Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 20, 2015 | Jun. 30, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | Pacira Pharmaceuticals, Inc. | ||
Entity Central Index Key | 1396814 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1,495,161,494 | ||
Entity Common Stock, Shares Outstanding | 36,236,036 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Current assets: | |||
Cash and cash equivalents | $37,520 | $12,515 | $10,126 |
Restricted cash | 1,509 | 1,633 | |
Short-term investments | 119,138 | 59,637 | |
Accounts receivable, net | 22,366 | 14,590 | |
Inventories | 29,263 | 15,557 | |
Prepaid expenses and other current assets | 4,461 | 2,819 | |
Total current assets | 214,257 | 106,751 | |
Long-term investments | 24,431 | 0 | |
Fixed assets, net | 60,632 | 48,182 | |
Goodwill | 23,761 | 10,328 | 8,297 |
Intangibles, net | 403 | 1,157 | |
Other assets | 2,588 | 3,402 | |
Total assets | 326,072 | 169,820 | |
Current liabilities: | |||
Accounts payable | 6,758 | 3,069 | |
Accrued expenses | 28,450 | 17,885 | |
Convertible senior notes | 103,100 | 98,961 | |
Current portion of royalty interest obligation | 276 | 1,020 | |
Current portion of deferred revenue | 1,426 | 1,008 | |
Total current liabilities | 140,010 | 121,943 | |
Royalty interest obligation | 0 | 226 | |
Deferred revenue | 9,508 | 3,212 | |
Other liabilities | 5,409 | 3,190 | |
Total liabilities | 154,927 | 128,571 | |
Commitments and contingencies | |||
Stockholders’ equity: | |||
Preferred stock, par value $0.001; 5,000,000 shares authorized, none issued and outstanding at December 31, 2014 and 2013 | 0 | 0 | |
Common stock, par value $0.001 and 250,000,000 shares authorized; 36,150,620 shares issued and outstanding at December 31, 2014; 33,636,442 shares issued and outstanding at December 31, 2013 | 36 | 34 | |
Additional paid-in capital | 481,334 | 337,639 | |
Accumulated deficit | -310,145 | -296,429 | |
Accumulated other comprehensive income (loss) | -80 | 5 | |
Total stockholders’ equity | 171,145 | 41,249 | 65,855 |
Total liabilities and stockholders’ equity | $326,072 | $169,820 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 36,150,620 | 33,636,442 |
Common stock, shares outstanding | 36,150,620 | 33,636,442 |
Treasury stock at cost, shares | 0 | 0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||
Net product sales | $193,526 | $81,956 | $18,191 |
Collaborative licensing and development revenue | 1,287 | 972 | 18,390 |
Royalty revenue | 2,855 | 2,623 | 2,503 |
Total revenues | 197,668 | 85,551 | 39,084 |
Operating expenses: | |||
Cost of revenues | 77,440 | 54,772 | 32,139 |
Research and development | 18,731 | 21,560 | 9,937 |
Selling, general and administrative | 106,662 | 62,508 | 46,306 |
Total operating expenses | 202,833 | 138,840 | 88,382 |
Loss from operations | -5,165 | -53,289 | -49,298 |
Other (expense) income: | |||
Interest income | 382 | 259 | 275 |
Interest expense | -8,278 | -7,253 | -1,807 |
Loss on early extinguishment of debt | 0 | -3,398 | -1,062 |
Royalty interest obligation | -323 | -623 | -278 |
Other, net | -159 | -47 | -111 |
Total other expense, net | -8,378 | -11,062 | -2,983 |
Loss before income taxes | -13,543 | -64,351 | -52,281 |
Income tax (expense) benefit | -173 | 442 | 0 |
Net loss | ($13,716) | ($63,909) | ($52,281) |
Net loss per share: | |||
Basic and diluted net loss per common share (in dollars per share) | ($0.39) | ($1.93) | ($1.72) |
Weighted average common shares outstanding: | |||
Basic and diluted (in shares) | 35,299 | 33,182 | 30,332 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Loss (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Comprehensive Income [Abstract] | |||
Net loss | ($13,716) | ($63,909) | ($52,281) |
Other comprehensive income (loss): | |||
Net unrealized gain (loss) on investments | -85 | -22 | 12 |
Total other comprehensive income (loss) | -85 | -22 | 12 |
Comprehensive loss | ($13,801) | ($63,931) | ($52,269) |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (Deficit) (USD $) | Total | Common Stock | Common Stock | Common Stock | Additional Paid-In Capital | Additional Paid-In Capital | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Income |
In Thousands, except Share data, unless otherwise specified | 2009 Convertible Notes and accrued interest | 2009 Secured Notes and accrued interest | 2009 Secured Notes and accrued interest | HBM Secured Notes and accrued interest and early prepayment penalty | ||||||
Balances at Dec. 31, 2011 | $48,269 | $25 | $228,470 | ($180,239) | ($2) | $15 | ||||
Balances (in shares) at Dec. 31, 2011 | 25,339,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Exercise of stock options | 770 | 1 | 769 | |||||||
Exercise of stock options (in shares) | 279,000 | |||||||||
Net loss | 100 | 100 | ||||||||
Exercise of warrants (in shares) | 105,000 | |||||||||
Exercise of warrants | 4,776 | 4,776 | ||||||||
Stock-based compensation | 0 | |||||||||
Initial public offering, net of issuance costs (in shares) | 0 | |||||||||
Exercise of stock options | 62,855 | 7 | 62,848 | |||||||
Follow-on public offering, net of issuance costs (in shares) | 6,900,000 | |||||||||
Conversion of Convertible Notes and accrued interest | 0 | |||||||||
Conversion of Convertible Notes (in shares) | 0 | |||||||||
Conversion of Secured Notes and accrued interest and early prepayment penalty | 0 | 0 | ||||||||
Conversion of Secured Notes and accrued interest and early prepayment penalty (in shares) | 0 | |||||||||
Unrealized gain (loss) on short-term investments | 12 | 12 | ||||||||
Shares issued under employee stock purchase plan | 1,354 | 1,354 | ||||||||
Net loss | -52,281 | -52,281 | ||||||||
Balances at Dec. 31, 2012 | 65,855 | 33 | 298,317 | -232,520 | -2 | 27 | ||||
Balances (in shares) at Dec. 31, 2012 | 32,623,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Exercise of stock options | 3,856 | 1 | 3,855 | |||||||
Exercise of stock options (in shares) | 741,000 | |||||||||
Net loss | 0 | 0 | ||||||||
Exercise of warrants (in shares) | 271,000 | |||||||||
Exercise of warrants | 11,513 | 11,513 | ||||||||
Exercise of stock options | 110,452 | |||||||||
Conversion of Secured Notes and accrued interest and early prepayment penalty | 0 | |||||||||
Unrealized gain (loss) on short-term investments | -22 | -22 | ||||||||
Equity component of convertible senior notes, net of issuance costs | 23,956 | 23,956 | ||||||||
Issuance of common stock from treasury | -2 | 2 | ||||||||
Issuance of common stock from treasury (in shares) | 1,000 | |||||||||
Net loss | -63,909 | -63,909 | ||||||||
Balances at Dec. 31, 2013 | 41,249 | 34 | 337,639 | -296,429 | 0 | 5 | ||||
Balances (in shares) at Dec. 31, 2013 | 33,636,000 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Exercise of stock options | 7,239 | 0 | 7,239 | |||||||
Exercise of stock options (in shares) | 624,000 | |||||||||
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 15,722 | 16,000 | ||||||||
Stock Issued During Period, Value, Employee Stock Purchase Plan | 0 | 1,184 | ||||||||
Net loss | 0 | |||||||||
Exercise of warrants (in shares) | 35,000 | |||||||||
Exercise of warrants | 24,822 | 24,822 | ||||||||
Exercise of stock options | 2 | 110,450 | ||||||||
Follow-on public offering, net of issuance costs (in shares) | 1,840,000 | |||||||||
Conversion of Secured Notes and accrued interest and early prepayment penalty | 0 | |||||||||
Unrealized gain (loss) on short-term investments | -85 | -85 | ||||||||
Shares issued under employee stock purchase plan | 1,184 | |||||||||
Net loss | -13,716 | -13,716 | ||||||||
Balances at Dec. 31, 2014 | $171,145 | $36 | $481,334 | ($310,145) | $0 | ($80) | ||||
Balances (in shares) at Dec. 31, 2014 | 36,151,000 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating activities: | |||
Net loss | ($13,716) | ($63,909) | ($52,281) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation of fixed assets and amortization of intangibles | 10,035 | 5,747 | 5,648 |
Amortization of unfavorable lease obligation and debt issuance costs | 487 | 459 | -239 |
Amortization of debt discount | 4,139 | 3,959 | 831 |
Loss on disposal of fixed assets | 158 | 32 | 1 |
Loss on early extinguishment of debt | 0 | 3,398 | 1,062 |
Stock-based compensation | 24,822 | 11,513 | 4,776 |
Changes in operating assets and liabilities: | |||
Restricted cash | 124 | -110 | -224 |
Accounts receivable, net | -7,776 | -10,238 | -2,239 |
Inventories | -13,706 | -3,480 | -10,832 |
Prepaid expenses and other assets | -1,447 | -972 | -59 |
Accounts payable and accrued expenses | 14,254 | 10,244 | 1,386 |
Royalty interest obligation | -970 | -434 | -1,076 |
Other liabilities | 2,352 | 1,047 | -106 |
Deferred revenue | 6,713 | -472 | -16,778 |
Net cash provided by (used in) operating activities | 25,469 | -43,216 | -70,130 |
Investing activities: | |||
Purchases of fixed assets | -21,889 | -12,794 | -18,257 |
Proceeds from sales of fixed assets | 0 | 0 | 1 |
Purchases of short-term investments | -139,840 | -114,299 | -54,047 |
Sales of short-term investments | 80,286 | 85,564 | 53,120 |
Purchases of long-term investments | -24,463 | 0 | 0 |
Payment of contingent consideration | -13,433 | -2,031 | -10,339 |
Net cash used in investing activities | -119,339 | -43,560 | -29,522 |
Financing activities: | |||
Proceeds from follow-on public offering, net | 110,452 | 0 | 62,855 |
Proceeds from exercise of stock options and warrants | 7,239 | 3,856 | 870 |
Proceeds from shares issued under employee stock purchase plan | 1,184 | 0 | 0 |
Proceeds from borrowings on long-term debt | 0 | 27,500 | |
Proceeds from convertible senior notes | 120,000 | 0 | |
Repayment of debt | 0 | -27,500 | -26,250 |
Payment of debt issuance and financing costs | 0 | -7,191 | -1,365 |
Net cash provided by financing activities | 118,875 | 89,165 | 63,610 |
Net increase (decrease) in cash and cash equivalents | 25,005 | 2,389 | -36,042 |
Cash and cash equivalents, beginning of year | 12,515 | 10,126 | 46,168 |
Cash and cash equivalents, end of year | 37,520 | 12,515 | 10,126 |
Supplemental cash flow information: | |||
Cash paid for interest, including royalty interest obligation | 5,193 | 3,500 | 4,229 |
Cash paid for income taxes | 34 | 0 | 0 |
Non-cash investing and financing activities: | |||
Equity component of convertible senior notes | 0 | 24,936 | 0 |
Value of warrants issued with debt | $0 | $0 | $1,354 |
DESCRIPTION_OF_BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS |
Pacira Pharmaceuticals, Inc. and its subsidiaries (collectively, the “Company” or “Pacira”) is a specialty pharmaceutical company focused on the development, commercialization and manufacture of proprietary pharmaceutical products, based on its proprietary DepoFoam® extended release drug delivery technology, primarily for use in hospitals and ambulatory surgery centers. The Company’s lead product, EXPAREL®, which consists of bupivacaine encapsulated in DepoFoam, was approved by the United States Food and Drug Administration, or FDA, on October 28, 2011 and launched commercially in April 2012. DepoFoam is also the basis for the Company’s other FDA-approved product, DepoCyt(e), which the Company manufactures for its commercial partners. | |
Pacira is subject to risks common to companies in similar industries and stages of development, including, but not limited to, competition from larger companies, reliance on revenue from few customers and products, reliance on a single manufacturing site, new technological innovations, dependence on key personnel, reliance on third-party service providers and sole source suppliers, protection of proprietary technology and compliance with government regulations. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||
Basis of Presentation and Principles of Consolidation | |||||||||
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. The accounts of wholly owned subsidiaries are included in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications were made to conform to the current presentation. | |||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and contingent liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, among other things, revenue recognition, impairment of long-lived assets, stock-based compensation and valuation of deferred tax assets. The Company’s critical accounting policies are those that are both most important to the Company’s consolidated financial condition and results of operations and require the most difficult, subjective or complex judgments on the part of management in their application, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Because of the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results could differ from these estimates. | |||||||||
Liquidity | |||||||||
Management believes that the Company’s existing cash and cash equivalents, restricted cash, short-term and long-term investments and cash flows generated from product sales will be sufficient to enable the Company to meet its planned operating expenses, capital expenditure requirements, payment of the principal on any conversions of the Company’s convertible senior notes and to service its indebtedness at least through December 31, 2015. However, changing circumstances may cause the Company to expend cash significantly faster than currently anticipated, and the Company may need to spend more cash than currently expected because of circumstances beyond its control. The Company expects to continue to incur substantial additional expenditures as it continues to commercialize EXPAREL, develops and seeks regulatory approval for its product candidates, and expands its manufacturing facilities for EXPAREL and its other product candidates including costs associated with certain technical transfer activities and construction of two dedicated manufacturing suites in the United Kingdom. | |||||||||
On January 23, 2013, the Company completed a private placement of $120.0 million in aggregate principal amount of 3.25% convertible senior notes, or Notes, due 2019. As further discussed in Note 8, Debt, the Company must settle the principal of the Notes in cash upon conversion, and it may settle any conversion premium in either cash, stock or a combination of cash and shares of common stock at the Company’s discretion. Based on certain conditions that were met during the three months ended December 31, 2014, the holders can convert their Notes at any time during the quarter ended March 31, 2015 and, therefore, the Notes are classified in the consolidated balance sheet at December 31, 2014 as a current obligation. In the event of conversion, holders would forgo all future interest payments, any unpaid interest and the possibility of further stock price appreciation. In the event that all of the Notes are converted, the Company would be required to repay the $120.0 million in principal value and approximately $309 million of cash or issue approximately 3.5 million shares of its common stock (or a combination of cash and shares of its common stock) to settle the conversion premium as of December 31, 2014, causing dilution to the Company’s current shareholders. | |||||||||
Revenue Recognition | |||||||||
The Company’s principal sources of revenue include (i) sales of EXPAREL in the United States, or U.S., (ii) sales of DepoCyt(e) in the U.S. and the European Union, or E.U., (iii) royalties based on sales by commercial partners of DepoCyt(e) and (iv) license fees, milestone payments and reimbursement for development work from third parties. The Company recognizes revenue when there is persuasive evidence that an arrangement exists, title has passed, collection is reasonably assured and the price is fixed or determinable. | |||||||||
Net Product Sales | |||||||||
The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by end users which include hospitals, ambulatory surgery centers and doctors. EXPAREL is delivered directly to the end user without the wholesaler ever taking physical possession of the product. The Company records revenue at the time the product is delivered to the end user. The Company also recognizes revenue from products manufactured and supplied to commercial partners, such as DepoCyt(e) upon shipment. Prior to the shipment of manufactured products, the Company conducts initial product release and stability testing in accordance with current Good Manufacturing Practices. | |||||||||
Revenues from sales of products are recorded net of returns allowances, prompt payment discounts, wholesaler service fees and volume rebates and chargebacks. The calculation of some of these items requires management to make estimates based on sales data, contracts, inventory data and other related information which may become known in the future. The Company reviews the adequacy of its provisions on a quarterly basis. | |||||||||
Returns Allowances | |||||||||
The Company allows customers to return product that is damaged or received in error. In addition, the Company allows EXPAREL to be returned beginning six months prior to, and twelve months following product expiration. As EXPAREL is a newly commercially available product, the Company estimates its sales return reserve based on return history from other hospital-based products with similar distribution models and its historical experience, which management believes is the best estimate of the anticipated product to be returned. The returns reserve is recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses. | |||||||||
The Company’s commercial partners can return Depocyt(e) within contractually specified timeframes if the product does not meet the applicable inspection tests. The Company estimates its returns reserve based on its experience with historical return rates. Historically, the Company’s product returns have not been material. | |||||||||
Prompt Payment Discounts | |||||||||
The prompt payment reserve is based upon discounts offered to wholesalers as an incentive to meet certain payment | |||||||||
terms. The Company accrues discounts to wholesalers based on contractual terms of agreements and historical experience. The Company accounts for these discounts at the time of sale as a reduction to gross product sales and a reduction to accounts receivable. | |||||||||
Wholesaler Service Fees | |||||||||
The Company’s customers include major and regional wholesalers with whom the Company has contracted a fee for service based on a percentage of gross product sales. This fee for service is recorded as a reduction to gross product sales and an increase to accrued expenses at the time the sale, and is recorded based on the contracted percentage. | |||||||||
Volume Rebates and Chargebacks | |||||||||
Volume rebates and chargeback reserves are based upon contracted discounts and promotional offers the Company provides to certain end users such as members of group purchasing organizations. Volume rebates are recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses. Chargeback reserves are recorded at the time of sale as a reduction to gross product sales and a reduction to accounts receivable. | |||||||||
Royalty Revenue | |||||||||
The Company recognizes revenue from royalties based on sales of its commercial partners’ net sales of products. Royalties are recognized as earned in accordance with contract terms when they can be reasonably estimated based and collection is reasonably assured. The Company’s commercial partners are obligated to report their net product sales and the resulting royalty due to the Company within 60 days from the end of each quarter. Based on historical product sales, royalty receipts and other relevant information, the Company accrues royalty revenue each quarter and subsequently trues-up its royalty revenue when it receives royalty reports from its commercial partners. | |||||||||
Collaborative Licensing and Development Revenue | |||||||||
The Company recognizes revenue from reimbursements received in connection with feasibility studies and development work for third parties who desire to utilize its DepoFoam extended release drug delivery technology for their products when the Company’s contractual services are performed, provided collection is reasonably assured. The Company’s principal costs under these agreements include costs for its personnel conducting research and development, its allocated overhead as well as research and development performed by outside contractors or consultants. | |||||||||
The Company recognizes revenues from non-refundable up-front license fees received under collaboration agreements ratably over the performance period as determined under the collaboration agreement (estimated development period in the case of development agreements, and contract period or longest patent life in the case of supply and distribution agreements). If the estimated performance period is subsequently modified, the Company will modify the period over which the up-front license fee is recognized accordingly on a prospective basis. Upon notification of a termination of a collaboration agreement, any remaining non-refundable license fees received by the Company, which had been deferred, are recognized over the remaining contractual term. If the termination is immediate and no additional services are to be performed, the deferred revenue is generally recognized in full. All such recognized revenues are included in collaborative licensing and development revenue in the Company’s consolidated statements of operations. | |||||||||
The Company recognizes revenue from milestone payments received under collaboration agreements when earned, provided that the milestone event is substantive, its achievability was not reasonably assured at the inception of the agreement, the Company has no further performance obligations relating to the event and collection is reasonably assured. If these criteria are not met, the Company recognizes milestone payments ratably over the remaining period of the Company’s performance obligations under the applicable agreements. | |||||||||
Concentration of Major Customers | |||||||||
The Company’s customers are national and regional wholesalers of pharmaceutical products as well as commercial, collaborative and licensing partners. The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers (including AmerisourceBergen Health Corporation, Cardinal Health, Inc., and McKesson Drug Company), but shipments of the product are sent directly to individual accounts, such as hospitals, ambulatory surgery centers and individual doctors. The table below includes the percentage of revenue comprised by the three largest customers (i.e., wholesalers or commercial partners) in each year presented: | |||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Largest customer | 33 | % | 33 | % | 30 | % | |||
