Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 22, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | Pacira Pharmaceuticals, Inc. | ||
Entity Central Index Key | 1,396,814 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 949 | ||
Entity Common Stock, Shares Outstanding | 37,525,108 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 35,944 | $ 56,984 |
Short-term investments | 136,653 | 101,981 |
Accounts receivable, net | 29,937 | 25,855 |
Inventories, net | 31,278 | 61,645 |
Prepaid expenses and other current assets | 9,277 | 6,117 |
Total current assets | 243,089 | 252,582 |
Long-term investments | 0 | 13,462 |
Fixed assets, net | 101,016 | 90,324 |
Goodwill | 46,737 | 30,880 |
Intangibles, net | 0 | 81 |
Other assets | 624 | 406 |
Total assets | 391,466 | 387,735 |
Current liabilities: | ||
Accounts payable | 7,511 | 8,739 |
Accrued expenses | 36,666 | 35,375 |
Convertible senior notes | 0 | 104,040 |
Income taxes payable | 595 | 1,426 |
Taxes Payable, Current | 66 | 208 |
Total current liabilities | 44,838 | 149,788 |
Convertible senior notes | 7,487 | 8,082 |
Deferred revenue | 11,427 | 11,473 |
Convertible Debt, Noncurrent | 108,738 | 0 |
Total liabilities | 172,490 | 169,343 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, par value $0.001; 5,000,000 shares authorized, none issued and outstanding at December 31, 2016 and 2015 | 0 | 0 |
Common stock, par value $0.001 and 250,000,000 shares authorized; 37,480,952 shares issued and outstanding at December 31, 2016; 36,848,319 shares issued and outstanding at December 31, 2015 | 37 | 37 |
Additional paid-in capital | 565,207 | 526,696 |
Accumulated deficit | (346,238) | (308,289) |
Accumulated other comprehensive loss | (30) | (52) |
Total stockholders’ equity | 218,976 | 218,392 |
Total liabilities and stockholders’ equity | $ 391,466 | $ 387,735 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
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) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 37,480,952 | 36,848,319 |
Common stock, shares outstanding | 37,480,952 | 36,848,319 |
Treasury stock at cost, shares | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Net product sales | $ 193,526 | $ 270,073 | $ 244,487 |
Collaborative licensing and milestone revenue | 1,287 | 3,426 | 1,426 |
Royalty revenue | 2,855 | 2,872 | 3,084 |
Total revenues | 197,668 | 276,371 | 248,997 |
Operating expenses: | |||
Cost of goods sold | 77,440 | 110,104 | 71,837 |
Research and development | 18,731 | 45,678 | 28,662 |
Selling, general and administrative | 106,662 | 152,613 | 139,043 |
Total operating expenses | 202,833 | 308,395 | 239,542 |
Income (loss) from operations | (5,165) | (32,024) | 9,455 |
Other (expense) income: | |||
Interest income | 382 | 1,323 | 678 |
Interest expense | (8,278) | (7,061) | (7,725) |
Loss on early extinguishment of debt | 0 | 0 | (52) |
Royalty interest obligation | (323) | 0 | (71) |
Other, net | (159) | (82) | (165) |
Total other expense, net | (8,378) | (5,820) | (7,335) |
Income (loss) before income taxes | (13,543) | (37,844) | 2,120 |
Income tax expense | (173) | (105) | (264) |
Net income (loss) | $ (13,716) | $ (37,949) | $ 1,856 |
Net income (loss) per share: | |||
Basic and diluted net loss per common share (in dollars per share) | $ (0.39) | $ (1.02) | $ 0.05 |
Earnings Per Share, Diluted | $ (0.39) | $ (1.02) | $ 0.04 |
Weighted average common shares outstanding: | |||
Basic and diluted (in shares) | 35,299 | 37,236 | 36,540 |
Weighted Average Number of Shares Outstanding, Diluted | 35,299 | 37,236 | 41,301 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (13,716) | $ (37,949) | $ 1,856 |
Other comprehensive income (loss): | |||
Net unrealized gain (loss) on investments | (85) | 22 | 28 |
Total other comprehensive income (loss) | (85) | 22 | 28 |
Comprehensive income (loss) | $ (13,801) | $ (37,927) | $ 1,884 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Balances at Dec. 31, 2013 | $ 41,249 | $ 34 | $ 337,639 | $ (296,429) | $ 5 |
Balances (in shares) at Dec. 31, 2013 | 33,636,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Follow-on public offering, net | 110,452 | $ 2 | 110,450 | ||
Follow-on public offering, net (in shares) | 1,840,000 | ||||
Exercise of stock options | 7,239 | 7,239 | |||
Exercise of stock options (in shares) | 624,000 | ||||
Shares issued under employee stock purchase plan | 1,184 | 1,184 | |||
Shares issued under employee stock purchase plan (in shares) | 16,000 | ||||
Cashless exercise of warrants (in shares) | 35,000 | ||||
Stock-based compensation | 24,822 | 24,822 | |||
Net unrealized gain (loss) on investments | (85) | (85) | |||
Net income (loss) | (13,716) | (13,716) | |||
Balances at Dec. 31, 2014 | 171,145 | $ 36 | 481,334 | (310,145) | (80) |
Balances (in shares) at Dec. 31, 2014 | 36,151,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | 10,073 | 10,072 | |||
Exercise of stock options (in shares) | 618,000 | ||||
Shares issued under employee stock purchase plan | 2,093 | 2,093 | |||
Shares issued under employee stock purchase plan (in shares) | 35,000 | ||||
Stock-based compensation | 33,368 | 33,368 | |||
Issuance of common stock upon conversion of convertible senior notes | 3,929 | 3,929 | |||
Issuance of common stock upon conversion of convertible senior notes (in shares) | 44,000 | ||||
Equity component of convertible senior notes, net of issuance costs | (4,100) | (4,100) | |||
Net unrealized gain (loss) on investments | 28 | 28 | |||
Net income (loss) | 1,856 | 1,856 | |||
Balances at Dec. 31, 2015 | 218,392 | $ 37 | 526,696 | (308,289) | (52) |
Balances (in shares) at Dec. 31, 2015 | 36,848,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | 5,770 | $ 0 | 5,770 | ||
Exercise of stock options (in shares) | 518,000 | ||||
Shares issued under employee stock purchase plan | $ 1,495 | 1,495 | |||
Shares issued under employee stock purchase plan (in shares) | 103,620 | 53,000 | |||
Stock-based compensation | $ 31,248 | 31,248 | |||
Equity component of convertible senior notes, net of issuance costs | (2) | (2) | |||
Net unrealized gain (loss) on investments | 22 | 22 | |||
Net income (loss) | (37,949) | (37,949) | |||
Balances at Dec. 31, 2016 | $ 218,976 | $ 37 | $ 565,207 | $ (346,238) | $ (30) |
Balances (in shares) at Dec. 31, 2016 | 37,481,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating activities: | |||
Net income (loss) | $ (13,716) | $ (37,949) | $ 1,856 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation of fixed assets and amortization of intangibles | 10,035 | 12,919 | 11,475 |
Amortization of unfavorable lease obligation and debt issuance costs | 487 | 479 | 481 |
Amortization of debt discount | 4,139 | 4,088 | 4,102 |
Loss on disposal of fixed assets | 158 | 389 | 6 |
Loss on early extinguishment of debt | 0 | 0 | 52 |
Stock-based compensation | 24,822 | 31,248 | 33,368 |
Changes in operating assets and liabilities: | |||
Restricted cash | 124 | 0 | 1,509 |
Accounts receivable, net | (7,776) | (4,082) | (3,489) |
Inventories, net | (13,706) | 30,367 | (32,382) |
Prepaid expenses and other assets | (1,621) | (3,377) | (2,007) |
Accounts payable, accrued expenses and income taxes payable | 15,349 | 710 | 8,966 |
Royalty interest obligation | (970) | 0 | (276) |
Other liabilities | 2,526 | 87 | 5,786 |
Deferred revenue | 6,713 | (1,426) | (1,426) |
Net cash provided by operating activities | 26,564 | 33,453 | 28,021 |
Investing activities: | |||
Purchases of fixed assets | (22,984) | (24,709) | (40,295) |
Purchases of investments | (164,303) | (192,815) | (189,082) |
Sales of investments | 80,286 | 171,627 | 217,240 |
Payment of contingent consideration | (13,433) | (15,857) | (7,119) |
Net cash used in investing activities | (120,434) | (61,754) | (19,256) |
Financing activities: | |||
Proceeds from follow-on public offering, net | 110,452 | 0 | 0 |
Proceeds from exercise of stock options and warrants | 7,239 | 5,770 | 10,073 |
Proceeds from shares issued under employee stock purchase plan | 1,184 | 1,495 | 2,093 |
Conversion of principal and equity component of convertible senior notes | (4) | (1,467) | |
Net cash provided by financing activities | 118,875 | 7,261 | 10,699 |
Net increase (decrease) in cash and cash equivalents | 25,005 | (21,040) | 19,464 |
Cash and cash equivalents, beginning of year | 56,984 | 37,520 | |
Cash and cash equivalents, end of year | 37,520 | 35,944 | 56,984 |
Supplemental cash flow information: | |||
Cash paid for interest, including royalty interest obligation | 5,193 | 3,852 | 4,224 |
Cash paid for income taxes, net of refunds | 34 | 247 | 195 |
Non-cash investing and financing activities: | |||
Issuance of stock from conversion of convertible senior notes | 0 | 0 | 3,929 |
Net increase (decrease) in accrued fixed assets | $ (1,095) | $ (789) | $ 1,393 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2016 | |
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, manufacture and commercialization of pharmaceutical products, based on its proprietary DepoFoam ® extended release drug delivery technology, for use primarily in hospitals and ambulatory surgery centers. The Company’s lead product, EXPAREL ® (bupivacaine liposome injectable suspension), 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. The Company also sells its bupivacaine liposome injectable suspension product to a commercial partner to serve animal health indications. 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 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 ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
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, inventory costs, impairments of goodwill and long-lived assets, liabilities and accruals, stock-based compensation and the 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, short-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 March 1, 2018 . 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. See Note 8, Debt, for further discussion of the Company’s convertible senior notes and conversion elections. 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 England. Revenue Recognition The Company’s principal sources of revenue include (i) sales of EXPAREL in the United States, or US, (ii) sales of DepoCyt(e) to our commercial partners within the US and the European Union, or EU, (iii) royalties based on sales by commercial partners of DepoCyt(e) and (iv) license fees and milestone payments. 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 DepoCyt(e) and other product sales 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, contract terms, 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 12 months following product expiration. The Company estimates its sales return reserve based on its historical return rates, 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 DepoCyt(e) 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 of 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. The following table provides a summary of activity with respect to the Company’s accrued rebates and chargebacks, returns, wholesaler service fees and prompt pay discounts for the years ended December 31, 2016 , 2015 and 2014 (in thousands): Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume Rebates and Chargebacks Total Balance at December 31, 2013 $ 897 $ 313 $ 266 $ 402 $ 1,878 Provision 829 3,833 2,780 881 8,323 Payments/credits (167 ) (3,571 ) (2,458 ) (962 ) (7,158 ) Balance at December 31, 2014 1,559 575 588 321 3,043 Provision 339 4,905 3,482 2,020 10,746 Payments/credits (165 ) (4,855 ) (3,325 ) (1,544 ) (9,889 ) Balance at December 31, 2015 1,733 625 745 797 3,900 Provision 694 5,448 4,118 2,611 12,871 Payments/credits (1,081 ) (5,478 ) (4,128 ) (2,284 ) (12,971 ) Balance at December 31, 2016 $ 1,346 $ 595 $ 735 $ 1,124 $ 3,800 Royalty Revenue The Company recognizes revenue from royalties based on sales of its commercial partners’ net sales of DepoCyt(e) and sales of bupivacaine liposome injectable suspension product to serve animal health indications. Royalties are recognized as earned in accordance with contract terms when they can be reasonably estimated and collection is reasonably assured. Based on historical product sales, royalty receipts and other relevant information, the Company accrues royalty revenue each quarter. Collaborative Licensing and Milestone Revenue The Company recognizes revenues from non-refundable up-front license fees received under collaboration agreements ratably over the performance period as determined under the 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 milestone 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.(i.e.,wholesalers or commercial partners) in each year presented: Year Ended December 31, 2016 2015 2014 Largest customer 32 % 33 % 33 % Second largest customer 28 % 29 % 29 % Third largest customer 26 % 28 % 24 % 86 % 90 % 86 % Revenues from customers outside the US accounted for 1% , 2% and 2% of the Company’s revenue for the years ended December 31, 2016 , 2015 and 2014 , respectively. Research and Development Expenses Research and development expenses consist of costs associated with products and processes being developed, 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. 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 accumulated other comprehensive loss until realized. Realized gains and losses are included in interest income in 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 Asset Retirement Obligations The Company has contractual obligations stemming from certain of its lease agreements to return leased space to its original condition upon termination of the lease agreement. The Company records an asset retirement obligation, or ARO, along with a corresponding capital asset in an amount equal to the estimated fair value of the ARO. In subsequent periods, the Company records interest expense to accrete the ARO to full value. Each ARO capital asset is depreciated over the depreciable term of the associated asset. 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. 