Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 12, 2018 | Jun. 30, 2017 | |
Entity Registrant Name | IRONWOOD PHARMACEUTICALS INC | ||
Entity Central Index Key | 1,446,847 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
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 | $ 2,706,473,658 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Class A common stock | |||
Entity Common Stock, Shares Outstanding | 136,899,154 | ||
Class B common stock | |||
Entity Common Stock, Shares Outstanding | 13,997,357 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 125,736 | $ 54,004 |
Available-for-sale securities | 95,680 | 251,212 |
Accounts receivable, net | 3,190 | 933 |
Related party accounts receivable, net | 78,967 | 63,921 |
Inventory | 735 | 1,081 |
Prepaid expenses and other current assets | 7,288 | 9,030 |
Total current assets | 311,596 | 380,181 |
Restricted cash | 7,056 | 8,247 |
Property and equipment, net | 17,274 | 20,512 |
Convertible note hedges | 108,188 | 132,521 |
Intangible assets, net | 159,905 | 166,119 |
Goodwill | 785 | 785 |
Other assets | 870 | 1,456 |
Total assets | 605,674 | 709,821 |
Current liabilities: | ||
Accounts payable | 15,958 | 17,702 |
Related party accounts payable, net | 1 | |
Accrued research and development costs | 7,313 | 6,937 |
Accrued expenses and other current liabilities | 38,237 | 38,301 |
Current portion of capital lease obligations | 4,077 | 6,227 |
Current portion of deferred rent | 195 | 7,719 |
Current portion of contingent consideration | 247 | 14,244 |
Total current liabilities | 66,027 | 91,131 |
Capital lease obligations, net of current portion | 82 | |
Deferred rent, net of current portion | 5,449 | 557 |
Contingent consideration, net of current portion | 31,011 | 63,416 |
Note hedge warrants | 92,188 | 113,237 |
Other liabilities | 5,060 | 8,190 |
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 | 1,318,536 | 1,258,398 |
Accumulated deficit | (1,308,760) | (1,191,823) |
Accumulated other comprehensive loss | (79) | (7) |
Total stockholders' equity | 9,848 | 66,716 |
Total liabilities and stockholders' equity | 605,674 | 709,821 |
Class A common stock | ||
Stockholders’ equity: | ||
Common stock | 137 | 133 |
Class B common stock | ||
Stockholders’ equity: | ||
Common stock | 14 | 15 |
2.25% Convertible Senior Notes due in 2022 | ||
Current liabilities: | ||
Notes payable | 249,193 | 234,243 |
11% PhaRMA Notes | ||
Current liabilities: | ||
Notes payable | $ 132,249 | |
8.375% Notes due 2026 | ||
Current liabilities: | ||
Notes payable | $ 146,898 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock | ||
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 | ||
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 | 136,465,526 | 132,631,387 |
Common stock, shares outstanding | 136,465,526 | 132,631,387 |
Class B common stock | ||
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 | 13,983,762 | 14,784,077 |
Common stock, shares outstanding | 13,983,762 | 14,484,077 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Collaborative arrangements revenue | $ 265,533 | $ 263,923 | $ 149,040 |
Product revenue, net | 3,061 | 109 | |
Sale of active pharmaceutical ingredient | 29,682 | 9,925 | 515 |
Total revenues | 298,276 | 273,957 | 149,555 |
Cost and expenses: | |||
Cost of revenues, excluding amortization of acquired intangible assets | 19,097 | 1,868 | 12 |
Write-down of commercial supply and inventory to net realizable value and loss on non-cancellable purchase commitments | 309 | 374 | 17,638 |
Research and development | 148,228 | 139,492 | 108,746 |
Selling, general and administrative | 233,123 | 173,281 | 125,247 |
Amortization of acquired intangible assets | 6,214 | 981 | |
(Gain) loss on fair value remeasurement of contingent consideration | (31,310) | 9,831 | |
Total cost and expenses | 375,661 | 325,827 | 251,643 |
Loss from operations | (77,385) | (51,870) | (102,088) |
Other (expense) income: | |||
Interest expense | (36,370) | (39,153) | (31,096) |
Interest and investment income | 2,111 | 1,169 | 443 |
(Loss) gain on derivatives | (3,284) | 8,146 | (9,928) |
Loss on extinguishment of debt | (2,009) | ||
Other expense, net | (39,552) | (29,838) | (40,581) |
Net loss | $ (116,937) | $ (81,708) | $ (142,669) |
Net loss per share—basic and diluted | $ (0.78) | $ (0.56) | $ (1) |
Weighted average number of common shares used in net loss per share—basic and diluted: | 148,993 | 144,928 | 142,155 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Comprehensive Loss | |||
Net loss | $ (116,937) | $ (81,708) | $ (142,669) |
Other comprehensive income (loss): | |||
Unrealized (losses) gains on available-for-sale securities | (72) | 79 | (67) |
Total other comprehensive income (loss) | (72) | 79 | (67) |
Comprehensive loss | $ (117,009) | $ (81,629) | $ (142,736) |
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, 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 available-for-sale securities | (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 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options and employee stock purchase plan | $ 3 | $ 2 | 23,996 | 24,001 | ||
Issuance of common stock upon exercise of stock options and employee stock purchase plan (in shares) | 1,813,018 | 1,867,111 | ||||
Issuance of common stock awards | 20 | 20 | ||||
Issuance of common stock awards (in shares) | 193,501 | |||||
Conversion of Class B common stock to Class A common stock | $ 3 | $ (3) | ||||
Conversion of Class B common stock to Class A common stock (in shares) | 3,253,390 | (3,253,390) | ||||
Share-based compensation expense related to share-based awards to non-employees | 529 | 529 | ||||
Share-based compensation expense related to share-based awards to employees and employee stock purchase plan | 28,670 | 28,670 | ||||
Unrealized losses on available-for-sale securities | 79 | 79 | ||||
Net loss | (81,708) | (81,708) | ||||
Balance at Dec. 31, 2016 | $ 133 | $ 15 | 1,258,398 | (1,191,823) | (7) | 66,716 |
Balance (in shares) at Dec. 31, 2016 | 132,631,387 | 14,484,077 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options and employee stock purchase plan | $ 3 | 26,318 | 26,321 | |||
Issuance of common stock upon exercise of stock options and employee stock purchase plan (in shares) | 2,156,152 | 1,042,047 | ||||
Issuance of common stock awards | 14 | 14 | ||||
Issuance of common stock awards (in shares) | 135,625 | |||||
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) | 1,542,362 | (1,542,362) | ||||
Share-based compensation expense related to share-based awards to non-employees | 301 | 301 | ||||
Share-based compensation expense related to share-based awards to employees and employee stock purchase plan | 33,505 | 33,505 | ||||
Unrealized losses on available-for-sale securities | (72) | (72) | ||||
Net loss | (116,937) | (116,937) | ||||
Balance at Dec. 31, 2017 | $ 137 | $ 14 | $ 1,318,536 | $ (1,308,760) | $ (79) | $ 9,848 |
Balance (in shares) at Dec. 31, 2017 | 136,465,526 | 13,983,762 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net loss | $ (116,937) | $ (81,708) | $ (142,669) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 8,403 | 10,279 | 11,630 |
Amortization of acquired intangible assets | 6,214 | 981 | |
Loss (gain) on disposal of property and equipment | 694 | (204) | (196) |
Share-based compensation expense | 33,820 | 29,219 | 25,469 |
Change in fair value of note hedge warrants | (21,049) | 37,909 | 4,479 |
Change in fair value of convertible note hedges | 24,333 | (46,055) | 5,449 |
Write-down of commercial supply and inventory to net realizable value and loss on non-cancellable purchase commitments | 309 | 374 | 17,638 |
Write-down of excess non-cancelable ZURAMPIC purchase commitments | 1,313 | ||
(Gain) loss on facility subleases | (1,579) | 3,480 | 296 |
Accretion of discount/premium on investment securities | (75) | 667 | 1,114 |
Non-cash interest expense | 16,080 | 14,812 | 8,102 |
Non-cash change in fair value of contingent consideration | (31,310) | 9,831 | |
Loss on extinguishment of debt | 2,009 | ||
Changes in assets and liabilities: | |||
Accounts receivable and related party accounts receivable | (17,303) | (10,336) | (28,679) |
Restricted cash | 1,190 | 500 | (600) |
Prepaid expenses and other current assets | 1,384 | (3,069) | 2,568 |
Inventory | 346 | ||
Other assets | 115 | 1,644 | 414 |
Accounts payable, related party accounts payable and accrued expenses | (6,843) | 19,683 | (1,551) |
Accrued research and development costs | 376 | 2,692 | 671 |
Deferred revenue | (8,989) | (7,191) | |
Deferred rent | (1,053) | (7,143) | (3,871) |
Net cash used in operating activities | (99,563) | (25,433) | (106,927) |
Cash flows from investing activities: | |||
Purchases of available-for-sale securities | (191,354) | (311,116) | (281,958) |
Sales and maturities of available-for-sale securities | 346,890 | 237,423 | 276,707 |
Purchases of property and equipment | (4,211) | (4,206) | (4,049) |
Payment for acquisition of lesinurad license | (100,000) | ||
Proceeds from sale of property and equipment | 135 | 225 | 147 |
Net cash provided by (used in) investing activities | 151,460 | (177,674) | (9,153) |
Cash flows from financing activities: | |||
Proceeds from issuance of convertible senior notes | 335,699 | ||
Proceeds from issuance of 2026 Notes, net of discount to lender | 146,250 | ||
Costs associated with issuance of 2026 Notes | (235) | (246) | |
Proceeds from issuance of note hedge warrants | 70,849 | ||
Purchase of convertible note hedges | (91,915) | ||
Costs associated with issuance of convertible senior notes | (11,730) | ||
Proceeds from exercise of stock options and employee stock purchase plan | 26,370 | 24,841 | 14,196 |
Payments on capital leases | (3,234) | (1,903) | (1,317) |
Principal payments on PhaRMA notes | (134,258) | (26,868) | (12,712) |
Payments on contingent purchase price consideration | (15,058) | ||
Net cash provided by (used in) financing activities | 19,835 | (4,176) | 303,070 |
Net increase (decrease) in cash and cash equivalents | 71,732 | (207,283) | 186,990 |
Cash and cash equivalents, beginning of period | 54,004 | 261,287 | 74,297 |
Cash and cash equivalents, end of period | 125,736 | 54,004 | 261,287 |
Supplemental cash flow disclosure: | |||
Cash paid for interest | 20,388 | 24,473 | 22,742 |
Non-cash investing activities | |||
Contingent consideration | 67,885 | ||
Purchases under capital leases | 1,151 | 6,277 | 2,957 |
Disposals under capital leases | (149) | (1,001) | (2,529) |
Fixed asset purchases in accounts payable and accrued expenses | $ (1,136) | $ 353 | $ 98 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
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 innovative product opportunities in areas of large unmet need, based upon the Company’s target-to-disease approach to development and leveraging the Company’s core areas of expertise in gastrointestinal (“GI”) and primary care, as well as in guanylate cyclase (“GC”) pathways. The Company’s first commercial product, linaclotide, is available to adult men and women suffering from irritable bowel syndrome with constipation (“IBS-C”), or chronic idiopathic constipation (“CIC”), in certain countries around the world. Linaclotide is available under the trademarked name LINZESS ® to adult men and women suffering from IBS-C or CIC in the United States (the “U.S.”) and Mexico and to adult men and women suffering from IBS-C in Japan. Linaclotide is available, under the trademarked name CONSTELLA ® to adult men and women suffering from IBS-C or CIC in Canada, and to adult men and women suffering from IBS-C in certain European countries. The Company and its partner Allergan plc (together with its affiliates, “Allergan”), 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. Allergan also has an exclusive license from the Company to develop and commercialize linaclotide in all countries other than China, Hong Kong, Macau, Japan and the countries and territories of North America (the “Allergan License Territory”). On a country-by-country and product-by-product basis in the Allergan License Territory, Allergan pays the Company a royalty as a percentage of net sales of products containing linaclotide as an active ingredient. In addition, Allergan has exclusive rights to commercialize linaclotide in Canada as CONSTELLA and in Mexico as LINZESS. Astellas Pharma Inc. (“Astellas”), the Company’s partner in Japan, has an exclusive license to develop and commercialize linaclotide in Japan. In March 2017, Astellas began commercializing LINZESS for the treatment of adults with IBS-C in Japan, and in September 2017, Astellas submitted a supplemental new drug application for approval of LINZESS for the treatment of adults with chronic constipation in Japan. The Company has a collaboration agreement with AstraZeneca AB (together with its affiliates, “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. During 2017, the Company and Allergan were advancing two delayed release formulations, linaclotide delayed release-1 and linaclotide delayed release-2. In November 2017, the Company announced an updated linaclotide life cycle management strategy in the U.S. to further support the key objectives of the program, which include strengthening the clinical profile of linaclotide by obtaining additional abdominal symptom claims and expanding the clinical utility of linaclotide by demonstrating the pain-relieving effect of a delayed release formulation, through the advancement of linaclotide delayed release-2, in all forms of IBS. The Company and Allergan are also continuing to explore ways to enhance the clinical profile of LINZESS by studying linaclotide in additional indications, populations and formulations to assess its potential to treat various conditions. With this updated strategy, the Company and Allergan no longer intend to pursue linaclotide delayed release-1. The Company is advancing another GI development program, IW-3718, a gastric retentive formulation of a bile acid sequestrant, for the potential treatment of uncontrolled gastroesophageal reflux disease (“uncontrolled GERD”). The Company’s clinical research has demonstrated that reflux of bile from the intestine into the stomach and esophagus plays a key role in the ongoing symptoms of uncontrolled GERD. IW-3718 is a novel formulation of a bile acid sequestrant designed to release in the stomach over an extended period of time, bind to bile that refluxes into the stomach, and potentially provide symptomatic relief in patients with uncontrolled GERD. In July 2017, the Company reported positive top-line data from a Phase IIb clinical trial evaluating IW-3718 that the Company believes supports potential advancement of this progarm into Phase III development. In June 2016, the Company closed a transaction with AstraZeneca (the “Lesinurad Transaction”) pursuant to which the Company received an exclusive license to develop, manufacture, and commercialize in the U.S. products containing lesinurad as an active ingredient (the “Lesinurad License”), including ZURAMPIC ® and DUZALLO ® . Lesinurad 200mg tablets were approved as ZURAMPIC by the U.S. Food and Drug Administration (“FDA”) in December 2015 for use in combination with a xanthine oxidase inhibitor for the treatment of hyperuricemia associated with uncontrolled gout (“uncontrolled gout”). In October 2016, the Company began commercializing ZURAMPIC in the U.S. The FDA approved DUZALLO, a fixed-dose combination product of lesinurad and allopurinol, in August 2017, for the treatment of hyperuricemia associated with gout in patients who have not achieved goal serum uric acid levels with a medically appropriate daily dose of allopurinol alone. In October 2017, the Company began commercializing DUZALLO in the U.S. In January 2018, the Company commenced an initiative to evaluate the optimal mix of investments for the lesinurad franchise for uncontrolled gout, including DUZALLO and ZURAMPIC. As part of this effort, in 2018 the Company is re-allocating resources within the lesinurad franchise to systematically explore a more comprehensive marketing mix in select test markets (with paired controls), while continuing to build market presence for the lesinurad franchise across the country. The Company expects the data received in 2018 from these test markets to inform the Company’s future investment in the lesinurad franchise. The Company is also leveraging its pharmacological expertise in GC pathways gained through the discovery and development of linaclotide, a GC-C agonist, to develop and advance a pipeline of soluble guanylate cyclase (“sGC”) stimulators, including praliciguat (IW-1973) and IW-1701. The Company is advancing praliciguat, its lead clinical sGC stimulator, for the potential treatment of diabetic nephropathy and the potential treatment of heart failure with preserved ejection fraction (“HFpEF”). The Company believes this data supports the continued advancement of praliciguat for evaluation as a potential treatment for patients with diabetic nephropathy and for patients with HFpEF . The Company’s second clinical sGC stimulator, IW-1701, is being developed for the potential treatment of achalasia and sickle cell disease. The Company has periodically entered into co-promotion agreements to maximize its salesforce productivity. As part of this strategy, 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 January 2017, the Company and Allergan entered into a commercial agreement under which adjustments to the Company’s or Allergan’s share of the net profits under the share adjustment provision of the collaboration agreement for linaclotide in North America are eliminated, in full, in 2018 and all subsequent years. As part of this agreement, Allergan appointed the Company, on a non-exclusive basis, to promote CANASA ® (mesalamine), approved for the treatment of ulcerative proctitis, and DELZICOL ® (mesalamine), approved for the treatment of ulcerative colitis, in the U.S. for approximately two years. In December 2017, this agreement was amended to include and extend the promotion of VIBERZI through December 31, 2018 and discontinue the promotion of DELZICOL effective January 1, 2018. These agreements are more fully described in Note 4, Business Combination, and Note 5, Collaboration, License, Co‑Promotion and Other Commercial 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”). In September 2016, the Company closed a direct private placement, pursuant to which the Company subsequently issued $150.0 million in aggregate principal amount of 8.375% notes due 2026 (the “2026 Notes”) on January 5, 2017 (the “Funding Date”). The Company received net proceeds of approximately $11.2 million from the 2026 Notes, after redemption of the PhaRMA Notes outstanding balance and accrued interest of approximately $135.1 million and deducting fees and expenses of approximately $3.7 million. The proceeds from the issuance of the 2026 Notes were used to redeem the outstanding principal balance of the 11% PhaRMA Notes due 2024 (the “PhaRMA Notes”), on the Funding Date. These transactions are more fully described in Note 12, Notes Payable , to these consolidated financial statements. 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 a majority of its activities to the research, development and commercialization of linaclotide and commercialization of lesinurad, 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, 2017, the Company had an accumulated deficit of approximately $1.3 billion. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
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. 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 Certain prior period financial statement items, such as Product Revenue and Sale of Active Pharmaceutical Ingredient, have been reclassified to conform to the current period presentation. 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, including returns, rebates, and other pricing adjustments; available-for-sale securities; inventory valuation, and related reserves; impairment of long-lived assets including its acquired intangible assets and goodwill; 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; contingent consideration; 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, U.S. government‑sponsored securities, and repurchase agreements. The carrying amount of cash equivalents approximates fair value. The amount of cash equivalents included in cash and cash equivalents was approximately $126.3 million and approximately $32.5 million at December 31, 2017 and 2016, 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 $7.1 million and approximately $8.2 million as of December 31, 2017 and 2016, respectively, which the Company records as restricted cash to secure these letters of credit. The cash will be restricted until the termination or modification 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, 2017, 2016 or 2015. Inventory Inventory is stated at the lower of cost or net realizable value with cost determined under the first‑in, first‑out basis in accordance with Accounting Standards Update (“ASU”) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). 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. 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 active pharmaceutical ingredient (“API”), linaclotide drug product and lesinurad finished goods. 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 collaboration with AstraZeneca, the Company is accountable for drug product and finished goods manufacturing for China and Macau and for drug product manufacturing for Hong Kong, with AstraZeneca accountable for finished goods manufacturing for Hong Kong. The Company also has an agreement with another independent third party to serve as a second source of API manufacturing of linaclotide for its partnered territories. In connection with the Lesinurad License with AstraZeneca, the Company and AstraZeneca entered into a commercial supply agreement (the “Lesinurad CSA”), pursuant to which the Company relies exclusively on AstraZeneca for the commercial manufacture and supply of ZURAMPIC and DUZALLO. 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 relate to amounts reimbursed under its collaboration, license and co-promotion agreements, as well as amounts due from product sales to wholesalers. The Company believes that credit risks associated with these partners and wholesalers 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, 2017 and 2016. 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 certain types of investments, 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 and the linaclotide license agreement with Astellas for Japan (Note 5), and also from wholesalers, for which the Company does not obtain collateral. Accounts receivable or payable to or from Allergan are presented as related party transactions on the consolidated balance sheets as Allergan owns common stock of the Company. The percentages of revenue recognized from significant customers of the Company in the years ended December 31, 2017, 2016 and 2015 as well as the account receivable balances, net of any payables due, at December 31, 2017 and 2016 are included in the following table: Accounts Revenue December 31, Year Ended December 31, 2017 2016 2017 2016 2015 Collaborative Partner: Allergan (North America and Europe) (1) % % 88 % 82 % 90 % Astellas (Japan) 3 % — % 10 % 16 % 5 % (1) In October 2015, Almirall, S.A. (“Almirall”) transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. For the years ended December 31, 2017, 2016 and 2015, no additional customers accounted for more than 10% of the Company’s revenue. 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: Estimated Useful Life Asset Description (In Years) Manufacturing equipment 10 Laboratory equipment 5 Computer and office equipment 3 Furniture and fixtures 7 Software 3 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. Finite and Indefinite-Lived Intangible Assets The Company records the fair value of purchased intangible assets with finite useful lives as of the transaction date of a business combination. Purchased intangible assets with finite useful lives are amortized to their estimated residual values over their estimated useful lives. The Company amortizes intangible assets that have finite lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. The Company evaluates the finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the reduction in the fair value below their respective carrying amounts. In addition, the remaining estimated useful life of the finite-lived intangible asset would be reassessed. The value of the Company’s finite-lived intangible assets are based on the future expected net cash flows related to ZURAMPIC and DUZALLO (the “Lesinurad Products”), which include significant assumptions around future net sales and the respective investment to support these products. In accordance with Accounting Standards Codification (“ASC”) Topic 350, Intangibles – Goodwill and Other (“ASC 350”), during the period that an asset is considered indefinite-lived, such as in-process research and development (“IPR&D”), it will not be amortized. Acquired IPR&D represents the fair value assigned to research and development assets that have not reached technological feasibility. The value assigned to acquired IPR&D is determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting revenue from the projects, and discounting the net cash flows to present value. The revenue and costs projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing a new drug. Additionally, the projections consider the relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by the Company and its competitors. The rates utilized to discount the net cash flows to their present value are commensurate with the stage of development of the projects and uncertainties in the economic estimates used in the projections. Upon the acquisition of IPR&D, the Company completes an assessment of whether its acquisition constitutes the purchase of a single asset or a group of assets. Multiple factors are considered in this assessment, including the nature of the technology acquired, the presence or absence of separate cash flows, the development process and stage of completion, quantitative significance and the rationale for entering into the transaction. Indefinite-lived assets are maintained on the Company’s consolidated balance sheet until either the project underlying it is completed or the asset becomes impaired. When development of an IPR&D asset is complete the associated asset is deemed finite-lived and is then amortized based on its respective estimated useful life at that point. The Company tests its indefinite-lived intangible assets for impairment annually as of October 1 st , or more frequently if events or changes in circumstances indicate an impairment may have occurred. Additionally, the Company evaluates its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the reduction in the fair value below their respective carrying amounts. In connection with each annual impairment assessment and any interim impairment assessment in which indicators of impairment have been identified, the Company compares the fair value of the asset as of the date of the assessment with the carrying value of the asset on the Company’s consolidated balance sheet. If an indicator of impairment exists, the Company compares the carrying value of the intangible asset or asset group to the undiscounted cash flows expected from that asset or asset group. If impairment is indicated by this test, the intangible asset is written down by the amount by which the discounted cash flows expected from the intangible asset exceeds its carrying value. To estimate the cash flows expected for the assets, the Company uses market participant assumptions pursuant to ASC 820, Fair Value . For the lesinurad finite-lived intangible assets, the Company makes significant assumptions as part of this assessment including but not limited to future net product sales, respective cost of product sales, and operating expenses. The Company believes that the following factors, among others, could trigger an impairment review: significant underperformance relative to historical or projected future operating results; significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business; approval of competitive products; and significant negative industry or economic trends. If the Company determines that an impairment has occurred, a write-down of the carrying value and an impairment charge to operating expenses in the period the determination is made is recorded. There were no impairments of intangible assets for the years ended December 31, 2017 or 2016. Goodwill Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized, but is reviewed for impairment. st , or more frequently if events or changes in circumstances indicate that would more likely than not reduce the fair value of the reporting unit below its carrying value. Impairment may result from, among other things, deterioration in the performance of the acquired asset, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. If the Company determines that an impairment has occurred, a write-down of the carrying value and an impairment charge to operating expenses in the period the determination is made is recorded. In evaluating the carrying value of goodwill, the Company must make assumptions regarding estimated future cash flows and other factors. Changes in strategy or market conditions could significantly impact those judgments in the future and require an adjustment to the recorded balances. There were no impai rments of goodwill for the years ended December 31, 2017 or 2016. 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, 2017, 2016, or 2015. 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. 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. 