Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 21, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Alkermes plc. | |
Entity Central Index Key | 1,520,262 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 153,656,837 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 158,106 | $ 186,378 |
Investments - short-term | 317,001 | 310,856 |
Receivables, net | 199,709 | 191,102 |
Inventory | 77,352 | 62,998 |
Prepaid expenses and other current assets | 43,458 | 39,344 |
Total current assets | 795,626 | 790,678 |
INTANGIBLE ASSETS - NET | 287,453 | 318,227 |
PROPERTY, PLANT AND EQUIPMENT, NET | 266,484 | 264,785 |
GOODWILL | 92,873 | 92,873 |
INVESTMENTS - LONG-TERM | 85,724 | 121,931 |
CONTINGENT CONSIDERATION | 65,500 | 63,200 |
DEFERRED TAX ASSETS | 112,332 | 47,768 |
OTHER ASSETS | 25,351 | 26,961 |
TOTAL ASSETS | 1,731,343 | 1,726,423 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 219,839 | 207,055 |
Long-term debt - short-term | 3,000 | 3,000 |
Deferred revenue - short-term | 1,805 | 1,938 |
Total current liabilities | 224,644 | 211,993 |
LONG-TERM DEBT | 279,552 | 280,666 |
OTHER LONG-TERM LIABILITIES | 18,278 | 17,161 |
DEFERRED REVENUE - LONG-TERM | 6,782 | 7,122 |
Total liabilities | 529,256 | 516,942 |
COMMITMENTS AND CONTINGENCIES (Note 12) | ||
SHAREHOLDERS' EQUITY: | ||
Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at June 30, 2017 and December 31, 2016, respectively | ||
Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized; 155,695,975 and 154,191,281 shares issued; 153,650,197 and 152,430,514 shares outstanding at June 30, 2017, and December 31, 2016, respectively | 1,554 | 1,539 |
Treasury shares, at cost (2,045,778 and 1,760,767 shares at June 30, 2017 and December 31, 2016, respectively) | (89,221) | (72,639) |
Additional paid-in capital | 2,291,388 | 2,231,797 |
Accumulated other comprehensive loss | (3,335) | (3,274) |
Accumulated deficit | (998,299) | (947,942) |
Total shareholders' equity | 1,202,087 | 1,209,481 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,731,343 | $ 1,726,423 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock shares, authorized | 50,000,000 | 50,000,000 |
Preferred stock shares, issued | 0 | 0 |
Preferred stock shares, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 155,695,975 | 154,191,281 |
Common stock, shares outstanding | 153,650,197 | 152,430,514 |
Treasury stock shares | 2,045,778 | 1,760,767 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
REVENUES: | ||||
Manufacturing and royalty revenues | $ 129,252 | $ 137,034 | $ 243,931 | $ 243,194 |
Product sales, net | 88,756 | 57,519 | 165,212 | 106,893 |
Research and development revenue | 833 | 612 | 1,476 | 1,853 |
Total revenues | 218,841 | 195,165 | 410,619 | 351,940 |
EXPENSES: | ||||
Cost of goods manufactured and sold (exclusive of amortization of acquired intangible assets shown below) | 39,775 | 33,998 | 80,187 | 61,709 |
Research and development | 99,153 | 97,006 | 203,988 | 198,079 |
Selling, general and administrative | 108,950 | 96,121 | 211,049 | 185,840 |
Amortization of acquired intangible assets | 15,472 | 15,157 | 30,774 | 30,313 |
Total expenses | 263,350 | 242,282 | 525,998 | 475,941 |
OPERATING LOSS | (44,509) | (47,117) | (115,379) | (124,001) |
OTHER EXPENSE, NET: | ||||
Interest income | 1,171 | 994 | 2,114 | 2,005 |
Interest expense | (2,923) | (3,323) | (5,687) | (6,618) |
Increase in the fair value of contingent consideration | 700 | 2,200 | 2,300 | 4,100 |
Other expense, net | (119) | (467) | (1,618) | (218) |
Total other expense, net | (1,171) | (596) | (2,891) | (731) |
LOSS BEFORE INCOME TAXES | (45,680) | (47,713) | (118,270) | (124,732) |
INCOME TAX BENEFIT | (2,681) | (520) | (6,390) | (116) |
NET LOSS | $ (42,999) | $ (47,193) | $ (111,880) | $ (124,616) |
LOSS PER COMMON SHARE: | ||||
Basic and diluted (in dollars per share) | $ (0.28) | $ (0.31) | $ (0.73) | $ (0.82) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||
Basic and diluted (in shares) | 153,392 | 151,301 | 153,050 | 151,063 |
COMPREHENSIVE LOSS: | ||||
Net loss | $ (42,999) | $ (47,193) | $ (111,880) | $ (124,616) |
Holding (loss) gain, net of a tax (benefit) provision of $(71), $149, $(49) and $574, respectively | (133) | 315 | (61) | 1,250 |
COMPREHENSIVE LOSS | $ (43,132) | $ (46,878) | $ (111,941) | $ (123,366) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Tax provision | $ (71) | $ 149 | $ (49) | $ 574 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (111,880) | $ (124,616) |
Adjustments to reconcile net loss to cash flows from operating activities: | ||
Depreciation and amortization | 48,269 | 45,786 |
Share-based compensation expense | 43,848 | 50,887 |
Deferred income taxes | (6,863) | (8,890) |
Excess tax benefit from share-based compensation | (4,606) | |
Increase in the fair value of contingent consideration | (2,300) | (4,100) |
Other non-cash charges | 3,532 | 1,143 |
Changes in assets and liabilities: | ||
Receivables | (8,606) | (29,522) |
Inventory | (14,585) | (13,245) |
Prepaid expenses and other assets | (5,574) | (13,408) |
Accounts payable and accrued expenses | 13,400 | 12,703 |
Deferred revenue | (473) | (923) |
Other long-term liabilities | 5,034 | 2,699 |
Cash flows used in operating activities | (36,198) | (86,092) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions of property, plant and equipment | (20,656) | (22,280) |
Proceeds from the sale of equipment | 7 | 81 |
Investment in Reset Therapeutics, Inc. | (15,000) | |
Purchases of investments | (160,554) | (169,622) |
Sales and maturities of investments | 190,642 | 307,953 |
Cash flows provided by investing activities | 9,439 | 101,132 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from the issuance of ordinary shares under share-based compensation arrangements | 16,404 | 7,490 |
Excess tax benefit from share-based compensation | 4,606 | |
Employee taxes paid related to net share settlement of equity awards | (16,417) | (8,432) |
Principal payments of long-term debt | (1,500) | (3,375) |
Cash flows (used in) provided by financing activities | (1,513) | 289 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (28,272) | 15,329 |
CASH AND CASH EQUIVALENTS - Beginning of period | 186,378 | 181,109 |
CASH AND CASH EQUIVALENTS - End of period | 158,106 | 196,438 |
Non-cash investing and financing activities: | ||
Purchased capital expenditures included in accounts payable and accrued expenses | $ 4,531 | $ 2,802 |
THE COMPANY
THE COMPANY | 6 Months Ended |
Jun. 30, 2017 | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. THE COMPANY Alkermes plc is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to research, develop and commercialize, both with partners and on its own, pharmaceutical products that are designed to address unmet medical needs of patients in major therapeutic areas. Alkermes has a diversified portfolio of marketed drug products and a clinical pipeline of products that address CNS disorders such as schizophrenia, depression, addiction and MS. Headquartered in Dublin, Ireland, Alkermes has a research and development (“R&D”) center in Waltham, Massachusetts; an R&D and manufacturing facility in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements of the Company for the three and six months ended June 30, 2017 and 2016 are unaudited and have been prepared on a basis substantially consistent with the audited financial statements for the year ended December 31, 2016. The year-end condensed consolidated balance sheet data, which is presented for comparative purposes, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. (commonly referred to as “GAAP”). In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, that are necessary to state fairly the results of operations for the reported periods. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Alkermes, which are contained in the Company’s Annual Report that has been filed with the SEC. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. Principles of Consolidation The condensed consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries as disclosed in Note 2, Summary of Significant Accounting Policies, within the “Notes to Consolidated Financial Statements” accompanying its Annual Report. Intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, judgments, assumptions and methodologies, including those related to revenue recognition and related allowances, its collaborative relationships, clinical trial expenses, the valuation of inventory, impairment and amortization of intangibles and long-lived assets, share-based compensation expense, income taxes including the valuation allowance for deferred tax assets, valuation of contingent consideration, valuation of investments and litigation loss contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Segment Information The Company operates as one business segment, which is the business of developing, manufacturing and commercializing medicines. The Company’s chief decision maker, the Chairman of the Board and Chief Executive Officer, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating unit. Income Taxes The Company’s income tax benefit in the three and six months ended June 30, 2017 and 2016 relates primarily to U.S. federal and state taxes. The Company records a deferred tax asset or liability based on the difference between the financial statement and tax basis of its assets and liabilities, as measured by enacted jurisdictional tax rates assumed to be in effect when these differences reverse. At June 30, 2017, the Company maintained a valuation allowance against certain of its U.S. and foreign deferred tax assets. The Company evaluates, at each reporting period, the need for a valuation allowance on its deferred tax assets on a jurisdiction-by-jurisdiction basis. New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Numerous updates have been issued subsequent to the initial guidance that provide clarification on a number of specific issues as well as requiring additional disclosures. This guidance becomes effective for the Company in its year ending December 31, 2018 and the Company will adopt the new