Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 12, 2016 | Jun. 30, 2015 | |
Entity Registrant Name | IRONWOOD PHARMACEUTICALS INC | ||
Entity Central Index Key | 1,446,847 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,647,058,706 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Class A common stock | |||
Entity Common Stock, Shares Outstanding | 127,453,930 | ||
Class B common stock | |||
Entity Common Stock, Shares Outstanding | 15,934,458 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 261,287 | $ 74,297 |
Available-for-sale securities | 178,107 | 174,037 |
Accounts receivable | 2,884 | 10 |
Related party accounts receivable, net | 51,634 | 25,829 |
Inventory | 4,954 | |
Prepaid expenses and other current assets | 6,293 | 9,180 |
Total current assets | 500,205 | 288,307 |
Restricted cash | 8,747 | 8,147 |
Property and equipment, net | 21,075 | 29,826 |
Convertible note hedges | 86,466 | |
Other assets | 2,628 | 3,042 |
Total assets | 619,121 | 329,322 |
Current liabilities: | ||
Accounts payable | 8,586 | 9,754 |
Related party accounts payable, net | 3 | 8 |
Accrued research and development costs | 4,245 | 3,574 |
Accrued expenses and other current liabilities | 23,301 | 22,612 |
Current portion of capital lease obligations | 2,631 | 1,152 |
Current portion of deferred rent | 5,544 | 4,992 |
Current portion of deferred revenue | 7,191 | 7,191 |
Current portion of PhaRMA notes payable | 24,964 | 11,258 |
Total current liabilities | 76,465 | 60,541 |
Capital lease obligations, net of current portion | 306 | 2,571 |
Deferred rent, net of current portion | 6,395 | 10,522 |
Deferred revenue, net of current portion | 1,798 | 8,989 |
Note hedge warrants | 75,328 | |
Convertible senior notes | 220,620 | |
PhaRMA Notes payable, net of current portion | 132,964 | $ 158,147 |
Other liabilities | $ 10,120 | |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 75,000,000 shares authorized, no shares issued and outstanding | ||
Additional paid-in capital | $ 1,205,183 | $ 1,055,876 |
Accumulated deficit | (1,110,115) | (967,446) |
Accumulated other comprehensive loss | (86) | (19) |
Total stockholders' equity | 95,125 | 88,552 |
Total liabilities and stockholders' equity | 619,121 | 329,322 |
Class A common stock | ||
Stockholders' equity: | ||
Common stock | 127 | 125 |
Class B common stock | ||
Stockholders' equity: | ||
Common stock | $ 16 | $ 16 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 75,000,000 | 75,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 127,371,478 | 124,915,658 |
Common stock, shares outstanding | 127,371,478 | 124,915,658 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 15,870,356 | 15,907,272 |
Common stock, shares outstanding | 15,870,356 | 15,907,272 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Condensed Consolidated Statements of Operations | |||
Collaborative arrangements revenue | $ 149,555 | $ 76,436 | $ 22,881 |
Cost and expenses: | |||
Cost of revenue | 12 | 5,291 | 7,203 |
Write-down of inventory to net realizable value and loss on non-cancelable purchase commitments | 17,638 | 20,292 | |
Research and development | 108,746 | 101,890 | 102,378 |
Selling, general and administrative | 125,247 | 118,333 | 123,228 |
Collaboration expense | 42,074 | ||
Total cost and expenses | 251,643 | 245,806 | 274,883 |
Loss from operations | (102,088) | (169,370) | (252,002) |
Other (expense) income: | |||
Interest expense | (31,096) | (21,166) | (21,002) |
Interest and investment income | 443 | 257 | 192 |
Loss on derivatives | (9,928) | ||
Other income | 661 | ||
Other expense, net | (40,581) | (20,248) | (20,810) |
Net loss | $ (142,669) | $ (189,618) | $ (272,812) |
Net loss per share - basic and diluted | $ (1) | $ (1.39) | $ (2.35) |
Weighted average number of common shares used in net loss per share - basic and diluted: | 142,155 | 136,811 | 115,852 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Condensed Consolidated Statements of Comprehensive Loss | |||
Net loss | $ (142,669) | $ (189,618) | $ (272,812) |
Other comprehensive loss: | |||
Unrealized losses on available-for-sale securities | (67) | (21) | (3) |
Total other comprehensive loss | (67) | (21) | (3) |
Comprehensive loss | $ (142,736) | $ (189,639) | $ (272,815) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common StockClass A common stock | Common StockClass B common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income (loss) | Total |
Balance at Dec. 31, 2012 | $ 78 | $ 30 | $ 648,955 | $ (505,016) | $ 5 | $ 144,052 |
Balance (in shares) at Dec. 31, 2012 | 78,253,074 | 29,512,253 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options and employee stock purchase plan | $ 1 | $ 1 | 9,295 | 9,297 | ||
Issuance of common stock upon exercise of stock options and employee stock purchase plan (in shares) | 645,196 | 1,538,887 | ||||
Issuance of common stock awards | 28 | 28 | ||||
Issuance of common stock awards (in shares) | 10,772 | |||||
Issuance of common stock upon public offering, net of offering costs of $10.8 million and 7.9 million for the year ended 2014 and 2013, respectively | $ 11 | 137,755 | 137,766 | |||
Issuance of common stock upon public offering, net of offering costs of $10.8 million and 7.9 million for the year ended 2014 and 2013, respectively | 11,204,948 | |||||
Conversion of Class B common stock to Class A common stock | $ 13 | $ (13) | ||||
Conversion of Class B common stock to Class A common stock (in shares) | 12,689,103 | (12,689,103) | ||||
Share-based compensation expense related to issuance of stock options to non-employees | 272 | 272 | ||||
Share-based compensation expense related to share-based awards to employees and employee stock purchase plan | 19,624 | 19,624 | ||||
Restricted common stock no longer subject to repurchase | 1 | 1 | ||||
Unrealized losses on short-term investments | (3) | (3) | ||||
Net loss | (272,812) | (272,812) | ||||
Balance at Dec. 31, 2013 | $ 103 | $ 18 | 815,930 | (777,828) | 2 | 38,225 |
Balance (in shares) at Dec. 31, 2013 | 102,803,093 | 18,362,037 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options and employee stock purchase plan | $ 2 | $ 2 | 23,328 | 23,332 | ||
Issuance of common stock upon exercise of stock options and employee stock purchase plan (in shares) | 1,705,752 | 1,876,880 | ||||
Issuance of common stock awards | 22 | 22 | ||||
Issuance of common stock awards (in shares) | 290,843 | |||||
Issuance of common stock upon public offering, net of offering costs of $10.8 million and 7.9 million for the year ended 2014 and 2013, respectively | $ 16 | 190,412 | 190,428 | |||
Issuance of common stock upon public offering, net of offering costs of $10.8 million and 7.9 million for the year ended 2014 and 2013, respectively | 15,784,325 | |||||
Conversion of Class B common stock to Class A common stock | $ 4 | $ (4) | ||||
Conversion of Class B common stock to Class A common stock (in shares) | 4,331,645 | (4,331,645) | ||||
Share-based compensation expense related to issuance of stock options to non-employees | 2,618 | 2,618 | ||||
Share-based compensation expense related to share-based awards to employees and employee stock purchase plan | 23,566 | 23,566 | ||||
Unrealized losses on short-term investments | (21) | (21) | ||||
Net loss | (189,618) | (189,618) | ||||
Balance at Dec. 31, 2014 | $ 125 | $ 16 | 1,055,876 | (967,446) | (19) | 88,552 |
Balance (in shares) at Dec. 31, 2014 | 124,915,658 | 15,907,272 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options and employee stock purchase plan | $ 1 | $ 1 | 13,619 | 13,621 | ||
Issuance of common stock upon exercise of stock options and employee stock purchase plan (in shares) | 972,325 | 1,293,032 | ||||
Issuance of common stock awards | 24 | 24 | ||||
Issuance of common stock awards (in shares) | 153,547 | |||||
Conversion of Class B common stock to Class A common stock | $ 1 | $ (1) | ||||
Conversion of Class B common stock to Class A common stock (in shares) | 1,329,948 | (1,329,948) | ||||
Share-based compensation expense related to share-based awards to employees and employee stock purchase plan | 25,448 | 25,448 | ||||
Equity component of convertible debt | 114,199 | 114,199 | ||||
Equity component of deferred financing costs for convertible debt | (3,983) | (3,983) | ||||
Unrealized losses on short-term investments | (67) | (67) | ||||
Net loss | (142,669) | (142,669) | ||||
Balance at Dec. 31, 2015 | $ 127 | $ 16 | $ 1,205,183 | $ (1,110,115) | $ (86) | $ 95,125 |
Balance (in shares) at Dec. 31, 2015 | 127,371,478 | 15,870,356 |
Consolidated Statements of Sto7
Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statements of Stockholders' Equity | ||
Issuance of common stock upon public offering, offering costs | $ 10.8 | $ 7.9 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net loss | $ (142,669) | $ (189,618) | $ (272,812) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 11,630 | 12,331 | 11,729 |
(Gain) loss on disposal of property and equipment | (196) | 119 | 610 |
Share-based compensation expense | 25,469 | 26,184 | 19,829 |
Change in fair value of note hedge warrants | 4,479 | ||
Change in fair value of convertible note hedges | 5,449 | ||
Write-down of inventory to net realizable value | 17,638 | 20,292 | |
Loss on facility subleases | 296 | 2,573 | |
Accretion of discount/ premium on investment securities | 1,114 | 1,085 | 1,254 |
Non-cash interest expense | 8,102 | 1,566 | 1,719 |
Changes in assets and liabilities: | |||
Accounts receivable and related party accounts receivable | (28,679) | (23,680) | (1,726) |
Restricted cash | (600) | (500) | |
Prepaid expenses and other current assets | 2,568 | (3,947) | (52) |
Inventory | (3,078) | (11,915) | |
Other assets | 414 | (2,876) | 116 |
Accounts payable, related party accounts payable and accrued expenses | (1,551) | 1,425 | (11,724) |
Accrued research and development costs | 671 | 162 | (2,252) |
Deferred revenue | (7,191) | 744 | (4,915) |
Deferred rent | (3,871) | 1,811 | (2,716) |
Other liabilities | (661) | ||
Net cash used in operating activities | (106,927) | (155,568) | (273,355) |
Cash flows from investing activities: | |||
Purchases of available-for-sale securities | (281,958) | (253,995) | (287,943) |
Sales and maturities of available-for-sale securities | 276,707 | 200,964 | 196,102 |
Purchases of property and equipment | (4,049) | (3,538) | (9,592) |
Proceeds from sale of property and equipment | 147 | ||
Net cash used in by investing activities | (9,153) | (56,569) | (101,433) |
Cash flows from financing activities: | |||
Proceeds from issuance of convertible senior notes | 335,699 | ||
Costs associated with issuance of convertible senior notes | (11,730) | ||
Proceeds from issuance of common stock | 190,428 | 137,766 | |
Proceeds from issuance of PhaRMA notes payable | 175,000 | ||
Costs associated with issuance of PhaRMA notes payable | (7,717) | ||
Proceeds from issuance of note hedge warrants | 70,849 | ||
Purchase of Convertible Note Hedges | (91,915) | ||
Proceeds from exercise of stock options, and shares issued under employee stock purchase plan | 14,196 | 22,741 | 9,297 |
Payments on capital lease obligations | (1,317) | (1,062) | (768) |
Principal payments on PhaRMA notes payable | (12,712) | (1,163) | |
Net cash provided by financing activities | 303,070 | 210,944 | 313,578 |
Net increase (decrease) in cash and cash equivalents | 186,990 | (1,193) | (61,210) |
Cash and cash equivalents, beginning of period | 74,297 | 75,490 | 136,700 |
Cash and cash equivalents, end of period | 261,287 | 74,297 | 75,490 |
Supplemental cash flow disclosure: | |||
Cash paid for interest | 22,742 | 19,606 | 18,428 |
Non-cash investing activities: | |||
Purchases under capital leases | 2,957 | 766 | 4,472 |
Disposals under capital leases | (2,529) | ||
Fixed asset purchases in accounts payable and accrued expenses | $ 98 | $ 1,592 | $ 261 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2015 | |
Nature of Business | |
Nature of Business | 1. Nature of Business Ironwood Pharmaceuticals, Inc. (the "Company") is a commercial biotechnology company leveraging its proven development and commercial capabilities as it seeks to bring multiple medicines to patients. The Company is advancing two therapeutic platforms, which include product opportunities in areas of large unmet need, including irritable bowel syndrome with constipation ("IBS-C) and chronic idiopathic constipation ("CIC"), vascular and fibrotic diseases, and refractory gastroesophageal reflux disease ("GERD"). The Company's first and to-date only commercial product, linaclotide, is available to adult men and women suffering from IBS-C or CIC in the United States ("U.S.") under the trademarked name LINZESS®, and is available to adult men and women suffering from IBS-C in certain European countries under the trademarked name CONSTELLA®. The Company and its U.S. partner Allergan plc (together with its affiliates, "Allergan"), formerly Actavis plc, began commercializing LINZESS in the U.S. in December 2012. Under the Company's collaboration with Allergan for North America, total net sales of LINZESS in the U.S., as recorded by Allergan, are reduced by commercial costs incurred by each party, and the resulting amount is shared equally between the Company and Allergan. The Company's former European partner, Almirall, S.A. ("Almirall"), began commercializing CONSTELLA in Europe for the symptomatic treatment of moderate to severe IBS-C in adults in the second quarter of 2013. In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan, and the Company and Allergan entered into an amendment to the European license agreement (Note 4). Currently, CONSTELLA is commercially available in certain European countries, including the United Kingdom, Italy and Spain. Within the Company's gastrointestinal ("GI") platform, the Company and Allergan are exploring development opportunities to enhance the clinical profile of LINZESS by seeking to expand its utility within IBS-C and CIC, as well as studying linaclotide in additional indications and populations to assess its potential to treat various GI conditions. The Company and Allergan are also developing linaclotide colonic release, a targeted oral delivery formulation of linaclotide designed to potentially improve abdominal pain relief in adult IBS-C patients. The Company is also exploring linaclotide colonic release for use in additional GI disorders where lower abdominal pain is a predominant symptom such as IBS-mixed ("IBS-M"), ulcerative colitis and diverticulitis, among others. Linaclotide is also being developed and commercialized in other parts of the world by certain of the Company's partners. In addition, the Company is advancing other GI development programs for indications such as refractory GERD and diabetic gastroparesis. Within the Company's vascular/fibrotic platform, it is leveraging its pharmacological expertise in guanylate cyclase ("GC") pathways gained through the discovery and development of linaclotide to advance development programs targeting soluble guanylate cyclase ("sGC"). sGC is a validated mechanism with the potential for broad therapeutic utility and multiple opportunities for product development in vascular and fibrotic diseases, as well as other therapeutic areas. In addition to the U.S. and Europe, the Company has entered into partnerships to develop and commercialize linaclotide in other parts of the world. In December 2013 and February 2014, linaclotide was approved in Canada and Mexico, respectively, as a treatment for adult women and men suffering from IBS-C or CIC. Allergan has exclusive rights to commercialize linaclotide in Canada as CONSTELLA and, through a sublicense from Allergan, Almirall had exclusive rights to commercialize linaclotide in Mexico as LINZESS. In May 2014, Allergan began commercializing CONSTELLA in Canada and in June 2014, Almirall began commercializing LINZESS in Mexico. In October 2015, Almirall and Allergan terminated the sublicense arrangement with respect to Mexico, returning the exclusive rights to commercialize CONSTELLA in Mexico to Allergan. CONSTELLA continues to be available to adult IBS-C patients in Mexico. Astellas Pharma Inc. ("Astellas"), the Company's partner in Japan, is developing linaclotide for the treatment of patients with IBS-C and chronic constipation in its territory. In November 2015, the Company and Astellas reported positive top-line data from Astellas' Phase III clinical trial of linaclotide in adult patients with IBS-C for Japan. In October 2012, the Company entered into a collaboration agreement with AstraZeneca AB ("AstraZeneca") to co-develop and co-commercialize linaclotide in China, Hong Kong and Macau, with AstraZeneca having primary responsibility for the local operational execution. In December 2015, the Company and AstraZeneca filed for approval with the China Food and Drug Administration ("CFDA") to market linaclotide in China. The Company continues to assess alternatives to bring linaclotide to IBS-C and CIC sufferers in the parts of the world outside of its partnered territories. In March 2015, the Company and Exact Sciences Corp, ("Exact Sciences"), entered into an agreement to co-promote Cologuard®, the first and only FDA-approved noninvasive stool DNA screening test for colorectal cancer, and in August 2015, the Company and Allergan entered into an agreement for the co-promotion of VIBERZI™ (eluxadoline) in the U.S., Allergan's treatment for adults suffering from IBS with diarrhea ("IBS-D"). In November 2015, Allergan and Pfizer Inc. entered into a definitive agreement providing for the combination of the two companies. The Company's collaboration for the development and commercialization of linaclotide, as well as the Company's agreement to co-promote VIBERZI, remains in effect. These agreements are more fully described in Note 4, Collaboration, License and Co-promotion Agreements , to these consolidated financial statements. In June 2015, the Company issued approximately $335.7 million in aggregate principal amount of 2.25% Convertible Senior Notes due 2022 (the "2022 Notes"). The Company received net proceeds of approximately $324.0 million from the sale of the 2022 Notes, after deducting fees and expenses of approximately $11.7 million (Note 10). The Company was incorporated in Delaware on January 5, 1998 as Microbia, Inc. On April 7, 2008, the Company changed its name to Ironwood Pharmaceuticals, Inc. To date, the Company has dedicated substantially all of its activities to the research, development and commercialization of linaclotide, as well as to the research and development of its other product candidates. The Company has incurred significant operating losses since its inception in 1998. As of December 31, 2015, the Company had an accumulated deficit of approximately $1.1 billion. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of Ironwood Pharmaceuticals, Inc. and its wholly owned subsidiaries, Ironwood Pharmaceuticals Securities Corporation and Ironwood Pharmaceuticals GmbH. All intercompany transactions and balances are eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles requires the Company's management to make estimates and judgments that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the amounts of revenues and expenses during the reported periods. On an on-going basis, the Company's management evaluates its estimates, judgments and methodologies. Significant estimates and assumptions in the consolidated financial statements include those related to revenue recognition, available-for-sale securities, inventory valuation, and related reserves; impairment of long-lived assets; initial valuation procedures for the issuance of convertible notes; fair value of derivatives; balance sheet classification of notes payable and convertible notes; income taxes, including the valuation allowance for deferred tax assets; research and development expenses; contingencies and share-based compensation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Cash and Cash Equivalents The Company considers all highly liquid investment instruments with a remaining maturity when purchased of three months or less to be cash equivalents. Investments qualifying as cash equivalents primarily consist of money market funds and U.S. government-sponsored securities. The carrying amount of cash equivalents approximates fair value. The amount of cash equivalents included in cash and cash equivalents was approximately $258.2 million and approximately $61.0 million at December 31, 2015 and 2014, respectively. Restricted Cash The Company is contingently liable under unused letters of credit with a bank, related to the Company's facility lease and automobile lease agreements, in the amount of approximately $8.7 million and approximately $8.1 million as of December 31, 2015 and 2014, respectively. As a result, the Company has restricted cash of approximately $8.7 million and approximately $8.1 million as of December 31, 2015 and 2014, respectively, securing these letters of credit. The cash will be restricted until the termination of the lease arrangements. Available-for-Sale Securities The Company classifies all short-term investments with a remaining maturity when purchased of greater than three months as available-for-sale. Available-for-sale securities are recorded at fair value, with the unrealized gains and losses reported in other comprehensive income (loss). The amortized cost of debt securities in this category is adjusted for the amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest and investment income. Realized gains and losses, interest, dividends, and declines in value judged to be other than temporary on available-for-sale securities are included in interest and investment income. The cost of securities sold is based on the specific identification method for purposes of recording realized gains and losses. To determine whether an other-than-temporary impairment exists, the Company considers whether it has the ability and intent to hold the investment until a market price recovery, and whether evidence indicating the recoverability of the cost of the investment outweighs evidence to the contrary. There were no other-than-temporary impairments for the years ended December 31, 2015, 2014 or 2013. Inventory Inventory is stated at the lower of cost or market with cost determined under the first-in, first-out basis. The Company evaluates inventory levels quarterly and any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired is written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. The Company also assesses, on a quarterly basis, whether it has any excess non-cancelable purchase commitments resulting from its minimum supply agreements with its suppliers of linaclotide active pharmaceutical ingredient ("API"). The Company relies on data from several sources to estimate the net realizable value of inventory and non-cancelable purchase commitments, including partner forecasts of projected inventory purchases that are received quarterly, the Company's internal forecasts and related process, historical sales by geographic region, and the status of and progress toward commercialization of linaclotide in partnered territories. The Company capitalizes inventories manufactured in preparation for initiating sales of a product candidate when the related product candidate is considered to have a high likelihood of regulatory approval and the related costs are expected to be recoverable through sales of the inventories. In determining whether or not to capitalize such inventories, the Company evaluates, among other factors, information regarding the product candidate's safety and efficacy, the status of regulatory submissions and communications with regulatory authorities and the outlook for commercial sales, including the existence of current or anticipated competitive drugs and the availability of reimbursement. In addition, the Company evaluates risks associated with manufacturing the product candidate, including the ability of the Company's third-party suppliers to complete the validation batches, and the remaining shelf life of the inventories. Costs associated with developmental products prior to satisfying the inventory capitalization criteria are charged to research and development expense as incurred. Concentrations of Suppliers The Company relies on third-party manufacturers and its collaboration partners to manufacture the linaclotide API and final linaclotide drug product. Currently, there are two third-party manufacturers approved for the production of the linaclotide API in three facilities. Each of Allergan and Astellas is responsible for drug product manufacturing of linaclotide into finished product for its respective territory. Under the Company's collaboration with AstraZeneca, the Company is responsible for drug product and finished goods manufacturing for China, Hong Kong and Macau. The Company also has an agreement with another independent third party to serve as a second source of drug product manufacturing of linaclotide for its partnered territories. If any of the Company's suppliers were to limit or terminate production or otherwise fail to meet the quality or delivery requirements needed to satisfy the supply commitments, the process of locating and qualifying alternate sources could require up to several months, during which time the Company's production could be delayed. Such delays could have a material adverse effect on the Company's business, financial position and results of operations. Accounts Receivable and Related Valuation Account The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding invoices and the overall quality and age of those invoices not specifically reviewed. The Company's receivables primarily relate to amounts reimbursed under its collaboration, license and co-promotion agreements. The Company believes that credit risks associated with these partners are not significant. To date, the Company has not had any write-offs of bad debt, and the Company did not have an allowance for doubtful accounts as of December 31, 2015 and 2014. Concentrations of Credit Risk Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents, restricted cash, available-for-sale securities, and accounts receivable. The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are subject to minimal credit risk. The Company's available-for-sale investments primarily consist of U.S. Treasury securities and certain U.S. government-sponsored securities and potentially subject the Company to concentrations of credit risk. The Company has adopted an investment policy which limits the amounts the Company may invest in any one type of investment, and requires all investments held by the Company to be at least A+ rated, thereby reducing credit risk exposure. Accounts receivable, including related party accounts receivable, primarily consist of amounts due under the linaclotide collaboration agreement with Allergan for North America, the linaclotide license agreement with Astellas for Japan and the co-promotion agreement with Exact Sciences for its Cologuard product (Note 4) for which the Company does not obtain collateral. Accounts receivable or payable to or from Allergan and Almirall are presented as related party transactions on the consolidated balance sheets as both entities own common stock of the Company. The percentages of revenue recognized from significant customers of the Company in the years ended December 31, 2015, 2014 and 2013 as well as the account receivable balances, net of any payables due, at December 31, 2015 and 2014 are included in the following table: Accounts Receivable Revenue December 31, Years Ended December 31, 2015 2014 2015 2014 2013 Collaborative Partner: Linaclotide Agreements: Allergan (North America) % % % % % Almirall (Europe) (1) — % — % — % % % Astellas (Japan) % — % % % % AstraZeneca (China, Hong Kong and Macau) (2) % — % % % % Co-promotion Agreements: Exact Sciences (Cologuard) % — % % — % — % (1) In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. There were no accounts receivable due from Almirall as of December 31, 2015. (2) At December 31, 2014, the Company was in a net payable position with AstraZeneca; as such, there was no accounts receivable due from AstraZeneca as of December 31, 2014. For the years ended December 31, 2015, 2014 and 2013, no additional customers accounted for more than 10% of the Company's revenue. Deferred Financing Costs Deferred financing costs include costs directly attributable to the Company's offerings of its equity securities and its debt financings. Costs attributable to equity offerings are charged against the proceeds of the offering once the offering is completed. Costs attributable to debt financings are deferred and amortized over the term of the debt using the effective interest rate method. A portion of the deferred financing cost incurred in connection with the 2022 Notes was deemed to relate to the equity component and was allocated to additional paid in capital. In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires debt issuance costs to be presented in an entity's balance sheet as a direct deduction from the associated debt liability. While the standard is retrospectively effective for annual reporting periods beginning after December 15, 2015, early adoption is permitted for any annual reporting period or interim period for which the entity's financial statements have not yet been issued. The Company elected early adoption of ASU 2015-03 in the three months ended June 30, 2015, which resulted in a balance sheet reclassification of issuance costs in connection with the 11% PhaRMA Notes due 2024 (the "PhaRMA Notes") of approximately $1.4 million recorded in prepaid expenses and other current assets and approximately $2.8 million in other assets to a reduction in PhaRMA Notes payable as of December 31, 2014. The financing costs incurred in connection with the issuance of the Company's 2022 Notes were recorded as a reduction in the carrying value of such debt in accordance with ASU 2015-03. The Company's adoption of this standard did not have a significant impact on its results of operations or cash flows for the year ended December 31, 2015. The 2022 Notes and PhaRMA Notes are more fully described in Note 10, Notes Payable , to these consolidated financial statements. Derivative Assets and Liabilities In June 2015, in connection with the issuance of the 2022 Notes, the Company entered into convertible note hedge transactions (the "Convertible Note Hedges"). Concurrently with entering into the Convertible Note Hedges, the Company also entered into certain warrant transactions in which it sold note hedge warrants (the "Note Hedge Warrants") to the Convertible Note Hedge counterparties to acquire 20,249,665 shares of the Company's Class A common stock, subject to customary anti-dilution adjustments (Note 10). These instruments are derivative financial instruments under Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging ("ASC 815"). These derivatives are recorded as assets or liabilities at fair value each reporting period and the fair value is determined using the Black-Scholes option-pricing model. The changes in fair value are recorded as a component of other (expense) income in the consolidated statements of operations. Significant inputs used to determine the fair value include the price per share of the Company's Class A common stock on the date of valuation, time to maturity of the derivative instruments, the strike prices of the derivative instruments, the risk-free interest rate, and the volatility of the Company's Class A common stock. Changes to these inputs could materially affect the valuation of the Convertible Note Hedges and Note Hedge Warrants in future periods. Revenue Recognition The Company's revenue is generated primarily through collaborative research and development, licensing and co-promotion agreements. The terms of these agreements contain multiple deliverables which may include (i) licenses, (ii) research and development activities, including participation on joint steering committees, (iii) the manufacture of finished drug product, API, or development materials for a partner which are reimbursed at a contractually determined rate, and (iv) co-promotion activities by the Company's clinical sales specialists. Non-refundable payments to the Company under these agreements may include (i) up-front license fees, (ii) payments for research and development activities, (iii) payments for the manufacture of finished drug product, API, or development materials, (iv) payments based upon the achievement of certain milestones, (v) payments for sales detailing, promotional support services and medical education initiatives, and (vi) royalties on product sales. Additionally, the Company may receive its share of the net profits or bear its share of the net losses from the sale of linaclotide in the U.S. and for China, Hong Kong and Macau through its collaborations with Allergan and AstraZeneca, respectively. At December 31, 2015, the Company had collaboration agreements with Allergan (North America) and AstraZeneca (China, Hong Kong and Macau), as well as license agreements with Allergan (Europe) and Astellas (Japan). Additionally, the Company had co-promotion agreements with Allergan for VIBERZI and Exact Sciences for Cologuard in the U.S. (Note 4). The Company recognizes revenue when there is persuasive evidence that an arrangement exists, services have been rendered or delivery has occurred, the price is fixed or determinable, and collection is reasonably assured. For certain of the Company's arrangements, particularly the license agreement with Allergan for the European territory, it is required that taxes be withheld on payments to the Company. The Company has adopted a policy to recognize revenue net of these tax withholdings. Agreements Entered into Prior to January 1, 2011 For arrangements that include multiple deliverables and were entered into prior to January 1, 2011, the Company follows the provisions of ASC Topic 605-25, Revenue Recognition—Multiple-Element Arrangements ("ASC 605-25"), in accounting for these agreements. Under ASC 605-25, the Company was required to identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting. Collaborative research and development and licensing agreements that contained multiple deliverables were divided into separate units of accounting when the following criteria were met: • Delivered element(s) had value to the collaborator on a standalone basis, • There was objective and reliable evidence of the fair value of the undelivered obligation(s), and • If the arrangement included a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) was considered probable and substantially within the Company's control. The Company allocated arrangement consideration among the separate units of accounting either on the basis of each unit's respective fair value or using the residual method, and applied the applicable revenue recognition criteria to each of the separate units. If the separation criteria were not met, revenue of the combined unit of accounting was recorded based on the method appropriate for the last delivered item. Up-Front License Fees The Company recognizes revenue from nonrefundable, up-front license fees on a straight-line basis over the contracted or estimated period of performance, which is typically the period over which the research and development is expected to occur or manufacturing services are expected to be provided. Accordingly, the Company is required to make estimates regarding the drug development and commercialization timelines for drugs and drug candidates being developed pursuant to any applicable agreement. The determination of the length of the period over which to recognize the revenue is subject to judgment and estimation and can have an impact on the amount of