Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | AMAG PHARMACEUTICALS INC. | |
Entity Central Index Key | 792,977 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 34,326,636 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 231,737 | $ 192,114 |
Marketable securities | 138,820 | 136,593 |
Accounts receivable, net | 99,945 | 103,501 |
Inventories | 31,598 | 37,356 |
Prepaid and other current assets | 16,345 | 12,304 |
Total current assets | 518,445 | 481,868 |
Property, plant and equipment, net | 25,921 | 25,996 |
Goodwill | 639,484 | 639,484 |
Intangible assets, net | 648,206 | 704,470 |
Restricted cash | 656 | 656 |
Other long-term assets | 2,238 | 762 |
Total assets | 1,834,950 | 1,853,236 |
Current liabilities: | ||
Accounts payable | 17,371 | 10,335 |
Accrued expenses | 199,071 | 175,490 |
Current portion of convertible notes, net | 20,460 | 0 |
Current portion of acquisition-related contingent consideration | 50,007 | 49,399 |
Deferred revenues | 42,510 | 42,494 |
Total current liabilities | 329,419 | 277,718 |
Long-term liabilities: | ||
Long-term debt, net | 466,595 | 466,291 |
Convertible notes, net | 251,508 | 268,392 |
Acquisition-related contingent consideration | 660 | 686 |
Deferred tax liabilities | 17,497 | 23,927 |
Deferred revenues | 27,398 | 24,387 |
Other long-term liabilities | 1,878 | 1,591 |
Total liabilities | 1,094,955 | 1,062,992 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized; none issued | 0 | 0 |
Common stock, par value $0.01 per share, 117,500,000 shares authorized; 34,322,193 and 34,083,112 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 343 | 341 |
Additional paid-in capital | 1,274,935 | 1,271,628 |
Accumulated other comprehensive loss | (4,362) | (3,908) |
Accumulated deficit | (530,921) | (477,817) |
Total stockholders’ equity | 739,995 | 790,244 |
Total liabilities and stockholders’ equity | $ 1,834,950 | $ 1,853,236 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
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 | 34,322,193 | 34,083,112 |
Common stock, shares outstanding | 34,322,193 | 34,083,112 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Product sales, net | $ 117,348 | $ 112,517 |
Service revenues, net | 28,969 | 26,931 |
Other revenues | 39 | 24 |
Total revenues | 146,356 | 139,472 |
Costs and expenses: | ||
Cost of product sales | 63,912 | 27,573 |
Cost of services | 5,473 | 5,010 |
Research and development expenses | 10,809 | 16,489 |
Acquired in-process research and development | 20,000 | 60,000 |
Selling, general and administrative expenses | 91,050 | 70,424 |
Total costs and expenses | 191,244 | 179,496 |
Operating loss | (44,888) | (40,024) |
Other (expense) income: | ||
Interest expense | (15,977) | (18,300) |
Interest and dividend income | 644 | 1,031 |
Gains on investments, net | 0 | 27 |
Total other expense, net | (15,333) | (17,242) |
Loss before income taxes | (60,221) | (57,266) |
Income tax benefit | (5,979) | (20,706) |
Net loss | $ (54,242) | $ (36,560) |
Net loss per share: | ||
Basic and diluted (in usd per share) | $ (1.59) | $ (1.06) |
Weighted average shares outstanding used to compute net loss per share: | ||
Basic and diluted (in shares) | 34,162 | 34,378 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (54,242) | $ (36,560) |
Other comprehensive (loss) income: | ||
Holding (losses) gains arising during period, net of tax | (454) | 92 |
Total comprehensive loss | $ (54,696) | $ (36,468) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (54,242) | $ (36,560) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 59,485 | 27,994 |
Provision for bad debt expense | 463 | 590 |
Amortization of premium/discount on purchased securities | 67 | 113 |
Non-cash equity-based compensation expense | 5,533 | 5,778 |
Amortization of debt discount and debt issuance costs | 3,880 | 3,209 |
Gains on marketable securities, net | 0 | (143) |
Change in fair value of contingent consideration | 626 | 1,043 |
Deferred income taxes | (6,643) | (21,192) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 3,093 | 6,553 |
Inventories | 3,534 | (403) |
Prepaid and other current assets | (3,720) | 1,523 |
Accounts payable and accrued expenses | 30,374 | (4,622) |
Deferred revenues | 3,027 | 2,067 |
Other assets and liabilities | 215 | (486) |
Net cash provided by (used in) operating activities | 45,692 | (14,536) |
Cash flows from investing activities: | ||
Proceeds from sales or maturities of marketable securities | 18,225 | 128,512 |
Purchase of marketable securities | (21,102) | (129,241) |
Capital expenditures | (923) | (658) |
Net cash used in investing activities | (3,800) | (1,387) |
Cash flows from financing activities: | ||
Long-term debt principal payments | 0 | (4,375) |
Payments of contingent consideration | (44) | (83) |
Proceeds from the exercise of common stock options | 123 | 152 |
Payments of employee tax withholding related to equity-based compensation | (2,348) | (1,322) |
Net cash used in financing activities | (2,269) | (5,628) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 39,623 | (21,551) |
Cash, cash equivalents, and restricted cash at beginning of the period | 192,770 | 276,898 |
Cash, cash equivalents, and restricted cash at end of the period | 232,393 | 255,347 |
Supplemental data for cash flow information: | ||
Cash paid for taxes | 136 | 208 |
Cash paid for interest | $ 18,971 | $ 26,195 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2018 | |
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), Intrarosa ® (prasterone) vaginal inserts, Feraheme ® (ferumoxytol injection) for intravenous (“IV”) use, and MuGard ® Mucoadhesive Oral Wound Rinse. In addition, we have the rights to research, develop and commercialize bremelanotide in North America. 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. Throughout this Quarterly Report on Form 10-Q, AMAG Pharmaceuticals, Inc. and our consolidated subsidiaries are collectively referred to as “the Company,” “AMAG,” “we,” “us,” or “our.” |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
