Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 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 | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 35,374,341 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 257,914 | $ 274,305 |
Investments | 136,186 | 304,781 |
Accounts receivable, net | 97,762 | 92,375 |
Inventories | 36,543 | 37,258 |
Prepaid and other current assets | 11,430 | 9,839 |
Total current assets | 539,835 | 718,558 |
Property, plant and equipment, net | 24,833 | 24,460 |
Goodwill | 639,484 | 639,484 |
Intangible assets, net | 769,160 | 1,092,178 |
Restricted cash | 2,653 | 2,593 |
Other long-term assets | 801 | 1,153 |
Total assets | 1,976,766 | 2,478,426 |
Current liabilities: | ||
Accounts payable | 8,511 | 3,684 |
Accrued expenses | 190,457 | 156,008 |
Current portion of long-term debt | 0 | 21,166 |
Current portion of acquisition-related contingent consideration | 99,106 | 97,068 |
Deferred revenues | 41,623 | 34,951 |
Total current liabilities | 339,697 | 312,877 |
Long-term liabilities: | ||
Long-term debt, net | 490,518 | 785,992 |
Convertible notes, net | 264,899 | 179,363 |
Acquisition-related contingent consideration | 1,582 | 50,927 |
Deferred tax liabilities | 55,800 | 197,066 |
Deferred revenues | 22,312 | 14,850 |
Other long-term liabilities | 1,651 | 2,962 |
Total liabilities | 1,176,459 | 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; 35,369,141 and 34,336,147 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 354 | 343 |
Additional paid-in capital | 1,284,867 | 1,238,031 |
Accumulated other comprehensive loss | (3,637) | (3,838) |
Accumulated deficit | (481,277) | (300,147) |
Total stockholders’ equity | 800,307 | 934,389 |
Total liabilities and stockholders’ equity | $ 1,976,766 | $ 2,478,426 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 117,500,000 | 117,500,000 |
Common stock, shares issued | 35,369,141 | 34,336,147 |
Common stock, shares outstanding | 35,369,141 | 34,336,147 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Product sales, net | $ 124,331 | $ 115,777 | $ 367,190 | $ 308,324 |
Service revenues, net | 29,410 | 27,965 | 84,365 | 71,863 |
License fee, collaboration and other revenues | 0 | 40 | 53 | 313 |
Total revenues | 153,741 | 143,782 | 451,608 | 380,500 |
Costs and expenses: | ||||
Cost of product sales | 31,085 | 25,706 | 90,761 | 65,942 |
Cost of services | 5,559 | 4,984 | 16,130 | 15,705 |
Research and development expenses | 16,274 | 17,116 | 63,021 | 45,579 |
Acquired in-process research and development | 0 | 0 | 65,845 | 0 |
Selling, general and administrative expenses | 31,307 | 57,216 | 182,719 | 172,314 |
Impairment charges of intangible assets | 319,246 | 0 | 319,246 | 15,963 |
Restructuring expenses | 0 | 0 | 0 | 712 |
Total costs and expenses | 403,471 | 105,022 | 737,722 | 316,215 |
Operating (loss) income | (249,730) | 38,760 | (286,114) | 64,285 |
Other (expense) income: | ||||
Interest expense | (16,847) | (18,309) | (52,403) | (55,002) |
Loss on debt extinguishment | (314) | 0 | (9,830) | 0 |
Interest and dividend income | 487 | 838 | 2,181 | 2,319 |
Other (expense) income | 0 | (24) | (43) | 197 |
Total other (expense) income | (16,674) | (17,495) | (60,095) | (52,486) |
(Loss) income before income taxes | (266,404) | 21,265 | (346,209) | 11,799 |
Income tax (benefit) expense | (114,343) | 5,069 | (143,521) | 3,725 |
Net (loss) income | $ (152,061) | $ 16,196 | $ (202,688) | $ 8,074 |
Net (loss) income per share: | ||||
Basic (in usd per share) | $ (4.31) | $ 0.47 | $ (5.80) | $ 0.23 |
Diluted (in usd per share) | $ (4.31) | $ 0.43 | $ (5.80) | $ 0.23 |
Weighted average shares outstanding used to compute net (loss) income per share: | ||||
Basic (in shares) | 35,311 | 34,171 | 34,948 | 34,377 |
Diluted (in shares) | 35,311 | 42,111 | 34,948 | 34,764 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (152,061) | $ 16,196 | $ (202,688) | $ 8,074 |
Other comprehensive (loss) income: | ||||
Holding (losses) gains arising during period, net of tax | (4) | (336) | 201 | 811 |
Total comprehensive (loss) income | $ (152,065) | $ 15,860 | $ (202,487) | $ 8,885 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (202,688) | $ 8,074 |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 88,941 | 68,960 |
Impairment of intangible assets | 319,246 | 15,963 |
Provision for bad debt expense | 3,503 | 2,209 |
Amortization of premium/discount on purchased securities | 218 | 518 |
Non-cash equity-based compensation expense | 18,058 | 16,809 |
Non-cash IPR&D expense | 945 | 0 |
Loss on debt extinguishment | 9,830 | 0 |
Amortization of debt discount and debt issuance costs | 10,600 | 9,015 |
(Loss) gains on investments, net | (255) | 24 |
Change in fair value of contingent consideration | (47,142) | 5,106 |
Deferred income taxes | (146,682) | 2,573 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (8,889) | 13,390 |
Inventories | (600) | (1,369) |
Receivable from collaboration | 0 | 428 |
Prepaid and other current assets | (1,409) | (1,293) |
Accounts payable and accrued expenses | 29,977 | 19,940 |
Deferred revenues | 14,134 | 21,888 |
Other assets and liabilities | (1,139) | 1,467 |
Net cash provided by operating activities | 86,648 | 183,702 |
Cash flows from investing activities: | ||
Proceeds from sales or maturities of investments | 279,526 | 71,733 |
Purchase of investments | (110,894) | (142,175) |
Intrarosa developed technology | (55,800) | 0 |
Change in restricted cash | (60) | 0 |
Capital expenditures | (6,573) | (3,360) |
Net cash provided by (used in) investing activities | 106,199 | (73,802) |
Cash flows from financing activities: | ||
Long-term debt principal payments | (328,125) | (13,127) |
Proceeds from 2022 Convertible Notes | 320,000 | 0 |
Payment to repurchase 2019 Convertible Notes | (191,480) | 0 |
Proceeds to settle warrants | 323 | 0 |
Payment of convertible debt issuance costs | (9,553) | 0 |
Payments of contingent consideration | (165) | (212) |
Payments for repurchases of common stock | 0 | (20,000) |
Proceeds from the issuance and exercise of common stock options | 2,350 | 2,184 |
Payments of employee tax withholding related to equity-based compensation | (2,588) | (2,171) |
Net cash used in financing activities | (209,238) | (33,326) |
Net (decrease) increase in cash and cash equivalents | (16,391) | 76,574 |
Cash and cash equivalents at beginning of the period | 274,305 | 228,705 |
Cash and cash equivalents at end of the period | 257,914 | 305,279 |
Supplemental data for cash flow information: | ||
Cash paid for taxes | 3,565 | 4,611 |
Cash paid for interest | 50,892 | 58,319 |
Non-cash investing and financing activities: | ||
Fair value of common stock issued in connection with the acquisition of the Intrarosa intangible asset | 12,555 | 0 |
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | $ 9,300 | $ 0 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 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 maternal and women’s health, anemia management and cancer supportive care, including Makena ® (hydroxyprogesterone caproate injection), Feraheme ® (ferumoxytol) for intravenous use, MuGard ® Mucoadhesive Oral Wound Rinse, and Intrarosa ® (prasterone) vaginal inserts for the treatment of moderate-to-severe dyspareunia, a symptom of vulvar and vaginal atrophy (“VVA”), due to menopause. 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. 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 | 9 Months Ended |
Sep. 30, 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 Consolidated 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 September 30, 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 product candidates 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 and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 AmerisourceBergen Corporation 22 % 20 % 21 % 22 % McKesson Corporation 21 % <10 % 19 % <10 % Caremark LLC (Specialty Pharmacy) — % 10 % — % 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 balances as of September 30, 2017 and December 31, 2016 were as follows: September 30, 2017 December 31, 2016 AmerisourceBergen Corporation 26 % 13 % McKesson Corporation 23 % 32 % We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities), Feraheme finished drug product and Intrarosa drug substance. 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 and nine months ended September 30, 2017 and 2016 , were offset by provisions for allowances and accruals as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Gross product sales $ 235,299 $ 201,303 $ 676,377 $ 530,076 Provision for product sales allowances and accruals: Contractual adjustments 80,110 61,504 225,622 161,023 Governmental rebates 30,858 24,022 83,565 60,729 Total 110,968 85,526 309,187 221,752 Product sales, net $ 124,331 $ 115,777 $ 367,190 $ 308,324 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 and nine months ended September 30, 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 | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | INVESTMENTS As of September 30, 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. Available-for-sale securities are those securities which we view as available for use in current operations, if needed. We generally classify our available-for-sale securities as short-term investments even though the stated maturity date may be one year or more beyond the current balance sheet date. The following is a summary of our investments as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term investments:* Corporate debt securities $ 47,494 $ 21 $ (12 ) $ 47,503 Commercial paper 3,990 — — 3,990 Certificates of deposit 11,449 — — 11,449 Total short-term investments 62,933 21 (12 ) 62,942 Long-term investments:** Corporate debt securities 63,918 45 (52 ) 63,911 U.S. treasury and government agency securities 9,378 — (45 ) 9,333 Total long-term investments 73,296 45 (97 ) 73,244 Total investments $ 136,229 $ 66 $ (109 ) $ 136,186 * Represents securities with a remaining maturity of less than one year. ** Represents securities with a remaining maturity of one to three years. December 31, 2016 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term investments:* Corporate debt securities $ 106,430 $ 3 $ (69 ) $ 106,364 U.S. treasury and government agency securities 1,021 — — 1,021 Commercial paper 40,560 — — 40,560 Certificates of deposit 6,000 — — 6,000 Total short-term investments 154,011 3 (69 ) 153,945 Long-term investments:** Corporate debt securities 139,742 32 (281 ) 139,493 U.S. treasury and government agency securities 11,395 — (52 ) 11,343 Total long-term investments 151,137 32 (333 ) 150,836 Total investments $ 305,148 $ 35 $ (402 ) $ 304,781 * Represents securities with a remaining maturity of less than one year. ** Represents securities with a remaining maturity of one to three years. 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 or nine months ended September 30, 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. 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 | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following tables represent the fair value hierarchy as of September 30, 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 September 30, 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 $ 4,826 $ 4,826 $ — $ — Corporate debt securities 111,414 — 111,414 — U.S. treasury and government agency securities 9,333 — 9,333 — Commercial paper 3,990 — 3,990 — Certificates of deposit 11,449 — 11,449 — Total Assets $ 141,012 $ 4,826 $ 136,186 $ — Liabilities: Contingent consideration - Lumara Health $ 98,778 $ — $ — $ 98,778 Contingent consideration - MuGard 1,910 — — 1,910 Total Liabilities $ 100,688 $ — $ — $ 100,688 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 analysis of prices received from third parties to determine whether prices are reasonable estimates of fair value. After completing our analysis, we did not adjust or override any fair value measurements provided by our pricing services as of September 30, 2017 . In addition, there were no transfers or reclassifications of any securities between Level 1 and Level 2 during the nine months ended September 30, 2017 . Contingent consideration In accordance with GAAP, for asset acquisitions, such as Intrarosa, we record contingent consideration for obligations we consider to be probable and estimable and these liabilities are not adjusted to fair value. As of September 30, 2017 , $10.0 million of contingent consideration was recorded in accrued expenses and is expected to be paid to Endoceutics in April 2018 on the first anniversary of the closing. We recorded 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 (165 ) Adjustments to fair value of contingent consideration (47,142 ) Balance as of September 30, 2017 $ 100,688 During the nine months ended September 30, 2017, we adjusted the fair value of our contingent consideration liability by approximately $47.1 million , primarily due to a decrease of approximately $49.2 million to the Makena contingent consideration. During the third quarter of 2017, we revised our long-term forecast of total projected net sales for Makena, which impacted both the amount and timing of future milestone payments. As a result, during the third quarter of 2017, we reduced our Makena-related contingent consideration liability by $50.4 million . We have classified $98.8 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 September 30, 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 September 30, 2017 , the total potential 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 11% . As of September 30, 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 September 30, 2017 , the estimated fair value of our 2023 Senior Notes, 2022 Convertible Notes and 2019 Convertible Notes (each as defined below) was $502.5 million , $308.6 million and $22.2 million , respectively, which differed from their carrying values. See Note P, “ Debt ” for additional information on our debt obligations. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Our major classes of inventories were as follows as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Raw materials $ 13,034 $ 14,382 Work in process 2,772 3,924 Finished goods 20,737 18,952 Total inventories $ 36,543 $ 37,258 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 9 Months Ended |