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 accordance with ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"), the Company presents debt issuance costs on the balance sheet as a direct deduction from the associated debt liability. The 2026 Notes, 2022 Notes and PhaRMA Notes are more fully described in Note 12, 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 12). These instruments are derivative financial instruments under 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 revenues are generated primarily through collaborative arrangements and license agreements related to the research and development and commercialization of linaclotide, as well as co-promotion arrangements in the U.S. and product revenue related to the commercial sale of ZURAMPIC and DUZALLO in the U.S. The terms of the collaborative research and development, license and co-promotion 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, 2017, 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) to develop and commercialize linaclotide. The Company also had an exclusive license agreement with AstraZeneca to develop, manufacture, and commercialize products containing lesinurad as an active agreement in the U.S., including ZURAMPIC and DUZALLO. 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 linaclotide license agreement with Allergan for all countries worldwide other than China, Hong Kong, Macau, Japan, and the countries and territories of North America, 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 Prior to the adoption of ASU 2009-13, the Company recognized 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 (Note 5). 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 relevant 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 lice |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Net Loss Per Share | 3. Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per common share (in thousands, except per share amounts): Year Ended December 31, 2017 2016 2015 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 $ (0.78) $ (0.56) $ (1.00) 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 convertible note hedge transactions. 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 12). 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 entered into certain warrant transactions in which it 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 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 12). 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 their effect would be anti‑dilutive (in thousands): Year Ended December 31, 2017 2016 2015 Options to purchase common stock Shares subject to repurchase Unvested shares from early option exercises — — 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. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Business Combinations | 4. Business Combination The Company closed the Lesinurad Transaction on June 2, 2016 (the “Acquisition Date”) with AstraZeneca pursuant to which the Company received an exclusive license to develop, manufacture and commercialize in the U.S. products containing lesinurad as an active ingredient, including ZURAMPIC (the “Products”). Subject to the terms of the Lesinurad License, AstraZeneca was obligated to conduct certain development activities through September 30, 2017 on the Company’s behalf for which the Company was obligated to reimburse AstraZeneca. Pursuant to the Lesinurad License, during the three months ended September 30, 2017, the Company and AstraZeneca transitioned the obligation for post-marketing activities required by the FDA from AstraZeneca to the Company. These post-marketing requirements for lesinurad are estimated to be less than $100.0 million over up to ten years from the Acquisition Date. In connection with the Lesinurad License, the Company and AstraZeneca entered into a commercial supply agreement (the “Lesinurad CSA”), pursuant to which the Company relies exclusively on AstraZeneca for the commercial manufacture and supply of ZURAMPIC and DUZALLO, and the lesinurad transitional services agreement (“the Lesinurad TSA”), pursuant to which AstraZeneca provided certain support services, including development, regulatory and commercial services, to the Company for ZURAMPIC until such activities under the Lesinurad TSA are transferred to the Company. As of December 31, 2017, all activities under the Lesinurad TSA had been transferred to the Company. The Company may obtain production techniques from AstraZeneca via a manufacturing technology transfer available under the Lesinurad CSA upon provision of six-months’ notice. The Company is responsible for commercialization of the Products in the U.S., and any additional development of the Products for commercialization in the U.S. In addition, under the terms of the Lesinurad License, the Company has the right of first negotiation and right of last refusal with AstraZeneca for the right to commercialize, develop and manufacture for commercialization in the U.S., products for the prevention or treatment of gout that include verinurad as at least one of its active ingredients. The Company concluded that the Lesinurad Transaction included inputs and processes that have the ability to create outputs and accordingly accounted for the transaction as a business combination in accordance with ASC 805. As such, the assets acquired and liabilities assumed have been recorded at fair value, with the remaining purchase price recorded as goodwill. The purchase price consisted of the up-front payment to AstraZeneca of $100.0 million, which was made in June 2016, and the fair value of contingent consideration of approximately $67.9 million. In addition to the up-front payment, the Company will also pay a tiered royalty to AstraZeneca in the single-digits as a percentage of net sales of the Products in the U.S., as well as commercial and other milestones of up to $165.0 million over the duration of the Lesinurad License. During the year ended December 31, 2017, the Company paid a $15.0 million milestone to AstraZeneca related to the approval of DUZALLO by the FDA. As of the Acquisition Date, the contingent consideration fair value of approximately $67.9 million was calculated using a discounted cash flow estimate of expected future milestone and royalty payments to AstraZeneca based on the Company’s internally forecasted net product revenue of ZURAMPIC and DUZALLO. The fair value of contingent consideration in the purchase price includes initial measurement period adjustments further described below, as of the Acquisition Date. The Company also paid approximately $1.6 million in transaction-related costs, including external consulting fees, which were expensed as incurred as selling, general and administrative expenses during the year ended December 31, 2016. The Company preliminarily valued the acquired assets and liabilities based on their estimated fair value as of the Acquisition Date upon closing the Lesinurad Transaction. Certain of these estimates were adjusted during the year ended December 31, 2016 as additional information became available related to conditions that existed as of the Acquisition Date. During the three months ended June 30, 2017, the Company finalized its allocation of the purchase price for the Lesinurad Transaction as of the Acquisition Date, and the goodwill balance included insignificant measurement period adjustments made in prior quarters. The final allocation of the purchase price for the Lesinurad Transaction as of the Acquisition Date, including the contingent consideration, is summarized in the following tables (in thousands): As of the Acquisition Date: Cash portion of consideration $ 100,000 Contingent consideration 67,885 Total purchase consideration $ 167,885 As of the Acquisition Date: Developed technology — ZURAMPIC $ 22,000 IPR&D — DUZALLO 145,100 Goodwill 785 Net assets acquired $ 167,885 The fair value of the IPR&D - DUZALLO was determined using a probability adjusted discounted cash flow approach, including assumptions of projected revenues, operating expenses and a discount rate of 14.0% applied to the projected cash flows. The remaining cost of development for this asset was approximately $13.9 million as of the Acquisition Date. In August 2017, DUZALLO was approved by the FDA for commercialization in the U.S. As a result, the Company reclassified the IPR&D – DUZALLO asset from indefinite-lived to finite-lived as development activities were completed. The amount allocated to the finite-lived intangible asset, developed technology – DUZALLO, totaled approximately $145.1 million. Developed technology - DUZALLO is being amortized on a straight-line basis to amortization of acquired intangible assets within the Company’s consolidated statement of operations over its estimated useful life of approximately 12 years, the period of estimated future cash flows, from the approval date. The Company believes that the straight-line method of amortization represents the pattern in which the economic benefits of the asset are consumed. As of December 31, 2017, the Company recognized accumulated amortization of approximately $4.5 million with respect to the developed technology – DUZALLO intangible asset. The fair value of the developed technology - ZURAMPIC intangible asset was determined using a probability adjusted discounted cash flow approach, including assumptions of projected revenues, operating expenses and a discount rate of 12.5% applied to the projected cash flows. The Company considers the developed technology - ZURAMPIC intangible asset acquired to be developed technology, as it was approved by the FDA for commercialization as of the Acquisition Date. The Company believes the assumptions are representative of those a market participant would use in estimating fair value. The developed technology - ZURAMPIC intangible asset is finite lived. The amount allocated to the developed technology - ZURAMPIC intangible asset is being amortized on a straight-line basis to amortization of acquired intangible assets within the Company’s consolidated statements of operations over its estimated useful life of approximately 13 years, the period of estimated future cash flows from the Acquisition Date. The Company believes that the straight-line method of amortization represents the pattern in which the economic benefits of the intangible asset are consumed. As of December 31, 2017, the Company recognized accumulated amortization of approximately $2.7 million with respect to the developed technology - ZURAMPIC intangible asset. The estimated future amortization of developed technology – ZURAMPIC and developed technology – DUZALLO intangible assets are expected to be as follows (in thousands): As of December 31, 2017 2018 $ 13,905 2019 13,905 2020 13,905 2021 13,905 2022 and thereafter 104,285 Total $ 159,905 The Company tests its goodwill for impairment annually as of October 1 st , or more frequently if events or changes in circumstances indicate an impairment may have occurred (Note 2). As of December 31, 2017, there was no impairment of goodwill. The Company evaluates its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the reduction in the fair value below their respective carrying amounts. In connection with each impairment assessment in which indicators of impairment have been identified, the Company compares the fair value of the asset or asset group as of the date of the assessment with the carrying value of the asset or asset group on the Company’s consolidated balance sheet. The value of the Company’s finite-lived intangible assets are based on the future expected net cash flows related to the Lesinurad Products, which include significant assumptions around future net sales and the respective investment to support these products. The Company believes that the following factors, among others, could trigger an impairment review: significant underperformance relative to historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business, approval of competitive products, significant negative industry or economic trends, the Company’s ability to establish, maintain and/or expand the sales, marketing, distribution and market-access capabilities, or enter into and maintain agreements necessary for commercialization with payers and third-party providers on acceptable the systematic exploration of a more comprehensive marketing mix in select test markets to inform the future investment in the lesinurad franchise. If the estimates and assumptions about these products change significantly, including with respect to their commercial performance, the finite-lived intangible assets may become impaired and the Company may be required to recognize a material write-down in the period in which the impairment occurs. As of December 31, 2017, there was no impairment of intangible assets. The Company allocated the excess of the purchase price over the identifiable intangible assets to goodwill. Such goodwill is not deductible for tax purposes and represents the value placed on entering new markets, expanding market share and operating synergies. All goodwill has been assigned to the Company’s single reporting unit, which is the single operating segment human therapeutics. As of December 31, 2017, the estimated fair value of the Company’s contingent consideration liability was approximately $31.3 million. This fair value measurement was based on significant inputs not observable in the market and thus represent Level 3 fair value measurements (Note 7). |
Collaboration, License, Co-Prom
Collaboration, License, Co-Promotion and Other Commercial Agreements | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Collaboration, License, Co-Promotion and Other Commercial Agreements | 5. Collaboration, License, Co-Promotion and Other Commercial Agreements For the year ended December 31, 2017, 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 Astellas for Japan and with Allergan for the Allergan License Territory. The Company also had agreements with Allergan to co-promote VIBERZI in the U.S. and to promote CANASA and DELZICOL in the U.S. The following table provides amounts included in the Company’s consolidated statements of operations as collaborative arrangements revenue and sale of API attributable to transactions from these arrangements (in thousands): Year Ended December 31, Collaborative Arrangements Revenue 2017 2016 2015 Linaclotide Agreements: Allergan (North America) $ $ $ Allergan (Europe and other) (1) AstraZeneca (China, Hong Kong and Macau) Astellas (Japan) — Co-Promotion and Other Agreements: Exact Sciences (Cologuard) (2) Allergan (VIBERZI) Other — — Total collaborative arrangements revenue $ $ $ Sale of API Linaclotide Agreements: Allergan (North America) $ — $ $ — Allergan (Europe and other) — Astellas (Japan) Total sale of API $ $ $ (1) In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. In January 2017, the Company and Allergan expanded the license to cover the Allergan License Territory. For the year ended December 31, 2016, collaborative arrangements revenue includes an insignificant amount of revenue from Almirall. (2) In August 2016, the Company terminated the Exact Sciences Co-Promotion Agreement for Cologuard. Under the terms of the agreement, the Company continued to receive royalty payments through July 2017. 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. 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, 2017, $205.0 million in license fees and all six development milestone payments had been received by the Company, as well as a $25.0 million equity investment in the Company’s capital stock (Note 18). The Company can also achieve up to $100.0 million in a sales-related milestone if certain conditions are met, which will be recognized as collaborative arrangements revenue as earned. As a result of the research and development cost‑sharing provisions of the linaclotide collaboration for North America, the Company recognized approximately $0.6 million in incremental research and development costs during the year ended December 31, 2017, and offset approximately $7.3 million, and approximately $16.9 million against research and development costs during the years ended December 31, 2016, and 2015, respectively, to reflect the obligations of each party under the collaboration to bear half of the development costs incurred. 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 for the North American territory. 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 and Allergan began commercializing LINZESS in the U.S. in December 2012. 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 set forth in the collaboration agreement for North America. During the years ended December 31, 2016 and 2015, these adjustments to the share of the net profits were 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 in Co-Promotion Agreement with Allergan for VIBERZI . Additionally, these adjustments to the share of the net profits are eliminated, in full, in 2018 and all subsequent years under the terms of the Company’s commercial agreement with Allergan entered into in January 2017 under which the Company promotes Allergan’s CANASA product and promoted its DELZICOL product as described below in Commercial Agreement with Allergan . Net profits or net losses consist of net sales of LINZESS 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. LINZESS 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 recognized collaborative arrangements revenue from the Allergan collaboration agreement for North America during the years ended December 31, 2017, 2016 and 2015 as follows (in thousands): Year Ended December 31, 2017 2016 2015 Collaborative arrangements revenue related to sales of LINZESS in the U.S. $ 256,238 $ 217,726 $ 133,425 Royalty revenue 2,295 1,154 910 Other (1) 1,677 — — Total collaborative arrangements revenue $ 260,210 $ 218,880 $ 134,335 (1) Includes net profit share adjustments of approximately $1.7 million recorded during the year ended December 31, 2017 related to a change in estimated selling expenses previously recorded. The collaborative arrangements revenue recognized in the years ended December 31, 2017, 2016 and 2015 primarily represents the Company’s share of the net profits on the sale of LINZESS in the U.S. In addition, during the years ended December 31, 2017, 2016 and 2015, the Company recorded no revenue, approximately $4.5 million, and no revenue, respectively, related to the sale of API to Allergan under the terms of the linaclotide collaboration for North America. 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, 2017, 2016 and 2015 (in thousands): Year Ended December 31, 2017 2016 2015 Collaborative arrangements revenue related to sales of LINZESS in the U.S. (1)(2) $ $ $ Selling, general and administrative costs incurred by the Company (1) The Company’s share of net profit $ $ $ (1) Includes only collaborative arrangement revenue or selling, general and administrative costs attributable to the cost‑sharing arrangement with Allergan. (2) Certain of the unfavorable adjustments to the Company’s share of the LINZESS net profits were 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 in Co-Promotion Agreement with Allergan for VIBERZI . In May 2014, CONSTELLA became commercially available in Canada and in June 2014, LINZESS became commercially available 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 in the period earned. The Company recognized approximately $2.3 million, approximately $1.2 million, and approximately $0.9 million, in royalty revenues from Canada and Mexico during the years ended December 31, 2017, 2016, and 2015 respectively. License Agreement with Allergan (All countries other than the countries and territories of North America, China, Hong Kong, Macau, and Japan) 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. In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. In accordance with the European License Agreement, the Company was required to participate on a joint development committee during linaclotide’s development period and is required to participate in a joint commercialization committee while linaclotide is commercially available. 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) certain 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 certain 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. The Company concluded that the 2015 amendment to the European License Agreement was not a modification to the linaclotide collaboration agreement with Allergan for North America. The commercial launch and sales based milestones under the European License Agreement are recognized as revenue as earned. The Company records royalties on sales of CONSTELLA in the period earned. The Company recognized approximately $0.6 million, approximately $0.4 million and approximately $0.5 million in royalty revenue during the years ended December 31, 2017, 2016 and 2015, respectively. In January 2017, concurrently with entering into the commercial agreement as described below in Commercial Agreement with Allergan , the Company and Allergan entered into an amendment to the European License Agreement. The European License Agreement, as amended (the “Allergan License Agreement”), extended the license to develop and commercialize linaclotide in all countries other than China, Hong Kong, Macau, Japan, and the countries and territories of North America. On a country-by-country and product-by-product basis in such additional territory, Allergan is obligated to pay the Company a royalty as a percentage of net sales of products containing linaclotide as an active ingredient in the upper-single digits for five years following the first commercial sale of a linaclotide product in a country, and in the low-double digits thereafter. The royalty rate for products in the expanded territory will decrease, on a country-by-country basis, to the lower-single digits, or cease entirely, following the occurrence of certain events. Allergan is also obligated to assume certain purchase commitments for quantities of linaclotide API under the Company’s agreements with third-party API suppliers. The amendment to the European License Agreement did not modify any of the milestones or royalty terms related to Europe. The Company concluded that the 2017 amendment was a material modification to the European License Agreement; however, this modification did not have a material impact on the Company's consolidated financial statements as there was no deferred revenue associated with the European License Agreement. The Company also concluded that the 2017 amendment to the European License Agreement was not a material modification to the linaclotide collaboration agreement with Allergan for North America. The Company’s conclusions on deliverables under ASC Topic 605-25, Revenue Recognition—Multiple-Element Arrangements (“ASC 605-25”) are described below in Commercial Agreement with Allergan . License Agreement for Japan with Astellas In November 2009, the Company entered into a license agreement with Astellas, as amended, to develop and commercialize linaclotide for the treatment of IBS‑C, CIC and other GI conditions in Japan. Astellas is responsible for all activities relating to development, regulatory approval and commercialization in Japan as well as funding the associated costs and the Company is required to participate on a joint development committee over linaclotide’s development period. During the year ended December 31, 2017, the Company and Astellas entered into a commercial API supply agreement (the “Astellas Commercial Supply Agreement”). Pursuant to the Astellas Commercial Supply Agreement, the Company sells linaclotide API supply to Astellas at a contractually defined rate and recognizes related revenue as sale of API in accordance with ASC 605. Under the license agreement, the Company receives 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. In 2009, Astellas paid the Company a non‑refundable, up‑front licensing fee of $30.0 million, which was recognized as collaborative arrangements revenue on a straight‑line basis over the Company’s estimate of the period over which linaclotide was developed under the license agreement. The development period was completed in December 2016 upon approval of LINZESS by the Japanese Ministry of Health, Labor and Welfare at which point all previously deferred revenue under the agreement was recognized. During the year ended December 31, 2016, the Company recognized approximately $6.3 million of revenue related to the up-front licensing fee. During the year ended December 31, 2015, the Company recognized approximately $5.1 million of revenue related to the up-front licensing fee. The agreement also includes three development milestone payments that totaled up to $45.0 million, all of which were achieved and recognized as revenue through December 31, 2016. 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. The second milestone payment, consisting of $15.0 million upon filing of a New Drug Application (“NDA”) for linaclotide with the Japanese Ministry of Health, Labor and Welfare, was achieved in February 2016. The third development milestone payment consisting of $15.0 million upon approval of an NDA by the Japanese Ministry of Health, Labor and Welfare to market linaclotide in Japan was achieved in December 2016. During the years ended December 31, 2017, 2016 and 2015, the Company recognized no revenue, approximately $39.0 million, and approximately $7.2 million, respectively, in collaborative arrangements revenue from the Astellas license agreement. The royalty on sales of LINZESS in Japan during the year ended December 31, 2017 relating to the quarters did not exceed the transfer price of API sold and other contractual deductions during the periods. During the years ended December 31, 2017, 2016 and 2015, the Company recognized approximately $29.7 million, approximately $5.4 million, and approximately $0.5 million, respectively, from the sale of API to Astellas under the license agreement and the Astellas Commercial Supply Agreement. 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 up-front 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 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. At the inception of the arrangement, 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 at the inception of the AstraZeneca Collaboration Agreement. The total amount of the non‑contingent consideration allocable to the AstraZeneca Agreements was approximately $34.0 million (“Arrangement Consideration”) which includes the $25.0 million non‑refundable up-front payment and approximately $9.0 million representing 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. The Company allocated the Arrangement Consideration to the non-contingent deliverables based on management’s best estimated selling price (“BESP”) of each deliverable using the relative selling price method, as the Company did not have vendor-specific objective evidence or third-party evidence of selling price for such deliverables. Of the total Arrangement Consideration, 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. 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, 2016 and 2015, the Company recognized approximately $0.4 million and approximately $2.2 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 such this portion of the Arrangement Consideration was no longer contingent. All amounts allocated to the license deliverable have been recognized as revenue as of December 31, 2016. 