Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Accounting Policies [Abstract] | |
Business Description and Basis of Presentation [Text Block] | Nature of the Business |
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IGI Laboratories, Inc. is a Delaware corporation formed in 1977. The Company’s office, laboratories and manufacturing facilities are located at 105 Lincoln Avenue, Buena, New Jersey. The Company is a developer, manufacturer, and marketer of topical formulations. The Company’s mission is to become a leader in the specialty generic pharmaceutical market. Under its own label, the Company sells generic topical pharmaceutical products that are bioequivalent to their brand name counterparts. The Company also provides development, formulation, and manufacturing services to the pharmaceutical, over-the-counter (OTC), and cosmetic markets. |
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Currently, the Company has two platforms for growth: |
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| • | Developing, manufacturing, and marketing a portfolio of generic pharmaceutical products under our own label in topical, injectable, complex and ophthalmic dosage forms; and, | | | | | | | | | | | |
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| • | Managing our current contract manufacturing and formulation services business. | | | | | | | | | | | |
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In addition, we will continue to explore ways to accelerate our growth through the creation of unique opportunities from the acquisition of additional intellectual property, and the expansion of the use of our existing intellectual property, including our licensed Novasome® technology. |
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To date, we have filed 24 Abbreviated New Drug Applications, or ANDAs, with the United States Food and Drug Administration, or FDA, for additional pharmaceutical products. We expect to continue to expand our presence in the generic pharmaceutical market through the filing of additional ANDAs with the FDA and the subsequent launch of products as these applications are approved. Our target is to file at least 20 ANDAs in 2015 through our internal research and development program. On March 12, 2014, the Company received its first approval from the FDA for an ANDA. The FDA has approved IGI's application for lidocaine hydrochloride USP 4% topical solution. On May 7, 2014, the Company received tentative approval from the FDA for its ANDA for diclofenac sodium 1.5% topical solution. On June 26, 2014, the Company executed an agreement to enable it to launch the product in March 2015 after final FDA approval. We will also seek to license or acquire further products, intellectual property, or ANDAs to expand our portfolio. |
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On September 24, 2014, we acquired from AstraZeneca Pharmaceuticals LP ANDAs and NDAs associated with eighteen products, seventeen of which were injectable products. On September 30, 2014, we acquired ANDAs and NDAs associated with two ophthalmic products from Valeant Pharmaceuticals North America LLC and Valeant Pharmaceuticals Luxembourg SARL (Valeant), in addition to the exclusive right to acquire three additional injectable products from Valeant. One of these additional products was acquired from Valeant on November 18, 2014. |
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On February 1, 2013, we acquired assets and intellectual property, including an ANDA, for econazole nitrate cream 1%, which we launched in September 2013. |
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IGI also develops, manufactures, fills, and packages topical semi-solid and liquid products for branded and generic pharmaceutical customers, as well as the OTC and cosmetic markets. These products are used in a wide range of applications from cosmetics and cosmeceuticals to the prescription treatment of conditions like dermatitis, psoriasis, and eczema. IGI is currently exploring various options to enable us to expand our development and manufacturing capabilities to include sterile injectable and ophthalmic products. |
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Consolidation, Policy [Policy Text Block] | Principles of Consolidation |
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The consolidated financial statements include the accounts of IGI Laboratories, Inc. and its wholly-owned and majority-owned subsidiaries. All inter-company accounts and transactions have been eliminated. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash Equivalents |
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Cash equivalents consist of short-term investments, which have original maturities of 90 days or less. These include direct obligations of the U.S. Treasury, including bills, notes and bonds, as well as obligations issued or guaranteed by agencies or instrumentalities of the U.S. government including government-sponsored enterprises (GSEs). |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments |
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The carrying amounts of cash and cash equivalents, trade receivables, restricted cash, notes payable, accounts payable, capital leases and other accrued liabilities at December 31, 2014 approximate their fair value for all periods presented. |
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The Company measures fair value in accordance with ASC 820-10, "Fair Value Measurements and Disclosures". ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: |
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Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