Second largest customer | 29 | % | 28 | % | 14 | % | |||
Third largest customer | 24 | % | 18 | % | 11 | % | |||
86 | % | 79 | % | 55 | % | ||||
Revenues from customers outside the U.S. accounted for 2%, 5% and 23% of the Company’s revenue for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Research and Development Expenses | |||||||||
Research and development expenses consist of costs associated with products being developed internally, and include related personnel expenses, laboratory supplies, active pharmaceutical ingredients, manufacturing supplies, facilities costs, preclinical and clinical trial costs and other outside service fees. The Company expenses research and development costs as incurred. A significant portion of the development activities are outsourced to third parties, including contract research organizations. In such cases, the Company may be required to estimate related service fees to be accrued. | |||||||||
Cash and Cash Equivalents | |||||||||
All highly-liquid investments with maturities of 90 days or less when purchased are considered cash equivalents. | |||||||||
Restricted Cash | |||||||||
As further discussed in Note 8, Debt, the Company had entered into a financing agreement with Paul Capital for the sale of a royalty interest in its DepoCyt(e) and DepoDur® product revenue and royalties. The royalty interest agreement pertained only to DepoCyt(e) and the Company’s previously-marketed product, DepoDur, and does not include revenue related to EXPAREL or any other product candidates. As part of this financing agreement, the Company and Paul Capital maintained a lockbox, where all DepoCyt(e) and DepoDur product revenue and royalties were received. The Company had no minimum payment obligations under this agreement. Commencing on April 1 of every year, the first $2.5 million received in the lockbox was restricted and was used to make quarterly payments due to Paul Capital, if any, under the agreement during the subsequent 12 month period. On March 31 of the subsequent year, the balance of cash in the lockbox, if any, is remitted to the Company. The Paul Capital agreement terminated on December 31, 2014. | |||||||||
Short-Term and Long-Term Investments | |||||||||
Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate bonds with initial maturities of greater than three months at the date of purchase, but less than one year. Long-term investments consist of corporate bonds with initial maturities greater than one year at the date of purchase. The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such determination at each balance sheet date. The Company’s investment policy sets minimum credit quality criteria and maximum maturity limits on its investments to provide for preservation of capital, liquidity and a reasonable rate of return. Available-for-sale securities are recorded at fair value, based on current market valuations. Unrealized holding gains and losses on available-for-sale securities are excluded from net loss and are reported as a separate component of other comprehensive loss until realized. Realized gains and losses are included in non-operating other income (expense) on the consolidated statements of operations and are derived using the specific identification method for determining the cost of the securities sold. | |||||||||
Inventories | |||||||||
Inventories consist of finished goods held for sale and distribution, raw materials and work in process. Inventories are stated at the lower of cost, which includes amounts related to material, labor and overhead; or market (net realizable) value and is determined using the first-in, first-out (“FIFO”) method. The Company periodically reviews its inventory to identify obsolete, slow-moving, or otherwise unsalable inventories, and establishes allowances for situations in which the cost of the inventory is not expected to be recovered. | |||||||||
Fixed Assets | |||||||||
Fixed assets are recorded at cost, net of accumulated depreciation and amortization. The Company reviews its property, plant and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. | |||||||||
Depreciation of fixed assets is provided over their estimated useful lives on a straight-line basis. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the related remaining lease terms. Useful lives by asset category are as follows: | |||||||||
Asset Category | Useful Lives | ||||||||
Computer equipment and software | 1 to 3 years | ||||||||
Office furniture and equipment | 5 years | ||||||||
Manufacturing and laboratory equipment | 5 to 10 years | ||||||||
Goodwill and Intangible Assets | |||||||||
Intangible assets are recorded at cost, net of accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives on a straight-line basis. The Company evaluates the recoverability of intangible assets periodically and takes into account events and circumstances which may indicate that impairment exists. Goodwill represents the excess of purchase price over fair value acquired in a business combination and is not amortized, but subject to impairment at least annually or when a triggering event occurs that could indicate a potential impairment. | |||||||||
Impairment of Long-Lived Assets | |||||||||
Management reviews long-lived assets, including fixed assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. | |||||||||
Convertible Debt Transactions | |||||||||
The Company separately accounts for the liability and equity components of convertible debt instruments by allocating the proceeds from the issuance between the liability component and the embedded conversion option, or equity component. This is done in accordance with accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The value of the equity component is calculated by first measuring the fair value of the liability component, using the interest rate of a similar liability that does not have a conversion feature, as of the issuance date. The difference between the initial proceeds from the convertible debt issuance and the fair value of the liability component is recorded as the carrying amount of the equity component. The Company recognizes the amortization of the resulting discount as part of interest expense in its consolidated statement of operations. | |||||||||
Upon settlement of the convertible senior notes, the liability component is measured at fair value. The Company allocates a portion of the fair value of the total settlement consideration transferred to the extinguishment of the liability component equal to the fair value of that component immediately prior to the settlement. Any difference between the consideration attributed to the liability component and the net carrying amount of the liability component, including any unamortized debt issuance costs, is recognized as a gain or loss in the consolidated statement of operations. Any remaining consideration is allocated to the reacquisition of the equity component and is recognized as a reduction of additional paid-in capital. | |||||||||
Foreign Currencies | |||||||||
The Company receives payment from certain commercial partners relating to royalties on DepoCyte® in Euros. Realized gains and losses from foreign currency transactions are reflected in the consolidated statements of operations and were not significant in any period. All foreign currency receivables and payables are measured at the applicable exchange rate at the end of the reporting period. | |||||||||
Income Taxes | |||||||||
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to basis differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2014 and 2013, all deferred tax assets were fully offset by a valuation allowance. | |||||||||
In February 2013, the Company received $0.4 million from the sale of unused net operating losses through the State of New Jersey’s Economic Development Authority Technology Business Tax Certificate Transfer Program. As a result, the Company recorded an income tax benefit by reversing the valuation allowance for the related net deferred tax assets. The Company continues to maintain a full valuation allowance on its remaining net deferred tax assets because there is significant doubt regarding the Company’s ability to utilize such net deferred tax assets. | |||||||||
The Company accrues interest and penalties, if any, on underpayment of income taxes related to unrecognized tax benefits as a component of income tax expense in its consolidated statements of operations. | |||||||||
Per Share Data | |||||||||
Basic net income (loss) per share is computed by dividing net income (loss) available (attributable) to common stockholders by the weighted average number of shares of common stock outstanding during the period. | |||||||||
Diluted net income (loss) per share is calculated by dividing net income (loss) available (attributable) to common stockholders as adjusted for the effect of dilutive securities, if any, by the weighted average number of common stock and dilutive common stock outstanding during the period. Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, warrants and the purchase of shares from the employee stock purchase plan (using the treasury stock method) as well as the conversion of the excess conversion value on the Notes. Potential common shares in the diluted net loss per share computation are excluded to the extent that they would be anti-dilutive. No potentially dilutive securities are included in the computation of any diluted per share amounts as the Company reported a net loss for all periods presented. | |||||||||
Stock-Based Compensation | |||||||||
The Company’s stock-based compensation program includes grants of stock options to employees, consultants, and non-employee directors in addition to the opportunity for employees to participate in an employee stock purchase plan. The expense associated with these programs is recognized in the Company’s consolidated statements of operations based on their fair values as they are earned under the applicable vesting terms or the length of an offering period. | |||||||||
The valuation of stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable stock options. Accordingly, the Company uses an option pricing model to derive an estimated fair value. In calculating the estimated fair value of stock options granted, the Company uses the Black-Scholes option valuation model, or Black-Scholes model, which requires the consideration of the following variables for purposes of estimating fair value: | |||||||||
• | Expected term of the option | ||||||||
• | Expected volatility | ||||||||
• | Expected dividends | ||||||||
• | Risk-free interest rate | ||||||||
Since its initial public offering, the Company utilizes its available historic volatility data combined with a publicly traded peer group’s historic volatility to determine expected volatility over the expected option term. In 2014, the Company used an expected term based on a weighted average combination of its historical data from stock option exercises and the simplified method. In prior years the Company utilized the “simplified” method for “plain vanilla” options to estimate the expected term of stock option grants. Under that approach, the weighted average expected life was presumed to be the average of the vesting term and the contractual term of the option. The risk-free interest rate is based on the implied yield on United States Department of the Treasury zero coupon bonds for periods commensurate with the expected term of the options. The dividend yield on the Company’s common stock is estimated to be zero as the Company has not paid any dividends since inception, nor does it have any intention to do so in the foreseeable future. The Company estimates the level of award forfeitures expected to occur based on its historical data and records compensation cost only for those awards that are ultimately expected to vest. | |||||||||
Segment Reporting | |||||||||
The Company operates in one reportable segment and, accordingly, no segment disclosures have been presented. |
RECENT_ACCOUNTING_PRONOUNCEMEN
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS |
In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, which requires that an entity recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to its customers. In order to achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. This update will replace existing revenue recognition guidance under GAAP when it becomes effective for the Company beginning January 1, 2017, with early adoption not permitted. The updated standard will permit the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact of this update on its consolidated financial statements. | |
In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements—Going Concern, which requires that management of an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. This update will become effective beginning January 1, 2017, with early adoption permitted. The provisions of this standard are not expected to significantly impact the Company. | |
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company. |
INVENTORIES
INVENTORIES | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
INVENTORIES | INVENTORIES | |||||||
The components of inventories are as follows (in thousands): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Raw materials | $ | 9,263 | $ | 5,290 | ||||
Work-in-process | 8,617 | 6,321 | ||||||
Finished goods | 11,383 | 3,946 | ||||||
Total | $ | 29,263 | $ | 15,557 | ||||
FIXED_ASSETS
FIXED ASSETS | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
FIXED ASSETS | FIXED ASSETS | |||||||
Fixed assets, net summarized by major category, consist of the following (in thousands): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Machinery and laboratory equipment | $ | 29,697 | $ | 19,570 | ||||
Computer equipment and software | 3,754 | 2,476 | ||||||
Office furniture and equipment | 1,001 | 441 | ||||||
Leasehold improvements | 26,350 | 24,852 | ||||||
Construction in progress | 19,944 | 13,419 | ||||||
Total | 80,746 | 60,758 | ||||||
Less: accumulated depreciation | (20,114 | ) | (12,576 | ) | ||||
Fixed assets, net | $ | 60,632 | $ | 48,182 | ||||
Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $9.3 million, $3.7 million and $3.6 million, respectively. During the years ended December 31, 2014, 2013 and 2012, the Company capitalized interest of $0.4 million, $1.1 million and $2.0 million, respectively. The balance of construction in progress at December 31, 2014 relates largely to the construction of a new manufacturing facility in the United Kingdom and a new fill line for EXPAREL at the Company’s Science Center Campus in San Diego, California. |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS | |||||||||||||
In March 2007, the Company acquired from SkyePharma Holding, Inc., or Skyepharma, its California operating subsidiary, or Pacira California, referred to herein as the Acquisition. The Company’s goodwill arose in April 2012 from a contingent milestone payment to Skyepharma in connection with the Acquisition. The Acquisition was accounted for under Statement of Financial Accounting Standards 141, Accounting for Business Combinations, which was the effective GAAP at the Acquisition date. In connection with the Acquisition, the Company agreed to certain earn-out payments based on a percentage of net sales of EXPAREL collected and certain other yet-to-be-developed products as well as milestone payments for EXPAREL as follows: | ||||||||||||||
(i) | $10.0 million upon the first commercial sale in the United States; | |||||||||||||
(ii) | $4.0 million upon the first commercial sale in a major EU country (United Kingdom, France, Germany, Italy and Spain); | |||||||||||||
(iii) | $8.0 million when annual net sales collected reach $100.0 million; | |||||||||||||
(iv) | $8.0 million when annual net sales collected reach $250.0 million; and | |||||||||||||
(v) | $32.0 million when annual net sales collected reach $500.0 million. | |||||||||||||
The first milestone was met in April 2012 resulting in a $10.0 million payment to Skyepharma. The Company recorded this payment net of a $2.0 million contingent consideration liability recognized at the time of the Acquisition, resulting in $8.0 million recorded as goodwill. In September 2014, the Company made an $8.0 million milestone payment to Skyepharma in connection with achieving $100.0 million of EXPAREL net sales collected. For purposes of meeting future milestone payments, with certain exceptions, annual net sales are measured on a rolling quarterly basis. Cumulatively through December 31, 2014, the Company has recorded an additional $7.8 million as goodwill for earn-out payments which are based on a percentage of net sales of EXPAREL collected. Any remaining earn-out payments will also be treated as additional costs of the Acquisition and, therefore, recorded as goodwill if and when each contingency is resolved. | ||||||||||||||
The change in the carrying value of goodwill is summarized as follows (in thousands): | ||||||||||||||
Carrying Value | ||||||||||||||
Balance at December 31, 2012 | $ | 8,297 | ||||||||||||
Percentage payments on collections of net sales of EXPAREL | 2,031 | |||||||||||||
Balance at December 31, 2013 | 10,328 | |||||||||||||
Milestone payment triggered by collections of net sales of EXPAREL | 8,000 | |||||||||||||
Percentage payments on collections of net sales of EXPAREL | 5,433 | |||||||||||||
Balance at December 31, 2014 | $ | 23,761 | ||||||||||||
Intangible assets, net, consist of core technology, developed technology and trademarks and trade names acquired in the Acquisition and are summarized as follows (in thousands): | ||||||||||||||
December 31, 2014 | Gross | Accumulated | Intangible | Estimated | ||||||||||
Carrying Value | Amortization | Assets, Net | Useful Life | |||||||||||
Amortizable intangible assets: | ||||||||||||||
Core technology | $ | 2,900 | $ | (2,497 | ) | $ | 403 | 9 Years | ||||||
Developed technology | 11,700 | (11,700 | ) | — | 7 Years | |||||||||
Trademarks and trade names | 400 | (400 | ) | — | 7 Years | |||||||||
Total intangible assets | $ | 15,000 | $ | (14,597 | ) | $ | 403 | |||||||
December 31, 2013 | Gross | Accumulated | Intangible | Estimated | ||||||||||
Carrying Value | Amortization | Assets, Net | Useful Life | |||||||||||
Amortizable intangible assets: | ||||||||||||||
Core technology | $ | 2,900 | $ | (2,175 | ) | $ | 725 | 9 years | ||||||
Developed technology | 11,700 | (11,282 | ) | 418 | 7 years | |||||||||
Trademarks and trade names | 400 | (386 | ) | 14 | 7 years | |||||||||
Total intangible assets | $ | 15,000 | $ | (13,843 | ) | $ | 1,157 | |||||||
Annual amortization expense for intangibles for the years ended December 31, 2014, 2013 and 2012 was $0.8 million, $2.1 million and $2.1 million, respectively. | ||||||||||||||
Future amortization expense relates only to core technology and is as follows (in thousands): | ||||||||||||||
2015 | $ | 322 | ||||||||||||
2016 | 81 | |||||||||||||
Total | $ | 403 | ||||||||||||
ACCRUED_EXPENSES
ACCRUED EXPENSES | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Payables and Accruals [Abstract] | ||||||||
ACCRUED EXPENSES | ACCRUED EXPENSES | |||||||
Accrued expenses consist of the following (in thousands): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Compensation and benefits | $ | 8,909 | $ | 5,488 | ||||
Accrued operating expenses | 12,094 | 8,001 | ||||||
Accrued royalties | 3,213 | 1,526 | ||||||
Accrued interest | 1,625 | 1,625 | ||||||
Product returns, rebates and other fees | 2,470 | 1,245 | ||||||
Income taxes payable | 139 | — | ||||||
Total | $ | 28,450 | $ | 17,885 | ||||
DEBT
DEBT | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ||||||||
DEBT | DEBT | |||||||
The composition of the Company’s debt and financing obligations is as follows (in thousands): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Debt: | ||||||||
Convertible senior notes | $ | 120,000 | $ | 120,000 | ||||
Discount on debt | (16,900 | ) | (21,039 | ) | ||||
Total debt, net of discount | 103,100 | 98,961 | ||||||
Royalty interest obligation | 276 | 1,246 | ||||||
Total debt and financing obligations | $ | 103,376 | $ | 100,207 | ||||
Senior Convertible Notes | ||||||||
On January 23, 2013, the Company completed a private placement of $120.0 million in aggregate principal amount of 3.25% Notes, and entered into an indenture agreement, or Indenture, with respect to the Notes. The Notes accrue interest at a fixed rate of 3.25% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2013. The Notes mature on February 1, 2019. | ||||||||
The net proceeds from the offering were $115.3 million after deducting the initial purchasers’ discounts, commissions and the offering expenses payable by the Company. The net proceeds from the Notes were used by the Company to repay the entire balance of the Company’s then existing credit facility. In connection with the extinguishment of the credit facility, the Company prepaid the remaining principal amount of $27.5 million, a $1.7 million end of term fee, an $0.8 million early prepayment penalty and $0.2 million of accrued interest. The Company recorded a loss on extinguishment of debt of $3.4 million, comprised of the early prepayment penalty, the remaining unamortized debt issuance costs and end of term fee. | ||||||||
Holders may convert their Notes prior to the close of business on the business day immediately preceding August 1, 2018, only under the following circumstances: | ||||||||
(i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2013, if the last reported sale price of the Company’s common stock for at least 20 trading days during the period including the last 30 consecutive trading days of the quarter (ending on the last trading day of the immediately preceding calendar quarter) is greater than 130% of the conversion price then applicable (the “Consecutive Sales Price”), on each applicable trading day; | ||||||||
(ii) during the five business-day period after any five consecutive trading-day period (the ‘‘measurement period’’) in which the trading price (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; | ||||||||
(iii) upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company’s assets; or | ||||||||
(iv) if the Company calls the Notes for redemption until the close of business on the business day immediately preceding the redemption date. | ||||||||