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 recognized approximately $0.3 million in incremental research and development costs during the year ended December 31, 2017, and recognized an insignificant reduction in incremental research and development costs during the year ended December 31, 2016. During the year ended December 31, 2015, the Company recognized approximately $0.7 million in incremental research and development costs. The amount allocated to the Co-Promotion Deliverable was recognized as collaborative arrangements revenue using the proportional performance method, which approximates recognition on a straight-line basis beginning on the date that the Company began to co-promote AstraZeneca’s product through December 31, 2013 (the earliest cancellation date). As of December 31, 2013, the Company completed its obligation related to the Co-Promotion Deliverable. The Company reassesses the periods of performance for each deliverable at the end of each reporting period. In March 2017, the Company began providing supply of linaclotide drug product and certain commercialization-related services pursuant to the AstraZeneca Collaboration Agreement. During the year ended December 31, 2017, the Company recognized approximately $0.2 million as collaborative arrangements revenue related to linaclotide drug product, as this deliverable was no longer contingent. Milestone payments received from AstraZeneca upon the achievement of sales targets will be recognized as earned. Co-Promotion and Other Agreements Co-Promotion Agreement with Exact Sciences Corp. for Cologuard In March 2015, the Company and Exact Sciences entered into an agreement to co-promote Exact Sciences’ Cologuard, the first and only FDA-approved noninvasive stool DNA screening test for colorectal cancer (the “Exact Sciences Co-Promotion Agreement”). The Exact Sciences Co-Promotion Agreement was terminated by the parties in August 2016. Under the terms of the non-exclusive Exact Sciences Co-Promotion Agreement, the Company’s sales team promoted and educated health care practitioners regarding Cologuard through July 2016. Exact Sciences maintained responsibility for all other aspects of the commercialization of Cologuard outside of the co-promotion. Under the terms of the Exact Sciences Co-Promotion Agreement, the Company was compensated primarily via royalties earned on the net sales of Cologuard generated from the healthcare practitioners on whom the Company called with such royalties payable through July 2017. There were no refund provisions in the Exact Sciences Co-Promotion Agreement. Activities under the Exact Sciences Co-Promotion Agreement were evaluated in accordance with ASC 605-25, to determine if they represented a multiple element revenue arrangement. The Company identified the following deliverables in the Exact Sciences Co-Promotion Agreement through July 31, 2016: (i) second position sales detailing, (ii) promotional support services, and (iii) medical education services. Each of the deliverables was 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. The Company determined that the BESP for each of the three deliverables approximated the value allocated to the deliverables under the agreement. The revenue related to each deliverable was recognized as collaborative arrangements revenue in the Company’s consolidated statement of operations, in accordance with ASC 605-25, during the period earned through July 2017. During the years ended December 31, 2017, 2016 and 2016, the Company recognized approximately $2.5 million, approximately $3.5 million and approximately $4.4 million as collaborative arrangements revenue related to this arrangement. Co-Promotion Agreement with Allergan for VIBERZI In August 2015, the Company and Allergan entered into an agreement for the co-promotion of VIBERZI in the U.S., Allergan’s treatment for adults suffering from IBS-D (the “VIBERZI Co-Promotion Agreement”). Under the terms of the VIBERZI Co-Promotion Agreement, the Company’s clinical sales specialists detailed VIBERZI to the same health care practitioners to whom they detail LINZESS. Allergan was responsible for all costs and activities relating to the commercialization of VIBERZI outside of the co-promotion. The Company’s promotional efforts under the non-exclusive co-promotion began when VIBERZI became commercially available in December 2015. The VIBERZI Co-Promotion Agreement was effective through December 31, 2017. The Company provided the minimum number of VIBERZI calls on physicians pursuant to the VIBERZI Co-Promotion Agreement, and was compensated with the elimination of certain of the unfavorable adjustments to the Company’s share of net profits stipulated by the linaclotide collaboration agreement with Allergan for North America for the years ending December 31, 2015, 2016 and 2017. The Company was reimbursed for medical education services and did not achieve any milestone payments under this agreement. The Company concluded that the VIBERZI Co-Promotion Agreement does not represent a material modification to the linaclotide collaboration agreement with Allergan for North America, as it is not material to the total arrangement consideration under the collaboration agreement, does not significantly modify the existing deliverables, and does not significantly change the term of the agreement. Activities under the VIBERZI Co-Promotion Agreement were evaluated in accordance with ASC 605-25 to determine if they represented a multiple element revenue arrangement. The Company identified the following deliverables in the VIBERZI Co-Promotion Agreement: (i) second position sales detailing of VIBERZI, and (ii) medical education services. Each of the deliverables was deemed to have standalone value based on their nature and both deliverables met the criteria to be accounted for as separate units of accounting under ASC 605-25. The Company determined the BESP for each of the deliverables approximated the value allocated to the deliverables under the agreement. As consideration is earned over the term of the agreement, the revenue will be allocated to each deliverable based on the relative selling price, using management’s BESP, and recognized as collaborative arrangements revenue in the Company’s consolidated statement of operations, in accordance with ASC 605-25, during the quarter earned. Under the linaclotide collaboration agreement for North America with Allergan, 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 set forth in the agreement; however, certain of these adjustments to the share of the net profits have been eliminated in connection with the co-promotion activities under the VIBERZI Co-Promotion Agreement through December 31, 2017. 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 $11.0 million, approximately $5.3 million, and approximately $2.9 million during the years ended December 31, 2017, 2016 and 2015, respectively. During the years ended December 31, 2017, 2016 and 2015 the Company also recognized approximately $1.5 million, approximately $1.8 million and approximately $0.2 million in revenue related to the VIBERZI Co-Promotion Agreement for the performance of medical education services. In December 2017, the Company and Allergan entered into an amendment to the commercial agreement with Allergan, |
Product Revenue
Product Revenue | 12 Months Ended |
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Product Revenue | 6. Product Revenue The Company began commercializing ZURAMPIC in October 2016 and DUZALLO in October 2017 in the U.S. During the three months ended December 31, 2017, the Company determined that it was able to reliably make certain estimates, including returns, necessary to recognize product revenue upon shipment to Distributors in accordance with ASC 605. As a result, the Company began recording net product revenue for the Lesinurad Products using a sell-in revenue recognition model. Accordingly, the Company recorded a cumulative adjustment of approximately $0.9 million to net product revenue and an insignificant amount to cost of revenues as a result of the transition to the sell-in revenue recognition model. During the years ended December 31, 2017 and 2016, the Company recognized approximately $3.1 million and an insignificant amount, respectively, of revenue related to product sales of the Lesinurad Products in the U.S. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
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Fair Value of Financial Instruments | 7. 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, 2017 and 2016 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 for similar instruments in active markets, 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 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 Company also invests in certain reverse repurchase agreements which are collateralized by deposits in the form of Government Securities and Obligations for an amount not less than 102% of their value. The Company does not record an asset or liability for the collateral as the company is not permitted to sell or re-pledge the collateral. The collateral has at least the prevailing credit rating of US Government Treasuries and Agencies. The Company utilizes a third party custodian to manage the exchange of funds and ensure that collateral received is maintained at 102% of the value of the reverse repurchase agreements on a daily 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 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2017 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents: Money market funds $ 44,311 $ 44,311 $ — $ — U.S. Treasury securities 11,991 11,991 — — Repurchase agreements 70,000 70,000 — — Available-for-sale securities: U.S. Treasury securities 64,343 64,343 — — U.S. government-sponsored securities 31,336 — 31,336 — Convertible Note Hedges 108,188 — — 108,188 Total assets measured at fair value $ 330,169 $ 190,645 $ 31,336 $ 108,188 Liabilities: Note Hedge Warrants $ 92,188 $ — $ — $ 92,188 Contingent Consideration 31,258 — — 31,258 Total liabilities measured at fair value $ 123,446 $ — $ — $ 123,446 Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents: Money market funds $ $ $ — $ — Available-for-sale securities: U.S. Treasury securities — — U.S. government-sponsored securities — — Convertible Note Hedges 132,521 — — 132,521 Total assets measured at fair value $ $ $ $ Liabilities: Note Hedge Warrants $ 113,237 $ — $ — $ 113,237 Contingent Consideration 77,660 — — 77,660 Total liabilities measured at fair value $ 190,897 $ — $ — $ 190,897 There were no transfers between fair value measurement levels during the years ended December 31, 2017 or 2016. 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, 2017 and 2016 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, 2017 and 2016 approximates fair value as it bears interest at a rate approximating a market interest rate. Convertible Note Hedges and Note Hedge Warrants 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, 2017 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, 2017 and 2016: 2017 2016 Convertible Note Hedge Convertible Note Hedge Note Hedges Warrants Note Hedges Warrants Risk-free interest rate (1) 2.1 % 2.2 % 2.0 % 2.1 % Time to maturity 4.5 5.0 5.5 6.0 Stock price (2) $ 14.99 $ 14.99 $ 15.29 $ 15.29 Strike price (3) $ 16.58 $ 21.50 $ 16.58 $ 21.50 Common stock volatility (4) 44.1 % 44.1 % 47.4 % 45.8 % 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, 2017 and December 31, 2016, respectively. (3) As per the respective agreements for the Convertible Note Hedges and Note Hedge Warrants. (4) Selected volatility based on historical 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 December 31, 2015 through December 31, 2017 (in thousands): Convertible Note Hedge Note Hedges Warrants Balance at December 31, 2015 $ 86,466 $ (75,328) Change in fair value, recorded as a component of gain (loss) on derivatives 46,055 (37,909) Balance at December 31, 2016 $ 132,521 $ (113,237) Change in fair value, recorded as a component of gain (loss) on derivatives (24,333) 21,049 Balance at December 31, 2017 $ 108,188 $ (92,188) Contingent Consideration In connection with the Lesinurad Transaction, the Company recorded a liability of $67.9 million as of the Acquisition Date. This valuation was based on a Monte-Carlo simulation, which includes significant estimates related to probability weighted net cash outflow projections, primarily comprised of estimated future royalty and milestone payments to AstraZeneca, discounted using a yield curve equivalent to the Company’s credit risk, which was the estimated cost of debt financing for market participants. Adjustments are recorded when there are changes in significant assumptions, including net sales projections, probability weighted net cash outflow projections, the discount rate, passage of time, and the yield curve equivalent to the Company’s credit risk, which is based on the estimated cost of debt for market participants. This estimate represents the probability weighted analysis of expected future milestone and royalty payments based on net sales to be made to AstraZeneca. Changes to these inputs are re-evaluated each reporting period and could materially affect the valuation of the contingent consideration. The estimated fair value of contingent consideration was approximately $31.3 million as of December 31, 2017. The following table reflects the change in the Company’s Level 3 contingent consideration payable from December 31, 2015 through December 31, 2017 (in thousands): Contingent Consideration Fair Value at December 31, 2015 $ — Additions (1) 67,885 Changes in fair value 9,831 Payments/transfers to accrued expenses and other current liabilities (56) Fair Value at December 31, 2016 77,660 Changes in fair value (2) (31,310) Payments/transfers to accrued expenses and other current liabilities (3) (15,092) Fair value at December 31, 2017 $ 31,258 (1) Includes approximately $19.8 million in measurement period adjustments to the Acquisition Date fair value recorded during the year ended December 31, 2016. (2) During the year ended December 31, 2017, the Company decreased its Lesinurad Products revenue projection. Accordingly, the expected estimated future royalty and milestone payments to AstraZeneca decreased, resulting in an approximately $31.3 million decrease to the contingent consideration liability. (3) Includes $15.0 million in milestone payment related to the FDA approval of DUZALLO. 11% PhaRMA Notes In January 2013, the Company closed a private placement of $175.0 million in aggregate principal amount of the PhaRMA Notes. The outstanding principal balance of the PhaRMA Notes was redeemed in January 2017. The estimated fair value of the PhaRMA Notes was approximately $134.9 million as of December 31, 2016 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 12). 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, 2017 and 2016 was approximately $392.8 million and approximately $384.2 million, respectively. 8.375% Notes Due 2026 In September 2016, the Company closed a direct private placement pursuant to which the Company issued $150.0 million in aggregate principal amount of the 2026 Notes in January 2017. The estimated fair value of the 2026 Notes was approximately $152.5 million as of December 31, 2017. This valuation was calculated using a discounted cash flow estimate of expected interest and principal payments and was determined using Level 3 inputs, including significant estimates related to expected LINZESS sales and a discount rate equivalent to market participant interest rates. |
Available-for-Sale Securities
Available-for-Sale Securities | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Available-for-Sale Securities | 8. Available‑for‑Sale Securities The following tables summarize the available‑for‑sale securities held at December 31, 2017 and 2016 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2017 U.S. Treasury securities $ 64,378 $ — $ (35) $ 64,343 U.S. government-sponsored securities 31,384 — (47) 31,337 Total $ 95,762 $ — $ (82) $ 95,680 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2016 U.S. Treasury securities $ 115,026 $ 6 $ (11) $ 115,021 U.S. government-sponsored securities 136,193 10 (12) 136,191 Total $ 251,219 $ 16 $ (23) $ 251,212 The contractual maturities of all securities held at December 31, 2017 are one year or less. There were 29 and 34 available‑for‑sale securities in an unrealized loss position at December 31, 2017 and 2016, 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, 2017 and 2016 was approximately $95.7 million and approximately $111.3 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, 2017. There were no sales of available-for-sale securities during the years ended December 31, 2017, 2016 and 2015. 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, 2017 | |
Disclosure Text Block | |
Inventory | 9. Inventory Inventory consisted of the following (in thousands): December 31, 2017 2016 Raw Materials $ — $ 1,010 Work in Progress — 71 Finished Goods 735 — $ 735 $ 1,081 The Company’s inventory represents linaclotide API and drug product and Lesinurad Products finished goods that are 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 linaclotide API supply agreements for supplying API to its collaboration and license partners outside of North America contain minimum purchase commitments (Note 13). 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 Company relies exclusively on AstraZeneca for the commercial manufacture and supply of ZURAMPIC and DUZALLO under the Lesinurad CSA. The determination of the net realizable value of inventory and non-cancelable purchase commitments for the commitments with the Company’s suppliers of linaclotide 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, 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 linaclotide API 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 5). 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. 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, 2017 and 2016, the accrual for excess linaclotide purchase commitments is recorded as approximately $3.4 million and approximately $2.5 million in accrued expenses and approximately $5.1 and approximately $7.6 million in other liabilities, respectively, in the Company's consolidated balance sheet. During the Lesinurad TSA period, title for ZURAMPIC commercial supply and samples did not pass to the Company. Accordingly, the Company recorded purchases of ZURAMPIC commercial supply and samples from AstraZeneca as prepaid assets until they were sold or used. Purchases of DUZALLO commercial supply and samples were not within the scope of the Lesinurad TSA. As of October 1, 2017, in connection with the expiration of the Lesinurad TSA, the Company was no longer operating under this agreement for the warehousing and distribution of commercial supply and samples of ZURAMPIC. During the years ended December 31, 2017 and 2016, the Company wrote down an insignificant amount and approximately $0.4 million, respectively, of prepaid ZURAMPIC commercial supply as a result of revised demand forecasts. Additionally, during the year ended December 31, 2017, the Company recorded an expense of approximately $0.2 million for excess non-cancelable ZURAMPIC commercial supply purchase commitments, pursuant to the Company’s forecasts, as a result of a reduction in near-term forecasted demand. These write-downs were recorded in write-downs of inventory to net realizable value and the loss on non-cancelable inventory purchase commitments in the Company's consolidated statement of operations. Further, during the year ended December 31, 2017, the Company wrote-down approximately $0.4 million of prepaid ZURAMPIC sample supply as a result of revised demand forecasts. Additionally, during the year end December 31, 2017, the Company recorded an expense of approximately $1.3 million for excess non-cancelable ZURAMPIC sample supply purchase commitments, pursuant to the Company’s forecasts, as a result of a reduction in near-term forecasted demand. These write-downs were recorded in selling, general and administrative expenses in the Company's consolidated statement of operations. As of December 31, 2017, the Company has evaluated all remaining minimum purchase commitments under its linaclotide API and lesinurad supply agreements and concluded that the commitments are realizable based on the current forecasts received from the Company’s partners in these territories and the Company’s internal forecasts (Note 13). |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Property and Equipment | 10. Property and Equipment Property and equipment, net consisted of the following (in thousands): December 31, 2017 2016 Manufacturing equipment $ 3,748 $ 3,748 Laboratory equipment 17,088 15,021 Computer and office equipment 2,835 2,553 Furniture and fixtures 2,318 2,078 Software 13,872 12,945 Construction in process 678 814 Leased vehicles 7,871 7,058 Leasehold improvements 38,084 38,513 86,494 82,730 Less accumulated depreciation and amortization (69,220) (62,218) $ 17,274 $ 20,512 As of December 31, 2017 and 2016, 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 13). As of December 31, 2017 and 2016, the Company had approximately $8.6 million and approximately $7.8 million of assets under capital leases with accumulated amortization balances of approximately $4.6 million and approximately $1.6 million, respectively. Depreciation and amortization expense of property and equipment, including amounts recorded under capital leases, was approximately $8.4 million, approximately $10.3 million, and approximately $11.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. During the year ended December 31, 2017, the Company recorded an expense of approximately $0.6 million related to a loss on disposal of assets. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Accrued Expenses | 11. Accrued Expenses Accrued expenses consisted of the following (in thousands): December 31, 2017 2016 Salaries $ $ Accrued vacation Accrued incentive compensation Other employee benefits Professional fees Accrued interest Repurchasable Stock — Other $ $ As of December 31, 2017, other accrued expenses of approximately $12.2 million includes approximately $3.4 million related to linaclotide excess purchase commitments, of which approximately $2.5 million relates to 2018 commitments, approximately $1.3 million related to excess non-cancelable ZURAMPIC sample purchase commitments, and approximately $0.2 million related to ZURAMPIC finished goods inventory. As of December 31, 2016, other accrued expenses of approximately $6.6 million includes approximately $2.8 million related to expenses incurred under the Lesinurad transitional services agreements. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Notes Payable | 12. Notes Payable 8.375% Notes due 2026 On September 23, 2016, the Company closed a direct private placement, pursuant to which the Company issued $150.0 million in aggregate principal amount of 8.375% notes due 2026 on the Funding Date, January 5, 2017. The proceeds from the issuance of the 2026 Notes were used to redeem the outstanding principal balance of the PhaRMA Notes on the Funding Date. The Company capitalized approximately $0.5 million of debt issuance costs, which were netted against the carrying value of the 2026 Notes. The 2026 Notes bear an annual interest rate of 8.375%, with interest payable March 15, June 15, September 15 and December 15 of each year (each an “8.375% Payment Date”) which began on June 15, 2017. Principal of the 2026 Notes will be payable on the 8.375% Payment Dates beginning March 15, 2019. From March 15, 2019, the Company will make quarterly payments on the 2026 Notes equal to the greater of (i) 7.5% of net sales of linaclotide in the U.S. for the preceding quarter (the “8.375% Synthetic Royalty Amount”) and (ii) accrued and unpaid interest on the 2026 Notes (the “8.375% Required Interest Amount”). Principal on the 2026 Notes will be repaid in an amount equal to the 8.375% Synthetic Royalty Amount minus the 8.375% Required Interest Amount, when this is a positive number, until the principal has been paid in full. Given the principal payments on the 2026 Notes are based on the 8.375% Synthetic Royalty Amount, which will vary from quarter to quarter, the 2026 Notes may be repaid prior to September 15, 2026, the final legal maturity date. The 2026 Notes are secured by a security interest in a segregated bank account established to receive the required quarterly payments as well as certain limited accounts receivables, payment intangibles or other rights to payment or proceeds, in each case, up to the 8.375% Synthetic Royalty Amount or estimated equivalent thereto, as applicable. Up to the amount of the required quarterly payments under the 2026 Notes, Allergan deposits its quarterly profit (loss) sharing payments due to the Company related to net sales of linaclotide in the U.S. pursuant to 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 8.375% Payment Date, the Company is obligated to deposit such shortfall out of the Company’s general funds into the segregated bank account. The 2026 Notes may be redeemed at any time prior to maturity, in whole or in part, at the option of the Company. If the applicable redemption of the 2026 Notes occurs prior to March 15, 2018, the Company will pay a redemption price equal to the outstanding principal balance of the 2026 Notes being redeemed, plus (i) the difference between (A) the required interest amount that would have otherwise been payable from the date of redemption through March 15, 2018 on the outstanding principal balance of the 2026 Notes being redeemed, minus (B) the aggregate amount of interest the purchasers would earn if the outstanding principal balance of the 2026 Notes being redeemed were reinvested for the period from the date of redemption through March 15, 2018 at a rate per annum equal to the yield expressed as a rate listed in The Wall Street Journal for United States Treasury securities having a term of not greater than 12 months on the date three business days prior to the date of redemption, plus (ii) an amount equal to the redemption premium that would otherwise be payable as if such redemption had occurred at March 15, 2018. If the applicable redemption of the 2026 Notes occurs on or after March 15, 2018, the Company will pay a redemption price equal to the percentage of outstanding principal balance of the 2026 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 2026 Notes being redeemed): Redemption Payment Dates Percentage From and including March 15, 2018 to and including March 14, 2019 108.00 % From and including March 15, 2019 to and including March 14, 2020 105.50 % From and including March 15, 2020 to and including March 14, 2021 102.75 % From and including March 15, 2021 and thereafter 100.00 % The 2026 Notes contain certain covenants related to the Company’s obligations with respect to the commercialization of linaclotide 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 2026 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 accounting for the 2026 Notes will require the Company to make certain estimates and assumptions about the future net sales of linaclotide in the U.S. Linaclotide has been marketed as LINZESS in the U.S. since December 2012 and the estimates of the magnitude and timing of linaclotide net sales are subject to significant variability and uncertainty. These estimates and assumptions are likely to change, which may result in future adjustments to the portion of the 2026 Notes that will be 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. 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, 2017 and 2016 consisted of the following (in thousands): December 31, Liability component: 2017 2016 Principal $ 335,699 $ 335,699 Less: unamortized debt discount (80,530) (94,675) Less: unamortized debt issuance costs (5,976) (6,781) Net carrying amount $ 249,193 $ 234,243 Equity component $ 114,199 $ 114,199 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, 2017 was 9.34%. The following table sets forth total interest expense recognized related to the 2022 Notes during the years ended December 31, 2017, 2016, and 2015 (in thousands): Year Ended December 31, 2017 2016 2015 Contractual interest expense $ 7,553 $ 7,553 $ 4,069 Amortization of debt issuance costs 806 661 305 Amortization of debt discount 14,145 12,961 6,563 Total interest expense $ 22,504 $ 21,175 $ 10,937 Future minimum payments under the 2022 Notes as of December 31, 2017, are as follows (in thousands): 2018 $ 7,553 2019 7,553 2020 7,553 2021 7,553 2022 339,477 Total future minimum payments under the 2022 Notes 369,689 Less: amounts representing interest (33,990) Less: unamortized debt discount (80,530) Less: unamortized debt issuance costs (5,976) Convertible senior notes balance $ 249,193 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 7). 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 were redeemed at par on the 2026 Notes’ Funding Date, January 5, 2017 resulting in a loss on extinguishment of debt related to the write-off of the remaining PhaRMA Notes unamortized debt issuance costs of approximately $2.0 million. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Commitments and Contingencies | 13. Commitments and Contingencies Lease Commitments The Company rents office and laboratory space at its corporate headquarters at 301 Binney Street, Cambridge, Massachusetts (the “Facility”) under a non-cancelable operating lease, entered into in January 2007, as amended (“2007 Lease Agreement”). In March 2017, the Company and BMR-Rogers Street LLC (the “Landlord”) entered into an additional amendment (the “2017 Amendment”) to the 2007 Lease Agreement. The 2017 Amendment extends the term of the 2007 Lease Agreement through January 31, 2025 for the approximately 223,000 square feet of the Facility that the Company currently occupies. The 2017 Amendment also provides that the Landlord resume possession of the approximately 93,000 square feet of additional space in the Facility that the Company previously subleased to a third party in 2014. The 2007 Lease Agreement, as amended by the 2017 Amendment, contains various provisions including an option to extend the term of the lease for an additional five years at a market base rental rate, a 3% annual rent escalation, and in certain cases, free rent periods. 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 2025. Additionally, the 2017 Amendment reduced the required letter of credit to secure the Company’s obligations under the lease agreement to approximately $6.4 million, which is recorded as restricted cash. During 2014, the Company entered into an agreement, with the Landlord’s consent, to sublease a portion of its corporate headquarters that it did not intend to use for its operation. In connection with the sublease, as well as a rent escalation tied to the Consumer Price Index and fair market rent pursuant to the terms of the 2007 Lease Agreement, the Company had previously recorded losses related to its obligations to the Landlord associated with the sublet space, net of sublease income in accordance with ASC Topic 420, “Exit or Disposal Cost Obligations”. Pursuant to the 2017 Amendment, the Landlord resumed possession of the space that the Company previously subleased to a third party, and the Company is no longer obligated for the sublease associated with this space. The provisions of the 2007 Lease Agreement governing the space which was previously subleased were terminated and as such, the Company revised its accounting estimates associated with its rent expense and sublease income. Upon the relief of these future liabilities, the Company recorded a gain on the extinguishment of sublease loss of approximately $1.6 million during the three months ended March 31, 2017. The change in accounting estimate associated with rent expense was recognized on a prospective, straight-line basis through May 2017. Rent expenses related to the 2007 Lease Agreement and the 2017 Amendment, net of sublease income, recorded during the years ended December 31, 2017, 2016 and 2015 were approximately $14.7 million, approximately $11.6 million and approximately $6.3 million, respectively. 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 through December 2017 with an automatic one-month renewal provision. 