing Agreements | ' | |
Collaboration and Financing Agreements | ||
Mallinckrodt LLC Co-Promotion Agreement | ||
On June 6, 2012, the Company and Mallinckrodt LLC (Mallinckrodt) entered into a co-promotion agreement (the Co-Promotion Agreement). Under the terms of the Co-Promotion Agreement, Mallinckrodt was granted a co-exclusive right (with the Company) to promote Sumavel DosePro to a mutually agreed prescriber audience in the United States. Mallinckrodt’s sales team began selling Sumavel DosePro to its customer base of prescribers in August 2012. Mallinckrodt committed to a minimum number of sales representatives for the initial term of the agreement, which originally ran through June 30, 2014. | ||
In partial consideration of Mallinckrodt’s sales efforts, the Company paid Mallinckrodt a service fee on a quarterly basis through January 31, 2014 that represented a specified fixed percentage of net sales of prescriptions generated from Mallinckrodt’s prescriber audience over a baseline amount of net sales to the same prescriber audience. For the three months ended March 31, 2014 and 2013, the Company incurred $100,000 and $143,000, respectively, in service fee expenses under the Co-Promotion Agreement, excluding the tail-payment expense discussed below. | ||
In January 2014, the Company entered into an amendment to the Co-Promotion Agreement, whereby the Co-Promotion Agreement terminated on January 31, 2014. The Company assumed full responsibility for the commercialization of Sumavel DosePro in February 2014. In connection with the termination of the Co-Promotion Agreement, the Company is required to make a one-time tail payment to Mallinckrodt, calculated as a fixed percentage of net sales from the Mallinckrodt targeted prescriber audience during the 12 month period ending on January 31, 2015. A liability of $559,000 for this estimated tail-payment was recorded as service fee expense in selling, general and administrative expenses in the statement of operations during the three months ended March 31, 2014. | ||
Valeant Pharmaceuticals North America LLC Co-Promotion Agreement | ||
On June 27, 2013, the Company entered into a co-promotion agreement (the Valeant Agreement) with Valeant Pharmaceuticals North America LLC (Valeant). Under the terms of the Valeant Agreement, the Company was granted the exclusive right (with Valeant or any of its affiliates) to promote Migranal® (dihydroergotamine mesylate) Nasal Spray (Migranal) to a prescriber audience of physicians and other health care practitioners in the United States. The Company's sales team began promoting Migranal to prescribers in August 2013. The term of the Valeant Agreement will run through December 31, 2015 (unless otherwise terminated), and can be extended by mutual agreement of the parties in additional twelve month increments. Valeant remains responsible for the manufacture, supply and distribution of Migranal for sale in the United States. In addition, Valeant supplies the Company with a specified amount of product samples every six months, and the Company will reimburse Valeant for the cost of additional samples and any promotional materials ordered by the Company. The cost of any additional samples and any promotional materials ordered by the Company will be recognized as selling, general and administrative expenses. | ||
In partial consideration of the Company's sales efforts, Valeant pays the Company a co-promotion fee on a quarterly basis that represents specified percentages of net sales generated by the Company over defined baseline amounts of net sales (Baseline Forecast or Adjusted Baseline Forecast). In addition, upon completion of the co-promotion term, and only if the Valeant Agreement is not terminated by Valeant due to a bankruptcy event (as defined in the Valeant Agreement) or the inability of the Company to comply with its material obligations under the Valeant Agreement, Valeant will be required to pay the Company an additional tail payment calculated as a fixed percentage of the Company's net sales over the Baseline Forecast (or Adjusted Baseline Forecast) during the first full six months following the last day of the term. | ||
The Company may terminate the Valeant Agreement in the event of a Valeant supply failure (as defined in the Valeant Agreement) or material product recall, or if the net sales price in a fiscal quarter is less than a specified percentage of the net sales price in the immediately preceding quarter, if the reduction in such net sales price would have a material adverse effect on the Company's financial return as a result of performance of its obligation under the Valeant Agreement. | ||
Either party may terminate the Valeant Agreement with six months' notice. Either party may terminate the Valeant Agreement with 30 days' prior notice if the Company's net sales within a fiscal quarter fall below the Baseline Forecast (or Adjusted Baseline Forecast) for one or more fiscal quarters, or following the commercial introduction of a generic product to Migranal promoted or otherwise commercialized by a third party in the United States. In addition, either party may terminate the Valeant Agreement in the event of a change of control of itself or the other party (upon 90 days' prior written notice), upon any action taken or objection raised by governmental authority that prevents either party from performing its obligations under the Valeant Agreement, upon the filing of an action alleging patent infringement, in connection with the material breach of the other party's material obligations, or if a bankruptcy event of the other party occurs. | ||
The Company recognizes co-promotion fees received under the Valeant Agreement as service revenue in the period in which its promotional activities generate net sales over the Baseline Forecast or Adjusted Baseline Forecast. For the three months ended March 31, 2014, the Company recognized service revenue of $866,000 under the Valeant Agreement. | ||
Astellas Pharma US, Inc. Co-Promotion Agreement | ||
In July 2009, the Company entered into the co-promotion agreement with Astellas (Astellas Co-Promotion Agreement). Under the terms of the agreement, the Company granted Astellas the co-exclusive right (with the Company) to market and sell Sumavel DosePro in the United States until June 30, 2013. Under the Astellas Co-Promotion Agreement, both Astellas and the Company were obligated to collaborate and fund the marketing of Sumavel DosePro and to provide annual minimum levels of sales effort directed at Sumavel DosePro during the term. In December 2011, the Company entered into an amendment to the Astellas Co-Promotion Agreement, or the amended Astellas Co-Promotion Agreement, whereby the agreement terminated on March 31, 2012. | ||
Following completion of the co-promotion term in March 2012, the Company was required to pay Astellas one tail payment in July 2013 and is required to pay Astellas another tail payment in July 2014, calculated as decreasing fixed percentages (ranging from mid-twenties down to a mid-teen percentage) of net sales in the Astellas Segment during the 12 months ended March 31, 2012. The fair value of the tail payments is being accreted through interest expense through the dates of payment in July 2013 and July 2014. The first tail payment of $2,032,000 was made in July 2013. As of March 31, 2014, the tail payment liability was $1,174,000. The Company recognized $43,000 and $141,000 of related interest expense during the three months ended March 31, 2014 and 2013, respectively. | ||
Healthcare Royalty Financing Agreement | ||