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Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. |
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Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
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The Company measures its derivative liability at fair value. The derivative convertible option related to Convertible Notes issued December 16, 2014 was valued using the “with” and “without” analysis. A “with” and “without” analysis is a standard valuation technique for valuing embedded derivatives by first considering the value of the Convertible Notes with the option and then considering the value of the Convertible Notes without the option. The difference is the fair value of the embedded derivatives. The convertible note derivative is classified within Level 3 because it is valued using the “with” and “without” method, which does utilize inputs that are unobservable in the market. |
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The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2014: |
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| | | Fair value measurement at reporting date using | |
| | | | Quoted prices in | | Significant | | | |
| | | | active markets for | | other | | Significant | |
| | | | identical assets | | observable | | unobservable | |
Derivative liabilites on account of convertible notes | | Balance | | (Level 1) | | inputs (Level 2) | | inputs (Level 3) | |
As of December 31, 2014 | | $ | 41,400 | | | - | | | - | | $ | 41,400 | |
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Based on the closing price of the Company’s common stock as of December 31, 2014, the fair value of the Notes was approximately $141.5 million compared to their face value of $143.75 million as of December 31, 2014. However, this variance is due to the conversion feature in the Notes rather than to changes in market interest rates. The Notes carry a fixed interest rate and therefore do not subject the Company to interest rate risk. As a result in the change in fair value,the Company recorded a $2.3 million change in the fair value of the derivative liability on the consolidated statements of operations. |
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Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block] | Accounts Receivable and Allowance for Doubtful Accounts |
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The Company extends credit to its contract services customers based upon credit evaluations in the normal course of business, primarily with 30-day terms. The Company does not require collateral from its customers. Bad debt provisions are provided for on the allowance method based on historical experience and management’s evaluation of outstanding accounts receivable. The Company reviews the allowance for doubtful accounts regularly, and past due balances are reviewed individually for collectability. The Company charges off uncollectible receivables against the allowance when the likelihood of collection is remote. |
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The Company extends credit to wholesaler and distributor customers and national retail chain customers, based upon credit evaluations, in the normal course of business, primarily with 60-day terms. The Company maintains customer-related accruals and allowances that consist primarily of chargebacks, rebates, sales returns, shelf stock allowances, administrative fees and other incentive programs. Some of these adjustments relate specifically to the generic prescription pharmaceutical business. Typically, the aggregate gross-to-net adjustments related to these customers can exceed 50% of the gross sales through this distribution channel. Certain of these accruals and allowances are recorded in the balance sheet as current liabilities and others are recorded as a reduction to accounts receivable. |
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Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentration of Credit Risk |
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Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash equivalents and trade receivables. These include direct obligations of the U.S. Treasury, including bills, notes and bonds, as well as obligations issued or guaranteed by agencies or instrumentalities of the U.S. government including government-sponsored enterprises (GSEs), which are not federally insured. |
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The Company maintains its cash in accounts with quality financial institutions. Although the Company currently believes that the financial institutions with which the Company does business will be able to fulfill their commitments to us, there is no assurance that those institutions will be able to continue to do so. |
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In 2014, the Company had sales to two customers which individually accounted for more than 10% of the Company’s total revenue. These customers had sales of $10.5 million and $4.4 million, respectively, and represented 44% of total revenues in the aggregate. Accounts receivable related to the Company’s major customers comprised 42% of all accounts receivable as of December 31, 2014. |
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In 2013, the Company had sales to three customers which individually accounted for more than 10% of the Company’s total revenue. These customers had sales of $2.8 million, $2.2 million and $2.1 million, respectively, and represented 39% of total revenues in the aggregate. Accounts receivable related to the Company’s major customers comprised 11% of all accounts receivable as of December 31, 2013. |