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 approximately $0.6 million, which is recorded as restricted cash. At December 31, 2017, the weighted average interest rate on the outstanding 2015 Vehicle Lease obligations was approximately 3.3%. The Company has also entered into capital leases for certain computer and office equipment. These capital leases expire in April 2018. At December 31, 2017, the weighted average interest rate on the outstanding capital lease obligations was approximately 14.5%. At December 31, 2017, future minimum lease payments under all non‑cancelable lease arrangements were as follows (in thousands): Operating Capital Lease Lease Payments Payments 2018 $ $ 2019 17,791 — 2020 18,326 — 2021 18,877 — 2022 and thereafter 61,310 — Total future minimum lease payments $ $ Less: amounts representing interest Capital lease obligations at December 31, 2017 Less: current portion of capital lease obligations Capital lease obligations, net of current portion $ — Commercial Supply Commitments The Company has entered into multiple 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 remaining total non-cancelable commercial supply purchase obligations of approximately $25.4 million through 2023. As of December 31, 2017, the Company had approximately $3.4 million recorded as an accrual for excess purchases commitments, of which approximately $2.5 million relates to the 2018 commitment, and approximately $5.1 million recorded as other liabilities related to linaclotide API supply (Note 9). The next payment of approximately $2.5 million related to these accrued excess purchase commitments is in 2018, and is reflected as an other current liability in the Company’s consolidated balance sheet. The remaining payments under these accrued excess purchase commitments are approximately $2.5 million in each of the years 2019 and 2020. Such payments are recorded as other liabilities in the Company’s consolidated balance sheet. As of December 31, 2017, 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): 2018 $ 2,322 2019 3,096 2020 3,096 2021 3,096 2022 3,096 Thereafter 3,096 Total unrecognized minimum purchase requirements $ 17,802 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. As of December 31, 2017, the Company has evaluated all remaining minimum purchase commitments under its linaclotide API supply agreements and has concluded that the remaining purchase commitments are realizable based on the current forecasts received from certain of the Company’s partners and the Company’s internal forecasts. The Lesinurad CSA with AstraZeneca provides for commercial supply and samples of ZURAMPIC and DUZALLO. The Lesinurad CSA includes minimum purchase obligations based on the Company’s forecasted demand for ZURAMPIC and DUZALLO commercial product and samples. As of December 31, 2017, the Company had approximately $5.6 million of such commitments related to ZURAMPIC and DUZALLO commercial supply and samples for 2018, and none thereafter. As of December 31, 2017, the Company has evaluated all remaining non-cancelable purchase commitments under the Lesinurad CSA and concluded that its non-cancelable purchase commitments are realizable based on the Company’s forecasted demand. Commitments Related to the Collaboration and License Agreements Under the collaboration agreements with Allergan for North America and AstraZeneca for China, Hong Kong and Macau, respectively, the Company shares all development and commercialization costs related to linaclotide in the U.S. with Allergan and for China, Hong Kong and Macau with AstraZeneca, 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. Under the Lesinurad License, the Company is responsible for the development and commercialization of lesinurad in the U.S. Pursuant to the terms of the Lesinurad License, the Company will pay a tiered royalty to AstraZeneca in the single-digits as a percentage of net sales of ZURAMPIC and DUZALLO, in the U.S., as well as commercial and other milestones of up to $165.0 million over the duration of the agreement, of which a $15.0 million milestone payment was made during 2017 related to the FDA approval of DUZALLO. 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 relate to the initiation 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, Business Combinations and Note 5, Collaboration, License, Co-promotion and Other Commercial Agreements , to these consolidated financial statements. Other Funding Commitments As of December 31, 2017, 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. These contracts are generally 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 did not have any liabilities recorded for these obligations as of December 31, 2017 and 2016. 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. The Company and Allergan have received Paragraph IV certification notice letters regarding Abbreviated New Drug Applications (“ANDAs”), submitted to the FDA by generic drug manufacturers requesting approval to engage in commercial manufacture, use, sale and offer for sale of linaclotide capsules (72 mcg, 145 mcg and 290 mcg), proposed generic versions of LINZESS. In January 2018, the Company and Allergan entered into a settlement agreement with one such generic manufacturer, Sun Pharma Global FZE, together with its affiliates (“Sun”). Pursuant to the terms of the settlement, the Company and Allergan will grant Sun a license to market a generic version of LINZESS in the United States beginning on February 1, 2031 (subject to FDA approval), unless certain limited circumstances, customary for settlement agreements of this nature, occur. For additional information relating to such ANDAs and any resolution of related litigation, see Item 3, Legal Proceedings , elsewhere in this Annual Report on Form 10-K. The Company is unable to estimate the outcome of the litigation at this time. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Stockholders' Equity | 14. 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 12). |
Stock Benefit Plans
Stock Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Stock Benefit Plans | 15. Stock Benefit Plans The following table summarizes the expense recognized for share‑based compensation arrangements in the consolidated statements of operations (in thousands): Year Ended December 31, 2017 2016 2015 Employee stock options $ 21,261 $ 21,412 $ 20,668 Restricted stock units 8,631 4,023 1,536 Restricted stock awards 2,441 2,325 2,408 Non-employee stock options 301 529 — Employee stock purchase plan 1,172 910 833 Stock award 14 20 24 $ 33,820 $ 29,219 $ 25,469 Share‑based compensation is reflected in the consolidated statements of operations as follows for the years ended December 31, 2017, 2016 and 2015 (in thousands): Years Ended December 31, 2017 2016 2015 Research and development $ $ $ Selling, general and administrative $ $ $ 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 one 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”). At December 31, 2017, there were 17,992,305 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, 2017, there were 14,507,164 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, 2017, there were 3,485,141 shares available for future grant under the 2010 Purchase Plan. 2005 Equity Plan The 2005 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, 2017, there were no shares available for future grant under the 2005 Equity Plan. Restricted Stock Awards In 2017, the Company granted an aggregate of 134,793 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 2017 annual meeting of stockholders through the Company’s 2018 annual meeting of stockholders, provided the individual continues to serve on the Company’s board of directors through each vest date. In 2016, the Company granted an aggregate of 191,977 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 2016 annual meeting of stockholders through the Company’s 2017 annual meeting of stockholders, provided the individual continues 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, 2017 is presented below: Weighted- Average Number of Grant Date Shares Fair Value Unvested as of December 31, 2016 94,696 $ 12.69 Granted 134,793 $ 17.53 Vested (166,993) $ 14.72 Forfeited — $ — Unvested as of December 31, 2017 62,496 $ 17.71 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, 2017 is as follows: Weighted- Average Number Grant Date of Shares Fair Value Unvested as of December 31, 2016 1,299,457 $ 12.53 Granted 1,527,084 $ 16.58 Vested (374,407) $ 12.66 Forfeited (174,969) $ 14.46 Unvested as of December 31, 2017 2,277,165 $ 15.08 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, 2017, 2016 and 2015: Year Ended December 31, Expected volatility 45.8 % 45.9 % 46.1 % Expected term (in years) Risk-free interest rate % % % Expected dividend yield — % — % — % Expected volatility is based on the historic volatility of the Company’s Class A common stock. 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, 2017, 2016 and 2015 was $7.62, $5.08, and $6.73, 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, 2017, options exercisable into 1,536,470 shares of Class B Common Stock and 19,549,828 shares of Class A Common Stock were outstanding. Subject to approval by the board of directors, option grantees under 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. For the year ended December 31, 2017, there were no option exercises prior to vesting, and as such, no liability was recorded. The Company recorded a liability of approximately $0.9 million as of December 31, 2016, for cash received related to the exercise of such options. 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, 2017, there were 300,000 shares that vested as a result of milestone or service period achievements. At December 31, 2017 and 2016, there were no shares and 300,000 shares issuable under unvested time‑accelerated options, respectively. 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 an insignificant amount in share‑based compensation related to these time-accelerated options during each of the years ended December 31, 2017, 2016 and 2015. 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, 2017, there were 351,500 shares that vested as a result of performance milestone achievements. The Company recorded no share-based compensation expense related to these performance-based options during the year ended December 31, 2017. The Company recorded share‑based compensation related to these performance‑based options of approximately $1.4 million and approximately $0.2 million, respectively, during the years ended December 31, 2016 and 2015. The following table summarizes stock option activity under the Company’s share‑based compensation plans, including performance‑based options: Shares of Common Weighted- Weighted- Stock Average Average Aggregate Attributable Exercise Contractual Intrinsic to Options Price Life Value (in years) (in thousands) Outstanding at December 31, 2016 $ $ Granted $ Exercised $ Cancelled $ Outstanding at December 31, 2017 $ $ Vested or expected to vest at December 31, 2017 $ $ Exercisable at December 31, 2017 (1) $ $ (1) All stock options granted under 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, 2017. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was approximately $16.0 million, approximately $23.9 million, and approximately $17.7 million. 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, 2017, by type of award and the weighted-average period over which that expense is expected to be recognized: Unrecognized Weighted-Average Expense, Net Remaining of Estimated Recognition Forfeitures Period (in thousands) (in years) Type of award: Stock options with time-based vesting $ 32,096 2.48 Restricted stock awards 916 0.41 Restricted stock units 20,690 2.78 Performance-based options (1) 1,148 — (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, 2017 | |
Disclosure Text Block | |
Income Taxes | 16. 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. On December 22, 2017, the Tax Cuts and Jobs Act was enacted. This law substantially amended the Internal Revenue Code, including reducing the U.S. corporate tax rates. Upon enactment, the Company’s deferred tax asset and related valuation allowance decreased by approximately $153.9 million. As the deferred tax asset is offset in full by valuation allowance, this enacted legislation had no impact on the Company’s financial position or results of operations. The Company will monitor future interpretations of the Tax Act as they develop and accordingly, the Company’s estimates may change. A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows (in thousands): Year Ended December 31, 2017 2016 2015 Income tax benefit using U.S. federal statutory rate $ (39,759) $ (27,780) $ (48,507) Effect of U.S. tax reform 153,894 — — Permanent differences 1,380 1,140 688 State income taxes, net of federal benefit (6,117) (4,606) (4,826) Non-deductible share-based compensation 9 3,528 3,824 Excess tax benefits (2,626) (5,453) — Fair market valuation of Note Hedge Warrants and Convertible Note Hedges 1,289 (3,160) 3,711 Tax credits (12,290) (3,014) (1,987) Expiring net operating losses and tax credits 276 39 194 Effect of change in state tax rate on deferred tax assets and deferred tax liabilities (232) (3,564) (627) Change in the valuation allowance (95,824) 42,975 47,587 Other — (105) (57) $ — $ — $ — Components of the Company’s deferred tax assets and liabilities are as follows (in thousands): Year Ended December 31, 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 254,839 $ 333,442 Tax credit carryforwards 50,732 36,963 Capitalized research and development 14,754 25,030 Contingent consideration 8,540 30,131 Share-based compensation 18,321 19,364 Basis difference on North America collaboration agreement 22,683 24,813 Accruals and reserves 10,595 17,144 Basis difference on 2022 Notes 3,110 — Other 10,375 15,867 Total deferred tax assets 393,949 502,754 Deferred tax liabilities: Basis difference on 2022 Notes — (1,071) Intangibles (15,252) (27,162) Total deferred tax liabilities (15,252) (28,233) Net deferred tax asset 378,697 474,521 Valuation allowance (378,697) (474,521) 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 will not realize the benefit of its deferred tax assets. Accordingly, the deferred tax assets have been fully reserved at December 31, 2017 and 2016. Management reevaluates the positive and negative evidence on a quarterly basis. The valuation allowance decreased approximately $95.8 million during the year ended December 31, 2017 primarily due to a decrease in net operating losses as a result of U.S. tax reform tax rate reduction, a decrease in contingent consideration, and a decrease in capitalized R&D, partially offset by the 2017 net operating loss and increase in tax credit carryforwards. The valuation allowance increased approximately $66.3 million during the year ended December 31, 2016, primarily due to an increase in net operating losses, tax credit carryforwards, basis difference on the North America collaboration agreement and share-based compensation expense. During the year ended December 31, 2016, the Company closed the Lesinurad Transaction which resulted in an approximately $0.3 million deferred tax impact. Additionally, the 2016 change in valuation allowance noted in the table above reflects the impact of the Company’s early adoption of ASC 2016-09, Compensation – Stock Compensation , of an approximately $23.1 million increase in net operating losses recorded through retained earnings. Subject to the limitations described below, at December 31, 2017 and 2016, the Company has federal net operating loss carryforwards of approximately $1,089.2 million and approximately $952.7 million, respectively, to offset future federal taxable income, which expire beginning in 2018 continuing through 2037. As of December 31, 2017 and 2016, the Company had state net operating loss carryforwards of approximately $807.7 million and approximately $686.2 million, respectively, to offset future state taxable income, which will begin to expire in 2027 and will continue to expire through 2037. The Company also had tax credit carryforwards of approximately $53.6 million and approximately $40.4 million as of December 31, 2017 and 2016, respectively, to offset future federal and state income taxes, which expire at various times through 2037. 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 years ended December 31, 2017 and 2016 (in thousands): Year Ended December 31, 2017 2016 2015 Balance at the beginning of the period $ 26,393 $ 17,614 $ — Increases based on tax positions related to the current period 24,078 26,393 17,614 Increases for tax positions related to prior periods — — 10,174 Decreases for tax positions in prior periods (26,393) (17,614) (10,174) Decreases for statute of limitation expiration — — — Decreases for settlement of tax audits — — — Balance at the end of the period $ 24,078 $ 26,393 $ 17,614 The Company had gross unrecognized tax benefits of approximately $24.1 million, approximately $26.4 million, and approximately $17.6 million as of December 31, 2017, 2016, and 2015, respectively . Of the approximately $24.1 million of total unrecognized tax benefits at December 31, 2017, 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, 2017, no interest or penalties have been accrued. The statute of limitations for assessment by the Internal Revenue Service (“IRS”) and state tax authorities is open for tax years ended December 31, 2016, 2015, and 2014, although carryforward attributes that were generated prior to tax year 2014 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, 2017 | |
Disclosure Text Block | |
Defined Contribution Plan | 17. 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, 2017, 2016 and 2015, the Company recorded approximately $3.9 million, approximately $3.2 million, and approximately $2.5 million of expense related to its 401(k) company match, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Related Party Transactions | 18. 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. Amounts due to and due from Allergan 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. As of December 31, 2017 and 2016, the Company had approximately $79.0 million and approximately $63.9 million, respectively, in related party accounts receivable, net of related party accounts payable, associated with Allergan. The Company has and currently obtains health insurance services for its employees from an insurance provider whose President and Chief Executive Officer became a member of the Company’s Board of Directors in April 2016. The Company paid approximately $12.1 million and approximately $8.5 million in insurance premiums to this insurance provider during the years ended December 31, 2017 and 2016, respectively. At December 31, 2017 and 2016, the Company had no outstanding payable balance and an insignificant amount of accounts payable, respectively, due to this related party. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Selected Quarterly Financial Data (Unaudited) | 19. Selected Quarterly Financial Data (Unaudited) The following table contains quarterly financial information for the years ended December 31, 2017 and 2016. 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 Second Third Fourth Total Quarter Quarter Quarter Quarter Year (in thousands, except per share data) 2017 Total revenues (1) $ 52,166 $ 65,077 $ 86,825 $ 94,208 $ 298,276 Total cost and expenses (2) 91,871 106,088 106,259 71,443 375,661 Other (expense) income, net (3) (12,796) (3,213) (12,863) (10,680) (39,552) Net (loss) income (52,501) (44,224) (32,297) 12,085 (116,937) Net (loss) income per share--basic and diluted $ (0.36) $ (0.30) $ (0.22) $ 0.08 $ (0.78) First Second Third Fourth Total Quarter Quarter Quarter Quarter Year (in thousands, except per share data) 2016 Total revenues (4) $ 66,042 $ 54,350 $ 66,106 $ $ Total cost and expenses (5) 68,010 69,665 94,393 Other (expense) income, net (6) (11,329) (6,387) (4,917) Net loss (13,297) (21,702) (33,204) Net loss per share--basic and diluted $ (0.09) $ (0.15) $ (0.23) $ $ (1) Total revenues includes approximately $29.7 million of revenue from sales of linaclotide API to our linaclotide partners, primarily driven by the commercialization of linaclotide in Japan for the year ended December 31, 2017. (2) Total costs and expenses includes approximately $39.3 million reduction in the fourth quarter of 2017 related to a gain on remeasurement of contingent consideration pursuant to the Company’s exclusive license to develop, manufacture, and commercialize products containing lesinurad as an active ingredient, including ZURAMPIC and DUZALLO, in the U.S. The contingent consideration obligation is revalued at each reporting period and changes in the fair value, other than changes due to payments, are recognized as a gain/(loss) on fair value remeasurement of contingent consideration in the Company’s statement of operations. Adjustments are recorded when there are changes in significant assumptions, including net sales projections, probability weighted net cash outflow projections, the discount rate, passage of time, and the yield curve equivalent to the Company’s credit risk, which is based on the estimated cost of debt for market participants. During the year ended December 31, 2017, the Company decreased its Lesinurad Products revenue projection. Accordingly, the expected estimated future royalty and milestone payments to AstraZeneca decreased, resulting in an approximately $31.3 million decrease to the contingent consideration liability. (3) Other (expense) income, net includes an approximately $2.0 million loss on extinguishment of debt in the first quarter of 2017 related to the write-off of the remaining PhaRMA Notes unamortized debt issuance costs. (4) Collaborative arrangements revenue includes the achievement of $30.0 million related to the receipt of milestone payments under the license agreement with Astellas, consisting of $15.0 million for the filing of an NDA for LINZESS with the Japanese Ministry of Health, Labor and Welfare during the first quarter of the year ended December 31, 2016, and $15.0 million for the subsequent approval of the NDA during the fourth quarter of the year ended December 31, 2016. (5) Total costs and expenses for the third and fourth quarters of the year ended December 31, 2016 includes approximately $3.2 million and a subsequent reduction of approximately $3.3 million, respectively, related to the amortization of acquired intangible asset, as well as approximately $8.7 million and approximately $1.1 million during the third and fourth quarters, respectively, as a loss on fair value remeasurement of contingent consideration (6) Other (expense) income, net for the year ended December 31, 2016 includes a loss of approximately $1.6 million for the first quarter, and gains of approximately $3.1 million, approximately $4.5 million, and approximately $2.1 million in the second, third and fourth quarters of 2016, respectively, related to gain on derivatives. The gain on derivatives for the year ended December 31, 2016 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 7). |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure Text Block | |
Subsequent Events | 20. Subsequent Events On January 30, 2018, the Company commenced an initiative to evaluate the optimal mix of investments for the lesinurad franchise. As part of this effort, the Company reduced its field-based workforce by approximately 60 employees, primarily consisting of field-based sales representatives that promote DUZALLO or ZURAMPIC in the first position, which the Company expects to complete during the first quarter of 2018. The Company estimates that it will incur aggregate charges in connection with the reduction in its field-based workforce of approximately $2.3 million to $2.8 million during the first quarter of 2018 for one-time employee severance and benefit costs, of which approximately 92% are expected to result in cash expenditures. |
Nature of Business (Policies)
Nature of Business (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policy Text Blocks | |
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. |
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 prior period financial statement items, such as Product Revenue and Sale of Active Pharmaceutical Ingredient, have been reclassified to conform to the current period presentation. |
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, including returns, rebates, and other pricing adjustments; available-for-sale securities; inventory valuation, and related reserves; impairment of long-lived assets including its acquired intangible assets and goodwill; 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; contingent consideration; 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, U.S. government‑sponsored securities, and repurchase agreements. The carrying amount of cash equivalents approximates fair value. The amount of cash equivalents included in cash and cash equivalents was approximately $126.3 million and approximately $32.5 million at December 31, 2017 and 2016, 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 $7.1 million and approximately $8.2 million as of December 31, 2017 and 2016, respectively, which the Company records as restricted cash to secure these letters of credit. The cash will be restricted until the termination or modification 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, 2017, 2016 or 2015. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value with cost determined under the first‑in, first‑out basis in accordance with Accounting Standards Update (“ASU”) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). 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. 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 active pharmaceutical ingredient (“API”), linaclotide drug product and lesinurad finished goods. 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 collaboration with AstraZeneca, the Company is accountable for drug product and finished goods manufacturing for China and Macau and for drug product manufacturing for Hong Kong, with AstraZeneca accountable for finished goods manufacturing for Hong Kong. The Company also has an agreement with another independent third party to serve as a second source of API manufacturing of linaclotide for its partnered territories. In connection with the Lesinurad License with AstraZeneca, the Company and AstraZeneca entered into a commercial supply agreement (the “Lesinurad CSA”), pursuant to which the Company relies exclusively on AstraZeneca for the commercial manufacture and supply of ZURAMPIC and DUZALLO. 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 relate to amounts reimbursed under its collaboration, license and co-promotion agreements, as well as amounts due from product sales to wholesalers. The Company believes that credit risks associated with these partners and wholesalers 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, 2017 and 2016. |
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 certain types of investments, 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 and the linaclotide license agreement with Astellas for Japan (Note 5), and also from wholesalers, for which the Company does not obtain collateral. Accounts receivable or payable to or from Allergan are presented as related party transactions on the consolidated balance sheets as Allergan owns common stock of the Company. The percentages of revenue recognized from significant customers of the Company in the years ended December 31, 2017, 2016 and 2015 as well as the account receivable balances, net of any payables due, at December 31, 2017 and 2016 are included in the following table: Accounts Revenue December 31, Year Ended December 31, 2017 2016 2017 2016 2015 Collaborative Partner: Allergan (North America and Europe) (1) % % 88 % 82 % 90 % Astellas (Japan) 3 % — % 10 % 16 % 5 % (1) In October 2015, Almirall, S.A. (“Almirall”) transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. For the years ended December 31, 2017, 2016 and 2015, no additional customers accounted for more than 10% of the Company’s revenue. |
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: Estimated Useful Life Asset Description (In Years) Manufacturing equipment 10 Laboratory equipment 5 Computer and office equipment 3 Furniture and fixtures 7 Software 3 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. |
