Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 28, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | AMAG PHARMACEUTICALS INC. | |
Entity Central Index Key | 792,977 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding (in shares) | 35,045,394 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 252,854 | $ 274,305 |
Investments | 305,541 | 304,781 |
Accounts receivable, net | 85,233 | 92,375 |
Inventories | 36,927 | 37,258 |
Prepaid and other current assets | 8,316 | 9,839 |
Total current assets | 688,871 | 718,558 |
Property, plant and equipment, net | 22,708 | 24,460 |
Goodwill | 639,484 | 639,484 |
Intangible assets, net | 1,067,329 | 1,092,178 |
Restricted cash | 2,493 | 2,593 |
Other long-term assets | 1,025 | 1,153 |
Total assets | 2,421,910 | 2,478,426 |
Current liabilities: | ||
Accounts payable | 7,591 | 3,684 |
Accrued expenses | 147,479 | 156,008 |
Current portion of long-term debt | 20,455 | 21,166 |
Current portion of acquisition-related contingent consideration | 97,515 | 97,068 |
Deferred revenues | 34,899 | 34,951 |
Total current liabilities | 307,939 | 312,877 |
Long-term liabilities: | ||
Long-term debt, net | 783,333 | 785,992 |
Convertible 2.5% notes, net | 181,566 | 179,363 |
Acquisition-related contingent consideration | 51,440 | 50,927 |
Deferred tax liabilities | 154,225 | 197,066 |
Deferred revenues | 16,970 | 14,850 |
Other long-term liabilities | 2,349 | 2,962 |
Total liabilities | 1,497,822 | 1,544,037 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized; none issued | 0 | 0 |
Common stock, par value $0.01 per share, 117,500,000 shares authorized; 34,445,394 and 34,336,147 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 344 | 343 |
Additional paid-in capital | 1,242,640 | 1,238,031 |
Accumulated other comprehensive loss | (3,746) | (3,838) |
Accumulated deficit | (315,150) | (300,147) |
Total stockholders’ equity | 924,088 | 934,389 |
Total liabilities and stockholders’ equity | $ 2,421,910 | $ 2,478,426 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 117,500,000 | 117,500,000 |
Common stock, shares issued (in shares) | 34,445,394 | 34,336,147 |
Common stock, shares outstanding (in shares) | 34,445,394 | 34,336,147 |
Convertible 2.5% notes, net | ||
Convertible notes, interest rate (as a percent) | 2.50% | 2.50% |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues: | ||
Product sales, net | $ 112,517,000 | $ 89,564,000 |
Service revenues, net | 26,931,000 | 19,520,000 |
License fee, collaboration and other revenues | 24,000 | 216,000 |
Total revenues | 139,472,000 | 109,300,000 |
Costs and expenses: | ||
Cost of product sales | 27,573,000 | 18,300,000 |
Cost of services | 5,010,000 | 5,526,000 |
Research and development expenses | 16,489,000 | 14,229,000 |
Acquired in-process research and development | 60,000,000 | 0 |
Selling, general and administrative expenses | 70,424,000 | 63,175,000 |
Restructuring expenses | 0 | 622,000 |
Total costs and expenses | 179,496,000 | 101,852,000 |
Operating income (loss) | (40,024,000) | 7,448,000 |
Other income (expense): | ||
Interest expense | (18,300,000) | (18,443,000) |
Interest and dividend income | 1,031,000 | 708,000 |
Gains on investments, net | 27,000 | 0 |
Other income (expense) | 0 | 220,000 |
Total other income (expense) | (17,242,000) | (17,515,000) |
Loss before income taxes | (57,266,000) | (10,067,000) |
Income tax benefit | (20,706,000) | (2,540,000) |
Net loss | $ (36,560,000) | $ (7,527,000) |
Net loss per share: | ||
Basic (in usd per share) | $ (1.06) | $ (0.22) |
Diluted (in usd per share) | $ (1.06) | $ (0.22) |
Weighted average shares outstanding used to compute net loss per share: | ||
Basic (in shares) | 34,378 | 34,739 |
Diluted (in shares) | 34,378 | 34,739 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (36,560) | $ (7,527) |
Unrealized gains (losses) on securities: | ||
Holding gains arising during period, net of tax | 92 | 932 |
Net unrealized gains on securities | 92 | 932 |
Total comprehensive loss | $ (36,468) | $ (6,595) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (36,560,000) | $ (7,527,000) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 27,994,000 | 19,644,000 |
Provision for bad debt expense | 590,000 | 2,209,000 |
Amortization of premium/discount on purchased securities | 113,000 | 177,000 |
Non-cash equity-based compensation expense | 5,778,000 | 6,160,000 |
Amortization of debt discount and debt issuance costs | 3,209,000 | 2,937,000 |
Gains on investments, net | (143,000) | 0 |
Change in fair value of contingent consideration | 1,043,000 | 5,056,000 |
Deferred income taxes | (21,192,000) | (1,469,000) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 6,553,000 | 715,000 |
Inventories | (403,000) | (2,157,000) |
Receivable from collaboration | 0 | 246,000 |
Prepaid and other current assets | 1,523,000 | (3,078,000) |
Accounts payable and accrued expenses | (4,622,000) | (6,647,000) |
Deferred revenues | 2,067,000 | 9,717,000 |
Other assets and liabilities | (486,000) | 593,000 |
Net cash (used in) provided by operating activities | (14,536,000) | 26,576,000 |
Cash flows from investing activities: | ||
Proceeds from sales or maturities of investments | 128,512,000 | 25,500,000 |
Purchase of investments | (129,241,000) | (63,413,000) |
Change in restricted cash | 100,000 | 0 |
Capital expenditures | (658,000) | (681,000) |
Net cash used in investing activities | (1,287,000) | (38,594,000) |
Cash flows from financing activities: | ||
Long-term debt principal payments | (4,375,000) | (4,375,000) |
Payment of contingent consideration | (83,000) | (65,000) |
Payments for repurchases of common stock | 0 | (7,562,000) |
Proceeds from the exercise of stock options | 152,000 | 400,000 |
Payments of employee tax withholding related to equity-based compensation | (1,322,000) | (1,696,000) |
Net cash used in financing activities | (5,628,000) | (13,298,000) |
Net decrease in cash and cash equivalents | (21,451,000) | (25,316,000) |
Cash and cash equivalents at beginning of the period | 274,305,000 | 228,705,000 |
Cash and cash equivalents at end of the period | 252,854,000 | 203,389,000 |
Supplemental data for cash flow information: | ||
Cash paid for taxes | 208,000 | 2,400 |
Cash paid for interest | $ 26,195,000 | $ 27,964 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | DESCRIPTION OF BUSINESS AMAG Pharmaceuticals, Inc., a Delaware corporation, was founded in 1981. We are a biopharmaceutical company focused on developing and delivering important therapeutics, conducting clinical research in areas of unmet need and creating education and support programs for the patients and families we serve. Our currently marketed products support the health of patients in the areas of women’s and maternal health, anemia management and cancer supportive care, including Makena ® (hydroxyprogesterone caproate injection), Feraheme ® (ferumoxytol) for intravenous use and MuGard ® Mucoadhesive Oral Wound Rinse. Through services related to the preservation of umbilical cord blood stem cell and cord tissue units (the “CBR Services”) operated through Cord Blood Registry ® (“CBR”), we also help families to preserve newborn stem cells, which are used today in transplant medicine for certain cancers and blood, immune and metabolic disorders, and which we believe have the potential to play a valuable role in the ongoing development of regenerative medicine. In addition, in February 2017, we acquired the rights to research, develop and commercialize bremelanotide in North America , which is being developed for the treatment of hypoactive sexual desire disorder (“HSDD”) in pre-menopausal women, and in April 2017, we acquired the rights to market Intrarosa TM (prasterone) in the U.S. for the treatment of moderate-to-severe dyspareunia, a common symptom of vulvar and vaginal atrophy (“VVA”), due to menopause. Throughout this Quarterly Report on Form 10-Q, AMAG Pharmaceuticals, Inc. and our consolidated subsidiaries are collectively referred to as “the Company,” “AMAG,” “we,” “us,” or “our.” |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments necessary for a fair statement of the financial position and results of operations of the Company for the interim periods presented. Such adjustments consisted only of normal recurring items. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). In accordance with GAAP for interim financial reports and the instructions for Form 10-Q and the rules of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. Our accounting policies are described in the Notes to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2016 (our “Annual Report”). Interim results are not necessarily indicative of the results of operations for the full year. These interim financial statements should be read in conjunction with our Annual Report. Principles of Consolidation The accompanying condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates and Assumptions The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. The most significant estimates and assumptions are used to determine amounts and values of, but are not limited to: revenue recognition related to product sales and services revenue; product sales allowances and accruals; allowance for doubtful accounts; investments; inventory; acquisition date fair value and subsequent fair value estimates used to assess impairment of long-lived assets, including goodwill, in-process research and development (“IPR&D”) and other intangible assets; contingent consideration; debt obligations; certain accrued liabilities, including clinical trial accruals; income taxes and equity-based compensation expense. Actual results could differ materially from those estimates. Concentrations and Significant Customer Information Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, investments, and accounts receivable. We currently hold our excess cash primarily in institutional money market funds, corporate debt securities, U.S. treasury and government agency securities, commercial paper and certificates of deposit. As of March 31, 2017 , we did not have a material concentration in any single investment. Our operations are located entirely within the U.S. We focus primarily on developing, manufacturing, and commercializing our products and marketing and selling the CBR Services. We perform ongoing credit evaluations of our product sales customers and generally do not require collateral. The following table sets forth customers who represented 10% or more of our total revenues for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 AmerisourceBergen Drug Corporation 22 % 24 % McKesson Corporation 14 % <10 % Our net accounts receivable primarily represented amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies and amounts due for CBR Services sold directly to consumers. Accounts receivable for our products and services are recorded net of reserves for estimated chargeback obligations, prompt payment discounts and any allowance for doubtful accounts. Customers which represented greater than 10% of our accounts receivable balance as of March 31, 2017 and December 31, 2016 were as follows: March 31, 2017 December 31, 2016 AmerisourceBergen Drug Corporation 31 % 13 % McKesson Corporation 21 % 32 % We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities) and Feraheme finished drug product. In addition, we rely on single sources for certain materials required to support the CBR Services. We would be exposed to a significant loss of revenue from the sale of our products and services if our suppliers and/or manufacturers could not fulfill demand for any reason. Revenue Recognition and Related Sales Allowances and Accruals Our primary sources of revenue during the reporting periods were product revenues from Makena and Feraheme and service revenues associated with the CBR Services. Revenue is recognized when the following criteria are met: • Persuasive evidence of an arrangement exists; • Delivery of product has occurred or services have been rendered; • The sales price charged is fixed or determinable; and • Collection is reasonably assured. Product Revenue Our product sales, which primarily represented revenues from Makena and Feraheme for the three months ended March 31, 2017 and 2016 , were offset by provisions for allowances and accruals as follows (in thousands): Three Months Ended March 31, 2017 2016 Gross product sales $ 206,724 $ 152,192 Provision for product sales allowances and accruals: Contractual adjustments 69,829 45,581 Governmental rebates 24,378 17,047 Total 94,207 62,628 Product sales, net $ 112,517 $ 89,564 We recognize product revenues net of certain allowances and accruals in our condensed consolidated statement of operations at the time of sale. Our contractual adjustments include provisions for returns, pricing and prompt payment discounts, as well as wholesaler distribution fees, rebates to hospitals that qualify for 340B pricing, and volume-based and other commercial rebates. Governmental rebates relate to our reimbursement arrangements with state Medicaid programs. We did not materially adjust our product sales allowances and accruals during the three months ended March 31, 2017 or 2016 . If we determine in future periods that our actual experience is not indicative of our expectations, if our actual experience changes, or if other factors affect our estimates, we may be required to adjust our allowances and accruals estimates, which would affect our net product sales in the period of the adjustment and could be significant. Multiple Element Arrangements For multiple element arrangements, we allocate revenue to all deliverables based on their relative selling prices. We determine the selling price to be used for allocating revenue to deliverables as follows: (a) vendor specific objective evidence; (b) third-party evidence of selling price and (c) the best estimate of the selling price. Vendor specific objective evidence generally exists only when we sell the deliverable separately and it is the price actually charged by us for that deliverable. Any discounts given to the customer are allocated by applying the relative selling price method. Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in our condensed consolidated balance sheets. Deferred revenue associated with our service revenues includes (a) amounts collected in advance of unit processing and (b) amounts associated with unearned storage fees collected at the beginning of the storage contract term, net of allocated discounts. Amounts not expected to be recognized within the next year are classified as long-term deferred revenues. Service Revenue Our service revenues for the CBR Services include the following two deliverables: (a) enrollment, including the provision of a collection kit and cord blood and cord tissue unit processing, which are delivered at the beginning of the relationship (the “processing services”), with revenue for this deliverable recognized after the collection and successful processing of the cord blood and cord tissue; and (b) the storage of newborn cord blood and cord tissue units (the “storage services”), for either an annual fee or a prepayment of 18 years or the lifetime of the newborn donor (the “lifetime option”), with revenue for this deliverable recognized ratably over the applicable storage period. For the lifetime option, storage fees are not charged during the lifetime of the newborn donor. However, revenue is recognized based on the average of male and female life expectancies using lifetime actuarial tables published by the Social Security Administration in effect at the time of the newborn’s birth. As there are other vendors who provide processing services and storage services at separately stated list prices, the processing services and storage services, including the first year storage, each have standalone value to the customer, and therefore represent separate deliverables. The selling price for the processing services is estimated based on the best estimate of selling price because we do not have vendor specific objective evidence or third-party evidence of selling price for these elements. The selling price for the storage services is determined based on vendor specific objective evidence as we have standalone renewals to support the selling price. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | INVESTMENTS As of March 31, 2017 and December 31, 2016 , our investments consisted of securities classified as available-for-sale in accordance with accounting standards which provide guidance related to accounting and classification of certain investments in debt and equity securities. The following is a summary of our investments as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Corporate debt securities Due in one year or less $ 137,390 $ 8 $ (86 ) $ 137,312 Due in one to three years 111,161 36 (135 ) 111,062 U.S. treasury and government agency securities Due in one year or less 2,513 — (1 ) 2,512 Due in one to three years 14,373 4 (49 ) 14,328 Commercial paper Due in one year or less 26,875 — — 26,875 Certificates of deposit Due in one year or less 12,000 — — 12,000 Due in one to three years 1,452 — — 1,452 Total investments $ 305,764 $ 48 $ (271 ) $ 305,541 December 31, 2016 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Corporate debt securities Due in one year or less $ 106,430 $ 3 $ (69 ) $ 106,364 Due in one to three years 139,742 32 (281 ) 139,493 U.S. treasury and government agency securities Due in one year or less 1,021 — — 1,021 Due in one to three years 11,395 — (52 ) 11,343 Commercial paper Due in one year or less 40,560 — — 40,560 Certificates of deposit Due in one year or less 6,000 — — 6,000 Total investments $ 305,148 $ 35 $ (402 ) $ 304,781 Impairments and Unrealized Gains and Losses on Investments We did no t recognize any other-than-temporary impairment losses in our condensed consolidated statements of operations related to our securities during the three months ended March 31, 2017 and 2016 . We considered various factors, including the length of time that each security was in an unrealized loss position and our ability and intent to hold these securities until the recovery of their amortized cost basis occurs. As of March 31, 2017 , none of our investments has been in an unrealized loss position for more than one year. Future events may occur, or additional information may become available, which may cause us to identify credit losses where we do not expect to receive cash flows sufficient to recover the entire amortized cost basis of a security and may necessitate the recording of future realized losses on securities in our portfolio. Significant losses in the estimated fair values of our investments could have a material adverse effect on our earnings in future periods. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following tables represent the fair value hierarchy as of March 31, 2017 and December 31, 2016 , for those assets and liabilities that we measure at fair value on a recurring basis (in thousands): Fair Value Measurements at March 31, 2017 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents $ 9,932 $ 9,932 $ — $ — Corporate debt securities 248,374 — 248,374 — U.S. treasury and government agency securities 16,840 — 16,840 — Commercial paper 26,875 — 26,875 — Certificates of deposit 13,452 — 13,452 — Total Assets $ 315,473 $ 9,932 $ 305,541 $ — Liabilities: Contingent consideration - Lumara Health $ 146,973 $ — $ — $ 146,973 Contingent consideration - MuGard 1,982 — — 1,982 Total Liabilities $ 148,955 $ — $ — $ 148,955 Fair Value Measurements at December 31, 2016 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents $ 9,951 $ 9,951 $ — $ — Corporate debt securities 245,857 — 245,857 — U.S. treasury and government agency securities 12,364 — 12,364 — Commercial paper 40,560 — 40,560 — Certificates of deposit 6,000 — 6,000 — Total Assets $ 314,732 $ 9,951 $ 304,781 $ — Liabilities: Contingent consideration - Lumara Health $ 145,974 $ — $ — $ 145,974 Contingent consideration - MuGard 2,021 — — 2,021 Total Liabilities $ 147,995 $ — $ — $ 147,995 Investments Our cash equivalents are classified as Level 1 assets under the fair value hierarchy as these assets, which consist of money market funds, have been valued using quoted market prices in active markets and do not have any restrictions on redemption. Our investments are classified as Level 2 assets under the fair value hierarchy as these assets were primarily determined from independent pricing services, which normally derive security prices from recently reported trades for identical or similar securities, making adjustments based upon other significant observable market transactions. At the end of each reporting period, we perform quantitative and qualitative analyses of prices received from third parties to determine whether prices are reasonable estimates of fair value. After completing our analyses, we did not adjust or override any fair value measurements provided by our pricing services as of March 31, 2017 . In addition, there were no transfers or reclassifications of any securities between Level 1 and Level 2 during the three months ended March 31, 2017 . Contingent consideration We record contingent consideration related to the November 2014 acquisition of Lumara Health Inc. (“Lumara Health ”) and related to our June 2013 license agreement for MuGard (the “MuGard License Agreement”) with Abeona Therapeutics, Inc. (“Abeona”), under which we acquired the U.S. commercial rights for the management of oral mucositis and stomatitis (the “MuGard Rights”). The fair value measurements of contingent consideration obligations and the related intangible assets arising from business combinations are classified as Level 3 assets under the fair value hierarchy as these assets have been valued using unobservable inputs. These inputs include: (a) the estimated amount and timing of projected cash flows; (b) the probability of the achievement of the factors on which the contingency is based; and (c) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement. The following table presents a reconciliation of contingent consideration obligations related to the acquisition of Lumara Health and the MuGard Rights (in thousands): Balance as of December 31, 2016 $ 147,995 Payments made (83 ) Adjustments to fair value of contingent consideration 1,043 Balance as of March 31, 2017 $ 148,955 The $1.0 million of adjustments to the fair value of the contingent consideration liability during the three months ended March 31, 2017 were due to an approximately $1.0 million increase to the Makena contingent consideration. We have classified $97.2 million of the Makena contingent consideration and $0.3 million of the MuGard contingent consideration as short-term liabilities in our condensed consolidated balance sheet as of March 31, 2017 . The $97.2 million Makena contingent consideration reflects a $100.0 million sales milestone payment expected to be paid in the fourth quarter of 2017 to the former Lumara Health security holders based on the forecasted achievement of a net sales milestone of Makena in the fourth quarter of 2017 . The fair value of the contingent milestone payments payable by us to the former stockholders of Lumara Health was determined based on our probability-adjusted discounted cash flows estimated to be realized from the net sales of Makena from December 1, 2014 through December 31, 2019. As of March 31, 2017 , the total undiscounted milestone payment amount we could pay in connection with the Lumara Health acquisition was $250.0 million through December 31, 2019. The fair value of the contingent royalty payments payable by us to Abeona under the MuGard License Agreement was determined based on various market factors, including an analysis of estimated sales using a discount rate of approximately 12% . As of March 31, 2017 , we estimated that the undiscounted royalty amounts we could pay under the MuGard License Agreement, based on current projections, may range from approximately $2.0 million to $6.0 million over the remainder of the ten year period, which commenced on June 6, 2013, the acquisition date, which is our best estimate of the period over which we expect the majority of the asset’s cash flows to be derived. We believe the estimated fair values of Lumara Health and the MuGard Rights are based on reasonable assumptions, however, our actual results may vary significantly from the estimated results. Debt We estimate the fair value of our debt obligations by using quoted market prices obtained from third-party pricing services, which is classified as a Level 2 input. As of March 31, 2017 , the estimated fair value of our 2023 Senior Notes, Convertible Notes and 2015 Term Loan Facility (each as defined below) was $473.8 million , $219.3 million and $323.5 million , respectively, which differed from their carrying values. See Note P, “ Debt ” for additional information on our debt obligations. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Our major classes of inventories were as follows as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 December 31, 2016 Raw materials $ 14,721 $ 14,382 Work in process 3,250 3,924 Finished goods 18,956 18,952 Total inventories $ 36,927 $ 37,258 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 December 31, 2016 Land $ 700 $ 700 Land improvements 300 300 Building and improvements 9,500 9,500 Computer equipment and software 14,190 13,866 Furniture and fixtures 2,401 2,401 Leasehold improvements 3,718 3,718 Laboratory and production equipment 6,638 6,449 Construction in progress 1,765 1,619 39,212 38,553 Less: accumulated depreciation (16,504 ) (14,093 ) Property, plant and equipment, net $ 22,708 $ 24,460 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill Our $639.5 million goodwill balance consisted of $198.1 million of goodwill acquired through the November 2014 Lumara Health acquisition and $441.4 million acquired through the August 2015 CBR acquisition. As of March 31, 2017 , we had no accumulated impairment losses related to goodwill. Intangible Assets As of March 31, 2017 and December 31, 2016 , our identifiable intangible assets consisted of the following (in thousands): March 31, 2017 December 31, 2016 Accumulated Accumulated Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 149,652 $ — $ 647,448 $ 797,100 $ 128,732 $ — $ 668,368 CBR customer relationships 297,000 17,519 — 279,481 297,000 13,590 — 283,410 1,094,100 167,171 — 926,929 1,094,100 142,322 — 951,778 Indefinite-lived intangible assets: Makena IPR&D 79,100 — — 79,100 79,100 — — 79,100 CBR trade names and trademarks 65,000 — 3,700 61,300 65,000 — 3,700 61,300 Total intangible assets $ 1,238,200 $ 167,171 $ 3,700 $ 1,067,329 $ 1,238,200 $ 142,322 $ 3,700 $ 1,092,178 As of March 31, 2017 , the weighted average remaining amortization period for our finite-lived intangible assets was approximately 8.5 years . The Makena base technology and IPR&D intangible assets were acquired in November 2014 in connection with our acquisition of Lumara Health. Amortization of the Makena base technology asset is being recognized using an economic consumption model over 20 years from the acquisition date, which we believe is an appropriate amortization period due to the estimated economic lives of the product rights and related intangibles. The CBR intangible assets (i.e., the CBR customer relationships and trade names and trademarks) were acquired in August 2015 in connection with our acquisition of CBR. Amortization of the CBR customer relationships is being recognized using an estimated useful life of 20 years from the acquisition date, which we believe is an appropriate amortization period due to the estimated economic lives of the CBR intangible assets. As part of our 2016 annual impairment test, we recorded an impairment charge of $3.7 million in the fourth quarter of 2016 related to the impairment of a portion of the CBR trade names and trademarks indefinite-lived intangible asset based on a revised long-term revenue forecast for CBR. Total amortization expense for the three months ended March 31, 2017 and 2016 , was $24.8 million and $16.6 million , respectively. Amortization expense for the Makena base technology is recorded in cost of product sales in our condensed consolidated statements of operations. Amortization expense for the CBR customer relationships is recorded in selling, general and administrative expenses in our condensed consolidated statements of operations. We expect amortization expense related to our finite-lived intangible assets to be as follows (in thousands): Estimated Amortization Period Expense Remainder of Year Ending December 31, 2017 $ 95,051 Year Ending December 31, 2018 81,433 Year Ending December 31, 2019 48,283 Year Ending December 31, 2020 46,845 Year Ending December 31, 2021 46,767 Thereafter 608,550 Total $ 926,929 |
Current and Long- Term Liabilit
Current and Long- Term Liabilities | 3 Months Ended |
Mar. 31, 2017 | |
Liabilities [Abstract] | |
Current and Long-Term Liabilities | CURRENT AND LONG-TERM LIABILITIES Accrued Expenses Accrued expenses consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 December 31, 2016 Commercial rebates, fees and returns $ 96,280 $ 89,466 Professional, license, and other fees and expenses 24,630 24,248 Research and development expenses 9,901 10,714 Interest expense 5,507 16,683 Salaries, bonuses, and other compensation 11,161 14,823 Restructuring expense — 74 Total accrued expenses $ 147,479 $ 156,008 Deferred Revenues Our deferred revenue balances as of March 31, 2017 and December 31, 2016 were related to our CBR Services revenues and included: (a) amounts collected in advance of unit processing and (b) amounts associated with unearned storage fees collected at the beginning of the storage contract term, net of allocated discounts. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The following table summarizes our effective tax rate and income tax benefit for the three months ended March 31, 2017 and 2016 (in thousands except for percentages): Three Months Ended March 31, 2017 2016 Effective tax rate 36 % 25 % Income tax benefit $ (20,706 ) $ (2,540 ) For the three months ended March 31, 2017 , we recognized an income tax benefit of $20.7 million representing an effective tax rate of 36% . The difference between the expected statutory federal tax rate of 35% and the effective tax rate for the three months ended March 31, 2017 , was primarily attributable to the impact of state income taxes and the federal research and development tax credit, partially offset by non-deductible stock compensation and other non-deductible expenses. For the three months ended March 31, 2016 , we recognized an income tax benefit of $2.5 million representing an effective tax rate of 25% . The difference between the expected statutory federal tax rate of 35% and the 25% effective tax rate for the three months ended March 31, 2016 , was primarily attributable to the impact of state income taxes, stock compensation, and federal research and development and orphan drug tax credits, partially offset by non-deductible contingent consideration expense associated with Lumara Health. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The table below presents information about the effects of net income (loss) of significant amounts reclassified out of accumulated other comprehensive income (loss), net of tax, associated with unrealized gains (losses) on securities during the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Beginning balance $ (3,838 ) $ (4,205 ) Other comprehensive income before reclassifications 92 932 Ending balance $ (3,746 ) $ (3,273 ) |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Income (Loss) per Share | BASIC AND DILUTED NET INCOME (LOSS) PER SHARE We compute basic net income (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding during the relevant period. Diluted net income (loss) per common share has been computed by dividing net income (loss) by the diluted number of common shares outstanding during the period. Except where the result would be antidilutive to net income (loss), diluted net income (loss) per common share would be computed assuming the impact of the conversion of the $200.0 million of 2.5% convertible senior notes due February 15, 2019 (the “Convertible Notes”), the exercise of outstanding stock options, the vesting of restricted stock units (“RSUs”), and the exercise of warrants. We have a choice to settle the conversion obligation under the Convertible Notes in cash, shares or any combination of the two. Pursuant to certain covenants in our six -year $350.0 million term loan facility (the “2015 Term Loan Facility”), which we entered into in 2015 to partially fund the acquisition of CBR, we may be restricted from settling the conversion obligation in whole or in part with cash unless certain conditions in the 2015 Term Loan Facility are satisfied. We utilize the if-converted method to reflect the impact of the conversion of the Convertible Notes. This method assumes the conversion of the Convertible Notes into shares of our common stock and reflects the elimination of interest expense related to the Convertible Notes when dilutive. The dilutive effect of the warrants, stock options and RSUs has been calculated using the treasury stock method. The components of basic and diluted net loss per share for the three months ended March 31, 2017 and 2016 , were as follows (in thousands, except per share data): Three Months Ended March 31, 2017 2016 Net loss $ (36,560 ) $ (7,527 ) Weighted average shares outstanding used to compute net loss per share: Basic 34,378 34,739 Diluted 34,378 34,739 Net loss per share: Basic $ (1.06 ) $ (0.22 ) Diluted $ (1.06 ) $ (0.22 ) The following table sets forth the potential common shares issuable upon the exercise of outstanding options, the vesting of RSUs, the exercise of warrants (prior to consideration of the treasury stock method), and the conversion of the Convertible Notes, which were excluded from our computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive (in thousands): Three Months Ended March 31, 2017 2016 Options to purchase shares of common stock 2,406 2,455 Shares of common stock issuable upon the vesting of RSUs 775 904 Warrants 7,382 7,382 Convertible 2.5% notes 7,382 7,382 Total 17,945 18,123 In connection with the issuance of the Convertible Notes, in February 2014, we entered into convertible bond hedges. The convertible bond hedges are not included for purposes of calculating the number of diluted shares outstanding, as their effect would be anti-dilutive. The convertible bond hedges are generally expected, but not guaranteed, to reduce the potential dilution and/or offset the cash payments we are required to make upon conversion of the Convertible Notes. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity-Based Compensation | EQUITY‑BASED COMPENSATION We currently maintain four equity compensation plans, namely our Third Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), our Amended and Restated 2000 Stock Plan, the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan and our 2015 Employee Stock Purchase Plan (“2015 ESPP”). All outstanding stock options granted under each of our equity compensation plans have an exercise price equal to the closing price of a share of our common stock on the grant date (excluding purchase rights under our 2015 ESPP). Stock Options The following table summarizes stock option activity for the three months ended March 31, 2017 : 2007 Equity 2000 Equity 2013 Lumara Inducement Plan Plan Equity Plan Grants Total Outstanding at December 31, 2016 2,158,822 5,200 134,181 814,975 3,113,178 Granted 322,210 — — — 322,210 Exercised (9,065 ) — — — (9,065 ) Expired or terminated (50,696 ) — (281 ) (27,625 ) (78,602 ) Outstanding at March 31, 2017 2,421,271 5,200 133,900 787,350 3,347,721 Restricted Stock Units The following table summarizes RSU activity for the three months ended March 31, 2017 : 2007 Equity 2000 Equity 2013 Lumara Inducement Plan Plan Equity Plan Grants Total Outstanding at December 31, 2016 773,804 — 27,694 135,456 936,954 Granted 732,956 — — — 732,956 Vested (143,056 ) — (11,664 ) (1,000 ) (155,720 ) Expired or terminated (26,957 ) — (501 ) (5,318 ) (32,776 ) Outstanding at March 31, 2017 1,336,747 — 15,529 129,138 1,481,414 In February 2017, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 191,250 shares of common stock. These performance-based RSUs will vest, if at all, on February 22, 2020, based on our total shareholder return (“TSR”) performance measured against the median TSR of a defined comparator group of companies over a three -year period. The maximum aggregate total fair value of these RSUs is $5.7 million , which is being recognized as expense over a period of three years from the date of grant, net of any estimated and actual forfeitures. Equity-based compensation expense Equity-based compensation expense for the three months ended March 31, 2017 and 2016 consisted of the following (in thousands): Three Months Ended March 31, 2017 2016 Cost of product sales $ 129 $ 320 Research and development 756 756 Selling, general and administrative 4,893 5,084 Total equity-based compensation expense 5,778 6,160 Income tax effect (1,605 ) (1,674 ) After-tax effect of equity-based compensation expense $ 4,173 $ 4,486 We reduce the compensation expense being recognized to account for estimated forfeitures, which we estimate based primarily on historical experience, adjusted for unusual events such as corporate restructurings, which may result in higher than expected turnover and forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We adopted ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) during the first quarter of 2017. We will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur. For additional information, see Note R, “ Recently Issued and Proposed Accounting Pronouncements, ” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Share Repurchase Program In January 2016, we announced that our board of directors authorized a program to repurchase up to $60.0 million in shares of our common stock. The repurchase program does not have an expiration date and may be suspended for periods or discontinued at any time. Under the program, we may purchase our stock from time to time at the discretion of management in the open market or in privately negotiated transactions. The number of shares repurchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, along with working capital requirements, general business conditions and other factors. We may also from time to time establish a trading plan under Rule 10b5-1 of the Securities and Exchange Act of 1934 to facilitate purchases of our shares under this program. As of March 31, 2017 , we repurchased and retired 831,744 shares of common stock under this repurchase program for $20.0 million at an average purchase price of $24.05 per share. We did no t repurchase any of our common stock during the first quarter of 2017 . Change in Stockholders’ Equity Total stockholders’ equity decreased by $10.3 million during the three months ended March 31, 2017 . This decrease was primarily driven by our net loss of $36.6 million , partially offset by $21.6 million related to the cumulative-effect adjustment to our accumulated deficit from previously unrecognized excess tax benefits upon our adoption of ASU No. 2016-09. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Commitments Our long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These include commitments related to our facility leases, purchases of inventory and other purchases related to our products, debt obligations, and other purchase obligations. Purchase Commitments In connection with our acquisition of CBR, we have certain minimum purchase commitments associated with an agreement entered into by CBR prior to our acquisition. This agreement expires in December 2018, with the remaining amount of minimum purchase commitments totaling $ 4.6 million as of March 31, 2017. Contingencies Legal Proceedings We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. For certain matters referenced below, the liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. In addition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible, we will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, we will provide disclosure to that effect. We expense legal costs as they are incurred. Sandoz Patent Infringement Lawsuit On February 5, 2016, we received a Paragraph IV certification notice letter regarding an Abbreviated New Drug Application submitted to the U.S. Food and Drug Administration (the “FDA”) by Sandoz Inc. (“Sandoz”) requesting approval to engage in commercial manufacture, use and sale of a generic version of ferumoxytol. A generic version of Feraheme can be marketed only with the approval of the FDA of the respective application for such generic version. The Drug Price Competition and Patent Term Restoration Act of 1984, as amended, (the “Hatch-Waxman Act”), requires an ANDA applicant whose proposed drug is a generic version of a previously-approved drug listed in the FDA publication, “Approved Drug Products with Therapeutic Equivalence Evaluations,” also known as the “Orange Book,” to certify to any patents listed in the Orange Book for the previously-approved drug and, in the case of a Paragraph IV certification, to notify the owner of the approved application and the relevant patent-holder. The Paragraph IV certification notice is required to contain a detailed factual and legal statement explaining the basis for the applicant’s opinion that the proposed product does not infringe the subject patents, that such patents are invalid or unenforceable, or both. If a patent infringement suit is filed within 45 days of receipt of the Paragraph IV notice, a so-called 30 -month stay is triggered that generally prevents the FDA from approving the ANDA until the expiration of the 30 -month stay period, conclusion of the litigation in the generic applicant’s favor, or expiration of the patent, whichever is earlier. In its notice letter, Sandoz claims that our ferumoxytol patents are invalid, unenforceable and/or not infringed by Sandoz’s manufacture, use, sale or offer for sale of the generic version. In March 2016, we initiated a patent infringement suit alleging that Sandoz’s ANDA filing itself constituted an act of infringement and that if it is approved, the manufacture, use, offer for sale, sale or importation of Sandoz’s ferumoxytol products would infringe our patents. By the filing of this complaint, we believe the 30 month stay was triggered and that Sandoz is prohibited from marketing its ferumoxytol product, even if it receives conditional approval from the FDA until the earliest of 30 months from the date of receipt of the notice of certification by the patent owner or NDA holder, the conclusion of litigation in the generic’s favor, or expiration of the patent(s). If the litigation is resolved in favor of the applicant or the challenged patent expires during the 30 month stay period, the stay is lifted and the FDA may thereafter approve the application based on the applicable standards for approval. On May 2, 2016, Sandoz filed a response to our patent infringement suit and the trial is scheduled for March 12, 2018. Any future unfavorable outcome in this matter could negatively affect the magnitude and timing of future Feraheme revenues. We intend to vigorously enforce our intellectual property rights relating to ferumoxytol. Other On July 20, 2015, the Federal Trade Commission (the “FTC”) notified us that it was conducting an investigation into whether Lumara Health or its predecessor engaged in unfair methods of competition with respect to Makena or any hydroxyprogesterone caproate product. The FTC noted in its letter that the existence of the investigation does not indicate that the FTC has concluded that Lumara Health or its predecessor has violated the law and we believe that our contracts and practices comply with relevant law and policy, including the federal Drug Quality and Security Act (the “DQSA”), which was enacted in November 2013, and public statements from and enforcement actions by the FDA regarding its implementation of the DQSA. In August 2015, we provided the FTC with a response that provided a brief overview of the DQSA for context, including: (a) how the statute outlined that large-scale compounding of products that are copies or near-copies of FDA-approved drugs (like Makena) is not in the interests of public safety; (b) our belief that the DQSA has had a significant impact on the compounding of hydroxyprogesterone caproate; and (c) how our contracts with former compounders allow those compounders to continue to serve physicians and patients with respect to supplying medically necessary alternative/altered forms of hydroxyprogesterone caproate. We believe we have fully cooperated with the FTC and that our August 2015 was comprehensive and thorough. We have had no further communications to or from the FTC on this matter since our August 2015 response. On or about April 6, 2016, we received Notice of a Lawsuit and Request to Waive Service of a Summons in a case entitled Plumbers’ Local Union No. 690 Health Plan v. Actavis Group et. al. (“Plumbers’ Union”), which was filed in the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania and, after removal to federal court, is now pending in the United States District Court for the Eastern District of Pennsylvania (Civ. Action No. 16-65-AB). Thereafter, we were also made aware of a related complaint entitled Delaware Valley Health Care Coalition v. Actavis Group et. al. (“Delaware Valley”), which was filed with the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania District Court of Pennsylvania (Case ID: 160200806). The complaints name K-V Pharmaceutical Company (“KV”) (Lumara Health’s predecessor company), certain of its successor entities, subsidiaries and affiliate entities (the “Subsidiaries”), along with a number of other pharmaceutical companies. We acquired Lumara Health in November 2014, a year after KV emerged from bankruptcy protection, at which time it, along with its then existing subsidiaries, became our wholly-owned subsidiary. We have not been served with process or waived service of summons in either case. The actions are being brought alleging unfair and deceptive trade practices with regard to certain pricing practices that allegedly resulted in certain payers overpaying for certain of KV’s generic products. On July 21, 2016, the Plaintiff in the Plumbers’ Union case dismissed KV with prejudice to refiling and on October 6, 2016, all claims against the Subsidiaries were dismissed without prejudice. We are in discussions with Plaintiff’s counsel to similarly dismiss all claims in the Delaware Valley case. Because the Delaware Valley case is in the earliest stages and we have not been served with process in this case, we are currently unable to predict the outcome or reasonably estimate the range of potential loss associated with this matter, if any. We may periodically become subject to other legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which we are focused. Other than the above actions, we are not aware of any material claims against us as of March 31, 2017 . |
Collaboration, License and Othe
Collaboration, License and Other Strategic Agreements | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Collaboration, License and Other Strategic Agreements | COLLABORATION, LICENSE AND OTHER STRATEGIC AGREEMENTS Our commercial strategy includes expanding our portfolio through the in-license or acquisition of additional pharmaceutical products or companies, including revenue-generating commercial products and late-state development assets. As of March 31, 2017 , we were a party to the following collaborations and license agreements: Palatin On January 8, 2017, we entered into a license agreement (the “Palatin License Agreement”) with Palatin Technologies, Inc. (“Palatin”) under which we acquired (a) an exclusive license in all countries of North America (the “Palatin Territory”), with the right to grant sub-licenses, to research, develop and commercialize bremelanotide and any other products containing bremelanotide (collectively, the “Bremelanotide Products”), an investigational product designed to be an on-demand treatment for HSDD in pre-menopausal women, (b) a worldwide non-exclusive license, with the right to grant sub-licenses, to manufacture the Bremelanotide Products, and (c) a non-exclusive license in all countries outside the Palatin Territory, with the right to grant sub-licenses, to research, develop and manufacture (but not commercialize) the Bremelanotide Products. Following the satisfaction of the conditions to closing under the Palatin License Agreement, the transaction closed on February 2, 2017. We accounted for the Palatin License Agreement as an asset acquisition as a result of our early adoption of ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Under the terms of the Palatin License Agreement, in February 2017 we paid Palatin $60.0 million as a one-time upfront payment and will reimburse Palatin up to an aggregate amount of $25.0 million for all reasonable, documented, out-of-pocket expenses incurred by Palatin in connection with the development and regulatory activities necessary to submit a new drug application in the U.S. for bremelanotide for the treatment of HSDD in pre-menopausal women. The $60.0 million upfront payment made in February 2017 to Palatin was recorded as in-process research and development expense as the product candidate had not received regulatory approval. In addition, the Palatin License Agreement requires us to make future contingent payments of (a) up to $80.0 million upon achievement of certain regulatory milestones, including FDA approval and (b) up to $300.0 million of aggregate sales milestone payments upon the achievement of certain annual net sales milestones over the course of the license. The first sales milestone payment of $25.0 million will be triggered when bremelanotide annual net sales exceed $250.0 million . We are also obligated to pay Palatin tiered royalties on annual net sales of the Bremelanotide Products, on a product-by-product basis, in the Palatin Territory ranging from the high-single digits to the low double-digits. The royalties will expire on a product-by-product and country-by-country basis upon the latest to occur of (a) the earliest date on which there are no valid claims of Palatin patent rights covering such Bremelanotide Product in such country, (b) the expiration of the regulatory exclusivity period for such Bremelanotide Product in such country and (c) 10 years following the first commercial sale of such Bremelanotide Product in such country. These royalties are subject to reduction in the event that: (i) we must license additional third party intellectual property in order to develop, manufacture or commercialize a Bremelanotide Product or (ii) generic competition occurs with respect to a Bremelanotide Product in a given country, subject to an aggregate cap on such deductions of royalties otherwise payable to Palatin. After the expiration of the applicable royalties for any Bremelanotide Product in a given country, the license for such Bremelanotide Product in such country would become a fully paid-up, royalty-free, perpetual and irrevocable license. Velo In July 2015, we entered into an option agreement with Velo Bio, LLC (“Velo”), a privately held life-sciences company that granted us an option to acquire the rights (the “DIF Rights”) to an orphan drug candidate, digoxin immune fab (“DIF”), a polyclonal antibody in clinical development for the treatment of severe preeclampsia in pregnant women. We made an upfront payment of $10.0 million in the third quarter of 2015 for the option to acquire the DIF Rights. DIF has been granted both orphan drug and fast-track review designations by the FDA for use in treating severe preeclampsia. Under the option agreement, Velo will complete a Phase 2b/3a clinical study, which we expect to begin in the second quarter of 2017. Following the conclusion of the DIF Phase 2b/3a study, we may terminate, or, for additional consideration, exercise or extend, our option to acquire the DIF Rights. If we exercise the option to acquire the DIF Rights, we would be responsible for additional costs in pursuing FDA approval, and would be obligated to pay to Velo certain milestone payments and single-digit royalties based on regulatory approval and commercial sales of the product. If we exercise the option, we will be responsible for payments totaling up to $65.0 million (including the payment of the option exercise price and the regulatory milestone payments) and up to an additional $250.0 million in sales milestone payments based on the achievement of annual sales milestones at targets ranging from $100.0 million to $900.0 million . In the event the royalty rate applicable to the quarter in which a milestone payment threshold is first achieved is zero, the applicable milestone payment amount will increase by 50% . We have determined that Velo is a variable interest entity (“VIE”) as it does not have enough equity to finance its activities without additional financial support. As we do not have the power to direct the activities of the VIE that most significantly affect its economic performance, which we have determined to be the Phase 2b/3a clinical study, we are not the primary beneficiary of and do not consolidate the VIE. Antares In September 2014, Lumara Health entered into a development and license agreement (the “Antares Agreement”) with Antares Pharma, Inc. (“Antares”), which in connection with our acquisition of Lumara Health in November of 2014, grants us an exclusive, worldwide, royalty-bearing license, with the right to sublicense, to certain intellectual property rights, including know-how, patents and trademarks, to develop, use, sell, offer for sale and import and export the Makena auto-injector. In consideration for the license, to support joint meetings and a development strategy with the FDA, and for initial tooling and process validation, Lumara Health paid Antares an up-front payment in October 2014. Under the Antares Agreement, we are responsible for the clinical development and preparation, submission and maintenance of all regulatory applications in each country where we desire to market and sell the Makena auto-injector, including the U.S. We are required to pay royalties to Antares on net sales of the Makena auto-injector for the life of the Antares Royalty Term. The royalty rates range from high single digit to low double digits and are tiered based on levels of net sales of the Makena auto-injector and decrease after the expiration of licensed patents or where there are generic equivalents to the Makena auto-injector being sold in a particular country. Antares is entitled to sales-based milestone payments. Antares is the exclusive supplier of the device components of the Makena auto-injector and Antares remains responsible for the manufacture and supply of the device components and assembly of the Makena auto-injector. We are responsible for the supply of the drug to be used in the assembly of the finished auto-injector product. The development and license agreement terminates at the end of the Antares Royalty Term, but is subject to early termination by us for convenience, by Antares if we do not submit regulatory filings in the U.S. by a certain date and by either party upon an uncured breach by or bankruptcy of the other party. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Our outstanding debt obligations as of March 31, 2017 and December 31, 2016 consisted of the following (in thousands): March 31, 2017 December 31, 2016 2023 Senior Notes $ 489,907 $ 489,612 2015 Term Loan Facility 313,881 317,546 Convertible Notes 181,566 179,363 Total long-term debt 985,354 986,521 Less: current maturities 20,455 21,166 Long-term debt, net of current maturities $ 964,899 $ 965,355 2023 Senior Notes On August 17, 2015, in connection with the CBR acquisition, we completed a private placement of $500.0 million aggregate principal amount of 7.875% Senior Notes due 2023 (the “2023 Senior Notes”). The 2023 Senior Notes were issued pursuant to an Indenture, dated as of August 17, 2015 (the “Indenture”), by and among us, certain of our subsidiaries acting as guarantors of the 2023 Senior Notes and Wilmington Trust, National Association, as trustee. The Indenture contains certain customary negative covenants, which are subject to a number of limitations and exceptions. Certain of the covenants will be suspended during any period in which the 2023 Senior Notes receive investment grade ratings. The 2023 Senior Notes, which are senior unsecured obligations of the Company, will mature on September 1, 2023 and bear interest at a rate of 7.875% per year, with interest payable semi-annually on September 1 and March 1 of each year, which began in March 2016. We may redeem some or all of the 2023 Senior Notes at any time, or from time to time, on or after September 1, 2018 at the redemption prices listed in the Indenture, plus accrued and unpaid interest to, but not including, the date of redemption. In addition, prior to September 1, 2018, we may redeem up to 35% of the aggregate principal amount of the 2023 Senior Notes utilizing the net cash proceeds from certain equity offerings, at a redemption price of 107.875% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption; provided that at least 65% of the aggregate amount of the 2023 Senior Notes originally issued under the Indenture remain outstanding after such redemption. We may also redeem all or some of the 2023 Senior Notes at any time, or from time to time, prior to September 1, 2018, at a price equal to 100% of the principal amount of the 2023 Senior Notes to be redeemed, plus a “make-whole” premium plus accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a “change of control,” as defined in the Indenture, we are required to offer to repurchase the 2023 Senior Notes at 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to, but not including, the repurchase date. The Indenture contains customary events of default, which allow either the trustee or the holders of not less than 25% in aggregate principal amount of the then-outstanding 2023 Senior Notes to accelerate, or in certain cases, which automatically cause the acceleration of, the amounts due under the 2023 Senior Notes. At March 31, 2017 , the principal amount of the outstanding borrowings was $500.0 million and the carrying value of the outstanding borrowings, net of issuance costs and other lender fees and expenses, was $489.9 million . 2015 Term Loan Facility On August 17, 2015, to fund a portion of the purchase price of CBR, we entered into a credit agreement with a group of lenders, including Jefferies Finance LLC as administrative and collateral agent, that provided us with, among other things, a six -year $350.0 million term loan facility. We borrowed the full $350.0 million available under the 2015 Term Loan Facility on August 17, 2015. The credit agreement also allows for the incurrence of incremental loans in an amount up to $225.0 million . The unamortized original issue costs and other lender fees and expenses, including a prepayment penalty, included $6.8 million of the unamortized original issue costs and other lender fees and expenses from our then existing five -year term loan facility as a result of accounting guidance for the modification of debt arrangements. The 2015 Term Loan Facility bears interest, at our option, at the London Interbank Offered Rate (“LIBOR”) plus a margin of 3.75% or the prime rate plus a margin of 2.75% . The LIBOR is subject to a 1.00% floor and the prime rate is subject to a 2.00% floor. As of March 31, 2017 , the stated interest rate, based on the LIBOR, was 4.75% , and the effective interest rate was 5.65% . We must repay the 2015 Term Loan Facility in installments of $4.4 million per quarter due on the last day of each quarter beginning with the quarter ended December 31, 2015. The 2015 Term Loan Facility matures on August 17, 2021 . The 2015 Term Loan Facility includes an annual mandatory prepayment of the debt in an amount equal to 50% of our excess cash flow (as defined in the 2015 Term Loan Facility) as measured on an annual basis, beginning with the year ended December 31, 2016. As a result, as of March 31, 2017 , $3.0 million was reclassified from long-term debt to current portion of long-term debt in our condensed consolidated balance sheet and paid in April 2017. On or after December 31, 2016, the applicable excess cash flow percentage shall be reduced based on the total net leverage ratio as of the last day of the period. Excess cash flow is generally defined as our adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) less debt service costs, unfinanced capital expenditures, unfinanced acquisition expenditures, contingent consideration paid, and current income taxes as well as other adjustments specified in the credit agreement. The 2015 Term Loan Facility has a lien on substantially all of our assets, including a pledge of 100% of the equity interests in our domestic subsidiaries and a pledge of 65% of the voting equity interests and 100% of the non-voting equity interests in our direct foreign subsidiaries. The 2015 Term Loan Facility contains customary events of default and affirmative and negative covenants for transactions of this type. All obligations under the 2015 Term Loan Facility are unconditionally guaranteed by substantially all of our direct and indirect domestic subsidiaries, with certain exceptions. These guarantees are secured by substantially all of the present and future property and assets of such subsidiaries, with certain exclusions. At March 31, 2017 , the principal amount of the outstanding borrowings was $323.8 million and the carrying value of the outstanding borrowings, net of issuance costs and other lender fees and expenses, was $313.9 million . 2.5% Convertible Notes On February 14, 2014, we issued $200.0 million aggregate principal amount of the Convertible Notes. We received net proceeds of $193.3 million from the sale of the Convertible Notes, after deducting fees and expenses of $6.7 million . We used $14.1 million of the net proceeds from the sale of the Convertible Notes to pay the cost of the convertible bond hedges, as described below (after such cost was partially offset by the proceeds to us from the sale of warrants in the warrant transactions described below). The Convertible Notes are governed by the terms of an indenture between us, as issuer, and Wilmington Trust, National Association, as the trustee. The Convertible Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on February 15 and August 15 of each year. The Convertible Notes will mature on February 15, 2019 , unless earlier repurchased or converted. Upon conversion of the Convertible Notes, at a holder’s election, such Convertible Notes will be convertible into cash, shares of our common stock, or a combination thereof, at our election (subject to certain limitations in the 2015 Term Loan Facility), at a conversion rate of approximately 36.9079 shares of common stock per $1,000 principal amount of the Convertible Notes, which corresponds to an initial conversion price of approximately $27.09 per share of our common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding May 15, 2018, holders may convert their Convertible Notes at their option only under the following circumstances: 1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; 2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or 3) upon the occurrence of specified corporate event. On or after May 15, 2018 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. Based on the last reported sale price of our common stock during the last 30 trading days of the fourth quarter of 2016, the Convertible Notes were not convertible as of March 31, 2017 . In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of the Convertible Notes by allocating the proceeds between the liability component and the embedded conversion option (“equity component”) due to our ability to settle the Convertible Notes in cash, common stock or a combination of cash and common stock, at our option (subject to certain limitations in the 2015 Term Loan Facility). The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The equity component of the Convertible Notes was recognized as a debt discount and represents the difference between the proceeds from the issuance of the Convertible Notes and the fair value of the liability of the Convertible Notes on their respective dates of issuance. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense using the effective interest method over five years. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Our outstanding Convertible Note balances as of March 31, 2017 consisted of the following (in thousands): March 31, 2017 Liability component: Principal $ 199,998 Less: debt discount and issuance costs, net (18,432 ) Net carrying amount $ 181,566 In connection with the issuance of the Convertible Notes, we incurred approximately $6.7 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs to the liability and equity components based on the allocation of the proceeds. Of the total $6.7 million of debt issuance costs, $1.3 million was allocated to the equity component and recorded as a reduction to additional paid-in capital and $5.4 million was allocated to the liability component and is now recorded as a reduction of the Convertible Notes in our condensed consolidated balance sheets. The portion allocated to the liability component is amortized to interest expense using the effective interest method over five years. We determined the expected life of the debt was equal to the five -year term on the Convertible Notes. The effective interest rate on the liability component was 7.23% for the period from the date of issuance through March 31, 2017 . As of March 31, 2017 , the “if-converted value” did not exceed the remaining principal amount of the Convertible Notes. The following table sets forth total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Contractual interest expense $ 1,250 $ 1,250 Amortization of debt issuance costs 274 258 Amortization of debt discount 1,929 1,815 Total interest expense $ 3,453 $ 3,323 As of March 31, 2017 , the principal amount of the Convertible Notes was $200.0 million and the carrying value of the Convertible Notes was $181.6 million . Convertible Bond Hedge and Warrant Transactions In connection with the pricing of the Convertible Notes and in order to reduce the potential dilution to our common stock and/or offset cash payments due upon conversion of the Convertible Notes, in February 2014 we entered into convertible bond hedge transactions covering approximately 7.4 million shares of our common stock underlying the $200.0 million aggregate principal amount of the Convertible Notes with the call spread counterparties. The convertible bond hedges have an exercise price of approximately $27.09 per share, subject to adjustment upon certain events, and are exercisable when and if the Convertible Notes are converted. If upon conversion of the Convertible Notes, the price of our common stock is above the exercise price of the convertible bond hedges, the call spread counterparties will deliver shares of our common stock and/or cash with an aggregate value approximately equal to the difference between the price of our common stock at the conversion date and the exercise price, multiplied by the number of shares of our common stock related to the convertible bond hedges being exercised. The convertible bond hedges are separate transactions entered into by us and are not part of the terms of the Convertible Notes or the warrants, discussed below. Holders of the Convertible Notes will not have any rights with respect to the convertible bond hedges. We paid $39.8 million for these convertible bond hedges and recorded this amount as a reduction to additional paid-in capital, net of tax, in 2014. In February 2014, we also entered into separate warrant transactions with each of the call spread counterparties relating to, in the aggregate, approximately 7.4 million shares of our common stock underlying the $200.0 million aggregate principal amount of the Convertible Notes. The initial exercise price of the warrants is $34.12 per share, subject to adjustment upon certain events, which is 70% above the last reported sale price of our common stock of $20.07 on February 11, 2014. The warrants would separately have a dilutive effect to the extent that the market value per share of our common stock, as measured under the terms of the warrants, exceeds the applicable exercise price of the warrants. The warrants were issued to the call spread counterparties pursuant to the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended. We received $25.6 million for these warrants and recorded this amount to additional paid-in capital in 2014. Aside from the initial payment of $39.8 million to the call spread counterparties for the convertible bond hedges, which was partially offset by the receipt of $25.6 million for the warrants, we are not required to make any cash payments to the call spread counterparties under the convertible bond hedges and will not receive any proceeds if the warrants are exercised. |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | RESTRUCTURING In connection with the CBR and Lumara Health acquisitions, we initiated restructuring programs in the third quarter of 2015 and the fourth quarter of 2014, respectively, which included severance benefit expenses primarily related to certain former CBR and Lumara Health employees. As a result of these restructurings, we recorded charges of approximately $0.6 million for the three months ended March 31, 2016 . We recorded no additional restructuring charges for the three months ended March 31, 2017 . All of the restructuring costs have been paid as of March 31, 2017. The following table outlines the components of our restructuring expenses which were included in current liabilities for the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Accrued restructuring, beginning of period $ 74 $ 2,883 Employee severance, benefits and related costs — 809 Payments (74 ) (1,599 ) Accrued restructuring, end of period $ — $ 2,093 |
Recently Issued and Proposed Ac
Recently Issued and Proposed Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued and Proposed Accounting Pronouncements | RECENTLY ISSUED AND PROPOSED 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 us as of the specified effective date. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This new standard eliminates Step 2 from the goodwill impairment test. ASU 2017-04 requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 still allows the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for any annual or interim goodwill impairment tests performed in the fiscal years beginning after December 15, 2019 and must be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We have adopted ASU 2017-04 as of January 1, 2017, with prospective application for our interim or annual goodwill impairment tests. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). This standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. We have early adopted ASU 2017-01 as of January 1, 2017, with prospective application to any business development transaction. Depending upon individual facts and circumstances of future transactions, this guidance will likely result in more transactions being accounted for as asset acquisitions rather than business combinations. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. ASU 2016-15 will be effective for us on January 1, 2018. We are currently evaluating the impact of our adoption of ASU 2016-15 in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 will be effective for us for fiscal years beginning on or after January 1, 2020, including interim periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of our adoption of ASU 2016-13 in our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ( “ ASU 2016-09”). The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. We adopted ASU 2016-09 during the first quarter of 2017 and will now record all excess tax benefits and deficiencies related to share-based compensation in our condensed consolidated statements of operations as discrete events in the interim reporting period in which the benefit or deficiency occurs. Such benefits and deficiencies will not be considered in the calculation of our annual estimated effective tax rate. Any excess tax benefits that were not previously recognized because the related tax deduction had not reduced current taxes payable (i.e. was not realized) are to be recorded using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the new guidance is adopted. We recorded a cumulative-effect adjustment to our accumulated deficit from previously unrecognized excess tax benefits of $21.6 million during the three months ended March 31, 2017. Lastly, we will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This statement requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. This statement is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. We are currently evaluating the impact of ASU 2016-02 in our condensed consolidated financial statements and we currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of ASU 2016-02. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).This new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including the requirement that equity investments with readily determinable fair values be measured at fair value with changes in fair value recognized in our results of operations. This new standard does not apply to investments accounted for under the equity method of accounting or those that result in consolidation of the investee. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment adjusted for changes in observable prices. A financial liability that is measured at fair value in accordance with the fair value option is required to be presented separately in other comprehensive income for the portion of the total change in the fair value resulting from change in the instrument-specific credit risk. In addition, a valuation allowance should be evaluated on deferred tax assets related to available-for-sale debt securities in combination with other deferred tax assets. ASU 2016-01 will be effective for us on January 1, 2018. The adoption of ASU 2016-01 is not expected to have a material impact on our financial position or results of operations. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). The new standard applies only to inventory for which cost is determined by methods other than last-in, first-out and the retail inventory method, which includes inventory that is measured using first-in, first-out or average cost. Inventory within the scope of ASU 2015-11 is required to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted ASU 2015-11 during the first quarter of 2017, which did not have a material impact on our results of operations, cash flows or financial position. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification Topic 606 (“ASU 2014-09”). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised 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. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customer Topic 606s, Principal versus Agent Considerations , which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers Topic 606, Identifying Performance Obligations and Licensing , which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers Topic 606, Narrow-Scope Improvements and Practical Expedients , related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectibility, non-cash consideration and the presentation of sales and other similar taxes collected from customers. In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , which amends certain narrow aspects of the guidance issued in ASU 2014-09, including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. We are currently evaluating the method of adoption and the potential impact that Topic 606 may have on our financial position and results of operations. These ASUs are effective for entities for interim and annual reporting periods beginning after December 15, 2017, including interim periods within that year, which for us is the period beginning January 1, 2018. Early adoption is permitted any time after the original effective date, which for us was January 1, 2017. Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. We have not yet selected a transition method and have initiated a revenue recognition task force to perform an assessment of our revenue contracts to determine what impact, if any, the adoption of ASU 2014-09 will have on our condensed consolidated financial statements. |