Sep. 30, 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 September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Land $ 700 $ 700 Land improvements 300 300 Building and improvements 9,534 9,500 Computer equipment and software 14,440 13,866 Furniture and fixtures 2,472 2,401 Leasehold improvements 3,804 3,718 Laboratory and production equipment 6,860 6,449 Construction in progress 7,016 1,619 45,126 38,553 Less: accumulated depreciation (20,293 ) (14,093 ) Property, plant and equipment, net $ 24,833 $ 24,460 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 9 Months Ended |
Sep. 30, 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 September 30, 2017 , we had no accumulated impairment losses related to goodwill. We test our goodwill balances during the fourth quarter of each year for impairment. An interim goodwill impairment test in advance of the annual impairment assessment may be required if events occur that indicate an impairment might be present. For example, a sustained substantial decline in our market capitalization, a material impairment charge related to other long-lived assets, unexpected adverse business conditions, economic factors and unanticipated competitive activities may signal that an interim impairment test is needed. Accordingly, among other factors, we monitor changes in our stock price between annual impairment tests. Our stock market capitalization has at times been, and as of September 30, 2017 is, lower than our stockholders’ equity or book value. We believe that the current short-term decline in share price below book value does not necessarily reflect the underlying value of the Company. Management believes that the fair value of the Company exceeds book value and accordingly, has not recognized an impairment of its goodwill. Intangible Assets As of September 30, 2017 and December 31, 2016 , our identifiable intangible assets consisted of the following (in thousands): September 30, 2017 December 31, 2016 Accumulated Accumulated Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 198,354 $ 319,246 $ 279,500 $ 797,100 $ 128,732 $ — $ 668,368 CBR customer relationships 297,000 25,379 — 271,621 297,000 13,590 — 283,410 Intrarosa developed technology 77,655 16 — 77,639 — — — — 1,171,755 223,749 319,246 628,760 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 $ 1,315,855 $ 223,749 $ 322,946 $ 769,160 $ 1,238,200 $ 142,322 $ 3,700 $ 1,092,178 Intangible assets are initially recorded at fair value and stated net of accumulated amortization and impairments. We amortize our intangible assets that have finite lives based on the pattern in which the economic benefit of the asset is expected to be utilized. Amortization is recorded over the estimated useful lives ranging from 7 to 20 years. We evaluate the realizability of our definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset. If the carrying value of an asset exceeds its undiscounted cash flows, we estimate the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, we use market participant assumptions pursuant to Accounting Standards Codification (“ASC”) Topic 820 , Fair Value Measurements . Indefinite lived intangible assets, such as IPR&D assets, are required to be tested for impairment annually, or more frequently if indicators of impairment are present. Our annual impairment test date is October 31st of each year. During the third quarter of 2017, we received new information from a variety of sources, including from market research and our authorized generic partner, related to potential generic competitors to the intramuscular formulation of Makena. This information, combined with continued progress on our own authorized generic strategy, was incorporated into our revised long-range revenue forecasts for the Makena intramuscular formulation. We determined that this new information constituted a triggering event with respect to our Makena base technology intangible asset (the intramuscular formulation). We estimated that the sum of the undiscounted projected cash flows of the Makena intramuscular product was less than the carrying value of the corresponding intangible asset. In accordance with ASC Topic 350 , Intangibles - Goodwill and Other we reassessed the fair value of the Makena base technology intangible asset using an income approach, a level three measurement technique. We determined that the fair value of the Makena base technology intangible asset was less than its carrying value and accordingly, we recorded an impairment charge of $319.2 million . The charge was recorded within a separate operating expense line item in our condensed consolidated statements of operations during the three months ended September 30, 2017. In addition, we reassessed the remaining useful life of the Makena base technology (the intramuscular formulation) and concluded that, as of September 30, 2017, seven years is an appropriate amortization period based on the estimated remaining economic life of the intramuscular formulation of Makena. Further, we evaluated our Makena IPR&D intangible asset, which is related to the Makena auto-injector, for impairment and concluded that its fair value was greater than its carrying value, and therefore it was not impaired. Future events, such as the upcoming February 2018 PDUFA date, could cause us to reassess the realizability of the Makena IPR&D asset. Furthermore, additional information may become available, which may cause us to identify additional impairment charges. Such charges could have a material adverse effect on our earnings in future periods. As of September 30, 2017 , the weighted average remaining amortization period for our finite-lived intangible assets was approximately 11.62 years. Total amortization expense for the nine months ended September 30, 2017 and 2016 , was $81.4 million and $58.3 million , respectively. 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 $ 60,693 Year Ending December 31, 2018 186,356 Year Ending December 31, 2019 35,779 Year Ending December 31, 2020 30,068 Year Ending December 31, 2021 31,020 Thereafter 284,844 Total $ 628,760 |
Current and Long- Term Liabilit
Current and Long- Term Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Current and Long-Term Liabilities | CURRENT AND LONG-TERM LIABILITIES Accrued Expenses Accrued expenses consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Commercial rebates, fees and returns $ 110,935 $ 89,466 Professional, license, and other fees and expenses 37,975 24,248 Research and development expenses 6,198 10,714 Intrarosa-related license fees 10,000 — Interest expense 7,470 16,683 Salaries, bonuses, and other compensation 17,879 14,823 Restructuring expense — 74 Total accrued expenses $ 190,457 $ 156,008 Deferred Revenues Our deferred revenue balances as of September 30, 2017 and December 31, 2016 of $63.9 million and $49.8 million , respectively, were primarily 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 | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The following table summarizes our effective tax rate and income tax (benefit) expense for the three and nine months ended September 30, 2017 and 2016 (in thousands except for percentages): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Effective tax rate 43 % 24 % 41 % 32 % Income tax (benefit) expense $ (114,343 ) $ 5,069 $ (143,521 ) $ 3,725 For the three and nine months ended September 30, 2017 , we recognized an income tax benefit of $114.3 million and $143.5 million , respectively, representing an effective tax rate of 43% and 41% , respectively. The difference between the expected statutory federal tax rate of 35% and the effective tax rates for the three and nine months ended September 30, 2017 , was primarily attributable to the impact of state income taxes, federal research and development and orphan drug tax credits, and contingent consideration associated with Lumara Health, partially offset by the establishment of a valuation allowance related to certain deferred tax assets. During the three months ended September 30, 2017, we entered into a three-year cumulative loss position and established a valuation allowance on certain deferred tax assets to the extent that our existing taxable temporary differences would not be available as a source of income to realize the benefits of those deferred tax assets. For the three and nine months ended September 30, 2016 , we recognized an income tax expense of $5.1 million and $3.7 million , respectively, representing an effective tax rate of 24% and 32% , respectively. The difference between the expected statutory federal tax rate of 35% and the effective tax rates for the three and nine months ended September 30, 2016 , was primarily attributable to contingent consideration associated with Lumara Health, including the tax deductible portion of the then anticipated 2016 milestone payment, and federal research and development and orphan drug tax credits, partially offset by the impact of state income taxes, non-deductible stock compensation, and other non-deductible expenses. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE 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 and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Beginning balance $ (3,633 ) $ (3,058 ) $ (3,838 ) $ (4,205 ) Other comprehensive (loss) income before reclassifications (4 ) (336 ) 201 811 Ending balance $ (3,637 ) $ (3,394 ) $ (3,637 ) $ (3,394 ) |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) per Share | 9 Months Ended |
Sep. 30, 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, diluted net income per common share would be computed assuming the impact of the conversion of the 2.50% convertible senior notes due 2019 (the “2019 Convertible Notes”) and the 3.25% convertible senior notes due 2022 (the “2022 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 of our 2022 Convertible Notes and the 2019 Convertible Notes (together, the “Convertible Notes”) in cash, shares, or any combination of shares and cash. Our six -year $350.0 million term loan facility (the “2015 Term Loan Facility”), which was repaid in full in May 2017, contained certain covenants that, prior to May 2017, restricted us from settling the conversion obligation in whole or in part with cash unless certain conditions in the 2015 Term Loan Facility were satisfied. Prior to the repayment of the 2015 Term Loan Facility, we utilized the if-converted method to reflect the impact of the conversion of the Convertible Notes. Our current policy is to settle the principal balance of the Convertible Notes in cash. As such, subsequent to the repayment of the 2015 Term Loan Facility, we apply the treasury stock method to these securities and the dilution related to the conversion premium, if any, of the Convertible Notes is included in the calculation of diluted weighted-average shares outstanding to the extent each issuance is dilutive based on the average stock price during each reporting period being greater than the conversion price of the respective Convertible Notes. The components of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2017 and 2016 , were as follows (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net (loss) income $ (152,061 ) $ 16,196 $ (202,688 ) $ 8,074 Weighted average common shares outstanding 35,311 34,171 34,948 34,377 Effect of dilutive securities: Stock options and RSUs — 558 — 387 2019 Convertible Notes — 7,382 — — Shares used in calculating dilutive net (loss) income per share 35,311 42,111 34,948 34,764 Net (loss) income per share: Basic $ (4.31 ) $ 0.47 $ (5.80 ) $ 0.23 Diluted $ (4.31 ) $ 0.43 $ (5.80 ) $ 0.23 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 September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Options to purchase shares of common stock 3,145 2,218 3,389 2,778 Shares of common stock issuable upon the vesting of RSUs 932 249 1,140 654 Warrants 1,008 7,382 1,008 7,382 2022 Convertible Notes 11,695 — 11,695 — 2019 Convertible Notes 790 — 790 7,382 Total 17,570 9,849 18,022 18,196 In connection with the issuance of the 2019 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 remaining 2019 Convertible Notes. |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 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 Fourth 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”). In May 2017 at our annual meeting of stockholders, our stockholders approved an amendment to our 2007 Plan to, among other things, increase the number of shares of our common stock available for issuance thereunder by 2,485,000 shares. 