Neos Therapeutics (NEOS) 10-Q 9 Aug 19 2019 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 02, 2019
Document and Entity Information
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Entity Registrant Name	Neos Therapeutics, Inc.
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		49,730,275
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001467652
Amendment Flag	false
Entity Ex Transition Period	true

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 25,757,000	$ 46,478,000
Short-term investments	4,494,000
Accounts receivable, net of allowances for chargebacks and cash discounts of $2,509 and $1,865, respectively	20,144,000	27,801,000
Inventories	12,374,000	10,367,000
Other current assets	1,811,000	4,032,000
Total current assets	64,580,000	88,678,000
Property and equipment, net	7,636,000	7,914,000
Operating lease right-of-use assets	3,274,000
Intangible assets, net	13,619,000	14,616,000
Other assets	149,000	149,000
Total assets	89,258,000	111,357,000
Current Liabilities:
Accounts payable	6,556,000	12,730,000
Accrued expenses	33,684,000	35,818,000
Current portion of operating lease liabilities	606,000
Current portion of long-term debt	16,372,000	8,557,000
Total current liabilities	57,218,000	57,105,000
Long-Term Liabilities:
Long-term debt, net of current portion	28,489,000	43,217,000
Operating lease liabilities	3,608,000
Derivative liability	1,373,000	2,017,000
Deferred rent		989,000
Other long-term liabilities	182,000	184,000
Total long-term liabilities	33,652,000	46,407,000
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding at June 30, 2019 and December 31, 2018
Common stock, $0.001 par value, 100,000,000 shares authorized at June 30, 2019 and December 31, 2018 ; 49,764,076 and 49,730,275 shares issued and outstanding, respectively, at June 30, 2019; 49,710,104 and 49,676,303 shares issued and outstanding, respectively, at December 31, 2018	50,000	50,000
Treasury stock, at cost, 33,801 shares at June 30, 2019 and December 31, 2018	(352,000)	(352,000)
Additional paid-in capital	327,035,000	325,130,000
Accumulated deficit	(328,346,000)	(316,983,000)
Accumulated other comprehensive loss	1,000
Total stockholders’ equity (deficit)	(1,612,000)	7,845,000
Total liabilities and stockholders’ equity	$ 89,258,000	$ 111,357,000

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS
Receivables allowances for chargebacks and cash discounts (in dollars)	$ 2,509	$ 1,865
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized shares	5,000,000	5,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	100,000,000
Common stock, issued shares	49,764,076	49,710,104
Common stock, outstanding shares	49,730,275	49,676,303
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, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues:
Net product sales	$ 15,643	$ 11,363	$ 30,277	$ 22,092
Net product sales	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Cost of goods sold	$ 5,099	$ 6,987	$ 11,495	$ 12,208
Cost of goods sold	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Gross profit	$ 10,544	$ 4,376	$ 18,782	$ 9,884
Research and development expenses	2,009	2,381	5,206	4,072
Selling and marketing expenses	7,269	11,557	14,338	24,547
General and administrative expenses	3,712	3,705	7,505	7,051
Loss from operations	(2,446)	(13,267)	(8,267)	(25,786)
Interest expense	(1,987)	(2,232)	(4,102)	(4,452)
Other income, net	670	292	1,006	595
Net loss	$ (3,763)	$ (15,207)	$ (11,363)	$ (29,643)
Weighted average common shares outstanding used to compute net loss per share, basic and diluted	49,727,718	29,008,909	49,715,707	29,002,966
Net loss per share of common stock, basic and diluted	$ (0.08)	$ (0.52)	$ (0.23)	$ (1.02)

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Comprehensive Income (loss)
Net loss	$ (3,763)	$ (15,207)	$ (11,363)	$ (29,643)
Other comprehensive income:
Net unrealized gain on short-term investments	2	4	1	7
Total other comprehensive income	2	4	1	7
Comprehensive loss	$ (3,761)	$ (15,203)	$ (11,362)	$ (29,636)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss), Net	Total
Balance, beginning at Dec. 31, 2017	$ 29	$ (352)	$ 274,584	$ (265,308)	$ (6)
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	17,832
Share-based compensation expense			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)
Balance, beginning at Dec. 31, 2017	$ 29	$ (352)	274,584	(265,308)	(6)
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	26,991
Shares issued for exercise of stock options (in shares)	832
Balance, ending at Dec. 31, 2018	$ 50	$ (352)	325,130	(316,983)		7,845
Balance, ending (in shares) at Dec. 31, 2018	49,710,104	(33,801)
Balance, beginning at Mar. 31, 2018	$ 29	$ (352)	275,551	(279,744)	(3)
Balance, beginning (in shares) at Mar. 31, 2018	29,030,757	(33,801)
Increase (Decrease) in Stockholders Equity
Issuance of common stock upon RSU conversion	17,832
Share-based compensation expense			1,086
Net unrealized gain on investments					4	4
Net loss				(15,207)		(15,207)
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)
Balance, beginning at Dec. 31, 2018	$ 50	$ (352)	325,130	(316,983)		7,845
Balance, beginning (in shares) at Dec. 31, 2018	49,710,104	(33,801)
Increase (Decrease) in Stockholders Equity
Issuance of common stock upon RSU conversion	18,765
Shares issued for exercise of stock options			11
Shares issued for exercise of stock options (in shares)	35,207
Payroll tax withheld for RSU releases			(2)
Share-based compensation expense			1,896
Net unrealized gain on investments					1	1
Net loss				(11,363)		(11,363)
Balance, ending at Jun. 30, 2019	$ 50	$ (352)	327,035	(328,346)	1	(1,612)
Balance, ending (in shares) at Jun. 30, 2019	49,764,076	(33,801)
Balance, beginning at Mar. 31, 2019	$ 50	$ (352)	326,014	(324,583)	(1)
Balance, beginning (in shares) at Mar. 31, 2019	49,756,317	(33,801)
Increase (Decrease) in Stockholders Equity
Issuance of common stock upon RSU conversion	7,759
Payroll tax withheld for RSU releases			(1)
Share-based compensation expense			1,022
Net unrealized gain on investments					2	2
Net loss				(3,763)		(3,763)
Balance, ending at Jun. 30, 2019	$ 50	$ (352)	$ 327,035	$ (328,346)	$ 1	$ (1,612)
Balance, ending (in shares) at Jun. 30, 2019	49,764,076	(33,801)

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Cash Flows From Operating Activities:
Net loss	$ (11,363)	$ (29,643)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense	1,896	2,053
Depreciation and amortization of property and equipment	1,049	850
Amortization of patents and other intangible assets	1,052	869
Changes in fair value of earnout, derivative and warrant liabilities	(644)	(349)
Amortization of senior debt discounts	696	427
Amortization of short-term investment purchase discounts	(58)	(106)
Gain (loss) on sale of equipment	(2)	1
Other adjustments		(47)
Changes in operating assets and liabilities:
Accounts receivable	7,657	(4,306)
Inventories	(2,007)	(981)
Other assets	2,221	2,251
Accounts payable	(6,174)	(5,400)
Accrued expenses	(2,134)	13,184
Operating lease liabilities	(49)
Net cash used in operating activities	(7,860)	(21,197)
Cash Flows From Investing Activities:
Purchases of short-term investments	(7,193)	(17,904)
Sales and maturities of short-term investments	2,758	26,743
Capital expenditures	(365)	(814)
Intangible asset expenditures	(55)	(28)
Net cash (used in) provided by investing activities	(4,855)	7,997
Cash Flows From Financing Activities:
Proceeds from the issuance of common stock, net of issuance costs	11
Payments made on borrowings	(8,015)	(451)
Payment of payroll taxes withheld for releases of restricted stock units	(2)
Net cash used in financing activities	(8,006)	(451)
Decrease in cash and cash equivalents	(20,721)	(13,651)
Cash and Cash Equivalents:
Beginning	46,478	31,969	$ 31,969
Ending	25,757	18,318	$ 46,478
Supplemental Disclosure of Noncash Transactions:
Acquired equipment under finance lease	406	105
Finance lease liability from purchase of equipment	406	105
Supplemental Cash Flow Information:
Interest paid	$ 3,510	$ 4,116

Organization and nature of oper

Organization and nature of operations	6 Months Ended
	Jun. 30, 2019
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 (“XR”) pharmaceuticals in patient- and caregiver-friendly orally disintegrating tablet (“ODT”) and oral suspension dosage forms. The Company has a pipeline of extended-release pharmaceuticals including three products approved by the U.S. Food and Drug Administration (the “FDA”) for the treatment of attention deficit hyperactivity disorder (“ADHD”). Adzenys XR-ODT was approved by the FDA in January 2016 and launched commercially in May 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, in June 2017, and launched commercially in September 2017. Also, the Company received approval from the FDA for Adzenys ER oral suspension (“Adzenys ER”) in September 2017 and launched this product in February 2018. In addition, the Company manufactures and markets a generic Tussionex (hydrocodone and chlorpheniramine) (“generic Tussionex”), extended-release oral suspension for the treatment of cough and upper respiratory symptoms of a cold. In addition to its marketed products, the Company is developing NT0502, its product candidate for the treatment of sialorrhea and NT-0400, its XR-ODT product candidate for nausea and vomiting.

Summary of significant accounti

Summary of significant accounting policies	6 Months Ended
	Jun. 30, 2019
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, 2019 are not necessarily indicative of the results for the year ending December 31, 2019 or any period thereafter. The audited consolidated financial statements as of and for the year ended December 31, 2018 included information and footnotes necessary for such presentation and were included in the Neos Therapeutics, Inc. Annual Report on Form 10-K filed with the SEC on March 18, 2019. 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, 2018. Principles of consolidation: At June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018, the consolidated financial statements include the accounts of the Company and its four wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. Use of estimates : The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Liquidity: During 2018 and the three and six months ended June 30, 2019, the Company incurred operating losses and used cash to fund operations. Management intends to achieve profitability through revenue growth from its currently marketed pharmaceutical products. The Company does not anticipate it will be profitable until such time as revenues from Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER increase substantially over current levels. In November 2018, the Company completed an offering of its common stock and restructured its outstanding debt, which reduced and possibly could delay the amount of principal payable in cash. Accordingly, management has performed the review required for going concern accounting and believes the Company presently has sufficient liquidity to continue to operate for the next twelve months after the filing of this Report on Form 10-Q. Cash equivalents: The Company invests its available cash balances in bank deposits and money market funds. The Company considers highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’s primary objectives for investment of available cash are the preservation of capital and the maintenance of liquidity. Short-term investments: Short-term investments, if any, consist of debt securities that have original maturities greater than three months but less than or equal to one year and are classified as available-for-sale securities. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of material tax effects reported, as accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity (deficit). Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in other income in the consolidated results of operations. A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income are recognized in other income when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government agencies, or corporate institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date, if any, as non-current assets. 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 there are multiple embedded instruments that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the balance sheet date. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption and are classified in interest expense in the consolidated results of operations. Intangible assets : Intangible assets subject to amortization, which principally include proprietary modified-release drug delivery technology, the costs to acquire the rights to Tussionex Abbreviated New Drug Application and patents, are recorded at cost and amortized over the estimated lives of the assets, which primarily range from 10 to 20 years. The Company estimates that the patents it has filed have a future beneficial value. Therefore, costs associated with filing for its patents are capitalized. Once the patent is approved and commercial revenue realized, the costs associated with the patent are amortized over the useful life of the patent. If the patent is not approved, the costs will be expensed. For new product candidates, patent applications and related expenses are expensed as incurred. 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 June 30, June 30, 2019 2018 2019 2018 (in thousands) Adzenys XR-ODT $ 7,241 $ 6,516 $ 13,898 $ 11,508 Cotempla XR-ODT 6,513 4,342 12,286 7,989 Adzenys ER 146 (28) 331 175 Generic Tussionex 1,743 533 3,762 2,420 $ 15,643 $ 11,363 $ 30,277 $ 22,092 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 adjustment at the time revenue is recognized. Historical trends of estimated rebates will be regularly monitored, which may result in adjustments to such estimates in the future. Product returns Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. Estimated returns are recorded as accrued expenses and as a gross to net sales adjustments at the time revenue is recognized. The Company analyzed recent branded product return history and other market data obtained from the Company’s 3PLs, as well as data available from sales of its branded products, to determine a reliable return rate for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER. Generic Tussionex product returns were estimated based upon return data available from sales of the Company’s generic Tussionex product over the past three years. Wholesaler chargebacks for generic product The Company’s generic Tussionex products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company. Estimated chargebacks are recorded as a discount allowance against accounts receivable and as a gross to net sales adjustments at the time revenue is recognized based on information provided by third parties. Due to estimates and assumptions inherent in determining the amount of 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. There were no advertising costs recognized during the three and six months ended June 30, 2019. The Company recognized advertising costs of $0.2 million and $0.4 million during the three and six months ended June 30, 2018, respectively. Share-based compensation: Share-based compensation awards, including grants of 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 stock-based awards is recognized on a straight-line basis, based on the grant date fair value, over the requisite service period of the award, which is generally the vesting term. The fair value of the Company’s stock-based awards to employees and directors is estimated using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the expected stock price volatility, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends. For performance-based stock awards, compensation expense is recognized on a straight-line basis, based on the grant date fair value, over the performance period or through the vesting date, whichever is longer. Management monitors the probability of achievement of the performance conditions and adjusts stock-based compensation expense, if necessary. After the closing of the Company’s IPO, the Company’s board of directors has determined the fair value of each share of underlying common stock based on the closing price of the Company’s common stock as reported by the NASDAQ Global Market on the date of grant. Under ASU No. 2017-09 guidance for accounting for share-based payments, the Company has elected to continue estimating forfeitures at the time of grant and, if necessary, revise the estimate in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest. 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, 2019 and December 31, 2018, 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 (NOLs) 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, 2019 and December 31, 2018, the Company determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. The Company may not ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. Recent accounting pronouncements : In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The standard is effective for public entities for the fiscal years ending after December 15, 2020, with early adoption permitted for the removed disclosures and delayed adoption permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13 on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a write-down. The standard is effective for public entities for the fiscal years ending after December 15, 2020, with early adoption permitted through a modified retrospective approach. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement -Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA, and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for entities for fiscal years beginning after December 15, 2018 with early adoption permitted, and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. This standard became effective for the Company on January 1, 2019. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (the “New Lease Standard”). The New Lease Standard supersedes the lease guidance under FASB Accounting Standards Codification ("ASC") Topic 840, Leases (“Prior GAAP”), resulting in the creation of FASB ASC Topic 842, Leases. Under the new guidance, lessees are required to recognize in the statement of financial position the following for all finance and operating leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. In January, July and December 2018, the FASB issued additional amendments to the new lease guidance relating to, transition, and clarification. The July 2018 amendment, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, provides an optional transition method that allows entities to elect to apply the standard using the modified retrospective transition method, which did not require the Company to adjust comparative periods. The Company adopted this standard on the effective date of January 1, 2019 and elected to use the modified retrospective transition method approach at transition. Therefore, no adjustments are made to amounts in prior period financial statements. In addition, the Company elected the following practical expedients: 1) the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allows the Company to carry forward the historical lease classification; 2) the land easements practical expedient, which allows the Company to carry forward the accounting treatment for land easements on existing agreements; 3) the short-term lease practical expedient, which allows the Company to exclude short-term leases from recognition in the unaudited consolidated balance sheets; and 4) The adoption of this accounting standard resulted in the recording of Operating lease ROU assets and Operating lease liabilities of $3.4 million and $4.3 million, respectively, as of January 1, 2019. The difference between the operating lease assets and liabilities was recorded as an adjustment to deferred rent for $0.9 million relating to real estate leases. The adoption of ASU 2016-02 had no impact on Accumulated Deficit. The Company implemented additional internal controls to identify lease contracts and enable the preparation of financial information related to the New Lease Standard. See Note 9 for additional information. 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, 2019
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 plans 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 vest, 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, 2019 and 2018 were excluded from consideration in the computation of diluted net loss per share of common stock for the three and six months ended June 30, 2019 and 2018, respectively, because including them would have been anti-dilutive: June 30, 2019 2018 Series C Redeemable Convertible Preferred Stock Warrants (as converted) 70,833 70,833 Stock options outstanding 4,528,342 3,576,062 RSUs outstanding 55,626 159,064