revenue recognized in a given period. Quarterly, the Company reassesses its period of substantial involvement over which the Company amortizes its up-front license fees and makes adjustments as appropriate. The Company's estimates regarding the period of performance under its collaborative research and development and licensing agreements have changed in the past and may change in the future. Any change in the Company's estimates could result in substantial changes to the Company's results for the period over which the revenues from an up-front license fee are recognized. In the event that an arrangement were to be terminated, the Company would recognize as revenue any portion of the up-front fee that had not previously been recorded as revenue, but was classified as deferred revenue at the date of such termination. At December 31, 2015, of the Company's linaclotide collaboration and license arrangements, only a portion of Astellas' up-front license fee remained deferred. The up-front license fees under the Allergan collaboration for North America and the Allergan collaboration for Europe (previously with Almirall) were fully amortized at December 31, 2015, as the period of performance under those arrangements ended in the three months ended September 30, 2012. Agreements Entered into or Materially Modified on or after January 1, 2011 The Company evaluates revenue from new multiple element agreements entered into on or after January 1, 2011 under ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements ("ASU 2009-13"). The Company also evaluates whether amendments to its multiple element arrangements are considered material modifications that are subject to the application of ASU 2009-13. This evaluation requires management to assess all relevant facts and circumstances and to make subjective determinations and judgments. As part of this assessment, the Company considers whether the modification results in a material change to the arrangement, including whether there is a change in total arrangement consideration that is more than insignificant, whether there are changes in the deliverables included in the arrangement, whether there is a change in the term of the arrangement and whether there is a significant modification to the delivery schedule for contracted deliverables. When evaluating multiple element arrangements under ASU 2009-13, the Company considers whether the deliverables under the arrangement represent separate units of accounting. This evaluation requires subjective determinations and requires management to make judgments about the individual deliverables and whether such deliverables are separable from the other aspects of the contractual relationship. In determining the units of accounting, management evaluates certain criteria, including whether the deliverables have standalone value, based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research, manufacturing and commercialization capabilities of the partner and the availability of peptide research and manufacturing expertise in the general marketplace. In addition, the Company considers whether the collaborator can use the license or other deliverables for their intended purpose without the receipt of the remaining elements, and whether the value of the deliverable is dependent on the undelivered items and whether there are other vendors that can provide the undelivered items. The consideration received is allocated among the separate units of accounting using the relative selling price method, and the applicable revenue recognition criteria are applied to each of the separate units. The Company determines the estimated selling price for deliverables using vendor-specific objective evidence ("VSOE") of selling price, if available, third-party evidence ("TPE") of selling price if VSOE is not available, or best estimate of selling price ("BESP") if neither VSOE nor TPE is available. Determining the BESP for a deliverable requires significant judgment. The Company uses BESP to estimate the selling price for licenses to the Company's proprietary technology, since the Company often does not have VSOE or TPE of selling price for these deliverables. In those circumstances where the Company utilizes BESP to determine the estimated selling price of a license to the Company's proprietary technology, the Company considers market conditions as well as entity-specific factors, including those factors contemplated in negotiating the agreements as well as internally developed models that include assumptions related to the market opportunity, estimated development costs, probability of success and the time needed to commercialize a product candidate pursuant to the license. In validating the Company's BESP, the Company evaluates whether changes in the key assumptions used to determine the BESP will have a significant effect on the allocation of arrangement consideration between multiple deliverables. At December 31, 2015, the Company's collaboration agreement with AstraZeneca for linaclotide and co-promotion agreements with Allergan for VIBERZI and Exact Sciences for Cologuard in the U.S. are each being accounted for under ASU 2009-13. Up-Front License Fees When management believes the license to its intellectual property has stand-alone value, the Company generally recognizes revenue attributed to the license upon delivery. When management believes the license to its intellectual property does not have stand-alone value from the other deliverables to be provided in the arrangement, it is combined with other deliverables and the revenue of the combined unit of accounting is recorded based on the method appropriate for the last delivered item. Milestones At the inception of each arrangement that includes pre-commercial milestone payments, the Company evaluates whether each pre-commercial milestone is substantive, in accordance with ASU No. 2010-17, Revenue Recognition—Milestone Method ("ASU 2010-17"), adopted on January 1, 2011. This evaluation includes an assessment of whether (a) the consideration is commensurate with either (1) the entity's performance to achieve the milestone, or (2) the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity's performance to achieve the milestone, (b) the consideration relates solely to past performance and (c) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment. At December 31, 2015, the Company had no pre-commercial milestones that were deemed substantive. If a substantive pre-commercial milestone were achieved and collection of the related receivable was reasonably assured, the Company would recognize revenue related to the milestone in its entirety in the period in which the milestone was achieved. If the Company were to achieve milestones that are considered substantive under any of the Company's collaborations, the Company may experience significant fluctuations in collaborative arrangements revenue from quarter to quarter and year to year depending on the timing of achieving such substantive milestones. In those circumstances where a pre-commercial milestone is not substantive, the Company recognizes as revenue on the date the milestone is achieved an amount equal to the applicable percentage of the performance period that had elapsed as of the date the milestone was achieved, with the balance being deferred and recognized over the remaining period of performance. Pre-commercial milestone payments received prior to the adoption of ASU 2010-17 continue to be recognized over the remaining period of performance. Commercial milestones are accounted for as royalties and are recorded as revenue upon achievement of the milestone, assuming all other revenue recognition criteria are met. Net Profit or Net Loss Sharing In accordance with ASC 808 Topic, Collaborative Arrangements , and ASC 605-45, Principal Agent Considerations , the Company considers the nature and contractual terms of the arrangement and the nature of the Company's business operations to determine the classification of the transactions under the Company's collaboration agreements. The Company records revenue transactions gross in the consolidated statements of operations if it is deemed the principal in the transaction, which includes being the primary obligor and having the risks and rewards of ownership. The Company recognizes its share of the pre-tax commercial net profit or net loss generated from the sales of LINZESS in the U.S. in the period the product sales are reported by Allergan and related cost of goods sold and selling, general and administrative expenses are incurred by the Company and its collaboration partner. These amounts are partially determined based on amounts provided by Allergan and involve the use of estimates and judgments, such as product sales allowances and accruals related to prompt payment discounts, chargebacks, governmental and contractual rebates, wholesaler fees, product returns, and co-payment assistance costs, which could be adjusted based on actual results in the future. The Company is highly dependent on Allergan for timely and accurate information regarding any net revenues realized from sales of LINZESS in the U.S. and the costs incurred in selling it, in order to accurately report its results of operations. For the periods covered in the consolidated financial statements presented, there have been no material changes to prior period estimates of revenues, cost of goods sold or selling, general and administrative expenses associated with the sales of LINZESS in the U.S. However, if the Company does not receive timely and accurate information or incorrectly estimates activity levels associated with the collaboration at a given point in time, the Company could be required to record adjustments in future periods. The Company records its share of the net profits or net losses from the sales of LINZESS in the U.S. on a net basis and presents the settlement payments to and from Allergan as collaboration expense or collaborative arrangements revenue, as applicable, as the Company is not the primary obligor and does not have the risks and rewards of ownership in the collaboration agreement with Allergan for North America. The Company and Allergan settle the cost sharing quarterly, such that the Company's statement of operations reflects 50% of the pre-tax net profit or loss generated from sales of LINZESS in the U.S. Royalties on Product Sales The Company receives or expects to receive in the future royalty revenues under certain of the Company's license or collaboration agreements. If the Company does not have any future performance obligations under these license or collaborations agreements, the Company records these revenues as earned. To the extent the Company does not have access to the royalty reports from the Company's partners or the ability to accurately estimate the royalty revenue in the period earned, the Company records such royalty revenues one quarter in arrears. Other The Company produces finished drug product, API and development materials for certain of its partners. The Company recognizes revenue on finished drug product, API and development materials when the material has passed all quality testing required for collaborator acceptance, delivery has occurred, title and risk of loss have transferred to the collaborator, the price is fixed or determinable, and collection is reasonably assured. As it relates to development materials and API produced for Astellas, the Company is reimbursed at a contracted rate. Such reimbursements are considered as part of revenue generated pursuant to the Astellas license agreement and are presented as collaborative arrangements revenue. Any finished drug product, API and development materials currently produced for Allergan for the U.S. or AstraZeneca for China, Hong Kong and Macau are recognized in accordance with the cost-sharing provisions of the Allergan and AstraZeneca collaboration agreements, respectively. In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan, and the Company separately entered into an amendment to the license agreement with Allergan relating to the development and commercialization of linaclotide in Europe. Pursuant to the terms of the amendment, Allergan assumed responsibility for the manufacturing of linaclotide API for Europe from the Company, as well as the associated costs (Note 4). Cost of Revenue Cost of revenue is recognized upon shipment of linaclotide API to certain of the Company's licensing partners outside of the U.S. and consists of the internal and external costs of producing such API. During the year ended December 31, 2015, the Company recorded expenses of approximately $17.6 million for the write-down of inventory and an accrual for excess non-cancelable inventory purchase commitments related to linaclotide API. These charges primarily related to a reduction in the near term demand forecast for CONSTELLA in the European territory by Almirall, the Company's former European partner; recent regulatory changes made by the CFDA to the marketing approval process in China; and the amendment to the license agreement with Allergan pertaining to the development and commercialization of linaclotide for Europe executed in October 2 |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Net Loss Per Share | |
Net Loss Per Share | 3. Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts): Year Ended December 31, 2015 2014 2013 Numerator: Net Loss $ ) $ ) $ ) Denominator: Weighted average number of common shares used in net loss per share—basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share—basic and diluted $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In June 2015, in connection with the issuance of approximately $335.7 million in aggregate principal amount of the 2022 Notes, the Company entered into the Convertible Note Hedges. The Convertible Note Hedges are generally expected to reduce the potential dilution to the Company's Class A common stockholders upon a conversion of the 2022 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2022 Notes in the event that the market price per share of the Company's Class A common stock, as measured under the terms of the Convertible Note Hedges, is greater than the conversion price of the 2022 Notes (Note 10). The Convertible Note Hedges are not considered for purposes of calculating the number of diluted weighted average shares outstanding, as their effect would be antidilutive. Concurrently with entering into the Convertible Note Hedges, the Company also issued Note Hedge Warrants to the Convertible Note Hedge counterparties to acquire 20,249,665 shares of the Company's Class A common stock, subject to customary anti-dilution adjustments. The Note Hedge Warrants could have a dilutive effect on the Company's Class A common stock to the extent that the market price per share of the Class A common stock exceeds the applicable strike price of such warrants (Note 10). The Note Hedge Warrants are not considered for purposes of calculating the number of diluted weighted averages shares outstanding, as their effect would be antidilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive (in thousands): Year Ended December 31, 2015 2014 2013 Options to purchase common stock Shares subject to repurchase — Unvested restricted stock units — — Note hedge warrants — — 2022 Notes — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ An insignificant number of shares issuable under the Company's employee stock purchase plan were excluded from the calculation of diluted weighted average shares outstanding because their effects would be anti-dilutive. |
Collaboration, License and Co-p
Collaboration, License and Co-promotion Agreements | 12 Months Ended |
Dec. 31, 2015 | |
Collaboration, License and Co-promotion Agreements | |
Collaboration, License and Co-promotion Agreements | 4. Collaboration, License and Co-promotion Agreements For the year ended December 31, 2015, the Company had linaclotide collaboration agreements with Allergan for North America and AstraZeneca for China, Hong Kong and Macau, as well as linaclotide license agreements with Allergan for the European territory (formerly with Almirall) and Astellas for Japan. The Company also had a co-promotion agreement with Exact Sciences to co-promote Cologuard in the U.S. and a co-promotion agreement with Allergan to co-promote VIBERZI in the U.S. The following table provides amounts included in the Company's consolidated statements of operations as collaborative arrangements revenue attributable to transactions from these arrangements (in thousands): Collaborative Arrangements Revenue Year Ended December 31, 2015 2014 2013 Linaclotide Agreements: Allergan (North America) $ $ $ AstraZeneca (China, Hong Kong and Macau) Almirall (Europe) (1) Astellas (Japan) Co-promotion Agreements: Exact Sciences (Cologuard) — — Allergan (VIBERZI) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total collaborative arrangements revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. Linaclotide Agreements Collaboration Agreement for North America with Allergan In September 2007, the Company entered into a collaboration agreement with Allergan to develop and commercialize linaclotide for the treatment of IBS-C, CIC and other GI conditions in North America. Under the terms of this collaboration agreement, the Company shares equally with Allergan all development costs as well as net profits or losses from the development and sale of linaclotide in the U.S. The Company receives royalties in the mid-teens percent based on net sales in Canada and Mexico. Allergan is solely responsible for the further development, regulatory approval and commercialization of linaclotide in those countries and funding any costs. In September 2012, Allergan sublicensed its commercialization rights in Mexico to Almirall. In October 2015, Almirall and Allergan terminated the sublicense arrangement with respect to Mexico, returning the exclusive rights to commercialize CONSTELLA in Mexico to Allergan. CONSTELLA continues to be available to adult IBS-C patients in Mexico. Allergan made non-refundable, up-front payments totaling $70.0 million to the Company in order to obtain rights to linaclotide in North America. Because the license to jointly develop and commercialize linaclotide did not have a standalone value without research and development activities provided by the Company, the Company recorded the up-front license fee as collaborative arrangements revenue on a straight line basis through September 30, 2012, the period over which linaclotide was jointly developed under the collaboration. The Company achieved all six development milestones under this agreement totaling $135.0 million, which were recognized through September 2012. The remaining milestone payment that could be received from Allergan upon the achievement of sales targets will be recognized as collaborative arrangements revenue as earned. The collaboration agreement for North America also includes contingent milestone payments, as well as a contingent equity investment, based on the achievement of specific development and commercial milestones. At December 31, 2015, $205.0 million in license fees and development milestone payments had been received by the Company, as well as a $25.0 million equity investment in the Company's capital stock. The Company can also achieve up to $100.0 million in a sales related milestone if certain conditions are met. The collaboration agreement for North America included a contingent equity investment, in the form of a forward purchase contract, which required Allergan to purchase shares of the Company's convertible preferred stock upon achievement of a specific development milestone. At the inception of the arrangement, the Company valued the contingent equity investment and recorded an approximately $9.0 million asset and incremental deferred revenue. The $9.0 million of incremental deferred revenue was recognized as collaborative arrangements revenue on a straight-line basis over the period of the Company's continuing involvement through September 30, 2012. In July 2009, the Company achieved the development milestone triggering the equity investment and reclassified the forward purchase contract as a reduction to convertible preferred stock. On September 1, 2009, the Company issued 2,083,333 shares of convertible preferred stock to Allergan (Note 16). As a result of the research and development cost-sharing provisions of the collaboration for North America, the Company offset approximately $16.9 million and $4.3 million against research and development costs during the years ended December 31, 2015 and 2014, respectively. The Company recognized approximately $2.2 million in incremental research and development costs during the year ended December 31, 2013, to reflect its obligation under the collaboration to bear half of the development costs incurred by both parties. In addition, in March 2015, the Company and Allergan agreed to share certain costs relating to the manufacturing of linaclotide API and certain other manufacturing activities. This arrangement resulted in net amounts received from Allergan of approximately $4.3 million for costs incurred in prior periods, which were recorded by the Company as a reduction in research and development expenses during the year ended December 31, 2015. The Company receives 50% of the net profits and bears 50% of the net losses from the commercial sale of LINZESS in the U.S.; provided, however, that if either party provides fewer calls on physicians in a particular year than it is contractually required to provide, such party's share of the net profits will be adjusted as stipulated by the collaboration agreement for North America. Certain of these adjustments to the share of the net profits may be reduced or eliminated in connection with the co-promotion activities under the Company's agreement with Allergan to co-promote VIBERZI in the U.S., as described below. Net profits or net losses consist of net sales to third-party customers and sublicense income in the U.S. less the cost of goods sold as well as selling, general and administrative expenses. Net sales are calculated and recorded by Allergan and may include gross sales net of discounts, rebates, allowances, sales taxes, freight and insurance charges, and other applicable deductions. The Company records its share of the net profits or net losses from the sale of LINZESS on a net basis and presents the settlement payments to and from Allergan as collaboration expense or collaborative arrangements revenue, as applicable. The Company and Allergan began commercializing LINZESS in the U.S. in December 2012. The Company recognized collaborative arrangements revenue from the Allergan collaboration agreement for North America during the years ended December 31, 2015, 2014 and 2013 as follows (in thousands): Year Ended December 31, 2015 2014 2013 Collaborative arrangements revenue related to sales of LINZESS in the U.S. (1)(2) $ $ $ Royalty revenue — Sale of API — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total collaborative arrangements revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The collaborative arrangements revenue recognized in the years ended December 31, 2015, 2014 and 2013 primarily represents the Company's share of the net profits and net losses on the sale of LINZESS in the U.S. The following table presents the amounts recorded by the Company for commercial efforts related to LINZESS in the U.S. in the years ended December 31, 2015, 2014 and 2013 (in thousands): Year Ended December 31, 2015 2014 2013 Collaborative arrangements revenue related to sales of LINZESS in the U.S. (1)(2) $ $ $ Collaboration expense — — ) Selling, general and administrative costs incurred by the Company (1) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company's share of net profit (loss) $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes only collaborative arrangement revenue or selling, general and administrative costs attributable to the cost-sharing arrangement with Allergan. (2) Includes net profit share adjustment payable to Allergan of approximately $2.4 million recorded during the year ended December 31, 2015. Certain of the unfavorable adjustments to the Company's share of the LINZESS net profits may be reduced or eliminated in connection with the co-promotion activities under the Company's agreement with Allergan to co-promote VIBERZI in the U.S., as described below. During the year ended December 31, 2015, in connection with these co-promotion activities, the net profit share adjustments payable to Allergan under the linaclotide collaboration agreement for North America were reduced by approximately $2.9 million and were reflected as collaborative arrangements revenue under this agreement. Net profit share adjustments received from Allergan of approximately $1.7 million were recorded during the year ended December 31, 2014. In May 2014, Allergan began commercializing CONSTELLA in Canada and in June 2014, Almirall began commercializing LINZESS in Mexico. In October 2015, Almirall and Allergan terminated the sublicense arrangement with respect to Mexico, returning the exclusive rights to commercialize CONSTELLA in Mexico to Allergan. CONSTELLA continues to be available to adult IBS-C patients in Mexico. The Company records royalties on sales of CONSTELLA in Canada and LINZESS in Mexico one quarter in arrears as it does not have access to the royalty reports from its partners or the ability to estimate the royalty revenue in the period earned. The Company recognized approximately $0.9 million and an insignificant amount of royalty revenues from Canada and Mexico during the years ended December 31, 2015 and 2014, respectively. License Agreement for the European Territory with Allergan (formerly with Almirall through October 2015) In April 2009, the Company entered into a license agreement with Almirall (the "European License Agreement") to develop and commercialize linaclotide in Europe (including the Commonwealth of Independent States and Turkey) for the treatment of IBS-C, CIC and other GI conditions. Under the terms of the European License Agreement, Almirall was responsible for the expenses associated with the development and commercialization of linaclotide in the European territory and the Company was required to participate on a joint development committee over linaclotide's development period and a joint commercialization committee while the product was being commercialized. In May 2009, the Company received an approximately $38.0 million payment from Almirall representing a $40.0 million non-refundable up-front payment net of foreign withholding taxes. The Company elected to record the non-refundable up-front payment net of taxes withheld. The license agreement also included a $15.0 million contingent equity investment, in the form of a forward purchase contract, which required Almirall to purchase shares of the Company's convertible preferred stock upon achievement of a specific development milestone. At the inception of the arrangement, the Company valued the contingent equity investment at approximately $6.0 million. The Company recognized the up-front license fee and the value of the contingent equity investment totaling approximately $6.0 million as collaborative arrangements revenue on a straight-line basis through September 30, 2012, the period over which linaclotide was developed under the European License Agreement. In November 2009, the Company achieved the development milestone triggering the equity investment and on November 13, 2009, the Company received $15.0 million from Almirall for the purchase of 681,819 shares of convertible preferred stock (Note 16). The original European License Agreement also included contingent milestone payments that could total up to $40.0 million upon achievement of specific development and commercial launch milestones. In November 2010, the Company achieved a development milestone, which resulted in an approximately $19.0 million payment, representing a $20.0 million milestone, net of foreign withholding taxes. This development milestone was recognized as collaborative arrangements revenue through September 2012. Commercial milestone payments under the original European License Agreement consisted of $4.0 million due upon the first commercial launch in each of the five major European Union ("E.U.") countries set forth in the agreement. In June 2013 and February 2014, the Company and Almirall amended the original European License Agreement. Pursuant to the terms of the amendments, (i) the commercial launch milestones were reduced to $17.0 million; (ii) new sales-based milestone payments were added to the agreement; and (iii) the escalating royalties based on sales of linaclotide were modified such that they began in the low-twenties percent and escalated to the mid-forties percent through April 2017, and thereafter began in the mid-twenties percent and escalated to the mid-forties percent at lower sales thresholds. In each case, these royalty payments were reduced by the transfer price paid for the API included in the product actually sold in the Almirall territory and other contractual deductions. The Company concluded that these amendments were a modification to the European License Agreement under ASU No. 2009-13, but the modification did not have a material impact on the Company's consolidated financial statements. During the second quarter of 2013, the Company achieved two milestones under the amended European License Agreement, which resulted in payments of approximately $1.9 million from Almirall to the Company related to the commercial launches in two of the five major E.U. countries, the United Kingdom and Germany. The approximately $1.9 million payment represented the two $1.0 million milestones, net of foreign tax withholdings. During the first and second quarters of 2014, the Company achieved two additional milestones under the amended European License Agreement triggering payments of approximately $1.0 million each related to the commercial launches in two additional major E.U. countries, Italy and Spain. Each approximately $1.0 million payment represents the $1.0 million milestone, net of foreign tax withholdings. In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. Additionally, in October 2015, the Company and Allergan separately entered into an amendment to the European License Agreement relating to the development and commercialization of linaclotide in Europe. Pursuant to the terms of the amendment, (i) the remaining sales-based milestones payable to the Company under the European License Agreement were modified to increase the total milestone payments such that, when aggregated with the remaining commercial launch milestones, they could total up to $42.5 million, (ii) the royalties payable to the Company during the term of the European License Agreement were modified such that the royalties based on sales volume in Europe begin in the mid-single digit percent and escalate to the upper-teens percent by calendar year 2019, and (iii) Allergan assumed responsibility for the manufacturing of linaclotide API for Europe from the Company, as well as the associated costs. Furthermore, with the Company no longer responsible for the manufacturing of linaclotide API for Europe, the royalties under the license agreement will no longer be reduced by the transfer price paid for the API included in the product actually sold by Allergan in Europe in any given period. The 2015 amendment to the European License Agreement does not represent a material modification to the linaclotide collaboration agreement with Allergan for North America and did not have a material impact on the Company's consolidated financial statements. The commercial launch and sales-based milestones under the European License Agreement are recognized as revenue as earned. The Company also records royalties on sales of CONSTELLA one quarter in arrears as it does not have access to the royalty reports from Allergan or the ability to estimate the royalty revenue in the period earned. Concurrently with the European license transfer, Almirall and Allergan terminated the sublicense arrangement with respect to Mexico, returning the exclusive rights to commercialize CONSTELLA in Mexico to Allergan. CONSTELLA continues to be available to adult IBS-C patients in Mexico. The Company recognized approximately $0.5 million of collaborative arrangements revenue, comprised of royalty revenue, from the European License Agreement during the year ended December 31, 2015. The Company recognized approximately $7.6 million in total collaborative arrangements revenue from the European License Agreement during the year ended December 31, 2014, including approximately $5.1 million from the sale of API to Almirall, approximately $1.9 million in commercial launch milestones, and approximately $0.6 million in royalty revenue. The Company recognized approximately $13.1 million in total collaborative arrangements revenue from the European License Agreement during the year ended December 31, 2013, including approximately $11.1 million from the sale of API to Almirall, approximately $0.2 million in royalty revenue and approximately $1.9 million in commercial launch milestones. License Agreement for Japan with Astellas In November 2009, the Company entered into a license agreement with Astellas to develop and commercialize linaclotide for the treatment of IBS-C, CIC and other GI conditions in Japan, South Korea, Taiwan, Thailand, the Philippines and Indonesia. As a result of an amendment executed in March 2013, the Company regained rights to linaclotide in South Korea, Taiwan, Thailand, the Philippines and Indonesia. The Company concluded that the amendment was not a material modification of the license agreement. Astellas continues to be responsible for all activities relating to development, regulatory approval and commercialization in Japan as well as funding any costs and the Company is required to participate on a joint development committee over linaclotide's development period. In 2009, Astellas paid the Company a non-refundable, up-front licensing fee of $30.0 million, which is being recognized as collaborative arrangements revenue on a straight-line basis over the Company's estimate of the period over which linaclotide will be developed under the license agreement. In March 2013, the Company revised its estimate of the development period from 115 months to 85 months based on the Company's assessment of regulatory approval timelines for Japan. During the years ended December 31, 2015, 2014 and 2013, the Company recognized approximately $5.1 million, $5.1 million and $4.6 million of revenue related to the up-front licensing fee, respectively, including approximately $1.9 million, $1.9 million and $1.5 million of revenue in each period attributable to the March 2013 revision to the estimated development period. At December 31, 2015, approximately $6.3 million of the up-front license fee remained deferred. The agreement also includes three development milestone payments that could total up to $45.0 million, none of which the Company considers substantive. The first milestone payment, consisting of $15.0 million upon enrollment of the first study subject in a Phase III study for linaclotide in Japan, was achieved in November 2014, and approximately $12.3 million was recognized as revenue through December 31, 2015, including approximately $2.1 million and approximately $10.2 million during the years ended December 31, 2015 and 2014, respectively. The remaining approximately $2.6 million of this milestone payment will be recognized over the remaining development period. The two additional milestone payments consist of $15.0 million upon filing of the Japanese equivalent of an NDA with the relevant regulatory authority in Japan and $15.0 million upon