Pacira BioSciences (PCRX) 10-Q 4 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 25, 2017
Document and Entity Information
Entity Registrant Name	Pacira Pharmaceuticals, Inc.
Entity Central Index Key	1,396,814
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus (Q1,Q2,Q3,FY)	Q1
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		40,093,883

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 108,970	$ 35,944
Short-term investments	274,729	136,653
Accounts receivable, net	27,702	29,937
Inventories, net	30,311	31,278
Prepaid expenses and other current assets	6,252	9,277
Total current assets	447,964	243,089
Fixed assets, net	102,571	101,016
Goodwill	48,829	46,737
Other assets	598	624
Total assets	599,962	391,466
Current liabilities:
Accounts payable	9,373	7,511
Accrued expenses	34,900	36,666
Convertible senior notes	759	0
Current portion of deferred revenue	520	595
Income taxes payable	96	66
Total current liabilities	45,648	44,838
Convertible senior notes	265,992	108,738
Deferred revenue	7,357	7,487
Other liabilities	10,332	11,427
Total liabilities	329,329	172,490
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued and outstanding at March 31, 2017 and December 31, 2016	0	0
Common stock, par value $0.001, 250,000,000 shares authorized; 40,023,258 shares issued and outstanding at March 31, 2017; 37,480,952 shares issued and outstanding at December 31, 2016	40	37
Additional paid-in capital	637,066	565,207
Accumulated deficit	(366,391)	(346,238)
Accumulated other comprehensive loss	(82)	(30)
Total stockholders’ equity	270,633	218,976
Total liabilities and stockholders’ equity	$ 599,962	$ 391,466

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
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	40,023,258	37,480,952
Common stock, shares outstanding	40,023,258	37,480,952
Treasury stock at cost, shares	0	0

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Net product sales	$ 68,425	$ 64,502
Collaborative licensing and milestone revenue	206	356
Royalty revenue	652	616
Total revenues	69,283	65,474
Operating expenses:
Cost of goods sold	24,581	20,278
Research and development	16,632	9,493
Selling, general and administrative	42,120	37,957
Total operating expenses	83,333	67,728
Loss from operations	(14,050)	(2,254)
Other (expense) income:
Interest income	514	252
Interest expense	(2,589)	(1,868)
Loss on early extinguishment of debt	(3,721)	0
Other, net	10	48
Total other expense, net	(5,786)	(1,568)
Loss before income taxes	(19,836)	(3,822)
Income tax expense	(30)	(32)
Net loss	$ (19,866)	$ (3,854)
Net loss per share:
Basic and diluted net loss per common share (in USD per share)	$ (0.52)	$ (0.10)
Weighted average common shares outstanding:
Basic and diluted (in shares)	37,998	37,020

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (19,866)	$ (3,854)
Other comprehensive income (loss):
Net unrealized gain (loss) on investments	(52)	101
Total other comprehensive income (loss)	(52)	101
Comprehensive loss	$ (19,918)	$ (3,753)

CONSOLIDATED STATEMENT OF STOCK

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Convertible Senior Notes Due 2019	Convertible Senior Notes Due 2019Additional Paid-In Capital	Convertible Senior Notes Due 2022	Convertible Senior Notes Due 2022Additional Paid-In Capital
Cumulative effect adjustment of the adoption of Accounting Standards Update 2016-09 (Note 2)			$ 287	$ (287)
Balances (in shares) at Dec. 31, 2016		37,481
Balances at Dec. 31, 2016	$ 218,976	$ 37	565,207	(346,238)	$ (30)
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)		62
Exercise of stock options	852		852
Stock-based compensation	$ 7,400		7,400
Issuance of common stock upon conversion of 2019 convertible senior notes (in shares)	2,480
Issuance of common stock upon conversion of 2019 convertible senior notes	$ 120,466	$ 3	120,463
Retirement of equity component of 2019 convertible senior notes	70,930					$ (125,811)	$ (125,811)	$ 68,668	$ 68,668
Net unrealized gain (loss) on investments	(52)				(52)
Net loss	(19,866)			(19,866)
Balances (in shares) at Mar. 31, 2017		40,023
Balances at Mar. 31, 2017	$ 270,633	$ 40	$ 637,066	$ (366,391)	$ (82)

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities:
Net loss	$ (19,866)	$ (3,854)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of fixed assets and amortization of intangibles	3,104	3,165
Amortization of unfavorable lease obligation and debt issuance costs	168	120
Amortization of debt discount	1,411	1,022
Loss on early extinguishment of debt	3,721	0
Loss on disposal of fixed assets	137	0
Stock-based compensation	7,400	8,490
Changes in operating assets and liabilities:
Accounts receivable, net	2,235	(46)
Inventories, net	967	(2,099)
Prepaid expenses and other assets	3,051	(2,917)
Accounts payable, accrued expenses and income taxes payable	(1,056)	(6,227)
Other liabilities	(1,061)	(419)
Deferred revenue	(205)	(356)
Net cash provided by (used in) operating activities	6	(3,121)
Investing activities:
Purchases of fixed assets	(3,616)	(7,053)
Purchases of investments	(180,342)	(67,843)
Sales of investments	42,214	54,925
Payment of contingent consideration	(2,092)	(1,904)
Net cash used in investing activities	(143,836)	(21,875)
Financing activities:
Proceeds from exercise of stock options	852	3,041
Proceeds from 2022 convertible senior notes	345,000	0
Repayment of debt	(117,712)	0
Payment of debt issuance and financing costs	(11,000)	0
Costs for conversion of convertible senior notes	(284)	0
Net cash provided by financing activities	216,856	3,041
Net increase (decrease) in cash and cash equivalents	73,026	(21,955)
Cash and cash equivalents, beginning of period	35,944	56,984
Cash and cash equivalents, end of period	108,970	35,029
Supplemental cash flow information:
Cash paid for interest	2,380	1,926
Cash paid for income taxes, net of refunds	0	142
Non-cash investing and financing activities:
Issuance of common stock from conversion of 2019 convertible senior notes	120,466	0
Retirement of equity component of 2019 convertible senior notes	(125,811)	0
Equity component of the 2022 convertible senior notes	70,930	0
Net increase in accrued fixed assets	$ 1,179	$ 1,554

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	3 Months Ended
	Mar. 31, 2017
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. Pacira is committed to driving innovation in postsurgical pain management with opioid-sparing strategies. 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	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation These interim 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 for interim reporting. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in complete annual financial statements have been condensed or omitted. Therefore, these interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The consolidated financial statements at March 31, 2017 , and for the three months ended March 31, 2017 and 2016 , are unaudited, but include all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP. The consolidated balance sheet at December 31, 2016 is derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The accounts of wholly-owned subsidiaries are included in the consolidated financial statements. Intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim periods or for the full year. 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 Company’s three largest customers (i.e., wholesalers or commercial partners) in each period presented: Three Months Ended 2017 2016 Largest customer 35% 33% Second largest customer 29% 28% Third largest customer 25% 27% 89% 88% Recent Accounting Pronouncements Recently Adopted In March 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or 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 and tax deficiencies in the statement of cash flows and accounting for award forfeitures. The update also removes the 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 elected an accounting policy change to record forfeitures as they occur rather than estimating forfeitures during each period and recorded a charge of $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 resulted in the recognition of $29.3 million of previously unrecognized excess tax benefits in deferred tax assets, fully offset by a valuation allowance. The changes have been applied prospectively in accordance with the update and prior periods have not been adjusted. 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 in the Company’s consolidated statements of cash flows. 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 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 previous 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 became effective for the Company prospectively beginning January 1, 2017. The adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements. Not Adopted as of March 31, 2017 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 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 12, Commitments and Contingencies , for further discussion on the Company’s leases. 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	3 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
INVENTORIES	INVENTORIES The components of inventories are as follows (in thousands): March 31, December 31, 2017 2016 Raw materials $ 12,966 $ 11,742 Work-in-process 7,709 11,621 Finished goods 9,636 7,915 Total $ 30,311 $ 31,278