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 nine months ended September 30, 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 931,417 — — 91,100 1,022,517 Exercised (90,696 ) — — — (90,696 ) Expired or terminated (306,070 ) — (7,969 ) (72,125 ) (386,164 ) Outstanding at September 30, 2017 2,693,473 5,200 126,212 833,950 3,658,835 Restricted Stock Units The following table summarizes RSU activity for the nine months ended September 30, 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 790,476 — — 24,300 814,776 Vested (349,306 ) — (12,831 ) (45,662 ) (407,799 ) Expired or terminated (181,986 ) — (752 ) (9,819 ) (192,557 ) Outstanding at September 30, 2017 1,032,988 — 14,111 104,275 1,151,374 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. As of September 30, 2017 , the maximum shares of common stock that may be issued under these awards is 162,750 . The maximum aggregate total fair value of these RSUs is $3.2 million , which is being recognized as expense over a period of three years from the date of grant. Equity-based compensation expense Equity-based compensation expense for the three and nine months ended September 30, 2017 and 2016 consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of product sales and services $ 566 $ 118 $ 892 $ 395 Research and development 799 858 2,651 2,583 Selling, general and administrative 5,024 4,492 14,515 13,831 Total equity-based compensation expense 6,389 5,468 18,058 16,809 Income tax effect (1,805 ) (1,568 ) (5,127 ) (4,637 ) After-tax effect of equity-based compensation expense $ 4,584 $ 3,900 $ 12,931 $ 12,172 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 Q, “ Recently Issued and Proposed Accounting Pronouncements. ” |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Preferred Stock and our 2017 NOL Rights Agreement Our certificate of incorporation authorizes our board of directors (the “Board”) to issue preferred stock from time to time in one or more series. The rights, preferences, restrictions, qualifications and limitations of such stock are determined by our Board. Following the expiration of our prior rights agreement and in an effort to protect stockholder value by continuing to help preserve our substantial tax assets associated with net operating loss carryforwards and certain other deferred tax assets (“NOLs”), our Board entered into a new shareholder rights plan with American Stock Transfer & Trust Company, LLC, as Rights Agent, in April 2017 (which was approved by our stockholders at our May 2017 annual meeting of stockholders and which is essentially a restatement of the prior rights agreement, but with an expiration date of April 6, 2018, subject to earlier expiration as described below) (the “2017 NOL Rights Agreement”). Our business operations have generated significant NOLs, and we may generate additional NOLs in future years. Under federal tax laws, we generally can use our NOLs and certain related tax credits to offset ordinary income tax paid in our prior two tax years or on our future taxable income for up to 20 years , when they “expire” for such purposes. Until they expire, we can “carry forward” NOLs and certain related tax credits that we do not use in any particular year to offset taxable income in future years. Our ability to utilize our NOLs to offset future taxable income may be significantly limited if we experience an “ownership change,” as determined under Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”). Under Section 382, an “ownership change” occurs if a stockholder or a group of stockholders that is deemed to own at least 5% of our outstanding stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a rolling three -year period. If an ownership change occurs, Section 382 would impose an annual limit on the amount of our NOLs that we can use to offset taxable income equal to the product of the total value of our outstanding equity immediately prior to the ownership change (reduced by certain items specified in Section 382) and the federal long-term tax-exempt interest rate in effect for the month of the ownership change. The 2017 NOL Rights Agreement is intended to act as a deterrent to any person or group acquiring 4.99% or more of our outstanding common stock without the prior approval of our Board. Under the 2017 NOL Rights Agreement, stockholders of record as of April 17, 2017 (the “Record Date”) were issued one preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $0.01 per share (the “Common Shares”), outstanding as of the Record Date. The Rights will also attach to new Common Shares issued after the Record Date. Each Right entitles the registered holder to purchase from us one one-thousandth of a share of our Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred Shares”) at a price of $80 per one one-thousandth of a Preferred Share (the “Purchase Price”), subject to adjustment. Each Preferred Share is designed to be the economic equivalent of 1,000 Common Shares. The Rights will separate from the common stock and become exercisable on the earlier of (i) the ten th day after a public announcement that a person or group of affiliated or associated persons, has become an “Acquiring Person” (as such term is defined in the 2017 NOL Rights Agreement) or (ii) ten business days (or such later date as the Board may determine) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer which would result in the beneficial ownership by an Acquiring Person of 4.99% (or, in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered Person (as such terms are defined in the 2017 NOL Rights Agreement)) or more of the outstanding Common Shares (the earlier of such dates being called the “Distribution Date”). In the event that we are acquired in a merger or other business combination transaction or 50% or more of our consolidated assets or earning power are sold to an Acquiring Person, its affiliates or associates or certain other persons in which such persons have an interest, proper provision will be made so that each such holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. The Rights will expire on the earliest of the close of business on (1) April 6, 2018, (2) the effective date of the repeal of Section 382 or any successor statute if the Board determines that the 2017 NOL Rights Agreement is no longer necessary or desirable for the preservation of tax benefits or (3) the first day of a taxable year of the Company to which the Board determines that no tax benefits may be carried forward (the “Final Expiration Date”), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by us. The terms of the Rights generally may be amended by the Board without the consent of the holders of the Rights, except that from and after the time that the Rights are no longer redeemable, no such amendment may adversely affect the interests of the holders of the Rights (excluding the interests of any Acquiring Person and any group of affiliated or associated persons). There can be no assurance that the 2017 NOL Rights Agreement will result in us being able to preserve all or any of the substantial tax assets associated with NOLs and other tax benefits. Share Repurchase Program In January 2016, we announced that our Board 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 September 30, 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 2017 . Change in Stockholders’ Equity Total stockholders’ equity decreased by $134.1 million during the nine months ended September 30, 2017 . This decrease was primarily driven by the following: • $21.6 million increase related to the cumulative-effect adjustment to our accumulated deficit from previously unrecognized excess tax benefits upon our adoption of ASU No. 2016-09; • $13.5 million increase related to net shares issued in connection with the Endoceutics License Agreement; • $18.1 million increase related to equity-based compensation expense; • $72.6 million increase related to the Equity Component of the 2022 Convertible Notes; • $202.7 million reduction due to our net loss for the nine months ended September 30, 2017 ; • $27.2 million reduction related to changes in deferred taxes associated with our debt transactions executed during the nine months ended September 30, 2017 ; • $28.3 million reduction related to the Equity Component of the 2019 Convertible Notes repurchased; and • $2.2 million reduction related to the Equity Component for debt issuance costs associated with the 2022 Convertible Notes. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 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. With the exception of the commitments described below, there have been no material changes in our contractual obligations since December 31, 2016 . Contingent Regulatory and Commercial Milestone Payments In connection with the Endoceutics License Agreement, described below, we are required to pay Endoceutics $10.0 million in April 2018 on the first anniversary of the closing. In addition, we are required to pay Endoceutics 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 of Intrarosa exceed $300.0 million . If annual net U.S. sales of Intrarosa exceed $500.0 million , there are additional sales milestone payments totaling up to $850.0 million , which would be triggered at various sales thresholds. We are also obligated 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 $1.0 billion 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 female sexual dysfunction (“FSD”) in the U.S. (as applicable), (b) for generic competition and (c) for third party payments, subject to an aggregate cap on such deductions of royalties otherwise payable to Endoceutics. In connection with the Palatin License Agreement, described below, we are required to pay Palatin up to $380.0 million in regulatory and commercial milestone payments including up to $80.0 million upon achievement of certain regulatory milestones, including $20.0 million upon the acceptance by the U.S. Food and Drug Administration (the “FDA”) of our New Drug Application (“NDA”) for bremelanotide and $60.0 million upon FDA approval, and 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. We are also obligated to pay Palatin tiered royalties on annual net sales of the Bremelanotide Products (as defined below), on a product-by-product basis, in the Palatin Territory ranging from the high-single digits to the low double-digits. 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 (“ANDA”) submitted to 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 ferumoxytol 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 response 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 September 30, 2017 . |
Collaboration, License and Othe
Collaboration, License and Other Strategic Agreements | 9 Months Ended |
Sep. 30, 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 September 30, 2017 , we were a party to the following collaborations and license agreements: Endoceutics In February 2017, we entered into the Endoceutics License Agreement with Endoceutics. Pursuant to the Endoceutics License Agreement, Endoceutics granted 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 FSD. The transactions contemplated by the Endoceutics License Agreement closed on April 3, 2017. We accounted for the Endoceutics License Agreement as an asset acquisition under our early adoption of ASU No. 2017-01, described in Note Q, “ Recently Issued and Proposed Accounting Pronouncements. ” 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, which had a value of $13.5 million , as measured on April 3, 2017, the date of closing. Of these 600,000 shares, 300,000 were subject to a 180 -day lock-up provision, and the other 300,000 are subject to a one -year lock-up provision. In addition, we paid Endoceutics $10.0 million in the third quarter of 2017 upon the delivery by Endoceutics of Intrarosa launch quantities and have agreed to make a payment of $10.0 million in April 2018 on the first anniversary of the closing. The anniversary payment is reflected in accrued expenses at September 30, 2017 . In the second quarter of 2017, we recorded a total of $83.5 million of consideration, of which $77.7 million was allocated to the Intrarosa developed technology intangible asset and $5.8 million was recorded as IPR&D expense based on their relative fair values. 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 $1.0 billion 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. (as applicable), (b) for generic competition and (c) for third party payments, subject to an aggregate cap on such deductions of royalties otherwise payable to Endoceutics. 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 of Intrarosa exceed $300.0 million . If annual net U.S. sales of Intrarosa exceed $500.0 million , there are additional sales milestone payments totaling up to $850.0 million , which would be triggered at various sales thresholds. Subject to the terms of the Endoceutics License Agreement, Endoceutics has agreed to conduct clinical studies for the use of Intrarosa in HSDD to support an application for regulatory approval for Intrarosa for the treatment of HSDD 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 and FSD in the U.S., subject to the terms of the Endoceutics License Agreement (which contains certain non-competition provisions agreed to by the parties), 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 and 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 and 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. 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 will 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. 