Neos Therapeutics (NEOS) 10-Q 9 Aug 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 03, 2018
Document and Entity Information
Entity Registrant Name	Neos Therapeutics, Inc.
Entity Central Index Key	1,467,652
Trading Symbol	neos
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		29,673,910
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 18,318	$ 31,969
Short-term investments	9,722	18,448
Accounts receivable, net of allowances for chargebacks and cash discounts of $788 and $1,154, respectively	17,977	13,671
Inventories	12,713	11,732
Other current assets	1,336	3,575
Total current assets	60,066	79,395
Property and equipment, net	8,269	8,203
Intangible assets, net	15,507	16,348
Other assets	150	162
Total assets	83,992	104,108
Current Liabilities:
Accounts payable	6,060	11,460
Accrued expenses	34,128	20,944
Current portion of long-term debt	15,983	896
Total current liabilities	56,171	33,300
Long-Term Liabilities:
Long-term debt, net of current portion	43,932	58,938
Derivative liability	1,311	1,660
Deferred rent	1,036	1,083
Other long-term liabilities	178	180
Total long-term liabilities	46,457	61,861
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding at June 30, 2018 and December 31, 2017
Common stock, $0.001 par value, 100,000,000 authorized at June 30, 2018 and December 31, 2017; 29,048,589 and 29,014,788 issued and outstanding at June 30, 2018, respectively; 29,030,757 and 28,996,956 issued and outstanding at December 31, 2017, respectively	29	29
Treasury stock, at cost, 33,801 shares at June 30, 2018 and December 31, 2017	(352)	(352)
Additional paid-in capital	276,637	274,584
Accumulated deficit	(294,951)	(265,308)
Accumulated other comprehensive income (loss)	1	(6)
Total stockholders' equity (deficit)	(18,636)	8,947
Total liabilities and stockholders' equity	$ 83,992	$ 104,108

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Receivables allowances for chargebacks and cash discounts (in dollars)	$ 788	$ 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	29,048,589	29,030,757
Common stock, outstanding shares	29,014,788	28,996,956
Treasury stock, shares	33,801	33,801

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Net product sales	$ 11,363	$ 5,179	$ 22,092	$ 10,810
Cost of goods sold	6,987	2,817	12,208	7,567
Gross profit	4,376	2,362	9,884	3,243
Research and development	2,381	3,692	4,072	5,416
Selling and marketing expenses	11,557	11,706	24,547	22,412
General and administrative expenses	3,705	3,316	7,051	6,854
Loss from operations	(13,267)	(16,352)	(25,786)	(31,439)
Interest expense	(2,232)	(2,390)	(4,452)	(4,602)
Other income, net	292	97	595	175
Net loss	$ (15,207)	$ (18,645)	$ (29,643)	$ (35,866)
Weighted average common shares outstanding used to compute net loss per share, basic and diluted	29,008,909	22,613,382	29,002,966	21,127,303
Net loss per share of common stock, basic and diluted	$ (0.52)	$ (0.82)	$ (1.02)	$ (1.70)

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Comprehensive Income (loss)
Net loss	$ (15,207)	$ (18,645)	$ (29,643)	$ (35,866)
Other comprehensive income (loss):
Net unrealized gain (loss) on short-term investments	4	(3)	7	(5)
Total other comprehensive income (loss)	4	(3)	7	(5)
Comprehensive loss	$ (15,203)	$ (18,648)	$ (29,636)	$ (35,871)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total
Balance, beginning at Dec. 31, 2017	$ 29	$ (352)	$ 274,584	$ (265,308)	$ (6)	$ 8,947
Balance, beginning (in shares) at Dec. 31, 2017	29,030,757	(33,801)
Increase (Decrease) in Stockholders Equity
Issuance of common stock upon RSU conversion (in shares)	17,832
Share-based compensation expense			2,053			2,053
Net unrealized gain on investments					7	7
Net loss				(29,643)		(29,643)
Balance, ending at Jun. 30, 2018	$ 29	$ (352)	$ 276,637	$ (294,951)	$ 1	$ (18,636)
Balance, ending (in shares) at Jun. 30, 2018	29,048,589	(33,801)

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Cash Flows From Operating Activities:
Net loss	$ (29,643)	$ (35,866)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense	2,053	1,933
Depreciation and amortization of property and equipment	850	643
Amortization of patents and other intangible assets	869	817
Changes in fair value of earnout, derivative and warrant liabilities	(349)
Deferred interest on debt		2,111
Amortization of senior debt discounts	427	245
Amortization of short-term investment purchase discounts	(106)
Loss (gain) on sale of equipment	1	(33)
Other adjustments	(47)	(95)
Changes in operating assets and liabilities:
Accounts receivable	(4,306)	466
Inventories	(981)	20
Deferred contract sales organization fees		720
Other assets	2,251	730
Accounts payable	(5,400)	180
Accrued expenses	13,184	5,874
Net cash used in operating activities	(21,197)	(22,255)
Cash Flows From Investing Activities:
Purchases of short-term investments	(17,904)	(26,821)
Sales and maturities of short-term investments	26,743	21,021
Proceeds from sale-leaseback of equipment		3,222
Capital expenditures	(814)	(1,776)
Intangible asset expenditures	(28)	(49)
Net cash provided by (used in) investing activities	7,997	(4,403)
Cash Flows From Financing Activities:
Proceeds from the issuance of common stock, net of issuance costs		60,087
Payments made on borrowings	(451)	(379)
Payments made on behalf of Deerfield		(40)
Net cash (used in) provided by financing activities	(451)	59,668
(Decrease) increase in cash and cash equivalents	(13,651)	33,010
Cash and Cash Equivalents:
Beginning	31,969	24,352	$ 24,352
Ending	18,318	57,362	$ 31,969
Supplemental Disclosure of Noncash Transactions:
Acquired equipment under capital lease	105
Capital lease liability from purchase of equipment	105
Issuance of senior secured convertible notes		6,586
Capital lease liability from sale-leaseback transactions		3,222
Derivative liability incurred in connection with First Amendment to Facility		2,043
Beneficial conversion feature incurred on convertible notes		613
Deferred contract sales organization fees		312
Supplemental Cash Flow Information:
Interest paid	$ 4,116	$ 2,249

Organization and nature of oper

Organization and nature of operations	6 Months Ended
	Jun. 30, 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, 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.