Fair value of financial instrum

Fair value of financial instruments	6 Months Ended
	Jun. 30, 2019
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, 2019 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 25,007 $ 750 $ — $ 25,757 Short-term investments — 4,494 — 4,494 Total financial assets $ 25,007 $ 5,244 $ — $ 30,251 Earnout liability $ — $ — $ 37 $ 37 Derivative liability (see Note 8) — — 1,373 1,373 Total financial liabilities $ — $ — $ 1,410 $ 1,410 Fair Value as of December 31, 2018 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 27,419 $ 19,059 $ — $ 46,478 Total financial assets $ 27,419 $ 19,059 $ — $ 46,478 Earnout liability $ — $ — $ 37 $ 37 Derivative liability (see Note 8) — — 2,017 2,017 Total financial liabilities $ — $ — $ 2,054 $ 2,054 The Company’s Level 1 assets included bank deposits, certificates of deposit and actively traded money market funds with an original maturity of 90 days or less at June 30, 2019 and December 31, 2018. Asset values were considered to approximate fair value due to their short-term nature. The Company’s Level 2 assets included commercial paper and corporate bonds with maturities of less than one year that are not actively traded which were classified as available-for-sale securities. The level 2 cash equivalents consist of U.S. agency bonds and corporate commercial paper that mature in less than 90 days which are valued using quoted prices and other data values. The estimated fair values of these securities were determined by third parties using valuation techniques that incorporate standard observable inputs and assumptions such as quoted prices for similar assets, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids/offers and other pertinent reference data. The Company’s cash and cash equivalents and short-term investments had quoted prices at June 30, 2019 and December 31, 2018 as shown below: June 30, 2019 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ 25,007 $ — $ 25,007 Financial and corporate debt securities 5,243 1 5,244 $ 30,250 $ 1 $ 30,251 December 31, 2018 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ 27,419 $ — $ 27,419 Financial and corporate debt securities 19,059 — 19,059 $ 46,478 $ — $ 46,478 The Company’s Level 3 liability included the fair value of the earnout liability and the fair value of the Deerfield Private Design Fund III, L.P. and Deerfield Special Situations Fund, L.P. derivative liability at June 30, 2019 and December 31, 2018. 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, 2019 and December 31, 2018. There were no significant changes in the pricing assumptions during the three and six months ended June 30, 2019. 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 6/30/2019 12/31/2018 Valuation Method Monte Carlo Monte Carlo Volatility (annual) N/A N/A Time period from valuation until maturity of debt (yrs.) 2.9 3.4 Cumulative probability of a change in control prepayment implied by model 24 % 25 % Cumulative probability of other accelerated prepayments implied by model 11 % 14 % Discount rate 24.80 % 23.12 % Fair value of liability at valuation date (thousands) $ 1,373 $ 2,017 Significant changes to these assumptions would result in increases/decreases to the fair value of the debt derivative liabilities. 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, 2018 $ 2,054 Change in fair value Balance at June 30, 2019 $ 1,410

Inventories

Inventories	6 Months Ended
	Jun. 30, 2019
Inventories
Inventories	Note 5. Inventories Inventories at the indicated dates consist of the following: June 30, December 31, 2019 2018 (in thousands) Raw materials $ 4,007 $ 3,845 Work in progress 3,806 2,704 Finished goods 4,833 4,259 Inventory at cost 12,646 10,808 Inventory reserve (272) (441) $ 12,374 $ 10,367

Sale-leaseback transaction

Sale-leaseback transaction	6 Months Ended
	Jun. 30, 2019
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. 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 8). Lease payments are applied using the effective interest rate inherent in the leases. Depreciation of the property and equipment is included within cost of goods sold and operating expenses in the consolidated statements of operations and within depreciation and amortization of property and equipment in the consolidated statements of cash flows. In February 2017, the Company entered into an agreement with Essex Capital Corporation (“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 each of the three months ended June 30, 2019 and 2018, approximately $1,000, and for each of the six months ended June 30, 2019 and 2018, approximately $2,000, 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, 2019
Accrued expenses
Accrued expenses	Note 7. Accrued expenses Accrued expenses as of June 30, 2019 and December 31, 2018 consist of the following: June 30, December 31, 2019 2018 (in thousands) Accrued savings offers $ 13,142 $ 11,289 Accrued rebates 5,036 7,762 Accrued customer returns 5,356 5,157 Accrued wholesaler fees 3,455 4,249 Accrued payroll and benefits 4,088 4,555 Other accrued expenses 2,607 2,806 Total accrued expenses $ 33,684 $ 35,818

Long-term debt

Long-term debt	6 Months Ended
	Jun. 30, 2019
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, 2019 2018 (in thousands) Deerfield senior secured credit facility, net of discount of $2,639 and $3,334, respectively $ 43,111 $ 49,916 Financing and capital leases, maturing through May 2024 1,750 1,858 44,861 51,774 Less current portion (16,372) (8,557) Long-term debt $ 28,489 $ 43,217 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 10). 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. Principal on the Facility was due in three equal annual installments beginning in May 2019 and continuing through May 2021, with a final payment of principal, interest and all other obligations under the Facility due May 11, 2022. Interest is due quarterly beginning in June 2016, at a rate of 12.95% per year. The Company had an option, which it exercised, to defer payment of each of the first four interest payments, adding such amounts to the outstanding loan principal. The aggregate $6.6 million in deferred interest payments (the “Accrued Interest”) was due and payable on June 1, 2017. Borrowings under the Facility are collateralized by substantially all of the Company’s assets, except the assets under capital lease. The terms of the Facility require the Company to maintain cash on deposit of not less than $5.0 million. On June 1, 2017 (the “Amendment Date”), the Company and Deerfield entered into a First Amendment (the “Amendment”) to the Facility which extended the date to repay the Accrued Interest under the Facility to June 1, 2018 (the “PIK Maturity Date”), which could have been extended to June 1, 2019 at the election of the Company if certain conditions had been met as specified in the Amendment. However, as described below, the accrued interest amount was converted into shares of common stock. The right to payment of the Accrued Interest was memorialized in the form of senior secured convertible notes (the “Convertible Notes”) issued to Deerfield on the Amendment Date. Interest was due quarterly at a rate of 12.95% per year. The principal amount of the Convertible Notes issued under the Amendment and all accrued and unpaid interest thereon was to become due and payable upon written notice from Deerfield, and if either (a) the Company did not meet certain quarterly sales milestones specified in the Amendment or (b) the Company had not received and publicly announced FDA approval of the new drug applications on or before the applicable Prescription Drug User Fee Act goal date as set forth on the schedules to the 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, ranged 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 was 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. The Company has filed a registration statement with the SEC covering the registration of these shares, as noted below. 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 was 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 was the earlier of (a) when all of the Registrable Securities covered by such registration have been sold or (b) when Deerfield or any of its transferees or assignees under the Registration Agreement cease to hold any Registrable Securities. For each registration, the Company bore all reasonable expenses, other than underwriting discounts and commissions, and was to reimburse Deerfield or any assignee or transferee for up to $25,000 in legal fees. The Company had satisfied all of its obligations under this Registration Agreement and did not pay any damages pursuant to this agreement; therefore, no liability had been recorded (see Note 13), and as of September 30, 2018, Deerfield or any of its transferees or assignees under the Registration Agreement reported that it had ceased to hold any Registrable Securities. The Company has accounted for the Amendment as a debt modification as the instruments were not substantially different; therefore, the remaining debt discount on the original Facility is being amortized using the effective interest method over the remaining term of the modified debt. The Company evaluated the Amendment together with the Convertible Notes to determine if those contracts or embedded components of those contracts qualified as derivatives requiring separate recognition. This evaluation identified a derivative liability of $2.1 million for the fair value of the change in control and other accelerated payment features as the prepayment fees resulted in premiums that were greater than 10%. As of June 30, 2019, the fair value of the derivative was $1.4 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 was amortized using the effective interest method to interest expense over the one-year term of the Convertible Notes. The Company recorded a $0.6 million corresponding credit to a beneficial conversion feature classified as additional paid in capital on June 1, 2017 in stockholders’ 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. On November 5, 2018, the Company and Deerfield entered into an amendment (the “Second Amendment”) to the Facility pursuant to which the Company agreed to pay $7.5 million of principal under the Facility otherwise due in May 2019 upon completion of an underwritten public offering of the Company’s shares of its common stock for gross proceeds of at least $30.0 million, plus additional shares of the Company’s shares of its common stock for additional gross proceeds of at least $4.5 million (the “November Offering”). The remaining $52.5 million of principal under the Facility is due as follows: $7.5 million on May 11, 2019, $15.0 million on May 11, 2020 (the “2020 Principal Payment”), $15.0 million on May 11, 2021 and $15.0 million on May 11, 2022; provided, that the 2020 Principal Payment due date shall be extended to May 11, 2021 or May 11, 2022 subject to certain achievement of net sales during periods ending 2019 and 2020, respectively. If all or any of the principal are prepaid or required to be prepaid under the Second Agreement prior to December 31, 2021, then the Company shall pay, in addition to such prepayment and accrued interest thereon, a prepayment premium equal to 6.25% of the amount of principal prepaid. Additionally, the Company shall pay all interest which, absent such prepayment, would have accrued on the principal prepaid through May 11, 2020 in connection with a prepayment due to a Change of Control of the Company or through December 31, 2020 in connection with any other prepayment, whether voluntary or in an Event of Default. If such prepayment occurs after December 31, 2021 then no prepayment premium is due. In addition, upon the payment in full of the Obligations (whether voluntarily, in the connection with a Change of Control or an Event of Default and whether before, at the time of or after the Maturity Date,) the Company shall pay to Deerfield a non-refundable exit fee in the amount of $750,239, which shall be due and payable in cash. Pursuant to the terms of the Facility, as amended, a $7.5 million principal payment was paid in cash in May 2019 and, the remaining principal outstanding as of June 30, 2019 is $45.0 million. Pursuant to the Second Amendment, upon the effectiveness thereof, the Company amended and restated its outstanding notes under the Second Agreement in the form of senior secured convertible notes (the “A&R Notes”). Under the terms of the Second Amendment and the A&R Notes, beginning on or about May 11, 2019, the Company has the right to pay principal and future interest in shares of Common Stock not to exceed 2,135,625 shares in the aggregate. The payment share price will be 93% of the lesser of (A) the Last Bid Price prior to the payment date and (B) the arithmetic average of the volume weighted average price on each of the ten consecutive trading days immediately preceding the payment date. Principal may not be satisfied at a price less than $3.00 per share, and the Company may not issue to Deerfield a number of shares upon any such payment to the extent that, upon such issuance, the number of shares beneficially owned by Deerfield and its affiliates would exceed 4.985% of the total number of shares of the Company’s common stock then issued and outstanding (the “4.985% Cap”). Additionally, Deerfield has the right to convert the remaining principal into shares of Common Stock not to exceed 3,796,668 shares in the aggregate (collectively, the “Conversion Shares”); provided, that the Lenders may only convert up to 50% of the remaining principal on or before November 5, 2019. Deerfield’s per share conversion price will be 95% reducing to a maximum 83% by one full percentage point for each full or partial calendar month between the date of the applicable conversion and the date on which such principal payment would otherwise be due, of the greater of (A) the average of the volume weighted average prices per share of the Common Stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion, and (B) $10.00 (subject to adjustment for Stock Events e.g. stock dividend, stock split etc.). Deerfield may not acquire a number of shares upon any such conversion to the extent that, upon such conversion, the number of shares beneficially owned by Deerfield and its affiliates would exceed the 4.985% Cap. In conjunction with the Second Amendment to the Facility and the related issuance of the A&R Notes, the Company entered into a Registration Rights Agreement (the “Second Registration Agreement”) pursuant to which the Company was required to file a registration statement with the SEC to register the Conversion Shares within 30 days from November 5, 2018, which was to become effective per the SEC no later than 75 days thereafter. The filing deadline was subsequently extended to December 21, 2018. The Company filed a registration statement on Form S-3 to comply with the Second Registration Agreement on December 11, 2018, which became effective on December 20, 2018. This filing covered 3,796,668 shares, which is the maximum number of shares that may be converted. The Company is also required to, among other things, maintain the effectiveness of such registration statement, continue to file the required SEC filings on a timely basis, use its best efforts to ensure that the registered securities are listed on each securities exchange on which securities of the same class or series as issued by the Company are then listed and comply with any FINRA requests. The Company’s obligations with respect to each registration end at the date which is the earlier of (a) when all of the Registrable Securities covered by such registration have been sold or (b) when Deerfield or any of its transferees or assignees under the Second Registration Agreement cease to hold any Registrable Securities. For each registration, the Company shall bear all reasonable expenses, other than underwriting discounts and commissions, and shall reimburse Deerfield or any assignee or transferee for up to $25,000 in legal fees. The Company expects to satisfy all of its obligations under the Second Registration Agreement and did not expect to pay any damages pursuant to this agreement; therefore, no liability had been recorded (see Note 13). Pursuant to the A&R Notes, if the Company fails to provide the number of Conversion Shares, then the Company would have to pay damages to Deerfield or subsequent holder or any designee for each day after the third business day after receipt of notice of conversion that such conversion is not timely effected. The Facility also contains certain customary nonfinancial covenants, including limitations on the Company’s ability to transfer assets, engage in a change of control, merge or acquire with or into another entity, incur additional indebtedness and distribute assets to shareholders. Upon an event of default, the lenders may declare all outstanding obligations accrued under the Facility to be immediately due and payable, and exercise its security interests and other rights. As of June 30, 2019, 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, 25.35% on the Convertible Notes and after the Second Amendment on November 5, 2018, using the effective interest rate of 16.69%, charged to interest expense and totaled $339,000 and $696,000 for the three and six months ended June 30, 2019, respectively, and $218,000 and $427,000 for the three and six months ended June 30, 2018, respectively. Financing and capital lease obligations: Financing and capital lease obligations consist of sale-leaseback and equipment leases, both of which include options to purchase and was classified as finance lease as of June 30, 2019 and capital lease as of December 31, 2018. As described in Note 6, during the year ended December 31, 2017, the Company entered into an agreement with Essex for the sale-leaseback of newly acquired assets with a total capitalized cost of $3.2 million. The approximate imputed interest rate on these leases is 14.9% . In addition, during the year ended December 31, 2018 and the quarter ended June 30, 2019, the Company entered into equipment leases with a total capitalized cost of $0.1 million and $0.4 million, respectively. The approximate interest rate on these leases is 5.3% and 6.5%, respectively. Interest expense on these leases was $58,000 and $122,000 for the three and six months ended June 30, 2019, respectively, and $91,000 and $189,000 for the three and six months ended June 30, 2018, respectively. Future principal payments of long-term debt including financing leases are as follows: Period ending: June 30, (in thousands) 2020 $ 16,372 2021 15,096 2022 15,852 2023 96 Thereafter 84 Future principal payments $ 47,500 Less unamortized debt discount related to long-term debt (2,639) Less current portion of long-term debt (16,372) Total long-term debt, net of current portion $ 28,489