On July 18, 2011, the Company closed the royalty financing agreement (the Financing Agreement) with Healthcare Royalty. Under the terms of the Financing Agreement, the Company borrowed $30,000,000 from Healthcare Royalty (the Borrowed Amount) and the Company agreed to repay such Borrowed Amount together with a return to Healthcare Royalty, as described below, out of the Company’s direct product sales, co-promotion revenues and out-license revenues (collectively, Revenue Interest) that the Company may record or receive as a result of worldwide commercialization of the Company’s products including Sumavel DosePro, Zohydro ER and other future products. | ||
In addition, upon the closing of and in connection with the Financing Agreement, the Company issued and sold to Healthcare Royalty $1,500,000 of the Company’s common stock, or 388,601 shares, at a price of $3.86 per share. The Company also issued to Healthcare Royalty a warrant exercisable for up to 225,000 shares of the Company’s common stock. The warrant is exercisable at $9.00 per share and has a term of 10 years. As the warrant contains covenants where compliance with such covenants may be outside the control of the Company, the warrant was recorded as a current liability and marked to market at each reporting date using the Black-Scholes option pricing valuation model (see Note 2). | ||
Under the Financing Agreement, the Company is obligated to pay to Healthcare Royalty: | ||
• | 5% to 5.75% of the first $75,000,000 of Revenue Interest recorded (in the case of net product sales) or received (in the case of co-promotion revenues and license fees) by the Company in a calendar year (initially 5% and then 5.75% after the co-promotion agreement with Astellas terminated on March 31, 2012); | |
• | 2.5% of the next $75,000,000 of Revenue Interest recorded (in the case of net product sales) or received (in the case of co-promotion revenues and license fees) by the Company in a calendar year; and | |
• | 0.5% of Revenue Interest over and above $150,000,000 recorded (in the case of net product sales) or received (in the case of co-promotion revenues and license fees) by the Company in a calendar year. | |
Net sales of Sumavel DosePro outside the United States are only included in the Revenue Interest if such net sales exceed $10,000,000. Once the aggregate payments, including the fixed payments described below, made by the Company to Healthcare Royalty equal $75,000,000, the percentage of Revenue Interest owed to Healthcare Royalty is reduced to 0.5% for the remainder of the term of the Financing Agreement, with only Sumavel DosePro and Zohydro ER subject to the Revenue Interest payments thereafter. The Company is also obligated to make three fixed payments of $10,000,000 on (or before at the option of the Company) each of January 31, 2015, January 31, 2016 and January 31, 2017. Unless terminated as discussed below, the Financing Agreement terminates on March 31, 2018. | ||
As security for the payment of the Company's obligations under the Financing Agreement, the Company also entered into a security agreement whereby the Company granted to Healthcare Royalty a security interest in all assets of the Company, including intellectual property and other rights of the Company to the extent necessary or used to commercialize the Company products. Healthcare Royalty entered into an intercreditor agreement under which its security interest was junior to the security interest of the lenders under the Company’s $25.0 million loan and security agreement with Oxford Finance LLC and Silicon Valley Bank. The intercreditor agreement terminated on July 30, 2012 when the Company terminated its $25.0 million loan and security agreement. Healthcare Royalty’s security interest will be extinguished at the end of the term or once the aggregate payments made by the Company to Healthcare Royalty equal $75,000,000, whichever is sooner. The Company has agreed to specified positive and negative non-financial covenants in connection with the Financing Agreement. | ||
The Company has the option to terminate the Financing Agreement at the Company’s election in connection with a change of control of the Company, upon the payment of a base amount of $52,500,000, or, if higher, an amount that generates a 19% internal rate of return on the Borrowed Amount as of the date of prepayment, in each case reduced by the Revenue Interest and principal payments received by Healthcare Royalty up to the date of prepayment. | ||
Healthcare Royalty has the option to terminate the Financing Agreement at its election in connection with a change of control of the Company (which includes the sale, transfer, assignment or licensing of the Company’s rights in the United States to either Sumavel DosePro or Zohydro ER), or an event of default (which includes the occurrence of a bankruptcy event or other material adverse change in the Company’s business), as defined in the Financing Agreement. Upon such a termination by Healthcare Royalty, the Company is obligated to make a payment of a base amount of $45,000,000, or, if higher, an amount that generates a 17% internal rate of return on the Borrowed Amount as of the date of prepayment, in each case reduced by the Revenue Interest and principal payments received by Healthcare Royalty up to the date of prepayment. | ||
The rights of the Company and Healthcare Royalty to terminate the Financing Agreement early, as well as the change in the Revenue Interest rate from 5% to 5.75% in connection with the early termination of the Astellas Co-Promotion Agreement, meet the definition of an embedded derivative. As a result, the Company carved out these embedded derivatives from the Financing Agreement and determined the fair value of each derivative using various discounted cash flow valuation models taking into account the probability of these events occurring and various scenarios surrounding the potential Revenue Interest payments that would be made if these events occurred (see Note 2). The aggregate fair value of the embedded derivatives as of March 31, 2014 and December 31, 2013 was $247,000 and $233,000, respectively, and is included in other long-term liabilities. | ||
The Company received aggregate net proceeds of $29,485,000 from the Financing Agreement (including the purchase of common stock). The discounts, which are being amortized using the effective interest method over the term of the arrangement within interest expense, include the fair value of the common stock warrants issued to Healthcare Royalty of $790,000 upon the closing of the Financing Agreement, fees payable to Healthcare Royalty in connection with the execution of the arrangement of $476,000 and the fair value of embedded derivatives of $605,000 upon the closing of the Financing Agreement. The Company has recognized other income (expense) in relation to the change in the fair value of the Healthcare Royalty common stock warrant of $122,000 and $(76,000) for the three months ended March 31, 2014 and 2013, respectively, in the statement of operations and comprehensive loss. The Company has recognized other expense in relation to the change in the fair value of the embedded derivatives of $14,000 and $81,000 for the three months ended March 31, 2014 and 2013, respectively, in the statement of operations and comprehensive loss. |
Common_Stock_Warrants
Common Stock Warrants | 3 Months Ended |
Mar. 31, 2014 | |
Disclosure Common Stock Warrants Additional Informational [Abstract] | ' |
Common Stock Warrants | ' |
Common Stock Warrants | |