Subsequent Events Subsequent Ev
Subsequent Events Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Endoceutics License Agreement On April 3, 2017, we closed the license agreement (the “Endoceutics License Agreement”) with Endoceutics, Inc. (“Endoceutics”), which we entered into on February 13, 2017, pursuant to which Endoceutics has agreed to grant to us rights to Intrarosa, an FDA-approved product for the treatment of moderate-to-severe dyspareunia (pain during sexual intercourse), a symptom of VVA due to menopause. The Endoceutics License Agreement grants us the right to develop and commercialize pharmaceutical products containing dehydroepiandrosterone (“DHEA”), including Intrarosa, at dosage strengths of 13 mg or less per dose and formulated for intravaginal delivery, excluding any dosage strengths over 13 mg per dose and combinations with other active pharmaceutical ingredients, in the U.S. for the treatment of VVA and female sexual dysfunction (“FSD”). We will account for the Endoceutics License Agreement as an asset acquisition as a result of our early adoption of ASU No. 2017-01, described above. Subject to the terms of the Endoceutics License Agreement, Endoceutics has agreed to conduct clinical studies for the use of Intrarosa in FSD to support an application for regulatory approval for Intrarosa for the treatment of FSD in the U.S. We and Endoceutics have agreed to share the direct costs related to such studies based upon a negotiated allocation with us funding up to $20.0 million . We may, with Endoceutics’ consent (not to be unreasonably withheld, conditioned or delayed), conduct any other studies of Intrarosa for the treatment of VVA and FSD anywhere in the world for the purpose of obtaining or maintaining regulatory approval of or commercializing Intrarosa for the treatment of VVA or FSD in the U.S. All data generated in connection with the above described studies would be owned by Endoceutics and licensed to us pursuant to the Endoceutics License Agreement. We will have the exclusive right to commercialize Intrarosa for the treatment of VVA or FSD in the U.S., subject to the terms of the Endoceutics License Agreement, including having final decision making authority with respect to commercial strategy, pricing and reimbursement and other commercialization matters. We have agreed to use commercially reasonable efforts to market, promote and otherwise commercialize Intrarosa for the treatment of VVA or FSD in the U.S., including a commitment to a minimum marketing spend for Intrarosa in 2017. Endoceutics has the right to directly conduct, itself or through its affiliates or subcontractors, additional commercialization activities for Intrarosa for the treatment of VVA or FSD in the U.S., which scope of activities will be agreed to by the parties acting reasonably and in good faith, and has the right to conduct activities related generally to the field of intracinology, in each case, subject to our right to withhold approval in certain instances. Upon the closing of the Endoceutics License Agreement, we made an upfront payment of $50.0 million and issued 600,000 shares of unregistered common stock to Endoceutics, 300,000 of which are subject to a 180 -day lock-up provision, and the other 300,000 of which are subject to a one -year lock-up provision. We have also agreed to make a payment to Endoceutics of up to $10.0 million upon the delivery of launch quantities of Intrarosa and a payment of $10.0 million on the first anniversary of the closing. In addition, we have also agreed to pay tiered royalties to Endoceutics equal to a percentage of net sales of Intrarosa in the U.S. ranging from mid-teens (for calendar year net sales up to $150.0 million to mid twenty percent (for any calendar year net sales that exceed $1 billion ) (such royalty rate to be dependent on the aggregate annual net sales of Intrarosa) for the commercial life of Intrarosa, with deductions (a) after the later of (i) the expiration date of the last to expire of a licensed patent containing a valid patent claim or (ii) ten years after the first commercial sale of Intrarosa for the treatment of VVA or FSD in the U.S., (b) for generic competition and (c) for third party payments. Endoceutics is also eligible to receive certain sales milestone payments, including a first sales milestone payment of $15.0 million , which would be triggered when Intrarosa annual net U.S. sales exceed $150.0 million , and a second milestone payment of $30.0 million , which would be triggered when annual net U.S. sales exceed $300.0 million . If annual net U.S. sales exceed $500.0 million , there are additional sales milestone payments totaling up to $850.0 million , which would be triggered at various increasing sales thresholds. In connection with the Endoceutics License Agreement, we entered into an exclusive commercial supply agreement with Endoceutics in April 2017, pursuant to which Endoceutics, itself or through affiliates or contract manufacturers, agreed to manufacture and supply Intrarosa to us (the “Supply Agreement”) and would be our exclusive supplier of Intrarosa in the U.S., subject to certain rights for us to manufacture and supply Intrarosa in the event of a cessation notice or supply failure (as such terms are defined in the Supply Agreement). Under the Supply Agreement, Endoceutics will maintain at all times a second source supplier for the manufacture of DHEA and the drug product and identify and validate and transfer manufacturing intellectual property to the second source supplier within two years of the closing of the transactions contemplated by the Endoceutics License Agreement (the “Effective Date”). The Supply Agreement will remain in effect until the termination of the Endoceutics License Agreement, unless terminated earlier by either party for an uncured material breach or insolvency of the other party, or by us if we exercise our rights to manufacture and supply Intrarosa following a cessation notice or supply failure. Under the Endoceutics License Agreement, except as permitted under the Endoceutics License Agreement or the Supply Agreement, and except for any compounds or products affecting the melanocortin receptor pathway, including without limitation, bremelanotide (collectively, “Excluded Product”), we will not be permitted to research, develop, manufacture, or commercialize (i) DHEA for delivery by any route of administration anywhere in world, (ii) any compound (including DHEA) or product for use in VVA anywhere in the world, or (iii) commencing on the date of an approval of Intrarosa for the treatment of FSD in the U.S. and continuing for the remainder of the term of the Endoceutics License Agreement, any compound (including DHEA) for use in FSD (each, a “Competing Product”). Any compound or product for use in FSD that would be a Competing Product in the United States but that (i) does not contain DHEA and (ii) was acquired or licensed or for which the research, development, manufacture or commercialization of such compound or product is initiated by us or our affiliates, in each case, prior to the date of an approval of Intrarosa for the treatment of FSD in the U.S., will be an Excluded Product and will not be subject to the exclusivity obligations under the Endoceutics License Agreement in the treatment of FSD, subject to certain restrictions in the Endoceutics License Agreement. These noncompete restrictions are subject to certain exclusions relating to the acquisition of competing programs. The Endoceutics License Agreement expires on the date of expiration of all royalty obligations due thereunder unless earlier terminated in accordance with the Endoceutics License Agreement. The Endoceutics License Agreement may be terminated by either Party for material breach that is either uncured after a 90 -day notice period, or if such breach cannot be cured within such 90 -day period, if the breaching party does not commence appropriate and material actions to cure such breach within the notice period and continue to diligently cure such breach for a period not to exceed 90 days, in either case, subject to tolling or determination of the arbitrators, if dispute resolution procedures are initiated within 30 days of the termination notice. We have the ability to elect not to terminate the Endoceutics License Agreement in the case of a material breach, in which case future milestone and royalty payments owed to Endoceutics would be reduced by a negotiated percentage or by an amount determined by arbitration. Either party may terminate under certain situations relating to the bankruptcy or insolvency of the other party. We may terminate the Endoceutics License Agreement for a valid business reason upon 365 days prior written notice to Endoceutics; or upon 60 days written notice in the event we reasonably determine in good faith, after due inquiry and after discussions with Endoceutics, that we cannot reasonably continue to develop or commercialize any Product as a result of a safety issue regarding the use of Intrarosa. We may also terminate the Endoceutics License Agreement upon 180 days notice if there is a change of control of AMAG and the acquiring entity (alone or with its affiliates) is engaged in a competing program (as defined in the Licensed Agreement) in the U.S. or in at least three countries within the European Union. |
Basis of Presentation and Sum26
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments necessary for a fair statement of the financial position and results of operations of the Company for the interim periods presented. Such adjustments consisted only of normal recurring items. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). In accordance with GAAP for interim financial reports and the instructions for Form 10-Q and the rules of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. Our accounting policies are described in the Notes to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2016 (our “Annual Report”). Interim results are not necessarily indicative of the results of operations for the full year. These interim financial statements should be read in conjunction with our Annual Report. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. The most significant estimates and assumptions are used to determine amounts and values of, but are not limited to: revenue recognition related to product sales and services revenue; product sales allowances and accruals; allowance for doubtful accounts; investments; inventory; acquisition date fair value and subsequent fair value estimates used to assess impairment of long-lived assets, including goodwill, in-process research and development (“IPR&D”) and other intangible assets; contingent consideration; debt obligations; certain accrued liabilities, including clinical trial accruals; income taxes and equity-based compensation expense. Actual results could differ materially from those estimates. |
Concentrations and Significant Customer Information | Concentrations and Significant Customer Information Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, investments, and accounts receivable. We currently hold our excess cash primarily in institutional money market funds, corporate debt securities, U.S. treasury and government agency securities, commercial paper and certificates of deposit. As of March 31, 2017 , we did not have a material concentration in any single investment. Our operations are located entirely within the U.S. We focus primarily on developing, manufacturing, and commercializing our products and marketing and selling the CBR Services. We perform ongoing credit evaluations of our product sales customers and generally do not require collateral. The following table sets forth customers who represented 10% or more of our total revenues for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 AmerisourceBergen Drug Corporation 22 % 24 % McKesson Corporation 14 % <10 % Our net accounts receivable primarily represented amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies and amounts due for CBR Services sold directly to consumers. Accounts receivable for our products and services are recorded net of reserves for estimated chargeback obligations, prompt payment discounts and any allowance for doubtful accounts. Customers which represented greater than 10% of our accounts receivable balance as of March 31, 2017 and December 31, 2016 were as follows: March 31, 2017 December 31, 2016 AmerisourceBergen Drug Corporation 31 % 13 % McKesson Corporation 21 % 32 % We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities) and Feraheme finished drug product. In addition, we rely on single sources for certain materials required to support the CBR Services. We would be exposed to a significant loss of revenue from the sale of our products and services if our suppliers and/or manufacturers could not fulfill demand for any reason. |
Revenue Recognition and Related Sales Allowances and Accruals | Revenue Recognition and Related Sales Allowances and Accruals Our primary sources of revenue during the reporting periods were product revenues from Makena and Feraheme and service revenues associated with the CBR Services. Revenue is recognized when the following criteria are met: • Persuasive evidence of an arrangement exists; • Delivery of product has occurred or services have been rendered; • The sales price charged is fixed or determinable; and • Collection is reasonably assured. Product Revenue Our product sales, which primarily represented revenues from Makena and Feraheme for the three months ended March 31, 2017 and 2016 , were offset by provisions for allowances and accruals as follows (in thousands): Three Months Ended March 31, 2017 2016 Gross product sales $ 206,724 $ 152,192 Provision for product sales allowances and accruals: Contractual adjustments 69,829 45,581 Governmental rebates 24,378 17,047 Total 94,207 62,628 Product sales, net $ 112,517 $ 89,564 We recognize product revenues net of certain allowances and accruals in our condensed consolidated statement of operations at the time of sale. Our contractual adjustments include provisions for returns, pricing and prompt payment discounts, as well as wholesaler distribution fees, rebates to hospitals that qualify for 340B pricing, and volume-based and other commercial rebates. Governmental rebates relate to our reimbursement arrangements with state Medicaid programs. We did not materially adjust our product sales allowances and accruals during the three months ended March 31, 2017 or 2016 . If we determine in future periods that our actual experience is not indicative of our expectations, if our actual experience changes, or if other factors affect our estimates, we may be required to adjust our allowances and accruals estimates, which would affect our net product sales in the period of the adjustment and could be significant. Multiple Element Arrangements For multiple element arrangements, we allocate revenue to all deliverables based on their relative selling prices. We determine the selling price to be used for allocating revenue to deliverables as follows: (a) vendor specific objective evidence; (b) third-party evidence of selling price and (c) the best estimate of the selling price. Vendor specific objective evidence generally exists only when we sell the deliverable separately and it is the price actually charged by us for that deliverable. Any discounts given to the customer are allocated by applying the relative selling price method. Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in our condensed consolidated balance sheets. Deferred revenue associated with our service revenues includes (a) amounts collected in advance of unit processing and (b) amounts associated with unearned storage fees collected at the beginning of the storage contract term, net of allocated discounts. Amounts not expected to be recognized within the next year are classified as long-term deferred revenues. Service Revenue Our service revenues for the CBR Services include the following two deliverables: (a) enrollment, including the provision of a collection kit and cord blood and cord tissue unit processing, which are delivered at the beginning of the relationship (the “processing services”), with revenue for this deliverable recognized after the collection and successful processing of the cord blood and cord tissue; and (b) the storage of newborn cord blood and cord tissue units (the “storage services”), for either an annual fee or a prepayment of 18 years or the lifetime of the newborn donor (the “lifetime option”), with revenue for this deliverable recognized ratably over the applicable storage period. For the lifetime option, storage fees are not charged during the lifetime of the newborn donor. However, revenue is recognized based on the average of male and female life expectancies using lifetime actuarial tables published by the Social Security Administration in effect at the time of the newborn’s birth. As there are other vendors who provide processing services and storage services at separately stated list prices, the processing services and storage services, including the first year storage, each have standalone value to the customer, and therefore represent separate deliverables. The selling price for the processing services is estimated based on the best estimate of selling price because we do not have vendor specific objective evidence or third-party evidence of selling price for these elements. The selling price for the storage services is determined based on vendor specific objective evidence as we have standalone renewals to support the selling price. |