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 statements 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 statements 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 accounts receivable and royalties on DepoCyte ® in Euros. 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, 2016 and 2015 , all deferred tax assets were fully offset by a valuation allowance 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 common 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 common 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 and warrants, the vesting of restricted stock units, or RSUs, 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 Company’s convertible senior notes. Potential common shares in the diluted net loss per share computation are excluded to the extent that they would be anti-dilutive. For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share. Stock-Based Compensation The Company’s stock-based compensation program includes grants of stock options and restricted stock units 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. The Company used an expected term based on its historical data from stock option exercises. 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 PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted In April 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15, 2015. The Company adopted this standard on January 1, 2016. The Company applied the new guidance retrospectively to all prior periods presented in the financial statements to conform to the 2016 presentation. As a result, $1.9 million of debt issuance costs related to the Company’s convertible senior notes at December 31, 2015 were reclassified from other assets to a reduction in the carrying value of the Company’s convertible senior notes. Not Adopted as of December 31, 2016 In May 2014, the FASB issued ASU 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. During the fiscal third quarter of 2015, the FASB approved a one year deferral to the effective date to be adopted by all public companies for all annual periods and interim reporting periods beginning after December 15, 2017. During 2016, the FASB issued additional guidance and clarification relating to identifying performance obligations, licensing, principal versus agent considerations, assessing collectability, presentation of sales taxes, noncash consideration and contract modifications and completed contracts at transition. These updates will replace existing revenue recognition guidance under GAAP when it becomes effective for the Company beginning January 1, 2018, and permits two methods of adoption: the full retrospective method, which requires the standard to be applied to each prior period presented, or the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. While the Company is continuing to evaluate the impact of these updates on its consolidated financial statements, it does not expect the implementation of ASU 2014-09 and the subsequently issued related guidance to have a material impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory . The standard requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market (market in this context is defined as one of three different measures, one of which is net realizable value). The standard is effective for the Company prospectively beginning January 1, 2017. The adoption of ASU 2015-11 is not expected to have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) . This update requires lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment for items such as initial direct costs. For income statement purposes, the new standard retains a dual model similar to Accounting Standards Codification, or ASC, 840, requiring leases to be classified as either operating or financing. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while financing leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). This update also introduces new disclosure requirements for leasing arrangements. The standard is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact of ASU 2016-02 on its consolidated financial statements. Refer to Note 17, Commitments and Contingencies , for further discussion on the Company’s leases. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This update includes multiple provisions intended to simplify various aspects of the accounting for share-based payment transactions including accounting for excess tax benefits and tax deficiencies, classification of excess tax benefits in the statement of cash flows and accounting for award forfeitures. The update also removes the present requirement to delay recognition of an excess tax benefit until it reduces current taxes payable, instead, it is required to be recognized at the time of settlement, subject to normal valuation allowance considerations. This update became effective for the Company beginning January 1, 2017. The Company will elect an accounting policy change to record forfeitures as they occur rather than estimating forfeitures during each period and will record a charge of approximately $0.3 million to retained earnings as of January 1, 2017 related to the reversal of cumulative forfeiture estimates. The adoption of this standard also will result in the recognition of $29.3 million of previously unrecognized excess tax benefits in deferred tax assets, fully offset by a valuation allowance. All tax-related cash flows resulting from stock-based compensation, including the excess tax benefits related to the settlement of stock-based awards, will be classified as cash flows from operating activities on the Company’s consolidated statements of cash flows. Based on a preliminary assessment, the Company does not believe that any of the provisions in ASU 2016-09 will have a significant impact on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) , which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. This update also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. This ASU is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of ASU 2016-13 on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies existing guidance on how companies present and classify certain cash receipts and cash payments in the statement of cash flows by addressing specific cash flow issues in an effort to reduce diversity in practice, including guidance on debt prepayment or extinguishment costs and contingent consideration payments made after a business combination. This update is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-15 on its consolidated financial statements. 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, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES The components of inventories are as follows (in thousands): December 31, 2016 2015 Raw materials $ 11,742 $ 16,712 Work-in-process 11,621 12,152 Finished goods 7,915 32,781 Total $ 31,278 $ 61,645 The Company is required to perform ongoing stability testing on select lots of EXPAREL at various time intervals. In October 2016, as part of its ongoing stability testing, the Company identified that a single batch of EXPAREL, which was manufactured in early 2016, did not meet the required specification. An internal investigation has tied this unexpected result to a modification to the manufacturing process that existed when this product was made, which has subsequently been corrected. The Company reserved all impacted inventory on hand and exchanged a limited number of boxes that were sold from the impacted inventory. As a result, the Company recorded in 2016 a $20.7 million charge to cost of goods sold related to this matter, of which $20.5 million was recorded as an inventory reserve and $0.2 million for replacement boxes and other related administrative costs. |
FIXED ASSETS
FIXED ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
FIXED ASSETS | FIXED ASSETS Fixed assets, net summarized by major category, consist of the following (in thousands): December 31, 2016 2015 Machinery and laboratory equipment $ 34,309 $ 29,864 Leasehold improvements 33,787 30,834 Computer equipment and software 5,623 4,007 Office furniture and equipment 1,606 1,439 Construction in progress 63,201 49,097 Total 138,526 115,241 Less: accumulated depreciation (37,510 ) (24,917 ) Fixed assets, net $ 101,016 $ 90,324 Depreciation expense for the years ended December 31, 2016 , 2015 and 2014 was $12.8 million , $11.2 million and $9.3 million , respectively. During the years ended December 31, 2016 , 2015 and 2014 , the Company capitalized interest of $1.5 million , $0.8 million and $0.4 million , respectively. As of December 31, 2016 and 2015 , total fixed assets, net, includes leasehold improvements and manufacturing process equipment located in England in the amount of $33.7 million and $25.9 million , respectively. For the years ended December 31, 2016 and 2015 , the Company has recorded an ARO of $0.5 million and $0.6 million , respectively, included in other liabilities on its consolidated balance sheet, for costs associated with returning leased space to its original condition upon the termination of certain lease agreements. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
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 DepoBupivacaine products collected, as well as milestone payments for DepoBupivacaine products, as follows: (i) $10.0 million upon the first commercial sale in the United States (met April 2012); (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 (met September 2014); (iv) $8.0 million when annual net sales collected reach $250.0 million (met June 2016); 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 annual EXPAREL net sales collected. In June 2016, the Company recorded an $8.0 million milestone payment for achieving $250.0 million of annual EXPAREL net sales collected. For purposes of meeting future potential milestone payments, with certain exceptions, annual net sales are measured on a rolling quarterly basis. Cumulatively through December 31, 2016 , the Company has recorded an additional $22.8 million as goodwill for earn-out payments which are based on a percentage of net sales of DepoBupivacaine products, including 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 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 related to contingent payments due under the Acquisition during the years ended December 31, 2016 , and 2015 , which are not deductible for income tax purposes. The change in the carrying value of goodwill is summarized as follows (in thousands): Carrying Value Balance at December 31, 2014 $ 23,761 Percentage payments on collections of net sales of DepoBupivacaine products 7,119 Balance at December 31, 2015 30,880 Milestone payment triggered by collections of net sales of DepoBupivacaine products 8,000 Percentage payments on collections of net sales of DepoBupivacaine products 7,857 Balance at December 31, 2016 $ 46,737 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, 2016 December 31, 2015 Amortizable Intangible Assets: Gross Accumulated Intangible Gross Carrying Value Accumulated Amortization Intangible Assets, Net Estimated Core technology $ 2,900 $ (2,900 ) $ — $ 2,900 $ (2,819 ) $ 81 9 Years Developed technology 11,700 (11,700 ) — 11,700 (11,700 ) — 7 Years Trademarks and trade names 400 (400 ) — 400 (400 ) — 7 Years Total intangible assets $ 15,000 $ (15,000 ) $ — $ 15,000 $ (14,919 ) $ 81 Annual amortization expense for intangibles for the years ended December 31, 2016 , 2015 and 2014 was $0.1 million , $0.3 million and $0.8 million , respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): December 31, 2016 2015 Compensation and benefits $ 11,228 $ 11,944 Accrued operating expenses 16,538 14,601 Accrued royalties 3,822 3,731 Accrued interest 1,605 1,605 Product returns, rebates and other fees 3,473 3,494 Total $ 36,666 $ 35,375 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The composition of the Company’s debt and financing obligations is as follows (in thousands): December 31, 2016 2015 3.25% convertible senior notes $ 118,531 $ 118,533 Deferred financing costs (1,276 ) (1,888 ) Discount on debt (8,517 ) (12,605 ) Total debt, net of debt discount $ 108,738 $ 104,040 Convertible Senior 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 due 2019, or the Notes, and entered into an indenture agreement, or the 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. The Notes mature on February 1, 2019. 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, if the last reported sales 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, 2016 , the requirements with respect to the Consecutive Sales Price were not met. As a result, the Notes are classified as a long-term obligation and are not convertible during the quarter ended March 31, 2017 . As of December 31, 2016 , the Notes had a market price of $1,406 per $1,000 principal amount, compared to an estimated conversion value of $1,301 per $1,000 principal amount. 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 $118.5 million in principal value and approximately $35.7 million of cash or issue approximately 1.1 million shares of its common stock (or a combination of cash and shares of its common stock at the Company’s option) to settle the conversion premium as of December 31, 2016 , causing dilution to the Company’s shareholders and/or significant expenditures of the Company’s cash and liquid securities. 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 was paid in cash pursuant to the terms of the Indenture in April 2015. The Company elected to settle the conversion premium by issuing 44,287 shares of its common stock, calculated based on a daily volume-weighted adjusted price over a 40 trading-day observation period which ended on April 8, 2015. The Company realized a $0.1 million loss on the early extinguishment of the converted Notes. The Company has completed other immaterial conversion requests. The future convertibility and resulting balance sheet classification of this liability is monitored at each quarterly reporting date and is analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. The Notes are classified on the Company’s consolidated balance sheet at December 31, 2016 as a long-term obligation and at December 31, 2015 as a current obligation. In the event that the holders of the Notes have the election to convert, the Notes would then be considered a current obligation and classified as such. As of 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 on 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 by the Company (in thousands): Year Ended December 31, 2016 2015 2014 Contractual interest expense $ 3,852 $ 3,856 $ 3,900 Amortization of debt issuance costs 612 615 620 Amortization of debt discount 4,088 4,102 4,139 Capitalized interest (Note 5) (1,491 ) (848 ) (381 ) Total $ 7,061 $ 7,725 $ 8,278 Effective interest rate on the Notes 7.22 % 7.21 % 7.22 % Sale of Royalty Interests In 2000, prior to the Acquisition, 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, which are recorded as a royalty interest obligation in the Company’s consolidated statements of operations. Payments began for product sales realized on or after January 1, 2003 and continued through December 31, 2014. The related financing arrangement with Paul Capital terminated on December 31, 2014, and the final payment to Paul Capital occurred in March 2015. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