Summary of significant accounti

Summary of significant accounting policies	6 Months Ended
	Jun. 30, 2018
Summary of significant accounting policies
Summary of significant accounting policies	Note 2. Summary of significant accounting policies Basis of presentation: The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results of operations for and financial condition as of the end of the interim period have been included. Results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the year ending December 31, 2018 or any period thereafter. The audited consolidated financial statements as of and for the year ended December 31, 2017 included information and footnotes necessary for such presentation and were included in the Neos Therapeutics, Inc. Annual Report on Form 10-K and filed with the SEC on March 16, 2018. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017. Principles of consolidation: At June 30, 2018 and December 31, 2017 and for the three and six months ended June 30, 2018 and 2017, the condensed 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. Reclassifications: In 2017, the Company reclassified certain patents from Other assets to Intangible assets, net as reported on the condensed consolidated balance sheets. Liquidity: During 2017 and the six months ended June 30, 2018, 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. 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-Q. The Company continues to evaluate alternatives to restructure or replace its debt and has considerable discretion over its operating expenses as options to supplement revenue to meet its cash needs. If the Company does not restructure or replace its debt or raise sufficient funds from other sources, the Company may not be able to meet its obligations over the next twelve months. 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 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. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in other income (expense) 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. Inventories: Inventories are measured at the lower of cost (first in, first out) or net realizable value. 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. 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 the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument 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. 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 (“Tussionex ANDA”) 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. 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. The Company views its operations and manages its business in one operating segment, which is the development, manufacturing and commercialization of pharmaceuticals. Disaggregation of revenue The following table disaggregates the Company’s net product sales by product: Three Months Ended Six Months Ended 2018 2017 2018 2017 Adzenys XR-ODT $ $ $ $ Cotempla XR-ODT — — Adzenys ER ) — — Generic Tussionex $ $ $ $ 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 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. Advertising costs: Advertising costs are comprised of print and electronic media placements that are expensed as incurred. The Company recognized advertising costs of $219,000 and $450,000 during the three and six months ended June 30, 2018, respectively, and advertising costs of $10,000 and $248,000 during the three and six months ended June 30, 2017, 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. Due to the previous lack of a public market for the trading of its common stock and a lack of company-specific historical and implied volatility data, the Company had, prior to the Initial Public Offer of the Company’s common shares (“IPO”), historically utilized third party valuation analyses to determine the fair value. 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 new 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. 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 June 30, 2018 and December 31, 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 June 30, 2018 and December 31, 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 March 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 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. The Company will adopt this 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) . 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 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. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. In January 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842, Leases (Topic 842) , which adds two practical expedients to the new lease guidance. The amendment and this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the effect that the standard will have on its consolidated financial statements and related disclosures and has not determined the expected impact at this time. 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. 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. 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. Impacts to Previously Reported Results Adoption of the new revenue standard impacted the Company’s previously reported results as follows: Three Months Ended June 30, 2017 As Previously New Revenue Condensed consolidated statement of operations Reported Adjustment As Adjusted (in thousands, except per share amounts) Revenue: net product sales $ $ $ Cost of goods sold Gross profit Net loss attributable to common stock ) ) Net loss per share of common stock, basic and diluted ) — ) Six Months Ended June 30, 2017 As Previously New Revenue Condensed consolidated statement of operations Reported Adjustment As Adjusted (in thousands, except per share amounts) Revenue: net product sales $ $ $ Cost of goods sold Gross profit ) Net loss attributable to common stock ) ) ) Net loss per share of common stock, basic and diluted ) — ) December 31, 2017 As Previously New Revenue Condensed consolidated balance sheet Reported Adjustment As Adjusted (in thousands) Inventories $ $ ) $ Other current assets ) Total current assets ) Accrued expenses Deferred revenue ) — Total current liabilities ) Accumulated deficit ) ) ) Total liabilities and stockholder’ equity ) Adoption of the New Revenue Standard had no impact to cash from or used in operating, financing, or investing activities on the Company’s consolidated statements of cash flows. From time to time, additional new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Net loss per share

Net loss per share	6 Months Ended
	Jun. 30, 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 as of June 30, 2018 and 2017 were excluded from consideration in the computation of diluted net loss per share of common stock for the six months ended June 30, 2018 and 2017, respectively, because including them would have been anti-dilutive: June 30, 2018 2017 Senior Secured Convertible Notes — registered conversion shares not issued — Series C Redeemable Convertible Preferred Stock Warrants (as converted) Stock options outstanding RSUs granted, not issued, or outstanding

Fair value of financial instrum

Fair value of financial instruments	6 Months Ended
	Jun. 30, 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 and accrued liabilities, approximated their fair value due to their short-term maturities. The remaining financial instruments were reported on the Company’s condensed 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 June 30, 2018 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ $ — $ Short-term investments — — Total financial assets $ — $ Earnout liability $ — $ — $ $ Derivative liability (see Note 8) — — Total financial liabilities $ — $ — $ $ Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ — $ — $ Short-term investments — — Total financial assets $ $ $ — $ Earnout liability $ — $ — $ $ Derivative liability (see Note 8) — — Total financial liabilities $ — $ — $ $ The Company’s Level 1 assets included bank deposits, certificates of deposit and actively traded money market funds with a maturity of 90 days or less at June 30, 2018 and December 31, 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 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 June 30, 2018 and December 31, 2017 as shown below: June 30, 2018 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ $ — $ Financial and corporate debt securities $ $ $ December 31, 2017 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ $ — $ Financial and corporate debt securities ) $ $ ) $ The Company’s Level 3 liabilities 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 June 30, 2018 and December 31, 2017. The fair value of the derivative liability was determined after taking into consideration valuations using the Monte Carlo method based on assumptions at June 30, 2018 and December 31, 2017. There were no significant changes in the pricing assumptions during the six months ended June 30, 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 6/30/2018 12/31/2017 Valuation Method Monte Carlo Monte Carlo Volatility (annual) N/A N/A Time period from valuation until maturity of debt (yrs.) Cumulative probability of a change in control prepayment implied by model % % Cumulative probability of other accelerated prepayments implied by model % % Discount rate % % Fair value of liability at valuation date (thousands) $ $ Significant changes to these assumptions would result in increases/decreases to the fair value of the debt 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, 2017 $ Change in fair value ) Balance at June 30, 2018 $

Inventories

Inventories	6 Months Ended
	Jun. 30, 2018
Inventories
Inventories	Note 5. Inventories Inventories at the indicated dates consist of the following: December 31, June 30, 2017 (in thousands) Raw materials $ $ Work in progress Finished goods Inventory at cost Inventory reserve ) ) $ $

Sale-leaseback transaction

Sale-leaseback transaction	6 Months Ended
	Jun. 30, 2018
Sale-leaseback transaction
Sale-leaseback transaction	Note 6. 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 three months ended June 30, 2018 and 2017, approximately $1,000 and $13,000, respectively, and for the six months ended June 30, 2018 and 2017, approximately $2,000 and $33,000, respectively, of the net gain on sale-leasebacks was recognized in other income on the condensed consolidated statements of operations.