FIXED ASSETS

FIXED ASSETS	3 Months Ended
	Mar. 31, 2017
Property, Plant and Equipment [Abstract]
FIXED ASSETS	FIXED ASSETS Fixed assets, summarized by major category, consist of the following (in thousands): March 31, December 31, 2017 2016 Machinery and laboratory equipment $ 34,399 $ 34,309 Leasehold improvements 33,814 33,787 Computer equipment and software 6,509 5,623 Office furniture and equipment 1,606 1,606 Construction in progress 66,855 63,201 Total 143,183 138,526 Less: accumulated depreciation (40,612 ) (37,510 ) Fixed assets, net $ 102,571 $ 101,016 For each of the three month periods ended March 31, 2017 and 2016, depreciation expense was $3.1 million . For the three months ended March 31, 2017 and 2016, capitalized interest on the construction of manufacturing sites was $0.2 million and $0.3 million , respectively. At March 31, 2017 and December 31, 2016 , total fixed assets, net, includes leasehold improvements and manufacturing process equipment located in England in the amount of $37.0 million and $33.7 million , respectively.

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Intangible Assets	GOODWILL In March 2007, the Company acquired from SkyePharma Holding, Inc., or Skyepharma, its California operating subsidiary, 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 standard 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, including EXPAREL, and certain other yet-to-be-developed products, as well as milestone payments for DepoBupivacaine products, including EXPAREL, 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 E.U. 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 achieved an $8.0 million milestone in connection with achieving $100.0 million of annual EXPAREL net sales collected, and in June 2016, the Company achieved another $8.0 million milestone for achieving $250.0 million of annual EXPAREL net sales collected. For purposes of meeting future potential milestone payments, annual net sales are measured on a rolling quarterly basis. Cumulatively through March 31, 2017 , the Company has recorded an additional $24.9 million as goodwill for earn-out payments that are based on a percentage of net sales of DepoBupivacaine products collected, including EXPAREL. Any remaining earn-out payments will also be treated as additional costs of the Acquisition and, therefore, recorded as goodwill if and when each contingency is resolved. The change in the carrying value of goodwill is summarized as follows (in thousands): Carrying Value Balance at December 31, 2016 $ 46,737 Percentage payments on collections of net sales of DepoBupivacaine products 2,092 Balance at March 31, 2017 $ 48,829

DEBT

DEBT	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
DEBT	DEBT Convertible Senior Notes Due 2022 On March 13, 2017, the Company completed a private placement of $345.0 million in aggregate principal amount of 2.375% convertible senior notes due 2022, or 2022 Notes, and entered into an indenture agreement, or 2022 Indenture, with respect to the 2022 Notes. The 2022 Notes accrue interest at a fixed rate of 2.375% per year, payable semiannually in arrears on April 1 and October 1 of each year, beginning on October 1, 2017. The 2022 Notes mature on April 1, 2022. The composition of the Company’s 2022 Notes is as follows (in thousands): March 31, December 31, 2017 2016 2.375% convertible senior notes due 2022 $ 345,000 $ — Deferred financing costs (8,661 ) — Discount on debt (70,347 ) — Total debt, net of debt discount and deferred financing costs $ 265,992 $ — The net proceeds from the issuance of the 2022 Notes were approximately $334.0 million , after deducting commissions and the estimated offering expenses payable by the Company. A portion of the net proceeds from the 2022 Notes were used by the Company to repurchase the majority of its then-outstanding convertible senior notes due 2019 in privately-negotiated transactions. Holders may convert the 2022 Notes at any time prior to the close of business on the business day immediately preceding October 1, 2021, only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2017 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (ii) during the five business-day period immediately after any five consecutive trading-day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2022 Indenture) per $1,000 principal amount of the 2022 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 2022 Notes for redemption, until the close of business on the business day immediately preceding the redemption date. On or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding April 1, 2022, holders may convert their 2022 Notes at any time. Upon conversion, holders will receive the principal amount of their 2022 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 2022 Indenture). For both the principal and excess conversion value, holders may receive 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 2022 Notes is 14.9491 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $66.89 per share of the Company’s common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the 2022 Notes represents a premium of approximately 37.5% to the closing sale price of $48.65 per share of the Company’s common stock on the NASDAQ Global Select Market on March 7, 2017, the date that the Company priced the private offering of the 2022 Notes. As of March 31, 2017 , the 2022 Notes had a market price of $1,037 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 2022 Notes will be paid pursuant to the terms of the 2022 Indenture. In the event that all of the 2022 Notes are converted, the Company would be required to repay the $345.0 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option). Prior to April 1, 2020, the Company may not redeem the 2022 Notes. On or after April 1, 2020, the Company may redeem for cash all or part of the 2022 Notes if the last reported sale price (as defined in the 2022 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 2022 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date. In addition, calling the 2022 Notes for redemption will constitute a “make whole fundamental change ” (as defined in the 2022 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption. No sinking fund is provided for the 2022 Notes. If the Company undergoes a fundamental change, as defined in the 2022 Indenture, subject to certain conditions, holders of the 2022 Notes may require the Company to repurchase for cash all or part of their 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a ‘‘make-whole fundamental change’’ (as defined in the 2022 Indenture) occurs prior to April 1, 2022, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change. The 2022 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2022 Notes, and equal in right of payment to the Company’s unsecured indebtedness. The 2022 Notes are also effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to any debt or other liabilities (including trade payables) of the Company’s subsidiaries. While the 2022 Notes are currently classified on the Company’s consolidated balance sheet at March 31, 2017 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the 2022 Notes have the election to convert the 2022 Notes at any time during the prescribed measurement period, the 2022 Notes would then be considered a current obligation and classified as such. 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 2022 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance. The initial carrying value of the liability component of $274.1 million was calculated using a 7.45% assumed borrowing rate. The equity component of $70.9 million , representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2022 Notes and is recorded in additional paid-in capital on the consolidated balance sheet at the issuance date. That equity component is treated as a discount on the liability component of the 2022 Notes, which is amortized over the five year term of the 2022 Notes using the effective interest rate method. 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 approximately $11.0 million related to the issuance of the 2022 Notes to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the five -year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity. The 2022 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. The 2022 Indenture contains customary events of default with respect to the 2022 Notes, including that upon certain events of default, 100% of the principal and accrued and unpaid interest on the 2022 Notes will automatically become due and payable. Convertible Senior Notes Due 2019 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 2019 Notes, and entered into an indenture agreement, or 2019 Indenture, with respect to the 2019 Notes. The 2019 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 2019 Notes mature on February 1, 2019. The composition of the Company’s 2019 Notes is as follows (in thousands): March 31, December 31, 2017 2016 3.25% convertible senior notes due 2019 $ 819 $ 118,531 Deferred financing costs (8 ) (1,276 ) Discount on debt (52 ) (8,517 ) Total debt, net of debt discount and deferred financing costs $ 759 $ 108,738 In March 2017, the Company used part of the net proceeds from the issuance of the 2022 Notes discussed above to repurchase $117.7 million aggregate principal of the 2019 Notes in privately-negotiated transactions for an aggregate of approximately $118.2 million in cash and the issuance of an aggregate of approximately 2.5 million shares of common stock. The partial repurchase of the 2019 Notes resulted in a $3.7 million loss on early debt extinguishment. At March 31, 2017 , $0.8 million of principal remains outstanding on the 2019 Notes. 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 2019 Notes at any time. Upon conversion, holders will receive cash up to the principal amount of the 2019 Notes and, with respect to any excess conversion value, may receive 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 2019 Notes was 40.2945 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $24.82 per share of the Company’s common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. Holders may convert their 2019 Notes prior to August 1, 2018 only if certain circumstances are met, including if during the previous calendar quarter, the sales price of the Company’s common stock was greater than 130% of the conversion price then applicable for at least 20 out of the last 30 consecutive trading days of the quarter. During the quarter ended March 31, 2017 , this condition for conversion was met. As a result, the 2019 Notes are classified as a current obligation and will be convertible until June 30, 2017 . As of March 31, 2017 , the 2019 Notes had a market price of $1,914 per $1,000 principal amount, compared to an estimated conversion value of $1,837 per $1,000 principal amount. In the event that the remaining 2019 Notes are converted, the Company would be required to repay the $0.8 million of principal value in cash and settle approximately $0.7 million of the conversion premium in cash, common stock or a combination of cash and shares of its common stock at the Company’s option as of March 31, 2017 . As of February 1, 2017, the Company may redeem for cash all or part of the 2019 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. If the 2019 Notes are called for redemption, the holder has the right to submit these notes for conversion at any time prior to the the redemption date, and the Company will, in addition to paying the principal and conversion premium, pay a make-whole premium equal to the sum of the present value of the remaining scheduled payments of interest that would have been made on the Notes to be converted had such notes remained outstanding from the applicable conversion date to the maturity date. Interest Expense The following table sets forth the total interest expense recognized in the periods presented (in thousands): Three Months Ended 2017 2016 Contractual interest expense $ 1,189 $ 963 Amortization of debt issuance costs 201 153 Amortization of debt discount 1,411 1,022 Capitalized interest (Note 4) (212 ) (270 ) Total $ 2,589 $ 1,868 Effective interest rate on convertible senior notes 7.48 % 7.22 %