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 be 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 of fair value measurements 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, 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, 2016 are calculated utilizing market quotations from an over-the-counter trading market for these 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 Level 1 Level 2 Level 3 December 31, 2016 Convertible senior notes * $ 108,738 $ — $ 166,672 $ — * The fair value of the Notes was based on the Company’s closing stock price of $32.30 per share at December 31, 2016 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of 1.1 million shares or $35.7 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 maturities greater than three months, but less than one year. Long-term investments consist of corporate bonds with maturities greater than one year. The net unrealized gains from the Company’s short-term and long-term investments are reported in other comprehensive income (loss). At December 31, 2016 , all of the Company’s short-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, 2016 , all short-term and long-term investments were rated A or better by Standard & Poor’s. The following summarizes the Company’s investments at December 31, 2016 and 2015 (in thousands): December 31, 2016 Cost Gross Gross Fair Value Debt securities: Short-term: Asset-backed securities $ 9,012 $ — $ (2 ) $ 9,010 Commercial paper 39,530 8 (15 ) 39,523 Corporate bonds 88,141 11 (32 ) 88,120 Total $ 136,683 $ 19 $ (49 ) $ 136,653 December 31, 2015 Cost Gross Gross Fair Value Debt securities: Short-term: Asset-backed securities $ 27,484 $ — $ (15 ) $ 27,469 Commercial paper 35,191 31 — 35,222 Corporate bonds 39,319 2 (31 ) 39,290 Subtotal 101,994 33 (46 ) 101,981 Long-term: Corporate bonds 13,501 — (39 ) 13,462 Total $ 115,495 $ 33 $ (85 ) $ 115,443 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, 2016 , 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, 2016 , three customers accounted for over 10% of the Company’s accounts receivable; 36% , 29% and 25% , respectively. At December 31, 2015 , three customers accounted for over 10% of the Company’s accounts receivable; 34% , 28% and 27% , respectively. Revenues are primarily derived from major wholesalers and pharmaceutical companies which 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, 2016 and 2015 , no allowances for doubtful accounts were deemed necessary by the Company on its accounts receivable. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
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 37,480,952 and 36,848,319 were outstanding at December 31, 2016 and 2015 , 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. 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, 2016 or 2015 . Warrants The Company had no warrants outstanding at December 31, 2016 . At December 31, 2015 , the Company had 7,216 warrants outstanding at a weighted average exercise price of $13.44 . Accumulated Other Comprehensive Income (Loss) The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive loss (in thousands): Net Unrealized Gains (Losses) From Available For Sale Investments Balance at December 31, 2014 $ (80 ) Other comprehensive income before reclassifications 28 Amounts reclassified from accumulated other comprehensive income (loss) — Balance at December 31, 2015 (52 ) Other comprehensive income before reclassifications 22 Amounts reclassified from accumulated other comprehensive income (loss) — Balance at December 31, 2016 $ (30 ) |
STOCK PLANS
STOCK PLANS | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK PLANS | STOCK PLANS Stock Incentive Plans The Company’s amended and restated 2011 stock incentive plan, or 2011 Plan, was adopted by its Board of Directors and approved by its stockholders in June 2014. The 2011 Plan allows the granting of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. Since the adoption of the 2011 Plan, any remaining shares available for issuance under a 2007 stock incentive plan, or 2007 Plan, are reallocated 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. In June 2016, the Company’s board of directors adopted an amendment to the 2011 Plan. Under the amendment, an additional 4,000,000 shares of common stock were authorized for issuance as equity awards under the plan. The amendment to the 2011 Plan was subsequently ratified by the Company’s stockholders and became effective in June 2016. All of the Company’s stock option grants have an exercise price equal to the closing price 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). Since 2015, the Company has granted RSUs to employees and its Board of Directors. 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 in June 2014. 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 ESPP 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 . Six-month offering periods begin on January 1 and July 1 of each year. During an offering period, eligible employees 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. The following table contains information about the Company’s plans at December 31, 2016 : Stock Incentive Plans Awards Reserved for Issuance Awards Issued Awards Available for Grant 2007 Plan 2,022,837 2,022,837 — 2011 Plan 9,931,700 6,503,336 3,428,364 2014 Inducement plan 175,000 66,626 108,374 12,129,537 8,592,799 3,536,738 Employee Stock Purchase Plan Shares Reserved for Purchase Shares Purchased Shares Available for Purchase 2014 ESPP 500,000 103,620 396,380 Stock-Based Compensation Compensation expense for stock options and RSUs 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 and RSUs 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, 2016 , 2015 and 2014 as follows (in thousands): Year Ended December 31, 2016 2015 2014 Cost of goods sold $ 6,438 $ 6,012 $ 3,582 Research and development 3,297 5,134 6,490 Selling, general and administrative 21,513 22,222 14,750 Total $ 31,248 $ 33,368 $ 24,822 Stock-based compensation from: Stock options (employee awards) $ 24,505 $ 27,262 $ 19,182 Stock options (consultant awards) 841 2,367 5,295 RSUs 5,117 2,887 — ESPP 785 852 345 Total $ 31,248 $ 33,368 $ 24,822 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. The following table summarizes the Company’s stock option activity and related information for the period from January 1, 2014 to December 31, 2016 : Number of Weighted Weighted Average Aggregate Outstanding at December 31, 2013 3,840,038 $ 13.50 8.01 $ 168,905 Granted 1,638,575 79.68 Exercised (624,229 ) 11.60 $ 45,289 Forfeited (175,967 ) 44.32 Expired (561 ) 21.70 Outstanding at December 31, 2014 4,677,856 35.78 7.86 $ 248,276 Granted 906,706 75.35 Exercised (618,434 ) 16.29 $ 39,401 Forfeited (294,880 ) 64.29 Expired (25,526 ) 81.94 Outstanding at December 31, 2015 4,645,722 44.03 7.31 $ 162,340 Granted 1,656,598 38.20 Exercised (518,226 ) 11.13 $ 21,750 Forfeited (401,048 ) 70.27 Expired (175,303 ) 80.91 Outstanding at December 31, 2016 5,207,743 $ 42.16 7.39 $ 37,581 Exercisable at December 31, 2016 2,798,083 $ 35.30 5.93 $ 37,403 Vested and expected to vest at December 31, 2016 4,858,131 $ 41.92 7.25 $ 37,567 As of December 31, 2016 , $57.1 million of total unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted average period of 2.8 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, 2016 , 2015 and 2014 was $19.13 , $37.82 and $42.62 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, 2016 2015 2014 Expected dividend yield None None None Risk free interest rate 1.03% - 2.48% 1.40% - 2.28% 0.02% - 2.16% Expected volatility 53.5% 52.9% 57.2% Expected term of options 5.77 years 5.76 years 5.86 years The following table summarizes the Company’s RSU activity and related information for the period from January 1, 2015 to December 31, 2016 : Number Weighted Aggregate Unvested at December 31, 2014 — $ — $ — Granted 232,046 78.65 Vested — — Forfeited (15,848 ) 79.43 Unvested at December 31, 2015 216,198 78.59 $ 16,602 Granted 256,631 40.21 Vested (61,487 ) 78.33 Forfeited (46,939 ) 68.84 Unvested at December 31, 2016 364,403 $ 52.85 $ 11,824 Expected to vest at December 31, 2016 308,797 $ 53.05 $ 9,974 As of December 31, 2016 , $16.0 million of total unrecognized compensation cost related to non-vested RSUs is expected to be recognized over a weighted average period of 3.0 years . The Company’s RSUs have a maximum vest date of four years from the date of grant. The fair values of RSUs awarded are equal to the closing price of the fair market value of the Company’s common stock on the date of grant. The fair values of the ESPP share options granted are estimated using the Black-Scholes model with the following weighted average assumptions: Year Ended December 31, 2016 2015 2014 ESPP option fair value $10.57 - $25.28 $21.93 - $25.24 $23.27 Expected dividend yield None None None Risk free interest rate 0.37% - 0.49% 0.11% - 0.13% 0.37% Expected volatility 63.4% 50.7% 28.2% Expected term of ESPP share options 6 months 6 months 4 months |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
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 common share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common 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 and warrants, the vesting of RSUs 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, 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. For purposes of calculating the dilutive impact of the conversion premium on the Notes, 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 the years ended December 31, 2016 and 2014 , no potentially dilutive securities have been included in the computation of diluted net loss per share for those periods. The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2016 , 2015 and 2014 (in thousands, except per share amounts): Year Ended December 31, 2016 2015 2014 Numerator: Net income (loss) $ (37,949 ) $ 1,856 $ (13,716 ) Denominator: Weighted average common shares outstanding—basic 37,236 36,540 35,299 Computation of diluted securities: Dilutive effect of stock options — 1,638 — Dilutive effect of RSUs — 3 — Dilutive effect of conversion premium on the Notes — 3,113 — Dilutive effect of warrants — 6 — Dilutive effect of ESPP — 1 — Weighted average common shares outstanding—diluted 37,236 41,301 35,299 Net income (loss) per share: Basic net income (loss) per common share $ (1.02 ) $ 0.05 $ (0.39 ) Diluted net income (loss) per common share $ (1.02 ) $ 0.04 $ (0.39 ) The following outstanding stock options, RSUs, conversion premium on the Notes, warrants and ESPP purchase options are antidilutive in the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Weighted average number of stock options 4,482 1,891 3,534 Weighted average number of RSUs 290 99 — Conversion premium on the Notes 2,022 — 2,483 Weighted average number of warrants 1 — 21 Weighted average ESPP purchase options 21 8 1 Total 6,816 1,998 6,039 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income (loss) before income taxes and the related tax expense is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Income (loss) before income taxes: Domestic $ (36,339 ) $ 3,760 $ (13,271 ) Foreign (1,505 ) (1,640 ) (272 ) Total income (loss) before income taxes $ (37,844 ) $ 2,120 $ (13,543 ) Current taxes: Federal $ 11 $ 92 $ — State 94 172 173 Total income tax expense $ 105 $ 264 $ 173 The tax provision of $0.1 million and $0.2 million for the years ended December 31, 2016 and 2014, respectively, is principally the result of minimum state taxes. The tax provision of $0.3 million for the year ended December 31, 2015 is the result of the federal alternative minimum tax and state taxes. A reconciliation of income taxes at the US federal statutory rate to the provision for income taxes is as follows: Year Ended December 31, 2016 2015 2014 U.S. federal statutory rate 35.00 % 35.00 % 35.00 % State taxes 2.20 % 0.71 % (32.62 )% Foreign taxes (0.81 )% 12.03 % (0.13 )% Change in valuation allowance (43.96 )% 10.32 % (17.71 )% Stock-based compensation (0.54 )% 7.26 % (0.44 )% Tax credits 8.77 % (30.63 )% 5.49 % Interest expense 5.75 % (37.57 )% 10.68 % Effect of state blended rate changes (4.65 )% — % — % Other (2.04 )% 15.33 % (1.55 )% Effective tax rate (0.28 )% 12.45 % (1.28 )% The Company’s effective tax rates of (0.28)% and (1.28)% for the years ended December 31, 2016 and 2014, respectively, differed from the expected US statutory tax rate of 35.0% . This difference was primarily driven by pretax losses for which the Company concluded that a majority of its tax benefits are not more-likely-than-not to be realized, resulting in the recording of a full valuation allowance. The Company’s effective tax rate of 12.45% for the year ended December 31, 2015 was favorably impacted by the utilization of domestic net operating loss carryforwards for which there was a full valuation allowance. Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2016 and 2015 are as follows (in thousands): December 31, 2016 2015 Deferred tax assets: Net operating loss carry-forwards $ 96,163 $ 101,011 Federal and state credits 13,724 7,232 Depreciation and amortization 2,604 1,310 Accruals and reserves 14,004 5,558 Deferred revenue 3,023 3,530 Stock based compensation 21,890 17,201 Other 531 953 Total deferred tax assets 151,939 136,795 Deferred tax liabilities: Discount on convertible senior notes (3,186 ) (4,679 ) 148,753 132,116 Less: valuation allowance (148,753 ) (132,116 ) Net deferred tax assets $ — $ — As of December 31, 2016 , the available federal net operating loss carryforwards, or NOLs, and the federal tax credit carryforwards totaled $341.4 million and $10.5 million , respectively. The Company also had state NOLs and state tax credit carryforwards of $222.8 million and $5.0 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-US tax NOLs of $3.4 million at December 31, 2016 . The federal and state NOLs will begin expiring in 2025 and 2017, respectively, if the Company has not used them prior to that time. The Company applies the with-and-without approach to determine the sequence in which stock-based compensation deductions and NOLs are utilized. Accordingly, no excess tax benefit related to stock option exercises was recognized in the current year. $78.2 million of the federal NOLs are related to excess tax benefits arising from the exercise of stock options. 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 certain 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 $192.4 million of federal net operating losses are subject to annual limitations. At December 31, 2016 , $120.1 million of these federal net operating losses were available. The Company estimates that an additional $14.8 million will become available in 2017, $10.3 million annually from 2018 through 2022, and the remaining $6.0 million through 2025. In addition, California and certain states have previously suspended or limited the use of net operating loss carryforwards for certain taxable years, and certain states are considering similar future measures. As a result, the Company may incur higher state income tax expense in the future. In accordance with ASC Topic 740, the Company establishes a valuation allowance for deferred tax assets that, in its judgment, are not more-likely-than-not realizable. These judgments are based on projections of future income, including tax-planning strategies, by individual tax jurisdictions. In each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowance is appropriate. As a result of this assessment, the Company had a net change in its valuation allowance totaling $16.6 million , $0.8 million and $9.9 million during the years ended December 31, 2016 , 2015 and 2014 , 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 reducing its net deferred tax assets to zero at both December 31, 2016 and 2015 . The Company did not have a liability related to unrecognized tax benefits, or UTBs, as of December 31, 2016 and 2015 . The Company believes its UTBs for uncertain tax positions are adequate, consistent with the principles of ASC Topic 740. The Company regularly assesses the likelihood of additional tax assessments by jurisdiction and, if necessary, adjusts its UTBs based on new information or developments. The Company recognizes interest and penalties related to UTBs as an income tax expense. No interest or penalties were recognized in income tax expense for the years ended December 31, 2016 , 2015 or 2014 , respectively. The Company is currently subject to audit by the United States Internal Revenue Service, or IRS, for the years 2014 through 2016, and state tax jurisdictions for the years 2010 through 2016. However, the IRS or states may still examine and adjust a net operating loss arising from a closed year to the extent it is utilized in a year that remains subject to audit. The Company’s previously filed income tax returns are not presently under audit by the IRS or state tax authorities. |
OTHER EMPLOYEE BENEFITS
OTHER EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2016 | |
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 $1.5 million , $1.7 million and $1.0 million of related compensation expense for the years ended December 31, 2016 , 2015 and 2014 , respectively. |
COMMERCIAL PARTNERS AND OTHER A
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
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, a Technical Transfer and Service Agreement and a Manufacturing and Supply Agreement to collaborate in the manufacture 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, England facility for the manufacture of EXPAREL in two dedicated manufacturing suites. Under these agreements, the Company will make monthly base fee payments for services rendered. The agreements will remain in full effect unless and until they expire or are terminated. Upon termination of the Technical Transfer and Services 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 $2.4 million . 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 by giving notice of up to three years (other than termination by the Company in the event of a material breach by Patheon), this agreement will expire on the 10th anniversary of the FDA approval date for the initial manufacturing suite. 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 developed and obtained FDA approval for the use of the product in veterinary surgery to manage postsurgical pain. In connection with its entry into the license agreement, the Company received a one-time payment of $1.0 million . In December 2013, the Company received a $0.5 million milestone payment under the agreement. In June 2016, the Company recorded $1.0 million in milestone revenue for Aratana’s filing of an FDA Administrative New Animal Drug Application, or ANADA, and in August 2016 recorded $1.0 million related to the FDA’s approval of the ANADA. The Company is eligible to receive up to an additional aggregate $40.0 million upon the achievement of commercial milestones. Aratana is 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. Unless terminated earlier pursuant to its terms, the license agreement is effective until December 2027, after which Aratana has the option to extend the agreement for an additional five-year term, subject to certain requirements. Aratana began purchasing bupivacaine liposome injectable suspension product in the third quarter of 2016, which they will market under the trade name NOCITA ® to serve animal health indications. NOCITA ® is a registered trademark of Aratana Therapeutics, Inc. 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 EU 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. Leadiant Biosciences, Ltd. In December 2002, the Company entered into a supply and distribution agreement with Enzon Pharmaceuticals Inc., subsequently acquired by Sigma-Tau Rare Disease, Ltd., subsequently known as Leadiant Biosciences, Ltd., or Leadiant, regarding the promotion and distribution of DepoCyt ® . Pursuant to the agreement, Leadiant was appointed the exclusive distributor of DepoCyt in the United States and Canada for a ten-year term, with successive two year renewal periods. Under the supply and distribution agreement, the Company supplies unlabeled DepoCyt vials to Leadiant. 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. The Company and Leadiant are currently operating under the terms of the agreement. CrossLink BioScience, LLC In October 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 (as amended). On June 30, 2016, the Company provided notice to CrossLink electing to terminate the agreement effective as of September 30, 2016. In connection with the termination of the agreement, a termination fee based on a percentage of earned performance-based fees is due to CrossLink. This fee of $7.1 million is payable to CrossLink quarterly over two years, beginning in the fourth quarter of 2016, and was recorded in selling, general and administrative expense in the consolidated statements of operations. At December 31, 2016 , $5.3 million is classified in accrued expenses and $1.8 million is classified in other liabilities. 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 was 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 was in effect until January 2017. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company’s former Chief Medical Officer, Dr. Gary Patou, is a partner of MPM Asset Management LLC, or MPM, an investor in the Company. The Company incurred related consulting expenses of $0.1 million , $0.3 million and $0.5 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. At December 31, 2016 there was nothing payable to MPM and at December 31 2015 , the amount payable to MPM was $0.1 million . The Company’s agreement with MPM expired on December 31, 2015. The Company contracted with Dr. Patou directly for his services for the first six months of 2016. 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. David Stack, the Company’s Chief Executive Officer and Chairman is a managing director at MPM. 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. The Company recorded expenses under the consulting arrangement of less than $0.1 million for each of the years ended December 31, 2016 , 2015 and 2014 . 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 an option to purchase 70,000 shares of common stock at an exercise price of $16.67 per share. At December 31, 2016 , there was nothing payable to Dr. Pace for consulting services and at December 31, 2015, less than $0.1 million was payable to Dr. Pace for consulting services. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Leases The Company’s leases for its research and development, manufacturing and warehouse facilities in San Diego, California expire in August 2020 and its lease for its corporate headquarters in Parsippany, New Jersey expires in March 2028. As of December 31, 2016 , aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands): Year Aggregate Minimum Payments 2017 $ 7,880 2018 8,063 2019 8,272 2020 6,389 2021 1,207 2022 through 2028 7,545 Total $ 39,356 Total rent expense, net of amortization of unfavorable lease obligations and tenant improvements, under all operating leases for the years ended December 31, 2016 , 2015 and 2014 was $6.0 million , $5.7 million and $4.9 million , respectively. Deferred rent at December 31, 2016 and 2015 was $8.6 million and $9.2 million , respectively. The Company’s research and development facility in San Diego, California included a lease incentive allowance of $5.6 million for the payment of leasehold improvements, which the Company utilized completely in 2015 and 2016. The leasehold improvements were capitalized into fixed assets, net on the consolidated balance sheets and are depreciated over the lease term. 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, including those related to patents, product liability and government investigations. 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. In April 2015, the Company received a subpoena from the US Department of Justice, US Attorney’s Office for the District of New Jersey, requiring the production of a broad range of documents pertaining to marketing and promotional practices related to EXPAREL. The Company is cooperating with the government’s inquiry. The Company can make no assurances as to the time or resources that will need to be devoted to this inquiry or the impact, if any, of this inquiry or any proceedings on its business, financial condition, results of operations and cash flows. Purchase Obligations The Company has $0.6 million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2016 . Other Commitments and Contingencies The FDA, as a condition of EXPAREL approval, has required the Company to study EXPAREL in pediatric patients. The Company was granted a deferral for the required pediatric trials in all age groups for EXPAREL in the setting of wound infiltration and plans to conduct these pediatric trials as a post-marketing requirement, which was stated in the New Drug Application approval letter for EXPAREL. The Company recently secured feedback from the FDA on the pediatric trial design in all age groups and is in the process of finalizing its clinical strategy. 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 $36.0 million are for milestones not yet met. Additionally, the Company agreed to pay to Skyepharma a low single-digit percentage payment on collections of EXPAREL sales in the United States, Japan, 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 Company has the right to cease paying the low single-digit percentage payments in the event that Skyepharma breaches certain covenants not to compete contained in the stock purchase agreement or the last valid patent claim expires. Refer to Note 6, Goodwill and Intangible Assets , for further discussion. 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. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following tables present selected quarterly financial data for the years ended December 31, 2016 and 2015 (in thousands, except per share data): Three Months Ended March 31, June 30, September 30, December 31, Total revenues $ 65,474 $ 69,640 $ 68,355 $ 72,902 Cost of goods sold 20,278 23,053 43,152 23,621 Total operating expenses 67,728 76,084 89,220 75,363 Net income (loss) (3,854 ) (7,958 ) (22,164 ) (3,973 ) Basic and diluted net loss per common share $ (0.10 ) $ (0.21 ) $ (0.59 ) $ (0.11 ) Three Months Ended March 31, June 30, September 30, December 31, Total revenues $ 58,316 $ 59,148 $ 62,213 $ 69,320 Cost of goods sold 17,580 18,929 15,901 19,427 Total operating expenses 54,975 57,330 57,104 70,133 Net income (loss) 1,260 8 3,086 (2,498 ) Basic and diluted net income (loss) per common share $ 0.03 $ 0.00 $ 0.08 $ (0.07 ) For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share. |
SUBSEQUENT EVENTS (Notes)