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In 2012, the Company had sales to two customers which individually accounted for more than 10% of the Company’s total revenue. These customers had sales of $2.8 million and $1.8 million, respectively, and represented 54% of total revenues in the aggregate. Accounts receivable related to the Company’s major customers comprised 59% of all accounts receivable as of December 31, 2012. |
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The Company had net revenue from one product, econazole nitrate cream, which accounted for 38% of total revenues in 2014. The Company did not have significant revenue from any one product in 2013 or 2012. |
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Inventory, Policy [Policy Text Block] | Inventories |
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Inventories are valued at the lower of cost, using the first-in, first-out (“FIFO”) method, or market. The company records an inventory reserve for losses associated with dated and expired raw materials. This reserve is based on management’s current knowledge with respect to inventory levels, planned production, and extension capabilities of materials on hand. Management does not believe the Company’s inventory is subject to significant risk of obsolescence in the near term. Reserve for obsolescence included in inventory at December 31, 2014 and 2013 were $0.2 million and $0.2 million respectively. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property, Plant and Equipment |
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Depreciation and amortization of property, plant and equipment is provided for under the straight-line method over the assets’ estimated useful lives as follows: |
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| Useful Lives | | | | | | | | | | | | |
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Buildings and improvements | 10 - 30 years | | | | | | | | | | | | |
Machinery and equipment | 3 - 10 years | | | | | | | | | | | | |
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Repair and maintenance costs are charged to operations as incurred while major improvements are capitalized. When assets are retired or disposed, the related cost and accumulated depreciation thereon are removed and any gains or losses are included in operating results. |
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Intangible Assets, Finite-Lived, Policy [Policy Text Block] | Intangible Assets |
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Intangible assets consist of the cost of an acquired product and product rights. Intangible assets are amortized over fifteen years (the asset’s estimated useful life). |
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Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Long-Lived Assets |
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In accordance with the provisions of ASC 360-10-55, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In performing such review for recoverability, the Company compares expected future cash flows of assets to the carrying value of the long-lived assets and related identifiable intangibles. If the expected future cash flows (undiscounted) are less than the carrying amount of such assets, the Company recognizes an impairment loss for the difference between the carrying value of the assets and their estimated fair value, with fair values being determined using projected discounted cash flows at the lowest level of cash flows identifiable in relation to the assets being reviewed. As of December 31, 2014, no impairments existed. |
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Loans and Leases Receivable, Nonaccrual Loan and Lease Status, Policy [Policy Text Block] | Accrued Expenses |
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Accrued expenses represent various obligations of the Company including certain operating expenses and taxes payable. For the fiscal year ended December 31, 2014, the largest component of accrued expenses was accrued wholesaler fees of $1.7 million, accrued payroll of $1.4 million, accrued royalties of $0.7 million, accrued consulting fees of $0.3 million, accrued interest expense of $0.2 million and accrued directors’ fees of $0.1 million. For the fiscal year ended December 31, 2013, the largest component of accrued expenses was accrued royalties of $0.9 million, accrued payroll of $0.7 million, accrued wholesaler fees of $0.6 million and accrued directors’ fees of $0.2 million. |
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Revenue Recognition, Services, Licensing Fees [Policy Text Block] | License Fee |
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License fees are amortized on a straight-line basis over the life of the agreement (10 years). |
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Environmental Costs, Policy [Policy Text Block] | Accounting for Environmental Costs |
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Accruals for environmental remediation are recorded when it is probable a liability has been incurred and costs are reasonably estimable. The estimated liabilities are recorded at undiscounted amounts. Environmental insurance recoveries are included in the statement of operations in the year in which the issue is resolved through settlement or other appropriate legal process. |
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Income Tax, Policy [Policy Text Block] | Income Taxes |
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The Company records income taxes in accordance with ASC 740-10, “Accounting for Income Taxes,” under the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to operating loss and tax credit carry forwards and differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded based on a determination of the ultimate realizability of future deferred tax assets. A valuation allowance equal to 100% of the net deferred tax assets has been recognized due to uncertainty regarding the future realization of these assets. |