Accrued expenses

Accrued expenses	6 Months Ended
	Jun. 30, 2018
Accrued expenses
Accrued expenses	Note 7. Accrued expenses Accrued expenses as of June 30, 2018 and December 31, 2017 consist of the following: June 30, December 31, (in thousands) Accrued savings offers $ $ Accrued rebates Accrued customer returns Accrued wholesaler fees Accrued payroll and benefits Other accrued expenses Total accrued expenses $ $

Long-term debt

Long-term debt	6 Months Ended
	Jun. 30, 2018
Long-term debt
Long-term debt	Note 8. Long-term debt Long-term debt at the indicated dates consists of the following: June 30, December 31, 2018 2017 (in thousands) Deerfield senior secured credit facility, net of discount of $2,417 and $2,843, respectively $ $ Capital leases, maturing through November 2022 Less current portion ) ) Long-term debt $ $ 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 9). 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 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 is 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 transferee or assignee 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 currently expects to satisfy all of its obligations under this Registration Agreement and does not expect to pay any damages pursuant to this agreement; therefore, no liability has been recorded (see Note 12). 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 June 30, 2018, the fair value of the derivative is $1.3 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 in stockholders’ equity (deficit) 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. Pursuant to the Convertible Notes, if the Company had failed to provide the number of conversion shares, then the Company would have paid damages to Deerfield or subsequent holder or any designee (“Holder”) for each day after the third business day after receipt of notice of conversion (the “Share Delivery Date”) that such conversion was 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 June 30, 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, charged to interest expense and totaled $218,000 and 427,000 for the three and six months ended June 30, 2018, respectively, and $163,000 and $245,000 for the three and six months ended June 30, 2017, respectively. Capital lease obligations: Capital lease obligations consist of sale-leaseback and equipment leases, both of which include options to purchase. As described in Note 6, 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 $91,000 and 189,000 for the three and six months ended June 30, 2018, respectively, and $22,000 and $42,000 for the three and six months ended June 30, 2017, respectively. Future principal payments of long-term debt including capital leases are as follows: Period ending: June 30, (in thousands) 2019 $ 2020 2021 2022 2023 Thereafter — Future principal payments $ Less unamortized debt discount related to long-term debt ) Less current portion of long-term debt ) Total long-term debt $

Common stock

Common stock	6 Months Ended
	Jun. 30, 2018
Common stock
Common stock	Note 9. Common stock 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 us 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. No sales have been made under the Sales Agreement during the six months ended June 30, 2018. As of June 30, 2018, $58.0 million of the Company’s common stock, preferred stock, debt securities, warrants and/or units remained available to be sold pursuant to the Shelf, including $36.2 million of the Company’s common stock which remained available to be sold under the Sales Agreement, subject to certain conditions specified therein. 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 May 1, 2018, the Company issued 17,832 shares of common stock pursuant to the conversion of vested RSUs.

Share-based Compensation

Share-based Compensation	6 Months Ended
	Jun. 30, 2018
Share-based Compensation
Share-based Compensation	Note 10. Share-based Compensation Share-based Compensation Plans In July 2015, the Company adopted the Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan (the “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, 2018 and 2017, the Company added 1,449,847 shares and 803,049 shares, respectively, to the option pool. The 2015 Plan superseded the Neos Therapeutics, Inc. 2009 Equity Plan (the “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 June 30, 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, 2017, 9,304 shares related to forfeited 2009 Plan options and 33,801 shares related to the surrender of restricted stock were added to the shares available under the 2015 Plan. During the six months ended June 30, 2018, 13,332 shares related to forfeited 2009 Plan options were added to the shares available under the 2015 Plan. As of June 30, 2018, 1,429,673 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. As of June 30, 2018, 200,000 shares of common stock remain available for grant under the Inducement Plan. 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. Share-based Compensation Expense The Company has reported share-based compensation expense for the three and six months ended June 30, 2018 and 2017, respectively, in its condensed consolidated statements of operations as follows: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in thousands) Cost of goods sold $ $ $ $ Research and development Selling and marketing General and administrative $ $ $ $ The total share based compensation expense included in the table above is attributable to stock options and RSUs of $986,000 and $101,000 for the three months ended June 30, 2018, respectively, and $1.9 million and $137,000 for the six months ended June 30, 2018, respectively. The total share based compensation expense included in the table above is attributable to stock options, RSUs and restricted stock of $0.9 million, $21,000 and $23,000 for the three months ended June 30, 2017, respectively, and $1.9 million, $21,000 and $45,000 for the six months ended June 30, 2017, respectively. As of June 30, 2018, there was $9.1 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 2.7 years for stock options and 3.4 years for RSUs. There is no unrecognized compensation cost associated with grants of restricted stock. Stock Options During the six months ended June 30, 2018, the Company’s board of directors granted 621,253 options under the 2015 Plan. In June 2018, the Company granted 600,000 options under the Inducement Plan to Gerald McLaughlin, the Company’s Chief Executive Officer, at an exercise price of $6.20 per share. 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: Six Months Ended June 30, 2018 Estimated dividend yield % Expected stock price volatility % Weighted-average risk-free interest rate % Expected life of option in years Weighted-average option fair value at grant $ A summary of outstanding and exercisable options as of June 30, 2018 and December 31, 2017 and the activity from December 31, 2017 through June 30, 2018, is presented below: Weighted- Number of Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2017 $ $ Exercisable at December 31, 2017 $ $ Granted $ Exercised — — Expired, forfeited or cancelled ) Outstanding at June 30, 2018 $ $ Exercisable at June 30, 2018 $ $ The weighted-average remaining contractual life of options outstanding and exercisable on June 30, 2018 was 8.2 and 7.0 years, respectively. The option exercise prices for all options granted January 1, 2018 through June 30, 2018 ranged from $6.20 per share to $10.40 per share. The weighted-average remaining contractual life of options outstanding and exercisable on December 31, 2017 was 7.9 and 7.2 years, respectively. The option exercise price for all options granted in the year ended December 31, 2017 ranged from $7.00 to $9.10 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. On May 1, 2018, 19,686 vested RSUs were converted into an equivalent 17,832 shares of common stock. The Company withheld 1,854 shares of its common stock to partially satisfy tax withholding obligation upon vesting of the RSUs. A summary of outstanding RSUs as of June 30, 2018 and December 31, 2017 and the activity from December 31, 2017 through June 30, 2018, is presented below: Weighted- Number of Average RSUs Fair Value Outstanding at December 31, 2017 $ Granted Converted ) Withheld for tax obligation ) Expired, forfeited or cancelled — — Outstanding at June 30, 2018 $ The weighted-average remaining contractual life of RSUs outstanding on June 30, 2018 was 9.3 years. Restricted stock The Company did not issue any shares of restricted stock for the six months ended June 30, 2018, or for the year ended December 31, 2017. No vested restricted stock awards were settled during the six months ended June 30, 2018. The Company had no unvested restricted stock as of June 30, 2018 and December 31, 2017. For the six months ended June 30, 2018, there were no shares of restricted stock granted or forfeited.

Treasury stock

Treasury stock	6 Months Ended
	Jun. 30, 2018
Treasury stock
Treasury stock	Note 11. 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 June 30, 2018.