Leases

Leases	6 Months Ended
	Jun. 30, 2019
Leases
Leases	Note 9. Leases The Company leases real estate, warehouses and certain equipment. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less ("short-term leases") are not recorded on the unaudited condensed consolidated balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company's operating leases do not provide an implicit rate of return, the Company considered its other similar term collateralized financing arrangements, including the Essex sale-leaseback and equipment leases, certain vendor-direct equipment financing and the Deerfield debt facility, as amended, to determine its incremental borrowing rate. Operating lease ROU assets are comprised of the lease liability plus prepaid rents and are reduced by lease incentives and deferred rents. The Company has lease agreements with non-lease components which are not bifurcated. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years. The exercise of a lease renewal option typically occurs at the discretion of both parties. Certain leases also include options to purchase the leased property. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease termination until it is reasonably certain that the Company will exercise that option. Certain of the Company's lease agreements include payments adjusted periodically for fair market value and certain other percentage increases. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease expense are as follows: Three Months Ended Six Months Ended June 30, 2019 June 30, 2019 Statement of Operations Classification (in thousands) (in thousands) Lease cost: Operating lease cost $ 269 $ 533 Cost of goods sold and operating expenses Short-term lease cost 12 24 Cost of goods sold and operating expenses Variable lease cost 59 112 Cost of goods sold and operating expenses Finance lease cost: Amortization of leased assets 133 252 Cost of goods sold Interest on lease liabilities 58 122 Interest expense Total net lease cost $ 531 $ 1,043 Supplemental unaudited consolidated balance sheet information related to leases is as follows: June 30, 2019 Balance Sheet Classification (in thousands) Leases: Assets: Operating lease assets $ 3,274 Operating lease right-of-use assets Finance lease assets 2,848 Property, plant and equipment, net Total leased assets $ 6,122 Liabilities: Current: Operating leases $ 606 Current portion of operating lease liabilities Finance leases 1,372 Current portion of long-term debt Noncurrent: Operating leases 3,608 Operating lease liabilities Finance leases 378 Long-term debt, net of current portion Total lease liabilities $ 5,964 June 30, 2019 Weighted-Average Remaining Lease Term (years) Operating lease assets 5.2 Finance lease assets 1.9 Weighted-Average Discount Rate Operating lease assets 15.0 % Finance lease assets 12.6 % Supplemental unaudited interim consolidated cash flow information related to leases is as follows: Six Months Ended June 30, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 581 Operating cash flows from finance leases 121 Financing cash flows from finance leases 515 ROU assets obtained in exchange for new finance lease liabilities 406 ROU assets obtained in exchange for new operating lease liabilities $ 135 Maturities of lease liabilities are as follows: June 30, 2019 Operating Leases Finance Leases (in thousands) 2019 $ 587 $ 677 2020 1,225 893 2021 1,118 117 2022 1,060 115 2023 1,055 95 Later years 1,106 40 Total lease payments $ 6,151 $ 1,937 Less amount representing interest (1,937) (187) Total lease obligations $ 4,214 $ 1,750 Disclosures related to periods prior to adoption of ASU 2016-02 Future minimum lease payments under non-cancelable rental and lease agreements which had initial or remaining term in excess of one year are as follows: December 31, 2018 Operating Leases Capital Leases (in thousands) 2019 $ 1,180 $ 1,257 2020 1,195 798 2021 1,062 21 2022 1,055 20 2023 1,055 — Later years 1,106 — Minimum lease commitment $ 6,653 $ 2,096 Less amount representing interest (238) Present value of net minimum lease obligations $ 1,858

Common stock

Common stock	6 Months Ended
	Jun. 30, 2019
Common Stock.
Common stock	Note 10. Common stock On August 1, 2016, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on August 12, 2016. This shelf registration statement covered 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 “2016 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 2016 Shelf (the “Cowen Sales Agreement”). In February 2017, the Company closed an underwritten public offering of 5,750,000 shares of its common stock under the 2016 Shelf 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. Deerfield 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 under the 2016 Shelf 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. During the year ended December 31, 2017, the Company sold an aggregate 749,639 shares of common stock under the Cowen Sales Agreement, at an average sale price of approximately $5.01 per share for gross proceeds of $3.7 million and net proceeds of $3.6 million and paying total compensation to the sales agent of approximately $0.1 million. On October 26, 2017, Deerfield provided a conversion notice electing to convert the entire $6.6 million of Convertible Notes into shares of the Company’s common stock at a conversion price of $7.08 per share. The conversion price was based on 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion. This resulted in issuing 929,967 shares of the Company’s common stock to Deerfield on this date and the Convertible Notes were cancelled. During the year ended December 31, 2018, the Company sold an aggregate 651,525 shares of common stock under the Cowen Sales Agreement, at an average sale price of approximately $6.25 per share for gross proceeds of $4.1 million and net proceeds of $3.9 million and paying total compensation to the sales agent and other costs of approximately $0.2 million. On November 5, 2018, the Company filed Supplement No. 1 to the prospectus dated August 12, 2016, which reduced the size of the continuous offering by the Company under such prospectus relating to the offering of Common Stock pursuant to the Sales Agreement. Following the reduction, the Company was authorized to issue up to $7,825,113 of its common stock pursuant to the Sales Agreement (inclusive of amounts previously sold thereunder prior to the date hereof). Aggregate gross proceeds of sales of the Company’s common stock under the Sales Agreement total $7,825,113, and sales of common stock under the Sales Agreement have been suspended. On November 8, 2018, the Company closed an underwritten public offering of 19,999,999 shares of its common stock at a public offering price of $2.30 per share, which includes 2,608,695 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option at the public offering price. The net proceeds to the Company from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by the Company were approximately $43.4 million. This offering met the criteria for the November Offering. During the six months ended June 30, 2019, the Company issued 18,765 shares of common stock pursuant to the conversion of vested RSUs and 35,207 shares of common stock pursuant to the exercise of vested stock options. During the year ended December 31, 2018, the Company issued 26,991 shares of common stock pursuant to the conversion of vested RSUs and 832 shares of common stock pursuant to the exercise of vested stock options. On March 18, 2019, the Company filed a shelf registration statement covering the offering, issuance and sale by the Company of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants and/or units (the “2019 Shelf”), which was declared effective by the SEC on May 1, 2019. Effective as of August 12, 2019, the 2016 Shelf is no longer available for further primary offerings or sales of our securities. The Company simultaneously entered into a sales agreement with Cantor Fitzgerald & Co., as sales agent, to provide for the offering, issuance and sale by the Company of up to $30.0 million of its common stock from time to time in “at-the-market” offerings under the 2019 Shelf (the “Cantor Sales Agreement”).