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS	3 Months Ended
	Mar. 31, 2017
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 convertible senior notes at March 31, 2017 are calculated utilizing market quotations from an over-the-counter trading market for these instruments (Level 2). The carrying amount and fair value of the 2019 Notes and 2022 Notes are as follows (in thousands): Financial Liabilities Carried at Historical Cost Carrying Value Fair Value Measurements Using March 31, 2017 Level 1 Level 2 Level 3 2.375% convertible senior notes due 2022 (1) $ 265,992 $ — $ 357,722 $ — 3.25% convertible senior notes due 2019 (2) $ 759 $ — $ 1,567 $ — (1) The closing price of the Company’s common stock was $45.60 per share at March 31, 2017 compared to a conversion price of $66.89 per share. Currently, the conversion price is above the stock price. The maximum conversion premium that can be due on the 2022 Notes is approximately 5.2 million shares, which assumes no increases in the conversion rate for certain corporate events. (2) The closing price of the Company’s common stock was $45.60 per share at March 31, 2017 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of less than 0.1 million shares or $0.7 million of cash. The maximum conversion premium that can be due on the 2019 Notes is less than 0.1 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 less than one year. The net unrealized gains and losses from the Company’s short-term investments are reported in other comprehensive income (loss). At March 31, 2017 , 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 March 31, 2017 , the Company’s short-term investments were rated A or better by Standard & Poor’s. The following summarizes the Company’s investments at March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Debt Securities Cost Gross Gross Fair Value Short-term: Asset-backed securities $ 46,285 $ — $ (9 ) $ 46,276 Commercial paper 45,232 6 (6 ) 45,232 Corporate bonds 183,294 8 (81 ) 183,221 Total $ 274,811 $ 14 $ (96 ) $ 274,729 December 31, 2016 Debt Securities Cost Gross Gross Fair Value 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 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 March 31, 2017 , 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 and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. Such amounts may exceed federally-insured limits. As of March 31, 2017 , three customers each accounted for over 10% of the Company’s accounts receivable, at 35% , 30% and 25% , respectively. At December 31, 2016 , three customers each accounted for over 10% of the Company’s accounts receivable, at 36% , 29% and 25% , respectively (for additional information regarding the Company’s customers, see Note 2 , Summary of Significant Accounting Policies ). Revenues are primarily derived from major wholesalers and pharmaceutical companies that generally have significant cash resources. The Company performs ongoing credit evaluations of its customers as warranted and generally does not require collateral. Allowances for doubtful accounts receivable are maintained based on historical payment patterns, aging of accounts receivable and the Company’s actual write-off history. As of March 31, 2017 and December 31, 2016 , no allowances for doubtful accounts were deemed necessary by the Company on its accounts receivable.

STOCK PLANS

STOCK PLANS	3 Months Ended
	Mar. 31, 2017
Stockholders' Equity Note [Abstract]
STOCK PLANS	STOCK PLANS Stock-Based Compensation The Company recognized stock-based compensation expense in its consolidated statements of operations as follows (in thousands): Three Months Ended 2017 2016 Cost of goods sold $ 1,375 $ 1,549 Research and development 658 893 Selling, general and administrative 5,367 6,048 Total $ 7,400 $ 8,490 Stock-based compensation from: Stock options (employee awards) $ 5,917 $ 6,856 Stock options (consultant awards) 53 274 Restricted stock units (employee awards) 1,223 1,085 Employee stock purchase plan 207 275 Total $ 7,400 $ 8,490 Employee Stock Purchase Plan The Company’s 2014 Employee Stock Purchase Plan, or ESPP, features two six-month offering periods per year, running from January 1 to June 30 and July 1 to December 31. Under the ESPP, employees may elect to contribute after-tax earnings to purchase shares at 85% of the closing fair market value of the Company’s common stock on either the offering date or the purchase date, whichever is less. During the three months ended March 31, 2017 , no shares were purchased or issued under the ESPP. Equity Awards The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the three months ended March 31, 2017 : Stock Options Number of Options Weighted Average Exercise Price Outstanding at December 31, 2016 5,207,743 $ 42.16 Granted 63,650 43.99 Exercised (62,056 ) 13.73 Forfeited (122,168 ) 55.49 Expired (28,351 ) 75.63 Outstanding at March 31, 2017 5,058,818 42.02 Restricted Stock Units Number of Units Weighted Average Grant Date Fair Value Unvested at December 31, 2016 364,403 $ 52.85 Granted 2,063 44.30 Vested (326 ) 62.73 Forfeited (18,535 ) 57.81 Unvested at March 31, 2017 347,605 52.47 The weighted average fair value of stock options granted for the three months ended March 31, 2017 was $22.56 per share. The fair values of stock options granted were estimated using the Black-Scholes option valuation model with the following weighted average assumptions: Three Months Ended Expected dividend yield None Risk free interest rate 2.09% Expected volatility 54.0% Expected term of options 5.75