Commitments and contingencies

Commitments and contingencies	6 Months Ended
	Jun. 30, 2018
Commitments and contingencies
Commitments and contingencies	Note 12. Commitments and contingencies Registration Payment Arrangement: In June 2017, in conjunction with the 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 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 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 transferee or assignee 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 had filed an Abbreviated New Drug Application (“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. The Company intends to vigorously enforce its intellectual property rights relating to Cotempla XR-ODT. 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 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 in the District of Delaware 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 “Settlement Agreement”) and a Licensing Agreement (the “Licensing Agreement” and collectively with the Settlement Agreement, the “Agreement”) with Actavis. The Agreement resolves all ongoing litigation involving the Company’s Adzenys XR-ODT patents and Actavis’s ANDA. Under the 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 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. Operating lease: The Company leases its Grand Prairie, Texas office space and manufacturing facility under an operating lease which expires in 2024. In addition, in December 2015, the Company executed a 60-month lease for office space in Blue Bell, Pennsylvania for its commercial operations, which commenced on May 1, 2016. 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 $1.0 million at June 30, 2018 and $1.1 million at 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 was $52,000 and $106,000 for the three and six months ended June 30, 2018, respectively, and $62,000 and $121,000 for the three and six months ended June 30, 2017, respectively. Rent expense for these leases, excluding the share of operating expenses, was $252,000 and $505,000 for the three and six months ended June 30, 2018, respectively, and $252,000 and $504,000 for the three and six months ended June 30, 2017, 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 $467,000 and $811,000 of compensation expense for the three and six months ended June 30, 2018, respectively, and $291,000 and $618,000 for the three and six months ended June 30, 2017, respectively, under the Bonus Plan.

License agreements

License agreements	6 Months Ended
	Jun. 30, 2018
License agreements
License agreements	Note 13. License agreements On October 17, 2017, the Company entered into the Agreement with Actavis. Under the 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 Licensing Agreement has been submitted to the applicable governmental agencies (see Note 12). 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 had 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 product, 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 License Agreement and 2017 License Agreement 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	6 Months Ended
	Jun. 30, 2018
Related party transactions
Related party transactions	Note 14. 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 9). 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. 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 (see Note 9). 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, was classified as a related party at the time of the corresponding transactions. 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 be 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 (see Note 8).

Summary of significant accoun22

Summary of significant accounting policies (Policies)	6 Months Ended
	Jun. 30, 2018
Summary of significant accounting policies
Basis of presentation	Basis of presentation: The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results of operations for and financial condition as of the end of the interim period have been included. Results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the year ending December 31, 2018 or any period thereafter. The audited consolidated financial statements as of and for the year ended December 31, 2017 included information and footnotes necessary for such presentation and were included in the Neos Therapeutics, Inc. Annual Report on Form 10-K and filed with the SEC on March 16, 2018. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017.
Principles of consolidation	Principles of consolidation: At June 30, 2018 and December 31, 2017 and for the three and six months ended June 30, 2018 and 2017, the condensed 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.
Reclassifications	Reclassifications: In 2017, the Company reclassified certain patents from Other assets to Intangible assets, net as reported on the condensed consolidated balance sheets.
Liquidity	Liquidity: During 2017 and the six months ended June 30, 2018, 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. 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-Q. The Company continues to evaluate alternatives to restructure or replace its debt and has considerable discretion over its operating expenses as options to supplement revenue to meet its cash needs. If the Company does not restructure or replace its debt or raise sufficient funds from other sources, the Company may not be able to meet its obligations over the next twelve months.
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 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. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in other income (expense) 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.
Inventories	Inventories: Inventories are measured at the lower of cost (first in, first out) or net realizable value. 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.
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 the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument 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.
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 (“Tussionex ANDA”) 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.
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. The Company views its operations and manages its business in one operating segment, which is the development, manufacturing and commercialization of pharmaceuticals. Disaggregation of revenue The following table disaggregates the Company’s net product sales by product: Three Months Ended Six Months Ended 2018 2017 2018 2017 Adzenys XR-ODT $ $ $ $ Cotempla XR-ODT — — Adzenys ER ) — — Generic Tussionex $ $ $ $ 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 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.
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 $219,000 and $450,000 during the three and six months ended June 30, 2018, respectively, and advertising costs of $10,000 and $248,000 during the three and six months ended June 30, 2017, 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. Due to the previous lack of a public market for the trading of its common stock and a lack of company-specific historical and implied volatility data, the Company had, prior to the Initial Public Offer of the Company’s common shares (“IPO”), historically utilized third party valuation analyses to determine the fair value. 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 new 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.
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 June 30, 2018 and December 31, 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 June 30, 2018 and December 31, 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 March 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 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. The Company will adopt this 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) . 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 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. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. In January 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842, Leases (Topic 842) , which adds two practical expedients to the new lease guidance. The amendment and this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the effect that the standard will have on its consolidated financial statements and related disclosures and has not determined the expected impact at this time. 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. 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. 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 Impacts to Previously Reported Results Adoption of the new revenue standard impacted the Company’s previously reported results as follows: Three Months Ended June 30, 2017 As Previously New Revenue Condensed consolidated statement of operations Reported Adjustment As Adjusted (in thousands, except per share amounts) Revenue: net product sales $ $ $ Cost of goods sold Gross profit Net loss attributable to common stock ) ) Net loss per share of common stock, basic and diluted ) — ) Six Months Ended June 30, 2017 As Previously New Revenue Condensed consolidated statement of operations Reported Adjustment As Adjusted (in thousands, except per share amounts) Revenue: net product sales $ $ $ Cost of goods sold Gross profit ) Net loss attributable to common stock ) ) ) Net loss per share of common stock, basic and diluted ) — ) December 31, 2017 As Previously New Revenue Condensed consolidated balance sheet Reported Adjustment As Adjusted (in thousands) Inventories $ $ ) $ Other current assets ) Total current assets ) Accrued expenses Deferred revenue ) — Total current liabilities ) Accumulated deficit ) ) ) Total liabilities and stockholder’ equity ) Adoption of the New Revenue Standard had no impact to cash from or used in operating, financing, or investing activities on the Company’s consolidated statements of cash flows. From time to time, additional new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Summary of significant accoun23

Summary of significant accounting policies (Tables)	6 Months Ended
	Jun. 30, 2018
Summary of significant accounting policies
Schedule of disaggregation of revenue	Three Months Ended Six Months Ended 2018 2017 2018 2017 Adzenys XR-ODT $ $ $ $ Cotempla XR-ODT — — Adzenys ER ) — — Generic Tussionex $ $ $ $
ASU 2014-09
Summary of significant accounting policies
Schedule of impacts to reported results due to new revenue standard	Three Months Ended June 30, 2017 As Previously New Revenue Condensed consolidated statement of operations Reported Adjustment As Adjusted (in thousands, except per share amounts) Revenue: net product sales $ $ $ Cost of goods sold Gross profit Net loss attributable to common stock ) ) Net loss per share of common stock, basic and diluted ) — ) Six Months Ended June 30, 2017 As Previously New Revenue Condensed consolidated statement of operations Reported Adjustment As Adjusted (in thousands, except per share amounts) Revenue: net product sales $ $ $ Cost of goods sold Gross profit ) Net loss attributable to common stock ) ) ) Net loss per share of common stock, basic and diluted ) — ) December 31, 2017 As Previously New Revenue Condensed consolidated balance sheet Reported Adjustment As Adjusted (in thousands) Inventories $ $ ) $ Other current assets ) Total current assets ) Accrued expenses Deferred revenue ) — Total current liabilities ) Accumulated deficit ) ) ) Total liabilities and stockholder’ equity )

