Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 11, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Neos Therapeutics, Inc. | ||
Entity Central Index Key | 0001467652 | ||
Trading Symbol | neos | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 177.9 | ||
Entity Common Stock, Shares Outstanding | 49,710,677 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 46,478,000 | $ 31,969,000 |
Short-term investments | 18,448,000 | |
Accounts receivable, net of allowances for chargebacks and cash discounts of $1,865 and $1,154 at December 31, 2018 and December 31, 2017, respectively | 27,801,000 | 13,671,000 |
Inventories | 10,367,000 | 11,732,000 |
Other current assets | 4,032,000 | 3,575,000 |
Total current assets | 88,678,000 | 79,395,000 |
Property and equipment, net | 7,914,000 | 8,203,000 |
Intangible assets, net | 14,616,000 | 16,348,000 |
Other assets | 149,000 | 162,000 |
Total assets | 111,357,000 | 104,108,000 |
Current Liabilities: | ||
Accounts payable | 12,730,000 | 11,460,000 |
Accrued expenses | 35,818,000 | 20,944,000 |
Current portion of long-term debt | 8,557,000 | 896,000 |
Total current liabilities | 57,105,000 | 33,300,000 |
Long-Term Liabilities: | ||
Long-term debt, net of current portion | 43,217,000 | 58,938,000 |
Derivative liability | 2,017,000 | 1,660,000 |
Deferred rent | 989,000 | 1,083,000 |
Other long-term liabilities | 184,000 | 180,000 |
Total long-term liabilities | 46,407,000 | 61,861,000 |
Stockholders' Equity (Deficit): | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding at December 31, 2018 and December 31, 2017 | ||
Common stock, $0.001 par value, 100,000,000 authorized at December 31, 2018 and December 31, 2017; 49,710,104 and 49,676,303 issued and outstanding, respectively, at December 31, 2018; 29,030,757 and 28,996,956 issued and outstanding, respectively, at December 31, 2017 | 50,000 | 29,000 |
Treasury stock, at cost, 33,801 shares at December 31, 2018 and December 31, 2017 | (352,000) | (352,000) |
Additional paid-in capital | 325,130,000 | 274,584,000 |
Accumulated deficit | (316,983,000) | (265,308,000) |
Accumulated other comprehensive loss | (6,000) | |
Total stockholders' equity | 7,845,000 | 8,947,000 |
Total liabilities and stockholders' equity | $ 111,357,000 | $ 104,108,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS | ||
Receivables allowances for chargebacks and cash discounts (in dollars) | $ 1,865 | $ 1,154 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 49,710,104 | 29,030,757 |
Common stock, outstanding shares | 49,676,303 | 28,996,956 |
Treasury stock, shares | 33,801 | 33,801 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | |||
Net product sales | $ 49,988 | $ 27,132 | $ 10,033 |
Net product sales | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Cost of goods sold | $ 26,928 | $ 14,030 | $ 11,734 |
Cost of goods sold | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Gross profit (loss) | $ 23,060 | $ 13,102 | $ (1,701) |
Research and development expenses | 8,508 | 8,957 | 12,207 |
Selling and marketing expenses | 44,133 | 46,881 | 49,291 |
General and administrative expenses | 13,915 | 13,805 | 12,625 |
Loss from operations | (43,496) | (56,541) | (75,824) |
Interest expense | (8,974) | (10,085) | (6,937) |
Loss on debt extinguishment | (1,187) | ||
Other income, net | 795 | 854 | 1,197 |
Net loss | $ (51,675) | $ (65,772) | $ (82,751) |
Weighted average common shares outstanding used to compute net loss per share, basic and diluted | 32,288,555 | 24,751,091 | 16,052,390 |
Net loss per share of common stock, basic and diluted | $ (1.60) | $ (2.66) | $ (5.16) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Comprehensive Income (loss) | |||
Net loss | $ (51,675) | $ (65,772) | $ (82,751) |
Other comprehensive loss: | |||
Gain (loss) on short-term investments | 6 | (5) | 2 |
Reclassification of gains included in net loss | (3) | ||
Total other comprehensive income (loss) | 6 | (5) | (1) |
Comprehensive loss | $ (51,669) | $ (65,777) | $ (82,752) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income | Total |
Balance, beginning at Dec. 31, 2015 | $ 16 | $ (171) | $ 195,314 | $ (116,785) | $ 78,374 | |
Balance, beginning (in shares) at Dec. 31, 2015 | 16,025,155 | (9,197) | ||||
Increase (Decrease) in Stockholders Equity | ||||||
Proceeds from exercise of options and warrants | 13 | 13 | ||||
Proceeds from exercise of options and warrants (in shares) | 54,747 | |||||
Purchase of treasury stock | $ (61) | (61) | ||||
Purchase of treasury stock (in shares) | (9,709) | |||||
Share-based compensation expense | 3,460 | 3,460 | ||||
Net unrealized loss on investments | $ (1) | (1) | ||||
Net loss | (82,751) | (82,751) | ||||
Balance, ending at Dec. 31, 2016 | $ 16 | $ (232) | 198,787 | (199,536) | (1) | (966) |
Balance, ending (in shares) at Dec. 31, 2016 | 16,079,902 | 18,906 | ||||
Increase (Decrease) in Stockholders Equity | ||||||
Issuance of common stock, net of issuance costs | $ 12 | 64,548 | 64,560 | |||
Issuance of common stock, net of issuance costs (in shares) | 12,019,639 | |||||
Issuance of common stock upon conversion of convertible notes | $ 1 | 6,585 | 6,586 | |||
Issuance of common stock upon conversion of convertible notes (in shares) | 929,967 | |||||
Purchase of treasury stock | $ (120) | (120) | ||||
Purchase of treasury stock (in shares) | (14,895) | |||||
Share-based compensation expense | 4,051 | 4,051 | ||||
Recognition of beneficial conversion feature on convertible notes | 613 | 613 | ||||
Conversion of Redeemable Preferred Stock (in shares) | 1,249 | |||||
Net unrealized loss on investments | (5) | (5) | ||||
Net loss | (65,772) | (65,772) | ||||
Balance, ending at Dec. 31, 2017 | $ 29 | $ (352) | 274,584 | (265,308) | (6) | 8,947 |
Balance, ending (in shares) at Dec. 31, 2017 | 29,030,757 | (33,801) | ||||
Increase (Decrease) in Stockholders Equity | ||||||
Issuance of common stock, net of issuance costs | $ 21 | 47,271 | 47,292 | |||
Issuance of common stock, net of issuance costs (in shares) | 20,651,524 | |||||
Issuance of common stock upon RSU conversion (in shares) | 26,991 | |||||
Shares issued from exercise of stock options (in shares) | 832 | |||||
Payroll tax withheld for release of RSUs | (46) | (46) | ||||
Share-based compensation expense | 3,321 | 3,321 | ||||
Net unrealized loss on investments | $ 6 | 6 | ||||
Net loss | (51,675) | (51,675) | ||||
Balance, ending at Dec. 31, 2018 | $ 50 | $ (352) | $ 325,130 | $ (316,983) | $ 7,845 | |
Balance, ending (in shares) at Dec. 31, 2018 | 49,710,104 | 33,801 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows From Operating Activities: | |||
Net loss | $ (51,675) | $ (65,772) | $ (82,751) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Share-based compensation expense | 3,321 | 4,051 | 3,460 |
Depreciation and amortization of property and equipment | 1,750 | 1,363 | 1,598 |
Amortization of patents and other intangible assets | 1,737 | 1,660 | 1,662 |
Changes in fair value of earnout, derivative and warrant liabilities | (387) | (509) | 18 |
Amortization of senior debt discounts | 961 | 1,316 | 406 |
Amortization of short-term investment purchase discounts | (131) | (126) | (156) |
Deferred interest on debt | 2,111 | 4,738 | |
Loss on debt extinguishment | 942 | ||
Gain on sale of equipment | (23) | (922) | |
Other adjustments | 48 | (91) | 5 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (14,130) | (7,536) | (2,232) |
Inventories | 1,365 | (6,190) | (3,022) |
Deferred contract sales organization fees | 720 | (123) | |
Other assets | (444) | (414) | (1,278) |
Accounts payable | 1,270 | 3,008 | 2,377 |
Accrued expenses | 14,874 | 13,171 | 4,632 |
Net cash used in operating activities | (41,441) | (53,261) | (70,646) |
Cash Flows From Investing Activities: | |||
Purchases of short-term investments | (17,906) | (48,015) | (66,088) |
Sales and maturities of short-term investments | 36,491 | 45,118 | 50,816 |
Proceeds from sale-leaseback of equipment | 3,222 | ||
Capital expenditures | (1,361) | (2,497) | (3,550) |
Intangible asset expenditures | (5) | (361) | (500) |
Net cash provided by (used in) investing activities | 17,219 | (2,533) | (19,322) |
Cash Flows From Financing Activities: | |||
Proceeds from Deerfield debt note, net of fees | 58,419 | ||
Payment of senior debt and fee | 26,063 | ||
Proceeds from sale of equipment | 415 | ||
Proceeds from the issuance of common stock, net of issuance costs | 47,292 | 64,560 | 13 |
Payments made on borrowings | (8,425) | (989) | (9,166) |
Payments made to purchase treasury stock | (120) | (61) | |
Payment of payroll taxes withheld for releases of restricted stock units | (46) | ||
Payments made on behalf of Deerfield | (90) | (40) | |
Net cash provided by financing activities | 38,731 | 63,411 | 23,557 |
Increase (decrease) in cash and cash equivalents | 14,509 | 7,617 | (66,411) |
Cash and Cash Equivalents: | |||
Beginning | 31,969 | 24,352 | 90,763 |
Ending | 46,478 | 31,969 | 24,352 |
Supplemental Disclosure of Noncash Transactions: | |||
Exit Fee liability incurred in connection with Second Amendment to Facility | 750 | ||
Derivative liability incurred in connection with First Amendment to Facility | 611 | 2,107 | |
Capital lease liability from purchase of equipment | 105 | ||
Issuance of senior secured convertible notes in lieu of interest payment | 6,586 | ||
Issuance of common stock upon conversion of senior secured convertible notes | 6,586 | ||
Capital lease liability from sale-leaseback transactions | 3,222 | ||
Prepaid assets included in accounts payable | 654 | ||
Beneficial conversion feature incurred on convertible notes | 613 | ||
Deferred contract sales organization fees | 597 | ||
Supplemental Cash Flow Information: | |||
Interest paid | $ 8,158 | $ 6,769 | $ 2,857 |
Organization and nature of oper
Organization and nature of operations | 12 Months Ended |
Dec. 31, 2018 | |
Organization and nature of operations | |
Organization and nature of operations | Note 1. Organization and nature of operations Neos Therapeutics, Inc., a Delaware corporation, and its subsidiaries (the “Company”) is a fully integrated pharmaceutical company. The Company has developed a broad, proprietary modified-release drug delivery technology that enables the manufacture of single and multiple ingredient extended-release pharmaceuticals in patient- and caregiver-friendly orally disintegrating tablet and liquid suspension dosage forms. The Company has a pipeline of extended-release pharmaceuticals including three approved products for the treatment of attention deficit hyperactivity disorder (“ADHD”). Adzenys XR-ODT was approved by the US Food and Drug Administration (the “FDA”) on January 27, 2016 and launched commercially on May 16, 2016. The Company received approval from the FDA for Cotempla XR-ODT, its methylphenidate XR-ODT for the treatment of ADHD in patients 6 to 17 years old, on June 19, 2017, and the Company initiated an early experience program with limited product availability on September 5, 2017 before launching this product nationwide on October 2, 2017. Also, the Company received approval from the FDA for Adzenys ER oral suspension (“Adzenys ER”) on September 15, 2017 and launched this product on February 26, 2018. In addition, the Company manufactures and markets a generic Tussionex (hydrocodone and chlorpheniramine) (“generic Tussionex”), extended-release liquid suspension for the treatment of cough and upper respiratory symptoms of a cold. In addition to its marketed products, the Company is developing NT-0400, its XR-ODT product candidate for nausea and vomiting and NT0502, its product candidate for the treatment of sialorrhea. |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of significant accounting policies | |
Summary of significant accounting policies | Note 2. Summary of significant accounting policies Basis of Presentation: The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and with the rules and regulations of the Securities and Exchange Commission (“SEC”). Principles of consolidation: The consolidated financial statements include the accounts of the Company and its four wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Concentration of credit risk : Accounts receivable subjects the Company to concentrations of credit risk. Accounts receivable were due from fourteen customers in the years ended December 31, 2018 and 2017, respectively. Three customers accounted for 96% and 94% of the accounts receivable at December 31, 2018 and 2017, respectively. There were fifteen, fourteen and thirteen customers that accounted for all gross revenue in the years ended December 31, 2018, 2017 and 2016, respectively. Of which, three customers accounted for 93% of the gross revenue for the years ended December 31, 2018 and 2017, respectively, and two customers accounted for 82% of the gross revenue for the year ended December 31, 2016. Segment information : Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment, which is the development, manufacturing and commercialization of pharmaceuticals. Reclassifications: In 2017, the Company reclassified certain patents from Other assets to Intangible assets, net as reported on the condensed consolidated balance sheets. There was no impact to the Company’s consolidated statements of operations. Liquidity: During 2018, 2017 and 2016, the Company produced operating losses and used cash to fund operations. Management intends to achieve profitability through revenue growth from pharmaceutical products developed with its extended-release technologies. The Company does not anticipate it will be profitable until after the successful commercialization of its approved products, Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER. In November 2018, the Company completed an offering of its common stock and restructured its outstanding debt to reduce and possibly delay the amount of principal payable in cash. Accordingly, management has performed the review required for going concern accounting and believes the Company presently has sufficient liquidity to continue to operate for the next twelve months after the filing of this Report on Form 10-K. Cash equivalents: The Company invests its available cash balances in bank deposits and money market funds. The Company considers highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’s primary objectives for investment of available cash are the preservation of capital and the maintenance of liquidity. Short-term investments: Short-term investments, if any, consist of debt securities that have original maturities greater than three months but less than or equal to one year and are classified as available-for-sale securities. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of material tax effects reported, as accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity (deficit). Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in other income in the consolidated results of operations. A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income are recognized in other income when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government agencies, or corporate institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date, if any, as non-current assets. Allowance for doubtful accounts : The allowance for doubtful accounts is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management determines the adequacy of the allowance based on reviews of individual accounts, historical losses, existing economic conditions and estimates based on management’s judgments in specific matters. Accounts are written off as they are deemed uncollectible based on periodic review of the accounts. There is no allowance for doubtful accounts at December 31, 2018 or December 31, 2017, as management believes that all receivables are fully collectible. Inventories: In 2016, inventories were stated at the lower of cost (first in, first out) or market and, effective January 1, 2017, inventory is now required to be measured at the lower of cost (first in, first out) or net realizable value. The change to stating inventories at the lower of cost or net realizable value in 2017 was adopted prospectively and did not have a significant effect on the Company’s ongoing financial reporting as valuing inventory at the lower of cost or net realizable value approximated the prior policy of valuing inventory at the lower of cost or market. Inventories have been reduced by an allowance for excess and obsolete inventories. Cost elements include material, labor and manufacturing overhead. Inventories consist of raw materials, work in process and finished goods. Until objective and persuasive evidence exists that regulatory approval has been received and future economic benefit is probable, pre-launch inventories are expensed into research and development. Manufacturing costs for the production of Adzenys XR-ODT incurred after the January 27, 2016 FDA approval date, for the production of Cotempla XR-ODT incurred after June 30, 2017, following the FDA approval date of June 19, 2017, and for the production of Adzenys ER incurred after September 30, 2017, following the FDA approval date of September 15, 2017, are being capitalized into inventory. Property and equipment: Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the respective lease term or the estimated useful lives of the assets. Intangible assets: Intangible assets subject to amortization, which principally include proprietary modified-release drug delivery technology, the costs to acquire the rights to Tussionex Abbreviated New Drug Application and patents, are recorded at cost and amortized over the estimated lives of the assets, which primarily range from 10 to 20 years. The Company estimates that the patents it has filed have a future beneficial value. Therefore, costs associated with filing for its patents are capitalized. Once the patent is approved and commercial revenue realized, the costs associated with the patent are amortized over the useful life of the patent. If the patent is not approved, the costs will be expensed. Impairment of long-lived assets : Long-lived assets such as property and equipment and intangibles subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable. Such assets are also evaluated for impairment in light of the Company’s continuing losses. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. No impairment charges were recorded for the years ended December 31, 2018, 2017 or 2016. Derivative liabilities: The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives requiring separate recognition in the Company’s financial statements. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability and the change in fair value is recorded in other income (expense) in the consolidated results of operations. In circumstances where there are multiple embedded instruments that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the balance sheet date. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption and are classified in interest expense in the consolidated results of operations. Revenue recognition: Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company makes estimates of the net sales price, including estimates of variable consideration (e.g., savings offers, prompt payment discounts, product returns, wholesaler fees, wholesaler chargebacks and estimated rebates) to be incurred on the selling price of the respective product sales, and recognizes the estimated amount as revenue when it transfers control of the product to its customers (e.g., upon delivery). Variable consideration is determined using either an expected value or a most likely amount method. The estimate of variable consideration is also subject to a constraint such that some or all of the estimated amount of variable consideration will only be included in the transaction price to the extent that it is probable that a significant reversal of revenue (in the context of the contract) will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint will require the use of significant management judgment and other market data. The Company provides for prompt payment discounts, wholesaler fees and wholesaler chargebacks based on customer contractual stipulations. The Company analyzes recent product return history and other market data obtained from its third party logistics providers (“3PLs”) to determine a reliable return rate. Additionally, management analyzes historical savings offers and rebate payments based on patient prescriptions dispensed for Adzenys XR ODT, Cotempla XR ODT and Adzenys ER and information obtained from third party providers to determine these respective variable considerations. The Company sells its generic Tussionex, Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER to a limited number of pharmaceutical wholesalers, all subject to rights of return. Pharmaceutical wholesalers buy drug products directly from manufacturers. Title to the product passes upon delivery to the wholesalers, when the risks and rewards of ownership are assumed by the wholesaler (freight on board destination). These wholesalers then resell the product to retail customers such as food, drug and mass merchandisers. Disaggregation of revenue The following table disaggregates the Company’s net product sales by product: Year Ended December 31, 2018 2017 2016 (in thousands) Adzenys XR-ODT $ 26,631 $ 20,377 $ 3,803 Cotempla XR-ODT 19,014 1,590 — Adzenys ER (27) — — Generic Tussionex 4,370 5,165 6,230 $ 49,988 $ 27,132 $ 10,033 Net product sales Net product sales represent total gross product sales less gross to net sales adjustments. Gross to net sales adjustments for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER include savings offers, prompt payment discounts, wholesaler fees, estimated rebates to be incurred on the selling price of the respective product sales and estimated allowances for product returns. Gross to net sales adjustments for generic Tussionex include prompt payment discounts, estimated allowances for product returns, wholesaler fees, estimated government rebates and estimated chargebacks to be incurred on the selling price of generic Tussionex related to the respective product sales. The Company recognizes total gross product sales less gross to net sales adjustments as revenue based on shipments from 3PLs to the Company’s wholesaler customers. Savings offers for branded products The Company offers savings programs for Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER to patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted. The Company records the amount of redeemed savings offers based on information from third-party providers against the estimated discount recorded as accrued expenses. The estimated discount is recorded as a gross to net sales adjustments at the time revenue is recognized. Prompt payment discounts Prompt payment discounts are based on standard programs with wholesalers and are recorded as a discount allowance against accounts receivable and as a gross to net sales adjustments at the time revenue is recognized. Wholesale distribution fees Wholesale distribution fees are based on definitive contractual agreements for the management of the Company’s products by wholesalers and are recorded as accrued expenses and as a gross to net sales adjustment at the time revenue is recognized. Rebates The Company’s branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER are subject to commercial managed care and government managed Medicare and Medicaid programs whereby discounts and rebates are provided to participating managed care organizations and federal and/or state governments. Calculations related to rebate accruals of branded products are estimated based on information from third-party providers. The Company’s generic Tussionex product is subject to state government-managed Medicaid programs whereby discounts and rebates are provided to participating state governments. Generic Tussionex government rebates are estimated based upon rebate payment data available from sales of the Company’s generic Tussionex product over the past three years. Estimated rebates are recorded as accrued expenses and as a gross to net sales adjustments at the time revenue is recognized. Historical trends of estimated rebates will be continually monitored and may result in future adjustments to such estimates. Product returns Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. Estimated returns are recorded as accrued expenses and as a gross to net sales adjustments at the time revenue is recognized. The Company analyzed recent branded product return history and other market data obtained from the Company’s 3PLs as well as data available from sales of its branded products to determine a reliable return rate for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER. Generic Tussionex product returns were estimated based upon return data available from sales of the Company’s generic Tussionex product over the past three years. Wholesaler chargebacks for generic product The Company’s generic Tussionex products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company. Estimated chargebacks are recorded as a discount allowance against accounts receivable and as a gross to net sales adjustments at the time revenue is recognized based on information provided by third parties. Due to estimates and assumptions inherent in determining the amount of generic Tussionex returns, rebates and chargebacks, the actual amount of returns, claims for rebates and chargebacks may be different from the estimates, at which time reserves would be adjusted accordingly. Wholesale distribution fees and the allowance for prompt pay discounts are recorded at the time of shipment and such fees and allowances are recorded in the same period that the related revenue is recognized. Research and development costs: Research and development costs are charged to operations when incurred and include salaries and benefits, facilities costs, overhead costs, raw materials, laboratory and clinical supplies, clinical trial costs, contract services, fees paid to regulatory authorities for review and approval of the Company’s product candidates and other related costs. During the third quarter of 2016, the Company reclassified its approved product and facility regulatory fees out of research and development expense and into cost of sales commensurate with the commercial launch of Adzenys XR-ODT. The Company has reclassified all such applicable regulatory fees for prior quarters and prior years out of research and development expense and into cost of goods sold in accordance with this approach. Distribution expenses: Costs invoiced to the Company by its third party logistics firm are classified as cost of goods sold in the consolidated statements of operations. Shipping and handling costs: Amounts billed to customers for shipping and handling fees for the delivery of goods are classified as cost of goods sold in the consolidated statements of operations. Advertising costs: Advertising costs are comprised of print and electronic media placements that are expensed as incurred. The Company recognized advertising costs of $0.6 million, $0.4 million and $7.4 million during the years ended December 31, 2018, 2017 and 2016 respectively. Share-based compensation: Share-based compensation awards, including grants of employee stock options, restricted stock, restricted stock units (“RSUs”) and modifications to existing stock options, are recognized in the statement of operations based on their fair values. Compensation expense related to awards to employees is recognized on a straight-line basis, based on the grant date fair value, over the requisite service period of the award, which is generally the vesting term. The fair value of the Company’s stock-based awards to employees and directors is estimated using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the expected stock price volatility, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends. For performance-based stock awards, compensation expense is recognized on a straight-line basis, based on the grant date fair value, over the performance period or through the vesting date, whichever is longer. Management monitors the probability of achievement of the performance conditions and adjusts stock-based compensation expense, if necessary. After the closing of the Company’s IPO, the Company’s board of directors has determined the fair value of each share of underlying common stock based on the closing price of the Company’s common stock as reported by the NASDAQ Global Market on the date of grant. Under ASU No. 2017-09 guidance for accounting for share-based payments, the Company has elected to continue estimating forfeitures at the time of grant and, if necessary, revise the estimate in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest. The adoption of this standard in 2017 did not have a material impact on the Company’s business, financial position, results of operations or liquidity. Beginning in July 2016, the Company began recording stock compensation expense in the same income statement line as the cash compensation of the employee with the option in accordance with Staff Accounting Bulletin (“SAB”) Topic 14 due to the increased number and amount of options and option compensation. Paragraph IV litigation costs: Legal costs incurred by the Company in the enforcement of the Company’s intellectual property rights are charged to expense as incurred. Income taxes: Income taxes are accounted for using the liability method, under which deferred taxes are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. Management evaluates the Company’s tax positions in accordance with guidance on accounting for uncertainty in income taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not that the position will be sustained upon examination. As of December 31, 2018 and 2017, the Company has unrecognized tax benefits associated with uncertain tax positions in the consolidated financial statements. These uncertain tax positions were netted against net operating losses (NOL’s) with no separate reserve for uncertain tax positions required. Deferred tax assets should be reduced by a valuation allowance if current evidence indicates that it is considered more likely than not that these benefits will not be realized. In evaluating the objective evidence that historical results provide, the Company considered that three years of cumulative operating losses was significant negative evidence outweighing projections for future taxable income. Therefore, at December 31, 2018 and 2017, the Company determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. The Company may not ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. Recent accounting pronouncements: In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The standard is effective for public entities for the fiscal years ending after December 15, 2020, with early adoption permitted for the removed disclosures and delayed adoption permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13 on its consolidated financial statements. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which was issued to state the income tax accounting implications of the Tax Cuts and Jobs Act of 2017 (the “TCJA”). The guidance clarifies the measurement period timeframe, changes in subsequent reporting periods and reporting requirements as a result of the TCJA. The measurement period begins in the period that includes the TCJA’s enactment date, which was December 22, 2017, and as a result the Company has reflected the impact of this ASU on the deferred tax calculation as of December 31, 2017. In February 2018, the FASB issued ASU No. 2018-02, Income Statement –Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA, and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for entities for fiscal years beginning after December 15, 2018 with early adoption permitted, and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. This standard became effective for the Company standard on January 1, 2019. The adoption of this standard will not have a material impact on the Company’s consolidated results of operations or financial position. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting . This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the modification. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. This standard became effective for the Company on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial position. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU was designed to reduce the diversity in practice of how the eight specified items are presented and classified in the statement of cash flows, including debt prepayment or debt extinguishment costs. The amendments are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those years. This standard became effective for the Company on January 1, 2018. The adoption of this standard did not have a significant effect on the Company’s ongoing financial reporting as the Company had classified its debt prepayment and debt extinguishment costs in the Condensed Consolidated Statements of Cash Flows in accordance with the amendments. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (the “New Lease Standard”). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. In January, July and December 2018, the FASB issued additional amendments to the new lease guidance relating to, transition, and clarification. The July 2018 amendment, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, provides an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. Pursuant to ASU No. 2018-11, the Company will elect to use the effective date approach at transition. Therefore, no adjustments will be made to amounts in prior period financial statements. Capital leases will be accounted for in substantially the same manner as capital leases are accounted for under existing GAAP. Operating leases will be accounted for in a manner similar to operating leases under existing GAAP, except that lessees will recognize a lease liability and a lease asset for all of those leases. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this standard on the effective date of January 1, 2019. The Company is substantially complete with its evaluation of the new standard as it relates to its operating lease disclosed in Note 15 “Commitments and Contingencies”. The remaining steps in the implementation process include finalizing lease liability and right of use asset schedules and the review and evaluation of disclosures and presentation in the Company’s financial statements. In addition, an evaluation of whether there are existing contracts that may contain embedded leases has been performed and the Company is evaluating the impact of its findings. However, it does not expect that the identification of any embedded leases will result in a material impact to the consolidated financial statements and disclosures upon the adoption of this standard. In addition, the Company made an accounting policy election to combine the lease and non-lease components and the short-term lease practical expedients allowed under ASC 842. The adoption of ASC 842 will lead to an increase in the assets and liabilities recorded on the balance sheets primarily due to the lease agreement attributable to leased office space. This New Lease Standard will not have a material impact on the Company’s balance sheets, consolidated statements of comprehensive loss or cash flows from operations. The Company will continue to monitor additional modifications, clarifications or interpretations undertaken by the FASB that may impact its current conclusions and will expand its analysis to include any new lease arrangements initiated prior to adoption. We expect to recognize approximately $3.0 million to $4.8 million of additional assets and corresponding liabilities on our balance sheet as of the beginning of fiscal 2019 and will record any cumulative effect of adopting the New Lease Standard as an adjustment to the opening balance of Retained Earnings. We do not expect that any adjustment to Retained Earnings at adoption will have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (the “New Revenue Standard”). The New Revenue Standard replaces transaction and industry-specific revenue recognition guidance under current U.S. GAAP with a principles-based approach for determining revenue recognition. The New Revenue Standard requires an entity to recognize the amount of revenue based on the value of transferred goods or services to customers. There is also additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The New Revenue Standard became effective for the Company on January 1, 2018. For purposes of providing com |
Net loss per share
Net loss per share | 12 Months Ended |
Dec. 31, 2018 | |
Net loss per share | |
Net loss per share | Note 3. Net loss per share Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. Potentially dilutive securities, which include warrants, outstanding stock options under the stock option plan and shares issuable in future periods, such as RSU awards, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding due to the Company’s net loss position. Restricted stock is considered legally issued and outstanding on the grant date, while RSUs are not considered legally issued and outstanding until the RSUs vest. Once the RSUs are vested, equivalent common shares will be issued or issuable to the grantee and therefore the RSUs are not considered for inclusion in total common shares issued and outstanding until vested. The following potentially dilutive securities outstanding were excluded from consideration in the computation of diluted net loss per share of common stock for the years ended December 31, 2018, 2017 and 2016, respectively, because including them would have been anti-dilutive: December 31, 2018 2017 2016 Series C Redeemable Convertible Preferred Stock Warrants (as converted) 70,833 70,833 70,833 Stock options outstanding 3,446,885 2,454,973 2,107,344 RSUs granted, not released 75,314 85,000 — |
Fair value of financial instrum
Fair value of financial instruments | 12 Months Ended |
Dec. 31, 2018 | |
Fair value of financial instruments | |
Fair value of financial instruments | Note 4. Fair value of financial instruments The Company records financial assets and liabilities at fair value. The carrying amounts of certain financial assets and liabilities including cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued liabilities and deferred revenue, approximated their fair value due to their short maturities. The remaining financial instruments were reported on the Company’s consolidated balance sheets at amounts that approximate current fair values based on market based assumptions and inputs. As a basis for categorizing inputs, the Company uses a three tier fair value hierarchy, which prioritizes the inputs used to measure fair value from market based assumptions to entity specific assumptions as follows: Level 1: Unadjusted quoted prices for identical assets in an active market. Level 2: Quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full-term of the asset. Level 3: Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset. The following table presents the hierarchy for the Company’s financial instruments measured at fair value on a recurring basis for the indicated dates: Fair Value as of December 31, 2018 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 27,419 $ 19,059 $ — $ 46,478 Total financial assets $ 27,419 $ 19,059 $ — $ 46,478 Earnout liability $ — $ — $ 37 $ 37 Derivative liability (see Note 11) — — 2,017 2,017 Total financial liabilities $ — $ — $ 2,054 $ 2,054 Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 31,969 $ — $ — $ 31,969 Short-term investments — 18,448 — 18,448 Total financial assets $ 31,969 $ 18,448 $ — $ 50,417 Earnout liability $ — $ — $ 170 $ 170 Derivative liability (see Note 11) — — 1,660 1,660 Total financial liabilities $ — $ — $ 1,830 $ 1,830 The Company’s Level 1 assets included bank deposits, certificates of deposit and actively traded money market funds with an original maturity of 90 days or less at December 31, 2018 and 2017. Asset values were considered to approximate fair value due to their short-term nature. The Company’s Level 2 assets included commercial paper and corporate bonds with maturities of less than one year that are not actively traded which were classified as available-for-sale securities. The level 2 cash equivalents consist of U.S. agency bonds and corporate commercial paper that mature in less than 90 days which are valued using quoted prices and other data values. The estimated fair values of these securities were determined by third parties using valuation techniques that incorporate standard observable inputs and assumptions such as quoted prices for similar assets, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids/offers and other pertinent reference data. The Company’s cash and cash equivalents and short-term investments had quoted prices at December 31, 2018 and 2017 as shown below: December 31, 2018 Amortized Unrealized Market Cost Loss Value (in thousands) Bank deposits and money market funds $ 27,419 $ — $ 27,419 Financial and corporate debt securities 19,059 — 19,059 $ 46,478 $ — $ 46,478 December 31, 2017 Amortized Unrealized Market Cost Loss Value (in thousands) Bank deposits and money market funds $ 31,969 $ — $ 31,969 Financial and corporate debt securities 18,454 (6) 18,448 $ 50,423 $ (6) $ 50,417 The Company’s Level 3 liability included the fair value of the earnout liability and the fair value of the Deerfield Private Design Fund III, L.P. and Deerfield Special Situations Fund, L.P. derivative liability at December 31, 2018 and 2017. The fair value of the earnout liability was determined after taking into consideration valuations using the Monte Carlo method based on assumptions at December 31, 2017 and revised at December 31, 2018. These revisions were primarily due to an updated revenue forecast for the Company’s generic Tussionex and the use of a directly-calculated revenue volatility of 42% based on data for potential comparable publicly-traded companies in the generic drug manufacturing space including the Company, whereas previously an unlevered equity volatility of 50% had been selected. Significant changes to these assumptions would result in increases/decreases to the fair value of the earnout liability. The methodologies and significant inputs used in the determination of the fair value of the earnout liability were as follows: December 31, 2018 December 31, 2017 Earnout Liability Earnout Liability Date of Valuation 12/31/2018 12/31/2017 Valuation Method Monte Carlo Monte Carlo Volatility (annual) 42% 42% Risk‑free rate (annual) 2.53% - 3.29% 1.62% ‑ 2.88% Time period from valuation until end of earnout .5 ‑ 9.5 .5 ‑ 9.5 Earnout Target 1 (thousands) $13,700 $13,700 Earnout Target 2 (thousands) $18,200 $18,200 Discount rate 21.35% - 21.68% 14.72% ‑ 15.98% Fair value of liability at valuation date (thousands) $37 $170 The fair value of the derivative liability was determined after taking into consideration valuations using the Monte Carlo method based on assumptions at December 31, 2018 and 2017. There were no significant changes in the pricing assumptions during the year ended December 31, 2018. The methodologies and significant inputs used in the determination of the fair value of the debt derivative liability were as follows: Derivative Liability Date of Valuation 12/31/2018 12/31/2017 Valuation Method Monte Carlo Monte Carlo Volatility (annual) N/A N/A Time period from valuation until maturity of debt (yrs.) 3.4 4.4 Cumulative probability of a change in control prepayment implied by model 25.1% 27% Cumulative probability of other accelerated prepayments implied by model 13.7% 17% Discount rate 23.12% 16.20% Fair value of liability at valuation date (thousands) $2,017 $1,660 Significant changes to these assumptions in the preceding valuation tables would result in increases/decreases to the fair value of the earnout liability and derivative liability. Changes in Level 3 liabilities measured at fair value for the periods indicated were as follows: Level 3 Liabilities (in thousands) Balance at December 31, 2016 $ 232 Addition of Deerfield derivative liability 2,107 Change in fair value (509) Balance at December 31, 2017 1,830 Change in fair value 224 Balance at December 31, 2018 $ 2,054 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventories | |
Inventories | Note 5. Inventories Inventories at the indicated dates consist of the following: December 31, 2018 2017 (in thousands) Raw materials $ 3,845 $ 3,476 Work in progress 2,704 6,155 Finished goods 4,259 2,470 Inventory at cost 10,808 12,101 Inventory reserve (441) (369) $ 10,367 $ 11,732 |
Property and equipment
Property and equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property and equipment | |
Property and equipment | Note 6. Property and equipment Property and equipment, net at the indicated dates consists of the following: December 31, 2018 2017 (in thousands) Assets under capital lease $ 3,327 $ 3,222 Leasehold improvements 4,340 4,195 Manufacturing, packaging and lab equipment 6,821 5,300 Office furniture and equipment 2,164 1,656 Assets under construction 188 1,056 16,840 15,429 Accumulated depreciation and amortization (including $633 and $157 at December 31, 2018 and 2017, respectively, applicable to capital leases) (8,926) (7,226) $ 7,914 $ 8,203 Depreciation and amortization expense related to property and equipment was $1,750,000, $1,363,000 and $1,598,000 for the years ended December 31, 2018, 2017 and 2016, respectively. Depreciation and amortization expense is recorded in cost of goods sold, research and development, or general and administrative expenses in the accompanying consolidated statements of operations. As noted in Note 7, the Company sold and leased back a substantial portion of its operating assets in a series of capital lease transactions. On October 20, 2016, the Company utilized a third party auctioneer to conduct an auction of certain fully-depreciated equipment assets, resulting in net proceeds of approximately $415,000 which were paid during the fourth quarter of 2016 and were recorded as a gain on sale and included in other income (loss) in the Company’s consolidated statement of operations. |
Sale-leaseback transaction
Sale-leaseback transaction | 12 Months Ended |
Dec. 31, 2018 | |
Sale-leaseback transaction | |
Sale-leaseback transaction | Note 7. Sale-leaseback transaction The Company accounts for the sale and leaseback transactions discussed below as capital leases under the provisions of Accounting Standards Codification Topic 840-40, Leases—Sale Leaseback Transactions . Accordingly, the leased assets are recorded in property and equipment and the capitalized lease obligations are included in long-term liabilities at the present value of the future lease payments in accordance with the terms of the lease (see Note 12). Lease payments are applied using the effective interest rate inherent in the leases. Depreciation of the property and equipment is included within depreciation and amortization in the consolidated statements of operations and consolidated statements of cash flows. In 2012, the Company negotiated financing arrangements with Essex Capital Corporation (“Essex”) which provided for the sale-leaseback of up to $6.5 million of the Company’s property and equipment with a bargain purchase option at the end of the respective lease. These financing arrangements were executed in five separate tranches that occurred in February, July and November 2013, and March 2014. The two February leases and the July lease had been fully satisfied before 2017. The November 2013 leases for a total of $1.0 million of assets expired in April 2017 and the related $161,000 gain was fully amortized at that time and the $100,000 lease buy-out option liability was fully satisfied. The March 2014 lease for $795,000 of assets expired in September 2017 and the related $116,000 gain was fully amortized at that time and the lease buy-out option liability of $79,000 was fully satisfied. In February 2017, the Company entered into an agreement with Essex for the sale-leaseback of newly acquired assets of up to $5.0 million to finance its capital expenditures. Each lease under this master agreement is for an initial term of 36 months and has an option to purchase the equipment at the end of the respective lease that management considers to be a bargain purchase option. Under this agreement, the Company entered into leases and sold assets with a total capitalized cost of $481,000 and $2,742,000 at effective interest rates of 14.3% and 14.9% on February 13, 2017 and June 30, 2017, respectively. The February sale resulted in net gains of $14,000 which has been deferred and is being amortized over the 36-month term of the lease. There was no gain or loss on the June 2017 sale. For the years ended December 31, 2018, 2017 and 2016, approximately $5,000, $44,000 and $507,000, respectively, of the net gain on sale-leasebacks was recognized in other income on the condensed consolidated statements of operations. |
Intangible assets
Intangible assets | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets | |
Intangible assets | Note 8. Intangible assets Major components of intangible assets, net at the indicated dates consist of the following: December 31, 2018 2017 (in thousands) Proprietary modified-release drug delivery technology $ 15,600 $ 15,600 Tussionex ANDA 4,829 4,829 CPI profit sharing 2,043 2,043 Patents 2,307 2,302 Other 1,035 1,035 25,814 25,809 Accumulated amortization (11,198) (9,461) $ 14,616 $ 16,348 As part of the June 15, 2009 reorganization of the Company as Neos Therapeutics, Inc., the Company performed a purchase price allocation analysis. The proprietary modified-release drug delivery technology was valued at $15.6 million based on projected cash flows expected to be generated from this technology. The $15.6 million is being amortized over 20 years. On August 28, 2014, the Company completed an acquisition of the rights to Tussionex ANDA from Cornerstone and Coating Place, Inc. ("CPI") which was accounted for as an asset acquisition. Prior to the acquisition, the Company, Cornerstone and CPI shared profits generated by the sale and manufacture of the product under a development and manufacturing agreement, and Cornerstone had commercialization rights to the product. The Company paid $4.2 million to Cornerstone to buy out their rights to commercialize and derive future profits from the product and entered into an agreement whereby Cornerstone transferred certain assets associated with the product to the Company. Legal fees of $90,000 associated with this buyout agreement have been capitalized as part of the purchase price. Additional estimated earnout costs due to Cornerstone of $589,000, recorded at fair value by the Company based upon a valuation provided by a third-party valuation firm, were capitalized as part of the purchase price of this intangible asset. This earnout amount was revalued at December 31, 2018, 2017 and 2016, resulting in a $133,000 decrease, a $62,000 decrease and an $18,000 increase in the estimated fair value of the earnout, respectively, which is recorded in other income (expense), net in the Company’s consolidated statements of operations. In addition, the Company paid $2.0 million to CPI to buy out their rights to future profits from the collaboration and entered into an agreement whereby CPI will continue to supply a component of the product. Legal fees of $43,000 associated with this buyout agreement have been capitalized as part of the purchase price of this intangible asset. These two intangible assets have an expected life of ten years and are being amortized on a straight-line basis beginning September 2014. Patents utilized in the manufacturing of the Company’s generic Tussionex product which total $352,000 are being amortized over their expected useful life of 10 years. Patents utilized in the manufacturing of Adzenys XR-ODT which total $599,000 are being amortized over their expected useful life, including $535,000 being amortized for approximately 16 years beginning with the approval of Adzenys XR-ODT on January 27, 2016 and $64,000 being amortized for approximately 15 years beginning in December 2017. Patents utilized in the manufacturing of Cotempla XR-ODT which total $83,000 are being amortized over their expected useful life of approximately 15 years, beginning with the approval of Cotempla XR-ODT on June 19, 2017. Patents utilized in the manufacturing of Adzenys ER which total $451,000 are being amortized over their expected useful life of approximately 15 years, beginning with the approval of Adzenys ER on September 15, 2017. Total amortization expense for intangible assets was $1,737,000, $1,660,000 and 1,662,000 for each of the years ended December 31, 2018, 2017 and 2016. Aggregate amortization of intangible assets for each of the next five years and thereafter is as follows: Year ending December 31, (in thousands) 2019 $ 1,737 2020 1,737 2021 1,737 2022 1,737 2023 1,642 Thereafter 5,205 $ 13,795 |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income taxes | |
Income taxes | Note 9. Income taxes The Company applies FASB ASC topic 740, "Income Taxes" or ASC 740 which addresses the determination of whether tax benefits claimed, or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company is generally subject to tax examination for a period of three years after tax returns are filed. Therefore, the statute of limitations remains open for tax years 2015 and forward. However, when a company has net operating loss carryovers, those tax years remain open until three years after the net operating losses are utilized. Therefore, the tax years remain open back to 2004. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act of 2017. The legislation significantly changes U.S. tax law by, among other things, lowering the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Cuts and Jobs Act of 2017, the Company revalued its ending net deferred tax assets at December 31, 2017 and recognized a assets with a corresponding reduction in the valuation allowance. The significant components of deferred income tax assets and liabilities consist of the following: December 31, 2018 2017 (in thousands) Deferred Tax Assets: Net operating loss $ 37,818 $ 32,193 Share-based compensation 1,757 1,340 R&D tax credit 2,378 1,696 Other reserves 1,616 1,069 Capital lease liability 390 563 State deferreds 1,236 397 Inventory 103 829 Accrued rebates 4,902 561 Other current assets — 319 Other 2,456 2,597 Total deferred tax assets 52,656 41,564 Deferred Tax Liabilities: Intangible assets (1,571) (1,846) Property and equipment (999) (747) Total deferred tax liabilities (2,570) (2,593) Valuation allowance (50,086) (38,971) Net deferred tax asset (liability) $ — $ — At December 31, 2018, the Company has gross federal net operating loss carry-forwards of $275,628,000 and research and development credits of $2,493,000, which begin to expire in 2024. The Company has tax effected state net operating loss carry-forwards of $3,166,000 and $3,136,000 at December 31, 2018 and 2017, respectively. Utilization of the net operating loss carry-forwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The Company has performed an analysis to determine the impact of any ownership change(s) under Section 382 of the Internal Revenue Code. Due to an ownership change in 2017, the amount of federal net operating loss that will expire unused due to the Section 382 limitation is $98,009,000 . The amount of federal research and development credit that will expire unused is $350,000. The deferred tax assets and related valuation allowances for both carryforwards have been reduced accordingly. It has been determined that the Company did not undergo an ownership change in 2018 and therefore there was no further impact to the ability of the Company to utilize the carryforward of the federal net operating loss or the federal research and development tax credit beyond those limits previously established by prior ownership changes. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company has no accrued interest related to its uncertain tax positions as they all relate to timing differences that would adjust the Company’s net operating loss carryforward and do not require recognition. As a result of these timing differences, at December 31, 2018 and December 31, 2017, the Company had gross unrecognized tax benefits related to uncertain tax positions of $3,956,000 and $7,261,000, respectively. The Company has no other tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within 12 months of the reporting date. Changes in unrecognized benefits in any given year are recorded as a component of deferred tax expense. A tabular rollforward of the Company’s gross unrecognized tax benefits is below: December 31, 2018 2017 (in thousands) Beginning Balance $ 7,261 $ 5,081 Decrease based on tax positions taken during a current period (3,305) 2,180 Ending Balance $ 3,956 $ 7,261 The Company has recorded a valuation allowance of $50,086,000 at December 31, 2018 and $38,971,000 at December 31, 2017 to fully reserve its net deferred tax assets. The Company has assessed the likelihood that the deferred tax assets will be realized and determined that it is more likely than not that all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Due to the uncertainty of realizing the deferred tax asset, the Company has placed a valuation allowance against the entire deferred tax asset. The Company may not ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. The change in the valuation allowance was a increase of 11,118,000 and an decrease of $29,037,000 for the years ended December 31, 2018 and December 2017, respectively. As a result of the TCJA reduction in the U.S. corporate income tax rate, the Company reduced its deferred tax assets in 2017 by $20,547,000 with a corresponding reduction in the valuation allowance. A reconciliation of the Company’s Federal statutory tax rate of 21% to the Company’s effective income tax rate is as follows: Year Ended December 31, 2018 2017 U.S. Statutory Tax Rate 21 % 34 % Change in Valuation Allowance (21.5) % 44 % Deferred Tax Adjustments 0 % (47) % Federal Rate Change 0 % (31) % State tax expense, net 1.8 % 2 % Provision to Return and Other Adjustments (1.3) % (2) % Tax Expense / (Benefit) 0 % 0 % |
Accrued expenses
Accrued expenses | 12 Months Ended |
Dec. 31, 2018 | |
Accrued expenses | |
Accrued expenses | Note 10. Accrued expenses Accrued expenses as of December 31, 2018 and 2017 consist of the following: December 31, December 31, 2018 2017 (in thousands) Accrued savings offers $ 11,289 $ 7,168 Accrued rebates 7,762 4,008 Accrued customer returns 5,157 2,711 Accrued payroll and benefits 4,555 2,534 Accrued wholesaler fees 4,249 2,345 Other accrued expenses 2,806 2,178 Total accrued expenses $ 35,818 $ 20,944 |
Long-term debt
Long-term debt | 12 Months Ended |
Dec. 31, 2018 | |
Long-term debt | |