Recently Issued and Proposed Accounting Pronouncements | RECENTLY ISSUED AND PROPOSED 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 us as of the specified effective date. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This new standard eliminates Step 2 from the goodwill impairment test. ASU 2017-04 requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 still allows the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for any annual or interim goodwill impairment tests performed in the fiscal years beginning after December 15, 2019 and must be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We have adopted ASU 2017-04 as of January 1, 2017, with prospective application for our interim or annual goodwill impairment tests. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). This standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. We have early adopted ASU 2017-01 as of January 1, 2017, with prospective application to any business development transaction. Depending upon individual facts and circumstances of future transactions, this guidance will likely result in more transactions being accounted for as asset acquisitions rather than business combinations. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. ASU 2016-15 will be effective for us on January 1, 2018. We are currently evaluating the impact of our adoption of ASU 2016-15 in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 will be effective for us for fiscal years beginning on or after January 1, 2020, including interim periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of our adoption of ASU 2016-13 in our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ( “ ASU 2016-09”). The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. We adopted ASU 2016-09 during the first quarter of 2017 and will now record all excess tax benefits and deficiencies related to share-based compensation in our condensed consolidated statements of operations as discrete events in the interim reporting period in which the benefit or deficiency occurs. Such benefits and deficiencies will not be considered in the calculation of our annual estimated effective tax rate. Any excess tax benefits that were not previously recognized because the related tax deduction had not reduced current taxes payable (i.e. was not realized) are to be recorded using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the new guidance is adopted. We recorded a cumulative-effect adjustment to our accumulated deficit from previously unrecognized excess tax benefits of $21.6 million during the three months ended March 31, 2017. Lastly, we will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This statement requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. This statement is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. We are currently evaluating the impact of ASU 2016-02 in our condensed consolidated financial statements and we currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of ASU 2016-02. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).This new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including the requirement that equity investments with readily determinable fair values be measured at fair value with changes in fair value recognized in our results of operations. This new standard does not apply to investments accounted for under the equity method of accounting or those that result in consolidation of the investee. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment adjusted for changes in observable prices. A financial liability that is measured at fair value in accordance with the fair value option is required to be presented separately in other comprehensive income for the portion of the total change in the fair value resulting from change in the instrument-specific credit risk. In addition, a valuation allowance should be evaluated on deferred tax assets related to available-for-sale debt securities in combination with other deferred tax assets. ASU 2016-01 will be effective for us on January 1, 2018. The adoption of ASU 2016-01 is not expected to have a material impact on our financial position or results of operations. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). The new standard applies only to inventory for which cost is determined by methods other than last-in, first-out and the retail inventory method, which includes inventory that is measured using first-in, first-out or average cost. Inventory within the scope of ASU 2015-11 is required to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted ASU 2015-11 during the first quarter of 2017, which did not have a material impact on our results of operations, cash flows or financial position. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification Topic 606 (“ASU 2014-09”). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised 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. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customer Topic 606s, Principal versus Agent Considerations , which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers Topic 606, Identifying Performance Obligations and Licensing , which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers Topic 606, Narrow-Scope Improvements and Practical Expedients , related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectibility, non-cash consideration and the presentation of sales and other similar taxes collected from customers. In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , which amends certain narrow aspects of the guidance issued in ASU 2014-09, including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. We are currently evaluating the method of adoption and the potential impact that Topic 606 may have on our financial position and results of operations. These ASUs are effective for entities for interim and annual reporting periods beginning after December 15, 2017, including interim periods within that year, which for us is the period beginning January 1, 2018. Early adoption is permitted any time after the original effective date, which for us was January 1, 2017. Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. We have not yet selected a transition method and have initiated a revenue recognition task force to perform an assessment of our revenue contracts to determine what impact, if any, the adoption of ASU 2014-09 will have on our condensed consolidated financial statements. |
Basis of Presentation and Sum27
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of customers representing 10% or more of revenues | The following table sets forth customers who represented 10% or more of our total revenues for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 AmerisourceBergen Drug Corporation 22 % 24 % McKesson Corporation 14 % <10 % |
Schedule of customers representing greater than 10% of accounts receivable balances | Customers which represented greater than 10% of our accounts receivable balance as of March 31, 2017 and December 31, 2016 were as follows: March 31, 2017 December 31, 2016 AmerisourceBergen Drug Corporation 31 % 13 % McKesson Corporation 21 % 32 % |
Analysis of U.S. product sales allowances and accruals | Our product sales, which primarily represented revenues from Makena and Feraheme for the three months ended March 31, 2017 and 2016 , were offset by provisions for allowances and accruals as follows (in thousands): Three Months Ended March 31, 2017 2016 Gross product sales $ 206,724 $ 152,192 Provision for product sales allowances and accruals: Contractual adjustments 69,829 45,581 Governmental rebates 24,378 17,047 Total 94,207 62,628 Product sales, net $ 112,517 $ 89,564 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of investments | The following is a summary of our investments as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Corporate debt securities Due in one year or less $ 137,390 $ 8 $ (86 ) $ 137,312 Due in one to three years 111,161 36 (135 ) 111,062 U.S. treasury and government agency securities Due in one year or less 2,513 — (1 ) 2,512 Due in one to three years 14,373 4 (49 ) 14,328 Commercial paper Due in one year or less 26,875 — — 26,875 Certificates of deposit Due in one year or less 12,000 — — 12,000 Due in one to three years 1,452 — — 1,452 Total investments $ 305,764 $ 48 $ (271 ) $ 305,541 December 31, 2016 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Corporate debt securities Due in one year or less $ 106,430 $ 3 $ (69 ) $ 106,364 Due in one to three years 139,742 32 (281 ) 139,493 U.S. treasury and government agency securities Due in one year or less 1,021 — — 1,021 Due in one to three years 11,395 — (52 ) 11,343 Commercial paper Due in one year or less 40,560 — — 40,560 Certificates of deposit Due in one year or less 6,000 — — 6,000 Total investments $ 305,148 $ 35 $ (402 ) $ 304,781 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following tables represent the fair value hierarchy as of March 31, 2017 and December 31, 2016 , for those assets and liabilities that we measure at fair value on a recurring basis (in thousands): Fair Value Measurements at March 31, 2017 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents $ 9,932 $ 9,932 $ — $ — Corporate debt securities 248,374 — 248,374 — U.S. treasury and government agency securities 16,840 — 16,840 — Commercial paper 26,875 — 26,875 — Certificates of deposit 13,452 — 13,452 — Total Assets $ 315,473 $ 9,932 $ 305,541 $ — Liabilities: Contingent consideration - Lumara Health $ 146,973 $ — $ — $ 146,973 Contingent consideration - MuGard 1,982 — — 1,982 Total Liabilities $ 148,955 $ — $ — $ 148,955 Fair Value Measurements at December 31, 2016 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents $ 9,951 $ 9,951 $ — $ — Corporate debt securities 245,857 — 245,857 — U.S. treasury and government agency securities 12,364 — 12,364 — Commercial paper 40,560 — 40,560 — Certificates of deposit 6,000 — 6,000 — Total Assets $ 314,732 $ 9,951 $ 304,781 $ — Liabilities: Contingent consideration - Lumara Health $ 145,974 $ — $ — $ 145,974 Contingent consideration - MuGard 2,021 — — 2,021 Total Liabilities $ 147,995 $ — $ — $ 147,995 |
Schedule of reconciliation of contingent consideration obligations related to acquisitions measured on recurring basis using Level 3 inputs | The following table presents a reconciliation of contingent consideration obligations related to the acquisition of Lumara Health and the MuGard Rights (in thousands): Balance as of December 31, 2016 $ 147,995 Payments made (83 ) Adjustments to fair value of contingent consideration 1,043 Balance as of March 31, 2017 $ 148,955 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of major classes of inventories | Our major classes of inventories were as follows as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 December 31, 2016 Raw materials $ 14,721 $ 14,382 Work in process 3,250 3,924 Finished goods 18,956 18,952 Total inventories $ 36,927 $ 37,258 |
Property, Plant and Equipment31
Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment, net | Property, plant and equipment, net consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 December 31, 2016 Land $ 700 $ 700 Land improvements 300 300 Building and improvements 9,500 9,500 Computer equipment and software 14,190 13,866 Furniture and fixtures 2,401 2,401 Leasehold improvements 3,718 3,718 Laboratory and production equipment 6,638 6,449 Construction in progress 1,765 1,619 39,212 38,553 Less: accumulated depreciation (16,504 ) (14,093 ) Property, plant and equipment, net $ 22,708 $ 24,460 |
Goodwill and Intangible Asset32
Goodwill and Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | As of March 31, 2017 and December 31, 2016 , our identifiable intangible assets consisted of the following (in thousands): March 31, 2017 December 31, 2016 Accumulated Accumulated Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 149,652 $ — $ 647,448 $ 797,100 $ 128,732 $ — $ 668,368 CBR customer relationships 297,000 17,519 — 279,481 297,000 13,590 — 283,410 1,094,100 167,171 — 926,929 1,094,100 142,322 — 951,778 Indefinite-lived intangible assets: Makena IPR&D 79,100 — — 79,100 79,100 — — 79,100 CBR trade names and trademarks 65,000 — 3,700 61,300 65,000 — 3,700 61,300 Total intangible assets $ 1,238,200 $ 167,171 $ 3,700 $ 1,067,329 $ 1,238,200 $ 142,322 $ 3,700 $ 1,092,178 |
Schedule of indefinite-lived intangible assets | As of March 31, 2017 and December 31, 2016 , our identifiable intangible assets consisted of the following (in thousands): March 31, 2017 December 31, 2016 Accumulated Accumulated Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 149,652 $ — $ 647,448 $ 797,100 $ 128,732 $ — $ 668,368 CBR customer relationships 297,000 17,519 — 279,481 297,000 13,590 — 283,410 1,094,100 167,171 — 926,929 1,094,100 142,322 — 951,778 Indefinite-lived intangible assets: Makena IPR&D 79,100 — — 79,100 79,100 — — 79,100 CBR trade names and trademarks 65,000 — 3,700 61,300 65,000 — 3,700 61,300 Total intangible assets $ 1,238,200 $ 167,171 $ 3,700 $ 1,067,329 $ 1,238,200 $ 142,322 $ 3,700 $ 1,092,178 |
Schedule of expected future annual amortization expense related to intangible assets | We expect amortization expense related to our finite-lived intangible assets to be as follows (in thousands): Estimated Amortization Period Expense Remainder of Year Ending December 31, 2017 $ 95,051 Year Ending December 31, 2018 81,433 Year Ending December 31, 2019 48,283 Year Ending December 31, 2020 46,845 Year Ending December 31, 2021 46,767 Thereafter 608,550 Total $ 926,929 |
Current and Long- Term Liabil33
Current and Long- Term Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Liabilities [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 December 31, 2016 Commercial rebates, fees and returns $ 96,280 $ 89,466 Professional, license, and other fees and expenses 24,630 24,248 Research and development expenses 9,901 10,714 Interest expense 5,507 16,683 Salaries, bonuses, and other compensation 11,161 14,823 Restructuring expense — 74 Total accrued expenses $ 147,479 $ 156,008 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate and expense | The following table summarizes our effective tax rate and income tax benefit for the three months ended March 31, 2017 and 2016 (in thousands except for percentages): Three Months Ended March 31, 2017 2016 Effective tax rate 36 % 25 % Income tax benefit $ (20,706 ) $ (2,540 ) |
Accumulated Other Comprehensi35
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Schedule of changes in accumulated other comprehensive loss, net of tax | The table below presents information about the effects of net income (loss) of significant amounts reclassified out of accumulated other comprehensive income (loss), net of tax, associated with unrealized gains (losses) on securities during the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Beginning balance $ (3,838 ) $ (4,205 ) Other comprehensive income before reclassifications 92 932 Ending balance $ (3,746 ) $ (3,273 ) |
Basic and Diluted Net Income 36
Basic and Diluted Net Income (Loss) per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of components of basic and diluted net income (loss) per share | The components of basic and diluted net loss per share for the three months ended March 31, 2017 and 2016 , were as follows (in thousands, except per share data): Three Months Ended March 31, 2017 2016 Net loss $ (36,560 ) $ (7,527 ) Weighted average shares outstanding used to compute net loss per share: Basic 34,378 34,739 Diluted 34,378 34,739 Net loss per share: Basic $ (1.06 ) $ (0.22 ) Diluted $ (1.06 ) $ (0.22 ) |
Schedule of anti-dilutive securities from computation of diluted net income (loss) per share | The following table sets forth the potential common shares issuable upon the exercise of outstanding options, the vesting of RSUs, the exercise of warrants (prior to consideration of the treasury stock method), and the conversion of the Convertible Notes, which were excluded from our computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive (in thousands): Three Months Ended March 31, 2017 2016 Options to purchase shares of common stock 2,406 2,455 Shares of common stock issuable upon the vesting of RSUs 775 904 Warrants 7,382 7,382 Convertible 2.5% notes 7,382 7,382 Total 17,945 18,123 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of details regarding stock options granted under equity incentive plans | The following table summarizes stock option activity for the three months ended March 31, 2017 : 2007 Equity 2000 Equity 2013 Lumara Inducement Plan Plan Equity Plan Grants Total Outstanding at December 31, 2016 2,158,822 5,200 134,181 814,975 3,113,178 Granted 322,210 — — — 322,210 Exercised (9,065 ) — — — (9,065 ) Expired or terminated (50,696 ) — (281 ) (27,625 ) (78,602 ) Outstanding at March 31, 2017 2,421,271 5,200 133,900 787,350 3,347,721 |
Summary of details regarding restricted stock units granted under equity incentive plans | The following table summarizes RSU activity for the three months ended March 31, 2017 : 2007 Equity 2000 Equity 2013 Lumara Inducement Plan Plan Equity Plan Grants Total Outstanding at December 31, 2016 773,804 — 27,694 135,456 936,954 Granted 732,956 — — — 732,956 Vested (143,056 ) — (11,664 ) (1,000 ) (155,720 ) Expired or terminated (26,957 ) — (501 ) (5,318 ) (32,776 ) Outstanding at March 31, 2017 1,336,747 — 15,529 129,138 1,481,414 |
Schedule of equity-based compensation expense | Equity-based compensation expense for the three months ended March 31, 2017 and 2016 consisted of the following (in thousands): Three Months Ended March 31, 2017 2016 Cost of product sales $ 129 $ 320 Research and development 756 756 Selling, general and administrative 4,893 5,084 Total equity-based compensation expense 5,778 6,160 Income tax effect (1,605 ) (1,674 ) After-tax effect of equity-based compensation expense $ 4,173 $ 4,486 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt obligations | Our outstanding debt obligations as of March 31, 2017 and December 31, 2016 consisted of the following (in thousands): March 31, 2017 December 31, 2016 2023 Senior Notes $ 489,907 $ 489,612 2015 Term Loan Facility 313,881 317,546 Convertible Notes 181,566 179,363 Total long-term debt 985,354 986,521 Less: current maturities 20,455 21,166 Long-term debt, net of current maturities $ 964,899 $ 965,355 |