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The Company complies with the provisions of ASC 740-10-25 that clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with ASC 740-10, “Accounting for Income Taxes,” and prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. There were no unrecognized tax benefits as of the date of adoption. As such, there are no unrecognized tax benefits included in the balance sheet that would, if recognized, affect the effective tax rate. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition |
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The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred or contractual services rendered, the sales price is fixed or determinable, and collection is reasonably assured in conformity with ASC 605, Revenue Recognition. |
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The Company derives its revenues from three basic types of transactions: sales of its own generic pharmaceutical topical products, sales of manufactured product for its customers included in product sales, and research and product development services performed for third parties. Due to differences in the substance of these transaction types, the transactions require, and the Company utilizes, different revenue recognition policies for each. |
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Product Sales: Product Sales includes IGI Product Sales and Contract Manufacturing Sales. |
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IGI Product Sales: The Company records revenue from IGI product sales when title and risk of ownership have been transferred to the customer, which is typically upon delivery of products to the customer. |
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Revenue and Provision for Sales Returns and Allowances |
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As customary in the pharmaceutical industry, the Company’s gross product sales from IGI label products are subject to a variety of deductions in arriving at reported net product sales. When the Company recognizes revenue from the sale of products, an estimate of sales returns and allowances (“SRA”) is recorded, which reduces product sales. Accounts receivable and/or accrued expenses are also reduced and/or increased by the SRA amount. These adjustments include estimates for chargebacks, rebates, cash discounts and returns and other allowances. These provisions are adjusted as estimates are based on historical payment experience, historical relationship to revenues, estimated customer inventory levels and current contract sales terms with direct and indirect customers. The estimation process used to determine our SRA provision has been applied on a consistent basis and no material adjustments have been necessary to increase or decrease our reserves for SRA as a result of a significant change in underlying estimates. The Company will use a variety of methods to assess the adequacy of our SRA reserves to ensure that our financial statements are fairly stated. These will include periodic reviews of customer inventory data, customer contract programs and product pricing trends to analyze and validate the SRA reserves. |
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The provision for chargebacks is our most significant sales allowance. A chargeback represents an amount payable in the future to a wholesaler for the difference between the invoice price paid to the Company by our wholesale customer for a particular product and the negotiated contract price that the wholesaler’s customer pays for that product. The Company’s chargeback provision and related reserve varies with changes in product mix, changes in customer pricing and changes to estimated wholesaler inventories. The provision for chargebacks also takes into account an estimate of the expected wholesaler sell-through levels to indirect customers at contract prices. The Company will validate the chargeback accrual quarterly through a review of the inventory reports obtained from our largest wholesale customers. This customer inventory information is used to verify the estimated liability for future chargeback claims based on historical chargeback and contract rates. These large wholesalers represent 90% - 95% of the Company’s chargeback payments. The Company continually monitors current pricing trends and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated. |
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Net revenues and accounts receivable balances in the Company’s consolidated financial statements are presented net of SRA estimates. Certain SRA balances are included in accounts payable and accrued expenses. |
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Gross-To-Net Sales Deductions |
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| | Years Ended December 31, | | | | |
| | 2014 | | 2013 | | 2012 | | | | |
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Gross IGI product sales | | $ | 51,136 | | $ | 15,001 | | $ | 18 | | | | |
Reduction to gross product sales: | | | | | | | | | | | | | |
Chargebacks and billbacks | | | -26,940 | | | -6,050 | | | __ | | | | |
Sales discounts and other allowances | | | -4,366 | | | -1,593 | | | -1 | | | | |
Total reduction to gross product sales | | $ | -31,306 | | $ | -7,643 | | $ | -1 | | | | |
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Net IGI product sales | | $ | 19,830 | | $ | 7,358 | | $ | 17 | | | | |
