Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 6-May-14 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Trading Symbol | 'HZNP | ' |
Entity Registrant Name | 'HORIZON PHARMA, INC. | ' |
Entity Central Index Key | '0001492426 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 73,464,786 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $103,374 | $80,480 |
Restricted cash | 738 | 738 |
Accounts receivable, net | 40,100 | 15,958 |
Inventories, net | 9,432 | 8,701 |
Prepaid expenses and other current assets | 9,105 | 4,888 |
Total current assets | 162,749 | 110,765 |
Property and equipment, net | 3,897 | 3,780 |
Intangible assets, net | 125,992 | 131,094 |
Other assets | 6,496 | 6,957 |
TOTAL ASSETS | 299,134 | 252,596 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 10,271 | 9,921 |
Accrued expenses | 44,712 | 24,049 |
Accrued royalties | 11,416 | 8,010 |
Deferred revenues-current portion | 3,102 | 1,330 |
Total current liabilities | 69,501 | 43,310 |
LONG-TERM LIABILITIES: | ' | ' |
Convertible debt, net | 112,774 | 110,762 |
Derivative liability | 313,440 | 109,410 |
Accrued royalties | 21,576 | 24,982 |
Deferred revenues, net of current | 8,017 | 9,686 |
Deferred tax liabilities, net | 2,903 | 3,362 |
Other long term liabilities | 166 | 166 |
Total long-term liabilities | 458,876 | 258,368 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
STOCKHOLDERS' EQUITY: | ' | ' |
Common stock, $0.0001 par value; 200,000,000 shares authorized; 71,413,573 and 66,097,417 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 7 | 7 |
Additional paid-in capital | 436,513 | 410,430 |
Accumulated other comprehensive loss | -2,398 | -2,403 |
Accumulated deficit | -663,365 | -457,116 |
Total stockholders' deficit | -229,243 | -49,082 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $299,134 | $252,596 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Statement Of Financial Position [Abstract] | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 71,413,573 | 66,097,417 |
Common stock, shares outstanding | 71,413,573 | 66,097,417 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Comprehensive Loss (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
REVENUES: | ' | ' |
Gross sales | $92,248 | $10,698 |
Sales discounts and allowances | -40,322 | -2,005 |
Net sales | 51,926 | 8,693 |
Cost of goods sold | 7,619 | 3,769 |
Gross profit | 44,307 | 4,924 |
OPERATING EXPENSES: | ' | ' |
Research and development | 2,833 | 2,198 |
Sales and marketing | 28,695 | 16,328 |
General and administrative | 11,192 | 4,942 |
Total operating expenses | 42,720 | 23,468 |
Operating income (loss) | 1,587 | -18,544 |
OTHER (EXPENSE) INCOME, NET: | ' | ' |
Interest expense, net | -4,207 | -3,603 |
Foreign exchange loss | -38 | -905 |
Loss on derivative fair value | -204,030 | ' |
Other, net | -667 | ' |
Total other expense, net | -208,942 | -4,508 |
Loss before benefit for income taxes | -207,355 | -23,052 |
BENEFIT FOR INCOME TAXES | -1,105 | -881 |
NET LOSS | -206,250 | -22,171 |
NET LOSS PER COMMON SHARE - Basic and diluted | ($3.07) | ($0.36) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted | 67,138,463 | 61,939,822 |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | ' | ' |
Foreign currency translation adjustments | 5 | -797 |
Other comprehensive income (loss) | 5 | -797 |
COMPREHENSIVE LOSS | ($206,245) | ($22,968) |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($206,250) | ($22,171) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and intangible amortization expense | 5,403 | 1,922 |
Stock-based compensation | 1,927 | 1,079 |
Loss on derivative revaluation | 204,030 | ' |
Amortization of debt discount and deferred financing costs | 2,333 | 910 |
Paid in kind interest expense | ' | 783 |
Foreign exchange loss | 38 | 905 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -24,142 | -4,300 |
Inventories | -729 | 866 |
Prepaid expenses and other current assets | -4,218 | 379 |
Accounts payable | 352 | -1,026 |
Accrued expenses | 20,702 | -1,682 |
Deferred revenues | 112 | 349 |
Deferred tax liabilities | -454 | -864 |
Other non-current assets and liabilities | 139 | 81 |
Net cash used in operating activities | -757 | -22,769 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -494 | -225 |
Net cash used in investing activities | -494 | -225 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from the issuance of common stock | 24,156 | ' |
Net cash provided by financing activities | 24,156 | ' |
Effect of foreign exchange rate changes on cash | -11 | -17 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 22,894 | -23,011 |
CASH AND CASH EQUIVALENTS, beginning of the year | 80,480 | 104,087 |
CASH AND CASH EQUIVALENTS, end of the period | 103,374 | 81,076 |
Supplemental cash flow information: | ' | ' |
Cash paid for interest | ' | 1,876 |
Cash paid for income taxes | 10 | 17 |
Fee paid for debt commitment | $5,000 | ' |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
NOTE 1 – BASIS OF PRESENTATION | |
The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The December 31, 2013 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. | |
The unaudited condensed consolidated financial statements presented herein include the accounts of Horizon Pharma, Inc. (the “Company”) and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation. | |
During the fourth quarter of 2013, the Company determined that there had been a misclassification of certain fees in its financial statements for the previously reported periods. Those financial statements classified wholesaler service fees as cost of goods sold. The Company determined that these fees should be classified as sales discounts and allowances, which are a reduction in revenue instead of an increase in cost of goods sold and has revised all identified prior period misclassifications in the periods in which they originated. The revision had no impact on the Company’s reported gross profit, net loss or cash flows and was immaterial individually or in the aggregate, to any of the prior reporting periods. Amounts included within this Quarterly Report on Form 10-Q for the period ended March 31, 2013 have been revised to reflect this adjustment of $478 from cost of goods sold to sales discounts and allowances. The revision increased sales discounts and allowances and reduced both net sales and cost of goods sold by this amount. | |
Additionally, as previously disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, the Company made a $258 reclassification of certain departmental expenses from general and administrative expenses to selling and marketing expenses in the Company’s condensed consolidated statements of comprehensive loss for the three months ended March 31, 2013. | |
During the first quarter of 2014, the Company recorded an out of period adjustment of $1,578 resulting in a reduction to its wholesaler fees. This adjustment to wholesaler fees was recorded as a reduction of sales discounts and allowances within the Company’s condensed consolidated statements of comprehensive loss for the three months ended March 31, 2014. The Company has evaluated the impact of the reduction in wholesaler fees to prior reporting periods and has determined it was immaterial. | |
Business Overview | |
The Company was incorporated in Delaware on March 23, 2010. On April 1, 2010, the Company became a holding company that operates primarily through its two wholly-owned subsidiaries, Horizon Pharma USA, Inc., a Delaware corporation, and Horizon Pharma AG, a company organized under the laws of Switzerland which was acquired by the Company on April 1, 2010 in exchange for newly-issued shares of Horizon Pharma, Inc. Horizon Pharma AG owns all of the outstanding share capital of its wholly-owned subsidiary, Horizon Pharma GmbH, a company organized under the laws of Germany, through which Horizon Pharma AG conducts most of its European operations. Unless the context indicates otherwise, the “Company” refers to Horizon Pharma, Inc. and its subsidiaries taken as a whole. | |
The Company is a specialty pharmaceutical company commercializing DUEXIS®, VIMOVO® and RAYOS®/LODOTRA®, each of which targets unmet therapeutic needs in arthritis, pain and inflammatory diseases. The Company developed DUEXIS and RAYOS/LODOTRA, and it acquired the U.S. rights to VIMOVO from AstraZeneca AB (“AstraZeneca”) in November 2013. The Company markets its products in the United States through its field sales force of approximately 290 representatives. The Company’s strategy is to develop, acquire or in-license additional innovative medicines or acquire companies, such as the Company’s proposed transaction with Vidara Therapeutics International Ltd. (“Vidara”), where the Company can execute a targeted commercial approach among specific target physicians, such as primary care physicians, orthopedic surgeons and rheumatologists, while taking advantage of its commercial strengths and the infrastructure that has been put in place. | |
On April 23, 2011, the U.S. Food and Drug Administration (“FDA”) approved DUEXIS, a proprietary tablet formulation containing a fixed-dose combination of ibuprofen and famotidine in a single pill. DUEXIS is indicated for the relief of signs and symptoms of rheumatoid arthritis (“RA”), osteoarthritis (“OA”) and to decrease the risk of developing upper gastrointestinal ulcers in patients who are taking ibuprofen for these indications. The Company began detailing DUEXIS to physicians in December 2011. In June 2012, the Company licensed DUEXIS rights in Latin America to Grünenthal S.A., a private company focused on the promotion of pain products. | |
The Company’s second approved product in the United States, RAYOS, known as LODOTRA outside the United States, is a proprietary delayed-release formulation of low-dose prednisone for the treatment of moderate to severe, active RA in adults, particularly when accompanied by morning stiffness. On July 26, 2012, the FDA approved RAYOS for the treatment of RA, polymyalgia rheumatica (“PMR”), psoriatic arthritis, ankylosing spondylitis (“AS”), asthma and chronic obstructive pulmonary disease and a number of other conditions. The Company is focusing its promotion of RAYOS in the United States on rheumatology indications, including RA and PMR. The Company began detailing RAYOS to a subset of U.S. rheumatologists in December 2012 and began the full launch in late January 2013 to the majority of U.S. rheumatologists and key primary care physicians. LODOTRA is currently marketed outside the United States by the Company’s distribution partner, Mundipharma International Corporation Limited (“Mundipharma”). | |
On November 18, 2013, the Company entered into agreements with AstraZeneca pursuant to which the Company acquired from AstraZeneca and its affiliates certain intellectual property and other assets, and assumed from AstraZeneca and its affiliates certain liabilities, each with respect to VIMOVO, and obtained rights to develop other pharmaceutical products that contain gastroprotective agents in a single fixed combination oral solid dosage form with non-steroidal anti-inflammatory drugs (“NSAIDs”) in the United States. VIMOVO (naproxen/esomeprazole magnesium) is a proprietary fixed-dose multi-layer delayed-release tablet combining an enteric-coated naproxen, an NSAID, core and an immediate-release esomeprazole, a proton pump inhibitor, layer surrounding the core. VIMOVO was originally developed by Pozen Inc. (“Pozen”) together with AstraZeneca pursuant to an exclusive global collaboration and license agreement under which AstraZeneca and Pozen agreed to co-develop VIMOVO and AstraZeneca obtained exclusive rights to commercialize VIMOVO worldwide. On April 30, 2010, the FDA approved VIMOVO for the relief of the signs and symptoms of OA, RA, and AS and to decrease the risk of developing gastric ulcers in patients at risk of developing NSAID associated gastric ulcers. | |
Under the asset purchase agreement with AstraZeneca, the Company acquired certain existing assets and rights necessary to commercialize VIMOVO in the United States including, among other things, the investigational new drug application (“IND”) and new drug application (“NDA”) for VIMOVO in the United States, AstraZeneca’s interest in certain patents covering VIMOVO in the United States and certain promotional materials and records related to VIMOVO in the United States. In addition, AstraZeneca assigned to the Company its amended and restated collaboration and license agreement for the United States with Pozen, pursuant to which AstraZeneca has in-licensed from Pozen certain patents and know-how of Pozen covering VIMOVO in the United States. For accounting purposes, the acquisition of the U.S. rights to VIMOVO was treated as a business combination. Collectively, these transactions are referred to as the “VIMOVO Acquisition.” | |
In December 2013, as a result of its acquisition of the U.S. rights to VIMOVO, the Company recognized revenues under the transition agreement with AstraZeneca. The Company announced the availability of Horizon-labeled VIMOVO on January 2, 2014, at which time it also began promotion with its primary care sales force and began direct recording of VIMOVO revenue under the transition agreement. | |
On March 18, 2014, the Company, Vidara Therapeutics Holdings LLC, a Delaware limited liability company (“Holdings”), Vidara, an Irish private limited company, Hamilton Holdings (USA), Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Vidara (“U.S. HoldCo”), and Hamilton Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of U.S. HoldCo (“Merger Sub”), entered into a Transaction Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and as a wholly-owned, indirect subsidiary of Vidara (the “Merger”), with Vidara converting to a public limited company and changing its name to Horizon Pharma plc (“New Horizon”). New Horizon will be organized under the laws of Ireland. Upon consummation of the Merger (the “Closing”), the security holders of the Company (excluding the holders of the convertible notes) will own approximately 74% of New Horizon and Holdings will own approximately 26% of New Horizon. At the Closing, Holdings will receive a cash payment of $200,000, plus the cash of Vidara and its subsidiaries as of Closing, less the indebtedness of Vidara and its subsidiaries and transaction expenses of Vidara and its subsidiaries paid by New Horizon at or following the Closing, subject to certain adjustments. | |
Vidara is a privately-held specialty pharmaceutical company with operations in Dublin, Ireland and the United States. Vidara markets ACTIMMUNE®, a bioengineered form of interferon gamma-1b, a protein that acts as a biologic response modifier, in the United States. ACTIMMUNE is approved by the FDA for use in children and adults with chronic granulomatous disease (“CGD”) and severe, malignant osteopetrosis (“SMO”). ACTIMMUNE is indicated for reducing the frequency and severity of serious infections associated with CGD and for delaying time to disease progression in patients with SMO. | |
The New Horizon ordinary shares to be issued to the stockholders of the Company will be registered with the Securities and Exchange Commission (“SEC”) and are expected to be listed on NASDAQ. The Company has secured a $250,000 bridge loan commitment from Deerfield Management Company, L.P., pending potential execution of its final financing plans. | |
The Merger, which has been approved by the boards of directors of the parties, is subject to approval by the stockholders of the Company and the satisfaction of customary closing conditions. The Merger is expected to close mid-year 2014. | |
The financial statements are prepared on a going concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business. As of March 31, 2014, the Company had cash and cash equivalents totaling $103,374. The Company believes that it has sufficient liquidity and capital resources to reach cash flow positive operations based on the Company’s current expectations of continued revenue growth. However, the Company is highly dependent in the near term on the commercial success of DUEXIS, VIMOVO and RAYOS in the U.S. market. Additionally, the Company has convertible debt which may be required to be settled in cash up to the principal amount upon certain circumstances outside the control of the Company, prior to obtaining stockholder approval to issue enough shares to cover the conversion option in shares of its common stock. The Company has incurred net operating losses and negative cash flows from operations since its inception. In order to continue its operations, the Company must generate sufficient revenue and achieve profitable operations. If that does not occur, the Company’s plan is to obtain additional debt or equity financing. There can be no assurance, however, that such financing will be available or on terms acceptable to the Company. These uncertainties and lack of commercial operating history raise substantial doubt about the Company’s ability to continue as a going concern. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||
Mar. 31, 2014 | |||
Accounting Policies [Abstract] | ' | ||
Summary of Significant Accounting Policies | ' | ||
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Segment Information | |||
The Company operates as one segment. Management uses one measure of profitability and does not segment its business for internal reporting. | |||
Use of Estimates | |||
The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Foreign Currency Translation and Transactions | |||
The reporting currency of the Company and its subsidiaries is the U.S. dollar. | |||
The U.S. dollar is the functional currency for the Company’s U.S. based businesses and the Euro is the functional currency for its subsidiaries in Switzerland and Germany. Foreign currency-denominated assets and liabilities of these subsidiaries are translated into U.S. dollars based on exchange rates prevailing at the end of the period, revenues and expenses are translated at average exchange rates prevailing during the corresponding period, and stockholders’ equity (deficit) accounts are translated at historical exchange rates as of the date of any equity transaction. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of those entities where the functional currency is not the U.S. dollar are included as a component of accumulated other comprehensive income (loss). | |||
Gains and losses resulting from foreign currency translations are reflected within the Company’s results of operations. During the three months ended March 31, 2014 and 2013, the Company recorded a loss from foreign currency translations of $38 and $905, respectively. The Company does not currently utilize and has not in the past utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure. | |||
Revenue Recognition | |||
Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured. Some of the Company’s agreements contain multiple elements and in accordance with these agreements, the Company may be eligible for upfront license fees, marketing or commercial milestones and payment for product deliveries. | |||
Revenue from upfront license fees | |||
The Company recognizes revenues from the receipt of non-refundable, upfront license fees. In situations where the licensee is able to obtain stand-alone value from the license and no further performance obligations exist on the Company’s part, revenues are recognized on the earlier of when payments are received or collection is reasonably assured. Where continuing involvement by the Company is required in the form of technology transfer, product manufacturing or technical support, revenues are deferred and recognized over the term of the agreement. | |||
Revenue from milestone receipts | |||
Milestone payments are recognized as revenue based on achievement of the associated milestones, as defined in the relevant agreements. Revenue from a milestone achievement is recognized when earned, as evidenced by acknowledgment from the Company’s partner, provided that (1) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement, (2) the milestone represents the culmination of an earnings process and (3) the milestone payment is non-refundable. If all of these criteria are not met, revenue from the milestone achievement is recognized over the remaining minimum period of the Company’s performance obligations under the agreement. | |||
Revenue from product deliveries | |||
The Company recognizes revenue from the delivery of its products when delivery has occurred, title has transferred, the selling price is fixed or determinable, collectability is reasonably assured and the Company has no further performance obligations. In addition, revenue is only recognized when the right of return no longer exists (which is the earlier of the product being dispensed through patient prescriptions or the expiration of the right of return) or when product returns can be reasonably estimated. Due to the Company’s ability to reasonably estimate and determine allowances for product returns, rebates and discounts, the Company recognizes DUEXIS and RAYOS revenue at the point of sale to wholesale pharmaceutical distributors and retail chains. The Company also recognizes VIMOVO revenue at the point of sale, consistent with its revenue recognition of DUEXIS and RAYOS, given the availability of prior VIMOVO product return data. | |||
The Company anticipates revenues will continue to result from distribution, marketing, manufacturing and supply agreements with third parties in Europe and certain Asian, Latin American and other countries with respect to LODOTRA. | |||
Under the manufacturing and supply agreements with Mundipharma Medical Company (“Mundipharma Medical”), Mundipharma Medical agreed to purchase LODOTRA exclusively from the Company at a price based on a specified percentage of the average net selling price (“ANSP”) for sales in a given country, subject to a minimum price. Mundipharma Medical has a nine-month period from purchase date to request an ANSP adjustment. If the ANSP is lower than the actual purchase price, then Mundipharma Medical would receive a price adjustment. Products sold to Mundipharma Medical are recognized upon delivery at the minimum price, as no contractual right of return exists. The difference between the actual selling price and the minimum price is recorded as deferred revenue until such time as adjustments for product returns, rebates and discounts can be reliably estimated or the nine-month ANSP adjustment period passes, at which time any previously deferred revenue would be recognized as revenue. As of March 31, 2014 and December 31, 2013, deferred revenues related to the sale of LODOTRA were $956 and $615, respectively. Additionally, as of March 31, 2014 and December 31, 2013, deferred revenues related to milestone and upfront payments received under existing agreements were $8,513 and $8,682, respectively. | |||