Schedule of outstanding convertible debt | Our outstanding Convertible Note balances as of March 31, 2017 consisted of the following (in thousands): March 31, 2017 Liability component: Principal $ 199,998 Less: debt discount and issuance costs, net (18,432 ) Net carrying amount $ 181,566 |
Schedule of total interest expense recognized related to the convertible notes | The following table sets forth total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Contractual interest expense $ 1,250 $ 1,250 Amortization of debt issuance costs 274 258 Amortization of debt discount 1,929 1,815 Total interest expense $ 3,453 $ 3,323 |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Schedule of components of restructuring expenses and current liabilities | The following table outlines the components of our restructuring expenses which were included in current liabilities for the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Accrued restructuring, beginning of period $ 74 $ 2,883 Employee severance, benefits and related costs — 809 Payments (74 ) (1,599 ) Accrued restructuring, end of period $ — $ 2,093 |
Basis of Presentation and Sum40
Basis of Presentation and Summary of Significant Accounting Policies - Concentration and Significant Customer Information (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Sales Revenue, Net | Customer Concentration Risk | AmerisourceBergen Drug Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk, including 10% or more of total revenue (as a percent) | 22.00% | 24.00% | |
Sales Revenue, Net | Customer Concentration Risk | McKesson Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk, including 10% or more of total revenue (as a percent) | 14.00% | 10.00% | |
Accounts Receivable | Credit Concentration Risk | AmerisourceBergen Drug Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk, including 10% or more of total revenue (as a percent) | 31.00% | 13.00% | |
Accounts Receivable | Credit Concentration Risk | McKesson Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk, including 10% or more of total revenue (as a percent) | 21.00% | 32.00% |
Basis of Presentation and Sum41
Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition and Related Sales Allowance and Accruals (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017USD ($)deliverable | Mar. 31, 2016USD ($) | |
Product Revenue | ||
Gross product sales | $ 206,724 | $ 152,192 |
Provision for product sales allowances and accruals: | ||
Contractual adjustments | 69,829 | 45,581 |
Governmental rebates | 24,378 | 17,047 |
Total | 94,207 | 62,628 |
Product sales, net | $ 112,517 | $ 89,564 |
Service Revenue | ||
Number of service revenue deliverables | deliverable | 2 | |
Prepayment term for storage of newborn cord blood and tissue units (in years) | 18 years |
Investments (Details)
Investments (Details) | 3 Months Ended | ||
Mar. 31, 2017USD ($)investments | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | |
Summary of Investments | |||
Available-for-sale securities, Amortized Cost | $ 305,764,000 | $ 305,148,000 | |
Available-for-sale securities, Gross Unrealized Gains | 48,000 | 35,000 | |
Available-for-sale securities, Gross Unrealized Losses | (271,000) | (402,000) | |
Available-for-sale securities, Estimated Fair Value | 305,541,000 | 304,781,000 | |
Other than temporary impairment losses | $ 0 | $ 0 | |
Number of investments that have been in an unrealized loss position for more than one year | investments | 0 | ||
Corporate debt securities | |||
Summary of Investments | |||
Available-for-sale securities, due in one year or less, Amortized Cost | $ 137,390,000 | 106,430,000 | |
Available-for-sale securities, due in one to three years, Amortized Cost | 111,161,000 | 139,742,000 | |
Available-for-sale securities, due in one year or less, Gross Unrealized Gains | 8,000 | 3,000 | |
Available-for-sale securities, due in one to three years, Gross Unrealized Gains | 36,000 | 32,000 | |
Available-for-sale securities, due in one year or less, Gross Unrealized Losses | (86,000) | (69,000) | |
Available-for-sale securities, due in one to three years, Gross Unrealized Losses | (135,000) | (281,000) | |
Available-for-sale securities, due in one year or less, Estimated Fair Value | 137,312,000 | 106,364,000 | |
Available-for-sale securities, due in one to three years, Estimated Fair Value | 111,062,000 | 139,493,000 | |
U.S. treasury and government agency securities | |||
Summary of Investments | |||
Available-for-sale securities, due in one year or less, Amortized Cost | 2,513,000 | 1,021,000 | |
Available-for-sale securities, due in one to three years, Amortized Cost | 14,373,000 | 11,395,000 | |
Available-for-sale securities, due in one year or less, Gross Unrealized Gains | 0 | 0 | |
Available-for-sale securities, due in one to three years, Gross Unrealized Gains | 4,000 | 0 | |
Available-for-sale securities, due in one year or less, Gross Unrealized Losses | (1,000) | 0 | |
Available-for-sale securities, due in one to three years, Gross Unrealized Losses | (49,000) | (52,000) | |
Available-for-sale securities, due in one year or less, Estimated Fair Value | 2,512,000 | 1,021,000 | |
Available-for-sale securities, due in one to three years, Estimated Fair Value | 14,328,000 | 11,343,000 | |
Commercial paper | |||
Summary of Investments | |||
Available-for-sale securities, due in one year or less, Amortized Cost | 26,875,000 | 40,560,000 | |
Available-for-sale securities, due in one year or less, Gross Unrealized Gains | 0 | 0 | |
Available-for-sale securities, due in one year or less, Gross Unrealized Losses | 0 | 0 | |
Available-for-sale securities, due in one year or less, Estimated Fair Value | 26,875,000 | 40,560,000 | |
Certificates of deposit | |||
Summary of Investments | |||
Available-for-sale securities, due in one year or less, Amortized Cost | 12,000,000 | 6,000,000 | |
Available-for-sale securities, due in one to three years, Amortized Cost | 1,452,000 | ||
Available-for-sale securities, due in one year or less, Gross Unrealized Gains | 0 | 0 | |
Available-for-sale securities, due in one to three years, Gross Unrealized Gains | 0 | ||
Available-for-sale securities, due in one year or less, Gross Unrealized Losses | 0 | 0 | |
Available-for-sale securities, due in one to three years, Gross Unrealized Losses | 0 | ||
Available-for-sale securities, due in one year or less, Estimated Fair Value | 12,000,000 | $ 6,000,000 | |
Available-for-sale securities, due in one to three years, Estimated Fair Value | $ 1,452,000 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Fair value of assets and liabilities measured on a recurring basis | ||
Transfers or reclassifications of securities from Level 1 to Level 2 | $ 0 | |
Transfers or reclassifications of securities from Level 2 to Level 1 | 0 | |
Fair Value, Measurements, Recurring | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 315,473,000 | $ 314,732,000 |
Total liabilities | 148,955,000 | 147,995,000 |
Fair Value, Measurements, Recurring | Contingent consideration | Lumara Health | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 146,973,000 | 145,974,000 |
Fair Value, Measurements, Recurring | Contingent consideration | MuGard | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 1,982,000 | 2,021,000 |
Fair Value, Measurements, Recurring | Cash equivalents | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 9,932,000 | 9,951,000 |
Fair Value, Measurements, Recurring | Corporate debt securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 248,374,000 | 245,857,000 |
Fair Value, Measurements, Recurring | U.S. treasury and government agency securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 16,840,000 | 12,364,000 |
Fair Value, Measurements, Recurring | Commercial paper | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 26,875,000 | 40,560,000 |
Fair Value, Measurements, Recurring | Certificates of deposit | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 13,452,000 | 6,000,000 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 9,932,000 | 9,951,000 |
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Contingent consideration | Lumara Health | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Contingent consideration | MuGard | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Cash equivalents | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 9,932,000 | 9,951,000 |
Fair Value, Measurements, Recurring | Level 1 | Corporate debt securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | U.S. treasury and government agency securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Commercial paper | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Certificates of deposit | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 305,541,000 | 304,781,000 |
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Contingent consideration | Lumara Health | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Contingent consideration | MuGard | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Cash equivalents | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Corporate debt securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 248,374,000 | 245,857,000 |
Fair Value, Measurements, Recurring | Level 2 | U.S. treasury and government agency securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 16,840,000 | 12,364,000 |
Fair Value, Measurements, Recurring | Level 2 | Commercial paper | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 26,875,000 | 40,560,000 |
Fair Value, Measurements, Recurring | Level 2 | Certificates of deposit | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 13,452,000 | 6,000,000 |
Fair Value, Measurements, Recurring | Level 3 | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Total liabilities | 148,955,000 | 147,995,000 |
Fair Value, Measurements, Recurring | Level 3 | Contingent consideration | Lumara Health | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 146,973,000 | 145,974,000 |
Fair Value, Measurements, Recurring | Level 3 | Contingent consideration | MuGard | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total liabilities | 1,982,000 | 2,021,000 |
Fair Value, Measurements, Recurring | Level 3 | Cash equivalents | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Corporate debt securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | U.S. treasury and government agency securities | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Commercial paper | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Certificates of deposit | ||
Fair value of assets and liabilities measured on a recurring basis | ||
Total assets | $ 0 | $ 0 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reconciliation of contingent consideration obligations related to acquisitions | ||
Adjustments to fair value of contingent consideration | $ 1,043 | $ 5,056 |
Change in fair value of contingent consideration | (1,043) | $ (5,056) |
Lumara Health and MuGard Rights | Fair Value, Measurements, Recurring | Level 3 | ||
Reconciliation of contingent consideration obligations related to acquisitions | ||
Balance at beginning of period | 147,995 | |
Payments made | (83) | |
Adjustments to fair value of contingent consideration | 1,043 | |
Balance at end of period | 148,955 | |
Change in fair value of contingent consideration | (1,043) | |
Mekana | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Contingent consideration classified as short-term liability | 97,200 | |
Reconciliation of contingent consideration obligations related to acquisitions | ||
Adjustments to fair value of contingent consideration | 1,000 | |
Change in fair value of contingent consideration | (1,000) | |
Milestone payment expected to be paid in 2016 to the former Lumara Health security holders based on achievement of a net sales milestone of Makena | 100,000 | |
Estimated undiscounted milestone amounts payable | 250,000 | |
MuGard | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Contingent consideration classified as short-term liability | $ 300 | |
Reconciliation of contingent consideration obligations related to acquisitions | ||
Discount rate (as a percent) | 12.00% | |
Period over which estimated undiscounted royalty amounts could be paid (in years) | 10 years | |
MuGard | Minimum | ||
Reconciliation of contingent consideration obligations related to acquisitions | ||
Estimated undiscounted royalty amounts payable | $ 2,000 | |
MuGard | Maximum | ||
Reconciliation of contingent consideration obligations related to acquisitions | ||
Estimated undiscounted royalty amounts payable | $ 6,000 |
Fair Value Measurements - Debt
Fair Value Measurements - Debt (Details) - Estimate of Fair Value Measurement - Level 2 $ in Millions | Mar. 31, 2017USD ($) |
2023 Senior Notes | |
Debt | |
Fair value of debt | $ 473.8 |
Convertible Notes | |
Debt | |
Fair value of debt | 219.3 |
2015 Term Loan Facility | |
Debt | |
Fair value of debt | $ 323.5 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 14,721 | $ 14,382 |
Work in process | 3,250 | 3,924 |
Finished goods | 18,956 | 18,952 |
Total inventories | $ 36,927 | $ 37,258 |
Property, Plant and Equipment47
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Property, plant and equipment, net | ||
Property, plant and equipment, gross | $ 39,212 | $ 38,553 |
Less: accumulated depreciation | (16,504) | (14,093) |
Property, plant and equipment, net | 22,708 | 24,460 |
Land | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 700 | 700 |
Land improvements | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 300 | 300 |
Building and improvements | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 9,500 | 9,500 |
Computer equipment and software | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 14,190 | 13,866 |
Furniture and fixtures | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 2,401 | 2,401 |
Leasehold improvements | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 3,718 | 3,718 |
Laboratory and production equipment | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 6,638 | 6,449 |
Construction in progress | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | $ 1,765 | $ 1,619 |
Goodwill and Intangible Asset48
Goodwill and Intangible Assets, Net - Goodwill (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Aug. 17, 2015 | Nov. 12, 2014 |
Goodwill [Line Items] | ||||
Goodwill | $ 639,484,000 | $ 639,484,000 | ||
Accumulated impairment losses | $ 0 | |||
Lumara Health | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 198,100,000 | |||
CBR | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 441,400,000 |
Goodwill and Intangible Asset49
Goodwill and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 1,094,100 | $ 1,094,100 |
Accumulated Amortization | 167,171 | 142,322 |
Impairments | 0 | 0 |
Total | 926,929 | 951,778 |
Indefinite And Finite-Lived Intangible Assets, Accumulated Impairment Loss | 3,700 | 3,700 |
Total intangible assets | ||
Total intangible assets at cost | 1,238,200 | 1,238,200 |
Net total intangible assets | 1,067,329 | 1,092,178 |
Makena IPR&D | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 79,100 | 79,100 |
Indefinite-lived intangible assets, impairment | 0 | 0 |
Indefinite-Lived Intangible Assets, Net | 79,100 | 79,100 |
CBR trade names and trademarks | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 65,000 | 65,000 |
Indefinite-lived intangible assets, impairment | 3,700 | 3,700 |
Indefinite-Lived Intangible Assets, Net | 61,300 | 61,300 |
Makena base technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 797,100 | 797,100 |
Accumulated Amortization | 149,652 | 128,732 |
Impairments | 0 | 0 |
Total | 647,448 | 668,368 |
CBR customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 297,000 | 297,000 |
Accumulated Amortization | 17,519 | 13,590 |
Impairments | 0 | 0 |
Total | $ 279,481 | $ 283,410 |
Goodwill and Intangible Asset50
Goodwill and Intangible Assets, Net - Intangible Assets (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |||
Aug. 31, 2015 | Nov. 30, 2014 | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of intangible assets | $ 24.8 | $ 16.6 | |||
Weighted average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-average remaining amortization period (in years) | 8 years 6 months | ||||
Makena base technology | Lumara Health | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization period (in years) | 20 years | ||||
Customer relationships | CBR | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization period (in years) | 20 years | ||||
Trade name and trademarks | CBR | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangible assets, indefinite-lived | $ 3.7 |
Goodwill and Intangible Asset51
Goodwill and Intangible Assets, Net - Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Estimated Amortization Expense | ||
Remainder of Year Ending December 31, 2017 | $ 95,051 | |
Year Ending December 31, 2018 | 81,433 | |
Year Ending December 31, 2019 | 48,283 | |
Year Ending December 31, 2020 | 46,845 | |
Year Ending December 31, 2021 | 46,767 | |
Thereafter | 608,550 | |
Total | $ 926,929 | $ 951,778 |
Current and Long- Term Liabil52
Current and Long- Term Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses | ||
Commercial rebates, fees and returns | $ 96,280 | $ 89,466 |
Professional, license, and other fees and expenses | 24,630 | 24,248 |
Research and development expenses | 9,901 | 10,714 |
Research and development expenses | 5,507 | 16,683 |
Interest expense | 11,161 | 14,823 |
Salaries, bonuses, and other compensation | 0 | 74 |
Restructuring expense | $ 147,479 | $ 156,008 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate (as a percent) | 36.00% | 25.00% |
Income tax benefit | $ (20,706) | $ (2,540) |
Income tax benefit | $ 20,706 | $ 2,540 |
Statutory U.S. federal tax rate (as a percent) | 35.00% | 35.00% |
Accumulated Other Comprehensi54
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | $ 934,389 | |
Other comprehensive income before reclassifications | 92 | $ 932 |
Ending balance | 924,088 | |
AOCI Attributable to Parent [Member] | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | (3,838) | (4,205) |
Ending balance | $ (3,746) | $ (3,273) |
Basic and Diluted Net Income 55
Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands | Aug. 17, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Feb. 14, 2014 |
Components of basic and diluted net income (loss) per share | ||||||
Net loss | $ (36,560,000) | $ (7,527,000) | ||||
Weighted average shares outstanding used to compute net loss per share: | ||||||
Basic (in shares) | 34,378 | 34,739 | ||||
Diluted (in shares) | 34,378 | 34,739 | ||||
Net income (loss) per share: | ||||||
Basic (in usd per share) | $ (1.06) | $ (0.22) | ||||
Diluted (in usd per share) | $ (1.06) | $ (0.22) | ||||
Anti-dilutive securities (in shares) | 17,945 | 18,123 | ||||