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Accounts receivable are presented net of SRA balances of $5.6 million and $1.9 at December 31, 2014 and 2013, respectively. Accounts payable and accrued expenses include $1.7 million and $0.6 at December 31, 2014 and 2013, respectively, for certain fees related to services provided by the wholesalers. Wholesale fees of $3.1 million, $0.9 million and $0 for the years ended December 31, 2014, 2013 and 2012, respectively, were included in cost of goods sold. |
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In addition, in connection with four of the six products the Company currently manufactures, markets and distributes in its own label, in accordance with an agreement entered into in December of 2011, the Company is required to pay a royalty calculated on the basis of net sales to one of its pharmaceutical partners. The royalty is calculated based on contracted terms of 40% of net sales for the four products which is to be paid quarterly to the pharmaceutical partner. In accordance with the agreement, net sales excludes fees related to services provided by the wholesalers. Accounts payable and accrued expenses include $0.7 million and $0.9 at December 31, 2014 and 2013, respectively, related to these royalties. Royalty expense of $3.6 million, $2.6 million and $0 was included in cost of goods sold for the twelve months ended December 31, 2014, 2013, and 2012 respectively. The Company includes significant estimates to arrive at net product sales arising from wholesaler chargebacks, Medicaid and Medicare rebates, allowances and other pricing and promotional programs. |
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Contract Manufacturing Sales: The Company recognizes revenue when title transfers to its customers, which is generally upon shipment of products. These shipments are made in accordance with sales commitments and related sales orders entered into with customers either verbally or in written form. The revenues associated with these transactions, net of appropriate cash discounts, product returns and sales reserves, are recorded upon shipment of the products included in product sales, net in the statement of operations. |
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Research and Development Income: The Company establishes agreed upon product development agreements with its customers to perform product development services. Product development revenues are recognized in accordance with the product development agreement upon the completion of the phases of development and when the Company has no future performance obligations relating to that phase of development. Revenue recognition requires the Company to assess progress against contracted obligations to assure completion of each stage. These payments are generally non-refundable and are reported as deferred until they are recognizable as revenue. If no such arrangement exists, product development fees are recognized ratably over the entire period during which the services are performed. |
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In making such assessments, judgments are required to evaluate contingencies such as potential variances in schedule and the costs, the impact of change orders, liability claims, contract disputes and achievement of contractual performance standards. Changes in total estimated contract cost and losses, if any, are recognized in the period they are determined. Billings on research and development contracts are typically based upon terms agreed upon by the Company and customer and are stated in the contracts themselves and do not always align with the revenues recognized by the Company. |
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Licensing and Royalty Income: Revenues earned under licensing or sublicensing contracts are recognized as earned in accordance with the terms of the agreements. The Company recognizes royalty revenue based on royalty reports received from the licensee. The Company does not have current plans to have meaningful revenue from licensing and royalty agreements in 2015. |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock-Based Compensation |
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ASC 718-10 defines the fair-value-based method of accounting for stock-based employee compensation plans and transactions used by the Company to account for its issuances of equity instruments to record compensation cost for stock-based employee compensation plans at fair value as well as to acquire goods or services from non-employees. Transactions in which the Company issues stock-based compensation to employees, directors and advisors and for goods or services received from non-employees are accounted for based on the fair value of the equity instruments issued. The Company utilizes pricing models in determining the fair values of options and warrants issued as stock-based compensation. These pricing models utilize the market price of the Company’s common stock and the exercise price of the option or warrant, as well as time value and volatility factors underlying the positions. Stock-based compensation expense is recognized over the vesting period of the grant. |
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Debt, Policy [Policy Text Block] | Debt Issuance Costs |
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Expenses related to debt financing activities are capitalized and amortized on an effective interest method, over the term of the loan. See detailed amounts per year in Notes 6, 7 and 8. |
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Research, Development, and Computer Software, Policy [Policy Text Block] | Product Development and Research |
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The Company's research and development costs are expensed as incurred. |