In July 2012, in connection with a public offering of common stock and warrants, the Company sold warrants to purchase 15,784,200 shares of common stock (including over-allotment purchase). The warrants are exercisable at an exercise price of $2.50 per share and will expire on July 27, 2017, which is five years from the date of issuance. As the warrants contain a cash settlement feature upon the occurrence of certain events that may be outside of the Company’s control, the warrants are recorded as a current liability and are marked to market at each reporting period (see Note 2). During the three months ended March 31, 2014 and the year ended December 31, 2013, warrants to purchase 465,250 and 103,500 shares of common stock, respectively, were exercised. The fair value of the warrants outstanding was approximately $21,785,000 and $30,849,000 as of March 31, 2014 and December 31, 2013, respectively. | |
In July 2011, upon the closing of and in connection with the Financing Agreement (see Note 4), the Company issued to Healthcare Royalty a warrant exercisable into 225,000 shares of common stock. The warrant is exercisable at $9.00 per share of common stock and has a term of ten years. As the warrant contains covenants where compliance with such covenants may be outside of the Company’s control, the warrant was recorded as a current liability and is marked to market at each reporting date (see Note 2). The fair value of the warrant was approximately $371,000 and $492,000 as of March 31, 2014 and December 31, 2013, respectively. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||
Stock-Based Compensation | ' | |||||||
Stock-Based Compensation | ||||||||
The Company uses the Black-Scholes option-pricing model for determining the estimated fair value of stock-based compensation for stock-based awards to employees and the board of directors. The assumptions used in the Black-Scholes option-pricing model for the three months ended March 31, 2014 and 2013 are as follows: | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Risk free interest rate | 2.00% | 0.8% to 1.1% | ||||||
Expected term | 6.0 to 6.1 years | 5.0 to 6.1 years | ||||||
Expected volatility | 84.90% | 86.8% to 87.9% | ||||||
Expected dividend yield | — | % | — | % | ||||
The risk-free interest rate assumption was based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The weighted average expected term of options was calculated using the simplified method as prescribed by accounting guidance for stock-based compensation. This decision was based on the lack of relevant historical data due to the Company’s limited historical experience. In addition, due to the Company’s limited historical data, the estimated volatility was calculated based upon the Company's historical volatility, supplemented with historical volatility of comparable companies whose share prices are publicly available for a sufficient period of time. | ||||||||
The Company recognized stock-based compensation expense as follows (in thousands): | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Cost of sales | $ | 127 | $ | 45 | ||||
Research and development | 357 | 216 | ||||||
Selling, general and administrative | 2,023 | 1,325 | ||||||
Total | $ | 2,507 | $ | 1,586 | ||||
As of March 31, 2014, there was approximately $20,285,000 of total unrecognized compensation costs related to outstanding employee and board of director stock options and restricted stock units, which is expected to be recognized over a weighted average period of 2.9 years. | ||||||||
As of March 31, 2014, there were 164,000 unvested stock options and 25,000 restricted stock units outstanding to consultants, with approximately $404,000 of related unrecognized compensation expense based on a March 31, 2014 measurement date. These unvested stock options outstanding to consultants are expected to vest over a weighted average period of 2.5 years, and the restricted stock units outstanding to consultants are expected to vest over approximately 0.2 years. In accordance with accounting guidance for stock-based compensation, the Company re-measures the fair value of stock option grants to non-employees at each reporting date and recognizes the related income or expense during their vesting period. The gain recognized from the valuation of stock options and restricted stock units to consultants was $174,000 for the three months ended March 31, 2014 and was immaterial for the three months ended March 31, 2013. Stock option expense for awards issued to consultants is included in the consolidated statement of operations and comprehensive loss within selling, general and administrative expense. |
Subsequent_Event_Notes
Subsequent Event (Notes) | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Event | ' |
Subsequent Event | |
On April 23, 2014, the Company entered into the Asset Purchase Agreement with the Buyers, pursuant to which, and on the terms and subject to the conditions thereof, among other things, the Company agreed to sell its Sumavel DosePro product line to the Buyers, including the registered trademarks, certain contracts, the New Drug Application and other regulatory approvals, the books and records, marketing materials and product data relating to Sumavel DosePro. | |
Under the terms of the Asset Purchase Agreement, the Buyers will pay the Company $85,000,000 in cash upon Closing of the transaction, $8,500,000 of which will be deposited into escrow to fund potential indemnification claims for a period of 12 months. In addition to the upfront cash payment, the Company is eligible to receive additional cash payments of up to $20,000,000 based on the achievement of pre-determined sales and manufacturing milestones. Furthermore, Endo Ventures will assume responsibility for the Company’s royalty obligation to Aradigm on sales of Sumavel DosePro and assume other liabilities relating to Sumavel DosePro after the Closing. | |
The Asset Purchase Agreement contains customary representations, warranties and covenants, including covenants obligating the Company to continue to conduct the Sumavel DosePro business in the ordinary course and to cooperate in seeking regulatory approvals. Upon the Closing, the Company and Endo Ventures Bermuda will enter into a license agreement, pursuant to which the Company will grant Endo Ventures an exclusive, worldwide, royalty-free license to make and have made (subject to the limitations in the license agreement), use and research, develop and commercialize Sumavel DosePro. Also upon the Closing, Endo Ventures will purchase from the Company the finished goods inventory of Sumavel DosePro. The Company and Endo Ventures also will enter into a supply agreement, pursuant to which the Company will continue to manufacture Sumavel DosePro, and Endo Ventures will support Company’ s Sumavel DosePro manufacturing operations with a working capital advance of $7,000,000. | |
The obligation of the Buyers to purchase the Sumavel DosePro product line is subject to the satisfaction or waiver of a number of conditions set forth in the Asset Purchase Agreement, including (i) the accuracy of the representations and warranties and compliance with covenants contained in the Asset Purchase Agreement, (ii) the absence of any permanent injunction, law, regulation, decree or order by any government, court or governmental entity that would make illegal or otherwise prohibit the consummation of the transactions under the Asset Purchase Agreement, (iii) the absence of any actions or proceedings questioning the validity or legality of the transactions under the Asset Purchase Agreement, (iv) the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of any required third party consents, (v) there not having been a material adverse effect with respect to the Company’s Sumavel DosePro business, (vi) the delivery to the Buyers of a license agreement, supply agreement, escrow agreement and other transaction documents, and (vii) other customary conditions. The Company expects the Closing to occur during the second quarter of 2014, subject to the satisfaction of the foregoing closing conditions. | |