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. Palatin In January 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 a 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 in February 2017. We accounted for the Palatin License Agreement as an asset acquisition under 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 agreed to 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 an NDA in the U.S. for bremelanotide for the treatment of HSDD in pre-menopausal women. As of September 30, 2017, we have substantially fulfilled these payment obligations to Palatin. The $60.0 million upfront payment made in February 2017 to Palatin was recorded as IPR&D 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 $20.0 million upon the acceptance by the FDA of our NDA for bremelanotide and $60.0 million upon 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. The Palatin License Agreement expires on the date of expiration of all royalty obligations due thereunder, unless earlier terminated in accordance with the Palatin License Agreement. 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 began 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 commencing on the launch of the Makena auto-injector until it is no longer sold or offered for sale (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 Antares 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 | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Our outstanding debt obligations as of September 30, 2017 and December 31, 2016 consisted of the following (in thousands): September 30, 2017 December 31, 2016 2023 Senior Notes $ 490,518 $ 489,612 2022 Convertible Notes 244,958 — 2019 Convertible Notes 19,941 179,363 2015 Term Loan Facility — 317,546 Total long-term debt 755,417 986,521 Less: current maturities — 21,166 Long-term debt, net of current maturities $ 755,417 $ 965,355 2023 Senior Notes In August 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. In October 2017, we repurchased $25.0 million of the 2023 Senior Notes in a privately negotiated transaction. At September 30, 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 $490.5 million . Convertible Notes The outstanding balances of our Convertible Notes as of September 30, 2017 consisted of the following (in thousands): 2022 Convertible Notes 2019 Convertible Notes Total Liability component: Principal $ 320,000 $ 21,417 $ 341,417 Less: debt discount and issuance costs, net 75,042 1,476 76,518 Net carrying amount $ 244,958 $ 19,941 $ 264,899 Equity Component $ 72,576 $ 9,905 $ 82,481 In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of our Convertible Notes by allocating the proceeds between the liability component and the embedded conversion option (the “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. The carrying amount of the liability components 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 (the “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. 2022 Convertible Notes On May 10, 2017, we issued $300.0 million aggregate principal amount of the 2022 Convertible Notes. We received net proceeds of $291.0 million from the sale of the 2022 Convertible Notes, after deducting fees and expenses of $9.0 million . In addition, on June 7, 2017, we issued an additional $20.0 million principal amount of 2022 Convertible Notes pursuant to the exercise of an over-allotment option granted to the underwriters in the offering. We received net proceeds of $19.4 million from the sale of the over-allotment option, after deducting fees and expenses of $0.6 million . In connection with the issuance of the 2022 Convertible Notes, we incurred approximately $9.6 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 $9.6 million of debt issuance costs, $2.2 million was allocated to the Equity Component and recorded as a reduction to additional paid-in capital and $7.4 million was allocated to the liability component and is now recorded as a reduction of the 2022 Convertible Notes in our condensed consolidated balance sheet. The portion allocated to the liability component is amortized to interest expense using the effective interest method over five years. The 2022 Convertible Notes are governed by the terms of an indenture between us, as issuer, and Wilmington Trust, National Association, as the trustee. The 2022 Convertible Notes are senior unsecured obligations and bear interest at a rate of 3.25% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2017. The 2022 Convertible Notes will mature on June 1, 2022 , unless earlier repurchased or converted. Upon conversion of the 2022 Convertible Notes, such 2022 Convertible Notes will be convertible into, at our election, cash, shares of our common stock, or a combination thereof, at a conversion rate of 36.5464 shares of common stock per $1,000 principal amount of the 2022 Convertible Notes, which corresponds to an initial conversion price of approximately $27.36 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 March 1, 2022, holders may convert their 2022 Convertible Notes at their option only under the following circumstances: 1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending September 30, 2017, 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 2022 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 events. On or after March 1, 2022, until the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Convertible Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. We determined the expected life of the debt was equal to the five -year term on the 2022 Convertible Notes. The effective interest rate on the liability component was 9.49% for the period from the date of issuance through September 30, 2017 . As of September 30, 2017 , the “if-converted value” did not exceed the remaining principal amount of the 2022 Convertible Notes. 2019 Convertible Notes In February 2014, we issued $200.0 million aggregate principal amount of the 2019 Convertible Notes. We received net proceeds of $193.3 million from the sale of the 2019 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 2019 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). In May 2017 and September 2017, we entered into privately negotiated transactions with certain investors to repurchase approximately $158.9 million and $19.6 million , respectively, aggregate principal amount of the 2019 Convertible Notes for an aggregate repurchase price of approximately $171.3 million and $21.4 million , respectively, including accrued interest. Pursuant to ASC Topic 470, Debt (“ASC 470”), the accounting for the May 2017 repurchase of the 2019 Convertible Notes was evaluated on a creditor-by-creditor basis with regard to the 2022 Convertible Notes to determine modification versus extinguishment accounting. We concluded that the May 2017 repurchase of the 2019 Convertible Notes should be accounted for as an extinguishment and we recorded a debt extinguishment gain of $0.2 million related to the difference between the consideration paid, the fair value of the liability component and carrying values at the repurchase date. As a result of the September 2017 repurchase of the 2019 Convertible Notes, we recorded a debt extinguishment loss of $0.3 million related to the difference between the consideration paid, the fair value of the liability component and carrying value at the repurchase date. The 2019 Convertible Notes are governed by the terms of an indenture between us, as issuer, and Wilmington Trust, National Association, as the trustee. The 2019 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 2019 Convertible Notes will mature on February 15, 2019 , unless earlier repurchased or converted. Upon conversion of the remaining 2019 Convertible Notes, such 2019 Convertible Notes will be convertible into, at our election, cash, shares of our common stock, or a combination thereof, at a conversion rate of 36.9079 shares of common stock per $1,000 principal amount of the 2019 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 2019 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 measurement period in which the trading price per $1,000 principal amount of the 2019 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 events. 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 2019 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 third quarter of 2017, the 2019 Convertible Notes were not convertible as of October 1, 2017. We determined the expected life of the debt was equal to the five -year term of the 2019 Convertible Notes. The effective interest rate on the liability component was 7.79% for the period from the date of issuance through September 30, 2017 . As of September 30, 2017 , the “if-converted value” did not exceed the remaining principal amount of the 2019 Convertible Notes. Convertible Notes Interest Expense The following table sets forth total interest expense recognized related to the Convertible Notes during the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Contractual interest expense $ 2,840 $ 1,250 $ 6,033 $ 3,750 Amortization of debt issuance costs 348 273 944 797 Amortization of debt discount 3,264 1,920 7,909 5,602 Total interest expense $ 6,452 $ 3,443 $ 14,886 $ 10,149 Convertible Bond Hedge and Warrant Transactions In connection with the pricing of the 2019 Convertible Notes and in order to reduce the potential dilution to our common stock and/or offset cash payments due upon conversion of the 2019 Convertible Notes, in February 2014 we entered into convertible bond hedge transactions and separate warrant transactions of our common stock underlying the aggregate principal amount of the 2019 Convertible Notes with the call spread counterparties. In connection with the May 2017 and September 2017 repurchases of the 2019 Convertible Notes, as discussed above, we entered into agreements with the call spread counterparties to terminate a portion of the then existing convertible bond hedge transactions in an amount corresponding to the amount of such 2019 Convertible Notes repurchased and to terminate a portion of the then-existing warrant transactions. As of September 30, 2017 , the remaining bond hedge transactions covered approximately 0.8 million shares of our common stock underlying the remaining $21.4 million principal amount of the 2019 Convertible Notes. 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 2019 Convertible Notes are converted. If upon conversion of the 2019 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 were separate transactions entered into by us and were not part of the terms of the 2019 Convertible Notes or the warrants, discussed below. Holders of the 2019 Convertible Notes will not have any rights with respect to the convertible bond hedges. As of September 30, 2017 , the remaining warrant transactions covered approximately 1.0 million shares of our common stock underlying the remaining $21.4 million principal amount of the 2019 Convertible Notes. The initial exercise price of the warrants is $34.12 per share, subject to adjustment upon certain events, which was 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. As part of the May 2017 agreements to partially terminate the bond hedge and warrant transactions, we received approximately $0.3 million , which we recorded as a net increase to additional paid-in capital during the nine months ended September 30, 2017. 2015 Term Loan Facility In August 2015, 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, under which we borrowed the full amount. The 2015 Term Loan Facility included 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, we prepaid $3.0 million of the debt in April 2017. In May 2017, we repaid the remaining $321.8 million of outstanding borrowings and accrued interest of the 2015 Term Loan Facility and, in accordance with ASC 470, recognized a $9.7 million loss on debt extinguishment. Future Payments Future annual principal payments on our long-term debt as of September 30, 2017 were as follows (in thousands): Period Future Annual Principal Payments Remainder of Year Ending December 31, 2017 $ — Year Ending December 31, 2018 — Year Ending December 31, 2019 21,417 Year Ending December 31, 2020 — Year Ending December 31, 2021 — Thereafter 820,000 Total $ 841,417 |
Recently Issued and Proposed Ac
Recently Issued and Proposed Accounting Pronouncements | 9 Months Ended |
Sep. 30, 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 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 first quarter of 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 collectability, 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. 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 reached conclusions on our key accounting assessments related to the standard for service revenue and are finalizing our accounting policies. We do not expect that our revenue recognition will be materially impacted by this new guidance as it relates to service revenue. We are currently performing an assessment of our revenue contracts to determine what impact, if any, the adoption of ASU 2014-09 will have on our product revenue, and we expect to complete this impact assessment in the fourth quarter of 2017. We currently plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to contracts that are not completed as of January 1, 2018, and recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings. There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. We are evaluating our internal control framework over revenue recognition to identify any changes that may need to be made in response to the new guidance. In addition, disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance. Our next phase of implementation will include designing and implementing the appropriate controls to obtain and disclose the information required under Topic 606. |