Net loss per share (Tables)

Net loss per share (Tables)	6 Months Ended
	Jun. 30, 2018
Net loss per share
Schedule of potentially dilutive securities excluded in the computation of diluted net loss per share	June 30, 2018 2017 Senior Secured Convertible Notes — registered conversion shares not issued — Series C Redeemable Convertible Preferred Stock Warrants (as converted) Stock options outstanding RSUs granted, not issued, or outstanding

Fair value of financial instr25

Fair value of financial instruments (Tables)	6 Months Ended
	Jun. 30, 2018
Fair value of financial instruments
Schedule of hierarchy for financial instruments measured at fair value on a recurring basis	Fair Value as of June 30, 2018 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ $ — $ Short-term investments — — Total financial assets $ — $ Earnout liability $ — $ — $ $ Derivative liability (see Note 8) — — Total financial liabilities $ — $ — $ $ Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ — $ — $ Short-term investments — — Total financial assets $ $ $ — $ Earnout liability $ — $ — $ $ Derivative liability (see Note 8) — — Total financial liabilities $ — $ — $ $
Schedule of cash and cash equivalents and short-term investments	June 30, 2018 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ $ — $ Financial and corporate debt securities $ $ $ December 31, 2017 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ $ — $ Financial and corporate debt securities ) $ $ ) $
Schedule of changes in Level 3 liabilities measured at fair value	Level 3 Liabilities (in thousands) Balance at December 31, 2017 $ Change in fair value ) Balance at June 30, 2018 $
Derivative liability
Fair value of financial instruments
Methodologies and significant inputs used in determination of fair value	Derivative Liability Date of Valuation 6/30/2018 12/31/2017 Valuation Method Monte Carlo Monte Carlo Volatility (annual) N/A N/A Time period from valuation until maturity of debt (yrs.) Cumulative probability of a change in control prepayment implied by model % % Cumulative probability of other accelerated prepayments implied by model % % Discount rate % % Fair value of liability at valuation date (thousands) $ $

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2018
Inventories
Schedule of inventories	December 31, June 30, 2017 (in thousands) Raw materials $ $ Work in progress Finished goods Inventory at cost Inventory reserve ) ) $ $

Accrued expenses (Tables)

Accrued expenses (Tables)	6 Months Ended
	Jun. 30, 2018
Accrued expenses
Schedule of accrued expenses	June 30, December 31, (in thousands) Accrued savings offers $ $ Accrued rebates Accrued customer returns Accrued wholesaler fees Accrued payroll and benefits Other accrued expenses Total accrued expenses $ $

Long-term debt (Tables)

Long-term debt (Tables)	6 Months Ended
	Jun. 30, 2018
Long-term debt
Schedule of long-term debt	June 30, December 31, 2018 2017 (in thousands) Deerfield senior secured credit facility, net of discount of $2,417 and $2,843, respectively $ $ Capital leases, maturing through November 2022 Less current portion ) ) Long-term debt $ $
Schedule of future principal payments of long-term debt including capital leases	Period ending: June 30, (in thousands) 2019 $ 2020 2021 2022 2023 Thereafter — Future principal payments $ Less unamortized debt discount related to long-term debt ) Less current portion of long-term debt ) Total long-term debt $

Share-based Compensation (Table

Share-based Compensation (Tables)	6 Months Ended
	Jun. 30, 2018
Share-based Compensation
Schedule of share-based compensation expense	Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in thousands) Cost of goods sold $ $ $ $ Research and development Selling and marketing General and administrative $ $ $ $
Schedule of weighted-average key assumptions used in determining fair value of options granted	Six Months Ended June 30, 2018 Estimated dividend yield % Expected stock price volatility % Weighted-average risk-free interest rate % Expected life of option in years Weighted-average option fair value at grant $
Summary of outstanding and exercisable options	Weighted- Number of Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2017 $ $ Exercisable at December 31, 2017 $ $ Granted $ Exercised — — Expired, forfeited or cancelled ) Outstanding at June 30, 2018 $ $ Exercisable at June 30, 2018 $ $
Summary of outstanding RSUs	Weighted- Number of Average RSUs Fair Value Outstanding at December 31, 2017 $ Granted Converted ) Withheld for tax obligation ) Expired, forfeited or cancelled — — Outstanding at June 30, 2018 $

Organization and nature of op30

Organization and nature of operations (Details)	6 Months Ended
	Jun. 30, 2018item
Organization and nature of operations
Number of approved product	3

Summary of significant accoun31

Summary of significant accounting policies (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018USD ($)subsidiary	Jun. 30, 2017USD ($)subsidiary	Jun. 30, 2018USD ($)segmentsubsidiary	Jun. 30, 2017USD ($)subsidiary	Dec. 31, 2017USD ($)subsidiary
Summary of significant accounting policies
Number of operating segments | segment			1
Disaggregation of revenue
Revenues	$ 11,363,000	$ 5,179,000	$ 22,092,000	$ 10,810,000
Product returns
Return time period for expired product prior to expiry date			6 months
Return time period for expired product after expiry date			12 months
Advertising costs
Advertising costs	219,000	10,000	$ 450,000	248,000
Income taxes
Deferred tax assets, net of valuation allowance	0		0		$ 0
Adzenys XR-ODT
Disaggregation of revenue
Revenues	6,516,000	4,439,000	11,508,000	7,552,000
Cotempla XR-ODT
Disaggregation of revenue
Revenues	4,342,000		7,989,000
Adzenys ER
Disaggregation of revenue
Revenues	(28,000)		175,000
Generic Tussionex
Disaggregation of revenue
Revenues	$ 533,000	$ 740,000	$ 2,420,000	$ 3,258,000
Minimum
Intangible assets
Useful life			10 years
Maximum
Intangible assets
Useful life			20 years
Wholly-owned subsidiaries
Summary of significant accounting policies
Number of wholly-owned subsidiaries | subsidiary	4	4	4	4	4