In connection with the Closing, the Company is required to extinguish all encumbrances on the assets to be sold to the Buyers, including those previously granted to Healthcare Royalty pursuant to the Financing Agreement. The Company expects to eliminate its existing debt obligation to Healthcare Royalty by paying approximately $40,000,000 to Healthcare Royalty, consistent with the terms of the Financing Agreement. | |
Either party may terminate the Asset Purchase Agreement if the Closing has not occurred by September 8, 2014, provided that if the party seeking to terminate the Asset Purchase Agreement is then in material breach of its obligations the outside date will be extended until ten business days following the date upon which such breach is cured. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |
Mar. 31, 2014 | ||
Accounting Policies [Abstract] | ' | |
Financial Statement Preparation and Use of Estimates | ' | |
Financial Statement Preparation and Use of Estimates | ||
The unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared by Zogenix, Inc. according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted. | ||
In the opinion of management, the accompanying unaudited consolidated financial statements for the periods presented reflect all adjustments, which are normal and recurring, necessary to fairly state the financial position, results of operations and cash flows. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the SEC on March 7, 2014. | ||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. | ||
Principles of Consolidation | ' | |
Principles of Consolidation | ||
The unaudited interim consolidated financial statements include the accounts of Zogenix, Inc. and its wholly owned subsidiary Zogenix Europe Limited, which was incorporated under the laws of England and Wales in June 2010. All intercompany transactions and investments have been eliminated in consolidation. Zogenix Europe Limited’s functional currency is the U.S. dollar, the reporting currency of its parent. | ||
Fair Value Measurements | ' | |
Fair Value Measurements | ||
The carrying amount of financial instruments consisting of cash, trade accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, accrued compensation and current portion of long-term debt included in the Company’s consolidated financial statements are reasonable estimates of fair value due to their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, management believes the fair value of long-term debt approximates its carrying value. The accrued liability for the annual tail payment due to Astellas Pharma US, Inc. (Astellas) (see Note 4) for the termination of the Company’s co-promotion agreement was measured at fair value in December 2011 using a present value technique, which incorporated the Company’s own credit risk as measured by the most recent round of debt financing with Healthcare Royalty Partners (Healthcare Royalty) (formerly Cowen Healthcare Royalty Partners II, L.P.). | ||
Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: | ||
Level 1: | Observable inputs such as quoted prices in active markets; | |
Level 2: | Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |
Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |
The Company classifies its cash equivalents within Level 1 of the fair value hierarchy because it values its cash equivalents using quoted market prices. The Company classifies its common stock warrant liabilities and embedded derivative liabilities within Level 3 of the fair value hierarchy because they are valued using valuation models with significant unobservable inputs. | ||
Changes in fair value of the liabilities shown in the table above are recorded through change in fair value of warrant liabilities and change in fair value of embedded derivatives in other income (expense) in the consolidated statements of operations and comprehensive loss. | ||
Net Loss per Share | ' | |
Net Loss per Share | ||
Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period, reduced by weighted average shares subject to repurchase, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common share equivalents outstanding for the period determined using the treasury-stock method and as-if converted method, as applicable. For purposes of this calculation, stock options, restricted stock units and warrants are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. | ||
Revenue Recognition | ' | |
Revenue Recognition | ||
The Company recognizes revenue from the sale of Sumavel DosePro, Zohydro ER and from license fees, milestones and service fees earned on collaborative arrangements. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred and title has passed, (iii) the price is fixed or determinable and (iv) collectability is reasonably assured. Revenue from sales transactions where the buyer has the right to return the product is recognized at the time of sale only if (a) the Company’s price to the buyer is substantially fixed or determinable at the date of sale, (b) the buyer has paid the Company, or the buyer is obligated to pay the Company and the obligation is not contingent on resale of the product, (c) the buyer’s obligation to the Company would not be changed in the event of theft or physical destruction or damage of the product, (d) the buyer acquiring the product for resale has economic substance apart from that provided by the Company, (e) the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (f) the amount of future returns can be reasonably estimated. The Company currently defers recognition of revenue on product shipments of Zohydro ER until the right of return no longer exists, as the Company currently cannot reliably estimate expected returns of the product at the time of shipment given the limited sales history of Zohydro ER. | ||
Product Revenue, Net | ||
The Company sells Sumavel DosePro and Zohydro ER in the United States to wholesale pharmaceutical distributors and retail pharmacies, or collectively the Company's customers, subject to rights of return within a period beginning six months prior to, and ending 12 months following, product expiration. The Company recognizes Sumavel DosePro product sales at the time title transfers to its customer, and reduces product sales for estimated future product returns and sales allowances in the same period the related revenue is recognized. | ||
Given the limited sales history of Zohydro ER, the Company cannot reliably estimate expected returns of the product at the time of shipment. Accordingly, the Company defers recognition of revenue on Zohydro ER product shipments until the right of return no longer exists, which occurs at the earlier of the time Zohydro ER is dispensed through patient prescriptions or expiration of the right of return. The Company estimates Zohydro ER patient prescriptions dispensed using an analysis of third-party syndicated data. Zohydro ER was launched in March 2014 and, accordingly, the Company does not have significant history estimating the number of patient prescriptions dispensed. If the Company underestimates or overestimates patient prescriptions dispensed for a given period, adjustments to revenue may be necessary in future periods. The deferred revenue balance does not have a direct correlation with future revenue recognition as the Company will record sales deductions at the time the prescription unit is dispensed. | ||