On or after August 1, 2018, until the close of business on the second scheduled trading day immediately preceding February 1, 2019, holders may convert their Notes at any time, regardless of the foregoing circumstances. Upon conversion, holders will receive cash up to the principal amount of the Notes and, with respect to any excess conversion value, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option. The initial conversion rate for the Notes was 40.2945 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $24.82 per share of the Company’s common stock. The conversion rate will be subject to adjustment for some events, but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the Notes represented a premium of approximately 32.5% to the closing sale price of $18.73 per share of the Company’s common stock on The NASDAQ Global Select Market on January 16, 2013, the date that the Company priced the private offering of the Notes. | ||||||||
During the quarter ended December 31, 2014, the requirements with respect to the Consecutive Sales Price were met. As a result, the Notes are classified as a current obligation and will be convertible until March 31, 2015. As of December 31, 2014, the Notes had a market price of $3,579 per $1,000 principal amount, compared to an estimated conversion value of $3,572. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation. Upon the receipt of conversion requests, the settlement of the Notes will be paid pursuant to the terms of the Indenture, which state that the principal must be settled in cash. In the event that all of the Notes are converted, the Company would be required to repay the $120.0 million in principal value and approximately $309 million of cash or issue approximately 3.5 million shares of its common stock (or a combination of cash and shares of its common stock) to settle the conversion premium as of December 31, 2014, causing dilution to the Company’s shareholders and/or significant expenditures of the Company’s cash and liquid securities. See Note 19, Subsequent Events, for further discussion of a conversion request received in February 2015. | ||||||||
While the Notes are classified in the Company’s consolidated balance sheets at December 31, 2014 and 2013 as a current obligation, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the Notes continue to have the election to convert the Notes at any time during the prescribed measurement period, the Notes will continue to be considered a current obligation and classified as such. Prior to February 1, 2018, in the event that none of the conversion conditions are satisfied, the Notes would be reclassified as a long-term liability. | ||||||||
Prior to February 1, 2017, the Company may not redeem the Notes. On or after February 1, 2017, the Company may redeem for cash all or part of the Notes if the last reported sale price (as defined in the Indenture) of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending within five trading days prior to the date on which the Company provides notice of redemption. The redemption price will equal the sum of (i) 100% of the principal amount of the Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date, plus (iii) a “make-whole premium” payment in cash equal to the sum of the present values of the remaining scheduled payments of interest that would have been made on the Notes to be redeemed had such Notes remained outstanding from the redemption date to the maturity date (excluding interest accrued to, but excluding, the redemption date that is otherwise paid pursuant to the preceding clause (ii)). The present values of the remaining interest payments will be computed using a discount rate equal to 2.0%. The Company must make the make-whole premium payments on all Notes called for redemption prior to the maturity date, including Notes converted after the date the Company provides the notice of redemption. No sinking fund is provided for the Notes, which means that the Company is not required to redeem or retire the Notes periodically. | ||||||||
If the Company undergoes a fundamental change as defined in the Indenture, subject to certain conditions, holders of the Notes may require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. | ||||||||
The Notes are senior unsecured obligations of the Company and will rank senior in right of payment to the Company’s future indebtedness, if any, that is expressly subordinated in right of payment to the Notes and equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated. The Notes are effectively junior in right of payment to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness and are structurally junior to all existing and future indebtedness and other liabilities (including trade payables) incurred by the Company’s subsidiaries. | ||||||||
The Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the incurrence of other indebtedness or the issuance or repurchase of securities by the Company. The Indenture contains customary events of default with respect to the Notes, including that upon certain events of default, 100% of the principal of and accrued and unpaid interest on the Notes will automatically become due and payable. | ||||||||
Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options, an entity must separately account for the liability and equity components of convertible debt instruments (such as the Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The equity component is recorded in additional paid-in capital in the consolidated balance sheet at the issuance date and the equity component is treated as a discount on the liability component of the Notes. The initial carrying value of the liability component of $95.1 million was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying value of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. | ||||||||
The Company allocated the total transaction costs of $4.7 million related to the issuance of the Notes to the liability and equity components of the Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the six-year term of the Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity. | ||||||||
The following table sets forth the total interest expense recognized related to the Notes issued in January 2013 (in thousands): | ||||||||
Year Ended December 31, | ||||||||
2014 | 2013 | |||||||
Contractual interest expense | $ | 3,900 | $ | 3,662 | ||||
Amortization of debt issuance costs | 620 | 584 | ||||||
Amortization of debt discount | 4,139 | 3,897 | ||||||
$ | 8,659 | $ | 8,143 | |||||
Effective interest rate | 7.22 | % | 7.22 | % | ||||
Oxford Loan Facility | ||||||||
On May 2, 2012, the Company entered into a definitive loan and security agreement, or the Loan Agreement, with Oxford Finance LLC, or the Lender, and borrowed the principal amount of $27.5 million, or the Loan Facility, at a fixed rate of 9.75%, with the first principal payment due December 1, 2013. The term loan under the Oxford Loan Facility was repaid and terminated in January 2013, and the Company recorded a loss on extinguishment of debt of $3.4 million comprised of the early prepayment penalty and the remaining unamortized debt issuance costs. | ||||||||
In connection with the Loan Agreement, the Company issued to the Lender warrants that were exercisable for an aggregate of 162,885 shares of its common stock at a per share exercise price of $10.97. The value of the warrants, $1.4 million, was recorded as a debt discount and amortized over the term of the loan to interest expense. The warrants were exercised in 2012. | ||||||||
Sale of Royalty Interests | ||||||||
In 2000, Pacira California and SkyePharma PLC entered into a Royalty Interests Assignment Agreement, or PLC Royalty Agreement, with an affiliate of Paul Capital Advisors, LLC, or Paul Capital, to raise $30.0 million. Under the PLC Royalty Agreement, Paul Capital had the right to receive a royalty interest in four of SkyePharma PLC’s product sales including product sales of, and other payments related to DepoCyt(e) and the no-longer marketed DepoDur. Payments began for product sales realized on or after January 1, 2003 and continued through December 31, 2014. | ||||||||
In connection with the Acquisition, the PLC Royalty Agreement was amended (“Amended and Restated Royalty Interests Assignment Agreement”). As part of this amendment the responsibility to pay the royalty interest in product sales of DepoCyt(e) and DepoDur were transferred to the Company, and the payment to Paul Capital in a “Purchase Option Event” of the Company, as described below, was defined. The net present value of royalties expected to be repaid to Paul Capital (the “royalty interest obligation”) was valued at $13.0 million. | ||||||||
The Company recorded the royalty interest obligation as a liability in the consolidated balance sheets in accordance with ASC 470-10-25, Sales of Future Revenues. The Company imputed interest expense associated with this liability using the effective interest rate method. The effective interest rate varied during the term of the agreement depending on a number of factors including the actual sales of DepoCyt(e) and DepoDur and a significant estimation, performed quarterly, of certain future cash flows of the Company related to these products during the remaining term of the Royalty Interests Assignment Agreement which terminated on December 31, 2014. Any adjustment to the estimates was reflected in the Company’s consolidated statements of operations as interest income (expense). In addition, such cash flows were subject to foreign exchange movements related to sales of DepoCyt(e) and DepoDur denominated in currencies other than U.S. dollars. | ||||||||
The Company had no minimum payment obligations under the PLC Royalty Agreement. However, the repayment of the Paul Capital liability was supported through a jointly controlled lockbox, where all DepoCyt(e) and DepoDur product revenue and royalties were received as discussed in Note 2, Summary of Significant Accounting Policies. |
FINANCIAL_INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction. To increase consistency and comparability in fair value measurements, the FASB established a three-level hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels are: | |||||||||||||||||
• | Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. | ||||||||||||||||
• | Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. | ||||||||||||||||
• | Level 3: Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. | ||||||||||||||||
The carrying value of financial instruments including cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these items. The fair value of the Company’s Notes at December 31, 2014 is calculated utilizing market quotations from an over-the-counter trading market for such notes (Level 2). The carrying amount and fair value of the Notes are as follows (in thousands): | |||||||||||||||||
Carrying | Fair Value Measurements Using | ||||||||||||||||
Financial Liabilities Carried at Historical Cost | Value | Level 1 | Level 2 | Level 3 | |||||||||||||
December 31, 2014 | |||||||||||||||||
Convertible senior notes * | $ | 103,100 | $ | — | $ | 429,438 | $ | — | |||||||||
* The fair value of the Notes was based on the Company’s closing stock price of $88.66 per share at December 31, 2014 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of 3.5 million shares or $309 million of cash. The maximum conversion premium that can be due on the Notes is 4.8 million shares, which assumes no increases in the conversion rate for certain corporate events. | |||||||||||||||||
Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate bonds with initial maturities of greater than three months at the date of purchase, but less than one year. Long-term investments consist of corporate bonds with initial maturities greater than one year at the date of purchase. The net unrealized gains from the Company’s short-term and long-term investments are reported in other comprehensive income (loss). At December 31, 2014, all of the Company’s short-term and long-term investments are classified as available for sale investments and are determined to be Level 2 instruments, which are measured at fair value using standard industry models with observable inputs. The fair value of the commercial paper is measured based on a standard industry model that uses the three-month Treasury bill rate as an observable input. The fair value of the asset-backed securities and corporate bonds is principally measured or corroborated by trade data for identical issues in which related trading activity is not sufficiently frequent to be considered a Level 1 input or that of comparable securities. At December 31, 2014, the Company had $119.1 million invested in short-term investments which were rated A or better by Standard & Poor’s and had maturities ranging from 175 to 365 days from date of purchase. At December 31, 2014, the Company had $24.4 million invested in long-term investments which were also rated A or better by Standard & Poor’s and had maturities ranging from 20 to 37 months from the date of purchase. | |||||||||||||||||
The following summarizes the Company’s short-term and long-term investments at December 31, 2014 and 2013 (in thousands): | |||||||||||||||||
December 31, 2014 | Cost | Gross | Gross | Fair Value | |||||||||||||
Unrealized | Unrealized | (Level 2) | |||||||||||||||
Gains | Losses | ||||||||||||||||
Debt securities: | |||||||||||||||||
Short-term: | |||||||||||||||||
Asset-backed securities | $ | 15,009 | $ | — | $ | (9 | ) | $ | 15,000 | ||||||||
Commercial paper | 1,747 | 3 | — | 1,750 | |||||||||||||
Corporate bonds | 102,430 | — | (42 | ) | 102,388 | ||||||||||||
Subtotal | 119,186 | 3 | (51 | ) | 119,138 | ||||||||||||
Long-term: | |||||||||||||||||
Corporate bonds | 24,463 | 10 | (42 | ) | 24,431 | ||||||||||||
Total | $ | 143,649 | $ | 13 | $ | (93 | ) | $ | 143,569 | ||||||||
December 31, 2013 | Cost | Gross | Gross | Fair Value | |||||||||||||
Unrealized | Unrealized | (Level 2) | |||||||||||||||
Gains | Losses | ||||||||||||||||
Debt securities: | |||||||||||||||||
Asset-backed securities | $ | 10,838 | $ | 1 | $ | (1 | ) | $ | 10,838 | ||||||||
Commercial paper | 17,986 | 11 | — | 17,997 | |||||||||||||
Corporate bonds | 30,808 | 1 | (7 | ) | 30,802 | ||||||||||||
Total | $ | 59,632 | $ | 13 | $ | (8 | ) | $ | 59,637 | ||||||||
Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets and liabilities acquired in a business combination and long-lived assets, which would be recognized at fair value if deemed to be impaired or if reclassified as assets held for sale. The fair value in these instances would be determined using Level 3 inputs. At December 31, 2014, the Company had no financial instruments that were measured using Level 3 inputs. | |||||||||||||||||
Credit Risk | |||||||||||||||||
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, long-term investments and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At times, such amounts may exceed federally-insured limits. The Company performs ongoing credit evaluations of its customers as warranted and generally does not require collateral. | |||||||||||||||||
As of December 31, 2014, three customers accounted for over 10% of the Company’s accounts receivable; 33%, 29% and 27%, respectively. At December 31, 2013, three customers accounted for over 10% of the Company’s accounts receivable; 31%, 31% and 20%, respectively. Revenues are primarily derived from major wholesalers and pharmaceutical companies that generally have significant cash resources. Allowances for doubtful accounts receivable are maintained based on historical payment patterns, aging of accounts receivable and actual write-off history. As of December 31, 2014 and 2013, no allowances for doubtful accounts were deemed necessary by the Company on its accounts receivable. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Stockholders' Equity Note [Abstract] | ||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY | |||
Common Stock | ||||
The Company is authorized to issue up to 250,000,000 shares of common stock, of which 36,150,620 and 33,636,442 were outstanding at December 31, 2014 and 2013, respectively. | ||||
In April 2014, the Company completed a follow-on underwritten public offering of 1,840,000 shares of common stock, including the shares issued to cover the underwriters’ overallotment option, at $64.00 per share. The Company received proceeds of $110.5 million as a result of the offering, net of underwriters’ fees and related expenses. | ||||
In April 2012, the Company sold 6,900,000 shares of common stock at a price of $9.75 per share in a registered public offering, which included the underwriters’ exercise of the overallotment option. The Company raised $62.9 million in net proceeds after deducting discounts and offering expenses. | ||||
Preferred Stock | ||||
The Company is authorized to issue up to 5,000,000 shares of preferred stock. No preferred stock was outstanding at December 31, 2014 or 2013. | ||||
Warrants | ||||
At December 31, 2014 and 2013, the Company had 7,216 and 58,354 warrants outstanding at a weighted average exercise price of $13.44 and $11.73, respectively. The warrants currently outstanding expire in February 2016. | ||||
Accumulated Other Comprehensive Income | ||||
The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (in thousands): | ||||
Net Unrealized Gains | ||||
(Losses) From Available | ||||
For Sale Investments | ||||
Balance at December 31, 2012 | $ | 27 | ||
Other comprehensive loss before reclassifications | (23 | ) | ||
Amounts reclassified from accumulated other comprehensive income | 1 | |||
Balance at December 31, 2013 | 5 | |||
Other comprehensive loss before reclassifications | (85 | ) | ||
Amounts reclassified from accumulated other comprehensive income | — | |||
Balance at December 31, 2014 | $ | (80 | ) |
STOCK_PLANS
STOCK PLANS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
STOCK PLANS | STOCK PLANS | ||||||||||||
Stock Incentive Plans | |||||||||||||
The Company’s 2011 stock incentive plan, or 2011 Plan, was adopted by its board of directors and approved by its stockholders in December 2010. The 2011 Plan allows the granting of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. The 2011 Plan was amended in June 2014, primarily to increase the number of shares of common stock available for grants by 2.75 million shares. Any shares forfeited or canceled from the Company’s 2007 Stock Incentive Plan are transferred to the 2011 Plan. In April 2014, the Company’s Board of Directors adopted the 2014 Inducement Plan which authorized 175,000 shares of common stock to be granted as equity awards to new employees. | |||||||||||||
All of the Company’s stock option grants have an exercise price equal to the closing price of the fair market value of the Company’s common stock on the date of grant, generally have a 10-year contractual term and vest in increments (generally over four years from the date of grant although the Company may occasionally grant options with different vesting terms). The Company uses authorized and unissued shares to satisfy its obligations under these plans. | |||||||||||||
2014 Employee Stock Purchase Plan | |||||||||||||
In April 2014, the Company’s Board of Directors adopted the 2014 Employee Stock Purchase Plan, or ESPP, which was subsequently approved by the Company’s stockholders. The purpose of the ESPP is to provide a vehicle for eligible employees to purchase shares of the Company’s common stock at a discounted price and to help retain and motivate current employees as well as attract new talent. Under the ESPP, up to 500,000 shares of common stock may be sold under the plan which expires in June 2024. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. The maximum fair market value of stock which can be purchased by a participant in a calendar year is $25,000. The initial offering period of the ESPP began on September 1, 2014 and ended on December 31, 2014. Beginning in 2015, six-month offering periods will begin on January 1st and July 1st of each year. During an offering period, eligible employees will have the opportunity to elect to purchase shares of the Company’s common stock on the purchase dates of June 30 and December 31. The per share purchase price will be equal to the lesser of 85% of the fair market value of the Company’s common stock on either the offering date or the purchase date. During the year ended December 31, 2014, 15,722 shares were purchased under the plan. | |||||||||||||
The following table contains information about the Company’s plans at December 31, 2014: | |||||||||||||
Stock Incentive Plans | Awards Reserved for Issuance | Awards Issued | Awards Available for Grant | ||||||||||
2007 Stock incentive plan | 2,022,837 | 2,022,837 | — | ||||||||||
2011 Plan | 5,931,700 | 4,400,525 | 1,531,175 | ||||||||||
2014 Inducement plan | 175,000 | 77,000 | 98,000 | ||||||||||
8,129,537 | 6,500,362 | 1,629,175 | |||||||||||
Employee Stock Purchase Plan | Shares Reserved for Purchase | Shares Purchased | Shares Available for Purchase | ||||||||||
2014 Employee stock purchase plan | 500,000 | 15,722 | 484,278 | ||||||||||
Stock-Based Compensation | |||||||||||||
Compensation expense for stock options granted to employees and directors is based on the estimated grant date fair value of options recognized over the requisite service period on a straight-line expense attribution method. Compensation expense for options granted to non-employees is based on the fair value of options, which are revalued each reporting period until vested and are recognized as expense over the requisite service period. Compensation expense for ESPP options is based on the grant date fair value of the ESPP shares and the grant date number of shares that can be purchased, which is recognized as expense over the length of an offering period. | |||||||||||||
The Company recognized stock-based compensation expense (net of forfeitures) in its consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012 as follows (in thousands): | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Cost of revenues | $ | 3,582 | $ | 1,526 | $ | 563 | |||||||
Research and development | 6,490 | 4,345 | 1,155 | ||||||||||
Selling, general and administrative | 14,750 | 5,642 | 3,058 | ||||||||||
Total | $ | 24,822 | $ | 11,513 | $ | 4,776 | |||||||
Stock-based compensation from: | |||||||||||||
Stock options | $ | 24,477 | $ | 11,513 | $ | 4,776 | |||||||
Employee stock purchase plan | 345 | — | — | ||||||||||
Total | $ | 24,822 | $ | 11,513 | $ | 4,776 | |||||||
In November 2014, the Company’s Board of Directors approved amendments to stock options held by a departing Vice President. The amendments accelerated the vesting of nine months’ worth of options and as a result the Company recognized an additional $0.6 million in stock-based compensation expense for the year ended December 31, 2014. In September 2013, the Company’s Board of Directors approved amendments to stock options held by two departing directors. The amendments (i) accelerated the vesting of the unvested portion of certain options, and (ii) extended the period during which each departing director could exercise all vested options to September 30, 2015. As a result of these amendments, the Company recognized an additional $0.2 million in stock-based compensation for the year ended December 31, 2013. | |||||||||||||