SUBSEQUENT EVENTS (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 18—SUBSEQUENT EVENTS In January 2017, the Company announced the initiation of a Co-Promotion Agreement, or the Agreement, with DePuy Synthes Sales, Inc., or DePuy Synthes, to market and promote the use of EXPAREL for orthopedic procedures in the United States. DePuy Synthes field representatives, specializing in joint reconstruction, spine, sports medicine and trauma, will collaborate with, and supplement, the Company’s field teams by expanding the reach and frequency of EXPAREL education in the hospital surgical suite and ambulatory surgery center settings. Under the five-year arrangement, DePuy Synthes will be the exclusive third-party distributor during the term of the Agreement to promote and sell EXPAREL for operating room use for orthopedic and spine surgeries (including knee, hip, shoulder, sports and trauma surgeries) in the United States. DePuy Synthes is entitled to a tiered commission ranging from low single-digits to double-digits on sales of EXPAREL under the Agreement, subject to conditions, limitations and adjustments. The initial term of the Agreement commenced on January 24, 2017 and ends on December 31, 2021, with the option to extend the Agreement in additional 12 month increments upon mutual agreement of the parties, subject to certain conditions. The Company and DePuy Synthes have mutual termination rights under the Agreement, subject to certain terms, conditions and advance notice requirements; provided that the Company or DePuy Synthes generally may not terminate the Agreement, without cause, within three years of the effective date of the Agreement. The Company also has additional unilateral termination rights under certain circumstances. The Agreement contains customary representations, warranties, covenants and confidentiality provisions, and also contains mutual indemnification obligations. DePuy Synthes is also subject to certain obligations and restrictions, including required compliance with certain laws and regulations and the Company’s policies, in connection with fulfilling their obligations under the Agreement. |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
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, inventory costs, impairments of goodwill and long-lived assets, liabilities and accruals, stock-based compensation and the 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, short-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 March 1, 2018 . 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. See Note 8, Debt, for further discussion of the Company’s convertible senior notes and conversion elections. 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 England. |
Revenue Recognition | Revenue Recognition The Company’s principal sources of revenue include (i) sales of EXPAREL in the United States, or US, (ii) sales of DepoCyt(e) to our commercial partners within the US and the European Union, or EU, (iii) royalties based on sales by commercial partners of DepoCyt(e) and (iv) license fees and milestone payments. 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 DepoCyt(e) and other product sales 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, contract terms, 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 12 months following product expiration. The Company estimates its sales return reserve based on its historical return rates, 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 DepoCyt(e) 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 of 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. The following table provides a summary of activity with respect to the Company’s accrued rebates and chargebacks, returns, wholesaler service fees and prompt pay discounts for the years ended December 31, 2016 , 2015 and 2014 (in thousands): Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume Rebates and Chargebacks Total Balance at December 31, 2013 $ 897 $ 313 $ 266 $ 402 $ 1,878 Provision 829 3,833 2,780 881 8,323 Payments/credits (167 ) (3,571 ) (2,458 ) (962 ) (7,158 ) Balance at December 31, 2014 1,559 575 588 321 3,043 Provision 339 4,905 3,482 2,020 10,746 Payments/credits (165 ) (4,855 ) (3,325 ) (1,544 ) (9,889 ) Balance at December 31, 2015 1,733 625 745 797 3,900 Provision 694 5,448 4,118 2,611 12,871 Payments/credits (1,081 ) (5,478 ) (4,128 ) (2,284 ) (12,971 ) Balance at December 31, 2016 $ 1,346 $ 595 $ 735 $ 1,124 $ 3,800 Royalty Revenue The Company recognizes revenue from royalties based on sales of its commercial partners’ net sales of DepoCyt(e) and sales of bupivacaine liposome injectable suspension product to serve animal health indications. Royalties are recognized as earned in accordance with contract terms when they can be reasonably estimated and collection is reasonably assured. Based on historical product sales, royalty receipts and other relevant information, the Company accrues royalty revenue each quarter. Collaborative Licensing and Milestone Revenue The Company recognizes revenues from non-refundable up-front license fees received under collaboration agreements ratably over the performance period as determined under the 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 milestone 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.(i.e.,wholesalers or commercial partners) in each year presented: Year Ended December 31, 2016 2015 2014 Largest customer 32 % 33 % 33 % Second largest customer 28 % 29 % 29 % Third largest customer 26 % 28 % 24 % 86 % 90 % 86 % Revenues from customers outside the US accounted for 1% , 2% and 2% of the Company’s revenue for the years ended December 31, 2016 , 2015 and 2014 , respectively. |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist of costs associated with products and processes being developed, 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. |
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 accumulated other comprehensive loss until realized. Realized gains and losses are included in interest income in 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 |
Asset Retirement Obligations | Asset Retirement Obligations The Company has contractual obligations stemming from certain of its lease agreements to return leased space to its original condition upon termination of the lease agreement. The Company records an asset retirement obligation, or ARO, along with a corresponding capital asset in an amount equal to the estimated fair value of the ARO. In subsequent periods, the Company records interest expense to accrete the ARO to full value. Each ARO capital asset is depreciated over the depreciable term of the associated asset. |
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. 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 statements 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 statements 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 accounts receivable and royalties on DepoCyte ® in Euros. 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, 2016 and 2015 , all deferred tax assets were fully offset by a valuation allowance 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 common 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 common 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 and warrants, the vesting of restricted stock units, or RSUs, 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 Company’s convertible senior notes. Potential common shares in the diluted net loss per share computation are excluded to the extent that they would be anti-dilutive. For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share. |
Stock-Based Compensation | Stock-Based Compensation The Company’s stock-based compensation program includes grants of stock options and restricted stock units 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. The Company used an expected term based on its historical data from stock option exercises. 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 Recently Adopted In April 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15, 2015. The Company adopted this standard on January 1, 2016. The Company applied the new guidance retrospectively to all prior periods presented in the financial statements to conform to the 2016 presentation. As a result, $1.9 million of debt issuance costs related to the Company’s convertible senior notes at December 31, 2015 were reclassified from other assets to a reduction in the carrying value of the Company’s convertible senior notes. Not Adopted as of December 31, 2016 In May 2014, the FASB issued ASU 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. During the fiscal third quarter of 2015, the FASB approved a one year deferral to the effective date to be adopted by all public companies for all annual periods and interim reporting periods beginning after December 15, 2017. During 2016, the FASB issued additional guidance and clarification relating to identifying performance obligations, licensing, principal versus agent considerations, assessing collectability, presentation of sales taxes, noncash consideration and contract modifications and completed contracts at transition. These updates will replace existing revenue recognition guidance under GAAP when it becomes effective for the Company beginning January 1, 2018, and permits two methods of adoption: the full retrospective method, which requires the standard to be applied to each prior period presented, or the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. While the Company is continuing to evaluate the impact of these updates on its consolidated financial statements, it does not expect the implementation of ASU 2014-09 and the subsequently issued related guidance to have a material impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory . The standard requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market (market in this context is defined as one of three different measures, one of which is net realizable value). The standard is effective for the Company prospectively beginning January 1, 2017. The adoption of ASU 2015-11 is not expected to have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) . This update requires lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment for items such as initial direct costs. For income statement purposes, the new standard retains a dual model similar to Accounting Standards Codification, or ASC, 840, requiring leases to be classified as either operating or financing. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while financing leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). This update also introduces new disclosure requirements for leasing arrangements. The standard is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact of ASU 2016-02 on its consolidated financial statements. Refer to Note 17, Commitments and Contingencies , for further discussion on the Company’s leases. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This update includes multiple provisions intended to simplify various aspects of the accounting for share-based payment transactions including accounting for excess tax benefits and tax deficiencies, classification of excess tax benefits in the statement of cash flows and accounting for award forfeitures. The update also removes the present requirement to delay recognition of an excess tax benefit until it reduces current taxes payable, instead, it is required to be recognized at the time of settlement, subject to normal valuation allowance considerations. This update became effective for the Company beginning January 1, 2017. The Company will elect an accounting policy change to record forfeitures as they occur rather than estimating forfeitures during each period and will record a charge of approximately $0.3 million to retained earnings as of January 1, 2017 related to the reversal of cumulative forfeiture estimates. The adoption of this standard also will result in the recognition of $29.3 million of previously unrecognized excess tax benefits in deferred tax assets, fully offset by a valuation allowance. All tax-related cash flows resulting from stock-based compensation, including the excess tax benefits related to the settlement of stock-based awards, will be classified as cash flows from operating activities on the Company’s consolidated statements of cash flows. Based on a preliminary assessment, the Company does not believe that any of the provisions in ASU 2016-09 will have a significant impact on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) , which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. This update also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. This ASU is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of ASU 2016-13 on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies existing guidance on how companies present and classify certain cash receipts and cash payments in the statement of cash flows by addressing specific cash flow issues in an effort to reduce diversity in practice, including guidance on debt prepayment or extinguishment costs and contingent consideration payments made after a business combination. This update is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-15 on its consolidated financial statements. 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 ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Activity in Accrued Rebates and Chargebacks, Returns, Wholsesaler Service Fees and Prompt Pay Discounts | The following table provides a summary of activity with respect to the Company’s accrued rebates and chargebacks, returns, wholesaler service fees and prompt pay discounts for the years ended December 31, 2016 , 2015 and 2014 (in thousands): Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume Rebates and Chargebacks Total Balance at December 31, 2013 $ 897 $ 313 $ 266 $ 402 $ 1,878 Provision 829 3,833 2,780 881 8,323 Payments/credits (167 ) (3,571 ) (2,458 ) (962 ) (7,158 ) Balance at December 31, 2014 1,559 575 588 321 3,043 Provision 339 4,905 3,482 2,020 10,746 Payments/credits (165 ) (4,855 ) (3,325 ) (1,544 ) (9,889 ) Balance at December 31, 2015 1,733 625 745 797 3,900 Provision 694 5,448 4,118 2,611 12,871 Payments/credits (1,081 ) (5,478 ) (4,128 ) (2,284 ) (12,971 ) Balance at December 31, 2016 $ 1,346 $ 595 $ 735 $ 1,124 $ 3,800 |