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Shipping and Handling Cost, Policy [Policy Text Block] | Shipping and Handling Costs |
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Costs related to shipping and handling is comprised of outbound freight and the associated labor. These costs are recorded in costs of sales. |
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Earnings Per Share, Policy [Policy Text Block] | Net Income (Loss) per Common Share |
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Basic net income (loss) per share of common stock is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share of common stock is computed using the weighted average number of shares of common stock and potential dilutive common stock equivalents outstanding during the period. Potential dilutive common stock equivalents include shares issuable upon the conversion of the convertible 3.75% senior notes and the exercise of options and warrants and the conversion of preferred stock. Due to the net loss for the years ended December 31, 2013 and 2012, the effect of the Company’s potential dilutive common stock equivalents was anti-dilutive for each year; as a result, the basic and diluted weighted average number of common shares outstanding and net loss per common share are the same. As of December 31, 2013, the shares of common stock issuable in connection with stock options and warrants of 2,998,406, and as of December 31, 2012, the shares of common stock issuable in connection with stock options and warrants and the conversion of preferred stock of 6,445,628 were not included in the diluted income per common share calculation since their effect was anti-dilutive. |
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For the years ended December 31, 2014, 2013 and 2012 |
(in thousands except shares and per share data) |
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| | 2014 | | 2013 | | 2012 | | | | |
Basic earnings per share computation: | | | | | | | | | | | | | |
Net income (loss) attributable to common stockholders —basic | | $ | 5,251 | | $ | -1,392 | | $ | -3,927 | | | | |
Weighted average common shares —basic | | | 49,817,721 | | | 43,517,640 | | | 39,786,446 | | | | |
Basic net income (loss) per share | | $ | 0.11 | | $ | -0.03 | | $ | -0.1 | | | | |
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Dilutive earnings per share computation: | | | | | | | | | | | | | |
Net income (loss) attributable to common stockholders —basic | | $ | 5,251 | | $ | -1,392 | | $ | -3,927 | | | | |
Interest expense related to convertible 3.75% senior notes | | | 224 | | | - | | | - | | | | |
Net income (loss) attributable to common stockholders —diluted | | $ | 5,475 | | $ | -1,392 | | $ | -3,927 | | | | |
Share Computation: | | | | | | | | | | | | | |
Weighted average common shares —basic | | | 49,817,721 | | | 43,517,640 | | | 39,786,446 | | | | |
Effect of convertible 3.75% senior notes | | | 12,732,168 | | | - | | | - | | | | |
Effect of dilutive stock options and warrants | | | 1,657,301 | | | - | | | - | | | | |
Weighted average common shares outstanding —diluted | | | 64,207,190 | | | 43,517,640 | | | 39,786,446 | | | | |
Diluted net income (loss) per share | | $ | 0.09 | | $ | -0.03 | | $ | -0.1 | | | | |
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Derivatives, Policy [Policy Text Block] | Derivatives |
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The Company accounts for its derivative instruments in accordance with ASC 815-10, “Derivatives and Hedging” (“ASC 815-10”). ASC 815-10 establishes accounting and reporting standards requiring that derivative instruments, including derivative instruments embedded in other contracts, be recorded on the balance sheet as either an asset or liability measured at its fair value. ASC 815-10 also requires that changes in the fair value of derivative instruments be recognized currently in results of operations unless specific hedge accounting criteria are met. The Company has not entered into hedging activities to date. The Company's derivative liability is the embedded convertible option of its Convertible Notes issued December 16, 2014 (as defined in Note 6), all of which have been recorded as a liability at fair value, and are revalued at each reporting date, with changes in the fair value of the instruments included in the consolidated statements of operations as non-operating income (expense). |
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates |
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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation of the derivative liability, SRA allowances, allowances for excess and obsolete inventories, allowances for doubtful accounts, provisions for income taxes and related deferred tax asset valuation allowances, stock based compensation and accruals for environmental cleanup and remediation costs. Actual results could differ from those estimates. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements |
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In May 2014, FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers”. This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt this ASU on January 1, 2017. Companies may use either a full retrospective or modified retrospective approach to adopt this ASU and management is currently evaluating which transition approach to use. The Company is currently evaluating the impact of ASU 2014-09. |
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In August 2014, FASB issued Accounting Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. This ASU requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2014-15. |
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