Summary of significant accoun32

Summary of significant accounting policies - Recent accounting pronouncements (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Condensed consolidated statements of operations
Net product sales	$ 11,363	$ 5,179	$ 22,092	$ 10,810
Cost of goods sold	6,987	2,817	12,208	7,567
Gross profit	4,376	2,362	9,884	3,243
Net loss attributable to common stock	$ (15,207)	$ (18,645)	$ (29,643)	$ (35,866)
Net loss per share of common stock, basic and diluted	$ (0.52)	$ (0.82)	$ (1.02)	$ (1.70)
Condensed consolidated balance sheet
Inventories	$ 12,713		$ 12,713		$ 11,732
Other current assets	1,336		1,336		3,575
Total current assets	60,066		60,066		79,395
Accrued expenses	34,128		34,128		20,944
Total current liabilities	56,171		56,171		33,300
Accumulated deficit	(294,951)		(294,951)		(265,308)
Total liabilities and stockholders' equity	$ 83,992		$ 83,992		104,108
As Previously Reported | ASU 2014-09
Condensed consolidated statements of operations
Net product sales		$ 4,909		$ 10,536
Cost of goods sold		2,576		7,191
Gross profit		2,333		3,345
Net loss attributable to common stock		$ (18,674)		$ (35,764)
Net loss per share of common stock, basic and diluted		$ (0.83)		$ (1.69)
Condensed consolidated balance sheet
Inventories					13,459
Other current assets					5,093
Total current assets					82,640
Accrued expenses					10,570
Deferred revenue					14,676
Total current liabilities					37,602
Accumulated deficit					(266,365)
Total liabilities and stockholders' equity					107,353
New Revenue Standard Adjustment | ASU 2014-09
Condensed consolidated statements of operations
Net product sales		$ 270		$ 274
Cost of goods sold		241		376
Gross profit		29		(102)
Net loss attributable to common stock		$ 29		$ (102)
Condensed consolidated balance sheet
Inventories					(1,727)
Other current assets					(1,518)
Total current assets					(3,245)
Accrued expenses					10,374
Deferred revenue					(14,676)
Total current liabilities					(4,302)
Accumulated deficit					(1,057)
Total liabilities and stockholders' equity					$ (3,245)

Net loss per share (Details)

Net loss per share (Details) - shares	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Senior Secured Convertible Notes
Net loss per share
Potentially dilutive shares excluded in the computation of diluted net loss per share		940,924
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
Stock options outstanding
Net loss per share
Potentially dilutive shares excluded in the computation of diluted net loss per share	3,576,062	2,357,123
RSU's
Net loss per share
Potentially dilutive shares excluded in the computation of diluted net loss per share	159,064	78,750

Fair value of financial instr34

Fair value of financial instruments - Hierarchy (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Hierarchy for financial instruments measured at fair value on a recurring basis
Short-term investments	$ 9,722	$ 18,448
Derivative liability (see Note 8)	1,311	1,660
Recurring basis | Fair Value
Hierarchy for financial instruments measured at fair value on a recurring basis
Cash and cash equivalents	18,318	31,969
Short-term investments	9,722	18,448
Total financial assets	28,040	50,417
Earnout liability	170	170
Derivative liability (see Note 8)	1,311	1,660
Total financial liabilities	1,481	1,830
Recurring basis | Fair Value | Level 1
Hierarchy for financial instruments measured at fair value on a recurring basis
Cash and cash equivalents	16,322	31,969
Total financial assets	16,322	31,969
Recurring basis | Fair Value | Level 2
Hierarchy for financial instruments measured at fair value on a recurring basis
Cash and cash equivalents	1,996
Short-term investments	9,722	18,448
Total financial assets	11,718	18,448
Recurring basis | Fair Value | Level 3
Hierarchy for financial instruments measured at fair value on a recurring basis
Earnout liability	170	170
Derivative liability (see Note 8)	1,311	1,660
Total financial liabilities	$ 1,481	$ 1,830

Fair value of financial instr35

Fair value of financial instruments - Cash and cash equivalents and short-term investments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Cash and cash equivalents and short-term investments
Amortized Cost	$ 28,039	$ 50,423
Unrealized Gain / (Loss)	1	(6)
Market Value	28,040	50,417
Bank deposits and money market funds
Cash and cash equivalents and short-term investments
Amortized Cost	16,322	31,969
Market Value	16,322	31,969
Financial and corporate debt securities
Cash and cash equivalents and short-term investments
Amortized Cost	11,717	18,454
Unrealized Gain / (Loss)	1	(6)
Market Value	$ 11,718	$ 18,448

Fair value of financial instr36

Fair value of financial instruments - Earnout liability and Derivative liability (Details) - Recurring basis - Level 3 - Derivative liability - Monte Carlo - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Methodologies and significant inputs used in the determination of the fair value
Time period from valuation until maturity of debt (yrs.)	3 years 10 months 11 days	4 years 4 months 10 days
Cumulative probability of a change in control prepayment implied by model	26.00%	27.00%
Cumulative probability of other accelerated prepayments implied by model	15.00%	17.00%
Discount rate	16.74%	16.20%
Fair value of liability at valuation date (thousands)	$ 1,311	$ 1,660

Fair value of financial instr37

Fair value of financial instruments - Changes in Level 3 (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018USD ($)
Changes in Level 3 liabilities measured at fair value
Balance at beginning of period	$ 1,830
Change in fair value	(349)
Balance at end of period	$ 1,481

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Inventories
Raw materials	$ 3,899	$ 3,476
Work in progress	4,420	6,155
Finished goods	4,742	2,470
Inventory at cost	13,061	12,101
Inventory reserve	(348)	(369)
Inventories net	$ 12,713	$ 11,732

Sale-leaseback transaction (Det

Sale-leaseback transaction (Details) - Essex Capital Corporation, as Investor

Jun. 30, 2017USD ($)

Feb. 13, 2017USD ($)

Jun. 30, 2017USD ($)

Feb. 28, 2017USD ($)

Jun. 30, 2018USD ($)

Jun. 30, 2017USD ($)

Jun. 30, 2018USD ($)

Jun. 30, 2017USD ($)

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

$ 1,000

$ 13,000

$ 2,000

$ 33,000

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

$ 2,742,000

$ 481,000

Imputed interest rate on lease (as a percent)

14.90%

14.30%

Net gain on sale leaseback

$ 14,000

Amortization period

36 months

Net gain recognized in period on sale leaseback transaction

$ 0

Accrued expenses (Details)

Accrued expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accrued expenses
Accrued savings offers	$ 13,370	$ 7,168
Accrued rebates	6,069	4,008
Accrued customer returns	3,792	2,711
Accrued wholesaler fees	3,674	2,345
Accrued payroll and benefits	4,478	2,534
Other accrued expenses	2,745	2,178
Total accrued expenses	$ 34,128	$ 20,944

Long-term debt - Summary (Detai

Long-term debt - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Long-term debt
Long-term debt and capital lease obligations, including current maturities	$ 59,915	$ 59,834
Less current portion	(15,983)	(896)
Long-term debt	43,932	58,938
Debt instrument, unamortized discount
Unamortized discount on debt	2,417
Debt issued to entities affiliated with Deerfield | Senior Secured Credit Facility
Long-term debt
Long-term debt and capital lease obligations, including current maturities	57,583	57,156
Debt instrument, unamortized discount
Unamortized discount on debt	2,417	2,843
Capital leases, maturing through November 2022
Long-term debt
Long-term debt and capital lease obligations, including current maturities	$ 2,332	$ 2,678