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.(i.e.,wholesalers or commercial partners) in each year presented: Year Ended December 31, 2016 2015 2014 Largest customer 32 % 33 % 33 % Second largest customer 28 % 29 % 29 % Third largest customer 26 % 28 % 24 % 86 % 90 % 86 % |
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, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventories | The components of inventories are as follows (in thousands): December 31, 2016 2015 Raw materials $ 11,742 $ 16,712 Work-in-process 11,621 12,152 Finished goods 7,915 32,781 Total $ 31,278 $ 61,645 |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 2015 Machinery and laboratory equipment $ 34,309 $ 29,864 Leasehold improvements 33,787 30,834 Computer equipment and software 5,623 4,007 Office furniture and equipment 1,606 1,439 Construction in progress 63,201 49,097 Total 138,526 115,241 Less: accumulated depreciation (37,510 ) (24,917 ) Fixed assets, net $ 101,016 $ 90,324 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2014 $ 23,761 Percentage payments on collections of net sales of DepoBupivacaine products 7,119 Balance at December 31, 2015 30,880 Milestone payment triggered by collections of net sales of DepoBupivacaine products 8,000 Percentage payments on collections of net sales of DepoBupivacaine products 7,857 Balance at December 31, 2016 $ 46,737 |
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, 2016 December 31, 2015 Amortizable Intangible Assets: Gross Accumulated Intangible Gross Carrying Value Accumulated Amortization Intangible Assets, Net Estimated Core technology $ 2,900 $ (2,900 ) $ — $ 2,900 $ (2,819 ) $ 81 9 Years Developed technology 11,700 (11,700 ) — 11,700 (11,700 ) — 7 Years Trademarks and trade names 400 (400 ) — 400 (400 ) — 7 Years Total intangible assets $ 15,000 $ (15,000 ) $ — $ 15,000 $ (14,919 ) $ 81 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): December 31, 2016 2015 Compensation and benefits $ 11,228 $ 11,944 Accrued operating expenses 16,538 14,601 Accrued royalties 3,822 3,731 Accrued interest 1,605 1,605 Product returns, rebates and other fees 3,473 3,494 Total $ 36,666 $ 35,375 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 2015 3.25% convertible senior notes $ 118,531 $ 118,533 Deferred financing costs (1,276 ) (1,888 ) Discount on debt (8,517 ) (12,605 ) Total debt, net of debt discount $ 108,738 $ 104,040 |
Schedule of total interest expense recognized related to the Notes | The following table sets forth the total interest expense recognized by the Company (in thousands): Year Ended December 31, 2016 2015 2014 Contractual interest expense $ 3,852 $ 3,856 $ 3,900 Amortization of debt issuance costs 612 615 620 Amortization of debt discount 4,088 4,102 4,139 Capitalized interest (Note 5) (1,491 ) (848 ) (381 ) Total $ 7,061 $ 7,725 $ 8,278 Effective interest rate on the Notes 7.22 % 7.21 % 7.22 % |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 Level 1 Level 2 Level 3 December 31, 2016 Convertible senior notes * $ 108,738 $ — $ 166,672 $ — * The fair value of the Notes was based on the Company’s closing stock price of $32.30 per share at December 31, 2016 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of 1.1 million shares or $35.7 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 investments at December 31, 2016 and 2015 (in thousands): December 31, 2016 Cost Gross Gross Fair Value Debt securities: Short-term: Asset-backed securities $ 9,012 $ — $ (2 ) $ 9,010 Commercial paper 39,530 8 (15 ) 39,523 Corporate bonds 88,141 11 (32 ) 88,120 Total $ 136,683 $ 19 $ (49 ) $ 136,653 December 31, 2015 Cost Gross Gross Fair Value Debt securities: Short-term: Asset-backed securities $ 27,484 $ — $ (15 ) $ 27,469 Commercial paper 35,191 31 — 35,222 Corporate bonds 39,319 2 (31 ) 39,290 Subtotal 101,994 33 (46 ) 101,981 Long-term: Corporate bonds 13,501 — (39 ) 13,462 Total $ 115,495 $ 33 $ (85 ) $ 115,443 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of accumulated other comprehensive income | Accumulated Other Comprehensive Income (Loss) The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive loss (in thousands): Net Unrealized Gains (Losses) From Available For Sale Investments Balance at December 31, 2014 $ (80 ) Other comprehensive income before reclassifications 28 Amounts reclassified from accumulated other comprehensive income (loss) — Balance at December 31, 2015 (52 ) Other comprehensive income before reclassifications 22 Amounts reclassified from accumulated other comprehensive income (loss) — Balance at December 31, 2016 $ (30 ) |
STOCK PLANS (Tables)
STOCK PLANS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 : Stock Incentive Plans Awards Reserved for Issuance Awards Issued Awards Available for Grant 2007 Plan 2,022,837 2,022,837 — 2011 Plan 9,931,700 6,503,336 3,428,364 2014 Inducement plan 175,000 66,626 108,374 12,129,537 8,592,799 3,536,738 Employee Stock Purchase Plan Shares Reserved for Purchase Shares Purchased Shares Available for Purchase 2014 ESPP 500,000 103,620 396,380 |
Schedule of recognized stock-based compensation in consolidated statements of operations | Year Ended December 31, 2016 2015 2014 Cost of goods sold $ 6,438 $ 6,012 $ 3,582 Research and development 3,297 5,134 6,490 Selling, general and administrative 21,513 22,222 14,750 Total $ 31,248 $ 33,368 $ 24,822 Stock-based compensation from: Stock options (employee awards) $ 24,505 $ 27,262 $ 19,182 Stock options (consultant awards) 841 2,367 5,295 RSUs 5,117 2,887 — ESPP 785 852 345 Total $ 31,248 $ 33,368 $ 24,822 |
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, 2014 to December 31, 2016 : Number of Weighted Weighted Average Aggregate Outstanding at December 31, 2013 3,840,038 $ 13.50 8.01 $ 168,905 Granted 1,638,575 79.68 Exercised (624,229 ) 11.60 $ 45,289 Forfeited (175,967 ) 44.32 Expired (561 ) 21.70 Outstanding at December 31, 2014 4,677,856 35.78 7.86 $ 248,276 Granted 906,706 75.35 Exercised (618,434 ) 16.29 $ 39,401 Forfeited (294,880 ) 64.29 Expired (25,526 ) 81.94 Outstanding at December 31, 2015 4,645,722 44.03 7.31 $ 162,340 Granted 1,656,598 38.20 Exercised (518,226 ) 11.13 $ 21,750 Forfeited (401,048 ) 70.27 Expired (175,303 ) 80.91 Outstanding at December 31, 2016 5,207,743 $ 42.16 7.39 $ 37,581 Exercisable at December 31, 2016 2,798,083 $ 35.30 5.93 $ 37,403 Vested and expected to vest at December 31, 2016 4,858,131 $ 41.92 7.25 $ 37,567 |
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, 2016 2015 2014 Expected dividend yield None None None Risk free interest rate 1.03% - 2.48% 1.40% - 2.28% 0.02% - 2.16% Expected volatility 53.5% 52.9% 57.2% Expected term of options 5.77 years 5.76 years 5.86 years |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 net income (loss) per share for the years ended December 31, 2016 , 2015 and 2014 (in thousands, except per share amounts): Year Ended December 31, 2016 2015 2014 Numerator: Net income (loss) $ (37,949 ) $ 1,856 $ (13,716 ) Denominator: Weighted average common shares outstanding—basic 37,236 36,540 35,299 Computation of diluted securities: Dilutive effect of stock options — 1,638 — Dilutive effect of RSUs — 3 — Dilutive effect of conversion premium on the Notes — 3,113 — Dilutive effect of warrants — 6 — Dilutive effect of ESPP — 1 — Weighted average common shares outstanding—diluted 37,236 41,301 35,299 Net income (loss) per share: Basic net income (loss) per common share $ (1.02 ) $ 0.05 $ (0.39 ) Diluted net income (loss) per common share $ (1.02 ) $ 0.04 $ (0.39 ) |
Schedule of potential dilutive effect of the securities excluded from the calculation of diluted loss per share | Year Ended December 31, 2016 2015 2014 Weighted average number of stock options 4,482 1,891 3,534 Weighted average number of RSUs 290 99 — Conversion premium on the Notes 2,022 — 2,483 Weighted average number of warrants 1 — 21 Weighted average ESPP purchase options 21 8 1 Total 6,816 1,998 6,039 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 US federal statutory rate to the provision for income taxes is as follows: Year Ended December 31, 2016 2015 2014 U.S. federal statutory rate 35.00 % 35.00 % 35.00 % State taxes 2.20 % 0.71 % (32.62 )% Foreign taxes (0.81 )% 12.03 % (0.13 )% Change in valuation allowance (43.96 )% 10.32 % (17.71 )% Stock-based compensation (0.54 )% 7.26 % (0.44 )% Tax credits 8.77 % (30.63 )% 5.49 % Interest expense 5.75 % (37.57 )% 10.68 % Effect of state blended rate changes (4.65 )% — % — % Other (2.04 )% 15.33 % (1.55 )% Effective tax rate (0.28 )% 12.45 % (1.28 )% The Company’s effective tax rates of (0.28)% and (1.28)% for the years ended December 31, 2016 and 2014, respectively, differed from the expected US statutory tax rate of 35.0% . This difference was primarily driven by pretax losses for which the Company concluded that a majority of its tax benefits are not more-likely-than-not to be realized, resulting in the recording of a full valuation allowance. The Company’s effective tax rate of 12.45% for the year ended December 31, 2015 was favorably impacted by the utilization of domestic net operating loss carryforwards for which there was a full valuation allowance. |
Schedule of significant components of the Company's deferred tax assets | Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2016 and 2015 are as follows (in thousands): December 31, 2016 2015 Deferred tax assets: Net operating loss carry-forwards $ 96,163 $ 101,011 Federal and state credits 13,724 7,232 Depreciation and amortization 2,604 1,310 Accruals and reserves 14,004 5,558 Deferred revenue 3,023 3,530 Stock based compensation 21,890 17,201 Other 531 953 Total deferred tax assets 151,939 136,795 Deferred tax liabilities: Discount on convertible senior notes (3,186 ) (4,679 ) 148,753 132,116 Less: valuation allowance (148,753 ) (132,116 ) Net deferred tax assets $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of annual minimum payments due under the Company's lease obligations | As of December 31, 2016 , aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands): Year Aggregate Minimum Payments 2017 $ 7,880 2018 8,063 2019 8,272 2020 6,389 2021 1,207 2022 through 2028 7,545 Total $ 39,356 |
SELECTED QUARTERLY FINANCIAL 40
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Data | The following tables present selected quarterly financial data for the years ended December 31, 2016 and 2015 (in thousands, except per share data): Three Months Ended March 31, June 30, September 30, December 31, Total revenues $ 65,474 $ 69,640 $ 68,355 $ 72,902 Cost of goods sold 20,278 23,053 43,152 23,621 Total operating expenses 67,728 76,084 89,220 75,363 Net income (loss) (3,854 ) (7,958 ) (22,164 ) (3,973 ) Basic and diluted net loss per common share $ (0.10 ) $ (0.21 ) $ (0.59 ) $ (0.11 ) Three Months Ended March 31, June 30, September 30, December 31, Total revenues $ 58,316 $ 59,148 $ 62,213 $ 69,320 Cost of goods sold 17,580 18,929 15,901 19,427 Total operating expenses 54,975 57,330 57,104 70,133 Net income (loss) 1,260 8 3,086 (2,498 ) Basic and diluted net income (loss) per common share $ 0.03 $ 0.00 $ 0.08 $ (0.07 ) For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share. |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jan. 23, 2013 | Dec. 31, 2016 |
Liquidity | ||
Estimated conversion value | $ 35,700,000 | |
Shares issuable upon conversion | 1,100,000 | |
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% |
Proceeds from Issuance of Debt | $ 118,500,000 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning of Period | $ 3,900 | $ 3,043 | $ 1,878 |
Accruals | 12,871 | 10,746 | 8,323 |
Payments (Credits) | (12,971) | (9,889) | (7,158) |
End of Period | 3,800 | 3,900 | 3,043 |
Accrued rebates and chargebacks | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning of Period | 797 | 321 | 402 |
Accruals | 2,611 | 2,020 | 881 |
Payments (Credits) | (2,284) | (1,544) | (962) |
End of Period | 1,124 | 797 | 321 |
Accrued returns | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning of Period | 1,733 | 1,559 | 897 |
Accruals | 694 | 339 | 829 |
Payments (Credits) | (1,081) | (165) | (167) |
End of Period | 1,346 | 1,733 | 1,559 |
Accrued wholesaler service fees | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning of Period | 745 | 588 | 266 |
Accruals | 4,118 | 3,482 | 2,780 |
Payments (Credits) | (4,128) | (3,325) | (2,458) |
End of Period | 735 | 745 | 588 |
Reserves for prompt pay discounts | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning of Period | 625 | 575 | 313 |
Accruals | 5,448 | 4,905 | 3,833 |
Payments (Credits) | (5,478) | (4,855) | (3,571) |
End of Period | $ 595 | $ 625 | $ 575 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - Net revenue - Customer concentration | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 86.00% | 86.00% | 90.00% |
Largest customer | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 33.00% | 32.00% | 33.00% |
Second largest customer | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 29.00% | 28.00% | 29.00% |
Third largest customer | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 24.00% | 26.00% | 28.00% |
Customers outside U.S. | |||
Concentration of Major Customers | |||
Percentage of revenue from customers to total revenue | 2.00% | 1.00% | 2.00% |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) | 12 Months Ended |
Dec. 31, 2016segment | |
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 |
RECENT ACCOUNTING PRONOUNCEME45
RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred Finance Costs, Net | $ 1,276 | $ 1,888 |
Other Assets [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred Finance Costs, Net | $ (1,900) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 11,742 | $ 16,712 |
Work-in-process | 11,621 | 12,152 |
Finished goods | 7,915 | 32,781 |
Total | $ 31,278 | $ 61,645 |
FIXED ASSETS (Details)
FIXED ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
FIXED ASSETS | |||
Total | $ 138,526 | $ 115,241 | |
Less accumulated depreciation | (37,510) | (24,917) | |
Fixed assets, net | 101,016 | 90,324 | |
Depreciation expense | $ 9,300 | 12,800 | 11,200 |
Capitalized interest | $ 400 | 1,500 | 800 |
Foreign Property, Plant and Equipment, Net | 33,700 | 25,900 | |