standard using the modified retrospective method. The Company is in the process of assessing the impact the new standard will have on its consolidated financial statements, as well as evaluating the disclosure requirements under the new standard. At this time, the Company cannot reasonably estimate the expected impact the adoption of this new standard will have on its consolidated financial statements. In January 2016, the FASB issued guidance that enhances the reporting model for financial instruments through addressing certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendments in this update include: requiring equity securities to be measured at fair value with changes in fair value recognized through the income statement; simplifying the impairment assessment of equity instruments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset; and clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This guidance becomes effective for the Company in its year ending December 31, 2018, and the Company is in the process of assessing the impact that this standard will have on its consolidated financial statements. In February 2016, the FASB issued guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and this guidance is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. This guidance becomes effective for the Company in its year ending December 31, 2019, and the Company is currently assessing the impact that this standard will have on its consolidated financial statements. In March 2016, the FASB issued guidance as part of its simplification initiative to eliminate the requirement to retroactively adopt the equity method of accounting when an investment qualifies for the use of the equity method as a result of an increase in the level of ownership interest or degree of influence. This guidance became effective for the Company on January 1, 2017, and the adoption of this standard did not have an impact on its consolidated financial statements. In March 2016, the FASB issued guidance as part of its simplification initiative that involves several aspects of the accounting for share-based payment transactions. The amendments in this update established that: (i) all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement; (ii) excess tax benefits be classified as an operating activity in the statement of cash flows; (iii) the entity make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, which is current GAAP, or account for forfeitures as they occur; (iv) the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) cash paid by an employer when directly withholding shares for tax withholding purposes be classified as a financing activity in the statement of cash flows. This guidance became effective for the Company on January 1, 2017. The amendments related to (i), (iii) and (iv) were adopted by the Company on a modified retrospective basis, which resulted in a cumulative-effect adjustment to reduce accumulated deficit by $61.5 million related to the timing of when excess tax benefits are recognized. The Company elected to continue to record expense only for those awards that are expected to vest. The amendments related to (ii) and (v) were adopted using the prospective transition method. In June 2016, the FASB issued guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this guidance replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance becomes effective for the Company in its year ending December 31, 2020, with early adoption permitted for the Company in its year ending December 31, 2019. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In August 2016, the FASB issued guidance to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance becomes effective for the Company in its year ending December 31, 2018, with early adoption permitted. The Company elected to early adopt this standard as of January 1, 2017. The adoption of this standard did not have an impact on the Company’s statement of cash flows. In October 2016, the FASB issued guidance to simplify and improve accounting on transfers of assets between affiliated entities. The updated guidance eliminates the prohibition for all intra-entity asset transfers, except for inventory. This guidance becomes effective for the Company in its year ending December 31, 2018, and the Company is currently assessing the impact that this standard will have on its consolidated financial statements. In January 2017, the FASB issued guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance becomes effective for the Company in its year ending December 31, 2018, with early adoption permitted for transactions that occurred before the issuance date or effective date of the standard if the transactions were not reported in financial statements that have been issued or made available for issuance. The Company adopted the provisions of this standard, effective January 1, 2017, and the adoption of this standard had no impact on the Company’s consolidated financial statements. In January 2017, the FASB issued guidance that simplifies the test for goodwill impairment. This guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective for the Company in its year ending December 31, 2020, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the provisions of this standard, effective January 1, 2017, and the adoption of this standard had no impact on the Company’s consolidated financial statements. In May 2017, the FASB issued guidance that amends the scope of modification accounting for share-based payment arrangements that addresses both diversity in practice and the cost and complexity of accounting for the change to the terms or conditions of a share-based payment award. The amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The guidance becomes effective for the Company in its year ending December 31, 2018 and early adoption is permitted. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In July 2017, the FASB issued guidance that addresses narrow issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The guidance becomes effective for the Company in its year ending December 31, 2019 and early adoption is permitted. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2017 | |
INVESTMENTS | |
INVESTMENTS | 3. INVESTMENT S Investments consisted of the following: Amortized Gross Unrealized Estimated Cost Gains Losses (1) Fair Value (In thousands) June 30, 2017 Short-term investments: Available-for-sale securities: U.S. government and agency debt securities $ 198,041 $ 9 $ (252) $ 197,798 Corporate debt securities 89,765 38 (41) 89,762 International government agency debt securities 29,483 1 (43) 29,441 Total short-term investments 317,289 48 (336) 317,001 Long-term investments: Available-for-sale securities: U.S. government and agency debt securities 53,109 — (237) 52,872 Corporate debt securities 18,433 — (51) 18,382 International government agency debt securities 10,954 — (10) 10,944 82,496 — (298) 82,198 Held-to-maturity securities: Fixed term deposit account 1,667 130 — 1,797 Certificates of deposit 1,729 — — 1,729 3,396 130 — 3,526 Total long-term investments 85,892 130 (298) 85,724 Total investments $ 403,181 $ 178 $ (634) $ 402,725 December 31, 2016 Short-term investments: Available-for-sale securities: U.S. government and agency debt securities $ 177,203 $ 96 $ (51) $ 177,248 Corporate debt securities 128,119 47 (53) 128,113 International government agency debt securities 5,511 — (16) 5,495 Total short-term investments 310,833 143 (120) 310,856 Long-term investments: Available-for-sale securities: U.S. government and agency debt securities 81,839 — (391) 81,448 Corporate debt securities 31,223 — (89) 31,134 International government agency debt securities 5,992 — (18) 5,974 119,054 — (498) 118,556 Held-to-maturity securities: Fixed term deposit account 1,667 — (7) 1,660 Certificates of deposit 1,715 — — 1,715 3,382 — (7) 3,375 Total long-term investments 122,436 — (505) 121,931 Total investments $ 433,269 $ 143 $ (625) $ 432,787 (1) Losses represent marketable securities that were in loss positions for less than one year. The proceeds from the sales and maturities of marketable securities, which were primarily reinvested and resulted in realized gains and losses, were as follows: Six Months Ended June 30, (In thousands) 2017 2016 Proceeds from the sales and maturities of marketable securities $ 190,642 $ Realized gains $ 9 $ 112 Realized losses $ 3 $ 28 The Company’s available-for-sale and held-to-maturity securities at June 30, 2017 had contractual maturities in the following periods: Available-for-sale Held-to-maturity Amortized Estimated Amortized Estimated (In thousands) Cost Fair Value Cost Fair Value Within 1 year $ 281,446 $ 281,180 $ $ After 1 year through 5 years 1,667 1,797 Total $ 399,785 $ 399,199 $ 3,396 $ 3,526 At June 30, 2017, the Company believed that the unrealized losses on its available-for-sale investments were temporary. The investments with unrealized losses consisted primarily of U.S. government and agency debt securities. In making the determination that the decline in fair value of these securities was temporary, the Company considered various factors, including, but not limited to: the length of time each security was in an unrealized loss position; the extent to which fair value was less than cost; financial condition and near-term prospects of the issuers; and the Company’s intent not to sell these securities and the assessment that it is more likely than not that the Company would not be required to sell these securities before the recovery of their amortized cost basis. In February 2016, the Company entered into a collaboration and license option agreement with Reset Therapeutics, Inc. (“Reset”), a related party. The Company made an upfront, non-refundable payment of $10.0 million in partial consideration of the grant to the Company of the rights and licenses included in such agreement, which was included in R&D expense in the three months ended March 31, 2016, and simultaneously made a $15.0 million investment in exchange for shares of Reset’s Series B Preferred Stock. The Company is accounting for its investment in Reset under the equity method based on its percentage of ownership of Reset, its seat on Reset’s board of directors and its belief that it can exert significant influence over the operating and financial policies of Reset. During the three and six months ended June 30, 2017, the Company recorded a reduction in its investment in Reset of $1.2 million and $2.8 million, respectively, which represents the Company’s proportional share of Reset’s net losses for these periods. The Company’s $10.5 million investment in Reset at June 30, 2017 is included within “Other assets” in the accompanying condensed consolidated balance sheets. In May 2014, the Company entered into an agreement whereby it is committed to provide up to €7.4 million to a partnership, Fountain Healthcare Partners II, L.P. of Ireland (“Fountain”), which was created to carry on the business of investing exclusively in companies and businesses engaged in the healthcare, pharmaceutical and life sciences sectors. The Company’s commitment represents approximately 7% of the partnership’s total funding, and the Company is accounting for its investment in Fountain under the equity method. During the three and six months ended June 30, 2017, the Company recorded a reduction in its investment in Fountain of less than $0. 