The Company will continue to recognize Zohydro ER revenue upon the earlier to occur of prescription units dispensed or expiration of the right of return until it can reliably estimate product returns, at which time the Company will record a one-time increase in revenue related to the recognition of revenue previously deferred, net of estimated future product returns and sales allowances. In addition, the costs of Zohydro ER associated with the deferred revenue are recorded as deferred costs, which are included in inventory, until such time the related deferred revenue is recognized. | ||
Product sales allowances for Sumavel DosePro and Zohydro ER include wholesaler and retail pharmacy distribution fees, prompt pay discounts, chargebacks, rebates and patient discount programs, and are based on amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of the Company's agreements with its customers and third-party payors and the levels of inventory within the distribution and retail channels that may result in future rebates or discounts taken. In certain cases, such as patient support programs, the Company recognizes the cost of patient discounts as a reduction of revenue based on estimated utilization. If actual future results vary, the Company may need to adjust these estimates, which could have an effect on product revenue in the period of adjustment. The Company records product sales deductions in the statement of operations at the time product revenue is recognized. | ||
Segment Reporting | ' | |
Segment Reporting | ||
Management has determined that the Company operates in one business segment, which is the development and commercialization of pharmaceutical products for people living with pain-related conditions and central nervous system disorders. | ||
Recent Accounting Pronouncements | ' | |
Recent Accounting Pronouncements | ||
In April 2014, the Financial Accounting Standards Board issued an accounting update that raises the threshold for disposals to qualify as discontinued operations and allows companies to have significant continuing involvement with and continuing cash flows from or to the discontinued operations. This accounting update also requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. This guidance will be effective for fiscal years beginning after December 15, 2014, with early adoption permitted. The Company does not expect that the adoption of the guidance will have a material impact on the Company's financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | |||||||||||||
Assets and liabilities measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013 are as follows (in thousands): | ||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||
Quoted | Significant | Significant | Total | |||||||||||
Prices in | Other | Unobservable | ||||||||||||
Active | Observable | Inputs | ||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||
for | (Level 2) | |||||||||||||
Identical | ||||||||||||||
Assets | ||||||||||||||
(Level 1) | ||||||||||||||
At March 31, 2014 | ||||||||||||||
Assets | ||||||||||||||
Cash equivalents(1) | $ | 46,725 | — | — | $ | 46,725 | ||||||||
Liabilities | ||||||||||||||
Common stock warrant liabilities(2) | $ | — | — | 22,156 | $ | 22,156 | ||||||||
Embedded derivative liabilities(3) | $ | — | — | 247 | $ | 247 | ||||||||
At December 31, 2013 | ||||||||||||||
Assets | ||||||||||||||
Cash equivalents(1) | $ | 69,120 | — | — | $ | 69,120 | ||||||||
Liabilities | ||||||||||||||
Common stock warrant liabilities(2) | $ | — | — | 31,341 | $ | 31,341 | ||||||||
Embedded derivative liabilities(3) | $ | — | — | 233 | $ | 233 | ||||||||
-1 | Cash equivalents are comprised of money market fund shares and are included as a component of cash and cash equivalents on the consolidated balance sheets. | |||||||||||||
-2 | Common stock warrant liabilities include liabilities associated with warrants issued in connection with the Company's July 2012 public offering of common stock and warrants (see Note 5) and warrants issued in connection with the Healthcare Royalty financing agreement (see Note 4), which are measured at fair value using the Black-Scholes option pricing valuation model. The assumptions used in the Black-Scholes option pricing valuation model for both common stock warrant liabilities were: (a) a risk-free interest rate based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the remaining contractual term of the warrants; (b) an assumed dividend yield of zero based on the Company’s expectation that it will not pay dividends in the foreseeable future; (c) an expected term based on the remaining contractual term of the warrants; and (d) given the Company’s lack of relevant historical data due to the Company’s limited historical experience, an expected volatility based upon the Company's historical volatility, supplemented with historical volatility of comparable companies whose share prices have been publicly available for a sufficient period of time. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities associated with the Healthcare Royalty financing agreement is the expected volatility. Significant increases in volatility would result in a higher fair value measurement. The following additional assumptions were used in the Black-Scholes option pricing valuation model to measure the fair value of the warrants sold in the July 2012 public offering: (a) management's projections regarding the probability of the occurrence of an extraordinary event and the timing of such event; and for the valuation scenario in which an extraordinary event occurs that is not an all cash transaction or an event whereby a public acquirer would assume the warrants, (b) an expected volatility rate using the Company's historical volatility, supplemented with historical volatility of comparable companies, through the projected date of public announcement of an extraordinary transaction, blended with a rate equal to the lesser of 40% and the 180-day volatility rate obtained from the HVT function on Bloomberg as of the trading day immediately following the public announcement of an extraordinary transaction. The significant unobservable inputs used in measuring the fair value of the common stock warrant liabilities associated with the July 2012 public offering are the expected volatility and the probability of the occurrence of an extraordinary event. Significant increases in volatility would result in a higher fair value measurement and significant increases in the probability of an extraordinary event occurring would result in a significantly lower fair value measurement. The decrease in the fair value of the common stock warrant liabilities as of March 31, 2014 was primarily driven by the decrease in the Company's stock price at March 31, 2014 as compared against December 31, 2013 measurement dates. | |||||||||||||
-3 | Embedded derivatives are measured at fair value using various discounted cash flow valuation models are included as a component of other long-term liabilities on the consolidated balance sheets. The assumptions used in the discounted cash flow valuation models include: (a) management's revenue projections and a revenue sensitivity analysis based on possible future outcomes; (b) probability weighted net cash flows based on the likelihood of Healthcare Royalty receiving interest payments over the term of the Healthcare Royalty financing agreement; (c) probability of bankruptcy; (d) weighted average cost of capital that included the addition of a company specific risk premium to account for uncertainty associated with the Company achieving future cash flows; (e) the probability of a change in control occurring during the term of the Healthcare Royalty financing agreement; and (f) the probability of an exercise of the embedded derivative instruments. The significant unobservable inputs used in measuring the fair value of the embedded derivatives are management’s revenue projections. Significant decreases in these significant inputs would result in a higher fair value measurement of the liability. | |||||||||||||