Basis of Presentation and Sum24
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 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 Consolidated 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 | We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities), Feraheme finished drug product and Intrarosa drug substance. 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. Our operations are located entirely within the U.S. We focus primarily on developing, manufacturing, and commercializing our products and product candidates and marketing and selling the CBR Services. We perform ongoing credit evaluations of our product sales customers and generally do not require collateral. 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. 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. |
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. 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 and nine months ended September 30, 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 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 first quarter of 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 collectability, 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. 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 reached conclusions on our key accounting assessments related to the standard for service revenue and are finalizing our accounting policies. We do not expect that our revenue recognition will be materially impacted by this new guidance as it relates to service revenue. We are currently performing an assessment of our revenue contracts to determine what impact, if any, the adoption of ASU 2014-09 will have on our product revenue, and we expect to complete this impact assessment in the fourth quarter of 2017. We currently plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to contracts that are not completed as of January 1, 2018, and recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings. There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. We are evaluating our internal control framework over revenue recognition to identify any changes that may need to be made in response to the new guidance. In addition, disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance. Our next phase of implementation will include designing and implementing the appropriate controls to obtain and disclose the information required under Topic 606. |
Basis of Presentation and Sum25
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 AmerisourceBergen Corporation 22 % 20 % 21 % 22 % McKesson Corporation 21 % <10 % 19 % <10 % Caremark LLC (Specialty Pharmacy) — % 10 % — % 10 % |
Schedule of customers representing greater than 10% of accounts receivable balances | Customers which represented greater than 10% of our accounts receivable balances as of September 30, 2017 and December 31, 2016 were as follows: September 30, 2017 December 31, 2016 AmerisourceBergen Corporation 26 % 13 % McKesson Corporation 23 % 32 % |
Analysis of product sales, allowances and accruals | Our product sales, which primarily represented revenues from Makena and Feraheme for the three and nine months ended September 30, 2017 and 2016 , were offset by provisions for allowances and accruals as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Gross product sales $ 235,299 $ 201,303 $ 676,377 $ 530,076 Provision for product sales allowances and accruals: Contractual adjustments 80,110 61,504 225,622 161,023 Governmental rebates 30,858 24,022 83,565 60,729 Total 110,968 85,526 309,187 221,752 Product sales, net $ 124,331 $ 115,777 $ 367,190 $ 308,324 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of investments | The following is a summary of our investments as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term investments:* Corporate debt securities $ 47,494 $ 21 $ (12 ) $ 47,503 Commercial paper 3,990 — — 3,990 Certificates of deposit 11,449 — — 11,449 Total short-term investments 62,933 21 (12 ) 62,942 Long-term investments:** Corporate debt securities 63,918 45 (52 ) 63,911 U.S. treasury and government agency securities 9,378 — (45 ) 9,333 Total long-term investments 73,296 45 (97 ) 73,244 Total investments $ 136,229 $ 66 $ (109 ) $ 136,186 * Represents securities with a remaining maturity of less than one year. ** Represents securities with a remaining maturity of one to three years. December 31, 2016 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term investments:* Corporate debt securities $ 106,430 $ 3 $ (69 ) $ 106,364 U.S. treasury and government agency securities 1,021 — — 1,021 Commercial paper 40,560 — — 40,560 Certificates of deposit 6,000 — — 6,000 Total short-term investments 154,011 3 (69 ) 153,945 Long-term investments:** Corporate debt securities 139,742 32 (281 ) 139,493 U.S. treasury and government agency securities 11,395 — (52 ) 11,343 Total long-term investments 151,137 32 (333 ) 150,836 Total investments $ 305,148 $ 35 $ (402 ) $ 304,781 * Represents securities with a remaining maturity of less than one year. ** Represents securities with a remaining maturity of one to three years. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 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 $ 4,826 $ 4,826 $ — $ — Corporate debt securities 111,414 — 111,414 — U.S. treasury and government agency securities 9,333 — 9,333 — Commercial paper 3,990 — 3,990 — Certificates of deposit 11,449 — 11,449 — Total Assets $ 141,012 $ 4,826 $ 136,186 $ — Liabilities: Contingent consideration - Lumara Health $ 98,778 $ — $ — $ 98,778 Contingent consideration - MuGard 1,910 — — 1,910 Total Liabilities $ 100,688 $ — $ — $ 100,688 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 | 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 (165 ) Adjustments to fair value of contingent consideration (47,142 ) Balance as of September 30, 2017 $ 100,688 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of major classes of inventories | Our major classes of inventories were as follows as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Raw materials $ 13,034 $ 14,382 Work in process 2,772 3,924 Finished goods 20,737 18,952 Total inventories $ 36,543 $ 37,258 |
Property, Plant and Equipment29
Property, Plant and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment, net | Property, plant and equipment, net consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Land $ 700 $ 700 Land improvements 300 300 Building and improvements 9,534 9,500 Computer equipment and software 14,440 13,866 Furniture and fixtures 2,472 2,401 Leasehold improvements 3,804 3,718 Laboratory and production equipment 6,860 6,449 Construction in progress 7,016 1,619 45,126 38,553 Less: accumulated depreciation (20,293 ) (14,093 ) Property, plant and equipment, net $ 24,833 $ 24,460 |
Goodwill and Intangible Asset30
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | As of September 30, 2017 and December 31, 2016 , our identifiable intangible assets consisted of the following (in thousands): September 30, 2017 December 31, 2016 Accumulated Accumulated Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 198,354 $ 319,246 $ 279,500 $ 797,100 $ 128,732 $ — $ 668,368 CBR customer relationships 297,000 25,379 — 271,621 297,000 13,590 — 283,410 Intrarosa developed technology 77,655 16 — 77,639 — — — — 1,171,755 223,749 319,246 628,760 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 $ 1,315,855 $ 223,749 $ 322,946 $ 769,160 $ 1,238,200 $ 142,322 $ 3,700 $ 1,092,178 |
Schedule of indefinite-lived intangible assets | As of September 30, 2017 and December 31, 2016 , our identifiable intangible assets consisted of the following (in thousands): September 30, 2017 December 31, 2016 Accumulated Accumulated Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 198,354 $ 319,246 $ 279,500 $ 797,100 $ 128,732 $ — $ 668,368 CBR customer relationships 297,000 25,379 — 271,621 297,000 13,590 — 283,410 Intrarosa developed technology 77,655 16 — 77,639 — — — — 1,171,755 223,749 319,246 628,760 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 $ 1,315,855 $ 223,749 $ 322,946 $ 769,160 $ 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 $ 60,693 Year Ending December 31, 2018 186,356 Year Ending December 31, 2019 35,779 Year Ending December 31, 2020 30,068 Year Ending December 31, 2021 31,020 Thereafter 284,844 Total $ 628,760 |
Current and Long- Term Liabil31
Current and Long- Term Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Commercial rebates, fees and returns $ 110,935 $ 89,466 Professional, license, and other fees and expenses 37,975 24,248 Research and development expenses 6,198 10,714 Intrarosa-related license fees 10,000 — Interest expense 7,470 16,683 Salaries, bonuses, and other compensation 17,879 14,823 Restructuring expense — 74 Total accrued expenses $ 190,457 $ 156,008 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate and income tax expense (benefit) | The following table summarizes our effective tax rate and income tax (benefit) expense for the three and nine months ended September 30, 2017 and 2016 (in thousands except for percentages): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Effective tax rate 43 % 24 % 41 % 32 % Income tax (benefit) expense $ (114,343 ) $ 5,069 $ (143,521 ) $ 3,725 |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of changes in accumulated other comprehensive income (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 and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Beginning balance $ (3,633 ) $ (3,058 ) $ (3,838 ) $ (4,205 ) Other comprehensive (loss) income before reclassifications (4 ) (336 ) 201 811 Ending balance $ (3,637 ) $ (3,394 ) $ (3,637 ) $ (3,394 ) |
Basic and Diluted Net Income 34
Basic and Diluted Net Income (Loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of components of basic and diluted net income (loss) per share | The components of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2017 and 2016 , were as follows (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net (loss) income $ (152,061 ) $ 16,196 $ (202,688 ) $ 8,074 Weighted average common shares outstanding 35,311 34,171 34,948 34,377 Effect of dilutive securities: Stock options and RSUs — 558 — 387 2019 Convertible Notes — 7,382 — — Shares used in calculating dilutive net (loss) income per share 35,311 42,111 34,948 34,764 Net (loss) income per share: Basic $ (4.31 ) $ 0.47 $ (5.80 ) $ 0.23 Diluted $ (4.31 ) $ 0.43 $ (5.80 ) $ 0.23 |
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 September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Options to purchase shares of common stock 3,145 2,218 3,389 2,778 Shares of common stock issuable upon the vesting of RSUs 932 249 1,140 654 Warrants 1,008 7,382 1,008 7,382 2022 Convertible Notes 11,695 — 11,695 — 2019 Convertible Notes 790 — 790 7,382 Total 17,570 9,849 18,022 18,196 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 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 nine months ended September 30, 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 931,417 — — 91,100 1,022,517 Exercised (90,696 ) — — — (90,696 ) Expired or terminated (306,070 ) — (7,969 ) (72,125 ) (386,164 ) Outstanding at September 30, 2017 2,693,473 5,200 126,212 833,950 3,658,835 |
Summary of details regarding restricted stock units granted under equity incentive plans | The following table summarizes RSU activity for the nine months ended September 30, 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 790,476 — — 24,300 814,776 Vested (349,306 ) — (12,831 ) (45,662 ) (407,799 ) Expired or terminated (181,986 ) — (752 ) (9,819 ) (192,557 ) Outstanding at September 30, 2017 1,032,988 — 14,111 104,275 1,151,374 |
Schedule of equity-based compensation expense | Equity-based compensation expense for the three and nine months ended September 30, 2017 and 2016 consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of product sales and services $ 566 $ 118 $ 892 $ 395 Research and development 799 858 2,651 2,583 Selling, general and administrative 5,024 4,492 14,515 13,831 Total equity-based compensation expense 6,389 5,468 18,058 16,809 Income tax effect (1,805 ) (1,568 ) (5,127 ) (4,637 ) After-tax effect of equity-based compensation expense $ 4,584 $ 3,900 $ 12,931 $ 12,172 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt obligations | Our outstanding debt obligations as of September 30, 2017 and December 31, 2016 consisted of the following (in thousands): September 30, 2017 December 31, 2016 2023 Senior Notes $ 490,518 $ 489,612 2022 Convertible Notes 244,958 — 2019 Convertible Notes 19,941 179,363 2015 Term Loan Facility — 317,546 Total long-term debt 755,417 986,521 Less: current maturities — 21,166 Long-term debt, net of current maturities $ 755,417 $ 965,355 |
Schedule of outstanding convertible debt | The outstanding balances of our Convertible Notes as of September 30, 2017 consisted of the following (in thousands): 2022 Convertible Notes 2019 Convertible Notes Total Liability component: Principal $ 320,000 $ 21,417 $ 341,417 Less: debt discount and issuance costs, net 75,042 1,476 76,518 Net carrying amount $ 244,958 $ 19,941 $ 264,899 Equity Component $ 72,576 $ 9,905 $ 82,481 |