Product Sales Discounts and Allowances | |||
The Company makes allowances for product returns, rebates and discounts at the time of sale to wholesale pharmaceutical distributors and national and regional retail chains. The Company is required to make significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company will be required to make adjustments to these allowances in the future. | |||
Customer Discounts and Rebates | |||
Product Launch Discounts | |||
The Company has offered additional discounts to wholesale distributors for product purchased at the time of product launch. The Company has recorded these discounts as an allowance against accounts receivable and a reduction of revenue when orders were placed. | |||
Customer Rebates | |||
The Company participates in certain commercial rebate programs. Under these rebate programs, the Company pays a rebate to the commercial entity or third-party administrator of the program. The Company accrues estimated rebates based on contract prices, estimated percentages of product sold to qualified patients and estimated levels of inventory in the distribution channel and records the rebate as a reduction of revenue. | |||
Distribution Service Fees | |||
The Company includes distribution service fees paid to its wholesalers for distribution and inventory management services as a reduction to revenue. The estimates are based on contractually determined fees, typically as a percentage of revenue. | |||
Government Rebates and Chargebacks | |||
Government Rebates | |||
The Company participates in certain federal government rebate programs, such as Medicare and Medicaid. The Company accrues estimated rebates based on percentages of product sold to qualified patients, estimated rebate percentages and estimated levels of inventory in the distribution channel that will be sold to qualified patients and records the rebate as a reduction of revenue. | |||
Government Chargebacks | |||
The Company provides discounts to federal government qualified entities with whom the Company has contracted. These federal entities purchase products from the wholesale pharmaceutical distributors at a discounted price, and the wholesale pharmaceutical distributors then charge back to the Company the difference between the current retail price and the contracted price that the federal entities paid for the products. The Company accrues estimated chargebacks based on contract prices and sell-through sales data obtained from third party information and records the chargeback as a reduction of revenue. | |||
Co-Pay Assistance | |||
The Company offers discount card programs to patients under which the patient receives a discount on his or her prescription. The Company reimburses pharmacies for this discount through a third-party vendor. The Company records the total amount of estimated discounts for sales recorded in the period as a reduction of revenue based on a combination of actual invoices received and an estimate of discounts to be paid for product in the sales channel based on historical information. | |||
Returns and Prompt Pay Allowances | |||
Sales Returns | |||
Consistent with industry practice, the Company maintains a return policy that allows customers to return product within a specified period prior to and subsequent to the product expiration date. Generally, product may be returned for a period beginning six months prior to its expiration date and up to one year after its expiration date. The right of return expires on the earlier of one year after the product expiration date or the time that the product is dispensed to the patient. The majority of product returns result from product dating, which falls within the range set by the Company’s policy, and are settled through the issuance of a credit to the customer. The estimate of the provision for returns is based upon the Company’s historical experience with actual returns, which is applied to the level of sales for the period that corresponds to the period during which the customer may return product. This period is known to the Company based on the shelf life of products at the time of shipment. The Company records sales returns as an allowance against accounts receivable and a reduction of revenue. | |||
Prompt Pay Discounts | |||
As an incentive for prompt payment, the Company offers a 2% cash discount to customers. The Company expects that all customers will comply with the contractual terms to earn the discount. The Company records the discount as an allowance against accounts receivable and a reduction of revenue. | |||
Bad Debt Expense | |||
The Company’s products are sold to wholesale distributors and retail chains through manufacturing and supply agreements. For the three months ended March 31, 2014 and for the years ended December 31, 2013, 2012 and 2011, the Company did not record a bad debt expense related to its accounts receivable balances. Accordingly, the Company has not established a reserve for bad debt expense. The Company will continue to monitor its accounts receivable balances to determine the impact, if any, of such factors as changes in customer concentration, credit risk and the realizability of its accounts receivable would require a bad debt reserve allowance in subsequent periods. | |||
Cost of Goods Sold | |||
The Company recognizes cost of goods sold in connection with its sale of DUEXIS, VIMOVO and RAYOS/LODOTRA. | |||
Cost of goods sold of DUEXIS includes all costs directly related to the acquisition of product from the Company’s third party manufacturers, including freight charges and costs of distribution. | |||
Cost of goods sold of RAYOS includes all costs directly related to the acquisition of product from the Company’s third party manufacturers, including freight charges and costs of distribution, amortization of developed technology, royalty payments to third parties for the use of certain licensed patents and applicable taxes. | |||
Cost of goods sold of LODOTRA includes raw material costs, costs associated with third parties who manufacture LODOTRA for the Company, supply chain costs, manufacturing overhead costs, amortization of developed technology, royalty payments to third parties for the use of certain licensed patents and applicable taxes. | |||
Cost of goods sold for VIMOVO in the fourth quarter of 2013, following the acquisition in November 2013 of certain assets and rights necessary to commercialize VIMOVO in the United States, included only intangible amortization expense. In connection with the Company’s commercialization of VIMOVO in the United States beginning in January 2014, cost of goods sold for VIMOVO now includes all costs directly related to the acquisition of product from AstraZeneca and/or a third-party manufacturer and intangible amortization expense. At the time of the VIMOVO Acquisition, the Company estimated the fair value of contingent royalties payable to Pozen using an income approach under the discounted cash flow method, which included revenue projections and other assumptions made by the Company to determine the fair value. If the Company were to significantly overperform or underperform against its original revenue projections or it became necessary to make changes to its assumptions, the Company would be required to reassess the fair value of the contingent royalties payable to Pozen. Any adjustments to fair value would be recorded in the period such adjustment was made as either a charge or credit to royalties payable, which is part of cost of goods sold in accordance with the Company’s established accounting policies, and could impact the reported operating results in the period the adjustment was made. | |||
Inventories | |||
Inventories are stated at the lower of cost or market value. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs. As of March 31, 2014 and December 31, 2013, the Company had inventories of $9,432 and $8,701, respectively. | |||
Inventories exclude product sample inventory, which is included in other current assets and is expensed as a component of sales and marketing expense when provided to physicians or healthcare providers. As of March 31, 2014 and December 31, 2013, the Company had product sample inventory of $1,588 and $1,323, respectively. | |||
Preclinical Studies and Clinical Trial Accruals | |||
The Company’s preclinical studies and clinical trials have historically been conducted by third-party contract research organizations and other vendors. Preclinical study and clinical trial expenses are based on the services received from these contract research organizations and vendors. Payments depend on factors such as the milestones accomplished, successful enrollment of certain numbers of patients and site initiation. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual accordingly. To date, the Company has had no significant adjustments to accrued clinical expenses. | |||
Net Loss Per Share | |||
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. For the periods presented, the Company’s potential dilutive shares, which include shares issuable upon the exercise of outstanding stock options, unvested restricted stock units and warrants to purchase common stock, have not been included in the computation of diluted net loss per share for the periods presented in which there is a net loss as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. | |||
Cash and Cash Equivalents | |||
Cash and cash equivalents primarily consist of cash balances and money market funds. Cash and cash equivalents were $103,374 and $80,480 as of March 31, 2014 and December 31, 2013, respectively. The Company’s policy is to invest excess cash in money market funds, which are generally of a short-term duration based upon operating requirements. | |||
Restricted Cash | |||
Restricted cash consists of balances included in interest-bearing money market accounts required by a vendor for the Company’s sponsored employee credit card program and by the lessor for the Company’s corporate office. As of both March 31, 2014 and December 31, 2013, the Company had restricted cash in the amount of $738. | |||
Fair Value of Financial Instruments | |||
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their short maturities. The estimated fair value of the Company’s derivative liability related to the convertible portion of its 5.00% Convertible Senior Notes due 2018 (the “Convertible Senior Notes”) was derived utilizing the binomial lattice approach for the valuation of convertible instruments. Assumptions used in the calculation included, among others, determining the appropriate credit spread using benchmarking analysis and solving for the implied credit spread, calculating the fair value of the stock component using a discounted risk free rate and borrowing cost and calculating the fair value of the note component using a discounted credit adjusted discount rate. Based on the assumptions used to determine the fair value of the derivative liability associated with the Convertible Senior Notes, the Company concluded that these inputs were Level 3 inputs. The Company will continue to derive the fair value of the derivative liability using the binomial lattice approach and these assumptions in all future reporting periods. | |||
Business Combinations | |||
The Company accounts for business combinations in accordance with the pronouncement guidance in ASC 805, Business Combinations, in which acquired assets and liabilities are measured at their respective estimated fair values as of the acquisition date. The Company may be required, as in the case of intangible assets or contingent royalties, to determine the fair value associated with these amounts by estimating the fair value using an income approach under the discounted cash flow method, which may include revenue projections and other assumptions made by the Company to determine the fair value. | |||
Property and Equipment, Net | |||
Property and equipment are stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes and an accelerated method for income tax reporting purposes. Upon retirement or sale of an asset, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operations. Repair and maintenance costs are charged to expenses as incurred and improvements are capitalized. | |||
Leasehold improvements are amortized on a straight-line basis over the term of the applicable lease, or the useful life of the assets, whichever is shorter. | |||
Depreciation and amortization periods for the Company’s property and equipment are as follows: | |||
Machinery and equipment | 5-7 years | ||
Furniture and fixtures | 3-5 years | ||
Computer equipment | 3 years | ||
Software | 3 years | ||
Trade show equipment | 3 years | ||
Software includes internal-use software acquired and modified to meet the Company’s internal requirements. Amortization commences when the software is ready for its intended use. | |||
Intangible Assets | |||
The Company’s intangible assets consist of developed technology related to three of its approved products: LODOTRA outside the United States, RAYOS in the United States and intellectual property rights related to the Company’s acquisition of the U.S. rights to VIMOVO. The Company amortizes the LODOTRA and RAYOS intangible assets over twelve years, which is the estimated useful life of the underlying patents, and amortizes the U.S. intellectual property rights of the VIMOVO intangible asset over an estimated useful life of 61.5 months, or through the end of 2018. The Company reviews its intangible assets when events or circumstances may indicate that the carrying value of these assets exceeds their fair value. The Company measures fair value based on the estimated future discounted cash flows associated with these assets in addition to other assumptions and projections that the Company deems to be reasonable and supportable. | |||
Research and Development Expenses | |||
Research and development expenses include, but are not limited to, payroll and other personnel expenses, consultant expenses, expenses incurred under agreements with contract research organizations to conduct clinical trials and expenses incurred to manufacture clinical trial materials. | |||
Sales and Marketing Expenses | |||
Sales and marketing expenses consist principally of payroll of sales representatives and marketing and support staff, travel and other personnel-related expenses, marketing materials and distributed sample inventories. In addition, sales and marketing expenses include the Company’s medical affairs expenses, which consist of expenses related to scientific publications, health outcomes, biostatistics, medical education and information, and medical communications. | |||
Concentration of Credit Risk and Other Risks and Uncertainties | |||
Financial instruments that may potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents are invested in deposits with various banks in the United States, Switzerland and Germany that management believes are creditworthy. At times, deposits in these banks may exceed the amount of insurance provided on such deposits. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents. | |||
The Company’s LODOTRA sales contracts are principally denominated in Euros and, therefore, its revenues are subject to significant foreign currency risk. | |||
To achieve profitable operations, the Company must successfully develop, obtain regulatory approval for, manufacture and market its products and product candidates, and/or acquire or in-license products from third parties. There can be no assurance that any additional products can be developed, will be approved for marketing by the regulatory authorities, or can be manufactured at an acceptable cost and with appropriate performance characteristics or that any new or existing products can be successfully marketed, acquired or in-licensed by the Company. These factors could have a material adverse effect on the Company’s operations. | |||
The Company relies on third parties to manufacture its commercial supplies of DUEXIS, VIMOVO and RAYOS/LODOTRA. The commercialization of any of its products or product candidates could be stopped, delayed or made less profitable if those third parties fail to provide the Company with sufficient quantities of product or fail to do so at acceptable quality levels or prices. | |||
The Company is required to maintain compliance with applicable Swiss laws with respect to its Swiss subsidiary, Horizon Pharma AG, including laws requiring maintenance of equity in the subsidiary to avoid overindebtedness, which requires Horizon Pharma AG to maintain assets in excess of its liabilities. The Company reviews on a regular basis whether its Swiss subsidiary is overindebted. As of March 31, 2014 and December 31, 2013, the Company’s Swiss subsidiary was overindebted, primarily as a result of operating losses at the subsidiary. The Company will continue to monitor and review steps to address any overindebtedness until such time as its Swiss subsidiary may generate positive income at a statutory level, which could require the Company to have cash at its Swiss subsidiary in excess of its near term operating needs and could affect the Company’s ability to have sufficient cash at its U.S. subsidiary to meet its near term operating needs. As of March 31, 2014 and December 31, 2013, Horizon Pharma AG had cash and cash equivalents of $2,558 and $3,476, respectively. Based upon the cash and cash equivalents held by Horizon Pharma AG as of March 31, 2014 and December 31, 2013 and Horizon Pharma AG’s level of overindebtedness at such time, the Company does not expect that its financial position or results of operations will be materially affected by any need to address overindebtedness at its Swiss subsidiary. To date, the overindebtedness of the Company’s Swiss subsidiary has not resulted in the need to divert material cash resources from its U.S. subsidiary. | |||
Historically, the Company’s accounts receivable balances have been highly concentrated with a select number of customers, consisting primarily of large wholesale pharmaceutical distributors who, in turn, sell the products to pharmacies, hospitals and other customers. For the three months ended March 31, 2014, the Company’s top three customers, AmerisourceBergen, McKesson Corporation and Cardinal Health, Inc., accounted for approximately 85% of total consolidated gross sales. For the year ended December 31, 2013, the Company’s top five customers, AmerisourceBergen, McKesson Corporation, Cardinal Health, Inc., Mundipharma and Rochester Drug Company, accounted for approximately 89% of total consolidated gross sales. | |||
In addition, three customers, McKesson Corporation, AmerisourceBergen and Cardinal Health, Inc., accounted for approximately 85% of the Company’s total outstanding accounts receivable balances at March 31, 2014. As of December 31, 2013, four customers, McKesson Corporation, AmerisourceBergen, Rochester Drug Company and Cardinal Health, Inc., accounted for approximately 85% of the Company’s total outstanding accounts receivable balances. Historically, the Company has not experienced any losses related to its accounts receivable balances. | |||
Comprehensive Income (Loss) | |||
Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss) (“OCI”). OCI includes certain changes in stockholders’ equity that are excluded from net income (loss), which consist of foreign currency translation adjustments. In February 2013, the Company adopted on a prospective basis FASB Accounting Standards Update 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated OCI on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. As of March 31, 2014 and December 31, 2013, accumulated other comprehensive loss was $2,398 and $2,403, respectively. |
Earnings_per_Share
Earnings per Share | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Earnings per Share | ' | ||||||||
NOTE 3 – EARNINGS PER SHARE | |||||||||
The following table presents basic and diluted earnings (loss) per share for the three months ended March 31, 2014 and 2013: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Basic and diluted earnings per share calculation: | |||||||||
Net loss | $ | (206,250 | ) | $ | (22,171 | ) | |||
Weighted average of common shares outstanding | 67,138,463 | 61,939,822 | |||||||
Basic and diluted net loss per share | $ | (3.07 | ) | $ | (0.36 | ) | |||
The following dilutive securities were excluded from the computation of diluted earnings per share for the three months ended March 31, 2014 and 2013 due to the anti-dilutive effects resulting from the Company’s net loss for the periods presented: | |||||||||
• | Outstanding stock options to purchase an aggregate of 5,704,679 and 4,008,164 shares of common stock at March 31, 2014 and 2013, respectively; outstanding and unvested restricted stock units covering an aggregate of 1,437,526 and 915,158 shares of common stock at March 31, 2014 and 2013, respectively; and 244,079 vested restricted stock units outstanding at March 31, 2014. | ||||||||
• | Outstanding common stock warrants to purchase an aggregate of 10,918,973 and 17,480,243 shares of common stock at March 31, 2014 and 2013, respectively. | ||||||||
• | 13,164,951 shares of the Company’s common stock associated with the potential conversion of the Convertible Senior Notes as the conversion is subject to such share limitation under applicable NASDAQ rules until such time as the Company receives stockholder approval to issue all shares required to cover the conversion option. |
Business_Acquisitions
Business Acquisitions | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Business Combinations [Abstract] | ' | ||||
Business Acquisitions | ' | ||||
NOTE 4 – BUSINESS ACQUISITIONS | |||||
Vidara acquisition | |||||
On March 18, 2014, the Company, Holdings, Vidara, U.S. HoldCo and Merger Sub, entered into the Merger Agreement. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and as a wholly-owned, indirect subsidiary of Vidara, with Vidara converting to a public limited company and changing its name to Horizon Pharma plc. | |||||