The following table summarizes the Company’s stock option activity and related information for the period from January 1, 2012 to December 31, 2014 (in thousands except share and per share amounts): | |||||||||||||
Number of | Weighted | Weighted Average | Aggregate | ||||||||||
Shares | Average | Remaining | Intrinsic Value | ||||||||||
Exercise Price | Contractual | (in Thousands) | |||||||||||
Term (Years) | |||||||||||||
Outstanding at January 1, 2012 | 2,337,017 | $ | 3.92 | 8.8 | $ | 11,829 | |||||||
Granted | 2,120,250 | 11.55 | |||||||||||
Exercised | (279,476 | ) | 2.75 | $ | 3,005 | ||||||||
Forfeited | (174,610 | ) | 7.94 | ||||||||||
Expired | (15 | ) | 7.07 | ||||||||||
Outstanding at December 31, 2012 | 4,003,166 | 7.86 | 8.66 | $ | 38,485 | ||||||||
Granted | 918,915 | 30.42 | |||||||||||
Exercised | (742,211 | ) | 5.19 | $ | 21,679 | ||||||||
Forfeited | (338,145 | ) | 10.93 | ||||||||||
Expired | (1,687 | ) | 7.24 | ||||||||||
Outstanding at December 31, 2013 | 3,840,038 | 13.5 | 8.01 | $ | 168,905 | ||||||||
Granted | 1,638,575 | 79.68 | |||||||||||
Exercised | (624,229 | ) | 11.6 | $ | 45,289 | ||||||||
Forfeited | (175,967 | ) | 44.32 | ||||||||||
Expired | (561 | ) | 21.7 | ||||||||||
Outstanding at December 31, 2014 | 4,677,856 | $ | 35.78 | 7.86 | $ | 248,276 | |||||||
Exercisable at December 31, 2014 | 2,085,829 | $ | 11.61 | 6.75 | $ | 160,707 | |||||||
Vested and expected to vest at December 31, 2014 | 4,486,980 | $ | 34.59 | 7.81 | $ | 243,438 | |||||||
As of December 31, 2014, $73.1 million of total unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted average period of 3.1 years. The Company’s stock options have a maximum expiration date of ten years from the date of grant. | |||||||||||||
The weighted average fair value of stock options granted for the years ended December 31, 2014, 2013 and 2012 was $42.62, $19.22 and $8.52 per share, respectively. The fair values of stock options granted were estimated using the Black-Scholes model with the following weighted average assumptions: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected dividend yield | None | None | None | ||||||||||
Risk free interest rate | 0.02 - 2.16% | 0.33 - 2.83% | 0.84 - 1.70% | ||||||||||
Expected volatility | 57.20% | 68.70% | 74.00% | ||||||||||
Expected term of options | 5.86 years | 6.22 years | 6.76 years | ||||||||||
The $23.27 fair value of the ESPP share options granted in September 2014 was estimated using the Black-Scholes model assuming: no expected dividends, a risk free interest rate of 0.37%, an expected volatility of 28.2% and an expected term of four months. |
NET_INCOME_LOSS_PER_SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
EARNINGS PER SHARE | PER SHARE | |||||||||||
Basic net income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of shares outstanding plus dilutive potential common stock outstanding during the period. Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, warrants and the purchase of shares from the employee stock purchase plan (using the treasury stock method) as well as the conversion of the excess conversion value on the Notes. As discussed in Note 8, Debt, the Company must settle the principal of the Notes in cash upon conversion, and it may settle any conversion premium in either cash or stock at the Company’s discretion. For purposes of calculating the dilutive impact, it is presumed that the conversion premium will be settled in common stock. | ||||||||||||
Potential common shares are excluded from the diluted net income (loss) per share computation to the extent that they would be antidilutive. Because the Company reported a net loss for all periods presented, no potentially dilutive securities have been included in the computation of diluted net loss per share. | ||||||||||||
The following table sets forth the computation of basic and diluted loss per share for the years ended December 31, 2014, 2013 and 2012 (in thousands except per share amounts): | ||||||||||||
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||
Net loss | $ | (13,716 | ) | $ | (63,909 | ) | $ | (52,281 | ) | |||
Denominator: | ||||||||||||
Weighted average shares of common stock outstanding | 35,299 | 33,182 | 30,332 | |||||||||
Net loss per share: | ||||||||||||
Basic and diluted net loss per share of common stock | $ | (0.39 | ) | $ | (1.93 | ) | $ | (1.72 | ) | |||
For the years ended December 31, 2014, 2013 and 2012, the number of potential common shares which were excluded from the diluted net loss per share calculation using the treasury stock method was 5.4 million, 3.4 million and 1.4 million, respectively. | ||||||||||||
The following outstanding stock options, conversion premium on the Notes, warrants and employee stock purchase plan units which could dilute basic earnings per share in the future are as follows (in thousands): | ||||||||||||
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Weighted average number of stock options outstanding | 3,534 | 3,980 | 3,304 | |||||||||
Conversion premium on the Notes | 2,483 | 1,194 | — | |||||||||
Weighted average number of warrants outstanding | 21 | 204 | 585 | |||||||||
Weighted average purchase options under ESPP | 1 | — | — | |||||||||
Total | 6,039 | 5,378 | 3,889 | |||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
INCOME TAXES | INCOME TAXES | ||||||||
A reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes is as follows: | |||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Benefit at U.S. Federal statutory rate | 35 | % | 35 | % | 35 | % | |||
State taxes | (32.75 | )% | 4.79 | % | 6.73 | % | |||
Increase in valuation allowance | (17.71 | )% | (42.91 | )% | (39.62 | )% | |||
Tax credits | 5.49 | % | 1.69 | % | — | % | |||
Interest expense | 10.68 | % | 0.3 | % | (0.22 | )% | |||
Other | (1.99 | )% | 1.82 | % | (1.89 | )% | |||
Provision for income taxes | (1.28 | )% | 0.69 | % | — | % | |||
There has been no provision for federal income taxes since the Company has incurred net operating losses since inception. The income tax provision of $0.2 million at December 31, 2014 is a result of minimum and apportionment based state taxes. | |||||||||
In 2013, the Company sold a portion of its unused New Jersey State net operating losses through a program sponsored by the New Jersey Economic Development Authority. Cash proceeds of $0.4 million were received by the Company resulting in a state tax benefit recognized during the year ended December 31, 2013. | |||||||||
Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Federal and state net operating loss carry-forwards | $ | 111,086 | $ | 114,819 | |||||
Federal and state research credits | 6,043 | 5,149 | |||||||
Depreciation and amortization | 3,494 | 3,248 | |||||||
Accruals and reserves | 3,861 | 1,696 | |||||||
Deferred revenue | 4,065 | 1,707 | |||||||
Stock based compensation | 8,487 | 2,622 | |||||||
Other | 588 | 752 | |||||||
Total deferred tax assets | 137,624 | 129,993 | |||||||
Deferred tax liabilities: | |||||||||
Discount on convertible senior notes | (6,283 | ) | (8,507 | ) | |||||
131,341 | 121,486 | ||||||||
Less: valuation allowance | (131,341 | ) | (121,486 | ) | |||||
Net deferred tax assets | $ | — | $ | — | |||||
As of December 31, 2014, the available federal net operating loss carryforward and the federal research and development tax credit carryforwards totaled $331.0 million and $4.4 million , respectively. Approximately $41.3 million of the federal net operating loss carryforward related to excess tax benefits arising from the exercise of stock options for which future tax benefits will be credited to equity when realized through a reduction in taxes payable. The Company also had state net operating loss carryforwards and state research and development tax credit carryforwards of approximately $196.3 million and $2.5 million, respectively which are subject to change on an annual basis due to variations in the Company’s annual state apportionment factors. The Company had non-U.S. tax net operating losses of approximately $0.3 million at December 31, 2014. | |||||||||
The net operating loss carryforwards will begin expiring in 2026 for federal purposes and 2015 for state purposes if the Company has not used them prior to that time, and the federal tax credits will begin expiring in 2028 unless previously used. The state tax credits carry forward indefinitely. | |||||||||
Since the Company had cumulative changes in ownership of more than 50% within a three-year period, under Internal Revenue Code sections 382 and 383, the Company’s ability to use any net operating loss and credit carryforwards to offset taxable income or tax will be limited. Such ownership changes were triggered by the initial acquisition of the Company’s stock in 2007 as well as cumulative ownership changes arising as a result of the completion of the initial public offering and other financing transactions. As a result of these ownership changes, the Company estimates that approximately $197.2 million of federal net operating losses are subject to annual limitations. At December 31, 2014, approximately $72.3 million of these federal net operating losses were available. The Company estimates that an additional $26.3 million will become available annually in 2015 and 2016, $14.8 million in 2017, $10.3 million annually from 2018 through 2022, and the remaining $6.0 million thereafter through 2025. In addition, California and certain states have suspended use of net operating loss carryforwards for certain taxable years, and other states are considering similar measures. As a result, the Company may incur higher state income tax expense in the future. | |||||||||
The valuation allowance for deferred tax assets increased by approximately $9.9 million, $17.5 million and $20.7 million during the years ended December 31, 2014, 2013 and 2012, respectively. There is significant doubt regarding the Company’s ability to utilize its net deferred tax assets and, therefore, the Company has recorded a full valuation allowance. | |||||||||
The 2007 Acquisition was treated as a stock acquisition for tax purposes and, therefore, the acquired intangibles for book purposes are not deductible for income tax purposes. The Company also recorded goodwill relating to contingent payments due under the Acquisition during the years ended December 31, 2014 and 2013, which are not deductible for income tax purposes. See Note 6, Goodwill and Intangible Assets, for further discussion. | |||||||||
In connection with the adoption of stock-based compensation guidance in 2006, the Company elected to follow the with-and-without approach to determine the sequence in which deductions and net operating loss carryforwards are utilized. Accordingly, no tax benefit related to stock options was recognized in the current year. | |||||||||
The Company evaluates its uncertain tax positions in a two-step process. The Company first determines whether it is more-likely-than-not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. | |||||||||
The Company did not have a liability related to unrecognized tax benefits as of December 31, 2014 and 2013 due to operating losses but has reduced its deferred tax assets by $0.4 million at December 31, 2014 and 2013. Further, because the Company has recorded a full valuation allowance on its net deferred tax assets, the effect of implementing ASC 740 has been a reduction of the tax valuation allowance by the amount above. | |||||||||
The Company recognizes interest and penalties related to unrecognized tax benefits as tax expense. No interest or penalties were accrued for 2014, 2013 or 2012. The Company is currently open for audit by the United States Internal Revenue Service, or IRS, and state tax jurisdictions for 2008 through 2014. However, the IRS or state may still examine and adjust a net operating loss arising from a closed year to the extent it is utilized in an open tax year. The American Tax Relief Act of 2012, enacted on January 2, 2013, retroactively reinstated the research and development tax credit for 2012. The Company reported credits of approximately $0.2 million for federal income tax purposes in the first quarter of 2013 related to 2012. |
OTHER_EMPLOYEE_BENEFITS
OTHER EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |
OTHER EMPLOYEE BENEFITS | OTHER EMPLOYEE BENEFITS |
The Company sponsors a 401(k) savings plan. Under the plan, employees may make contributions which are eligible for a discretionary percentage match as defined in the plan and determined by the Board of Directors. The Company recognized $1.0 million, $0.6 million and $0.3 million of related compensation expense for the years ended December 31, 2014, 2013 and 2012, respectively. |
COMMERCIAL_PARTNERS_AND_OTHER_
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | 12 Months Ended |
Dec. 31, 2014 | |
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | |
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | COMMERCIAL PARTNERS AND OTHER AGREEMENTS |
Commercial Partners | |
Patheon UK Limited | |
In April 2014, the Company and Patheon UK Limited, or Patheon, entered into a Strategic Co-Production Agreement and Technical Transfer and Service Agreement to collaborate in the manufacture and packaging of EXPAREL. Under the terms of the Technical Transfer and Service Agreement, Patheon has agreed to undertake certain technical transfer activities and construction services needed to prepare its Swindon, United Kingdom facility for the manufacture and packaging of EXPAREL in two dedicated manufacturing suites. This agreement will remain in full effect unless and until it expires or is terminated. Upon termination of this agreement (other than termination by the Company in the event that Patheon does not meet the construction and manufacturing milestones or for a breach by Patheon), the Company will pay for the make good costs occasioned by the removal of its manufacturing equipment and for Patheon’s termination costs up to a maximum amount of $2.0 million. | |
The Company also entered into a Manufacturing and Supply Agreement with Patheon. Under the terms of the Manufacturing and Supply Agreement, following the FDA approval date of the suites, the Company has agreed to purchase EXPAREL product from Patheon. Unless earlier terminated, this agreement will expire on the 10th anniversary of the FDA approval date for the initial manufacturing suite. | |
Future expenditures associated with the aforementioned agreements are primarily driven by the potential commercial requirements and demand for the Company’s products which cannot be fully determined at this time. | |
Aratana Therapeutics, Inc. | |
On December 5, 2012, the Company entered into a worldwide license, development and commercialization agreement with Aratana Therapeutics, Inc., or Aratana. Under the agreement, the Company granted Aratana an exclusive royalty-bearing license, including the limited right to grant sublicenses, for the development and commercialization of the Company’s bupivacaine liposome injectable suspension product for animal health indications. Under the agreement, Aratana will develop and seek approval for the use of the product in veterinary surgery to manage postsurgical pain, focusing initially on developing the product for cats, dogs and other companion animals. In connection with its entry into the license agreement, the Company received a one-time payment of $1.0 million and is eligible to receive up to an additional aggregate $42.5 million upon the achievement of development and commercial milestones. Once the product has been approved by the FDA for sale in the United States, Aratana will be required to pay the Company a tiered double digit royalty on net sales made in the United States. If the product is approved by foreign regulatory agencies for sale outside of the United States, Aratana will be required to pay the Company a tiered double digit royalty on such net sales. Royalty rates will be reduced by a certain percentage upon the entry of a generic competitor for animal health indications into a jurisdiction or if Aratana must pay royalties to third parties under certain circumstances. In December 2013, the Company received a $0.5 million milestone payment under the agreement. | |
Mundipharma International Corporation Limited | |
In June 2003, the Company entered into an agreement granting Mundipharma International Corporation Limited, or Mundipharma, exclusive marketing and distribution rights to DepoCyte in the E.U. and certain other European countries. Under the agreement, as amended, and a separate supply agreement, the Company receives a fixed payment for supplying vials of DepoCyte and a double-digit royalty, net of supply price, on sales in the applicable territories. In April 2014, the Company and Mundipharma amended their agreements to, among other things, (i) extend the term of such agreements by an additional 15 years to June 2033, and (ii) expand the territories where Mundipharma can market and distribute DepoCyte to all countries other than the United States of America, Canada and Japan. In connection with the agreements, the Company received a non-refundable upfront payment of $8.0 million in May 2014 which was deferred and is being recognized over the contractual term. | |
Sigma-Tau Pharmaceuticals, Inc. | |
In December 2002, the Company entered into a supply and distribution agreement with Enzon Pharmaceuticals Inc., subsequently acquired by Sigma-Tau Pharmaceuticals, Inc., or Sigma-Tau, regarding the sale of DepoCyt®. Pursuant to the agreement, Sigma-Tau was appointed the exclusive distributor of DepoCyt in the United States and Canada. Under the supply and distribution agreement, the Company supplies unlabeled DepoCyt vials to Sigma-Tau for finished packaging by Sigma-Tau. Under these agreements, the Company receives a fixed payment for supplying the vials of DepoCyt and a double-digit royalty on sales, net of supply price, in the United States and Canada. | |
CrossLink BioScience, LLC | |
Effective October 1, 2013, the Company and CrossLink BioScience, LLC, or CrossLink, commenced a five-year arrangement for the promotion and sale of EXPAREL pursuant to the terms of a Master Distributor Agreement. Under the agreement, the Company appointed CrossLink as a third-party distributor during the term to promote and sell EXPAREL to orthopedic surgeons in the United States, with the exception of certain geographical areas and accounts. The prices and purchasing terms related to sales of EXPAREL are determined by the Company, and all orders are subject to acceptance or rejection by the Company. CrossLink is entitled to receive commissions on its sales of EXPAREL in the applicable territories, subject to certain conditions and adjustments. CrossLink may receive additional performance-based payments if it achieves certain sales goals. The Company may terminate the agreement if CrossLink fails to meet certain minimum performance metrics or if the Company pays a termination fee. Effective March 1, 2015, the agreement was amended to, among other things, amend certain payment terms and specify certain sub-distributors that may promote and sell EXPAREL under the agreement. | |
Research Development Foundation | |
Pursuant to an agreement with Research Development Foundation, or RDF, the Company is required to pay RDF a low single-digit royalty on the collection of revenues from its DepoFoam-based products, for as long as certain patents assigned to the Company under the agreement remain valid. RDF has the right to terminate the agreement for an uncured material breach by the Company, in connection with its bankruptcy or insolvency or if it directly or indirectly opposes or disputes the validity of the assigned patent rights. | |
Amylin Pharmaceuticals, Inc. | |
In March 2008, the Company entered into a development and licensing agreement with Amylin Pharmaceuticals, Inc., or Amylin. Under the development and licensing agreement, the Company provided Amylin with access to its proprietary DepoFoam drug delivery technology to conduct research, feasibility and formulation work, and for the manufacturing of pre-clinical and clinical material for various Amylin products. The Company is entitled to payments from Amylin for its work on the formulation and development of compounds with the DepoFoam technology, its achievement of certain clinical development milestones, its achievement of certain worldwide sales and a tiered royalty based upon sales. The development and licensing agreement with Amylin remains in effect until January 2017, however, neither party is currently performing any activities under the agreement. | |
Terminated Agreements | |
EKR Therapeutics, Inc. | |
On January 3, 2012, EKR Therapeutics, Inc., delivered a notice to the Company to terminate the licensing, distribution and marketing agreement relating to DepoDur. The associated supply agreement also terminated concurrently with the termination of the licensing, distribution and marketing agreement, effective June 8, 2012. As a result of the termination, the Company recognized any unamortized deferred revenue relating to the agreement on a straight-line basis through the termination date in June 2012. | |
Flynn Pharmaceuticals Limited | |
On October 29, 2012, the Company terminated the marketing agreement with Flynn Pharmaceuticals Limited, which had granted exclusive distribution rights to DepoDur in the E.U., certain other European countries, South Africa and the Middle East. The supply agreement terminated concurrently with the marketing agreement. The termination was effective immediately. As a result of the termination, the Company recognized any unamortized deferred revenue relating to the agreement upon termination. | |
Novo Nordisk AS | |
On June 29, 2012, the Company received a notice of termination from Novo Nordisk AS, or Novo, of the Development and License Agreement, dated January 14, 2011, which had granted non-exclusive rights to Novo under certain of its patents and know-how to develop, manufacture and commercialize formulations of a Novo proprietary drug using the Company’s DepoFoam drug delivery technology. The Company received a one-time upfront payment of $1.5 million in January 2011 and a milestone payment of $2.0 million in November 2011, both of which had been deferred and were being recognized on a straight-line basis over the estimated contract period to collaborative licensing and development revenue in the consolidated statements of operations. Pursuant to the terms of the agreement, the termination of the agreement was effective on August 28, 2012. The agreement was terminated due to Novo’s decision to discontinue development of the proprietary drug subject to the agreement. As a result of the termination, the Company recognized any unamortized deferred revenue relating to the agreement on a straight-line basis through the termination date in August 2012. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS |
The Company’s Chief Medical Officer, Dr. Gary Patou, is a partner of MPM Asset Management LLC, or MPM, an investor in the Company. David Stack, the Company’s President, Chief Executive Officer and Chairman is also a managing director at MPM. The Company contracted with MPM and Dr. Patou for the services of Dr. Patou, or Consultant. MPM earned monthly consulting fees between $16,000 and $26,000 in exchange for 50% to 80% of the Consultant’s business time. The Company incurred expenses of $0.5 million, $0.3 million and $0.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. At December 31, 2014 and 2013, the amount payable to MPM was $0.2 million and $0.1 million, respectively. | |
In December 2012, the Company entered into a worldwide license, development and commercialization agreement with Aratana as discussed in Note 15, Commercial Partners and Other Agreements. MPM and its affiliates are holders of capital stock of Aratana. | |
In April 2012, the Company entered into a consulting agreement with Dr. Gary Pace, a director of the Company, whereby Dr. Pace would provide consulting services. Pursuant to the consulting agreement and subsequent amendments, the consulting services are paid at the rate of $5,000 to $15,000 per month based on the number of days worked. The Company recorded expenses under the consulting arrangement for the years ended December 31, 2014, 2013 and 2012 of $0.1 million, $0.1 million, and $0.2 million, respectively. In connection with the consulting arrangement, Dr. Pace received an option to purchase 20,000 shares of common stock at an exercise price of $11.02 per share and received an option to purchase 70,000 shares of common stock at an exercise price of $16.67 per share. The amounts payable at December 31, 2014 and 2013 to Dr. Pace for the consulting services were less than $0.1 million. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES | ||||
Leases | |||||
The Company leases research and development, manufacturing and warehouse facilities in San Diego, California and its corporate headquarters in Parsippany, New Jersey. The three leases in San Diego run through August 2020. In March 2014, the Company amended the lease for its corporate headquarters which increased the size of the leased premises and extended the lease term through March 2028. In November 2014, the Company entered into lease contracts for additional research and development space at the Company’s Science Center Campus in San Diego. The leases will commence in August 2015 and expire in October 2020. | |||||
In connection with the Acquisition, the Company determined that its lease rates associated with the Science Center Campus were in excess of market rates resulting in a $3.3 million unfavorable lease accrual as of the Acquisition date. The unfavorable lease accrual, which is recorded in other long-term liabilities in the Company’s consolidated balance sheets, is amortized over the remaining terms of the leases. The annual amortization of the unfavorable lease accrual for each of the years ended December 31, 2014, 2013 and 2012 was $0.1 million, $0.1 million and $0.4 million, respectively. | |||||
As of December 31, 2014, the aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands): | |||||
Year | |||||
2015 | $ | 6,133 | |||
2016 | 7,263 | ||||
2017 | 7,459 | ||||
2018 | 7,660 | ||||
2019 | 7,876 | ||||
2020 through 2028 | 11,786 | ||||
Total | $ | 48,177 | |||
Total rent expense, net of amortization of unfavorable lease obligation and tenant improvements, under all operating leases for years ended December 31, 2014, 2013 and 2012 was $4.9 million, $4.9 million and $4.8 million, respectively. Deferred rent at December 31, 2014 and 2013 was $4.5 million and $2.3 million, respectively. | |||||
Litigation | |||||
From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of its business. Except as described below, the Company is not presently a party to any litigation which it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material adverse effect on its business, operating results, financial condition or cash flows. | |||||
On October 3, 2014, a purported class action lawsuit was filed in the United States District Court for the District of New Jersey against the Company and three of its current officers, Nicholas R. Lovallo v. Pacira Pharmaceuticals, Inc., et al., Case No. 2:14-cv-06172-WHW-CLW. The lawsuit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and is premised on allegedly false and/or misleading statements, and non-disclosure of material facts, regarding the Company’s business, operations, prospects and performance during the proposed class period of April 9, 2012 to September 24, 2014. The Company intends to vigorously defend all claims asserted, including by filing a motion to dismiss. Given the early stage of the litigation, at this time the Company is unable to reasonably estimate possible losses or form a judgment that an unfavorable outcome is either probable or remote. It is not currently possible to assess whether or not the outcome of these proceedings will have a material adverse effect on the Company. | |||||
Other Commitments and Contingencies | |||||
The FDA, as a condition of the approval of EXPAREL has required the Company to study EXPAREL in pediatric patients. The Company has agreed to a trial timeline where, over several years, it will study pediatric patient populations in descending order starting with 12-18 year olds and ending with children under two years of age. The cost to complete the trial may be significant. | |||||
In addition to the initial $19.6 million purchase price for the Acquisition, the Company entered into an earn-out agreement with Skyepharma which was based on the Company reaching certain revenue milestones following the Acquisition. Pursuant to this agreement, the Company is required to pay Skyepharma milestone payments up to an aggregate of $62.0 million, of which $18.0 million has been paid. Additionally, the Company agreed to pay to Skyepharma a 3% percentage payment on collections of EXPAREL sales in the United States, Japan, the United Kingdom, France, Germany, Italy and Spain. | |||||
Such obligations to make percentage payments will continue for the term in which such sales related to EXPAREL are covered by a valid claim in certain patent rights related to EXPAREL and other biologics products. The expiration date of the last valid claim will occur in 2018. The Company has the right to cease paying the 3% percentage payments in the event that Skyepharma breaches certain covenants not to compete contained in the stock purchase agreement. In the event that the Company ceases to sell EXPAREL and begin marketing a similar replacement product for EXPAREL, it would no longer be obligated to make percentage payments, but it may be required to make certain milestone payments upon reaching certain sales milestones. | |||||
Refer to Note 6, Goodwill and Intangible Assets, for further discussion. |
SELECTED_QUARTERLY_FINANCIAL_D
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||||||
The following table presents selected quarterly financial data for the years ended December 31, 2014 and 2013 (in thousands, except per share data): | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||||
Total revenues | $ | 36,662 | $ | 47,165 | $ | 52,048 | $ | 61,793 | ||||||||
Cost of revenues | 18,127 | 19,954 | 20,391 | 18,968 | ||||||||||||
Total operating expenses | 45,920 | 50,007 | 53,033 | 53,873 | ||||||||||||
Net income (loss) | (11,477 | ) | (5,037 | ) | (3,004 | ) | 5,802 | |||||||||
Basic net income (loss) per common share | $ | (0.34 | ) | $ | (0.14 | ) | $ | (0.08 | ) | $ | 0.16 | |||||
Diluted net income (loss) per common share | $ | (0.34 | ) | $ | (0.14 | ) | $ | (0.08 | ) | $ | 0.14 | |||||
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2013 | 2013 | 2013 | 2013 | |||||||||||||
Total revenues | $ | 11,587 | $ | 17,141 | $ | 23,259 | $ | 33,564 | ||||||||
Cost of revenues | 11,391 | 10,214 | 14,791 | 18,376 | ||||||||||||
Total operating expenses | 30,232 | 29,151 | 36,073 | 43,384 | ||||||||||||
Net loss | (23,138 | ) | (14,031 | ) | (14,784 | ) | (11,956 | ) | ||||||||
Basic net loss per common share | $ | (0.71 | ) | $ | (0.42 | ) | $ | (0.44 | ) | $ | (0.36 | ) | ||||
Diluted net loss per common share | $ | (0.71 | ) | $ | (0.42 | ) | $ | (0.44 | ) | $ | (0.36 | ) | ||||
For periods where the Company reported a net loss, no potentially dilutive securities have been included in the computation of diluted net loss per share. |
SUBSEQUENT_EVENTS_Notes
SUBSEQUENT EVENTS (Notes) | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS |
In February 2015, the Company received notice of an election for conversion from one of the holders of the Notes. The principal amount of the conversion request was $1.5 million which must be paid in cash pursuant to the terms of the Indenture. The Company elected to settle the conversion premium in shares of its common stock, calculated using a 40 trading-day observation period ending April 8, 2015. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation | ||||||||
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. The accounts of wholly owned subsidiaries are included in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications were made to conform to the current presentation. | |||||||||
Use of Estimates | Use of Estimates | ||||||||
The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and contingent liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, among other things, revenue recognition, impairment of long-lived assets, stock-based compensation and valuation of deferred tax assets. The Company’s critical accounting policies are those that are both most important to the Company’s consolidated financial condition and results of operations and require the most difficult, subjective or complex judgments on the part of management in their application, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Because of the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results could differ from these estimates. | |||||||||
Liquidity | Liquidity | ||||||||
Management believes that the Company’s existing cash and cash equivalents, restricted cash, short-term and long-term investments and cash flows generated from product sales will be sufficient to enable the Company to meet its planned operating expenses, capital expenditure requirements, payment of the principal on any conversions of the Company’s convertible senior notes and to service its indebtedness at least through December 31, 2015. However, changing circumstances may cause the Company to expend cash significantly faster than currently anticipated, and the Company may need to spend more cash than currently expected because of circumstances beyond its control. The Company expects to continue to incur substantial additional expenditures as it continues to commercialize EXPAREL, develops and seeks regulatory approval for its product candidates, and expands its manufacturing facilities for EXPAREL and its other product candidates including costs associated with certain technical transfer activities and construction of two dedicated manufacturing suites in the United Kingdom. | |||||||||
Senior convertible notes | On January 23, 2013, the Company completed a private placement of $120.0 million in aggregate principal amount of 3.25% convertible senior notes, or Notes, due 2019. As further discussed in Note 8, Debt, the Company must settle the principal of the Notes in cash upon conversion, and it may settle any conversion premium in either cash, stock or a combination of cash and shares of common stock at the Company’s discretion. Based on certain conditions that were met during the three months ended December 31, 2014, the holders can convert their Notes at any time during the quarter ended March 31, 2015 and, therefore, the Notes are classified in the consolidated balance sheet at December 31, 2014 as a current obligation. In the event of conversion, holders would forgo all future interest payments, any unpaid interest and the possibility of further stock price appreciation. In the event that all of the Notes are converted, the Company would be required to repay the $120.0 million in principal value and approximately $309 million of cash or issue approximately 3.5 million shares of its common stock (or a combination of cash and shares of its common stock) to settle the conversion premium as of December 31, 2014, causing dilution to the Company’s current shareholders. | ||||||||
Revenue Recognition | Revenue Recognition | ||||||||
The Company’s principal sources of revenue include (i) sales of EXPAREL in the United States, or U.S., (ii) sales of DepoCyt(e) in the U.S. and the European Union, or E.U., (iii) royalties based on sales by commercial partners of DepoCyt(e) and (iv) license fees, milestone payments and reimbursement for development work from third parties. The Company recognizes revenue when there is persuasive evidence that an arrangement exists, title has passed, collection is reasonably assured and the price is fixed or determinable. | |||||||||
Net Product Sales | |||||||||
The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by end users which include hospitals, ambulatory surgery centers and doctors. EXPAREL is delivered directly to the end user without the wholesaler ever taking physical possession of the product. The Company records revenue at the time the product is delivered to the end user. The Company also recognizes revenue from products manufactured and supplied to commercial partners, such as DepoCyt(e) upon shipment. Prior to the shipment of manufactured products, the Company conducts initial product release and stability testing in accordance with current Good Manufacturing Practices. | |||||||||
Revenues from sales of products are recorded net of returns allowances, prompt payment discounts, wholesaler service fees and volume rebates and chargebacks. The calculation of some of these items requires management to make estimates based on sales data, contracts, inventory data and other related information which may become known in the future. The Company reviews the adequacy of its provisions on a quarterly basis. | |||||||||
Returns Allowances | |||||||||
The Company allows customers to return product that is damaged or received in error. In addition, the Company allows EXPAREL to be returned beginning six months prior to, and twelve months following product expiration. As EXPAREL is a newly commercially available product, the Company estimates its sales return reserve based on return history from other hospital-based products with similar distribution models and its historical experience, which management believes is the best estimate of the anticipated product to be returned. The returns reserve is recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses. | |||||||||
The Company’s commercial partners can return Depocyt(e) within contractually specified timeframes if the product does not meet the applicable inspection tests. The Company estimates its returns reserve based on its experience with historical return rates. Historically, the Company’s product returns have not been material. | |||||||||
Prompt Payment Discounts | |||||||||
The prompt payment reserve is based upon discounts offered to wholesalers as an incentive to meet certain payment | |||||||||
terms. The Company accrues discounts to wholesalers based on contractual terms of agreements and historical experience. The Company accounts for these discounts at the time of sale as a reduction to gross product sales and a reduction to accounts receivable. | |||||||||
Wholesaler Service Fees | |||||||||
The Company’s customers include major and regional wholesalers with whom the Company has contracted a fee for service based on a percentage of gross product sales. This fee for service is recorded as a reduction to gross product sales and an increase to accrued expenses at the time the sale, and is recorded based on the contracted percentage. | |||||||||
Volume Rebates and Chargebacks | |||||||||
Volume rebates and chargeback reserves are based upon contracted discounts and promotional offers the Company provides to certain end users such as members of group purchasing organizations. Volume rebates are recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses. Chargeback reserves are recorded at the time of sale as a reduction to gross product sales and a reduction to accounts receivable. | |||||||||
Royalty Revenue | |||||||||
The Company recognizes revenue from royalties based on sales of its commercial partners’ net sales of products. Royalties are recognized as earned in accordance with contract terms when they can be reasonably estimated based and collection is reasonably assured. The Company’s commercial partners are obligated to report their net product sales and the resulting royalty due to the Company within 60 days from the end of each quarter. Based on historical product sales, royalty receipts and other relevant information, the Company accrues royalty revenue each quarter and subsequently trues-up its royalty revenue when it receives royalty reports from its commercial partners. | |||||||||
Collaborative Licensing and Development Revenue | |||||||||
The Company recognizes revenue from reimbursements received in connection with feasibility studies and development work for third parties who desire to utilize its DepoFoam extended release drug delivery technology for their products when the Company’s contractual services are performed, provided collection is reasonably assured. The Company’s principal costs under these agreements include costs for its personnel conducting research and development, its allocated overhead as well as research and development performed by outside contractors or consultants. | |||||||||
The Company recognizes revenues from non-refundable up-front license fees received under collaboration agreements ratably over the performance period as determined under the collaboration agreement (estimated development period in the case of development agreements, and contract period or longest patent life in the case of supply and distribution agreements). If the estimated performance period is subsequently modified, the Company will modify the period over which the up-front license fee is recognized accordingly on a prospective basis. Upon notification of a termination of a collaboration agreement, any remaining non-refundable license fees received by the Company, which had been deferred, are recognized over the remaining contractual term. If the termination is immediate and no additional services are to be performed, the deferred revenue is generally recognized in full. All such recognized revenues are included in collaborative licensing and development revenue in the Company’s consolidated statements of operations. | |||||||||
The Company recognizes revenue from milestone payments received under collaboration agreements when earned, provided that the milestone event is substantive, its achievability was not reasonably assured at the inception of the agreement, the Company has no further performance obligations relating to the event and collection is reasonably assured. If these criteria are not met, the Company recognizes milestone payments ratably over the remaining period of the Company’s performance obligations under the applicable agreements. | |||||||||
Concentration of Major Customers | Concentration of Major Customers | ||||||||
The Company’s customers are national and regional wholesalers of pharmaceutical products as well as commercial, collaborative and licensing partners. The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers (including AmerisourceBergen Health Corporation, Cardinal Health, Inc., and McKesson Drug Company), but shipments of the product are sent directly to individual accounts, such as hospitals, ambulatory surgery centers and individual doctors. The table below includes the percentage of revenue comprised by the three largest customers (i.e., wholesalers or commercial partners) in each year presented: | |||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Largest customer | 33 | % | 33 | % | 30 | % | |||
Second largest customer | 29 | % | 28 | % | 14 | % | |||
Third largest customer | 24 | % | 18 | % | 11 | % | |||
86 | % | 79 | % | 55 | % | ||||
Revenues from customers outside the U.S. accounted for 2%, 5% and 23% of the Company’s revenue for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Research and Development Expenses | Research and Development Expenses | ||||||||
Research and development expenses consist of costs associated with products being developed internally, and include related personnel expenses, laboratory supplies, active pharmaceutical ingredients, manufacturing supplies, facilities costs, preclinical and clinical trial costs and other outside service fees. The Company expenses research and development costs as incurred. A significant portion of the development activities are outsourced to third parties, including contract research organizations. In such cases, the Company may be required to estimate related service fees to be accrued. | |||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||
All highly-liquid investments with maturities of 90 days or less when purchased are considered cash equivalents. | |||||||||
Restricted Cash | Restricted Cash | ||||||||
As further discussed in Note 8, Debt, the Company had entered into a financing agreement with Paul Capital for the sale of a royalty interest in its DepoCyt(e) and DepoDur® product revenue and royalties. The royalty interest agreement pertained only to DepoCyt(e) and the Company’s previously-marketed product, DepoDur, and does not include revenue related to EXPAREL or any other product candidates. As part of this financing agreement, the Company and Paul Capital maintained a lockbox, where all DepoCyt(e) and DepoDur product revenue and royalties were received. The Company had no minimum payment obligations under this agreement. Commencing on April 1 of every year, the first $2.5 million received in the lockbox was restricted and was used to make quarterly payments due to Paul Capital, if any, under the agreement during the subsequent 12 month period. On March 31 of the subsequent year, the balance of cash in the lockbox, if any, is remitted to the Company. The Paul Capital agreement terminated on December 31, 2014. | |||||||||