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	3 Months Ended
	Mar. 31, 2017
Stockholders' Equity Note [Abstract]
Stockholders' Equity	STOCKHOLDERS’ EQUITY Accumulated Other Comprehensive Income (Loss) The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands): Three Months Ended Net unrealized gains (losses) from available for sale investments: 2017 2016 Balance at beginning of period $ (30 ) $ (52 ) Other comprehensive income (loss) before reclassifications (52 ) 101 Amounts reclassified from accumulated other comprehensive income (loss) — — Balance at end of period $ (82 ) $ 49

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
NET INCOME (LOSS) PER SHARE	NET INCOME (LOSS) 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 ESPP (using the treasury stock method) as well as the conversion of the excess conversion value on the 2019 Notes and 2022 Notes. As discussed in Note 6, Debt, the Company has either the obligation or the option to pay cash for the aggregate principal amount due upon the conversion of its convertible senior notes. Since it is the Company’s intent to settle the principal amount of its convertible senior notes in cash, the potentially dilutive effect of such notes on net income (loss) per share is computed under the treasury stock method. Potential common shares are excluded from the diluted net loss per share computation to the extent they would be antidilutive. Because the Company reported a net loss for the three months ended March 31, 2017 and 2016 , 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 three months ended March 31, 2017 and 2016 (in thousands, except per share amounts): Three Months Ended 2017 2016 Numerator: Net loss $ (19,866 ) $ (3,854 ) Denominator: Weighted average common shares outstanding 37,998 37,020 Net loss per share: Basic and diluted net loss per common share $ (0.52 ) $ (0.10 ) The following outstanding stock options, RSUs, conversion premiums on the Company’s convertible senior notes, warrants and ESPP purchase options are antidilutive in the periods presented (in thousands): Three Months Ended 2017 2016 Weighted average number of stock options 5,112 4,324 Weighted average number of RSUs 353 205 Conversion premium on the 2019 Notes 1,624 2,749 Weighted average number of warrants — 3 Weighted average ESPP purchase options 38 23 Total 7,127 7,304

TAXES

TAXES	3 Months Ended
	Mar. 31, 2017
Income Tax Disclosure [Abstract]
TAXES	TAXES Income (loss) before income taxes is as follows (in thousands): Three Months Ended 2017 2016 Loss before income taxes: Domestic $ (19,320 ) $ (3,499 ) Foreign (516 ) (323 ) Total loss before income taxes $ (19,836 ) $ (3,822 ) The Company recorded income tax expense of less than $0.1 million in both the three months ended March 31, 2017 and 2016. The provision for income taxes is recorded based upon the best current estimate of the Company’s annual effective tax rate, or AETR. Generally, the AETR is the result of a mix of profits and losses the Company and its subsidiaries earn in multiple tax jurisdictions with different income tax rates. For both the three months ended March 31, 2017 and 2016, the Company determined that its actual year-to-date rate was the best estimate of its AETR. The tax provisions reflect current state income taxes. Due to net losses in both periods presented, no current federal income tax expense was recorded. Due to the fact that the Company’s deferred tax assets are fully offset by a valuation allowance, the tax provisions do not reflect deferred tax expenses. During the three months ended March 31, 2017 , the Company established a deferred tax liability of $26.5 million with an offset to additional paid-in capital resulting from the conversion feature of the 2022 Notes. The initial difference between the book value of convertible debt issued with a beneficial conversion feature and its tax basis is a temporary difference. The net effect of the deferred tax liability recorded to additional paid-in capital was zero because the Company has a full valuation allowance against its net deferred tax assets.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 , aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands): Year Aggregate Minimum Payments 2017 (remaining nine months) $ 5,925 2018 8,063 2019 8,272 2020 6,389 2021 1,207 2022 through 2028 7,545 Total $ 37,401 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 U.S. Department of Justice, U.S. 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 its final outcome, or the impact, if any, of this inquiry or any proceedings on its business, financial condition, results of operations and cash flows.

COMMERCIAL PARTNERS AND OTHER A

COMMERCIAL PARTNERS AND OTHER AGREEMENTS	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
COMMERCIAL PARTNERS AND OTHER AGREEMENTS	NOTE 13—COMMERCIAL PARTNERS AND OTHER AGREEMENTS DePuy Synthes Sales, Inc. In January 2017, the Company announced the initiation of a Co-Promotion Agreement, or the Agreement, with DePuy Synthes Sales, Inc., or DePuy Synthes, part of the Johnson & Johnson family of companies, 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 an 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. 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, the “Agreement”). 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 March 31, 2017 , $3.5 million is classified in accrued expenses and $1.2 million is classified in other liabilities, consistent with the contractual timing of payments.

SUMMARY OF SIGNIFICANT ACCOUN21

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation These interim 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 for interim reporting. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in complete annual financial statements have been condensed or omitted. Therefore, these interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The consolidated financial statements at March 31, 2017 , and for the three months ended March 31, 2017 and 2016 , are unaudited, but include all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP. The consolidated balance sheet at December 31, 2016 is derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The accounts of wholly-owned subsidiaries are included in the consolidated financial statements. Intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim periods or for the full year.
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.
Recent Accounting Pronouncements	Recent Accounting Pronouncements Recently Adopted In March 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or 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 and tax deficiencies in the statement of cash flows and accounting for award forfeitures. The update also removes the 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 elected an accounting policy change to record forfeitures as they occur rather than estimating forfeitures during each period and recorded a charge of $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 resulted in the recognition of $29.3 million of previously unrecognized excess tax benefits in deferred tax assets, fully offset by a valuation allowance. The changes have been applied prospectively in accordance with the update and prior periods have not been adjusted. 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 in the Company’s consolidated statements of cash flows. 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 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 previous 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 became effective for the Company prospectively beginning January 1, 2017. The adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements. Not Adopted as of March 31, 2017 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 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 12, Commitments and Contingencies , for further discussion on the Company’s leases. 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 ACCOUN22

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Schedule of percentage of revenue comprised by the three largest customers (i.e. wholesalers or commercial partners)	The table below includes the percentage of revenue comprised by the Company’s three largest customers (i.e., wholesalers or commercial partners) in each period presented: Three Months Ended 2017 2016 Largest customer 35% 33% Second largest customer 29% 28% Third largest customer 25% 27% 89% 88%

INVENTORIES (Tables)