Long-term debt | Note 11. Long-term debt Long-term debt at the indicated dates consists of the following: December 31, 2018 2017 (in thousands) Deerfield senior secured credit facility, net of discount of $3,334 and $2,843, respectively $ 49,916 $ 57,156 Capital leases, maturing through November 2022 1,858 2,678 51,774 59,834 Less current portion (8,557) (896) Long-term debt $ 43,217 $ 58,938 Senior secured credit facility: On May 11, 2016, the Company entered into a $60.0 million senior secured credit facility (the “Facility”) with Deerfield Private Design Fund III, L.P. (66 2 / 3 % of Facility) and Deerfield Special Situations Fund, L.P. (33 1 / 3 % of Facility) (collectively, “Deerfield”), as lenders. In February 2017, the Company closed an underwritten public offering of 5,750,000 shares of its common stock at a public offering price of $5.00 per share (see Note 12). Deerfield, the Company’s senior lender, participated in the purchase of the Company’s common shares as part of this public offering, and as a result, was classified as a related party at the time of the corresponding transactions. Approximately $33 million of the $60.0 million Facility proceeds was used to prepay the existing $24.3 million principal and $0.1 million of accrued interest related to the senior Loan and Security Agreement (the “LSA”) with Hercules Technology III, L.P., (“Hercules”), the $1.1 million LSA end of term fee, a LSA prepayment charge of $243,000 and the $5.9 million of principal and $1.3 million of interest on the 10% amended and restated subordinated note (the “Note”) that was issued by the Company to Essex, which were otherwise payable in 2016 and 2017. Principal on the Facility was due in three equal annual installments beginning in May 2019 and continuing through May 2021, with a final payment of principal, interest and all other obligations under the Facility due May 11, 2022. Interest is due quarterly beginning in June 2016, at a rate of 12.95% per year. The Company had an option, which it exercised, to defer payment of each of the first four interest payments, adding such amounts to the outstanding loan principal. The aggregate $6.6 million in deferred interest payments (the “Accrued Interest”) was due and payable on June 1, 2017. Borrowings under the Facility are collateralized by substantially all of the Company’s assets, except the assets under capital lease.The terms of the Facility require the Company to maintain cash on deposit of not less than $5.0 million. On June 1, 2017 (the “Amendment Date”), the Company and Deerfield entered into a First Amendment (the “Amendment”) to the Facility which extended the date to repay the Accrued Interest under the Facility to June 1, 2018 (the “PIK Maturity Date”), which could have been extended to June 1, 2019 at the election of the Company if certain conditions had been met as specified in the Amendment. However, as described below, the accrued interest amount was converted into shares of common stock. The right to payment of the Accrued Interest was memorialized in the form of senior secured convertible notes (the “Convertible Notes”) issued to Deerfield on the Amendment Date. Interest was due quarterly at a rate of 12.95% per year. The principal amount of the Convertible Notes issued under the Amendment and all accrued and unpaid interest thereon was to become due and payable upon written notice from Deerfield, and if either (a) the Company did not meet certain quarterly sales milestones specified in the Amendment or (b) the Company had not received and publicly announced FDA approval of the new drug applications on or before the applicable Prescription Drug User Fee Act (the “PDUFA”) goal date as set forth on the schedules to Amendment. Per the Amendment, the Company will prepay all of the outstanding obligations under the Facility and the Convertible Notes upon the occurrence of a change in control or a sale of substantially all of the Company’s assets and liabilities. The Amendment increased the staggered prepayment fees for prepayments due upon a change of control or any other prepayment made or required to be made by the Company by 300 basis points from June 1, 2017 through the period ending prior to May 11, 2020 for the change in control prepayment fees and through the period ending prior to May 11, 2022 for any other prepayments, respectively (the “Prepayment Premiums”). Such Prepayment Premiums, as amended, range from 12.75% to 2%. The $6.6 million of Convertible Notes was convertible into shares of the Company’s common stock at the noteholder’s option at any time up to the close of business on the date that is five days prior to the PIK Maturity Date. The per share conversion price was the greater of (a) 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion, and (b) $7.00. Deerfield cannot own more than 9.985% of the Company’s outstanding shares at any one time, and the aggregate conversion cannot exceed 19.9% of the Company’s outstanding common stock as of June 1, 2017. On October 26, 2017, Deerfield provided a conversion notice electing to convert the entire $6.6 million of Convertible Notes into shares of the Company’s common stock at a conversion price of $7.08 per share. The conversion price was based on 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion. This resulted in issuing 929,967 shares of the Company’s common stock to Deerfield on this date and the Convertible Notes were cancelled. In conjunction with the Amendment to the Facility and the related issuance of the Convertible Notes, the Company entered into a Registration Rights Agreement (the “Registration Agreement”) which required the Company to file a registration statement with the SEC to register the shares of common stock issued or issuable upon conversion of the Convertible Notes (the “Conversion Shares”) (subject to certain adjustment for stock split, dividend or other distribution, recapitalization or similar events,the “Registrable Securities”) within 30 days from June 1, 2017, which was to become effective per the SEC no later than 75 days thereafter. The Company filed a registration statement on Form S-3 to comply with the Registration Agreement on June 30, 2017, which became effective on July 11, 2017. This filing covered 940,924 shares, which is the number of shares that would be issued at the floor conversion rate of $7.00 per share. The Company is also required to, among other things, maintain the effectiveness of such registration statement, continue to file the required SEC filings on a timely basis, use its best efforts to ensure that the registered securities are listed on each securities exchange on which securities of the same class or series as issued by the Company are then listed and comply with any Financial Industry Regulatory Authority (“FINRA“) requests. The Company’s obligations with respect to each registration end at the date which is the earlier of (a) when all of the Registrable Securities covered by such registration have been sold or (b) when Deerfield or any of its transferees or assignees under the Registration Agreement cease to hold any Registrable Securities. For each registration, the Company shall bear all reasonable expenses, other than underwriting discounts and commissions, and shall reimburse Deerfield or any assignee or transferee for up to $25,000 in legal fees. The Company had satisfied all of its obligations under this Registration Agreement and did not pay any damages pursuant to this agreement; therefore, no liability had been recorded (see Note 15), and as of September 30, 2018, Deerfield or any of its transferees or assignees under the Registration Agreement reported that it had ceased to hold any Registrable Securities. The Company has accounted for the Amendment as a debt modification as the instruments were not substantially different; therefore, the remaining debt discount on the original Facility is being amortized using the effective interest method over the remaining term of the modified debt. The Company evaluated the Amendment together with the Convertible Notes to determine if those contracts or embedded components of those contracts qualified as derivatives requiring separate recognition. This evaluation identified a derivative liability of $2.1 million for the fair value of the change in control and other accelerated payment features as the prepayment fees resulted in premiums that were greater than 10%. As of December 31, 2018, the fair value of the derivative is $2.0 million (see Note 4). As the change in control and other accelerated payments terms, including the prepayment fees, were applied to the entire debt per the terms of the amended Facility, the corresponding debt discount will be amortized using the effective interest method over the remaining term of the Facility. The fees paid to or on behalf of the creditor for the debt modification totaled $40,000 and were recorded as additional debt discount on the amended Facility to be amortized to interest expense using the effective interest method over the term of the Facility. The Company’s evaluation also determined that the embedded conversion options should not be bifurcated as derivatives from the Convertible Notes host instruments. Therefore, the Company recorded a $0.6 million discount to the convertible notes for the intrinsic value of the embedded conversion option based upon the difference between the fair value of the underlying common stock on June 1, 2017 and the effective conversion price embedded in the Convertible Notes, which will be amortized using the effective interest method to interest expense over the one-year term of the Convertible Notes. The Company recorded a $0.6 million corresponding credit to a beneficial conversion feature classified as additional paid in capital on June 1,2017 in stockholders’ (deficit) equity in the Company’s financial statements. In connection with the Facility, the Company paid a $1,350,000 yield enhancement fee to Deerfield, approximately $173,000 of legal costs to the Company’s attorneys and $58,000 of legal costs on behalf of Deerfield’s attorneys, all of which were recorded as debt discount and amortized over the six-year term of the Facility, using the effective interest method. On November 5, 2018, the Company and Deerfield entered into an amendment (the “Second Amendment”) to the Facility pursuant to which the Company agreed to pay $7.5 million of principal under the Facility otherwise due in May 2019 upon completion of an underwritten public offering of the Company’s shares of its common stock for gross proceeds of at least $30.0 million, plus additional shares of the Company’s shares of its common stock for additional gross proceeds of at least $4.5 million (the “November Offering”). The remaining $52.5 million of principal under the Facility is due as follows: $7.5 million on May 11, 2019, $15.0 million on May 11, 2020 (the “2020 Principal Payment”), $15.0 million on May 11, 2021 and $15.0 million on May 11, 2022; provided, that the 2020 Principal Payment due date shall be extended to May 11, 2021 or May 11, 2022 subject to certain achievement of net sales. If all or any of the principal are prepaid or required to be prepaid under the Second Agreement prior to December 31, 2021, then the Company shall pay, in addition to such prepayment and accrued interest thereon, a prepayment premium equal to 6.25% of the amount of principal prepaid. Additionally, the Company shall pay all interest which, absent such prepayment, would have accrued on the principal prepaid through May 11, 2020 in connection with a prepayment due to a Change of Control of the Company or through December 31, 2020 in connection with any other prepayment , whether voluntary or in an Event of Default. If such prepayment occurs after December 31, 2021 then no prepayment premium is due. In addition, upon the payment in full of the Obligations (whether voluntarily, in the connection with a Change of Control or an Event of Default and whether before, at the time of or after the Maturity Date, Pursuant to the Second Amendment, upon the effectiveness thereof, the Company amended and restated its outstanding notes under the Second Agreement in the form of senior secured convertible notes (the “ In conjunction with the Second Amendment to the Facility and the related issuance of the A&R Notes, the Company entered into a Registration Rights Agreement (the “Second Registration Agreement”) which required the Company to file a registration statement with the SEC to register the shares of common stock issued or issuable upon conversion of the A&R Notes within 30 days from November 5, 2018, which was to become effective per the SEC no later than 75 days thereafter. The filing deadline was subsequently extended to December 21, 2018. The Company filed a registration statement on Form S-3 to comply with the Second Registration Agreement on December 11, 2018, which became effective on December 20, 2018. This filing covered 3,796,668 shares, which is the maximum number of shares that may be converted. The Company is also required to, among other things, maintain the effectiveness of such registration statement, continue to file the required SEC filings on a timely basis, use its best efforts to ensure that the registered securities are listed on each securities exchange on which securities of the same class or series as issued by the Company are then listed and comply with any FINRA requests. The Company’s obligations with respect to each registration end at the date which is the earlier of (a) when all of the Registrable Securities covered by such registration have been sold or (b) when Deerfield or any of its transferees or assignees under the Second Registration Agreement cease to hold any Registrable Securities. For each registration, the Company shall bear all reasonable expenses, other than underwriting discounts and commissions, and shall reimburse Deerfield or any assignee or transferee for up to $25,000 in legal fees. The Company had satisfied all of its obligations under the Second Registration Agreement and did not pay any damages pursuant to this agreement; therefore, no liability had been recorded (see Note 15). Pursuant to the A&R Notes, if the Company fails to provide the number of Conversion Shares, then the Company would have to pay damages to Deerfield or subsequent holder or any designee for each day after the third business day after receipt of notice of conversion that such conversion is not timely effected. The Facility also contains certain customary nonfinancial covenants, including limitations on the Company’s ability to transfer assets, engage in a change of control, merge or acquire with or into another entity, incur additional indebtedness and distribute assets to shareholders. Upon an event of default, the lenders may declare all outstanding obligations accrued under the Facility to be immediately due and payable, and exercise its security interests and other rights. As of December 31, 2018, the Company was in compliance with the covenants under the Facility. Debt discount amortization for the Facility, including the Amendment after June 1, 2017, was calculated using the effective interest rates of 15.03% on the original facility debt and 25.35% on the Convertible Notes and after the Second Amendment on November 5, 2018, using the effective interest rate of 16.69%, charged to interest expense and totaled $961,000 and $1,316,000 for the years ended December 31, 2018 and 2017, respectively. Senior debt: In March 2014, the Company entered into the LSA, which was subsequently amended in August 2014, September 2014, December 2014 and June 2015. As amended, the LSA provided a total commitment of $25.0 million, available in four draws. Borrowings under the LSA were collateralized by substantially all of the Company’s assets, except the Company’s intellectual property and assets under capital lease. The first draw of $10.0 million, (“Tranche 1”), was issued during March 2014 and was used in its entirety to repay outstanding principal under a previous credit facility. The second draw of $5.0 million, (“Tranche 2”), was issued during September 2014. The third draw (“Tranche 3”) in the amount of $5.0 million was issued in March 2015, and the fourth and final draw (“Tranche 4”) in the amount of $5.0 million was issued in June 2015. Each draw was to be repaid in monthly installments, comprised of interest-only monthly payments until May 2016, when installments of interest and principal calculated over a thirty-month amortization period commenced. A balloon payment of the entire principal balance outstanding on October 1, 2017 and all accrued but unpaid interest thereunder was due and payable on October 1, 2017. The interest rate was 9% per annum for Tranche 1 and Tranche 4 and 10.5% per annum for Tranche 2 and Tranche 3. An end of term charge of $1.1 million was payable at the earliest to occur of (1) October 1, 2017, (2) the date the Company prepaid its outstanding Secured Obligations, as defined therein, or (3) the date the Secured Obligations became due and payable. As such, the end of term charge of $1.1 million was paid on May 11, 2016 when the Company prepaid its outstanding Secured Obligations, as defined therein. In connection with the LSA, the Company issued the Hercules Warrants which consisted of 60,000 Series C warrants in March 2014 and 110,000 Series C warrants in September 2014 at the then current price of $5.00 per share. The Hercules Warrants became warrants with a term of five years for the purchase of 70,833 shares of common stock at a price of $12.00 per share upon the closing of the Company’s IPO and were therefore reclassified from warrant liability to Additional Paid in Capital within Stockholders’ Equity at July 22, 2015. LSA end of term charge amortization totaled $121,000 for the year ended December 31, 2016. LSA debt discount amortization charged to interest expense totaled $104,000 for the year ended December 30, 2016. The early prepayment of the LSA with some of the proceeds from the Facility resulted in a $1,187,000 loss on debt extinguishment which is separately shown in the consolidated statement of operations for the year ended December 31, 2016. 10% subordinated note: The Company had a Note in the aggregate principal amount of $5.9 million that was issued by the Company to Essex which was to mature in March 2017. Interest was to be accrued and added to the principal balance until such time as the Company achieved positive EBITDA for three consecutive months. During the year ended December 31, 2016, interest expense of $263,000 was accrued. On May 11, 2016, the Company prepaid the $5.9 million outstanding aggregate principal and $1.3 million in accrued and unpaid interest. Capital lease obligations: Capital lease obligations consist of sale-leaseback and equipment leases, both of which include options to purchase. As described in Notes 7 and 17, during the years ended December 31, 2017, 2014 and 2013, the Company entered into agreements with Essex for the sale‑leaseback of existing and newly acquired assets with a total capitalized cost of $3.2 million, $795,000 and $5.5 million, respectively, which are classified as capital leases. The approximate imputed interest rate on these leases is 14.9%, 14.5% and 14.5%, respectively. Total interest expense on all capital leases was $341,000, $263,000 and 204,000 for the years ended December 31, 2018, 2017 and 2016 respectively. Future capital lease obligations were included in the long-term liabilities on the ompany’s condensed consolidated balance sheets. Future minimum capital lease payments through the years ending December 31, 2022 are as follows: Year ending: December 31, (in thousands) 2019 $ 1,257 2020 798 2021 21 2022 20 Total minimum lease payments $ 2,096 Less amount representing interest (238) Future minimum lease payments $ 1,858 Future principal payments of long-term debt, including capital leases, are as follows: Year ending: December 31, (in thousands) 2019 $ 8,557 2020 15,761 2021 15,020 2022 15,770 Future principal payments $ 55,108 Less unamortized debt discount (3,334) Less current portion of long-term debt (8,557) Total long-term debt $ 43,217 |
Common stock
Common stock | 12 Months Ended |
Dec. 31, 2018 | |
Common stock | |
Common stock | Note 12. Common stock On July 28, 2015, the Company closed its initial public offering (“IPO”) whereby the Company sold 5,520,000 shares of common stock, at a public offering price of $15.00 per share, which includes 720,000 shares of common stock resulting from the underwriters’ exercise of their over‑allotment option at the IPO price on July 23, 2015. Proceeds from the Company’s IPO, net of underwriting discounts and commissions and other offering costs, were $75.0 million. In connection with the IPO, the Company’s Board of Directors approved a 1‑for‑2.4 reverse stock split of the Company’s common stock which also resulted in a proportional adjustment to the conversion ratios of the preferred stock and the preferred stock warrants. All references to common stock and per share amounts in these condensed financial statements and accompanying footnotes have been retroactively adjusted for all periods presented to give effect to this reverse stock split. In February 2017, the Company closed an underwritten public offering of 5,750,000 shares of its common stock at a public offering price of $5.00 per share, which included 750,000 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option on February 17, 2017. Deerfield, the Company’s senior lender, participated in the purchase of the Company’s common shares as part of this public offering, and as a result, was classified as a related party at the time of the corresponding transactions. The net proceeds to the Company from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by the Company, were approximately $26.7 million. On June 30, 2017, the Company closed an underwritten public offering of 4,800,000 shares of its common stock at a public offering price of $6.25 per share for total proceeds of $30.0 million before estimated offering costs of $0.2 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 720,000 shares of its common stock which was exercised in full on July 26, 2017. The net proceeds to the Company through July 26, 2017 from this offering, after deducting offering expenses payable by the Company, were approximately $34.3 million. The shares of common stock for both the June 2017 and February 2017 offerings were offered pursuant to a shelf registration statement on Form S-3, including a base prospectus, filed by the Company on August 1, 2016, and declared effective by the SEC on August 12, 2016. This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $125.0 million of its common stock, preferred stock, debt securities, warrants and/or units (the “Shelf”). The Company simultaneously entered into a sales agreement with Cowen and Company, LLC, as sales agent, to provide for the offering, issuance and sale by the Company of up to $40.0 million of its common stock from time to time in “at-the-market” offerings under the Shelf (the “Sales Agreement”). During the year ended December 31, 2017, the Company sold an aggregate 749,639 shares of common stock under the Sales Agreement, at an average sale price of approximately $5.01 per share for gross proceeds of $3.7 million and net proceeds of $3.6 million and paying total compensation to the sales agent of approximately $0.1 million. On October 26, 2017, Deerfield provided a conversion notice electing to convert the entire $6.6 million of Convertible Notes into shares of the Company’s common stock at a conversion price of $7.08 per share. The conversion price was based on 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion. This resulted in issuing 929,967 shares of the Company’s common stock to Deerfield on this date and the Convertible Notes were cancelled. During the year ended December 31, 2018, the Company sold an aggregate 651,525 shares of common stock under the Sales Agreement, at an average sale price of approximately $6.25 per share for gross proceeds of $4.1 million and net proceeds of $3.9 million and paying total compensation to the sales agent and other costs of approximately $0.2 million. On November 5, 2018, the Company filed Supplement No. 1 to the prospectus dated August 12, 2016, which reduced the size of the continuous offering by the Company under such prospectus relating to the offering of Common Stock pursuant to the Sales Agreement. Following the reduction, the Company is authorized to issue up to $7,825,113 of its common stock pursuant to the Sales Agreement (inclusive of amounts previously sold thereunder prior to the date hereof). Aggregate gross proceeds of sales of the Company’s common stock under the Sales Agreement total $7,825,113, and sales of common stock under the Sales Agreement have been suspended. On November 8, 2018, the Company closed an underwritten public offering of 19,999,999 shares of its common stock at a public offering price of $2.30 per share, which includes 2,608,695 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option at the public offering price. The net proceeds to the Company from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by the Company were approximately $43.4 million. This offering met the criteria for the November Offering. As of December 31, 2018, $5.2 million of the Company’s common stock, preferred stock, debt securities, warrants and/or units remained available to be sold pursuant to the Shelf. During the year ended December 31, 2018, the Company issued 26,991 shares of common stock pursuant to the conversion of vested RSUs and 832 shares of common stock pursuant to the exercise of vested stock options. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation | |
Share-based Compensation | Note 13. Share-based Compensation Share-based Compensation Plans In July 2015, the Company adopted the Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan (“2015 Plan”) which became effective immediately prior to the closing of the IPO and initially had 767,330 shares of common stock reserved for issuance. On January 1, 2016 and each January 1 thereafter, the number of shares of common stock reserved and available for issuance under the 2015 Plan shall be cumulatively increased by five percent of the number of shares of stock issued and outstanding on the immediately preceding December 31 or such lesser number of shares determined by the administrator of the 2015 Plan. Accordingly, on January 1,2019, 2018 and 2017, the Company added 2,483,815 shares,1,449,847 shares and 803,049 shares, respectively, to the option pool. The 2015 Plan superseded the Neos Therapeutics, Inc. 2009 Equity Plan (“2009 Plan”), originally adopted in November 2009 and which had 1,375,037 shares reserved and available for issuance. Effective upon closing of the IPO, the Company’s board of directors determined not to grant any further awards under the 2009 Plan. The shares of common stock underlying any awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise) under the 2009 Plan will be added to the shares of common stock available under the 2015 Plan. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The 2015 Plan is administered by the Company’s compensation committee. The Company’s compensation committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants and to determine the specific terms and conditions of each award, subject to the provisions of the 2015 Plan. The Company’s compensation committee may delegate authority to grant certain awards to the Company’s chief executive officer. Through December 31, 2018, the Company has granted options, restricted stock and RSUs. The exercise price per share for the stock covered by a stock award granted shall be determined by the administrator at the time of grant but shall not be less than 100 percent of the fair market value on the date of grant. Unexercised stock awards under the 2015 Plan expire after the earlier of 10 years or termination of employment, except in the case of any unexercised vested options, which generally expire 90 days after termination of employment. The 2009 Plan allowed the Company to grant options to purchase shares of the Company’s common stock and to grant restricted stock awards to members of its management and selected members of the Company’s board of directors. Restricted stock awards are recorded as deferred compensation and amortized into compensation expense, on a straight-line basis over a defined vesting period ranging from 1 to 48 months. Options were granted to officers, employees, nonemployee directors and consultants, and independent contractors of the Company. The Company also granted performance based awards to selected management. The performance options vested over a three-year period based on achieving certain operational milestones and the remaining options vest in equal increments over periods ranging from two to four years. Unexercised options under the 2009 Plan expire after the earlier of 10 years or termination of employment, except in the case of any unexercised vested options, which generally expire 90 days after termination of employment. All terminated options are available for reissuance under the 2015 Plan. Since the inception of the 2015 Plan through December 31, 2018, 82,635 shares related to forfeited 2009 Plan options were added to the shares available under the 2015 Plan. During year ended December 31, 2018, 73,331 shares related to forfeited 2009 Plan options were added to the shares available under the 2015 Plan. As of December 31, 2018, 1,793,905 shares of common stock remain available for grant under the 2015 Plan. In June 2018, the Company adopted the Neos Therapeutics, Inc. 2018 Inducement Plan (the “Inducement Plan”) which had 800,000 shares of common stock reserved and available for issuance. The Inducement Plan allows the Company to grant equity awards to induce highly-qualified prospective officers and employees who are not currently employed by the Company to accept employment and provide them with a proprietary interest in the Company. The Inducement Plan is administered by the Company’s compensation committee. The exercise price per share for the stock covered by a stock award granted pursuant to the Inducement Plan shall be determined by the administrator at the time of grant but shall not be less than 100 percent of the fair market value on the date of grant. Unexercised stock awards under the Inducement Plan expire after 10 years following the grant date. Under the Company’s employment agreement dated June 27, 2018 with Gerald McLaughlin, the Company’s Chief Executive Officer, the Company granted Mr. McLaughlin, under the Inducement Plan, an option to purchase 600,000 shares of the Company’s common stock, which vests in equal annual installments over four years from Mr. McLaughlin’s start date. In addition, on July 30, 2018, the Company granted Mr. McLaughlin, under the Inducement Plan, an option to purchase 200,000 shares of the Company’s common stock. The shares underlying this option shall vest subject to certain performance metrics to be evaluated for the fiscal year ending December 31, 2019. As of December 31, 2018, no shares of common stock remain available for grant under the Inducement Plan. Share-based Compensation Expense The Company has reported share-based compensation expense for the years ended December 31, 2018, 2017 and 2016, respectively, in its condensed consolidated statements of operations as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Cost of goods sold $ 470 $ 390 $ 311 Research and development 344 394 304 Selling and marketing 731 913 723 General and administrative 1,776 2,354 2,122 $ 3,321 $ 4,051 $ 3,460 The total share based compensation expense included in the table above is attributable to stock options and RSUs of $3.1 million and $261,000, respectively, for the year ended December 31, 2018. The total share based compensation expense included in the table above is attributable to stock options,RSUs and restricted stock of $3.9 million, $86,000 and $71,000,respectively, for the year ended December 31, 2017. The total share based compensation expense included in the table above is attributable to stock options and restricted stock of $3.4 million and $91,000, respectively, for the year ended December 31, 2016. As of December 31, 2018, there was $5.1 million of compensation costs adjusted for any estimated forfeitures, related to non-vested stock options and RSUs granted under the Company’s equity incentive plans not yet recognized in the Company’s financial statements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.5 years for stock options and 2.9 years for RSUs. There is no unrecognized compensation cost associated with grants of restricted stock. Stock Options During the year ended December 31, 2018, the Company’s board of directors granted 953,539 options under the 2015 Plan. In June and July 2018, the Company granted 600,000 and 200,000 options, respectively, under the Inducement Plan to Gerald McLaughlin, the Company’s Chief Executive Officer, at an exercise price of $6.20 and $5.55 per share, respectively. The Company estimates the fair value of all stock options on the grant date by applying the Black-Scholes option pricing valuation model. The application of this valuation model involves assumptions that are highly subjective, judgmental and sensitive in the determination of compensation cost. Prior to the IPO, given the absence of an active market for the Company’s common stock prior to its IPO, the Company’s board of directors was required to estimate the fair value of its common stock at the time of each option grant primarily based upon valuations performed by a third-party valuation firm. The weighted-average key assumptions used in determining the fair value of options granted during the period indicated are as follows: Year Ended December 31, 2018 2017 2016 Estimated dividend yield 0 % 0 % 0 % Expected stock price volatility 60 % 60 % 60 % Weighted-average risk-free interest rate 2.75 % 2.01 % 1.18 % Expected life of option in years 6.13 6.06 6.15 Weighted-average option fair value at grant $ 3.930 $ 4.090 $ 5.800 A summary of outstanding and exercisable options as of December 31, 2018, 2017 and 2016, and the activity from December 31, 2015 through December 31, 2018, is presented below: Number of Weighted-Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2015 1,352,283 $ 13.607 $ 964 Exercisable at December 31, 2015 229,000 $ 3.385 $ 2,504 Granted 859,257 10.385 — Exercised (10,886) 1.231 — Expired, forfeited or cancelled (93,310) 17.780 — Outstanding at December 31, 2016 2,107,344 $ 12.173 $ 1,128 Exercisable at December 31, 2016 595,424 $ 9.715 $ 881 Granted 570,432 7.220 — Exercised (1,249) 0.223 — Expired, forfeited or cancelled (221,554) 10.325 — Outstanding at December 31, 2017 2,454,973 $ 11.195 $ 4,764 Exercisable at December 31, 2017 1,137,766 $ 10.919 $ 2,890 Granted 1,753,539 6.786 — Exercised (832) 0.320 — Expired, forfeited or cancelled (760,795) 11.281 — Outstanding at December 31, 2018 3,446,885 $ 8.935 $ 70 Exercisable at December 31, 2018 1,643,011 $ 10.627 $ 70 The weighted-average remaining contractual life of options outstanding and exercisable on December 31, 2018 was 7.9 and 6.6 years, respectively. The option exercise price for all options granted in the year ended December 31, 2018 ranged from $4.76 to $10.40 per share. Restricted Stock Units On May 1, 2017, the Company granted 78,750 RSUs to members of its management which vest in four equal annual installments, beginning May 1, 2018. On October 2, 2017, the Company granted 6,250 RSUs to a member of its management which vest in four equal annual installments, beginning October 2, 2018. On March 1, 2018, the Company granted 93,750 RSUs to members of its management which vest in four equal annual installments, beginning March 1, 2019. The Company satisfies its RSUs by issuing the Company’s common shares when RSUs vest and are issued. In addition, when RSUs vest and are issued, RSU recipients may elect to have the Company withhold units as consideration for the tax withholding obligation for their vested RSUs. During the year ended December 31, 2018, 33,748 vested RSUs were converted into an equivalent 26,991 shares of common stock. The Company withheld 6,757 shares of its common stock to partially satisfy tax withholding obligations upon vesting of the RSUs for the year ended December 31, 2018. A summary of outstanding RSUs as of December 31, 2018 and 2017 and the activity from December 31, 2017 through December 31, 2018, is presented below: Number of Weighted-Average RSUs Fair Value Outstanding at December 31, 2016 — $ — Granted 85,000 7.15 Exercised — — Expired, forfeited or cancelled — — Outstanding at December 31, 2017 85,000 $ 7.15 Granted 93,750 8.30 Converted (26,991) 7.34 Withheld for tax obligation (6,757) 7.34 Expired, forfeited or cancelled (69,688) 7.77 Outstanding at December 31, 2018 75,314 $ 7.93 Restricted stock The Company did not issue any shares of restricted stock for the years ended December 31, 2018, 2017 and 2016. On October 16, 2017, October 17, 2016 and October 16, 2015, 14,895 shares, 9,709 shares and 9,197 shares, respectively, of restricted stock were surrendered by the holder to the Company to cover taxes associated with vesting of restricted stock. The Company had no unvested restricted stock as of December 31, 2018 and 2017, and had 35,513 shares of unvested restricted stock with a weighted average fair value of $2.55 as of December 31, 2016. For the years ended December 31, 2018, 2017 and 2016, there were no shares of restricted stock granted or forfeited. |
Treasury stock
Treasury stock | 12 Months Ended |
Dec. 31, 2018 | |
Treasury stock | |
Treasury stock | Note 14. Treasury stock The Company has the authority to repurchase common stock from former employees, officers, directors or other persons who performed services for the Company at the lower of the original purchase price or the then-current fair market value. On October 16, 2017, October 17, 2016 and October 16, 2015, 14,895 shares, 9,709 shares and 9,197 shares, respectively, of restricted stock were surrendered by the holder to the Company to cover taxes associated with vesting of restricted stock and such shares were added back into the treasury stock of the Company, increasing total treasury stock to 33,801 shares as of December 31, 2017 and 2018. On February 19, 2015, the Company’s board of directors approved the cancellation of the Company’s 55,905 shares of treasury stock which had been repurchased at the original purchase price of $0.002 in 2013. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and contingencies | |
Commitments and contingencies | Note 15. Commitments and contingencies Registration Payment Arrangement: On November 5, 2018 , in conjunction with the Second Amendment to the Facility and the related issuance of the Convertible Notes, the Company entered into the Registration Agreement which required the Company to file a registration statement with the SEC to register the Registrable Securities (see Note 8) within 30 days from November 5, 2018, which was to become effective per the SEC no later than 75 days thereafter. The filing deadline was subsequently extended to December 21, 2018. The Company filed a registration statement on Form S-3 to comply with the Registration Agreement on December 11, 2018, which became effective on December 20, 2018. This filing covered 3,796,668 shares, which is the number of shares that would be issued up to the Exchange Cap as (defined in the agreement). The Company is also required to, among other things, maintain the effectiveness of such registration statement, continue to file the required SEC filings on a timely basis, use its best efforts to ensure that the registered securities are listed on each securities exchange on which securities of the same class or series as issued by the Company are then listed and comply with any FINRA requests. Upon any Registration Failure, the Company shall pay additional damages to the Holder for each 30-day period (prorated for any partial period) after the date of such Registration Failure in an amount in cash equal to two percent of the original principal amount of the Convertible Notes. The Company’s obligations with respect to each registration end at the date which is the earlier of (a) when all of the Registrable Securities covered by such registration have been sold or (b) when Deerfield or any of its transferees or assignees under the Registration Agreement cease to hold any of the Registrable Securities. For each registration filing, the Company shall bear all reasonable expenses, other than underwriting discounts and commissions, and shall reimburse Deerfield or any assignee or transferee for up to $25,000 in legal fees. The Company currently expects to satisfy all of its obligations under the Registration Agreement and does not expect to pay any damages pursuant to this agreement; therefore, no liability has been recorded. Patent Infringement Litigation: On October 31, 2017, the Company received a paragraph IV certification from Teva Pharmaceuticals USA, Inc. (“Teva”) advising the Company that Teva has filed an ANDA with the FDA for a generic version of Cotempla XR-ODT, in connection with seeking to market its product prior to the expiration of patents covering Cotempla XR-ODT. The certification notice alleged that the three U.S. patents listed in the FDA’s Orange Book for Cotempla XR-ODT, one with an expiration date in April 2026 and two with expiration dates in June 2032, will not be infringed by Teva’s proposed product, are invalid and/or are unenforceable. On December 13, 2017, the Company filed a patent infringement lawsuit in federal district court in the District of Delaware against Teva alleging that Teva infringed the Company’s Cotempla XR-ODT patents by submitting to the FDA an ANDA seeking to market a generic version of Cotempla XR-ODT prior to the expiration of the Company’s patents. This lawsuit automatically stayed, or barred, the FDA from approving Teva’s ANDA for 30 months or until a district court decision that is adverse to the asserted patents is rendered, whichever is earlier. On December 21, 2018, the Company entered into a Settlement Agreement (the “Teva Settlement Agreement”) and a Licensing Agreement (the “Teva Licensing Agreement” and collectively with the Settlement Agreement, the “Teva Agreement”) with Teva. The Teva Agreement resolved all ongoing litigation involving the Company’s Cotempla XR-ODT patents and Teva’s ANDA. Under the Teva Agreement, the Company granted Teva the right to manufacture and market its generic version of Cotempla XR-ODT under the ANDA beginning on July 1, 2026, or earlier under certain circumstances. A stipulation and order of dismissal was entered by the U.S. District Court for the District of Delaware. The Teva Agreement has been submitted to the applicable governmental agencies. On July 25, 2016, the Company received a paragraph IV certification from Actavis Laboratories FL, Inc. (“Actavis”) advising the Company that Actavis had filed an Abbreviated New Drug Application (“ANDA”) with the FDA for a generic version of Adzenys XR-ODT. The certification notice alleged that the four U.S. patents listed in the FDA’s Orange Book for Adzenys XR-ODT, one with an expiration date in April 2026 and three with expiration dates in June 2032, will not be infringed by Actavis’s proposed product, are invalid and/or are unenforceable. On September 1, 2016, the Company filed a patent infringement lawsuit in federal district court against Actavis alleging that Actavis infringed the Company’s Adzenys XR-ODT patents by submitting to the FDA an ANDA seeking to market a generic version of Adzenys XR-ODT prior to the expiration of the Company’s patents. On October 17, 2017, the Company entered into a Settlement Agreement (the “Actavis Settlement Agreement”) and a Licensing Agreement (the “Actavis Licensing Agreement” and collectively with the Actavis Settlement Agreement, the “Actavis Agreement”) with Actavis. The Actavis Agreement resolved all ongoing litigation involving the Company’s Adzenys XR-ODT patents and Actavis’s ANDA. Under the Actavis Agreement, the Company granted Actavis the right to manufacture and market its generic version of Adzenys XR-ODT under the ANDA beginning on September 1, 2025, or earlier under certain circumstances. A stipulation and order of dismissal was entered by the U.S. District Court for the District of Delaware. The Actavis Agreement has been submitted to the applicable governmental agencies . Other Litigation: On March 7, 2018, the Company received a citation advising the Company that the County of Harris Texas (the “County”) filed a lawsuit on December 13, 2017 against the Company and various other alleged manufacturers, promoters, sellers and distributors of opioid pharmaceutical products. Through this lawsuit, the County seeks to recoup as damages some of the expenses it allegedly has incurred to combat opioid use and addiction. The County also seeks punitive damages, disgorgement of profits and attorneys’ fees. While the Company believes that the lawsuit is without merit and intends to vigorously defend against it, the Company is not able to predict at this time whether this proceeding will have a material impact on its results of operations. Defined contribution plans : The Company maintains a defined contribution plan covering substantially all employees under the provisions of Section 401(k) of the Internal Revenue Code (“Code”). As the Company has elected a Safe-Harbor provision for the 401(k) Plan, participants are always fully vested in their employer contributions. Employees may contribute annually up to the lesser of 50% of their compensation or the applicable limit established by the Code. Effective January 1, 2015, the Company amended its 401(k) plan to provide a Company matching contribution on 100% of a participant’s contribution for the first 3% of their salary deferral and 50% of the next 2% of their salary deferral. For the years ended December 31, 2018, 2017 and 2016, the Company recorded $576,000, $419,000 and $371,000, respectively, of expense for 401(k) contributions. Operating leases : The Company leases its Grand Prairie, Texas office space and manufacturing facility under an operating lease which expires in 2024. In addition, the Company has a 60-month lease for office space in Blue Bell, Pennsylvania for its commercial operations which commenced on May 1, 2016. Total future minimum lease payments under these operating leases with noncancelable terms are as follows: Year ending December 31, (in thousands) 2019 $ 1,107 2020 1,161 2021 1,057 2022 1,055 2023 1,055 Thereafter 1,106 Future minimum lease payments $ 6,541 The Company accounts for rent expense on long-term operating leases on a straight-line basis over the life of the lease resulting in a deferred rent balance of $989,000 and $1,083,000 at December 31, 2018 and December 31, 2017, respectively. The Company is also liable for a share of operating expenses for both premises as defined in the lease agreements. The Company’s share of these operating expenses for both locations was $206,000 and $243,000 for the years ended December 31, 2018 and 2017. Rent expense for these leases, excluding the share of operating expenses, was $1,011,000, $1,010,000 and $1,011,000 for the years ended December 31, 2018, 2017 and 2016, respectively. Cash incentive bonus plan: In July 2015, the Company adopted the Senior Executive Cash Incentive Bonus Plan (“Bonus Plan”). The Bonus Plan provides for cash payments based upon the attainment of performance targets established by the Company’s compensation committee. The payment targets will be related to financial and operational measures or objectives with respect to the Company, or corporate performance goals, as well as individual targets. The Company has recorded $666,000, $701,000 and $464,000 of compensation expense for the years ended December 31, 2018, 2017 and 2016, respectively, under the Bonus Plan. |
License agreements
License agreements | 12 Months Ended |
Dec. 31, 2018 | |
License agreements | |
License agreements | Note 16. License agreements On December 21, 2018, the Company entered into the Teva Agreement with Teva . Under the Teva Licensing Agreement, the Company granted Teva a non-exclusive license to certain patents owned by the Company by which Teva has the right to manufacture and market its generic version of Cotempla XR-ODT under its ANDA beginning on July 1, 2026, or earlier under certain circumstances. The Teva Licensing Agreement has been submitted to the applicable governmental agencies (see Note 15). On October 23, 2018, the Company entered into an Exclusive License Agreement (“NeuRx License”) with NeuRx Pharmaceuticals LLC for the exclusive worldwide right to research, develop, manufacture, make, have made, use, distribute, sell, have sold, offer for sale, import, export and otherwise commercialize NRX-101 for the treatment, prevention and diagnosis of any and all diseases and conditions. The NeuRx License provides for an upfront payment of $175,000, development and milestone payments and royalties based on annual net sales, as defined in the agreement. Royalties are to be paid on a country-by-country and licensed product-by-licensed product basis, during the period of time beginning on the first commercial sale of such licensed product in such country and continuing until the later of: (i) the expiration of the last-to-expire valid claim in any licensed patent in such country that covers such licensed product in such country; and/or (ii) expiration of regulatory exclusivity of such licensed product in such country. On October 17, 2017, the Company entered into the Actavis Agreement with Actavis. Under the Actavis Licensing Agreement, the Company granted Actavis a non-exclusive license to certain patents owned by the Company by which Actavis has the right to manufacture and market its generic version of Adzenys XR-ODT under its ANDA beginning on September 1, 2025, or earlier under certain circumstances. The Actavis Licensing Agreement has been submitted to the applicable governmental agencies (see Note 15). On July 23, 2014, the Company entered into a Settlement Agreement and an associated License Agreement (the “2014 License Agreement”) with Shire LLC (“Shire”) for a non-exclusive license to certain patents for certain activities with respect to the Company’s New Drug Application (the “NDA”) No. 204326 for an extended-release orally disintegrating amphetamine polistirex tablet. In accordance with the terms of the 2014 License Agreement, following the receipt of the approval from the FDA for Adzenys XR-ODT, the Company paid a lump sum, non-refundable license fee of an amount less than $1.0 million in February 2016. The Company is paying a single digit royalty on net sales of Adzenys XR-ODT during the life of the patents. On January 26, 2017, the Company sent a letter to Shire, notifying Shire that the Company has made a Paragraph IV certification to the FDA that in the Company’s opinion and to the best of its knowledge, the patents owned by Shire that purportedly cover the Company’s Adzenys ER are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Adzenys ER. On March 6, 2017, the Company entered into a License Agreement (the “2017 License Agreement”) with Shire, pursuant to which Shire granted the Company a non-exclusive license to certain patents owned by Shire for certain activities with respect to the Company’s NDA No. 204325 for an extended-release amphetamine liquid suspension. In accordance with the terms of the 2017 License Agreement, following the receipt of the approval from the FDA for Adzenys ER, the Company paid a lump sum, non-refundable license fee of an amount less than $1.0 million in October 2017. The Company will also pay a single digit royalty on net sales of Adzenys ER during the life of the relevant Shire patents. Such license fees are capitalized as an intangible asset and are amortized into cost of goods sold over the life of the longest associated patent. The royalties are recorded as cost of goods sold in the same period as the net sales upon which they are calculated. Additionally, each of the 2014 and 2017 License Agreements contains a covenant from Shire not to file a patent infringement suit against the Company alleging that Adzenys XR-ODT or Adzenys ER, respectively, infringes the Shire patents. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related party transactions | |
Related party transactions | Note 17. Related party transactions In February 2017, the Company closed an underwritten public offering of 5,750,000 shares of its common stock at a public offering price of $5.00 per share, which includes 750,000 shares of the Company’s common stock resulting from the underwriters’ exercise of their over-allotment option at the public offering price on February 17, 2017 (see Note 12). On June 30, 2017, the Company closed an underwritten public offering of 4,800,000 shares of its common stock at a public offering price of $6.25 per share for total proceeds of $30.0 million before estimated offering costs of $0.2 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 720,000 shares of its common stock (see Note 12). Deerfield, the Company’s senior lender, participated in the purchase of the Company’s common shares as part of both public offerings, and as a result, is classified as a related party. The Company is obligated under a $60.0 million senior secured credit Facility that was issued by the Company to Deerfield. On June 1, 2017, the Company and Deerfield entered into an Amendment to the Company’s existing Facility with Deerfield which extended the date to repay the Accrued Interest under the Facility to June 1, 2018, which may have been extended to June 1, 2019 at the election of the Company if certain conditions have been met as specified in the Amendment. The right to payment of the Accrued Interest was memorialized in the form of Convertible Notes issued to Deerfield on the Amendment Date. On October 26, 2017, Deerfield provided a conversion notice electing to convert the entire $6.6 million of Convertible Notes into shares of the Company’s common stock at a conversion price of $7.08 per share. The conversion price was based on 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion. This resulted in issuing 929,967 shares of the Company’s common stock to Deerfield on this date and the Convertible Notes were cancelled. On November 5, 2018, the Company and Deerfield entered into the Second Amendment to the Facility pursuant to which the Company agreed to pay $7.5 million of principal under the Facility otherwise due in May 2019 upon completion of the November Offering. The Second Amendment provides an option for the $15.0 million principal on the Facility due in May 2020 to be paid in either May 2021 or May 2022 upon the achievement of certain revenue milestones as described in the Second Amendment. Also, pursuant to the Second Amendment, the Company amended and restated its outstanding notes under the Facility in the form of senior secured convertible notes. The Company has the right to pay principal and future interest in shares of Common Stock not to exceed 2,135,625 shares in the aggregate. Additionally, subject to the terms of the amended and restated convertible notes, Deerfield has the right to convert the remaining principal under the Facility into shares of Common Stock not to exceed 3,796,668 shares in the aggregate at a conversion price of 95% of the greater of the average of the volume weighted average price per share of the Common Stock for the three trading day period immediately preceding such conversion and $10.00. On November 8, 2018, the Company closed an underwritten public offering of 19,999,999 shares of its common stock at a public offering price of $2.30 per share, which includes 2,608,695 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option at the public offering price. The net proceeds to the Company from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by the Company were approximately $43.4 million. Deerfield also participated in the purchase of the Company’s common shares as part of this offerings (see Note 11). |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | Note 18. Selected Quarterly Financial Data (Unaudited) The following financial information reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods. Operating results for these periods are not necessarily indicative of the operating results for a full year. Historical results are not necessarily indicative of results to be expected in future periods. Selected quarterly financial data for years ended December 31, 2018 and 2017, are as follows (in thousands, except share and per share amounts): Quarter Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Net sales(1) $ 10,729 $ 11,363 $ 12,503 $ 15,393 Gross profit(1) 5,508 4,376 5,546 7,631 Net loss attributable to common stock $ (14,436) $ (15,207) $ (12,695) $ (9,337) Weighted average common shares outstanding used to compute net loss per share, basic and diluted (2) 28,996,956 29,008,909 29,625,792 41,415,358 Net loss per share of common stock, basic and fully diluted (3): $ (0.50) $ (0.52) $ (0.43) $ (0.23) Quarter Ended March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 Net sales (1) $ 5,631 $ 5,179 $ 7,100 $ 9,222 Gross profit (1) 881 2,362 4,277 5,582 Net loss attributable to common stock $ (17,221) $ (18,645) $ (16,254) $ (13,652) Weighted average common shares outstanding used to compute net loss per share, basic and diluted (2) 19,624,712 22,613,382 27,884,983 28,746,608 Net loss per share of common stock, basic and fully diluted (3): $ (0.88) $ (0.82) $ (0.58) $ (0.47) (1) The Company began selling Adzenys XR-ODT on May 16, 2016, initiated an early experience program for Cotempla XR-ODT with limited product availability on September 5, 2017 before launching this product nationwide on October 2, 2017 and launched Adzenys ER on February 26, 2018. Net product sales represent total gross product sales less gross to net sales adjustments. Gross to net sales adjustments for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER include savings offers, prompt payment discounts, wholesaler fees, estimated rebates to be incurred on the selling price of the respective product sales and estimated allowances for product returns. The Company began selling generic Tussionex in August 2014. Gross to net sales adjustments for generic Tussionex include prompt payment discounts, estimated allowances for product returns, wholesaler fees, estimated government rebates and estimated chargebacks to be incurred on the selling price of generic Tussionex related to the respective product sales. The Company recognizes total gross product sales less gross to net sales adjustments as revenue based on shipments from 3PLs to the Company’s wholesaler customers. Also, the net loss amounts reflect the sales and marketing expenses associated with the commercialization of Adzenys XR‑ODT, Cotempla XR-ODT and Adzenys ER. (2) In February 2017, the Company closed an underwritten public offering of 5,750,000 shares of its common stock at a public offering price of $5.00 per share, which included 750,000 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option on February 17, 2017. On June 30, 2017, the Company closed an underwritten public offering of 4,800,000 shares of the its common stock at a public offering price of $6.25 per share for total proceeds of $30.0 million before estimated offering costs of $0.2 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 720,000 shares of its common stock which was exercised in full on July 26, 2017. On October 26, 2017, Deerfield provided a conversion notice electing to convert the entire $6.6 million of Convertible Notes into shares of the Company’s common stock at a conversion price of $7.08 per share. The conversion price was based on 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion. This resulted in issuing 929,967 shares of the Company’s common stock to Deerfield on this date and the Convertible Notes were cancelled. On November 8, 2018, the Company closed an underwritten public offering of 19,999,999 shares of its common stock at a public offering price of $2.30 per share, which includes 2,608,695 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option at the public offering price. These transactions produced a significant increase in the number of shares outstanding which will impact the year-over-year comparability of the Company’s loss per share calculations. (3) Loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly loss per share may not necessarily equal the total for the year. |