approval of such equivalent by the relevant regulatory authority. In addition, the Company will receive royalties which escalate based on sales volume, beginning in the low-twenties percent, less the transfer price paid for the API included in the product actually sold and other contractual deductions. During the years ended December 31, 2015, 2014 and 2013, the Company recognized approximately $7.7 million, approximately $17.7 million, and approximately $5.8 million, respectively, in collaborative arrangements revenue from the Astellas license agreement, including approximately $0.5 million, approximately $2.4 million, and approximately $1.2 million, respectively, from the sale of API to Astellas. Collaboration Agreement for China, Hong Kong and Macau with AstraZeneca In October 2012, the Company entered into a collaboration agreement with AstraZeneca (the "AstraZeneca Collaboration Agreement") to co-develop and co-commercialize linaclotide in China, Hong Kong and Macau (the "License Territory"). The collaboration provides AstraZeneca with an exclusive nontransferable license to exploit the underlying technology in the License Territory. The parties share responsibility for continued development and commercialization of linaclotide under a joint development plan and a joint commercialization plan, respectively, with AstraZeneca having primary responsibility for the local operational execution. The parties agreed to an Initial Development Plan ("IDP") which includes the planned development of linaclotide in China, including the lead responsibility for each activity and the related internal and external costs. The IDP indicates that AstraZeneca is responsible for a multinational Phase III clinical trial (the "Phase III Trial"), the Company is responsible for nonclinical development and supplying clinical trial material and both parties are responsible for the regulatory submission process. The IDP indicates that the party specifically designated as being responsible for a particular development activity under the IDP shall implement and conduct such activities. The activities are governed by a Joint Development Committee ("JDC"), with equal representation from each party. The JDC is responsible for approving, by unanimous consent, the joint development plan and development budget, as well as approving protocols for clinical studies, reviewing and commenting on regulatory submissions, and providing an exchange of data and information. The AstraZeneca Collaboration Agreement will continue until there is no longer a development plan or commercialization plan in place, however, it can be terminated by AstraZeneca at any time upon 180 days' prior written notice. Under certain circumstances, either party may terminate the AstraZeneca Collaboration Agreement in the event of bankruptcy or an uncured material breach of the other party. Upon certain change in control scenarios of AstraZeneca, the Company may elect to terminate the AstraZeneca Collaboration Agreement and may re-acquire its product rights in a lump sum payment equal to the fair market value of such product rights. In connection with the AstraZeneca Collaboration Agreement, the Company and AstraZeneca also executed a co-promotion agreement (the "Co-Promotion Agreement"), pursuant to which the Company utilized its existing sales force to co-promote NEXIUM® (esomeprazole magnesium), one of AstraZeneca's products, in the U.S. The Co-Promotion Agreement expired in May 2014. There are no refund provisions in the AstraZeneca Collaboration Agreement and the Co-Promotion Agreement (together, the "AstraZeneca Agreements"). Under the terms of the AstraZeneca Collaboration Agreement, the Company received a $25.0 million non-refundable upfront payment upon execution. The Company is also eligible for $125.0 million in additional commercial milestone payments contingent on the achievement of certain sales targets. The parties will also share in the net profits and losses associated with the development and commercialization of linaclotide in the License Territory, with AstraZeneca receiving 55% of the net profits or incurring 55% of the net losses until a certain specified commercial milestone is achieved, at which time profits and losses will be shared equally thereafter. Activities under the AstraZeneca Agreements were evaluated in accordance with the ASC 605-25, Revenue Recognition—Multiple-Element Arrangements ("ASC 605-25"), to determine if they represented a multiple element revenue arrangement. The Company identified the following deliverables in the AstraZeneca Agreements: • an exclusive license to develop and commercialize linaclotide in the License Territory (the "License Deliverable"), • research, development and regulatory services pursuant to the IDP, as modified from time to time (the "R&D Services"), • JDC services, • obligation to supply clinical trial material, and • co-promotion services for AstraZeneca's product (the "Co-Promotion Deliverable"). The License Deliverable is nontransferable and has certain sublicense restrictions. The Company determined that the License Deliverable had standalone value as a result of AstraZeneca's internal product development and commercialization capabilities, which would enable it to use the License Deliverable for its intended purposes without the involvement of the Company. The remaining deliverables were deemed to have standalone value based on their nature and all deliverables met the criteria to be accounted for as separate units of accounting under ASC 605-25. Factors considered in this determination included, among other things, whether any other vendors sell the items separately and if the customer could use the delivered item for its intended purpose without the receipt of the remaining deliverables. The Company identified the supply of linaclotide drug product for commercial requirements and commercialization services as contingent deliverables because these services are contingent upon the receipt of regulatory approval to commercialize linaclotide in the License Territory, and there were no binding commitments or firm purchase orders pending for commercial supply. As these deliverables are contingent, and are not at an incremental discount, they are not evaluated as deliverables at the inception of the arrangement. These contingent deliverables will be evaluated and accounted for separately as each related contingency is resolved. As of December 31, 2015, no contingent deliverables were provided by the Company under the AstraZeneca Agreements. In August 2014, the Company and AstraZeneca, through the JDC, modified the IDP and development budget to include approximately $14.0 million in additional activities over the remaining development period, to be shared by the Company and AstraZeneca under the terms of the AstraZeneca Collaboration Agreement. These additional activities serve to support the continued development of linaclotide in the Licensed Territory, including the Phase III Trial. Pursuant to the terms of the modified IDP and development budget, certain of the Company's deliverables were modified, specifically the R&D Services and the obligation to supply clinical trial material. The modification did not, however, have a material impact on the Company's consolidated financial statements. The total amount of the non-contingent consideration allocable to the AstraZeneca Agreements of approximately $34.0 million ("Arrangement Consideration") includes the $25.0 million non-refundable upfront payment and 55% of the costs for clinical trial material supply services and research, development and regulatory activities allocated to the Company in the IDP or as approved by the JDC in subsequent periods, or approximately $9.0 million. The Company allocated the Arrangement Consideration of approximately $34.0 million to the non-contingent deliverables based on management's BESP of each deliverable using the relative selling price method as the Company did not have VSOE or TPE of selling price for such deliverables. The Company estimated the BESP for the License Deliverable using a multi-period excess-earnings method under the income approach which utilized cash flow projections, the key assumptions of which included the following market conditions and entity-specific factors: (a) the specific rights provided under the license to develop and commercialize linaclotide; (b) the potential indications for linaclotide pursuant to the license; (c) the likelihood linaclotide will be developed for more than one indication; (d) the stage of development of linaclotide for IBS-C and CIC and the projected timeline for regulatory approval; (e) the development risk by indication; (f) the market size by indication; (g) the expected product life of linaclotide assuming commercialization; (h) the competitive environment, and (i) the estimated development and commercialization costs of linaclotide in the License Territory. The Company utilized a discount rate of 11.5% in its analysis, representing the weighted average cost of capital derived from returns on equity for comparable companies. The Company determined its BESP for the remaining deliverables based on the nature of the services to be performed and estimates of the associated effort and cost of the services adjusted for a reasonable profit margin such that they represented estimated market rates for similar services sold on a standalone basis. The Company concluded that a change in key assumptions used to determine BESP for each deliverable would not have a significant effect on the allocation of the Arrangement Consideration, as the estimated selling price of the License Deliverable significantly exceeds the other deliverables. Of the approximately $34.0 million of Arrangement Consideration, consisting of the $25.0 million non-refundable upfront payment and 55% of the costs for clinical trial material supply services and research, development and regulatory activities allocated to the Company, approximately $29.7 million was allocated to the License Deliverable, approximately $1.8 million to the R&D Services, approximately $0.1 million to the JDC services, approximately $0.3 million to the clinical trial material supply services, and approximately $2.1 million to the Co-Promotion Deliverable in the relative selling price model, at the time of the material modification. Because the Company shares development costs with AstraZeneca, payments from AstraZeneca with respect to both research and development and selling, general and administrative costs incurred by the Company prior to the commercialization of linaclotide in the License Territory are recorded as a reduction in expense, in accordance with the Company's policy, which is consistent with the nature of the cost reimbursement. Development costs incurred by the Company that pertain to the joint development plan and subsequent amendments to the joint development plan, as approved by the JDC, are recorded as research and development expense as incurred. Payments to AstraZeneca are recorded as incremental research and development expense. The Company completed its obligations related to the License Deliverable upon execution of the AstraZeneca Agreements; however, the revenue recognized in the statement of operations was limited to the non-contingent portion of the License Deliverable consideration in accordance with ASC 605-25. During the years ended December 31, 2015 and 2014, the Company recognized approximately $2.2 million and approximately $2.5 million, respectively, in collaborative arrangements revenue related to the License Deliverable in connection with the modification to the IDP and development budget in August 2014, as this portion of the Arrangement Consideration was no longer contingent. During the year ended December 31, 2013, the Company did not recognize any amounts in collaborative arrangements revenue related to the License Deliverable. The Company also performs R&D Services and JDC services, and supplies clinical trial materials during the estimated development period. All Arrangement Consideration allocated to such services is being recognized as a reduction of research and development costs, using the proportional performance method, by which the amounts are recognized in proportion to the costs incurred. As a result of the cost-sharing arrangements under the collaboration, the Company recogni |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 5. Fair Value of Financial Instruments The tables below present information about the Company's assets that are measured at fair value on a recurring basis as of December 31, 2015 and 2014 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize observable inputs such as quoted prices in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are either directly or indirectly observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which require the Company to develop its own assumptions for the asset or liability. The Company's investment portfolio includes mainly fixed income securities that do not always trade on a daily basis. As a result, the pricing services used by the Company apply other available information as applicable through processes such as benchmark yields, benchmarking of like securities, sector groupings and matrix pricing to prepare valuations. In addition, model processes are used to assess interest rate impact and develop prepayment scenarios. These models take into consideration relevant credit information, perceived market movements, sector news and economic events. The inputs into these models may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads and other relevant data. The Company validates the prices provided by its third party pricing services by obtaining market values from other pricing sources and analyzing pricing data in certain instances. The following tables present the assets and liabilities the Company has measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Money market funds $ $ $ — $ — U.S. government-sponsored securities — — Available-for-sale securities: U.S. Treasury securities — — U.S. government-sponsored securities — — Convertible Note Hedges — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: Note Hedge Warrants $ $ — $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities $ $ — $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at Reporting Date Using December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Money market funds $ $ $ — $ — Available-for-sale securities: U.S. Treasury securities — — U.S. government-sponsored securities — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets measured at fair value $ $ $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ There were no transfers between fair value measurement levels during the years ended December 31, 2015 or 2014. Cash equivalents, accounts receivable, related party accounts receivable, prepaid expenses and other current assets, accounts payable, related party accounts payable, accrued expenses and the current portion of capital lease obligations at December 31, 2015 and 2014 are carried at amounts that approximate fair value due to their short-term maturities. The non-current portion of the capital lease obligations at December 31, 2015 and 2014 approximates fair value as it bears interest at a rate approximating a market interest rate. The Company's Convertible Note Hedges and the Note Hedge Warrants are recorded as derivative assets and liabilities, and are classified as Level 3 under the fair value hierarchy. These derivatives are not actively traded and are valued using the Black-Scholes option-pricing model which requires the use of subjective assumptions. Significant inputs used to determine the fair value as of December 31, 2015 included the price per share of the Company's Class A common stock, time to maturity of the derivative instruments, the strike prices of the derivative instruments, the risk-free interest rate, and the volatility of the Company's Class A common stock. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock in the foreseeable future; therefore, the expected dividend yield is assumed to be zero. Changes to these inputs could materially affect the valuation of the Convertible Note Hedges and Note Hedge Warrants. The following inputs were used in the fair market valuation of the Convertible Note Hedges and Note Hedge Warrants as of December 31, 2015: Convertible Note Hedges Note Hedge Warrants Risk-free interest rate (1) % % Time to maturity Stock price (2) $ $ Strike price (3) $ $ Common stock volatility (4) % % Dividend yield — % — % (1) Based on U.S. Treasury yield curve, with terms commensurate with the terms of the Convertible Note Hedges and the Note Hedge Warrants. (2) The closing price of the Company's Class A common stock on the last trading day of the year ended December 31, 2015. (3) As per the respective agreements for the Convertible Note Hedges and Note Hedge Warrants. (4) Selected volatility based on historical volatility and implied volatility of the Company's Class A common stock. The Convertible Note Hedges and the Note Hedge Warrants are recorded at fair value at each reporting period and changes in fair value are recorded in other expense, net within the Company's consolidated statements of operations. Gains and losses for these derivative financial instruments are presented separately in the Company's consolidated statements of cash flows. The following table reflects the change in the Company's Level 3 convertible note derivatives from their initial value at issuance through December 31, 2015 (in thousands): Convertible Note Hedges Note Hedge Warrants Balance at December 31, 2014 $ — $ — Issuance of Note Hedge Warrants — ) Purchase of Convertible Note Hedges — Change in fair value, recorded as a component of loss on derivatives ) ) ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2015 $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11% PhaRMA Notes In January 2013, the Company closed a private placement of $175.0 million in aggregate principal amount of the PhaRMA Notes due on or before June 15, 2024. The estimated fair value of the PhaRMA Notes was approximately $166.8 million and approximately $182.5 million as of December 31, 2015 and December 31, 2014, respectively, and was determined using Level 3 inputs, including a quoted rate. 2.25% Convertible Senior Notes In June 2015, the Company issued approximately $335.7 million of its 2022 Notes. The Company separately accounted for the liability and equity components of the 2022 Notes by allocating the proceeds between the liability component and equity component (Note 10). The fair value of the 2022 Notes, which differs from their carrying value, is influenced by interest rates, the price of the Company's Class A common stock and the volatility thereof, and the prices for the 2022 Notes observed in market trading, which are Level 2 inputs. The estimated fair value of the 2022 Notes as of December 31, 2015 was approximately $311.6 million. |
Available-for-Sale Securities
Available-for-Sale Securities | 12 Months Ended |
Dec. 31, 2015 | |
Available-for-Sale Securities | |
Available-for-Sale Securities | 6. Available-for-Sale Securities The following tables summarize the available-for-sale securities held at December 31, 2015 and 2014 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2015 U.S. Treasury securities $ $ — $ ) $ U.S. government-sponsored securities ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2014 U.S. Treasury securities $ $ $ — $ U.S. government-sponsored securities ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The contractual maturities of all securities held at December 31, 2015 are one year or less. There were 32 and 27 available-for-sale securities in an unrealized loss position at December 31, 2015 and 2014, respectively, none of which had been in an unrealized loss position for more than twelve months. The aggregate fair value of these securities at December 31, 2015 and 2014 was approximately $167.6 million and approximately $101.9 million, respectively. The Company reviews its investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment's carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. The Company did not hold any securities with other-than-temporary impairment at December 31, 2015. There were no sales of available-for-sale securities during the years ended December 31, 2015, 2014 and 2013. Net unrealized holding gains or losses for the period that have been included in accumulated other comprehensive income were not material to the Company's consolidated results of operations. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2015 | |
Inventory | |
Inventory | 7. Inventory Inventory consisted of the following (in thousands): December 31, 2015 2014 Raw materials $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory represents linaclotide API that is available for commercial sale. The Company evaluates inventory levels quarterly and any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired is written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. The Company has entered into multiple commercial supply agreements for the purchase of linaclotide API. Two of the Company's API supply agreements for supplying API to its collaboration partners outside of North America contain minimum purchase commitments (Note 11). Prior to October 2015, the Company was also responsible for the manufacturing of linaclotide API for Europe. As part of the Company's net realizable value assessment of its inventory, the Company assesses whether it has any excess non-cancelable purchase commitments resulting from its minimum supply agreements with its suppliers of linaclotide API. The determination of the net realizable value of inventory and non-cancelable purchase commitments is based on demand forecasts from the Company's partners, that are received quarterly, to project the next 24 months of demand and the Company's internal forecast for projected demand in subsequent years. During the three months ended June 30, 2015, Almirall, the Company's former European partner, reduced its forecasted purchases of linaclotide API for its territory for the subsequent 18 months. In addition, recent regulatory changes made by the CFDA to the marketing approval process in China resulted in a potentially lengthened approval timeline for the commercialization of linaclotide. The reduced demand from Almirall and the potential extended timeline for commercialization of linaclotide in China resulted in lower projected sales of linaclotide API to the Company's partners in Europe and China. As a result, during the three months ended June 30, 2015, the Company wrote-down the balance of its inventory of approximately $5.0 million to zero and accrued approximately $3.2 million for excess non-cancelable inventory purchase commitments. In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan, and the Company separately entered into an amendment to the license agreement with Allergan relating to the development and commercialization of linaclotide in Europe. Pursuant to the terms of the amendment, Allergan assumed responsibility for the manufacturing of linaclotide API for Europe, as well as the associated costs (Note 4). Upon the execution of the amendment to the license agreement, the Company recorded an incremental loss on non-cancelable API purchase commitments of approximately $6.9 million related to one of the Company's API supply agreements covering the commercial supply of linaclotide API for the European market. During the three months ended September 30, 2015, the Company also recorded an incremental loss on non-cancelable API purchase commitments related to in-process API batches. As of December 31, 2015, the Company has evaluated all remaining minimum purchase commitments under its linaclotide API supply agreements through 2023 (Note 11) and concluded that the approximately $22.3 million of purchase commitments from the second API supply agreement covering the Japan, China, Hong Kong and Macau markets are realizable based on the current forecasts received from the Company's partners in these territories and the Company's internal forecasts. During the year ended December 31, 2014, the Company wrote-down approximately $20.3 million in inventory to an estimated net realizable value of approximately $5.0 million. This write-down was primarily attributable to Almirall's reduced inventory demand forecasts for the European territory, mainly due to the suspension of commercialization of CONSTELLA in Germany and a challenging commercial environment throughout Europe. The write-downs of inventory to net realizable value and the loss on non-cancelable inventory purchase commitments are recorded as a separate line item in the Company's consolidated statement of operations. As of December 31, 2015, the accrual for excess purchase commitments is recorded as approximately $10.1 million in other liabilities in the Company's consolidated balance sheet. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment | |
Property and Equipment | 8. Property and Equipment Property and equipment, net consisted of the following (in thousands): December 31, 2015 2014 Manufacturing equipment $ $ Laboratory equipment Computer and office equipment Furniture and fixtures Software Construction in process Leased vehicles Leasehold improvements ​ ​ ​ ​ ​ ​ ​ ​ Less accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2015 and 2014, substantially all of the Company's manufacturing equipment was located in the United Kingdom at one of the Company's contract manufacturers. All other property and equipment were located in the U.S. for the periods presented. The Company has entered into capital leases for certain computers, vehicles and office equipment (Note 11). As of December 31, 2015 and 2014, the Company had approximately $3.8 million and approximately $5.5 million of assets under capital leases with accumulated amortization balances of approximately $1.3 million and approximately $2.0 million, respectively. Depreciation and amortization expense of property and equipment, including amounts recorded under capital leases, was approximately $11.6 million, approximately $12.3 million and approximately $11.7 million for the years ended December 31, 2015, 2014 and 2013, respectively. In addition, the Company wrote-down approximately $0.5 million of leasehold improvement assets not utilized by the Company under the terms of its subleases during the year ended December 31, 2014. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Expenses | |
Accrued Expenses | 9. Accrued Expenses Accrued expenses consisted of the following (in thousands): December 31, 2015 2014 Salaries and benefits $ $ Professional fees Accrued interest Other ​ ​ ​ ​ ​ ​ ​ ​ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable. | |
Notes Payable | 10. Notes Payable 2.25% Convertible Senior Notes due 2022 In June 2015, the Company issued approximately $335.7 million aggregate principal amount of the 2022 Notes. The Company received net proceeds of approximately $324.0 million from the sale of the 2022 Notes, after deducting fees and expenses of approximately $11.7 million. The Company used approximately $21.1 million of the net proceeds from the sale of the 2022 Notes to pay the net cost of the Convertible Note Hedges (after such cost was partially offset by the proceeds to the Company from the sale of the Note Hedge Warrants), as described below. The 2022 Notes are governed by an indenture (the "Indenture") between the Company and U.S. Bank National Association, as the trustee. The 2022 Notes are senior unsecured obligations and bear cash interest at the annual rate of 2.25%, payable on June 15 and December 15 of each year, which began on December 15, 2015. The 2022 Notes will mature on June 15, 2022, unless earlier converted or repurchased. The Company may settle conversions of the 2022 Notes through payment or delivery, as the case may be, of cash, shares of Class A common stock of the Company or a combination of cash and shares of Class A common stock, at the Company's option (subject to, and in accordance with, the settlement provisions of the Indenture). The initial conversion rate for the 2022 Notes is 60.3209 shares of Class A common stock (subject to adjustment as provided for in the Indenture) per $1,000 principal amount of the 2022 Notes, which is equal to an initial conversion price of approximately $16.58 per share and 20,249,665 shares. Holders of the 2022 Notes may convert their 2022 Notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2021 in multiples of $1,000 principal amount, only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on September 30, 2015 (and only during such calendar quarter), if the last reported sale price of the Company's Class A 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 or equal to 130% of the conversion price for the 2022 Notes on each applicable trading day; • during the five business day period after any five consecutive trading day period (the "measurement period") in which the "trading price" (as defined in the Indenture) per $1,000 principal amount of 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 Class A common stock and the conversion rate for the 2022 Notes on each such trading day; or • upon the occurrence of specified corporate events described in the Indenture. On or after December 15, 2021, until the close of business on the second scheduled trading day immediately preceding June 15, 2022, holders may convert their 2022 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. If a make-whole fundamental change, as described in the Indenture, occurs and a holder elects to convert its 2022 Notes in connection with such make-whole fundamental change, such holder may be entitled to an increase in the conversion rate as described in the Indenture. The Company may not redeem the 2022 Notes prior to the maturity date and no "sinking fund" is provided for by the 2022 Notes, which means that the Company is not required to periodically redeem or retire the 2022 Notes. Upon the occurrence of certain fundamental changes involving the Company, 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. The Indenture does not contain any financial covenants or restrict the Company's ability to repurchase the Company's securities, pay dividends or make restricted payments in the event of a transaction that substantially increases the Company's level of indebtedness. The Indenture provides for customary events of default. In the case of an event of default with respect to the 2022 Notes arising from specified events of bankruptcy or insolvency, all outstanding 2022 Notes will become due and payable immediately without further action or notice. If any other event of default with respect to the 2022 Notes under the Indenture occurs or is continuing, the trustee or holders of at least 25% in aggregate principal amount of the then outstanding 2022 Notes may declare the principal amount of the 2022 Notes to be immediately due and payable. Notwithstanding the foregoing, the Indenture provides that, upon the Company's election, and for up to 180 days, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right to receive additional interest on the 2022 Notes. In accordance with accounting guidance for debt with conversion and other options, the Company separately accounted for the liability and equity components of the 2022 Notes by allocating the proceeds between the liability component and the embedded conversion option, or equity component, due to the Company's ability to settle the 2022 Notes in cash, its Class A common stock, or a combination of cash and Class A common stock at the option of the Company. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected the Company's non-convertible debt borrowing rate for similar debt. The equity component of the 2022 Notes was recognized as a debt discount and represents the difference between the gross proceeds from the issuance of the 2022 Notes and the fair value of the liability of the 2022 Notes on their respective dates of issuance. The excess of the principal amount of the liability component over its carrying amount, or debt discount, is amortized to interest expense using the effective interest method over seven years, or the life of the 2022 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The Company's outstanding Convertible Note balances as of December 31, 2015 consisted of the following (in thousands): Principal $ Less: unamortized debt discount ) Less: unamortized debt issuance costs ) ​ ​ ​ ​ ​ Net carrying amount $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity component $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In connection with the issuance of the 2022 Notes, the Company incurred approximately $11.7 million of debt issuance costs, which primarily consisted of initial purchasers' discounts and legal and other professional fees. The Company allocated these costs to the liability and equity components based on the allocation of the proceeds. The portion of these costs allocated to the equity components totaling approximately $4.0 million were recorded as a reduction to additional paid-in capital. The portion of these costs allocated to the liability components totaling approximately $7.7 million were recorded as a reduction in the carrying value of the debt on the balance sheet and are amortized to interest expense using the effective interest method over the expected life of the 2022 Notes. The Company determined the expected life of the 2022 Notes was equal to their seven-year term. The effective interest rate on the liability components of the 2022 Notes for the period from the date of issuance through December 31, 2015 was 9.34%. The following table sets forth total interest expense recognized related to the 2022 Notes during the year ended December 31, 2015 (in thousands): Contractual interest expense $ Amortization of debt issuance costs Amortization of debt discount ​ ​ ​ ​ ​ Total interest expense $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Future minimum payments under the 2022 Notes as of December 31, 2015, are as follows (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total future minimum payments under the 2022 Notes ​ ​ ​ ​ ​ Less: amounts representing interest ) Less: unamortized debt discount ) Less: unamortized debt issuance costs ) ​ ​ ​ ​ ​ Convertible senior notes balance $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible Note Hedge and Warrant Transactions with Respect to 2022 Notes To minimize the impact of potential dilution to the Company's Class A common stockholders upon conversion of the 2022 Notes, the Company entered into the Convertible Note Hedges covering 20,249,665 shares of the Company's Class A common stock in connection with the issuance of the 2022 Notes. The Convertible Note Hedges have an exercise price of approximately $16.58 per share and are exercisable when and if the 2022 Notes are converted. If upon conversion of the 2022 Notes, the price of the Company's Class A common stock is above the exercise price of the Convertible Note Hedges, the counterparties are obligated to deliver shares of the Company's Class A common stock and/or cash with an aggregate value approximately equal to the difference between the price of the Company's Class A common stock at the conversion date and the exercise price, multiplied by the number of shares of the Company's Class A common stock related to the Convertible Note Hedge being exercised. Concurrently with entering into the Convertible Note Hedges, the Company also sold Note Hedge Warrants to the Convertible Note Hedge counterparties to acquire 20,249,665 shares of the Company's Class A common stock, subject to customary anti-dilution adjustments. The strike price of the Note Hedge Warrants is initially $21.50 per share, subject to adjustment, and such warrants are exercisable over the 150 trading day period beginning on September 15, 2022. The Note Hedge Warrants could have a dilutive effect on the Class A common stock to the extent that the market price per share of the Company's Class A common stock exceeds the applicable strike price of such warrants. The Convertible Note Hedges and the Note Hedge Warrants are separate transactions entered into by the Company and are not part of the terms of the 2022 Notes. Holders of the 2022 Notes and the Note Hedge Warrants do not have any rights with respect to the Convertible Note Hedges. The Company paid approximately $91.9 million for the Convertible Note Hedges and recorded this amount as a long-term asset on the consolidated balance sheet. The Company received approximately $70.8 million for the Note Hedge Warrants and recorded this amount as a long-term liability, resulting in a net cost to the Company of approximately $21.1 million. The Convertible Note Hedges and Note Hedge Warrants are accounted for as derivative assets and liabilities, respectively, in accordance with ASC 815 (Note 5). 