Share-based Compensation

Share-based Compensation	6 Months Ended
	Jun. 30, 2019
Share-based Compensation
Share-based Compensation	Note 11. Share-based Compensation Share-based Compensation Plans In July 2015, the Company adopted the Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan (“2015 Plan”) which became effective immediately prior to the closing of the IPO and initially had 767,330 shares of common stock reserved for issuance. On January 1, 2016 and each January 1 thereafter, the number of shares of common stock reserved and available for issuance under the 2015 Plan shall be cumulatively increased by five percent of the number of shares of stock issued and outstanding on the immediately preceding December 31 or such lesser number of shares determined by the administrator of the 2015 Plan. Accordingly, on January 1, 2019 and 2018, the Company added 2,483,815 shares and 1,449,847 shares, respectively, to the option pool. The 2015 Plan superseded the Neos Therapeutics, Inc. 2009 Equity Plan (“2009 Plan”), originally adopted in November 2009 and which had 1,375,037 shares reserved and available for issuance. Effective upon closing of the IPO, the Company’s Board of Directors determined not to grant any further awards under the 2009 Plan. The shares of common stock underlying any awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise) under the 2009 Plan will be added to the shares of common stock available under the 2015 Plan. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The 2015 Plan is administered by the Company’s Compensation Committee, which 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, 2019, the Company has granted options, restricted stock and RSUs under the 2015 Plan. The exercise price per share for the stock covered by a stock award granted shall be determined by the administrator at the time of grant but shall not be less than 100 percent of the fair market value on the date of grant. Unexercised stock awards under the 2015 Plan expire after the earlier of 10 years or termination of employment, except in the case of any unexercised vested options, which generally expire 90 days after termination of employment. The 2009 Plan allowed the Company to grant options to purchase shares of the Company’s common stock and to grant restricted stock awards to members of its management and selected members of the Company’s board of directors. Restricted stock awards are recorded as deferred compensation and amortized into compensation expense, on a straight-line basis over a defined vesting period ranging from 1 to 48 months. Options were granted to officers, employees, nonemployee directors and consultants, and independent contractors of the Company. The Company also granted performance-based awards to selected management. The performance options vested over a three-year period based on achieving certain operational milestones and the remaining options vest in equal increments over periods ranging from two to four years. Unexercised options under the 2009 Plan expire after the earlier of 10 years or termination of employment, except in the case of any unexercised vested options, which generally expire 90 days after termination of employment. All terminated options are available for reissuance under the 2015 Plan. Since the inception of the 2015 Plan through December 31, 2018, 82,635 shares related to forfeited 2009 Plan options were added to the shares available under the 2015 Plan. During the six months ended June 30, 2019, 350,396 shares related to forfeited 2009 Plan options were added to the shares available under the 2015 Plan. As of June 30, 2019, 3,161,056 shares of common stock remain available for grant under the 2015 Plan. In June 2018, the Company adopted the Neos Therapeutics, Inc. 2018 Inducement Plan (the “Inducement Plan”) which had 800,000 shares of common stock reserved and available for issuance. The Inducement Plan allows the Company to grant equity awards to induce highly-qualified prospective officers and employees who are not currently employed by the Company to accept employment and provide them with a proprietary interest in the Company. The Inducement Plan is administered by the Company’s compensation committee. The exercise price per share for the stock covered by a stock award granted pursuant to the Inducement Plan shall be determined by the administrator at the time of grant but shall not be less than 100 percent of the fair market value on the date of grant. Unexercised stock awards under the Inducement Plan expire after 10 years following the grant date. Under the Company’s employment agreement dated June 27, 2018 with Gerald McLaughlin, the Company’s Chief Executive Officer, the Company granted Mr. McLaughlin, under the Inducement Plan, an option to purchase 600,000 shares of the Company’s common stock, which vests in equal annual installments over four years from Mr. McLaughlin’s start date. In addition, on July 30, 2018, the Company granted Mr. McLaughlin, under the Inducement Plan, an option to purchase 200,000 shares of the Company’s common stock. The shares underlying this option shall vest subject to certain performance metrics to be evaluated for the fiscal year ending December 31, 2019. As of June 30, 2019, no shares of common stock remain available for grant under the Inducement Plan. Share-based Compensation Expense The Company has reported share-based compensation expense for the three and six months ended June 30, 2019 and 2018, respectively, in its condensed consolidated statements of operations as follows: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 (in thousands) Cost of goods sold $ 143 $ 123 $ 287 $ 242 Research and development 115 121 205 199 Selling and marketing 91 306 211 563 General and administrative 673 536 1,193 1,049 $ 1,022 $ 1,086 $ 1,896 $ 2,053 The total share-based compensation expense included in the table above is attributable to stock options and RSUs of $978,000 and $44,000 for the three months ended June 30, 2019, respectively, and $1.8 million and $95,000 for the six months ended June 30, 2019, respectively. 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. As of June 30, 2019, there was $5.4 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 2.6 years for stock options and 2.4 years for RSUs. There is no unrecognized compensation cost associated with grants of restricted stock. Stock Options During the six months ended June 30, 2019, the Company granted 1,951,208 options under the 2015 Plan. During the year ended December 31, 2018, the Company granted 953,539 options under the 2015 Plan. In June and July 2018, the Company granted 600,000 and 200,000 options, respectively, under the Inducement Plan to Gerald McLaughlin, the Company’s Chief Executive Officer, at an exercise price of $6.20 and $5.55 per share, respectively. The Company estimates the fair value of all stock options on the grant date by applying the Black-Scholes option pricing valuation model. The application of this valuation model involves assumptions that are highly subjective, judgmental and sensitive in the determination of compensation cost. Prior to the IPO, given the absence of an active market for the Company’s common stock prior to its IPO, the Company’s board of directors was required to estimate the fair value of its common stock at the time of each option grant primarily based upon valuations performed by a third-party valuation firm. The weighted-average key assumptions used in determining the fair value of options granted during the period indicated are as follows: Six Months Ended June 30, 2019 Estimated dividend yield 0.00 % Expected stock price volatility 60.00 % Weighted-average risk-free interest rate 2.50 % Expected life of option in years 6.07 Weighted-average option fair value at grant $ 1.27 A summary of outstanding and exercisable options as of June 30, 2019 and December 31, 2018 and the activity from December 31, 2018 through June 30, 2019, is presented below: Weighted- Number of Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2018 3,446,885 $ 8.935 $ 70 Exercisable at December 31, 2018 1,643,011 $ 10.627 $ 70 Granted 1,951,208 2.21 Exercised (35,207) 0.32 Expired, forfeited or cancelled (834,544) 10.92 Outstanding at June 30, 2019 4,528,342 $ 5.74 $ 17 Exercisable at June 30, 2019 1,277,610 $ 9.42 $ 17 The weighted-average remaining contractual life of options outstanding and exercisable on June 30, 2019 was 8.7 and 7.1 years, respectively. The option exercise prices for all options granted January 1, 2019 through June 30, 2019 ranged from $1.44 per share to $3.14 per share. The weighted-average remaining contractual life of options outstanding and exercisable on December 31, 2018 was 7.9 and 6.6 years, respectively. The option exercise price for all options granted in the year ended December 31, 2018 ranged from $4.76 to $10.40 per share. Restricted Stock Units On May 1, 2017, the Company granted 78,750 RSUs to members of its management which vest in four equal annual installments, beginning May 1, 2018. On October 2, 2017, the Company granted 6,250 RSUs to a member of its management which vest in four equal annual installments, beginning October 2, 2018. On March 1, 2018, the Company granted 93,750 RSUs to members of its management which vest in four equal annual installments, beginning March 1, 2019. The Company satisfies its RSUs by issuing shares of the Company’s common stock when RSUs vest and are issued. In addition, when RSUs vest and are issued, RSU recipients may elect to have the Company withhold units as consideration for the tax withholding obligation for their vested RSUs. During the six months ended June 30, 2019, 19,688 vested RSUs were converted into an equivalent 18,765 shares of common stock. The Company withheld 923 shares of its common stock to partially satisfy tax withholding obligations upon vesting of the RSUs for the six months ended June 30, 2019. During the year ended December 31, 2018, 33,748 vested RSUs were converted into an equivalent 26,991 shares of common stock. The Company withheld 6,757 shares of its common stock to partially satisfy tax withholding obligations upon vesting of the RSUs for the year ended December 31, 2018. A summary of outstanding RSUs as of June 30, 2019 and December 31, 2018 and the activity from December 31, 2018 through June 30, 2019, is presented below: Weighted- Number of Average RSUs Fair Value Outstanding at December 31, 2018 75,314 $ 7.93 Granted — — Vested (19,688) 7.76 Expired, forfeited or cancelled — — Outstanding at June 30, 2019 55,626 $ 7.99 Restricted stock The Company did not issue any shares of restricted stock for the six months ended June 30, 2019, or for the year ended December 31, 2018. No vested restricted stock awards were settled during the six months ended June 30, 2019. The Company had no unvested restricted stock as of June 30, 2019 and December 31, 2018. For the six months ended June 30, 2019, there were no shares of restricted stock granted or forfeited.

Treasury stock

Treasury stock	6 Months Ended
	Jun. 30, 2019
Treasury stock.
Treasury stock	Note 12. 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 June 30, 2019 and December 31, 2018.

Commitments and contingencies

Commitments and contingencies	6 Months Ended
	Jun. 30, 2019
Commitments and contingencies
Commitments and contingencies	Note 13. Commitments and contingencies Registration Payment Arrangement : On November 5, 2018, in conjunction with the Second Amendment to the Facility and the related issuance of the Convertible Notes, the Company entered into the Second Registration Agreement which required the Company to file a registration statement with the SEC to register the Registrable Securities (see Note 8) within 30 days from November 5, 2018, which was to become effective per the SEC no later than 75 days thereafter. The filing deadline was subsequently extended to December 21, 2018. The Company filed a registration statement on Form S-3 to comply with the Registration Agreement on December 11, 2018, which became effective on December 20, 2018. This filing covered 3,796,668 shares, which is the number of shares that would be issued up to the Exchange Cap as (defined in the agreement). The Company is also required to, among other things, maintain the effectiveness of such registration statement, continue to file the required SEC filings on a timely basis, use its best efforts to ensure that the registered securities are listed on each securities exchange on which securities of the same class or series as issued by the Company are then listed and comply with any FINRA requests. Upon any Registration Failure, the Company shall pay additional damages to the Holder for each 30-day period (prorated for any partial period) after the date of such Registration Failure in an amount in cash equal to two percent of the original principal amount of the Convertible Notes. The Company’s obligations with respect to each registration end at the date which is the earlier of (a) when all of the Registrable Securities covered by such registration have been sold or (b) when Deerfield or any of its transferees or assignees under the Registration Agreement cease to hold any of the Registrable Securities. For each registration filing, the Company shall bear all reasonable expenses, other than underwriting discounts and commissions, and shall reimburse Deerfield or any assignee or transferee for up to $25,000 in legal fees. The Company currently expects to satisfy all of its obligations under the Registration Agreement and does not expect to pay any damages pursuant to this agreement; therefore, no liability has been recorded. Patent Infringement Litigation: On October 31, 2017, the Company received a paragraph IV certification from Teva Pharmaceuticals USA, Inc. (“Teva”) advising the Company that Teva has filed an ANDA with the FDA for a generic version of Cotempla XR-ODT, in connection with seeking to market its product prior to the expiration of patents covering Cotempla XR-ODT. 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. On December 21, 2018, the Company entered into a Settlement Agreement (the “Teva Settlement Agreement”) and a Licensing Agreement (the “Teva Licensing Agreement” and collectively with the Teva Settlement Agreement, the “Teva Agreement”) with Teva that resolved all ongoing litigation involving the Company’s Cotempla XR-ODT patents and Teva’s ANDA. Under the Teva Agreement, the Company granted Teva the right to manufacture and market its generic version of Cotempla XR-ODT under the ANDA beginning on July 1, 2026, or earlier under certain circumstances. A stipulation and order of dismissal was entered by the U.S. District Court for the District of Delaware. The Teva Agreement has been submitted to the applicable governmental agencies. On July 25, 2016, the Company received a paragraph IV certification from Actavis Laboratories FL, Inc. (“Actavis”) advising the Company that Actavis had filed an Abbreviated New Drug Application (“ANDA”) with the FDA for a generic version of Adzenys XR-ODT. On September 1, 2016, the Company filed a patent infringement lawsuit in federal district court against Actavis alleging that Actavis infringed the Company’s Adzenys XR-ODT patents. On October 17, 2017, the Company entered into a Settlement Agreement (the “Actavis Settlement Agreement”) and a Licensing Agreement (the “Actavis Licensing Agreement” and collectively with the Actavis Settlement Agreement, the “Actavis Agreement”) with Actavis that resolved all ongoing litigation involving the Company’s Adzenys XR-ODT patents and Actavis’s ANDA. Under the Actavis Agreement, the Company granted Actavis the right to manufacture and market its generic version of Adzenys XR-ODT under the ANDA beginning on September 1, 2025, or earlier under certain circumstances. A stipulation and order of dismissal was entered by the U.S. District Court for the District of Delaware. The Actavis Agreement has been submitted to the applicable governmental agencies. Other Litigation: On March 7, 2018 and April 18, 2019, the Company received citations advising the Company that the County of Harris Texas (“Harris County”) and the County of Walker Texas (“Walker County”) filed lawsuits on December 13, 2017 and January 11, 2019, respectively, against the Company and various other alleged manufacturers, promoters, sellers and distributors of opioid pharmaceutical products. Through these lawsuits, each of Harris County and Walker County seek to recoup as damages some of the expenses they allegedly have incurred to combat opioid use and addiction. Each of Harris County and Walker County also seeks punitive damages, disgorgement of profits and attorneys’ fees. While the Company believes that these lawsuits are without merit and intends to vigorously defend against them, the Company is not able to predict at this time whether these proceedings 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 additional office space in Blue Bell, Pennsylvania, which commenced on May 1, 2016. Prior to the adoption of the New Lease Standard on January 1, 2019, the Company accounted for rent expense on long-term operating leases on a straight-line basis over the life of the lease resulting in a deferred rent balance of $989,000 at December 31, 2018. The Company adopted ASU No. 2016-02 at January 1, 2019 and recognized an operating lease liability of $4.3 million under the New Lease Standard (See Note 2 and 9). 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 $60,000 and $112,000 for the three and six months ended June 30, 2019, respectively, and $52,000 and $106,000 for the three and six months ended June 30, 2018, respectively. Rent expense for these leases, excluding the share of operating expenses, was $252,000 for each of the three months ended June 30, 2019 and 2018, and $505,000 for each of the six months ended June 30, 2019 and 2018. 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 $528,000 and $995,000 of compensation expense for the three and six months ended June 30, 2019, respectively, and $467,000 and $811,000 for the three and six months ended June 30, 2018, respectively, under the Bonus Plan.