At the effective time of the Merger (the “Effective Time”), (i) each share of the Company’s common stock issued and outstanding will be converted into one ordinary share of New Horizon; (ii) each equity plan of the Company will be assumed by New Horizon and each outstanding option under the Company’s equity plans will be converted into an option to acquire the number of ordinary shares of New Horizon equal to the number of shares of common stock underlying such option immediately prior to the Effective Time at the same exercise price per share as such option of the Company, and each other stock award that is outstanding under the Company’s equity plans will be converted into a right to receive, on substantially the same terms and conditions as were applicable to such equity award before the Effective Time, the number of ordinary shares of New Horizon equal to the number of shares of common stock of the Company subject to such stock award immediately prior to the Effective Time; (iii) each warrant to acquire the Company’s common stock outstanding immediately prior to the Effective Time and not terminated as of the Effective Time will be converted into a warrant to acquire, on substantially the same terms and conditions as were applicable under such warrant before the Effective Time, the number of ordinary shares of New Horizon equal to the number of shares of common stock underlying such warrant immediately prior to the Effective Time; and (iv) the Convertible Senior Notes will remain outstanding and, pursuant to a supplemental indenture to be entered into effective as of the Effective Time, will become convertible into the same number of ordinary shares of New Horizon at the same conversion rate in effect immediately prior to the Effective Time. Holdings will also retain ownership of 31,350,000 ordinary shares of New Horizon at the Effective Time. Upon consummation of the Merger (the “Closing”), the security holders of the Company (excluding the holders of the Convertible Senior Notes) will own approximately 74% of New Horizon and Holdings will own approximately 26% of New Horizon. At the Closing, Holdings will receive a cash payment of $200,000, plus the cash of Vidara and its subsidiaries as of Closing, less the indebtedness of Vidara and its subsidiaries and transaction expenses of Vidara and its subsidiaries paid by New Horizon at or following the Closing, plus or minus an adjustment to the extent that Vidara’s working capital (exclusive of cash) as of the Closing exceeds or is less than target working capital of $123. | |||||
In connection with the Merger Agreement, the Company entered into a commitment letter (the “Commitment Letter”) with Deerfield Management Company, L.P. (“Deerfield”) and certain funds managed by Deerfield (the “Deerfield Funds”), pursuant to which the Deerfield Funds have committed to provide up to $250,000 of senior secured loans to finance the Merger (the “Facility”). The commitment to provide the Facility is subject to certain conditions, including the negotiation of definitive documentation and other customary closing conditions consistent with the Merger Agreement. The receipt of funding under the Facility is not a condition to the obligations of the Company under the terms of the Merger Agreement. | |||||
The obligation of each party to consummate the Merger is subject to certain conditions, including the receipt of the requisite approval by the stockholders of the Company as well as other customary closing conditions. | |||||
If the Merger Agreement is terminated by Holdings following a change of the recommendation of the Company’s board of directors, the Company would be obligated to pay Holdings a termination fee of $23,000 and may be obligated to pay such termination fee in other circumstances specified in the Merger Agreement. If the Merger Agreement is terminated because the stockholders of the Company do not approve the adoption of the Merger Agreement and the Merger, then the Company would be obligated to pay Holdings an expense reimbursement fee of $13,500. If the Merger Agreement is terminated because the Company fails to close the transaction after satisfaction of all of the conditions to Closing and Holdings is ready to close the Merger, then the Company would be obligated to pay Holdings a termination fee of $44,000. | |||||
VIMOVO acquisition | |||||
On November 18, 2013, the Company entered into agreements with AstraZeneca pursuant to which the Company acquired from AstraZeneca and its affiliates certain intellectual property and other assets, and assumed from AstraZeneca and its affiliates certain liabilities, each with respect to VIMOVO, and obtained rights to develop other pharmaceutical products that contain gastroprotective agents in a single fixed combination oral solid dosage form with NSAIDs, in the United States. VIMOVO (naproxen/esomeprazole magnesium), a proprietary fixed-dose multi-layer delayed-release tablet combining an enteric-coated naproxen, an NSAID, core and an immediate-release esomeprazole, a proton pump inhibitor, layer surrounding the core, was approved by the FDA in 2010 for the relief of the signs and symptoms of OA, RA and AS, and to decrease the risk of developing gastric ulcers in patients at risk of developing NSAID-associated gastric ulcers. | |||||
Pursuant to the transactions contemplated by the asset purchase agreement, the Company acquired certain existing assets and rights necessary to commercialize VIMOVO in the United States including, among other things, the IND and NDA for VIMOVO in the United States, AstraZeneca’s interest in certain patents covering VIMOVO in the United States and certain promotional materials and records related to VIMOVO in the United States. The Company will also be entitled to the benefit of a covenant not to sue granted by Merck Sharp & Dohme Corp. and certain of its affiliates (collectively, “Merck”) to AstraZeneca, with respect to certain patents owned by AstraZeneca but exclusively licensed to Merck, that cover the manufacture and commercialization of VIMOVO in the United States. In addition, AstraZeneca assigned to the Company its amended and restated collaboration and license agreement for the United States with Pozen pursuant to which AstraZeneca has in-licensed from Pozen certain patents and know-how of Pozen covering VIMOVO in the United States. The terms of the amended and restated collaboration and license agreement for the United States with Pozen (the “Pozen license agreement”) are described below. | |||||
In November 2013, in connection with the closing of the transactions contemplated by the asset purchase agreement, the Company also entered into a license agreement with AstraZeneca, a supply agreement with AstraZeneca’s affiliate, AstraZeneca LP, and certain other agreements that are described below. The Company also executed a transition agreement with AstraZeneca pursuant to which AstraZeneca transitioned to the Company regulatory and commercial responsibility for VIMOVO in the United States. From the closing of the transaction until December 31, 2013, AstraZeneca continued to commercialize VIMOVO in the United States under AstraZeneca’s existing pricing and paid to the Company the net profits recognized on sales of VIMOVO in the United States. Beginning January 2, 2014, the Company commenced commercialization of VIMOVO in the United States on its own behalf and under new pricing for VIMOVO. In consideration for the U.S. rights to VIMOVO, the Company paid to AstraZeneca a one-time upfront cash payment of $35,000. | |||||
The Company is responsible for and controls matters relating to VIMOVO in the United States, including responsibility for commercialization of VIMOVO in the United States, responsibility for ongoing developmental and regulatory activities with respect to VIMOVO in the United States and responsibility for the current VIMOVO litigation with respect to the patents the Company purchased under the asset purchase agreement and the patents the Company licensed from Pozen under the Pozen license agreement. AstraZeneca will be responsible for and will retain control of VIMOVO outside the United States. | |||||
Additionally, in connection with the closing of the transactions contemplated by the asset purchase agreement, the Company entered into a license agreement with AstraZeneca (the “AstraZeneca license agreement”), pursuant to which AstraZeneca granted the Company an exclusive license under certain intellectual property (including patents, know-how, trademarks, copyrights and domain names) of AstraZeneca and its affiliates to develop, manufacture and commercialize VIMOVO in the United States. AstraZeneca also granted the Company a non-exclusive license under certain intellectual property of AstraZeneca and its affiliates to manufacture, import, export and perform research and development activities with respect to VIMOVO outside the United States but solely for purposes of commercializing VIMOVO in the United States. In addition, AstraZeneca granted the Company a non-exclusive right of reference and use under certain regulatory documentation controlled by AstraZeneca and its affiliates to develop, manufacture and commercialize VIMOVO in the United States and to manufacture, import, export and perform research and development activities with respect to VIMOVO outside the United States but solely for purposes of commercializing VIMOVO in the United States. | |||||
Under the AstraZeneca license agreement, the Company granted AstraZeneca a non-exclusive sublicense under such licensed intellectual property and a non-exclusive right of reference under certain regulatory documentation controlled by the Company to manufacture, import, export and perform research and development activities with respect to VIMOVO in the United States but solely for purposes of commercializing VIMOVO outside the United States. | |||||
Under the AstraZeneca license agreement, the Company and its affiliates are subject to certain limitations and restrictions on its ability to develop, commercialize and seek regulatory approval with respect to VIMOVO or other products that contain gastroprotective agents in a single fixed combination oral solid dosage form with NSAIDs (excluding DUEXIS). These limitations and restrictions include, among other things, restrictions on indications for which the Company may commercialize VIMOVO or any such other products, restrictions on the Company’s ability to develop or seek regulatory approval with respect to such other products that contain esomeprazole, restrictions on the Company’s ability to develop or seek regulatory approval for VIMOVO for any indications other than the indications for which NSAIDs are indicated, and restrictions on the Company’s marketing activities with respect to VIMOVO and any such other products. | |||||
Under the Pozen license agreement, Pozen granted to the Company an exclusive, royalty-bearing license under certain of Pozen’s intellectual property in the United States to manufacture, develop and commercialize VIMOVO and other products controlled by the Company that contain gastroprotective agents in a single fixed combination oral solid dosage form with NSAIDs, excluding DUEXIS, in the United States. | |||||
Under the Pozen license agreement, the Company is required to pay Pozen a flat 10% royalty on net sales of VIMOVO and such other products sold by the Company, its affiliates or sublicensees during the royalty term, subject to minimum annual royalty obligations of $5,000 in 2014 and $7,500 each year thereafter, which minimum royalty obligations will continue for each year during which one of Pozen’s patents covers such products in the United States and there are no competing products in the United States. The royalty rate may be reduced to a mid-single digit royalty rate as a result of loss of market share to competing products. The Company’s obligation to pay royalties to Pozen will expire upon the later of (a) expiration of the last-to-expire of certain patents covering such products in the United States, and (b) ten years after the first commercial sale of such products in the United States. In addition, the Company is obligated to reimburse Pozen for costs, including attorneys’ fees, incurred by Pozen in connection with VIMOVO patent litigation moving forward, subject to agreed caps. | |||||
The Company is responsible for and is required to use diligent and reasonable efforts to commercialize VIMOVO or another qualified product in the United States. The Company also owns and maintains all regulatory filings and marketing approvals in the United States for any such products, including all INDs and NDAs for VIMOVO. Pozen has covenanted that it will not at any time prior to the expiration of the royalty term, and will ensure that its affiliates do not, directly or indirectly, develop or commercialize or license any third party to develop or commercialize certain competing products in the United States. | |||||
The Pozen license agreement, unless earlier terminated, will expire upon expiration of the royalty term for all such products in the United States. Either party has the right to terminate the agreement upon any uncured material breach by the other party or upon the bankruptcy or similar proceeding of the other party. The Company also has the right to terminate the Pozen license agreement for cause upon certain defined product failures. | |||||
In November 2013, in connection with the asset purchase agreement and the Pozen license agreement, the Company, AstraZeneca and Pozen entered into a letter agreement in which Pozen consented to AstraZeneca’s assignment of the Pozen license agreement to the Company and that addresses the rights and responsibilities of the parties in relation to the Pozen license agreement and the amended and restated collaboration and license agreement between Pozen and AstraZeneca for territories outside the United States (the “Pozen-AstraZeneca license agreement”). Under the letter agreement, the Company and AstraZeneca agreed to pay Pozen milestone payments upon the achievement by the Company and AstraZeneca, collectively, of certain annual aggregate global sales thresholds ranging from $550,000 to $1,250,000 with respect to products licensed by Pozen to the Company under the Pozen license agreement and to AstraZeneca under the Pozen-AstraZeneca license agreement. The aggregate milestone payment amount that may be owed by AstraZeneca and the Company, collectively, under the letter agreement is $260,000, with the amount payable by each of the Company and AstraZeneca with respect to each milestone to be based upon the proportional sales achieved by each of the Company and AstraZeneca, respectively, in the applicable year. | |||||
The letter agreement will terminate with respect to Pozen and the Company upon the termination of the Pozen license agreement and will terminate with respect to Pozen and AstraZeneca upon the termination of the Pozen-AstraZeneca license agreement. | |||||
In November 2013, in connection with the asset purchase agreement, the Company entered into a supply agreement with AstraZeneca pursuant to which AstraZeneca agreed to supply VIMOVO to the Company for commercialization in the United States through December 31, 2014. Under the supply agreement, AstraZeneca will supply the quantity of VIMOVO that the Company orders, both for the Company’s own use and for use by the Company’s sublicensees, on a transitional basis through December 31, 2014. The Company agreed to pay a set transfer price agreed to by the Company and AstraZeneca for quantities of VIMOVO supplied by AstraZeneca under the supply agreement. | |||||
The supply agreement will expire on December 31, 2014, unless terminated earlier as described herein. The supply agreement may be terminated earlier by either party for any uncured material breach by the other party of its obligations under the supply agreement or upon the bankruptcy or similar proceeding of the other party. Additionally, the Company has the right to terminate the supply agreement at any time upon 120 days prior written notice to AstraZeneca or immediately upon written notice if the existing regulatory approval of VIMOVO is suspended for any reason or if any regulatory authority provides a warning letter or other official documentation expressing major and significant concerns from a regulatory perspective with AstraZeneca’s or its affiliates’ or third party manufacturer’s manufacturing of VIMOVO. Additionally, the supply agreement will automatically terminate upon any termination of the AstraZeneca license agreement. | |||||
Pursuant to ASC Topic 805, Business Combinations, the Company accounted for the acquisition of the U.S. rights to VIMOVO under the acquisition method of accounting, in which the Company recognized and accounted for the acquisition of the U.S. rights to VIMOVO as a business combination. Net tangible and intangible assets acquired and contingent royalty liabilities, based upon their respective estimated fair values as of the acquisition date (November 22, 2013). The following table shows the fair values assigned to the assets acquired and liabilities assumed by the Company as part of the asset purchase agreement: | |||||
Allocation | |||||
Samples inventory | $ | 287 | |||
VIMOVO intellectual property | 67,705 | ||||
Contingent royalty liabilities | (32,992 | ) | |||
Total cash consideration paid | $ | 35,000 | |||
The valuation of the intellectual property acquired, an identifiable intangible asset, was based on management’s estimates, information and reasonable and supportable assumptions. The allocation was generally based on the Company’s estimated fair value of the rights to payments with respect to U.S. revenue associated with VIMOVO which were acquired in the transaction. This estimated fair value was determined using the income approach under the discounted cash flow method. Significant assumptions used in valuing the intellectual property intangible asset included revenue projections through 2030 based on assumptions relating to pricing and reimbursement rates and market size and market penetration rates, cost of goods sold based on current manufacturing experience, general and administrative expenses, sales and marketing expenses, and research and development expenses for clinical and regulatory support. The calculated value of the VIMOVO intellectual property intangible asset is amortized using the straight-line method over an estimated useful life of 61.5 months. | |||||
Additionally, the Company assigned a fair value to its liability for contingent royalties. The contingent royalty liability was based on anticipated revenue streams utilizing the income approach under the discounted cash flow method. As a result, the Company recorded $33,000 of fair value royalty payments due to Pozen, of which $24,500 was guaranteed during the years 2014 through 2018 and $8,500 was contingent on meeting certain revenue targets. |
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
NOTE 5 – INVENTORIES | |||||||||
Inventories are stated at the lower of cost or market value. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs. Inventories exclude product sample inventory, which is included in other current assets and is expensed as a component of sales and marketing expense when provided to physicians or healthcare providers. | |||||||||
The components of inventories as of March 31, 2014 and December 31, 2013, are summarized as follows: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Raw materials | $ | 135 | $ | 91 | |||||
Work-in-process | 839 | 522 | |||||||
Finished goods | 8,458 | 8,088 | |||||||
Net inventories | $ | 9,432 | $ | 8,701 | |||||
Prepaid_Expenses_and_Other_Cur
Prepaid Expenses and Other Current Assets | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ' | ||||||||
Prepaid Expenses and Other Current Assets | ' | ||||||||
NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS | |||||||||
Prepaid expenses and other current assets as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Prepaid debt commitment fee | $ | 4,333 | $ | — | |||||
Product samples inventory | 1,588 | 1,323 | |||||||
Prepaid software license fees | 828 | 855 | |||||||
Prepaid clinical trial studies | 630 | 688 | |||||||
Prepaid co-pay expenses | 523 | 621 | |||||||
Prepaid marketing expenses | 38 | 381 | |||||||
Prepaid insurance | 250 | 379 | |||||||
Prepaid FDA product and manufacturing fees | 429 | 312 | |||||||
Other prepaid expenses | 486 | 329 | |||||||
Total prepaid and other current assets | $ | 9,105 | $ | 4,888 | |||||
Property_and_Equipment
Property and Equipment | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property Plant And Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
NOTE 7 – PROPERTY AND EQUIPMENT | |||||||||
Property and equipment as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Machinery and equipment | $ | 2,367 | $ | 2,367 | |||||
Furniture and fixtures | 113 | 113 | |||||||
Computer equipment | 2,245 | 2,160 | |||||||
Software | 1,092 | 775 | |||||||
Trade show equipment | 228 | 228 | |||||||
Leasehold improvement | 873 | 783 | |||||||
6,918 | 6,426 | ||||||||
Less-accumulated depreciation | (3,021 | ) | (2,646 | ) | |||||
Total property and equipment | $ | 3,897 | $ | 3,780 | |||||
Depreciation expense was $376 and $259 for the three months ended March 31, 2014 and 2013, respectively. |
Intangible_Assets
Intangible Assets | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||||||||||
NOTE 8 – INTANGIBLE ASSETS | |||||||||||||||||||||||||||||||||
The Company’s intangible assets consist of developed technology related to the Company’s approved products LODOTRA in Europe and RAYOS in the United States and VIMOVO intellectual property rights in the United States. | |||||||||||||||||||||||||||||||||
On November 18, 2013, the Company entered into an asset purchase agreement with AstraZeneca, pursuant to which the Company acquired from AstraZeneca and its affiliates certain intellectual property with respect to VIMOVO and obtained the rights to develop other pharmaceutical products that contain gastroprotective agents in a single fixed combination oral solid dosage form with NSAIDs in the United States. In connection with the Company’s acquisition of the U.S. rights to VIMOVO, the Company capitalized $67,705 for the U.S. intellectual property rights of VIMOVO to intangible assets. | |||||||||||||||||||||||||||||||||
The Company tests its intangible assets for impairment when events or circumstances may indicate that the carrying value of these assets exceeds their fair value. The Company does not believe there have been any circumstances or events that would indicate that the carrying value of any of its intangible assets have been impaired at March 31, 2014 or December 31, 2013. | |||||||||||||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013, intangible assets consisted of the following: | |||||||||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||||||
Cost | Accumulated | Currency | Net Book | Cost | Accumulated | Currency | Net Book | ||||||||||||||||||||||||||
Basis | Amortization | Translation | Value | Basis | Amortization | Translation | Value | ||||||||||||||||||||||||||
Developed technology | $ | 84,779 | $ | (19,547 | ) | $ | (2,211 | ) | $ | 63,021 | $ | 84,779 | $ | (17,823 | ) | $ | (2,136 | ) | $ | 64,820 | |||||||||||||
VIMOVO intellectual property | 67,705 | (4,734 | ) | — | 62,971 | 67,705 | (1,431 | ) | — | 66,274 | |||||||||||||||||||||||
Total intangible assets | $ | 152,484 | $ | (24,281 | ) | $ | (2,211 | ) | $ | 125,992 | $ | 152,484 | $ | (19,254 | ) | $ | (2,136 | ) | $ | 131,094 | |||||||||||||
Amortization expense was $5,027 and $1,656 for the three months ended March 31, 2014 and 2013, respectively. As of March 31, 2014, estimated future amortization expense was as follows: | |||||||||||||||||||||||||||||||||