11% PhaRMA Notes due 2024 In January 2013, the Company closed a private placement of $175.0 million in aggregate principal amount of notes due on or before June 15, 2024. The PhaRMA Notes bear an annual interest rate of 11%, with interest payable March 15, June 15, September 15 and December 15 of each year (each a "Payment Date") which began on June 15, 2013. On March 15, 2014, the Company began making quarterly payments on the PhaRMA Notes equal to the greater of (i) 7.5% of net sales of LINZESS in the U.S. for the preceding quarter (the "Synthetic Royalty Amount") and (ii) accrued and unpaid interest on the PhaRMA Notes (the "Required Interest Amount"). Principal on the PhaRMA Notes will be repaid in an amount equal to the Synthetic Royalty Amount minus the Required Interest Amount, when this is a positive number, until the principal has been paid in full. Given the principal payments on the PhaRMA Notes are based on the Synthetic Royalty Amount, which will vary from quarter to quarter, the PhaRMA Notes may be repaid prior to June 15, 2024, the final legal maturity date. The Company made principal payments of approximately $13.9 million through December 31, 2015, and expects to pay approximately $25.0 million of the principal within twelve months following December 31, 2015. The PhaRMA Notes are secured solely by a security interest in a segregated bank account established to receive the required quarterly payments. Up to the amount of the required quarterly payments under the PhaRMA Notes, Allergan will deposit its quarterly profit (loss) sharing payments due to the Company under the collaboration agreement for North America, if any, into the segregated bank account. If the funds deposited by Allergan into the segregated bank account are insufficient to make a required payment of interest or principal on a particular Payment Date, the Company is obligated to deposit such shortfall out of the Company's general funds into the segregated bank account. The PhaRMA Notes may be redeemed at any time prior to maturity, in whole or in part, at the option of the Company. The Company will pay a redemption price equal to the percentage of outstanding principal balance of the PhaRMA Notes being redeemed specified below for the period in which the redemption occurs (plus the accrued and unpaid interest to the redemption date on the PhaRMA Notes being redeemed): Payment Dates Redemption Percentage From and including January 1, 2015 to and including December 31, 2015 % From and including January 1, 2016 to and including December 31, 2016 % From and including January 1, 2017 and thereafter % The PhaRMA Notes contain certain covenants related to the Company's obligations with respect to the commercialization of LINZESS and the related collaboration agreement with Allergan for North America, as well as certain customary covenants, including covenants that limit or restrict the Company's ability to incur certain liens, merge or consolidate or make dispositions of assets. The PhaRMA Notes also specify a number of events of default (some of which are subject to applicable cure periods), including, among other things, covenant defaults, other non-payment defaults, and bankruptcy and insolvency defaults. Upon the occurrence of an event of default, subject to cure periods in certain circumstances, all amounts outstanding may become immediately due and payable. The upfront cash proceeds of $175.0 million, less a discount of approximately $0.4 million for payment of legal fees incurred on behalf of the noteholders, were recorded as notes payable at issuance. The Company also capitalized approximately $7.3 million of debt issuance costs in connection with the PhaRMA Notes. During the three months ended June 30, 2015, the Company early adopted ASU 2015-03, which requires debt issuance costs to be presented in an entity's balance sheet as a direct deduction from the associated debt liability (Note 2). The Company's adoption of ASU 2015-03 resulted in a balance sheet reclassification of issuance costs in connection with the PhaRMA Notes of approximately $1.4 million of prepaid expenses and other current assets and approximately $2.8 million of other assets to a reduction in PhaRMA Notes payable as of December 31, 2014. The PhaRMA Notes issuance costs and discount are being amortized over the estimated term of the obligation using the effective interest method. The repayment provisions represent embedded derivatives that are clearly and closely related to the PhaRMA Notes and as such do not require separate accounting treatment. The accounting for the PhaRMA Notes requires the Company to make certain estimates and assumptions about the future net sales of LINZESS in the U.S. LINZESS has been marketed since December 2012 and the estimates of the magnitude and timing of LINZESS net sales are subject to variability and significant uncertainty. These estimates and assumptions are likely to change, which may result in future adjustments to the portion of the PhaRMA Notes that is classified as a current liability, the amortization of debt issuance costs and discounts as well as the accretion of the interest expense. Any such adjustments could be material to the Company's consolidated financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies Lease Commitments The Company leases its facility, offsite data storage location, vehicles and various equipment under leases that expire at varying dates through 2018. Certain of these leases contain renewal options, and require the Company to pay operating costs, including property taxes, insurance, maintenance and other operating expenses. As of December 31, 2015, the Company rents office and laboratory space at its corporate headquarters in Cambridge, Massachusetts under a non-cancelable operating lease, entered into in January 2007, as amended ("2007 Lease Agreement"). The 2007 Lease Agreement contains various provisions for renewal at the Company's option and, in certain cases, free rent periods and rent escalation tied to the Consumer Price Index. The rent expense, inclusive of the escalating rent payments and free rent periods, is recognized on a straight-line basis over the lease term through January 2018. The Company maintains a letter of credit securing its obligations under the lease agreement of approximately $7.6 million, which is recorded as restricted cash. In addition to rents due under this lease, the Company is obligated to pay facilities charges, including utilities and taxes. In connection with the 2007 Lease Agreement, the Company was provided allowances totaling approximately $22.9 million as reimbursement for financing capital improvements to the facility. The reimbursement amount is recorded as deferred rent on the consolidated balance sheets and is being amortized as a reduction to rent expense over the lease term, as applicable. During the three months ended September 30, 2014, the Company entered into arrangements, with the landlord's consent, to sublease a portion of its Cambridge, Massachusetts corporate headquarters as it did not intend to use the space for its operations. Under the first sublease, the Company's operating lease obligations through 2018 are partially offset by future sublease payments to it of approximately $16.1 million (of which approximately $5.0 million has been received through December 31, 2015) and under the second sublease, the Company's operating lease obligations through 2016 are partially offset by future sublease payments to it of approximately $1.9 million (of which approximately $1.1 million has been received through December 31, 2015). During the year ended December 31, 2014, the Company recorded aggregate charges of approximately $2.6 million, which represent its obligations to the landlord associated with the sublet space, net of sublease income due to the Company under the subleases, and a partial write-down of leasehold improvement assets not utilized by the Company under the terms of the subleases. In 2013, the Company entered into 36-month capital leases (the "2013 Vehicle Leases") for the vehicle fleet for its field-based sales force and medical science liaisons. The 2013 Vehicle Leases expire at various times through September 2016. In accordance with the terms of 2013 Vehicle Leases, the Company maintains a letter of credit securing its obligations under the lease agreements of $0.5 million, which is recorded as restricted cash. In November 2015, the Company entered into 12-month capital leases (the "2015 Vehicle Leases") for certain vehicles within its vehicle fleet for its field-based sales force and medical science liaisons. The 2015 Vehicle Leases expire at varying times beginning in November 2016. In accordance with the terms of the 2015 Vehicle Leases, the Company maintains a letter of credit securing its obligations under the lease agreements of $0.6 million, which is recorded as restricted cash. In connection with entering into the 2015 Vehicle Leases, certain of the 2013 Vehicle Leases were terminated as of December 31, 2015. At December 31, 2015, the weighted average interest rate on the outstanding 2015 Vehicle Lease obligations was approximately 3.3% and the weighted average interest rate on the outstanding 2013 Vehicle Lease obligations was approximately 7.7%. The Company has also entered into capital leases for certain computer and office equipment. These capital leases expire in April 2018. At December 31, 2015, the weighted average interest rate on the outstanding capital lease obligations was approximately 14.5%. At December 31, 2015, future minimum lease payments under all non-cancelable lease arrangements were as follows (in thousands): Operating Lease Payments Lease Payments to be Received from Subleases Net Operating Lease Payments Capital Lease Payments 2016 $ $ ) $ $ 2017 ) 2018 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total future minimum lease payments $ $ ) $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: amounts representing interest ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital lease obligations at December 31, 2015 Less: current portion of capital lease obligations ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital lease Obligations, net of current portion $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rental expense, net of sublease income of approximately $5.3 million and approximately $2.6 million, under the operating leases amounted to approximately $6.3 million and approximately $10.2 million for the years ended December 31, 2015 and 2014, respectively. Rental expense amounted to approximately $8.8 million for the year ended December 31, 2013. Commercial Supply Commitments The Company has entered into multiple commercial supply agreements for the purchase of linaclotide finished drug product and API. Two of the Company's API supply agreements for supplying API to its collaboration partners outside of North America contain minimum purchase commitments. In July 2015 and August 2015, the Company entered into amendments to its agreements with two of its suppliers of linaclotide API. One amendment reduced the Company's non-cancelable purchase commitments and the other increased the Company's non-cancelable purchase commitments, but extended the timeframe over which the Company must purchase the API. The amended contracts include total non-cancelable commercial supply purchase obligations of approximately $34.9 million through 2023. During the year ended December 31, 2015, the Company recognized approximately $10.1 million as an accrual for excess purchases commitments that is recorded in other liabilities in the Company's consolidated balance sheet (Note 7). Payments under these accrued excess purchase commitments begin in 2017, and are approximately $2.5 million in each of the years 2017, 2018, 2019 and 2020. As of December 31, 2015, the Company's unrecognized minimum purchase requirements and other firm commitments related to the supply contracts associated with the territories not covered by the partnerships with Allergan for North America were as follows (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total unrecognized minimum purchase requirements $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In addition, the Company and Allergan are jointly obligated to make minimum purchases of linaclotide API for the territories covered by the Company's collaboration with Allergan for North America. Currently, Allergan fulfills all such minimum purchase commitments and, as a result, they are excluded from the amounts above. Commitments Related to the Collaboration and License Agreements Under the collaborative agreements with Allergan for North America and AstraZeneca for China, Hong Kong and Macau, respectively, the Company shares with Allergan and AstraZeneca all development and commercialization costs related to linaclotide in the U.S. and for China, Hong Kong and Macau, respectively. The actual amounts that the Company pays its partners or that partners pay to the Company will depend on numerous factors outside of the Company's control, including the success of certain clinical development efforts with respect to linaclotide, the content and timing of decisions made by the regulators, the reimbursement and competitive landscape around linaclotide and the Company's other product candidates, and other factors. In addition, the Company has commitments to make potential future milestone payments to third parties under certain of its license and collaboration arrangements. These milestones primarily include the commencement and results of clinical trials, obtaining regulatory approval in various jurisdictions and the future commercial success of development programs, the outcome and timing of which are difficult to predict and subject to significant uncertainty. In addition to the milestones discussed above, the Company is obligated to pay royalties on future sales, which are contingent on generating levels of sales of future products that have not been achieved and may never be achieved. These agreements are more fully described in Note 4, Collaboration, License and Co-promotion Agreements , to these consolidated financial statements. Other Funding Commitments As of December 31, 2015, the Company has several on-going studies in various clinical trial stages. The Company's most significant clinical trial expenditures are to contract research organizations ("CRO"). The contracts with CROs generally are cancellable, with notice, at the Company's option and do not have any significant cancellation penalties. Guarantees As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company's request in such capacity. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company has directors' and officers' insurance coverage that is intended to limit its exposure and enable it to recover a portion of any future amounts paid. The Company enters into certain agreements with other parties in the ordinary course of business that contain indemnification provisions. These typically include agreements with directors and officers, business partners, contractors, landlords, clinical sites and customers. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company's activities. These indemnification provisions generally survive termination of the underlying agreements. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. However, to date the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of these obligations is minimal. Accordingly, the Company had no liabilities recorded for these obligations as of December 31, 2015 and 2014. Litigation From time to time, the Company is involved in various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these other claims cannot be predicted with certainty, management does not believe that the outcome of any of these ongoing legal matters, individually and in aggregate, will have a material adverse effect on the Company's consolidated financial statements. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity | |
Stockholders' Equity | 12. Stockholders' Equity Preferred Stock The Company's preferred stock may be issued from time to time in one or more series, with each such series to consist of such number of shares and to have such terms as adopted by the board of directors. Authority is given to the board of directors to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitation or restrictions thereof, including without limitation, dividend rights, conversion rights, redemption privileges and liquidation preferences. Common Stock The Company has designated two series of common stock, Series A common stock ("Class A Common Stock") and Series B common stock ("Class B Common Stock"). All shares of common stock that were outstanding immediately prior to August 2008 were converted into shares of Class B Common Stock. The holders of Class A Common Stock and Class B Common Stock vote together as a single class. Class A Common Stock is entitled to one vote per share. Class B Common Stock is also entitled to one vote per share with the following exceptions: (1) after the completion of an initial public offering ("IPO") of the Company's stock, the holders of the Class B Common Stock are entitled to ten votes per share if the matter is an adoption of an agreement of merger or consolidation, an adoption of a resolution with respect to the sale, lease, or exchange of the Company's assets or an adoption of dissolution or liquidation of the Company, and (2) Class B common stockholders are entitled to ten votes per share on any matter if any individual, entity, or group seeks to obtain or has obtained beneficial ownership of 30% or more of the Company's outstanding shares of common stock. Class B Common Stock can be sold at any time and irrevocably converts to Class A Common Stock, on a one-for-one basis, upon sale or transfer. The Class B Common Stock is also entitled to a separate class vote for the issuance of additional shares of Class B Common Stock (except pursuant to dividends, splits or convertible securities), or any amendment, alteration or repeal of any provision of the Company's charter. All Class B Common Stock will automatically convert into Class A Common Stock upon the earliest of: • the later of (1) the first date on which the number of shares of Class B Common Stock then outstanding is less than 19,561,556 which represents 25% of the number of shares of Class B Common Stock outstanding immediately following the completion of the Company's IPO or (2) December 31, 2018; • December 31, 2038; or • a date agreed to in writing by a majority of the holders of the Class B Common Stock. The Company has reserved such number of shares of Class A Common Stock as there are outstanding shares of Class B Common Stock solely for the purpose of effecting the conversion of the Class B Common Stock. The holders of shares of Class A Common Stock and Class B Common Stock are entitled to dividends if and when declared by the board of directors. In the event that dividends are paid in the form of common stock or rights to acquire common stock, the holders of shares of Class A Common Stock shall receive Class A Common Stock or rights to acquire Class A Common Stock and the holders of shares of Class B Common Stock shall receive Class B Common Stock or rights to acquire Class B Common Stock, as applicable. In the event of a voluntary or involuntary liquidation, dissolution, distribution of assets, or winding up of the Company, the holders of shares of Class A Common Stock and the holders of shares of Class B Common Stock are entitled to share equally, on a per share basis, in all assets of the Company of whatever kind available for distribution to the holders of common stock. The Company has reserved, out of its authorized but unissued shares of Class A Common Stock, sufficient shares to affect the conversion of the 2022 Notes and the Note Hedge Warrants, pursuant to the terms thereof (Note 10). During the second quarter of 2013, the Company sold 11,204,948 shares of its Class A Common Stock through a firm commitment, underwritten public offering at a price to the public of $13.00 per share. As a result of this offering, the Company received aggregate net proceeds, after underwriting discounts and commissions and other offering expenses, of approximately $137.8 million. In the first quarter of 2014, the Company sold 15,784,325 shares of its Class A Common Stock through a firm commitment, underwritten public offering at a price to the public of $12.75 per share. As a result of this offering, the Company received aggregate net proceeds, after underwriting discounts and commissions and other offering expenses, of approximately $190.4 million. |
Stock Benefit Plans
Stock Benefit Plans | 12 Months Ended |
Dec. 31, 2015 | |
Stock Benefit Plans | |
Stock Benefit Plans | 13. Stock Benefit Plans The following table summarizes the expense recognized for share-based compensation arrangements in the consolidated statements of operations (in thousands): Years Ended December 31, 2015 2014 2013 Employee stock options $ $ $ Restricted stock units — — Restricted stock awards Non-employee stock options — Employee stock purchase plan Workforce reduction — — Stock award ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share-based compensation is reflected in the consolidated statements of operations as follows for the years ended December 31, 2015, 2014 and 2013 (in thousands): Years Ended December 31, 2015 2014 2013 Research and development $ $ $ Selling, general and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ On November 4, 2014, the Company agreed to accelerate the vesting of all of a former executive officer's outstanding unvested stock options on the executive officer's departure date of December 31, 2014, and to allow the exercise of vested stock options for up to two years subsequent to the departure date, or until their expiration, whichever is earlier. These equity modifications resulted in an incremental charge of approximately $2.3 million, which was recorded within selling, general and administrative expenses during the year ended December 31, 2014. Stock Benefit Plans The Company has two share-based compensation plans pursuant to which awards are currently being made: the Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan ("2010 Equity Plan") and the Amended and Restated 2010 Employee Stock Purchase Plan ("2010 Purchase Plan"). The Company also has two share-based compensation plans under which there are outstanding awards, but from which no further awards will be made: the Amended and Restated 2005 Stock Incentive Plan ("2005 Equity Plan") and the Amended and Restated 2002 Stock Incentive Plan ("2002 Equity Plan"). At December 31, 2015, there were 13,486,020 shares available for future grant under all such plans. 2010 Equity Plan During 2010, the Company's stockholders approved the 2010 Equity Plan under which stock options, restricted stock awards, RSUs, and other stock-based awards may be granted to employees, officers, directors, or consultants of the Company. There were 6,000,000 shares of common stock initially reserved for issuance under the 2010 Equity Plan. The number of shares available for future grant may be increased on the first day of each fiscal year by an amount equal to the lesser of: (i) 6,600,000; (ii) 4% of the number of outstanding shares of common stock on the first day of each fiscal year; and (iii) an amount determined by the board of directors. Awards that are returned to the Company's other equity plans as a result of their expiration, cancellation, termination or repurchase are automatically made available for issuance under the 2010 Equity Plan. At December 31, 2015, there were 11,410,963 shares available for future grant under the 2010 Equity Plan. 2010 Purchase Plan During 2010, the Company's stockholders approved the 2010 Purchase Plan, which gives eligible employees the right to purchase shares of common stock at the lower of 85% of the fair market value on the first or last day of an offering period. Each offering period is six months. There were 400,000 shares of common stock initially reserved for issuance pursuant to the 2010 Purchase Plan. The number of shares available for future grant under the 2010 Purchase Plan may be increased on the first day of each fiscal year by an amount equal to the lesser of: (i) 1,000,000 shares, (ii) 1% of the Class A shares of common stock outstanding on the last day of the immediately preceding fiscal year, or (iii) such lesser number of shares as is determined by the board of directors. At December 31, 2015, there were 2,075,057 shares available for future grant under the 2010 Purchase Plan. 2005 Equity Plan and 2002 Equity Plan The 2005 Equity Plan and 2002 Equity Plan provided for the granting of stock options, restricted stock awards, RSUs, and other share-based awards to employees, officers, directors, consultants, or advisors of the Company. At December 31, 2015, there were no shares available for future grant under the 2005 Equity Plan or the 2002 Equity Plan. Restricted Stock Awards In 2015, the Company granted an aggregate of 151,604 shares of Class A Common Stock to independent members of the board of directors under restricted stock agreements in accordance with the terms of the 2010 Equity Plan and the Company's director compensation plan, effective in January 2014. These shares of restricted stock vest ratably over the period of service from the Company's 2015 annual meeting of stockholders through the Company's 2016 annual meeting of stockholders, provided the individual continues to serve on the Company's board of directors through each vest date. In 2014, the Company granted an aggregate of 288,606 shares of common stock to independent members of the board of directors under restricted stock agreements in accordance with the terms of the 2010 Equity Plan and the Company's director compensation plan, effective in January 2014. These shares of restricted stock vested ratably over the period of service from January 2014 through the Company's 2015 annual meeting of stockholders, provided the individual continued to serve on the Company's board of directors through each vest date. A summary of the unvested shares of restricted stock as of December 31, 2015 is presented below: Number of Shares Weighted- Average Grant Date Fair Value Unvested as of December 31, 2014 $ Granted $ Vested ) $ Forfeited — $ — ​ ​ ​ ​ ​ ​ ​ ​ Unvested as of December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted Stock Units In 2015, the Company began utilizing RSUs, in addition to stock options as part of the equity compensation it provides to its employees, each RSU representing the right to receive one share of the Company's Class A Common Stock pursuant to the terms of the applicable award agreement and granted pursuant to the terms of the Company's 2010 Equity Plan. The RSUs generally vest 25% per year on the approximate anniversary of the date of grant until fully vested, provided the employee remains continuously employed with the Company through each vesting date. Shares of the Company's Class A Common Stock are delivered to the employee upon vesting, subject to payment of applicable withholding taxes. The fair value of all RSUs is based on the market value of the Company's Class A Common Stock on the date of grant. Compensation expense, including the effect of estimated forfeitures, is recognized over the applicable service period. A summary of RSU activity for the year ended December 31, 2015 is as follows: Number of Shares Weighted- Average Grant Date Fair Value Unvested as of December 31, 2014 — $ — Granted $ Vested — $ — Forfeited ) $ ​ ​ ​ ​ ​ ​ ​ ​ Unvested as of December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock Options Stock options granted under the Company's equity plans generally have a ten-year term and vest over a period of four years, provided the individual continues to serve at the Company through the vesting dates. Options granted under all equity plans are exercisable at a price per share not less than the fair market value of the underlying common stock on the date of grant. The estimated fair value of options, including the effect of estimated forfeitures, is recognized over the requisite service period, which is typically the vesting period of each option. The weighted average assumptions used to estimate the fair value of the stock options using the Black-Scholes option-pricing model were as follows for the years ended December 31, 2015, 2014 and 2013: Years Ended December 31, 2015 2014 2013 Expected volatility % % % Expected term (in years) Risk-free interest rate % % % Expected dividend yield — % — % — % Prior to February 3, 2010, the Company was not publicly traded and therefore had no trading history. Therefore, the Company has been using a blended volatility rate that blends its own historical volatility with that of comparable public companies. For purposes of identifying comparable companies, the Company selected publicly-traded companies that are in the biopharmaceutical industry, have products or product candidates in similar therapeutic areas and stages of nonclinical and clinical development, have sufficient trading history to derive a historic volatility rate and have similar vesting terms as the Company's options. Beginning in 2014, the Company estimates the expected term using historical data. The risk-free interest rate used for each grant is based on a zero-coupon U.S. Treasury instrument with a remaining term similar to the expected term of the share-based award. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock in the foreseeable future; therefore, the expected dividend yield is assumed to be zero. The weighted-average grant date fair value per share of options granted during the years ended December 31, 2015, 2014 and 2013 was $6.73, $6.47 and $5.96, respectively. The Company's Class B Common Stock is issuable upon exercise of options granted prior to the closing of the Company's IPO under the 2002 Equity Plan and the 2005 Equity Plan, and its Class A Common Stock is issuable upon exercise of all options granted after the closing of the Company's IPO under the Company's equity plans. At December 31, 2015, options exercisable into 4,554,128 shares of Class B Common Stock and 16,012,732 shares of Class A Common Stock were outstanding. Subject to approval by the board of directors, option grantees under the 2002 Equity Plan and the 2005 Equity Plan may have the right to exercise an option prior to vesting. The exercise of these shares is not substantive and as a result, the cash paid for the exercise prices is considered a deposit or prepayment of the exercise price and is recorded as a liability. Amounts received upon the exercise of these shares were not material to the consolidated financial statements at December 31, 2015 and 2014. The Company, from time to time, issues certain time-accelerated stock options to certain employees. The vesting of these options accelerates upon the achievement of certain performance-based milestones. If these criteria are not met, such options will vest between six and ten years after the date of grant. During the year ended December 31, 2015, no shares vested as a result of milestone or service period achievements. At December 31, 2015 and 2014, there were 400,000 shares issuable under unvested time-accelerated options. When achievement of the milestone is not deemed probable, the Company recognizes compensation expense associated with time-accelerated stock options initially over the vesting period of the respective stock option. When deemed probable of achievement, the Company expenses the remaining unrecognized compensation over the implicit service period. The Company recorded share-based compensation related to these time-accelerated options of an insignificant amount, $1.2 million, and an insignificant amount during the years ended December 31, 2015, 2014 and 2013, respectively. The Company also grants to certain employees performance-based options to purchase shares of common stock. These options are subject to performance-based milestone vesting. During the year ended December 31, 2015, no shares vested as a result of performance milestone achievements. The Company recorded share-based compensation related to these performance-based options of approximately $0.2 million, approximately $0.5 million, and an insignificant amount, respectively, during the years ended December 31, 2015, 2014 and 2013. The following table summarizes stock option activity under the Company's share-based compensation plans, including performance-based options: Shares of Common Stock Attributable to Options Weighted- Average Exercise Price Weighted- Average Contractual Life Aggregate Intrinsic Value (in years) (in thousands) Outstanding at December 31, 2014 $ $ Granted $ Exercised ) $ Cancelled ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2015 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested or expected to vest at December 31, 2015 $ $ Exercisable at December 31, 2015 (1) $ $ (1) All stock options granted under the 2002 Equity Plan and the 2005 Equity Plan contain provisions allowing for the early exercise of such options into restricted stock. The exercisable shares disclosed above represent those that were vested as of December 31, 2015. The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was approximately $17.7 million, $26.9 million and approximately $19.7 million, respectively. The intrinsic value was calculated as the difference between the fair value of the Company's common stock and the exercise price of the option issued. The following table sets forth the Company's unrecognized share-based compensation expense, net of estimated forfeitures, as of December 31, 2015, by type of award and the weighted-average period over which that expense is expected to be recognized: Unrecognized Expense, Net of Estimated Forfeitures Weighted-Average Remaining Recognition Period (in thousands) (in years) Type of award: Stock options with time-based vesting $ Restricted stock awards Restricted stock units Time-accelerated stock options (1) — Performance-based options (1) — (1) The weighted-average remaining recognition period cannot be determined for performance-based or time-accelerated options due to the nature of such awards, as detailed above. The total unrecognized share-based compensation cost will be adjusted for future changes in estimated forfeitures. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Income Taxes | 14. Income Taxes In general, the Company has not recorded a provision for federal or state income taxes as it has had cumulative net operating losses since inception. A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows (in thousands): Years Ended December 31, 2015 2014 2013 Income tax benefit using U.S. federal statutory rate $ ) $ ) $ ) Permanent differences State income taxes, net of federal benefit ) ) ) Stock-based compensation Fair market valuation of Note Hedge Warrants and Convertible Note Hedges — — Tax credits ) ) ) Expiring net operating losses and tax credits — Effect of change in state tax rate on deferred tax assets and deferred tax liabilities ) Change in the valuation allowance Other ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ — $ — $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Components of the Company's deferred tax assets and liabilities are as follows (in thousands): Years Ended December 31, 2015 2014 Deferred tax assets: Net operating loss carryforwards $ $ Tax credit carryforwards Capitalized research and development Deferred revenue Other ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets Deferred tax liabilities: Basis difference on 2022 Notes ) — ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities ) — ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax asset Valuation allowance ) ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax asset $ — $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Management has considered the Company's history of operating losses and concluded, in accordance with the applicable accounting standards, that it is more likely than not that the Company may not realize the benefit of its deferred tax assets. Accordingly, the deferred tax assets have been fully reserved at December 31, 2015 and 2014. Management reevaluates the positive and negative evidence on a quarterly basis. The valuation allowance increased approximately $40.7 million during the year ended December 31, 2015, due primarily to an increase in the Company's tax credit carryforwards, capitalized research and development expenses and share-based compensation expense. Additionally, the change in valuation allowance noted in the table above reflects the impact of a deferred tax liability being recorded through additional paid-in capital of approximately $6.9 million for the establishment of basis differences on the 2022 Notes. The valuation allowance increased approximately $58.7 million during the year ended December 31, 2014, due primarily to the increase in the net operating loss carryforwards and tax credits. Subject to the limitations described below, at December 31, 2015 and 2014, the Company has net operating loss carryforwards of approximately $857.9 million and approximately $745.6 million, respectively, to offset future federal taxable income, which expire beginning in 2018 continuing through 2035. The federal net operating loss carryforwards exclude approximately $61.6 million of deductions related to the exercise of stock options. This amount represents an excess tax benefit and has not been included in the gross deferred tax asset reflected for net operating losses. This amount will be recorded as an increase in additional paid in capital on the consolidated balance sheet once the excess benefits are "realized" in accordance with ASC 718, Compensation—Stock Compensation ("ASC 718"). As of December 31, 2015 and 2014, the Company had state net operating loss carryforwards of approximately $566.7 million and approximately $517.4 million, respectively, to offset future state taxable income, which have begun to expire and will continue to expire through 2035. The Company also had tax credit carryforwards of approximately $37.1 million and approximately $35.1 million as of December 31, 2015 and 2014, respectively, to offset future federal and state income taxes, which expire at various times through 2035. Utilization of net operating loss carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986 ("IRC Section 382") and with Section 383 of the Internal Revenue Code of 1986, as well as similar state provisions. These ownership changes may limit the amount of net operating loss carryforwards and research and development credit carryforwards that can be utilized annually to offset future taxable income and taxes, respectively. In general, an ownership change, as defined by IRC Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. The Company has completed several financings since its inception which may result in a change in control as defined by IRC Section 382, or could result in a change in control in the future. The following table summarizes the changes in the Company's unrecognized income tax benefits for the year ended December 31, 2015 (in thousands): Balance at January 1, 2015 $ — Increases based on tax positions related to the current period Increases for tax positions related to prior periods Decreases for tax positions in prior periods ) Decreases for statute of limitation expiration — Decreases for settlement of tax audits — ​ ​ ​ ​ ​ Balance at December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company had gross unrecognized tax benefits of approximately $17.6 million as of December 31, 2015. The Company did not have any unrecognized tax benefits as of December 31, 2014 and 2013. Of the approximately $17.6 million of total unrecognized tax benefits at December 31, 2015, none of the unrecognized tax positions would, if recognized, affect the Company's effective tax rate, as this item only impacts the Company's deferred tax accounting. The Company will recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. As of December 31, 2015, 2014 and 2013, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company's consolidated statements of operations. The statute of limitations for assessment by the Internal Revenue Service ("IRS") and state tax authorities is open for tax years ended December 31, 2014, 2013, and 2012, although carryforward attributes that were generated prior to tax year 2012 may still be adjusted upon examination by the IRS or state tax authorities if they either have been, or will be, used in a future period. There are currently no federal or state income tax audits in progress. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2015 | |
Defined Contribution Plan | |
Defined Contribution Plan | 15. Defined Contribution Plan The Ironwood Pharmaceuticals, Inc. 401(k) Savings Plan is a defined contribution plan in the form of a qualified 401(k) plan in which substantially all employees are eligible to participate upon employment. Subject to certain IRS limits, eligible employees may elect to contribute from 1% to 100% of their compensation. Company contributions to the plan are at the sole discretion of the Company's board of directors. Currently, the Company provides a matching contribution of 75% of the employee's contributions, up to $6,000 annually. During the years ended December 31, 2015, 2014 and 2013, the Company recorded approximately $2.5 million, approximately $2.6 million, and approximately $2.8 million of expense related to its 401(k) company match, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions | |
Related Party Transactions | 16. Related Party Transactions In September 2009, Allergan became a related party when the Company sold to Allergan 2,083,333 shares of the Company's convertible preferred stock. In November 2009, Almirall became a related party when the Company sold to Almirall 681,819 shares of the Company's convertible preferred stock (Note 4). These shares of preferred stock converted to the Company's Class B common stock on a 1:1 basis upon the completion of the Company's IPO in February 2010. Amounts due to and due from Allergan and Almirall are reflected as related party accounts payable and related party accounts receivable, respectively. These balances are reported net of any balances due to or from the related party. At December 31, 2015, the Company did not have any related party accounts receivable associated with Almirall, and approximately $51.6 million in related party accounts receivable, net of related party accounts payable, associated with Allergan. At December 31, 2014, the Company did not have any related party accounts receivable associated with Almirall and approximately $25.8 million in related party accounts receivable, net of related party accounts payable, associated with Allergan. |
State Grants
State Grants | 12 Months Ended |
Dec. 31, 2015 | |
State Grants | |
State Grants | 17. State Grants In the years ended December 31, 2012 and 2011, the Company was awarded an approximately $1.7 million and approximately $0.9 million tax incentive, respectively, associated with the Life Sciences Tax Incentive Program from the Massachusetts Life Sciences Center. The program was established in 2008 in order to incentivize life sciences companies to create new sustained jobs in Massachusetts. Jobs must be maintained for at least five years, during which time the grant proceeds can be recovered by the Massachusetts Department of Revenue ("DOR") if the Company does not meet and maintain its job creation commitments. The award received in 2011 was recognized as other income in the consolidated statement of operations in the third quarter of 2011, as the Company believed it had satisfied its job creation commitments. For the approximately $1.7 million in funds received in 2012, the Company believed it had satisfied its job creation commitments for the years 2012 and 2013 and recognized approximately $0.7 million as other income in the consolidated statement of operations for the year ended December 31, 2014. The remaining approximately $1.0 million was recorded as other current liabilities at December 31, 2014 and was returned to the DOR during the year ended December 31, 2015, as the Company did not satisfy the job creation commitments under the award. |
Workforce Reduction
Workforce Reduction | 12 Months Ended |
Dec. 31, 2015 | |
Workforce Reduction. | |
Workforce Reduction | 18. Workforce Reduction On January 8, 2014, the Company announced a headcount reduction of approximately 10% to align its workforce with its strategy. The field-based sales force and medical science liaison team were excluded from the workforce reduction. During the three months ended March 31, 2014, the Company substantially completed the implementation of this reduction in workforce and, in accordance with ASC 420, Exit or Disposal Cost Obligations, recorded approximately $4.3 million of costs, including employee severance, benefits and related costs. These costs were reflected in the Consolidated Statement of Operations as approximately $3.0 million in research and development expenses and approximately $1.2 million in selling, general and administrative expenses. The Company did not record any additional charges associated with this workforce reduction during the years ended December 31, 2015 and 2014. All payments related to this reduction in workforce were made by the end of 2014. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | 19. Selected Quarterly Financial Data (Unaudited) The following table contains quarterly financial information for the years ended December 31, 2015 and 2014. The Company believes that the following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period. First Quarter Second Quarter Third Quarter Fourth Quarter Total Year (in thousands, except per share data) 2015 Collaborative arrangements revenue $ $ $ $ $ Total cost and expenses (1) Other (expense) income, net (2) ) ) ) ) ) Net loss ) ) ) ) ) Net loss per share—basic and diluted $ ) $ ) $ ) $ ) $ ) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year (in thousands, except per share data) 2014 Collaborative arrangements revenue (3) $ $ $ $ $ Total cost and expenses (4) Other (expense) income, net ) ) ) ) ) Net loss ) ) ) ) ) Net loss per share—basic and diluted $ ) $ ) $ ) $ ) $ ) (1) Total costs and expenses for the second and third quarter of the year ended December 31, 2015 includes approximately $8.2 million and $9.4 million, respectively, related to a write down of inventory to net realizable value and accruals for excess non-cancelable inventory purchase commitments (Note 7). (2) Other (expense) income, net for the second and third quarters of the year ended December 31, 2015 includes approximately $0.2 million and $11.4 million, respectively, as a loss on derivatives. Other (expense) income, net for the fourth quarter of the year ended December 31, 2015 includes approximately $1.6 million, as a gain on derivatives. The gain (loss) on derivatives consists of the change in fair value of the Company's Convertible Note Hedges and Note Hedge Warrants, which are recorded as derivative assets and liabilities. The Convertible Note Hedges and the Note Hedge Warrants are recorded at fair value at each reporting period and changes in fair value are recorded in the Company's consolidated statements of operations (Note 5). (3) Collaborative arrangements revenue for the fourth quarter of the year ended December 31, 2014 includes approximately $10.2 million related to the receipt of a milestone payment under the Company's license agreement with Astellas for the enrollment of the first study subject in a Phase III study for linaclotide in Japan, which was achieved in November 2014 (Note 4). (4) Total costs and expenses for the second and fourth quarter of the year ended December 31, 2014 includes approximately $8.9 million and $11.4 million, respectively, related to a write down of inventory to net realizable value (Note 7). |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Ironwood Pharmaceuticals, Inc. and its wholly owned subsidiaries, Ironwood Pharmaceuticals Securities Corporation and Ironwood Pharmaceuticals GmbH. All intercompany transactions and balances are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles requires the Company's management to make estimates and judgments that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the amounts of revenues and expenses during the reported periods. On an on-going basis, the Company's management evaluates its estimates, judgments and methodologies. Significant estimates and assumptions in the consolidated financial statements include those related to revenue recognition, available-for-sale securities, inventory valuation, and related reserves; impairment of long-lived assets; initial valuation procedures for the issuance of convertible notes; fair value of derivatives; balance sheet classification of notes payable and convertible notes; income taxes, including the valuation allowance for deferred tax assets; research and development expenses; contingencies and share-based compensation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investment instruments with a remaining maturity when purchased of three months or less to be cash equivalents. Investments qualifying as cash equivalents primarily consist of money market funds and U.S. government-sponsored securities. The carrying amount of cash equivalents approximates fair value. The amount of cash equivalents included in cash and cash equivalents was approximately $258.2 million and approximately $61.0 million at December 31, 2015 and 2014, respectively. |
Restricted Cash | Restricted Cash The Company is contingently liable under unused letters of credit with a bank, related to the Company's facility lease and automobile lease agreements, in the amount of approximately $8.7 million and approximately $8.1 million as of December 31, 2015 and 2014, respectively. As a result, the Company has restricted cash of approximately $8.7 million and approximately $8.1 million as of December 31, 2015 and 2014, respectively, securing these letters of credit. The cash will be restricted until the termination of the lease arrangements. |
Available-for-Sale Securities | Available-for-Sale Securities The Company classifies all short-term investments with a remaining maturity when purchased of greater than three months as available-for-sale. Available-for-sale securities are recorded at fair value, with the unrealized gains and losses reported in other comprehensive income (loss). The amortized cost of debt securities in this category is adjusted for the amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest and investment income. Realized gains and losses, interest, dividends, and declines in value judged to be other than temporary on available-for-sale securities are included in interest and investment income. The cost of securities sold is based on the specific identification method for purposes of recording realized gains and losses. To determine whether an other-than-temporary impairment exists, the Company considers whether it has the ability and intent to hold the investment until a market price recovery, and whether evidence indicating the recoverability of the cost of the investment outweighs evidence to the contrary. There were no other-than-temporary impairments for the years ended December 31, 2015, 2014 or 2013. |
Inventory | Inventory Inventory is stated at the lower of cost or market with cost determined under the first-in, first-out basis. The Company evaluates inventory levels quarterly and any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired is written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. The Company also assesses, on a quarterly basis, whether it has any excess non-cancelable purchase commitments resulting from its minimum supply agreements with its suppliers of linaclotide active pharmaceutical ingredient ("API"). The Company relies on data from several sources to estimate the net realizable value of inventory and non-cancelable purchase commitments, including partner forecasts of projected inventory purchases that are received quarterly, the Company's internal forecasts and related process, historical sales by geographic region, and the status of and progress toward commercialization of linaclotide in partnered territories. The Company capitalizes inventories manufactured in preparation for initiating sales of a product candidate when the related product candidate is considered to have a high likelihood of regulatory approval and the related costs are expected to be recoverable through sales of the inventories. In determining whether or not to capitalize such inventories, the Company evaluates, among other factors, information regarding the product candidate's safety and efficacy, the status of regulatory submissions and communications with regulatory authorities and the outlook for commercial sales, including the existence of current or anticipated competitive drugs and the availability of reimbursement. In addition, the Company evaluates risks associated with manufacturing the product candidate, including the ability of the Company's third-party suppliers to complete the validation batches, and the remaining shelf life of the inventories. Costs associated with developmental products prior to satisfying the inventory capitalization criteria are charged to research and development expense as incurred. |
Concentrations of Suppliers | Concentrations of Suppliers The Company relies on third-party manufacturers and its collaboration partners to manufacture the linaclotide API and final linaclotide drug product. Currently, there are two third-party manufacturers approved for the production of the linaclotide API in three facilities. Each of Allergan and Astellas is responsible for drug product manufacturing of linaclotide into finished product for its respective territory. Under the Company's collaboration with AstraZeneca, the Company is responsible for drug product and finished goods manufacturing for China, Hong Kong and Macau. The Company also has an agreement with another independent third party to serve as a second source of drug product manufacturing of linaclotide for its partnered territories. If any of the Company's suppliers were to limit or terminate production or otherwise fail to meet the quality or delivery requirements needed to satisfy the supply commitments, the process of locating and qualifying alternate sources could require up to several months, during which time the Company's production could be delayed. Such delays could have a material adverse effect on the Company's business, financial position and results of operations. |
Accounts Receivable and Related Valuation Account | Accounts Receivable and Related Valuation Account The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding invoices and the overall quality and age of those invoices not specifically reviewed. The Company's receivables primarily relate to amounts reimbursed under its collaboration, license and co-promotion agreements. The Company believes that credit risks associated with these partners are not significant. To date, the Company has not had any write-offs of bad debt, and the Company did not have an allowance for doubtful accounts as of December 31, 2015 and 2014. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents, restricted cash, available-for-sale securities, and accounts receivable. The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are subject to minimal credit risk. The Company's available-for-sale investments primarily consist of U.S. Treasury securities and certain U.S. government-sponsored securities and potentially subject the Company to concentrations of credit risk. The Company has adopted an investment policy which limits the amounts the Company may invest in any one type of investment, and requires all investments held by the Company to be at least A+ rated, thereby reducing credit risk exposure. Accounts receivable, including related party accounts receivable, primarily consist of amounts due under the linaclotide collaboration agreement with Allergan for North America, the linaclotide license agreement with Astellas for Japan and the co-promotion agreement with Exact Sciences for its Cologuard product (Note 4) for which the Company does not obtain collateral. Accounts receivable or payable to or from Allergan and Almirall are presented as related party transactions on the consolidated balance sheets as both entities own common stock of the Company. The percentages of revenue recognized from significant customers of the Company in the years ended December 31, 2015, 2014 and 2013 as well as the account receivable balances, net of any payables due, at December 31, 2015 and 2014 are included in the following table: Accounts Receivable Revenue December 31, Years Ended December 31, 2015 2014 2015 2014 2013 Collaborative Partner: Linaclotide Agreements: Allergan (North America) % % % % % Almirall (Europe) (1) — % — % — % % % Astellas (Japan) % — % % % % AstraZeneca (China, Hong Kong and Macau) (2) % — % % % % Co-promotion Agreements: Exact Sciences (Cologuard) % — % % — % — % (1) In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. There were no accounts receivable due from Almirall as of December 31, 2015. (2) At December 31, 2014, the Company was in a net payable position with AstraZeneca; as such, there was no accounts receivable due from AstraZeneca as of December 31, 2014. For the years ended December 31, 2015, 2014 and 2013, no additional customers accounted for more than 10% of the Company's revenue. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs include costs directly attributable to the Company's offerings of its equity securities and its debt financings. Costs attributable to equity offerings are charged against the proceeds of the offering once the offering is completed. Costs attributable to debt financings are deferred and amortized over the term of the debt using the effective interest rate method. A portion of the deferred financing cost incurred in connection with the 2022 Notes was deemed to relate to the equity component and was allocated to additional paid in capital. In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires debt issuance costs to be presented in an entity's balance sheet as a direct deduction from the associated debt liability. While the standard is retrospectively effective for annual reporting periods beginning after December 15, 2015, early adoption is permitted for any annual reporting period or interim period for which the entity's financial statements have not yet been issued. The Company elected early adoption of ASU 2015-03 in the three months ended June 30, 2015, which resulted in a balance sheet reclassification of issuance costs in connection with the 11% PhaRMA Notes due 2024 (the "PhaRMA Notes") of approximately $1.4 million recorded in prepaid expenses and other current assets and approximately $2.8 million in other assets to a reduction in PhaRMA Notes payable as of December 31, 2014. The financing costs incurred in connection with the issuance of the Company's 2022 Notes were recorded as a reduction in the carrying value of such debt in accordance with ASU 2015-03. The Company's adoption of this standard did not have a significant impact on its results of operations or cash flows for the year ended December 31, 2015. The 2022 Notes and PhaRMA Notes are more fully described in Note 10, Notes Payable , to these consolidated financial statements. |
Derivative Assets and Liabilities | Derivative Assets and Liabilities In June 2015, in connection with the issuance of the 2022 Notes, the Company entered into convertible note hedge transactions (the "Convertible Note Hedges"). Concurrently with entering into the Convertible Note Hedges, the Company also entered into certain warrant transactions in which it sold note hedge warrants (the "Note Hedge Warrants") to the Convertible Note Hedge counterparties to acquire 20,249,665 shares of the Company's Class A common stock, subject to customary anti-dilution adjustments (Note 10). These instruments are derivative financial instruments under Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging ("ASC 815"). These derivatives are recorded as assets or liabilities at fair value each reporting period and the fair value is determined using the Black-Scholes option-pricing model. The changes in fair value are recorded as a component of other (expense) income in the consolidated statements of operations. Significant inputs used to determine the fair value include the price per share of the Company's Class A common stock on the date of valuation, time to maturity of the derivative instruments, the strike prices of the derivative instruments, the risk-free interest rate, and the volatility of the Company's Class A common stock. Changes to these inputs could materially affect the valuation of the Convertible Note Hedges and Note Hedge Warrants in future periods. |
Revenue Recognition | Revenue Recognition The Company's revenue is generated primarily through collaborative research and development, licensing and co-promotion agreements. The terms of these agreements contain multiple deliverables which may include (i) licenses, (ii) research and development activities, including participation on joint steering committees, (iii) the manufacture of finished drug product, API, or development materials for a partner which are reimbursed at a contractually determined rate, and (iv) co-promotion activities by the Company's clinical sales specialists. Non-refundable payments to the Company under these agreements may include (i) up-front license fees, (ii) payments for research and development activities, (iii) payments for the manufacture of finished drug product, API, or development materials, (iv) payments based upon the achievement of certain milestones, (v) payments for sales detailing, promotional support services and medical education initiatives, and (vi) royalties on product sales. Additionally, the Company may receive its share of the net profits or bear its share of the net losses from the sale of linaclotide in the U.S. and for China, Hong Kong and Macau through its collaborations with Allergan and AstraZeneca, respectively. At December 31, 2015, the Company had collaboration agreements with Allergan (North America) and AstraZeneca (China, Hong Kong and Macau), as well as license agreements with Allergan (Europe) and Astellas (Japan). Additionally, the Company had co-promotion agreements with Allergan for VIBERZI and Exact Sciences for Cologuard in the U.S. (Note 4). The Company recognizes revenue when there is persuasive evidence that an arrangement exists, services have been rendered or delivery has occurred, the price is fixed or determinable, and collection is reasonably assured. For certain of the Company's arrangements, particularly the license agreement with Allergan for the European territory, it is required that taxes be withheld on payments to the Company. The Company has adopted a policy to recognize revenue net of these tax withholdings. Agreements Entered into Prior to January 1, 2011 For arrangements that include multiple deliverables and were entered into prior to January 1, 2011, the Company follows the provisions of ASC Topic 605-25, Revenue Recognition—Multiple-Element Arrangements ("ASC 605-25"), in accounting for these agreements. Under ASC 605-25, the Company was required to identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting. Collaborative research and development and licensing agreements that contained multiple deliverables were divided into separate units of accounting when the following criteria were met: • Delivered element(s) had value to the collaborator on a standalone basis, • There was objective and reliable evidence of the fair value of the undelivered obligation(s), and • If the arrangement included a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) was considered probable and substantially within the Company's control. The Company allocated arrangement consideration among the separate units of accounting either on the basis of each unit's respective fair value or using the residual method, and applied the applicable revenue recognition criteria to each of the separate units. If the separation criteria were not met, revenue of the combined unit of accounting was recorded based on the method appropriate for the last delivered item. Up-Front License Fees The Company recognizes revenue from nonrefundable, up-front license fees on a straight-line basis over the contracted or estimated period of performance, which is typically the period over which the research and development is expected to occur or manufacturing services are expected to be provided. Accordingly, the Company is required to make estimates regarding the drug development and commercialization timelines for drugs and drug candidates being developed pursuant to any applicable agreement. The determination of the length of the period over which to recognize the revenue is subject to judgment and estimation and can have an impact on the amount of revenue recognized in a given period. Quarterly, the Company reassesses its period of substantial involvement over which the Company amortizes its up-front license fees and makes adjustments as appropriate. The Company's estimates regarding the period of performance under its collaborative research and development and licensing agreements have changed in the past and may change in the future. Any change in the Company's estimates could result in substantial changes to the Company's results for the period over which the revenues from an up-front license fee are recognized. In the event that an arrangement were to be terminated, the Company would recognize as revenue any portion of the up-front fee that had not previously been recorded as revenue, but was classified as deferred revenue at the date of such termination. At December 31, 2015, of the Company's linaclotide collaboration and license arrangements, only a portion of Astellas' up-front license fee remained deferred. The up-front license fees under the Allergan collaboration for North America and the Allergan collaboration for Europe (previously with Almirall) were fully amortized at December 31, 2015, as the period of performance under those arrangements ended in the three months ended September 30, 2012. Agreements Entered into or Materially Modified on or after January 1, 2011 The Company evaluates revenue from new multiple element agreements entered into on or after January 1, 2011 under ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements ("ASU 2009-13"). The Company also evaluates whether amendments to its multiple element arrangements are considered material modifications that are subject to the application of ASU 2009-13. This evaluation requires management to assess all relevant facts and circumstances and to make subjective determinations and judgments. As part of this assessment, the Company considers whether the modification results in a material change to the arrangement, including whether there is a change in total arrangement consideration that is more than insignificant, whether there are changes in the deliverables included in the arrangement, whether there is a change in the term of the arrangement and whether there is a significant modification to the delivery schedule for contracted deliverables. When evaluating multiple element arrangements under ASU 2009-13, the Company considers whether the deliverables under the arrangement represent separate units of accounting. This evaluation requires subjective determinations and requires management to make judgments about the individual deliverables and whether such deliverables are separable from the other aspects of the contractual relationship. In determining the units of accounting, management evaluates certain criteria, including whether the deliverables have standalone value, based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research, manufacturing and commercialization capabilities of the partner and the availability of peptide research and manufacturing expertise in the general marketplace. In addition, the Company considers whether the collaborator can use the license or other deliverables for their intended purpose without the receipt of the remaining elements, and whether the value of the deliverable is dependent on the undelivered items and whether there are other vendors that can provide the undelivered items. The consideration received is allocated among the separate units of accounting using the relative selling price method, and the applicable revenue recognition criteria are applied to each of the separate units. The Company determines the estimated selling price for deliverables using vendor-specific objective evidence ("VSOE") of selling price, if available, third-party evidence ("TPE") of selling price if VSOE is not available, or best estimate of selling price ("BESP") if neither VSOE nor TPE is available. Determining the BESP for a deliverable requires significant judgment. The Company uses BESP to estimate the selling price for licenses to the Company's proprietary technology, since the Company often does not have VSOE or TPE of selling price for these deliverables. In those circumstances where the Company utilizes BESP to determine the estimated selling price of a license to the Company's proprietary technology, the Company considers market conditions as well as entity-specific factors, including those factors contemplated in negotiating the agreements as well as internally developed models that include assumptions related to the market opportunity, estimated development costs, probability of success and the time needed to commercialize a product candidate pursuant to the license. In validating the Company's BESP, the Company evaluates whether changes in the key assumptions used to determine the BESP will have a significant effect on the allocation of arrangement consideration between multiple deliverables. At December 31, 2015, the Company's collaboration agreement with AstraZeneca for linaclotide and co-promotion agreements with Allergan for VIBERZI and Exact Sciences for Cologuard in the U.S. are each being accounted for under ASU 2009-13. Up-Front License Fees When management believes the license to its intellectual property has stand-alone value, the Company generally recognizes revenue