Subsequent event
Subsequent event | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent event | |
Subsequent event | Note 19. Subsequent event On January 1, 2019, in accordance with the Evergreen Provisions of the 2015 Plan, the Company added 2,483,815 shares to the option pool, increasing the total number of shares reserved and available for issuance under the 2015 Plan to 4,277,720 shares. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2018 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (in thousands) Balance Additions at charged to Deductions Balance beginning costs and and at end of of period expenses Payments period For the year ended December 31, 2018 Allowance for chargebacks (1) $ 816 $ 8,565 $ (8,067) $ 1,314 Allowance for cash discounts (1) 337 3,519 (3,305) 551 Sales offers (2) 7,168 71,303 (67,183) 11,288 Reserve for wholesaler fees (2) 2,345 17,414 (15,510) 4,249 Reserve for returns (2) 2,711 3,803 (1,357) 5,157 Rebates (2) 4,008 18,746 (14,991) 7,763 For the year ended December 31, 2017 Allowance for chargebacks (1) $ 779 $ 10,146 $ (10,109) $ 816 Allowance for cash discounts (1) 171 1,814 (1,648) 337 Sales offers (2) 2,070 30,978 (25,880) 7,168 Reserve for wholesaler fees (2) 509 8,244 (6,408) 2,345 Reserve for returns (2) 1,157 1,792 (238) 2,711 Rebates (2) 544 7,837 (4,373) 4,008 For the year ended December 31, 2016 Allowance for chargebacks (1) 940 10,504 (10,665) 779 Allowance for cash discounts (1) 99 772 (700) 171 Sales offers (2) — 5,816 (3,746) 2,070 Reserve for wholesaler fees (2) 361 2,838 (2,690) 509 Reserve for returns (2) 429 764 (36) 1,157 Rebates (2) 110 519 (85) 544 (1) Shown as a reduction of accounts receivable and gross sales as indicated in column heading. (2) Shown as accrued expenses and a reduction of gross sales. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of significant accounting policies | |
Basis of presentation | Basis of Presentation: The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and with the rules and regulations of the Securities and Exchange Commission (“SEC”). |
Principles of consolidation | Principles of consolidation: The consolidated financial statements include the accounts of the Company and its four wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. |
Use of estimates | Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. |
Concentration of credit risk | Concentration of credit risk : Accounts receivable subjects the Company to concentrations of credit risk. Accounts receivable were due from fourteen customers in the years ended December 31, 2018 and 2017, respectively. Three customers accounted for 96% and 94% of the accounts receivable at December 31, 2018 and 2017, respectively. There were fifteen, fourteen and thirteen customers that accounted for all gross revenue in the years ended December 31, 2018, 2017 and 2016, respectively. Of which, three customers accounted for 93% of the gross revenue for the years ended December 31, 2018 and 2017, respectively, and two customers accounted for 82% of the gross revenue for the year ended December 31, 2016. |
Segment information | Segment information : Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment, which is the development, manufacturing and commercialization of pharmaceuticals. |
Reclassifications | Reclassifications: In 2017, the Company reclassified certain patents from Other assets to Intangible assets, net as reported on the condensed consolidated balance sheets. There was no impact to the Company’s consolidated statements of operations. |
Liquidity | Liquidity: During 2018, 2017 and 2016, the Company produced operating losses and used cash to fund operations. Management intends to achieve profitability through revenue growth from pharmaceutical products developed with its extended-release technologies. The Company does not anticipate it will be profitable until after the successful commercialization of its approved products, Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER. In November 2018, the Company completed an offering of its common stock and restructured its outstanding debt to reduce and possibly delay the amount of principal payable in cash. Accordingly, management has performed the review required for going concern accounting and believes the Company presently has sufficient liquidity to continue to operate for the next twelve months after the filing of this Report on Form 10-K. |
Cash equivalents | Cash equivalents: The Company invests its available cash balances in bank deposits and money market funds. The Company considers highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’s primary objectives for investment of available cash are the preservation of capital and the maintenance of liquidity. |
Short-term investments | Short-term investments: Short-term investments, if any, consist of debt securities that have original maturities greater than three months but less than or equal to one year and are classified as available-for-sale securities. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of material tax effects reported, as accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity (deficit). Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in other income in the consolidated results of operations. A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income are recognized in other income when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government agencies, or corporate institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date, if any, as non-current assets. |
Allowance for doubtful accounts | Allowance for doubtful accounts : The allowance for doubtful accounts is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management determines the adequacy of the allowance based on reviews of individual accounts, historical losses, existing economic conditions and estimates based on management’s judgments in specific matters. Accounts are written off as they are deemed uncollectible based on periodic review of the accounts. There is no allowance for doubtful accounts at December 31, 2018 or December 31, 2017, as management believes that all receivables are fully collectible. |
Inventories | Inventories: In 2016, inventories were stated at the lower of cost (first in, first out) or market and, effective January 1, 2017, inventory is now required to be measured at the lower of cost (first in, first out) or net realizable value. The change to stating inventories at the lower of cost or net realizable value in 2017 was adopted prospectively and did not have a significant effect on the Company’s ongoing financial reporting as valuing inventory at the lower of cost or net realizable value approximated the prior policy of valuing inventory at the lower of cost or market. Inventories have been reduced by an allowance for excess and obsolete inventories. Cost elements include material, labor and manufacturing overhead. Inventories consist of raw materials, work in process and finished goods. Until objective and persuasive evidence exists that regulatory approval has been received and future economic benefit is probable, pre-launch inventories are expensed into research and development. Manufacturing costs for the production of Adzenys XR-ODT incurred after the January 27, 2016 FDA approval date, for the production of Cotempla XR-ODT incurred after June 30, 2017, following the FDA approval date of June 19, 2017, and for the production of Adzenys ER incurred after September 30, 2017, following the FDA approval date of September 15, 2017, are being capitalized into inventory. |
Property and equipment | Property and equipment: Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the respective lease term or the estimated useful lives of the assets. |
Intangible assets | Intangible assets: Intangible assets subject to amortization, which principally include proprietary modified-release drug delivery technology, the costs to acquire the rights to Tussionex Abbreviated New Drug Application and patents, are recorded at cost and amortized over the estimated lives of the assets, which primarily range from 10 to 20 years. The Company estimates that the patents it has filed have a future beneficial value. Therefore, costs associated with filing for its patents are capitalized. Once the patent is approved and commercial revenue realized, the costs associated with the patent are amortized over the useful life of the patent. If the patent is not approved, the costs will be expensed. |
Impairment of long-lived assets | Impairment of long-lived assets : Long-lived assets such as property and equipment and intangibles subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable. Such assets are also evaluated for impairment in light of the Company’s continuing losses. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. No impairment charges were recorded for the years ended December 31, 2018, 2017 or 2016. |
Derivative liabilities | Derivative liabilities: The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives requiring separate recognition in the Company’s financial statements. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability and the change in fair value is recorded in other income (expense) in the consolidated results of operations. In circumstances where there are multiple embedded instruments that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the balance sheet date. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption and are classified in interest expense in the consolidated results of operations. |
Revenue recognition | Revenue recognition: Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company makes estimates of the net sales price, including estimates of variable consideration (e.g., savings offers, prompt payment discounts, product returns, wholesaler fees, wholesaler chargebacks and estimated rebates) to be incurred on the selling price of the respective product sales, and recognizes the estimated amount as revenue when it transfers control of the product to its customers (e.g., upon delivery). Variable consideration is determined using either an expected value or a most likely amount method. The estimate of variable consideration is also subject to a constraint such that some or all of the estimated amount of variable consideration will only be included in the transaction price to the extent that it is probable that a significant reversal of revenue (in the context of the contract) will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint will require the use of significant management judgment and other market data. The Company provides for prompt payment discounts, wholesaler fees and wholesaler chargebacks based on customer contractual stipulations. The Company analyzes recent product return history and other market data obtained from its third party logistics providers (“3PLs”) to determine a reliable return rate. Additionally, management analyzes historical savings offers and rebate payments based on patient prescriptions dispensed for Adzenys XR ODT, Cotempla XR ODT and Adzenys ER and information obtained from third party providers to determine these respective variable considerations. The Company sells its generic Tussionex, Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER to a limited number of pharmaceutical wholesalers, all subject to rights of return. Pharmaceutical wholesalers buy drug products directly from manufacturers. Title to the product passes upon delivery to the wholesalers, when the risks and rewards of ownership are assumed by the wholesaler (freight on board destination). These wholesalers then resell the product to retail customers such as food, drug and mass merchandisers. Disaggregation of revenue The following table disaggregates the Company’s net product sales by product: Year Ended December 31, 2018 2017 2016 (in thousands) Adzenys XR-ODT $ 26,631 $ 20,377 $ 3,803 Cotempla XR-ODT 19,014 1,590 — Adzenys ER (27) — — Generic Tussionex 4,370 5,165 6,230 $ 49,988 $ 27,132 $ 10,033 Net product sales Net product sales represent total gross product sales less gross to net sales adjustments. Gross to net sales adjustments for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER include savings offers, prompt payment discounts, wholesaler fees, estimated rebates to be incurred on the selling price of the respective product sales and estimated allowances for product returns. Gross to net sales adjustments for generic Tussionex include prompt payment discounts, estimated allowances for product returns, wholesaler fees, estimated government rebates and estimated chargebacks to be incurred on the selling price of generic Tussionex related to the respective product sales. The Company recognizes total gross product sales less gross to net sales adjustments as revenue based on shipments from 3PLs to the Company’s wholesaler customers. Savings offers for branded products The Company offers savings programs for Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER to patients covered under commercial payor plans in which the cost of a prescription to such patients is discounted. The Company records the amount of redeemed savings offers based on information from third-party providers against the estimated discount recorded as accrued expenses. The estimated discount is recorded as a gross to net sales adjustments at the time revenue is recognized. Prompt payment discounts Prompt payment discounts are based on standard programs with wholesalers and are recorded as a discount allowance against accounts receivable and as a gross to net sales adjustments at the time revenue is recognized. Wholesale distribution fees Wholesale distribution fees are based on definitive contractual agreements for the management of the Company’s products by wholesalers and are recorded as accrued expenses and as a gross to net sales adjustment at the time revenue is recognized. Rebates The Company’s branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER are subject to commercial managed care and government managed Medicare and Medicaid programs whereby discounts and rebates are provided to participating managed care organizations and federal and/or state governments. Calculations related to rebate accruals of branded products are estimated based on information from third-party providers. The Company’s generic Tussionex product is subject to state government-managed Medicaid programs whereby discounts and rebates are provided to participating state governments. Generic Tussionex government rebates are estimated based upon rebate payment data available from sales of the Company’s generic Tussionex product over the past three years. Estimated rebates are recorded as accrued expenses and as a gross to net sales adjustments at the time revenue is recognized. Historical trends of estimated rebates will be continually monitored and may result in future adjustments to such estimates. Product returns Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. Estimated returns are recorded as accrued expenses and as a gross to net sales adjustments at the time revenue is recognized. The Company analyzed recent branded product return history and other market data obtained from the Company’s 3PLs as well as data available from sales of its branded products to determine a reliable return rate for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER. Generic Tussionex product returns were estimated based upon return data available from sales of the Company’s generic Tussionex product over the past three years. Wholesaler chargebacks for generic product The Company’s generic Tussionex products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company. Estimated chargebacks are recorded as a discount allowance against accounts receivable and as a gross to net sales adjustments at the time revenue is recognized based on information provided by third parties. Due to estimates and assumptions inherent in determining the amount of generic Tussionex returns, rebates and chargebacks, the actual amount of returns, claims for rebates and chargebacks may be different from the estimates, at which time reserves would be adjusted accordingly. Wholesale distribution fees and the allowance for prompt pay discounts are recorded at the time of shipment and such fees and allowances are recorded in the same period that the related revenue is recognized. |
Research and development costs | Research and development costs: Research and development costs are charged to operations when incurred and include salaries and benefits, facilities costs, overhead costs, raw materials, laboratory and clinical supplies, clinical trial costs, contract services, fees paid to regulatory authorities for review and approval of the Company’s product candidates and other related costs. During the third quarter of 2016, the Company reclassified its approved product and facility regulatory fees out of research and development expense and into cost of sales commensurate with the commercial launch of Adzenys XR-ODT. The Company has reclassified all such applicable regulatory fees for prior quarters and prior years out of research and development expense and into cost of goods sold in accordance with this approach. |
Distribution expenses | Distribution expenses: Costs invoiced to the Company by its third party logistics firm are classified as cost of goods sold in the consolidated statements of operations. |
Shipping and handling costs | Shipping and handling costs: Amounts billed to customers for shipping and handling fees for the delivery of goods are classified as cost of goods sold in the consolidated statements of operations. |
Advertising costs | Advertising costs: Advertising costs are comprised of print and electronic media placements that are expensed as incurred. The Company recognized advertising costs of $0.6 million, $0.4 million and $7.4 million during the years ended December 31, 2018, 2017 and 2016 respectively. |
Share-based compensation | Share-based compensation: Share-based compensation awards, including grants of employee stock options, restricted stock, restricted stock units (“RSUs”) and modifications to existing stock options, are recognized in the statement of operations based on their fair values. Compensation expense related to awards to employees is recognized on a straight-line basis, based on the grant date fair value, over the requisite service period of the award, which is generally the vesting term. The fair value of the Company’s stock-based awards to employees and directors is estimated using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the expected stock price volatility, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends. For performance-based stock awards, compensation expense is recognized on a straight-line basis, based on the grant date fair value, over the performance period or through the vesting date, whichever is longer. Management monitors the probability of achievement of the performance conditions and adjusts stock-based compensation expense, if necessary. After the closing of the Company’s IPO, the Company’s board of directors has determined the fair value of each share of underlying common stock based on the closing price of the Company’s common stock as reported by the NASDAQ Global Market on the date of grant. Under ASU No. 2017-09 guidance for accounting for share-based payments, the Company has elected to continue estimating forfeitures at the time of grant and, if necessary, revise the estimate in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest. The adoption of this standard in 2017 did not have a material impact on the Company’s business, financial position, results of operations or liquidity. Beginning in July 2016, the Company began recording stock compensation expense in the same income statement line as the cash compensation of the employee with the option in accordance with Staff Accounting Bulletin (“SAB”) Topic 14 due to the increased number and amount of options and option compensation. |
Paragraph IV litigation costs | . Paragraph IV litigation costs: Legal costs incurred by the Company in the enforcement of the Company’s intellectual property rights are charged to expense as incurred. |
Income taxes | Income taxes: Income taxes are accounted for using the liability method, under which deferred taxes are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. Management evaluates the Company’s tax positions in accordance with guidance on accounting for uncertainty in income taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not that the position will be sustained upon examination. As of December 31, 2018 and 2017, the Company has unrecognized tax benefits associated with uncertain tax positions in the consolidated financial statements. These uncertain tax positions were netted against net operating losses (NOL’s) with no separate reserve for uncertain tax positions required. Deferred tax assets should be reduced by a valuation allowance if current evidence indicates that it is considered more likely than not that these benefits will not be realized. In evaluating the objective evidence that historical results provide, the Company considered that three years of cumulative operating losses was significant negative evidence outweighing projections for future taxable income. Therefore, at December 31, 2018 and 2017, the Company determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. The Company may not ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. |
Recent accounting pronouncements | Recent accounting pronouncements: In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The standard is effective for public entities for the fiscal years ending after December 15, 2020, with early adoption permitted for the removed disclosures and delayed adoption permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13 on its consolidated financial statements. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which was issued to state the income tax accounting implications of the Tax Cuts and Jobs Act of 2017 (the “TCJA”). The guidance clarifies the measurement period timeframe, changes in subsequent reporting periods and reporting requirements as a result of the TCJA. The measurement period begins in the period that includes the TCJA’s enactment date, which was December 22, 2017, and as a result the Company has reflected the impact of this ASU on the deferred tax calculation as of December 31, 2017. In February 2018, the FASB issued ASU No. 2018-02, Income Statement –Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA, and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for entities for fiscal years beginning after December 15, 2018 with early adoption permitted, and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. This standard became effective for the Company standard on January 1, 2019. The adoption of this standard will not have a material impact on the Company’s consolidated results of operations or financial position. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting . This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the modification. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. This standard became effective for the Company on January 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial position. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU was designed to reduce the diversity in practice of how the eight specified items are presented and classified in the statement of cash flows, including debt prepayment or debt extinguishment costs. The amendments are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those years. This standard became effective for the Company on January 1, 2018. The adoption of this standard did not have a significant effect on the Company’s ongoing financial reporting as the Company had classified its debt prepayment and debt extinguishment costs in the Condensed Consolidated Statements of Cash Flows in accordance with the amendments. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (the “New Lease Standard”). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. In January, July and December 2018, the FASB issued additional amendments to the new lease guidance relating to, transition, and clarification. The July 2018 amendment, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, provides an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. Pursuant to ASU No. 2018-11, the Company will elect to use the effective date approach at transition. Therefore, no adjustments will be made to amounts in prior period financial statements. Capital leases will be accounted for in substantially the same manner as capital leases are accounted for under existing GAAP. Operating leases will be accounted for in a manner similar to operating leases under existing GAAP, except that lessees will recognize a lease liability and a lease asset for all of those leases. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this standard on the effective date of January 1, 2019. The Company is substantially complete with its evaluation of the new standard as it relates to its operating lease disclosed in Note 15 “Commitments and Contingencies”. The remaining steps in the implementation process include finalizing lease liability and right of use asset schedules and the review and evaluation of disclosures and presentation in the Company’s financial statements. In addition, an evaluation of whether there are existing contracts that may contain embedded leases has been performed and the Company is evaluating the impact of its findings. However, it does not expect that the identification of any embedded leases will result in a material impact to the consolidated financial statements and disclosures upon the adoption of this standard. In addition, the Company made an accounting policy election to combine the lease and non-lease components and the short-term lease practical expedients allowed under ASC 842. The adoption of ASC 842 will lead to an increase in the assets and liabilities recorded on the balance sheets primarily due to the lease agreement attributable to leased office space. This New Lease Standard will not have a material impact on the Company’s balance sheets, consolidated statements of comprehensive loss or cash flows from operations. The Company will continue to monitor additional modifications, clarifications or interpretations undertaken by the FASB that may impact its current conclusions and will expand its analysis to include any new lease arrangements initiated prior to adoption. We expect to recognize approximately $3.0 million to $4.8 million of additional assets and corresponding liabilities on our balance sheet as of the beginning of fiscal 2019 and will record any cumulative effect of adopting the New Lease Standard as an adjustment to the opening balance of Retained Earnings. We do not expect that any adjustment to Retained Earnings at adoption will have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (the “New Revenue Standard”). The New Revenue Standard replaces transaction and industry-specific revenue recognition guidance under current U.S. GAAP with a principles-based approach for determining revenue recognition. The New Revenue Standard requires an entity to recognize the amount of revenue based on the value of transferred goods or services to customers. There is also additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The New Revenue Standard became effective for the Company on January 1, 2018. For purposes of providing comparable periods upon adoption, the Company applied the full retrospective transition method, which required the Company to restate each prior reporting period presented. The impact of the New Revenue Standard relates to the Company’s accounting for branded net product sales. There are no changes to the net product sales of generic Tussionex revenue since the Company has estimated product returns since inception of recognizing revenue in August 2014. As a result, the Company revised its results for branded net product sales revenue which commenced in May 2016 with the launch of Adzenys XR-ODT for the years ended December 31, 2016 and 2017 and applicable interim periods within those years, as if the New Revenue Standard had been effective for those periods. The Company implemented internal controls and key system functionality to enable the preparation of financial information and reached conclusions on key accounting assessments related to the New Revenue Standard, including management’s assessment that the impact of accounting for costs incurred to obtain a contract is immaterial. Under the New Revenue Standard, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Therefore, the Company is required to make estimates of the net sales price, including estimates of variable consideration (e.g., savings offers, prompt payment discounts, product returns, wholesaler fees and estimated rebates) to be incurred on the selling price of the respective branded product sales, and recognize the estimated amount as revenue, when it transfers control of the product to its customers (e.g., upon shipment or delivery). Variable consideration must be determined using either an expected value or most likely amount method. The estimate of variable consideration is also subject to a constraint such that some or all of the estimated amount of variable consideration will only be included in the transaction price to the extent that it is probable that a significant reversal of revenue (in the context of the contract) will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint require the use of significant management judgment and other market data. To implement the New Revenue Standard, the Company analyzed recent branded product return history and other market data obtained from its 3PLs as well as data available from sales of its branded products to determine a reliable return rate. Additionally, management analyzed historical savings offers, prompt payment discounts, wholesaler fees and rebates payments based on patient prescriptions dispensed of Adzenys XR-ODT, Cotempla XR-ODT , Adzenys ER and information obtained from third-party providers to determine these respective variable considerations. Management has concluded that estimates of the above variable considerations are reasonably constrained, and estimates can be used for recognizing branded total gross product sales less gross to net sales adjustments as revenue beginning January 1, 2018. The Company had restated it’s Consolidated Financial Statements for the years ended on December 31, 2017 and 2016 in the 8-K filed with SEC on December 11, 2018 for the adoption of the New Revenue Standard. Refer to Impacts to Previously Reported Results below for the impact of adoption of the New Revenue Standard included in the Company’s condensed consolidated statements of operations. Adoption of the New Revenue Standard resulted in the recognition of additional net branded product sales revenue of $2.1 million and $0.9 million for years ended December 31, 2017 and 2016, respectively, partially offset by associated increased cost of goods sold of $1.6 million and $0.3 million, respectively. As a result, the net loss reported was reduced by $0.5 million and $0.6 million reflecting the gross profit from the accelerated revenue and associated cost of goods sold for years ended December 31, 2017 and 2016, respectively. The net loss per share of common stock, basic and diluted reported was improved by $0.02 and $0.03 per share for December 31, 2017 and 2016, respectively. The adoption of the New Revenue Standard reduced the net operating loss carry forward for 2017 and 2016, respectively; however, there was no impact to the provision for income taxes because the Company’s deferred tax asset benefits are fully reserved for December 31, 2017 and 2016, respectively. In addition, adoption of the New Revenue Standard resulted in a decrease in reported total current assets by $3.2 million as of December 31, 2017, due to the elimination of deferred cost of goods sold and wholesaler fees. Reported total current liabilities decreased by $4.3 million as of December 31, 2017, due to the elimination of deferred revenue partially offset by increases in accrued expenses for contract obligations related to savings offers, product returns and rebates. See Impacts of New Revenue Standard to Previously Reported Results below for the impact of adoption of the New Revenue Standard on the Company’s consolidated financial statements. Impacts of New Revenue Standard to Previously Reported Results Adoption of the new revenue standard impacted the Company’s reported results as follows: Year Ended December, 31 2017 2016 New New Revenue Revenue As Standard As As Standard As Condensed consolidated statements of operations: Reported Adjustment Adjusted Reported Adjustment Adjusted (In thousands, except per share data) Revenue: net product sales $ 25,018 $ 2,114 $ 27,132 $ 9,154 $ 879 $ 10,033 Cost of goods sold 12,391 1,639 14,030 11,437 297 11,734 Gross profit (loss) 12,627 475 13,102 (2,283) 582 (1,701) Net loss attributable to common stock (66,247) 475 (65,772) (83,333) 582 (82,751) Net loss per share of common stock, basic and diluted (2.68) 0.02 (2.66) (5.19) 0.03 (5.16) December 31, 2017 New Revenue As Standard As Condensed consolidated statements of balance sheet: Reported Adjustment Adjusted Inventories $ 13,459 $ (1,727) $ 11,732 Other current assets 5,093 (1,518) 3,575 Total current assets 82,640 (3,245) 79,395 Accrued expenses 10,570 10,374 20,944 Deferred revenue 14,676 (14,676) — Total current liabilities 37,602 (4,302) 33,300 Accumulated deficit (266,365) 1,057 (265,308) Total liabilities and stockholder's equity 107,353 (3,245) 104,108 Adoption of the New Revenue Standard had no impact to cash from or used in operating, financing, or investing on the Company’s consolidated statements of cash flows. |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of significant accounting policies | |
Schedule of disaggregation of revenue | Year Ended December 31, 2018 2017 2016 (in thousands) Adzenys XR-ODT $ 26,631 $ 20,377 $ 3,803 Cotempla XR-ODT 19,014 1,590 — Adzenys ER (27) — — Generic Tussionex 4,370 5,165 6,230 $ 49,988 $ 27,132 $ 10,033 |
Schedule of impacts to reported results due to new revenue standard | Year Ended December, 31 2017 2016 New New Revenue Revenue As Standard As As Standard As Condensed consolidated statements of operations: Reported Adjustment Adjusted Reported Adjustment Adjusted (In thousands, except per share data) Revenue: net product sales $ 25,018 $ 2,114 $ 27,132 $ 9,154 $ 879 $ 10,033 Cost of goods sold 12,391 1,639 14,030 11,437 297 11,734 Gross profit (loss) 12,627 475 13,102 (2,283) 582 (1,701) Net loss attributable to common stock (66,247) 475 (65,772) (83,333) 582 (82,751) Net loss per share of common stock, basic and diluted (2.68) 0.02 (2.66) (5.19) 0.03 (5.16) December 31, 2017 New Revenue As Standard As Condensed consolidated statements of balance sheet: Reported Adjustment Adjusted Inventories $ 13,459 $ (1,727) $ 11,732 Other current assets 5,093 (1,518) 3,575 Total current assets 82,640 (3,245) 79,395 Accrued expenses 10,570 10,374 20,944 Deferred revenue 14,676 (14,676) — Total current liabilities 37,602 (4,302) 33,300 Accumulated deficit (266,365) 1,057 (265,308) Total liabilities and stockholder's equity 107,353 (3,245) 104,108 |
Net loss per share (Tables)
Net loss per share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Net loss per share | |
Schedule of potentially dilutive securities excluded in the computation of diluted net loss per share | December 31, 2018 2017 2016 Series C Redeemable Convertible Preferred Stock Warrants (as converted) 70,833 70,833 70,833 Stock options outstanding 3,446,885 2,454,973 2,107,344 RSUs granted, not released 75,314 85,000 — |
Fair value of financial instr_2
Fair value of financial instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair value of financial instruments | |
Schedule of hierarchy for financial instruments measured at fair value on a recurring basis | Fair Value as of December 31, 2018 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 27,419 $ 19,059 $ — $ 46,478 Total financial assets $ 27,419 $ 19,059 $ — $ 46,478 Earnout liability $ — $ — $ 37 $ 37 Derivative liability (see Note 11) — — 2,017 2,017 Total financial liabilities $ — $ — $ 2,054 $ 2,054 Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 31,969 $ — $ — $ 31,969 Short-term investments — 18,448 — 18,448 Total financial assets $ 31,969 $ 18,448 $ — $ 50,417 Earnout liability $ — $ — $ 170 $ 170 Derivative liability (see Note 11) — — 1,660 1,660 Total financial liabilities $ — $ — $ 1,830 $ 1,830 |
Schedule of cash and cash equivalents and short-term investments | December 31, 2018 Amortized Unrealized Market Cost Loss Value (in thousands) Bank deposits and money market funds $ 27,419 $ — $ 27,419 Financial and corporate debt securities 19,059 — 19,059 $ 46,478 $ — $ 46,478 December 31, 2017 Amortized Unrealized Market Cost Loss Value (in thousands) Bank deposits and money market funds $ 31,969 $ — $ 31,969 Financial and corporate debt securities 18,454 (6) 18,448 $ 50,423 $ (6) $ 50,417 |
Schedule of changes in Level 3 liabilities measured at fair value | Level 3 Liabilities (in thousands) Balance at December 31, 2016 $ 232 Addition of Deerfield derivative liability 2,107 Change in fair value (509) Balance at December 31, 2017 1,830 Change in fair value 224 Balance at December 31, 2018 $ 2,054 |
Earnout liability | |
Fair value of financial instruments | |
Methodologies and significant inputs used in determination of fair value | December 31, 2018 December 31, 2017 Earnout Liability Earnout Liability Date of Valuation 12/31/2018 12/31/2017 Valuation Method Monte Carlo Monte Carlo Volatility (annual) 42% 42% Risk‑free rate (annual) 2.53% - 3.29% 1.62% ‑ 2.88% Time period from valuation until end of earnout .5 ‑ 9.5 .5 ‑ 9.5 Earnout Target 1 (thousands) $13,700 $13,700 Earnout Target 2 (thousands) $18,200 $18,200 Discount rate 21.35% - 21.68% 14.72% ‑ 15.98% Fair value of liability at valuation date (thousands) $37 $170 |
Derivative liability | |
Fair value of financial instruments | |
Methodologies and significant inputs used in determination of fair value | Derivative Liability Date of Valuation 12/31/2018 12/31/2017 Valuation Method Monte Carlo Monte Carlo Volatility (annual) N/A N/A Time period from valuation until maturity of debt (yrs.) 3.4 4.4 Cumulative probability of a change in control prepayment implied by model 25.1% 27% Cumulative probability of other accelerated prepayments implied by model 13.7% 17% Discount rate 23.12% 16.20% Fair value of liability at valuation date (thousands) $2,017 $1,660 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventories | |
Schedule of inventories | December 31, 2018 2017 (in thousands) Raw materials $ 3,845 $ 3,476 Work in progress 2,704 6,155 Finished goods 4,259 2,470 Inventory at cost 10,808 12,101 Inventory reserve (441) (369) $ 10,367 $ 11,732 |
Property and equipment (Tables)
Property and equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property and equipment | |
Schedule of property and equipment, net | December 31, 2018 2017 (in thousands) Assets under capital lease $ 3,327 $ 3,222 Leasehold improvements 4,340 4,195 Manufacturing, packaging and lab equipment 6,821 5,300 Office furniture and equipment 2,164 1,656 Assets under construction 188 1,056 16,840 15,429 Accumulated depreciation and amortization (including $633 and $157 at December 31, 2018 and 2017, respectively, applicable to capital leases) (8,926) (7,226) $ 7,914 $ 8,203 |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Intangible assets | |
Schedule of intangible assets, net | December 31, 2018 2017 (in thousands) Proprietary modified-release drug delivery technology $ 15,600 $ 15,600 Tussionex ANDA 4,829 4,829 CPI profit sharing 2,043 2,043 Patents 2,307 2,302 Other 1,035 1,035 25,814 25,809 Accumulated amortization (11,198) (9,461) $ 14,616 $ 16,348 |
Schedule of aggregate amortization of intangible assets | Year ending December 31, (in thousands) 2019 $ 1,737 2020 1,737 2021 1,737 2022 1,737 2023 1,642 Thereafter 5,205 $ 13,795 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income taxes | |
Schedule of significant components of deferred income tax assets and liabilities | December 31, 2018 2017 (in thousands) Deferred Tax Assets: Net operating loss $ 37,818 $ 32,193 Share-based compensation 1,757 1,340 R&D tax credit 2,378 1,696 Other reserves 1,616 1,069 Capital lease liability 390 563 State deferreds 1,236 397 Inventory 103 829 Accrued rebates 4,902 561 Other current assets — 319 Other 2,456 2,597 Total deferred tax assets 52,656 41,564 Deferred Tax Liabilities: Intangible assets (1,571) (1,846) Property and equipment (999) (747) Total deferred tax liabilities (2,570) (2,593) Valuation allowance (50,086) (38,971) Net deferred tax asset (liability) $ — $ — |
Schedule of gross unrecognized tax benefits | December 31, 2018 2017 (in thousands) Beginning Balance $ 7,261 $ 5,081 Decrease based on tax positions taken during a current period (3,305) 2,180 Ending Balance $ 3,956 $ 7,261 |
Schedule of reconciliation of Federal statutory tax rate | Year Ended December 31, 2018 2017 U.S. Statutory Tax Rate 21 % 34 % Change in Valuation Allowance (21.5) % 44 % Deferred Tax Adjustments 0 % (47) % Federal Rate Change 0 % (31) % State tax expense, net 1.8 % 2 % Provision to Return and Other Adjustments (1.3) % (2) % Tax Expense / (Benefit) 0 % 0 % |
Accrued expenses (Tables)
Accrued expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued expenses | |
Schedule of accrued expenses | December 31, December 31, 2018 2017 (in thousands) Accrued savings offers $ 11,289 $ 7,168 Accrued rebates 7,762 4,008 Accrued customer returns 5,157 2,711 Accrued payroll and benefits 4,555 2,534 Accrued wholesaler fees 4,249 2,345 Other accrued expenses 2,806 2,178 Total accrued expenses $ 35,818 $ 20,944 |
Long-term debt (Tables)
Long-term debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long-term debt | |
Schedule of long-term debt | December 31, 2018 2017 (in thousands) Deerfield senior secured credit facility, net of discount of $3,334 and $2,843, respectively $ 49,916 $ 57,156 Capital leases, maturing through November 2022 1,858 2,678 51,774 59,834 Less current portion (8,557) (896) Long-term debt $ 43,217 $ 58,938 |
Schedule of future minimum capital lease payments | Year ending: December 31, (in thousands) 2019 $ 1,257 2020 798 2021 21 2022 20 Total minimum lease payments $ 2,096 Less amount representing interest (238) Future minimum lease payments $ 1,858 |
Schedule of future principal payments of long-term debt including capital leases | Year ending: December 31, (in thousands) 2019 $ 8,557 2020 15,761 2021 15,020 2022 15,770 Future principal payments $ 55,108 Less unamortized debt discount (3,334) Less current portion of long-term debt (8,557) Total long-term debt $ 43,217 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation | |
Schedule of share-based compensation expense | Year Ended December 31, 2018 2017 2016 (in thousands) Cost of goods sold $ 470 $ 390 $ 311 Research and development 344 394 304 Selling and marketing 731 913 723 General and administrative 1,776 2,354 2,122 $ 3,321 $ 4,051 $ 3,460 |
Schedule of weighted-average key assumptions used in determining fair value of options granted | Year Ended December 31, 2018 2017 2016 Estimated dividend yield 0 % 0 % 0 % Expected stock price volatility 60 % 60 % 60 % Weighted-average risk-free interest rate 2.75 % 2.01 % 1.18 % Expected life of option in years 6.13 6.06 6.15 Weighted-average option fair value at grant $ 3.930 $ 4.090 $ 5.800 |
Summary of outstanding and exercisable options | Number of Weighted-Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2015 1,352,283 $ 13.607 $ 964 Exercisable at December 31, 2015 229,000 $ 3.385 $ 2,504 Granted 859,257 10.385 — Exercised (10,886) 1.231 — Expired, forfeited or cancelled (93,310) 17.780 — Outstanding at December 31, 2016 2,107,344 $ 12.173 $ 1,128 Exercisable at December 31, 2016 595,424 $ 9.715 $ 881 Granted 570,432 7.220 — Exercised (1,249) 0.223 — Expired, forfeited or cancelled (221,554) 10.325 — Outstanding at December 31, 2017 2,454,973 $ 11.195 $ 4,764 Exercisable at December 31, 2017 1,137,766 $ 10.919 $ 2,890 Granted 1,753,539 6.786 — Exercised (832) 0.320 — Expired, forfeited or cancelled (760,795) 11.281 — Outstanding at December 31, 2018 3,446,885 $ 8.935 $ 70 Exercisable at December 31, 2018 1,643,011 $ 10.627 $ 70 |
Summary of outstanding RSUs | Number of Weighted-Average RSUs Fair Value Outstanding at December 31, 2016 — $ — Granted 85,000 7.15 Exercised — — Expired, forfeited or cancelled — — Outstanding at December 31, 2017 85,000 $ 7.15 Granted 93,750 8.30 Converted (26,991) 7.34 Withheld for tax obligation (6,757) 7.34 Expired, forfeited or cancelled (69,688) 7.77 Outstanding at December 31, 2018 75,314 $ 7.93 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and contingencies | |
Schedule of future minimum lease payments | Year ending December 31, (in thousands) 2019 $ 1,107 2020 1,161 2021 1,057 2022 1,055 2023 1,055 Thereafter 1,106 Future minimum lease payments $ 6,541 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of selected quarterly financial data | Selected quarterly financial data for years ended December 31, 2018 and 2017, are as follows (in thousands, except share and per share amounts): Quarter Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Net sales(1) $ 10,729 $ 11,363 $ 12,503 $ 15,393 Gross profit(1) 5,508 4,376 5,546 7,631 Net loss attributable to common stock $ (14,436) $ (15,207) $ (12,695) $ (9,337) Weighted average common shares outstanding used to compute net loss per share, basic and diluted (2) 28,996,956 29,008,909 29,625,792 41,415,358 Net loss per share of common stock, basic and fully diluted (3): $ (0.50) $ (0.52) $ (0.43) $ (0.23) Quarter Ended March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 Net sales (1) $ 5,631 $ 5,179 $ 7,100 $ 9,222 Gross profit (1) 881 2,362 4,277 5,582 Net loss attributable to common stock $ (17,221) $ (18,645) $ (16,254) $ (13,652) Weighted average common shares outstanding used to compute net loss per share, basic and diluted (2) 19,624,712 22,613,382 27,884,983 28,746,608 Net loss per share of common stock, basic and fully diluted (3): $ (0.88) $ (0.82) $ (0.58) $ (0.47) (1) The Company began selling Adzenys XR-ODT on May 16, 2016, initiated an early experience program for Cotempla XR-ODT with limited product availability on September 5, 2017 before launching this product nationwide on October 2, 2017 and launched Adzenys ER on February 26, 2018. Net product sales represent total gross product sales less gross to net sales adjustments. Gross to net sales adjustments for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER include savings offers, prompt payment discounts, wholesaler fees, estimated rebates to be incurred on the selling price of the respective product sales and estimated allowances for product returns. The Company began selling generic Tussionex in August 2014. Gross to net sales adjustments for generic Tussionex include prompt payment discounts, estimated allowances for product returns, wholesaler fees, estimated government rebates and estimated chargebacks to be incurred on the selling price of generic Tussionex related to the respective product sales. The Company recognizes total gross product sales less gross to net sales adjustments as revenue based on shipments from 3PLs to the Company’s wholesaler customers. Also, the net loss amounts reflect the sales and marketing expenses associated with the commercialization of Adzenys XR‑ODT, Cotempla XR-ODT and Adzenys ER. (2) In February 2017, the Company closed an underwritten public offering of 5,750,000 shares of its common stock at a public offering price of $5.00 per share, which included 750,000 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option on February 17, 2017. On June 30, 2017, the Company closed an underwritten public offering of 4,800,000 shares of the its common stock at a public offering price of $6.25 per share for total proceeds of $30.0 million before estimated offering costs of $0.2 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 720,000 shares of its common stock which was exercised in full on July 26, 2017. On October 26, 2017, Deerfield provided a conversion notice electing to convert the entire $6.6 million of Convertible Notes into shares of the Company’s common stock at a conversion price of $7.08 per share. The conversion price was based on 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion. This resulted in issuing 929,967 shares of the Company’s common stock to Deerfield on this date and the Convertible Notes were cancelled. On November 8, 2018, the Company closed an underwritten public offering of 19,999,999 shares of its common stock at a public offering price of $2.30 per share, which includes 2,608,695 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option at the public offering price. These transactions produced a significant increase in the number of shares outstanding which will impact the year-over-year comparability of the Company’s loss per share calculations. (3) Loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly loss per share may not necessarily equal the total for the year. |
Organization and nature of op_2
Organization and nature of operations (Details) | 12 Months Ended |
Dec. 31, 2018item | |
Organization and nature of operations | |
Number of approved product | 3 |
Summary of significant accoun_4
Summary of significant accounting policies (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($)subsidiary | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segmentsubsidiarycustomer | Dec. 31, 2017USD ($)customer | Dec. 31, 2016USD ($)customer | |
Summary of significant accounting policies | |||||||||||
Number of operating segments | segment | 1 | ||||||||||
Concentration of credit risk | |||||||||||
Allowance for doubtful accounts | $ 0 | $ 0 | $ 0 | $ 0 | |||||||
Impairment of long-lived assets | |||||||||||
Impairment charges | 0 | 0 | $ 0 | ||||||||
Disaggregation of revenue | |||||||||||
Revenues | 15,393 | $ 12,503 | $ 11,363 | $ 10,729 | $ 9,222 | $ 7,100 | $ 5,179 | $ 5,631 | $ 49,988 | 27,132 | 10,033 |
Product returns | |||||||||||
Return time period for expired product prior to expiry date | 6 months | ||||||||||
Return time period for expired product after expiry date | 12 years | ||||||||||
Return period of Tusioness product (in years) | 3 years | ||||||||||
Advertising costs | |||||||||||
Advertising costs | $ 600 | $ 400 | $ 7,400 | ||||||||
Income taxes | |||||||||||
Deferred tax assets, net of valuation allowance | $ 0 | $ 0 | |||||||||
Accounts Receivable | Customer Concentration Risk | |||||||||||
Concentration of credit risk | |||||||||||
Concentration Risk, Number | customer | 14 | 14 | |||||||||
Accounts Receivable | Customer Concentration Risk | Major Customers | |||||||||||
Concentration of credit risk | |||||||||||
Concentration Risk, Number | customer | 3 | 3 | |||||||||
Concentration Risk, Percentage | 96.00% | 94.00% | |||||||||
Revenues And Deferred Revenues | Customer Concentration Risk | |||||||||||
Concentration of credit risk | |||||||||||
Concentration Risk, Number | customer | 15 | 14 | 13 | ||||||||
Revenues And Deferred Revenues | Customer Concentration Risk | Major Customers | |||||||||||
Concentration of credit risk | |||||||||||
Concentration Risk, Number | customer | 3 | 3 | 2 | ||||||||
Concentration Risk, Percentage | 93.00% | 93.00% | 82.00% | ||||||||
Adzenys XR-ODT | |||||||||||
Disaggregation of revenue | |||||||||||
Revenues | $ 26,631 | $ 20,377 | $ 3,803 | ||||||||
Cotempla XR-ODT | |||||||||||
Intangible assets | |||||||||||
Useful life | 15 years | ||||||||||
Disaggregation of revenue | |||||||||||
Revenues | 19,014 | $ 1,590 | |||||||||
Adzenys ER | |||||||||||
Intangible assets | |||||||||||
Useful life | 15 years | ||||||||||
Disaggregation of revenue | |||||||||||
Revenues | (27) | ||||||||||
Generic Tussionex | |||||||||||
Intangible assets | |||||||||||
Useful life | 10 years | ||||||||||
Disaggregation of revenue | |||||||||||
Revenues | $ 4,370 | $ 5,165 | $ 6,230 | ||||||||
Minimum | |||||||||||
Property and equipment | |||||||||||
Property and equipment - Useful life | 3 years | ||||||||||
Intangible assets | |||||||||||
Useful life | 10 years | ||||||||||
Maximum | |||||||||||
Property and equipment | |||||||||||
Property and equipment - Useful life | 10 years | ||||||||||
Intangible assets | |||||||||||
Useful life | 20 years | ||||||||||
Wholly-owned subsidiaries | |||||||||||
Summary of significant accounting policies | |||||||||||
Number of wholly-owned subsidiaries | subsidiary | 4 | 4 |
Summary of significant accoun_5
Summary of significant accounting policies - Recent accounting pronouncements (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2019 | |
consolidated statements of operations | ||||||||||||
Net product sales | $ 15,393 | $ 12,503 | $ 11,363 | $ 10,729 | $ 9,222 | $ 7,100 | $ 5,179 | $ 5,631 | $ 49,988 | $ 27,132 | $ 10,033 | |
Net product sales | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | |
Cost of goods sold | $ 26,928 | $ 14,030 | $ 11,734 | |||||||||
Cost of goods sold | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | |||||||||
Gross profit | $ 7,631 | $ 5,546 | $ 4,376 | $ 5,508 | $ 5,582 | $ 4,277 | $ 2,362 | $ 881 | $ 23,060 | $ 13,102 | $ (1,701) | |
Net loss attributable to common stock | $ (9,337) | $ (12,695) | $ (15,207) | $ (14,436) | $ (13,652) | $ (16,254) | $ (18,645) | $ (17,221) | ||||
Net loss per share of common stock, basic and diluted | $ (0.23) | $ (0.43) | $ (0.52) | $ (0.50) | $ (0.47) | $ (0.58) | $ (0.82) | $ (0.88) | $ (1.60) | $ (2.66) | $ (5.16) | |
Condensed consolidated balance sheet | ||||||||||||
Inventories | $ 10,367 | $ 11,732 | $ 10,367 | $ 11,732 | ||||||||
Other current assets | 4,032 | 3,575 | 4,032 | 3,575 | ||||||||
Total current assets | 88,678 | 79,395 | 88,678 | 79,395 | ||||||||
Accrued expenses | 35,818 | 20,944 | 35,818 | 20,944 | ||||||||
Total current liabilities | 57,105 | 33,300 | 57,105 | 33,300 | ||||||||
Accumulated deficit | (316,983) | (265,308) | (316,983) | (265,308) | ||||||||
Total liabilities and stockholders' equity | $ 111,357 | 104,108 | $ 111,357 | 104,108 | ||||||||
ASU 2016-02 | Adjustment | Minimum | ||||||||||||
Leases | ||||||||||||
Recognition of additional operating lease assets due to adoption of New Lease Standard | $ 3,000 | |||||||||||
Recognition of additional operating lease liabilities due to adoption of New Lease Standard | 3,000 | |||||||||||
ASU 2016-02 | Adjustment | Maximum | ||||||||||||
Leases | ||||||||||||
Recognition of additional operating lease assets due to adoption of New Lease Standard | 4,800 | |||||||||||
Recognition of additional operating lease liabilities due to adoption of New Lease Standard | $ 4,800 | |||||||||||
As Reported | ||||||||||||
consolidated statements of operations | ||||||||||||
Net product sales | 25,018 | $ 9,154 | ||||||||||
Cost of goods sold | 12,391 | 11,437 | ||||||||||
Gross profit | 12,627 | (2,283) | ||||||||||
Net loss attributable to common stock | $ (66,247) | $ (83,333) | ||||||||||
Net loss per share of common stock, basic and diluted | $ (2.68) | $ (5.19) | ||||||||||
Condensed consolidated balance sheet | ||||||||||||
Inventories | 13,459 | $ 13,459 | ||||||||||
Other current assets | 5,093 | 5,093 | ||||||||||
Total current assets | 82,640 | 82,640 | ||||||||||
Accrued expenses | 10,570 | 10,570 | ||||||||||
Deferred revenue | 14,676 | 14,676 | ||||||||||
Total current liabilities | 37,602 | 37,602 | ||||||||||
Accumulated deficit | (266,365) | (266,365) | ||||||||||
Total liabilities and stockholders' equity | 107,353 | 107,353 | ||||||||||
New Revenue Standard Adjustment | ASU 2014-09 | ||||||||||||
consolidated statements of operations | ||||||||||||
Net product sales | 2,114 | $ 879 | ||||||||||
Cost of goods sold | 1,639 | 297 | ||||||||||
Gross profit | 475 | 582 | ||||||||||
Net loss attributable to common stock | $ 475 | $ 582 | ||||||||||
Net loss per share of common stock, basic and diluted | $ 0.02 | $ 0.03 | ||||||||||
Condensed consolidated balance sheet | ||||||||||||
Inventories | (1,727) | $ (1,727) | ||||||||||
Other current assets | (1,518) | (1,518) | ||||||||||
Total current assets | (3,245) | (3,245) | ||||||||||
Accrued expenses | 10,374 | 10,374 | ||||||||||
Deferred revenue | (14,676) | (14,676) | ||||||||||
Total current liabilities | (4,302) | (4,302) | ||||||||||
Accumulated deficit | 1,057 | 1,057 | ||||||||||
Total liabilities and stockholders' equity | (3,245) | (3,245) | ||||||||||
As Adjusted | ASU 2014-09 | ||||||||||||
consolidated statements of operations | ||||||||||||
Net product sales | 27,132 | $ 10,033 | ||||||||||
Cost of goods sold | 14,030 | 11,734 | ||||||||||
Gross profit | 13,102 | (1,701) | ||||||||||
Net loss attributable to common stock | $ (65,772) | $ (82,751) | ||||||||||
Net loss per share of common stock, basic and diluted | $ (2.66) | $ (5.16) | ||||||||||
Condensed consolidated balance sheet | ||||||||||||
Inventories | 11,732 | $ 11,732 | ||||||||||
Other current assets | 3,575 | 3,575 | ||||||||||
Total current assets | 79,395 | 79,395 | ||||||||||
Accrued expenses | 20,944 | 20,944 | ||||||||||
Total current liabilities | 33,300 | 33,300 | ||||||||||
Accumulated deficit | (265,308) | (265,308) | ||||||||||
Total liabilities and stockholders' equity | $ 104,108 | $ 104,108 |
Net loss per share (Details)
Net loss per share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Warrants | Series C Redeemable Convertible Preferred Stock Warrants (as converted) | |||