Finite and Indefinite-Lived Intangible Assets | Finite and Indefinite-Lived Intangible Assets The Company records the fair value of purchased intangible assets with finite useful lives as of the transaction date of a business combination. Purchased intangible assets with finite useful lives are amortized to their estimated residual values over their estimated useful lives. The Company amortizes intangible assets that have finite lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. The Company evaluates the finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the reduction in the fair value below their respective carrying amounts. In addition, the remaining estimated useful life of the finite-lived intangible asset would be reassessed. The value of the Company’s finite-lived intangible assets are based on the future expected net cash flows related to ZURAMPIC and DUZALLO (the “Lesinurad Products”), which include significant assumptions around future net sales and the respective investment to support these products. In accordance with Accounting Standards Codification (“ASC”) Topic 350, Intangibles – Goodwill and Other (“ASC 350”), during the period that an asset is considered indefinite-lived, such as in-process research and development (“IPR&D”), it will not be amortized. Acquired IPR&D represents the fair value assigned to research and development assets that have not reached technological feasibility. The value assigned to acquired IPR&D is determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting revenue from the projects, and discounting the net cash flows to present value. The revenue and costs projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing a new drug. Additionally, the projections consider the relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by the Company and its competitors. The rates utilized to discount the net cash flows to their present value are commensurate with the stage of development of the projects and uncertainties in the economic estimates used in the projections. Upon the acquisition of IPR&D, the Company completes an assessment of whether its acquisition constitutes the purchase of a single asset or a group of assets. Multiple factors are considered in this assessment, including the nature of the technology acquired, the presence or absence of separate cash flows, the development process and stage of completion, quantitative significance and the rationale for entering into the transaction. Indefinite-lived assets are maintained on the Company’s consolidated balance sheet until either the project underlying it is completed or the asset becomes impaired. When development of an IPR&D asset is complete the associated asset is deemed finite-lived and is then amortized based on its respective estimated useful life at that point. The Company tests its indefinite-lived intangible assets for impairment annually as of October 1 st , or more frequently if events or changes in circumstances indicate an impairment may have occurred. Additionally, the Company evaluates its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the reduction in the fair value below their respective carrying amounts. In connection with each annual impairment assessment and any interim impairment assessment in which indicators of impairment have been identified, the Company compares the fair value of the asset as of the date of the assessment with the carrying value of the asset on the Company’s consolidated balance sheet. If an indicator of impairment exists, the Company compares the carrying value of the intangible asset or asset group to the undiscounted cash flows expected from that asset or asset group. If impairment is indicated by this test, the intangible asset is written down by the amount by which the discounted cash flows expected from the intangible asset exceeds its carrying value. To estimate the cash flows expected for the assets, the Company uses market participant assumptions pursuant to ASC 820, Fair Value . For the lesinurad finite-lived intangible assets, the Company makes significant assumptions as part of this assessment including but not limited to future net product sales, respective cost of product sales, and operating expenses. The Company believes that the following factors, among others, could trigger an impairment review: significant underperformance relative to historical or projected future operating results; significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business; approval of competitive products; and significant negative industry or economic trends. If the Company determines that an impairment has occurred, a write-down of the carrying value and an impairment charge to operating expenses in the period the determination is made is recorded. There were no impairments of intangible assets for the years ended December 31, 2017 or 2016. |
Goodwill | Goodwill Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized, but is reviewed for impairment. st , or more frequently if events or changes in circumstances indicate that would more likely than not reduce the fair value of the reporting unit below its carrying value. Impairment may result from, among other things, deterioration in the performance of the acquired asset, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. If the Company determines that an impairment has occurred, a write-down of the carrying value and an impairment charge to operating expenses in the period the determination is made is recorded. In evaluating the carrying value of goodwill, the Company must make assumptions regarding estimated future cash flows and other factors. Changes in strategy or market conditions could significantly impact those judgments in the future and require an adjustment to the recorded balances. There were no impai rments of goodwill for the years ended December 31, 2017 or 2016. |
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, 2017, 2016, or 2015. |
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. 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. |
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 accordance with ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"), the Company presents debt issuance costs on the balance sheet as a direct deduction from the associated debt liability. The 2026 Notes, 2022 Notes and PhaRMA Notes are more fully described in Note 12, 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 12). These instruments are derivative financial instruments under 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 revenues are generated primarily through collaborative arrangements and license agreements related to the research and development and commercialization of linaclotide, as well as co-promotion arrangements in the U.S. and product revenue related to the commercial sale of ZURAMPIC and DUZALLO in the U.S. The terms of the collaborative research and development, license and co-promotion 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, 2017, 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) to develop and commercialize linaclotide. The Company also had an exclusive license agreement with AstraZeneca to develop, manufacture, and commercialize products containing lesinurad as an active agreement in the U.S., including ZURAMPIC and DUZALLO. 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 linaclotide license agreement with Allergan for all countries worldwide other than China, Hong Kong, Macau, Japan, and the countries and territories of North America, 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 Prior to the adoption of ASU 2009-13, the Company recognized 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 (Note 5). 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 relevant 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. 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, 2017, 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. 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 collaboration agreements, the Company records these revenues as earned. To the extent the Company relies on royalty reports from the Company’s partners, the Company estimates royalty revenue in the period earned based on its forecast and historical data. Product Revenue, Net Net product revenue is derived from sales of the Lesinurad Products in the U.S. The Company sells the Lesinurad Products principally to a limited number of national wholesalers and selected regional wholesalers (the “Distributors”). The Distributors subsequently resell the Lesinurad Products to patients and healthcare providers. The Company recognizes net product revenue from sales of the Lesinurad Products in accordance with ASC 605, Revenue Recognition (“ASC 605”), when persuasive evidence of an arrangement exists, delivery has occurred and title of the product and associated risk of loss has passed to the customer, the price is fixed or determinable, and collection from the customer has been reasonably assured. ASC 605 requires, among other criteria, that future returns can be reasonably estimated in order to recognize revenue. The Company recognizes revenue on a gross basis as it has concluded that it is the principal in the product revenue transactions for the Lesinurad Products, as it holds the general inventory risk, latitude in establishing price, physical loss inventory risk and credit risk. The Company began commercializing ZURAMPIC in October 2016 and DUZALLO in October 2017 in the U.S. Initially, upon the product launch of each of the Lesinurad Products, the Company determined that it was not able to reliably make certain estimates, including returns, necessary to recognize product revenue upon shipment to Distributors. As a result, through September 30, 2017, the Company recorded net product revenue for the Lesinurad Products using a deferred revenue recognition model (sell-through). Under the deferred revenue model, the Company did not recognize revenue until the respective product was prescribed to an end-user. Accordingly, the Company recognized net product revenue when the Lesinurad Products were prescribed to the end-user, on a first-in, first-out basis using estimated prescription demand and pharmacy demand from third party sources and the Company’s analysis of third party market research data, as well as other third-party information through September 30, 2017. During the three months ended December 31, 2017, the Company concluded it had sufficient volume of historical activity and visibility into the distribution channel, in order to reasonably make all estimates required under ASC 605 to recognize product revenue upon delivery to the Distributor (Note 5). Accordingly, the Company recorded a cumulative adjustment of approximately $0.9 million to net product revenue and an insignificant amount to cost of revenues as a result of the transition to the sell-in revenue recognition model. During the three months and year ended December 31, 2017, product revenue is recognized upon delivery of the Lesinurad Products to the Distributors. The Company evaluates the creditworthiness of each of its Distributors to determine whether revenue can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be delayed until receipt of payment. In order to conclude that the price is fixed or determinable, the Company must be able to (i) calculate its gross product revenue from the sales to Distributors and (ii) reasonably estimate its net product revenue. The Company calculates gross product revenue based on the wholesale acquisition cost that the Company charges its Distributors for ZURAMPIC and DUZALLO. The Company estimates its net product revenue by deducting from its gross product revenue (i) trade discounts and allowances, such as invoice discounts for prompt payment and distributor fees, (ii) estimated government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (iii) reserves for expected product returns and (iv) estimated costs of incentives offered to certain indirect customers including patients. These estimates could be adjusted based on actual results in the period such variances become known. Trade Discounts and Allowances: The Company generally provides invoice discounts on sales of Lesinurad Products to its Distributors for prompt payment and pays fees for distribution services, such as fees for certain data that Distributors provide to the Company. Consistent with historical industry practice, the Company expects its Distributors to earn these discounts and fees, and accordingly deducts the full amount of these discounts and fees from its gross product revenues at the time such revenues are recognized. Rebates, Chargebacks and Discounts: The Company contracts with Medicaid, other government agencies and various private organizations ("Third-party Payors") to allow for eligible purchases of the Lesinurad Products at partial or full reimbursement from such Third-party Payors. The Company estimates the rebates, chargebacks and discounts it will be obligated to provide to Third-party Payors and deducts these estimated amounts from its gross product revenue at the time the revenue is recognized. Based upon (i) the Company's contracts with these Third-party Payors, (ii) the government-mandated discounts applicable to government-funded programs, (iii) information obtained from the Company's Distributors and third-parties regarding the payor mix for Lesinurad Products and (iv) historical industry information regarding the payor mix for analog products, the Company estimates the rebates, chargebacks and discounts that it will be obligated to provide to Third-party Payors. Product Returns: The Company estimates the amount of Lesinurad Products that will be returned and deducts these estimated amounts from its gross revenue at the time the revenue is recognized. The Company's Distributors have the right to return unopened, unprescribed Lesinurad Products beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date. The expiration date for the Lesinurad Products is up to 36 months after it has been converted into tablet form, which is the last step in the manufacturing process for Lesinurad Products and generally occurs within a few months before Lesinurad Products is delivered to Distributors. Reporting from the Distributors includes Distributor sales and inventory held by Distributors, which provides the Company with visibility into the distribution channel in order to determine which products, if any, were eligible to be returned. Other Incentives: Incentives that the Company offers include voluntary patient assistance programs, such as co-pay assistance programs which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. Product revenue is recorded net of the trade discounts, allowances, rebates, chargebacks, discounts, product returns, and other incentives. Certain of these adjustments are recorded as an accounts receivable reserve. As of December 31, 2017, the accounts receivable reserve related to product sales was approximately $0.4 million. Other The Company produces linaclotide finished drug product, API and development materials for certain of its partners. The Company recognizes revenue on linaclotide 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 partner, 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 sale of API. Any linaclotide 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 5). |
Cost of Revenues | Cost of Revenues Cost of revenues includes cost related to the sales of linaclotide API and drug product, as well as the cost of product revenue related to sales of the Lesinurad Products in the U.S. Cost related to the sales of linaclotide API and drug product are recognized upon shipment of linaclotide API and drug product to certain of the Company’s partners outside of the U.S. The Company’s cost of revenue for linaclotide consists of the internal and external costs of producing such API and drug product. Cost of product revenue related to the sales of the Lesinurad Products in the U.S. includes the cost of producing finished goods that correspond with product revenue for the reporting period, such as third-party supply and overhead costs, as well as certain period costs related to freight, packaging, stability and quality testing, and customer acquisition. |
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 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 related to linaclotide. The Company records expenses incurred under the linaclotide 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 is owed payment from Allergan or AstraZeneca for such territories, the Company records the reimbursement by Allergan or AstraZeneca for their share of the development effort as a reduction of research and development expense. Amounts owed 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 Company’s AstraZeneca collaboration agreement for linaclotide, the Company is reimbursed for certain selling, general and administrative expenses and the Company nets these reimbursements against the Company’s selling, general and administrative expenses as incurred. The Company includes Allergan’s selling, general and administrative cost-sharing payments in the calculation of the net profits and net losses from the sale of LINZESS in the U.S. and present the net payment to or from Allergan as collaboration expense or collaborative arrangements revenue, respectively. |
Share-Based Compensation | Share-Based Compensation The Company’s share-based compensation programs grant awards which have included stock awards, restricted stock awards (“RSAs”), 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, expected term, and expected forfeitures, 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 stock options granted for 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 stock option awards is remeasured at each reporting period and expensed over the vesting term of the underlying stock options. While the assumptions used to calculate and account for share-based compensation awards represent management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if revisions are made to the Company’s underlying assumptions and estimates, the Company’s share-based compensation expense could vary significantly from period to period. |
Patent Costs | Patent Costs The Company incurred and recorded as operating expense legal and other fees related to patents of approximately $4.2 million, approximately $2.3 million, and approximately $2.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. These costs were charged to selling, general and administrative expenses as incurred. |
Business Combinations | Business Combination The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination by assessing whether or not the Company has acquired inputs and processes that have the ability to create outputs. If determined to be a business combination, the Company accounts for business acquisitions under the acquisition method of accounting as indicated in the Financial Accounting Standards Board (“FASB”) issued ASC Topic 805, Business Combination , (“ASC 805”) which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent liabilities and non-controlling interest in the acquiree based on the fair value estimates as of the date of acquisition. In accordance with ASC 805, the Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired. The consideration for the Company’s business acquisitions includes future payments that are contingent upon the occurrence of a particular event or events. Contingent consideration at December 31, 2017 and 2016 relates to future royalty and milestone payments based on the estimated future sales of the Lesinurad Products. The obligations for such contingent consideration payments are recorded at fair value on the acquisition date. The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration obligations, other than changes due to payments, are recognized as a (gain) loss on fair value remeasurement of contingent consideration in the consolidated statements of operations. Adjustments are recorded when there are changes in significant assumptions, including net sales projections, probability weighted net cash outflow projections, the discount rate, passage of time, and the yield curve equivalent to the Company’s credit risk, which is based on the estimated cost of debt for market participants. During the year ended December 31, 2017, the Company decreased certain of its net cash outflow projections associated with estimated future royalty and milestone payments, which resulted in an approximately $31.3 million decrease to the contingent consideration liability. (Note 4 and Note 7). |
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. |
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. |
Subsequent Events | Subsequent Events The Company considers events or transactions that have occurred after the balance sheet date of December 31, 2017, 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, 2017 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 605, 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. In April 2016, the FASB issued ASU No. 2016-10 , Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. These standards have the same effective date and transition date as ASU 2014-09. These standards allow for either a full retrospective or a modified retrospective transition approach. The Company has concluded these ASUs will be adopted using the modified retrospective transition approach effective January 1, 2018. The adoption of ASU 2014-09, ASU 2016-10 and ASU 2016-12 will not have a material impact on the Company’s financial position and results of operations as a result of the cumulative adjustment prescribed by the modified retrospective method of adoption; however, the Company anticipates significant changes to its financial statement disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which supersedes the lease accounting requirements in ASC Topic 840, Leases, and most industry-specific guidance. ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a 12-month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization and interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU 2016-02 requires the use of modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the potential impact that the adoption of ASU 2016-02 may have on the Company’s financial position and results of operations. The Company’s analysis includes, but is not limited to, reviewing existing leases, reviewing other service agreements for embedded leases, evaluating potential system implementations, assessing potential disclosures and evaluating the impact of adoption on the Company’s consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory (“ASU 2016-16”). ASU 2016-16 eliminates the ability to defer the tax expense related to intra-entity asset transfers other than Inventory. Under the new standard, entities should recognize the income tax consequences on an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for fiscal periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the potential impact that the adoption of ASU 2016-16 will have on the Company’s financial position or results of operations. The standard does not have a material impact on the Company’s financial position or results of operations for the year ended and as of December 31, 2017. In October 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash (“ASU 2016-18”), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash or restricted cash equivalents. Therefore, amounts described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company is evaluating the potential impact that the adoption of ASU 2016-18 may have on the Company’s financial position or results of operations. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), to clarify the definition of a business by adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets versus businesses. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company will evaluate the potential impact that the adoption of ASU 2017-01 will have on the Company’s financial position or results of operations for all future transactions that are within the scope of Topic 805. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350) (“ASU 2017-04”) to simplify the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the potential impact that the adoption of ASU 2017-04 may have on the Company’s financial position and results of operations. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 708) Scope of Modification Accounting (“ASU 2017-09”) which provides guidance that clarifies when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Adoption of ASU 2017-09 is required for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2017-09 to have a material impact on the Company’s financial position and results of operations. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of percentages of revenue and accounts receivable recognized from significant customers | Accounts Revenue December 31, Year Ended December 31, 2017 2016 2017 2016 2015 Collaborative Partner: Allergan (North America and Europe) (1) % % 88 % 82 % 90 % Astellas (Japan) 3 % — % 10 % 16 % 5 % (1) In October 2015, Almirall, S.A. (“Almirall”) transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. |
Schedule of estimated useful life | Estimated Useful Life Asset Description (In Years) Manufacturing equipment 10 Laboratory equipment 5 Computer and office equipment 3 Furniture and fixtures 7 Software 3 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of computation of basic and diluted net loss per common share | The following table sets forth the computation of basic and diluted net loss per common share (in thousands, except per share amounts): Year Ended December 31, 2017 2016 2015 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 $ (0.78) $ (0.56) $ (1.00) |
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 their effect would be anti‑dilutive (in thousands): Year Ended December 31, 2017 2016 2015 Options to purchase common stock Shares subject to repurchase Unvested shares from early option exercises — — Restricted stock units Note hedge warrants 2022 Notes |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of preliminary allocation of purchase consideration including contingent acquisition consideration payable | As of the Acquisition Date: Cash portion of consideration $ 100,000 Contingent consideration 67,885 Total purchase consideration $ 167,885 |
Schedule of identifiable assets acquired | As of the Acquisition Date: Developed technology — ZURAMPIC $ 22,000 IPR&D — DUZALLO 145,100 Goodwill 785 Net assets acquired $ 167,885 |
Schedule of estimated future amortization expense | As of December 31, 2017 2018 $ 13,905 2019 13,905 2020 13,905 2021 13,905 2022 and thereafter 104,285 Total $ 159,905 |
Collaboration, License, Co-Pr32
Collaboration, License, Co-Promotion and Other Commercial Agreements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
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 and sale of API attributable to transactions from these arrangements (in thousands): Year Ended December 31, Collaborative Arrangements Revenue 2017 2016 2015 Linaclotide Agreements: Allergan (North America) $ $ $ Allergan (Europe and other) (1) AstraZeneca (China, Hong Kong and Macau) Astellas (Japan) — Co-Promotion and Other Agreements: Exact Sciences (Cologuard) (2) Allergan (VIBERZI) Other — — Total collaborative arrangements revenue $ $ $ Sale of API Linaclotide Agreements: Allergan (North America) $ — $ $ — Allergan (Europe and other) — Astellas (Japan) Total sale of API $ $ $ (1) In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to Allergan. In January 2017, the Company and Allergan expanded the license to cover the Allergan License Territory. For the year ended December 31, 2016, collaborative arrangements revenue includes an insignificant amount of revenue from Almirall. (2) In August 2016, the Company terminated the Exact Sciences Co-Promotion Agreement for Cologuard. Under the terms of the agreement, the Company continued to receive royalty payments through July 2017. |
Allergan | |
Table Text Blocks | |
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, 2017, 2016 and 2015 as follows (in thousands): Year Ended December 31, 2017 2016 2015 Collaborative arrangements revenue related to sales of LINZESS in the U.S. $ 256,238 $ 217,726 $ 133,425 Royalty revenue 2,295 1,154 910 Other (1) 1,677 — — Total collaborative arrangements revenue $ 260,210 $ 218,880 $ 134,335 (1) Includes net profit share adjustments of approximately $1.7 million recorded during the year ended December 31, 2017 related to a change in estimated selling expenses previously recorded. |
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, 2017, 2016 and 2015 (in thousands): Year Ended December 31, 2017 2016 2015 Collaborative arrangements revenue related to sales of LINZESS in the U.S. (1)(2) $ $ $ Selling, general and administrative costs incurred by the Company (1) The Company’s share of net profit $ $ $ (1) Includes only collaborative arrangement revenue or selling, general and administrative costs attributable to the cost‑sharing arrangement with Allergan. (2) Certain of the unfavorable adjustments to the Company’s share of the LINZESS net profits were 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 in Co-Promotion Agreement with Allergan for VIBERZI . |
Fair Value of Financial Instr33
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
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 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2017 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents: Money market funds $ 44,311 $ 44,311 $ — $ — U.S. Treasury securities 11,991 11,991 — — Repurchase agreements 70,000 70,000 — — Available-for-sale securities: U.S. Treasury securities 64,343 64,343 — — U.S. government-sponsored securities 31,336 — 31,336 — Convertible Note Hedges 108,188 — — 108,188 Total assets measured at fair value $ 330,169 $ 190,645 $ 31,336 $ 108,188 Liabilities: Note Hedge Warrants $ 92,188 $ — $ — $ 92,188 Contingent Consideration 31,258 — — 31,258 Total liabilities measured at fair value $ 123,446 $ — $ — $ 123,446 Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents: Money market funds $ $ $ — $ — Available-for-sale securities: U.S. Treasury securities — — U.S. government-sponsored securities — — Convertible Note Hedges 132,521 — — 132,521 Total assets measured at fair value $ $ $ $ Liabilities: Note Hedge Warrants $ 113,237 $ — $ — $ 113,237 Contingent Consideration 77,660 — — 77,660 Total liabilities measured at fair value $ 190,897 $ — $ — $ 190,897 |
Schedule of assumptions used in fair market valuations | The following inputs were used in the fair market valuation of the Convertible Note Hedges and Note Hedge Warrants as of December 31, 2017 and 2016: 2017 2016 Convertible Note Hedge Convertible Note Hedge Note Hedges Warrants Note Hedges Warrants Risk-free interest rate (1) 2.1 % 2.2 % 2.0 % 2.1 % Time to maturity 4.5 5.0 5.5 6.0 Stock price (2) $ 14.99 $ 14.99 $ 15.29 $ 15.29 Strike price (3) $ 16.58 $ 21.50 $ 16.58 $ 21.50 Common stock volatility (4) 44.1 % 44.1 % 47.4 % 45.8 % 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, 2017 and December 31, 2016, respectively. (3) As per the respective agreements for the Convertible Note Hedges and Note Hedge Warrants. (4) Selected volatility based on historical 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 December 31, 2015 through December 31, 2017 (in thousands): Convertible Note Hedge Note Hedges Warrants Balance at December 31, 2015 $ 86,466 $ (75,328) Change in fair value, recorded as a component of gain (loss) on derivatives 46,055 (37,909) Balance at December 31, 2016 $ 132,521 $ (113,237) Change in fair value, recorded as a component of gain (loss) on derivatives (24,333) 21,049 Balance at December 31, 2017 $ 108,188 $ (92,188) |