Reconciliation of Liabilities Measured at Fair Value Using Significant Observable Inputs (Level 3) | ' | |||||||||||||
The following table provides a reconciliation of liabilities measured at fair value using significant observable inputs (Level 3) for the three months ended March 31, 2014 (in thousands): | ||||||||||||||
Common | Embedded | |||||||||||||
Stock | Derivative | |||||||||||||
Warrant | Liabilities | |||||||||||||
Liabilities | ||||||||||||||
Balance at December 31, 2013 | $ | 31,341 | $ | 233 | ||||||||||
Changes in fair value | (8,269 | ) | 14 | |||||||||||
Exercises | $ | (916 | ) | $ | — | |||||||||
Balance at March 31, 2014 | $ | 22,156 | $ | 247 | ||||||||||
Basic and Diluted Net Loss Per Share | ' | |||||||||||||
The following table presents the computation of basic and diluted net loss per share (in thousands, except per share amounts): | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Numerator | ||||||||||||||
Net loss for basic EPS | $ | (20,932 | ) | $ | (21,055 | ) | ||||||||
Effect of dilutive securities: | ||||||||||||||
Common stock warrants | $ | (8,269 | ) | $ | — | |||||||||
Non-employee stock options and restricted stock units | (132 | ) | — | |||||||||||
$ | (8,401 | ) | $ | — | ||||||||||
Net loss for diluted EPS | $ | (29,333 | ) | $ | (21,055 | ) | ||||||||
Denominator | ||||||||||||||
Weighted average common shares outstanding, basic | 139,309 | 100,809 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||
Common stock warrants | 5,870 | — | ||||||||||||
Non-employee stock options and restricted stock units | 144 | — | ||||||||||||
Dilutive potential shares of common stock | 6,014 | — | ||||||||||||
Weighted average common shares outstanding, diluted | 145,323 | 100,809 | ||||||||||||
Basic net loss per share | $ | (0.15 | ) | $ | (0.21 | ) | ||||||||
Diluted net loss per share | $ | (0.20 | ) | $ | (0.21 | ) | ||||||||
Schedule of Calculation of Diluted Net Loss Per Share | ' | |||||||||||||
The following table presents potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive (in thousands, of common equivalent shares): | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Common stock options and restricted stock units | 11,246 | 123 | ||||||||||||
Common stock warrants | 508 | — | ||||||||||||
11,754 | 123 | |||||||||||||
Inventory_net_Tables
Inventory, net (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Disclosure Inventory Net [Abstract] | ' | |||||||
Inventory, Net | ' | |||||||
March 31, 2014 | December 31, 2013 | |||||||
Raw materials | $ | 2,980 | $ | 2,770 | ||||
Work in process | 5,385 | 6,054 | ||||||
Finished goods | 5,659 | 1,112 | ||||||
Deferred cost of sales | 830 | — | ||||||
$ | 14,854 | $ | 9,936 | |||||
Deferred cost of sales consists of the costs of Zohydro ER associated with the deferred revenue, which are included in inventory, until such time the related deferred revenue is recognized. |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||
Assumptions used in the Black-Scholes Option-Pricing Model | ' | |||||||
The assumptions used in the Black-Scholes option-pricing model for the three months ended March 31, 2014 and 2013 are as follows: | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Risk free interest rate | 2.00% | 0.8% to 1.1% | ||||||
Expected term | 6.0 to 6.1 years | 5.0 to 6.1 years | ||||||
Expected volatility | 84.90% | 86.8% to 87.9% | ||||||
Expected dividend yield | — | % | — | % | ||||
Stock-Based Compensation Expense | ' | |||||||
The Company recognized stock-based compensation expense as follows (in thousands): | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Cost of sales | $ | 127 | $ | 45 | ||||
Research and development | 357 | 216 | ||||||
Selling, general and administrative | 2,023 | 1,325 | ||||||
Total | $ | 2,507 | $ | 1,586 | ||||
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation Narrative (Details) (Subsequent Event [Member], USD $) | 0 Months Ended |
Apr. 23, 2014 | |
Subsequent Event [Member] | ' |
Subsequent Event [Line Items] | ' |
Proceeds from Divestiture of Businesses | $85,000,000 |
Escrow Deposit | 8,500,000 |
Milestone Receivable Related to Sale of Property | $20,000,000 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2014 | |
segment | |
Accounting Policies [Abstract] | ' |
Number of business segments | 1 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) (USD $) | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Minimum [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Significant Other Observable Inputs (Level 2) [Member] | Significant Other Observable Inputs (Level 2) [Member] | Significant Other Observable Inputs (Level 2) [Member] | Significant Other Observable Inputs (Level 2) [Member] | Significant Other Observable Inputs (Level 2) [Member] | Significant Other Observable Inputs (Level 2) [Member] | Significant Unobservable Inputs (Level 3) [Member] | Significant Unobservable Inputs (Level 3) [Member] | Significant Unobservable Inputs (Level 3) [Member] | Significant Unobservable Inputs (Level 3) [Member] | Significant Unobservable Inputs (Level 3) [Member] | Significant Unobservable Inputs (Level 3) [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | |||||||||||||||||||||||||
Common Stock Warrant Liabilities [Member] | Common Stock Warrant Liabilities [Member] | Embedded Derivative Liabilities [Member] | Embedded Derivative Liabilities [Member] | Money market fund shares [Member] | Money market fund shares [Member] | Common Stock Warrant Liabilities [Member] | Common Stock Warrant Liabilities [Member] | Embedded Derivative Liabilities [Member] | Embedded Derivative Liabilities [Member] | Money market fund shares [Member] | Money market fund shares [Member] | Common Stock Warrant Liabilities [Member] | Common Stock Warrant Liabilities [Member] | Embedded Derivative Liabilities [Member] | Embedded Derivative Liabilities [Member] | Money market fund shares [Member] | Money market fund shares [Member] | Common Stock Warrant Liabilities [Member] | Common Stock Warrant Liabilities [Member] | Embedded Derivative Liabilities [Member] | Embedded Derivative Liabilities [Member] | Money market fund shares [Member] | Money market fund shares [Member] | ||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||
Maximum volatility rate | 40.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||
Assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||
Assets measured at fair value on a recurring basis | ' | ' | ' | ' | ' | $46,725 | [1] | $69,120 | [1] | ' | ' | ' | ' | $0 | [1] | $0 | [1] | ' | ' | ' | ' | $0 | [1] | $0 | [1] | ' | ' | ' | ' | $46,725 | [1] | $69,120 | [1] | ||||||||||||||||
Liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||
Liabilities measured at fair value on a recurring basis | ' | $0 | [2] | $0 | [2] | $0 | [3] | $0 | [3] | ' | ' | $0 | [2] | $0 | [2] | $0 | [3] | $0 | [3] | ' | ' | $22,156 | [2] | $31,341 | [2] | $247 | [3] | $233 | [3] | ' | ' | $22,156 | [2] | $31,341 | [2] | $247 | [3] | $233 | [3] | ' | ' | ||||||||
[1] | Cash equivalents are comprised of money market fund shares and are included as a component of cash and cash equivalents on the consolidated balance sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||