Net loss per share | |||
Potentially dilutive shares excluded in the computation of diluted net loss per share | 70,833 | 70,833 | 70,833 |
Stock options outstanding | |||
Net loss per share | |||
Potentially dilutive shares excluded in the computation of diluted net loss per share | 3,446,885 | 2,454,973 | 2,107,344 |
RSUs | |||
Net loss per share | |||
Potentially dilutive shares excluded in the computation of diluted net loss per share | 75,314 | 85,000 |
Fair value of financial instr_3
Fair value of financial instruments - Hierarchy (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Short-term investments | $ 18,448 | |
Derivative liability | $ 2,017 | 1,660 |
Recurring basis | Fair Value | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Cash and cash equivalents | 46,478 | 31,969 |
Short-term investments | 18,448 | |
Total financial assets | 46,478 | 50,417 |
Earnout liability | 37 | 170 |
Derivative liability | 2,017 | 1,660 |
Total financial liabilities | 2,054 | 1,830 |
Recurring basis | Fair Value | Level 1 | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Cash and cash equivalents | 27,419 | 31,969 |
Total financial assets | 27,419 | 31,969 |
Recurring basis | Fair Value | Level 2 | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Cash and cash equivalents | 19,059 | |
Short-term investments | 18,448 | |
Total financial assets | 19,059 | 18,448 |
Recurring basis | Fair Value | Level 3 | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Earnout liability | 37 | 170 |
Derivative liability | 2,017 | 1,660 |
Total financial liabilities | $ 2,054 | $ 1,830 |
Fair value of financial instr_4
Fair value of financial instruments - Cash and cash equivalents and short-term investments (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Cash and cash equivalents and short-term investments | ||
Amortized Cost | $ 46,478 | $ 50,423 |
Unrealized Gain / (Loss) | (6) | |
Market Value | 46,478 | 50,417 |
Bank deposits and money market funds | ||
Cash and cash equivalents and short-term investments | ||
Amortized Cost | 27,419 | 31,969 |
Market Value | 27,419 | 31,969 |
Financial and corporate debt securities | ||
Cash and cash equivalents and short-term investments | ||
Amortized Cost | 19,059 | 18,454 |
Unrealized Gain / (Loss) | (6) | |
Market Value | $ 19,059 | $ 18,448 |
Fair value of financial instr_5
Fair value of financial instruments - Earnout liability and Derivative liability (Details) - Recurring basis - Level 3 $ in Thousands | Dec. 31, 2018USD ($)Yitem | Dec. 31, 2017USD ($)Yitem | Jun. 30, 2017USD ($)Yitem |
Earnout liability | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Valuation Method Monte Carlo | neos:MonteCarloApproachValuationTechniqueMember | neos:MonteCarloApproachValuationTechniqueMember | |
Fair value of liability at valuation date (thousands) | $ | $ 37 | $ 170 | |
Earnout liability | Volatility (annual) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 42 | 42 | |
Earnout liability | Earnout Target 1 (thousands) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 13,700,000 | 13,700,000 | |
Earnout liability | Earnout Target 2 (thousands) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 18,200,000 | 18,200,000 | |
Earnout liability | Maximum | Risk-free rate (annual) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 3.29 | 2.88 | |
Earnout liability | Maximum | Time period from valuation until end of earnout (in years) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 9.5 | 9.5 | |
Earnout liability | Maximum | Discount rate (in percent) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 21.68 | 15.98 | |
Earnout liability | Minimum | Risk-free rate (annual) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 2.53 | 1.62 | |
Earnout liability | Minimum | Time period from valuation until end of earnout (in years) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | Y | 0.5 | 0.5 | |
Earnout liability | Minimum | Discount rate (in percent) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 21.35 | 14.72 | |
Derivative liability | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Valuation Method Monte Carlo | neos:MonteCarloApproachValuationTechniqueMember | neos:MonteCarloApproachValuationTechniqueMember | |
Fair value of liability at valuation date (thousands) | $ | $ 2,017 | $ 1,660 | |
Derivative liability | Time period from valuation until end of earnout (in years) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | Y | 3.400 | 4.4 | |
Derivative liability | Cumulative probability of a change in control prepayment implied by model (in percent) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 25.1 | 27 | |
Derivative liability | Cumulative probability of other accelerated prepayments implied by model (in percent) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 13.7 | 17 | |
Derivative liability | Discount rate (in percent) | |||
Methodologies and significant inputs used in the determination of the fair value | |||
Derivative Liability | 23.12 | 16.20 |
Fair value of financial instr_6
Fair value of financial instruments - Changes in Level 3 (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in Level 3 liabilities measured at fair value | ||
Balance at beginning of period | $ 1,830 | $ 232 |
Addition of Deerfield derivative liability | 2,107 | |
Change in fair value | 224 | (509) |
Balance at end of period | $ 2,054 | $ 1,830 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventories | ||
Raw materials | $ 3,845 | $ 3,476 |
Work in progress | 2,704 | 6,155 |
Finished goods | 4,259 | 2,470 |
Inventory at cost | 10,808 | 12,101 |
Inventory reserve | (441) | (369) |
Inventories net | $ 10,367 | $ 11,732 |
Property and equipment (Details
Property and equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and equipment | ||||
Property and equipment gross | $ 16,840,000 | $ 15,429,000 | ||
Accumulated depreciation and amortization (including $633 and $157 at December 31, 2018 and 2017, respectively, applicable to capital leases) | (8,926,000) | (7,226,000) | ||
Property and equipment, net | 7,914,000 | 8,203,000 | ||
Depreciation and amortization expense | 1,750,000 | 1,363,000 | $ 1,598,000 | |
Accumulated depreciation and amortization of capital lease | 633,000 | 157,000 | ||
Net proceeds of depreciated equipment | $ 415,000 | |||
Assets under capital lease | ||||
Property and equipment | ||||
Property and equipment gross | 3,327,000 | 3,222,000 | ||
Leasehold improvements | ||||
Property and equipment | ||||
Property and equipment gross | 4,340,000 | 4,195,000 | ||
Manufacturing, packaging and lab equipment | ||||
Property and equipment | ||||
Property and equipment gross | 6,821,000 | 5,300,000 | ||
Office furniture and equipment | ||||
Property and equipment | ||||
Property and equipment gross | 2,164,000 | 1,656,000 | ||
Assets under construction | ||||
Property and equipment | ||||
Property and equipment gross | $ 188,000 | $ 1,056,000 | ||
Equipment | ||||
Property and equipment | ||||
Net proceeds of depreciated equipment | $ 415,000 |
Sale-leaseback transaction (Det
Sale-leaseback transaction (Details) - Related Party Sale-leaseback Transactions | Feb. 13, 2017USD ($) | Jun. 30, 2017USD ($) | Feb. 28, 2017USD ($) | Feb. 13, 2017 | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Mar. 31, 2014tranche | Sep. 30, 2017USD ($) | Apr. 30, 2017USD ($) | Dec. 31, 2012USD ($) |
Other income, net | |||||||||||
Sale-leaseback transaction | |||||||||||
Net gain recognized in period on sale leaseback transaction | $ 5,000 | $ 44,000 | $ 507,000 | ||||||||
Transaction One | |||||||||||
Sale-leaseback transaction | |||||||||||
Number of tranches | tranche | 5 | ||||||||||
Maximum amount authorized under sale and leaseback transaction | $ 6,500,000 | ||||||||||
Lease 4 November 2013 | |||||||||||
Sale-leaseback transaction | |||||||||||
Original value of assets for which lease expired | $ 1,000,000 | ||||||||||
Cumulative gain recognized | 161,000 | ||||||||||
Original value of lease buy-out option liability | $ 100,000 | ||||||||||
Lease 5 March 2014 | |||||||||||
Sale-leaseback transaction | |||||||||||
Original value of assets for which lease expired | $ 795,000 | ||||||||||
Cumulative gain recognized | 116,000 | ||||||||||
Original value of lease buy-out option liability | $ 79,000 | ||||||||||
Transaction Two | |||||||||||
Sale-leaseback transaction | |||||||||||
Maximum amount authorized under sale and leaseback transaction | $ 5,000,000 | ||||||||||
Lease term | 36 months | ||||||||||
Proceeds from sale of assets | $ 481,000 | $ 2,742,000 | |||||||||
Imputed interest rate on lease (as a percent) | 14.30% | 14.90% | |||||||||
Net gain on sale leaseback | $ 14,000 | ||||||||||
Amortization period | 36 months | ||||||||||
Net gain recognized in period on sale leaseback transaction | $ 0 |
Intangible assets (Details)
Intangible assets (Details) - USD ($) | Aug. 28, 2014 | Jun. 15, 2009 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible assets | |||||
Intangible assets, gross | $ 25,814,000 | $ 25,809,000 | |||
Accumulated amortization | (11,198,000) | (9,461,000) | |||
Intangible assets, net | 14,616,000 | 16,348,000 | |||
Payment made to acquire asset | 5,000 | 361,000 | $ 500,000 | ||
Amortization expense | 1,737,000 | 1,660,000 | 1,662,000 | ||
Aggregate amortization of intangible assets for each of the next five years and thereafter | |||||
2019 | 1,737,000 | ||||
2020 | 1,737,000 | ||||
2021 | 1,737,000 | ||||
2022 | 1,737,000 | ||||
2023 | 1,642,000 | ||||
Thereafter | 5,205,000 | ||||
Finite lived intangible assets, net | 13,795,000 | ||||
Proprietary modified-release drug delivery technology | |||||
Intangible assets | |||||
Intangible assets, gross | 15,600,000 | 15,600,000 | |||
Amount of finite-lived intangibles | $ 15,600,000 | ||||
Useful life | 20 years | ||||
Tussionex ANDA | |||||
Intangible assets | |||||
Intangible assets, gross | 4,829,000 | 4,829,000 | |||
Payment made to acquire asset | $ 4,200,000 | ||||
Legal fees | 90,000 | ||||
Earnout fair value | 589,000 | ||||
Tussionex ANDA | Other income (expense) | |||||
Intangible assets | |||||
Increase (decrease) in fair value of earnout liability | (133,000) | (62,000) | $ 18,000 | ||
CPI Profit Sharing | |||||
Intangible assets | |||||
Intangible assets, gross | 2,043,000 | 2,043,000 | |||
Payment made to acquire asset | 2,000,000 | ||||
Legal fees | $ 43,000 | ||||
Patents | |||||
Intangible assets | |||||
Intangible assets, gross | 2,307,000 | 2,302,000 | |||
Other | |||||
Intangible assets | |||||
Intangible assets, gross | $ 1,035,000 | $ 1,035,000 | |||
Tussionex ANDA and CPI profit sharing | |||||
Intangible assets | |||||
Useful life | 10 years |
Intangible assets - Patents (De
Intangible assets - Patents (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Generic Tussionex | |
Intangible assets | |
Patents being amortized | $ 352,000 |
Useful life | 10 years |
Adzenys XR-ODT | |
Intangible assets | |
Patents being amortized | $ 599,000 |
Cotempla XR-ODT | |
Intangible assets | |
Patents being amortized | $ 83,000 |
Useful life | 15 years |
Adzenys ER | |
Intangible assets | |
Patents being amortized | $ 451,000 |
Useful life | 15 years |
Patents being amortized on January 27, 2016 | Adzenys XR-ODT | |
Intangible assets | |
Patents being amortized | $ 535,000 |
Useful life | 16 years |
Patents being amortized on December 2017 | Adzenys XR-ODT | |
Intangible assets | |
Patents being amortized | $ 64,000 |
Useful life | 15 years |
Income taxes - Deferred Taxes (
Income taxes - Deferred Taxes (Details) - USD ($) $ in Thousands | Dec. 21, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Income taxes | ||||
Reduction of federal income tax rate | 35.00% | 21.00% | 21.00% | 34.00% |
Reduction of deferred tax expense | $ 20,600 | |||
Deferred Tax Assets: | ||||
Net operating loss | $ 37,818 | $ 37,818 | 32,193 | |
Share-based compensation | 1,757 | 1,757 | 1,340 | |
R&D tax credit | 2,378 | 2,378 | 1,696 | |
Other reserves | 1,616 | 1,616 | 1,069 | |
Capital lease liability | 390 | 390 | 563 | |
State deferreds | 1,236 | 1,236 | 397 | |
Inventory | 103 | 103 | 829 | |
Accrued rebates | 4,902 | 4,902 | 561 | |
Other current assets | 319 | |||
Other | 2,456 | 2,456 | 2,597 | |
Total deferred tax assets | 52,656 | 52,656 | 41,564 | |
Deferred Tax Liabilities: | ||||
Intangible assets | (1,571) | (1,571) | (1,846) | |
Property and equipment | (999) | (999) | (747) | |
Total deferred tax liabilities | (2,570) | (2,570) | (2,593) | |
Valuation allowance | $ (50,086) | $ (50,086) | $ (38,971) |
Income taxes - Tax Carry-forwar
Income taxes - Tax Carry-forwards and Unrecognized Tax Benefits (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Unrecognized tax benefits | ||
Accrued interest related to uncertain tax positions | $ 0 | |
Roll forward of gross unrecognized tax benefits | ||
Beginning Balance | 7,261,000 | $ 5,081,000 |
Increase/(Decrease) based on tax positions taken during a prior period | (3,305,000) | 2,180,000 |
Ending Balance | 3,956,000 | 7,261,000 |
Federal | ||
Tax carryforwards and uncertainties | ||
Net operating loss carry-forwards | 275,628,000 | |
Net operating loss carryforward that will expire unused | 98,009,000 | |
State | ||
Tax carryforwards and uncertainties | ||
Net operating loss carry-forwards | 3,166,000 | $ 3,136,000 |
Research and development credits | ||
Tax carryforwards and uncertainties | ||
Tax credits carry-forwards | 2,493,000 | |
Research and development credits | Federal | ||
Tax carryforwards and uncertainties | ||
Tax credit carryforwards that will expire unused | $ 350,000 |
Income taxes - Valuation Allowa
Income taxes - Valuation Allowance (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income taxes | ||
(Decrease) increase in valuation allowance | $ 11,118,000 | $ (29,037,000) |
Reduction of deferred tax assets | $ 20,547,000 |
Income taxes - Reconciliation o
Income taxes - Reconciliation of Tax Rate (Details) | Dec. 21, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Income taxes | ||||
U.S. Statutory Tax Rate | 35.00% | 21.00% | 21.00% | 34.00% |
Change in Valuation Allowance | (21.50%) | 44.00% | ||
Deferred Tax Adjustments | 0.00% | (47.00%) | ||
Federal Rate Change | 0.00% | (31.00%) | ||
State tax expense, net | 1.80% | 2.00% | ||
Provision to Return and Other Adjustments | (1.30%) | (2.00%) | ||
Tax Expense / (Benefit) | 0.00% | 0.00% |
Accrued expenses (Details)
Accrued expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued expenses | ||
Accrued savings offers | $ 11,289 | $ 7,168 |
Accrued rebates | 7,762 | 4,008 |
Accrued customer returns | 5,157 | 2,711 |
Accrued payroll and benefits | 4,555 | 2,534 |
Accrued wholesaler fees | 4,249 | 2,345 |
Other accrued expenses | 2,806 | 2,178 |
Total accrued expenses | $ 35,818 | $ 20,944 |
Long-term debt - Summary (Detai
Long-term debt - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term debt | ||
Long-term debt and capital lease obligations, including current maturities | $ 51,774 | $ 59,834 |
Less current portion | (8,557) | (896) |
Long-term debt | 43,217 | 58,938 |
Debt instrument, unamortized discount | ||
Unamortized discount on debt | 3,334 | |
Debt issued to entities affiliated with Deerfield | Senior Secured Credit Facility | ||
Long-term debt | ||
Long-term debt and capital lease obligations, including current maturities | 49,916 | 57,156 |
Debt instrument, unamortized discount | ||
Unamortized discount on debt | 3,334 | 2,843 |
Capital leases, maturing through November 2022 | ||
Long-term debt | ||
Long-term debt and capital lease obligations, including current maturities | $ 1,858 | $ 2,678 |
Long-term debt - Senior Secured
Long-term debt - Senior Secured Credit facility (Details) | Nov. 08, 2018$ / sharesshares | Nov. 05, 2018USD ($)item$ / sharesshares | Oct. 26, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 01, 2017USD ($)item$ / shares | May 11, 2016USD ($)iteminstallment | Jun. 30, 2017USD ($)$ / sharesshares | Feb. 28, 2017$ / sharesshares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2014USD ($) |
Long-term debt | ||||||||||||
Proceeds from debt | $ 58,419,000 | |||||||||||
Debt discount amortization | $ 961,000 | $ 1,316,000 | 406,000 | |||||||||
Derivative liability | 2,017,000 | 1,660,000 | ||||||||||
Unamortized discount on debt | $ 3,334,000 | |||||||||||
Recognition of beneficial conversion feature on convertible notes | $ 613,000 | |||||||||||
Payment of senior debt and fee | 26,063,000 | |||||||||||
Senior Notes and Subordinated Debt | ||||||||||||
Long-term debt | ||||||||||||
Repayments of debt | $ 33,000,000 | |||||||||||
Senior debt (Hercules LSA) | ||||||||||||
Long-term debt | ||||||||||||
Interest paid | 100,000 | |||||||||||
Payments of end of term fee | 1,100,000 | |||||||||||
Debt discount amortization | 104,000 | |||||||||||
Payment of senior debt and fee | 24,300,000 | |||||||||||
Prepayment penalty | 243,000 | |||||||||||
Senior Secured Convertible Note | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | $ 6,600,000 | |||||||||||
Interest rate (as a percent) | 12.95% | |||||||||||
Term of debt (in years) | 1 year | |||||||||||
Effective interest rate during debt term (as a percent) | 16.69% | 25.35% | ||||||||||
Time period before debt maturity when debt conversion option expires | 5 days | |||||||||||
Increase in prepayment fee (in basis points) | 300 | |||||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | |||||||||||
Number of trading days used to determine conversion stock price | 3 days | |||||||||||
Unamortized discount on debt | $ 600,000 | |||||||||||
Recognition of beneficial conversion feature on convertible notes | $ 600,000 | |||||||||||
Maximum percentage of stock for note holder | 9.985% | |||||||||||
Maximum percentage of stock for aggregate conversion | 19.90% | |||||||||||
Common Stock | ||||||||||||
Long-term debt | ||||||||||||
Issuance of common stock, net of issuance costs (in shares) | shares | 20,651,524 | 12,019,639 | ||||||||||
Underwritten Public Offering | Common Stock | ||||||||||||
Long-term debt | ||||||||||||
Issuance of common stock, net of issuance costs (in shares) | shares | 19,999,999 | 4,800,000 | 4,800,000 | 5,750,000 | ||||||||
Public offering price (in dollars per share) | $ / shares | $ 2.30 | $ 6.25 | $ 6.25 | $ 5 | ||||||||
Gross proceeds from issuance of stock | $ 30,000,000 | $ 30,000,000 | ||||||||||
Minimum | Senior Secured Convertible Note | ||||||||||||
Long-term debt | ||||||||||||
Prepayment fee of debt (in percentage) | 2.00% | |||||||||||
Conversion price | $ / shares | $ 7 | |||||||||||
Minimum | Common Stock | ||||||||||||
Long-term debt | ||||||||||||
Gross proceeds from issuance of stock | $ 4,500,000 | |||||||||||
Minimum | Underwritten Public Offering | Common Stock | ||||||||||||
Long-term debt | ||||||||||||
Gross proceeds from issuance of stock | 30,000,000 | |||||||||||
Maximum | Senior Secured Convertible Note | ||||||||||||
Long-term debt | ||||||||||||
Prepayment fee of debt (in percentage) | 12.75% | |||||||||||
Senior Secured Credit Facility | Registration Agreement | ||||||||||||
Long-term debt | ||||||||||||
Maximum reimbursable legal fees | $ 25,000 | |||||||||||
Liability recorded for expected unmet agreement obligations | $ 0 | |||||||||||
Senior Secured Credit Facility | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | 60,000,000 | |||||||||||
Proceeds from debt | $ 60,000,000 | |||||||||||
Number of equal annual installments | installment | 3 | |||||||||||
Interest rate (as a percent) | 12.95% | |||||||||||
Deferred interest payments | $ 6,600,000 | |||||||||||
Number of first interest payments for which the reporting entity has the option to defer | item | 4 | |||||||||||
Debt yield enhancement fee | $ 1,350,000 | |||||||||||
Debt legal costs | 25,000 | |||||||||||
Term of debt (in years) | 6 years | |||||||||||
Minimum cash on deposit to maintain under debt arrangement | $ 5,000,000 | |||||||||||
Effective interest rate during debt term (as a percent) | 15.03% | |||||||||||
Debt discount amortization | $ 961,000 | $ 1,316,000 | ||||||||||
Unamortized discount on debt | $ 3,334,000 | $ 2,843,000 | ||||||||||
Senior Secured Credit Facility | Debt issued to entities affiliated with Deerfield | Company's Attorneys | ||||||||||||
Long-term debt | ||||||||||||
Debt legal costs | 173,000 | |||||||||||
Senior Secured Credit Facility | Debt issued to entities affiliated with Deerfield | On Behalf Of Deerfield's Attorneys | ||||||||||||
Long-term debt | ||||||||||||
Debt legal costs | $ 58,000 | |||||||||||
Senior Secured Credit Facility | Deerfield Private Design Found III, LP | ||||||||||||
Long-term debt | ||||||||||||
Debt borrowing structure (as a percent) | 66.67% | |||||||||||
Senior Secured Credit Facility | Deerfield Special Situations Fund, LP | ||||||||||||
Long-term debt | ||||||||||||
Debt borrowing structure (as a percent) | 33.33% | |||||||||||
Senior Secured Credit Facility | Senior Secured Convertible Note | ||||||||||||
Long-term debt | ||||||||||||
Derivative liability | $ 2,100,000 | |||||||||||
Minimum premiums as percent required to treat as derivative | 10.00% | |||||||||||
Payment of debt modification fee | $ 40,000 | |||||||||||
Maximum time period to register shares per agreement | 30 days | |||||||||||
Maximum time period for registration to become effective per agreement | 75 days | |||||||||||
Senior Secured Credit Facility | Minimum | Senior Secured Convertible Note | ||||||||||||
Long-term debt | ||||||||||||
Conversion price | $ / shares | $ 7 | |||||||||||
Senior Secured Credit Facility | Maximum | Senior Secured Convertible Note | ||||||||||||
Long-term debt | ||||||||||||
Number of shares which may be issued for conversion of convertible notes | item | 940,924 | |||||||||||
Second Amendment Facility Due in May 2019 | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | $ 52,500,000 | |||||||||||
Prepayment of premium amount (as a percent) | 6.25% | |||||||||||
Non-refundable exit fee | $ 750,239 | |||||||||||
Payment of senior debt and fee | $ 7,500,000 | |||||||||||
Second Amendment Facility Due in May 2019 | Common Stock | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Share price, percentage of Last Bid Price | 93.00% | |||||||||||
Principal payment (in dollars per shares) | $ / shares | $ 3 | |||||||||||
Ownership Cap percentage | 4.985% | |||||||||||
Number of trading days used to determine conversion stock price | 10 days | |||||||||||
Second Amendment Facility Due in May 2019 | 2019 | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | $ 7,500,000 | |||||||||||
Second Amendment Facility Due in May 2019 | 2020 | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | 15,000,000 | |||||||||||
Second Amendment Facility Due in May 2019 | 2021 | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | 15,000,000 | |||||||||||
Second Amendment Facility Due in May 2019 | 2022 | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | $ 15,000,000 | |||||||||||
Second Amendment Facility Due in May 2019 | Maximum | Common Stock | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Number of shares issued upon conversion of debt | shares | 2,135,625 | |||||||||||
Second Amendment Facility Due in May 2020 | Common Stock | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Ownership Cap percentage | 4.985% | |||||||||||
Conversion price | $ / shares | $ 10 | |||||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | |||||||||||
Number of trading days used to determine conversion stock price | 3 days | |||||||||||
Second Amendment Facility Due in May 2020 | Maximum | Common Stock | Debt issued to entities affiliated with Deerfield | ||||||||||||
Long-term debt | ||||||||||||
Percentage of principal amount available for conversion | 50.00% | |||||||||||
Number of shares issued upon conversion of debt | shares | 3,796,668 | |||||||||||
Conversion price, expressed as a percentage of stock price | 83.00% | |||||||||||
Number of shares which may be issued for conversion of convertible notes | item | 3,796,668 | |||||||||||
Essex Capital Corporation, as Investor | 10% subordinated note payable | ||||||||||||
Long-term debt | ||||||||||||
Face amount of debt issued | $ 5,900,000 | |||||||||||
Repayments of debt | 5,900,000 | $ 5,900,000 | ||||||||||
Interest paid | $ 1,300,000 | |||||||||||
Interest accrued | $ 263,000 | |||||||||||
Interest rate (as a percent) | 10.00% | 10.00% | ||||||||||
Conversion Of Convertible Notes | Senior Secured Convertible Note | ||||||||||||
Long-term debt | ||||||||||||
Amount of debt converted into stock | $ 6,600,000 | |||||||||||
Number of shares issued upon conversion of debt | shares | 929,967 | |||||||||||
Conversion price | $ / shares | $ 7.08 | |||||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | |||||||||||
Number of trading days used to determine conversion stock price | 3 days | |||||||||||
Conversion Of Convertible Notes | Senior Secured Credit Facility | ||||||||||||
Long-term debt | ||||||||||||
Amount of debt converted into stock | $ 6,600,000 | |||||||||||
Number of shares issued upon conversion of debt | shares | 929,967 | |||||||||||
Conversion price | $ / shares | $ 7.08 | |||||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | |||||||||||
Number of trading days used to determine conversion stock price | 3 days | 3 days |
Long-term debt - Senior Debt (D
Long-term debt - Senior Debt (Details) | May 11, 2016USD ($) | Jul. 22, 2015$ / sharesshares | Sep. 25, 2014USD ($)$ / sharesshares | Mar. 28, 2014USD ($)item$ / sharesshares | May 31, 2016 | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2014 | Mar. 31, 2014 |
Long-term debt | ||||||||||||
Loss on debt extinguishment | $ (1,187,000) | |||||||||||
Debt discount amortization | $ 961,000 | $ 1,316,000 | 406,000 | |||||||||
Senior debt (Hercules LSA) | ||||||||||||
Long-term debt | ||||||||||||
Maximum borrowing capacity per agreement | $ 25,000,000 | |||||||||||
Number of draws available per debt agreement | item | 4 | |||||||||||
Term of interest and principal payments, which commence at a later date | 30 months | |||||||||||
LSA end of term fee due upon prepayment or repayment | $ 1,100,000 | |||||||||||
Payments of end of term fee | $ 1,100,000 | |||||||||||
End of term charge amortization | 121,000 | |||||||||||
Loss on debt extinguishment | 1,187,000 | |||||||||||
Debt discount amortization | $ 104,000 | |||||||||||
Senior debt (Hercules LSA) | Tranche 1 | ||||||||||||
Long-term debt | ||||||||||||
Draws from senior debt note | $ 10,000,000 | |||||||||||
Interest rate (as a percent) | 9.00% | |||||||||||
Senior debt (Hercules LSA) | Tranche 1 | Series C Warrants Issued with Senior Debt | ||||||||||||
Long-term debt | ||||||||||||
Warrants issued (in shares) | shares | 60,000 | |||||||||||
Exercise price (in dollars per share) | $ / shares | $ 5 | |||||||||||
Senior debt (Hercules LSA) | Tranche 2 | ||||||||||||
Long-term debt | ||||||||||||
Draws from senior debt note | $ 5,000,000 | |||||||||||
Interest rate (as a percent) | 10.50% | |||||||||||
Senior debt (Hercules LSA) | Tranche 2 | Series C Warrants Issued with Senior Debt | ||||||||||||
Long-term debt | ||||||||||||
Warrants issued (in shares) | shares | 110,000 | |||||||||||
Exercise price (in dollars per share) | $ / shares | $ 5 | |||||||||||
Senior debt (Hercules LSA) | Tranche 3 | ||||||||||||
Long-term debt | ||||||||||||
Draws from senior debt note | $ 5,000,000 | |||||||||||
Interest rate (as a percent) | 10.50% | |||||||||||
Senior debt (Hercules LSA) | Tranche 4 | ||||||||||||
Long-term debt | ||||||||||||
Draws from senior debt note | $ 5,000,000 | |||||||||||
Interest rate (as a percent) | 9.00% | |||||||||||
Conversion, initial public offering | Common Stock Warrants | ||||||||||||
Long-term debt | ||||||||||||
Warrants issued (in shares) | shares | 70,833 | |||||||||||
Exercise price (in dollars per share) | $ / shares | $ 12 | |||||||||||
Warrants Term | 5 years |
Long-term debt - Subordinated R
Long-term debt - Subordinated Related Party Note (Details) - USD ($) | May 11, 2016 | Dec. 31, 2016 | Dec. 31, 2014 | Dec. 31, 2018 |
10% subordinated note payable | Essex Capital Corporation, as Investor | ||||
Long-term debt | ||||
Interest rate (as a percent) | 10.00% | 10.00% | ||
Face amount of debt issued | $ 5,900,000 | |||
Repayments of debt | 5,900,000 | $ 5,900,000 | ||
Interest paid | $ 1,300,000 | |||
Interest accrued | $ 263,000 | |||
Senior Secured Credit Facility | Debt issued to entities affiliated with Deerfield | ||||
Long-term debt | ||||
Interest rate (as a percent) | 12.95% | |||
Face amount of debt issued | $ 60,000,000 |
Long-term debt - Capital Lease
Long-term debt - Capital Lease Obligations to Related Party (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2014 | Dec. 31, 2013 | |
Essex sale-leaseback transactions | Transaction One | |||||
Long-term debt | |||||
Imputed interest rate on lease (as a percent) | 14.90% | 14.50% | 14.50% | ||
Capital leases, maturing through November 2022 | |||||
Long-term debt | |||||
Interest expense | $ 341,000 | $ 263,000 | $ 204,000 | ||
Capital leases, maturing through November 2022 | Essex sale-leaseback transactions | Transaction One | |||||
Long-term debt | |||||
Existing assets under sale-leaseback transaction | $ 5,500,000 | ||||
Newly acquired assets under sale-leaseback transaction | $ 795,000 | ||||
Capital leases, maturing through November 2022 | Essex sale-leaseback transactions | Transaction Two | |||||
Long-term debt | |||||
Newly acquired assets under sale-leaseback transaction | $ 3,200,000 |
Long-term debt - Future Minimum
Long-term debt - Future Minimum Capital Lease Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Future minimum capital lease payments | |