Schedule of changes in contingent consideration payable | The following table reflects the change in the Company’s Level 3 contingent consideration payable from December 31, 2015 through December 31, 2017 (in thousands): Contingent Consideration Fair Value at December 31, 2015 $ — Additions (1) 67,885 Changes in fair value 9,831 Payments/transfers to accrued expenses and other current liabilities (56) Fair Value at December 31, 2016 77,660 Changes in fair value (2) (31,310) Payments/transfers to accrued expenses and other current liabilities (3) (15,092) Fair value at December 31, 2017 $ 31,258 (1) Includes approximately $19.8 million in measurement period adjustments to the Acquisition Date fair value recorded during the year ended December 31, 2016. (2) During the year ended December 31, 2017, the Company decreased its Lesinurad Products revenue projection. Accordingly, the expected estimated future royalty and milestone payments to AstraZeneca decreased, resulting in an approximately $31.3 million decrease to the contingent consideration liability. (3) Includes $15.0 million in milestone payment related to the FDA approval of DUZALLO. |
Available-for-Sale Securities (
Available-for-Sale Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of summary of available-for-sale securities | The following tables summarize the available‑for‑sale securities held at December 31, 2017 and 2016 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2017 U.S. Treasury securities $ 64,378 $ — $ (35) $ 64,343 U.S. government-sponsored securities 31,384 — (47) 31,337 Total $ 95,762 $ — $ (82) $ 95,680 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2016 U.S. Treasury securities $ 115,026 $ 6 $ (11) $ 115,021 U.S. government-sponsored securities 136,193 10 (12) 136,191 Total $ 251,219 $ 16 $ (23) $ 251,212 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of Inventory | Inventory consisted of the following (in thousands): December 31, 2017 2016 Raw Materials $ — $ 1,010 Work in Progress — 71 Finished Goods 735 — $ 735 $ 1,081 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of property and equipment | Property and equipment, net consisted of the following (in thousands): December 31, 2017 2016 Manufacturing equipment $ 3,748 $ 3,748 Laboratory equipment 17,088 15,021 Computer and office equipment 2,835 2,553 Furniture and fixtures 2,318 2,078 Software 13,872 12,945 Construction in process 678 814 Leased vehicles 7,871 7,058 Leasehold improvements 38,084 38,513 86,494 82,730 Less accumulated depreciation and amortization (69,220) (62,218) $ 17,274 $ 20,512 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of accrued expenses and other current liabilities | Accrued expenses consisted of the following (in thousands): December 31, 2017 2016 Salaries $ $ Accrued vacation Accrued incentive compensation Other employee benefits Professional fees Accrued interest Repurchasable Stock — Other $ $ |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of redemption price as percentage of outstanding principal balance | Redemption Payment Dates Percentage From and including March 15, 2018 to and including March 14, 2019 108.00 % From and including March 15, 2019 to and including March 14, 2020 105.50 % From and including March 15, 2020 to and including March 14, 2021 102.75 % From and including March 15, 2021 and thereafter 100.00 % |
Schedule of outstanding Convertible Note | The Company's outstanding Convertible Note balances as of December 31, 2017 and 2016 consisted of the following (in thousands): December 31, Liability component: 2017 2016 Principal $ 335,699 $ 335,699 Less: unamortized debt discount (80,530) (94,675) Less: unamortized debt issuance costs (5,976) (6,781) Net carrying amount $ 249,193 $ 234,243 Equity component $ 114,199 $ 114,199 |
Schedule of interest expense related to Convertible Notes | The following table sets forth total interest expense recognized related to the 2022 Notes during the years ended December 31, 2017, 2016, and 2015 (in thousands): Year Ended December 31, 2017 2016 2015 Contractual interest expense $ 7,553 $ 7,553 $ 4,069 Amortization of debt issuance costs 806 661 305 Amortization of debt discount 14,145 12,961 6,563 Total interest expense $ 22,504 $ 21,175 $ 10,937 |
Schedule of future minimum payments details of debt | Future minimum payments under the 2022 Notes as of December 31, 2017, are as follows (in thousands): 2018 $ 7,553 2019 7,553 2020 7,553 2021 7,553 2022 339,477 Total future minimum payments under the 2022 Notes 369,689 Less: amounts representing interest (33,990) Less: unamortized debt discount (80,530) Less: unamortized debt issuance costs (5,976) Convertible senior notes balance $ 249,193 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Schedule of future minimum lease payments under all non-cancelable lease arrangements | At December 31, 2017, future minimum lease payments under all non‑cancelable lease arrangements were as follows (in thousands): Operating Capital Lease Lease Payments Payments 2018 $ $ 2019 17,791 — 2020 18,326 — 2021 18,877 — 2022 and thereafter 61,310 — Total future minimum lease payments $ $ Less: amounts representing interest Capital lease obligations at December 31, 2017 Less: current portion of capital lease obligations Capital lease obligations, net of current portion $ — |
Schedule of unrecognized minimum purchase requirements | Such payments are recorded as other liabilities in the Company’s consolidated balance sheet. As of December 31, 2017, 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): 2018 $ 2,322 2019 3,096 2020 3,096 2021 3,096 2022 3,096 Thereafter 3,096 Total unrecognized minimum purchase requirements $ 17,802 |
Stock Benefit Plans (Tables)
Stock Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
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): Year Ended December 31, 2017 2016 2015 Employee stock options $ 21,261 $ 21,412 $ 20,668 Restricted stock units 8,631 4,023 1,536 Restricted stock awards 2,441 2,325 2,408 Non-employee stock options 301 529 — Employee stock purchase plan 1,172 910 833 Stock award 14 20 24 $ 33,820 $ 29,219 $ 25,469 |
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, 2017, 2016 and 2015 (in thousands): Years Ended December 31, 2017 2016 2015 Research and development $ $ $ Selling, general and administrative $ $ $ |
Summary of the unvested shares of restricted stock | A summary of the unvested shares of restricted stock as of December 31, 2017 is presented below: Weighted- Average Number of Grant Date Shares Fair Value Unvested as of December 31, 2016 94,696 $ 12.69 Granted 134,793 $ 17.53 Vested (166,993) $ 14.72 Forfeited — $ — Unvested as of December 31, 2017 62,496 $ 17.71 |
Summary of RSU activity | A summary of RSU activity for the year ended December 31, 2017 is as follows: Weighted- Average Number Grant Date of Shares Fair Value Unvested as of December 31, 2016 1,299,457 $ 12.53 Granted 1,527,084 $ 16.58 Vested (374,407) $ 12.66 Forfeited (174,969) $ 14.46 Unvested as of December 31, 2017 2,277,165 $ 15.08 |
Schedule of weighted-average assumptions used to estimate the fair value of the stock options using the Black-Scholes option-pricing model | Year Ended December 31, Expected volatility 45.8 % 45.9 % 46.1 % Expected term (in years) Risk-free interest rate % % % Expected dividend yield — % — % — % |
Summary of stock option activity | Shares of Common Weighted- Weighted- Stock Average Average Aggregate Attributable Exercise Contractual Intrinsic to Options Price Life Value (in years) (in thousands) Outstanding at December 31, 2016 $ $ Granted $ Exercised $ Cancelled $ Outstanding at December 31, 2017 $ $ Vested or expected to vest at December 31, 2017 $ $ Exercisable at December 31, 2017 (1) $ $ (1) All stock options granted under 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, 2017. |
Schedule of unrecognized share-based compensation expense, net of estimated forfeitures by type of awards and weighted-average period | Unrecognized Weighted-Average Expense, Net Remaining of Estimated Recognition Forfeitures Period (in thousands) (in years) Type of award: Stock options with time-based vesting $ 32,096 2.48 Restricted stock awards 916 0.41 Restricted stock units 20,690 2.78 Performance-based options (1) 1,148 — (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. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
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): Year Ended December 31, 2017 2016 2015 Income tax benefit using U.S. federal statutory rate $ (39,759) $ (27,780) $ (48,507) Effect of U.S. tax reform 153,894 — — Permanent differences 1,380 1,140 688 State income taxes, net of federal benefit (6,117) (4,606) (4,826) Non-deductible share-based compensation 9 3,528 3,824 Excess tax benefits (2,626) (5,453) — Fair market valuation of Note Hedge Warrants and Convertible Note Hedges 1,289 (3,160) 3,711 Tax credits (12,290) (3,014) (1,987) Expiring net operating losses and tax credits 276 39 194 Effect of change in state tax rate on deferred tax assets and deferred tax liabilities (232) (3,564) (627) Change in the valuation allowance (95,824) 42,975 47,587 Other — (105) (57) $ — $ — $ — |
Schedule of components of deferred tax assets and liabilities | Components of the Company’s deferred tax assets and liabilities are as follows (in thousands): Year Ended December 31, 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 254,839 $ 333,442 Tax credit carryforwards 50,732 36,963 Capitalized research and development 14,754 25,030 Contingent consideration 8,540 30,131 Share-based compensation 18,321 19,364 Basis difference on North America collaboration agreement 22,683 24,813 Accruals and reserves 10,595 17,144 Basis difference on 2022 Notes 3,110 — Other 10,375 15,867 Total deferred tax assets 393,949 502,754 Deferred tax liabilities: Basis difference on 2022 Notes — (1,071) Intangibles (15,252) (27,162) Total deferred tax liabilities (15,252) (28,233) Net deferred tax asset 378,697 474,521 Valuation allowance (378,697) (474,521) 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 years ended December 31, 2017 and 2016 (in thousands): Year Ended December 31, 2017 2016 2015 Balance at the beginning of the period $ 26,393 $ 17,614 $ — Increases based on tax positions related to the current period 24,078 26,393 17,614 Increases for tax positions related to prior periods — — 10,174 Decreases for tax positions in prior periods (26,393) (17,614) (10,174) Decreases for statute of limitation expiration — — — Decreases for settlement of tax audits — — — Balance at the end of the period $ 24,078 $ 26,393 $ 17,614 |
Selected Quarterly Financial 42
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Table Text Blocks | |
Selected Quarterly Financial Data (Unaudited) | First Second Third Fourth Total Quarter Quarter Quarter Quarter Year (in thousands, except per share data) 2017 Total revenues (1) $ 52,166 $ 65,077 $ 86,825 $ 94,208 $ 298,276 Total cost and expenses (2) 91,871 106,088 106,259 71,443 375,661 Other (expense) income, net (3) (12,796) (3,213) (12,863) (10,680) (39,552) Net (loss) income (52,501) (44,224) (32,297) 12,085 (116,937) Net (loss) income per share--basic and diluted $ (0.36) $ (0.30) $ (0.22) $ 0.08 $ (0.78) First Second Third Fourth Total Quarter Quarter Quarter Quarter Year (in thousands, except per share data) 2016 Total revenues (4) $ 66,042 $ 54,350 $ 66,106 $ $ Total cost and expenses (5) 68,010 69,665 94,393 Other (expense) income, net (6) (11,329) (6,387) (4,917) Net loss (13,297) (21,702) (33,204) Net loss per share--basic and diluted $ (0.09) $ (0.15) $ (0.23) $ $ (1) Total revenues includes approximately $29.7 million of revenue from sales of linaclotide API to our linaclotide partners, primarily driven by the commercialization of linaclotide in Japan for the year ended December 31, 2017. (2) Total costs and expenses includes approximately $39.3 million reduction in the fourth quarter of 2017 related to a gain on remeasurement of contingent consideration pursuant to the Company’s exclusive license to develop, manufacture, and commercialize products containing lesinurad as an active ingredient, including ZURAMPIC and DUZALLO, in the U.S. The contingent consideration obligation is revalued at each reporting period and changes in the fair value, other than changes due to payments, are recognized as a gain/(loss) on fair value remeasurement of contingent consideration in the Company’s statement of operations. Adjustments are recorded when there are changes in significant assumptions, including net sales projections, probability weighted net cash outflow projections, the discount rate, passage of time, and the yield curve equivalent to the Company’s credit risk, which is based on the estimated cost of debt for market participants. During the year ended December 31, 2017, the Company decreased its Lesinurad Products revenue projection. Accordingly, the expected estimated future royalty and milestone payments to AstraZeneca decreased, resulting in an approximately $31.3 million decrease to the contingent consideration liability. (3) Other (expense) income, net includes an approximately $2.0 million loss on extinguishment of debt in the first quarter of 2017 related to the write-off of the remaining PhaRMA Notes unamortized debt issuance costs. (4) Collaborative arrangements revenue includes the achievement of $30.0 million related to the receipt of milestone payments under the license agreement with Astellas, consisting of $15.0 million for the filing of an NDA for LINZESS with the Japanese Ministry of Health, Labor and Welfare during the first quarter of the year ended December 31, 2016, and $15.0 million for the subsequent approval of the NDA during the fourth quarter of the year ended December 31, 2016. (5) Total costs and expenses for the third and fourth quarters of the year ended December 31, 2016 includes approximately $3.2 million and a subsequent reduction of approximately $3.3 million, respectively, related to the amortization of acquired intangible asset, as well as approximately $8.7 million and approximately $1.1 million during the third and fourth quarters, respectively, as a loss on fair value remeasurement of contingent consideration (6) Other (expense) income, net for the year ended December 31, 2016 includes a loss of approximately $1.6 million for the first quarter, and gains of approximately $3.1 million, approximately $4.5 million, and approximately $2.1 million in the second, third and fourth quarters of 2016, respectively, related to gain on derivatives. The gain on derivatives for the year ended December 31, 2016 consists of the change in fair value of the Company’s Convertible Note Hedges and Note Hedge Warrants, which are recorded as derivative assets and liabilities. The Convertible Note Hedges and the Note Hedge Warrants are recorded at fair value at each reporting period and changes in fair value are recorded in the Company’s consolidated statements of operations (Note 7). |
Nature of Business - Overview (
Nature of Business - Overview (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Overview | |
Treatment of ulcerative | 2 years |
Nature of Business - Notes Paya
Nature of Business - Notes Payable (Details) - USD ($) $ in Thousands | Jan. 05, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Sep. 23, 2016 | Jun. 30, 2015 | Jan. 31, 2013 |
Notes Payable | |||||||
Net proceed received | $ 11,200 | ||||||
Fees and expenses | $ 3,700 | ||||||
2.25% Convertible Senior Notes due in 2022 | Convertible Senior Notes | |||||||
Notes Payable | |||||||
Aggregate principal amount of notes issued | $ 335,699 | $ 335,699 | $ 335,699 | ||||
Annual interest rate of notes (as a percent) | 2.25% | ||||||
Fees and expenses | $ 11,700 | ||||||
8.375% Notes due 2026 | Notes Payable | |||||||
Notes Payable | |||||||
Aggregate principal amount of notes issued | $ 150,000 | $ 150,000 | |||||
Annual interest rate of notes (as a percent) | 8.375% | 8.375% | |||||
11% PhaRMA Notes | Notes Payable | |||||||
Notes Payable | |||||||
Aggregate principal amount of notes issued | $ 175,000 | ||||||
Annual interest rate of notes (as a percent) | 11.00% | 11.00% | 11.00% | ||||
Debt redeemed | $ 135,100 |
Nature of Business - Accumulate
Nature of Business - Accumulated Deficit (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accumulated deficit | ||
Accumulated deficit since inception | $ 1,308,760 | $ 1,191,823 |
Summary of Significant Accoun46
Summary of Significant Accounting Policies - Segment Information (Details) | 12 Months Ended |
Dec. 31, 2017segment | |
Segment Information | |
Number of reportable segments | 1 |
Summary of Significant Accoun47
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Cash and Cash Equivalents | ||
Cash Equivalent included in cash and cash equivalent | $ 126.3 | $ 32.5 |
Summary of Significant Accoun48
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Letters of credit | ||
Restricted Cash | ||
Contingent liability under unused letters of credit | $ 7.1 | $ 8.2 |
Summary of Significant Accoun49
Summary of Significant Accounting Policies - Available-for-Sale Securities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
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 |
Summary of Significant Accoun50
Summary of Significant Accounting Policies - Concentrations of Suppliers (Details) - Supplier concentration | 12 Months Ended |
Dec. 31, 2017item | |
Concentrations | |
Number of third-party manufacturers | 2 |
Number of manufacturing facilities | 3 |
Summary of Significant Accoun51
Summary of Significant Accounting Policies - Concentrations of Credit Risk (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounts receivable | Credit Concentration Risk | Allergan | North America and Europe | |||
Concentrations | |||
Revenue and accounts receivable by major customer (as a percent) | 96.00% | 99.00% | |
Accounts receivable | Credit Concentration Risk | Astellas | Japan | |||
Concentrations | |||
Revenue and accounts receivable by major customer (as a percent) | 3.00% | ||
Revenue | Customer Concentration Risk | Allergan | North America and Europe | |||
Concentrations | |||
Revenue and accounts receivable by major customer (as a percent) | 88.00% | 82.00% | 90.00% |
Revenue | Customer Concentration Risk | Astellas | Japan | |||
Concentrations | |||
Revenue and accounts receivable by major customer (as a percent) | 10.00% | 16.00% | 5.00% |
Summary of Significant Accoun52
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
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 |
Summary of Significant Accoun53
Summary of Significant Accounting Policies - Finite and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Finite and Indefinite-Lived Intangible Assets | ||
Impairment of intangibles | $ 0 | $ 0 |
Summary of Significant Accoun54
Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill | ||
Impairment of goodwill | $ 0 | $ 0 |
Summary of Significant Accoun55
Summary of Significant Accounting Policies - Impairment of Long-Lived Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Impairment of Long-Lived Assets | |||
Significant impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun56
Summary of Significant Accounting Policies - Derivative Assets and Liabilities (Details) | Jun. 30, 2015shares |
Note Hedge Warrant Derivatives | Class A common stock | Note Hedge Warrants | |
Note Hedge Warrants | |
Shares into which warrants may be converted (in shares) | 20,249,665 |
Summary of Significant Accoun57
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 12 Months Ended |
Dec. 31, 2017 | |
U.S. | Allergan | |
Collaboration agreements | |
Percentage of the pre-tax net profit or loss (as a percent) | 50.00% |
Summary of Significant Accoun58
Summary of Significant Accounting Policies - Change in Accounting Estimate (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Product revenue | ||
Product revenue, net | $ 3,061 | $ 109 |
Lesinurad | ||
Product revenue | ||
Product revenue, net | 3,100 | $ 3,100 |
Lesinurad | Sell-through to Sell-in revenue recognition model | ||
Product revenue | ||
Product revenue, net | $ 900 |
Summary of Significant Accoun59
Summary of Significant Accounting Policies - Product Returns (Details) - Lesinurad | 12 Months Ended |
Dec. 31, 2017 | |
Collaboration agreements | |
Period for product return prior to labeled expiration date | 6 months |
Period for product return after labeled expiration date | 12 months |
Maximum expiry period for tablet | 36 months |
Summary of Significant Accoun60
Summary of Significant Accounting Policies - Accounts Receivable Reserve (Details) $ in Millions | Dec. 31, 2017USD ($) |
Allowance for Promotions | |
Accounts receivable reserve | |
Accounts receivable reserve | $ 0.4 |
Summary of Significant Accoun61
Summary of Significant Accounting Policies - Patent Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Patent Costs | |||
Selling, general and administrative | $ 233,123 | $ 173,281 | $ 125,247 |
Patents | |||
Patent Costs | |||
Selling, general and administrative | $ 4,200 | $ 2,300 | $ 2,200 |
Summary of Significant Accoun62
Summary of Significant Accounting Policies - Business Combinations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Contingent Consideration | |||||
(Gain) loss on fair value remeasurement of contingent consideration | $ (39,300) | $ 1,100 | $ 8,700 | $ (31,310) | $ 9,831 |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | |||||||||||
Net loss | $ 12,085 | $ (32,297) | $ (44,224) | $ (52,501) | $ (13,505) | $ (33,204) | $ (21,702) | $ (13,297) | $ (116,937) | $ (81,708) | $ (142,669) |
Denominator: | |||||||||||
Weighted average number of common shares used in net loss per share—basic and diluted | 148,993 | 144,928 | 142,155 | ||||||||
Net loss per share—basic and diluted | $ 0.08 | $ (0.22) | $ (0.30) | $ (0.36) | $ (0.09) | $ (0.23) | $ (0.15) | $ (0.09) | $ (0.78) | $ (0.56) | $ (1) |
Net Loss Per Share - Notes Paya
Net Loss Per Share - Notes Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2015 |
Convertible Senior Notes | 2.25% Convertible Senior Notes due in 2022 | |||
Notes Payable | |||
Aggregate principal amount of notes issued | $ 335,699 | $ 335,699 | $ 335,699 |
Net Loss Per Share - Note Hedge
Net Loss Per Share - Note Hedge Warrants (Details) | Jun. 30, 2015shares |
Note Hedge Warrant Derivatives | Class A common stock | Note Hedge Warrants | |
Note Hedge Warrants | |
Shares into which warrants may be converted (in shares) | 20,249,665 |
Net Loss Per Share - Potentiall
Net Loss Per Share - Potentially Dilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Potentially dilutive securities | |||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 63,925 | 62,648 | 62,041 |
Options to purchase common stock | |||
Potentially dilutive securities | |||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 21,086 | 20,455 | 20,567 |
Shares subject to repurchase | |||
Potentially dilutive securities | |||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 62 | 94 | 74 |
Unvested shares from early option exercises | |||
Potentially dilutive securities | |||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 300 | ||
Restricted stock units | |||
Potentially dilutive securities | |||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 2,277 | 1,299 | 900 |
Note Hedge Warrants | |||
Potentially dilutive securities | |||
Total potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding (in shares) | 20,250 | 20,250 | 20,250 |
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 | 20,250 | 20,250 |
Business Combinations - General
Business Combinations - General Information (Details) - USD ($) $ in Thousands | Jun. 02, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 |
Business Combinations | ||||
Payment for acquisition of lesinurad license | $ 100,000 | |||
Lesinurad transaction | Post-marketing Activities [Member] | Maximum | ||||
Business Combinations | ||||
Reimbursement obligation | $ 100,000 | |||
Lesinurad transaction | AstraZeneca | ||||
Business Combinations | ||||
Payment for acquisition of lesinurad license | $ 100,000 | |||
Contingent consideration | $ 67,885 | |||
Acquisition related issuance costs | $ 1,600 | |||
Licensing agreement | AstraZeneca | ||||
Business Combinations | ||||
Period for reimbursement amount of development activities (in years) | 10 years | |||
Royalty percentage per agreement | single-digits | |||
Milestone payment to be paid by company upon milestone achievement | $ 165,000 | |||
Milestone payment made | $ 15,000 | |||
Commercial Supply Agreement (CSA) | Lesinurad transaction | AstraZeneca | ||||
Business Combinations | ||||
Time period for manufacturing technology transfer per agreement | 6 months |
Business Combinations - Allocat
Business Combinations - Allocation of Purchase Price Consideration (Details) - USD ($) $ in Thousands | Jun. 02, 2016 | Dec. 31, 2016 |
Preliminary allocation of purchase consideration | ||
Cash portion of consideration | $ 100,000 | |
Lesinurad transaction | AstraZeneca | ||
Preliminary allocation of purchase consideration | ||
Cash portion of consideration | $ 100,000 | |
Contingent consideration | 67,885 | |
Total purchase consideration | $ 167,885 |
Business Combinations - Net Ass
Business Combinations - Net Assets Acquired (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 02, 2016 |
Identifiable assets acquired | |||
Goodwill | $ 785 | $ 785 | |
Lesinurad transaction | AstraZeneca | |||
Identifiable assets acquired | |||
Goodwill | $ 785 | ||
Net assets acquired | 167,885 | ||
ZURAMPIC | Lesinurad transaction | AstraZeneca | Developed Technology | |||
Identifiable assets acquired | |||
Developed technology | 22,000 | ||
DUZALLO | Lesinurad transaction | AstraZeneca | In-process Research and Development | |||
Identifiable assets acquired | |||
In-process research and development | $ 145,100 |
Business Combinations - Fair Va
Business Combinations - Fair Value Determination (Details) - USD ($) $ in Thousands | Jun. 02, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Aug. 18, 2017 |
Lesinurad transaction | AstraZeneca | Developed Technology | |||||
Business Combinations | |||||
Finite-lived intangible assets | $ 159,905 | $ 159,905 | |||
Estimated useful life | 13 years | ||||
Accumulated amortization of intangible assets | $ 2,700 | 2,700 | |||
DUZALLO | Developed Technology | |||||
Business Combinations | |||||
Finite-lived intangible assets | $ 145,100 | ||||
Estimated useful life | 12 years | ||||
Accumulated amortization of intangible assets | $ 4,500 | $ 4,500 | |||
DUZALLO | Lesinurad transaction | AstraZeneca | In-process Research and Development | |||||
Business Combinations | |||||
Discount rate applied to determine fair value (as a percent) | 14.00% | ||||
Remaining cost of development for intangible asset | $ 13,900 | ||||
ZURAMPIC | Lesinurad transaction | AstraZeneca | Developed Technology | |||||
Business Combinations | |||||
Discount rate applied to determine fair value (as a percent) | 12.50% |
Business Combinations - Estimat
Business Combinations - Estimated Future Amortization Expense (Details) - Lesinurad transaction - AstraZeneca - Developed Technology $ in Thousands | Dec. 31, 2017USD ($) |
Estimated future amortization expense | |
2,018 | $ 13,905 |
2,019 | 13,905 |
2,020 | 13,905 |
2,021 | 13,905 |
2022 and thereafter | 104,285 |
Total | $ 159,905 |
Business Combinations - Intangi
Business Combinations - Intangible Asset and Goodwill Impairment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Combinations | ||
Impairment of goodwill | $ 0 | $ 0 |
Lesinurad transaction | ||
Business Combinations | ||
Impairment of finite-lived intangible | $ 0 |
Business Combinations - Conting
Business Combinations - Contingent Consideration Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Significant Unobservable Inputs (Level 3) | |||
Business Combinations | |||
Contingent consideration | $ 31,258 | $ 77,660 | $ 0 |
Collaboration, License, Co-Pr74
Collaboration, License, Co-Promotion and Other Commercial Agreements - Summary (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | $ 265,533 | $ 263,923 | $ 149,040 |
Sale of active pharmaceutical ingredient | 29,682 | 9,925 | 515 |
Collaborative arrangement | North America | |||
Collaboration, License and Co-Promotion Agreements | |||
Sale of active pharmaceutical ingredient | 0 | 4,500 | 0 |
Co-Promotion Agreements | Other | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 419 | ||
Allergan | Product related collaborative arrangements | North America | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 260,210 | 218,880 | 134,335 |
Allergan | Product related collaborative arrangements | North America | Linaclotide | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 260,210 | 218,880 | 134,335 |
Sale of active pharmaceutical ingredient | 4,482 | ||
Allergan | Product related collaborative arrangements | Europe and Other | Linaclotide | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 617 | 406 | 530 |
Sale of active pharmaceutical ingredient | 3 | 10 | |
Allergan | Co-Promotion Agreements | Viberzi | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 1,535 | 1,764 | 177 |
AstraZeneca | Linaclotide | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 200 | ||
AstraZeneca | Product related collaborative arrangements | China, Hong Kong, and Macau | Linaclotide | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 208 | 370 | 2,370 |
Astellas | Collaborative arrangement | Japan | |||
Collaboration, License and Co-Promotion Agreements | |||
Sale of active pharmaceutical ingredient | 29,700 | 5,400 | 500 |