1 million and $0.6 million, respectively , which represents the Company’s proportional share of Fountain’s net losses for these periods. The Company’s $ 2.1 million (€ 1.8 million) investment in Fountain at June 30, 2017 is included within “Other assets” in the accompanying condensed consolidated balance sheets. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2017 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: June 30, (In thousands) 2017 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 1,797 $ 1,797 $ — $ — U.S. government and agency debt securities 250,670 — Corporate debt securities 108,144 — — International government agency debt securities 40,385 — — Contingent consideration 65,500 — — 65,500 Common stock warrants 1,157 — — 1,157 Total $ 467,653 $ 158,102 $ 242,894 $ 66,657 December 31, 2016 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 1,660 $ 1,660 $ — $ — U.S. government and agency debt securities 258,696 — Corporate debt securities 159,247 — — International government agency debt securities 11,469 — — Contingent consideration 63,200 — — 63,200 Common stock warrants 1,392 — — 1,392 Total $ 495,664 $ 158,030 $ 273,042 $ 64,592 The Company transfers its financial assets and liabilities, measured at fair value on a recurring basis, between the fair value hierarchies at the end of each reporting period. There were no transfers of any securities between the fair value hierarchies during the six months ended June 30, 2017. The Company’s investments in U.S. government and agency debt securities, international government agency debt securities and corporate debt securities classified as Level 2 within the fair value hierarchy were initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing market-observable data. The market-observable data included reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events. The Company validated the prices developed using the market-observable data by obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active. The following table is a rollforward of the fair value of the Company’s assets whose fair values were determined using Level 3 inputs at June 30, 2017: (In thousands) Fair Value Balance, January 1, 2017 $ 64,592 Increase in the fair value of contingent consideration 2,300 Decrease in the fair value of warrants (235) Balance, June 30, 2017 $ 66,657 In March 2015, the Company entered into a definitive agreement to sell its Gainesville, GA facility, the related manufacturing and royalty revenue associated with certain products manufactured at the facility, and the rights to IV/IM and other parenteral forms of Meloxicam and certain intellectual property related to IV/IM and parenteral forms of Meloxicam (the “Gainesville Transaction”) to Recro Pharma, Inc. (“Recro”) and Recro Pharma LLC. In connection with the Gainesville Transaction, the Company is eligible to receive low double-digit royalties on net sales of IV/IM and parenteral forms of Meloxicam and any other product with the same active ingredient as Meloxicam IV/IM that is discovered or identified using certain of the Company’s intellectual property to which Recro was provided a right of use, through license or transfer, pursuant to the Gainesville Transaction (together, the “Meloxicam Products”) and up to $125.0 million in milestone payments upon the achievement of certain regulatory and sales milestones related to the Meloxicam Products, including, at Recro’s election, either (i) $10.0 million upon the submission of a New Drug Application (“NDA”) filing for the first Meloxicam Product and $30.0 million upon regulatory approval of an NDA for the first Meloxicam Product or (ii) an aggregate of $45.0 million upon regulatory approval of an NDA for the first Meloxicam Product. At June 30, 2017, the Company determined the value of the Gainesville Transaction’s contingent consideration using the following valuation approaches: • • To estimate the fair value of future royalties on net sales of the Meloxicam Products , the Company assessed the likelihood of the Meloxicam Products being approved for sale and estimated the expected future sales given approval and intellectual property protection. The Company then discounted these expected payments using a discount rate of 17.0%, which the Company believes captures a market participant’s view of the risk associated with the expected payments; and • Meloxicam Products , adjusted by an appropriate factor capturing their respective correlation with the market. A resulting expected (probability-weighted) milestone payment was then discounted at a rate ranging from 9.5% to 11.4%, which included cost of debt plus an alpha. During the three and six months ended June 30, 2017, the Company determined that the value of the Gainesville Transaction’s contingent consideration increased by $0.7 million and $2.3 million, respectively. During the three and six months ended June 30, 2016, the value of the contingent consideration increased by $2.2 million and $4.1 million, respectively. This increase was recorded as “Increase in the fair value of contingent consideration” in the accompanying condensed consolidated statements of operations and comprehensive loss. As part of the Gainesville Transaction, the Company also received warrants to purchase 350,000 shares of Recro common stock at a per share exercise price of $19.46. The Company used a Black-Scholes model with the following assumptions to determine the fair value of these warrants at June 30, 2017: Closing stock price at June 30, 2017 $ 7.03 Warrant strike price $ 19.46 Expected term (years) 4.78 Risk-free rate 1.89 % Volatility 84.7 % During the three and six months ended June 30, 2017, the Company determined that the fair value of the warrants, recorded within “Other assets” in the accompanying condensed consolidated balance sheets, decreased by $0.4 million and $0.2 million, respectively. The fair value of the warrants increased by $0.4 million and decreased by $0.4 million during the three and six months ended June 30, 2016, respectively. The change in the fair value of the warrants was recorded within “Other expense, net” in the accompanying condensed consolidated statements of operations and comprehensive loss. The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate fair value due to their short-term nature. The fair value of the remaining financial instruments not currently recognized at fair value on the Company’s condensed consolidated balance sheets at June 30, 2017 consisted of a $300.0 million term loan, bearing interest at LIBOR plus 2.75% with a LIBOR floor of 0.75% with a maturity date of September 25, 2021 (“Term Loan B-1”). The estimated fair value of Term Loan B-1, which was based on quoted market price indications (Level 2 in the fair value hierarchy) and which may not be representative of actual values that could have been or will be realized in the future, was as follows at June 30, 2017: Carrying Estimated (In thousands) Value Fair Value Term Loan B-1 $ $ |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2017 | |
INVENTORY | |
INVENTORY | 5. INVENTORY Inventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. Inventory consisted of the following: June 30, December 31, (In thousands) 2017 2016 Raw materials $ 29,339 $ 19,413 Work in process 24,724 21,811 Finished goods (1) 23,289 21,774 Total inventory $ 77,352 $ 62,998 (1) At June 30, 2017 and December 31, 2016, the Company had $12.2 million and $7.1 million, respectively, of finished goods inventory located at its third-party warehouse and shipping service provider. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2017 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 6. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: June 30, December 31, (In thousands) 2017 2016 Land $ 6,303 $ 5,913 Building and improvements 155,117 152,871 Furniture, fixture and equipment 276,081 251,437 Leasehold improvements 19,578 19,241 Construction in progress 32,352 41,254 Subtotal 489,431 470,716 Less: accumulated depreciation (222,947) (205,931) Total property, plant and equipment, net $ 266,484 $ 264,785 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2017 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | 7. GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets consisted of the following: Six Months Ended June 30, 2017 (In thousands) Weighted Gross Accumulated Net Carrying Goodwill $ 92,873 $ — $ 92,873 Finite-lived intangible assets: Collaboration agreements 12 $ 465,590 $ (243,644) $ 221,946 NanoCrystal technology 13 74,600 (27,805) 46,795 OCR technologies 12 42,560 (23,848) 18,712 Total $ 582,750 $ (295,297) $ 287,453 Based on the Company’s most recent analysis, amortization of intangible assets included within its condensed consolidated balance sheet at June 30, 2017 is expected to be approximately $60.0 million, $60.0 million, $55.0 million, $50.0 million and $45.0 million in the years ending December 31, 2017 through 2021, respectively. Although the Company believes such available information and assumptions are reasonable, given the inherent risks and uncertainties underlying its expectations regarding such future revenues, there is the potential for the Company’s actual results to vary significantly from such expectations. If revenues are projected to change, the related amortization of the intangible assets will change in proportion to the change in revenues. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2017 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following: June 30, December 31, (In thousands) 2017 2016 Accounts payable $ 54,677 $ 46,275 Accrued compensation 37,281 45,622 Accrued sales discounts, allowances and reserves 73,833 60,973 Accrued other 54,048 54,185 Total accounts payable and accrued expenses $ 219,839 $ 207,055 |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2017 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 9. LONG-TERM DEBT Long-term debt consisted of the following: June 30, December 31, (In thousands) 2017 2016 Term Loan B-1, due September 25, 2021 $ 282,552 $ 283,666 Less: current portion (3,000) (3,000) Long-term debt $ 279,552 $ 280,666 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2017 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 10. SHARE-BASED COMPENSATION Share-based compensation expense consisted of the following: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2017 2016 2017 2016 Cost of goods manufactured and sold $ 1,908 $ 2,264 $ 4,141 $ 4,542 Research and development 5,661 6,367 11,255 12,798 Selling, general and administrative 15,110 18,000 28,452 33,547 Total share-based compensation expense $ 22,679 $ 26,631 $ 43,848 $ 50,887 At June 30, 2017 and December 31, 2016, $0.3 million and $1.1 million, respectively, of share-based compensation cost was capitalized and recorded as “Inventory” in the accompanying condensed consolidated balance sheets. In February 2017, the board of directors awarded restricted stock units (“RSUs”) to all employees of the Company as of the date of the award, subject to vesting on the achievement of two future key milestones in the Company’s clinical-stage pipeline and the achievement of a revenue-related goal; provided that, if any such vesting event occurs during the first year after grant, the vesting of the RSU award will not occur until the one-year anniversary of the grant date. The award will expire if the performance conditions have not been met on or before the three-year anniversary of the grant date. The grant date fair value of the performance-vesting RSUs was equal to the market value of the Company's stock on the date of grant. At June 30, 2017, the Company does not consider it probable that the performance criteria will be met and has not recognized any share-based compensation expense related to these performance-vesting RSUs. At June 30, 2017, there was $59.5 million of unrecognized compensation cost related to these performance-vesting RSUs, which would be recognized in accordance with the terms of the award when the Company deems it probable that the performance criteria will be met. |
LOSS PER SHARE
LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2017 | |
LOSS PER SHARE | |
LOSS PER SHARE | 11. LOSS PER SHARE Basic loss per ordinary share is calculated based upon net loss available to holders of ordinary shares divided by the weighted average number of shares outstanding. For the three and six months ended June 30, 2017 and 2016, as the Company was in a net loss position, the diluted loss per share does not assume conversion or exercise of stock options and awards as they would have an anti-dilutive effect on loss per share. The following potential ordinary equivalent shares have not been included in the net loss per ordinary share calculation because the effect would have been anti-dilutive: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2017 2016 2017 2016 Stock options 9,850 11,168 9,511 10,463 Restricted stock units 2,159 1,370 1,998 1,297 Total 12,009 12,538 11,509 11,760 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Lease Commitments In March 2017, the Company entered into a lease agreement to lease approximately 65,000 square feet of office space in Waltham, Massachusetts (the “Building”). Beginning March 1, 2017, the Company began leasing approximately 43,290 square feet (“Premises A”) of the Building, and, on January 1, 2018, the Company will gain access to the additional 21,645 square feet (“Premises B”). The lease on both Premises A and Premises B ends on September 30, 2020 and will result in rental expense of approximately $1.2 million in 2017 and $2.2 million from 2018 through 2020. Litigation From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. On a quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated, the Company would accrue a liability for the estimated loss. Because of uncertainties related to claims and litigation, accruals are based on the Company’s best estimates using the latest available information. On a periodic basis, as additional information becomes available, or based on specific events such as the outcome of litigation or settlement of claims, the Company may reassess the potential liability related to these matters and may revise these estimates, which could result in material adverse adjustments to the Company’s operating results. At June 30, 2017, there were no potential material losses from claims, asserted or unasserted, or legal proceedings the Company determined were probable of occurring. ARISTADA On July 13, 2015, Otsuka Pharmaceutical Development & Commercialization, Inc. (“Otsuka PD&C”) filed a Citizen Petition with the U.S. Food and Drug Administration (“FDA”) which requested that the FDA refuse to approve the NDA for ARISTADA or delay approval of such NDA until the exclusivity rights covering long-acting aripiprazole expire in December 2017. The FDA approved ARISTADA on October 5, 2015 and, concurrent with such approval, denied Otsuka PD&C’s Citizen Petition. On October 15, 2015, Otsuka Pharmaceutical Co., Ltd., Otsuka PD&C, and Otsuka America Pharmaceutical, Inc. (collectively, “Otsuka”) filed an action for declaratory and injunctive relief with the U.S. District Court for the District of Columbia (the “DC Court”) against Sylvia Mathews Burwell, Secretary, U.S. Department of Health and Human Services; Dr. Stephen Ostroff, Acting Commissioner, FDA; and the FDA, requesting that the DC Court: (a) expedite the legal proceedings; (b) declare that the FDA’s denial of Otsuka’s claimed exclusivity rights and approval of the ARISTADA NDA were arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law; (c) vacate the FDA’s approval of the ARISTADA NDA and vacate any FDA decisions or actions underlying or supporting or predicated upon that approval; (d) declare that Otsuka’s claimed exclusivity rights preclude the FDA from granting approval of the Alkermes NDA until the expiration of such exclusivity rights in December 2017; and (e) grant any and all other, further, and additional relief, including all necessary and appropriate protective preliminary, interim, or permanent relief, as the nature of the cause may require, including all necessary and appropriate declarations of rights and injunctive relief. The Company successfully intervened in, and received the DC Court’s approval to become a party to, this action. On July 28, 2016, the DC Court issued an opinion in favor of the Company and the FDA, affirming in all respects the FDA’s decision to approve ARISTADA for the treatment of schizophrenia, and denying the action filed by Otsuka for declaratory and injunctive relief. Otsuka filed an appeal of the DC Court’s decision with the U.S. Court of Appeals for the District of Columbia Circuit (“DC Circuit”) asking the DC Circuit to reverse the DC Court’s decision, vacate the FDA’s approval of the ARISTADA NDA and remand the case to the DC Court for consideration of any appropriate equitable remedy for Otsuka’s lost exclusivity. The DC Circuit’s appellate hearing for this matter occurred on December 12, 2016. The Company believes Otsuka’s action is without merit and will continue to vigorously defend ARISTADA against such action. For information about risks relating to this action, see “Part I, Item 1A—Risk Factors” of the Annual Report and specifically the section entitled “Citizen Petitions and other actions filed with, or litigation against, the FDA or other regulatory agencies or litigation against Alkermes may negatively impact the approval of our products and our business.” AMPYRA AMPYRA ANDA Litigation Ten separate Paragraph IV Certification Notices have been received by the Company and/or its partner Acorda from: Accord Healthcare, Inc. (“Accord”); Actavis Laboratories FL, Inc. (“Actavis”); Alkem Laboratories Ltd. (“Alkem”); Apotex Corporation and Apotex, Inc. (collectively, “Apotex”); Aurobindo Pharma Ltd. (“Aurobindo”); Mylan Pharmaceuticals, Inc. (“Mylan”); Par Pharmaceutical, Inc. (“Par”); Roxane Laboratories, Inc. (“Roxane”); Sun Pharmaceutical Industries Limited and Sun Pharmaceuticals Industries Inc. (collectively, “Sun”); and Teva Pharmaceuticals USA, Inc. (“Teva,” and collectively with Accord, Actavis, Alkem, Apotex, Aurobindo, Mylan, Par, Roxane and Sun, the “ANDA Filers”) advising that each of the ANDA Filers had submitted an abbreviated NDA (“ANDA”) to the FDA seeking marketing approval for generic versions of AMPYRA (dalfampridine) Extended-Release Tablets, 10 mg. The ANDA Filers challenged the validity of the Orange Book-listed patents for AMPYRA, and they also asserted that their generic versions do not infringe certain claims of these patents. In response, the Company and/or Acorda filed lawsuits against the ANDA Filers in the U.S. District Court for the District of Delaware (the “Delaware Court”) asserting infringement of U.S. Patent No. 5,540,938 (the “‘938 Patent”), which the Company owns, and U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685, which are owned