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 and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Contractual interest expense $ 2,840 $ 1,250 $ 6,033 $ 3,750 Amortization of debt issuance costs 348 273 944 797 Amortization of debt discount 3,264 1,920 7,909 5,602 Total interest expense $ 6,452 $ 3,443 $ 14,886 $ 10,149 |
Schedule of future annual principal payments on long-term debt | Future annual principal payments on our long-term debt as of September 30, 2017 were as follows (in thousands): Period Future Annual Principal Payments Remainder of Year Ending December 31, 2017 $ — Year Ending December 31, 2018 — Year Ending December 31, 2019 21,417 Year Ending December 31, 2020 — Year Ending December 31, 2021 — Thereafter 820,000 Total $ 841,417 |
Basis of Presentation and Sum37
Basis of Presentation and Summary of Significant Accounting Policies - Concentration and Significant Customer Information (Details) - facility | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Sales Revenue, Net | Customer Concentration Risk | AmerisourceBergen Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 22.00% | 20.00% | 21.00% | 22.00% | |
Sales Revenue, Net | Customer Concentration Risk | McKesson Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 21.00% | 10.00% | 19.00% | 10.00% | |
Sales Revenue, Net | Customer Concentration Risk | Caremark LLC (Specialty Pharmacy) | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 0.00% | 10.00% | 0.00% | 10.00% | |
Accounts Receivable | Credit Concentration Risk | AmerisourceBergen Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 26.00% | 13.00% | |||
Accounts Receivable | Credit Concentration Risk | McKesson Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 23.00% | 32.00% | |||
Feraheme | |||||
Concentrations and Significant Customer Information | |||||
Number of production facilities | 2 |
Basis of Presentation and Sum38
Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition, Related Sales Allowance and Accruals (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)deliverable | Sep. 30, 2016USD ($) | |
Product Revenue | ||||
Gross product sales | $ 235,299 | $ 201,303 | $ 676,377 | $ 530,076 |
Provision for product sales allowances and accruals: | ||||
Contractual adjustments | 80,110 | 61,504 | 225,622 | 161,023 |
Governmental rebates | 30,858 | 24,022 | 83,565 | 60,729 |
Total | 110,968 | 85,526 | 309,187 | 221,752 |
Product sales, net | $ 124,331 | $ 115,777 | $ 367,190 | $ 308,324 |
Service Revenue | ||||
Number of service revenue deliverables | deliverable | 2 | |||
Prepayment term for storage of newborn cord blood and tissue units | 18 years |
Investments (Details)
Investments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Short-term investments: | |||||
Amortized Cost | $ 62,933,000 | $ 62,933,000 | $ 154,011,000 | ||
Gross Unrealized Gains | 21,000 | 21,000 | 3,000 | ||
Gross Unrealized Losses | (12,000) | (12,000) | (69,000) | ||
Estimated Fair Value | 62,942,000 | 62,942,000 | 153,945,000 | ||
Long-term investments: | |||||
Amortized Cost | 73,296,000 | 73,296,000 | 151,137,000 | ||
Gross Unrealized Gains | 45,000 | 45,000 | 32,000 | ||
Gross Unrealized Losses | (97,000) | (97,000) | (333,000) | ||
Estimated Fair Value | 73,244,000 | 73,244,000 | 150,836,000 | ||
Amortized Cost | 136,229,000 | 136,229,000 | 305,148,000 | ||
Gross Unrealized Gains | 66,000 | 66,000 | 35,000 | ||
Gross Unrealized Losses | (109,000) | (109,000) | (402,000) | ||
Estimated Fair Value | 136,186,000 | 136,186,000 | 304,781,000 | ||
Other-than-temporary impairment losses | 0 | $ 0 | 0 | $ 0 | |
Corporate debt securities | |||||
Short-term investments: | |||||
Amortized Cost | 47,494,000 | 47,494,000 | 106,430,000 | ||
Gross Unrealized Gains | 21,000 | 21,000 | 3,000 | ||
Gross Unrealized Losses | (12,000) | (12,000) | (69,000) | ||
Estimated Fair Value | 47,503,000 | 47,503,000 | 106,364,000 | ||
Long-term investments: | |||||
Amortized Cost | 63,918,000 | 63,918,000 | 139,742,000 | ||
Gross Unrealized Gains | 45,000 | 45,000 | 32,000 | ||
Gross Unrealized Losses | (52,000) | (52,000) | (281,000) | ||
Estimated Fair Value | 63,911,000 | 63,911,000 | 139,493,000 | ||
U.S. treasury and government agency securities | |||||
Short-term investments: | |||||
Amortized Cost | 1,021,000 | ||||
Gross Unrealized Gains | 0 | ||||
Gross Unrealized Losses | 0 | ||||
Estimated Fair Value | 1,021,000 | ||||
Long-term investments: | |||||
Amortized Cost | 9,378,000 | 9,378,000 | 11,395,000 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | (45,000) | (45,000) | (52,000) | ||
Estimated Fair Value | 9,333,000 | 9,333,000 | 11,343,000 | ||
Commercial paper | |||||
Short-term investments: | |||||
Amortized Cost | 3,990,000 | 3,990,000 | 40,560,000 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | 0 | ||
Estimated Fair Value | 3,990,000 | 3,990,000 | 40,560,000 | ||
Certificates of deposit | |||||
Short-term investments: | |||||
Amortized Cost | 11,449,000 | 11,449,000 | 6,000,000 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | 0 | ||
Estimated Fair Value | $ 11,449,000 | $ 11,449,000 | $ 6,000,000 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair value, measurements, recurring - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Cash equivalents | $ 4,826 | $ 9,951 |
Total assets | 141,012 | 314,732 |
Liabilities: | ||
Total Liabilities | 100,688 | 147,995 |
Lumara | ||
Liabilities: | ||
Contingent consideration, liability | 98,778 | 145,974 |
MuGard | ||
Liabilities: | ||
Contingent consideration, liability | 1,910 | 2,021 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash equivalents | 4,826 | 9,951 |
Total assets | 4,826 | 9,951 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Lumara | ||
Liabilities: | ||
Contingent consideration, liability | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | MuGard | ||
Liabilities: | ||
Contingent consideration, liability | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Total assets | 136,186 | 304,781 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Lumara | ||
Liabilities: | ||
Contingent consideration, liability | 0 | 0 |
Significant Other Observable Inputs (Level 2) | MuGard | ||
Liabilities: | ||
Contingent consideration, liability | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Total Liabilities | 100,688 | 147,995 |
Significant Unobservable Inputs (Level 3) | Lumara | ||
Liabilities: | ||
Contingent consideration, liability | 98,778 | 145,974 |
Significant Unobservable Inputs (Level 3) | MuGard | ||
Liabilities: | ||
Contingent consideration, liability | 1,910 | 2,021 |
Corporate debt securities | ||
Assets: | ||
Available-for-sale securities | 111,414 | 245,857 |
Corporate debt securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Corporate debt securities | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Available-for-sale securities | 111,414 | 245,857 |
Corporate debt securities | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
U.S. treasury and government agency securities | ||
Assets: | ||
Available-for-sale securities | 9,333 | 12,364 |
U.S. treasury and government agency securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
U.S. treasury and government agency securities | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Available-for-sale securities | 9,333 | 12,364 |
U.S. treasury and government agency securities | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Commercial paper | ||
Assets: | ||
Available-for-sale securities | 3,990 | 40,560 |
Commercial paper | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Commercial paper | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Available-for-sale securities | 3,990 | 40,560 |
Commercial paper | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Certificates of deposit | ||
Assets: | ||
Available-for-sale securities | 11,449 | 6,000 |
Certificates of deposit | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Certificates of deposit | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Available-for-sale securities | 11,449 | 6,000 |
Certificates of deposit | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Available-for-sale securities | $ 0 | $ 0 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Contingent consideration accrued | $ 190,457 | $ 190,457 | $ 156,008 | |
Reconciliation of contingent consideration obligations related to acquisitions | ||||
Adjustments to fair value of contingent consideration | (47,142) | $ 5,106 | ||
Makena | ||||
Reconciliation of contingent consideration obligations related to acquisitions | ||||
Adjustments to fair value of contingent consideration | 50,400 | 49,200 | ||
Contingent consideration classified as short-term liability | 98,800 | 98,800 | ||
Undiscounted milestone payment | 250,000 | 250,000 | ||
MuGard | ||||
Reconciliation of contingent consideration obligations related to acquisitions | ||||
Contingent consideration classified as short-term liability | 300 | 300 | ||
Undiscounted milestone payment | 6,000 | $ 6,000 | ||
Discount rate | 11.00% | |||
Estimated undiscounted royalty amounts payable | 2,000 | $ 2,000 | ||
Period over which estimated undiscounted royalty amounts could be paid | 10 years | |||
Contingent Consideration | ||||
Reconciliation of contingent consideration obligations related to acquisitions | ||||
Balance at beginning of period | $ 147,995 | |||
Payments made | (165) | |||
Adjustments to fair value of contingent consideration | (47,142) | |||
Balance at end of period | 100,688 | 100,688 | ||
Contingent Consideration | Endoceutics License Agreement | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Contingent consideration accrued | $ 10,000 | $ 10,000 |
Fair Value Measurements - Debt
Fair Value Measurements - Debt (Details) - Significant Other Observable Inputs (Level 2) $ in Millions | Sep. 30, 2017USD ($) |
Senior Notes Due 2023 | |
Debt | |
Fair value of debt | $ 502.5 |
Senior Convertible Notes Due 2022 | |
Debt | |
Fair value of debt | 308.6 |
Senior Convertible Notes Due 2019 | |
Debt | |
Fair value of debt | $ 22.2 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 13,034 | $ 14,382 |
Work in process | 2,772 | 3,924 |
Finished goods | 20,737 | 18,952 |
Total inventories | $ 36,543 | $ 37,258 |
Property, Plant and Equipment44
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Property, plant and equipment, net | ||
Property, plant and equipment, gross | $ 45,126 | $ 38,553 |
Less: accumulated depreciation | (20,293) | (14,093) |
Property, plant and equipment, net | 24,833 | 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 | 9,534 | 9,500 |
Computer equipment and software | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 14,440 | 13,866 |
Furniture and fixtures | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 2,472 | 2,401 |
Leasehold improvements | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 3,804 | 3,718 |
Laboratory and production equipment | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 6,860 | 6,449 |
Construction in progress | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | $ 7,016 | $ 1,619 |
Goodwill and Intangible Asset45
Goodwill and Intangible Assets, Net - Goodwill (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Aug. 31, 2015 | Nov. 30, 2014 |
Goodwill [Line Items] | ||||
Goodwill | $ 639,484,000 | $ 639,484,000 | ||
Accumulated impairment losses | $ 0 | |||
Lumara Health Inc. | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 198,100,000 | |||
CBR | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 441,400,000 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | $ 1,171,755 | $ 1,094,100 |
Finite-lived intangible assets, accumulated amortization | 223,749 | 142,322 |
Finite-lived intangible assets, impairments | 319,246 | 0 |
Total | 628,760 | 951,778 |
Total intangible assets | ||
Total intangible assets, cost | 1,315,855 | 1,238,200 |
Total intangible assets, impairments | 322,946 | 3,700 |
Total intangible assets, net | 769,160 | 1,092,178 |
CBR customer relationships | ||
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | 297,000 | 297,000 |
Finite-lived intangible assets, accumulated amortization | 25,379 | 13,590 |
Finite-lived intangible assets, impairments | 0 | 0 |
Total | 271,621 | 283,410 |
Makena | Developed technology rights | ||
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | 797,100 | 797,100 |
Finite-lived intangible assets, accumulated amortization | 198,354 | 128,732 |
Finite-lived intangible assets, impairments | 319,246 | 0 |
Total | 279,500 | 668,368 |
Intrarosa | Developed technology rights | ||
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | 77,655 | 0 |
Finite-lived intangible assets, accumulated amortization | 16 | 0 |
Finite-lived intangible assets, impairments | 0 | 0 |
Total | 77,639 | 0 |
Makena IPR&D | ||
Indefinite-lived intangible assets: | ||
Indefinite-lived intangible assets, cost | 79,100 | 79,100 |
Indefinite-lived intangible assets, impairments | 0 | 0 |
Indefinite-lived intangible assets, net | 79,100 | 79,100 |
CBR trade names and trademarks | ||
Indefinite-lived intangible assets: | ||
Indefinite-lived intangible assets, cost | 65,000 | 65,000 |
Indefinite-lived intangible assets, impairments | 3,700 | 3,700 |
Indefinite-lived intangible assets, net | $ 61,300 | $ 61,300 |
Goodwill and Intangible Asset47
Goodwill and Intangible Assets, Net - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Expected useful life | 11 years 7 months 15 days | |||