2014 (remainder of the year) | $ | 15,088 | |||||||||||||||||||||||||||||||
2015 | 20,118 | ||||||||||||||||||||||||||||||||
2016 | 20,118 | ||||||||||||||||||||||||||||||||
2017 | 20,118 | ||||||||||||||||||||||||||||||||
2018 and thereafter | 50,550 | ||||||||||||||||||||||||||||||||
Total | $ | 125,992 | |||||||||||||||||||||||||||||||
Accrued_Liabilities
Accrued Liabilities | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Payables And Accruals [Abstract] | ' | ||||||||
Accrued Liabilities | ' | ||||||||
NOTE 9 – ACCRUED LIABILITIES | |||||||||
Accrued liabilities as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Accrued trade discounts and rebates | $ | 25,264 | $ | 8,463 | |||||
Payroll related expenses | 9,160 | 9,491 | |||||||
Accrued interest | 2,685 | 810 | |||||||
Professional services | 2,676 | 350 | |||||||
Sales and marketing expenses | 2,208 | 1,761 | |||||||
Deferred rent | 928 | 755 | |||||||
Clinical and regulatory expenses | 556 | 488 | |||||||
Consulting services | 546 | 283 | |||||||
Contract manufacturing expenses | 161 | 301 | |||||||
Accrued other | 528 | 1,347 | |||||||
Total accrued liabilities | $ | 44,712 | $ | 24,049 | |||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
NOTE 10 – FAIR VALUE MEASUREMENTS | |||||||||||||||||
The following tables set forth the Company’s financial instruments that are measured at fair value on a recurring basis within the fair value hierarchy. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The standard describes three levels of inputs that may be used to measure fair value: | |||||||||||||||||
Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||||||
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||||||||||
The Company utilizes the market approach to measure fair value for its money market funds. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. | |||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | |||||||||||||||||
The following table sets forth the Company’s financial assets and liabilities at fair value on a recurring basis as of March 31, 2014 and December 31, 2013: | |||||||||||||||||
As of March 31, 2014 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets: | |||||||||||||||||
Money market funds | $ | 86,585 | $ | — | $ | — | $ | 86,585 | |||||||||
Total assets at fair value | $ | 86,585 | $ | — | $ | — | $ | 86,585 | |||||||||
Liabilities: | |||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 313,440 | $ | 313,440 | |||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 313,440 | $ | 313,440 | |||||||||
As of December 31, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets: | |||||||||||||||||
Money market funds | $ | 66,817 | $ | — | $ | — | $ | 66,817 | |||||||||
Total assets at fair value | $ | 66,817 | $ | — | $ | — | $ | 66,817 | |||||||||
Liabilities: | |||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 109,410 | $ | 109,410 | |||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 109,410 | $ | 109,410 | |||||||||
In accordance with the pronouncement guidance in ASC 815 “Derivatives and Hedging”, the conversion option included within the Convertible Senior Notes was deemed to include an embedded derivative, which required the Company to bifurcate and separately account for the embedded derivative as a separate liability on its condensed consolidated balance sheets. The estimated fair value was derived utilizing the binomial lattice approach for the valuation of convertible instruments. Assumptions used in the calculation included, among others, determining the appropriate credit spread using benchmarking analysis and solving for the implied credit spread, calculating the fair value of the stock component using a discounted risk free rate and borrowing cost and calculating the fair value of the note component using a discounted credit adjusted discount rate. Based on the assumptions used to determine the fair value of the derivative liability associated with the Convertible Senior Notes, the Company concluded that these inputs were Level 3 inputs. | |||||||||||||||||
The following table presents the assumptions used by the Company to determine the fair value as of March 31, 2014 and December 31, 2013 of the conversion option embedded in the Convertible Senior Notes: | |||||||||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||||||||
Stock price | $15.12 | $7.62 | |||||||||||||||
Risk free rate | 1.59 | % | 1.69 | % | |||||||||||||
Borrowing cost | 3.5 | % | 5.0% and 3.5 | % | |||||||||||||
Weights | Equal weight | Equal weight | |||||||||||||||
Credit spread (in basis points) | 1,110 | 930 and 1,170 | |||||||||||||||
Volatilty | 40 | % | 40 | % | |||||||||||||
Initial conversion price | $5.36 | $5.36 | |||||||||||||||
Remaining time to maturity (in years) | 4.6 | 4.9 | |||||||||||||||
At March 31, 2014, the Company conducted a fair value assessment to reflect the market value adjustments for the embedded derivative due to the increase in the Company’s common stock value and for changes in the fair value assumptions. During the three months ended March 31, 2014, the Company recorded a $204,030 loss in its results of operations to properly reflect the fair value of the embedded derivative of $313,440. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments And Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
NOTE 11 – COMMITMENTS AND CONTINGENCIES | |
Lease Obligations | |
In September 2011, the Company entered into an office lease agreement for 21,182 square feet of office space in Deerfield, Illinois, which was effective August 31, 2011. The initial term of the lease commenced on December 1, 2011, and expires on June 30, 2018. The minimum net rent was initially approximately $30 per month during the first year and increases each year during the initial term, up to approximately $35 per month after the sixth year. The Company has the option to extend the lease for an additional five-year term, which would commence upon the expiration of the initial term. In August 2012, the Company entered into an amendment to the lease agreement to expand the office space available to it by an additional 4,926 square feet in the same Deerfield, Illinois facility as its existing office space. The initial rent on the additional lease is $7 per month and will increase up to a maximum of $8 per month after the sixth year. In December 2013, the Company entered into a second amendment to the lease agreement to expand the office space available to it by an additional 8,352 square feet. The two amendments to the lease term coincide with the original lease and run through June 30, 2018. The initial rent on the second amendment is $12 per month and will increase up to a maximum of $14 per month after the fifth year. | |
The Company also leases its offices in Reinach, Switzerland and in Mannheim, Germany. The Reinach office lease rate is $7 (6 CHF) per month, expiring on May 31, 2015. The Mannheim office lease rate is approximately $7 (5 Euros) per month, expiring on December 31, 2014. | |
Commitments | |
If the proposed Merger between the Company and Vidara is consummated, the Company will be required to pay its investment bankers a fee of $8,000. An additional $1,000 non-refundable fee has already been paid to the investment bankers in connection with the delivery of the fairness opinion. The Company also paid Deerfield a commitment fee of $5,000 upon execution of the Commitment Letter. The Commitment Letter expires on June 30, 2014 unless by June 30, 2014 the Company has provided notice to Deerfield that it commits to borrow at least $225,000 under the Facility, in which case the Commitment Letter will expire on the earlier of September 30, 2014, or the Closing and the entry into definitive documentation for the Facility with the Deerfield Funds. In the event the commitments under the Commitment Letter are extended to September 30, 2014 and the Company fails to consummate the Merger, the Company will be required to pay an additional fee of $3,750 to Deerfield. The Company has also agreed to pay customary fees and expenses in connection with obtaining the Facility and has agreed to indemnify Deerfield and the Deerfield Funds if certain losses are incurred by Deerfield and the Deerfield Funds in connection therewith. | |
Annual Purchase Commitments | |
In August 2007, the Company entered into a manufacturing and supply agreement with Jagotec AG (“Jagotec”). Under the agreement, Jagotec or its affiliates are required to manufacture and supply RAYOS/LODOTRA exclusively to the Company in bulk. The Company committed to a minimum purchase of RAYOS/LODOTRA tablets from Jagotec for five years from the date of first launch of RAYOS/LODOTRA in a major country, as defined in the agreement, which was in April 2009. At March 31, 2014, the minimum remaining purchase commitment based on tablet pricing in effect under the agreement was $3,481. The agreement automatically renews on a yearly basis until either party provides two years advance written notice of termination. In April 2013, the agreement automatically renewed, and, therefore, the earliest the current agreement can expire according to this advance notice procedure is April 15, 2016. | |
In May 2011, the Company entered into a manufacturing and supply agreement with sanofi-aventis U.S., and amended the agreement effective as of September 25, 2013. Pursuant to the agreement, as amended, sanofi-aventis U.S. is obligated to manufacture and supply DUEXIS to the Company in final, packaged form, and the Company is obligated to purchase DUEXIS exclusively from sanofi-aventis U.S. for the commercial requirements of DUEXIS in North America, South America and certain countries and territories in Europe, including the European Union member states and Scandinavia. At March 31, 2014, the Company had a binding purchase commitment to sanofi-aventis U.S. for DUEXIS of $8,818, which is to be delivered during 2014. | |
In November 2013, the Company and AstraZeneca entered in a supply agreement pursuant to which AstraZeneca agreed to supply VIMOVO to the Company for commercialization in the United States through December 31, 2014. As of December 5, 2013, the Company has been providing AstraZeneca with a forecast of its supply requirements, including any forecasts for its sublicensees. The first four months of each forecast is a binding purchase commitment and may not be changed without AstraZeneca’s written consent. As of March 31, 2014, the minimum binding purchase commitment to AstraZeneca was $3,408 and is to be delivered through the fourth quarter of 2014. | |
Royalty Agreements | |
In connection with the August 2004 development and license agreement with SkyePharma AG (“SkyePharma”) and Jagotec, a wholly-owned subsidiary of SkyePharma, regarding certain proprietary technology and know-how owned by SkyePharma, Jagotec is entitled to receive a single digit percentage royalty on net sales of RAYOS/LODOTRA and on any sub-licensing income, which includes any payments not calculated based on the net sales of RAYOS/LODOTRA, such as license fees, lump sum and milestone payments. Royalty expense recognized in cost of goods sold for the three months ended March 31, 2014 and 2013 was $331 and $169, respectively. | |
Under the Pozen license agreement, the Company is required to pay Pozen a flat 10% royalty on net sales of VIMOVO and such other products sold by the Company, its affiliates or sublicensees during the royalty term, subject to minimum annual royalty obligations of $5,000 in 2014 and $7,500 each year thereafter, which minimum royalty obligations will continue for each year during which one of Pozen’s patents covers such products in the United States and there are no competing products in the United States. The royalty rate may be reduced to a mid-single digit royalty rate as a result of loss of market share to competing products. The Company’s obligation to pay royalties to Pozen will expire upon the later of (a) expiration of the last-to-expire of certain patents covering such products in the United States, and (b) ten years after the first commercial sale of such products in the United States. | |
Contingencies | |
The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company’s management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. | |
Indemnification | |
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations. | |
In accordance with its amended and restated certificate of incorporation and amended and restated bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. Additionally, the Company has entered, and intends to continue to enter, into separate indemnification agreements with its directors and executive officers. These agreements, among other things, require the Company to indemnify its directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers, or any of the Company’s subsidiaries or any other company or enterprise to which the person provides services at the Company’s request. There have been no claims to date and the Company has a director and officer insurance policy that enables it to recover a portion of any amounts paid for future potential claims. |
Legal_Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2014 | |
Commitments And Contingencies Disclosure [Abstract] | ' |
Legal Proceedings | ' |
NOTE 12 – LEGAL PROCEEDINGS | |
On February 15, 2012, the Company received a Paragraph IV Patent Certification from Par Pharmaceutical, Inc. advising that Par Pharmaceutical, Inc. had filed an Abbreviated New Drug Application (“ANDA”) with the FDA for a generic version of DUEXIS, containing 800 mg of ibuprofen and 26.6 mg of famotidine. In March 2012, the Company filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Par Pharmaceutical, Inc. and Par Pharmaceutical Companies, Inc.(collectively, “Par”) for filing an ANDA against DUEXIS and seeking an injunction to prevent the approval of Par’s ANDA and/or prevent Par from selling a generic version of DUEXIS. In January 2013, the Company filed a second suit against Par in the United States District Court for the District of Delaware claiming patent infringement of additional patents that have been issued for DUEXIS and seeking an injunction to prevent the approval of Par’s ANDA and/or prevent Par from selling a generic version of DUEXIS. | |
On August 21, 2013, the Company entered into a settlement agreement (“Par settlement agreement”), and license agreement (“Par license agreement”) with Par relating to its patent infringement litigation. The Par settlement agreement provides for a full settlement and release by both the Company and Par of all claims that were or could have been asserted in the litigation and that arise out of the specific patent issues that were the subject of the litigation, including all resulting damages or other remedies. | |
Under the Par license agreement, the Company granted Par a non-exclusive license (that is only royalty-bearing in some circumstances) to manufacture and commercialize Par’s generic version of DUEXIS in the United States after the generic entry date and to take steps necessary to develop inventory of, and obtain regulatory approval for, but not commercialize, Par’s generic version of DUEXIS prior to the generic entry date (collectively, the “License”). The License covers all patents owned or controlled by us during the term of the Par license agreement that would, absent the License, be infringed by the manufacture, use, sale, offer for sale, or importation of Par’s generic version of DUEXIS in the United States. Unless terminated sooner pursuant to the terms of the Par license agreement, the License will continue until the last to expire of the licensed patents and/or applicable periods of regulatory exclusivity. | |
Under the Par license agreement, the generic entry date is January 1, 2023; however, Par may be able to enter the market earlier in certain circumstances. Such events relate to the resolution of potential future third party DUEXIS patent litigation, the entry of other third party generic versions of DUEXIS or certain specific changes in DUEXIS market conditions. Only in the event that Par enters the DUEXIS market due to the specified changes in DUEXIS market conditions will the License become royalty-bearing, with the royalty obligations ceasing upon the occurrence of one of the other events that would have allowed Par to enter the DUEXIS market. | |
Under the Par license agreement, the Company also agreed not to sue or assert any claim against Par for infringement of any patent or patent application owned or controlled by the Company during the term of the Par license agreement based on the manufacture, use, sale, offer for sale, or importation of Par’s generic version of DUEXIS in the United States. | |
The Par license agreement may be terminated by the Company if Par commits a material breach of the agreement that is not cured or curable within 30 days after the Company provides notice of the breach. The Company may also terminate the Par license agreement immediately if Par or any of its affiliates initiate certain challenges to the validity or enforceability of any of the licensed patents or their foreign equivalents. In addition, the Par license agreement will terminate automatically upon termination of the Par settlement agreement. | |
On March 13, 2013, the Company received purported Notice Letters that a Paragraph IV Patent Certification had been filed by Alvogen Pine Brook, Inc. (“Alvogen”) advising that Alvogen had filed an ANDA with the FDA for a generic version of RAYOS, containing up to 5 mg of prednisone. In the Notice Letters, Alvogen noted that as of March 13, 2013, the FDA had not accepted the ANDA for review. Alvogen has agreed that their Notice Letters do not constitute Notice as described in 21 U.S.C. 355(j)(2)(B). | |
On July 15, 2013, the Company received a Paragraph IV Patent Certification from Watson Laboratories, Inc.—Florida (“Watson”) advising that Watson had filed an ANDA with the FDA for a generic version of RAYOS, containing up to 5 mg of prednisone. Watson has not advised the Company as to the timing or status of the FDA’s review of its filing. On August 26, 2013, the Company, together with Jagotec, filed suit in the United States District Court for the District of New Jersey against Watson, Actavis Pharma, Inc., Andrx Corp., and Actavis, Inc., (collectively “WLF”) seeking an injunction to prevent the approval of the ANDA. The lawsuit alleges that WLF has infringed U.S. Patent Nos. 6,488,960, 6,677,326, 8,168,218, 8,309,124, and 8,394,407 by filing an ANDA seeking approval from the FDA to market generic versions of RAYOS containing 1 mg, 2 mg, and 5 mg of prednisone prior to the expiration of the patents. The subject patents are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of WLF’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or invalid. | |
On or about August 12, 2013, the Company received a Notice of Opposition to a European patent covering LODOTRA, EP 2049123, filed by Laboratorios Liconsa, S.A. In the European Union, the grant of a patent may be opposed by one or more private parties. | |
On September 12, 2013, the Company received a Paragraph IV Patent Certification from Par Pharmaceutical, Inc. advising that Par Pharmaceutical, Inc. had filed an ANDA with the FDA for a generic version of RAYOS, containing up to 5 mg of prednisone. On October 22, 2013, the Company, together with Jagotec, filed suit in the United States District Court for the District of New Jersey against Par seeking an injunction to prevent the approval of the ANDA. The lawsuit alleged that Par had infringed U.S. Patent Nos. 6,488,960, 6,677,326, 8,168,218, 8,309,124 and 8,394,407 by filing an ANDA seeking approval from the FDA to market generic versions of RAYOS prior to the expiration of the patents. The subject patents are listed in the FDA’s Orange Book. On November 20, 2013, the Company was notified by counsel for Par that Par Pharmaceutical, Inc. had elected to withdraw its ANDA with the FDA for a generic version of RAYOS containing 2 mg and 5 mg of prednisone. On December 5, 2013, the Company entered into a Stipulation of Dismissal with Par Pharmaceutical, Inc. whereby Par Pharmaceutical, Inc. agreed to withdraw its application to market a generic version of RAYOS. | |
Currently, patent litigation is pending against five generic companies intending to market VIMOVO before the expiration of patents listed in the Orange Book. These cases are in the District of New Jersey and are grouped in three sets: (i) Dr. Reddy’s Laboratories, Inc. (“Dr. Reddy’s”); Lupin Pharmaceuticals Inc. (“Lupin”); Anchen Pharmaceuticals Inc. (“Anchen”) (collectively, the “DRL cases”); (ii) Mylan Laboratories Limited (collectively the “Mylan cases”); and (iii) Watson Pharma, Inc. (collectively, the “Watson cases”). The Company understands that Dr. Reddy’s has entered into a settlement with AstraZeneca with respect to patent rights directed to Nexium for the commercialization of VIMOVO, and that according to the settlement agreement, Dr. Reddy’s will not be able to commercialize VIMOVO under AstraZeneca’s Nexium patent rights until May 28, 2014. As part of the Company’s acquisition of the U.S. rights to VIMOVO, the Company has taken over and is responsible for the patent litigations that include the Pozen patents licensed to the Company under the Pozen license agreement. | |
The DRL cases were filed on April 21, 2011, July 25, 2011, October 28, 2011, and October 23, 2013 and collectively include allegations of infringement of U.S. Patent Nos. 6,926,907 and 8,557,285. The Company understands the cases arise from Paragraph IV Notice Letters providing notice of the filing of an ANDA with the FDA seeking regulatory approval to market a generic version of VIMOVO before the expiration of the patents-in-suit. The Company understands the Dr. Reddy’s notice letters were dated March 11, 2011 and November 12, 2012; the Lupin notice letter was dated June 10, 2011; and the Anchen notice letter was dated September 16, 2011. The court has issued a claims construction order. The DRL cases do not have pretrial deadlines or a trial date set. The Company understands Anchen has recertified under Paragraph III and has filed a motion to dismiss on that basis. | |
The Watson cases were filed on May 10, 2013 and October 23, 2013 and collectively include allegations of infringement of U.S. Patent Nos. 6,926,907 and 8,557,285. The Company understands the cases arise from a March 29, 2013 Paragraph IV Notice Letter providing notice of the filing of an ANDA with the FDA seeking regulatory approval to market a generic version of VIMOVO before the expiration of the patents-in-suit. The court has not yet set a trial date or schedule for the Watson cases. | |