by Acorda. Requested judicial remedies included recovery of litigation costs and injunctive relief. All lawsuits were filed within 45 days from the date of receipt of each of the Paragraph IV Certification Notices from the ANDA Filers. As a result, a 30-month statutory stay of approval period applied to each of the ANDA Filers’ ANDAs under the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”). The 30-month stay started on January 22, 2015, and restricted the FDA from approving the ANDA Filers’ ANDAs until July 2017 at the earliest, unless a Federal district court issued a decision adverse to all of the asserted Orange Book-listed patents prior to that date. Lawsuits with eight of the ANDA Filers have been consolidated into a single case. The Company and/or Acorda entered into a settlement agreement with each of Accord, Actavis, Alkem, Apotex, Aurobindo, Par and Sun (collectively, the “Settling ANDA Filers”) to resolve the patent litigation that the Company and/or Acorda brought against the Settling ANDA Filers in the Delaware Court. As a result of the settlement agreements, the Settling ANDA Filers will be permitted to market generic versions of AMPYRA in the U.S. at a specified date in the future. The parties submitted their respective settlement agreements to the U.S. Federal Trade Commission and the U.S. Department of Justice, as required by federal law. The settlements with the Settling ANDA Filers did not impact the patent litigation that the Company and Acorda brought against the remaining ANDA Filers (the “Non-Settling ANDA Filers”), as described in this Form 10-Q. On March 31, 2017, after a bench trial, the Delaware Court issued an opinion (the “Delaware Court Decision”), upholding the validity of the ‘938 Patent, which pertains to the formulation of AMPYRA and is set to expire in July 2018, and finding that Apotex, Mylan, Roxane and Teva stipulated that their proposed generic forms of AMPYRA infringed the ‘938 Patent. The Delaware Court also invalidated U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. In May 2017, Acorda filed its appeal of the Delaware Court Decision with the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) with respect to the findings on U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. In June 2017, the Non-Settling ANDA Filers filed their cross-appeal of the Delaware Court Decision with the Federal Circuit with respect to the validity of the ‘ 938 Patent. Mylan challenged the jurisdiction of the Delaware Court with respect to the Delaware action. In January 2015, the Delaware Court denied Mylan’s motion to dismiss. Subsequently, in January 2015, the Delaware Court granted Mylan’s request for an interlocutory appeal of its jurisdictional decision to the Federal Circuit . In March 2016, the Federal Circuit denied Mylan’s appeal, and the case remains in the Delaware Court. Mylan requested the Federal Circuit to reconsider its decision. However, on June 20, 2016, the Federal Circuit denied Mylan’s request. Mylan filed an appeal with the U.S. Supreme Court, which was denied. Due to Mylan’s motion to dismiss, the Company, along with Acorda, also filed another patent infringement suit against Mylan in the U.S. District Court for the Northern District of West Virginia asserting the same U.S. Patents and requesting the same judicial relief as in the Delaware action. In December 2014, the Company, along with Acorda, filed a motion in the Northern District of West Virginia to stay that action in deference to the Delaware action. In February 2015, the District Court for the Northern District of West Virginia granted the motion to stay the proceeding, and, in May 2017, dismissed the proceeding in view of the Delaware Court Decision. The patent infringement case against Mylan, however, was part of the consolidated Delaware action. In addition to the Paragraph IV Certification Notices received from the ANDA Filers, in April 2017, Acorda received an additional Paragraph IV Certification Notice from Micro Labs, Ltd. (“Micro Labs”), contending that U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685 are invalid and not infringed by Micro Labs’ proposed generic version of AMPYRA (dalfampridine) Extended-Release Tablets, 10 mg . On May 24, 2017, Acorda filed a lawsuit against Micro Labs and Micro Labs USA, Inc. in the U.S. District Court for the District of New Jersey asserting infringement of U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. Requested judicial remedies included recovery of litigation costs and injunctive relief. The lawsuit was brought within 45 days from receipt of such Paragraph IV Certification Notice ; therefore, the FDA cannot approve Micro Labs’ ANDA for 30 months (unless a Federal district court issues a decision adverse to all of the asserted Orange Book-listed patents prior to that date ) . The Company intends to vigorously enforce its intellectual property rights. For information about risks relating to the AMPYRA Paragraph IV litigations and other proceedings see “Part II, Item 1A—Risk Factors” in this Form 10-Q and in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and “Part I, Item 1A—Risk Factors” of the Company’s Annual Report. AMPYRA IPR Proceedings A hedge fund (acting with affiliated entities and individuals and proceeding under the name of the Coalition for Affordable Drugs) filed inter partes review (“IPR”) petitions with the U.S. Patent and Trademark Office (the “USPTO”), challenging U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685, which are owned by Acorda, representing four of the five AMPYRA Orange Book-listed patents. In March 2016, the USPTO’s Patent Trials and Appeal Board (the “PTAB”) instituted the IPR, and oral argument for the IPR was held on January 19, 2017. On March 9, 2017, the PTAB upheld the challenged claims. This decision does not affect the litigation discussed in the “AMPYRA ANDA Litigation” section above. BYDUREON, RISPERDAL CONSTA AND VIVITROL Government Matters On June 22, 2017, the Company received a subpoena from an Office of the U.S. Attorney for documents related to VIVITROL. The Company is cooperating with the government. IPR Proceedings On June 3, 2016, Luye Pharma Group Ltd., Luye Pharma (USA) Ltd., Shandong Luye Pharmaceutical Co., Ltd., and Nanjing Luye Pharmaceutical Co., Ltd. (collectively, “Luye”) filed two separate IPR petitions challenging U.S. Patent No. 6,667,061 (the “‘061 Patent”), which is an Orange Book-listed patent for each of BYDUREON, RISPERDAL CONSTA and VIVITROL. The Company opposed the institution of these IPR petitions. On November 30, 2016, the USPTO’s PTAB instituted one of Luye’s IPR petitions and denied instituting Luye’s other IPR petition. Oral argument for the instituted IPR is currently scheduled for August 28, 2017. A decision on the instituted IPR would be expected, pursuant to the statutory time frame, by November 30, 2017. The Company will vigorously defend the ‘061 Patent in the IPR proceedings. For information about risks relating to the ‘061 Patent IPR proceedings see “Part I, Item 1A—Risk Factors” in the Company’s Annual Report and specifically the sections entitled “Patent protection for our products is important and uncertain” and “Uncertainty over intellectual property in the pharmaceutical industry has been the source of litigation, which is inherently costly and unpredictable.” |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of the Company for the three and six months ended June 30, 2017 and 2016 are unaudited and have been prepared on a basis substantially consistent with the audited financial statements for the year ended December 31, 2016. The year-end condensed consolidated balance sheet data, which is presented for comparative purposes, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. (commonly referred to as “GAAP”). In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, that are necessary to state fairly the results of operations for the reported periods. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Alkermes, which are contained in the Company’s Annual Report that has been filed with the SEC. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries as disclosed in Note 2, Summary of Significant Accounting Policies, within the “Notes to Consolidated Financial Statements” accompanying its Annual Report. Intercompany accounts and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, judgments, assumptions and methodologies, including those related to revenue recognition and related allowances, its collaborative relationships, clinical trial expenses, the valuation of inventory, impairment and amortization of intangibles and long-lived assets, share-based compensation expense, income taxes including the valuation allowance for deferred tax assets, valuation of contingent consideration, valuation of investments and litigation loss contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. |
Segment Information | Segment Information The Company operates as one business segment, which is the business of developing, manufacturing and commercializing medicines. The Company’s chief decision maker, the Chairman of the Board and Chief Executive Officer, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating unit. |
Income Taxes | Income Taxes The Company’s income tax benefit in the three and six months ended June 30, 2017 and 2016 relates primarily to U.S. federal and state taxes. The Company records a deferred tax asset or liability based on the difference between the financial statement and tax basis of its assets and liabilities, as measured by enacted jurisdictional tax rates assumed to be in effect when these differences reverse. At June 30, 2017, the Company maintained a valuation allowance against certain of its U.S. and foreign deferred tax assets. The Company evaluates, at each reporting period, the need for a valuation allowance on its deferred tax assets on a jurisdiction-by-jurisdiction basis. |