INVENTORIES (Tables)	3 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
Schedule of components of inventories	The components of inventories are as follows (in thousands): March 31, December 31, 2017 2016 Raw materials $ 12,966 $ 11,742 Work-in-process 7,709 11,621 Finished goods 9,636 7,915 Total $ 30,311 $ 31,278

FIXED ASSETS (Tables)

FIXED ASSETS (Tables)	3 Months Ended
	Mar. 31, 2017
Property, Plant and Equipment [Abstract]
Schedule of fixed assets summarized by major category	Fixed assets, summarized by major category, consist of the following (in thousands): March 31, December 31, 2017 2016 Machinery and laboratory equipment $ 34,399 $ 34,309 Leasehold improvements 33,814 33,787 Computer equipment and software 6,509 5,623 Office furniture and equipment 1,606 1,606 Construction in progress 66,855 63,201 Total 143,183 138,526 Less: accumulated depreciation (40,612 ) (37,510 ) Fixed assets, net $ 102,571 $ 101,016

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS (Tables)	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Goodwill	The change in the carrying value of goodwill is summarized as follows (in thousands): Carrying Value Balance at December 31, 2016 $ 46,737 Percentage payments on collections of net sales of DepoBupivacaine products 2,092 Balance at March 31, 2017 $ 48,829

DEBT (Tables)

DEBT (Tables)	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Schedule of composition of the Company's debt and financing obligations	The composition of the Company’s 2022 Notes is as follows (in thousands): March 31, December 31, 2017 2016 2.375% convertible senior notes due 2022 $ 345,000 $ — Deferred financing costs (8,661 ) — Discount on debt (70,347 ) — Total debt, net of debt discount and deferred financing costs $ 265,992 $ — The net proceeds from the issuance of the 2022 Notes were approximately $334.0 million , after deducting commissions and the estimated offering expenses payable by the Company. A portion of the net proceeds from the 2022 Notes were used by the Company to repurchase the majority of its then-outstanding convertible senior notes due 2019 in privately-negotiated transactions. Holders may convert the 2022 Notes at any time prior to the close of business on the business day immediately preceding October 1, 2021, only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2017 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (ii) during the five business-day period immediately after any five consecutive trading-day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2022 Indenture) per $1,000 principal amount of the 2022 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 2022 Notes for redemption, until the close of business on the business day immediately preceding the redemption date. On or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding April 1, 2022, holders may convert their 2022 Notes at any time. Upon conversion, holders will receive the principal amount of their 2022 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 2022 Indenture). For both the principal and excess conversion value, holders may receive 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 2022 Notes is 14.9491 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $66.89 per share of the Company’s common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the 2022 Notes represents a premium of approximately 37.5% to the closing sale price of $48.65 per share of the Company’s common stock on the NASDAQ Global Select Market on March 7, 2017, the date that the Company priced the private offering of the 2022 Notes. As of March 31, 2017 , the 2022 Notes had a market price of $1,037 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 2022 Notes will be paid pursuant to the terms of the 2022 Indenture. In the event that all of the 2022 Notes are converted, the Company would be required to repay the $345.0 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option). Prior to April 1, 2020, the Company may not redeem the 2022 Notes. On or after April 1, 2020, the Company may redeem for cash all or part of the 2022 Notes if the last reported sale price (as defined in the 2022 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 2022 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date. In addition, calling the 2022 Notes for redemption will constitute a “make whole fundamental change ” (as defined in the 2022 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption. No sinking fund is provided for the 2022 Notes. If the Company undergoes a fundamental change, as defined in the 2022 Indenture, subject to certain conditions, holders of the 2022 Notes may require the Company to repurchase for cash all or part of their 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a ‘‘make-whole fundamental change’’ (as defined in the 2022 Indenture) occurs prior to April 1, 2022, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change. The 2022 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2022 Notes, and equal in right of payment to the Company’s unsecured indebtedness. The 2022 Notes are also effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to any debt or other liabilities (including trade payables) of the Company’s subsidiaries. While the 2022 Notes are currently classified on the Company’s consolidated balance sheet at March 31, 2017 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the 2022 Notes have the election to convert the 2022 Notes at any time during the prescribed measurement period, the 2022 Notes would then be considered a current obligation and classified as such. 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 2022 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance. The initial carrying value of the liability component of $274.1 million was calculated using a 7.45% assumed borrowing rate. The equity component of $70.9 million , representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2022 Notes and is recorded in additional paid-in capital on the consolidated balance sheet at the issuance date. That equity component is treated as a discount on the liability component of the 2022 Notes, which is amortized over the five year term of the 2022 Notes using the effective interest rate method. 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 approximately $11.0 million related to the issuance of the 2022 Notes to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the five -year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity. The 2022 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. The 2022 Indenture contains customary events of default with respect to the 2022 Notes, including that upon certain events of default, 100% of the principal and accrued and unpaid interest on the 2022 Notes will automatically become due and payable. Convertible Senior Notes Due 2019
Schedule of total interest expense recognized related to the Notes	The following table sets forth the total interest expense recognized in the periods presented (in thousands): Three Months Ended 2017 2016 Contractual interest expense $ 1,189 $ 963 Amortization of debt issuance costs 201 153 Amortization of debt discount 1,411 1,022 Capitalized interest (Note 4) (212 ) (270 ) Total $ 2,589 $ 1,868 Effective interest rate on convertible senior notes 7.48 % 7.22 %

FINANCIAL INSTRUMENTS (Tables)

FINANCIAL INSTRUMENTS (Tables)	3 Months Ended
	Mar. 31, 2017
Fair Value Disclosures [Abstract]
Schedule of carrying amount and fair value of the long-term debt	The carrying amount and fair value of the 2019 Notes and 2022 Notes are as follows (in thousands): Financial Liabilities Carried at Historical Cost Carrying Value Fair Value Measurements Using March 31, 2017 Level 1 Level 2 Level 3 2.375% convertible senior notes due 2022 (1) $ 265,992 $ — $ 357,722 $ — 3.25% convertible senior notes due 2019 (2) $ 759 $ — $ 1,567 $ — (1) The closing price of the Company’s common stock was $45.60 per share at March 31, 2017 compared to a conversion price of $66.89 per share. Currently, the conversion price is above the stock price. The maximum conversion premium that can be due on the 2022 Notes is approximately 5.2 million shares, which assumes no increases in the conversion rate for certain corporate events. (2) The closing price of the Company’s common stock was $45.60 per share at March 31, 2017 compared to a conversion price of $24.82 per share which, if converted, would result in an approximate conversion premium of less than 0.1 million shares or $0.7 million of cash. The maximum conversion premium that can be due on the 2019 Notes is less than 0.1 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 March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Debt Securities Cost Gross Gross Fair Value Short-term: Asset-backed securities $ 46,285 $ — $ (9 ) $ 46,276 Commercial paper 45,232 6 (6 ) 45,232 Corporate bonds 183,294 8 (81 ) 183,221 Total $ 274,811 $ 14 $ (96 ) $ 274,729 December 31, 2016 Debt Securities Cost Gross Gross Fair Value 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

STOCK PLANS (Tables)