The Mylan cases were filed on June 28, 2013 and October 23, 2013 and collectively include allegations of infringement of U.S. Patent Nos. 6,926,907 and 8,557,285. The Company understands the cases arise from a May 16, 2013 Paragraph IV Notice Letter providing notice of the filing of an ANDA with the FDA seeking regulatory approval to market a generic version of VIMOVO before the expiration of the patents-in-suit. The court has not yet set a trial date or schedule for the Mylan cases. |
Debt_Agreement
Debt Agreement | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Debt Agreement | ' | ||||||||
NOTE 13 – DEBT AGREEMENT | |||||||||
The Company’s outstanding debt balances as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Convertible Senior Notes | $ | 150,000 | $ | 150,000 | |||||
Debt discount | (37,226 | ) | (39,238 | ) | |||||
Long-term debt, net of current maturities | $ | 112,774 | $ | 110,762 | |||||
Convertible Senior Notes | |||||||||
On November 18, 2013, the Company entered into note purchase agreements with investors to issue $150,000 aggregate principal amount of Convertible Senior Notes. The note purchase agreements contain customary representations, warranties, covenants and closing conditions. The Convertible Senior Notes were issued on November 22, 2013. The Company received net proceeds of $143,598 from the sale of the Convertible Senior Notes, after deducting fees and expenses of $6,402. The Convertible Senior Notes are governed by an Indenture, dated as of November 22, 2013, between the Company and U.S. Bank National Association, as trustee. The Convertible Senior Notes bear interest at a rate of 5.00% per year, payable in arrears on May 15 and November 15 of each year, beginning on May 15, 2014. The Convertible Senior Notes will mature on November 15, 2018, unless earlier repurchased or converted. | |||||||||
The Company used a portion of the proceeds from the Convertible Senior Notes to purchase $18,675 related to a capped call transaction. The capped call transaction is comprised of a net settled purchased call option and a net settled written call option. The Company purchased the call option with an initial strike price of $5.364, which was equal to the initial conversion price, and sold a call option with a strike price of $6.705, which is equal to the cap price. The number of options underlying the capped call is 150,000 or the equivalent to the number of $1,000 Convertible Senior Notes initially issued by the Company. | |||||||||
The Convertible Senior Notes were sold at a price equal to 100% of the principal amount thereof and are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding August 15, 2018 only under certain conditions. Prior to August 15, 2018, the Convertible Senior Notes will be convertible, at the option of the holders thereof, only under the following circumstances: | |||||||||
1 | Conversion upon Satisfaction of Sale Price Condition: During any fiscal quarter beginning after June 30, 2014, if the closing price of the Company’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day. | ||||||||
2 | Conversion upon Satisfaction of Trading Price Condition: The Convertible Senior Notes can be surrendered for conversion during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Senior Notes was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such date. | ||||||||
3 | Conversion upon Specified Distributions: If the Company elects to: | ||||||||
i. | issue to all or substantially all holders of the Company’s common stock any rights, options or warrants (other than in connection with a stockholder rights plan) entitling them, for a period of not more than 45 calendar days after the declaration date for such issuance, to subscribe for or purchase shares of the Company’s common stock at a price per share that is less than the average of the last reported sale prices of the Company’s common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the declaration date for such issuance; or | ||||||||
ii. | distribute to all or substantially all holders of the Company’s common stock our assets, securities or rights to purchase our securities, which distribution has a per share value, as reasonably determined by the Company’s board of directors or a committee thereof, exceeding 10% of the last reported sale price of the Company’s common stock on the trading day preceding the date of announcement for such distribution. | ||||||||
4 | Conversion upon Specified Corporate Events: If (i) a transaction or event that constitutes a fundamental change or a make-whole fundamental change occurs or (ii) the Company is party to a consolidation, merger, binding share exchange, or transfer or lease of all or substantially all of its consolidated assets pursuant to which the Company’s common stock would be converted into cash, securities or other assets. | ||||||||
On or after August 15, 2018 until the close of business on the second scheduled trading day immediately preceding the maturity date for the Convertible Senior Notes, holders will be able to convert their Convertible Senior Notes at their option at the conversion rate then in effect at any time, regardless of these conditions. | |||||||||
Subject to certain limitations, the Company may settle conversions of the Convertible Senior Notes by paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. If the Company undergoes a fundamental change prior to the maturity date of the Convertible Senior Notes, the holders may require the Company to repurchase for cash all or any portion of their Convertible Senior Notes at a price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest. | |||||||||
The conversion rate for the Convertible Senior Notes will initially be 186.4280 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $5.36 per share of common stock); provided that unless and until the Company obtains stockholder approval to issue more than 13,164,951 shares of its common stock, which is 19.99% of the Company’s common stock outstanding on November 18, 2013, upon conversion of the Convertible Senior Notes in accordance with the listing standards of The NASDAQ Global Market, the number of shares of common stock deliverable upon conversion will be subject to a “conversion share cap.” Unless and until such stockholder approval is obtained, the Company is required to settle conversions of the Convertible Senior Notes in cash up to their principal amount, shares for any conversion spread, and, if the number of shares deliverable for the conversion spread exceeds the conversion share cap, cash in lieu of shares that would otherwise be deliverable. The conversion rate of the Convertible Senior Notes, and the corresponding conversion price, is subject to adjustment for certain events, but will not be adjusted for accrued and unpaid interest. As of March 31, 2014, the carrying value of the Convertible Senior Notes approximated their fair value. | |||||||||
Pursuant to a number of factors outlined in ASC Topic 815, Derivative and Hedging, the conversion option in the Convertible Senior Notes was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. On November 22, 2013, a derivative liability and a corresponding debt discount in the amount of $40,110 were recorded. The debt discount is being charged to interest expense ratably over the life of the convertible debt. The effective interest rate computed on the Convertible Senior Notes was 11.22%. | |||||||||
The derivative liability is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At December 31, 2013, the Company conducted a fair value assessment of the embedded derivative due primarily to changes in the Company’s common stock value. As a result of the fair value assessment, the Company recorded a $69,300 expense in its results of operations for the three and twelve months ended December 31, 2013 to properly reflect the fair value of the embedded derivative of $109,410 as of December 31, 2013. At March 31, 2014, the Company conducted a subsequent fair value assessment to reflect the market value adjustments for the embedded derivative due to the increase in the Company’s common stock value and for changes in the fair value assumptions. During the three months ended March 31, 2014, the Company recorded a $204,030 loss in its results of operations to properly reflect the fair value of the embedded derivative of $313,440. | |||||||||
Upon receiving stockholder approval, the derivative liability will be re-measured on such date of approval to determine the fair value. Any gains or losses as a result of the re-measurement of the derivate liability will be recorded in the Company’s results of operations during that period and the entire fair value of the derivative liability will be recorded to the Company’s additional paid-in capital upon conversion. | |||||||||
Commitment Letter | |||||||||
On March 18, 2014, the Company entered into the Commitment Letter with Deerfield and certain Deerfield Funds pursuant to which the Deerfield Funds have committed to provide up to $250,000 of senior secured loans to finance the Merger. The commitment to provide the Facility is subject to certain conditions, including the negotiation of definitive documentation and other customary closing conditions consistent with the Merger Agreement. The receipt of funding under the Facility is not a condition to the obligations we have under the terms of the Merger Agreement. | |||||||||
The Company also paid Deerfield a commitment fee of $5,000 upon execution of the Commitment Letter. The $5,000 commitment fee paid to Deerfield was capitalized as a prepaid expense and is being amortized to expense through June 30, 2014. The Commitment Letter expires on June 30, 2014 unless by June 30, 2014 the Company has provided notice to Deerfield that it commits to borrow at least $225,000 under the Facility, in which case the Commitment Letter will expire on the earlier of September 30, 2014, or the Closing and the entry into definitive documentation for the Facility with the Deerfield Funds. In the event the commitments under the Commitment Letter are extended to September 30, 2014 and the Company fails to consummate the Merger, the Company will be required to pay an additional fee of $3,750 to Deerfield. The Company has also agreed to pay customary fees and expenses in connection with obtaining the Facility and has agreed to indemnify Deerfield and the Deerfield Funds if certain losses are incurred by Deerfield and the Deerfield Funds in connection therewith. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
NOTE 14 – RELATED PARTY TRANSACTIONS | |
The Company has entered into a consulting agreement with a former stockholder who previously served as a director of Horizon Pharma USA. In addition, the Company’s wholly-owned subsidiary, Horizon Pharma AG, has entered into a consulting agreement with a former owner and majority shareholder of Nitec. For the three months ended March 31, 2014 and 2013, the Company paid $122 and $197, respectively, in consulting fees to the related parties. |
Income_Taxes
Income Taxes | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income Taxes | ' | ||||||||
NOTE 15 – INCOME TAXES | |||||||||
The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. | |||||||||
The following table presents the benefit for income taxes for the three months ended March 31, 2014 and 2013: | |||||||||
For the Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Net loss before benefit for income taxes | $ | (207,355 | ) | $ | (23,052 | ) | |||
Benefit for income taxes | (1,105 | ) | (881 | ) | |||||
Net loss | $ | (206,250 | ) | $ | (22,171 | ) | |||
During the three months ended March 31, 2014 and 2013, benefit for incomes taxes was $1,105 and $881, respectively. The increase in benefit for income taxes during the first quarter of 2014 was primarily due to a higher net loss compared to the prior year period. Additionally, during the three months ended March 31, 2013, the Company recorded an additional benefit for income taxes of $831 associated with a reduction in the Company’s deferred tax valuation allowance resulting from a determination that a portion of deferred tax assets associated with deferred revenues from milestone payments would be realized in future years. | |||||||||
At March 31, 2014, the Company had a net deferred tax liability of $2,903 primarily related to temporary differences associated with its intangible assets. During the three months ended March 31, 2014, the Company recorded a $204,030 loss on the derivative revaluation in connection with the increase in the fair value of the embedded derivative associated with the Convertible Senior Notes. The loss on derivative revaluation was a permanent tax difference and is not deductible for income tax reporting purposes. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2014 | |
Equity [Abstract] | ' |
Stockholders' Equity | ' |
NOTE 16 – STOCKHOLDERS’ EQUITY | |
During the three months ended March 31, 2014, the Company issued an aggregate of 5,154,142 shares of common stock upon the cash exercise of warrants and the Company received proceeds of $23,544 representing the aggregate exercise price for such warrants. In addition, warrants to purchase an aggregate of 41,631 shares of the Company’s common stock were exercised in cashless exercises, resulting in the issuance of 34,774 shares of common stock. |
Equity_Incentive_Plans
Equity Incentive Plans | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||||||||
Equity Incentive Plans | ' | ||||||||
NOTE 17 – EQUITY INCENTIVE PLANS | |||||||||
Employee Stock Purchase Plan | |||||||||
In July 2010, the Company’s board of directors adopted the 2011 Employee Stock Purchase Plan (the “2011 ESPP”). In June 2011, the Company’s stockholders approved the 2011 ESPP, and it became effective upon the signing of the underwriting agreement related to the Company’s initial public offering in July 2011. The Company reserved a total of 463,352 shares of common stock for issuance under the 2011 ESPP. The 2011 ESPP provides that an additional number of shares will automatically be added to the shares authorized for issuance under the 2011 ESPP each year on January 1, until 2021. The number of shares added each year will be equal to the least of: (a) 4% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; (b) 1,053,074 shares of common stock; or (c) a number of shares of common stock that may be determined each year by the Company’s board of directors that is less than (a) and (b). Subject to certain limitations, the Company’s employees may elect to have 1% to 15% of their compensation withheld through payroll deductions to purchase shares of common stock under the 2011 ESPP. Employees purchase shares of common stock at a price per share equal to 85% of the lower of the fair market value at the start or end of the six-month offering period. | |||||||||
On December 5, 2013, pursuant to the terms of the 2011 ESPP, the Company’s board of directors approved an increase in the number of shares available for issuance under the 2011 ESPP of 1,053,074 shares, effective January 1, 2014. As of March 31, 2014, 350,547 shares have been issued and an aggregate of 1,465,879 shares of common stock were authorized and available for future grants under the 2011 ESPP. | |||||||||
Stock-Based Compensation Plans | |||||||||
In October 2005, the Company adopted the 2005 Stock Plan (the “2005 Plan”). The 2005 Plan provides for the granting of stock options to employees and consultants of the Company. Options granted under the 2005 Plan may be either incentive stock options or nonqualified stock options. Upon the signing of the underwriting agreement related to the Company’s initial public offering, on July 28, 2011, no further option grants were made under the 2005 Plan. As of July 28, 2011, the 460,842 shares of common stock reserved for future issuance and the 1,304,713 shares of common stock reserved for future issuance upon the exercise of options outstanding under the 2005 Plan were transferred to the 2011 Equity Incentive Plan (the “2011 EIP”), as described below. All stock options granted under the 2005 Plan prior to the offering continue to be governed by the terms of the 2005 Plan. | |||||||||
In July 2010, the Company’s board of directors adopted the 2011 EIP. In June 2011, the Company’s stockholders approved the 2011 EIP, and it became effective upon the signing of the underwriting agreement related to the Company’s initial public offering on July 28, 2011. The 2011 EIP had an initial reserve of 3,366,228 shares of common stock, including 460,842 shares of common stock previously reserved for future issuance under the 2005 Plan, 1,304,713 shares of common stock reserved for future issuance upon the exercise of options outstanding under the 2005 Plan as of the 2011 EIP’s effective date and 1,600,673 new shares of common stock reserved. The 2011 EIP provides that an additional number of shares will automatically be added to the shares authorized for issuance each year on January 1, until 2021. The number of shares added each year will be equal to the least of: (a) 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; (b) 1,474,304 shares of common stock; or (c) a number of shares of common stock that may be determined each year by the Company’s board of directors that is less than (a) and (b). On December 5, 2013, pursuant to the terms of the Company’s 2011 EIP, the Company’s board of directors approved an increase in the number of shares available for issuance under the 2011 EIP of 1,474,304 shares, effective January 1, 2014. As of March 31, 2014, there were 344,275 shares available for future grants under the 2011 EIP, not including the additional shares available for grant pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules (“Rule 5635(c)(4)”) described below. | |||||||||
On November 7, 2013, November 16, 2013 and March 3, 2014, the Company’s board of directors approved amendments to the Company’s 2011 EIP to reserve an additional 200,000 shares, 800,000 shares and 730,000 shares of the Company’s common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company (or following a bona fide period of non-employment with the Company), as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4). On January 10, 2014, the Company’s board of directors approved an amendment to the 2011 EIP to increase the number of shares available for issuance under the 2011 EIP by 703,400 shares (the “January 2014 amendment”), with such increase to the number of shares available for issuance under the 2011 EIP subject to stockholder approval of the January 2014 amendment. As of March 31, 2014, there were 438,400 shares available for future grants under the 2011 EIP pursuant to Rule 5635(c)(4). | |||||||||
Under the 2011 EIP, the board of directors, or a committee of the board of directors, may grant incentive and nonqualified stock options, stock appreciation rights, restricted stock units, or restricted stock awards to employees, directors and consultants to the Company or any subsidiary of the Company. Under the terms of the 2011 EIP, the exercise price of stock options may not be less than 100% of the fair market value on the date of grant and their term may not exceed ten years. | |||||||||
Stock Option Plans | |||||||||
The following table summarizes stock option activity during the three months ended March 31, 2014: | |||||||||
Options | Weighted | ||||||||
Average | |||||||||
Exercise Price | |||||||||
Outstanding as of December 31, 2013 | 4,411,080 | $ | 6.47 | ||||||
Granted | 1,500,900 | $ | 9.55 | ||||||
Exercised | (114,925 | ) | $ | 5.79 | |||||
Forfeited | (92,376 | ) | $ | 5.28 | |||||
Outstanding as of March 31, 2014 | 5,704,679 | $ | 7.31 | ||||||
Exercisable as of March 31, 2014 | 2,210,466 | $ | 9.22 | ||||||
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the three months ended March 31, 2014 and 2013, and assumptions used to value stock options, are as follows: | |||||||||
For the Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Dividend yield | — | — | |||||||
Risk-free interest rate | 2 | % | 1 | % | |||||
Weighted average volatility | 83 | % | 88.3 | % | |||||
Expected life (in years) | 6 | 6 | |||||||
Weighted average grant date fair value per share of options granted | $ | 6.75 | $ | 1.74 | |||||
Dividend yields | |||||||||
The Company has never paid dividends and does not anticipate paying any dividends in the near future. | |||||||||
Risk-Free Interest Rate | |||||||||
The Company determined the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate as of the date of grant. | |||||||||
Volatility | |||||||||
The Company used an average historical stock price volatility of comparable companies to be representative of future stock price volatility, as the Company did not have sufficient trading history for its common stock. | |||||||||
Expected Term | |||||||||
Given the Company’s limited historical exercise behavior, the expected term of options granted was determined using the “simplified” method since the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. Under this approach, the expected term is presumed to be the average of the vesting term and the contractual life of the option. | |||||||||
During the three months ended March 31, 2013, the Company utilized a forfeiture rate of 5% for estimating the forfeitures of stock options granted. During the three months ended March 31, 2014, the Company reassessed its forfeiture rate based on actual historical experience and subsequently utilized a forfeiture rate that ranges from 5% to 15% based on the stratification of various employee grant categories. | |||||||||
Restricted Stock Units | |||||||||
The following table summarizes restricted stock unit activity during the three months ended March 31, 2014: | |||||||||
Number of Units | Weighted Average | ||||||||
Grant-Date Fair | |||||||||
Value Per Units | |||||||||
Outstanding as of December 31, 2013 | 833,001 | $ | 2.86 | ||||||
Granted | 766,300 | $ | 8.85 | ||||||
Vested | (161,775 | ) | $ | 2.4 | |||||
Outstanding as of March 31, 2014 | 1,437,526 | $ | 6.1 | ||||||
The following table summarizes stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013: | |||||||||
For the Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Stock-based compensation expense: | |||||||||
Research and development | $ | 300 | $ | 282 | |||||
Sales and marketing | 584 | 280 | |||||||
General and administrative | 1,043 | 517 | |||||||
Net effect of stock-based compensation expense on net loss | $ | 1,927 | $ | 1,079 | |||||
The Company estimates that, as of March 31, 2014, pre-tax compensation expense was $20,829 for all unvested stock-based awards, including both stock options and restricted stock units that will be recognized through the second quarter of 2017. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of its common stock which have been reserved under the 2011 Plan. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Accounting Policies [Abstract] | ' | ||
Segment Information | ' | ||
Segment Information | |||
The Company operates as one segment. Management uses one measure of profitability and does not segment its business for internal reporting. | |||