Astellas | Product related collaborative arrangements | Japan | Linaclotide | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | 38,990 | 7,191 | |
Sale of active pharmaceutical ingredient | 29,682 | 5,440 | 505 |
Exact Sciences | Co-Promotion Agreements | Cologuard | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue | $ 2,544 | $ 3,513 | $ 4,437 |
Collaboration, License, Co-Pr75
Collaboration, License, Co-Promotion and Other Commercial Agreements - North America - General Information (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017USD ($)payment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Canada and Mexico | Collaborative arrangement | |||
Collaboration, License and Co-Promotion Agreements | |||
Royalty percentage per agreement | mid-teens | ||
Allergan | North America | Collaborative arrangement | Development milestones | |||
Collaboration, License and Co-Promotion Agreements | |||
Number of milestone payments received | payment | 6 | ||
Allergan | North America | Product related collaborative arrangements | |||
Collaboration, License and Co-Promotion Agreements | |||
Equity investment in the entity's capital stock | $ 25 | ||
Net cost sharing offset or incremental expense related to research and development expense | 0.6 | $ 7.3 | $ 16.9 |
Cost sharing amount, reduction to research and development | $ 4.3 | ||
Allergan | North America | Product related collaborative arrangements | Development and sales milestones | |||
Collaboration, License and Co-Promotion Agreements | |||
Cumulative license fees and development milestone payments received | 205 | ||
Allergan | North America | Product related collaborative arrangements | Sales milestones | |||
Collaboration, License and Co-Promotion Agreements | |||
Sales-related milestone if certain conditions are met | $ 100 | ||
Allergan | North America | Product related collaborative arrangements | Commercialization milestone | |||
Collaboration, License and Co-Promotion Agreements | |||
Percentage of net profit from commercialization (as a percent) | 50.00% | ||
Percentage of net loss from commercialization (as a percent) | 50.00% |
Collaboration, License, Co-Pr76
Collaboration, License, Co-Promotion and Other Commercial Agreements - North America - Collaborative Arrangements Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Collaboration, License and Co-Promotion Agreements | |||
Total collaborative arrangements revenue | $ 265,533 | $ 263,923 | $ 149,040 |
Allergan | Product related collaborative arrangements | North America | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue related to sales of LINZESS in the U.S. | 256,238 | 217,726 | 133,425 |
Royalty revenue | 2,295 | 1,154 | 910 |
Other | 1,677 | ||
Total collaborative arrangements revenue | $ 260,210 | $ 218,880 | $ 134,335 |
Collaboration, License, Co-Pr77
Collaboration, License, Co-Promotion and Other Commercial Agreements - North America - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Collaboration, License and Co-Promotion Agreements | |||
Sale of active pharmaceutical ingredient | $ 29,682 | $ 9,925 | $ 515 |
North America | Collaborative arrangement | |||
Collaboration, License and Co-Promotion Agreements | |||
Net profit share adjustments | 1,700 | ||
Sale of active pharmaceutical ingredient | $ 0 | $ 4,500 | $ 0 |
Collaboration, License, Co-Pr78
Collaboration, License, Co-Promotion and Other Commercial Agreements - North America - Commercial Efforts (Details) - Allergan - Product related collaborative arrangements - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
North America | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue related to sales of LINZESS in the U.S. | $ 256,238 | $ 217,726 | $ 133,425 |
U.S. | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative arrangements revenue related to sales of LINZESS in the U.S. | 256,238 | 217,726 | 133,425 |
Selling, general and administrative costs incurred by the Company | (41,252) | (35,197) | (32,028) |
The Company's share of net profit (loss) | $ 214,986 | $ 182,529 | $ 101,397 |
Collaboration, License, Co-Pr79
Collaboration, License, Co-Promotion and Other Commercial Agreements - North America - Royalty Revenue (Details) - Product related collaborative arrangements - Allergan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
North America | |||
Collaboration, License and Co-Promotion Agreements | |||
Royalty revenue | $ 2,295 | $ 1,154 | $ 910 |
Canada and Mexico | |||
Collaboration, License and Co-Promotion Agreements | |||
Royalty revenue | $ 2,300 | $ 1,200 | $ 900 |
Collaboration, License, Co-Pr80
Collaboration, License, Co-Promotion and Other Commercial Agreements - European and Other Territories (Details) - Allergan - Licensing agreement - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 31, 2015 | |
Collaboration, License and Co-Promotion Agreements | ||||
Royalty percentage, five years following the first commercial sale | upper-single digits | |||
Annual royalty | 5 years | |||
Royalty percentage, thereafter | low-double digits | |||
Royalty percentage, expanded territory | lower-single digits | |||
Europe | ||||
Collaboration, License and Co-Promotion Agreements | ||||
Remaining milestone payment due upon the amendment to the license agreement | $ 42.5 | |||
Revenue recognized in royalty payments | $ 0.6 | $ 0.4 | $ 0.5 |
Collaboration, License, Co-Pr81
Collaboration, License, Co-Promotion and Other Commercial Agreements - Japan (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Feb. 29, 2016USD ($) | Nov. 30, 2009USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Collaboration, License and Co-Promotion Agreements | |||||
Active Pharmaceutical Ingredient Sales | $ 29,682 | $ 9,925 | $ 515 | ||
Astellas | Collaborative arrangement | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Up-front license fee revenue recognized | 6,300 | ||||
Astellas | Japan | Collaborative arrangement | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Collaborative arrangements revenue earned | 0 | 39,000 | 7,200 | ||
Active Pharmaceutical Ingredient Sales | 29,700 | $ 5,400 | 500 | ||
Astellas | Japan | Product related collaborative arrangements | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Up-front fee received | $ 30,000 | ||||
Up-front license fee revenue recognized | $ 5,100 | ||||
Astellas | Japan | Product related collaborative arrangements | Additional development milestones | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Number of milestone payments | item | 3 | ||||
Astellas | Japan | Product related collaborative arrangements | Additional development milestones | Maximum | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Total milestone payments to be received | $ 45,000 | ||||
Astellas | Japan | Product related collaborative arrangements | Phase 3 milestones | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Milestone payment to be received by company upon milestone achievement | 15,000 | ||||
Astellas | Japan | Product related collaborative arrangements | Japanese NDA equivalent filing milestone | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Milestone payment to be received by company upon milestone achievement | $ 15,000 | ||||
Astellas | Japan | Product related collaborative arrangements | Approval of Japanese NDA equivalent filing milestone | |||||
Collaboration, License and Co-Promotion Agreements | |||||
Milestone payment to be received by company upon milestone achievement | $ 15,000 |
Collaboration, License, Co-Pr82
Collaboration, License, Co-Promotion and Other Commercial Agreements - China, Hong Kong and Macau (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2012 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Collaboration, License and Co-Promotion Agreements | ||||
Collaborative arrangements revenue | $ 265,533 | $ 263,923 | $ 149,040 | |
AstraZeneca | Linaclotide | ||||
Collaboration, License and Co-Promotion Agreements | ||||
Collaborative arrangements revenue | 200 | |||
AstraZeneca | Collaborative arrangement | China, Hong Kong, and Macau | ||||
Collaboration, License and Co-Promotion Agreements | ||||
Collaborative arrangements revenue earned | 400 | 2,200 | ||
AstraZeneca | Product related collaborative arrangements | China, Hong Kong, and Macau | ||||
Collaboration, License and Co-Promotion Agreements | ||||
Prior notice period to terminate the agreement | 180 days | |||
Up-front fee received | $ 25,000 | |||
Total amount of non-contingent arrangement consideration | 34,000 | |||
Amount of arrangement consideration for clinical trial material supply services and research, development and regulatory activities | $ 9,000 | |||
Percentage of costs of clinical trial material supply services and research, development and regulatory activities allocated | 55.00% | |||
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 | 300 | 700 | ||
AstraZeneca | Product related collaborative arrangements | China, Hong Kong, and Macau | Linaclotide | ||||
Collaboration, License and Co-Promotion Agreements | ||||
Collaborative arrangements revenue | $ 208 | $ 370 | $ 2,370 | |
AstraZeneca | Product related collaborative arrangements | China, Hong Kong, and Macau | Commercialization milestone | ||||
Collaboration, License and Co-Promotion Agreements | ||||
Milestone payment to be received by company upon milestone achievement | $ 125,000 | |||
Percentage of net profit from commercialization (as a percent) | 55.00% | |||
Percentage of net loss from commercialization (as a percent) | 55.00% |
Collaboration, License, Co-Pr83
Collaboration, License, Co-Promotion and Other Commercial Agreements - Co-Promotion Agreements (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Collaboration, License and Co-Promotion Agreements | |||
Treatment of ulcerative | 2 years | ||
Exact Sciences | Co-Promotion Agreements | Cologuard | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative Arrangement Revenues Earned | $ 2.5 | $ 3.5 | $ 4.4 |
Allergan | |||
Collaboration, License and Co-Promotion Agreements | |||
Treatment of ulcerative | 2 years | ||
Allergan | Co-Promotion Agreements | Viberzi | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative Arrangement Revenues Earned | $ 1.5 | 1.8 | 0.2 |
Net profit share adjustment | 11 | 5.3 | 2.9 |
Allergan | Commercial Agreement | Viberzi | |||
Collaboration, License and Co-Promotion Agreements | |||
Milestone payment to be received by company upon milestone achievement | 7.5 | ||
Collaborative arrangement compensated amount | 3 | ||
Astellas | Collaborative arrangement | Japan | |||
Collaboration, License and Co-Promotion Agreements | |||
Collaborative Arrangement Revenues Earned | $ 0 | $ 39 | $ 7.2 |
Collaboration, License, Co-Pr84
Collaboration, License, Co-Promotion and Other Commercial Agreements - Other Collaborations and License Agreements (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Agreement One - other collaboration and license agreements | Development milestones | |
Collaboration, License and Co-Promotion Agreements | |
Contingent milestone payable | $ 7.5 |
Milestone payment made | 2.5 |
Agreement One - other collaboration and license agreements | Regulatory milestones | |
Collaboration, License and Co-Promotion Agreements | |
Contingent milestone payable | 18 |
Milestone payment made | 0 |
Agreement Two - other collaboration and license agreements | |
Collaboration, License and Co-Promotion Agreements | |
Contingent milestone payable per product, maximum | 114.5 |
Agreement Two - other collaboration and license agreements | Sales milestones | |
Collaboration, License and Co-Promotion Agreements | |
Contingent milestone payable per product | 35 |
Agreement Two - other collaboration and license agreements | Development milestones | |
Collaboration, License and Co-Promotion Agreements | |
Contingent milestone payable per product | 21.5 |
Agreement Two - other collaboration and license agreements | Regulatory milestones | |
Collaboration, License and Co-Promotion Agreements | |
Contingent milestone payable per product | $ 58 |
Product Revenue (Details)
Product Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Product Revenue | ||
Product revenue, net | $ 3,061 | $ 109 |
Lesinurad | ||
Product Revenue | ||
Product revenue, net | 3,100 | $ 3,100 |
Sell-through to Sell-in revenue recognition model | Lesinurad | ||
Product Revenue | ||
Product revenue, net | $ 900 |
Fair Value of Financial Instr86
Fair Value of Financial Instruments - General Information (Details) | Dec. 31, 2017 |
Fair Value of Financial Instruments | |
Threshold percentage of collateralized value (as a percent) | 102.00% |
Fair Value of Financial Instr87
Fair Value of Financial Instruments - Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | |||
Available-for-sale securities | $ 95,680 | $ 251,212 | |
Convertible note hedges | 108,188 | 132,521 | |
Liabilities: | |||
Note hedge warrants | 92,188 | 113,237 | |
Convertible Note Hedge | |||
Assets: | |||
Convertible note hedges | 91,900 | ||
Note Hedge Warrant Derivatives | |||
Liabilities: | |||
Note hedge warrants | 70,800 | ||
Significant Unobservable Inputs (Level 3) | |||
Liabilities: | |||
Contingent consideration | 31,258 | 77,660 | $ 0 |
Recurring basis | |||
Assets: | |||
Total assets measured at fair value | 330,169 | 416,219 | |
Liabilities: | |||
Contingent consideration | 31,258 | 77,660 | |
Total liabilities | 123,446 | 190,897 | |
Recurring basis | Convertible Note Hedge | |||
Assets: | |||
Convertible note hedges | 108,188 | 132,521 | |
Recurring basis | Note Hedge Warrant Derivatives | |||
Liabilities: | |||
Note hedge warrants | 92,188 | 113,237 | |
Recurring basis | Money market funds | |||
Assets: | |||
Cash and cash equivalents | 44,311 | 32,486 | |
Recurring basis | Repurchase Agreement [Member] | |||
Assets: | |||
Cash and cash equivalents | 70,000 | ||
Recurring basis | U.S. Treasury securities | |||
Assets: | |||
Cash and cash equivalents | 11,991 | ||
Available-for-sale securities | 64,343 | 115,021 | |
Recurring basis | U.S. government-sponsored securities | |||
Assets: | |||
Available-for-sale securities | 31,336 | 136,191 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Assets: | |||
Total assets measured at fair value | 190,645 | 147,507 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds | |||
Assets: | |||
Cash and cash equivalents | 44,311 | 32,486 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Repurchase Agreement [Member] | |||
Assets: | |||
Cash and cash equivalents | 70,000 | ||
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury securities | |||
Assets: | |||
Cash and cash equivalents | 11,991 | ||
Available-for-sale securities | 64,343 | 115,021 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | |||
Assets: | |||
Total assets measured at fair value | 31,336 | 136,191 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. government-sponsored securities | |||
Assets: | |||
Available-for-sale securities | 31,336 | 136,191 | |
Recurring basis | Significant Unobservable Inputs (Level 3) | |||
Assets: | |||
Total assets measured at fair value | 108,188 | 132,521 | |
Liabilities: | |||
Contingent consideration | 31,258 | 77,660 | |
Total liabilities | 123,446 | 190,897 | |
Recurring basis | Significant Unobservable Inputs (Level 3) | Convertible Note Hedge | |||
Assets: | |||
Convertible note hedges | 108,188 | 132,521 | |
Recurring basis | Significant Unobservable Inputs (Level 3) | Note Hedge Warrant Derivatives | |||
Liabilities: | |||
Note hedge warrants | $ 92,188 | $ 113,237 |
Fair Value of Financial Instr88
Fair Value of Financial Instruments - Transfers Between Fair Value Measurement Levels (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value transfers | ||
Fair value transfer between measurement levels | $ 0 | $ 0 |
Fair Value of Financial Instr89
Fair Value of Financial Instruments - Convertible Note Hedges and Note Hedge Warrants - Assumptions (Details) - Significant Unobservable Inputs (Level 3) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Convertible Note Hedge | |||
Convertible Note Hedges and Note Hedge Warrants | |||
Risk-free interest rate (as a percent) | [1] | 2.10% | 2.00% |
Time to maturity | 4 years 6 months | 5 years 6 months | |
Stock price (in dollars per share) | [2] | $ 14.99 | $ 15.29 |
Strike price (in dollars per share) | [3] | $ 16.58 | $ 16.58 |
Common stock volatility (as a percent) | [4] | 44.10% | 47.40% |
Dividend yield (as a percent) | 0.00% | 0.00% | |
Note Hedge Warrants | |||
Convertible Note Hedges and Note Hedge Warrants | |||
Risk-free interest rate (as a percent) | [1] | 2.20% | 2.10% |
Time to maturity | 5 years | 6 years | |
Stock price (in dollars per share) | [2] | $ 14.99 | $ 15.29 |
Strike price (in dollars per share) | [3] | $ 21.50 | $ 21.50 |
Common stock volatility (as a percent) | [4] | 44.10% | 45.80% |
Dividend yield (as a percent) | 0.00% | 0.00% | |
[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, 2017 and December 31, 2016, respectively. | ||
[3] | As per the respective agreements for the Convertible Note Hedges and Note Hedge Warrants. | ||
[4] | Selected volatility based on historical volatility of the Company’s Class A common stock. |
Fair Value of Financial Instr90
Fair Value of Financial Instruments - Convertible Note Hedges and Note Hedge Warrants - Change in Level 3 (Details) - Convertible Note Hedge - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Change in Level 3 Assets | ||
Balance at beginning of period | $ 132,521 | $ 86,466 |
Change in fair value, recorded as a component of gain (loss) on derivatives | (24,333) | 46,055 |
Balance at end of period | $ 108,188 | $ 132,521 |
Fair Value of Financial Instr91
Fair Value of Financial Instruments - Note Hedge Warrants - Change in Level 3 (Details) - Note Hedge Warrants - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Change in Level 3 Liabilities | ||
Balance at beginning of period | $ (113,237) | $ (75,328) |
Change in fair value, recorded as a component of gain (loss) on derivatives | 21,049 | (37,909) |
Balance at end of period | $ (92,188) | $ (113,237) |
Fair Value of Financial Instr92
Fair Value of Financial Instruments - Contingent Consideration - Liability Recorded (Details) - Lesinurad transaction - AstraZeneca - USD ($) $ in Millions | Dec. 31, 2017 | Jun. 02, 2016 |
Contingent Consideration | ||
Estimated fair value of contingent acquisition consideration payable | $ 31.3 | |
Scenario, Previously Reported | ||
Contingent Consideration | ||
Estimated fair value of contingent acquisition consideration payable | $ 67.9 |
Fair Value of Financial Instr93
Fair Value of Financial Instruments - Contingent Consideration - Changes in Level 3 Contingent Consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in contingent consideration payable | |||||
Non-cash change in fair value of contingent consideration | $ (39,300) | $ 1,100 | $ 8,700 | $ (31,310) | $ 9,831 |
Significant Unobservable Inputs (Level 3) | |||||
Changes in contingent consideration payable | |||||
Beginning balance | 77,660 | 0 | |||
Additions | 67,885 | ||||
Non-cash change in fair value of contingent consideration | (31,310) | 9,831 | |||
Payments/transfers to accrued expenses and other current liabilities | (15,092) | (56) | |||
Ending balance | $ 31,258 | $ 77,660 | $ 31,258 | $ 77,660 |
Fair Value of Financial Instr94
Fair Value of Financial Instruments - Contingent Consideration - Measurement Period Adjustments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 02, 2016 | |
Contingent Consideration | ||||||
(Gain) loss on fair value remeasurement of contingent consideration | $ (39,300) | $ 1,100 | $ 8,700 | $ (31,310) | $ 9,831 | |
Lesinurad transaction | AstraZeneca | ||||||
Contingent Consideration | ||||||
Contingent consideration | 31,300 | 31,300 | ||||
Scenario, Adjustment | Lesinurad transaction | AstraZeneca | ||||||
Contingent Consideration | ||||||
Contingent consideration | $ 15,000 | $ 15,000 | $ (19,800) |
Fair Value of Financial Instr95
Fair Value of Financial Instruments - Notes Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Jan. 05, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Sep. 23, 2016 | Jun. 30, 2015 | Jan. 31, 2013 |
Notes Payable | 11% PhaRMA Notes | |||||||
Fair value disclosures | |||||||
Annual interest rate of notes (as a percent) | 11.00% | 11.00% | 11.00% | ||||
Aggregate principal amount of notes issued in private placement | $ 175,000 | ||||||
Notes Payable | 11% PhaRMA Notes | Significant Unobservable Inputs (Level 3) | |||||||
Fair value disclosures | |||||||
Estimated fair value | $ 134,900 | ||||||
Notes Payable | 8.375% Notes due 2026 | |||||||
Fair value disclosures | |||||||
Annual interest rate of notes (as a percent) | 8.375% | 8.375% | |||||
Aggregate principal amount of notes issued in private placement | $ 150,000 | $ 150,000 | |||||
Notes Payable | 8.375% Notes due 2026 | Significant Unobservable Inputs (Level 3) | |||||||
Fair value disclosures | |||||||
Estimated fair value | 152,500 | ||||||
Convertible Senior Notes | 2.25% Convertible Senior Notes due in 2022 | |||||||
Fair value disclosures | |||||||
Annual interest rate of notes (as a percent) | 2.25% | ||||||
Aggregate principal amount of notes issued in private placement | 335,699 | 335,699 | $ 335,699 | ||||
Convertible Senior Notes | 2.25% Convertible Senior Notes due in 2022 | Significant Other Observable Inputs (Level 2) | |||||||
Fair value disclosures | |||||||
Estimated fair value | $ 392,800 | $ 384,200 |
Available-for-Sale Securities -
Available-for-Sale Securities - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Available-for-Sale Securities | ||
Amortized Cost | $ 95,762 | $ 251,219 |
Gross Unrealized Gains | 16 | |
Gross Unrealized Losses | (82) | (23) |
Fair Value | 95,680 | 251,212 |
U.S. Treasury securities | ||
Available-for-Sale Securities | ||
Amortized Cost | 64,378 | 115,026 |
Gross Unrealized Gains | 6 | |
Gross Unrealized Losses | (35) | (11) |
Fair Value | 64,343 | 115,021 |
U.S. government-sponsored securities | ||
Available-for-Sale Securities | ||
Amortized Cost | 31,384 | 136,193 |
Gross Unrealized Gains | 10 | |
Gross Unrealized Losses | (47) | (12) |
Fair Value | $ 31,337 | $ 136,191 |
Available-for-Sale Securities97
Available-for-Sale Securities - Additional Information (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017USD ($)position | Dec. 31, 2016USD ($)position | Dec. 31, 2015USD ($) | |
Available-for-Sale Securities | |||
Contractual maturity period, maximum | 1 year | ||
Number of investments classified as available-for-sale securities in an unrealized loss position (in investments) | position | 29 | 34 | |
Number of investments classified as available-for-sale securities in an unrealized loss position for more than twelve months (in investments) | position | 0 | ||
Aggregate fair value of securities none of which had been in an unrealized loss position for more than twelve months | $ | $ 95.7 | $ 111.3 | |
Proceeds from sales of available-for-sale securities | $ | $ 0 | $ 0 | $ 0 |
Inventory - Tabular Disclosure
Inventory - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2015 |
Inventory | |||
Raw Materials | $ 1,010 | ||
Work in Progress | 71 | ||
Finished Goods | $ 735 | ||
Total | $ 735 | $ 1,081 | $ 0 |
Inventory - General Information
Inventory - General Information (Details) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2015USD ($) | Dec. 31, 2014 | Dec. 31, 2017USD ($)agreement | Dec. 31, 2016USD ($) | |
Inventory | ||||
Number of supply agreements containing minimum purchase commitments | agreement | 2 | |||
Demand forecast period | 24 months | |||
Reduced forecasted purchases period | 18 months | |||
Write-down of inventory | $ 5,000 | |||
Inventory | $ 0 | $ 735 | $ 1,081 |
Inventory - Commercial Supply A
Inventory - Commercial Supply Agreements - Accrual for Non-cancelable Inventory Purchase Commitments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2015 | |
Commercial and Sample Supply Commitments | |||
Accrual for non-cancellable purchase commitments | |||
Accrual for non-cancellable purchase commitments | $ 3.2 | ||
Europe | Allergan | |||
Accrual for non-cancellable purchase commitments | |||
Loss on non-cancellable purchase commitments | $ 6.9 | ||
Linaclotide | Accrued Expenses and Other Current Liabilities | Commercial and Sample Supply Commitments | |||
Accrual for non-cancellable purchase commitments | |||
Accrual for non-cancellable purchase commitments | 3.4 | $ 2.5 | |
Linaclotide | Other liabilities | Commercial and Sample Supply Commitments | |||
Accrual for non-cancellable purchase commitments | |||
Accrual for non-cancellable purchase commitments | $ 5.1 | $ 7.6 |
Inventory - Commercial Suppl101
Inventory - Commercial Supply Agreements - Write-downs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Inventory | ||
Write-down of excess non-cancellable ZURAMPIC sample purchase commitments | $ 1,313 | |
Commercial and Sample Supply Commitments | Lesinurad transaction | ZURAMPIC | ||
Inventory | ||
Write-down of prepaid ZURAMPIC commercial supply | $ 400 | |
Write-down of loss on non-cancellable commercial supply purchase commitments | 200 | |
Write-down of prepaid ZURAMPIC sample supply | 400 | |
Write-down of excess non-cancellable ZURAMPIC sample purchase commitments | $ 1,300 |
Property and Equipment - Tabula
Property and Equipment - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment | ||
Property and equipment, gross | $ 86,494 | $ 82,730 |
Less accumulated depreciation and amortization | (69,220) | (62,218) |
Property and equipment, net | 17,274 | 20,512 |
Manufacturing equipment | ||
Property and Equipment | ||
Property and equipment, gross | 3,748 | 3,748 |
Laboratory equipment | ||
Property and Equipment | ||
Property and equipment, gross | 17,088 | 15,021 |
Computer and office equipment | ||
Property and Equipment | ||
Property and equipment, gross | 2,835 | 2,553 |
Furniture and fixtures | ||
Property and Equipment | ||
Property and equipment, gross | 2,318 | 2,078 |
Software | ||
Property and Equipment | ||
Property and equipment, gross | 13,872 | 12,945 |
Construction in process | ||
Property and Equipment | ||
Property and equipment, gross | 678 | 814 |
Leased vehicles | ||
Property and Equipment | ||
Property and equipment, gross | 7,871 | 7,058 |
Leasehold improvements | ||
Property and Equipment | ||
Property and equipment, gross | $ 38,084 | $ 38,513 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - location | Dec. 31, 2017 | Dec. 31, 2016 |
Manufacturing equipment | United Kingdom | ||
Property and Equipment | ||
Number of contract manufacturers possessing manufacturing equipment | 1 | 1 |
Property and Equipment - Capita
Property and Equipment - Capital Leases (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment | ||
Assets under capital lease | $ 8.6 | $ 7.8 |
Accumulated amortization balances related to assets under capital lease | $ 4.6 | $ 1.6 |
Property and Equipment - Expens
Property and Equipment - Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property and Equipment | |||
Depreciation and amortization | $ 8,403 | $ 10,279 | $ 11,630 |
Loss (gain) on disposal of property and equipment | $ 694 | $ (204) | $ (196) |
Accrued Expenses - Tabular Disc
Accrued Expenses - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses | ||
Salaries | $ 4,566 | $ 4,420 |
Accrued vacation | 4,672 | 4,007 |
Accrued incentive compensation | 13,403 | 15,680 |
Other employee benefits | 1,305 | 4,562 |
Professional fees | 1,261 | 1,213 |
Accrued interest | 873 | 971 |
Repurchasable Stock | 882 | |
Other | 12,157 | 6,566 |
Total accrued expenses and other current liabilities | $ 38,237 | $ 38,301 |
Accrued Expenses - Additional I
Accrued Expenses - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2015 | |
Accrued Expenses | |||
Other accrued expenses | $ 12,157 | $ 6,566 | |
Write-down of excess non-cancelable ZURAMPIC purchase commitments | 1,313 | ||
ZURAMPIC | |||
Accrued Expenses | |||
Other accrued expenses, finished goods inventory | 200 | ||
Lesinurad transaction | |||
Accrued Expenses | |||
Other accrued expenses | 2,800 | ||
Commercial and Sample Supply Commitments | |||
Accrued Expenses | |||
Accrual for non-cancellable purchase commitments | $ 3,200 | ||
Commercial and Sample Supply Commitments | Linaclotide | |||
Accrued Expenses | |||
First payment for purchase commitment - 2018 | 2,500 | ||
Commercial and Sample Supply Commitments | Linaclotide | Accrued Expenses and Other Current Liabilities | |||
Accrued Expenses | |||
Accrual for non-cancellable purchase commitments | 3,400 | $ 2,500 | |
Commercial and Sample Supply Commitments | Lesinurad transaction | ZURAMPIC | |||
Accrued Expenses | |||
Write-down of excess non-cancelable ZURAMPIC purchase commitments | $ 1,300 |
Notes Payable - 8.375% Notes du
Notes Payable - 8.375% Notes due 2026 - General Information (Details) - 8.375% Notes due 2026 - Notes Payable - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Sep. 23, 2016 | |
Notes Payable | ||
Aggregate principal amount of notes issued | $ 150 | $ 150 |
Annual interest rate of notes (as a percent) | 8.375% | 8.375% |
Debt issuance costs capitalized | $ 0.5 | |
Percentage of net sales to determine quarterly payments (as a percent) | 7.50% | |
Redemption Period | 12 months |
Notes Payable - 8.375% Notes109
Notes Payable - 8.375% Notes due 2026 - Redemption Percentage (Details) - 8.375% Notes due 2026 - Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
From and including March 15, 2018 to and including March 14, 2019 | |
Notes Payable | |
Payment start date | Mar. 15, 2018 |
Payment end date | Mar. 14, 2019 |
Redemption Percentage | 108.00% |
From and including March 15, 2019 to and including March 14, 2020 | |
Notes Payable | |
Payment start date | Mar. 15, 2019 |
Payment end date | Mar. 14, 2020 |
Redemption Percentage | 105.50% |
From and including March 15, 2020 to and including March 14, 2021 | |
Notes Payable | |
Payment start date | Mar. 15, 2020 |