Long-term debt - Senior Secured

Long-term debt - Senior Secured Credit facility (Details)	Oct. 26, 2017USD ($)$ / sharesshares	Jun. 30, 2017$ / sharesshares	Jun. 01, 2017USD ($)item$ / shares	May 11, 2016USD ($)iteminstallment	Feb. 28, 2017$ / sharesshares	Jun. 30, 2018USD ($)	Jun. 30, 2017USD ($)$ / shares	Jun. 30, 2018USD ($)	Jun. 30, 2017USD ($)$ / shares	Dec. 31, 2017USD ($)
Long-term debt
Debt discount amortization								$ 427,000	$ 245,000
Derivative liability						$ 1,311,000		1,311,000		$ 1,660,000
Derivative liability (see Note 8)						1,311,000		1,311,000		1,660,000
Unamortized discount on debt						2,417,000		$ 2,417,000
Recognition of beneficial conversion feature on convertible notes									$ 613,000
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
Prepayment charges				243,000
Payment of senior debt and fee				24,300,000
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)								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%
Senior Secured Convertible Note | Registration Agreement
Long-term debt
Liability recorded for expected unmet agreement obligations			$ 0
Underwritten Public Offering | Common Stock
Long-term debt
Issuance of common stock, net of issuance costs (in shares) | shares		4,800,000			5,750,000
Public offering price (in dollars per share) | $ / shares		$ 6.25			$ 5		$ 6.25		$ 6.25
Minimum | Senior Secured Convertible Note
Long-term debt
Prepayment fee of debt (in percentage)			2.00%
Conversion price | $ / shares			$ 7
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
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
Date of first installment of principal payment				May 1, 2019
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
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						218,000	$ 163,000	$ 427,000	$ 245,000
Unamortized discount on debt						$ 2,417,000		$ 2,417,000		$ 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 Fund 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%
Derivative liability (see Note 8)			$ 2,100,000
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
Essex Capital Corporation, as Investor | 10% subordinated note payable
Long-term debt
Repayments of debt				$ 5,900,000
Interest paid				$ 1,300,000
Conversion Of Convertible Notes | Senior Secured Credit Facility
Long-term debt
Amount of debt converted into stock	$ 6,600,000
Number of shares of stock into which debt was converted | 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

Long-term debt - Capital Lease

Long-term debt - Capital Lease Obligations to Related Party (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 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	$ 91,000	$ 22,000	$ 189,000	$ 42,000
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 Princip

Long-term debt - Future Principal Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Future principal payments of long-term debt including capital leases
2,019	$ 15,983
2,020	16,300
2,021	15,020
2,022	15,020
2,023	9
Future principal payments	62,332
Less unamortized debt discount related to long-term debt	(2,417)
Less current portion of long-term debt	(15,983)	$ (896)
Total long-term debt	$ 43,932	$ 58,938

Common stock - Public Offerings

Common stock - Public Offerings (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 30, 2017	Feb. 17, 2017	Feb. 28, 2017	Jun. 30, 2017	Jul. 26, 2017
Public offerings and related transactions
Net proceeds from issuance of stock				$ 60,087
Common Stock | Underwritten Public Offering
Public offerings and related transactions
Issuance of common stock, net of issuance costs (in shares)	4,800,000		5,750,000
Public offering price (in dollars per share)	$ 6.25		$ 5	$ 6.25
Gross proceeds from issuance of stock	$ 30,000
Payments of stock issuance costs	$ 200
Term of option to purchase share	30 days			30 days
Net proceeds from issuance of stock		$ 26,700			$ 34,300
Shares offered to underwriters under option granted (in 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)		750,000

Common stock - Shelf Registrati

Common stock - Shelf Registration Statement and offer under sales agreement (Details) - USD ($) $ / shares in Units, $ in Thousands	May 01, 2018	Oct. 26, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Aug. 01, 2016
Shelf registration statement
Net proceeds from issuance of stock				$ 60,087
Value of securities which remain available to be sold pursuant to the shelf			$ 58,000
Maximum
Shelf registration statement
Authorized amount to raise capital as per shelf registration statement						$ 125,000
Sales Agreement | Maximum | Cowen and Company LLC
Shelf registration statement
Authorized amount for issuance of common stock as per shelf registration statement						$ 40,000
Common Stock
Shelf registration statement
Stock Issued During Period, Shares, Conversion Of Restricted Stock Units	17,832		17,832
Common Stock | Sales Agreement
Shelf registration statement
Value of common stock which remains available to be sold under the sales agreement			$ 36,200
Sales Agreement | Common Stock
Shelf registration statement
Shares issued			0		749,639
Sales agreement offering price (in dollars per share)					$ 5.01
Gross proceeds from issuance of stock					$ 3,700
Net proceeds from issuance of stock					3,600
Payments of stock issuance costs					$ 100
Conversion Of Convertible Notes | Senior Secured Convertible Notes
Shelf registration statement
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
Number of shares of stock into which debt was converted		929,967

Share-based Compensation - Plan

Share-based Compensation - Plan Information (Details) - shares	Jun. 27, 2018	Jan. 01, 2018	Jan. 01, 2017	Jun. 30, 2018	Dec. 31, 2017	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
Neos Therapeutics, Inc. 2009 Equity Plan
Stock options, restricted stock and performance stock options
Shares reserved for issuance under the plan								1,375,037
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				13,332	9,304
Share of restricted stock transferred into shares available under current plan					33,801
Shares available for grant				1,429,673
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
Stock option exercise price, minimum expressed as percentage of fair market value on grant date				100.00%
Shares available for grant				200,000
Neos Therapeutics, Inc 2018 Inducement Plan | Stock options
Stock options, restricted stock and performance stock options
Expiration period				10 years
Neos Therapeutics, Inc 2018 Inducement Plan | Stock options | Chief Executive Officer
Stock options, restricted stock and performance stock options
Vested shares of the common stock subject to the option vesting on each of the first two anniversaries (in shares)	600,000

Share-based Compensation - Expe

Share-based Compensation - Expense Allocation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Expense
Total compensation cost	$ 1,086	$ 948	$ 2,053	$ 1,933
Cost of goods sold
Share-based Compensation Expense
Total compensation cost	123	87	242	171
Research and development
Share-based Compensation Expense
Total compensation cost	121	105	199	184
Selling and marketing
Share-based Compensation Expense
Total compensation cost	306	217	563	413
General and administrative
Share-based Compensation Expense
Total compensation cost	$ 536	$ 539	$ 1,049	$ 1,165

Share-based Compensation - Ex49

Share-based Compensation - Expense Other (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Expense
Total compensation cost	$ 1,086,000	$ 948,000	$ 2,053,000	$ 1,933,000
Unrecognized compensation cost	9,100,000		9,100,000
Stock options
Share-based Compensation Expense
Total compensation cost	$ 986,000	900,000	1,900,000	1,900,000
Compensation cost not yet recognized, period for recognition	2 years 8 months 12 days
RSU's
Share-based Compensation Expense
Total compensation cost	$ 101,000	21,000	137,000	21,000
Compensation cost not yet recognized, period for recognition	3 years 4 months 24 days
Restricted stock
Share-based Compensation Expense
Total compensation cost		$ 23,000		$ 45,000
Unrecognized compensation cost	$ 0		$ 0