Use of Estimates | ' | ||
Use of Estimates | |||
The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Foreign Currency Translation and Transactions | ' | ||
Foreign Currency Translation and Transactions | |||
The reporting currency of the Company and its subsidiaries is the U.S. dollar. | |||
The U.S. dollar is the functional currency for the Company’s U.S. based businesses and the Euro is the functional currency for its subsidiaries in Switzerland and Germany. Foreign currency-denominated assets and liabilities of these subsidiaries are translated into U.S. dollars based on exchange rates prevailing at the end of the period, revenues and expenses are translated at average exchange rates prevailing during the corresponding period, and stockholders’ equity (deficit) accounts are translated at historical exchange rates as of the date of any equity transaction. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of those entities where the functional currency is not the U.S. dollar are included as a component of accumulated other comprehensive income (loss). | |||
Gains and losses resulting from foreign currency translations are reflected within the Company’s results of operations. During the three months ended March 31, 2014 and 2013, the Company recorded a loss from foreign currency translations of $38 and $905, respectively. The Company does not currently utilize and has not in the past utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure. | |||
Revenue Recognition | ' | ||
Revenue Recognition | |||
Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured. Some of the Company’s agreements contain multiple elements and in accordance with these agreements, the Company may be eligible for upfront license fees, marketing or commercial milestones and payment for product deliveries. | |||
Revenue from upfront license fees | |||
The Company recognizes revenues from the receipt of non-refundable, upfront license fees. In situations where the licensee is able to obtain stand-alone value from the license and no further performance obligations exist on the Company’s part, revenues are recognized on the earlier of when payments are received or collection is reasonably assured. Where continuing involvement by the Company is required in the form of technology transfer, product manufacturing or technical support, revenues are deferred and recognized over the term of the agreement. | |||
Revenue from milestone receipts | |||
Milestone payments are recognized as revenue based on achievement of the associated milestones, as defined in the relevant agreements. Revenue from a milestone achievement is recognized when earned, as evidenced by acknowledgment from the Company’s partner, provided that (1) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement, (2) the milestone represents the culmination of an earnings process and (3) the milestone payment is non-refundable. If all of these criteria are not met, revenue from the milestone achievement is recognized over the remaining minimum period of the Company’s performance obligations under the agreement. | |||
Revenue from product deliveries | |||
The Company recognizes revenue from the delivery of its products when delivery has occurred, title has transferred, the selling price is fixed or determinable, collectability is reasonably assured and the Company has no further performance obligations. In addition, revenue is only recognized when the right of return no longer exists (which is the earlier of the product being dispensed through patient prescriptions or the expiration of the right of return) or when product returns can be reasonably estimated. Due to the Company’s ability to reasonably estimate and determine allowances for product returns, rebates and discounts, the Company recognizes DUEXIS and RAYOS revenue at the point of sale to wholesale pharmaceutical distributors and retail chains. The Company also recognizes VIMOVO revenue at the point of sale, consistent with its revenue recognition of DUEXIS and RAYOS, given the availability of prior VIMOVO product return data. | |||
The Company anticipates revenues will continue to result from distribution, marketing, manufacturing and supply agreements with third parties in Europe and certain Asian, Latin American and other countries with respect to LODOTRA. | |||
Under the manufacturing and supply agreements with Mundipharma Medical Company (“Mundipharma Medical”), Mundipharma Medical agreed to purchase LODOTRA exclusively from the Company at a price based on a specified percentage of the average net selling price (“ANSP”) for sales in a given country, subject to a minimum price. Mundipharma Medical has a nine-month period from purchase date to request an ANSP adjustment. If the ANSP is lower than the actual purchase price, then Mundipharma Medical would receive a price adjustment. Products sold to Mundipharma Medical are recognized upon delivery at the minimum price, as no contractual right of return exists. The difference between the actual selling price and the minimum price is recorded as deferred revenue until such time as adjustments for product returns, rebates and discounts can be reliably estimated or the nine-month ANSP adjustment period passes, at which time any previously deferred revenue would be recognized as revenue. As of March 31, 2014 and December 31, 2013, deferred revenues related to the sale of LODOTRA were $956 and $615, respectively. Additionally, as of March 31, 2014 and December 31, 2013, deferred revenues related to milestone and upfront payments received under existing agreements were $8,513 and $8,682, respectively. | |||
Product Sales Discounts and Allowances | ' | ||
Product Sales Discounts and Allowances | |||
The Company makes allowances for product returns, rebates and discounts at the time of sale to wholesale pharmaceutical distributors and national and regional retail chains. The Company is required to make significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company will be required to make adjustments to these allowances in the future. | |||
Customer Discounts and Rebates | |||
Product Launch Discounts | |||
The Company has offered additional discounts to wholesale distributors for product purchased at the time of product launch. The Company has recorded these discounts as an allowance against accounts receivable and a reduction of revenue when orders were placed. | |||
Customer Rebates | |||
The Company participates in certain commercial rebate programs. Under these rebate programs, the Company pays a rebate to the commercial entity or third-party administrator of the program. The Company accrues estimated rebates based on contract prices, estimated percentages of product sold to qualified patients and estimated levels of inventory in the distribution channel and records the rebate as a reduction of revenue. | |||
Distribution Service Fees | |||
The Company includes distribution service fees paid to its wholesalers for distribution and inventory management services as a reduction to revenue. The estimates are based on contractually determined fees, typically as a percentage of revenue. | |||
Government Rebates and Chargebacks | |||
Government Rebates | |||
The Company participates in certain federal government rebate programs, such as Medicare and Medicaid. The Company accrues estimated rebates based on percentages of product sold to qualified patients, estimated rebate percentages and estimated levels of inventory in the distribution channel that will be sold to qualified patients and records the rebate as a reduction of revenue. | |||
Government Chargebacks | |||
The Company provides discounts to federal government qualified entities with whom the Company has contracted. These federal entities purchase products from the wholesale pharmaceutical distributors at a discounted price, and the wholesale pharmaceutical distributors then charge back to the Company the difference between the current retail price and the contracted price that the federal entities paid for the products. The Company accrues estimated chargebacks based on contract prices and sell-through sales data obtained from third party information and records the chargeback as a reduction of revenue. | |||
Co-Pay Assistance | |||
The Company offers discount card programs to patients under which the patient receives a discount on his or her prescription. The Company reimburses pharmacies for this discount through a third-party vendor. The Company records the total amount of estimated discounts for sales recorded in the period as a reduction of revenue based on a combination of actual invoices received and an estimate of discounts to be paid for product in the sales channel based on historical information. | |||
Returns and Prompt Pay Allowances | |||
Sales Returns | |||
Consistent with industry practice, the Company maintains a return policy that allows customers to return product within a specified period prior to and subsequent to the product expiration date. Generally, product may be returned for a period beginning six months prior to its expiration date and up to one year after its expiration date. The right of return expires on the earlier of one year after the product expiration date or the time that the product is dispensed to the patient. The majority of product returns result from product dating, which falls within the range set by the Company’s policy, and are settled through the issuance of a credit to the customer. The estimate of the provision for returns is based upon the Company’s historical experience with actual returns, which is applied to the level of sales for the period that corresponds to the period during which the customer may return product. This period is known to the Company based on the shelf life of products at the time of shipment. The Company records sales returns as an allowance against accounts receivable and a reduction of revenue. | |||
Prompt Pay Discounts | |||
As an incentive for prompt payment, the Company offers a 2% cash discount to customers. The Company expects that all customers will comply with the contractual terms to earn the discount. The Company records the discount as an allowance against accounts receivable and a reduction of revenue. | |||
Bad Debt Expense | ' | ||
Bad Debt Expense | |||
The Company’s products are sold to wholesale distributors and retail chains through manufacturing and supply agreements. For the three months ended March 31, 2014 and for the years ended December 31, 2013, 2012 and 2011, the Company did not record a bad debt expense related to its accounts receivable balances. Accordingly, the Company has not established a reserve for bad debt expense. The Company will continue to monitor its accounts receivable balances to determine the impact, if any, of such factors as changes in customer concentration, credit risk and the realizability of its accounts receivable would require a bad debt reserve allowance in subsequent periods. | |||
Cost of Goods Sold | ' | ||
Cost of Goods Sold | |||
The Company recognizes cost of goods sold in connection with its sale of DUEXIS, VIMOVO and RAYOS/LODOTRA. | |||
Cost of goods sold of DUEXIS includes all costs directly related to the acquisition of product from the Company’s third party manufacturers, including freight charges and costs of distribution. | |||
Cost of goods sold of RAYOS includes all costs directly related to the acquisition of product from the Company’s third party manufacturers, including freight charges and costs of distribution, amortization of developed technology, royalty payments to third parties for the use of certain licensed patents and applicable taxes. | |||
Cost of goods sold of LODOTRA includes raw material costs, costs associated with third parties who manufacture LODOTRA for the Company, supply chain costs, manufacturing overhead costs, amortization of developed technology, royalty payments to third parties for the use of certain licensed patents and applicable taxes. | |||
Cost of goods sold for VIMOVO in the fourth quarter of 2013, following the acquisition in November 2013 of certain assets and rights necessary to commercialize VIMOVO in the United States, included only intangible amortization expense. In connection with the Company’s commercialization of VIMOVO in the United States beginning in January 2014, cost of goods sold for VIMOVO now includes all costs directly related to the acquisition of product from AstraZeneca and/or a third-party manufacturer and intangible amortization expense. At the time of the VIMOVO Acquisition, the Company estimated the fair value of contingent royalties payable to Pozen using an income approach under the discounted cash flow method, which included revenue projections and other assumptions made by the Company to determine the fair value. If the Company were to significantly overperform or underperform against its original revenue projections or it became necessary to make changes to its assumptions, the Company would be required to reassess the fair value of the contingent royalties payable to Pozen. Any adjustments to fair value would be recorded in the period such adjustment was made as either a charge or credit to royalties payable, which is part of cost of goods sold in accordance with the Company’s established accounting policies, and could impact the reported operating results in the period the adjustment was made. | |||
Inventories | ' | ||
Inventories | |||
Inventories are stated at the lower of cost or market value. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs. As of March 31, 2014 and December 31, 2013, the Company had inventories of $9,432 and $8,701, respectively. | |||
Inventories exclude product sample inventory, which is included in other current assets and is expensed as a component of sales and marketing expense when provided to physicians or healthcare providers. As of March 31, 2014 and December 31, 2013, the Company had product sample inventory of $1,588 and $1,323, respectively. | |||
Preclinical Studies and Clinical Trial Accruals | ' | ||
Preclinical Studies and Clinical Trial Accruals | |||
The Company’s preclinical studies and clinical trials have historically been conducted by third-party contract research organizations and other vendors. Preclinical study and clinical trial expenses are based on the services received from these contract research organizations and vendors. Payments depend on factors such as the milestones accomplished, successful enrollment of certain numbers of patients and site initiation. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual accordingly. To date, the Company has had no significant adjustments to accrued clinical expenses. | |||
Net Loss Per Share | ' | ||
Net Loss Per Share | |||
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. For the periods presented, the Company’s potential dilutive shares, which include shares issuable upon the exercise of outstanding stock options, unvested restricted stock units and warrants to purchase common stock, have not been included in the computation of diluted net loss per share for the periods presented in which there is a net loss as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. | |||
Cash and Cash Equivalents | ' | ||
Cash and Cash Equivalents | |||
Cash and cash equivalents primarily consist of cash balances and money market funds. Cash and cash equivalents were $103,374 and $80,480 as of March 31, 2014 and December 31, 2013, respectively. The Company’s policy is to invest excess cash in money market funds, which are generally of a short-term duration based upon operating requirements. | |||
Restricted Cash | ' | ||
Restricted Cash | |||
Restricted cash consists of balances included in interest-bearing money market accounts required by a vendor for the Company’s sponsored employee credit card program and by the lessor for the Company’s corporate office. As of both March 31, 2014 and December 31, 2013, the Company had restricted cash in the amount of $738. | |||
Fair Value of Financial Instruments | ' | ||
Fair Value of Financial Instruments | |||
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their short maturities. The estimated fair value of the Company’s derivative liability related to the convertible portion of its 5.00% Convertible Senior Notes due 2018 (the “Convertible Senior Notes”) was derived utilizing the binomial lattice approach for the valuation of convertible instruments. Assumptions used in the calculation included, among others, determining the appropriate credit spread using benchmarking analysis and solving for the implied credit spread, calculating the fair value of the stock component using a discounted risk free rate and borrowing cost and calculating the fair value of the note component using a discounted credit adjusted discount rate. Based on the assumptions used to determine the fair value of the derivative liability associated with the Convertible Senior Notes, the Company concluded that these inputs were Level 3 inputs. The Company will continue to derive the fair value of the derivative liability using the binomial lattice approach and these assumptions in all future reporting periods. | |||
Business Combinations | ' | ||
Business Combinations | |||
The Company accounts for business combinations in accordance with the pronouncement guidance in ASC 805, Business Combinations, in which acquired assets and liabilities are measured at their respective estimated fair values as of the acquisition date. The Company may be required, as in the case of intangible assets or contingent royalties, to determine the fair value associated with these amounts by estimating the fair value using an income approach under the discounted cash flow method, which may include revenue projections and other assumptions made by the Company to determine the fair value. | |||
Property and Equipment, Net | ' | ||
Property and Equipment, Net | |||
Property and equipment are stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes and an accelerated method for income tax reporting purposes. Upon retirement or sale of an asset, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operations. Repair and maintenance costs are charged to expenses as incurred and improvements are capitalized. | |||
Leasehold improvements are amortized on a straight-line basis over the term of the applicable lease, or the useful life of the assets, whichever is shorter. | |||
Depreciation and amortization periods for the Company’s property and equipment are as follows: | |||
Machinery and equipment | 5-7 years | ||
Furniture and fixtures | 3-5 years | ||
Computer equipment | 3 years | ||
Software | 3 years | ||
Trade show equipment | 3 years | ||
Software includes internal-use software acquired and modified to meet the Company’s internal requirements. Amortization commences when the software is ready for its intended use. | |||
Intangible Assets | ' | ||
Intangible Assets | |||
The Company’s intangible assets consist of developed technology related to three of its approved products: LODOTRA outside the United States, RAYOS in the United States and intellectual property rights related to the Company’s acquisition of the U.S. rights to VIMOVO. The Company amortizes the LODOTRA and RAYOS intangible assets over twelve years, which is the estimated useful life of the underlying patents, and amortizes the U.S. intellectual property rights of the VIMOVO intangible asset over an estimated useful life of 61.5 months, or through the end of 2018. The Company reviews its intangible assets when events or circumstances may indicate that the carrying value of these assets exceeds their fair value. The Company measures fair value based on the estimated future discounted cash flows associated with these assets in addition to other assumptions and projections that the Company deems to be reasonable and supportable. | |||
Research and Development Expenses | ' | ||
Research and Development Expenses | |||
Research and development expenses include, but are not limited to, payroll and other personnel expenses, consultant expenses, expenses incurred under agreements with contract research organizations to conduct clinical trials and expenses incurred to manufacture clinical trial materials. | |||
Sales and Marketing Expenses | ' | ||
Sales and Marketing Expenses | |||
Sales and marketing expenses consist principally of payroll of sales representatives and marketing and support staff, travel and other personnel-related expenses, marketing materials and distributed sample inventories. In addition, sales and marketing expenses include the Company’s medical affairs expenses, which consist of expenses related to scientific publications, health outcomes, biostatistics, medical education and information, and medical communications. | |||
Concentration of Credit Risk and Other Risks and Uncertainties | ' | ||
Concentration of Credit Risk and Other Risks and Uncertainties | |||
Financial instruments that may potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents are invested in deposits with various banks in the United States, Switzerland and Germany that management believes are creditworthy. At times, deposits in these banks may exceed the amount of insurance provided on such deposits. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents. | |||
The Company’s LODOTRA sales contracts are principally denominated in Euros and, therefore, its revenues are subject to significant foreign currency risk. | |||
To achieve profitable operations, the Company must successfully develop, obtain regulatory approval for, manufacture and market its products and product candidates, and/or acquire or in-license products from third parties. There can be no assurance that any additional products can be developed, will be approved for marketing by the regulatory authorities, or can be manufactured at an acceptable cost and with appropriate performance characteristics or that any new or existing products can be successfully marketed, acquired or in-licensed by the Company. These factors could have a material adverse effect on the Company’s operations. | |||
The Company relies on third parties to manufacture its commercial supplies of DUEXIS, VIMOVO and RAYOS/LODOTRA. The commercialization of any of its products or product candidates could be stopped, delayed or made less profitable if those third parties fail to provide the Company with sufficient quantities of product or fail to do so at acceptable quality levels or prices. | |||