[2] | Common stock warrant liabilities include liabilities associated with warrants issued in connection with the Company's July 2012 public offering of common stock and warrants (see Note 5) and warrants issued in connection with the Healthcare Royalty financing agreement (see Note 4), which are measured at fair value using the Black-Scholes option pricing valuation model. The assumptions used in the Black-Scholes option pricing valuation model for both common stock warrant liabilities were: (a) a risk-free interest rate based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the remaining contractual term of the warrants; (b) an assumed dividend yield of zero based on the Company’s expectation that it will not pay dividends in the foreseeable future; (c) an expected term based on the remaining contractual term of the warrants; and (d) given the Company’s lack of relevant historical data due to the Company’s limited historical experience, an expected volatility based upon the Company's historical volatility, supplemented with historical volatility of comparable companies whose share prices have been publicly available for a sufficient period of time. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities associated with the Healthcare Royalty financing agreement is the expected volatility. Significant increases in volatility would result in a higher fair value measurement. The following additional assumptions were used in the Black-Scholes option pricing valuation model to measure the fair value of the warrants sold in the July 2012 public offering: (a) management's projections regarding the probability of the occurrence of an extraordinary event and the timing of such event; and for the valuation scenario in which an extraordinary event occurs that is not an all cash transaction or an event whereby a public acquirer would assume the warrants, (b) an expected volatility rate using the Company's historical volatility, supplemented with historical volatility of comparable companies, through the projected date of public announcement of an extraordinary transaction, blended with a rate equal to the lesser of 40% and the 180-day volatility rate obtained from the HVT function on Bloomberg as of the trading day immediately following the public announcement of an extraordinary transaction. The significant unobservable inputs used in measuring the fair value of the common stock warrant liabilities associated with the July 2012 public offering are the expected volatility and the probability of the occurrence of an extraordinary event. Significant increases in volatility would result in a higher fair value measurement and significant increases in the probability of an extraordinary event occurring would result in a significantly lower fair value measurement. The decrease in the fair value of the common stock warrant liabilities as of March 31, 2014 was primarily driven by the decrease in the Company's stock price at March 31, 2014 as compared against December 31, 2013 measurement dates. | ||||||||||||||||||||||||||||||||||||||||||||||||
[3] | Embedded derivatives are measured at fair value using various discounted cash flow valuation models are included as a component of other long-term liabilities on the consolidated balance sheets. The assumptions used in the discounted cash flow valuation models include: (a) management's revenue projections and a revenue sensitivity analysis based on possible future outcomes; (b) probability weighted net cash flows based on the likelihood of Healthcare Royalty receiving interest payments over the term of the Healthcare Royalty financing agreement; (c) probability of bankruptcy; (d) weighted average cost of capital that included the addition of a company specific risk premium to account for uncertainty associated with the Company achieving future cash flows; (e) the probability of a change in control occurring during the term of the Healthcare Royalty financing agreement; and (f) the probability of an exercise of the embedded derivative instruments. The significant unobservable inputs used in measuring the fair value of the embedded derivatives are management’s revenue projections. Significant decreases in these significant inputs would result in a higher fair value measurement of the liability. |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies - Reconciliation of Liabilities Measured at Fair Value Using Significant Observable Inputs Level 3 (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Warrants and Rights Outstanding [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' |
Beginning Balance | $31,341 |
Changes in fair value | -8,269 |
Exercises | -916 |
Ending Balance | 22,156 |
Embedded Derivative Liabilities [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' |
Beginning Balance | 233 |
Changes in fair value | 14 |
Exercises | 0 |
Ending Balance | $247 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies - Basic and Diluted Net Loss Per Share (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Numerator | ' | ' |
Net loss for basic EPS | ($20,932) | ($21,055) |
Common stock warrants | -8,269 | 0 |
Non-employee stock options and restricted stock units | -132 | 0 |
Dilutive Securities | -8,401 | 0 |
Net loss for diluted EPS | ($29,333) | ($21,055) |
Denominator | ' | ' |
Weighted average common shares outstanding, basic | 139,309 | 100,809 |
Common stock warrants, shares | 5,870 | 0 |
Non-employee stock options and restricted stock units, shares | 144 | 0 |
Dilutive potential shares of common stock, shares | 6,014 | 0 |
Weighted average common shares outstanding, diluted | 145,323 | 100,809 |
Basic net loss per share, usd per share | ($0.15) | ($0.21) |
Diluted net loss per share, usd per share | ($0.20) | ($0.21) |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies - Schedule of Calculation of Diluted Net Loss Per Share (Detail) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share amount | 11,754 | 123 |
Common stock options and restricted stock units | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share amount | 11,246 | 123 |
Common stock warrants | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share amount | 508 | 0 |
Inventory_Net_Detail
Inventory, Net (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Disclosure Inventory Net [Abstract] | ' | ' |
Raw materials | $2,980 | $2,770 |
Work in process | 5,385 | 6,054 |
Finished goods | 5,659 | 1,112 |
Deferred cost of sales | 830 | 0 |
Inventory, net | $14,854 | $9,936 |
Collaboration_and_Financing_Ag1
Collaboration and Financing Agreements - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | |||||||||||||
Jul. 18, 2011 | Jul. 18, 2011 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Jul. 18, 2011 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Jul. 18, 2011 | Mar. 31, 2014 | Mar. 31, 2013 | Jul. 18, 2011 | Jul. 18, 2011 | Mar. 31, 2014 | Jul. 18, 2011 | Mar. 31, 2014 | Jul. 18, 2011 | Mar. 31, 2014 | Jul. 18, 2011 | Jul. 18, 2011 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 27, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Jul. 31, 2013 | |
Embedded Derivative Liabilities [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | Minimum [Member] | Maximum [Member] | Mallinckrodt LLC Co-Promotion Agreement [Member] | Mallinckrodt LLC Co-Promotion Agreement [Member] | Valeant Pharmaceuticals North America LLC Co-Promotion Agreement [Member] | Valeant Pharmaceuticals North America LLC Co-Promotion Agreement [Member] | Astellas Pharma Us Inc Co Promotion Agreement [Member] | Astellas Pharma Us Inc Co Promotion Agreement [Member] | Astellas Pharma Us Inc Co Promotion Agreement [Member] | |||||