Asset Retirement Obligation | 500 | 600 | |
Manufacturing and laboratory equipment | |||
FIXED ASSETS | |||
Total | 34,309 | 29,864 | |
Computer equipment and software | |||
FIXED ASSETS | |||
Total | 5,623 | 4,007 | |
Office furniture and equipment | |||
FIXED ASSETS | |||
Total | 1,606 | 1,439 | |
Leasehold improvements | |||
FIXED ASSETS | |||
Total | 33,787 | 30,834 | |
Construction in progress | |||
FIXED ASSETS | |||
Total | $ 63,201 | $ 49,097 |
GOODWILL AND INTANGIBLE ASSET48
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2012 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Sep. 30, 2014 | |
Goodwill | |||||
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 | $ 8,000,000 | ||||
Goodwill [Roll Forward] | |||||
Beginning balance | $ 30,880,000 | $ 23,761,000 | |||
Goodwill Recorded on Milestone Payments | 8,000,000 | 7,119,000 | |||
Percentage payments on collections of net sales of DepoBupivacaine products | 7,857,000 | ||||
Ending balance | 46,737,000 | $ 30,880,000 | |||
Total Goodwill Recorded for Earn Out Payments | 22,800,000 | ||||
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 | $ 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 | ||||
Goodwill [Roll Forward] | |||||
Net Sales Collected Threshold Which Triggers a Payment Obligation | $ 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 ASSET49
GOODWILL AND INTANGIBLE ASSETS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets | |||
Gross amount | $ 15,000 | $ 15,000 | |
Accumulated amortization | (15,000) | (14,919) | |
Intangibles, net | 0 | 81 | |
Amortization expense for intangibles | $ 800 | 100 | 300 |
Approximate amortization expense for intangibles | |||
Intangibles, net | 0 | 81 | |
Core Technology | |||
Intangible Assets | |||
Gross amount | 2,900 | 2,900 | |
Accumulated amortization | (2,900) | (2,819) | |
Intangibles, net | $ 0 | $ 81 | |
Estimated Useful Life | 9 years | 9 years | |
Approximate amortization expense for intangibles | |||
Intangibles, net | $ 0 | $ 81 | |
Developed Technology | |||
Intangible Assets | |||
Gross amount | 11,700 | 11,700 | |
Accumulated amortization | (11,700) | (11,700) | |
Intangibles, net | $ 0 | $ 0 | |
Estimated Useful Life | 7 years | 7 years | |
Approximate amortization expense for intangibles | |||
Intangibles, net | $ 0 | $ 0 | |
Trademarks and trade names | |||
Intangible Assets | |||
Gross amount | 400 | 400 | |
Accumulated amortization | (400) | (400) | |
Intangibles, net | $ 0 | $ 0 | |
Estimated Useful Life | 7 years | 7 years | |
Approximate amortization expense for intangibles | |||
Intangibles, net | $ 0 | $ 0 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Compensation and benefits | $ 11,228 | $ 11,944 |
Accrued operating expenses | 16,538 | 14,601 |
Accrued royalties | 3,822 | 3,731 |
Accrued interest | 1,605 | 1,605 |
Product returns, rebates and other fees | 3,473 | 3,494 |
Total | $ 36,666 | $ 35,375 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |||
Conversion Request Convertible Senior Notes | $ 1,500 | ||
Debt: | |||
Current portion of long-term debt | 118,531 | $ 118,533 | |
Deferred Finance Costs, Net | (1,276) | (1,888) | |
Discount on debt | (8,517) | (12,605) | |
Total debt, net of debt discount | $ 108,738 | 104,040 | |
Debt Instrument, Convertible, Conversion Premium, Shares | 44,287 | ||
Settlement Period - Convertible Debt Conversion Request | 40 days | ||
Loss on early extinguishment of debt | $ 0 | $ 0 | $ 52 |
DEBT (Details 2)
DEBT (Details 2) | Jan. 23, 2013USD ($) | Jan. 23, 2013USD ($) | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($) | Dec. 31, 2000USD ($)product | Jan. 16, 2013 | May 02, 2012shares |
Debt disclosures | |||||||||
Loss on early extinguishment of debt | $ 0 | $ 0 | $ 52,000 | ||||||
Estimated conversion value | $ 35,700,000 | 35,700,000 | |||||||
Debt Conversion, Converted Instrument, Shares Issued | shares | 1,100,000 | ||||||||
Interest Expense, Debt [Abstract] | |||||||||
Amortization of debt discount | 4,139,000 | 4,088,000 | 4,102,000 | ||||||
Interest Costs Capitalized | 400,000 | 1,500,000 | 800,000 | ||||||
Oxford Loan Facility | |||||||||
Debt Instrument, Unamortized Discount | $ 8,517,000 | $ 8,517,000 | 12,605,000 | ||||||
Number of shares exercisable for warrants issued to holders of the debt | shares | 162,885 | ||||||||
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 | product | 4 | ||||||||
Notes | |||||||||
Financing obligations: | |||||||||
Gross Proceeds From Issuance of Debt | $ 120,000,000 | ||||||||
Debt disclosures | |||||||||
Debt issued in private offering | $ 118,500,000 | ||||||||
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) | $ / shares | $ 24.82 | $ 24.82 | |||||||
Premium on sale price to calculate conversion price of notes (as a percent) | 32.50% | ||||||||
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 | 3,852,000 | 3,856,000 | ||||||
Amortization of debt issuance costs | 620,000 | 612,000 | 615,000 | ||||||
Amortization of debt discount | 4,139,000 | 4,088,000 | 4,102,000 | ||||||
Interest Costs Capitalized | (381,000) | (1,491,000) | (848,000) | ||||||
Total interest expense recognized | $ 8,278,000 | $ 7,061,000 | $ 7,725,000 | ||||||
Effective interest rate (as a percent) | 7.22% | 7.22% | 7.21% | ||||||
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 | 1,406 | $ 1,406 | |||||||
Estimated conversion value | $ 1,301 | $ 1,301 | |||||||
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% |
FINANCIAL INSTRUMENTS (Details)
FINANCIAL INSTRUMENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Apr. 30, 2014 | Jan. 16, 2013 | ||
Fair Value Measurements | ||||
Price per share (in dollars per share) | $ 32.30 | $ 64 | ||
Debt Instrument, Convertible, Conversion Premium, Shares | 1,100,000 | |||
Estimated conversion value | $ 35,700 | |||
Level 1 | ||||
Fair Value Measurements | ||||
Long-term debt-current and long-term | [1] | 0 | ||
Level 2 | ||||
Fair Value Measurements | ||||
Long-term debt-current and long-term | [1] | 166,672 | ||
Level 3 | ||||
Fair Value Measurements | ||||
Long-term debt-current and long-term | [1] | $ 0 | ||
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 | ||||
Debt Instrument, Convertible, Conversion Premium, Shares | 4,800,000 | |||
Carrying Value | ||||
Fair Value Measurements | ||||
Long-term debt-current and long-term | [1] | $ 108,738 | ||
[1] | The fair value of the Notes was based on the Company’s closing stock price of $32.30 per share at December 31, 2016 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of 1.1 million shares or $35.7 million of cash. The maximum conversion premium that can be due on the Notes is 4.8 million shares, which assumes no increases in the conversion rate for certain corporate events. |
FINANCIAL INSTRUMENTS (Details
FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value Measurements | ||
Cost | $ 136,683 | $ 115,495 |
Gross Unrealized Gains | 19 | 33 |
Gross Unrealized Losses | (49) | (85) |
Level 2 | ||
Fair Value Measurements | ||
Fair Value | 136,653 | 115,443 |
Short-term Investments [Member] | ||
Fair Value Measurements | ||
Cost | 101,994 | |
Gross Unrealized Gains | 33 | |
Gross Unrealized Losses | (46) | |
Short-term Investments [Member] | Level 2 | ||
Fair Value Measurements | ||
Fair Value | 101,981 | |
Short-term Investments [Member] | Asset-backed Securities | ||
Fair Value Measurements | ||
Cost | 9,012 | 27,484 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (2) | (15) |
Short-term Investments [Member] | Asset-backed Securities | Level 2 | ||
Fair Value Measurements | ||
Fair Value | 9,010 | 27,469 |
Short-term Investments [Member] | Commercial Paper | ||
Fair Value Measurements | ||
Cost | 39,530 | 35,191 |
Gross Unrealized Gains | 8 | 31 |
Gross Unrealized Losses | (15) | 0 |
Short-term Investments [Member] | Commercial Paper | Level 2 | ||
Fair Value Measurements | ||
Fair Value | 39,523 | 35,222 |
Short-term Investments [Member] | Corporate bonds | ||
Fair Value Measurements | ||
Cost | 88,141 | 39,319 |
Gross Unrealized Gains | 11 | 2 |
Gross Unrealized Losses | (32) | (31) |
Short-term Investments [Member] | Corporate bonds | Level 2 | ||
Fair Value Measurements | ||
Fair Value | $ 88,120 | 39,290 |
Long-Term Investments [Member] | Corporate bonds | ||
Fair Value Measurements | ||
Cost | 13,501 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (39) | |
Long-Term Investments [Member] | Corporate bonds | Level 2 | ||
Fair Value Measurements | ||
Fair Value | $ 13,462 |
FINANCIAL INSTRUMENTS (Detail55
FINANCIAL INSTRUMENTS (Details 3) - customer | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Credit Risk | ||
Number of major customers | 3 | 3 |
Accounts receivable | Credit risk | Major customer one | ||
Credit Risk | ||
Concentration risk (as a percent) | 36.00% | 34.00% |
Accounts receivable | Credit risk | Major customer two | ||
Credit Risk | ||
Concentration risk (as a percent) | 29.00% | 28.00% |
Accounts receivable | Credit risk | Major customer three | ||
Credit Risk | ||
Concentration risk (as a percent) | 25.00% | 27.00% |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||
Apr. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |||
Common stock, shares authorized | 250,000,000 | 250,000,000 | |
Common stock, shares outstanding | 37,480,952 | 36,848,319 | |
Stock Issued During Period, Shares, New Issues | 1,840,000 | ||
Price per share (in dollars per share) | $ 64 | $ 32.30 | |
Proceeds from Issuance Initial Public Offering | $ 110.5 | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | |
Warrants | |||
Warrants outstanding (in shares) | 0 | 7,216 | |
Exercise price per share (in dollars per share) | $ 13.44 |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balances at the beginning of the period | $ (52) | |
Balances at the end of the period | (30) | $ (52) |
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balances at the beginning of the period | (52) | (80) |
Other comprehensive income before reclassifications | 22 | 28 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Balances at the end of the period | $ (30) | $ (52) |
STOCK PLANS (Details)
STOCK PLANS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Apr. 30, 2014 | |
Stock Incentive Plans | ||
Awards Reserved for Issuance (in shares) | 12,129,537 | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 4,000,000 | |
Awards Issued (in shares) | 8,592,799 | |
Awards Available for Grant (in shares) | 3,536,738 | |
Employee Stock Purchase Plan, Number of Shares Authorized | 500,000 | |
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 103,620 | |
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 | 396,380 | |
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) | 9,931,700 | |
Awards Issued (in shares) | 6,503,336 | |
Awards Available for Grant (in shares) | 3,428,364 | |
Inducement Plan 2014 [Member] | ||
Stock Incentive Plans | ||
Awards Reserved for Issuance (in shares) | 175,000 | 175,000 |
Awards Issued (in shares) | 66,626 | |
Awards Available for Grant (in shares) | 108,374 | |
Restricted Stock Units (RSUs) [Member] | ||
Stock Incentive Plans | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 16,000,000 |
STOCK PLANS (Details 2)
STOCK PLANS (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | |
Share-Based Compensation | ||||
Stock-based compensation expense | $ 24,822 | $ 31,248 | $ 33,368 | |
Compensation expense from stock options, employees | 19,182 | 24,505 | 27,262 | |
Compensation expense from stock options, non-employee awards | 5,295 | 841 | 2,367 | |
Restricted Stock or Unit Expense | 0 | 5,117 | 2,887 | |
Compensation expense from employee stock purchase plan | 345 | 785 | 852 | |
Stock-based compensation | 24,822 | 31,248 | 33,368 | |
Cost of revenues | ||||
Share-Based Compensation | ||||
Stock-based compensation expense | 3,582 | 6,438 | 6,012 | |
Research and development | ||||
Share-Based Compensation | ||||
Stock-based compensation expense | 6,490 | 3,297 | 5,134 | |
Selling, general and administrative | ||||
Share-Based Compensation | ||||
Stock-based compensation expense | $ 14,750 | $ 21,513 | $ 22,222 | |
Stock options | ||||
Share-Based Compensation | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 4,677,856 | 5,207,743 | 4,645,722 | 3,840,038 |
Stock-based compensation expense | $ 600 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 35.78 | $ 42.16 | $ 44.03 | $ 13.50 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 7 years 10 months 11 days | 7 years 4 months 22 days | 7 years 3 months 22 days | 8 years 3 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 248,276 | $ 37,581 | $ 162,340 | $ 168,905 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,638,575 | 1,656,598 | 906,706 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 79.68 | $ 38.20 | $ 75.35 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 624,229 | 518,226 | 618,434 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 11.60 | $ 11.13 | $ 16.29 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 45,289 | $ 21,750 | $ 39,401 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | 175,967 | 401,048 | 294,880 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price | $ 44.32 | $ 70.27 | $ 64.29 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | 561 | 175,303 | 25,526 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price | $ 21.70 | $ 80.91 | $ 81.94 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 2,798,083 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 35.30 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 5 years 11 months 4 days | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 37,403 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 4,858,131 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ 41.92 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 7 years 3 months | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | $ 37,567 |
STOCK PLANS (Details 3)
STOCK PLANS (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2012 | |
Stock Incentive Plans | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Outstanding | $ 0 | $ 11,824 | $ 16,602 | $ 0 | ||||||