2019 | $ 1,257 |
2020 | 798 |
2021 | 21 |
2022 | 20 |
Total minimum lease payments | 2,096 |
Less amount representing interest | (238) |
Future minimum lease payments | $ 1,858 |
Long-term debt - Future Princip
Long-term debt - Future Principal Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Future principal payments of long-term debt including capital leases | ||
2019 | $ 8,557 | |
2020 | 15,761 | |
2021 | 15,020 | |
2022 | 15,770 | |
Future principal payments | 55,108 | |
Less unamortized debt discount | (3,334) | |
Less current portion of long-term debt | (8,557) | $ (896) |
Total long-term debt | $ 43,217 | $ 58,938 |
Common stock - Public Offerings
Common stock - Public Offerings (Details) $ / shares in Units, $ in Thousands | Nov. 08, 2018USD ($)$ / sharesshares | Jul. 26, 2017USD ($) | Jun. 30, 2017USD ($)$ / sharesshares | Feb. 17, 2017USD ($)shares | Jul. 28, 2015USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Feb. 28, 2017$ / sharesshares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) |
Public offerings and related transactions | ||||||||||
Net proceeds from issuance of stock | $ | $ 47,292 | $ 64,560 | $ 13 | |||||||
Reverse stock split ratio | 0.4167 | |||||||||
Common Stock | ||||||||||
Public offerings and related transactions | ||||||||||
Issuance of common stock, net of issuance costs (in shares) | shares | 20,651,524 | 12,019,639 | ||||||||
Common Stock | IPO | ||||||||||
Public offerings and related transactions | ||||||||||
Issuance of common stock, net of issuance costs (in shares) | shares | 5,520,000 | |||||||||
Public offering price (in dollars per share) | $ / shares | $ 15 | |||||||||
Net proceeds from issuance of stock | $ | $ 75,000 | |||||||||
Common Stock | Underwritten Public Offering | ||||||||||
Public offerings and related transactions | ||||||||||
Issuance of common stock, net of issuance costs (in shares) | shares | 19,999,999 | 4,800,000 | 4,800,000 | 5,750,000 | ||||||
Public offering price (in dollars per share) | $ / shares | $ 2.30 | $ 6.25 | $ 6.25 | $ 5 | ||||||
Gross proceeds from issuance of stock | $ | $ 30,000 | $ 30,000 | ||||||||
Payments of stock issuance costs | $ | $ 200 | $ 200 | ||||||||
Term of option to purchase share | 30 days | 30 days | ||||||||
Net proceeds from issuance of stock | $ | $ 43,400 | $ 34,300 | $ 26,700 | |||||||
Shares offered to underwriters under option granted (in shares) | shares | 720,000 | 720,000 | ||||||||
Common Stock | Over-allotment option | ||||||||||
Public offerings and related transactions | ||||||||||
Issuance of common stock, net of issuance costs (in shares) | shares | 2,608,695 | 750,000 | 720,000 |
Common stock - Shelf Registrati
Common stock - Shelf Registration Statement and offer under sales agreement (Details) - USD ($) | Nov. 08, 2018 | Nov. 05, 2018 | Oct. 26, 2017 | Jul. 26, 2017 | Jun. 30, 2017 | Feb. 17, 2017 | Jul. 28, 2015 | Jun. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 01, 2016 |
Shelf registration statement | |||||||||||||
Net proceeds from issuance of stock | $ 47,292,000 | $ 64,560,000 | $ 13,000 | ||||||||||
Value of securities which remain available to be sold pursuant to the shelf | $ 5,200,000 | ||||||||||||
Maximum | |||||||||||||
Shelf registration statement | |||||||||||||
Authorized amount to raise capital as per shelf registration statement | $ 125,000,000 | ||||||||||||
Sales Agreement | Maximum | Cowen and Company LLC | |||||||||||||
Shelf registration statement | |||||||||||||
Authorized amount for issuance of common stock as per shelf registration statement | $ 40,000,000 | ||||||||||||
Common Stock | |||||||||||||
Shelf registration statement | |||||||||||||
Shares issued | 20,651,524 | 12,019,639 | |||||||||||
Stock Issued During Period, Shares, Conversion Of Restricted Stock Units | 26,991 | ||||||||||||
Stock Issued During Period Shares Conversion of Stock Options | 832 | ||||||||||||
Common Stock | Sales Agreement | |||||||||||||
Shelf registration statement | |||||||||||||
Gross proceeds from issuance of stock | $ 7,825,113 | ||||||||||||
Maximum authorized amount in continuous offering | $ 7,825,113 | ||||||||||||
Sales Agreement | Common Stock | |||||||||||||
Shelf registration statement | |||||||||||||
Shares issued | 651,525 | 749,639 | |||||||||||
Sales agreement offering price (in dollars per share) | $ 6.25 | $ 5.01 | |||||||||||
Gross proceeds from issuance of stock | $ 4,100,000 | $ 3,700,000 | |||||||||||
Net proceeds from issuance of stock | 3,900,000 | 3,600,000 | |||||||||||
Payments of stock issuance costs | $ 200,000 | $ 100,000 | |||||||||||
Public offering price (in dollars per share) | $ 6.25 | $ 5.01 | |||||||||||
Underwritten Public Offering | Common Stock | |||||||||||||
Shelf registration statement | |||||||||||||
Shares issued | 19,999,999 | 4,800,000 | 4,800,000 | 5,750,000 | |||||||||
Sales agreement offering price (in dollars per share) | $ 2.30 | $ 6.25 | $ 6.25 | $ 5 | |||||||||
Net proceeds from issuance of stock | $ 43,400,000 | $ 34,300,000 | $ 26,700,000 | ||||||||||
Payments of stock issuance costs | $ 200,000 | $ 200,000 | |||||||||||
Public offering price (in dollars per share) | $ 2.30 | $ 6.25 | $ 6.25 | $ 5 | |||||||||
Over-allotment option | Common Stock | |||||||||||||
Shelf registration statement | |||||||||||||
Shares issued | 2,608,695 | 750,000 | 720,000 | ||||||||||
Conversion Of Convertible Notes | Senior Secured Convertible Notes | |||||||||||||
Shelf registration statement | |||||||||||||
Amount of debt converted into stock | $ 6,600,000 | ||||||||||||
Conversion price | $ 7.08 | ||||||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | ||||||||||||
Number of trading days used to determine conversion stock price | 3 days | ||||||||||||
Number of shares of stock into which debt was converted | 929,967 |
Share-based Compensation - Plan
Share-based Compensation - Plan Information (Details) - shares | Jan. 01, 2019 | Jan. 01, 2018 | Oct. 16, 2017 | Jan. 01, 2017 | Oct. 17, 2016 | Oct. 16, 2015 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Jan. 01, 2016 | Jul. 31, 2015 | Nov. 30, 2009 |
Stock options outstanding | Performance based | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Vesting period | 3 years | |||||||||||
Stock options | Minimum | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Vesting period | 2 years | |||||||||||
Stock options | Maximum | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Vesting period | 4 years | |||||||||||
Restricted stock | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Shares surrendered by holder to cover taxes associated with vesting | 14,895 | 9,709 | 9,197 | |||||||||
Neos Therapeutics, Inc. 2009 Equity Plan | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Shares reserved for issuance under the plan | 1,375,037 | |||||||||||
Shares related to forfeited prior plan options transferred into shares available under current plan | 73,331 | |||||||||||
Neos Therapeutics, Inc. 2009 Equity Plan | Stock options | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Expiration period | 10 years | |||||||||||
Expiration period of unexercised vested award after termination of employment | 90 days | |||||||||||
Neos Therapeutics, Inc. 2009 Equity Plan | Restricted stock | Minimum | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Vesting period | 1 month | |||||||||||
Neos Therapeutics, Inc. 2009 Equity Plan | Restricted stock | Maximum | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Vesting period | 48 months | |||||||||||
Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Shares reserved for issuance under the plan | 767,330 | |||||||||||
Increase to the number of shares reserved and available for issuance as a percentage of outstanding common stock (as a percent) | 5.00% | |||||||||||
Increase in number of shares reserved and available for issuance | 1,449,847 | 803,049 | ||||||||||
Stock option exercise price, minimum expressed as percentage of fair market value on grant date | 100.00% | |||||||||||
Shares related to forfeited prior plan options transferred into shares available under current plan | 82,635 | |||||||||||
Shares available for grant | 1,793,905 | 1,793,905 | ||||||||||
Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan | Subsequent event | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Shares reserved for issuance under the plan | 4,277,720 | |||||||||||
Increase in number of shares reserved and available for issuance | 2,483,815 | |||||||||||
Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan | Stock options | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Expiration period | 10 years | |||||||||||
Expiration period of unexercised vested award after termination of employment | 90 days | |||||||||||
Neos Therapeutics, Inc 2018 Inducement Plan | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Shares reserved for issuance under the plan | 800,000 | |||||||||||
Shares available for grant | 0 | 0 | ||||||||||
Neos Therapeutics, Inc 2018 Inducement Plan | Stock options | ||||||||||||
Stock options, restricted stock and performance stock options | ||||||||||||
Stock option exercise price, minimum expressed as percentage of fair market value on grant date | 100.00% | |||||||||||
Expiration period | 10 years |
Share-based Compensation - Expe
Share-based Compensation - Expense Allocation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Expense | |||
Total compensation cost | $ 3,321 | $ 4,051 | $ 3,460 |
Cost of goods sold | |||
Share-based Compensation Expense | |||
Total compensation cost | 470 | 390 | 311 |
Research and development | |||
Share-based Compensation Expense | |||
Total compensation cost | 344 | 394 | 304 |
Selling and marketing | |||
Share-based Compensation Expense | |||
Total compensation cost | 731 | 913 | 723 |
General and administrative | |||
Share-based Compensation Expense | |||
Total compensation cost | $ 1,776 | $ 2,354 | $ 2,122 |
Share-based Compensation - Ex_2
Share-based Compensation - Expense Other (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Expense | |||
Total compensation cost | $ 3,321,000 | $ 4,051,000 | $ 3,460,000 |
Unrecognized compensation cost | 5,100,000 | ||
Stock options | |||
Share-based Compensation Expense | |||
Total compensation cost | $ 3,100,000 | 3,900,000 | 3,400,000 |
Compensation cost not yet recognized, period for recognition | 2 years 6 months | ||
RSUs | |||
Share-based Compensation Expense | |||
Total compensation cost | $ 261,000 | 86,000 | |
Compensation cost not yet recognized, period for recognition | 2 years 10 months 24 days | ||
Restricted stock | |||
Share-based Compensation Expense | |||
Total compensation cost | $ 71,000 | $ 91,000 | |
Unrecognized compensation cost | $ 0 |
Share-based Compensation - Assu
Share-based Compensation - Assumptions Used in Determining Fair Value of Options (Details) - Stock options - $ / shares | 1 Months Ended | 12 Months Ended | |||
Jul. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock options, restricted stock and performance stock options | |||||
Options granted (in shares) | 1,753,539 | 570,432 | 859,257 | ||
Exercise price (in dollars per share) | $ 6.786 | $ 7.220 | $ 10.385 | ||
Weighted average key assumptions used in determining the fair value of options granted | |||||
Estimated dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | ||
Volatility (annual) (as a percent) | 60.00% | 60.00% | 60.00% | ||
Expected life of option in years | 6 years 1 month 17 days | 6 years 22 days | 6 years 1 month 24 days | ||
Weighted-average option fair value at grant (in dollars per share) | $ 3.930 | $ 4.090 | $ 5.800 | ||
Weighted average | |||||
Weighted average key assumptions used in determining the fair value of options granted | |||||
Weighted-average risk-free interest rate (as a percent) | 2.75% | 2.01% | 1.18% | ||
Minimum | |||||
Stock options, restricted stock and performance stock options | |||||
Exercise price (in dollars per share) | $ 4.76 | ||||
Maximum | |||||
Stock options, restricted stock and performance stock options | |||||
Exercise price (in dollars per share) | $ 10.40 | ||||
Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan | |||||
Stock options, restricted stock and performance stock options | |||||
Options granted (in shares) | 953,539 | ||||
Neos Therapeutics, Inc 2018 Inducement Plan | Chief Executive Officer | |||||
Stock options, restricted stock and performance stock options | |||||
Options granted (in shares) | 200,000 | 600,000 | |||
Exercise price (in dollars per share) | $ 5.55 | $ 6.20 |
Share-based Compensation - Opti
Share-based Compensation - Options (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of number of outstanding and exercisable options and the activity | ||||
Outstanding at beginning of year (in shares) | 2,454,973 | 2,107,344 | 1,352,283 | |
Exercisable at beginning of year (in shares) | 1,137,766 | 595,424 | 229,000 | |
Granted (in shares) | 1,753,539 | 570,432 | 859,257 | |
Exercised (in shares) | (832) | (1,249) | (10,886) | |
Expired, forfeited or cancelled (in shares) | (760,795) | (221,554) | (93,310) | |
Outstanding at end of period (in shares) | 3,446,885 | 2,454,973 | 2,107,344 | |
Exercisable at end of period (in shares) | 1,643,011 | 1,137,766 | 595,424 | |
Summary of weighted-average exercise price of outstanding and exercisable options and the activity | ||||
Outstanding at beginning of year (in dollars per share) | $ 11.195 | $ 12.173 | $ 13.607 | |
Exercisable at beginning of year (in dollars per share) | 10.919 | 9.715 | 3.385 | |
Exercise price (in dollars per share) | 6.786 | 7.220 | 10.385 | |
Exercised (in dollars per share) | 0.320 | 0.223 | 1.231 | |
Expired, forfeited or cancelled (in dollars per share) | 11.281 | 10.325 | 17.780 | |
Outstanding at end of period (in dollars per share) | 8.935 | 11.195 | 12.173 | |
Exercisable at end of period (in dollars per share) | $ 10.627 | $ 10.919 | $ 9.715 | |
Summary of intrinsic value of outstanding and exercisable options and other information | ||||
Intrinsic value, outstanding options | $ 70 | $ 4,764 | $ 1,128 | $ 964 |
Intrinsic value, exercisable options | $ 70 | $ 2,890 | $ 881 | $ 2,504 |
Weighted average remaining contractual life of options outstanding | 7 years 10 months 24 days | |||
Weighted-average remaining contractual life of options exercisable | 6 years 7 months 6 days | |||
Minimum | ||||
Summary of weighted-average exercise price of outstanding and exercisable options and the activity | ||||
Exercise price (in dollars per share) | $ 4.76 | |||
Maximum | ||||
Summary of weighted-average exercise price of outstanding and exercisable options and the activity | ||||
Exercise price (in dollars per share) | $ 10.40 |
Share-based Compensation - RSUs
Share-based Compensation - RSUs (Details) | Mar. 01, 2019 | Oct. 02, 2018shares | Oct. 02, 2017shares | May 01, 2017shares | Dec. 31, 2018$ / sharesshares | Dec. 31, 2017$ / sharesshares |
RSUs | ||||||
Summary of outstanding equity instruments and activity | ||||||
Outstanding at beginning of year (in equity instruments) | 85,000 | |||||
Granted (in equity instruments) | 93,750 | 6,250 | 78,750 | 93,750 | 85,000 | |
Converted (in equity instruments) | (26,991) | |||||
Withheld for tax obligation (in equity instruments) | (6,757) | |||||
Expired, forfeited or cancelled (in equity instruments) | (69,688) | |||||
Outstanding at end of period (in equity instruments) | 75,314 | 85,000 | ||||
Summary of weighted-average fair value | ||||||
Outstanding at beginning of year (in dollars per equity instrument) | $ / shares | $ 7.15 | |||||
Granted (in dollars per equity instrument) | $ / shares | $ 8.30 | $ 7.15 | ||||
Converted (in dollars per equity instrument) | $ / shares | 7.34 | |||||
Withheld for tax obligation ( in dollars per equity instrument) | $ / shares | 7.34 | |||||
Expired, forfeited or cancelled (in dollars per equity instrument) | $ / shares | $ 7.77 | |||||
Outstanding at end of period (in dollars per equity instrument) | $ / shares | $ 7.93 | $ 7.15 | ||||
Restricted Stock | ||||||
Vested units converted to common stock (in shares) | 33,748 | |||||
Four equal tranches | RSUs | ||||||
Stock options, restricted stock and performance stock options | ||||||
Vesting period | 4 years | 4 years | 4 years | |||
Common Stock | ||||||
Restricted Stock | ||||||
Shares converted | 26,991 | |||||
Shares surrendered by holder to cover taxes associated with vesting | 6,757 |
Share-based Compensation - Rest
Share-based Compensation - Restricted Stock (Details) - Restricted stock - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock options, restricted stock and performance stock options | |||
Shares issued | 0 | 0 | 0 |
Unvested restricted stock outstanding (in shares) | 35,513 | ||
Weighted average fair value of nonvested restricted stock (in dollars per share) | $ 2.55 | ||
Shares granted | 0 | 0 | 0 |
Shares forfeited | 0 | 0 | 0 |
Treasury stock (Details)
Treasury stock (Details) - $ / shares | Oct. 16, 2017 | Oct. 17, 2016 | Oct. 16, 2015 | Feb. 19, 2015 | Dec. 31, 2018 | Dec. 31, 2017 |
Treasury stock | ||||||
Shares of treasury stock held | 33,801 | 33,801 | ||||
Cancellation of treasury stock | 55,905 | |||||
Original purchase price of treasury stock (in dollars per share) | $ 0.002 | |||||
Restricted stock | ||||||
Treasury stock | ||||||
Shares surrendered by holder to cover taxes associated with vesting | 14,895 | 9,709 | 9,197 |
Commitments and contingencies -
Commitments and contingencies - Registration Payment Arrangement (Details) | Nov. 05, 2018USD ($)item$ / shares | Jun. 01, 2017USD ($) | Dec. 31, 2018USD ($) |
Second Amendment Facility Due in May 2020 | Debt issued to entities affiliated with Deerfield | Common Stock | |||
Registration Payment Arrangement | |||
Conversion price | $ / shares | $ 10 | ||
Second Amendment Facility Due in May 2020 | Debt issued to entities affiliated with Deerfield | Common Stock | Maximum | |||
Registration Payment Arrangement | |||
Number of shares which may be issued for conversion of convertible notes | item | 3,796,668 | ||
Registration Agreement | Senior Secured Convertible Notes | |||
Registration Payment Arrangement | |||
Time period after date of any Registration Failure during which additional damages are required to be paid | 30 days | ||
Additional damages payable upon any Registration Failure, as percent of original principal amount of debt | 2.00% | ||
Maximum reimbursable legal fees | $ 25,000 | ||
Registration Agreement | Senior Secured Credit Facility | |||
Registration Payment Arrangement | |||
Maximum reimbursable legal fees | $ 25,000 | ||
Liability recorded for expected unmet agreement obligations | $ 0 |
Commitments and contingencies_2
Commitments and contingencies - Patent Infringement Litigation (Details) | Oct. 31, 2017 |
Actavis | |
Patent infringement litigation | |
Time Period For Which FDA Approval is Barred Upon Commencement Of Lawsuit | 30 months |
Commitments and contingencies_3
Commitments and contingencies - Defined Contribution Plans (Details) - USD ($) | Jan. 01, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Defined Contribution Plans | ||||
Maximum employee annual contribution (as a percent) | 50.00% | |||
Expense on defined contribution plans | $ 576,000 | $ 419,000 | $ 371,000 | |
First Tier Contributions | ||||
Defined Contribution Plans | ||||
Employer's match of of employee contributions (as a percent) | 100.00% | |||
Percentage of match by employer (as a percent) | 3.00% | |||
Second Tier Contributions | ||||
Defined Contribution Plans | ||||
Employer's match of of employee contributions (as a percent) | 50.00% | |||
Percentage of match by employer (as a percent) | 2.00% |
Commitments and contingencies_4
Commitments and contingencies - Operating Lease, Cash Incentive Bonus Plan, Inducement Option Grant (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Future minimum operating lease payments | |||
2019 | $ 1,107,000 | ||
2020 | 1,161,000 | ||
2021 | 1,057,000 | ||
2022 | 1,055,000 | ||
2023 | 1,055,000 | ||
Thereafter | 1,106,000 | ||
Future minimum lease payments | 6,541,000 | ||
Deferred rent balance | 989,000 | $ 1,083,000 | |
Rent expense, share of operating expenses | 206,000 | 243,000 | $ 243,000 |
Bonus Expenses | 666,000 | 701,000 | 464,000 |
Grand Prairie Lease Plus Blue Bell Lease | |||
Future minimum operating lease payments | |||
Rent expense, excluding share of operating expenses | $ 1,011,000 | $ 1,010,000 | $ 1,011,000 |
Blue Bell, Pennsylvania | |||
Commitments | |||
Term of operating lease | 60 months |
License agreements (Details)
License agreements (Details) - USD ($) | Oct. 23, 2018 | Oct. 31, 2017 | Feb. 29, 2016 |
Shire LLC | NDA 204326 | Maximum | |||
License agreements | |||
Payment of non-refundable license fee | $ 1,000,000 | ||
Shire LLC | NDA 204325 | Maximum | |||
License agreements | |||
Payment of non-refundable license fee | $ 1,000,000 | ||
NeuRx License | |||
License agreements | |||
Upfront payment to be paid | $ 175,000 |
Related party transactions (Det
Related party transactions (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 08, 2018 | Nov. 05, 2018 | Oct. 26, 2017 | Jul. 26, 2017 | Jun. 30, 2017 | Feb. 17, 2017 | Jul. 28, 2015 | Jun. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Stock transaction disclosures | ||||||||||||
Payment of facility | $ 26,063 | |||||||||||
Principal repayment to be paid | $ 90 | $ 40 | ||||||||||
Net proceeds from issuance of stock | $ 47,292 | $ 64,560 | $ 13 | |||||||||
Common Stock | ||||||||||||
Stock transaction disclosures | ||||||||||||
Issuance of common stock, net of issuance costs (in shares) | 20,651,524 | 12,019,639 | ||||||||||
Underwritten Public Offering | Common Stock | ||||||||||||
Stock transaction disclosures | ||||||||||||
Issuance of common stock, net of issuance costs (in shares) | 19,999,999 | 4,800,000 | 4,800,000 | 5,750,000 | ||||||||
Public offering price (in dollars per share) | $ 2.30 | $ 6.25 | $ 6.25 | $ 5 | ||||||||
Term of option to purchase share | 30 days | 30 days | ||||||||||
Shares offered to underwriters under option granted (in shares) | 720,000 | 720,000 | ||||||||||
Net proceeds from issuance of stock | $ 43,400 | $ 34,300 | $ 26,700 | |||||||||
Over-allotment option | Common Stock | ||||||||||||
Stock transaction disclosures | ||||||||||||
Issuance of common stock, net of issuance costs (in shares) | 2,608,695 | 750,000 | 720,000 | |||||||||
Senior Secured Credit Facility | Conversion Of Convertible Notes | ||||||||||||
Stock transaction disclosures | ||||||||||||
Number of shares issued upon conversion of debt | 929,967 | |||||||||||
Amount of debt converted into stock | $ 6,600 | |||||||||||
Conversion price | $ 7.08 | |||||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | |||||||||||
Number of trading days used to determine conversion stock price | 3 days | 3 days | ||||||||||
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2019 | ||||||||||||
Stock transaction disclosures | ||||||||||||
Payment of facility | $ 7,500 | |||||||||||
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2019 | Common Stock | ||||||||||||
Stock transaction disclosures | ||||||||||||
Number of trading days used to determine conversion stock price | 10 days | |||||||||||
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2019 | Maximum | Common Stock | ||||||||||||
Stock transaction disclosures | ||||||||||||
Number of shares issued upon conversion of debt | 2,135,625 | |||||||||||
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2020 | ||||||||||||
Stock transaction disclosures | ||||||||||||
Principal repayment to be paid | $ 15,000 | |||||||||||
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2020 | Common Stock | ||||||||||||
Stock transaction disclosures | ||||||||||||
Conversion price | $ 10 | |||||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | |||||||||||
Number of trading days used to determine conversion stock price | 3 days | |||||||||||
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2020 | Maximum | Common Stock | ||||||||||||
Stock transaction disclosures | ||||||||||||
Number of shares issued upon conversion of debt | 3,796,668 | |||||||||||
Conversion price, expressed as a percentage of stock price | 83.00% | |||||||||||
Investor | Debt issued to entities affiliated with Deerfield | Senior Secured Credit Facility | ||||||||||||
Related party transactions | ||||||||||||
Face amount of debt at time of related party stock purchase | $ 60,000 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Selected Quarterly Financial Information | |||||||||||
Net product sales | $ 15,393 | $ 12,503 | $ 11,363 | $ 10,729 | $ 9,222 | $ 7,100 | $ 5,179 | $ 5,631 | $ 49,988 | $ 27,132 | $ 10,033 |
Net product sales | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Gross profit (loss) | $ 7,631 | $ 5,546 | $ 4,376 | $ 5,508 | $ 5,582 | $ 4,277 | $ 2,362 | $ 881 | $ 23,060 | $ 13,102 | $ (1,701) |
Net loss attributable to common stock | $ (9,337) | $ (12,695) | $ (15,207) | $ (14,436) | $ (13,652) | $ (16,254) | $ (18,645) | $ (17,221) | |||
Weighted average common shares outstanding used to compute net loss per share, basic and diluted | 41,415,358 | 29,625,792 | 29,008,909 | 28,996,956 | 28,746,608 | 27,884,983 | 22,613,382 | 19,624,712 | 32,288,555 | 24,751,091 | 16,052,390 |
Net loss per share of common stock, basic and fully diluted | $ (0.23) | $ (0.43) | $ (0.52) | $ (0.50) | $ (0.47) | $ (0.58) | $ (0.82) | $ (0.88) | $ (1.60) | $ (2.66) | $ (5.16) |
Selected Quarterly Financial _4
Selected Quarterly Financial Data (Unaudited) - Explanatory Information (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 08, 2018 | Nov. 05, 2018 | Oct. 26, 2017 | Jun. 30, 2017 | Feb. 17, 2017 | Jul. 28, 2015 | Jun. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Conversion Of Convertible Notes | Senior Secured Credit Facility | ||||||||||
Selected Quarterly Financial Data (Unaudited) | ||||||||||
Amount of debt converted into stock | $ 6.6 | |||||||||
Conversion price | $ 7.08 | |||||||||
Conversion price, expressed as a percentage of stock price | 95.00% | |||||||||
Number of trading days used to determine conversion stock price | 3 days | 3 days | ||||||||
Number of shares of stock into which debt was converted | 929,967 | |||||||||
Common Stock | ||||||||||
Selected Quarterly Financial Data (Unaudited) | ||||||||||
Issuance of common stock, net of issuance costs (in shares) | 20,651,524 | 12,019,639 | ||||||||
Common Stock | Over-allotment option | ||||||||||
Selected Quarterly Financial Data (Unaudited) | ||||||||||
Issuance of common stock, net of issuance costs (in shares) | 2,608,695 | 750,000 | 720,000 | |||||||
Common Stock | Underwritten Public Offering | ||||||||||
Selected Quarterly Financial Data (Unaudited) | ||||||||||
Issuance of common stock, net of issuance costs (in shares) | 19,999,999 | 4,800,000 | 4,800,000 | 5,750,000 | ||||||
Public offering price (in dollars per share) | $ 2.30 | $ 6.25 | $ 6.25 | $ 5 | ||||||
Gross proceeds from issuance of stock | $ 30 | $ 30 | ||||||||
Payments of stock issuance costs | $ 0.2 | $ 0.2 | ||||||||
Term of option to purchase share | 30 days | 30 days | ||||||||
Shares offered to underwriters under option granted (in shares) | 720,000 | 720,000 |
Subsequent event (Details)
Subsequent event (Details) - Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan - shares | Jan. 01, 2019 | Jan. 01, 2018 | Jan. 01, 2017 | Jul. 31, 2015 |
Subsequent event | ||||
Increase in number of shares reserved and available for issuance | 1,449,847 | 803,049 | ||
Shares reserved for issuance under the plan | 767,330 | |||
Subsequent event | ||||
Subsequent event | ||||
Increase in number of shares reserved and available for issuance | 2,483,815 | |||
Shares reserved for issuance under the plan | 4,277,720 |
Schedule II - VALUATION AND Q_2
Schedule II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for chargebacks | |||
Movement in valuation and qualifying accounts | |||
Balance at beginning of period | $ 816 | $ 779 | $ 940 |
Additions charged to costs and expenses | 8,565 | 10,146 | 10,504 |
Deductions and Payments | (8,067) | (10,109) | (10,665) |
Balance at end of period | 1,314 | 816 | 779 |
Allowance for cash discounts | |||
Movement in valuation and qualifying accounts | |||
Balance at beginning of period | 337 | 171 | 99 |
Additions charged to costs and expenses | 3,519 | 1,814 | 772 |
Deductions and Payments | (3,305) | (1,648) | (700) |
Balance at end of period | 551 | 337 | 171 |
Sales offers | |||
Movement in valuation and qualifying accounts | |||
Balance at beginning of period | 7,168 | 2,070 | |
Additions charged to costs and expenses | 71,303 | 30,978 | 5,816 |
Deductions and Payments | (67,183) | (25,880) | (3,746) |
Balance at end of period | 11,288 | 7,168 | 2,070 |
Reserve for wholesaler fees | |||
Movement in valuation and qualifying accounts | |||
Balance at beginning of period | 2,345 | 509 | 361 |
Additions charged to costs and expenses | 17,414 | 8,244 | 2,838 |
Deductions and Payments | (15,510) | (6,408) | (2,690) |
Balance at end of period | 4,249 | 2,345 | 509 |
Reserve for returns | |||
Movement in valuation and qualifying accounts | |||
Balance at beginning of period | 2,711 | 1,157 | 429 |
Additions charged to costs and expenses | 3,803 | 1,792 | 764 |
Deductions and Payments | (1,357) | (238) | (36) |
Balance at end of period | 5,157 | 2,711 | 1,157 |
Rebates | |||
Movement in valuation and qualifying accounts | |||
Balance at beginning of period | 4,008 | 544 | 110 |
Additions charged to costs and expenses | 18,746 | 7,837 | 519 |
Deductions and Payments | (14,991) | (4,373) | (85) |
Balance at end of period | $ 7,763 | $ 4,008 | $ 544 |