attributed to the license upon delivery. When management believes the license to its intellectual property does not have stand-alone value from the other deliverables to be provided in the arrangement, it is combined with other deliverables and the revenue of the combined unit of accounting is recorded based on the method appropriate for the last delivered item. Milestones At the inception of each arrangement that includes pre-commercial milestone payments, the Company evaluates whether each pre-commercial milestone is substantive, in accordance with ASU No. 2010-17, Revenue Recognition—Milestone Method ("ASU 2010-17"), adopted on January 1, 2011. This evaluation includes an assessment of whether (a) the consideration is commensurate with either (1) the entity's performance to achieve the milestone, or (2) the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity's performance to achieve the milestone, (b) the consideration relates solely to past performance and (c) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment. At December 31, 2015, the Company had no pre-commercial milestones that were deemed substantive. If a substantive pre-commercial milestone were achieved and collection of the related receivable was reasonably assured, the Company would recognize revenue related to the milestone in its entirety in the period in which the milestone was achieved. If the Company were to achieve milestones that are considered substantive under any of the Company's collaborations, the Company may experience significant fluctuations in collaborative arrangements revenue from quarter to quarter and year to year depending on the timing of achieving such substantive milestones. In those circumstances where a pre-commercial milestone is not substantive, the Company recognizes as revenue on the date the milestone is achieved an amount equal to the applicable percentage of the performance period that had elapsed as of the date the milestone was achieved, with the balance being deferred and recognized over the remaining period of performance. Pre-commercial milestone payments received prior to the adoption of ASU 2010-17 continue to be recognized over the remaining period of performance. Commercial milestones are accounted for as royalties and are recorded as revenue upon achievement of the milestone, assuming all other revenue recognition criteria are met. Net Profit or Net Loss Sharing In accordance with ASC 808 Topic, Collaborative Arrangements , and ASC 605-45, Principal Agent Considerations , the Company considers the nature and contractual terms of the arrangement and the nature of the Company's business operations to determine the classification of the transactions under the Company's collaboration agreements. The Company records revenue transactions gross in the consolidated statements of operations if it is deemed the principal in the transaction, which includes being the primary obligor and having the risks and rewards of ownership. The Company recognizes its share of the pre-tax commercial net profit or net loss generated from the sales of LINZESS in the U.S. in the period the product sales are reported by Allergan and related cost of goods sold and selling, general and administrative expenses are incurred by the Company and its collaboration partner. These amounts are partially determined based on amounts provided by Allergan and involve the use of estimates and judgments, such as product sales allowances and accruals related to prompt payment discounts, chargebacks, governmental and contractual rebates, wholesaler fees, product returns, and co-payment assistance costs, which could be adjusted based on actual results in the future. The Company is highly dependent on Allergan for timely and accurate information regarding any net revenues realized from sales of LINZESS in the U.S. and the costs incurred in selling it, in order to accurately report its results of operations. For the periods covered in the consolidated financial statements presented, there have been no material changes to prior period estimates of revenues, cost of goods sold or selling, general and administrative expenses associated with the sales of LINZESS in the U.S. However, if the Company does not receive timely and accurate information or incorrectly estimates activity levels associated with the collaboration at a given point in time, the Company could be required to record adjustments in future periods. The Company records its share of the net profits or net losses from the sales of LINZESS in the U.S. on a net basis and presents the settlement payments to and from Allergan as collaboration expense or collaborative arrangements revenue, as applicable, as the Company is not the primary obligor and does not have the risks and rewards of ownership in the collaboration agreement with Allergan for North America. The Company and Allergan settle the cost sharing quarterly, such that the Company's statement of operations reflects 50% of the pre-tax net profit or loss generated from sales of LINZESS in the U.S. Royalties on Product Sales The Company receives or expects to receive in the future royalty revenues under certain of the Company's license or collaboration agreements. If the Company does not have any future performance obligations under these license or collaborations agreements, the Company records these revenues as earned. To the extent the Company does not have access to the royalty reports from the Company's partners or the ability to accurately estimate the royalty revenue in the period earned, the Company records such royalty revenues one quarter in arrears. Other The Company produces finished drug product, API and development materials for certain of its partners. The Company recognizes revenue on finished drug product, API and development materials when the material has passed all quality testing required for collaborator acceptance, delivery has occurred, title and risk of loss have transferred to the collaborator, the price is fixed or determinable, and collection is reasonably assured. As it relates to development materials and API produced for Astellas, the Company is reimbursed at a contracted rate. Such reimbursements are considered as part of revenue generated pursuant to the Astellas license agreement and are presented as collaborative arrangements revenue. Any finished drug product, API and development materials currently produced for Allergan for the U.S. or AstraZeneca for China, Hong Kong and Macau are recognized in accordance with the cost-sharing provisions of the Allergan and AstraZeneca collaboration agreements, respectively. In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan, and the Company separately entered into an amendment to the license agreement with Allergan relating to the development and commercialization of linaclotide in Europe. Pursuant to the terms of the amendment, Allergan assumed responsibility for the manufacturing of linaclotide API for Europe from the Company, as well as the associated costs (Note 4). |
Cost of Revenue | Cost of Revenue Cost of revenue is recognized upon shipment of linaclotide API to certain of the Company's licensing partners outside of the U.S. and consists of the internal and external costs of producing such API. During the year ended December 31, 2015, the Company recorded expenses of approximately $17.6 million for the write-down of inventory and an accrual for excess non-cancelable inventory purchase commitments related to linaclotide API. These charges primarily related to a reduction in the near term demand forecast for CONSTELLA in the European territory by Almirall, the Company's former European partner; recent regulatory changes made by the CFDA to the marketing approval process in China; and the amendment to the license agreement with Allergan pertaining to the development and commercialization of linaclotide for Europe executed in October 2015. Pursuant to the terms of the amendment, Allergan assumed responsibility for the manufacturing of linaclotide API for Europe, as well as the associated costs, which resulted in accruing for a loss on non-cancelable inventory purchase commitments under one of the Company's API supply agreements covering the commercial supply of linaclotide API for the European market. During the year ended December 31, 2014, the Company wrote-down approximately $20.3 million in inventory to an estimated net realizable value of approximately $5.0 million. This write-down was primarily attributable to Almirall's reduced inventory demand forecasts for the European territory, mainly due to the suspension of commercialization of CONSTELLA in Germany and a challenging commercial environment throughout Europe. The write-down of inventory to net realizable value and the loss on non-cancelable inventory purchase commitments is recorded as a separate line item in the Company's Consolidated Statement of Operations. These charges are more fully described in Note 7, Inventory , to these consolidated financial statements. |
Research and Development Costs | Research and Development Costs The Company expenses research and development costs to operations as incurred. The Company defers and capitalizes nonrefundable advance payments made by the Company for research and development activities until the related goods are received or the related services are performed. Research and development expenses are comprised of costs incurred in performing research and development activities, including salary, benefits and other employee-related expenses; share-based compensation expense; laboratory supplies and other direct expenses; facilities expenses; overhead expenses; third-party contractual costs relating to nonclinical studies and clinical trial activities and related contract manufacturing expenses, development of manufacturing processes and regulatory registration of third-party manufacturing facilities; licensing fees for the Company's product candidates; and other outside expenses. The Company has entered into collaboration agreements with Allergan for the U.S. and AstraZeneca for China, Hong Kong and Macau pursuant to which it shares research and development expenses with its collaborators. The Company records expenses incurred under the collaboration arrangements for such work as research and development expense. Because the collaboration arrangements are cost-sharing arrangements, the Company concluded that when there is a period during the collaboration arrangements during which the Company receives payments from Allergan or AstraZeneca for such territories, the Company records the payments by Allergan or AstraZeneca for their share of the development effort as a reduction of research and development expense. Payments to Allergan or AstraZeneca for such territories are recorded as incremental research and development expense. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses The Company expenses selling, general and administrative costs to operations as incurred. Selling, general and administrative expense consists primarily of compensation, benefits and other employee-related expenses for personnel in the Company's administrative, finance, legal, information technology, business development, commercial, sales, marketing, communications and human resource functions. Other costs include the legal costs of pursuing patent protection of the Company's intellectual property, general and administrative related facility costs, insurance costs and professional fees for accounting and legal services. Under the collaboration agreements with Allergan for the U.S. and AstraZeneca for China, Hong Kong and Macau, the Company is reimbursed for certain selling, general and administrative expenses and it nets these reimbursements against selling, general and administrative expenses as incurred. Payments to Allergan or AstraZeneca for such territories are recorded as incremental selling, general and administrative expense. |
Share-Based Compensation | Share-Based Compensation The Company's stock-based compensation programs grant awards which have included stock awards, restricted stock, restricted stock units ("RSUs"), and stock options. Share-based compensation is recognized as an expense in the financial statements based on the grant date fair value over the requisite service period. For awards that vest based on service conditions, the Company uses the straight-line method to allocate compensation expense to reporting periods. The grant date fair value of options granted is calculated using the Black-Scholes option-pricing model, which requires the use of subjective assumptions including volatility and expected term, among others. The fair value of the Company's RSUs is based on the market value of the Company's Class A common stock on the date of grant. Compensation expense for RSUs is recognized on a straight-line basis over the applicable service period. The Company records the expense for stock option grants subject to performance-based milestone vesting using the accelerated attribution method over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the relative satisfaction of the performance conditions as of the reporting date. The Company records the expense of services rendered by non-employees based on the estimated fair value of the stock option using the Black-Scholes option-pricing model. The fair value of unvested non-employee awards is remeasured at each reporting period and expensed over the vesting term of the underlying stock options. |
Patent Costs | Patent Costs The Company incurred and recorded as operating expense legal and other fees related to patents of approximately $2.2 million, approximately $1.3 million, and approximately $3.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. These costs were charged to selling, general and administrative expenses as incurred. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The Company calculates basic net income (loss) per common share and diluted net income (loss) per common share by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the diluted number of shares outstanding during the period. Except where the result would be antidilutive to net income (loss), diluted net income (loss) per common share is computed assuming the conversion of the 2022 Notes, the exercise of outstanding common stock options and the vesting of RSUs and restricted stock (using the treasury stock method), as well as their related income tax effects. The Company allocates undistributed earnings between the classes of common stock on a one-to-one basis when computing net income (loss) per share. As a result, basic and diluted net income (loss) per Class A and Class B shares are equivalent. |
Property and Equipment | Property and Equipment Property and equipment, including leasehold improvements, are recorded at cost, and are depreciated when placed into service using the straight-line method based on their estimated useful lives as follows: Asset Description Estimated Useful Life (In Years) Manufacturing equipment Laboratory equipment Computer and office equipment Furniture and fixtures Software Included in property and equipment are certain costs of software obtained for internal use. Costs incurred during the preliminary project stage are expensed as incurred, while costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Maintenance and training costs related to software obtained for internal use are expensed as incurred. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the lease term. Capital lease assets are amortized over the lease term. However, if ownership was transferred by the end of the capital lease, or there was a bargain purchase option, such capital lease assets would be amortized over the useful life that would be assigned if such assets were owned. Costs for capital assets not yet placed into service have been capitalized as construction in progress, and will be depreciated in accordance with the above guidelines once placed into service. Maintenance and repair costs are expensed as incurred. |
Income Taxes | Income Taxes The Company provides for income taxes under the liability method. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17") which provides guidance for balance sheet classification of deferred taxes. This standard requires that deferred tax assets and liabilities be classified as non-current on the balance sheet, and eliminates the prior guidance which required an entity to separate deferred tax liabilities and assets into a current amount and a noncurrent amount on the balance sheet. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Earlier adoption is permitted as of the beginning of an interim or annual period. The amendments in ASU 2015-17 may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company elected early adoption in the year ended December 31, 2015, and elected to apply the amendments on a retrospective basis. The Company's adoption of this standard did not have a significant impact on its consolidated balance sheet for the years ended December 31, 2015 or 2014, or on the results of operations or cash flows for the years ended December 31, 2015, 2014 or 2013. The Company accounts for uncertain tax positions recognized in the consolidated financial statements in accordance with the provisions of ASC Topic 740, Income Taxes , by prescribing a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company evaluates uncertain tax positions on a quarterly basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Any changes to these estimates, based on the actual results obtained and/or a change in assumptions, could impact the Company's income tax provision in future periods. Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as a provision for income tax in the Company's consolidated statement of operations. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company regularly reviews the carrying amount of its long-lived assets to determine whether indicators of impairment may exist, which warrant adjustments to carrying values or estimated useful lives. If indications of impairment exist, projected future undiscounted cash flows associated with the asset are compared to the carrying amount to determine whether the asset's value is recoverable. If the carrying value of the asset exceeds such projected undiscounted cash flows, the asset will be written down to its estimated fair value. There were no significant impairments of long-lived assets for the years ended December 31, 2015, 2014, or 2013. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances from non-owner sources and currently consists of net loss and changes in unrealized gains and losses on available-for-sale securities. |
Segment Information | Segment Information Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company's chief operating decision-maker in deciding how to allocate resources and in assessing performance. The Company currently operates in one reportable business segment—human therapeutics. |
Reclassifications and Revisions to Prior Period Financial Statements | Reclassifications and Revisions to Prior Period Financial Statements Certain financial statement items have been reclassified to conform to the current period presentation. |
Subsequent Events | Subsequent Events The Company considers events or transactions that have occurred after the balance sheet date of December 31, 2015, but prior to the filing of the financial statements with the Securities and Exchange Commission to provide additional evidence relative to certain estimates or to identify matters that require additional recognition or disclosure. Subsequent events have been evaluated through the filing of the financial statements accompanying this Annual Report on Form 10-K. |
New Accounting Pronouncements | New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Except as set forth below, the Company did not adopt any new accounting pronouncements during the year ended December 31, 2015 that had a material effect on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and most industry-specific guidance. The new standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. Early adoption is permitted beginning after December 15, 2016, including interim reporting periods within those years. The Company is currently evaluating the potential impact that ASU 2014-09 may have on its financial position and results of operations. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (" ASU 2014-15"). ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures, if required. ASU 2014-15 is effective for annual reporting periods ending after December 15, 2016, and applies to annual and interim periods thereafter. The Company is evaluating the impact that the adoption of ASU 2014-15 will have on the Company's consolidated financial statements and related disclosures, but does not expect it to have a significant impact on the Company's results of operations, cash flows or financial position. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement , which amends ASC Topic 350, Intangibles—Goodwill and Other—Internal Use Software . Under this standard, if a cloud computing arrangement includes a software license, the software license element of the arrangement should be accounted for consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and may be applied on either a prospective or retrospective basis. Early adoption is not permitted. The Company does not expect adoption of this standard to have a significant impact on the Company's financial position or results of operations. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 requires that for entities that measure inventory using the first-in, first-out method, inventory should be measured at the lower of cost and net realizable value. The standard defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a significant impact on the Company's financial position or results of operations. No other accounting standards known by the Company to be applicable to it that have been issued or proposed by the FASB or other standard-setting bodies and that do not require adoption until a future date are expected to have a material impact on the Company's consolidated financial statements upon adoption. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of percentages of revenue and accounts receivable recognized from significant customers | Accounts Receivable Revenue December 31, Years Ended December 31, 2015 2014 2015 2014 2013 Collaborative Partner: Linaclotide Agreements: Allergan (North America) % % % % % Almirall (Europe) (1) — % — % — % % % Astellas (Japan) % — % % % % AstraZeneca (China, Hong Kong and Macau) (2) % — % % % % Co-promotion Agreements: Exact Sciences (Cologuard) % — % % — % — % (1) In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. There were no accounts receivable due from Almirall as of December 31, 2015. (2) At December 31, 2014, the Company was in a net payable position with AstraZeneca; as such, there was no accounts receivable due from AstraZeneca as of December 31, 2014. |
Schedule of estimated useful life | Asset Description Estimated Useful Life (In Years) Manufacturing equipment Laboratory equipment Computer and office equipment Furniture and fixtures Software |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Net Loss Per Share | |
Schedule of computation of basic and diluted net loss per share | The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts): Year Ended December 31, 2015 2014 2013 Numerator: Net Loss $ ) $ ) $ ) Denominator: Weighted average number of common shares used in net loss per share—basic and diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share—basic and diluted $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of potentially dilutive securities that have been excluded from computation of diluted weighted average shares outstanding | The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive (in thousands): Year Ended December 31, 2015 2014 2013 Options to purchase common stock Shares subject to repurchase — Unvested restricted stock units — — Note hedge warrants — — 2022 Notes — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Collaboration, License and Co31
Collaboration, License and Co-promotion Agreements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of revenue attributable to transactions from collaboration and license arrangements | The following table provides amounts included in the Company's consolidated statements of operations as collaborative arrangements revenue attributable to transactions from these arrangements (in thousands): Collaborative Arrangements Revenue Year Ended December 31, 2015 2014 2013 Linaclotide Agreements: Allergan (North America) $ $ $ AstraZeneca (China, Hong Kong and Macau) Almirall (Europe) (1) Astellas (Japan) Co-promotion Agreements: Exact Sciences (Cologuard) — — Allergan (VIBERZI) — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total collaborative arrangements revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. |
Allergan (North America) | |
Schedule of revenue attributable to transactions from collaboration and license arrangements | The Company recognized collaborative arrangements revenue from the Allergan collaboration agreement for North America during the years ended December 31, 2015, 2014 and 2013 as follows (in thousands): Year Ended December 31, 2015 2014 2013 Collaborative arrangements revenue related to sales of LINZESS in the U.S. (1)(2) $ $ $ Royalty revenue — Sale of API — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total collaborative arrangements revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of amount recorded by the Company for share of net loss related to collaborative arrangement | The following table presents the amounts recorded by the Company for commercial efforts related to LINZESS in the U.S. in the years ended December 31, 2015, 2014 and 2013 (in thousands): Year Ended December 31, 2015 2014 2013 Collaborative arrangements revenue related to sales of LINZESS in the U.S. (1)(2) $ $ $ Collaboration expense — — ) Selling, general and administrative costs incurred by the Company (1) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company's share of net profit (loss) $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes only collaborative arrangement revenue or selling, general and administrative costs attributable to the cost-sharing arrangement with Allergan. (2) Includes net profit share adjustment payable to Allergan of approximately $2.4 million recorded during the year ended December 31, 2015. Certain of the unfavorable adjustments to the Company's share of the LINZESS net profits may be reduced or eliminated in connection with the co-promotion activities under the Company's agreement with Allergan to co-promote VIBERZI in the U.S., as described below. During the year ended December 31, 2015, in connection with these co-promotion activities, the net profit share adjustments payable to Allergan under the linaclotide collaboration agreement for North America were reduced by approximately $2.9 million and were reflected as collaborative arrangements revenue under this agreement. Net profit share adjustments received from Allergan of approximately $1.7 million were recorded during the year ended December 31, 2014. |
Fair Value of Financial Instr32
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value of Financial Instruments | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following tables present the assets and liabilities the Company has measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Money market funds $ $ $ — $ — U.S. government-sponsored securities — — Available-for-sale securities: U.S. Treasury securities — — U.S. government-sponsored securities — — Convertible Note Hedges — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: Note Hedge Warrants $ $ — $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities $ $ — $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at Reporting Date Using December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash and cash equivalents: Money market funds $ $ $ — $ — Available-for-sale securities: U.S. Treasury securities — — U.S. government-sponsored securities — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets measured at fair value $ $ $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of assumptions used in fair market valuations | Convertible Note Hedges Note Hedge Warrants Risk-free interest rate (1) % % Time to maturity Stock price (2) $ $ Strike price (3) $ $ Common stock volatility (4) % % Dividend yield — % — % (1) Based on U.S. Treasury yield curve, with terms commensurate with the terms of the Convertible Note Hedges and the Note Hedge Warrants. (2) The closing price of the Company's Class A common stock on the last trading day of the year ended December 31, 2015. (3) As per the respective agreements for the Convertible Note Hedges and Note Hedge Warrants. (4) Selected volatility based on historical volatility and implied volatility of the Company's Class A common stock. |
Schedule of the change in Level 3 convertible note derivatives | The following table reflects the change in the Company's Level 3 convertible note derivatives from their initial value at issuance through December 31, 2015 (in thousands): Convertible Note Hedges Note Hedge Warrants Balance at December 31, 2014 $ — $ — Issuance of Note Hedge Warrants — ) Purchase of Convertible Note Hedges — Change in fair value, recorded as a component of loss on derivatives ) ) ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2015 $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Available-for-Sale Securities (
Available-for-Sale Securities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Available-for-Sale Securities | |
Schedule of summary of available-for-sale securities | The following tables summarize the available-for-sale securities held at December 31, 2015 and 2014 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2015 U.S. Treasury securities $ $ — $ ) $ U.S. government-sponsored securities ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2014 U.S. Treasury securities $ $ $ — $ U.S. government-sponsored securities ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory | |
Schedule of Inventory | Inventory consisted of the following (in thousands): December 31, 2015 2014 Raw materials $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment, net consisted of the following (in thousands): December 31, 2015 2014 Manufacturing equipment $ $ Laboratory equipment Computer and office equipment Furniture and fixtures Software Construction in process Leased vehicles Leasehold improvements ​ ​ ​ ​ ​ ​ ​ ​ Less accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Expenses | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands): December 31, 2015 2014 Salaries and benefits $ $ Professional fees Accrued interest Other ​ ​ ​ ​ ​ ​ ​ ​ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable. | |
Schedule of outstanding Convertible Note | The Company's outstanding Convertible Note balances as of December 31, 2015 consisted of the following (in thousands): Principal $ Less: unamortized debt discount ) Less: unamortized debt issuance costs ) ​ ​ ​ ​ ​ Net carrying amount $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity component $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of interest expense related to Convertible Notes | The following table sets forth total interest expense recognized related to the 2022 Notes during the year ended December 31, 2015 (in thousands): Contractual interest expense $ Amortization of debt issuance costs Amortization of debt discount ​ ​ ​ ​ ​ Total interest expense $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of future minimum payments details of debt | Future minimum payments under the 2022 Notes as of December 31, 2015, are as follows (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total future minimum payments under the 2022 Notes ​ ​ ​ ​ ​ Less: amounts representing interest ) Less: unamortized debt discount ) Less: unamortized debt issuance costs ) ​ ​ ​ ​ ​ Convertible senior notes balance $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of redemption price as percentage of outstanding principal balance | Payment Dates Redemption Percentage From and including January 1, 2015 to and including December 31, 2015 % From and including January 1, 2016 to and including December 31, 2016 % From and including January 1, 2017 and thereafter % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | |
Schedule of future minimum lease payments under all non-cancelable lease arrangements | At December 31, 2015, future minimum lease payments under all non-cancelable lease arrangements were as follows (in thousands): Operating Lease Payments Lease Payments to be Received from Subleases Net Operating Lease Payments Capital Lease Payments 2016 $ $ ) $ $ 2017 ) 2018 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total future minimum lease payments $ $ ) $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: amounts representing interest ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital lease obligations at December 31, 2015 Less: current portion of capital lease obligations ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital lease Obligations, net of current portion $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of unrecognized minimum purchase requirements | As of December 31, 2015, the Company's unrecognized minimum purchase requirements and other firm commitments related to the supply contracts associated with the territories not covered by the partnerships with Allergan for North America were as follows (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total unrecognized minimum purchase requirements $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Stock Benefit Plans (Tables)
Stock Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of expense recognized for share-based compensation arrangements | The following table summarizes the expense recognized for share-based compensation arrangements in the consolidated statements of operations (in thousands): Years Ended December 31, 2015 2014 2013 Employee stock options $ $ $ Restricted stock units — — Restricted stock awards Non-employee stock options — Employee stock purchase plan Workforce reduction — — Stock award ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Share-based compensation expense reflected in the condensed consolidated statements of operations | Share-based compensation is reflected in the consolidated statements of operations as follows for the years ended December 31, 2015, 2014 and 2013 (in thousands): Years Ended December 31, 2015 2014 2013 Research and development $ $ $ Selling, general and administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of weighted-average assumptions used to estimate the fair value of the stock options using the Black-Scholes option-pricing model | Years Ended December 31, 2015 2014 2013 Expected volatility % % % Expected term (in years) Risk-free interest rate % % % Expected dividend yield — % — % — % |
Summary of stock option activity | Shares of Common Stock Attributable to Options Weighted- Average Exercise Price Weighted- Average Contractual Life Aggregate Intrinsic Value (in years) (in thousands) Outstanding at December 31, 2014 $ $ Granted $ Exercised ) $ Cancelled ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2015 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested or expected to vest at December 31, 2015 $ $ Exercisable at December 31, 2015 (1) $ $ (1) All stock options granted under the 2002 Equity Plan and the 2005 Equity Plan contain provisions allowing for the early exercise of such options into restricted stock. The exercisable shares disclosed above represent those that were vested as of December 31, 2015. |