Options to purchase shares of common stock | ||||||
Net income (loss) per share: | ||||||
Anti-dilutive securities (in shares) | 2,406 | 2,455 | ||||
Shares of common stock issuable upon the vesting of RSUs | ||||||
Net income (loss) per share: | ||||||
Anti-dilutive securities (in shares) | 775 | 904 | ||||
Warrants | ||||||
Net income (loss) per share: | ||||||
Anti-dilutive securities (in shares) | 7,382 | 7,382 | ||||
Convertible 2.5% notes | ||||||
Net income (loss) per share: | ||||||
Anti-dilutive securities (in shares) | 7,382 | 7,382 | ||||
Convertible 2.5% notes, net | ||||||
Basic and Diluted Net Income (Loss) per Share | ||||||
Principal amount of debt at time of issuance | $ 200,000,000 | $ 200,000,000 | ||||
Interest rate (as a percent) | 2.50% | 2.50% | ||||
2015 Term Loan Facility | ||||||
Basic and Diluted Net Income (Loss) per Share | ||||||
Principal amount of debt at time of issuance | $ 350,000,000 | $ 350,000,000 | ||||
Debt term (in years) | 6 years | 6 years |
Equity-Based Compensation - Act
Equity-Based Compensation - Activity Related to Plans (Details) $ in Millions | 1 Months Ended | 3 Months Ended |
Feb. 28, 2017USD ($)shares | Mar. 31, 2017planshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of equity compensation plans | plan | 4 | |
Performance Restricted Stock Units (RSUs) | 2007 Equity Plan | ||
Restricted Stock Units | ||
Granted (in shares) | 191,250 | |
Award vesting period (in years) | 3 years | |
Fair value, performance- based RSUs | $ | $ 5.7 | |
Compensation expense, period for recognition (in years) | 3 years | |
Stock Options | ||
Stock Options | ||
Outstanding at beginning of period (in shares) | 3,113,178 | |
Granted (in shares) | 322,210 | |
Exercised (in shares) | (9,065) | |
Expired or terminated (in shares) | (78,602) | |
Outstanding at end of period (in shares) | 3,347,721 | |
Stock Options | 2007 Equity Plan | ||
Stock Options | ||
Outstanding at beginning of period (in shares) | 2,158,822 | |
Granted (in shares) | 322,210 | |
Exercised (in shares) | (9,065) | |
Expired or terminated (in shares) | (50,696) | |
Outstanding at end of period (in shares) | 2,421,271 | |
Stock Options | 2000 Equity Plan | ||
Stock Options | ||
Outstanding at beginning of period (in shares) | 5,200 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Expired or terminated (in shares) | 0 | |
Outstanding at end of period (in shares) | 5,200 | |
Stock Options | 2013 Lumara Equity Plan | ||
Stock Options | ||
Outstanding at beginning of period (in shares) | 134,181 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Expired or terminated (in shares) | (281) | |
Outstanding at end of period (in shares) | 133,900 | |
Stock Options | Inducement Grants | ||
Stock Options | ||
Outstanding at beginning of period (in shares) | 814,975 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Expired or terminated (in shares) | (27,625) | |
Outstanding at end of period (in shares) | 787,350 | |
Restricted Stock Units | ||
Restricted Stock Units | ||
Outstanding at beginning of year (in shares) | 936,954 | |
Granted (in shares) | 732,956 | |
Vested (in shares) | (155,720) | |
Expired or terminated (in shares) | (32,776) | |
Outstanding at end of year (in shares) | 1,481,414 | |
Restricted Stock Units | 2007 Equity Plan | ||
Restricted Stock Units | ||
Outstanding at beginning of year (in shares) | 773,804 | |
Granted (in shares) | 732,956 | |
Vested (in shares) | (143,056) | |
Expired or terminated (in shares) | (26,957) | |
Outstanding at end of year (in shares) | 1,336,747 | |
Restricted Stock Units | 2000 Equity Plan | ||
Restricted Stock Units | ||
Outstanding at beginning of year (in shares) | 0 | |
Granted (in shares) | 0 | |
Vested (in shares) | 0 | |
Expired or terminated (in shares) | 0 | |
Outstanding at end of year (in shares) | 0 | |
Restricted Stock Units | 2013 Lumara Equity Plan | ||
Restricted Stock Units | ||
Outstanding at beginning of year (in shares) | 27,694 | |
Granted (in shares) | 0 | |
Vested (in shares) | (11,664) | |
Expired or terminated (in shares) | (501) | |
Outstanding at end of year (in shares) | 15,529 | |
Restricted Stock Units | Inducement Grants | ||
Restricted Stock Units | ||
Outstanding at beginning of year (in shares) | 135,456 | |
Granted (in shares) | 0 | |
Vested (in shares) | (1,000) | |
Expired or terminated (in shares) | (5,318) | |
Outstanding at end of year (in shares) | 129,138 |
Equity-Based Compensation - Equ
Equity-Based Compensation - Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Equity-based compensation expense | ||
Total equity-based compensation expense | $ 5,778 | $ 6,160 |
Income tax effect | (1,605) | (1,674) |
After-tax effect of equity-based compensation expense | 4,173 | 4,486 |
Cost of product sales | ||
Equity-based compensation expense | ||
Total equity-based compensation expense | 129 | 320 |
Research and development | ||
Equity-based compensation expense | ||
Total equity-based compensation expense | 756 | 756 |
Selling, general and administrative | ||
Equity-based compensation expense | ||
Total equity-based compensation expense | $ 4,893 | $ 5,084 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 15 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Jan. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Share repurchase program, authorized amount | $ 60,000,000 | |||
Common stock repurchased and retired (in shares) | 0 | 831,744 | ||
Stock repurchased and retired during period, value | $ 20,000,000 | |||
Average share price (in usd per share) | $ 24.05 | |||
Decrease in total stockholders' equity | $ (10,300,000) | |||
Net loss | (36,560,000) | $ (7,527,000) | ||
Accounting Standards Update 2016-09, Excess Tax Benefit Component | Retained Earnings | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative- effect adjustment | $ 21,600,000 | $ 21,600,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Feb. 05, 2016 | Mar. 31, 2017 |
Sandoz Patent Infringement Lawsuit | |||
Legal Proceedings | |||
Period of time, patent infringement suit can be filed in federal district court (in days) | 45 days | ||
Month stay period (in months) | 30 months | 30 months | |
CBR Acquisition Holdings Corporation | |||
Legal Proceedings | |||
Purchase commitment | $ 4.6 |
Collaboration, License and Ot60
Collaboration, License and Other Strategic Agreements (Details) - USD ($) | Feb. 02, 2017 | Mar. 31, 2017 | Sep. 30, 2015 |
Velo Bio option agreement | |||
Collaborative Agreements | |||
Upfront payment, option agreement | $ 10,000,000 | ||
Payments due | $ 65,000,000 | ||
Velo Bio option agreement | Minimum | |||
Collaborative Agreements | |||
Sales milestone targets | 100,000,000 | ||
Velo Bio option agreement | Maximum | |||
Collaborative Agreements | |||
Sales milestone payments based on annual sales milestones | 250,000,000 | ||
Sales milestone targets | $ 900,000,000 | ||
Increase of milestone payment when royalty rate is zero (as a percent) | 50.00% | ||
Palatin license agreement | License Agreement Terms | |||
Collaborative Agreements | |||
Research payment | $ 60,000,000 | ||
Maximum reimbursement | $ 25,000,000 | ||
Expiration period, following first commercial sale (in years) | 10 years | ||
Palatin license agreement | License Agreement Terms | Regulatory milestone | |||
Collaborative Agreements | |||
Maximum future contingent payments | $ 80,000,000 | ||
Palatin license agreement | License Agreement Terms | First Sales Milestone | |||
Collaborative Agreements | |||
Maximum future contingent payments | 300,000,000 | ||
Sales milestone | 25,000,000 | ||
Sales milestone, triggering amount | $ 250,000,000 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 985,354 | $ 986,521 |
Less: current maturities | 20,455 | 21,166 |
Long-term debt, net of current maturities | 964,899 | 965,355 |
2023 Senior Notes | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 489,907 | 489,612 |
2015 Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 313,881 | 317,546 |
Convertible Notes | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 181,566 | $ 179,363 |
Debt - 2023 Senior Notes (Detai
Debt - 2023 Senior Notes (Details) - 2023 Senior Notes - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Aug. 17, 2015 | |
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 7.875% | |
Redemption price (as a percent) | 107.875% | |
Repurchase price of principal amount of notes plus accrued and unpaid interest (as a percent) | 100.00% | |
Carrying value, net | $ 489,900,000 | |
Maximum | ||
Debt Instrument [Line Items] | ||
Principal amount of redeemable debt (as a percent) | 35.00% | |
Minimum | ||
Debt Instrument [Line Items] | ||
Principal amount of outstanding debt (as a percent) | 65.00% | |
Aggregate principal that must be held to accelerate amounts due (as a percent) | 25.00% | |
Change Of Control | ||
Debt Instrument [Line Items] | ||
Repurchase price of principal amount of notes plus accrued and unpaid interest (as a percent) | 101.00% | |
CBR | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount of debt issued | $ 500,000,000 | |
CBR | Private Placement | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount of debt issued | $ 500,000,000 |
Debt - 2015 Term Loan Facility
Debt - 2015 Term Loan Facility (Details) - USD ($) | Aug. 17, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2017 |
Six-Year Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Debt term (in years) | 6 years | 6 years | ||
Aggregate principal amount of debt issued | $ 350,000,000 | $ 350,000,000 | ||
Maximum incremental loan capacity allowed | 225,000,000 | |||
Installment payment amount | $ 4,400,000 | |||
Annual mandatory prepayment of debt (as a percent) | 50.00% | |||
Reclassification from long term debt to current portion of long-term debt | $ 3,000,000 | |||
Equity interests in domestic subsidiaries pledged as collateral (as a percent) | 100.00% | |||
Voting equity interests in direct foreign subsidiaries pledged as collateral (as a percent) | 65.00% | |||
Non-voting equity interests in direct foreign subsidiaries pledged as collateral (as a percent) | 100.00% | |||
Principal amount of debt outstanding | 323,800,000 | |||
Net carrying value of outstanding borrowings | $ 313,900,000 | |||
Six-Year Term Loan Facility | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Margin rate (as a percent) | 3.75% | |||
Floor for variable rate (as a percent) | 1.00% | |||
Interest rate (as a percent) | 4.75% | |||
Effective interest rate (as a percent) | 5.65% | |||
Six-Year Term Loan Facility | Prime Rate | ||||
Debt Instrument [Line Items] | ||||
Margin rate (as a percent) | 2.75% | |||
Floor for variable rate (as a percent) | 2.00% | |||
Five-Year Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Debt term (in years) | 5 years | |||
Unamortized debt issuance costs | $ 6,800,000 |
Debt - 2.5% Convertible Notes (
Debt - 2.5% Convertible Notes (Details) | Feb. 14, 2014USD ($) | Mar. 31, 2017USD ($)day$ / shares | Dec. 31, 2016USD ($) | Feb. 28, 2014USD ($) |
Debt Instrument [Line Items] | ||||
Carrying value of convertible debt | $ 181,566,000 | $ 179,363,000 | ||
Convertible 2.5% notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount of debt issued | $ 200,000,000 | |||
Net proceeds from issuance of convertible debt | $ 193,300,000 | |||
Fees and expenses | 6,700,000 | |||
Proceeds used to pay the cost of the bond hedges | $ 14,100,000 | |||
Interest rate (as a percent) | 2.50% | |||
Initial conversion rate of common stock per $1000 of principal amount | 0.0369079 | |||
Initial conversion price of convertible notes into common stock (in usd per share) | $ / shares | $ 27.09 | |||
Consecutive trading period (in days) | 30 days | |||
Principal amount used for debt instrument conversion ratio | $ 1,000 | |||
Period of amortization of debt discount to interest expense using effective interest method (in years) | 5 years | |||
Debt issuance costs allocated to equity component | $ 1,300,000 | |||
Debt issuance costs allocated to the liability component | 5,400,000 | |||
Debt term (in years) | 5 years | |||
Effective interest rate on liability component (as a percent) | 7.23% | |||
Principal amount of debt outstanding | $ 199,998,000 | |||
Carrying value of convertible debt | $ 181,566,000 | |||
Convertible 2.5% notes | Debt Instrument Convertible Covenant One | ||||
Debt Instrument [Line Items] | ||||
Trading period (in days) | day | 20 | |||
Consecutive trading period (in days) | 30 days | |||
Convertible 2.5% notes | Debt Instrument Convertible Covenant One | Minimum | ||||
Debt Instrument [Line Items] | ||||
Closing sales price of the entity's common stock that the conversion price must exceed or be equal in order for the notes to be convertible (as a percent) | 130.00% | |||
Convertible 2.5% notes | Debt Instrument Convertible Covenant Two | ||||
Debt Instrument [Line Items] | ||||
Consecutive business days after any five consecutive trading day period during the note measurement period (in days) | 5 days | |||
Consecutive trading days before five consecutive business days during the note measurement period (in days) | 5 days | |||
Principal amount used for debt instrument conversion ratio | $ 1,000 | |||
Convertible 2.5% notes | Debt Instrument Convertible Covenant Two | Maximum | ||||
Debt Instrument [Line Items] | ||||
Product of the last reported sale price of the entity's common stock and the conversion rate of convertible debt instruments (less than) (as a percent) | 98.00% | |||
Convertible 2.5% notes, net | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount of debt issued | $ 200,000,000 | $ 200,000,000 | ||
Interest rate (as a percent) | 2.50% | 2.50% | ||
Convertible 2.5% notes, net | Convertible 2.5% notes | ||||
Debt Instrument [Line Items] | ||||
Period of amortization of debt discount to interest expense using effective interest method (in years) | 5 years | |||
Principal amount of debt outstanding | $ 200,000,000 | |||
Carrying value of convertible debt | $ 181,600,000 |
Debt - Outstanding Convertible
Debt - Outstanding Convertible Note Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Liability component: | ||
Net carrying amount | $ 181,566 | $ 179,363 |
Convertible Notes | ||
Liability component: | ||
Principal | 199,998 | |
Less: debt discount and issuance costs, net | (18,432) | |
Net carrying amount | $ 181,566 |
Debt - Total Interest Expense R
Debt - Total Interest Expense Recognized Related to the Convertible Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Debt Instrument [Line Items] | ||
Total interest expense | $ 18,300 | $ 18,443 |
Convertible Notes | ||
Debt Instrument [Line Items] | ||
Contractual interest expense | 1,250 | 1,250 |
Amortization of debt issuance costs | 274 | 258 |
Amortization of debt discount | 1,929 | 1,815 |
Total interest expense | $ 3,453 | $ 3,323 |
Debt - Convertible Bond Hedge,
Debt - Convertible Bond Hedge, Warrant Transactions (Details) - USD ($) $ / shares in Units, shares in Millions | 1 Months Ended | 12 Months Ended | |
Feb. 28, 2014 | Dec. 31, 2014 | Feb. 11, 2014 | |
Debt Instrument [Line Items] | |||
Common stock covered under convertible bond hedge (in shares) | 7.4 | ||
Exercise price (in usd per share) | $ 27.09 | ||
Purchase of convertible bond hedges, net of tax | $ 39,800,000 | ||
Common stock called by warrants (in shares) | 7.4 | ||
Initial exercise price (in usd per share) | $ 34.12 | ||
Exercise price above last reported sale price of common stock (as a percent) | 70.00% | ||
Sale price of common stock (in usd per share) | $ 20.07 | ||
Proceeds from issuance of warrants | $ 25,600,000 | ||
Convertible 2.5% notes | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount of debt issued | $ 200,000,000 |
Restructuring (Details)
Restructuring (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Restructuring and Related Activities [Abstract] | ||
Restructuring charges | $ 0 | $ 622,000 |
Components of restructuring expenses and reserve | ||
Accrued restructuring, beginning of period | 74,000 | 2,883,000 |
Employee severance, benefits and related costs | 0 | 809,000 |
Payments | (74,000) | (1,599,000) |
Accrued restructuring, end of period | $ 0 | $ 2,093,000 |
Recently Issued and Proposed 69
Recently Issued and Proposed Accounting Pronouncements (Details) $ in Millions | Mar. 31, 2017USD ($) |
Retained Earnings | Accounting Standards Update 2016-09, Excess Tax Benefit Component | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative- effect adjustment | $ 21.6 |
Subsequent Events (Details)
Subsequent Events (Details) - Endoceutics License Agreement - Subsequent Event | Apr. 03, 2017USD ($)countryshares |
Subsequent Event [Line Items] | |
Upfront payment | $ 50,000,000 |
Stock issued under arrangement (in shares) | shares | 600,000 |
Period after first commercial sale (in years) | 10 years |
Notice period (in days) | 90 days |
Breach curing period (in days) | 90 days |
Dispute resolution period (in days) | 30 days |
Research and Development Arrangement | |
Subsequent Event [Line Items] | |
Out-of-pocket expenses (up to) | $ 20,000,000 |
Inventories | |
Subsequent Event [Line Items] | |
Supplier period (in years) | 2 years |
180 Day Lock-Up Provision | |
Subsequent Event [Line Items] | |
Stock issued under arrangement (in shares) | shares | 300,000 |
Stock issued, lock-up period | 180 days |
One Year Lock-Up Provision | |
Subsequent Event [Line Items] | |
Stock issued under arrangement (in shares) | shares | 300,000 |
Stock issued, lock-up period | 1 year |
Anniversary of Closing | |
Subsequent Event [Line Items] | |
Future contingent payments | $ 10,000,000 |
Delivery of Launch Quantities | |
Subsequent Event [Line Items] | |
Future contingent payments | 10,000,000 |
Tiered Royalties | |
Subsequent Event [Line Items] | |
Future contingent payments | 150,000,000 |
Net sales threshold | $ 1,000,000,000 |
Maximum | Tiered Royalties | |
Subsequent Event [Line Items] | |
Royalty percentage (as a percent) | 20.00% |
Endoceutics, Inc. | First Sales Milestone | |
Subsequent Event [Line Items] | |
Sales milestone | $ 15,000,000 |
First sales milestone triggering amount | 150,000,000 |
Endoceutics, Inc. | Second Sales Milestone | |
Subsequent Event [Line Items] | |
Sales milestone | 30,000,000 |
First sales milestone triggering amount | 300,000,000 |
Endoceutics, Inc. | Third Sales Milestone | |
Subsequent Event [Line Items] | |
Sales milestone | 850,000,000 |
First sales milestone triggering amount | $ 500,000,000 |
Valid Business Reason | |
Subsequent Event [Line Items] | |
Termination period (in days) | 365 days |
Product Safety Issue | |
Subsequent Event [Line Items] | |
Termination period (in days) | 60 days |
Change In Control | |
Subsequent Event [Line Items] | |
Termination period (in days) | 180 days |
Change In Control | European Union | |
Subsequent Event [Line Items] | |
Number of contracts competing | country | 3 |