License agreements

License agreements	6 Months Ended
	Jun. 30, 2019
License agreements
License agreements	Note 14. License agreements On October 23, 2018, the Company entered into an Exclusive License Agreement (“NeuRx License”) with NeuRx Pharmaceuticals LLC (“NeuRx”), pursuant to which NeuRx granted the Company an exclusive, worldwide, royalty-bearing license to research, develop, manufacture, and commercialize certain pharmaceutical products containing NeuRx’s proprietary compound designated as NRX-101, referred to by the Company as NT0502. NT0502 is a new chemical entity that is being developed by the Company for the treatment of sialorrhea, which is excessive salivation or drooling. Under the NeuRx License, the Company made an upfront payment of $175,000 to NeuRx upon the execution of the agreement and may in the future be required to make certain development and milestone payments and royalties based on annual net sales, as defined in the NeuRx License. Royalties are to be paid on a country-by-country and licensed product-by-licensed product basis, during the period of time beginning on the first commercial sale of such licensed product in such country and continuing until the later of: (i) the expiration of the last-to-expire valid claim in any licensed patent in such country that covers such licensed product in such country; and/or (ii) expiration of regulatory exclusivity of such licensed product in such country. Under the Teva Licensing Agreement, the Company granted Teva a non-exclusive license to certain patents owned by the Company by which Teva has the right to manufacture and market its generic version of Cotempla XR-ODT under its ANDA beginning on July 1, 2026, or earlier under certain circumstances. The Teva Licensing Agreement has been submitted to the applicable governmental agencies (see Note 13). Under the Actavis Licensing Agreement, the Company granted Actavis a non-exclusive license to certain patents owned by the Company by which Actavis has the right to manufacture and market its generic version of Adzenys XR-ODT under its ANDA beginning on September 1, 2025, or earlier under certain circumstances. The Licensing Agreement has been submitted to the applicable governmental agencies (see Note 13). 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 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 oral 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 is paying a single digit royalty on net sales of Adzenys ER during the life of the patents. Such license fees are capitalized as an intangible asset and are amortized into cost of goods sold over the life of the longest associated patent. The royalties are recorded as cost of goods sold in the same period as the net sales upon which they are calculated. Additionally, each of the 2014 and 2017 License Agreements contains a covenant from Shire not to file a patent infringement suit against the Company alleging that Adzenys XR-ODT or Adzenys ER, respectively, infringes the Shire patents.

Related party transactions

Related party transactions	6 Months Ended
	Jun. 30, 2019
Related party transactions
Related party transactions	Note 15. 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. 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. Deerfield, the Company’s senior lender, participated in the purchase of the Company’s common shares as part of both public offerings, and as a result, is classified as a related party. The Company is obligated under a $60.0 million senior secured credit Facility that was issued by the Company to Deerfield. On June 1, 2017, the Company and Deerfield entered into an Amendment to the Company’s existing Facility with Deerfield which extended the date to repay the Accrued Interest under the Facility to June 1, 2018, which may have been extended to June 1, 2019 at the election of the Company if certain conditions have been met as specified in the Amendment. The right to payment of the Accrued Interest was memorialized in the form of Convertible Notes issued to Deerfield on the Amendment Date. On October 26, 2017, Deerfield provided a conversion notice electing to convert the entire $6.6 million of Convertible Notes into shares of the Company’s common stock at a conversion price of $7.08 per share. The conversion price was based on 95% of the average of the volume weighted average prices per share of the Company’s common stock on the NASDAQ Global Market for the three trading day period immediately preceding such conversion. This resulted in issuing 929,967 shares of the Company’s common stock to Deerfield on this date and the Convertible Notes were cancelled (see Note 8). On November 5, 2018, the Company and Deerfield entered into the Second Amendment to the Facility pursuant to which the Company agreed to pay $7.5 million of principal under the Facility otherwise due in May 2019 upon completion of the November Offering. The Second Amendment provides an option for the $15.0 million principal on the Facility due in May 2020 to be paid in either May 2021 or May 2022 upon the achievement of certain revenue milestones as described in the Second Amendment. Also, pursuant to the Second Amendment, the Company amended and restated its outstanding notes under the Facility in the form of senior secured convertible notes. The Company has the right to pay principal and future interest in shares of Common Stock not to exceed 2,135,625 shares in the aggregate. Additionally, subject to the terms of the amended and restated convertible notes, Deerfield has the right to convert the remaining principal under the Facility into shares of Common Stock not to exceed 3,796,668 shares in the aggregate at a conversion price ranging from 95% to 83% of the greater of the average of the volume weighted average price per share of the Common Stock for the three trading day period immediately preceding such conversion and $10.00. On November 8, 2018, the Company closed an underwritten public offering of 19,999,999 shares of its common stock at a public offering price of $2.30 per share, which includes 2,608,695 shares of its common stock resulting from the underwriters’ exercise of their over-allotment option at the public offering price. The net proceeds to the Company from this offering, after deducting underwriting discounts and commissions and other offering expenses payable by the Company were approximately $43.4 million. Deerfield also participated in the purchase of the Company’s common shares as part of this offering (see Note 8).

Summary of significant accoun_2

Summary of significant accounting policies (Policies)	6 Months Ended
	Jun. 30, 2019
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, 2019 are not necessarily indicative of the results for the year ending December 31, 2019 or any period thereafter. The audited consolidated financial statements as of and for the year ended December 31, 2018 included information and footnotes necessary for such presentation and were included in the Neos Therapeutics, Inc. Annual Report on Form 10-K filed with the SEC on March 18, 2019. 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, 2018.
Principles of consolidation	Principles of consolidation: At June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018, the consolidated financial statements include the accounts of the Company and its four wholly-owned subsidiaries. All significant intercompany transactions have been eliminated.
Use of estimates	Use of estimates : The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.
Liquidity	Liquidity: During 2018 and the three and six months ended June 30, 2019, the Company incurred operating losses and used cash to fund operations. Management intends to achieve profitability through revenue growth from its currently marketed pharmaceutical products. The Company does not anticipate it will be profitable until such time as revenues from Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER increase substantially over current levels. In November 2018, the Company completed an offering of its common stock and restructured its outstanding debt, which reduced and possibly could delay the amount of principal payable in cash. Accordingly, management has performed the review required for going concern accounting and believes the Company presently has sufficient liquidity to continue to operate for the next twelve months after the filing of this Report on Form 10-Q.
Cash equivalents	Cash equivalents: The Company invests its available cash balances in bank deposits and money market funds. The Company considers highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’s primary objectives for investment of available cash are the preservation of capital and the maintenance of liquidity.
Short-term investments	Short-term investments: Short-term investments, if any, consist of debt securities that have original maturities greater than three months but less than or equal to one year and are classified as available-for-sale securities. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of material tax effects reported, as accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity (deficit). Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in other income in the consolidated results of operations. A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income are recognized in other income when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government agencies, or corporate institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date, if any, as non-current assets.
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 there are multiple embedded instruments that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the balance sheet date. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption and are classified in interest expense in the consolidated results of operations.
Intangible assets	Intangible assets : Intangible assets subject to amortization, which principally include proprietary modified-release drug delivery technology, the costs to acquire the rights to Tussionex Abbreviated New Drug Application and patents, are recorded at cost and amortized over the estimated lives of the assets, which primarily range from 10 to 20 years. The Company estimates that the patents it has filed have a future beneficial value. Therefore, costs associated with filing for its patents are capitalized. Once the patent is approved and commercial revenue realized, the costs associated with the patent are amortized over the useful life of the patent. If the patent is not approved, the costs will be expensed. For new product candidates, patent applications and related expenses are expensed as incurred.
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 June 30, June 30, 2019 2018 2019 2018 (in thousands) Adzenys XR-ODT $ 7,241 $ 6,516 $ 13,898 $ 11,508 Cotempla XR-ODT 6,513 4,342 12,286 7,989 Adzenys ER 146 (28) 331 175 Generic Tussionex 1,743 533 3,762 2,420 $ 15,643 $ 11,363 $ 30,277 $ 22,092 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 adjustment at the time revenue is recognized. Historical trends of estimated rebates will be regularly monitored, which may result in adjustments to such estimates in the future. Product returns Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. Estimated returns are recorded as accrued expenses and as a gross to net sales adjustments at the time revenue is recognized. The Company analyzed recent branded product return history and other market data obtained from the Company’s 3PLs, as well as data available from sales of its branded products, to determine a reliable return rate for branded Adzenys XR-ODT, Cotempla XR-ODT and Adzenys ER. Generic Tussionex product returns were estimated based upon return data available from sales of the Company’s generic Tussionex product over the past three years. Wholesaler chargebacks for generic product The Company’s generic Tussionex products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company. Estimated chargebacks are recorded as a discount allowance against accounts receivable and as a gross to net sales adjustments at the time revenue is recognized based on information provided by third parties. Due to estimates and assumptions inherent in determining the amount of 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. There were no advertising costs recognized during the three and six months ended June 30, 2019. The Company recognized advertising costs of $0.2 million and $0.4 million during the three and six months ended June 30, 2018, respectively.
Share-based compensation	Share-based compensation: Share-based compensation awards, including grants of 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 stock-based awards is recognized on a straight-line basis, based on the grant date fair value, over the requisite service period of the award, which is generally the vesting term. The fair value of the Company’s stock-based awards to employees and directors is estimated using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the expected stock price volatility, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends. For performance-based stock awards, compensation expense is recognized on a straight-line basis, based on the grant date fair value, over the performance period or through the vesting date, whichever is longer. Management monitors the probability of achievement of the performance conditions and adjusts stock-based compensation expense, if necessary. After the closing of the Company’s IPO, the Company’s board of directors has determined the fair value of each share of underlying common stock based on the closing price of the Company’s common stock as reported by the NASDAQ Global Market on the date of grant. Under ASU No. 2017-09 guidance for accounting for share-based payments, the Company has elected to continue estimating forfeitures at the time of grant and, if necessary, revise the estimate in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest.
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, 2019 and December 31, 2018, 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 (NOLs) 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, 2019 and December 31, 2018, the Company determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. The Company may not ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards.
Recent accounting pronouncements	Recent accounting pronouncements : In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The standard is effective for public entities for the fiscal years ending after December 15, 2020, with early adoption permitted for the removed disclosures and delayed adoption permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13 on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a write-down. The standard is effective for public entities for the fiscal years ending after December 15, 2020, with early adoption permitted through a modified retrospective approach. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement -Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA, and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for entities for fiscal years beginning after December 15, 2018 with early adoption permitted, and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. This standard became effective for the Company on January 1, 2019. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (the “New Lease Standard”). The New Lease Standard supersedes the lease guidance under FASB Accounting Standards Codification ("ASC") Topic 840, Leases (“Prior GAAP”), resulting in the creation of FASB ASC Topic 842, Leases. Under the new guidance, lessees are required to recognize in the statement of financial position the following for all finance and operating leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. In January, July and December 2018, the FASB issued additional amendments to the new lease guidance relating to, transition, and clarification. The July 2018 amendment, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, provides an optional transition method that allows entities to elect to apply the standard using the modified retrospective transition method, which did not require the Company to adjust comparative periods. The Company adopted this standard on the effective date of January 1, 2019 and elected to use the modified retrospective transition method approach at transition. Therefore, no adjustments are made to amounts in prior period financial statements. In addition, the Company elected the following practical expedients: 1) the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allows the Company to carry forward the historical lease classification; 2) the land easements practical expedient, which allows the Company to carry forward the accounting treatment for land easements on existing agreements; 3) the short-term lease practical expedient, which allows the Company to exclude short-term leases from recognition in the unaudited consolidated balance sheets; and 4) The adoption of this accounting standard resulted in the recording of Operating lease ROU assets and Operating lease liabilities of $3.4 million and $4.3 million, respectively, as of January 1, 2019. The difference between the operating lease assets and liabilities was recorded as an adjustment to deferred rent for $0.9 million relating to real estate leases. The adoption of ASU 2016-02 had no impact on Accumulated Deficit. The Company implemented additional internal controls to identify lease contracts and enable the preparation of financial information related to the New Lease Standard. See Note 9 for additional information. 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 accoun_3

Summary of significant accounting policies (Tables)	6 Months Ended
	Jun. 30, 2019
Summary of significant accounting policies
Schedule of disaggregation of revenue	Three Months Ended Six months ended June 30, June 30, 2019 2018 2019 2018 (in thousands) Adzenys XR-ODT $ 7,241 $ 6,516 $ 13,898 $ 11,508 Cotempla XR-ODT 6,513 4,342 12,286 7,989 Adzenys ER 146 (28) 331 175 Generic Tussionex 1,743 533 3,762 2,420 $ 15,643 $ 11,363 $ 30,277 $ 22,092

Net loss per share (Tables)