Weighted average assumptions used to estimate the fair values of each option grant | ||||||||||
Share-based Compensation arrangement by Share-based payment award, equity instruments others than options, vested and expected to vest, weighted average grant date fair value | $ 53.05 | |||||||||
share-based compensation arrangement by share-based payment award, equity instruments other than options, vested and expected to vest, aggregate intrinsic value | $ 9,974 | |||||||||
Employee Stock Option [Member] | ||||||||||
Stock Incentive Plans | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum | 1.03% | 1.40% | 0.02% | |||||||
Number of Shares | ||||||||||
Balance at the beginning of the period (in shares) | 4,645,722 | 4,677,856 | 4,645,722 | 4,677,856 | ||||||
Granted (in shares) | 1,638,575 | 1,656,598 | 906,706 | |||||||
Exercised (in shares) | (624,229) | (518,226) | (618,434) | |||||||
Forfeited (in shares) | (175,967) | (401,048) | (294,880) | |||||||
Expired (in shares) | (561) | (175,303) | (25,526) | |||||||
Balance at the end of the period (in shares) | 4,677,856 | 5,207,743 | 4,645,722 | 4,677,856 | 3,840,038 | |||||
Exercisable at the end of the period (in shares) | 2,798,083 | |||||||||
Vested and expected to vest at the end of the period (in shares) | 4,858,131 | |||||||||
Weighted Average Exercise Price | ||||||||||
Balance at the beginning of the period (in dollars per share) | $ 44.03 | $ 35.78 | $ 44.03 | $ 35.78 | ||||||
Granted (in dollars per share) | $ 79.68 | 38.20 | 75.35 | |||||||
Exercised (in dollars per share) | 11.60 | 11.13 | 16.29 | |||||||
Forfeited (in dollars per share) | 44.32 | 70.27 | 64.29 | |||||||
Expired (in dollars per share) | 21.70 | 80.91 | 81.94 | |||||||
Balance at the end of the period (in dollars per share) | $ 35.78 | 42.16 | $ 44.03 | $ 35.78 | $ 13.50 | |||||
Exercisable at the end of the period (in dollars per share) | 35.30 | |||||||||
Vested and expected to vest at the end of the period (in dollars per share) | $ 41.92 | |||||||||
Weighted Average remaining contractual term | ||||||||||
Balance at the end of the period | 7 years 10 months 11 days | 7 years 4 months 22 days | 7 years 3 months 22 days | 8 years 3 days | ||||||
Exercisable at the end of the period | 5 years 11 months 4 days | |||||||||
Vested and expected to vest at the end of the period | 7 years 3 months | |||||||||
Aggregate intrinsic value | ||||||||||
Balance at the beginning of the period (in dollars) | $ 162,340 | $ 248,276 | $ 162,340 | $ 248,276 | ||||||
Exercised (in dollars) | $ 45,289 | 21,750 | 39,401 | |||||||
Balance at the end of the period (in dollars) | $ 248,276 | 37,581 | $ 162,340 | $ 248,276 | $ 168,905 | |||||
Exercisable at the end of the period (in dollars) | 37,403 | |||||||||
Vested and expected to vest at the end of the period (in dollars) | 37,567 | |||||||||
Additional disclosures | ||||||||||
Unrecognized compensation cost related to non-vested stock options (in dollars) | $ 57,100 | |||||||||
Weighted average contractual term of the unrecognized stock-based compensation | 2 years 9 months 2 days | |||||||||
Weighted average fair value of options granted (in dollars per share) | $ 42.62 | $ 19.13 | $ 37.82 | |||||||
Weighted average assumptions used to estimate the fair values of each option grant | ||||||||||
Risk free interest rate, maximum (as a percent) | 2.48% | 2.28% | 2.16% | |||||||
Expected volatility (as a percent) | 57.20% | 53.50% | 52.90% | |||||||
Expected life of options | 5 years 10 months 11 days | 5 years 9 months 6 days | 5 years 9 months 3 days | |||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||
Stock Incentive Plans | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 0 | 364,403 | 216,198 | 0 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 0 | $ 52.85 | $ 78.59 | $ 0 | ||||||
Additional disclosures | ||||||||||
Weighted average contractual term of the unrecognized stock-based compensation | 3 years | |||||||||
Weighted average assumptions used to estimate the fair values of each option grant | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 256,631 | 232,046 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 40.21 | $ 78.65 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | (61,487) | 0 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 78.33 | $ 0 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (46,939) | (15,848) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 68.84 | $ 79.43 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest | 308,797 | |||||||||
Stock options | ||||||||||
Additional disclosures | ||||||||||
Weighted average fair value of options granted (in dollars per share) | $ 10.57 | $ 25.28 | $ 21.93 | $ 25.24 | $ 23.27 | |||||
Weighted average assumptions used to estimate the fair values of each option grant | ||||||||||
Expected volatility (as a percent) | 63.40% | 50.70% | 28.20% | |||||||
Expected life of options | 6 months | 6 months | 6 months | 6 months | 4 months | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.37% | 0.49% | 0.13% | 0.11% | 0.37% |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator: | ||||||||||||
Net income (loss) | $ (3,973) | $ (22,164) | $ (7,958) | $ (3,854) | $ (2,498) | $ 3,086 | $ 8 | $ 1,260 | $ (13,716) | $ (37,949) | $ 1,856 | $ (13,716) |
Basic and diluted net loss per share of common stock (in dollars per share) | $ (0.11) | $ (0.59) | $ (0.21) | $ (0.10) | $ (0.07) | $ 0.08 | $ 0 | $ 0.03 | ||||
Weighted Average Number of Shares Outstanding, Basic | 35,299 | 37,236 | 36,540 | |||||||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0 | 0 | 1,638 | |||||||||
Incremental Common Shares Attributable to Dilutive Effect of Restricted Stock Units | 0 | 0 | 3 | |||||||||
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities | 0 | 0 | 3,113 | |||||||||
Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants | 0 | 0 | 6 | |||||||||
Incremental Common Shares Attributable to Dilutive Effect of Equity Unit Purchase Agreements | 0 | 0 | 1 | |||||||||
Weighted Average Number of Shares Outstanding, Diluted | 35,299 | 37,236 | 41,301 | |||||||||
Earnings Per Share, Basic | $ (0.39) | $ (1.02) | $ 0.05 | |||||||||
Earnings Per Share, Diluted | $ (0.39) | $ (1.02) | $ 0.04 |
NET INCOME (LOSS) PER SHARE (62
NET INCOME (LOSS) PER SHARE (Details 2) - shares shares in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 6,039 | 6,816 | 1,998 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 3,534 | 4,482 | 1,891 |
Restricted Stock Units (RSUs) [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 0 | 290 | 99 |
Convertible debt | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 2,483 | 2,022 | 0 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 21 | 1 | 0 |
Employee Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential dilutive effect of securities (in shares) | 1 | 21 | 8 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Provision [Line Items] | ||||
United States Statutory Tax Rate | 35.00% | 35.00% | 35.00% | |
Income (Loss) from Continuing Operations before Income Taxes, Domestic | $ (13,271) | $ (36,339) | $ 3,760 | |
Income (Loss) from Continuing Operations before Income Taxes, Foreign | (272) | (1,505) | (1,640) | |
Income (Loss) from Continuing Operations before Income Taxes, Total | (13,543) | (37,844) | 2,120 | |
Current Federal Tax Expense (Benefit) | 0 | 11 | 92 | |
Current State and Local Tax Expense (Benefit) | 173 | 94 | 172 | |
Income Tax Expense (Benefit) | $ 173 | 105 | 264 | |
Income Tax Provision | 100 | $ 300 | $ 200 | |
Non-US Net Operating Loss | $ 3,400 | |||
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) | 2.20% | 0.71% | (32.62%) | |
Effective Income Tax Rate Reconciliation, Foreign | (0.81%) | 12.03% | (0.13%) | |
Increase in valuation allowance (as a percent) | (43.96%) | 10.32% | (17.71%) | |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Amount | (0.54%) | 7.26% | (0.44%) | |
Tax credits (as a percent) | 8.77% | (30.63%) | 5.49% | |
Interest expense (as a percent) | 5.75% | (37.57%) | 10.68% | |
Effect of state blended tax rate changes | (4.65%) | 0.00% | 0.00% | |
Other (as a percent) | (2.04%) | 15.33% | (1.55%) | |
Provision for income taxes (as a percent) | (0.28%) | 12.45% | (1.28%) | |
Deferred tax assets: | ||||
Net operating loss carry-forwards | $ 96,163 | $ 101,011 | ||
Federal and state credits | 13,724 | 7,232 | ||
Depreciation and amortization | 2,604 | 1,310 | ||
Accruals and reserves | 14,004 | 5,558 | ||
Deferred revenue | 3,023 | 3,530 | ||
Deferred Tax Assets, Stock Based Compensation | 21,890 | 17,201 | ||
Other | 531 | 953 | ||
Total deferred tax assets | 151,939 | 136,795 | ||
Discount on convertible senior notes | (3,186) | (4,679) | ||
Net deferred tax assets, before valuation allowance | 148,753 | 132,116 | ||
Less: valuation allowance | (148,753) | (132,116) | ||
Net deferred tax assets | 0 | $ 0 | ||
Federal | ||||
Income Tax Provision [Line Items] | ||||
Net Operating Loss, Subject to Limitation | 192,400 | |||
Available Net Operating Loss, Subject to Limitation | 120,100 | |||
Future NOL's Which Will Become Available (2017) | 14,800 | |||
Future NOL's Which Will Become Available (2018-2022) | 10,300 | |||
Future NOL's Which Will Become Available (2015-Onward) | 6,000 | |||
Research Tax Credit Carryforward [Member] | Federal | ||||
Income Tax Provision [Line Items] | ||||
Tax Credit Carryforward, Amount | $ 10,500 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
INCOME TAXES | ||||
United States Statutory Tax Rate | 35.00% | 35.00% | 35.00% | |
Deferred Tax Assets, Valuation Allowance | $ 148,753 | $ 132,116 | ||
Increase in valuation allowance for deferred tax assets | $ 9,900 | $ 16,600 | $ 800 | |
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 | $ 78,200 | |||
Federal | ||||
INCOME TAXES | ||||
Net operating losses | 341,400 | |||
Federal | Research Tax Credit Carryforward [Member] | ||||
INCOME TAXES | ||||
Tax Credit Carryforward, Amount | 10,500 | |||
State | ||||
INCOME TAXES | ||||
Net operating losses | 222,800 | |||
State | Research Tax Credit Carryforward [Member] | ||||
INCOME TAXES | ||||
Tax Credit Carryforward, Amount | $ 5,000 |
OTHER EMPLOYEE BENEFITS (Detail
OTHER EMPLOYEE BENEFITS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Savings Plan | |||
Compensation expense recognized | $ 1 | $ 1.5 | $ 1.7 |
COMMERCIAL PARTNERS AND OTHER66
COMMERCIAL PARTNERS AND OTHER AGREEMENTS (Details) - USD ($) | Dec. 05, 2012 | Aug. 31, 2016 | Jun. 30, 2016 | Apr. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2016 |
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Contract Termination Fee | $ 7,100,000 | |||||
Contract Termination Fee, Current Portion | 5,300,000 | |||||
Contract Termination Fee, Long-Term Portion | 1,800,000 | |||||
Aratana | ||||||
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Up-front payment received | $ 1,000,000 | |||||
Milestone payment received | $ 1,000,000 | $ 1,000,000 | $ 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 | $ 40,000,000 | |||||
Patheon [Member] | ||||||
COMMERCIAL PARTNERS AND OTHER AGREEMENTS | ||||||
Contract Termination Fee | $ 2,400,000 | |||||
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 ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2012 | Apr. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
MPM | |||||
RELATED PARTY TRANSACTIONS | |||||
Due to Related Parties | $ 0 | $ 100,000 | |||
MPM | Consulting agreement | |||||
RELATED PARTY TRANSACTIONS | |||||
Expenses incurred by the entity | $ 500,000 | 100,000 | 300,000 | ||
Member of board of directors | |||||
RELATED PARTY TRANSACTIONS | |||||
Due to Related Parties | 0 | 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 | Maximum | |||||
RELATED PARTY TRANSACTIONS | |||||
Expenses incurred by the entity | $ 100,000 | $ 100,000 | $ 100,000 |
COMMITMENTS AND CONTINGENCIES68
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Leased Assets [Line Items] | |||
Leasehold Improvements, Gross | $ 5,600 | ||
Purchase Obligation | 600 | ||
Annual minimum payments due | |||
2,017 | 7,880 | ||
2,018 | 8,063 | ||
2,019 | 8,272 | ||
2,020 | 6,389 | ||
2,021 | 1,207 | ||
2022 through 2028 | 7,545 | ||
Total | 39,356 | ||
Rent expense | $ 4,900 | 6,000 | $ 5,700 |
Deferred rent | $ 8,600 | $ 9,200 |
COMMITMENTS AND CONTINGENCIES69
COMMITMENTS AND CONTINGENCIES (Details 3) - USD ($) $ in Millions | Mar. 21, 2007 | Dec. 31, 2016 |
SkyePharma Holding, Inc. | ||
Commitments | ||
Total milestone payments paid | $ 36 | |
SkyePharma Holding, Inc. | Maximum | ||
Commitments | ||
Milestone payments for EXPAREL agreed in connection with acquisition | $ 62 | |
PPI-California | ||
Commitments | ||
Initial purchase price for acquisition | $ 19.6 |
SELECTED QUARTERLY FINANCIAL 70
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Total revenues | $ 72,902 | $ 68,355 | $ 69,640 | $ 65,474 | $ 69,320 | $ 62,213 | $ 59,148 | $ 58,316 | $ 197,668 | $ 276,371 | $ 248,997 | |
Cost of goods sold | 23,621 | 43,152 | 23,053 | 20,278 | 19,427 | 15,901 | 18,929 | 17,580 | 77,440 | 110,104 | 71,837 | |
Total operating expenses | 75,363 | 89,220 | 76,084 | 67,728 | 70,133 | 57,104 | 57,330 | 54,975 | 202,833 | 308,395 | 239,542 | |
Net income (loss) | $ (3,973) | $ (22,164) | $ (7,958) | $ (3,854) | $ (2,498) | $ 3,086 | $ 8 | $ 1,260 | $ (13,716) | $ (37,949) | $ 1,856 | $ (13,716) |
Earnings Per Share, Basic and Diluted | $ (0.11) | $ (0.59) | $ (0.21) | $ (0.10) | $ (0.07) | $ 0.08 | $ 0 | $ 0.03 | ||||
Earnings Per Share, Basic | $ (0.39) | $ (1.02) | $ 0.05 | |||||||||
Earnings Per Share, Diluted | $ (0.39) | $ (1.02) | $ 0.04 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions | Dec. 31, 2016USD ($) |
Subsequent Event [Line Items] | |
Conversion Request Convertible Senior Notes | $ 1.5 |
Uncategorized Items - pcrx-2016
Label | Element | Value |
Stock Issued During Period, Value, Restricted Stock Award, Gross | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardGross | $ 0 |
Common Stock [Member] | ||
Stock Issued During Period, Value, Restricted Stock Award, Gross | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardGross | $ 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod | 62,000 |