Payment end date | Mar. 14, 2021 |
Redemption Percentage | 102.75% |
From and including March 15, 2021 and thereafter | |
Notes Payable | |
Payment start date | Mar. 15, 2021 |
Redemption Percentage | 100.00% |
Notes Payable - 2.25% Convertib
Notes Payable - 2.25% Convertible Senior Notes due 2022 - General Information (Details) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2015USD ($)item$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 31, 2015USD ($) | Jan. 05, 2017USD ($) | Dec. 31, 2016USD ($) | |
Notes Payable | |||||
Net proceed received | $ 146,250,000 | ||||
Fees and expenses | $ 3,700,000 | ||||
Net proceeds received | $ 335,699,000 | ||||
2.25% Convertible Senior Notes due in 2022 | Convertible Senior Notes | |||||
Notes Payable | |||||
Aggregate principal amount of notes issued | $ 335,699,000 | 335,699,000 | $ 335,699,000 | ||
Net proceed received | 324,000,000 | ||||
Fees and expenses | 11,700,000 | ||||
Payments for convertible bond hedges | $ 21,100,000 | ||||
Annual interest rate of notes (as a percent) | 2.25% | ||||
Debt issuance costs capitalized | $ 5,976,000 | $ 6,781,000 | |||
Maximum period of the sole remedy for event failures in the Indenture | 180 days | ||||
Amortization period | 7 years | ||||
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 | ||||
Principal amount used for debt instrument conversion ratio | $ 1,000 | ||||
Initial conversion price (in dollars per share) | $ / shares | $ 16.58 | ||||
Shares issuable upon conversion of debt (in shares) | shares | 20,249,665 | ||||
Number of trading days | 30 days | ||||
Minimum percentage of stock price | 130.00% | ||||
Number of business days immediately after any five consecutive trading day period during the measurement period | item | 5 | ||||
Number of consecutive trading days before five business days during the measurement period | item | 5 | ||||
Repurchase price, as percentage of principal amount, if company undergoes change of control | 100.00% | ||||
Class A common stock | Maximum | 2.25% Convertible Senior Notes due in 2022 | 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 | Minimum | 2.25% Convertible Senior Notes due in 2022 | Convertible Senior Notes | |||||
Notes Payable | |||||
Number of trading days | 20 days | ||||
Percentage of aggregate principal amount payable, in case of event of default | 25.00% |
Notes Payable - 2.25% Conver111
Notes Payable - 2.25% Convertible Senior Notes due 2022 - Balances (Details) - 2.25% Convertible Senior Notes due in 2022 - Convertible Senior Notes - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2015 |
Liability component: | |||
Aggregate principal amount of notes issued | $ 335,699 | $ 335,699 | $ 335,699 |
Less: unamortized debt discount | (80,530) | (94,675) | |
Less: unamortized debt issuance costs | (5,976) | (6,781) | |
Net carrying amount | 249,193 | 234,243 | |
Equity component | $ 114,199 | $ 114,199 |
Notes Payable - 2.25% Conver112
Notes Payable - 2.25% Convertible Senior Notes due 2022 - Additional Information (Details) - 2.25% Convertible Senior Notes due in 2022 - Convertible Senior Notes - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2017 | |
Notes Payable | ||
Debt issuance costs incurred | $ 11.7 | |
Debt issuance costs allocated to equity components | 4 | |
Debt issuance costs allocated to liability components | $ 7.7 | |
Debt instrument term | 7 years | |
Effective interest rate on liability components | 9.34% |
Notes Payable - 2.25% Conver113
Notes Payable - 2.25% Convertible Senior Notes due 2022 - Total Interest Expense (Details) - 2.25% Convertible Senior Notes due in 2022 - Convertible Senior Notes - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Interest Expense | |||
Contractual interest expense | $ 7,553 | $ 7,553 | $ 4,069 |
Amortization of debt issuance costs | 806 | 661 | 305 |
Amortization of debt discount | 14,145 | 12,961 | 6,563 |
Total interest expense | $ 22,504 | $ 21,175 | $ 10,937 |
Notes Payable - 2.25% Conver114
Notes Payable - 2.25% Convertible Senior Notes due 2022 - Future Minimum Payments (Details) - 2.25% Convertible Senior Notes due in 2022 - Convertible Senior Notes - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Future minimum payments of Convertible senior notes | ||
2,018 | $ 7,553 | |
2,019 | 7,553 | |
2,020 | 7,553 | |
2,021 | 7,553 | |
2,022 | 339,477 | |
Total future minimum payments under the 2022 Notes | 369,689 | |
Less: amounts representing interest | (33,990) | |
Less: unamortized debt discount | (80,530) | $ (94,675) |
Less: unamortized debt issuance costs | (5,976) | (6,781) |
Net carrying amount | $ 249,193 | $ 234,243 |
Notes Payable - Convertible Not
Notes Payable - Convertible Note Hedge and Warrant Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2015 | |
Notes Payable | |||
Long-term asset | $ 108,188 | $ 132,521 | |
Long-term liability | 92,188 | $ 113,237 | |
Cost of hedging instruments, net of hedging instrument proceeds | 21,100 | ||
Convertible Note Hedge | |||
Notes Payable | |||
Long-term asset | $ 91,900 | ||
Convertible Note Hedge | Class A common stock | |||
Notes Payable | |||
Shares issuable upon conversion of debt (in shares) | 20,249,665 | ||
Initial conversion price (in dollars per share) | $ 16.58 | ||
Note Hedge Warrant Derivatives | |||
Notes Payable | |||
Long-term liability | $ 70,800 | ||
Note Hedge Warrant Derivatives | Class A common stock | |||
Notes Payable | |||
Number of trading days | 150 days | ||
Note Hedge Warrants | Class A common stock | |||
Notes Payable | |||
Warrants strike price (in dollars per share) | $ 21.50 | ||
Note Hedge Warrants | Note Hedge Warrant Derivatives | Class A common stock | |||
Notes Payable | |||
Shares into which warrants may be converted (in shares) | 20,249,665 |
Notes Payable - PhaRMA Notes (D
Notes Payable - PhaRMA Notes (Details) - USD ($) $ in Thousands | Jan. 05, 2017 | Dec. 31, 2017 | Sep. 30, 2016 | Jan. 31, 2013 |
Notes Payable | ||||
Loss on extinguishment of debt | $ 2,009 | |||
Notes Payable | 11% PhaRMA Notes | ||||
Notes Payable | ||||
Annual interest rate of notes (as a percent) | 11.00% | 11.00% | 11.00% | |
Aggregate principal amount of notes issued in private placement | $ 175,000 | |||
Loss on extinguishment of debt | $ 2,000 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Commitments (Details) ft² in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017USD ($)ft² | Mar. 31, 2017USD ($)ft² | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Lease Commitments | |||||
Restricted cash | $ 7,056 | $ 8,247 | |||
Gain (loss) on facility subleases | 1,579 | (3,480) | $ (296) | ||
Office and laboratory space in Cambridge, Massachusetts | |||||
Lease Commitments | |||||
Rentable area leased (in square feet) | ft² | 223 | 223 | |||
Rentable area subleased (in square feet) | ft² | 93 | 93 | |||
Option to extend lease term | 5 years | ||||
Annual rent escalation | 3.00% | 3.00% | |||
Restricted cash | $ 6,400 | $ 6,400 | |||
Gain (loss) on facility subleases | $ 1,600 | ||||
Rent expense | $ 14,700 | $ 11,600 | $ 6,300 |
Commitments and Contingencie118
Commitments and Contingencies - Capital Leases (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
2015 Vehicle Leases | |
Capital lease obligation | |
Initial term of the lease | 12 months |
Option to extend lease term | 1 month |
Letters of credit securing capital lease obligations | $ 0.6 |
Weighted average interest rate on the outstanding capital lease obligations (as a percent) | 3.30% |
Computer and office equipment | |
Capital lease obligation | |
Weighted average interest rate on the outstanding capital lease obligations (as a percent) | 14.50% |
Commitments and Contingencie119
Commitments and Contingencies - Operating Lease Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future minimum lease payments under Operating Lease Payments | |
2,018 | $ 17,059 |
2,019 | 17,791 |
2,020 | 18,326 |
2,021 | 18,877 |
2022 and thereafter | 61,310 |
Total future minimum lease payments | $ 133,363 |
Commitments and Contingencie120
Commitments and Contingencies - Capital Lease Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future minimum lease payments under Capital Leases Payments | |
2,018 | $ 4,084 |
Total future minimum lease payments | 4,084 |
Less amounts representing interest | (7) |
Capital lease obligations at the end of the period | $ 4,077 |
Commitments and Contingencie121
Commitments and Contingencies - Capital Lease Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Capital lease obligations | ||
Capital lease obligations at the end of the period | $ 4,077 | |
Current portion of capital lease obligations | $ 4,077 | $ 6,227 |
Capital lease obligations, net of current portion | $ 82 |
Commitments and Contingencie122
Commitments and Contingencies - Commercial Supply Commitments - General Information (Details) $ in Millions | Dec. 31, 2017USD ($)agreement | Aug. 04, 2015item |
Purchase obligations | ||
Number of supply agreements | agreement | 2 | |
Number of suppliers | item | 2 | |
Commercial supply purchase obligations | $ | $ 25.4 |
Commitments and Contingencie123
Commitments and Contingencies - Commercial Supply Commitments - Recorded Purchase Commitments (Details) - Commercial and Sample Supply Commitments - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2015 |
Accrual for non-cancellable purchase commitments | |||
Accrual for non-cancellable purchase commitments | $ 3.2 | ||
Linaclotide | |||
Accrual for non-cancellable purchase commitments | |||
First payment for purchase commitment - 2018 | $ 2.5 | ||
Second payment for purchase commitment - 2019 | 2.5 | ||
Third payment for purchase commitment - 2020 | 2.5 | ||
Accrued Expenses and Other Current Liabilities | Linaclotide | |||
Accrual for non-cancellable purchase commitments | |||
Accrual for non-cancellable purchase commitments | 3.4 | $ 2.5 | |
Other liabilities | Linaclotide | |||
Accrual for non-cancellable purchase commitments | |||
Accrual for non-cancellable purchase commitments | $ 5.1 | $ 7.6 |
Commitments and Contingencie124
Commitments and Contingencies - Commercial Supply Commitments - Unrecognized Minimum Purchase Requirements (Details) - Commercial and Sample Supply Commitments $ in Thousands | Dec. 31, 2017USD ($) |
Unrecognized minimum purchase requirements and other firm commitments | |
2,018 | $ 2,322 |
2,019 | 3,096 |
2,020 | 3,096 |
2,021 | 3,096 |
2,022 | 3,096 |
Thereafter | 3,096 |
Total unrecognized minimum purchase requirements | $ 17,802 |
Commitments and Contingencie125
Commitments and Contingencies - Commercial Supply Commitments - Other Commitments (Details) $ in Millions | Dec. 31, 2017USD ($) |
Commercial and Sample Supply Commitments | Lesinurad transaction | AstraZeneca | |
Commitments and Contingencies | |
Purchase obligation, due in next twelve months | $ 5.6 |
Commitments and Contingencie126
Commitments and Contingencies - Commitments Related to the Collaboration and License Agreements (Details) - Licensing agreement - AstraZeneca $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments and Contingencies | |
Milestone payment to be paid by company upon milestone achievement | $ 165 |
Milestone payment made | $ 15 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 12 Months Ended |
Dec. 31, 2017Voteitemshares | |
Stockholders' Equity | |
Number of series of common stock designated | item | 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% |
Class A common stock | |
Stockholders' Equity | |
Number of voting rights per share | 1 |
Number of voting rights per share | one |
Class B common stock | |
Stockholders' Equity | |
Number of voting rights per share | 1 |
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 - Summary o
Stock Benefit Plans - Summary of Expense Recognized by Share-based Compensation Arrangement (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Benefit Plans | |||
Expense recognized for share-based compensation arrangements | $ 33,820 | $ 29,219 | $ 25,469 |
Employee stock options | |||
Stock Benefit Plans | |||
Expense recognized for share-based compensation arrangements | 21,261 | 21,412 | 20,668 |
Restricted stock units | |||
Stock Benefit Plans | |||
Expense recognized for share-based compensation arrangements | 8,631 | 4,023 | 1,536 |
Restricted stock awards | |||
Stock Benefit Plans | |||
Expense recognized for share-based compensation arrangements | 2,441 | 2,325 | 2,408 |
Non-employee stock options | |||
Stock Benefit Plans | |||
Expense recognized for share-based compensation arrangements | 301 | 529 | |
Employee stock purchase plan | |||
Stock Benefit Plans | |||
Expense recognized for share-based compensation arrangements | 1,172 | 910 | 833 |
Stock awards | |||
Stock Benefit Plans | |||
Expense recognized for share-based compensation arrangements | $ 14 | $ 20 | $ 24 |
Stock Benefit Plans - Share-bas
Stock Benefit Plans - Share-based Compensation Reflected in the Consolidated Statement of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Benefit Plans | |||
Share-based compensation expense | $ 33,820 | $ 29,219 | $ 25,469 |
Research and development | |||
Stock Benefit Plans | |||
Share-based compensation expense | 12,768 | 11,344 | 10,065 |
Selling, general and administrative | |||
Stock Benefit Plans | |||
Share-based compensation expense | $ 21,052 | $ 17,875 | $ 15,404 |
Stock Benefit Plans - Stock Ben
Stock Benefit Plans - Stock Benefit Plans (Details) | 12 Months Ended | |
Dec. 31, 2017planshares | Dec. 31, 2010shares | |
Stock Benefit Plans | ||
Number of share-based compensation plans pursuant to which awards are currently being made | plan | 2 | |
Number of share-based compensation plans under which there are outstanding awards | plan | 1 | |
Employee stock purchase plan | ||
Stock Benefit Plans | ||
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 (as a percent) | 85.00% | |
Offering period | 6 months | |
Shares reserved for issuance (in shares) | 400,000 | |
Threshold number of additional shares available for future grant (in shares) | 1,000,000 | |
Shares available for future grant (in shares) | 3,485,141 | |
Employee stock purchase plan | Class A common stock | ||
Stock Benefit Plans | ||
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 (as a percent) | 1.00% | |
The Plans | ||
Stock Benefit Plans | ||
Shares available for future grant (in shares) | 17,992,305 | |
2010 Equity Plan | ||
Stock Benefit Plans | ||
Shares reserved for issuance (in shares) | 6,000,000 | |
Threshold number of additional shares available for future grant (in shares) | 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 (as a percent) | 4.00% | |
Shares available for future grant (in shares) | 14,507,164 | |
2005 Equity Plan | ||
Stock Benefit Plans | ||
Shares available for future grant (in shares) | 0 |
Stock Benefit Plans - Restricte
Stock Benefit Plans - Restricted Stock Awards - General Information (Details) - Restricted stock awards - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Benefit Plans | ||
Granted (in shares) | 134,793 | |
Class A common stock | ||
Stock Benefit Plans | ||
Granted (in shares) | 134,793 | 191,977 |
Stock Benefit Plans - Restri132
Stock Benefit Plans - Restricted Stock Awards - Activity (Details) - Restricted stock awards | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | shares | 94,696 |
Granted (in shares) | shares | 134,793 |
Vested (in shares) | shares | (166,993) |
Outstanding at the end of the period (in shares) | shares | 62,496 |
Weighted-Average Grant Date Fair Value | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 12.69 |
Granted (in dollars per share) | $ / shares | 17.53 |
Vested (in dollars per share) | $ / shares | 14.72 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 17.71 |
Stock Benefit Plans - Restri133
Stock Benefit Plans - Restricted Stock Units - General Information (Details) - Restricted stock units | 12 Months Ended |
Dec. 31, 2015shares | |
Stock Benefit Plans | |
Right to number of shares of common stock per RSU (in shares) | 1 |
Vesting percentage (as a percent) | 25.00% |
Stock Benefit Plans - Restri134
Stock Benefit Plans - Restricted Stock Units - Activity (Details) - Restricted stock units | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | shares | 1,299,457 |
Granted (in shares) | shares | 1,527,084 |
Vested (in shares) | shares | (374,407) |
Forfeited (in shares) | shares | (174,969) |
Outstanding at the end of the period (in shares) | shares | 2,277,165 |
Weighted-Average Grant Date Fair Value | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 12.53 |
Granted (in dollars per share) | $ / shares | 16.58 |
Vested (in dollars per share) | $ / shares | 12.66 |
Forfeited (in dollars per share) | $ / shares | 14.46 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 15.08 |
Stock Benefit Plans - Stock Opt
Stock Benefit Plans - Stock Options - General Information (Details) - Options to purchase common stock | 12 Months Ended |
Dec. 31, 2017 | |
Stock Benefit Plans | |
Expiration period | 10 years |
Vesting period | 4 years |
Stock Benefit Plans - Stock 136
Stock Benefit Plans - Stock Options - Assumptions (Details) - Options to purchase common stock | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
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) | 45.80% | 45.90% | 46.10% |
Expected term | 6 years | 6 years 22 days | 6 years 15 days |
Risk-free interest rate (as a percent) | 2.00% | 1.50% | 1.70% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Stock Benefit Plans - Stock 137
Stock Benefit Plans - Stock Options - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Benefit Plans | |||
Share-based compensation expense | $ 33,820 | $ 29,219 | $ 25,469 |
Options to purchase common stock | |||
Stock Benefit Plans | |||
Weighted average grant date fair value (in dollars per share) | $ 7.62 | $ 5.08 | $ 6.73 |
Options outstanding (in shares) | 21,086,298 | 20,454,659 | |
Number of option exercises prior to vesting (in shares) | 0 | ||
Recorded liability | $ 0 | $ 900 | |
Vesting period | 4 years | ||
Shares issuable under outstanding options (in shares) | 21,086,298 | 20,454,659 | |
Options to purchase common stock | Class A common stock | |||
Stock Benefit Plans | |||
Options outstanding (in shares) | 19,549,828 | ||
Shares issuable under outstanding options (in shares) | 19,549,828 | ||
Options to purchase common stock | Class B common stock | |||
Stock Benefit Plans | |||
Options outstanding (in shares) | 1,536,470 | ||
Shares issuable under outstanding options (in shares) | 1,536,470 | ||
Time-accelerated stock options | |||
Stock Benefit Plans | |||
Options outstanding (in shares) | 0 | 300,000 | |
Shares issuable under outstanding options (in shares) | 0 | 300,000 | |
Time-accelerated stock options | Minimum | |||
Stock Benefit Plans | |||
Vesting period | 6 years | ||
Time-accelerated stock options | Maximum | |||
Stock Benefit Plans | |||
Vesting period | 10 years | ||
Performance-based milestone options | |||
Stock Benefit Plans | |||
Shares vested as a result of milestone or service period achievements (in shares) | 300,000 | ||
Vested (in shares) | 351,500 | ||
Share-based compensation expense | $ 0 | $ 1,400 | $ 200 |
Stock Benefit Plans - Stock 138
Stock Benefit Plans - Stock Options - Activity (Details) - Options to purchase common stock - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares | ||
Outstanding at the beginning of the period (in shares) | 20,454,659 | |
Granted (in shares) | 3,766,704 | |
Exercised (in shares) | (2,216,688) | |
Cancelled (in shares) | (918,377) | |
Outstanding at the end of the period (in shares) | 21,086,298 | 20,454,659 |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 11.92 | |
Granted (in dollars per share) | 16.56 | |
Exercised (in dollars per share) | 9.72 | |
Cancelled (in dollars per share) | 13.63 | |
Outstanding at the end of the period (in dollars per share) | $ 12.90 | $ 11.92 |
Vested or expected to vest | ||
Number of Shares (in shares) | 19,981,726 | |
Weighted-Average Exercise Price (in dollars per share) | $ 12.83 | |
Weighted Average Contractual Life | 5 years 11 months 16 days | |
Aggregate Intrinsic Value | $ 49,657 | |
Stock options | ||
Weighted Average Contractual Life - Outstanding | 6 years 1 month 2 days | 6 years 4 months 6 days |
Aggregate Intrinsic Value - Outstanding | $ 51,476 | $ 70,247 |
Number of Shares - Exercisable (in shares) | 14,606,136 | |
Weighted-Average Exercise Price - Exercisable (in dollars per share) | $ 12.42 | |
Weighted Average Contractual Life - Exercisable | 5 years 1 month 21 days | |
Aggregate Intrinsic Value - Exercisable | $ 39,835 |
Stock Benefit Plans - Stock 139
Stock Benefit Plans - Stock Options - Total Intrinsic Value (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Options to purchase common stock | |||
Stock options | |||
Total intrinsic value of options exercised | $ 16 | $ 23.9 | $ 17.7 |
Stock Benefit Plans - Unrecogni
Stock Benefit Plans - Unrecognized Share-based Compensation (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Options to purchase common stock | |
Unrecognized share-based compensation | |
Unrecognized Expense, Net of Estimated Forfeitures | $ 32,096 |
Weighted-Average Remaining Recognition Period | 2 years 5 months 23 days |
Restricted stock awards | |
Unrecognized share-based compensation | |
Unrecognized Expense, Net of Estimated Forfeitures | $ 916 |
Weighted-Average Remaining Recognition Period | 4 months 28 days |
Restricted stock units | |
Unrecognized share-based compensation | |
Unrecognized Expense, Net of Estimated Forfeitures | $ 20,690 |
Weighted-Average Remaining Recognition Period | 2 years 9 months 11 days |
Performance-based milestone options | |
Unrecognized share-based compensation | |
Unrecognized Expense, Net of Estimated Forfeitures | $ 1,148 |
Income Taxes - General Informat
Income Taxes - General Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Taxes | |
Effect of tax reform | $ 153,894 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of income taxes | |||
Income tax benefit using U.S. federal statutory rate | $ (39,759) | $ (27,780) | $ (48,507) |
Effect of tax reform | 153,894 | ||
Permanent differences | 1,380 | 1,140 | 688 |
State income taxes, net of federal benefit | (6,117) | (4,606) | (4,826) |
Share-based compensation | 9 | 3,528 | 3,824 |
Share-based compensation - windfalls | (2,626) | (5,453) | |
Fair market valuation of Note Hedge Warrants and Convertible Note Hedges | 1,289 | (3,160) | 3,711 |
Tax credits | (12,290) | (3,014) | (1,987) |
Expiring net operating losses and tax credits | 276 | 39 | 194 |
Effect of change in state tax rate on deferred tax assets and deferred tax liabilities | (232) | (3,564) | (627) |
Change in the valuation allowance | (95,824) | 42,975 | 47,587 |
Other | (105) | (57) | |
Benefit for income taxes from continuing operations | $ 0 | $ 0 | $ 0 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 254,839 | $ 333,442 |
Tax credit carryforwards | 50,732 | 36,963 |
Capitalized research and development | 14,754 | 25,030 |
Contingent consideration | 8,540 | 30,131 |
Share-based compensation | 18,321 | 19,364 |
Basis difference on North America collaboration agreement | 22,683 | 24,813 |
Accruals and reserves | 10,595 | 17,144 |
Basis difference on 2022 Notes | 3,110 | |
Other | 10,375 | 15,867 |
Total deferred tax assets | 393,949 | 502,754 |
Deferred tax liabilities: | ||
Basis difference on 2022 Notes | (1,071) | |
Intangibles | (15,252) | (27,162) |
Total deferred tax liabilities | (15,252) | (28,233) |
Net deferred tax assets | 378,697 | 474,521 |
Valuation allowance | (378,697) | (474,521) |
Net deferred tax asset | $ 0 | $ 0 |
Income Taxes - Valuation Allowa
Income Taxes - Valuation Allowance (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | ||
(Decrease) increase in valuation allowance | $ (95.8) | $ 66.3 |
Lesinurad transaction | ||
Income Taxes | ||
(Decrease) increase in valuation allowance | $ 0.3 |
Income Taxes - Early Adoption o
Income Taxes - Early Adoption of ASC 2016-09 (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes | ||
Accumulated deficit | $ (1,308,760) | $ (1,191,823) |
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09 | ||
Income Taxes | ||
Accumulated deficit | $ (23,100) |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Federal | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | $ 1,089.2 | $ 952.7 |
State | ||
Net operating loss carryforwards | ||
Net operating loss carryforwards | $ 807.7 | $ 686.2 |
Income Taxes - Tax Credit Carry
Income Taxes - Tax Credit Carryforwards (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Tax credit carryforward | ||
Tax credit carryforward | $ 53.6 | $ 40.4 |
Income Taxes - Unrecognized Inc
Income Taxes - Unrecognized Income Tax Benefits - Tabular Disclosure (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Unrecognized income tax benefits | |||
Unrecognized Tax Benefits, Beginning Balance | $ 26,393 | $ 17,614 | $ 0 |
Increases based on tax positions related to the current period | 24,078 | 26,393 | 17,614 |
Increases for tax positions of prior periods | 10,174 | ||
Decreases for tax positions in prior periods | (26,393) | (17,614) | (10,174) |
Unrecognized Tax Benefits, End Balance | $ 24,078 | $ 26,393 | $ 17,614 |
Income Taxes - Unrecognized 149
Income Taxes - Unrecognized Income Tax Benefits - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Unrecognized tax benefits | ||||
Unrecognized tax benefits | $ 24,078 | $ 26,393 | $ 17,614 | $ 0 |
Amount of unrecognized tax benefits that, if recognized, would affect effective tax rate | 0 | |||
Accrued interest and penalties from uncertain tax positions | 0 | |||
Interest and tax penalties expense | $ 0 | $ 0 | $ 0 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Contribution 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 | ||
Compensation cost | $ 3,900,000 | $ 3,200,000 | $ 2,500,000 |
Minimum | |||
Defined Contribution Plan | |||
Employee contribution per calendar year (as a percent of compensation) | 1.00% | ||
Maximum | |||
Defined Contribution Plan | |||
Employee contribution per calendar year (as a percent of compensation) | 100.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2009 | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions | |||
Accounts payable | $ 1 | ||
Allergan | |||
Related Party Transactions | |||
Accounts receivable | $ 79,000 | 63,900 | |
Allergan | Convertible preferred stock | |||
Related Party Transactions | |||
Shares sold (in shares) | 2,083,333 | ||
Board of Directors | |||
Related Party Transactions | |||
Amount of insurance premium paid to the insurance provider | 12,100 | 8,500 | |
Accounts payable | $ 0 | $ 0 |
Selected Quarterly Financial152
Selected Quarterly Financial Data (Unaudited) - Tabular Disclosure (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Quarterly Financial Data | |||||||||||
Total revenues | $ 94,208 | $ 86,825 | $ 65,077 | $ 52,166 | $ 87,459 | $ 66,106 | $ 54,350 | $ 66,042 | $ 298,276 | $ 273,957 | $ 149,555 |
Total cost and expenses | 71,443 | 106,259 | 106,088 | 91,871 | 93,759 | 94,393 | 69,665 | 68,010 | 375,661 | 325,827 | 251,643 |
Other (expense) income, net | (10,680) | (12,863) | (3,213) | (12,796) | (7,205) | (4,917) | (6,387) | (11,329) | (39,552) | (29,838) | (40,581) |
Net (loss) income | $ 12,085 | $ (32,297) | $ (44,224) | $ (52,501) | $ (13,505) | $ (33,204) | $ (21,702) | $ (13,297) | $ (116,937) | $ (81,708) | $ (142,669) |
Net (loss) income per share—basic and diluted | $ 0.08 | $ (0.22) | $ (0.30) | $ (0.36) | $ (0.09) | $ (0.23) | $ (0.15) | $ (0.09) | $ (0.78) | $ (0.56) | $ (1) |
Selected Quarterly Financial153
Selected Quarterly Financial Data (Unaudited) - Collaborative Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Collaboration agreements | |||||||||||
Collaborative arrangements revenue | $ 94,208 | $ 86,825 | $ 65,077 | $ 52,166 | $ 87,459 | $ 66,106 | $ 54,350 | $ 66,042 | $ 298,276 | $ 273,957 | $ 149,555 |
Linaclotide Partners | Japan | Collaborative arrangement | |||||||||||
Collaboration agreements | |||||||||||
Collaborative arrangements revenue | $ 29,700 | ||||||||||
Astellas | Collaborative arrangement | |||||||||||
Collaboration agreements | |||||||||||
Collaborative arrangements revenue | $ 30,000 | ||||||||||
Astellas | Japan | Collaborative arrangement | |||||||||||
Collaboration agreements | |||||||||||
Collaborative arrangements revenue | $ 15,000 | $ 15,000 |
Selected Quarterly Financial154
Selected Quarterly Financial Data (Unaudited) - Contingent Consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Contingent Consideration | |||||
(Gain) loss on fair value remeasurement of contingent consideration | $ (39,300) | $ 1,100 | $ 8,700 | $ (31,310) | $ 9,831 |
Selected Quarterly Financial155
Selected Quarterly Financial Data (Unaudited) - Loss on Extinguishment of Debt (Details) - USD ($) $ in Thousands | Jan. 05, 2017 | Dec. 31, 2017 |
Notes Payable | ||
Loss on extinguishment of debt | $ 2,009 | |
11% PhaRMA Notes | Notes Payable | ||
Notes Payable | ||
Loss on extinguishment of debt | $ 2,000 |
Selected Quarterly Financial156
Selected Quarterly Financial Data (Unaudited) - Amortization of Acquired Intangible Asset (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amortization of acquired intangible asset | ||||
Amortization of acquired intangible assets | $ 3,300 | $ 3,200 | $ 6,214 | $ 981 |
Selected Quarterly Financial157
Selected Quarterly Financial Data (Unaudited) - Gain (Loss) on Derivatives (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | |
Nonoperating Income (Expense) | ||||
Other (expense) income | ||||
Gain (loss) on derivatives | $ 2.1 | $ 4.5 | $ 3.1 | $ (1.6) |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ in Millions | Jan. 30, 2018USD ($)employee |
Subsequent Events | |
Number of employees eliminated | employee | 60 |
Percentage of cash expenditure of severance costs | 92.00% |
Minimum | |
Subsequent Events | |
Estimated restructuring charges | $ 2.3 |
Maximum | |
Subsequent Events | |
Estimated restructuring charges | $ 2.8 |