Short-Term Investments | Short-Term and Long-Term Investments | ||||||||
Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate bonds with initial maturities of greater than three months at the date of purchase, but less than one year. Long-term investments consist of corporate bonds with initial maturities greater than one year at the date of purchase. The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such determination at each balance sheet date. The Company’s investment policy sets minimum credit quality criteria and maximum maturity limits on its investments to provide for preservation of capital, liquidity and a reasonable rate of return. Available-for-sale securities are recorded at fair value, based on current market valuations. Unrealized holding gains and losses on available-for-sale securities are excluded from net loss and are reported as a separate component of other comprehensive loss until realized. Realized gains and losses are included in non-operating other income (expense) on the consolidated statements of operations and are derived using the specific identification method for determining the cost of the securities sold. | |||||||||
Inventories | Inventories | ||||||||
Inventories consist of finished goods held for sale and distribution, raw materials and work in process. Inventories are stated at the lower of cost, which includes amounts related to material, labor and overhead; or market (net realizable) value and is determined using the first-in, first-out (“FIFO”) method. The Company periodically reviews its inventory to identify obsolete, slow-moving, or otherwise unsalable inventories, and establishes allowances for situations in which the cost of the inventory is not expected to be recovered. | |||||||||
Fixed Assets | Fixed Assets | ||||||||
Fixed assets are recorded at cost, net of accumulated depreciation and amortization. The Company reviews its property, plant and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. | |||||||||
Depreciation of fixed assets is provided over their estimated useful lives on a straight-line basis. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the related remaining lease terms. Useful lives by asset category are as follows: | |||||||||
Asset Category | Useful Lives | ||||||||
Computer equipment and software | 1 to 3 years | ||||||||
Office furniture and equipment | 5 years | ||||||||
Manufacturing and laboratory equipment | 5 to 10 years | ||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets | ||||||||
Intangible assets are recorded at cost, net of accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives on a straight-line basis. The Company evaluates the recoverability of intangible assets periodically and takes into account events and circumstances which may indicate that impairment exists. Goodwill represents the excess of purchase price over fair value acquired in a business combination and is not amortized, but subject to impairment at least annually or when a triggering event occurs that could indicate a potential impairment. | |||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets | ||||||||
Management reviews long-lived assets, including fixed assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. | |||||||||
Convertible Debt Transactions | Convertible Debt Transactions | ||||||||
The Company separately accounts for the liability and equity components of convertible debt instruments by allocating the proceeds from the issuance between the liability component and the embedded conversion option, or equity component. This is done in accordance with accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The value of the equity component is calculated by first measuring the fair value of the liability component, using the interest rate of a similar liability that does not have a conversion feature, as of the issuance date. The difference between the initial proceeds from the convertible debt issuance and the fair value of the liability component is recorded as the carrying amount of the equity component. The Company recognizes the amortization of the resulting discount as part of interest expense in its consolidated statement of operations. | |||||||||
Upon settlement of the convertible senior notes, the liability component is measured at fair value. The Company allocates a portion of the fair value of the total settlement consideration transferred to the extinguishment of the liability component equal to the fair value of that component immediately prior to the settlement. Any difference between the consideration attributed to the liability component and the net carrying amount of the liability component, including any unamortized debt issuance costs, is recognized as a gain or loss in the consolidated statement of operations. Any remaining consideration is allocated to the reacquisition of the equity component and is recognized as a reduction of additional paid-in capital. | |||||||||
Foreign Currencies | Foreign Currencies | ||||||||
The Company receives payment from certain commercial partners relating to royalties on DepoCyte® in Euros. Realized gains and losses from foreign currency transactions are reflected in the consolidated statements of operations and were not significant in any period. All foreign currency receivables and payables are measured at the applicable exchange rate at the end of the reporting period. | |||||||||
Income Taxes | Income Taxes | ||||||||
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to basis differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2014 and 2013, all deferred tax assets were fully offset by a valuation allowance. | |||||||||
In February 2013, the Company received $0.4 million from the sale of unused net operating losses through the State of New Jersey’s Economic Development Authority Technology Business Tax Certificate Transfer Program. As a result, the Company recorded an income tax benefit by reversing the valuation allowance for the related net deferred tax assets. The Company continues to maintain a full valuation allowance on its remaining net deferred tax assets because there is significant doubt regarding the Company’s ability to utilize such net deferred tax assets. | |||||||||
The Company accrues interest and penalties, if any, on underpayment of income taxes related to unrecognized tax benefits as a component of income tax expense in its consolidated statements of operations. | |||||||||
Per Share Data | Per Share Data | ||||||||
Basic net income (loss) per share is computed by dividing net income (loss) available (attributable) to common stockholders by the weighted average number of shares of common stock outstanding during the period. | |||||||||
Diluted net income (loss) per share is calculated by dividing net income (loss) available (attributable) to common stockholders as adjusted for the effect of dilutive securities, if any, by the weighted average number of common stock and dilutive common stock outstanding during the period. Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, warrants and the purchase of shares from the employee stock purchase plan (using the treasury stock method) as well as the conversion of the excess conversion value on the Notes. Potential common shares in the diluted net loss per share computation are excluded to the extent that they would be anti-dilutive. No potentially dilutive securities are included in the computation of any diluted per share amounts as the Company reported a net loss for all periods presented. | |||||||||
Stock-Based Compensation | Stock-Based Compensation | ||||||||
The Company’s stock-based compensation program includes grants of stock options to employees, consultants, and non-employee directors in addition to the opportunity for employees to participate in an employee stock purchase plan. The expense associated with these programs is recognized in the Company’s consolidated statements of operations based on their fair values as they are earned under the applicable vesting terms or the length of an offering period. | |||||||||
The valuation of stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable stock options. Accordingly, the Company uses an option pricing model to derive an estimated fair value. In calculating the estimated fair value of stock options granted, the Company uses the Black-Scholes option valuation model, or Black-Scholes model, which requires the consideration of the following variables for purposes of estimating fair value: | |||||||||
• | Expected term of the option | ||||||||
• | Expected volatility | ||||||||
• | Expected dividends | ||||||||
• | Risk-free interest rate | ||||||||
Since its initial public offering, the Company utilizes its available historic volatility data combined with a publicly traded peer group’s historic volatility to determine expected volatility over the expected option term. In 2014, the Company used an expected term based on a weighted average combination of its historical data from stock option exercises and the simplified method. In prior years the Company utilized the “simplified” method for “plain vanilla” options to estimate the expected term of stock option grants. Under that approach, the weighted average expected life was presumed to be the average of the vesting term and the contractual term of the option. The risk-free interest rate is based on the implied yield on United States Department of the Treasury zero coupon bonds for periods commensurate with the expected term of the options. The dividend yield on the Company’s common stock is estimated to be zero as the Company has not paid any dividends since inception, nor does it have any intention to do so in the foreseeable future. The Company estimates the level of award forfeitures expected to occur based on its historical data and records compensation cost only for those awards that are ultimately expected to vest. | |||||||||
Segment Reporting | Segment Reporting | ||||||||
The Company operates in one reportable segment and, accordingly, no segment disclosures have been presented. | |||||||||
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS | ||||||||
In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, which requires that an entity recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to its customers. In order to achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. This update will replace existing revenue recognition guidance under GAAP when it becomes effective for the Company beginning January 1, 2017, with early adoption not permitted. The updated standard will permit the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact of this update on its consolidated financial statements. | |||||||||
In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements—Going Concern, which requires that management of an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. This update will become effective beginning January 1, 2017, with early adoption permitted. The provisions of this standard are not expected to significantly impact the Company. | |||||||||
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Schedule of percentage of revenue comprised by the three largest customers | The table below includes the percentage of revenue comprised by the three largest customers (i.e., wholesalers or commercial partners) in each year presented: | ||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Largest customer | 33 | % | 33 | % | 30 | % | |||
Second largest customer | 29 | % | 28 | % | 14 | % | |||
Third largest customer | 24 | % | 18 | % | 11 | % | |||
86 | % | 79 | % | 55 | % | ||||
Schedule of useful lives by asset category | Useful lives by asset category are as follows: | ||||||||
Asset Category | Useful Lives | ||||||||
Computer equipment and software | 1 to 3 years | ||||||||
Office furniture and equipment | 5 years | ||||||||
Manufacturing and laboratory equipment | 5 to 10 years |
INVENTORIES_Tables
INVENTORIES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
Schedule of components of inventories | The components of inventories are as follows (in thousands): | |||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Raw materials | $ | 9,263 | $ | 5,290 | ||||
Work-in-process | 8,617 | 6,321 | ||||||
Finished goods | 11,383 | 3,946 | ||||||
Total | $ | 29,263 | $ | 15,557 | ||||
FIXED_ASSETS_Tables
FIXED ASSETS (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Schedule of fixed assets summarized by major category | Fixed assets, net summarized by major category, consist of the following (in thousands): | |||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Machinery and laboratory equipment | $ | 29,697 | $ | 19,570 | ||||
Computer equipment and software | 3,754 | 2,476 | ||||||
Office furniture and equipment | 1,001 | 441 | ||||||
Leasehold improvements | 26,350 | 24,852 | ||||||
Construction in progress | 19,944 | 13,419 | ||||||
Total | 80,746 | 60,758 | ||||||
Less: accumulated depreciation | (20,114 | ) | (12,576 | ) | ||||
Fixed assets, net | $ | 60,632 | $ | 48,182 | ||||
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||
Summary of change in carrying value of goodwill | The change in the carrying value of goodwill is summarized as follows (in thousands): | |||||||||||||
Carrying Value | ||||||||||||||
Balance at December 31, 2012 | $ | 8,297 | ||||||||||||
Percentage payments on collections of net sales of EXPAREL | 2,031 | |||||||||||||
Balance at December 31, 2013 | 10,328 | |||||||||||||
Milestone payment triggered by collections of net sales of EXPAREL | 8,000 | |||||||||||||
Percentage payments on collections of net sales of EXPAREL | 5,433 | |||||||||||||
Balance at December 31, 2014 | $ | 23,761 | ||||||||||||
Summary of intangible assets | Intangible assets, net, consist of core technology, developed technology and trademarks and trade names acquired in the Acquisition and are summarized as follows (in thousands): | |||||||||||||
December 31, 2014 | Gross | Accumulated | Intangible | Estimated | ||||||||||
Carrying Value | Amortization | Assets, Net | Useful Life | |||||||||||
Amortizable intangible assets: | ||||||||||||||
Core technology | $ | 2,900 | $ | (2,497 | ) | $ | 403 | 9 Years | ||||||
Developed technology | 11,700 | (11,700 | ) | — | 7 Years | |||||||||
Trademarks and trade names | 400 | (400 | ) | — | 7 Years | |||||||||
Total intangible assets | $ | 15,000 | $ | (14,597 | ) | $ | 403 | |||||||
December 31, 2013 | Gross | Accumulated | Intangible | Estimated | ||||||||||
Carrying Value | Amortization | Assets, Net | Useful Life | |||||||||||
Amortizable intangible assets: | ||||||||||||||
Core technology | $ | 2,900 | $ | (2,175 | ) | $ | 725 | 9 years | ||||||
Developed technology | 11,700 | (11,282 | ) | 418 | 7 years | |||||||||
Trademarks and trade names | 400 | (386 | ) | 14 | 7 years | |||||||||
Total intangible assets | $ | 15,000 | $ | (13,843 | ) | $ | 1,157 | |||||||
Schedule of approximate amortization expense for intangibles subject to amortization | uture amortization expense relates only to core technology and is as follows (in thousands): | |||||||||||||
2015 | $ | 322 | ||||||||||||
2016 | 81 | |||||||||||||
Total | $ | 403 | ||||||||||||
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): | |||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Compensation and benefits | $ | 8,909 | $ | 5,488 | ||||
Accrued operating expenses | 12,094 | 8,001 | ||||||
Accrued royalties | 3,213 | 1,526 | ||||||
Accrued interest | 1,625 | 1,625 | ||||||
Product returns, rebates and other fees | 2,470 | 1,245 | ||||||
Income taxes payable | 139 | — | ||||||
Total | $ | 28,450 | $ | 17,885 | ||||
DEBT_Tables
DEBT (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Schedule of composition of the Company's debt and financing obligations | The composition of the Company’s debt and financing obligations is as follows (in thousands): | |||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Debt: | ||||||||
Convertible senior notes | $ | 120,000 | $ | 120,000 | ||||
Discount on debt | (16,900 | ) | (21,039 | ) | ||||
Total debt, net of discount | 103,100 | 98,961 | ||||||
Royalty interest obligation | 276 | 1,246 | ||||||
Total debt and financing obligations | $ | 103,376 | $ | 100,207 | ||||
Schedule of total interest expense recognized related to the Notes | The following table sets forth the total interest expense recognized related to the Notes issued in January 2013 (in thousands): | |||||||
Year Ended December 31, | ||||||||
2014 | 2013 | |||||||
Contractual interest expense | $ | 3,900 | $ | 3,662 | ||||
Amortization of debt issuance costs | 620 | 584 | ||||||
Amortization of debt discount | 4,139 | 3,897 | ||||||
$ | 8,659 | $ | 8,143 | |||||
Effective interest rate | 7.22 | % | 7.22 | % |
FINANCIAL_INSTRUMENTS_Tables
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Schedule of carrying amount and fair value of the long-term debt | The carrying amount and fair value of the Notes are as follows (in thousands): | ||||||||||||||||
Carrying | Fair Value Measurements Using | ||||||||||||||||
Financial Liabilities Carried at Historical Cost | Value | Level 1 | Level 2 | Level 3 | |||||||||||||
December 31, 2014 | |||||||||||||||||
Convertible senior notes * | $ | 103,100 | $ | — | $ | 429,438 | $ | — | |||||||||
* The fair value of the Notes was based on the Company’s closing stock price of $88.66 per share at December 31, 2014 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of 3.5 million shares or $309 million of cash. The maximum conversion premium that can be due on the Notes is 4.8 million shares, which assumes no increases in the conversion rate for certain corporate events. | |||||||||||||||||
Schedule of short-term investments | The following summarizes the Company’s short-term and long-term investments at December 31, 2014 and 2013 (in thousands): | ||||||||||||||||
December 31, 2014 | Cost | Gross | Gross | Fair Value | |||||||||||||
Unrealized | Unrealized | (Level 2) | |||||||||||||||
Gains | Losses | ||||||||||||||||
Debt securities: | |||||||||||||||||
Short-term: | |||||||||||||||||
Asset-backed securities | $ | 15,009 | $ | — | $ | (9 | ) | $ | 15,000 | ||||||||
Commercial paper | 1,747 | 3 | — | 1,750 | |||||||||||||
Corporate bonds | 102,430 | — | (42 | ) | 102,388 | ||||||||||||
Subtotal | 119,186 | 3 | (51 | ) | 119,138 | ||||||||||||
Long-term: | |||||||||||||||||
Corporate bonds | 24,463 | 10 | (42 | ) | 24,431 | ||||||||||||
Total | $ | 143,649 | $ | 13 | $ | (93 | ) | $ | 143,569 | ||||||||
December 31, 2013 | Cost | Gross | Gross | Fair Value | |||||||||||||
Unrealized | Unrealized | (Level 2) | |||||||||||||||
Gains | Losses | ||||||||||||||||
Debt securities: | |||||||||||||||||
Asset-backed securities | $ | 10,838 | $ | 1 | $ | (1 | ) | $ | 10,838 | ||||||||
Commercial paper | 17,986 | 11 | — | 17,997 | |||||||||||||
Corporate bonds | 30,808 | 1 | (7 | ) | 30,802 | ||||||||||||
Total | $ | 59,632 | $ | 13 | $ | (8 | ) | $ | 59,637 | ||||||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Stockholders' Equity Note [Abstract] | ||||
Schedule of accumulated other comprehensive income | Accumulated Other Comprehensive Income | |||
The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (in thousands): | ||||
Net Unrealized Gains | ||||
(Losses) From Available | ||||
For Sale Investments | ||||
Balance at December 31, 2012 | $ | 27 | ||
Other comprehensive loss before reclassifications | (23 | ) | ||
Amounts reclassified from accumulated other comprehensive income | 1 | |||
Balance at December 31, 2013 | 5 | |||
Other comprehensive loss before reclassifications | (85 | ) | ||
Amounts reclassified from accumulated other comprehensive income | — | |||
Balance at December 31, 2014 | $ | (80 | ) |
STOCK_PLANS_Tables
STOCK PLANS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Schedule of information about the plans | The following table contains information about the Company’s plans at December 31, 2014: | ||||||||||||
Stock Incentive Plans | Awards Reserved for Issuance | Awards Issued | Awards Available for Grant | ||||||||||
2007 Stock incentive plan | 2,022,837 | 2,022,837 | — | ||||||||||
2011 Plan | 5,931,700 | 4,400,525 | 1,531,175 | ||||||||||
2014 Inducement plan | 175,000 | 77,000 | 98,000 | ||||||||||
8,129,537 | 6,500,362 | 1,629,175 | |||||||||||
Employee Stock Purchase Plan | Shares Reserved for Purchase | Shares Purchased | Shares Available for Purchase | ||||||||||
2014 Employee stock purchase plan | 500,000 | 15,722 | 484,278 | ||||||||||
Schedule of recognized stock-based compensation in consolidated statements of operations | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Cost of revenues | $ | 3,582 | $ | 1,526 | $ | 563 | |||||||
Research and development | 6,490 | 4,345 | 1,155 | ||||||||||
Selling, general and administrative | 14,750 | 5,642 | 3,058 | ||||||||||
Total | $ | 24,822 | $ | 11,513 | $ | 4,776 | |||||||
Stock-based compensation from: | |||||||||||||
Stock options | $ | 24,477 | $ | 11,513 | $ | 4,776 | |||||||
Employee stock purchase plan | 345 | — | — | ||||||||||
Total | $ | 24,822 | $ | 11,513 | $ | 4,776 | |||||||
Schedule of the Company's stock option activity and related information | The following table summarizes the Company’s stock option activity and related information for the period from January 1, 2012 to December 31, 2014 (in thousands except share and per share amounts): | ||||||||||||
Number of | Weighted | Weighted Average | Aggregate | ||||||||||
Shares | Average | Remaining | Intrinsic Value | ||||||||||
Exercise Price | Contractual | (in Thousands) | |||||||||||
Term (Years) | |||||||||||||
Outstanding at January 1, 2012 | 2,337,017 | $ | 3.92 | 8.8 | $ | 11,829 | |||||||
Granted | 2,120,250 | 11.55 | |||||||||||
Exercised | (279,476 | ) | 2.75 | $ | 3,005 | ||||||||
Forfeited | (174,610 | ) | 7.94 | ||||||||||
Expired | (15 | ) | 7.07 | ||||||||||
Outstanding at December 31, 2012 | 4,003,166 | 7.86 | 8.66 | $ | 38,485 | ||||||||
Granted | 918,915 | 30.42 | |||||||||||
Exercised | (742,211 | ) | 5.19 | $ | 21,679 | ||||||||
Forfeited | (338,145 | ) | 10.93 | ||||||||||
Expired | (1,687 | ) | 7.24 | ||||||||||
Outstanding at December 31, 2013 | 3,840,038 | 13.5 | 8.01 | $ | 168,905 | ||||||||
Granted | 1,638,575 | 79.68 | |||||||||||
Exercised | (624,229 | ) | 11.6 | $ | 45,289 | ||||||||
Forfeited | (175,967 | ) | 44.32 | ||||||||||
Expired | (561 | ) | 21.7 | ||||||||||
Outstanding at December 31, 2014 | 4,677,856 | $ | 35.78 | 7.86 | $ | 248,276 | |||||||