STOCK PLANS (Tables)	3 Months Ended
	Mar. 31, 2017
Stockholders' Equity Note [Abstract]
Schedule of recognized stock-based compensation in consolidated statements of operations	The Company recognized stock-based compensation expense in its consolidated statements of operations as follows (in thousands): Three Months Ended 2017 2016 Cost of goods sold $ 1,375 $ 1,549 Research and development 658 893 Selling, general and administrative 5,367 6,048 Total $ 7,400 $ 8,490 Stock-based compensation from: Stock options (employee awards) $ 5,917 $ 6,856 Stock options (consultant awards) 53 274 Restricted stock units (employee awards) 1,223 1,085 Employee stock purchase plan 207 275 Total $ 7,400 $ 8,490
Schedule of the Company's stock option activity and related information	The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the three months ended March 31, 2017 : Stock Options Number of Options Weighted Average Exercise Price Outstanding at December 31, 2016 5,207,743 $ 42.16 Granted 63,650 43.99 Exercised (62,056 ) 13.73 Forfeited (122,168 ) 55.49 Expired (28,351 ) 75.63 Outstanding at March 31, 2017 5,058,818 42.02 Restricted Stock Units Number of Units Weighted Average Grant Date Fair Value Unvested at December 31, 2016 364,403 $ 52.85 Granted 2,063 44.30 Vested (326 ) 62.73 Forfeited (18,535 ) 57.81 Unvested at March 31, 2017 347,605 52.47

STOCKHOLDERS' EQUITY (Tables)

STOCKHOLDERS' EQUITY (Tables)	3 Months Ended
	Mar. 31, 2017
Stockholders' Equity Note [Abstract]
Schedule of accumulated other comprehensive income (loss)	The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands): Three Months Ended Net unrealized gains (losses) from available for sale investments: 2017 2016 Balance at beginning of period $ (30 ) $ (52 ) Other comprehensive income (loss) before reclassifications (52 ) 101 Amounts reclassified from accumulated other comprehensive income (loss) — — Balance at end of period $ (82 ) $ 49

NET INCOME (LOSS) PER SHARE (Ta

NET INCOME (LOSS) PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2017
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 three months ended March 31, 2017 and 2016 (in thousands, except per share amounts): Three Months Ended 2017 2016 Numerator: Net loss $ (19,866 ) $ (3,854 ) Denominator: Weighted average common shares outstanding 37,998 37,020 Net loss per share: Basic and diluted net loss per common share $ (0.52 ) $ (0.10 )
Schedule of potential dilutive effect of the securities excluded from the calculation of diluted loss per share	The following outstanding stock options, RSUs, conversion premiums on the Company’s convertible senior notes, warrants and ESPP purchase options are antidilutive in the periods presented (in thousands): Three Months Ended 2017 2016 Weighted average number of stock options 5,112 4,324 Weighted average number of RSUs 353 205 Conversion premium on the 2019 Notes 1,624 2,749 Weighted average number of warrants — 3 Weighted average ESPP purchase options 38 23 Total 7,127 7,304

TAXES (Tables)

TAXES (Tables)	3 Months Ended
	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Schedule of Income before Income Tax, Domestic and Foreign	Income (loss) before income taxes is as follows (in thousands): Three Months Ended 2017 2016 Loss before income taxes: Domestic $ (19,320 ) $ (3,499 ) Foreign (516 ) (323 ) Total loss before income taxes $ (19,836 ) $ (3,822 )

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum lease payments	As of March 31, 2017 , aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands): Year Aggregate Minimum Payments 2017 (remaining nine months) $ 5,925 2018 8,063 2019 8,272 2020 6,389 2021 1,207 2022 through 2028 7,545 Total $ 37,401

SUMMARY OF SIGNIFICANT ACCOUN33

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017customer	Mar. 31, 2016	Dec. 31, 2016USD ($)
Concentration risk by major customer
Concentration of Major Customers
Number of major customers | customer	3
Net revenue | Concentration risk by major customer
Concentration of Major Customers
Percentage of revenue from customers to total revenue	89.00%	88.00%
Net revenue | Concentration risk by major customer | Largest customer
Concentration of Major Customers
Percentage of revenue from customers to total revenue	35.00%	33.00%
Net revenue | Concentration risk by major customer | Second largest customer
Concentration of Major Customers
Percentage of revenue from customers to total revenue	29.00%	28.00%
Net revenue | Concentration risk by major customer | Third largest customer
Concentration of Major Customers
Percentage of revenue from customers to total revenue	25.00%	27.00%
Long-term debt
Concentration of Major Customers
Debt issuance costs reclassified (from) to | $			$ 1.9

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Inventory Valuation Reserves	$ 21,300
Raw materials	12,966	$ 11,742
Work-in-process	7,709	11,621
Finished goods	9,636	7,915
Total	$ 30,311	$ 31,278

FIXED ASSETS (Details)

FIXED ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
FIXED ASSETS
Total	$ 143,183		$ 138,526
Less: accumulated depreciation	(40,612)		(37,510)
Fixed assets, net	102,571		101,016
Depreciation expense	3,100	$ 100
Capitalized interest (Note 4)	212	$ 270
Foreign Property, Plant and Equipment, Net	37,000		33,700
Machinery and laboratory equipment
FIXED ASSETS
Total	34,399		34,309
Leasehold improvements
FIXED ASSETS
Total	33,814		33,787
Computer equipment and software
FIXED ASSETS
Total	6,509		5,623
Office furniture and equipment
FIXED ASSETS
Total	1,606		1,606
Construction in progress
FIXED ASSETS
Total	$ 66,855		$ 63,201

GOODWILL AND INTANGIBLE ASSET36

GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016	Apr. 30, 2012
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	$ 48,829,000	$ 46,737,000	$ 8,000,000
Goodwill recorded for the percentage payments on net sales of EXPAREL collected	24,900,000
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
Milestone payments for EXPAREL agreed in connection with acquisition	8,000,000
Annual net sales threshold	100,000,000
Payment Obligation Arising Due to Net Sales Collected Threshold of $100 Million	8,000,000
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
Net Sales Collected Threshold Which Triggers a Payment Obligation	250,000,000
Contingent liability for milestone achievement	8,000,000
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 ASSET37

GOODWILL AND INTANGIBLE ASSETS (Details 2) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Goodwill [Roll Forward]
Balance at December 31, 2016	$ 46,737
Percentage payments on collections of net sales of DepoBupivacaine products	2,092
Balance at March 31, 2017	$ 48,829

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Settlement Period - Convertible Debt Conversion Request	40 days
Convertible Senior Notes Due 2019
Debt Instrument [Line Items]
Total debt, net of debt discount and deferred financing costs	$ 800
Unsecured Debt | Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Convertible senior notes, gross	345,000	$ 0
Deferred financing costs	(8,661)	0
Discount on debt	(70,347)	0
Total debt, net of debt discount and deferred financing costs	265,992	0
Unsecured Debt | Convertible Senior Notes Due 2019
Debt Instrument [Line Items]
Convertible senior notes, gross	819	118,531
Deferred financing costs	(8)	(1,276)
Discount on debt	(52)	(8,517)
Total debt, net of debt discount and deferred financing costs	$ 759	$ 108,738