Schedule of unrecognized share-based compensation expense, net of estimated forfeitures by type of awards and weighted-average period | Unrecognized Expense, Net of Estimated Forfeitures Weighted-Average Remaining Recognition Period (in thousands) (in years) Type of award: Stock options with time-based vesting $ Restricted stock awards Restricted stock units Time-accelerated stock options (1) — Performance-based options (1) — (1) The weighted-average remaining recognition period cannot be determined for performance-based or time-accelerated options due to the nature of such awards, as detailed above. |
Restricted stock awards | |
Summary of the unvested shares of restricted stock | A summary of the unvested shares of restricted stock as of December 31, 2015 is presented below: Number of Shares Weighted- Average Grant Date Fair Value Unvested as of December 31, 2014 $ Granted $ Vested ) $ Forfeited — $ — ​ ​ ​ ​ ​ ​ ​ ​ Unvested as of December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Restricted stock units | |
Summary of the unvested shares of restricted stock | Number of Shares Weighted- Average Grant Date Fair Value Unvested as of December 31, 2014 — $ — Granted $ Vested — $ — Forfeited ) $ ​ ​ ​ ​ ​ ​ ​ ​ Unvested as of December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Reconciliation of income taxes from continuing operations computed using U.S. federal statutory rate to that reflected in operations | A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows (in thousands): Years Ended December 31, 2015 2014 2013 Income tax benefit using U.S. federal statutory rate $ ) $ ) $ ) Permanent differences State income taxes, net of federal benefit ) ) ) Stock-based compensation Fair market valuation of Note Hedge Warrants and Convertible Note Hedges — — Tax credits ) ) ) Expiring net operating losses and tax credits — Effect of change in state tax rate on deferred tax assets and deferred tax liabilities ) Change in the valuation allowance Other ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ — $ — $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of components of deferred tax assets and liabilities | Components of the Company's deferred tax assets and liabilities are as follows (in thousands): Years Ended December 31, 2015 2014 Deferred tax assets: Net operating loss carryforwards $ $ Tax credit carryforwards Capitalized research and development Deferred revenue Other ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets Deferred tax liabilities: Basis difference on 2022 Notes ) — ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities ) — ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax asset Valuation allowance ) ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax asset $ — $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of changes in the unrecognized tax benefits | The following table summarizes the changes in the Company's unrecognized income tax benefits for the year ended December 31, 2015 (in thousands): Balance at January 1, 2015 $ — Increases based on tax positions related to the current period Increases for tax positions related to prior periods Decreases for tax positions in prior periods ) Decreases for statute of limitation expiration — Decreases for settlement of tax audits — ​ ​ ​ ​ ​ Balance at December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Selected Quarterly Financial 41
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of quarterly financial information | First Quarter Second Quarter Third Quarter Fourth Quarter Total Year (in thousands, except per share data) 2015 Collaborative arrangements revenue $ $ $ $ $ Total cost and expenses (1) Other (expense) income, net (2) ) ) ) ) ) Net loss ) ) ) ) ) Net loss per share—basic and diluted $ ) $ ) $ ) $ ) $ ) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year (in thousands, except per share data) 2014 Collaborative arrangements revenue (3) $ $ $ $ $ Total cost and expenses (4) Other (expense) income, net ) ) ) ) ) Net loss ) ) ) ) ) Net loss per share—basic and diluted $ ) $ ) $ ) $ ) $ ) (1) Total costs and expenses for the second and third quarter of the year ended December 31, 2015 includes approximately $8.2 million and $9.4 million, respectively, related to a write down of inventory to net realizable value and accruals for excess non-cancelable inventory purchase commitments (Note 7). (2) Other (expense) income, net for the second and third quarters of the year ended December 31, 2015 includes approximately $0.2 million and $11.4 million, respectively, as a loss on derivatives. Other (expense) income, net for the fourth quarter of the year ended December 31, 2015 includes approximately $1.6 million, as a gain on derivatives. The gain (loss) on derivatives consists of the change in fair value of the Company's Convertible Note Hedges and Note Hedge Warrants, which are recorded as derivative assets and liabilities. The Convertible Note Hedges and the Note Hedge Warrants are recorded at fair value at each reporting period and changes in fair value are recorded in the Company's consolidated statements of operations (Note 5). (3) Collaborative arrangements revenue for the fourth quarter of the year ended December 31, 2014 includes approximately $10.2 million related to the receipt of a milestone payment under the Company's license agreement with Astellas for the enrollment of the first study subject in a Phase III study for linaclotide in Japan, which was achieved in November 2014 (Note 4). (4) Total costs and expenses for the second and fourth quarter of the year ended December 31, 2014 includes approximately $8.9 million and $11.4 million, respectively, related to a write down of inventory to net realizable value (Note 7). |
Nature of Business (Details)
Nature of Business (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Nature of Business | |||
Accumulated deficit since inception | $ 1,110,115 | $ 967,446 | |
Deferred Finance Costs | |||
Net proceeds received | $ 335,699 | ||
Fees and expenses | $ 11,700 | ||
2.25% Convertible Senior Notes due in 2022 | |||
Deferred Finance Costs | |||
Aggregate principal amount of notes issued | 335,700 | ||
Net proceeds received | 324,000 | ||
Fees and expenses | $ 11,700 | ||
Annual interest rate of notes (as a percent) | 2.25% | ||
PhaRMA Notes | |||
Deferred Finance Costs | |||
Annual interest rate of notes (as a percent) | 11.00% |
Summary of Significant Accoun43
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash and Cash Equivalents | |||
Cash Equivalent included in cash and cash equivalent | $ 258,200 | $ 61,000 | |
Restricted Cash | |||
Restricted cash securing letters of credit | $ 8,747 | 8,147 | |
Available-for-Sale Securities | |||
Minimum original maturity period of entity's short-term investments in order to classify them as available for sale | 3 months | ||
Other-than-temporary impairments | $ 0 | 0 | $ 0 |
Letters of credit | |||
Restricted Cash | |||
Contingent liability under unused letters of credit | 8,700 | 8,100 | |
Restricted cash securing letters of credit | $ 8,700 | $ 8,100 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Details 2) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013 | ||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Accounts receivable | $ 2,884 | $ 10 | ||
Deferred Finance Costs | ||||
Prepaid expenses and other current assets | 6,293 | 9,180 | ||
Other assets | 2,628 | $ 3,042 | ||
PhaRMA Notes | ||||
Deferred Finance Costs | ||||
Annual interest rate of notes (as a percent) | 11.00% | |||
Accounting Standards Update 2015-03 | New Accounting Pronouncement, Early Adoption, Effect | ||||
Deferred Finance Costs | ||||
Prepaid expenses and other current assets | $ 1,400 | |||
Other assets | 2,800 | |||
Accounting Standards Update 2015-03 | New Accounting Pronouncement, Early Adoption, Effect | PhaRMA Notes | ||||
Deferred Finance Costs | ||||
Prepaid expenses and other current assets | 1,400 | |||
Other assets | 2,800 | |||
Almirall (Europe) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Accounts receivable | $ 0 | |||
AstraZeneca (China, Hong Kong and Macau) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Accounts receivable | $ 0 | |||
Supplier concentration | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Number of third-party manufacturers | item | 2 | |||
Number of manufacturing facilities | item | 3 | |||
Accounts receivable | Accounts receivable balances | Allergan (North America) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | 95.00% | 100.00% | ||
Accounts receivable | Accounts receivable balances | Astellas (Japan) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | 2.00% | |||
Accounts receivable | Accounts receivable balances | AstraZeneca (China, Hong Kong and Macau) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | [1] | 1.00% | ||
Accounts receivable | Accounts receivable balances | Exact Sciences (Cologuard) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | 2.00% | |||
Revenue | Customer concentration | Allergan (North America) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | 90.00% | 62.00% | 13.00% | |
Revenue | Customer concentration | Almirall (Europe) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | [2] | 10.00% | 57.00% | |
Revenue | Customer concentration | Astellas (Japan) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | 5.00% | 23.00% | 25.00% | |
Revenue | Customer concentration | AstraZeneca (China, Hong Kong and Macau) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | [1] | 2.00% | 5.00% | 5.00% |
Revenue | Customer concentration | Exact Sciences (Cologuard) | ||||
Revenue and accounts receivable by major customer; third-party manufacturers | ||||
Revenue and accounts receivable by major customer (as a percent) | 3.00% | |||
[1] | At December 31, 2014, the Company was in a net payable position with AstraZeneca; as such, there was no accounts receivable due from AstraZeneca as of December 31, 2014. | |||
[2] | In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. There were no accounts receivable due from Almiral as of December 31, 2015. |
Summary of Significant Accoun45
Summary of Significant Accounting Policies (Details 3) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2012 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cost of Revenue | ||||||
Write-down of inventory | $ 4,950 | $ 17,638 | $ 20,292 | |||
Inventory | 4,954 | |||||
Additional Disclosure for Income Statement | ||||||
Selling, general and administrative | 125,247 | 118,333 | $ 123,228 | |||
Actavis Plc | ||||||
Net Profit or Net Loss Sharing | ||||||
Percentage of the pre-tax net profit or loss | 50.00% | |||||
Class A common stock | Note Hedge Warrant | ||||||
Derivative Assets and Liabilities | ||||||
Convertible notes, bond hedge warrants issued | 20,249,665 | |||||
Patents | ||||||
Additional Disclosure for Income Statement | ||||||
Selling, general and administrative | 2,200 | 1,300 | $ 3,200 | |||
Almirall (Europe) | ||||||
Cost of Revenue | ||||||
Write-down of inventory | $ 17,600 | 20,300 | ||||
Inventory | $ 5,000 |
Summary of Significant Accoun46
Summary of Significant Accounting Policies (Details 4) | 12 Months Ended | ||
Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Segment Information | |||
Number of reportable segments | segment | 1 | ||
Impairment of Long-Lived Assets | |||
Significant impairment of long-lived assets | $ | $ 0 | $ 0 | $ 0 |
Manufacturing Equipment | |||
Property and equipment | |||
Estimated useful life | 10 years | ||
Laboratory Equipment | |||
Property and equipment | |||
Estimated useful life | 5 years | ||
Computer and office equipment | |||
Property and equipment | |||
Estimated useful life | 3 years | ||
Furniture and fixtures | |||
Property and equipment | |||
Estimated useful life | 7 years | ||
Software | |||
Property and equipment | |||
Estimated useful life | 3 years |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Numerator: | |||||||||||
Net loss | $ (14,037) | $ (47,390) | $ (48,020) | $ (33,222) | $ (37,647) | $ (41,988) | $ (60,357) | $ (49,626) | $ (142,669) | $ (189,618) | $ (272,812) |
Denominator: | |||||||||||
Weighted average number of common shares used in net loss per share - basic and diluted: | 142,155 | 136,811 | 115,852 | ||||||||
Net loss per share - basic and diluted | $ (0.09) | $ (0.33) | $ (0.34) | $ (0.24) | $ (0.27) | $ (0.30) | $ (0.44) | $ (0.38) | $ (1) | $ (1.39) | $ (2.35) |
Net Loss Per Share (Details 2)
Net Loss Per Share (Details 2) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2015 | |
Potentially dilutive securities | ||||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 62,041,000 | 20,057,000 | 20,928,000 | |
Note hedge warrants | ||||
Potentially dilutive securities | ||||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 20,250,000 | |||
Note hedge warrants | Class A common stock | ||||
Potentially dilutive securities | ||||
Convertible notes, bond hedge warrants issued | 20,249,665 | |||
Options to purchase common stock | ||||
Potentially dilutive securities | ||||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 20,567,000 | 19,958,000 | 20,928,000 | |
Shares subject to repurchase | ||||
Potentially dilutive securities | ||||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 74,000 | 99,000 | ||
Restricted stock units | ||||
Potentially dilutive securities | ||||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 900,000 | |||
2.25% Convertible Senior Notes due in 2022 | ||||
Potentially dilutive securities | ||||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 20,250,000 | |||
2.25% Convertible Senior Notes due in 2022 | ||||
Potentially dilutive securities | ||||
Aggregate principal amount of notes issued | $ 335.7 | |||
2.25% Convertible Senior Notes due in 2022 | Convertible Senior Notes | ||||
Potentially dilutive securities | ||||
Aggregate principal amount of notes issued | $ 335.7 |
Collaboration, License and Co49
Collaboration, License and Co-promotion Agreements (Details) - USD ($) | Nov. 13, 2009 | Sep. 01, 2009 | Oct. 31, 2015 | Oct. 31, 2012 | Sep. 30, 2012 | Nov. 30, 2010 | Nov. 30, 2009 | May. 31, 2009 | Apr. 30, 2009 | Sep. 30, 2007 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | $ 53,307,000 | $ 39,572,000 | $ 27,744,000 | $ 28,932,000 | $ 38,073,000 | $ 16,918,000 | $ 6,840,000 | $ 14,605,000 | $ 149,555,000 | $ 76,436,000 | $ 22,881,000 | |||||||||||
Net amounts receivable from third party | 2,884,000 | $ 10,000 | 2,884,000 | 10,000 | ||||||||||||||||||
Research and development expense | 108,746,000 | 101,890,000 | 102,378,000 | |||||||||||||||||||
Collaboration expense | (42,074,000) | |||||||||||||||||||||
Allergan (North America) | Collaborative arrangement | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Net profit share adjustment | 2,900,000 | |||||||||||||||||||||
Allergan (North America) | Collaborative arrangements | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | 134,335,000 | 47,682,000 | 2,957,000 | |||||||||||||||||||
Up-front fee received | $ 70,000,000 | |||||||||||||||||||||
Equity investment in the entity's capital stock | 25,000,000 | |||||||||||||||||||||
Asset value for contingent equity investment by collaborative party recorded at inception of agreement | $ 9,000,000 | |||||||||||||||||||||
Incremental deferred revenue related to contingent equity investment | $ 9,000,000 | |||||||||||||||||||||
Net cost sharing offset or incremental expense related to research and development expense | 16,900,000 | 4,300,000 | (2,200,000) | |||||||||||||||||||
Research and development expense | (4,300,000) | |||||||||||||||||||||
Collaborative arrangements revenue related to sales of LINZESS in the U.S. | 133,425,000 | 47,618,000 | 2,914,000 | |||||||||||||||||||
Royalty revenue | 910,000 | 64,000 | ||||||||||||||||||||
Sale of API | 43,000 | |||||||||||||||||||||
Total collaborative arrangements revenue | 134,335,000 | 47,682,000 | 2,957,000 | |||||||||||||||||||
Collaboration expense | (42,074,000) | |||||||||||||||||||||
Selling, general and administrative costs incurred by the Company | (32,028,000) | (31,646,000) | (33,839,000) | |||||||||||||||||||
The Company's share of net profit | 101,397,000 | 15,972,000 | (72,999,000) | |||||||||||||||||||
Net profit share adjustment payable | 2,400,000 | |||||||||||||||||||||
Net profit share adjustment received | 1,700,000 | |||||||||||||||||||||
Net profit share adjustment | 2,900,000 | |||||||||||||||||||||
Allergan (North America) | Collaborative arrangements | Convertible preferred stock (Note 16) | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Issuance of Convertible preferred stock (in shares) | 2,083,333 | |||||||||||||||||||||
Allergan (North America) | Collaborative arrangements | Development and sales milestones | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Cumulative license fees and development milestone payments received | 205,000,000 | |||||||||||||||||||||
Allergan (North America) | Collaborative arrangements | Development milestones | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Milestone payment received | $ 135,000,000 | $ 6 | ||||||||||||||||||||
Allergan (North America) | Collaborative arrangements | Commercialization milestone | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Percentage of net profit from commercialization | 50.00% | |||||||||||||||||||||
Percentage of net loss from commercialization | 50.00% | |||||||||||||||||||||
AstraZeneca (China, Hong Kong and Macau) | Collaborative arrangements | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | $ 2,370,000 | 3,417,000 | 1,044,000 | |||||||||||||||||||
Up-front fee received | $ 25,000,000 | |||||||||||||||||||||
Net cost sharing offset or incremental expense related to research and development expense | 700,000 | 2,400,000 | (1,900,000) | |||||||||||||||||||
AstraZeneca (China, Hong Kong and Macau) | Collaborative arrangements | Commercialization milestone | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Percentage of net profit from commercialization | 55.00% | |||||||||||||||||||||
Percentage of net loss from commercialization | 55.00% | |||||||||||||||||||||
Almirall (Europe) | Collaborative arrangements | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | [1] | 540,000 | 7,587,000 | 13,103,000 | ||||||||||||||||||
Up-front fee received | $ 40,000,000 | |||||||||||||||||||||
Milestone payment due upon the first commercial launch in each of the five major European Union countries | $ 4,000,000 | 4,000,000 | ||||||||||||||||||||
Asset value for contingent equity investment by collaborative party recorded at inception of agreement | $ 6,000,000 | |||||||||||||||||||||
Incremental deferred revenue related to contingent equity investment | $ 6,000,000 | |||||||||||||||||||||
Royalty revenue | 600,000 | 200,000 | ||||||||||||||||||||
Sale of API | 5,100,000 | 11,100,000 | ||||||||||||||||||||
Almirall (Europe) | Collaborative arrangements | Convertible preferred stock (Note 16) | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Equity investment in the entity's capital stock | $ 15,000,000 | |||||||||||||||||||||
Issuance of Convertible preferred stock (in shares) | 681,819 | |||||||||||||||||||||
Almirall (Europe) | Collaborative arrangements | Development milestones | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Milestone payment received | $ 20,000,000 | |||||||||||||||||||||
Astellas (Japan) | Collaborative arrangement | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Sale of API | 500,000 | 2,400,000 | 1,200,000 | |||||||||||||||||||
Astellas (Japan) | Collaborative arrangements | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | 7,696,000 | $ 17,750,000 | $ 5,777,000 | |||||||||||||||||||
Up-front fee received | $ 30,000,000 | |||||||||||||||||||||
Exact Sciences (Cologuard) | Collaborative arrangements | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | 4,437,000 | |||||||||||||||||||||
Allergan (VIBERZI) | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | 177,000 | |||||||||||||||||||||
Future payments | Allergan (North America) | Collaborative arrangements | Maximum | Sales milestones | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Total collaborative arrangements revenue | 100,000,000 | |||||||||||||||||||||
Canada and Mexico | Allergan (North America) | Collaborative arrangements | ||||||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||||||
Royalty revenue | $ 900,000 | |||||||||||||||||||||
[1] | In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. |
Collaboration, License and Co50
Collaboration, License and Co-promotion Agreements (Details 2) $ in Thousands | Nov. 13, 2009USD ($)shares | Nov. 30, 2010USD ($) | May. 31, 2009USD ($) | Apr. 30, 2009USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($)item | Mar. 31, 2014USD ($)item | Jun. 30, 2013USD ($)item | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Oct. 31, 2015USD ($) | |
Collaboration and License Agreements | ||||||||||||||||||
Total collaborative arrangements revenue | $ 53,307 | $ 39,572 | $ 27,744 | $ 28,932 | $ 38,073 | $ 16,918 | $ 6,840 | $ 14,605 | $ 149,555 | $ 76,436 | $ 22,881 | |||||||
Almirall (Europe) | Collaborative arrangements | ||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||
Up-front fee received, net | $ 38,000 | |||||||||||||||||
Up-front fee received | $ 40,000 | |||||||||||||||||
Asset value for contingent equity investment by collaborative party recorded at inception of agreement | $ 6,000 | |||||||||||||||||
Incremental deferred revenue related to contingent equity investment | 6,000 | |||||||||||||||||
Milestone payment due upon the first commercial launch in each of the five major European Union countries | $ 4,000 | $ 4,000 | ||||||||||||||||
Number of major European Union countries | item | 5 | 5 | ||||||||||||||||
Number of major European Union countries in which commercial launch occurred | item | 2 | |||||||||||||||||
Total collaborative arrangements revenue | [1] | $ 540 | 7,587 | 13,103 | ||||||||||||||
Revenue recognized from sale of API | 5,100 | 11,100 | ||||||||||||||||
Revenue recognized in commercial launch milestones | 1,900 | 1,900 | ||||||||||||||||
Revenue recognized in royalty payments | $ 600 | $ 200 | ||||||||||||||||
Almirall (Europe) | Collaborative arrangements | Convertible preferred stock (Note 16) | ||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||
Equity investment in the entity's capital stock | $ 15,000 | |||||||||||||||||
Issuance of Convertible preferred stock (in shares) | shares | 681,819 | |||||||||||||||||
Almirall (Europe) | Collaborative arrangements | Development and sales milestones | ||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||
Maximum contingent equity and milestone payments to be received | 40,000 | |||||||||||||||||
Total milestone payment due upon the first commercial launch in all major European Union countries | $ 17,000 | |||||||||||||||||
Almirall (Europe) | Collaborative arrangements | Development milestones | ||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||
Milestone payment received, net of foreign withholding taxes | $ 19,000 | |||||||||||||||||
Milestone payment received | $ 20,000 | |||||||||||||||||
Almirall (Europe) | Collaborative arrangements | Development milestones | Convertible preferred stock (Note 16) | ||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||
Contingent equity investment to be received form forward purchase contract | $ 15,000 | |||||||||||||||||
Almirall (Europe) | Collaborative arrangements | Amended Development Milestones | ||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||
Milestone payment received, net of foreign withholding taxes | $ 1,000 | $ 1,000 | $ 1,900 | |||||||||||||||
Number of milestones achieved under collaboration agreement | item | 2 | 2 | 2 | |||||||||||||||
Milestones, net of foreign tax withholdings | $ 1,000 | $ 1,000 | ||||||||||||||||
Almirall S A and Allergan Plc | Collaborative arrangements | ||||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||||
Remaining milestone payment due upon the amendment to the license agreement | $ 42,500 | |||||||||||||||||
[1] | In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. |
Collaboration, License and Co51
Collaboration, License and Co-promotion Agreements (Details 3) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | 14 Months Ended | ||||||||||||
Mar. 31, 2013 | Nov. 30, 2009USD ($) | May. 31, 2009USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2015USD ($) | ||
Collaboration and License Agreements | ||||||||||||||||
Collaborative arrangements revenue | $ 53,307 | $ 39,572 | $ 27,744 | $ 28,932 | $ 38,073 | $ 16,918 | $ 6,840 | $ 14,605 | $ 149,555 | $ 76,436 | $ 22,881 | |||||
Almirall (Europe) | Collaborative arrangements | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Up-front fee received | $ 40,000 | |||||||||||||||
Collaborative arrangements revenue | [1] | 540 | 7,587 | 13,103 | ||||||||||||
Revenue recognized from sale of API | 5,100 | 11,100 | ||||||||||||||
Astellas (Japan) | Collaborative arrangement | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Revenue recognized from sale of API | 500 | 2,400 | 1,200 | |||||||||||||
Astellas (Japan) | Collaborative arrangements | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Up-front fee received | $ 30,000 | |||||||||||||||
Estimated development period prior to assessment | 115 months | |||||||||||||||
Estimated development period | 85 months | |||||||||||||||
Revenue recognized as a result of revised estimate of development period | 1,900 | 1,900 | 1,500 | |||||||||||||
Up-front license fee revenue recognized | 5,100 | 5,100 | 4,600 | |||||||||||||
Up-front license fee deferred | 6,300 | 6,300 | $ 6,300 | |||||||||||||
Collaborative arrangements revenue | $ 7,696 | 17,750 | $ 5,777 | |||||||||||||
Astellas (Japan) | Collaborative arrangements | Additional development milestones | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Total number of milestone payments to be received (in payments) | item | 3 | |||||||||||||||
Astellas (Japan) | Collaborative arrangements | Additional development milestones | Maximum | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Total milestone payments to be received | $ 45,000 | |||||||||||||||
Astellas (Japan) | Collaborative arrangements | Phase 3 milestones | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Milestone payment to be received by company upon milestone achievement | 15,000 | |||||||||||||||
Revenue recognized over the remaining development period | $ 2,600 | 2,600 | 2,600 | |||||||||||||
Collaborative arrangements revenue | $ 2,100 | $ 10,200 | $ 12,300 | |||||||||||||
Astellas (Japan) | Collaborative arrangements | Japanese NDA equivalent filing milestone | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Total number of milestone payments to be received (in payments) | item | 2 | |||||||||||||||
Milestone payment to be received by company upon milestone achievement | $ 15,000 | |||||||||||||||
Astellas (Japan) | Collaborative arrangements | Approval of Japanese NDA equivalent filing milestone | ||||||||||||||||
Collaboration and License Agreements | ||||||||||||||||
Milestone payment to be received by company upon milestone achievement | $ 15,000 | |||||||||||||||
[1] | In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. |
Collaboration, License and Co52
Collaboration, License and Co-promotion Agreements (Details 4) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||
Oct. 31, 2015 | Aug. 31, 2014 | Oct. 31, 2012 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Collaboration and License Agreements | ||||||||||||||
Total revenues | $ 53,307 | $ 39,572 | $ 27,744 | $ 28,932 | $ 38,073 | $ 16,918 | $ 6,840 | $ 14,605 | $ 149,555 | $ 76,436 | $ 22,881 | |||
AstraZeneca (China, Hong Kong and Macau) | Collaborative arrangement | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Collaborative arrangements revenue earned | 2,200 | 2,500 | ||||||||||||
AstraZeneca (China, Hong Kong and Macau) | Collaborative arrangements | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Prior notice period to terminate the agreement | 180 days | |||||||||||||
Up-front fee received | $ 25,000 | |||||||||||||
Additional budget for activities supporting the development of linaclotide | $ 14,000 | |||||||||||||
Total amount of non-contingent arrangement consideration | $ 34,000 | |||||||||||||
Percentage of costs of clinical trial material supply services and research, development and regulatory activities allocated | 55.00% | |||||||||||||
Amount of arrangement consideration for clinical trial material supply services and research, development and regulatory activities | $ 9,000 | |||||||||||||
Discount rate utilized in analysis (as a percent) | 11.50% | |||||||||||||
Arrangement Consideration allocated to the License Deliverable | $ 29,700 | |||||||||||||
Arrangement Consideration allocated to the R&D Services | 1,800 | |||||||||||||
Arrangement Consideration allocated to the JDC services | 100 | |||||||||||||
Arrangement Consideration allocated to the clinical trial material supply services | 300 | |||||||||||||
Arrangement Consideration allocated to Co-Promotion Deliverable | 2,100 | |||||||||||||
Net cost sharing offset or incremental expense related to research and development expense | 700 | 2,400 | (1,900) | |||||||||||
Collaborative arrangements revenue earned | 200 | 900 | 1,000 | |||||||||||
Total revenues | 2,370 | 3,417 | 1,044 | |||||||||||
AstraZeneca (China, Hong Kong and Macau) | Collaborative arrangements | Sales milestones | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Milestone payment to be received by company upon milestone achievement | $ 125,000 | |||||||||||||
AstraZeneca (China, Hong Kong and Macau) | Collaborative arrangements | Commercialization milestone | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Percentage of net profit from commercialization | 55.00% | |||||||||||||
Percentage of net loss from commercialization | 55.00% | |||||||||||||
Exact Sciences Corp | Co-promotion | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Total revenues | 4,400 | |||||||||||||
Initial term of agreement | 1 year | |||||||||||||
Period following termination of agreement during which the reduced royalties will be paid | 1 year | |||||||||||||
Exact Sciences Corp | Co-promotion | Maximum | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Reimbursement of revenue | $ 4,800 | |||||||||||||
Allergan (North America) | Collaborative arrangement | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Net profit share adjustment | 2,900 | |||||||||||||
Allergan (North America) | Collaborative arrangements | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Up-front fee received | $ 70,000 | |||||||||||||
Net cost sharing offset or incremental expense related to research and development expense | 16,900 | 4,300 | (2,200) | |||||||||||
Net profit share adjustment | 2,900 | |||||||||||||
Total revenues | $ 134,335 | $ 47,682 | $ 2,957 | |||||||||||
Allergan (North America) | Collaborative arrangements | Commercialization milestone | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Percentage of net profit from commercialization | 50.00% | |||||||||||||
Percentage of net loss from commercialization | 50.00% | |||||||||||||
Allergan (North America) | Co-promotion | ||||||||||||||
Collaboration and License Agreements | ||||||||||||||
Milestone payment to be received by company upon milestone achievement | $ 10,000 | |||||||||||||
Collaborative arrangements revenue earned | $ 200 |
Collaboration, License and Co53
Collaboration, License and Co-promotion Agreements (Details 5) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Collaboration and License Agreements | |||
Research and development expense | $ 108,746 | $ 101,890 | $ 102,378 |
Other Collaboration and License Agreements | |||
Collaboration and License Agreements | |||
Aggregate up-front fee paid | 5,800 | ||
Contingent milestone payable per product, maximum | 114,500 | ||
Research and development expense | 1,000 | $ 3,600 | |
Other Collaboration and License Agreements | Sales milestones | |||
Collaboration and License Agreements | |||
Contingent milestone payable per product | 35,000 | ||
Other Collaboration and License Agreements | Development milestones | |||
Collaboration and License Agreements | |||
Contingent milestone payable | $ 7,500 | ||
Milestone payment | 2,500 | ||
Contingent milestone payable per product | 21,500 | ||
Other Collaboration and License Agreements | Regulatory milestones | |||
Collaboration and License Agreements | |||
Contingent milestone payable | 18,000 | ||
Milestone payment | 0 | ||
Contingent milestone payable per product | $ 58,000 | ||
Co-promotion | Allergan (North America) | |||
Collaboration and License Agreements | |||
Number of health care practitioners (in practitioners) | item | 25,000 | ||
Collaborative arrangements revenue recognized | $ 200 | ||
Milestone payment to be received by company upon milestone achievement | $ 10,000 |
Fair Value of Financial Instr54
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Jan. 31, 2013 | Jan. 04, 2013 |
Description | |||||
Available-for-sale securities | $ 178,107 | $ 174,037 | |||
Fair Value Transfer Between Measurement Levels | 0 | 0 | |||
11% PhaRMA Notes | |||||
Description | |||||
Aggregate principal amount of notes issued in private placement | $ 175,000 | ||||
2.25% Convertible Senior Notes due in 2022 | |||||
Description | |||||
Aggregate principal amount of notes issued in private placement | $ 335,700 | ||||
Annual cash interest rate | 2.25% | ||||
PhaRMA Notes | |||||
Description | |||||
Aggregate principal amount of notes issued in private placement | $ 175,000 | ||||
Annual cash interest rate | 11.00% | ||||
Convertible Senior Notes | |||||
Description | |||||
Annual cash interest rate | 2.25% | ||||
Convertible Senior Notes | 2.25% Convertible Senior Notes due in 2022 | |||||
Description | |||||
Aggregate principal amount of notes issued in private placement | $ 335,700 | ||||
Annual cash interest rate | 2.25% | ||||
Significant Other Observable Inputs (Level 2) | 2.25% Convertible Senior Notes due in 2022 | |||||
Description | |||||
Estimated fair value | 311,600 | ||||
Significant Unobservable Inputs (Level 3) | 11% PhaRMA Notes | |||||
Description | |||||
Estimated fair value | 166,800 | 182,500 | |||
Recurring basis | |||||
Description | |||||
Total assets | 522,816 | 235,003 | |||
Total liabilities | 75,328 | ||||
Recurring basis | Convertible Note Hedges | |||||
Description | |||||
Derivative instrument | 86,466 | ||||
Recurring basis | Note hedge warrants | |||||
Description | |||||
Total liabilities | 75,328 | ||||
Recurring basis | Money market funds | |||||
Description | |||||
Cash and cash equivalents | 254,903 | 60,966 | |||
Recurring basis | U.S. Treasury securities | |||||
Description | |||||
Available-for-sale securities | 50,091 | 24,005 | |||
Recurring basis | U.S. government-sponsored securities | |||||
Description | |||||
Cash and cash equivalents | 3,340 | ||||
Available-for-sale securities | 128,016 | 150,032 | |||
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||||
Description | |||||
Total assets | 304,994 | 84,971 | |||
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds | |||||
Description | |||||
Cash and cash equivalents | 254,903 | 60,966 | |||
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities | |||||
Description | |||||
Available-for-sale securities | 50,091 | 24,005 | |||
Recurring basis | Significant Other Observable Inputs (Level 2) | |||||
Description | |||||
Total assets | 131,356 | 150,032 | |||
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. government-sponsored securities | |||||
Description | |||||
Cash and cash equivalents | 3,340 | ||||
Available-for-sale securities | 128,016 | $ 150,032 | |||
Recurring basis | Significant Unobservable Inputs (Level 3) | |||||
Description | |||||