Impairment charges of intangible assets | $ 319,246 | $ 0 | $ 319,246 | $ 15,963 |
Amortization of intangible assets | $ 81,400 | $ 58,300 | ||
Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Expected useful life | 7 years | |||
Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Expected useful life | 20 years | |||
Makena | Developed technology rights | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Expected useful life | 7 years | |||
Impairment charges of intangible assets | $ 319,200 |
Goodwill and Intangible Asset48
Goodwill and Intangible Assets, Net - Schedule of Expected Future Annual Amortization Expense related to Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Estimated Amortization Expense | ||
Remainder of Year Ending December 31, 2017 | $ 60,693 | |
Year Ending December 31, 2018 | 186,356 | |
Year Ending December 31, 2019 | 35,779 | |
Year Ending December 31, 2020 | 30,068 | |
Year Ending December 31, 2021 | 31,020 | |
Thereafter | 284,844 | |
Total | $ 628,760 | $ 951,778 |
Current and Long- Term Liabil49
Current and Long- Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accrued Expenses | ||
Commercial rebates, fees and returns | $ 110,935 | $ 89,466 |
Professional, license, and other fees and expenses | 37,975 | 24,248 |
Research and development expenses | 6,198 | 10,714 |
Intrarosa-related license fees | 10,000 | 0 |
Interest expense | 7,470 | 16,683 |
Salaries, bonuses, and other compensation | 17,879 | 14,823 |
Restructuring expense | 0 | 74 |
Total accrued expenses | 190,457 | 156,008 |
Deferred revenue | $ 63,900 | $ 49,800 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 43.00% | 24.00% | 41.00% | 32.00% |
Income tax (benefit) expense | $ (114,343) | $ 5,069 | $ (143,521) | $ 3,725 |
Statutory federal tax rate | 35.00% | 35.00% | 35.00% | 35.00% |
Accumulated Other Comprehensi51
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
AOCI Attributable to Parent, Net of Tax | ||||
Beginning balance | $ 934,389 | |||
Other comprehensive (loss) income before reclassifications | $ (4) | $ (336) | 201 | $ 811 |
Ending balance | 800,307 | 800,307 | ||
AOCI Attributable to Parent | ||||
AOCI Attributable to Parent, Net of Tax | ||||
Beginning balance | (3,633) | (3,058) | (3,838) | (4,205) |
Ending balance | $ (3,637) | $ (3,394) | $ (3,637) | $ (3,394) |
Basic and Diluted Net Income 52
Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Components of basic and diluted net income (loss) per share | |||||
Net (loss) income | $ (152,061,000) | $ 16,196,000 | $ (202,688,000) | $ 8,074,000 | |
Weighted average common shares outstanding | 35,311 | 34,171 | 34,948 | 34,377 | |
Effect of dilutive securities: | |||||
Stock options and RSUs (in shares) | 0 | 558 | 0 | 387 | |
2019 Convertible Notes (in shares) | 0 | 7,382 | 0 | 0 | |
Shares used in calculating dilutive net (loss) income per share | 35,311 | 42,111 | 34,948 | 34,764 | |
Net (loss) income per share: | |||||
Basic (in usd per share) | $ (4.31) | $ 0.47 | $ (5.80) | $ 0.23 | |
Diluted (in usd per share) | $ (4.31) | $ 0.43 | $ (5.80) | $ 0.23 | |
Anti-dilutive securities (in shares) | 17,570 | 9,849 | 18,022 | 18,196 | |
Options to purchase shares of common stock | |||||
Net (loss) income per share: | |||||
Anti-dilutive securities (in shares) | 3,145 | 2,218 | 3,389 | 2,778 | |
Shares of common stock issuable upon the vesting of RSUs | |||||
Net (loss) income per share: | |||||
Anti-dilutive securities (in shares) | 932 | 249 | 1,140 | 654 | |
Warrants | |||||
Net (loss) income per share: | |||||
Anti-dilutive securities (in shares) | 1,008 | 7,382 | 1,008 | 7,382 | |
2019 Convertible Notes | Convertible Debt Securities | |||||
Net (loss) income per share: | |||||
Anti-dilutive securities (in shares) | 790 | 0 | 790 | 7,382 | |
2022 Convertible Notes | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Debt term | 5 years | ||||
2022 Convertible Notes | Convertible Debt Securities | |||||
Net (loss) income per share: | |||||
Anti-dilutive securities (in shares) | 11,695 | 0 | 11,695 | 0 | |
2015 Term Loan Facility | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Debt term | 6 years | ||||
Convertible Debt | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Interest rate | 2.50% | 2.50% | |||
Convertible Debt | 2019 Convertible Notes | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Interest rate | 2.50% | 2.50% | |||
Convertible Debt | 2022 Convertible Notes | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Interest rate | 3.25% | 3.25% | |||
Line of Credit | 2015 Term Loan Facility | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Debt term | 6 years | ||||
Debt amount | $ 350,000,000 | $ 350,000,000 |
Equity-Based Compensation - Act
Equity-Based Compensation - Activity Related to Plans (Details) $ in Millions | 1 Months Ended | 9 Months Ended | |
May 31, 2017shares | Feb. 28, 2017shares | Sep. 30, 2017USD ($)planshares | |
Equity compensation plans | |||
Number of equity compensation plans | plan | 4 | ||
Stock Options | |||
Stock Options | |||
Outstanding (in shares) | 3,113,178 | ||
Granted (in shares) | 1,022,517 | ||
Exercised (in shares) | (90,696) | ||
Expired or terminated (in shares) | (386,164) | ||
Outstanding (in shares) | 3,658,835 | ||
Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 936,954 | ||
Granted (in shares) | 814,776 | ||
Vested (in shares) | (407,799) | ||
Expired or terminated (in shares) | (192,557) | ||
Outstanding (in shares) | 1,151,374 | ||
2007 Equity Plan | |||
Equity compensation plans | |||
Additional common stock for issuance (in shares) | 2,485,000 | ||
2007 Equity Plan | Stock Options | |||
Stock Options | |||
Outstanding (in shares) | 2,158,822 | ||
Granted (in shares) | 931,417 | ||
Exercised (in shares) | (90,696) | ||
Expired or terminated (in shares) | (306,070) | ||
Outstanding (in shares) | 2,693,473 | ||
2007 Equity Plan | Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 773,804 | ||
Granted (in shares) | 790,476 | ||
Vested (in shares) | (349,306) | ||
Expired or terminated (in shares) | (181,986) | ||
Outstanding (in shares) | 1,032,988 | ||
2007 Equity Plan | Performance Restricted Stock Units (RSUs) | |||
Restricted Stock Units | |||
Granted (in shares) | 191,250 | ||
Award vesting period | 3 years | ||
Maximum shares of common stock that may be issued | 162,750 | ||
Fair value, performance- based RSUs | $ | $ 3.2 | ||
Compensation expense, period for recognition | 3 years | ||
2000 Equity Plan | Stock Options | |||
Stock Options | |||
Outstanding (in shares) | 5,200 | ||
Granted (in shares) | 0 | ||
Exercised (in shares) | 0 | ||
Expired or terminated (in shares) | 0 | ||
Outstanding (in shares) | 5,200 | ||
2000 Equity Plan | Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 0 | ||
Granted (in shares) | 0 | ||
Vested (in shares) | 0 | ||
Expired or terminated (in shares) | 0 | ||
Outstanding (in shares) | 0 | ||
2013 Lumara Equity Plan | Stock Options | |||
Stock Options | |||
Outstanding (in shares) | 134,181 | ||
Granted (in shares) | 0 | ||
Exercised (in shares) | 0 | ||
Expired or terminated (in shares) | (7,969) | ||
Outstanding (in shares) | 126,212 | ||
2013 Lumara Equity Plan | Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 27,694 | ||
Granted (in shares) | 0 | ||
Vested (in shares) | (12,831) | ||
Expired or terminated (in shares) | (752) | ||
Outstanding (in shares) | 14,111 | ||
Inducement Grants | Stock Options | |||
Stock Options | |||
Outstanding (in shares) | 814,975 | ||
Granted (in shares) | 91,100 | ||
Exercised (in shares) | 0 | ||
Expired or terminated (in shares) | (72,125) | ||
Outstanding (in shares) | 833,950 | ||
Inducement Grants | Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 135,456 | ||
Granted (in shares) | 24,300 | ||
Vested (in shares) | (45,662) | ||
Expired or terminated (in shares) | (9,819) | ||
Outstanding (in shares) | 104,275 |
Equity-Based Compensation - Equ
Equity-Based Compensation - Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Equity-based compensation expense | ||||
Total equity-based compensation expense | $ 6,389 | $ 5,468 | $ 18,058 | $ 16,809 |
Income tax effect | (1,805) | (1,568) | (5,127) | (4,637) |
After-tax effect of equity-based compensation expense | 4,584 | 3,900 | 12,931 | 12,172 |
Cost of product sales and services | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | 566 | 118 | 892 | 395 |
Research and development | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | 799 | 858 | 2,651 | 2,583 |
Selling, general and administrative | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | $ 5,024 | $ 4,492 | $ 14,515 | $ 13,831 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Jun. 07, 2017 | Apr. 17, 2017 | Apr. 03, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Jan. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of preferred share purchase rights for each outstanding share of common stock | 1 | ||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Preferred stock, par value (in dollars per share) | 0.01 | 0.01 | 0.01 | $ 0.01 | |||||
Initial exercise price (in usd per share) | $ 80 | $ 34.12 | $ 34.12 | ||||||
Number of preferred share, called by each right | 0.001 | ||||||||
Preferred stock, economic equivalent to common stock (in shares) | 1,000 | ||||||||
Period following public announcement of an acquiring person | 10 days | ||||||||
Period following intention of a tender offer | 10 days | ||||||||
Covenant, consolidated assets sold | 50.00% | ||||||||
Multiplier for shares calculation upon acquisition | 2 | ||||||||
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 | ||||||||
Decease in total stockholders' equity | $ 134,100,000 | ||||||||
Increase related to net shares issued in connection with license agreement, value | 12,555,000 | $ 0 | |||||||
Increase related to equity-based compensation expense | 18,100,000 | ||||||||
Net loss | $ 152,061,000 | $ (16,196,000) | 202,688,000 | $ (8,074,000) | |||||
Reduction for changes in deferred taxes associated with debt | 27,200,000 | ||||||||
Convertible Notes | Convertible Notes due 2022 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Increase related to equity component of debt repurchased | 72,600,000 | ||||||||
Reduction related to equity component for debt issuance costs | $ 2,200,000 | 2,200,000 | |||||||
Convertible Notes | Convertible Notes due 2019 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Reduction related to equity component of debt | 28,300,000 | ||||||||
Endoceutics License Agreement | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Increase related to net shares issued in connection with license agreement, value | $ 13,500,000 | $ 13,500,000 | |||||||
Accounting Standards Update 2016-09, Excess Tax Benefit Component | Retained Earnings | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Increase related to cumulative- effect adjustment | $ 21,600,000 | ||||||||
Common Stock | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Maximum majority ownership, resulting from 2017 net operating loss rights agreement | 4.99% | 4.99% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Apr. 03, 2017 | Feb. 05, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2016 |
Commitments | ||||||
Contingent consideration accrued | $ 190,457,000 | $ 156,008,000 | ||||
Sandoz Patent Infringement Lawsuit | ||||||
Commitments | ||||||
Period of time, patent infringement suit can be filed in federal district court | 45 days | |||||
Month stay period | 30 months | 30 months | ||||
Endoceutics License Agreement | ||||||
Commitments | ||||||
Period after first commercial sale | 10 years | 10 years | ||||
Palatin License Agreement | License Agreement Terms | ||||||
Commitments | ||||||
Maximum future contingent payments | $ 380,000,000 | |||||
Endoceutics License Agreement | Contingent Consideration | ||||||
Commitments | ||||||
Contingent consideration accrued | 10,000,000 | |||||
First Sales Milestone | Endoceutics License Agreement | Endoceutics, Inc. | ||||||
Commitments | ||||||
Sales milestone | $ 15,000,000 | 15,000,000 | ||||
Sales milestone, triggering amount | 150,000,000 | 150,000,000 | ||||
First Sales Milestone | Palatin License Agreement | License Agreement Terms | ||||||
Commitments | ||||||
Sales milestone | $ 25,000,000 | |||||
Sales milestone, triggering amount | 250,000,000 | |||||
Maximum future contingent payments | 300,000,000 | |||||
Second Sales Milestone | Endoceutics License Agreement | Endoceutics, Inc. | ||||||
Commitments | ||||||
Sales milestone | 30,000,000 | 30,000,000 | ||||
Sales milestone, triggering amount | 300,000,000 | 300,000,000 | ||||
Third Sales Milestone | Endoceutics License Agreement | Endoceutics, Inc. | ||||||
Commitments | ||||||
Sales milestone | 850,000,000 | 850,000,000 | ||||
Sales milestone, triggering amount | 500,000,000 | 500,000,000 | ||||
Tiered Royalties | Endoceutics License Agreement | ||||||
Commitments | ||||||
Maximum future contingent payments | $ 150,000,000 | $ 150,000,000 | ||||
Royalty percentage, maximum | 20.00% | 20.00% | ||||
Net sales threshold, future contingent payments | $ 1,000,000,000 | $ 1,000,000,000 | ||||
Regulatory milestone | Palatin License Agreement | License Agreement Terms | ||||||
Commitments | ||||||
Maximum future contingent payments | $ 80,000,000 | |||||
Regulatory milestone, acceptance by U.S. Food and Drug Administration for new drug application | Palatin License Agreement | License Agreement Terms | ||||||