DEBT (Details 2)

DEBT (Details 2) $ / shares in Units, shares in Millions	Mar. 13, 2017USD ($)$ / shares	Feb. 01, 2017d	Jan. 23, 2013USD ($)$ / shares	Mar. 31, 2017USD ($)$ / sharesshares	Mar. 31, 2017USD ($)d$ / shares	Mar. 31, 2016USD ($)	Mar. 07, 2017$ / shares	Dec. 31, 2016USD ($)
DEBT AND FINANCING OBLIGATIONS
Closing sale price (in dollars per share) | $ / shares				$ 45.6	$ 45.6
Estimated conversion value				$ 700,000	$ 700,000
Shares issued to settle the conversion premium | shares				2.5
Loss on early extinguishment of debt				$ 3,700,000	$ 3,721,000	$ 0
Convertible debt, threshold percentage of stock price trigger					130.00%
Convertible debt, threshold trading days | d					20
Convertible debt, threshold consecutive trading days					30 days
Repayments of debt					$ 117,712,000	$ 0
Convertible Senior Notes Due 2022
DEBT AND FINANCING OBLIGATIONS
Initial conversion rate of common stock per $1000 of principal amount of Notes (in shares)	14.9491
Initial conversion price of notes into common stock (in dollars per share) | $ / shares	$ 66.89		$ 66.89
Convertible debt, premium on common stock	37.50%
Closing sale price (in dollars per share) | $ / shares							$ 48.65
Debt redemption price due to fundamental change as percentage of principal amount	100.00%
Liability component of convertible debt	$ 274,100,000
Convertible debt, assumed borrowing rate	7.45%
Convertible debt, carrying amount of equity component	$ 70,900,000
Total transaction costs related to the issuance of Notes	$ 11,000,000
Debt issuance costs, amortization period	5 years
Debt customary events of default, percentage of principal and accrued and unpaid interest due and payable upon default	100.00%
Convertible Senior Notes Due 2022 | Conversion terms prior to close of business on business day immediately proceeding October 1, 2021
DEBT AND FINANCING OBLIGATIONS
Convertible debt, common stock closing sales price minimum, number of trading days	20 days
Convertible debt, number of consecutive trading days	30 days
Convertible debt, common stock closing sales price minimum as percentage of conversion price	130.00%
Convertible debt, number of consecutive business days after consecutive trading day period	5 days
Convertible debt, period of consecutive trading days	5 days
Principal amount used for debt instrument conversion ratio	$ 1,000			1,000	1,000
Convertible debt, trading price as percentage of product of last reported common stock sale price and conversion rate maximum	98.00%
Market price per $1000 of principal amount of notes				1,037	1,037
Convertible Senior Notes Due 2022 | Debt Redemption Terms on or after April 1, 2020
DEBT AND FINANCING OBLIGATIONS
Convertible debt, common stock closing sales price minimum, number of trading days	20 days
Convertible debt, number of consecutive trading days	30 days
Convertible debt, common stock closing sales price minimum as percentage of conversion price	130.00%
Convertible debt, number of trading days prior to date on which entity provides notice of redemption	5 days
Debt Instrument, Percentage of Principal Amount for Computation of Redemption Price	100.00%
Convertible Senior Notes Due 2019
DEBT AND FINANCING OBLIGATIONS
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	$ 24.82
Debt repurchased face amount				$ 117,700,000	$ 117,700,000
Debt repurchase amount				118,200,000	118,200,000
Convertible notes outstanding amount				800,000	800,000
Repayments of debt					800,000
Convertible Senior Notes Due 2019 | Conversion terms, prior to close of business on business day immediately preceding August 1, 2018
DEBT AND FINANCING OBLIGATIONS
Principal amount used for debt instrument conversion ratio				1,000	1,000
Market price per $1000 of principal amount of notes				1,914	1,914
Estimated conversion value				1,837	1,837
Convertible Senior Notes Due 2019 | Debt Redemption Terms on or after February 1, 2017
DEBT AND FINANCING OBLIGATIONS
Convertible debt, number of trading days prior to date on which entity provides notice of redemption		5 days
Convertible debt, threshold percentage of stock price trigger		130.00%
Convertible debt, threshold trading days | d		20
Convertible debt, threshold consecutive trading days		30 days
Unsecured Debt | Convertible Senior Notes Due 2022
DEBT AND FINANCING OBLIGATIONS
Debt issued in private placement	$ 345,000,000
Stated interest rate (as a percent)	2.375%
Net proceeds from issuance of convertible debt	$ 334,000,000
Convertible notes outstanding amount				265,992,000	265,992,000			$ 0
Unsecured Debt | Convertible Senior Notes Due 2019
DEBT AND FINANCING OBLIGATIONS
Debt issued in private placement			$ 120,000,000
Stated interest rate (as a percent)			3.25%
Convertible notes outstanding amount				$ 759,000	$ 759,000			$ 108,738,000

DEBT (Details 3)

DEBT (Details 3) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Debt Disclosure [Abstract]
Contractual interest expense	$ 1,189	$ 963
Amortization of debt issuance costs	201	153
Amortization of debt discount	1,411	1,022
Capitalized interest (Note 4)	(212)	(270)
Total	$ 2,589	$ 1,868
Effective interest rate on convertible senior notes	7.48%	7.22%

FINANCIAL INSTRUMENTS (Details)

FINANCIAL INSTRUMENTS (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions	Jan. 23, 2013	Mar. 31, 2017	Mar. 13, 2017	Mar. 07, 2017
Fair Value Measurements
Closing sale price (in dollars per share)		$ 45.6
Debt Instrument, Convertible, Conversion Premium, Shares		0.1
Estimated conversion value		$ 700
Convertible Senior Notes Due 2022
Fair Value Measurements
Closing sale price (in dollars per share)				$ 48.65
Initial conversion price of notes into common stock (in dollars per share)	$ 66.89		$ 66.89
Convertible Senior Notes Due 2022 | Level 1
Fair Value Measurements
Convertible senior notes		0
Convertible Senior Notes Due 2022 | Level 2
Fair Value Measurements
Convertible senior notes		357,722
Convertible Senior Notes Due 2022 | Level 3
Fair Value Measurements
Convertible senior notes		0
Convertible Senior Notes Due 2022 | Carrying Value
Fair Value Measurements
Convertible senior notes		$ 265,992
Convertible Senior Notes Due 2019
Fair Value Measurements
Initial conversion price of notes into common stock (in dollars per share)	$ 24.82	$ 24.82
Convertible Senior Notes Due 2019 | Level 1
Fair Value Measurements
Convertible senior notes		$ 0
Convertible Senior Notes Due 2019 | Level 2
Fair Value Measurements
Convertible senior notes		1,567
Convertible Senior Notes Due 2019 | Level 3
Fair Value Measurements
Convertible senior notes		0
Convertible Senior Notes Due 2019 | Carrying Value
Fair Value Measurements
Convertible senior notes		$ 759
Maximum | Convertible Senior Notes Due 2022
Fair Value Measurements
Debt Instrument, Convertible, Conversion Premium, Shares	5.2
Maximum | Convertible Senior Notes Due 2019
Fair Value Measurements
Debt Instrument, Convertible, Conversion Premium, Shares	0.1