Net loss per share (Tables)	6 Months Ended
	Jun. 30, 2019
Net loss per share
Schedule of potentially dilutive securities excluded in the computation of diluted net loss per share	June 30, 2019 2018 Series C Redeemable Convertible Preferred Stock Warrants (as converted) 70,833 70,833 Stock options outstanding 4,528,342 3,576,062 RSUs outstanding 55,626 159,064

Fair value of financial instr_2

Fair value of financial instruments (Tables)	6 Months Ended
	Jun. 30, 2019
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, 2019 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 25,007 $ 750 $ — $ 25,757 Short-term investments — 4,494 — 4,494 Total financial assets $ 25,007 $ 5,244 $ — $ 30,251 Earnout liability $ — $ — $ 37 $ 37 Derivative liability (see Note 8) — — 1,373 1,373 Total financial liabilities $ — $ — $ 1,410 $ 1,410 Fair Value as of December 31, 2018 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ 27,419 $ 19,059 $ — $ 46,478 Total financial assets $ 27,419 $ 19,059 $ — $ 46,478 Earnout liability $ — $ — $ 37 $ 37 Derivative liability (see Note 8) — — 2,017 2,017 Total financial liabilities $ — $ — $ 2,054 $ 2,054
Schedule of cash and cash equivalents and short-term investments	June 30, 2019 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ 25,007 $ — $ 25,007 Financial and corporate debt securities 5,243 1 5,244 $ 30,250 $ 1 $ 30,251 December 31, 2018 Amortized Unrealized Market Cost Gain / (Loss) Value (in thousands) Bank deposits and money market funds $ 27,419 $ — $ 27,419 Financial and corporate debt securities 19,059 — 19,059 $ 46,478 $ — $ 46,478
Schedule of changes in Level 3 liabilities measured at fair value	Level 3 Liabilities (in thousands) Balance at December 31, 2018 $ 2,054 Change in fair value Balance at June 30, 2019 $ 1,410
Derivative liability
Fair value of financial instruments
Methodologies and significant inputs used in determination of fair value	Derivative Liability Date of Valuation 6/30/2019 12/31/2018 Valuation Method Monte Carlo Monte Carlo Volatility (annual) N/A N/A Time period from valuation until maturity of debt (yrs.) 2.9 3.4 Cumulative probability of a change in control prepayment implied by model 24 % 25 % Cumulative probability of other accelerated prepayments implied by model 11 % 14 % Discount rate 24.80 % 23.12 % Fair value of liability at valuation date (thousands) $ 1,373 $ 2,017

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2019
Inventories
Schedule of inventories	June 30, December 31, 2019 2018 (in thousands) Raw materials $ 4,007 $ 3,845 Work in progress 3,806 2,704 Finished goods 4,833 4,259 Inventory at cost 12,646 10,808 Inventory reserve (272) (441) $ 12,374 $ 10,367

Accrued expenses (Tables)

Accrued expenses (Tables)	6 Months Ended
	Jun. 30, 2019
Accrued expenses
Schedule of accrued expenses	June 30, December 31, 2019 2018 (in thousands) Accrued savings offers $ 13,142 $ 11,289 Accrued rebates 5,036 7,762 Accrued customer returns 5,356 5,157 Accrued wholesaler fees 3,455 4,249 Accrued payroll and benefits 4,088 4,555 Other accrued expenses 2,607 2,806 Total accrued expenses $ 33,684 $ 35,818

Long-term debt (Tables)

Long-term debt (Tables)	6 Months Ended
	Jun. 30, 2019
Long-term debt
Schedule of long-term debt	June 30, December 31, 2019 2018 (in thousands) Deerfield senior secured credit facility, net of discount of $2,639 and $3,334, respectively $ 43,111 $ 49,916 Financing and capital leases, maturing through May 2024 1,750 1,858 44,861 51,774 Less current portion (16,372) (8,557) Long-term debt $ 28,489 $ 43,217
Schedule of future principal payments of long-term debt including financing leases	Period ending: June 30, (in thousands) 2020 $ 16,372 2021 15,096 2022 15,852 2023 96 Thereafter 84 Future principal payments $ 47,500 Less unamortized debt discount related to long-term debt (2,639) Less current portion of long-term debt (16,372) Total long-term debt, net of current portion $ 28,489

Leases (Tables)

Leases (Tables)	6 Months Ended
	Jun. 30, 2019
Leases
Schedule of lease expense	Three Months Ended Six Months Ended June 30, 2019 June 30, 2019 Statement of Operations Classification (in thousands) (in thousands) Lease cost: Operating lease cost $ 269 $ 533 Cost of goods sold and operating expenses Short-term lease cost 12 24 Cost of goods sold and operating expenses Variable lease cost 59 112 Cost of goods sold and operating expenses Finance lease cost: Amortization of leased assets 133 252 Cost of goods sold Interest on lease liabilities 58 122 Interest expense Total net lease cost $ 531 $ 1,043
Schedule of balance sheet information related to leases	June 30, 2019 Balance Sheet Classification (in thousands) Leases: Assets: Operating lease assets $ 3,274 Operating lease right-of-use assets Finance lease assets 2,848 Property, plant and equipment, net Total leased assets $ 6,122 Liabilities: Current: Operating leases $ 606 Current portion of operating lease liabilities Finance leases 1,372 Current portion of long-term debt Noncurrent: Operating leases 3,608 Operating lease liabilities Finance leases 378 Long-term debt, net of current portion Total lease liabilities $ 5,964
Schedule of weighted average lease term and discount rates	June 30, 2019 Weighted-Average Remaining Lease Term (years) Operating lease assets 5.2 Finance lease assets 1.9 Weighted-Average Discount Rate Operating lease assets 15.0 % Finance lease assets 12.6 %
Schedule of supplemental cash flow information related to leases	Six Months Ended June 30, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 581 Operating cash flows from finance leases 121 Financing cash flows from finance leases 515 ROU assets obtained in exchange for new finance lease liabilities 406 ROU assets obtained in exchange for new operating lease liabilities $ 135
Schedule of future minimum rental payments	June 30, 2019 Operating Leases Finance Leases (in thousands) 2019 $ 587 $ 677 2020 1,225 893 2021 1,118 117 2022 1,060 115 2023 1,055 95 Later years 1,106 40 Total lease payments $ 6,151 $ 1,937 Less amount representing interest (1,937) (187) Total lease obligations $ 4,214 $ 1,750
Schedule of future minimum lease payments under non-cancelable rental and lease agreements	December 31, 2018 Operating Leases Capital Leases (in thousands) 2019 $ 1,180 $ 1,257 2020 1,195 798 2021 1,062 21 2022 1,055 20 2023 1,055 — Later years 1,106 — Minimum lease commitment $ 6,653 $ 2,096 Less amount representing interest (238) Present value of net minimum lease obligations $ 1,858

Share-based Compensation (Table

Share-based Compensation (Tables)	6 Months Ended
	Jun. 30, 2019
Share-based Compensation
Schedule of share-based compensation expense	Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 (in thousands) Cost of goods sold $ 143 $ 123 $ 287 $ 242 Research and development 115 121 205 199 Selling and marketing 91 306 211 563 General and administrative 673 536 1,193 1,049 $ 1,022 $ 1,086 $ 1,896 $ 2,053
Schedule of weighted-average key assumptions used in determining fair value of options granted	Six Months Ended June 30, 2019 Estimated dividend yield 0.00 % Expected stock price volatility 60.00 % Weighted-average risk-free interest rate 2.50 % Expected life of option in years 6.07 Weighted-average option fair value at grant $ 1.27
Summary of outstanding and exercisable options	Weighted- Number of Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2018 3,446,885 $ 8.935 $ 70 Exercisable at December 31, 2018 1,643,011 $ 10.627 $ 70 Granted 1,951,208 2.21 Exercised (35,207) 0.32 Expired, forfeited or cancelled (834,544) 10.92 Outstanding at June 30, 2019 4,528,342 $ 5.74 $ 17 Exercisable at June 30, 2019 1,277,610 $ 9.42 $ 17
Summary of outstanding RSUs	Weighted- Number of Average RSUs Fair Value Outstanding at December 31, 2018 75,314 $ 7.93 Granted — — Vested (19,688) 7.76 Expired, forfeited or cancelled — — Outstanding at June 30, 2019 55,626 $ 7.99

Organization and nature of op_2

Organization and nature of operations (Details)	6 Months Ended
	Jun. 30, 2019product
Organization and nature of operations
Number of approved product	3

Summary of significant accoun_4

Summary of significant accounting policies (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019USD ($)subsidiary	Jun. 30, 2018USD ($)subsidiary	Jun. 30, 2019USD ($)segmentsubsidiary	Jun. 30, 2018USD ($)subsidiary	Dec. 31, 2018USD ($)subsidiary
Summary of significant accounting policies
Number of operating segments | segment			1
Disaggregation of revenue
Revenues	$ 15,643	$ 11,363	$ 30,277	$ 22,092
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	0	200	$ 0	400
Income taxes
Deferred tax assets, net of valuation allowance	0		0		$ 0
Adzenys XR-ODT
Disaggregation of revenue
Revenues	7,241	6,516	13,898	11,508
Cotempla XR-ODT
Disaggregation of revenue
Revenues	6,513	4,342	12,286	7,989
Adzenys ER
Disaggregation of revenue
Revenues	146	(28)	331	175
Generic Tussionex
Disaggregation of revenue
Revenues	$ 1,743	$ 533	$ 3,762	$ 2,420
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 accoun_5

Summary of significant accounting policies - Recent accounting pronouncements (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Lease, Cost [Abstract]
Operating lease right-of-use assets	$ 3,274,000
Operating lease liabilities	$ 4,214,000
Deferred rent			$ 989,000
ASU 2016-02
Lease, Cost [Abstract]
Operating lease liabilities		$ 4,300,000
ASU 2018-11
Lease, Cost [Abstract]
Lease, Practical Expedients, Package [true false]	true
Lease, Practical Expedient, Land Easement [true false]	true
Operating lease right-of-use assets		3,400,000
Operating lease liabilities		4,300,000
Deferred rent		$ 900,000

Net loss per share (Details)

Net loss per share (Details) - shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
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	4,528,342	3,576,062
RSUs outstanding
Net loss per share
Potentially dilutive shares excluded in the computation of diluted net loss per share	55,626	159,064

Fair value of financial instr_3

Fair value of financial instruments - Hierarchy (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Hierarchy for financial instruments measured at fair value on a recurring basis
Short-term investments	$ 4,494
Derivative liability	1,373	$ 2,017
Recurring basis | Fair Value
Hierarchy for financial instruments measured at fair value on a recurring basis
Cash and cash equivalents	25,757	46,478
Short-term investments	4,494
Total financial assets	30,251	46,478
Earnout liability	37	37
Derivative liability	1,373	2,017
Total financial liabilities	1,410	2,054
Recurring basis | Fair Value | Level 1
Hierarchy for financial instruments measured at fair value on a recurring basis
Cash and cash equivalents	25,007	27,419
Total financial assets	25,007	27,419
Recurring basis | Fair Value | Level 2
Hierarchy for financial instruments measured at fair value on a recurring basis
Cash and cash equivalents	750	19,059
Short-term investments	4,494
Total financial assets	5,244	19,059
Recurring basis | Fair Value | Level 3
Hierarchy for financial instruments measured at fair value on a recurring basis
Earnout liability	37	37
Derivative liability	1,373	2,017
Total financial liabilities	$ 1,410	$ 2,054

Fair value of financial instr_4

Fair value of financial instruments - Cash and cash equivalents and short-term investments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Cash and cash equivalents and short-term investments
Amortized Cost	$ 30,250	$ 46,478
Unrealized Gain / (Loss)	1
Market Value	30,251	46,478
Bank deposits and money market funds
Cash and cash equivalents and short-term investments
Amortized Cost	25,007	27,419
Market Value	25,007	27,419
Financial and corporate debt securities
Cash and cash equivalents and short-term investments
Amortized Cost	5,243	19,059
Unrealized Gain / (Loss)	1
Market Value	$ 5,244	$ 19,059

Fair value of financial instr_5

Fair value of financial instruments - Earnout liability and Derivative liability (Details) - Recurring basis - Level 3 $ in Thousands	Jun. 30, 2019USD ($)Yitem	Dec. 31, 2018USD ($)Yitem
Methodologies and significant inputs used in the determination of the fair value
Valuation Method Monte Carlo	us-gaap:ValuationTechniqueOptionPricingModelMember	us-gaap:ValuationTechniqueOptionPricingModelMember
Fair value of liability at valuation date (thousands) | $	$ 1,373	$ 2,017
Time period from valuation until end of earnout (in years)
Methodologies and significant inputs used in the determination of the fair value
Derivative Liability | Y	2.9	3.4
Cumulative probability of a change in control prepayment implied by model (in percent)
Methodologies and significant inputs used in the determination of the fair value
Derivative Liability	24	25
Cumulative probability of other accelerated prepayments implied by model (in percent)
Methodologies and significant inputs used in the determination of the fair value
Derivative Liability	11	14
Discount rate (in percent)
Methodologies and significant inputs used in the determination of the fair value
Derivative Liability	24.80	23.12