Embedded Derivative Liabilities [Member] | Embedded Derivative Liabilities [Member] | Embedded Derivative Liabilities [Member] | Embedded Derivative Liabilities [Member] | Common Stock Warrant Liabilities [Member] | Common Stock Warrant Liabilities [Member] | Common Stock Warrant Liabilities [Member] | Scenario 1 [Member] | Scenario 1 [Member] | Scenario 2 [Member] | Scenario 2 [Member] | Scenario 3 [Member] | Scenario 3 [Member] | Healthcare Royalty Financing Agreement [Member] | Healthcare Royalty Financing Agreement [Member] | |||||||||||||||
Scenario 1 [Member] | Scenario 1 [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Co-promotion agreement termination notice period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '6 months | ' | ' | ' | ' |
Agreement Termination Notice Period Net Sales Contingent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '30 days | ' | ' | ' | ' |
Agreement Termination Notice Period Change of Control Contingent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '90 days | ' | ' | ' | ' |
Sales Revenue, Services, Net | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $866,000 | ' | ' | ' |
Incurred Service Fee Expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | 143,000 | ' | ' | ' | ' | ' |
Tail payment liability related interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 43,000 | 141,000 | ' |
Tail payment liability | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 559,000 | ' | ' | ' | 1,174,000 | ' | 2,032,000 |
CoPromotion Agreement Additional Term Increments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '12 months | ' | ' | ' | ' |
Debt instrument, outstanding | ' | ' | ' | ' | ' | 30,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued and sold to Healthcare Royalty, amount | ' | ' | 140,000 | 139,000 | ' | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued and sold to Healthcare Royalty, shares | ' | ' | 139,539,000 | 100,809,000 | ' | 388,601 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued and sold to Healthcare Royalty, price per share | ' | ' | ' | ' | ' | $3.86 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant exercisable to Healthcare Royalty, shares | 225,000 | 225,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant exercisable to Healthcare Royalty, price per share (usd per share) | $9 | ' | ' | ' | ' | ' | $9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of warrant exercisable | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue Interest Rate | ' | ' | ' | ' | ' | 0.50% | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | 2.50% | ' | 0.50% | ' | 5.00% | 5.75% | ' | ' | ' | ' | ' | ' | ' |
Net product sales amount received | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 75,000,000 | ' | 75,000,000 | ' | 150,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed Debt Repayment Dates | ' | ' | ' | ' | ' | ' | 'January 31, 2015, January 31, 2016 and January 31, 2017 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed Payments for Jan 31,2015 | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed Payments for Jan 31,2016 | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed Payments for Jan 31,2017 | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Agreement termination date | ' | ' | ' | ' | ' | ' | 31-Mar-18 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intercreditor loan | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Terminate payment base amount | ' | ' | ' | ' | ' | ' | 75,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 52,500,000 | ' | 45,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowed internal rate of return | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19.00% | ' | 17.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of embedded derivatives | ' | ' | ' | ' | ' | ' | ' | 247,000 | ' | 233,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate net proceed from financing agreement | ' | ' | ' | ' | ' | 29,485,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing discounts | ' | ' | ' | ' | ' | 476,000 | ' | ' | ' | ' | 605,000 | ' | ' | 790,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Change in fair value | ' | ' | ' | ' | $14,000 | ' | ' | ($14,000) | ($81,000) | ' | ' | $122,000 | ($76,000) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common_Stock_Warrants_Addition
Common Stock Warrants - Additional Informational (Detail) (USD $) | 0 Months Ended | 1 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Jul. 27, 2012 | Jul. 18, 2011 | Jul. 18, 2011 | Mar. 31, 2014 | Dec. 31, 2013 |
Schedule Of Common Stock [Line Items] | ' | ' | ' | ' | ' |
Shares of common stock exercisable through warrants | 15,784,200 | ' | ' | ' | ' |
Warrants exercise price per share | $2.50 | ' | ' | ' | ' |
Warrants expiry date | 'July 27, 2017 | ' | ' | ' | ' |
Term of common stock warrant exercisable (years) | '5 years | '10 years | ' | ' | ' |
Fair value of warrant liabilities | ' | ' | ' | $21,785 | $30,849 |
Warrant exercisable to Healthcare Royalty, shares | ' | 225,000 | 225,000 | ' | ' |
Warrant exercisable to Healthcare Royalty, price per share (usd per share) | ' | $9 | ' | ' | ' |
Healthcare Royalty | ' | ' | ' | ' | ' |
Schedule Of Common Stock [Line Items] | ' | ' | ' | ' | ' |
Fair value of warrant liabilities | ' | ' | ' | $371 | $492 |
StockBased_Compensation_Assump
Stock-Based Compensation - Assumptions used in Black-Scholes Option-Pricing Model (Detail) (Stock Options [Member]) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Risk free interest rate , minimum | 2.00% | 0.80% |
Risk free interest rate, maximum | 2.00% | 1.10% |
Expected volatility, minimum | 84.90% | 86.80% |
Expected volatility, maximum | 84.90% | 87.90% |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Expected term | '6 years | '5 years |
Maximum [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Expected term | '6 years 1 month 6 days | '6 years 1 month 6 days |
StockBased_Compensation_Expens
Stock-Based Compensation Expense (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Stock-based compensation expense | $2,507 | $1,586 |
Cost of sales | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Stock-based compensation expense | 127 | 45 |
Research and development | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Stock-based compensation expense | 357 | 216 |
Selling, general and administrative | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' |
Stock-based compensation expense | $2,023 | $1,325 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Share-based Compensation, Nonemployee, Fair Value Increase (Decrease) | $174 |
Consultants [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 164 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | 404 |
Stock Options [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Total unrecognized compensation costs | $20,285 |
Recognition over weighted average periods | '2 years 10 months 9 days |
Stock Options [Member] | Consultants [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | '2 years 6 months |
Restricted Stock Units (RSUs) [Member] | Consultants [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 25 |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | '2 months 12 days |
Subsequent_Event_Details
Subsequent Event (Details) (Subsequent Event [Member], USD $) | 0 Months Ended |
Apr. 23, 2014 | |
Subsequent Event [Line Items] | ' |
Proceeds from Divestiture of Businesses | $85,000,000 |
Escrow Deposit | 8,500,000 |
Milestone Receivable Related to Sale of Property | 20,000,000 |
Proceeds from Related Party Debt | 7,000,000 |
Healthcare Royalty Financing Agreement [Member] | ' |
Subsequent Event [Line Items] | ' |
Expected Debt Repayment | $40,000,000 |