FINANCIAL INSTRUMENTS (Details

FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value Measurements
Cost	$ 274,811	$ 136,683
Gross Unrealized Gains	14	19
Gross Unrealized Losses	(96)	(49)
Level 2
Fair Value Measurements
Fair Value	274,729	136,653
Short-term Investments | Asset-backed securities
Fair Value Measurements
Cost	46,285	9,012
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(9)	(2)
Short-term Investments | Asset-backed securities | Level 2
Fair Value Measurements
Fair Value	46,276	9,010
Short-term Investments | Commercial paper
Fair Value Measurements
Cost	45,232	39,530
Gross Unrealized Gains	6	8
Gross Unrealized Losses	(6)	(15)
Short-term Investments | Commercial paper | Level 2
Fair Value Measurements
Fair Value	45,232	39,523
Short-term Investments | Corporate bonds
Fair Value Measurements
Cost	183,294	88,141
Gross Unrealized Gains	8	11
Gross Unrealized Losses	(81)	(32)
Short-term Investments | Corporate bonds | Level 2
Fair Value Measurements
Fair Value	$ 183,221	$ 88,120

FINANCIAL INSTRUMENTS (Detail43

FINANCIAL INSTRUMENTS (Details 3)	3 Months Ended	12 Months Ended
	Mar. 31, 2017USD ($)customer	Dec. 31, 2016USD ($)customer
Credit Risk
Number of major customers | customer	3	3
Amount of allowance for doubtful accounts | $	$ 0	$ 0
Accounts receivable | Credit risk | Major customer one
Credit Risk
Concentration risk (as a percent)	35.00%	36.00%
Accounts receivable | Credit risk | Major customer two
Credit Risk
Concentration risk (as a percent)	30.00%	29.00%
Accounts receivable | Credit risk | Major customer three
Credit Risk
Concentration risk (as a percent)	25.00%	25.00%

STOCK PLANS (Details)

STOCK PLANS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-Based Compensation
Stock-based compensation expense	$ 7,400	$ 8,490
Compensation expense from stock options, employees	5,917	6,856
Compensation expense from stock options, non-employee awards	53	274
Restricted Stock or Unit Expense	1,223	1,085
Compensation expense from employee stock purchase plan	207	275
Stock-based compensation	$ 7,400	8,490
Purchase price of common stock, ESPP (as a percent)	85.00%
Shares issued under employee stock purchase plan (shares)	0
Cost of goods sold
Share-Based Compensation
Stock-based compensation expense	$ 1,375	1,549
Research and development
Share-Based Compensation
Stock-based compensation expense	658	893
Selling, general and administrative
Share-Based Compensation
Stock-based compensation expense	$ 5,367	$ 6,048

STOCK PLANS (Details 2)

STOCK PLANS (Details 2)	3 Months Ended
	Mar. 31, 2017$ / sharesshares
Stock Incentive Plans
Shares issued under employee stock purchase plan (shares) | shares	0
Weighted average fair value (in dollars per share) | $ / shares	$ 22.56
Employee Stock Option
Stock Incentive Plans
Outstanding beginning of period (in shares) | shares	5,207,743
Granted (in shares) | shares	63,650
Exercised (in shares) | shares	(62,056)
Forfeited (in shares) | shares	(122,168)
Expired (in shares) | shares	(28,351)
Outstanding end of period (in shares) | shares	5,058,818
Outstanding beginning of period (in dollars per share) | $ / shares	$ 42.16
Granted (in dollars per share) | $ / shares	43.99
Exercised (in dollars per share) | $ / shares	13.73
Forfeited (in dollars per share) | $ / shares	55.49
Expired (in dollars per share) | $ / shares	75.63
Outstanding at end of period (in dollars per share) | $ / shares	$ 42.02

STOCK PLANS (Details 3)

STOCK PLANS (Details 3)	3 Months Ended
	Mar. 31, 2017$ / sharesshares
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Risk free interest rate (as a percent)	2.09%
Expected volatility (as a percent)	54.00%
Expected term of options	5 years 9 months
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested at beginning of period (shares) | shares	364,403
Granted (shares) | shares	2,063
Vested (shares) | shares	(326)
Forfeited (shares) | shares	(18,535)
Unvested at end of period (shares) | shares	347,605
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Unvested at beginning of period (usd per share) | $ / shares	$ 52.85
Granted (usd per share) | $ / shares	44.30
Vested (usd per share) | $ / shares	62.73
Forfeited (usd per share) | $ / shares	57.81
Unvested at end of period (usd per share) | $ / shares	$ 52.47

STOCKHOLDERS' EQUITY (Details)

STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances at beginning of period	$ (30)
Balance at end of period	(82)
Accumulated Net Unrealized Investment Gain (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances at beginning of period	(30)	$ (52)
Other comprehensive loss before reclassifications	(52)	101
Amounts reclassified from accumulated other comprehensive income (loss)	0	0
Balance at end of period	$ (82)	$ 49

NET INCOME (LOSS) PER SHARE (De

NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator for basic and diluted loss per share
Net loss	$ (19,866)	$ (3,854)
Denominator
Weighted Average Number of Shares Outstanding, Basic (shares)	37,998	37,020
Earnings Per Share, Basic	$ (0.52)	$ (0.10)

NET INCOME (LOSS) PER SHARE (49

NET INCOME (LOSS) PER SHARE (Details 2) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
EARNINGS PER SHARE
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	7,127	7,304
Employee Stock Option
EARNINGS PER SHARE
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,112	4,324
Restricted Stock Units (RSUs)
EARNINGS PER SHARE
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	353	205
Conversion premium on the Notes
EARNINGS PER SHARE
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,624	2,749
Warrants
EARNINGS PER SHARE
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	3
Employee Stock
EARNINGS PER SHARE
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	38	23

TAXES (Details)

TAXES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	$ (19,320)	$ (3,499)
Income (Loss) from Continuing Operations before Income Taxes, Foreign	(516)	(323)
Income (Loss) from Continuing Operations before Income Taxes, Total	(19,836)	(3,822)
Income Tax Provision	100	$ 100
Deferred Tax Liability, Stock-Based Compensation	$ 26,500

COMMITMENTS AND CONTINGENCIES51

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	Mar. 31, 2017USD ($)
Commitments and Contingencies Disclosure [Abstract]
Contract termination fee	$ 7,100
Future minimum lease payments
2017 (remaining nine months)	5,925
2,017	8,063
2,018	8,272
2,019	6,389
2,020	1,207
2022 through 2028	7,545
Total	37,401
Contract Termination Fee, Current Portion	3,500
Contract Termination Fee, Long-Term Portion	$ 1,200

COMMERCIAL PARTNERS AND OTHER52

COMMERCIAL PARTNERS AND OTHER AGREEMENTS (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Oct. 31, 2013	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Agreement term	5 years
Contract termination fee		$ 7.1
Fee payment period		2 years
Contract Termination Fee, Current Portion		$ 3.5
Contract Termination Fee, Long-Term Portion		$ 1.2