The Company is required to maintain compliance with applicable Swiss laws with respect to its Swiss subsidiary, Horizon Pharma AG, including laws requiring maintenance of equity in the subsidiary to avoid overindebtedness, which requires Horizon Pharma AG to maintain assets in excess of its liabilities. The Company reviews on a regular basis whether its Swiss subsidiary is overindebted. As of March 31, 2014 and December 31, 2013, the Company’s Swiss subsidiary was overindebted, primarily as a result of operating losses at the subsidiary. The Company will continue to monitor and review steps to address any overindebtedness until such time as its Swiss subsidiary may generate positive income at a statutory level, which could require the Company to have cash at its Swiss subsidiary in excess of its near term operating needs and could affect the Company’s ability to have sufficient cash at its U.S. subsidiary to meet its near term operating needs. As of March 31, 2014 and December 31, 2013, Horizon Pharma AG had cash and cash equivalents of $2,558 and $3,476, respectively. Based upon the cash and cash equivalents held by Horizon Pharma AG as of March 31, 2014 and December 31, 2013 and Horizon Pharma AG’s level of overindebtedness at such time, the Company does not expect that its financial position or results of operations will be materially affected by any need to address overindebtedness at its Swiss subsidiary. To date, the overindebtedness of the Company’s Swiss subsidiary has not resulted in the need to divert material cash resources from its U.S. subsidiary. | |||
Historically, the Company’s accounts receivable balances have been highly concentrated with a select number of customers, consisting primarily of large wholesale pharmaceutical distributors who, in turn, sell the products to pharmacies, hospitals and other customers. For the three months ended March 31, 2014, the Company’s top three customers, AmerisourceBergen, McKesson Corporation and Cardinal Health, Inc., accounted for approximately 85% of total consolidated gross sales. For the year ended December 31, 2013, the Company’s top five customers, AmerisourceBergen, McKesson Corporation, Cardinal Health, Inc., Mundipharma and Rochester Drug Company, accounted for approximately 89% of total consolidated gross sales. | |||
In addition, three customers, McKesson Corporation, AmerisourceBergen and Cardinal Health, Inc., accounted for approximately 85% of the Company’s total outstanding accounts receivable balances at March 31, 2014. As of December 31, 2013, four customers, McKesson Corporation, AmerisourceBergen, Rochester Drug Company and Cardinal Health, Inc., accounted for approximately 85% of the Company’s total outstanding accounts receivable balances. Historically, the Company has not experienced any losses related to its accounts receivable balances. | |||
Comprehensive Income (Loss) | ' | ||
Comprehensive Income (Loss) | |||
Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss) (“OCI”). OCI includes certain changes in stockholders’ equity that are excluded from net income (loss), which consist of foreign currency translation adjustments. In February 2013, the Company adopted on a prospective basis FASB Accounting Standards Update 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated OCI on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. As of March 31, 2014 and December 31, 2013, accumulated other comprehensive loss was $2,398 and $2,403, respectively. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||
Mar. 31, 2014 | |||
Accounting Policies [Abstract] | ' | ||
Depreciation and Amortization Periods for Property and Equipment | ' | ||
Depreciation and amortization periods for the Company’s property and equipment are as follows: | |||
Machinery and equipment | 5-7 years | ||
Furniture and fixtures | 3-5 years | ||
Computer equipment | 3 years | ||
Software | 3 years | ||
Trade show equipment | 3 years |
Earnings_per_Share_Tables
Earnings per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Basic and Diluted Earnings (Loss) per Share | ' | ||||||||
The following table presents basic and diluted earnings (loss) per share for the three months ended March 31, 2014 and 2013: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Basic and diluted earnings per share calculation: | |||||||||
Net loss | $ | (206,250 | ) | $ | (22,171 | ) | |||
Weighted average of common shares outstanding | 67,138,463 | 61,939,822 | |||||||
Basic and diluted net loss per share | $ | (3.07 | ) | $ | (0.36 | ) | |||
Business_Acquisitions_Tables
Business Acquisitions (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Business Combinations [Abstract] | ' | ||||
Fair Values Assigned to Assets Acquired and Liabilities Assumed | ' | ||||
The following table shows the fair values assigned to the assets acquired and liabilities assumed by the Company as part of the asset purchase agreement: | |||||
Allocation | |||||
Samples inventory | $ | 287 | |||
VIMOVO intellectual property | 67,705 | ||||
Contingent royalty liabilities | (32,992 | ) | |||
Total cash consideration paid | $ | 35,000 | |||
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Components of Inventories | ' | ||||||||
The components of inventories as of March 31, 2014 and December 31, 2013, are summarized as follows: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Raw materials | $ | 135 | $ | 91 | |||||
Work-in-process | 839 | 522 | |||||||
Finished goods | 8,458 | 8,088 | |||||||
Net inventories | $ | 9,432 | $ | 8,701 | |||||
Prepaid_Expenses_and_Other_Cur1
Prepaid Expenses and Other Current Assets (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ' | ||||||||
Prepaid Expenses and Other Current Assets | ' | ||||||||
Prepaid expenses and other current assets as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Prepaid debt commitment fee | $ | 4,333 | $ | — | |||||
Product samples inventory | 1,588 | 1,323 | |||||||
Prepaid software license fees | 828 | 855 | |||||||
Prepaid clinical trial studies | 630 | 688 | |||||||
Prepaid co-pay expenses | 523 | 621 | |||||||
Prepaid marketing expenses | 38 | 381 | |||||||
Prepaid insurance | 250 | 379 | |||||||
Prepaid FDA product and manufacturing fees | 429 | 312 | |||||||
Other prepaid expenses | 486 | 329 | |||||||
Total prepaid and other current assets | $ | 9,105 | $ | 4,888 | |||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property Plant And Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Property and equipment as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Machinery and equipment | $ | 2,367 | $ | 2,367 | |||||
Furniture and fixtures | 113 | 113 | |||||||
Computer equipment | 2,245 | 2,160 | |||||||
Software | 1,092 | 775 | |||||||
Trade show equipment | 228 | 228 | |||||||
Leasehold improvement | 873 | 783 | |||||||
6,918 | 6,426 | ||||||||
Less-accumulated depreciation | (3,021 | ) | (2,646 | ) | |||||
Total property and equipment | $ | 3,897 | $ | 3,780 | |||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013, intangible assets consisted of the following: | |||||||||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||||||
Cost | Accumulated | Currency | Net Book | Cost | Accumulated | Currency | Net Book | ||||||||||||||||||||||||||
Basis | Amortization | Translation | Value | Basis | Amortization | Translation | Value | ||||||||||||||||||||||||||
Developed technology | $ | 84,779 | $ | (19,547 | ) | $ | (2,211 | ) | $ | 63,021 | $ | 84,779 | $ | (17,823 | ) | $ | (2,136 | ) | $ | 64,820 | |||||||||||||
VIMOVO intellectual property | 67,705 | (4,734 | ) | — | 62,971 | 67,705 | (1,431 | ) | — | 66,274 | |||||||||||||||||||||||
Total intangible assets | $ | 152,484 | $ | (24,281 | ) | $ | (2,211 | ) | $ | 125,992 | $ | 152,484 | $ | (19,254 | ) | $ | (2,136 | ) | $ | 131,094 | |||||||||||||
Estimated Future Amortization Expense | ' | ||||||||||||||||||||||||||||||||
Amortization expense was $5,027 and $1,656 for the three months ended March 31, 2014 and 2013, respectively. As of March 31, 2014, estimated future amortization expense was as follows: | |||||||||||||||||||||||||||||||||
2014 (remainder of the year) | $ | 15,088 | |||||||||||||||||||||||||||||||
2015 | 20,118 | ||||||||||||||||||||||||||||||||
2016 | 20,118 | ||||||||||||||||||||||||||||||||
2017 | 20,118 | ||||||||||||||||||||||||||||||||
2018 and thereafter | 50,550 | ||||||||||||||||||||||||||||||||
Total | $ | 125,992 | |||||||||||||||||||||||||||||||
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Payables And Accruals [Abstract] | ' | ||||||||
Accrued Liabilities | ' | ||||||||
Accrued liabilities as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
Accrued trade discounts and rebates | $ | 25,264 | $ | 8,463 | |||||
Payroll related expenses | 9,160 | 9,491 | |||||||
Accrued interest | 2,685 | 810 | |||||||
Professional services | 2,676 | 350 | |||||||
Sales and marketing expenses | 2,208 | 1,761 | |||||||
Deferred rent | 928 | 755 | |||||||
Clinical and regulatory expenses | 556 | 488 | |||||||
Consulting services | 546 | 283 | |||||||
Contract manufacturing expenses | 161 | 301 | |||||||
Accrued other | 528 | 1,347 | |||||||
Total accrued liabilities | $ | 44,712 | $ | 24,049 | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Assets and Liabilities at Fair Value on Recurring Basis | ' | ||||||||||||||||
The following table sets forth the Company’s financial assets and liabilities at fair value on a recurring basis as of March 31, 2014 and December 31, 2013: | |||||||||||||||||
As of March 31, 2014 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets: | |||||||||||||||||
Money market funds | $ | 86,585 | $ | — | $ | — | $ | 86,585 | |||||||||
Total assets at fair value | $ | 86,585 | $ | — | $ | — | $ | 86,585 | |||||||||
Liabilities: | |||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 313,440 | $ | 313,440 | |||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 313,440 | $ | 313,440 | |||||||||
As of December 31, 2013 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets: | |||||||||||||||||
Money market funds | $ | 66,817 | $ | — | $ | — | $ | 66,817 | |||||||||
Total assets at fair value | $ | 66,817 | $ | — | $ | — | $ | 66,817 | |||||||||
Liabilities: | |||||||||||||||||
Derivative liability | $ | — | $ | — | $ | 109,410 | $ | 109,410 | |||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 109,410 | $ | 109,410 | |||||||||
Assumptions Used to Determine Fair Value of Conversion Option Embedded in Convertible Senior Notes | ' | ||||||||||||||||
The following table presents the assumptions used by the Company to determine the fair value as of March 31, 2014 and December 31, 2013 of the conversion option embedded in the Convertible Senior Notes: | |||||||||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||||||||
Stock price | $15.12 | $7.62 | |||||||||||||||
Risk free rate | 1.59 | % | 1.69 | % | |||||||||||||
Borrowing cost | 3.5 | % | 5.0% and 3.5 | % | |||||||||||||
Weights | Equal weight | Equal weight | |||||||||||||||
Credit spread (in basis points) | 1,110 | 930 and 1,170 | |||||||||||||||
Volatilty | 40 | % | 40 | % | |||||||||||||
Initial conversion price | $5.36 | $5.36 | |||||||||||||||
Remaining time to maturity (in years) | 4.6 | 4.9 |
Debt_Agreement_Tables
Debt Agreement (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Outstanding Debt Balances | ' | ||||||||
The Company’s outstanding debt balances as of March 31, 2014 and December 31, 2013, consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Convertible Senior Notes | $ | 150,000 | $ | 150,000 | |||||
Debt discount | (37,226 | ) | (39,238 | ) | |||||
Long-term debt, net of current maturities | $ | 112,774 | $ | 110,762 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Benefit for Income Taxes | ' | ||||||||
The following table presents the benefit for income taxes for the three months ended March 31, 2014 and 2013: | |||||||||
For the Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Net loss before benefit for income taxes | $ | (207,355 | ) | $ | (23,052 | ) | |||
Benefit for income taxes | (1,105 | ) | (881 | ) | |||||
Net loss | $ | (206,250 | ) | $ | (22,171 | ) | |||
Equity_Incentive_Plans_Tables
Equity Incentive Plans (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ||||||||
Summary of Stock Option Activity | ' | ||||||||
The following table summarizes stock option activity during the three months ended March 31, 2014: | |||||||||
Options | Weighted | ||||||||
Average | |||||||||
Exercise Price | |||||||||
Outstanding as of December 31, 2013 | 4,411,080 | $ | 6.47 | ||||||
Granted | 1,500,900 | $ | 9.55 | ||||||
Exercised | (114,925 | ) | $ | 5.79 | |||||
Forfeited | (92,376 | ) | $ | 5.28 | |||||
Outstanding as of March 31, 2014 | 5,704,679 | $ | 7.31 | ||||||
Exercisable as of March 31, 2014 | 2,210,466 | $ | 9.22 | ||||||
Weighted Average Fair Value per Share of Stock Option Awards Granted and Assumptions Used to Value Stock Options | ' | ||||||||
The weighted average fair value per share of stock option awards granted during the three months ended March 31, 2014 and 2013, and assumptions used to value stock options, are as follows: | |||||||||
For the Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Dividend yield | — | — | |||||||
Risk-free interest rate | 2 | % | 1 | % | |||||
Weighted average volatility | 83 | % | 88.3 | % | |||||
Expected life (in years) | 6 | 6 | |||||||
Weighted average grant date fair value per share of options granted | $ | 6.75 | $ | 1.74 | |||||
Summary of Restricted Stock Unit Activity | ' | ||||||||
The following table summarizes restricted stock unit activity during the three months ended March 31, 2014: | |||||||||
Number of Units | Weighted Average | ||||||||
Grant-Date Fair | |||||||||
Value Per Units | |||||||||
Outstanding as of December 31, 2013 | 833,001 | $ | 2.86 | ||||||
Granted | 766,300 | $ | 8.85 | ||||||
Vested | (161,775 | ) | $ | 2.4 | |||||
Outstanding as of March 31, 2014 | 1,437,526 | $ | 6.1 | ||||||
Summary of Stock-Based Compensation Expense | ' | ||||||||
The following table summarizes stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013: | |||||||||
For the Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Stock-based compensation expense: | |||||||||
Research and development | $ | 300 | $ | 282 | |||||
Sales and marketing | 584 | 280 | |||||||
General and administrative | 1,043 | 517 | |||||||
Net effect of stock-based compensation expense on net loss | $ | 1,927 | $ | 1,079 | |||||
Basis_of_Presentation_Addition
Basis of Presentation - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 18, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Employee | ||||||
Basis Of Presentation [Line Items] | ' | ' | ' | ' | ' | ' |
Adjustment to cost of goods sold | ' | ' | ' | $478 | ' | ' |
Adjustment to general and administrative expenses | ' | ' | 258 | ' | ' | ' |
Out of period adjustment to wholesaler fees | ' | 1,578 | ' | ' | ' | ' |
Number of sales representatives | ' | 290 | ' | ' | ' | ' |
Non-controlling interest, ownership percentage in parent | 74.00% | ' | ' | ' | ' | ' |
Cash received | 200,000 | ' | ' | ' | ' | ' |
Secured bridge loan commitment | 250,000 | 32,992 | ' | ' | ' | ' |
Cash and cash equivalents | ' | $103,374 | ' | $81,076 | $80,480 | $104,087 |
Horizon Pharma plc [Member] | ' | ' | ' | ' | ' | ' |
Basis Of Presentation [Line Items] | ' | ' | ' | ' | ' | ' |
Non-controlling interest, ownership percentage in parent | 26.00% | ' | ' | ' | ' | ' |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Nov. 22, 2013 |
Up Front Fee and Milestone Payment Arrangement [Member] | Up Front Fee and Milestone Payment Arrangement [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Lodotra [Member] | Lodotra [Member] | Other Current Assets [Member] | Other Current Assets [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | ||||||
Sales Revenue [Member] | Sales Revenue [Member] | Accounts Receivable [Member] | Accounts Receivable [Member] | ||||||||||||||||
Customer | Customer | Customer | Customer | ||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign exchange gain (loss) | ($38) | ($905) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred revenues from sale | ' | ' | ' | ' | ' | 8,513 | 8,682 | ' | ' | ' | ' | ' | ' | 956 | 615 | ' | ' | ' | ' |
Cash discount to incentive for prompt payment | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Bad debt expense | 0 | ' | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reserve for bad debt expense | 0 | ' | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Inventories, net | 9,432 | ' | 8,701 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Product sample inventory | 1,588 | ' | 1,323 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,588 | 1,323 | ' | ' |
Cash and cash equivalents | 103,374 | 81,076 | 80,480 | 104,087 | ' | ' | ' | 2,558 | 3,476 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted cash | 738 | ' | 738 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | 11.22% |
Useful life of intangible assets | ' | ' | '12 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of intangible asset period | '61 months 15 days | ' | '61 months 15 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of major customers for sales revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3 | 5 | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated receivable/sales percentage to major customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | 85.00% | 89.00% | 85.00% | 85.00% | ' | ' | ' | ' | ' | ' |
Number of major customers for accounts receivable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3 | 4 | ' | ' | ' | ' | ' | ' |
Accumulated other comprehensive loss | ($2,398) | ' | ($2,403) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Depreciation and Amortization Periods for Property and Equipment (Detail) | 3 Months Ended |
Mar. 31, 2014 | |
Machinery and Equipment [Member] | Minimum [Member] | ' |
Summary Of Significant Accounting Policies [Line Items] | ' |
Depreciation and amortization | '5 years |
Machinery and Equipment [Member] | Maximum [Member] | ' |
Summary Of Significant Accounting Policies [Line Items] | ' |
Depreciation and amortization | '7 years |
Furniture and Fixtures [Member] | Minimum [Member] | ' |
Summary Of Significant Accounting Policies [Line Items] | ' |
Depreciation and amortization | '3 years |
Furniture and Fixtures [Member] | Maximum [Member] | ' |
Summary Of Significant Accounting Policies [Line Items] | ' |
Depreciation and amortization | '5 years |
Computer Equipment [Member] | ' |
Summary Of Significant Accounting Policies [Line Items] | ' |
Depreciation and amortization | '3 years |
Software [Member] | ' |
Summary Of Significant Accounting Policies [Line Items] | ' |
Depreciation and amortization | '3 years |
Trade Show Equipment [Member] | ' |
Summary Of Significant Accounting Policies [Line Items] | ' |
Depreciation and amortization | '3 years |
Earnings_per_Share_Basic_and_D
Earnings per Share - Basic and Diluted Earnings (Loss) per Share (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Basic and diluted earnings per share calculation: | ' | ' |
Net loss | ($206,250) | ($22,171) |
Weighted average of common shares outstanding | 67,138,463 | 61,939,822 |
Basic and diluted net loss per share | ($3.07) | ($0.36) |
Earnings_per_Share_Additional_
Earnings per Share - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Stock Options [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Reconciliation of basic and diluted earnings per share | 5,704,679 | 4,008,164 |
Unvested Restricted Stock Units [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Reconciliation of basic and diluted earnings per share | 1,437,526 | 915,158 |
Vested Restricted Stock Units [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Reconciliation of basic and diluted earnings per share | 244,079 | ' |
Outstanding Common Stock Warrants [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Reconciliation of basic and diluted earnings per share | 10,918,973 | 17,480,243 |
Convertible Senior Notes [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Reconciliation of basic and diluted earnings per share | 13,164,951 | ' |
Business_Acquisitions_Addition
Business Acquisitions - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||||||||
In Thousands, except Share data, unless otherwise specified | Mar. 18, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Nov. 30, 2013 | Nov. 30, 2013 | Mar. 31, 2014 | Mar. 18, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 18, 2014 |
Royalty [Member] | Guaranteed [Member] | Contingent Royalties [Member] | Pozen License Agreement [Member] | Pozen License Agreement [Member] | AstraZeneca [Member] | Contract Termination [Member] | 2014 [Member] | Each Year [Member] | New Horizon [Member] | |||||
Minimum [Member] | Maximum [Member] | |||||||||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Merger Agreement date | ' | 18-Mar-14 | ' | ' | ' | ' | ' | ' | ' | 18-Nov-13 | ' | ' | ' | ' |
Number of ordinary shares to be issued from conversion of common stock | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-controlling interest, ownership by parent in share | 31,350,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-controlling interest, ownership percentage in parent | 74.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 26.00% |
Cash paid to parent company by consolidated subsidiaries | $200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Closing cash receivable by parent company | 123 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Secured bridge loan commitment | 250,000 | 32,992 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Agreement termination fee | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 23,000 | ' | ' | ' |
Reimbursement fee | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,500 | ' | ' | ' |
Liabilities obligation, termination fee | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 44,000 | ' | ' | ' |
One-time upfront cash payment | ' | 35,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of royalty on net sales | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum annual royalty obligations | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,000 | 7,500 | ' |
Annual aggregate global sales under license agreement | ' | ' | ' | ' | ' | ' | ' | 550,000 | 1,250,000 | ' | ' | ' | ' | ' |
Amount payable based upon proportional sales | ' | ' | ' | 260,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Supply agreement expire date | ' | 31-Dec-14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition date | ' | 22-Nov-13 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of intangible asset period | ' | '61 months 15 days | '61 months 15 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of royalty payments | ' | $313,440 | ' | ' | $33,000 | $24,500 | $8,500 | ' | ' | ' | ' | ' | ' | ' |
Business_Acquisitions_Fair_Val
Business Acquisitions - Fair Values Assigned to Assets Acquired and Liabilities Assumed (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 18, 2014 |
Business Combinations [Abstract] | ' | ' |
Samples inventory | $287 | ' |
VIMOVO intellectual property | 67,705 | ' |
Contingent royalty liabilities | -32,992 | -250,000 |
Total cash consideration paid | $35,000 | ' |
Inventories_Components_of_Inve
Inventories - Components of Inventories (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ' | ' |
Raw materials | $135 | $91 |