New Accounting Pronouncements | New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Numerous updates have been issued subsequent to the initial guidance that provide clarification on a number of specific issues as well as requiring additional disclosures. This guidance becomes effective for the Company in its year ending December 31, 2018 and the Company will adopt the new standard using the modified retrospective method. The Company is in the process of assessing the impact the new standard will have on its consolidated financial statements, as well as evaluating the disclosure requirements under the new standard. At this time, the Company cannot reasonably estimate the expected impact the adoption of this new standard will have on its consolidated financial statements. In January 2016, the FASB issued guidance that enhances the reporting model for financial instruments through addressing certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendments in this update include: requiring equity securities to be measured at fair value with changes in fair value recognized through the income statement; simplifying the impairment assessment of equity instruments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset; and clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This guidance becomes effective for the Company in its year ending December 31, 2018, and the Company is in the process of assessing the impact that this standard will have on its consolidated financial statements. In February 2016, the FASB issued guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and this guidance is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. This guidance becomes effective for the Company in its year ending December 31, 2019, and the Company is currently assessing the impact that this standard will have on its consolidated financial statements. In March 2016, the FASB issued guidance as part of its simplification initiative to eliminate the requirement to retroactively adopt the equity method of accounting when an investment qualifies for the use of the equity method as a result of an increase in the level of ownership interest or degree of influence. This guidance became effective for the Company on January 1, 2017, and the adoption of this standard did not have an impact on its consolidated financial statements. In March 2016, the FASB issued guidance as part of its simplification initiative that involves several aspects of the accounting for share-based payment transactions. The amendments in this update established that: (i) all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement; (ii) excess tax benefits be classified as an operating activity in the statement of cash flows; (iii) the entity make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, which is current GAAP, or account for forfeitures as they occur; (iv) the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) cash paid by an employer when directly withholding shares for tax withholding purposes be classified as a financing activity in the statement of cash flows. This guidance became effective for the Company on January 1, 2017. The amendments related to (i), (iii) and (iv) were adopted by the Company on a modified retrospective basis, which resulted in a cumulative-effect adjustment to reduce accumulated deficit by $61.5 million related to the timing of when excess tax benefits are recognized. The Company elected to continue to record expense only for those awards that are expected to vest. The amendments related to (ii) and (v) were adopted using the prospective transition method. In June 2016, the FASB issued guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this guidance replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance becomes effective for the Company in its year ending December 31, 2020, with early adoption permitted for the Company in its year ending December 31, 2019. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In August 2016, the FASB issued guidance to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance becomes effective for the Company in its year ending December 31, 2018, with early adoption permitted. The Company elected to early adopt this standard as of January 1, 2017. The adoption of this standard did not have an impact on the Company’s statement of cash flows. In October 2016, the FASB issued guidance to simplify and improve accounting on transfers of assets between affiliated entities. The updated guidance eliminates the prohibition for all intra-entity asset transfers, except for inventory. This guidance becomes effective for the Company in its year ending December 31, 2018, and the Company is currently assessing the impact that this standard will have on its consolidated financial statements. In January 2017, the FASB issued guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance becomes effective for the Company in its year ending December 31, 2018, with early adoption permitted for transactions that occurred before the issuance date or effective date of the standard if the transactions were not reported in financial statements that have been issued or made available for issuance. The Company adopted the provisions of this standard, effective January 1, 2017, and the adoption of this standard had no impact on the Company’s consolidated financial statements. In January 2017, the FASB issued guidance that simplifies the test for goodwill impairment. This guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective for the Company in its year ending December 31, 2020, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the provisions of this standard, effective January 1, 2017, and the adoption of this standard had no impact on the Company’s consolidated financial statements. In May 2017, the FASB issued guidance that amends the scope of modification accounting for share-based payment arrangements that addresses both diversity in practice and the cost and complexity of accounting for the change to the terms or conditions of a share-based payment award. The amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The guidance becomes effective for the Company in its year ending December 31, 2018 and early adoption is permitted. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In July 2017, the FASB issued guidance that addresses narrow issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The guidance becomes effective for the Company in its year ending December 31, 2019 and early adoption is permitted. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
INVESTMENTS | |
Schedule of investments | Amortized Gross Unrealized Estimated Cost Gains Losses (1) Fair Value (In thousands) June 30, 2017 Short-term investments: Available-for-sale securities: U.S. government and agency debt securities $ 198,041 $ 9 $ (252) $ 197,798 Corporate debt securities 89,765 38 (41) 89,762 International government agency debt securities 29,483 1 (43) 29,441 Total short-term investments 317,289 48 (336) 317,001 Long-term investments: Available-for-sale securities: U.S. government and agency debt securities 53,109 — (237) 52,872 Corporate debt securities 18,433 — (51) 18,382 International government agency debt securities 10,954 — (10) 10,944 82,496 — (298) 82,198 Held-to-maturity securities: Fixed term deposit account 1,667 130 — 1,797 Certificates of deposit 1,729 — — 1,729 3,396 130 — 3,526 Total long-term investments 85,892 130 (298) 85,724 Total investments $ 403,181 $ 178 $ (634) $ 402,725 December 31, 2016 Short-term investments: Available-for-sale securities: U.S. government and agency debt securities $ 177,203 $ 96 $ (51) $ 177,248 Corporate debt securities 128,119 47 (53) 128,113 International government agency debt securities 5,511 — (16) 5,495 Total short-term investments 310,833 143 (120) 310,856 Long-term investments: Available-for-sale securities: U.S. government and agency debt securities 81,839 — (391) 81,448 Corporate debt securities 31,223 — (89) 31,134 International government agency debt securities 5,992 — (18) 5,974 119,054 — (498) 118,556 Held-to-maturity securities: Fixed term deposit account 1,667 — (7) 1,660 Certificates of deposit 1,715 — — 1,715 3,382 — (7) 3,375 Total long-term investments 122,436 — (505) 121,931 Total investments $ 433,269 $ 143 $ (625) $ 432,787 (1) Losses represent marketable securities that were in loss positions for less than one year. |
Proceeds from the sales and maturities of marketable securities, plus the resulting realized gains and losses | Six Months Ended June 30, (In thousands) 2017 2016 Proceeds from the sales and maturities of marketable securities $ 190,642 $ Realized gains $ 9 $ 112 Realized losses $ 3 $ 28 |
The cost and fair value of available-for-sale and held-to-maturity securities by contractual maturity | The Company’s available-for-sale and held-to-maturity securities at June 30, 2017 had contractual maturities in the following periods: Available-for-sale Held-to-maturity Amortized Estimated Amortized Estimated (In thousands) Cost Fair Value Cost Fair Value Within 1 year $ 281,446 $ 281,180 $ $ After 1 year through 5 years 1,667 1,797 Total $ 399,785 $ 399,199 $ 3,396 $ 3,526 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
FAIR VALUE MEASUREMENTS | |
Summary of the Company's assets and liabilities measured at fair value on a recurring basis | June 30, (In thousands) 2017 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 1,797 $ 1,797 $ — $ — U.S. government and agency debt securities 250,670 — Corporate debt securities 108,144 — — International government agency debt securities 40,385 — — Contingent consideration 65,500 — — 65,500 Common stock warrants 1,157 — — 1,157 Total $ 467,653 $ 158,102 $ 242,894 $ 66,657 December 31, 2016 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 1,660 $ 1,660 $ — $ — U.S. government and agency debt securities 258,696 — Corporate debt securities 159,247 — — International government agency debt securities 11,469 — — Contingent consideration 63,200 — — 63,200 Common stock warrants 1,392 — — 1,392 Total $ 495,664 $ 158,030 $ 273,042 $ 64,592 |
Schedule of rollforward of the fair value of the Company's investments whose fair value was determined using Level 3 inputs | (In thousands) Fair Value Balance, January 1, 2017 $ 64,592 Increase in the fair value of contingent consideration 2,300 Decrease in the fair value of warrants (235) Balance, June 30, 2017 $ 66,657 |