Exercisable at December 31, 2014 | 2,085,829 | $ | 11.61 | 6.75 | $ | 160,707 | |||||||
Vested and expected to vest at December 31, 2014 | 4,486,980 | $ | 34.59 | 7.81 | $ | 243,438 | |||||||
Schedule of weighted average assumptions used to estimate the fair values of each option grant using the Black-Scholes option pricing model | The fair values of stock options granted were estimated using the Black-Scholes model with the following weighted average assumptions: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected dividend yield | None | None | None | ||||||||||
Risk free interest rate | 0.02 - 2.16% | 0.33 - 2.83% | 0.84 - 1.70% | ||||||||||
Expected volatility | 57.20% | 68.70% | 74.00% | ||||||||||
Expected term of options | 5.86 years | 6.22 years | 6.76 years |
NET_INCOME_LOSS_PER_SHARE_Tabl
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
Schedule of computation of basic and diluted loss per share | The following table sets forth the computation of basic and diluted loss per share for the years ended December 31, 2014, 2013 and 2012 (in thousands except per share amounts): | |||||||||||
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||
Net loss | $ | (13,716 | ) | $ | (63,909 | ) | $ | (52,281 | ) | |||
Denominator: | ||||||||||||
Weighted average shares of common stock outstanding | 35,299 | 33,182 | 30,332 | |||||||||
Net loss per share: | ||||||||||||
Basic and diluted net loss per share of common stock | $ | (0.39 | ) | $ | (1.93 | ) | $ | (1.72 | ) | |||
Schedule of potential dilutive effect of the securities excluded from the calculation of diluted loss per share | ||||||||||||
Year Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Weighted average number of stock options outstanding | 3,534 | 3,980 | 3,304 | |||||||||
Conversion premium on the Notes | 2,483 | 1,194 | — | |||||||||
Weighted average number of warrants outstanding | 21 | 204 | 585 | |||||||||
Weighted average purchase options under ESPP | 1 | — | — | |||||||||
Total | 6,039 | 5,378 | 3,889 | |||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Schedule of reconciliation of income taxes at the U.S. Federal statutory rate to the provision for income taxes | A reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes is as follows: | ||||||||
Year Ended December 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Benefit at U.S. Federal statutory rate | 35 | % | 35 | % | 35 | % | |||
State taxes | (32.75 | )% | 4.79 | % | 6.73 | % | |||
Increase in valuation allowance | (17.71 | )% | (42.91 | )% | (39.62 | )% | |||
Tax credits | 5.49 | % | 1.69 | % | — | % | |||
Interest expense | 10.68 | % | 0.3 | % | (0.22 | )% | |||
Other | (1.99 | )% | 1.82 | % | (1.89 | )% | |||
Provision for income taxes | (1.28 | )% | 0.69 | % | — | % | |||
Schedule of significant components of the Company's deferred tax assets | Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Federal and state net operating loss carry-forwards | $ | 111,086 | $ | 114,819 | |||||
Federal and state research credits | 6,043 | 5,149 | |||||||
Depreciation and amortization | 3,494 | 3,248 | |||||||
Accruals and reserves | 3,861 | 1,696 | |||||||
Deferred revenue | 4,065 | 1,707 | |||||||
Stock based compensation | 8,487 | 2,622 | |||||||
Other | 588 | 752 | |||||||
Total deferred tax assets | 137,624 | 129,993 | |||||||
Deferred tax liabilities: | |||||||||
Discount on convertible senior notes | (6,283 | ) | (8,507 | ) | |||||
131,341 | 121,486 | ||||||||
Less: valuation allowance | (131,341 | ) | (121,486 | ) | |||||
Net deferred tax assets | $ | — | $ | — | |||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Schedule of annual minimum payments due under the Company's lease obligations | As of December 31, 2014, the aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands): | ||||
Year | |||||
2015 | $ | 6,133 | |||
2016 | 7,263 | ||||
2017 | 7,459 | ||||
2018 | 7,660 | ||||
2019 | 7,876 | ||||
2020 through 2028 | 11,786 | ||||
Total | $ | 48,177 | |||
SELECTED_QUARTERLY_FINANCIAL_D1
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||
Schedule of Quarterly Financial Data | The following table presents selected quarterly financial data for the years ended December 31, 2014 and 2013 (in thousands, except per share data): | |||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||||
Total revenues | $ | 36,662 | $ | 47,165 | $ | 52,048 | $ | 61,793 | ||||||||
Cost of revenues | 18,127 | 19,954 | 20,391 | 18,968 | ||||||||||||
Total operating expenses | 45,920 | 50,007 | 53,033 | 53,873 | ||||||||||||
Net income (loss) | (11,477 | ) | (5,037 | ) | (3,004 | ) | 5,802 | |||||||||
Basic net income (loss) per common share | $ | (0.34 | ) | $ | (0.14 | ) | $ | (0.08 | ) | $ | 0.16 | |||||
Diluted net income (loss) per common share | $ | (0.34 | ) | $ | (0.14 | ) | $ | (0.08 | ) | $ | 0.14 | |||||
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2013 | 2013 | 2013 | 2013 | |||||||||||||
Total revenues | $ | 11,587 | $ | 17,141 | $ | 23,259 | $ | 33,564 | ||||||||
Cost of revenues | 11,391 | 10,214 | 14,791 | 18,376 | ||||||||||||
Total operating expenses | 30,232 | 29,151 | 36,073 | 43,384 | ||||||||||||
Net loss | (23,138 | ) | (14,031 | ) | (14,784 | ) | (11,956 | ) | ||||||||
Basic net loss per common share | $ | (0.71 | ) | $ | (0.42 | ) | $ | (0.44 | ) | $ | (0.36 | ) | ||||
Diluted net loss per common share | $ | (0.71 | ) | $ | (0.42 | ) | $ | (0.44 | ) | $ | (0.36 | ) | ||||
For periods where the Company reported a net loss, no potentially dilutive securities have been included in the computation of diluted net loss per share. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | 0 Months Ended | |
Dec. 31, 2014 | Jan. 23, 2013 | Jan. 23, 2013 | |
Liquidity | |||
Estimated conversion value | $309,000,000 | ||
Shares issuable upon conversion | 3,500,000 | ||
Revenue Recognition | |||
Beginning period prior to product expiration allowed for the product to be returned | 6 months | ||
Period following product expiration upto which the product is allowed to be returned | 12 months | ||
Notes | |||
Liquidity | |||
Stated interest rate (as a percent) | 3.25% | 3.25% | 3.25% |
Proceeds from Issuance of Debt | $120,000,000 | $120,000,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Restricted Cash | |||
Amount received in lockbox restricted for payment of royalty interest | 2,500,000 | ||
Period for making payment from amount received in lockbox restricted for payment of royalty interest | 12 months | ||
Net revenue | Customer concentration | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 86.00% | 79.00% | 55.00% |
Net revenue | Customer concentration | Largest customer | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 33.00% | 33.00% | 30.00% |
Net revenue | Customer concentration | Second largest customer | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 29.00% | 28.00% | 14.00% |
Net revenue | Customer concentration | Third largest customer | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 24.00% | 18.00% | 11.00% |
Net revenue | Customer concentration | Customers outside U.S. | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 2.00% | 5.00% | 23.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 1 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Feb. 28, 2013 | Dec. 31, 2014 |
segment | ||
Income Taxes | ||
Amount received from sale of unused net operating losses | $0.40 | |
Segment Reporting | ||
Number of reportable segments | 1 | |
Manufacturing and laboratory equipment | Minimum | ||
Fixed Assets | ||
Useful life | 5 years | |
Manufacturing and laboratory equipment | Maximum | ||
Fixed Assets | ||
Useful life | 10 years | |
Computer equipment and software | Minimum | ||
Fixed Assets | ||
Useful life | 1 year | |
Computer equipment and software | Maximum | ||
Fixed Assets | ||
Useful life | 3 years | |
Office furniture and equipment | ||
Fixed Assets | ||
Useful life | 5 years |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ||
Raw materials | $9,263 | $5,290 |
Work-in-process | 8,617 | 6,321 |
Finished goods | 11,383 | 3,946 |
Total | $29,263 | $15,557 |
FIXED_ASSETS_Details
FIXED ASSETS (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
FIXED ASSETS | |||
Total | $80,746,000 | $60,758,000 | |
Less accumulated depreciation | -20,114,000 | -12,576,000 | |
Fixed assets, net | 60,632,000 | 48,182,000 | |
Depreciation expense | 9,300,000 | 3,700,000 | 3,600,000 |
Capitalized interest | 400,000 | 1,100,000 | 2,000,000 |
Manufacturing and laboratory equipment | |||
FIXED ASSETS | |||
Total | 29,697,000 | 19,570,000 | |
Computer equipment and software | |||
FIXED ASSETS | |||
Total | 3,754,000 | 2,476,000 | |
Office furniture and equipment | |||
FIXED ASSETS | |||
Total | 1,001,000 | 441,000 | |
Leasehold improvements | |||
FIXED ASSETS | |||
Total | 26,350,000 | 24,852,000 | |
Construction in progress | |||
FIXED ASSETS | |||
Total | $19,944,000 | $13,419,000 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Apr. 30, 2012 | Sep. 30, 2014 | |
Goodwill | ||||
Goodwill Recorded on Milestone Payments | $8,000,000 | |||
Payment obligation arising in connection with the acquisition | 10,000,000 | |||
Contingent consideration liability recognized at the time of the acquisition | 2,000,000 | |||
Goodwill recorded in connection with the acquisition | 23,761,000 | 10,328,000 | 8,000,000 | |
Goodwill [Roll Forward] | ||||
Beginning balance | 10,328,000 | 8,297,000 | 8,000,000 | |
Percentage payments on collections of net sales of EXPAREL | 5,433,000 | 2,031,000 | ||
Ending balance | 23,761,000 | 10,328,000 | 8,000,000 | |
Total Goodwill Recorded for Earn Out Payments | 7,800,000 | |||
Upon first commercial sale in the United States | ||||
Goodwill | ||||
Milestone payments for EXPAREL agreed in connection with acquisition | 10,000,000 | |||
Upon first commercial sale in a major EU country (United Kingdom, France, Germany, Italy and Spain) | ||||
Goodwill | ||||
Milestone payments for EXPAREL agreed in connection with acquisition | 4,000,000 | |||
When annual net sales collected reach $100.0 million | ||||
Goodwill | ||||
Payment Obligation Arising Due to Net Sales Collected Threshold of $100 Million | 8,000,000 | |||
Milestone payments for EXPAREL agreed in connection with acquisition | 8,000,000 | |||
Annual net sales threshold | 100,000,000 | |||
Goodwill [Roll Forward] | ||||
Net Sales Collected Threshold Which Triggers a Payment Obligation | 100,000,000 | |||
When annual net sales collected reach $250.0 million | ||||
Goodwill | ||||
Milestone payments for EXPAREL agreed in connection with acquisition | 8,000,000 | |||
Annual net sales threshold | 250,000,000 | |||
When annual net sales collected reach $500.0 million | ||||
Goodwill | ||||
Milestone payments for EXPAREL agreed in connection with acquisition | 32,000,000 | |||
Annual net sales threshold | $500,000,000 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Intangible Assets | |||
Gross amount | $15,000,000 | $15,000,000 | |
Accumulated amortization | -14,597,000 | -13,843,000 | |
Intangibles, net | 403,000 | 1,157,000 | |
Amortization expense for intangibles | 800,000 | 2,100,000 | 2,100,000 |
Approximate amortization expense for intangibles | |||
Intangibles, net | 403,000 | 1,157,000 | |
Core Technology | |||
Intangible Assets | |||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 322,000 | ||
Gross amount | 2,900,000 | 2,900,000 | |
Accumulated amortization | -2,497,000 | -2,175,000 | |
Intangibles, net | 403,000 | 725,000 | |
Estimated Useful Life | 9 years | 9 years | |
Approximate amortization expense for intangibles | |||
2014 | 81,000 | ||
Intangibles, net | 403,000 | 725,000 | |
Developed Technology | |||
Intangible Assets | |||
Gross amount | 11,700,000 | 11,700,000 | |
Accumulated amortization | -11,700,000 | -11,282,000 | |
Intangibles, net | 0 | 418,000 | |
Estimated Useful Life | 7 years | 7 years | |
Approximate amortization expense for intangibles | |||
Intangibles, net | 0 | 418,000 | |
Trademarks and trade names | |||
Intangible Assets | |||
Gross amount | 400,000 | 400,000 | |
Accumulated amortization | -400,000 | -386,000 | |
Intangibles, net | 0 | 14,000 | |
Estimated Useful Life | 7 years | 7 years | |
Approximate amortization expense for intangibles | |||
Intangibles, net | $0 | $14,000 |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Payables and Accruals [Abstract] | ||
Compensation and benefits | $8,909 | $5,488 |
Accrued operating expenses | 12,094 | 8,001 |
Accrued royalties | 3,213 | 1,526 |
Accrued interest | 1,625 | 1,625 |
Product returns, rebates and other fees | 2,470 | 1,245 |
Income taxes payable | 139 | 0 |
Total | $28,450 | $17,885 |
DEBT_Details
DEBT (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Debt: | ||
Current portion of long-term debt | $120,000 | $120,000 |
Discount on debt | -16,900 | -21,039 |
Total debt, net of debt discount | 103,100 | 98,961 |
Royalty Interest Obligation | 276 | 1,246 |
Total debt and financing obligations | $103,376 | $100,207 |
DEBT_Details_2
DEBT (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | |||||||||
Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2000 | Jan. 23, 2013 | Jan. 23, 2013 | Jan. 31, 2013 | 31-May-12 | Apr. 30, 2014 | 2-May-12 | Apr. 30, 2012 | Jan. 16, 2013 | |
product | |||||||||||||
Debt disclosures | |||||||||||||
Loss on early extinguishment of debt | $0 | $3,398,000 | $1,062,000 | ||||||||||
Closing sale price (in dollars per share) | $88.66 | $88.66 | $64 | $9.75 | |||||||||
Estimated conversion value | 309,000,000 | 309,000,000 | |||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 3,500,000 | ||||||||||||
Interest Expense, Debt [Abstract] | |||||||||||||
Amortization of debt discount | 4,139,000 | 3,959,000 | 831,000 | ||||||||||
Oxford Loan Facility | |||||||||||||
Debt Instrument, Unamortized Discount | 16,900,000 | 16,900,000 | 21,039,000 | ||||||||||
Number of shares exercisable for warrants issued to holders of the debt | 162,885 | ||||||||||||
Exercise price per share (in dollars per share) | 10.97 | ||||||||||||
Affiliate of Paul Capital | |||||||||||||
Assumptions used in determining fair value of the warrants | |||||||||||||
Amount to be raised | 30,000,000 | ||||||||||||
Number of product sales on which there is a right to receive royalty interest | 4 | ||||||||||||
Net present value of royalties expected to be repaid | 13,000,000 | ||||||||||||
Notes | |||||||||||||
Financing obligations: | |||||||||||||
Gross Proceeds From Issuance of Debt | 120,000,000 | ||||||||||||
Debt disclosures | |||||||||||||
Debt issued in private offering | 120,000,000 | 120,000,000 | |||||||||||
Stated interest rate (as a percent) | 3.25% | 3.25% | 3.25% | 3.25% | |||||||||
Net proceeds from private placement of debt | 115,300,000 | ||||||||||||
Principal amount used for debt instrument conversion ratio | 1,000 | 1,000 | |||||||||||
Initial conversion rate of common stock per $1000 of principal amount of Notes (in shares) | 40.2945 | ||||||||||||
Initial conversion price of notes into common stock (in dollars per share) | $24.82 | $24.82 | |||||||||||
Premium on sale price to calculate conversion price of notes (as a percent) | 32.50% | ||||||||||||
Closing sale price (in dollars per share) | $18.73 | ||||||||||||
Debt Redemption Price Due to Fundamental Change as Percentage of Principal Amount | 100.00% | ||||||||||||
In event of default, the percentage of principal amount due and payable | 100.00% | ||||||||||||
Liability component of convertible debt | 95,100,000 | 95,100,000 | |||||||||||
Total transaction costs related to the issuance of Notes | 4,700,000 | ||||||||||||
Term of Notes | 6 years | ||||||||||||
Interest Expense, Debt [Abstract] | |||||||||||||
Contractual interest expense | 3,900,000 | 3,662,000 | |||||||||||
Amortization of debt issuance costs | 620,000 | 584,000 | |||||||||||
Amortization of debt discount | 4,139,000 | 3,897,000 | |||||||||||
Total interest expense recognized | 8,659,000 | 8,143,000 | |||||||||||
Effective interest rate (as a percent) | 7.22% | 7.22% | |||||||||||
Notes | Conversion terms business day immediately preceding August 1, 2018 | |||||||||||||
Debt disclosures | |||||||||||||
Minimum number of days within 30 consecutive trading days in which the closing price of the entity's common stock must exceed the conversion price for the notes to be convertible | 20 days | ||||||||||||
Number of consecutive trading days during which the closing price of the entity's common stock must exceed the conversion price for at least 20 days in order for the notes to be convertible | 30 days | ||||||||||||
Percentage of the conversion price that the closing sales price of the entity's common stock must exceed in order for the notes to be convertible | 130.00% | ||||||||||||
Number of consecutive business days immediately after any five consecutive trading day period during the note measurement period | 5 days | ||||||||||||
Number of consecutive trading days before five consecutive business days during the note measurement period | 5 days | ||||||||||||
Principal amount used for debt instrument conversion ratio | 1,000 | 1,000 | |||||||||||
Percentage of the trading price to the product of the last reported sale price of the entity's common stock and the conversion rate | 98.00% | ||||||||||||
Market price per $1000 of principal amount of notes | 3,579 | 3,579 | |||||||||||
Estimated conversion value | 3,572 | 3,572 | |||||||||||
Notes | Debt redemption terms on or after February 1, 2017 | |||||||||||||
Debt disclosures | |||||||||||||
Minimum number of days within 30 consecutive trading days in which the closing price of the entity's common stock must exceed the conversion price for the notes to be convertible | 20 days | ||||||||||||
Number of consecutive trading days during which the closing price of the entity's common stock must exceed the conversion price for at least 20 days in order for the notes to be convertible | 30 days | ||||||||||||
Percentage of the conversion price that the closing sales price of the entity's common stock must exceed in order for the notes to be convertible | 130.00% | ||||||||||||
Number of trading days prior to the date on which the company provides notice of redemption during which the closing price of the entity's common stock must exceed the conversion price for the notes to be redeemed | 5 days | ||||||||||||
Redemption price as percentage of principal amount of notes plus accrued and unpaid interest plus make-whole premium payment | 100.00% | ||||||||||||
Assumptions used in determining fair value of the warrants | |||||||||||||
Discount rate (as a percent) | 2.00% | ||||||||||||
Oxford Loan Facility | |||||||||||||
Debt disclosures | |||||||||||||
Debt issued in private offering | 27,500,000 | ||||||||||||
Stated interest rate (as a percent) | 9.75% | ||||||||||||
Repayment of remaining principal amount of debt | 27,500,000 | ||||||||||||
End of term charge on early termination | 1,700,000 | ||||||||||||
Prepayment fees on early termination | 800,000 | ||||||||||||
Repayment of accrued interest | 200,000 | ||||||||||||
Loss on early extinguishment of debt | 3,400,000 | 3,400,000 | |||||||||||
Oxford Loan Facility | |||||||||||||
Number of shares exercisable for warrants issued to holders of the debt | 162,885 | 162,885 | |||||||||||
Exercise price per share (in dollars per share) | 10.97 | 10.97 | |||||||||||
Assumptions used in determining fair value of the warrants | |||||||||||||
Relative fair value of the warrants | $1,400,000 | $1,400,000 |
FINANCIAL_INSTRUMENTS_Details
FINANCIAL INSTRUMENTS (Details) (USD $) | 12 Months Ended | 9 Months Ended | |||||
Dec. 31, 2014 | Sep. 30, 2014 | Apr. 30, 2014 | Dec. 31, 2013 | Apr. 30, 2012 | Jan. 16, 2013 | ||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | $143,649,000 | $59,632,000 | |||||
Long-term investments | 24,431,000 | 0 | |||||
Price per share (in dollars per share) | $88.66 | $64 | $9.75 | ||||
Debt Instrument, Convertible, Conversion Premium, Shares | 3,500,000 | ||||||
Estimated conversion value | 309,000,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 13,000 | 13,000 | |||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 93,000 | 8,000 | |||||
Level 1 | |||||||
Fair Value Measurements | |||||||
Long-term debt-current and long-term | 0 | [1] | |||||
Level 2 | |||||||
Fair Value Measurements | |||||||
Long-term debt-current and long-term | 429,438,000 | [1] | |||||
Available-for-sale Securities | 143,569,000 | 59,637,000 | |||||
Level 3 | |||||||
Fair Value Measurements | |||||||
Long-term debt-current and long-term | 0 | [1] | |||||
Notes | |||||||
Fair Value Measurements | |||||||
Price per share (in dollars per share) | $18.73 | ||||||
Initial conversion price of notes into common stock (in dollars per share) | $24.82 | ||||||
Maximum | |||||||
Fair Value Measurements | |||||||
Long Term Investments Maturity Period | 37 months | ||||||
Debt Instrument, Convertible, Conversion Premium, Shares | 4,800,000 | ||||||
Minimum | |||||||
Fair Value Measurements | |||||||
Long Term Investments Maturity Period | 20 months | ||||||
Standard & Poor's, A Rating | |||||||
Fair Value Measurements | |||||||
Long-term investments | 24,400,000 | ||||||
Short-term Investments [Member] | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 119,186,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 3,000 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 51,000 | ||||||
Short-term Investments [Member] | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 119,138,000 | ||||||
Asset-backed Securities | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 30,808,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 1,000 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 7,000 | ||||||
Asset-backed Securities | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 30,802,000 | ||||||
Asset-backed Securities | Short-term Investments [Member] | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 15,009,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 0 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 9,000 | ||||||
Asset-backed Securities | Short-term Investments [Member] | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 15,000,000 | ||||||
Commercial Paper | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 10,838,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 1,000 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 1,000 | ||||||
Commercial Paper | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 10,838,000 | ||||||
Commercial Paper | Short-term Investments [Member] | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 1,747,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 3,000 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 0 | ||||||