Work-in-process | 839 | 522 |
Finished goods | 8,458 | 8,088 |
Net inventories | $9,432 | $8,701 |
Prepaid_Expenses_and_Other_Cur2
Prepaid Expenses and Other Current Assets - Prepaid Expenses and Other Current Assets (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Prepaid Expenses And Other Current Assets [Line Items] | ' | ' |
Product samples inventory | $1,588 | $1,323 |
Prepaid insurance | 250 | 379 |
Other prepaid expenses | 486 | 329 |
Total prepaid and other current assets | 9,105 | 4,888 |
Debt Commitment Fee [Member] | ' | ' |
Prepaid Expenses And Other Current Assets [Line Items] | ' | ' |
Prepaid expense | 4,333 | ' |
Software License Fees [Member] | ' | ' |
Prepaid Expenses And Other Current Assets [Line Items] | ' | ' |
Prepaid expense | 828 | 855 |
Research and Development [Member] | ' | ' |
Prepaid Expenses And Other Current Assets [Line Items] | ' | ' |
Prepaid expense | 630 | 688 |
Co-Pay Expenses [Member] | ' | ' |
Prepaid Expenses And Other Current Assets [Line Items] | ' | ' |
Prepaid expense | 523 | 621 |
Marketing Expenses [Member] | ' | ' |
Prepaid Expenses And Other Current Assets [Line Items] | ' | ' |
Prepaid expense | 38 | 381 |
FDA Product and Manufacturing Fees [Member] | ' | ' |
Prepaid Expenses And Other Current Assets [Line Items] | ' | ' |
Prepaid expense | $429 | $312 |
Property_and_Equipment_Propert
Property and Equipment - Property and Equipment (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | $6,918 | $6,426 |
Less-accumulated depreciation | -3,021 | -2,646 |
Total property and equipment | 3,897 | 3,780 |
Machinery and Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 2,367 | 2,367 |
Furniture and Fixtures [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 113 | 113 |
Computer Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 2,245 | 2,160 |
Software [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 1,092 | 775 |
Trade Show Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 228 | 228 |
Leasehold Improvement [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | $873 | $783 |
Property_and_Equipment_Additio
Property and Equipment - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Property Plant And Equipment [Abstract] | ' | ' |
Depreciation expense | $376 | $259 |
Intangible_Assets_Additional_I
Intangible Assets - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 18, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ' | ' |
Capitalized intangible asset | $67,705 | ' | ' |
Amortization expense of developed technology | ' | $5,027 | $1,656 |
Intangible_Assets_Intangible_A
Intangible Assets - Intangible Assets (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost Basis | $152,484 | $152,484 |
Accumulated Amortization | -24,281 | -19,254 |
Currency Translation | -2,211 | -2,136 |
Net Book Value | 125,992 | 131,094 |
Developed Technology [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost Basis | 84,779 | 84,779 |
Accumulated Amortization | -19,547 | -17,823 |
Currency Translation | -2,211 | -2,136 |
Net Book Value | 63,021 | 64,820 |
VIMOVO Intellectual Property [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost Basis | 67,705 | 67,705 |
Accumulated Amortization | -4,734 | -1,431 |
Currency Translation | ' | ' |
Net Book Value | $62,971 | $66,274 |
Intangible_Assets_Estimated_Fu
Intangible Assets - Estimated Future Amortization Expense (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ' |
2014 (remainder of the year) | $15,088 | ' |
2015 | 20,118 | ' |
2016 | 20,118 | ' |
2017 | 20,118 | ' |
2018 and thereafter | 50,550 | ' |
Net Book Value | $125,992 | $131,094 |
Accrued_Liabilities_Accrued_Li
Accrued Liabilities - Accrued Liabilities (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Payables And Accruals [Abstract] | ' | ' |
Accrued trade discounts and rebates | $25,264 | $8,463 |
Payroll related expenses | 9,160 | 9,491 |
Accrued interest | 2,685 | 810 |
Professional services | 2,676 | 350 |
Sales and marketing expenses | 2,208 | 1,761 |
Deferred rent | 928 | 755 |
Clinical and regulatory expenses | 556 | 488 |
Consulting services | 546 | 283 |
Contract manufacturing expenses | 161 | 301 |
Accrued other | 528 | 1,347 |
Total accrued liabilities | $44,712 | $24,049 |
Fair_Value_Measurements_Assets
Fair Value Measurements - Assets and Liabilities at Fair Value on Recurring Basis (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total liabilities at fair value | $313,440 | ' |
Fair Value Measurements, Recurring Basis [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 86,585 | 66,817 |
Total liabilities at fair value | 313,440 | 109,410 |
Fair Value Measurements, Recurring Basis [Member] | Derivative Liability [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total liabilities at fair value | 313,440 | 109,410 |
Fair Value Measurements, Recurring Basis [Member] | Money Market Funds [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 86,585 | 66,817 |
Level 1 [Member] | Fair Value Measurements, Recurring Basis [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 86,585 | 66,817 |
Total liabilities at fair value | ' | ' |
Level 1 [Member] | Fair Value Measurements, Recurring Basis [Member] | Derivative Liability [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total liabilities at fair value | ' | ' |
Level 1 [Member] | Fair Value Measurements, Recurring Basis [Member] | Money Market Funds [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | 86,585 | 66,817 |
Level 2 [Member] | Fair Value Measurements, Recurring Basis [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | ' |
Total liabilities at fair value | ' | ' |
Level 2 [Member] | Fair Value Measurements, Recurring Basis [Member] | Derivative Liability [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total liabilities at fair value | ' | ' |
Level 2 [Member] | Fair Value Measurements, Recurring Basis [Member] | Money Market Funds [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | ' |
Level 3 [Member] | Fair Value Measurements, Recurring Basis [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | ' |
Total liabilities at fair value | 313,440 | 109,410 |
Level 3 [Member] | Fair Value Measurements, Recurring Basis [Member] | Derivative Liability [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total liabilities at fair value | 313,440 | 109,410 |
Level 3 [Member] | Fair Value Measurements, Recurring Basis [Member] | Money Market Funds [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Total assets at fair value | ' | ' |
Fair_Value_Measurements_Assump
Fair Value Measurements - Assumptions Used to Determine Fair Value of Conversion Option Embedded in Convertible Senior Notes (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' | ' |
Stock price | $15.12 | $7.62 |
Risk free rate | 1.59% | 1.69% |
Borrowing cost | 3.50% | ' |
Weights | 'Equal weight | 'Equal weight |
Credit spread | 11.10% | ' |
Volatilty | 40.00% | 40.00% |
Initial conversion price | $5.36 | $5.36 |
Remaining time to maturity | '4 years 7 months 6 days | '4 years 10 months 24 days |
Maximum [Member] | ' | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' | ' |
Borrowing cost | ' | 5.00% |
Credit spread | ' | 11.70% |
Minimum [Member] | ' | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' | ' |
Borrowing cost | ' | 3.50% |
Credit spread | ' | 9.30% |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Fair Value Disclosures [Abstract] | ' |
Loss on derivative fair value assessment operations | $204,030 |
Total liabilities at fair value | $313,440 |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) | 3 Months Ended | 3 Months Ended | ||||||||||||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
USD ($) | USD ($) | DUEXIS [Member] | Second Amendment for Lease Agreement [Member] | Each Year [Member] | Deerfield Management Company, L.P. [Member] | LODOTRA/RAYOS [Member] | Jagotec AG [Member] | Sanofi-Aventis U.S [Member] | AstraZeneca [Member] | Deerfield, Illinois Office [Member] | Deerfield, Illinois Office Additional Facility [Member] | Reinach Office [Member] | Reinach Office [Member] | Mannheim Office [Member] | Mannheim Office [Member] | |
USD ($) | USD ($) | USD ($) | Minimum [Member] | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | CHF | USD ($) | EUR (€) | |||||
sqft | USD ($) | sqft | sqft | |||||||||||||
Amendments | ||||||||||||||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Area of lease agreement | ' | ' | ' | 8,352 | ' | ' | ' | ' | ' | ' | 21,182 | 4,926 | ' | ' | ' | ' |
Date of entering into lease agreement | ' | ' | ' | 31-Dec-13 | ' | ' | ' | ' | ' | ' | 30-Sep-11 | 31-Aug-12 | ' | ' | ' | ' |
Lease commencement date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1-Dec-11 | ' | ' | ' | ' | ' |
Term of the lease expires | ' | ' | ' | 30-Jun-18 | ' | ' | 15-Apr-16 | ' | ' | ' | 30-Jun-18 | 30-Jun-18 | 31-May-15 | 31-May-15 | 31-Dec-14 | 31-Dec-14 |
Minimum net rent, initially | ' | ' | ' | $12 | ' | ' | ' | ' | ' | ' | $30 | $7 | $7 | 6 | $7 | € 5 |
Maximum rent after the fifth and sixth year by gradual increase each year | ' | ' | ' | 14 | ' | ' | ' | ' | ' | ' | 35 | 8 | ' | ' | ' | ' |
Option to extend term of lease | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' |
Number of amendments | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investment bankers fee | 8,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-refundable fee paid to investment bankers | 1,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fee paid | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Committed borrowing capacity | ' | ' | ' | ' | ' | 225,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional commitment fee | 3,750 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowing capacity description | 'If the proposed Merger between the Company and Vidara is consummated, the Company will be required to pay its investment bankers a fee of $8,000. An additional $1,000 non-refundable fee has already been paid to the investment bankers in connection with the delivery of the fairness opinion. The Company also paid Deerfield a commitment fee of $5,000 upon execution of the Commitment Letter. The Commitment Letter expires on June 30, 2014 unless by June 30, 2014 the Company has provided notice to Deerfield that it commits to borrow at least $225,000 under the Facility, in which case the Commitment Letter will expire on the earlier of September 30, 2014, or the Closing and the entry into definitive documentation for the Facility with the Deerfield Funds. In the event the commitments under the Commitment Letter are extended to September 30, 2014 and the Company fails to consummate the Merger, the Company will be required to pay an additional fee of $3,750 to Deerfield. The Company has also agreed to pay customary fees and expenses in connection with obtaining the Facility and has agreed to indemnify Deerfield and the Deerfield Funds if certain losses are incurred by Deerfield and the Deerfield Funds in connection therewith. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase commitment based on tablet and its pricing | ' | ' | 8,818 | ' | ' | ' | 3,481 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of commitment made by the company to purchase tablets | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' |
Manufacturing and supply agreement initiation date | ' | ' | ' | ' | ' | ' | '2013-04 | '2007-08 | '2011-05 | '2013-11 | ' | ' | ' | ' | ' | ' |
Binding purchase order issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,408 | ' | ' | ' | ' | ' | ' |
Royalty expense recognized in cost of goods sold | 331 | 169 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Royalty on net sales | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum annual royalty obligations | $5,000 | ' | ' | ' | $7,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Legal_Proceedings_Additional_I
Legal Proceedings - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2014 | |
DUEXIS [Member] | ' |
Legal Proceedings [Line Items] | ' |
License agreement generic entry date | 1-Jan-23 |
Period to defend a patent infringement | '30 days |
RAYOS [Member] | ' |
Legal Proceedings [Line Items] | ' |
Prevention period from approving the ANDA | '30 months |
Debt_Agreement_Outstanding_Deb
Debt Agreement - Outstanding Debt Balances (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Debt Disclosure [Abstract] | ' | ' |
Convertible Senior Notes | $150,000 | $150,000 |
Debt discount | -37,226 | -39,238 |
Long-term debt, net of current maturities | $112,774 | $110,762 |
Debt_Agreement_Additional_Info
Debt Agreement - Additional Information (Detail) (USD $) | 3 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||||||||||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 18, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Nov. 22, 2013 | Nov. 18, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
Deerfield Management Company, L.P. [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | Convertible Senior Notes [Member] | ||||
Minimum [Member] | Options Purchased [Member] | Option Sold [Member] | Conversion Condition One [Member] | Conversion Condition Two [Member] | Conversion Condition Three [Member] | |||||||||
Call Option [Member] | Call Option [Member] | Trading_day | Trading_day | Trading_day | ||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible Senior Notes | $150,000 | ' | $150,000 | ' | ' | ' | ' | ' | $150,000 | ' | ' | ' | ' | ' |
Net proceeds received | ' | ' | ' | ' | ' | ' | ' | 143,598 | ' | ' | ' | ' | ' | ' |
Notes fees | ' | ' | ' | ' | ' | ' | ' | 6,402 | ' | ' | ' | ' | ' | ' |
Interest rate | ' | ' | ' | ' | 5.00% | ' | ' | 11.22% | ' | ' | ' | ' | ' | ' |
Maturity date of debt instrument | ' | ' | ' | ' | 15-Nov-18 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes expenses | ' | ' | ' | ' | 18,675 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Strike price, per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.364 | 6.705 | ' | ' | ' |
Number of options underlying capped call | ' | ' | ' | ' | 150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of debt instrument equivalent to options underlying capped call | ' | ' | ' | ' | 1,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible Senior Notes sold, percentage | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument number of trading days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20 | 5 | 45 |
Debt Instrument consecutive trading days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '30 days | '5 days | '10 days |
Debt Instrument convertible minimum percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 130.00% | ' | 10.00% |
Convertible senior notes, principal payment | ' | ' | ' | ' | 1,000 | ' | ' | ' | ' | ' | ' | ' | 1,000 | ' |
Debt Instrument convertible maximum percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 98.00% | ' |
Percentage of principal amount of debt instrument to be repurchased | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Initial conversion, number of shares | ' | ' | ' | ' | 186.428 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Initial conversion price, per share | ' | ' | ' | ' | $5.36 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of common stock | 71,413,573 | ' | 66,097,417 | ' | ' | ' | ' | ' | 13,164,951 | ' | ' | ' | ' | ' |
Percentage of common stock outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 19.99% | ' | ' | ' | ' | ' |
Derivative liability | ' | ' | ' | ' | ' | ' | ' | 40,110 | ' | ' | ' | ' | ' | ' |
Loss/expense on derivative fair value assessment operations | 204,030 | ' | ' | ' | 204,030 | 69,300 | 69,300 | ' | ' | ' | ' | ' | ' | ' |
Total liabilities at fair value | 313,440 | ' | ' | ' | 313,440 | 109,410 | 109,410 | ' | ' | ' | ' | ' | ' | ' |
Secured bridge loan commitment | 32,992 | 250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fee paid | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Committed borrowing capacity | ' | ' | ' | 225,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional commitment fee | $3,750 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Related Party Transactions [Abstract] | ' | ' |
Consulting fees to related parties | $122 | $197 |
Income_Taxes_Benefit_for_Incom
Income Taxes - Benefit for Income Taxes (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income Tax Disclosure [Abstract] | ' | ' |
Net loss before benefit for income taxes | ($207,355) | ($23,052) |
BENEFIT FOR INCOME TAXES | -1,105 | -881 |
Net loss | ($206,250) | ($22,171) |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income Tax Disclosure [Abstract] | ' | ' |
Deferred tax liabilities, net | $2,903 | ' |
Income tax benefit | -1,105 | -881 |
Deferred tax valuation allowance | ' | 831 |
loss on the derivative revaluation | $204,030 | ' |
Stockholders_Equity_Additional
Stockholder's Equity - Additional Information (Detail) (USD $) | 3 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 |
Equity [Abstract] | ' |
Common stock issued upon cash exercise of warrants | 5,154,142 |
Proceeds from aggregate exercise price | $23,544 |
Number of warrants exercised | 41,631 |
Common stock issuance in cashless exercises | 34,774 |
Equity_Incentive_Plans_Additio
Equity Incentive Plans - Additional Information (Detail) (USD $) | 3 Months Ended | 3 Months Ended | 0 Months Ended | |||||||||||||||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 05, 2013 | Jul. 28, 2011 | Jul. 28, 2011 | Mar. 31, 2014 | Dec. 05, 2013 | Nov. 16, 2013 | Nov. 07, 2013 | Jan. 02, 2012 | Jul. 28, 2011 | Jan. 02, 2011 | Mar. 03, 2014 | Jan. 10, 2014 |
Minimum [Member] | Maximum [Member] | 2011 ESPP [Member] | 2011 ESPP [Member] | 2011 ESPP [Member] | 2005 Plan [Member] | 2011 EIP [Member] | 2011 EIP [Member] | 2011 EIP [Member] | 2011 EIP [Member] | 2011 EIP [Member] | 2011 EIP [Member] | 2011 EIP [Member] | 2011 EIP [Member] | 2011 EIP [Member] | ||||
Subsequent Event [Member] | Subsequent Event [Member] | |||||||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock shares reserved for future issuance | ' | ' | ' | ' | ' | 1,465,879 | ' | 463,352 | 460,842 | 438,400 | 1,474,304 | 800,000 | 200,000 | ' | 3,366,228 | ' | 730,000 | ' |
Percentage of common stock shares outstanding | ' | ' | ' | ' | ' | ' | ' | 4.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares outstanding | ' | ' | ' | ' | ' | ' | ' | 1,053,074 | ' | ' | ' | ' | ' | 1,474,304 | ' | ' | ' | ' |
Minimum payroll deduction to purchase shares of common stock under 2011 ESPP | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum payroll deduction to purchase shares of common stock under 2011 ESPP | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Employees purchase shares of common stock at price per share equal | ' | ' | ' | ' | ' | ' | ' | 85.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lower of fair market (offering period) | ' | ' | ' | ' | ' | ' | ' | '6 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional reserve of common stock for issuance | ' | ' | ' | ' | ' | ' | 1,053,074 | ' | ' | 344,275 | ' | ' | ' | ' | 1,600,673 | ' | ' | 703,400 |
Common stock, shares issued | ' | ' | ' | ' | ' | 350,547 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock shares authorized | ' | ' | ' | ' | ' | 1,465,879 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Option grants under plan | 1,500,900 | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock reserved for future issuance upon exercise of options outstanding | 5,704,679 | ' | 4,411,080 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,304,713 | ' | ' | ' |
Number of common stock share added each year in percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | ' |
Exercise price of stock options percentages of the fair market value on the date of grant | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' |
Exercise price of stock options | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' |
Percentage of forfeiture rate for estimating forfeitures of stock options granted | ' | 5.00% | ' | 5.00% | 15.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pre-tax unrecognized compensation expense for all unvested stock-based awards | $20,829 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity_Incentive_Plans_Summary
Equity Incentive Plans - Summary of Stock Option Activity (Detail) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Options, Outstanding Beginning Balance | 4,411,080 |
Options, Granted | 1,500,900 |
Options, Exercised | -114,925 |
Options, Forfeited | -92,376 |
Options, Outstanding Ending Balance | 5,704,679 |
Options, Exercisable as of March 31, 2014 | 2,210,466 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $6.47 |
Weighted Average Exercise Price, Granted | $9.55 |
Weighted Average Exercise Price, Exercised | $5.79 |
Weighted Average Exercise Price, Forfeited | $5.28 |
Weighted Average Exercise Price, Outstanding Ending Balance | $7.31 |
Weighted Average Exercise Price, Exercisable as of March 31, 2014 | $9.22 |
Equity_Incentive_Plans_Weighte
Equity Incentive Plans - Weighted Average Fair Value per Share of Stock Option Awards Granted and Assumptions Used to Value Stock Options (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ' |
Dividend yield | ' | ' |
Risk-free interest rate | 2.00% | 1.00% |
Weighted average volatility | 83.00% | 88.30% |
Expected life (in years) | '6 years | '6 years |
Weighted average grant date fair value per share of options granted | $6.75 | $1.74 |
Equity_Incentive_Plans_Summary1
Equity Incentive Plans - Summary of Restricted Stock Unit Activity (Detail) (Restricted Stock Units (RSUs) [Member], USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Restricted Stock Units (RSUs) [Member] | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' |
Number of Units, Outstanding Beginning Balance | 833,001 |
Number of Units, Granted | 766,300 |
Number of Units, Vested | -161,775 |
Number of Units, Outstanding Ending Balance | 1,437,526 |
Weighted Average Grant-Date Fair Value Per Units, Outstanding Beginning Balance | $2.86 |
Weighted Average Grant-Date Fair Value Per Units, Granted | $8.85 |
Weighted Average Grant-Date Fair Value Per Units, Vested | $2.40 |
Weighted Average Grant-Date Fair Value Per Units, Outstanding Ending Balance | $6.10 |
Equity_Incentive_Plans_Summary2
Equity Incentive Plans - Summary of Stock-Based Compensation Expense (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Net effect of stock-based compensation expense on net loss | $1,927 | $1,079 |
Research and Development [Member] | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Net effect of stock-based compensation expense on net loss | 300 | 282 |
Sales and Marketing [Member] | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Net effect of stock-based compensation expense on net loss | 584 | 280 |
General and Administrative [Member] | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Net effect of stock-based compensation expense on net loss | $1,043 | $517 |