Schedule of Assumptions used to Determine Fair Value of Warrants [Table Text Block] | Closing stock price at June 30, 2017 $ 7.03 Warrant strike price $ 19.46 Expected term (years) 4.78 Risk-free rate 1.89 % Volatility 84.7 % |
Estimated fair value of term loans | Carrying Estimated (In thousands) Value Fair Value Term Loan B-1 $ $ |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
INVENTORY | |
Schedule of inventories | June 30, December 31, (In thousands) 2017 2016 Raw materials $ 29,339 $ 19,413 Work in process 24,724 21,811 Finished goods (1) 23,289 21,774 Total inventory $ 77,352 $ 62,998 (1) At June 30, 2017 and December 31, 2016, the Company had $12.2 million and $7.1 million, respectively, of finished goods inventory located at its third-party warehouse and shipping service provider. |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of property, plant and equipment | June 30, December 31, (In thousands) 2017 2016 Land $ 6,303 $ 5,913 Building and improvements 155,117 152,871 Furniture, fixture and equipment 276,081 251,437 Leasehold improvements 19,578 19,241 Construction in progress 32,352 41,254 Subtotal 489,431 470,716 Less: accumulated depreciation (222,947) (205,931) Total property, plant and equipment, net $ 266,484 $ 264,785 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of goodwill and intangible assets | Six Months Ended June 30, 2017 (In thousands) Weighted Gross Accumulated Net Carrying Goodwill $ 92,873 $ — $ 92,873 Finite-lived intangible assets: Collaboration agreements 12 $ 465,590 $ (243,644) $ 221,946 NanoCrystal technology 13 74,600 (27,805) 46,795 OCR technologies 12 42,560 (23,848) 18,712 Total $ 582,750 $ (295,297) $ 287,453 |
ACCOUNTS PAYABLE AND ACCRUED 25
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
Schedule of accounts payable and accrued expenses | June 30, December 31, (In thousands) 2017 2016 Accounts payable $ 54,677 $ 46,275 Accrued compensation 37,281 45,622 Accrued sales discounts, allowances and reserves 73,833 60,973 Accrued other 54,048 54,185 Total accounts payable and accrued expenses $ 219,839 $ 207,055 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
LONG-TERM DEBT | |
Schedule of long-term debt | June 30, December 31, (In thousands) 2017 2016 Term Loan B-1, due September 25, 2021 $ 282,552 $ 283,666 Less: current portion (3,000) (3,000) Long-term debt $ 279,552 $ 280,666 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
SHARE-BASED COMPENSATION | |
Schedule of share-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2017 2016 2017 2016 Cost of goods manufactured and sold $ 1,908 $ 2,264 $ 4,141 $ 4,542 Research and development 5,661 6,367 11,255 12,798 Selling, general and administrative 15,110 18,000 28,452 33,547 Total share-based compensation expense $ 22,679 $ 26,631 $ 43,848 $ 50,887 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
LOSS PER SHARE | |
Schedule of anti-dilutive potential common equivalent shares excluded from calculation of net (loss) income per share | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2017 2016 2017 2016 Stock options 9,850 11,168 9,511 10,463 Restricted stock units 2,159 1,370 1,998 1,297 Total 12,009 12,538 11,509 11,760 |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Employee Benefit Plan (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2017segment | Jan. 01, 2017USD ($) | |
Employee benefit plans | ||
Number of business segments | segment | 1 | |
U.S. | ||
Employee benefit plans | ||
Adjustment to retained earnings to record net deferred tax asset | $ | $ 61.5 |
INVESTMENTS - SUMMARY OF INVEST
INVESTMENTS - SUMMARY OF INVESTMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Held-to-maturity securities: | ||
Estimated Fair Value | $ 3,526 | |
Total investments | ||
Amortized Cost | 403,181 | $ 433,269 |
Gross Unrealized Gains | 178 | 143 |
Gross Unrealized Losses, Less than One Year | (634) | (625) |
Estimated Fair Value | 402,725 | 432,787 |
Short-term investments | ||
Available-for-sale securities: | ||
Amortized Cost | 317,289 | 310,833 |
Gross Unrealized Gains | 48 | 143 |
Gross Unrealized Losses, Less than One Year | (336) | (120) |
Estimated Fair Value | 317,001 | 310,856 |
Short-term investments | U.S. government and agency debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 198,041 | 128,119 |
Gross Unrealized Gains | 9 | 47 |
Gross Unrealized Losses, Less than One Year | (252) | (53) |
Estimated Fair Value | 197,798 | 128,113 |
Short-term investments | Corporate debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 89,765 | 177,203 |
Gross Unrealized Gains | 38 | 96 |
Gross Unrealized Losses, Less than One Year | (41) | (51) |
Estimated Fair Value | 89,762 | 177,248 |
Short-term investments | International government agency debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 29,483 | 5,511 |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses, Less than One Year | (43) | (16) |
Estimated Fair Value | 29,441 | 5,495 |
Long-term investments | ||
Available-for-sale securities: | ||
Amortized Cost | 82,496 | 119,054 |
Gross Unrealized Losses, Less than One Year | (298) | (498) |
Estimated Fair Value | 82,198 | 118,556 |
Held-to-maturity securities: | ||
Amortized Cost | 3,396 | 3,382 |
Gross Unrealized Gains | 130 | |
Gross Unrealized Losses, Less than One Year | (7) | |
Estimated Fair Value | 3,526 | 3,375 |
Long-term Investments | ||
Total long-term investments | 85,892 | 122,436 |
Gross Unrealized Gains | 130 | |
Gross Unrealized Losses, Less than one year | (298) | (505) |
Total long-term investments | 85,724 | 121,931 |
Long-term investments | Fixed Term Deposit Account | ||
Held-to-maturity securities: | ||
Amortized Cost | 1,667 | 1,667 |
Gross Unrealized Gains | 130 | |
Gross Unrealized Losses, Less than One Year | (7) | |
Estimated Fair Value | 1,797 | 1,660 |
Long-term investments | Certificates of deposit | ||
Held-to-maturity securities: | ||
Amortized Cost | 1,729 | 1,715 |
Estimated Fair Value | 1,729 | 1,715 |
Long-term investments | U.S. government and agency debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 53,109 | 81,839 |
Gross Unrealized Losses, Less than One Year | (237) | (391) |
Estimated Fair Value | 52,872 | 81,448 |
Long-term investments | Corporate debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 18,433 | 31,223 |
Gross Unrealized Losses, Less than One Year | (51) | (89) |
Estimated Fair Value | 18,382 | 31,134 |
Long-term investments | International government agency debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 10,954 | 5,992 |
Gross Unrealized Losses, Less than One Year | (10) | (18) |
Estimated Fair Value | $ 10,944 | $ 5,974 |
INVESTMENTS - REALIZED GAINS AN
INVESTMENTS - REALIZED GAINS AND LOSSES (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
INVESTMENTS | ||
Proceeds from the sales and maturities of marketable securities | $ 190,642 | $ 307,953 |
Realized gains | 9 | 112 |
Realized losses | $ 3 | $ 28 |
INVESTMENTS - AVAILABLE FOR SAL
INVESTMENTS - AVAILABLE FOR SALE AND HELD TO MATURITY (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Available-for-sale, Amortized Cost | |
Within 1 year | $ 281,446 |
After 1 year through 5 years | 118,339 |
Total | 399,785 |
Available-for-sale, Estimated Fair Value | |
Within 1 year | 281,180 |
After 1 year through 5 years | 118,019 |
Total | 399,199 |
Held-to-maturity, Amortized Cost | |
Within 1 year | 1,729 |
After 1 year through 5 years | 1,667 |
Total | 3,396 |
Held-to-maturity, Estimated Fair Value | |
Within 1 year | 1,729 |
After 1 year through 5 years | 1,797 |
Estimated Fair Value | $ 3,526 |
INVESTMENTS - Narratives (Detai
INVESTMENTS - Narratives (Details) € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Feb. 29, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2017EUR (€) | Jun. 30, 2017USD ($) | Mar. 31, 2017 | May 31, 2014EUR (€) | |
Reset Therapeutics Inc | Investee [Member] | |||||||
Equity method investment | |||||||
Cost Of License | $ 10 | ||||||
Carrying value of equity investment | $ 15 | ||||||
Reduction in carrying value of investment of the entity, which represents the Company's share of investee's net losses | $ (1.2) | $ (2.8) | |||||
Fountain Healthcare Partners II, LP of Ireland | |||||||
Equity method investment | |||||||
Carrying value of equity investment | € | € 7.4 | ||||||
Reduction in carrying value of investment of the entity, which represents the Company's share of investee's net losses | $ (0.1) | $ 0.6 | |||||
Funding commitment as percentage of partnership's total funding | 7.00% | ||||||
Other Assets | Reset Therapeutics Inc | Investee [Member] | |||||||
Equity method investment | |||||||
Carrying value of equity investment | $ 10.5 | ||||||
Other Assets | Fountain Healthcare Partners II, LP of Ireland | |||||||
Equity method investment | |||||||
Carrying value of equity investment | € 1.8 | $ 2.1 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Recurring basis - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair value | ||
Estimated Fair Value | $ 467,653 | $ 495,664 |
Assets, Total | 467,653 | 495,664 |
Level 1 | ||
Fair value | ||
Estimated Fair Value | 158,102 | 158,030 |
Assets, Total | 158,102 | 158,030 |
Level 2 | ||
Fair value | ||
Estimated Fair Value | 242,894 | 273,042 |
Assets, Total | 242,894 | 273,042 |
Level 3 | ||
Fair value | ||
Estimated Fair Value | 66,657 | 64,592 |
Assets, Total | 66,657 | 64,592 |
Cash equivalents | ||
Fair value | ||
Estimated Fair Value | 1,797 | 1,660 |
Assets, Total | 1,797 | 1,660 |
Cash equivalents | Level 1 | ||
Fair value | ||
Estimated Fair Value | 1,797 | 1,660 |
Assets, Total | 1,797 | 1,660 |
U.S. government and agency debt securities | ||
Fair value | ||
Estimated Fair Value | 250,670 | 258,696 |
Assets, Total | 250,670 | 258,696 |
U.S. government and agency debt securities | Level 1 | ||
Fair value | ||
Estimated Fair Value | 156,305 | 156,370 |
Assets, Total | 156,305 | 156,370 |
U.S. government and agency debt securities | Level 2 | ||
Fair value | ||
Estimated Fair Value | 94,365 | 102,326 |