Total assets | 86,466 | ||||
Total liabilities | 75,328 | ||||
Recurring basis | Significant Unobservable Inputs (Level 3) | Convertible Note Hedges | |||||
Description | |||||
Derivative instrument | 86,466 | ||||
Recurring basis | Significant Unobservable Inputs (Level 3) | Note hedge warrants | |||||
Description | |||||
Total liabilities | $ 75,328 |
Fair Value of Financial Instr55
Fair Value of Financial Instruments (Details 2) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($)$ / shares | ||
Changes in fair value | ||
Issuance of Note Hedge Warrants | $ 70,849 | |
Purchase of Convertible Note Hedges | $ (91,915) | |
Convertible Note Hedges | Convertible note derivatives | Significant Unobservable Inputs (Level 3) | ||
Derivative Instrument Detail [Abstract] | ||
Risk-free interest rate (as a percent) | 2.00% | [1] |
Time to maturity | 6 years 6 months | |
Stock price (in dollars per share) | $ / shares | $ 11.59 | [2] |
Strike price (in dollars per share) | $ / shares | $ 16.58 | [3] |
Common stock volatility (as a percent) | 45.00% | [4] |
Changes in fair value | ||
Purchase of Convertible Note Hedges | $ 91,915 | |
Change in fair value, recorded as a component of Loss on derivatives | (5,449) | |
Balance at end of period | $ 86,466 | |
Note hedge warrants | Convertible note derivatives | Significant Unobservable Inputs (Level 3) | ||
Derivative Instrument Detail [Abstract] | ||
Risk-free interest rate (as a percent) | 2.10% | [1] |
Time to maturity | 7 years | |
Stock price (in dollars per share) | $ / shares | $ 11.59 | [2] |
Strike price (in dollars per share) | $ / shares | $ 21.50 | [3] |
Common stock volatility (as a percent) | 45.00% | [4] |
Changes in fair value | ||
Issuance of Note Hedge Warrants | $ (70,849) | |
Change in fair value, recorded as a component of Loss on derivatives | (4,479) | |
Balance at end of period | $ (75,328) | |
[1] | Based on U.S. Treasury yield curve, with terms commensurate with the terms of the Convertible Note Hedges and the Note Hedge Warrants. | |
[2] | The closing price of the Company’s Class A common stock on the last trading day of the year ended December 31, 2015. | |
[3] | As per the respective agreements for the Convertible Note Hedges and Note Hedge Warrants. | |
[4] | Selected volatility based on historical volatility and implied volatility of the Company’s Class A common stock. |
Available-for-Sale Securities56
Available-for-Sale Securities (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)item | Dec. 31, 2013USD ($) | |
Available-for-Sale Securities | |||
Amortized Cost | $ 178,193 | $ 174,056 | |
Gross Unrealized Gains | 2 | 6 | |
Gross Unrealized Losses | (88) | (25) | |
Fair Value | $ 178,107 | $ 174,037 | |
Contractual maturity period, maximum | 1 year | ||
Number of investments classified as available-for-sale securities in an unrealized loss position (in investments) | item | 32 | 27 | |
Number of investments classified as available-for-sale securities in an unrealized loss position for more than twelve months (in investments) | item | 0 | 0 | |
Aggregate fair value of securities none of which had been in an unrealized loss position for more than twelve months | $ 167,600 | $ 101,900 | |
Proceeds from sales of available-for-sale securities | 0 | 0 | $ 0 |
U.S. Treasury securities | |||
Available-for-Sale Securities | |||
Amortized Cost | 50,124 | 24,001 | |
Gross Unrealized Gains | 4 | ||
Gross Unrealized Losses | (33) | ||
Fair Value | 50,091 | 24,005 | |
U.S. government-sponsored securities | |||
Available-for-Sale Securities | |||
Amortized Cost | 128,069 | 150,055 | |
Gross Unrealized Gains | 2 | 2 | |
Gross Unrealized Losses | (55) | (25) | |
Fair Value | $ 128,016 | $ 150,032 |
Inventory (Details)
Inventory (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)agreement | |
Number of minimum supply agreements (in agreements) | agreement | 2 | |||||
Demand forecast period | 24 months | |||||
Reduced forecasted purchases period | 18 months | |||||
Write-down of inventory | $ 4,950 | $ 17,638 | $ 20,292 | |||
Loss on non-cancellable purchase commitments | $ 9,488 | 3,200 | $ 11,400 | $ 8,900 | ||
Accrual loss on non-cancellable purchase commitments, current | $ 3,200 | |||||
Net realizable value | $ 4,954 | $ 4,954 | ||||
Japan, China, Hong Kong and Macau | ||||||
Non-cancellable commercial supply purchase obligations | 22,300 | |||||
Other Liabilities | ||||||
Accrual for non-cancellable purchase commitments, noncurrent | 10,100 | |||||
Allergan (North America) | European market | ||||||
Loss on non-cancellable purchase commitments | $ 6,900 |
Property and Equipment (Details
Property and Equipment (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Property and equipment | |||
Property and equipment, gross | $ 77,681 | $ 82,805 | |
Less accumulated depreciation and amortization | (56,606) | (52,979) | |
Property and equipment, net | 21,075 | 29,826 | |
Assets under capital lease | 3,800 | 5,500 | $ 5,500 |
Accumulated amortization balances related to assets under capital lease | 1,300 | 2,000 | |
Total depreciation and amortization expenses | 11,600 | 12,300 | 11,700 |
Depreciation and amortization | $ 11,630 | $ 12,331 | $ 11,729 |
United Kingdom | |||
Property and equipment | |||
Number of contract manufacturers possessing manufacturing equipment | 1 | 1 | |
Manufacturing Equipment | |||
Property and equipment | |||
Property and equipment, gross | $ 3,748 | $ 3,623 | |
Laboratory Equipment | |||
Property and equipment | |||
Property and equipment, gross | 13,681 | 15,126 | |
Computer and office equipment | |||
Property and equipment | |||
Property and equipment, gross | 3,596 | 5,185 | |
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, gross | 2,062 | 2,093 | |
Software | |||
Property and equipment | |||
Property and equipment, gross | 12,715 | 13,921 | |
Construction in process | |||
Property and equipment | |||
Property and equipment, gross | 375 | 1,457 | |
Leased vehicles | |||
Property and equipment | |||
Property and equipment, gross | 3,039 | 4,472 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | $ 38,465 | 36,928 | |
Write-down of leasehold improvement assets | $ 500 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Accrued Expenses | |||
Salaries and benefits | $ 19,582 | $ 16,582 | |
Professional fees | 507 | 574 | |
Accrued interest | 1,103 | 850 | |
Accrued loss on non-cancellable purchase commitments | $ 3,200 | ||
Other | 2,109 | 4,606 | |
Total accrued expense | $ 23,301 | $ 22,612 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2015 | |
Notes Payable | ||
Net proceeds received | $ 335,699,000 | |
Fees and expenses | $ 11,700,000 | |
Convertible Senior Notes | ||
Notes Payable | ||
Annual interest rate of notes (as a percent) | 2.25% | |
Maximum period of the sole remedy for event failures in the Indenture | 180 days | |
2.25% Convertible Senior Notes due in 2022 | ||
Notes Payable | ||
Aggregate principal amount of notes issued | $ 335,700,000 | |
Net proceeds received | 324,000,000 | |
Fees and expenses | $ 11,700,000 | |
Annual interest rate of notes (as a percent) | 2.25% | |
2.25% Convertible Senior Notes due in 2022 | Convertible Senior Notes | ||
Notes Payable | ||
Aggregate principal amount of notes issued | $ 335,700,000 | |
Net proceeds received | 324,000,000 | |
Payments for convertible bond hedges | $ 21,100,000 | |
Annual interest rate of notes (as a percent) | 2.25% | |
Amortization period | 7 years | |
Class A common stock | Convertible Senior Notes | ||
Notes Payable | ||
Number of trading days | 30 days | |
Class A common stock | Minimum | Convertible Senior Notes | ||
Notes Payable | ||
Number of trading days | 20 days | |
Class A common stock | 2.25% Convertible Senior Notes due in 2022 | Convertible Senior Notes | ||
Notes Payable | ||
Initial conversion rate, number of shares to be issued per $1000 of principal amount (in shares) | 60.3209 | |
Initial conversion price (in dollars per share) | $ 16.58 | |
Approximate shares issued upon conversion (in shares) | 20,249,665 | |
Principal amount used for debt instrument conversion ratio | $ 1,000 | |
Minimum percentage of stock price | 130.00% | |
Number of business days immediately after any five consecutive trading day period during the measurement period | 5 days | |
Number of consecutive trading days before five business days during the measurement period | 5 days | |
Repurchase price, as percentage of principal amount, if company undergoes change of control | 100.00% | |
Class A common stock | 2.25% Convertible Senior Notes due in 2022 | Maximum | Convertible Senior Notes | ||
Notes Payable | ||
Percentage of the trading price to the product of the sale price of the entity's common stock and the conversion rate | 98.00% | |
Class A common stock | 2.25% Convertible Senior Notes due in 2022 | Minimum | Convertible Senior Notes | ||
Notes Payable | ||
Percentage of aggregate principal amount payable, in case of event of default | 25.00% |
Notes Payable (Details 2)
Notes Payable (Details 2) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2015 | |
Convertible Senior Notes | ||
Liability component: | ||
Principal | $ 335,699 | |
Less: unamortized debt discount | (107,636) | |
Less: unamortized debt issuance costs | (7,443) | |
Net carrying amount | 220,620 | |
Equity component | 114,199 | |
Future minimum payments of Convertible senior notes | ||
Total future minimum payments under the 2022 Notes | 335,699 | |
Less: unamortized debt discount | (107,636) | |
Less: unamortized debt issuance costs | (7,443) | |
Net carrying amount | 220,620 | |
2.25% Convertible Senior Notes due in 2022 | ||
Liability component: | ||
Principal | 384,795 | |
Less: unamortized debt discount | (107,636) | |
Less: unamortized debt issuance costs | (7,443) | |
Net carrying amount | 220,620 | |
Future minimum payments of Convertible senior notes | ||
2,016 | 7,553 | |
2,017 | 7,553 | |
2,018 | 7,553 | |
2,019 | 7,553 | |
2,020 | 7,553 | |
Thereafter | 347,030 | |
Total future minimum payments under the 2022 Notes | 384,795 | |
Less: amounts representing interest | (49,096) | |
Less: unamortized debt discount | (107,636) | |
Less: unamortized debt issuance costs | (7,443) | |
Net carrying amount | $ 220,620 | |
2.25% Convertible Senior Notes due in 2022 | Convertible Senior Notes | ||
Liability component: | ||
Debt Issuance Cost | $ 11,700 | |
Debt issuance costs allocated to equity components | 4,000 | |
Debt issuance costs allocated to liability components | $ 7,700 | |
Debt instrument term | 7 years | |
Effective interest rate on liability components | 9.34% | |
Contractual interest expense | $ 4,069 | |
Amortization of debt issuance costs | 305 | |
Amortization of debt discount | 6,563 | |
Total interest expense | $ 10,937 |
Notes Payable (Details 3)
Notes Payable (Details 3) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Notes Payable | |
Long-term asset | $ 86,466 |
Long-term liability | 75,328 |
Convertible Note Hedge | |
Notes Payable | |
Long-term asset | 91,900 |
Long-term liability | 70,800 |
Cost of hedging instruments, net of hedging instrument proceeds | $ 21,100 |
Convertible Note Hedge | Class A common stock | |
Notes Payable | |
Convertible notes, shares issued | shares | 20,249,665 |
Convertible notes, share price (in dollars per share) | $ / shares | $ 16.58 |
Convertible notes, bond hedge warrants issued | shares | 20,249,665 |
Convertible notes, bond hedge warrants strike price (in dollars per share) | $ / shares | $ 21.50 |
Number of trading days for exercise of warrants | 150 days |
Notes Payable (Details 4)
Notes Payable (Details 4) - USD ($) $ in Thousands | Mar. 15, 2014 | Jan. 04, 2013 | Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 |
Notes Payable | ||||||
Estimated principal payments | $ 24,964 | $ 11,258 | ||||
Upfront cash proceeds | $ 175,000 | |||||
Prepaid expenses and other current assets | 6,293 | 9,180 | ||||
Other assets | 2,628 | 3,042 | ||||
PhaRMA Notes | ||||||
Notes Payable | ||||||
Aggregate principal amount of notes issued in private placement | $ 175,000 | |||||
Annual cash interest rate | 11.00% | |||||
Principal payment | 13,900 | |||||
Estimated principal payments | $ 25,000 | |||||
Percentage of net sales of LINZESS considered to determine quarterly payments on the notes | 7.50% | |||||
Upfront cash proceeds | 175,000 | |||||
Discount on issuance of debt | 400 | |||||
Debt issuance costs capitalized | $ 7,300 | |||||
PhaRMA Notes | From and including January 1, 2015 to and including December 31, 2015 | ||||||
Notes Payable | ||||||
Payment start date | Jan. 1, 2015 | |||||
Payment end date | Dec. 31, 2015 | |||||
Redemption Percentage | 105.50% | |||||
PhaRMA Notes | From and including January 1, 2016 to and including December 31, 2016 | ||||||
Notes Payable | ||||||
Payment start date | Jan. 1, 2016 | |||||
Payment end date | Dec. 31, 2016 | |||||
Redemption Percentage | 102.75% | |||||
PhaRMA Notes | From and including January 1, 2017 and thereafter | ||||||
Notes Payable | ||||||
Payment start date | Jan. 1, 2017 | |||||
Redemption Percentage | 100.00% | |||||
Accounting Standards Update 2015-03 | New Accounting Pronouncement, Early Adoption, Effect | ||||||
Notes Payable | ||||||
Prepaid expenses and other current assets | 1,400 | |||||
Other assets | 2,800 | |||||
Accounting Standards Update 2015-03 | New Accounting Pronouncement, Early Adoption, Effect | PhaRMA Notes | ||||||
Notes Payable | ||||||
Prepaid expenses and other current assets | 1,400 | |||||
Other assets | $ 2,800 |
Commitments and Contingencies64
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies | |||
Reimbursement for financing capital improvements | $ 22.9 | ||
Office and laboratory space in Cambridge, Massachusetts | |||
Commitments and Contingencies | |||
Letter of credit outstanding amount | 7.6 | ||
First Sublease payments offset the lease obligations | $ 16.1 | ||
First Sublease payments received | 5 | ||
Second Sublease payments offset the lease obligations | $ 1.9 | ||
Second Sublease payments received | $ 1.1 | ||
Operating Leases, Rent Expense, Net | $ 2.6 |
Commitments and Contingencies65
Commitments and Contingencies (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2014 | |
2013 Vehicle Leases | |||
Capital lease obligation | |||
Initial term of the lease | 36 months | ||
Weighted average interest rate on the outstanding capital lease obligations (as a percent) | 7.70% | 7.70% | 7.70% |
Letters of credit securing capital lease obligations | $ 0.5 | $ 0.5 | $ 0.5 |
2015 Vehicle Leases | |||
Capital lease obligation | |||
Initial term of the lease | 12 months | ||
Weighted average interest rate on the outstanding capital lease obligations (as a percent) | 3.30% | ||
Letters of credit securing capital lease obligations | $ 0.6 | ||
Computer and office equipment | |||
Capital lease obligation | |||
Weighted average interest rate on the outstanding capital lease obligations (as a percent) | 14.50% |
Commitments and Contingencies66
Commitments and Contingencies (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Future minimum lease payments under Operating Lease Payments | |||
2,016 | $ 15,617 | ||
2,017 | 16,170 | ||
2,018 | 635 | ||
Total future minimum lease payments | 32,422 | ||
Future minimum lease payments under Capital Leases Payments | |||
2,016 | 2,756 | ||
2,017 | 253 | ||
2,018 | 85 | ||
Total future minimum lease payments | 3,094 | ||
Less amounts representing interest | (157) | ||
Capital lease obligations at the end of the period | 2,937 | ||
Current portion of capital lease obligations | (2,631) | $ (1,152) | |
Capital lease obligations, net of current portion | 306 | 2,571 | |
Subleases | |||
Future minimum Lease Payments to be Received from Subleases | |||
2,016 | (5,740) | ||
2,017 | (5,665) | ||
2,018 | (476) | ||
Total future minimum lease payments | (11,881) | ||
Net Operating Lease Payments | |||
Future minimum lease payments under Operating Lease Payments | |||
2,016 | 9,878 | ||
2,017 | 10,505 | ||
2,018 | 159 | ||
Total future minimum lease payments | 20,542 | ||
Continuing operations | |||
Operating lease | |||
Rent expense | 6,300 | 10,200 | $ 8,800 |
Sublease income | $ 5,300 | $ 2,600 |
Commitments and Contingencies67
Commitments and Contingencies (Details 4) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)agreement | Dec. 31, 2014agreement | Aug. 04, 2015USD ($) | |
Commercial Supply Commitments | |||
Number of supply agreements (in agreements) | agreement | 2 | ||
Commercial Supply Commitments | |||
Commercial Supply Commitments | |||
Number of supply agreements (in agreements) | agreement | 2 | ||
Number of suppliers (in suppliers) | 2 | ||
Number of amendments (in amendments) | 1 | ||
Non-cancellable commercial supply purchase obligations | $ 34,900 | ||
Yearly required payment for purchase commitments | $ 2,500 | ||
Unrecognized minimum purchase requirements and other firm commitments | |||
2,016 | 2,259 | ||
2,017 | 2,259 | ||
2,018 | 2,322 | ||
2,019 | 3,096 | ||
2,020 | 3,096 | ||
Thereafter | 9,288 | ||
Total unrecognized minimum purchase requirements | 22,320 | ||
Commercial Supply Commitments | Other liabilities. | |||
Commercial Supply Commitments | |||
Accrual for non-cancellable purchase commitments, noncurrent | $ 10,100 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2014USD ($)$ / sharesshares | Jun. 30, 2013USD ($)$ / sharesshares | Dec. 31, 2015itemshares | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Stockholders' Equity | |||||
Number of series of common stock designated | 2 | ||||
Minimum percentage of beneficial ownership in entity's outstanding shares of common stock used to determine number of voting rights allowed per share of common stock | 30.00% | ||||
Number of shares of Class A common stock to be received for each share of Class B common stock converted | 1 | ||||
Threshold number of shares of Class B common stock outstanding used to determine date of conversion | shares | 19,561,556 | ||||
Percentage of the number of shares of Class B common stock outstanding immediately following the completion of an initial public offering used to determine date of conversion | 25.00% | ||||
Proceeds from issuance of common stock | $ | $ 190,428 | $ 137,766 | |||
Class A common stock | |||||
Stockholders' Equity | |||||
Number of voting rights per share | one | ||||
Shares sold | shares | 15,784,325 | 11,204,948 | |||
Issuance price per share (in dollars per share) | $ / shares | $ 12.75 | $ 13 | |||
Proceeds from issuance of common stock | $ | $ 190,400 | $ 137,800 | |||
Class B common stock | |||||
Stockholders' Equity | |||||
Number of voting rights per share | one | ||||
Number of voting rights per share if the matter is an adoption agreement of merger or consolidation, an adoption of a resolution with respect to sale, lease, or exchange of the Company's assets or an adoption of dissolution or liquidation of the Company | 10 | ||||
Number of voting rights per share if any individual, entity, or group seeks to obtain or has obtained beneficial ownership of 30% or more of the Company's outstanding shares of common stock | 10 |
Stock Benefit Plans (Details)
Stock Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | $ 25,469 | $ 26,184 | $ 19,829 |
Employee stock options | |||
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | 20,668 | 19,373 | 17,981 |
Restricted stock units | |||
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | 1,536 | ||
Restricted stock awards | |||
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | 2,408 | 2,671 | 552 |
Non-employee stock options | |||
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | 2,618 | 271 | |
Employee stock purchase plan | |||
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | 833 | 941 | 995 |
Workforce reduction | |||
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | 551 | ||
Stock award | |||
Restricted Stock | |||
Expense recognized for share-based compensation arrangements | $ 24 | $ 30 | $ 30 |
Stock Benefit Plans (Details 2)
Stock Benefit Plans (Details 2) - USD ($) $ in Thousands | Nov. 04, 2014 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Allocated Share-based Compensation Expense | $ 25,469 | $ 26,184 | $ 19,829 | ||
Incremental charge | 125,247 | 118,333 | 123,228 | ||
Research and development | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Allocated Share-based Compensation Expense | 10,065 | 9,482 | 9,178 | ||
Selling, general and administrative | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Allocated Share-based Compensation Expense | 15,404 | 16,702 | 10,651 | ||
Employee stock options | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Allocated Share-based Compensation Expense | 20,668 | 19,373 | $ 17,981 | ||
Employee stock options | Executive Officer [Member] | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Incremental charge | $ 2,300 | ||||
Employee stock options | Maximum | Executive Officer [Member] | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Vesting period | 2 years | ||||
Restricted stock units | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Allocated Share-based Compensation Expense | $ 1,536 | ||||
Options to purchase common stock | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Vesting period | 4 years | ||||
Performance-based milestone options | |||||
Share-based compensation is reflected in the condensed consolidated statements of operations | |||||
Allocated Share-based Compensation Expense | $ 200 | $ 500 |
Stock Benefit Plans (Details 3)
Stock Benefit Plans (Details 3) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015USD ($)item$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($) | Dec. 31, 2010shares | |
Restricted Stock | ||||
Number of share-based compensation plans pursuant to which awards are currently being made | item | 2 | |||
Number of share-based compensation plans under which there are outstanding awards | item | 2 | |||
Additional disclosures | ||||
Allocated Share-based Compensation Expense | $ | $ 25,469 | $ 26,184 | $ 19,829 | |
Employee stock purchase plan | ||||
Restricted Stock | ||||
Shares reserved for issuance | 400,000 | |||
Threshold number of additional shares available for future grant | 1,000,000 | |||
Shares available for future grant | 2,075,057 | |||
Purchase price as a percentage of fair market value of a share of common stock on the first or last day of an offering period | 85.00% | |||
Offering period | 6 months | |||
Additional disclosures | ||||
Allocated Share-based Compensation Expense | $ | $ 833 | $ 941 | 995 | |
Employee stock purchase plan | Class A common stock | ||||
Restricted Stock | ||||
Percentage for the threshold number of additional shares available for future grant, expressed as percentage of common stock outstanding on the last day of the immediately preceding fiscal year | 1.00% | |||
Restricted stock units | ||||
Restricted Stock | ||||
Vesting percentage | 25.00% | |||
Summary of unvested shares of restricted stock, shares | ||||
Granted (in shares) | 936,414 | |||
Forfeited (in shares) | (36,363) | |||
Outstanding at the end of the period (in shares) | 900,051 | |||
Summary of unvested shares of restricted stock, weighted-average fair value | ||||
Granted (in dollars per share) | $ / shares | $ 13.44 | |||
Forfeited (in dollars per share) | $ / shares | 15.46 | |||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 13.36 | |||
Additional disclosures | ||||
Allocated Share-based Compensation Expense | $ | $ 1,536 | |||
Unrecognized share-based compensation | $ | $ 7,768 | |||
Restricted stock awards | ||||
Summary of unvested shares of restricted stock, shares | ||||
Outstanding at the beginning of the period ( in shares) | 98,890 | |||
Granted (in shares) | 151,604 | |||
Vested (in shares) | (175,992) | |||
Outstanding at the end of the period (in shares) | 74,502 | 98,890 | ||
Summary of unvested shares of restricted stock, weighted-average fair value | ||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 13.77 | |||
Granted (in dollars per share) | $ / shares | 14.16 | |||
Vested (in dollars per share) | $ / shares | 13.95 | |||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 14.14 | $ 13.77 | ||
Additional disclosures | ||||
Allocated Share-based Compensation Expense | $ | $ 2,408 | $ 2,671 | $ 552 | |
Unrecognized share-based compensation | $ | $ 892 | |||
Restricted stock awards | Class A common stock | ||||
Summary of unvested shares of restricted stock, shares | ||||
Granted (in shares) | 151,604 | |||
Options to purchase common stock | ||||
Restricted Stock | ||||
Expiration period | 10 years | |||
Vesting period | 4 years | |||
Weighted-average assumptions used to estimate the fair value of the stock options using the Black-Scholes option-pricing model | ||||
Expected volatility (as a percent) | 46.10% | 46.80% | 46.30% | |
Expected term | 6 years 15 days | 6 years 1 month 6 days | 6 years 6 months | |
Risk-free interest rate (as a percent) | 1.70% | 1.80% | 1.60% | |
Additional disclosures | ||||
Option exercisable (in shares) | 12,669,438 | |||
Unrecognized share-based compensation | $ | $ 31,254 | |||
Vested (in shares) | 19,137,709 | |||
Options to purchase common stock | Class A common stock | ||||
Additional disclosures | ||||
Option exercisable (in shares) | 16,012,732 | |||
Options to purchase common stock | Class B common stock | ||||
Additional disclosures | ||||
Option exercisable (in shares) | 4,554,128 | |||
Time-accelerated stock options | ||||
Additional disclosures | ||||
Unrecognized share-based compensation | $ | $ 71 | |||
Performance-based milestone options | ||||
Additional disclosures | ||||
Allocated Share-based Compensation Expense | $ | 200 | $ 500 | ||
Unrecognized share-based compensation | $ | $ 3,655 | |||
Vested (in shares) | 0 | |||
The Plans | ||||
Restricted Stock | ||||
Shares available for future grant | 13,486,020 | |||
The Plans | Time-accelerated stock options | ||||
Additional disclosures | ||||
Allocated Share-based Compensation Expense | $ | $ 1,200 | $ 1,200 | $ 1,200 | |
The Plans | Time-accelerated stock options | Minimum | ||||
Restricted Stock | ||||
Vesting period | 6 years | |||
The Plans | Time-accelerated stock options | Maximum | ||||
Restricted Stock | ||||
Vesting period | 10 years | |||
2010 Plan | ||||
Restricted Stock | ||||
Shares reserved for issuance | 6,000,000 | |||
Threshold number of additional shares available for future grant | 6,600,000 | |||
Percentage for the threshold number of additional shares available for future grant, expressed as percentage of common stock outstanding on the last day of the immediately preceding fiscal year | 4.00% | |||
Shares available for future grant | 11,410,963 | |||
2002 Equity Plan | ||||
Restricted Stock | ||||
Shares available for future grant | 0 | |||
2005 Equity Plan and director compensation program | Restricted stock awards | ||||
Summary of unvested shares of restricted stock, shares | ||||
Granted (in shares) | 288,606 |
Stock Benefit Plans (Details 4)
Stock Benefit Plans (Details 4) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Options to purchase common stock | |||
Number of Shares | |||
Outstanding at the beginning of the period (in shares) | 19,957,773 | ||
Granted (in shares) | 3,518,950 | ||
Exercised (in shares) | (2,005,330) | ||
Cancelled (in shares) | (904,533) | ||
Outstanding at the end of the period (in shares) | 20,566,860 | 19,957,773 | |
Vested or expected to vest at the end of the period (in shares) | 19,137,709 | ||
Exercisable at the end of the period (in shares) | 12,669,438 | ||
Weighted-Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 10.07 | ||
Granted (in dollars per share) | 14.69 | ||
Exercised (in dollars per share) | 5.49 | ||
Cancelled (in dollars per share) | 13.13 | ||
Outstanding at the end of the period (in dollars per share) | 11.18 | $ 10.07 | |
Vested or expected to vest at the end of the period (in dollars per share) | 11.11 | ||
Exercisable at the end of the period (in dollars per share) | $ 10.35 | ||
Weighted-Average Contractual Life | |||
Outstanding at the beginning of the period | 6 years 1 month 20 days | 6 years | |
Outstanding at the end of the period | 6 years 1 month 20 days | 6 years | |
Vested or expected to vest at the end of the period | 6 years 25 days | ||
Exercisable at the end of the period | 4 years 9 months 26 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the beginning of the period | $ 104,897 | ||
Outstanding at the end of the period | 38,279 | $ 104,897 | |
Vested or expected to vest at the end of the period | 36,239 | ||
Exercisable at the end of the period | $ 29,953 | ||
Weighted average grant date fair value (in dollars per share) | $ 6.73 | $ 6.47 | $ 5.96 |
Total intrinsic value of options exercised | $ 17,700 | $ 26,900 | $ 19,700 |
Unrecognized share-based compensation | |||
Unrecognized expense, net of estimated forfeitures | $ 31,254 | ||
Weighted-Average Remaining recognition period | 2 years 7 months 6 days | ||
Restricted stock awards | |||
Unrecognized share-based compensation | |||
Unrecognized expense, net of estimated forfeitures | $ 892 | ||
Weighted-Average Remaining recognition period | 5 months 1 day | ||
Restricted stock units | |||
Unrecognized share-based compensation | |||
Unrecognized expense, net of estimated forfeitures | $ 7,768 | ||
Weighted-Average Remaining recognition period | 3 years 5 months 16 days | ||
Time-accelerated stock options | |||
Unrecognized share-based compensation | |||
Unrecognized expense, net of estimated forfeitures | $ 71 | ||
Time-accelerated stock options | The Plans | |||
Number of Shares | |||
Outstanding at the beginning of the period (in shares) | 400,000 | ||
Outstanding at the end of the period (in shares) | 400,000 | 400,000 | |
Performance-based milestone options | |||
Number of Shares | |||
Vested or expected to vest at the end of the period (in shares) | 0 | ||
Unrecognized share-based compensation | |||
Unrecognized expense, net of estimated forfeitures | $ 3,655 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of income taxes | |||
Income tax benefit using U.S. federal statutory rate | $ (48,507) | $ (64,470) | $ (92,756) |
Permanent differences | 688 | 1,916 | 1,413 |
State income taxes, net of federal benefit | (4,826) | (5,632) | (13,684) |
Stock-based compensation | 3,824 | 3,584 | 3,830 |
Fair market valuation of Note Hedge Warrants and Convertible Note Hedges | 3,711 | ||
Tax credits | (1,987) | (2,652) | (5,089) |
Expiring net operating losses and tax credits | 194 | 3,590 | |
Effect of change in state tax rate on deferred tax assets and deferred tax liabilities | (627) | 5,490 | 1,057 |
Change in the valuation allowance | 47,587 | 58,185 | 105,186 |
Other | (57) | (11) | $ 43 |
Deferred tax assets: | |||
Net operating loss carryforwards | 280,191 | 279,123 | |
Tax credit carryforwards | 33,996 | 32,186 | |
Capitalized research and development | 30,064 | 6,826 | |
Deferred revenue | 3,360 | 4,220 | |
Other | 66,450 | 45,135 | |
Total deferred tax assets | 414,061 | 367,490 | |
Deferred tax liabilities: | |||
Basis difference on 2022 Notes | (5,877) | ||
Total deferred tax liabilities | (5,877) | ||
Net deferred tax assets | 408,184 | 367,490 | |
Valuation allowance | (408,184) | (367,490) | |
Increase in valuation allowance | 40,700 | $ 58,700 | |
Valuation allowance impact due to deferred tax liability from 2022 Notes basis differences | $ 6,900 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Income Taxes | ||
Excess tax benefit related to the exercise of stock options excluded from net operating loss carryforward | $ 61.6 | |
Federal | ||
Net operating loss carryforwards available to offset future taxable income | ||
Net operating loss carryforwards | 857.9 | $ 745.6 |
State | ||
Net operating loss carryforwards available to offset future taxable income | ||
Net operating loss carryforwards | $ 566.7 | $ 517.4 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | |
Unrecognized income tax benefits | ||||
Increases based on tax positions related to the current period | $ 17,614 | |||
Increases for tax positions of prior periods | 10,174 | |||
Decreases for tax positions in prior periods | (10,174) | |||
Unrecognized Tax Benefits, End Balance | 17,614 | |||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract] | ||||
Unrecognized tax benefits | 17,614 | $ 17,614 | ||
Amount of unrecognized tax benefits that, if recognized, would affect effective tax rate | 17,600 | |||
Accrued interest and penalties from uncertain tax positions | $ 0 | $ 0 | 0 | |
Interest and tax penalties expense expense | $ 0 | 0 | $ 0 | |
Research and developments | ||||
Tax credit carryforwards available to offset future federal and state income taxes | ||||
Tax credit carryforward | $ 35,100 | $ 37,100 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
401(k) Savings Plan | |||
Employer match of first $6,000 of employee contributions (as a percent) | 75.00% | ||
Amount of employee contributions matched 75% by employer | $ 6,000 | ||
Continuing operations | |||
401(k) Savings Plan | |||
Compensation cost | $ 2,500,000 | $ 2,600,000 | $ 2,800,000 |
Minimum | |||
401(k) Savings Plan | |||
Employee contribution per calendar year (as a percent of compensation) | 1.00% | ||
Maximum | |||
401(k) Savings Plan | |||
Employee contribution per calendar year (as a percent of compensation) | 100.00% |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2009shares | Sep. 30, 2009shares | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Class B common stock | ||||
Related Party Transactions | ||||
Preferred stock conversion basis | 1 | |||
Allergan (North America) | ||||
Related Party Transactions | ||||
Accounts receivable | $ | $ 51.6 | $ 25.8 | ||
Allergan (North America) | Convertible preferred stock (Note 16) | ||||
Related Party Transactions | ||||
Issuance of Convertible preferred stock (in shares) | 2,083,333 | |||
Almirall (Europe) | Convertible preferred stock (Note 16) | ||||
Related Party Transactions | ||||
Issuance of Convertible preferred stock (in shares) | 681,819 |
State Grants (Details)
State Grants (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2011 | |
State grant received associated with the Life Science Tax Incentive Program | $ 1.7 | $ 0.9 | |
Minimum period for which jobs must be maintained | 5 years | ||
Recognized state grant associated with the Life Sciences Tax Incentive Program | $ 0.7 | ||
Other Liabilities | |||
Tax incentive due to Massachusetts DOR | $ 1 |
Workforce Reduction (Details)
Workforce Reduction (Details) - USD ($) $ in Millions | Jan. 08, 2014 | Mar. 31, 2014 | Dec. 31, 2014 |
Restructuring | |||
Reduction in workforce (as a percent) | 10.00% | ||
Restructuring-related costs | $ 4.3 | ||
Research and development | |||
Restructuring | |||
Restructuring-related costs | $ 3 | ||
Selling, general and administrative | |||
Restructuring | |||
Restructuring-related costs | $ 1.2 |
Selected Quarterly Financial 80
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Collaborative arrangements revenue | $ 53,307 | $ 39,572 | $ 27,744 | $ 28,932 | $ 38,073 | $ 16,918 | $ 6,840 | $ 14,605 | $ 149,555 | $ 76,436 | $ 22,881 |
Total cost and expenses | 59,134 | 65,757 | 69,753 | 56,999 | 71,198 | 53,657 | 61,959 | 58,992 | 251,643 | 245,806 | 274,883 |
Other (expense) income, net | (8,210) | (21,205) | (6,011) | (5,155) | (4,522) | (5,249) | (5,238) | (5,239) | (40,581) | (20,248) | (20,810) |
Net loss | $ (14,037) | $ (47,390) | $ (48,020) | $ (33,222) | $ (37,647) | $ (41,988) | $ (60,357) | $ (49,626) | $ (142,669) | $ (189,618) | $ (272,812) |
Net loss per share - basic and diluted | $ (0.09) | $ (0.33) | $ (0.34) | $ (0.24) | $ (0.27) | $ (0.30) | $ (0.44) | $ (0.38) | $ (1) | $ (1.39) | $ (2.35) |
Loss On Purchase Commitments | $ 9,488 | $ 3,200 | $ 11,400 | $ 8,900 | |||||||
Write down of inventory and loss on purchase commitments | 9,400 | 8,200 | |||||||||
Other (expense) income | $ 1,600 | $ 11,400 | $ 200 | $ 10,200 |