Fair value of financial instr_6

Fair value of financial instruments - Changes in Level 3 (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019USD ($)
Changes in Level 3 liabilities measured at fair value
Balance at beginning of period	$ 2,054
Change in fair value	(644)
Balance at end of period	$ 1,410

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Inventories
Raw materials	$ 4,007	$ 3,845
Work in progress	3,806	2,704
Finished goods	4,833	4,259
Inventory at cost	12,646	10,808
Inventory reserve	(272)	(441)
Inventories net	$ 12,374	$ 10,367

Sale-leaseback transaction (Det

Sale-leaseback transaction (Details) - Related Party Sale-leaseback Transactions - USD ($)	Jun. 30, 2017	Feb. 13, 2017	Jun. 30, 2017	Feb. 28, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Other income, net
Sale-leaseback transaction
Net gain recognized in period on sale leaseback transaction					$ 1,000	$ 1,000	$ 2,000	$ 2,000
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, 2019	Dec. 31, 2018
Accrued expenses
Accrued savings offers	$ 13,142	$ 11,289
Accrued rebates	5,036	7,762
Accrued customer returns	5,356	5,157
Accrued wholesaler fees	3,455	4,249
Accrued payroll and benefits	4,088	4,555
Other accrued expenses	2,607	2,806
Total accrued expenses	$ 33,684	$ 35,818

Long-term debt - Summary (Detai

Long-term debt - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Long-term debt
Long term debt and finance lease obligations, including current maturities	$ 44,861	$ 51,774
Less current portion of long term debt	(16,372)	(8,557)
Long-term debt, net of current	28,489	43,217
Debt instrument, unamortized discount
Unamortized discount on debt	2,639
Debt issued to entities affiliated with Deerfield | Senior Secured Credit Facility
Long-term debt
Long term debt and finance lease obligations, including current maturities	43,111	49,916
Debt instrument, unamortized discount
Unamortized discount on debt	2,639	3,334
Financing and capital leases, maturing through May 2024 | Senior Secured Credit Facility
Long-term debt
Long term debt and finance lease obligations, including current maturities	$ 1,750	$ 1,858

Long-term debt - Senior Secured

Long-term debt - Senior Secured Credit facility (Details)

Nov. 08, 2018$ / sharesshares

Nov. 05, 2018USD ($)item$ / sharesshares

Oct. 26, 2017USD ($)$ / sharesshares

Jun. 30, 2017USD ($)$ / sharesshares

Jun. 01, 2017USD ($)item$ / shares

May 11, 2016USD ($)iteminstallment

May 31, 2019USD ($)

Feb. 28, 2017$ / sharesshares

Jun. 30, 2019USD ($)

Jun. 30, 2018USD ($)

Jun. 30, 2019USD ($)

Jun. 30, 2018USD ($)

Dec. 31, 2018USD ($)

Long-term debt

Debt discount amortization

$ 696,000

$ 427,000

Derivative liability

$ 1,373,000

1,373,000

$ 2,017,000

Unamortized discount on debt

2,639,000

$ 2,639,000

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

19,999,999

4,800,000

5,750,000

Public offering price (in dollars per share) | $ / shares

$ 2.30

$ 6.25

$ 5

Gross proceeds from issuance of stock

$ 30,000,000

Minimum | Senior Secured Convertible Note

Long-term debt

Prepayment fee of debt (in percentage)

2.00%

Conversion price | $ / shares

$ 7

Minimum | Common Stock

Long-term debt

Gross proceeds from issuance of stock

4,500,000

Minimum | Underwritten Public Offering | Common Stock

Long-term debt

Gross proceeds from issuance of stock

$ 30,000,000

Maximum | Senior Secured Convertible Note

Long-term debt

Prepayment fee of debt (in percentage)

12.75%

Senior Secured Credit Facility | Registration Agreement

Long-term debt

Maximum reimbursable legal fees

$ 25,000

Senior Secured Credit Facility | Debt issued to entities affiliated with Deerfield

Long-term debt

Face amount of debt issued

$ 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

Debt Instrument, Covenant Compliance

As of June 30, 2019, the Company was in compliance with the covenants under the Facility.

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)

16.69%

15.03%

Debt discount amortization

339,000

$ 218,000

$ 696,000

$ 427,000

Unamortized discount on debt

2,639,000

2,639,000

$ 3,334,000

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

1,400,000

1,400,000

Minimum premiums as percent required to treat as derivative

10.00%

Payment of debt modification fee

$ 40,000

Maximum time period to register shares per agreement

30 days

30 days

Maximum time period for registration to become effective per agreement

75 days

75 days

Senior Secured Credit Facility | Minimum | Senior Secured Convertible Note

Long-term debt

Conversion price | $ / shares

$ 7

Senior Secured Credit Facility | Maximum | Senior Secured Convertible Note

Long-term debt

Number of shares which may be issued for conversion of convertible notes | item

940,924

Second Amendment Facility Due in May 2019 | Debt issued to entities affiliated with Deerfield

Long-term debt

Face amount of debt issued

$ 52,500,000

Prepayment of premium amount (as a percent)

6.25%

Non-refundable exit fee

$ 750,239

Payment of senior debt and fee

$ 7,500,000

$ 7,500,000

Principal outstanding

$ 45,000,000

$ 45,000,000

Second Amendment Facility Due in May 2019 | Common Stock | Debt issued to entities affiliated with Deerfield

Long-term debt

Share price, percentage of Last Bid Price

93.00%

Principal payment (in dollars per shares) | $ / shares

$ 3

Ownership Cap percentage

4.985%

Number of trading days used to determine conversion stock price

10 days

Second Amendment Facility Due in May 2019 | 2019 | Debt issued to entities affiliated with Deerfield

Long-term debt

Face amount of debt issued

$ 7,500,000

Second Amendment Facility Due in May 2019 | 2020 | Debt issued to entities affiliated with Deerfield

Long-term debt

Face amount of debt issued

15,000,000

Second Amendment Facility Due in May 2019 | 2021 | Debt issued to entities affiliated with Deerfield

Long-term debt

Face amount of debt issued

15,000,000

Second Amendment Facility Due in May 2019 | 2022 | Debt issued to entities affiliated with Deerfield

Long-term debt

Face amount of debt issued

$ 15,000,000

Second Amendment Facility Due in May 2019 | Maximum | Common Stock | Debt issued to entities affiliated with Deerfield

Long-term debt

Number of shares issued upon conversion of debt | shares

2,135,625

Second Amendment Facility Due in May 2020 | Common Stock | Debt issued to entities affiliated with Deerfield

Long-term debt

Ownership Cap percentage

4.985%

Conversion price | $ / shares

$ 10

Conversion price, expressed as a percentage of stock price

95.00%

Number of trading days used to determine conversion stock price

3 days

Second Amendment Facility Due in May 2020 | Maximum | Common Stock | Debt issued to entities affiliated with Deerfield

Long-term debt

Percentage of principal amount available for conversion

50.00%

Number of shares issued upon conversion of debt | shares

3,796,668

Conversion price, expressed as a percentage of stock price

83.00%

Number of shares which may be issued for conversion of convertible notes | item

3,796,668

Conversion Of Convertible Notes | Senior Secured Credit Facility

Long-term debt

Amount of debt converted into stock

$ 6,600,000

Number of shares issued upon conversion of debt | shares

929,967

Conversion price | $ / shares

$ 7.08

Conversion price, expressed as a percentage of stock price

95.00%

Number of trading days used to determine conversion stock price

3 days

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, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2013	Dec. 31, 2017
Essex sale-leaseback transactions | Transaction One
Long-term debt
Imputed interest rate on lease (as a percent)						14.90%
Financing and capital leases, maturing through May 2024
Long-term debt
Interest expense	$ 58,000	$ 91,000	$ 122,000	$ 189,000
Financing and capital leases, maturing through May 2024 | Equipment lease
Long-term debt
Newly acquired asset under equipment lease	$ 400,000		$ 400,000		$ 100,000
Interest rate on lease (as a percent)	6.50%				5.30%
Financing and capital leases, maturing through May 2024 | 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, 2019	Dec. 31, 2018
Maturities Of Longterm Debt And Finance Lease Obligations Abstract
2020	$ 16,372
2021	15,096
2022	15,852
2023	96
Thereafter	84
Long-term debt and capital lease obligations, including current maturities	47,500
Less unamortized debt discount	(2,639)
Less current portion of long term debt	(16,372)	$ (8,557)
Long-term debt, net of current portion	$ 28,489	$ 43,217

Leases (Details)

Leases (Details)	6 Months Ended
	Jun. 30, 2019
Leases
Lessee, Operating Lease, Existence of Option to Extend [true false]	true
Minimum
Leases
Term of operating lease	1 year
Maximum
Leases
Term of operating lease	10 years

Leases - Lease expense (Details

Leases - Lease expense (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases cost
Operating lease cost	$ 269	$ 533
Short-term lease cost	12	24
Variable lease cost	59	112
Finance lease cost:
Amortization of leased assets	133	252
Interest on lease liabilities	58	122
Total net lease cost	$ 531	$ 1,043

Leases - Consolidated balance s

Leases - Consolidated balance sheet information (Details) $ in Thousands	Jun. 30, 2019USD ($)
Balance sheet information related to leases
Operating lease assets	$ 3,274
Finance lease assets	$ 2,848
Finance Lease, Assets (Balance Sheet Location)	us-gaap:PropertyPlantAndEquipmentNet
Total leased assets	$ 6,122
Operating Lease, Current Liabilities	606
Finance Lease, Current Liabilities	$ 1,372
Finance Lease, Current Liabilities (Balance Sheet Location)	us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent
Operating Lease, Non-current Liabilities	$ 3,608
Finance Lease, Non-current Liabilities	$ 378
Finance Lease, Non-current Liabilities (Balance Sheet Location)	us-gaap:LongTermDebtAndCapitalLeaseObligations
Total lease liabilities	$ 5,964

Leases - Schedule of Weighted A

Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate Information (Details)	Jun. 30, 2019
Leases
Operating Lease, Weighted average remaining lease term (in years)	5 years 2 months 12 days
Finance Lease, Weighted average remaining lease term (in years)	1 year 10 months 24 days
Operating Lease, Weighted average discount rate (as a percent)	15.00%
Finance Lease, Weighted average discount rate (as a percent)	12.60%

Leases - Supplemental cash flow

Leases - Supplemental cash flow information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019USD ($)
Leases
Operating cash flows from operating leases	$ 581
Operating cash flows from finance leases	121
Financing cash flows from finance leases	515
ROU assets obtained in exchange for new finance lease liabilities	406
ROU assets obtained in exchange for new operating lease liabilities	$ 135

Leases - Future minimum rental

Leases - Future minimum rental payments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Operating Leases
2019	$ 587
2020	1,225
2021	1,118
2022	1,060
2023	1,055
Later years	1,106
Total lease payments	6,151
2019		$ 1,180
2020		1,195
2021		1,062
2022		1,055
2023		1,055
Later years		1,106
Total lease payments		6,653
Less amount representing interest	(1,937)
Total lease obligations	4,214
Finance Leases
2019	677
2020	893
2021	117
2022	115
2023	95
Later years	40
Total lease payments	1,937
Less amount representing interest	(187)
Total lease obligations	$ 1,750
2019		1,257
2020		798
2021		21
2022		20
Minimum lease commitment		2,096
Less amount representing interest		(238)
Present value of net minimum lease obligations		$ 1,858

Common stock - Shelf Registrati

Common stock - Shelf Registration Statement and Public Offerings (Details) - USD ($) $ / shares in Units, $ in Thousands	Nov. 08, 2018	Jun. 30, 2017	Jun. 26, 2017	Feb. 17, 2017	Feb. 28, 2017	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2017	Aug. 01, 2016
Public offerings and related transactions
Net proceeds from issuance of stock						$ 11
Common Stock | Underwritten Public Offering
Public offerings and related transactions
Issuance of common stock, net of issuance costs (in shares)	19,999,999	4,800,000			5,750,000
Public offering price (in dollars per share)	$ 2.30	$ 6.25			$ 5
Gross proceeds from issuance of stock		$ 30,000
Payments of stock issuance costs		$ 200
Term of option to purchase share		30 days
Net proceeds from issuance of stock	$ 43,400		$ 34,300	$ 26,700
Shares offered to underwriters under option granted (in shares)		720,000
Common Stock | Over-allotment option
Public offerings and related transactions
Issuance of common stock, net of issuance costs (in shares)	2,608,695			750,000
Common Stock | Sales Agreement
Public offerings and related transactions
Issuance of common stock, net of issuance costs (in shares)							651,525	749,639
Public offering price (in dollars per share)							$ 6.25	$ 5.01
Payments of stock issuance costs							$ 200	$ 100
Net proceeds from issuance of stock							$ 3,900	$ 3,600
Maximum
Public offerings and related transactions
Authorized amount to raise capital as per shelf registration statement									$ 125,000
Cowen and Company LLC | Maximum | Sales Agreement
Public offerings and related transactions
Authorized amount for issuance of common stock as per shelf registration statement									$ 40,000