Assets, Total | 94,365 | 102,326 |
Corporate debt securities | ||
Fair value | ||
Estimated Fair Value | 108,144 | 159,247 |
Assets, Total | 108,144 | 159,247 |
Corporate debt securities | Level 2 | ||
Fair value | ||
Estimated Fair Value | 108,144 | 159,247 |
Assets, Total | 108,144 | 159,247 |
International government agency debt securities | ||
Fair value | ||
Estimated Fair Value | 40,385 | 11,469 |
Assets, Total | 40,385 | 11,469 |
International government agency debt securities | Level 2 | ||
Fair value | ||
Estimated Fair Value | 40,385 | 11,469 |
Assets, Total | 40,385 | 11,469 |
Contingent Consideration | ||
Fair value | ||
Estimated Fair Value | 65,500 | 63,200 |
Assets, Total | 65,500 | 63,200 |
Contingent Consideration | Level 3 | ||
Fair value | ||
Estimated Fair Value | 65,500 | 63,200 |
Assets, Total | 65,500 | 63,200 |
Equity securities | ||
Fair value | ||
Estimated Fair Value | 1,157 | 1,392 |
Assets, Total | 1,157 | 1,392 |
Equity securities | Level 3 | ||
Fair value | ||
Estimated Fair Value | 1,157 | 1,392 |
Assets, Total | $ 1,157 | $ 1,392 |
FAIR VALUE MEASUREMENTS - ROLLF
FAIR VALUE MEASUREMENTS - ROLLFORWARD OF FAIR VALUE OF ASSETS (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Roll forward of the fair value of the Company's investments whose fair value was determined using Level 3 inputs | |
Transfers between the levels | $ 0 |
Balance at the beginning of the period | 64,592,000 |
Balance at the end of the period | 66,657,000 |
Change in the Fair Value Of Contingent Consideration | |
Roll forward of the fair value of the Company's investments whose fair value was determined using Level 3 inputs | |
Increase (decrease) in the fair value | 2,300,000 |
Warrant | |
Roll forward of the fair value of the Company's investments whose fair value was determined using Level 3 inputs | |
Increase (decrease) in the fair value | $ (235,000) |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narratives (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2015USD ($) | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)item$ / shares | Jun. 30, 2016USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016USD ($) | Apr. 10, 2015shares | Apr. 09, 2015$ / shares | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Milestone payment upon submission of NDA filing | $ 10,000 | |||||||||
Milestone payment upon regulatory approval of NDA with milestone payment on NDA Filing | 30,000 | |||||||||
Milestone payment upon regulatory approval of NDA | $ 45,000 | |||||||||
Discount rate (as a percent) | 17.00% | |||||||||
Contingent consideration | $ 65,500 | $ 65,500 | $ 63,200 | |||||||
OTHER ASSETS | 25,351 | 25,351 | $ 26,961 | |||||||
Increase in the fair value of contingent consideration | 700 | $ 2,200 | 2,300 | $ 4,100 | ||||||
Other Assets | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Decrease (Increase) in fair value of warrants | 400 | (400) | $ 200 | 400 | ||||||
Minimum | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Discount rate (as a percent) | 9.50% | |||||||||
Maximum | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Discount rate (as a percent) | 11.40% | |||||||||
Gainesville Transaction | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Number of regulatory milestones | item | 2 | |||||||||
Increase in the fair value of contingent consideration | $ 700 | $ 2,200 | $ 2,300 | $ 4,100 | ||||||
Gainesville Transaction | Scenario One Forecast Member | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Discount rate (as a percent) | 2.70% | 2.10% | ||||||||
Gainesville Transaction | Scenario Two Forecast Member | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Discount rate (as a percent) | 2.70% | 2.10% | ||||||||
Gainesville Transaction | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Warrants received | shares | 350,000 | |||||||||
Gainesville Transaction | Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Maximum milestone payment receivable | $ 125,000 | |||||||||
Recro | Gainesville Transaction | ||||||||||
Fair Value Assumptions and Methodology for Assets and Liabilities [Abstract] | ||||||||||
Closing stock price at December 31, 2016 | $ / shares | $ 7.03 | $ 7.03 | ||||||||
Warrant strike price | $ / shares | $ 19.46 | $ 19.46 | $ 19.46 | |||||||
Expected term (years) | 4 years 9 months 11 days | |||||||||
Risk-free rate (as a percent) | 1.89% | |||||||||
Volatility (as a percent) | 84.70% |
FAIR VALUE MEASUREMENTS - REMAI
FAIR VALUE MEASUREMENTS - REMAINING FINANCIAL INSTRUMENTS (Details) - Term Loan B-1 - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Estimated fair value of the Term Loans | ||
Fair value of remaining financial instruments not recognized at fair value | $ 300,000 | |
Variable interest rate base | LIBOR | |
Carrying Value | $ 282,552 | $ 283,666 |
Estimated Fair Value | $ 287,179 | |
LIBOR | ||
Estimated fair value of the Term Loans | ||
Interest rate added to base rate (as a percent) | 2.75% | |
Interest rate, variable interest rate floor (as a percent) | 0.75% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
INVENTORY | ||
Raw materials | $ 29,339 | $ 19,413 |
Work in process | 24,724 | 21,811 |
Finished goods | 23,289 | 21,774 |
Total inventory | 77,352 | 62,998 |
Finished goods inventory located at third-party warehouse and shipping service provider | $ 12,200 | $ 7,100 |
PROPERTY, PLANT AND EQUIPMENT39
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Property, plant and equipment | ||
Subtotal | $ 489,431 | $ 470,716 |
Less: accumulated depreciation | (222,947) | (205,931) |
Total property, plant and equipment, net | 266,484 | 264,785 |
Land | ||
Property, plant and equipment | ||
Subtotal | 6,303 | 5,913 |
Buildings and improvements | ||
Property, plant and equipment | ||
Subtotal | 155,117 | 152,871 |
Furniture, fixture and equipment | ||
Property, plant and equipment | ||
Subtotal | 276,081 | 251,437 |
Leasehold improvements | ||
Property, plant and equipment | ||
Subtotal | 19,578 | 19,241 |
Construction in progress | ||
Property, plant and equipment | ||
Subtotal | $ 32,352 | $ 41,254 |
GOODWILL AND INTANGIBLE ASSET40
GOODWILL AND INTANGIBLE ASSETS - INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Goodwill | ||
Gross Carrying Amount | $ 92,873 | |
Goodwill | 92,873 | $ 92,873 |
Finite-lived intangible assets: | ||
Gross Carrying Amount | 582,750 | |
Accumulated Amortization | (295,297) | |
Net Carrying Amount | $ 287,453 | |
Collaboration agreements | ||
Finite-lived intangible assets: | ||
Weighted Amortizable Life | 12 years | |
Gross Carrying Amount | $ 465,590 | |
Accumulated Amortization | (243,644) | |
Net Carrying Amount | $ 221,946 | |
NanoCrystal technology | ||
Finite-lived intangible assets: | ||
Weighted Amortizable Life | 13 years | |
Gross Carrying Amount | $ 74,600 | |
Accumulated Amortization | (27,805) | |
Net Carrying Amount | $ 46,795 | |
OCR technologies | ||
Finite-lived intangible assets: | ||
Weighted Amortizable Life | 12 years | |
Gross Carrying Amount | $ 42,560 | |
Accumulated Amortization | (23,848) | |
Net Carrying Amount | $ 18,712 |
GOODWILL AND INTANGIBLE ASSET41
GOODWILL AND INTANGIBLE ASSETS - AMORTIZATION (Details) $ in Millions | Jun. 30, 2017USD ($) |
Expected amortization of intangible assets | |
2,017 | $ 60 |
2,018 | 60 |
2,019 | 55 |
2,020 | 50 |
2,021 | $ 45 |
ACCOUNTS PAYABLE AND ACCRUED 42
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Accounts payable | $ 54,677 | $ 46,275 |
Accrued compensation | 37,281 | 45,622 |
Accrued sales discounts, allowances and reserves | 73,833 | 60,973 |
Accrued other | 54,048 | 54,185 |
Total accounts payable and accrued expenses | $ 219,839 | $ 207,055 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Long-term debt | ||
Less: current portion | $ (3,000) | $ (3,000) |
Long-term debt | 279,552 | 280,666 |
Term Loan B-1 | ||
Long-term debt | ||
Total | $ 282,552 | $ 283,666 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Share-based compensation Expense | |||||
Total share-based compensation expense | $ 22,679 | $ 26,631 | $ 43,848 | $ 50,887 | |
Share based compensation cost capitalized | 300 | $ 1,100 | |||
Cost of goods manufactured and sold | |||||
Share-based compensation Expense | |||||
Total share-based compensation expense | 1,908 | 2,264 | 4,141 | 4,542 | |
Research and development | |||||
Share-based compensation Expense | |||||
Total share-based compensation expense | 5,661 | 6,367 | 11,255 | 12,798 | |
Selling, general and administrative | |||||
Share-based compensation Expense | |||||
Total share-based compensation expense | 15,110 | $ 18,000 | 28,452 | $ 33,547 | |
Performance-based RSUs | |||||
Share-based compensation Expense | |||||
Unrecognized compensation cost | $ 59,500 | $ 59,500 |
LOSS PER SHARE (Details)
LOSS PER SHARE (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Denominator: | ||||
Anti-dilutive potential common equivalent shares excluded from calculation of net loss per ordinary share | 12,009 | 12,538 | 11,509 | 11,760 |
Stock options | ||||
Denominator: | ||||
Anti-dilutive potential common equivalent shares excluded from calculation of net loss per ordinary share | 9,850 | 11,168 | 9,511 | 10,463 |
Restricted stock units | ||||
Denominator: | ||||
Anti-dilutive potential common equivalent shares excluded from calculation of net loss per ordinary share | 2,159 | 1,370 | 1,998 | 1,297 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2017USD ($)item | Jan. 01, 2018ft² | Mar. 31, 2017ft² | Mar. 01, 2017ft² | |
Area of Real Estate Property | ft² | 65,000 | 43,290 | ||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
Rental expense for year 2017 | $ 1,200 | |||
Rental expense for year 2018 | 2,200 | |||
Rental expense for year 2019 | 2,200 | |||
Rental expense for year 2020 | 2,200 | |||
Potential losses from claims, legal proceedings probable of occurring | $ 0 | |||
Number of separate Paragraph IV notices received | item | 10 | |||
Maximum number of days for lawsuit | 45 days | |||
Minimum number of months before FDA can approve patent request | 30 months | |||
Scenario, Forecast [Member] | ||||
Area of Real Estate Property | ft² | 21,645 |