Commitments | ||||||
Maximum future contingent payments | 20,000,000 | |||||
Regulatory milestone, U.S. Food and Drug Administration approval | Palatin License Agreement | License Agreement Terms | ||||||
Commitments | ||||||
Maximum future contingent payments | $ 60,000,000 |
Collaboration, License and Ot57
Collaboration, License and Other Strategic Agreements (Details) - USD ($) | Apr. 03, 2017 | Feb. 28, 2017 | Jul. 31, 2015 | Jun. 30, 2017 | Sep. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Collaborative Agreements | ||||||||
Net shares issued in connection with license agreement, value | $ 12,555,000 | $ 0 | ||||||
Finite-lived intangible assets | 1,171,755,000 | $ 1,094,100,000 | ||||||
Velo Bio option agreement | ||||||||
Collaborative Agreements | ||||||||
Upfront payment, option agreement | $ 10,000,000 | |||||||
Payments due | $ 65,000,000 | |||||||
Sales milestone payments based on annual sales milestones | $ 250,000,000 | |||||||
Covenant, royalty rate | 0.00% | |||||||
Increase of milestone payment when royalty rate is zero | 50.00% | |||||||
Minimum | Velo Bio option agreement | ||||||||
Collaborative Agreements | ||||||||
Sales milestone targets | $ 100,000,000 | |||||||
Maximum | Velo Bio option agreement | ||||||||
Collaborative Agreements | ||||||||
Sales milestone targets | $ 900,000,000 | |||||||
Endoceutics License Agreement | ||||||||
Collaborative Agreements | ||||||||
Upfront payment | $ 50,000,000 | |||||||
Number of shares issued under arrangement | 600,000 | |||||||
Net shares issued in connection with license agreement, value | $ 13,500,000 | $ 13,500,000 | ||||||
Consideration recorded | $ 83,500,000 | |||||||
IPR&D expense | 5,800,000 | |||||||
Period after first commercial sale | 10 years | 10 years | ||||||
Transfer of intellectual property to second source supplier, term (within) | 2 years | |||||||
Endoceutics License Agreement | Research and Development Arrangement | ||||||||
Collaborative Agreements | ||||||||
Out-of-pocket expenses (up to) | $ 20,000,000 | |||||||
Endoceutics License Agreement | Intrarosa developed technology | ||||||||
Collaborative Agreements | ||||||||
Finite-lived intangible assets | $ 77,700,000 | |||||||
Endoceutics License Agreement | Anniversary of Closing | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | $ 10,000,000 | |||||||
Endoceutics License Agreement | Delivery of Launch Quantities | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | 10,000,000 | |||||||
Endoceutics License Agreement | Tiered Royalties | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | $ 150,000,000 | $ 150,000,000 | ||||||
Royalty percentage, maximum | 20.00% | 20.00% | ||||||
Net sales threshold, future contingent payments | $ 1,000,000,000 | $ 1,000,000,000 | ||||||
Endoceutics License Agreement | First Sales Milestone | Endoceutics, Inc. | ||||||||
Collaborative Agreements | ||||||||
Sales milestone | 15,000,000 | 15,000,000 | ||||||
Sales milestone, triggering amount | 150,000,000 | 150,000,000 | ||||||
Endoceutics License Agreement | Second Sales Milestone | Endoceutics, Inc. | ||||||||
Collaborative Agreements | ||||||||
Sales milestone | 30,000,000 | 30,000,000 | ||||||
Sales milestone, triggering amount | 300,000,000 | 300,000,000 | ||||||
Endoceutics License Agreement | Third Sales Milestone | Endoceutics, Inc. | ||||||||
Collaborative Agreements | ||||||||
Sales milestone | 850,000,000 | 850,000,000 | ||||||
Sales milestone, triggering amount | $ 500,000,000 | 500,000,000 | ||||||
Endoceutics License Agreement | 180 Day Lock-Up Provision | ||||||||
Collaborative Agreements | ||||||||
Number of shares issued under arrangement | 300,000 | |||||||
Stock issued, lock-up period | 180 days | |||||||
Endoceutics License Agreement | One Year Lock-Up Provision | ||||||||
Collaborative Agreements | ||||||||
Number of shares issued under arrangement | 300,000 | |||||||
Stock issued, lock-up period | 1 year | |||||||
Palatin License Agreement | License Agreement Terms | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | 380,000,000 | |||||||
Upfront payment | $ 60,000,000 | |||||||
Maximum reimbursement | $ 25,000,000 | |||||||
Expiration period, following first commercial sale | 10 years | |||||||
Palatin License Agreement | First Sales Milestone | License Agreement Terms | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | $ 300,000,000 | |||||||
Sales milestone | 25,000,000 | |||||||
Sales milestone, triggering amount | 250,000,000 | |||||||
Palatin License Agreement | Regulatory milestone | License Agreement Terms | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | $ 80,000,000 | |||||||
Palatin License Agreement | Regulatory milestone, acceptance by U.S. Food and Drug Administration for new drug application | License Agreement Terms | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | 20,000,000 | |||||||
Palatin License Agreement | Regulatory milestone, U.S. Food and Drug Administration approval | License Agreement Terms | ||||||||
Collaborative Agreements | ||||||||
Maximum future contingent payments | $ 60,000,000 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Total | $ 755,417 | $ 986,521 |
Less: current maturities | 0 | 21,166 |
Long-term debt, net of current maturities | 755,417 | 965,355 |
2023 Senior Notes | ||
Debt Instrument [Line Items] | ||
Total | 490,518 | 489,612 |
2022 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Total | 244,958 | 0 |
2019 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Total | 19,941 | 179,363 |
2015 Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Total | $ 0 | $ 317,546 |
Debt - 2023 Senior Notes (Detai
Debt - 2023 Senior Notes (Details) - 2023 Senior Notes - USD ($) | Aug. 17, 2015 | Oct. 31, 2017 | Sep. 30, 2017 |
Debt Instrument [Line Items] | |||
Interest rate | 7.875% | ||
Percent of principal amount of debt that may be redeemed (up to) | 35.00% | ||
Redemption price | 107.875% | ||
Percent of original principal amount of debt outstanding (at least) | 65.00% | ||
Repurchase price of principal amount of notes plus accrued and unpaid interest | 100.00% | ||
Aggregate principal that must be held to accelerate amounts due (not less than) | 25.00% | ||
Carrying value, net | $ 490,500,000 | ||
Change Of Control | |||
Debt Instrument [Line Items] | |||
Repurchase price of principal amount of notes plus accrued and unpaid interest | 101.00% | ||
CBR | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount of debt issued | $ 500,000,000 | $ 500,000,000 | |
Subsequent Event | |||
Debt Instrument [Line Items] | |||
Repurchased amount | $ 25,000,000 |
Debt - Outstanding Convertible
Debt - Outstanding Convertible Note Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Liability component: | ||
Principal | $ 841,417 | |
Net carrying amount | 264,899 | $ 179,363 |
Convertible Notes | ||
Liability component: | ||
Principal | 341,417 | |
Less: debt discount and issuance costs, net | 76,518 | |
Net carrying amount | 264,899 | |
Equity Component | 82,481 | |
Convertible Notes | 2022 Convertible Notes | ||
Liability component: | ||
Principal | 320,000 | |
Less: debt discount and issuance costs, net | 75,042 | |
Net carrying amount | 244,958 | |
Equity Component | 72,576 | |
Convertible Notes | 2019 Convertible Notes | ||
Liability component: | ||
Principal | 21,417 | |
Less: debt discount and issuance costs, net | 1,476 | |
Net carrying amount | 19,941 | |
Equity Component | $ 9,905 |
Debt - Convertible Notes (Detai
Debt - Convertible Notes (Details) | Jun. 07, 2017USD ($) | May 10, 2017USD ($) | Feb. 14, 2014USD ($) | Sep. 30, 2017USD ($)$ / shares | May 31, 2017USD ($) | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)day$ / shares | Sep. 30, 2016USD ($) |
Debt Instrument [Line Items] | |||||||||
Payment of convertible debt issuance costs | $ 9,553,000 | $ 0 | |||||||
Repurchase price of convertible debt | 191,480,000 | 0 | |||||||
Gain (loss) on debt extinguishment | $ (314,000) | $ 0 | $ (9,830,000) | $ 0 | |||||
Convertible Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Period of amortization of debt discount to interest expense using effective interest method | 5 years | ||||||||
Net proceeds from issuance of convertible debt | $ 193,300,000 | ||||||||
Debt issuance costs | 6,700,000 | ||||||||
Interest rate | 2.50% | 2.50% | 2.50% | ||||||
Initial conversion price of convertible notes into common stock (in usd per share) | $ / shares | $ 27.09 | $ 27.09 | $ 27.09 | ||||||
Consecutive trading period | day | 30 | ||||||||
Effective interest rate on liability component | 7.79% | 7.79% | 7.79% | ||||||
Proceeds used to pay the cost of the bond hedges | 14,100,000 | ||||||||
Convertible Notes | Debt Instrument Convertible Covenant One | |||||||||
Debt Instrument [Line Items] | |||||||||
Trading period | day | 20 | ||||||||
Consecutive trading period | day | 30 | ||||||||
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 | 130.00% | ||||||||
Convertible 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 | 5 days | ||||||||
Consecutive trading days before five consecutive business days during the note measurement period | 5 days | ||||||||
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 Notes due 2022 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of debt issued | $ 20,000,000 | $ 300,000,000 | |||||||
Debt term | 5 years | ||||||||
Convertible Notes due 2022 | Convertible Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Period of amortization of debt discount to interest expense using effective interest method | 5 years | ||||||||
Net proceeds from issuance of convertible debt | 19,400,000 | 291,000,000 | |||||||
Payment of convertible debt issuance costs | 600,000 | $ 9,000,000 | |||||||
Debt issuance costs | 9,600,000 | ||||||||
Debt issuance costs, allocated to equity component | 2,200,000 | $ 2,200,000 | |||||||
Debt issuance costs allocated to the liability component | $ 7,400,000 | ||||||||
Interest rate | 3.25% | 3.25% | 3.25% | ||||||
Debt conversion ratio | 0.0365464 | ||||||||
Initial conversion price of convertible notes into common stock (in usd per share) | $ / shares | $ 27.36 | $ 27.36 | $ 27.36 | ||||||
Effective interest rate on liability component | 9.49% | 9.49% | 9.49% | ||||||
Convertible Notes due 2019 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of debt issued | $ 200,000,000 | ||||||||
Convertible Notes due 2019 | Convertible Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate | 2.50% | 2.50% | 2.50% | ||||||
Debt conversion ratio | 0.0369079 | ||||||||
Repurchase of principal amount of convertible debt | $ 19,600,000 | $ 158,900,000 | |||||||
Repurchase price of convertible debt | 21,400,000 | 171,300,000 | |||||||
Gain (loss) on debt extinguishment | $ (300,000) | $ 200,000 |
Debt - Total Interest Expense R
Debt - Total Interest Expense Recognized Related to the Convertible Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | ||||
Total interest expense | $ 16,847 | $ 18,309 | $ 52,403 | $ 55,002 |
Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 2,840 | 1,250 | 6,033 | 3,750 |
Amortization of debt issuance costs | 348 | 273 | 944 | 797 |
Amortization of debt discount | 3,264 | 1,920 | 7,909 | 5,602 |
Total interest expense | $ 6,452 | $ 3,443 | $ 14,886 | $ 10,149 |
Debt - Convertible Bond Hedge,
Debt - Convertible Bond Hedge, Warrant Transactions (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Apr. 17, 2017 | Feb. 11, 2014 | |
Debt Instrument [Line Items] | |||
Exercise price (in usd per share) | $ 27.09 | ||
Initial exercise price (in usd per share) | $ 34.12 | $ 80 | |
Exercise price above last reported sale price of common stock | 70.00% | ||
Sale price of common stock (in usd per share) | $ 20.07 | ||
Proceeds from termination of bond hedge and warrants | $ 0.3 | ||
Convertible Notes due 2019 | Convertible Notes | |||
Debt Instrument [Line Items] | |||
Remaining principal amount of convertible notes | $ 21.4 | ||
Bond Option | |||
Debt Instrument [Line Items] | |||
Common stock covered under convertible bond hedge/warrants (in shares) | 0.8 | ||
Warrants | |||
Debt Instrument [Line Items] | |||
Common stock covered under convertible bond hedge/warrants (in shares) | 1 |
Debt - 2015 Term Loan Facility
Debt - 2015 Term Loan Facility (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Aug. 31, 2017 | May 31, 2017 | Apr. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Aug. 31, 2015 | |
Debt Instrument [Line Items] | ||||||||
Gain (loss) on debt extinguishment | $ (314,000) | $ 0 | $ (9,830,000) | $ 0 | ||||
Six-Year Term Loan Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt term | 6 years | |||||||
Aggregate principal amount of debt issued | $ 350,000,000 | |||||||
Annual mandatory prepayment of debt | 50.00% | 50.00% | ||||||
Repayment of debt | $ 3,000,000 | |||||||
Repaid outstanding borrowings and accrued interest | $ 321,800,000 | |||||||
Gain (loss) on debt extinguishment | $ (9,700,000) |
Debt - Future Payments (Details
Debt - Future Payments (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Debt Disclosure [Abstract] | |
Remainder of Year Ending December 31, 2017 | $ 0 |
Year Ending December 31, 2018 | 0 |
Year Ending December 31, 2019 | 21,417 |
Year Ending December 31, 2020 | 0 |
Year Ending December 31, 2021 | 0 |
Thereafter | 820,000 |
Total | $ 841,417 |
Recently Issued and Proposed 66
Recently Issued and Proposed Accounting Pronouncements (Details) $ in Millions | Dec. 31, 2016USD ($) |
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 |