Commercial Paper | Short-term Investments [Member] | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 1,750,000 | ||||||
Corporate Bond Securities [Member] | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 17,986,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 11,000 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 0 | ||||||
Corporate Bond Securities [Member] | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 17,997,000 | ||||||
Corporate Bond Securities [Member] | Short-term Investments [Member] | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 102,430,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 0 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 42,000 | ||||||
Corporate Bond Securities [Member] | Short-term Investments [Member] | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 102,388,000 | ||||||
Corporate Bond Securities [Member] | Long-Term Investments [Member] | |||||||
Fair Value Measurements | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 24,463,000 | ||||||
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 10,000 | ||||||
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments | 42,000 | ||||||
Corporate Bond Securities [Member] | Long-Term Investments [Member] | Level 2 | |||||||
Fair Value Measurements | |||||||
Available-for-sale Securities | 24,431,000 | ||||||
Carrying Value | |||||||
Fair Value Measurements | |||||||
Long-term debt-current and long-term | $103,100,000 | [1] | |||||
[1] | The fair value of the Notes was based on the Company’s closing stock price of $88.66 per share at December 31, 2014 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of 3.5 million shares or $309 million of cash. The maximum conversion premium that can be due on the Notes is 4.8 million shares, which assumes no increases in the conversion rate for certain corporate events. |
FINANCIAL_INSTRUMENTS_Details_
FINANCIAL INSTRUMENTS (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Short-term investments | ||
Short-term investments | 119,138 | $59,637 |
Available-for-sale Debt Securities, Amortized Cost Basis | 143,649 | 59,632 |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 13 | 13 |
Gross Unrealized Losses | -93 | -8 |
Level 2 | ||
Short-term investments | ||
Fair Value | 143,569 | 59,637 |
Commercial Paper | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 10,838 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 1 | |
Gross Unrealized Losses | -1 | |
Commercial Paper | Level 2 | ||
Short-term investments | ||
Fair Value | 10,838 | |
Corporate Bond Securities [Member] | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 17,986 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 11 | |
Gross Unrealized Losses | 0 | |
Corporate Bond Securities [Member] | Level 2 | ||
Short-term investments | ||
Fair Value | 17,997 | |
Asset-backed Securities | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 30,808 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 1 | |
Gross Unrealized Losses | -7 | |
Asset-backed Securities | Level 2 | ||
Short-term investments | ||
Fair Value | 30,802 | |
Minimum | ||
Short-term investments | ||
Maturity period | 175 days | |
Maximum | ||
Short-term investments | ||
Maturity period | 365 days | |
Standard & Poor's, A Rating | ||
Short-term investments | ||
Short-term investments | 119,100 | |
Short-term Investments [Member] | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 119,186 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 3 | |
Gross Unrealized Losses | -51 | |
Short-term Investments [Member] | Level 2 | ||
Short-term investments | ||
Fair Value | 119,138 | |
Short-term Investments [Member] | Commercial Paper | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 1,747 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 3 | |
Gross Unrealized Losses | 0 | |
Short-term Investments [Member] | Commercial Paper | Level 2 | ||
Short-term investments | ||
Fair Value | 1,750 | |
Short-term Investments [Member] | Corporate Bond Securities [Member] | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 102,430 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 0 | |
Gross Unrealized Losses | -42 | |
Short-term Investments [Member] | Corporate Bond Securities [Member] | Level 2 | ||
Short-term investments | ||
Fair Value | 102,388 | |
Short-term Investments [Member] | Asset-backed Securities | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 15,009 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 0 | |
Gross Unrealized Losses | -9 | |
Short-term Investments [Member] | Asset-backed Securities | Level 2 | ||
Short-term investments | ||
Fair Value | 15,000 | |
Long-Term Investments [Member] | Corporate Bond Securities [Member] | ||
Short-term investments | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 24,463 | |
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments | 10 | |
Gross Unrealized Losses | -42 | |
Long-Term Investments [Member] | Corporate Bond Securities [Member] | Level 2 | ||
Short-term investments | ||
Fair Value | 24,431 |
FINANCIAL_INSTRUMENTS_Details_1
FINANCIAL INSTRUMENTS (Details 3) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
customer | customer | |
Credit Risk | ||
Number of major customers | 3 | 3 |
Accounts receivable | Credit risk | Major customer one | ||
Credit Risk | ||
Concentration risk (as a percent) | 33.00% | 31.00% |
Accounts receivable | Credit risk | Major customer two | ||
Credit Risk | ||
Concentration risk (as a percent) | 29.00% | 31.00% |
Accounts receivable | Credit risk | Major customer three | ||
Credit Risk | ||
Concentration risk (as a percent) | 27.00% | 20.00% |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 1 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 |
Stockholders' Equity Note [Abstract] | ||||
Common stock, shares authorized | 250,000,000 | 250,000,000 | ||
Common stock, shares outstanding | 36,150,620 | 33,636,442 | ||
Stock Issued During Period, Shares, New Issues | 1,840,000 | |||
Additional common stock issued in registered public offering (in shares) | 6,900,000 | |||
Price per share (in dollars per share) | $64 | $9.75 | $88.66 | |
Proceeds from Issuance Initial Public Offering | $110.50 | |||
Net proceeds in a registered public offering | $62.90 | |||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||
Warrants | ||||
Warrants outstanding (in shares) | 7,216 | 58,354 | ||
Exercise price per share (in dollars per share) | $13.44 | $11.73 |
STOCKHOLDERS_EQUITY_Details_2
STOCKHOLDERS' EQUITY (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 |
Total Accumulated Other Comprehesive Income (Loss) | ||||
Balances at the beginning of the period | ($80) | |||
Balances at the end of the period | 5 | -80 | ||
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||||
Total Accumulated Other Comprehesive Income (Loss) | ||||
Balances at the beginning of the period | 5 | 27 | 27 | -80 |
Other comprehensive loss before reclassifications | -85 | -23 | ||
Amounts reclassified from accumulated other comprehensive income | 0 | 1 | ||
Balances at the end of the period | $5 | ($80) |
STOCK_PLANS_Details
STOCK PLANS (Details) (USD $) | 12 Months Ended | 1 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | Apr. 30, 2014 | |
Stock Incentive Plans | |||
Shares Issued During Period, Employee Stock Purchase Plan | 15,722 | ||
Awards Reserved for Issuance (in shares) | 8,129,537 | ||
Awards Issued (in shares) | 6,500,362 | ||
Awards Available for Grant (in shares) | 1,629,175 | ||
Employee Stock Purchase Plan, Number of Shares Authorized | 500,000 | ||
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 15,722 | ||
Employee Stock Purchase Plan (ESPP), Shares in ESPP | 500,000 | ||
Maximum Fair Market Value Purchase of ESPP Shares | $25,000 | ||
Employee Stock Purchase Plan fair value | 85.00% | ||
Employee Stock Purchase Plan, Number of Shares Available For Purchase | 484,278 | ||
Two Thousand Seven Stock Incentive Plan [Member] | |||
Stock Incentive Plans | |||
Awards Reserved for Issuance (in shares) | 2,022,837 | ||
Awards Issued (in shares) | 2,022,837 | ||
Awards Available for Grant (in shares) | 0 | ||
Stock Incentive Plan 2011 [Member] | |||
Stock Incentive Plans | |||
Awards Reserved for Issuance (in shares) | 5,931,700 | ||
Awards Issued (in shares) | 4,400,525 | ||
Awards Available for Grant (in shares) | 1,531,175 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 2,750,000 | ||
Inducement Plan 2014 [Member] | |||
Stock Incentive Plans | |||
Awards Reserved for Issuance (in shares) | 175,000 | 175,000 | |
Awards Issued (in shares) | 77,000 | ||
Awards Available for Grant (in shares) | 98,000 |
STOCK_PLANS_Details_2
STOCK PLANS (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-Based Compensation | |||
Stock-based compensation expense | $24,822 | $11,513 | $4,776 |
Compensation expense from stock options | 24,477 | 11,513 | 4,776 |
Compensation expense from employee stock purchase plan | 345 | 0 | 0 |
Stock-based compensation | 24,822 | 11,513 | 4,776 |
Cost of revenues | |||
Share-Based Compensation | |||
Stock-based compensation expense | 3,582 | 1,526 | 563 |
Research and development | |||
Share-Based Compensation | |||
Stock-based compensation expense | 6,490 | 4,345 | 1,155 |
Selling, general and administrative | |||
Share-Based Compensation | |||
Stock-based compensation expense | 14,750 | 5,642 | 3,058 |
Stock options | |||
Share-Based Compensation | |||
Stock-based compensation expense | $600 | $200 |
STOCK_PLANS_Details_3
STOCK PLANS (Details 3) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Additional disclosures | ||||
Weighted average contractual term of the unrecognized stock-based compensation | 3 years 0 months 25 days | |||
Stock options | ||||
Number of Shares | ||||
Balance at the beginning of the period (in shares) | 3,840,038 | 4,003,166 | 2,337,017 | |
Granted (in shares) | 1,638,575 | 918,915 | 2,120,250 | |
Exercised (in shares) | -624,229 | -742,211 | -279,476 | |
Forfeited (in shares) | -175,967 | -338,145 | -174,610 | |
Expired (in shares) | -561 | -1,687 | -15 | |
Balance at the end of the period (in shares) | 4,677,856 | 3,840,038 | 4,003,166 | 2,337,017 |
Exercisable at the end of the period (in shares) | 2,085,829 | |||
Vested and expected to vest at the end of the period (in shares) | 4,486,980 | |||
Weighted Average Exercise Price | ||||
Balance at the beginning of the period (in dollars per share) | $13.50 | $7.86 | $3.92 | |
Granted (in dollars per share) | $79.68 | $30.42 | $11.55 | |
Exercised (in dollars per share) | $11.60 | $5.19 | $2.75 | |
Forfeited (in dollars per share) | $44.32 | $10.93 | $7.94 | |
Expired (in dollars per share) | $21.70 | $7.24 | $7.07 | |
Balance at the end of the period (in dollars per share) | $35.78 | $13.50 | $7.86 | $3.92 |
Exercisable at the end of the period (in dollars per share) | $11.61 | |||
Vested and expected to vest at the end of the period (in dollars per share) | $34.59 | |||
Weighted Average remaining contractual term | ||||
Balance at the end of the period | 7 years 10 months 8 days | 8 years 0 months 3 days | 8 years 7 months 28 days | 8 years 9 months 18 days |
Exercisable at the end of the period | 6 years 9 months 0 days | |||
Vested and expected to vest at the end of the period | 7 years 9 months 23 days | |||
Aggregate intrinsic value | ||||
Balance at the beginning of the period (in dollars) | $168,905,000 | $38,485,000 | $11,829,000 | |
Exercised (in dollars) | 45,289,000 | 21,679,000 | 3,005,000 | |
Balance at the end of the period (in dollars) | 248,276,000 | 168,905,000 | 38,485,000 | 11,829,000 |
Exercisable at the end of the period (in dollars) | 160,707,000 | |||
Vested and expected to vest at the end of the period (in dollars) | 243,438,000 | |||
Additional disclosures | ||||
Unrecognized compensation cost related to non-vested stock options (in dollars) | $73,100,000 | |||
Weighted average fair value of options granted (in dollars per share) | $42.62 | $19.22 | $8.52 | |
Weighted average assumptions used to estimate the fair values of each option grant | ||||
Risk free interest rate, minimum (as a percent) | 0.02% | 0.33% | 0.84% | |
Risk free interest rate, maximum (as a percent) | 2.16% | 2.80% | 1.70% | |
Expected volatility (as a percent) | 57.20% | 68.70% | 74.00% | |
Expected life of options | 5 years 10 months 11 days | 6 years 2 months 19 days | 6 years 9 months 4 days | |
Employee Stock [Member] | ||||
Weighted average assumptions used to estimate the fair values of each option grant | ||||
Expected volatility (as a percent) | 28.20% | |||
Expected life of options | 0 years 4 months | |||
Per Share Fair Value of Employee Stock Purchase Plan Shares | $23.27 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.37% |
NET_INCOME_LOSS_PER_SHARE_Deta
NET INCOME (LOSS) PER SHARE (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Numerator: | |||||||||||
Net loss | $5,802 | ($3,004) | ($5,037) | ($11,477) | ($11,956) | ($14,784) | ($14,031) | ($23,138) | ($13,716) | ($63,909) | ($52,281) |
Denominator: | |||||||||||
Weighted average shares of common stock outstanding | 35,299,000 | 33,182,000 | 30,332,000 | ||||||||
Net loss per share: | |||||||||||
Basic and diluted net loss per share of common stock (in dollars per share) | ($0.39) | ($1.93) | ($1.72) | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (Treasury Stock Method) | 5,400,000 | 3,400,000 | 1,400,000 |
NET_INCOME_LOSS_PER_SHARE_Deta1
NET INCOME (LOSS) PER SHARE (Details 2) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 6,039 | 5,378 | 3,889 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 3,534 | 3,980 | 3,304 |
Convertible debt | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 2,483 | 1,194 | 0 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 21 | 204 | 585 |
Employee Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 1 | 0 | 0 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2013 | |
Income Tax Provision [Line Items] | ||||
Income Tax Provision | $200,000 | |||
Non-US Net Operating Loss | 300,000 | |||
Minimum Cumulative Percentage of Change in Ownership as Condition to Offset Taxable Income or Tax | 50.00% | |||
Reconciliation of income taxes at U.S. Federal statutory rate to the provision for income taxes | ||||
Benefit at U.S. Federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | |
State taxes-deferred (as a percent) | -32.75% | 4.79% | 6.73% | |
Increase in valuation allowance (as a percent) | -17.71% | -42.91% | -39.62% | |
Tax credits (as a percent) | 5.49% | 1.69% | 0.00% | |
Interest expense (as a percent) | 10.68% | 0.30% | -0.22% | |
Other (as a percent) | -1.99% | 1.82% | -1.89% | |
Provision for income taxes (as a percent) | -1.28% | 0.69% | 0.00% | |
Deferred tax assets: | ||||
Federal and state net operating loss carry-forwards | 111,086,000 | 114,819,000 | ||
Federal and state research credits | 6,043,000 | 5,149,000 | ||
Depreciation and amortization | 3,494,000 | 3,248,000 | ||
Accruals and reserves | 3,861,000 | 1,696,000 | ||
Deferred revenue | 4,065,000 | 1,707,000 | ||
Deferred Tax Assets, Stock Based Compensation | 8,487,000 | 2,622,000 | ||
Other | 588,000 | 752,000 | ||
Total deferred tax assets | 137,624,000 | 129,993,000 | ||
Equity component of convertible notes | -6,283,000 | -8,507,000 | ||
Net deferred tax assets, before valuation allowance | 131,341,000 | 121,486,000 | ||
Less: valuation allowance for deferred tax assets | -131,341,000 | -121,486,000 | ||
Net deferred tax assets | 0 | 0 | ||
Federal | ||||
Income Tax Provision [Line Items] | ||||
Net Operating Loss, Subject to Limitation | 197,200,000 | |||
Available Net Operating Loss, Subject to Limitation | 72,300,000 | |||
Future NOL's Which Will Become Available | 26,300,000 | |||
Future NOL's Which Will Become Available (2017) | 14,800,000 | |||
Future NOL's Which Will Become Available (2018-2022) | 10,300,000 | |||
Future NOL's Which Will Become Available (2015-Onward) | 6,000,000 | |||
Research Tax Credit Carryforward [Member] | Federal | ||||
Income Tax Provision [Line Items] | ||||
Tax Credit Carryforward, Amount | $4,400,000 | $200,000 |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2013 | |
INCOME TAXES | |||||
Amount received from sale of unused net operating losses | $400,000 | ||||
Deferred Tax Assets, Valuation Allowance | 131,341,000 | 121,486,000 | |||
Increase in valuation allowance for deferred tax assets | 9,900,000 | 17,500,000 | 20,700,000 | ||
Minimum Cumulative Percentage of Change in Ownership as Condition to Offset Taxable Income or Tax | 50.00% | ||||
NOL carryforwards that relate to stock-based compensation | 41,300,000 | ||||
Decrease in deferred tax assets | 400,000 | 400,000 | |||
Federal | |||||
INCOME TAXES | |||||
Net operating losses | 331,000,000 | ||||
Federal | Research Tax Credit Carryforward [Member] | |||||
INCOME TAXES | |||||
Tax Credit Carryforward, Amount | 4,400,000 | 200,000 | |||
State | |||||
INCOME TAXES | |||||
Amount received from sale of unused net operating losses | 400,000 | ||||
Net operating losses | 196,300,000 | ||||
State | Research Tax Credit Carryforward [Member] | |||||
INCOME TAXES | |||||
Tax Credit Carryforward, Amount | $2,500,000 |
OTHER_EMPLOYEE_BENEFITS_Detail
OTHER EMPLOYEE BENEFITS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Savings Plan | |||
Compensation expense recognized | $1 | $0.60 | $0.30 |
COMMERCIAL_PARTNERS_AND_OTHER_1
COMMERCIAL PARTNERS AND OTHER AGREEMENTS (Details) (USD $) | 0 Months Ended | 1 Months Ended | ||||
Dec. 05, 2012 | Dec. 31, 2013 | Nov. 30, 2011 | Jan. 31, 2011 | Apr. 30, 2014 | Dec. 31, 2014 | |
Aratana | ||||||
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Up-front payment received | $1,000,000 | |||||
Milestone payment received | 500,000 | |||||
Aratana | Maximum | Achievement of development and commercial milestones | ||||||
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Milestone payments Company is entitled to receive based on terms of agreement | 42,500,000 | |||||
Novo Nordisk | ||||||
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Up-front payment received | 1,500,000 | |||||
Milestone payment received | 2,000,000 | |||||
Patheon [Member] | ||||||
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Contract Termination Fee | 2,000,000 | |||||
Initial Term of Manufacturing Supply Agreement | 10th | |||||
Mundipharma Ltd [Member] | ||||||
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Term Extension of 2003 Agreements | P15Y | |||||
European Rights Expansion & New Distribution Payment | 0 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 31, 2012 | Apr. 30, 2012 | |
MPM | |||||
RELATED PARTY TRANSACTIONS | |||||
Outstanding amount payable to related party | $200,000 | $100,000 | |||
MPM | Consulting agreement | |||||
RELATED PARTY TRANSACTIONS | |||||
Expenses incurred by the entity | 500,000 | 300,000 | 400,000 | ||
MPM | Consulting agreement | Minimum | |||||
RELATED PARTY TRANSACTIONS | |||||
Monthly rate payable to related party | 16,000 | ||||
Percentage of consultant's business time devoted in exchange of monthly fee payable under the consulting agreement | 50.00% | ||||
MPM | Consulting agreement | Maximum | |||||
RELATED PARTY TRANSACTIONS | |||||
Monthly rate payable to related party | 26,000 | ||||
Percentage of consultant's business time devoted in exchange of monthly fee payable under the consulting agreement | 80.00% | ||||
Member of board of directors | |||||
RELATED PARTY TRANSACTIONS | |||||
Outstanding amount payable to related party | 100,000 | 100,000 | |||
Member of board of directors | Consulting agreement | |||||
RELATED PARTY TRANSACTIONS | |||||
Number of shares that can be purchased under option (in shares) | 70,000 | 20,000 | |||
Exercise price of shares that can be purchased under option (in dollars per share) | $16.67 | $11.02 | |||
Member of board of directors | Consulting agreement | Minimum | |||||
RELATED PARTY TRANSACTIONS | |||||
Monthly rate payable to related party | 5,000 | ||||
Member of board of directors | Consulting agreement | Maximum | |||||
RELATED PARTY TRANSACTIONS | |||||
Monthly rate payable to related party | 15,000 | ||||
Expenses incurred by the entity | $100,000 | $100,000 | $200,000 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2007 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Unfavorable lease accrual | $3,300,000 | |||
Amortization of the unfavorable lease accrual | 100,000 | 100,000 | 400,000 | |
Annual minimum payments due | ||||
2014 | 6,133,000 | |||
2015 | 7,263,000 | |||
2016 | 7,459,000 | |||
2017 | 7,660,000 | |||
2018 | 7,876,000 | |||
Thereafter | 11,786,000 | |||
Total | 48,177,000 | |||
Rent expense | 4,900,000 | 4,900,000 | 4,800,000 | |
Deferred rent | $4,500,000 | $2,300,000 |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details 2) | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum age of pediatric patients in descending order to study EXPAREL | 12 years |
Maximum age of pediatric patients in descending order to study EXPAREL | 18 years |
Age of children to study EXPAREL in pediatric patients | 2 years |
COMMITMENTS_AND_CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 3) (USD $) | 12 Months Ended | 0 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 | Mar. 21, 2007 |
Commitments | ||
Royalty on sale of product (as a percent) | 3.00% | |
SkyePharma Holding, Inc. | ||
Commitments | ||
Total milestone payments paid | 18 | |
SkyePharma Holding, Inc. | Maximum | ||
Commitments | ||
Milestone payments for EXPAREL agreed in connection with acquisition | 62 | |
PPI-California | ||
Commitments | ||
Initial purchase price for acquisition | $19.60 |
SELECTED_QUARTERLY_FINANCIAL_D2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenues | $61,793 | $52,048 | $47,165 | $36,662 | $33,564 | $23,259 | $17,141 | $11,587 | $197,668 | $85,551 | $39,084 |
Cost of revenues | 18,968 | 20,391 | 19,954 | 18,127 | 18,376 | 14,791 | 10,214 | 11,391 | 77,440 | 54,772 | 32,139 |
Total operating expenses | 53,873 | 53,033 | 50,007 | 45,920 | 43,384 | 36,073 | 29,151 | 30,232 | 202,833 | 138,840 | 88,382 |
Net loss | $5,802 | ($3,004) | ($5,037) | ($11,477) | ($11,956) | ($14,784) | ($14,031) | ($23,138) | ($13,716) | ($63,909) | ($52,281) |
Earnings Per Share, Basic | $0.16 | ($0.08) | ($0.14) | ($0.34) | ($0.36) | ($0.44) | ($0.42) | ($0.71) | |||
Earnings Per Share, Diluted | $0.14 | ($0.08) | ($0.14) | ($0.34) | ($0.36) | ($0.44) | ($0.42) | ($0.71) |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (Subsequent Event [Member], USD $) | 1 Months Ended | |
In Millions, unless otherwise specified | Feb. 28, 2015 | Feb. 06, 2015 |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Conversion Request Convertible Senior Notes | $1.50 | |
Trading-Day Observation Period [Table Text Block] | 40 days |