Common stock - Offer under sale

Common stock - Offer under sales agreement (Details) - USD ($)	Nov. 08, 2018	Nov. 05, 2018	Oct. 26, 2017	Jun. 30, 2017	Jun. 26, 2017	Feb. 17, 2017	Feb. 28, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Mar. 18, 2019
Shelf registration statement
Net proceeds from issuance of stock										$ 11,000
Maximum
Shelf registration statement
Authorized amount to raise capital as per second shelf registration statement														$ 100,000,000
Cantor Sales Agreement | Maximum | Cantor Fitzgerald & Co
Shelf registration statement
Authorized amount for issuance of common stock as per second shelf registration statement														$ 30,000,000
Common Stock
Shelf registration statement
Issuance of common stock upon RSU conversion								7,759	17,832	18,765	17,832	26,991
Shares issued upon the exercise of outstanding stock options										35,207		832
Common Stock | Sales Agreement
Shelf registration statement
Gross proceeds from issuance of stock		$ 7,825,113
Maximum authorized amount in continuous offering		$ 7,825,113
Sales Agreement | Common Stock
Shelf registration statement
Shares issued												651,525	749,639
Sales agreement offering price (in dollars per share)												$ 6.25	$ 5.01
Gross proceeds from issuance of stock												$ 4,100,000	$ 3,700,000
Net proceeds from issuance of stock												3,900,000	3,600,000
Payments of stock issuance costs												$ 200,000	$ 100,000
Public offering price (in dollars per share)												$ 6.25	$ 5.01
Underwritten Public Offering | Common Stock
Shelf registration statement
Shares issued	19,999,999			4,800,000			5,750,000
Sales agreement offering price (in dollars per share)	$ 2.30			$ 6.25			$ 5
Net proceeds from issuance of stock	$ 43,400,000				$ 34,300,000	$ 26,700,000
Payments of stock issuance costs				$ 200,000
Public offering price (in dollars per share)	$ 2.30			$ 6.25			$ 5
Over-allotment option | Common Stock
Shelf registration statement
Shares issued	2,608,695					750,000
Conversion Of Convertible Notes | Senior Secured Convertible Notes
Shelf registration statement
Amount of debt converted into stock			$ 6,600,000
Conversion price			$ 7.08
Conversion price, expressed as a percentage of stock price			95.00%
Number of trading days used to determine conversion stock price			3 days
Number of shares of stock into which debt was converted			929,967

Share-based Compensation - Plan

Share-based Compensation - Plan Information (Details) - shares	Jan. 01, 2019	Jun. 27, 2018	Jan. 01, 2018	Oct. 16, 2017	Oct. 17, 2016	Oct. 16, 2015	Jun. 30, 2019	Dec. 31, 2018	Jan. 01, 2016	Jul. 31, 2015	Nov. 30, 2009
Stock options outstanding | Performance based
Stock options, restricted stock and performance stock options
Vesting period							3 years
Stock options | Minimum
Stock options, restricted stock and performance stock options
Vesting period							2 years
Stock options | Maximum
Stock options, restricted stock and performance stock options
Vesting period							4 years
Restricted stock
Stock options, restricted stock and performance stock options
Shares surrendered by holder to cover taxes associated with vesting				14,895	9,709	9,197
Neos Therapeutics, Inc. 2009 Equity Plan
Stock options, restricted stock and performance stock options
Shares reserved for issuance under the plan											1,375,037
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	2,483,815		1,449,847
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							350,396	82,635
Shares available for grant							3,161,056
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							0
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 vests in equal installments over four years (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, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Expense
Total compensation cost	$ 1,022	$ 1,086	$ 1,896	$ 2,053
Cost of goods sold.
Share-based Compensation Expense
Total compensation cost	143	123	287	242
Research and development
Share-based Compensation Expense
Total compensation cost	115	121	205	199
Selling and marketing
Share-based Compensation Expense
Total compensation cost	91	306	211	563
General and administrative
Share-based Compensation Expense
Total compensation cost	$ 673	$ 536	$ 1,193	$ 1,049

Share-based Compensation - Ex_2

Share-based Compensation - Expense Other (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Expense
Total compensation cost	$ 1,022,000	$ 1,086,000	$ 1,896,000	$ 2,053,000
Unrecognized compensation cost	5,400,000		5,400,000
Stock options
Share-based Compensation Expense
Total compensation cost	978,000	986,000	$ 1,800,000	1,900,000
Compensation cost not yet recognized, period for recognition			2 years 7 months 6 days
Shares issued upon the exercise of outstanding stock options			35,207
RSUs outstanding
Share-based Compensation Expense
Total compensation cost	44,000	$ 101,000	$ 95,000	$ 137,000
Compensation cost not yet recognized, period for recognition			2 years 4 months 24 days
Restricted stock
Share-based Compensation Expense
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	12 Months Ended
	Jul. 31, 2018	Jun. 30, 2018	Jun. 30, 2019	Dec. 31, 2018
Stock options, restricted stock and performance stock options
Options granted (in shares)			1,951,208
Granted (in dollars per share)			$ 2.21
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)			2.50%
Expected life of option in years			6 years 26 days
Weighted-average option fair value at grant (in dollars per share)			$ 1.27
Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan
Stock options, restricted stock and performance stock options
Options granted (in shares)			1,951,208	953,539
Neos Therapeutics, Inc 2018 Inducement Plan
Stock options, restricted stock and performance stock options
Options granted (in shares)	200,000	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
Granted (in dollars per share)	$ 5.55	$ 6.20

Share-based Compensation - Opti

Share-based Compensation - Options (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Summary of number of outstanding and exercisable options and the activity
Outstanding at beginning of year (in shares)	3,446,885
Exercisable at beginning of year (in shares)	1,643,011
Granted (in shares)	1,951,208
Exercised (in shares)	(35,207)
Expired, forfeited or cancelled (in shares)	(834,544)
Outstanding at end of period (in shares)	4,528,342	3,446,885
Exercisable at end of period (in shares)	1,277,610	1,643,011
Summary of weighted-average exercise price of outstanding and exercisable options and the activity
Outstanding at beginning of year (in dollars per share)	$ 8.935
Exercisable at beginning of year (in dollars per share)	10.627
Granted (in dollars per share)	2.21
Exercised (in dollars per share)	0.32
Expired, forfeited or cancelled (in dollars per share)	10.92
Outstanding at end of period (in dollars per share)	5.74	$ 8.935
Exercisable at end of period (in dollars per share)	$ 9.42	$ 10.627
Summary of intrinsic value of outstanding and exercisable options and other information
Intrinsic value, outstanding options	$ 17	$ 70
Intrinsic value, exercisable options	$ 17	$ 70
Weighted average remaining contractual life of options outstanding	8 years 8 months 12 days	7 years 10 months 24 days
Weighted-average remaining contractual life of options exercisable	7 years 1 month 6 days	6 years 7 months 6 days
Minimum
Summary of weighted-average exercise price of outstanding and exercisable options and the activity
Granted (in dollars per share)	$ 1.44	$ 4.76
Maximum
Summary of weighted-average exercise price of outstanding and exercisable options and the activity
Granted (in dollars per share)	$ 3.14	$ 10.40

Share-based Compensation _ Rest

Share-based Compensation – Restricted Stock Units (Details) - RSUs outstanding - shares	Mar. 01, 2018	Oct. 02, 2017	May 01, 2017	Jun. 30, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted	93,750	6,250	78,750
Shares vested				19,688	33,748
Shares converted				18,765	26,991
Shares withheld for tax obligation				923	6,757
Four equal tranches
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years	4 years	4 years

Share-based Compensation - Summ

Share-based Compensation - Summary of Outstanding RSUs (Details) - RSUs outstanding - $ / shares	Mar. 01, 2018	Oct. 02, 2017	May 01, 2017	Jun. 30, 2019	Dec. 31, 2018
Summary of outstanding equity instruments and activity
Outstanding at beginning of year (in equity instruments)				75,314
Granted (in equity instruments)	93,750	6,250	78,750
Vested (in equity instruments)				(19,688)	(33,748)
Outstanding at end of period (in equity instruments)				55,626	75,314
Summary of weighted-average fair value
Outstanding at beginning of year (in dollars per equity instrument)				$ 7.93
Vested (in dollars per equity instrument)				7.76
Outstanding at end of period (in dollars per equity instrument)				$ 7.99	$ 7.93
Restricted Stock.
Shares surrendered by holder to cover taxes associated with vesting				923	6,757

Share-based Compensation - Rest

Share-based Compensation - Restricted Stock (Details) - Restricted stock - shares	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
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, 2019	Dec. 31, 2018
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)	Nov. 05, 2018USD ($)item	Jun. 01, 2017USD ($)
Second Amendment Facility Due in May 2020 | Debt issued to entities affiliated with Deerfield | Common Stock | Maximum
Registration Payment Arrangement
Number of shares which may be issued for conversion of convertible notes | item	3,796,668
Registration Agreement | Senior Secured Convertible Notes
Registration Payment Arrangement
Time period after date of any Registration Failure during which additional damages are required to be paid	30 days
Additional damages payable upon any Registration Failure, as percent of original principal amount of debt	2.00%
Maximum reimbursable legal fees	$ 25,000
Registration Agreement | Senior Secured Credit Facility
Registration Payment Arrangement
Maximum reimbursable legal fees		$ 25,000

Commitments and contingencies_2

Commitments and contingencies - Operating Lease, Cash Incentive Bonus Plan, Inducement Option Grant (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jan. 01, 2019	Dec. 31, 2018	Dec. 31, 2015
Commitments
Operating lease liabilities	$ 4,214,000		$ 4,214,000
Deferred rent balance						$ 989,000
Bonus Expenses	528,000	$ 467,000	995,000	$ 811,000
Grand Prairie Lease Plus Blue Bell Lease
Commitments
Rent expense, share of operating expenses	60,000	52,000	112,000	106,000
Rent expense, excluding share of operating expenses	$ 252,000	$ 252,000	$ 505,000	$ 505,000
Blue Bell, Pennsylvania
Commitments
Term of operating lease							60 months
ASU 2016-02
Commitments
Operating lease liabilities					$ 4,300,000

License agreements (Details)

License agreements (Details) - USD ($)	Oct. 23, 2018	Oct. 31, 2017	Feb. 29, 2016
Shire LLC | NDA 204326 | Maximum
License agreements
Payment of non-refundable license fee			$ 1,000,000
Shire LLC | NDA 204325 | Maximum
License agreements
Payment of non-refundable license fee		$ 1,000,000
NeuRx License
License agreements
Upfront payment to be paid	$ 175,000

Related party transactions (Det

Related party transactions (Details) - USD ($) $ / shares in Units, $ in Thousands	Nov. 08, 2018	Nov. 05, 2018	Oct. 26, 2017	Jun. 30, 2017	Jun. 26, 2017	Feb. 17, 2017	May 31, 2019	Feb. 28, 2017	Jun. 30, 2019
Stock transaction disclosures
Net proceeds from issuance of stock									$ 11
Minimum | Common Stock
Stock transaction disclosures
Proceeds from issuance of common stock		$ 4,500
Underwritten Public Offering | Common Stock
Stock transaction disclosures
Issuance of common stock, net of issuance costs (in shares)	19,999,999			4,800,000				5,750,000
Public offering price (in dollars per share)	$ 2.30			$ 6.25				$ 5
Proceeds from issuance of common stock				$ 30,000
Payments of stock issuance costs				$ 200
Term of option to purchase share				30 days
Shares offered to underwriters under option granted (in shares)				720,000
Net proceeds from issuance of stock	$ 43,400				$ 34,300	$ 26,700
Underwritten Public Offering | Minimum | Common Stock
Stock transaction disclosures
Proceeds from issuance of common stock		30,000
Over-allotment option | Common Stock
Stock transaction disclosures
Issuance of common stock, net of issuance costs (in shares)	2,608,695					750,000
Senior Secured Credit Facility | Conversion Of Convertible Notes
Stock transaction disclosures
Number of shares issued upon conversion of debt			929,967
Amount of debt converted into stock			$ 6,600
Conversion price			$ 7.08
Conversion price, expressed as a percentage of stock price			95.00%
Number of trading days used to determine conversion stock price			3 days
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2019
Stock transaction disclosures
Payment of facility		$ 7,500					$ 7,500
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2019 | Common Stock
Stock transaction disclosures
Number of trading days used to determine conversion stock price		10 days
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2019 | Maximum | Common Stock
Stock transaction disclosures
Number of shares issued upon conversion of debt		2,135,625
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2020
Stock transaction disclosures
Principal repayment to be paid		$ 15,000
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2020 | Common Stock
Stock transaction disclosures
Conversion price		$ 10
Conversion price, expressed as a percentage of stock price		95.00%
Number of trading days used to determine conversion stock price		3 days
Debt issued to entities affiliated with Deerfield | Second Amendment Facility Due in May 2020 | Maximum | Common Stock
Stock transaction disclosures
Number of shares issued upon conversion of debt		3,796,668
Conversion price, expressed as a percentage of stock price		83.00%
Investor | Debt issued to entities affiliated with Deerfield | Senior Secured Credit Facility
Related party transactions
Face amount of debt at time of related party stock purchase								$ 60,000