Share-based Compensation - Assu

Share-based Compensation - Assumptions Used in Determining Fair Value of Options (Details) - Stock options - $ / shares	1 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
Stock options, restricted stock and performance stock options
Options granted (in shares)		1,221,253
Exercise price (in dollars per share)		$ 7.30
Weighted average key assumptions used in determining the fair value of options granted
Estimated dividend yield (as a percent)		0.00%
Expected stock price volatility (as a percent)		60.00%
Weighted-average risk-free interest rate (as a percent)		2.70%
Expected life of option in years		6 years 2 months 27 days
Weighted-average option fair value at grant (in dollars per share)		$ 4.26
Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan
Stock options, restricted stock and performance stock options
Options granted (in shares)		621,253
Neos Therapeutics, Inc 2018 Inducement Plan
Stock options, restricted stock and performance stock options
Options granted (in shares)	600,000
Neos Therapeutics, Inc 2018 Inducement Plan | Chief Executive Officer
Stock options, restricted stock and performance stock options
Options granted (in shares)	200,000
Exercise price (in dollars per share)	$ 6.20

Share-based Compensation - Opti

Share-based Compensation - Options (Details) - Stock options $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018USD ($)$ / sharesshares	Dec. 31, 2017USD ($)$ / sharesshares
Summary of number of outstanding and exercisable options and the activity
Outstanding at beginning of year (in shares) | shares	2,454,973
Exercisable at beginning of year (in shares) | shares	1,137,766
Granted (in shares) | shares	1,221,253
Expired, forfeited or cancelled (in shares) | shares	(100,164)
Outstanding at end of period (in shares) | shares	3,576,062	2,454,973
Exercisable at end of period (in shares) | shares	1,462,834	1,137,766
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
Exercisable at beginning of year (in dollars per share)	10.919
Exercise price (in dollars per share)	7.30
Expired, forfeited or cancelled (in dollars per share)	10.30
Outstanding at end of period (in dollars per share)	9.89	$ 11.195
Exercisable at end of period (in dollars per share)	$ 10.32	$ 10.919
Summary of intrinsic value of outstanding and exercisable options and other information
Intrinsic value, outstanding options | $	$ 1,270	$ 4,764
Intrinsic value, exercisable options | $	$ 1,240	$ 2,890
Weighted average remaining contractual life of options outstanding	8 years 2 months 12 days	7 years 10 months 24 days
Weighted-average remaining contractual life of options exercisable	7 years	7 years 2 months 12 days
Minimum
Summary of weighted-average exercise price of outstanding and exercisable options and the activity
Exercise price (in dollars per share)	$ 6.20	$ 7
Maximum
Summary of weighted-average exercise price of outstanding and exercisable options and the activity
Exercise price (in dollars per share)	$ 10.40	$ 9.10

Share-based Compensation - RSUs

Share-based Compensation - RSUs (Details) - RSU's	May 01, 2018shares	Mar. 01, 2018shares	Oct. 02, 2017shares	May 01, 2017shares	Jun. 30, 2018$ / sharesshares
Stock options, restricted stock and performance stock options
Shares vested	19,686
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
Converted (in equity instruments)					(17,832)
Withheld for tax obligation (in equity instruments)					(1,854)
Outstanding at end of period (in equity instruments)					159,064
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
Converted (in dollars per equity instrument) | $ / shares					7
Withheld for tax obligation ( in dollars per equity instrument) | $ / shares					7
Outstanding at end of period (in dollars per equity instrument) | $ / shares					$ 7.85
Summary of intrinsic value
Weighted average remaining contractual life of equity instruments outstanding					9 years 3 months 18 days
Four equal tranches
Stock options, restricted stock and performance stock options
Vesting period		4 years	4 years	4 years

Share-based Compensation - Rest

Share-based Compensation - Restricted Stock (Details) - Restricted stock - shares	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Stock options, restricted stock and performance stock options
Shares issued	0	0
Vested restricted stock awards settled (in shares)	0
Unvested restricted stock outstanding (in shares)	0	0
Shares granted	0
Shares forfeited	0

Treasury stock (Details)

Treasury stock (Details) - shares	Oct. 16, 2017	Oct. 17, 2016	Oct. 16, 2015	Jun. 30, 2018	Dec. 31, 2017
Treasury stock
Shares of treasury stock held				33,801	33,801
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) - Senior Secured Convertible Notes - Registration Agreement	Jun. 01, 2017USD ($)item$ / shares
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
Minimum
Registration Payment Arrangement
Conversion price | $ / shares	$ 7
Maximum
Registration Payment Arrangement
Number of shares which may be issued for conversion of convertible notes | item	940,924

Commitments and contingencies56

Commitments and contingencies - Patent Infringement Litigation (Details)	Oct. 31, 2017
Teva
Patent infringement litigation
Time Period For Which FDA Approval is Barred Upon Commencement Of Lawsuit	30 months

Commitments and contingencies57

Commitments and contingencies - Operating Lease, Cash Incentive Bonus Plan, Inducement Option Grant (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Commitments
Deferred rent balance		$ 1,036,000		$ 1,036,000		$ 1,083,000
Bonus Expenses		467,000	$ 291,000	811,000	$ 618,000
Grand Prairie Lease Plus Blue Bell Lease
Commitments
Rent expense, share of operating expenses		52,000	62,000	106,000	121,000
Rent expense, excluding share of operating expenses		$ 252,000	$ 252,000	$ 505,000	$ 504,000
Blue Bell, Pennsylvania
Commitments
Term of operating lease	60 months

License agreements (Details)

License agreements (Details) - Shire LLC - Maximum - USD ($) $ in Millions	Oct. 31, 2017	Feb. 29, 2016
NDA 204,326
License agreements
Payment of non-refundable license fee		$ 1
NDA 204,325
License agreements
Payment of non-refundable license fee	$ 1

Related party transactions - De

Related party transactions - Debt (Details) - USD ($) $ / shares in Units, $ in Millions	Oct. 26, 2017	Jun. 30, 2017	Feb. 17, 2017	Feb. 28, 2017	Jun. 30, 2017
Underwritten Public Offering | Common Stock
Stock transaction disclosures
Issuance of common stock, net of issuance costs (in shares)		4,800,000		5,750,000
Public offering price (in dollars per share)		$ 6.25		$ 5	$ 6.25
Term of option to purchase share		30 days			30 days
Shares offered to underwriters under option granted (in shares)		720,000			720,000
Over-allotment option | Common Stock
Stock transaction disclosures
Issuance of common stock, net of issuance costs (in shares)			750,000
Senior Secured Credit Facility | Debt issued to entities affiliated with Deerfield | Investor
Related party transactions
Face amount of debt at time of related party stock purchase				$ 60
Conversion Of Convertible Notes | Senior Secured Credit Facility
Stock transaction disclosures
Number of shares of stock into which debt was converted	929,967
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