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, 2017 (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; marketable securities; 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, inclusive of valuation allowances; and equity-based compensation expense. Actual results could differ materially from those estimates. Restricted Cash As of March 31, 2018 and December 31, 2017, we classified $0.7 million of our cash as restricted cash, a non-current asset on the balance sheet. This amount represented the security deposit delivered to the landlord of our Waltham, Massachusetts headquarters in the form of an irrevocable letter of credit. Concentrations and Significant Customer Information Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities, and accounts receivable. We currently hold our excess cash primarily in institutional money market funds, corporate debt securities, U.S. treasury and government agency securities, commercial paper and certificates of deposit. As of March 31, 2018 , 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 months ended March 31, 2018 and 2017 : Three Months Ended March 31, 2018 2017 AmerisourceBergen Drug Corporation 22 % 22 % McKesson Corporation 22 % 14 % Our net accounts receivable primarily represent amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies and amounts due for CBR Services sold to consumers who pay for the services directly. 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 March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 McKesson Corporation 26 % 22 % AmerisourceBergen Drug Corporation 24 % 27 % We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities) and finished drug product as well as for drug substance and final packaging services for Intrarosa. 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 Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. We recognized the cumulative effect of applying the new revenue standard to all contracts with customers that were not completed as of January 1, 2018 as an adjustment to the opening balance of stockholders' equity at the beginning of 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of ASC 606 did not have an impact on the amount of reported revenues with respect to our product or service revenue. In connection with the adoption of ASC 606, we are required to capitalize certain contract acquisition costs consisting primarily of commissions paid when contracts are signed and amortize these costs over the expected contractual relationship with the customer. As of January 1, 2018, we capitalized $1.5 million in incremental contract acquisition costs (specifically sales commissions related to the CBR Services) related to contracts that were not completed. The Impact of ASC 606 Adoption As a result of applying the modified retrospective transition method to adopt ASC 606, the following financial statement line items for the three months ended March 31, 2018 were affected (in thousands): Condensed Consolidated Balance Sheet March 31, 2018 As Reported Balances without adoption of Impact of Adoption Assets: Prepaid and other current assets $ 16,345 $ 16,248 $ 97 Other long-term assets $ 2,238 $ 538 $ 1,700 Total assets $ 1,834,950 $ 1,833,153 $ 1,797 Liabilities and stockholders' equity: Deferred tax liabilities $ 17,497 $ 17,156 $ 341 Accumulated deficit $ (530,921 ) $ (532,377 ) $ 1,456 Total liabilities and stockholders' equity $ 1,834,950 $ 1,833,153 $ 1,797 Condensed Consolidated Statement of Operations March 31, 2018 As Reported Balances without adoption of ASC 606 Impact of Adoption Costs and expenses: Selling, general and administrative expenses $ 91,050 $ 91,368 $ (318 ) Net loss $ (54,242 ) $ (54,560 ) $ 318 Condensed Consolidated Statement of Cash Flows March 31, 2018 As Reported Balances without adoption of ASC 606 Impact of Adoption Operating activities: Net loss $ (54,242 ) $ (54,560 ) $ 318 Changes in operating assets and liabilities: Prepaid and other current assets $ (3,720 ) $ (3,702 ) $ (18 ) Other assets and liabilities $ 215 $ 515 $ (300 ) Reclassifications Certain amounts in prior periods have been reclassified in order to conform to the current period presentation. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | REVENUE RECOGNITION On January 1, 2018, we adopted ASC 606 applying the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for prior periods. We recorded a net increase to opening stockholders' equity of $1.1 million as of January 1, 2018, reflecting the cumulative impact of adopting ASC 606 primarily related to the capitalization of incremental direct costs of obtaining a contract, which consisted of sales commissions related to the CBR Services. There was no impact to revenue for the three months ended March 31, 2018. Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps: a. Identify the contract(s) with a customer; b. Identify the performance obligations in the contract; c. Determine the transaction price; d. Allocate the transaction price to the performance obligations in the contract; and e. Recognize revenue when (or as) the performance obligations are satisfied. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, if the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Our major sources of revenue during the reporting periods were: (a) product revenues from Makena and Feraheme; and (b) service revenues associated with the CBR Services. The adoption of ASC 606 did not have an impact on our product or service revenue. Revenue and Allowances The following table provides information about disaggregated revenue by products and services (in thousands): Three Months Ended March 31, 2018 2017 Product sales, net Makena $ 89,983 $ 86,455 Feraheme 25,135 25,922 Intrarosa 2,165 — MuGard 65 140 Total $ 117,348 $ 112,517 Service revenues, net $ 28,969 $ 26,931 Total gross product sales were offset by product sales allowances and accruals for the three months ended March 31, 2018 and 2017 as follows (in thousands, except for percentages): Three Months Ended March 31, 2018 Percent of 2017 Percent of Gross product sales $ 239,870 $ 206,724 Provision for product sales allowances and accruals: Contractual adjustments 86,144 36 % 69,829 34 % Governmental rebates 36,378 15 % 24,378 12 % Total 122,522 51 % 94,207 46 % Product sales, net $ 117,348 $ 112,517 The following table summarizes the product revenue allowance and accrual activity for the three months ended March 31, 2018 (in thousands): Contractual Governmental Adjustments Rebates Total Balance at December 31, 2017 $ 62,164 $ 50,598 $ 112,762 Provisions related to current period sales 85,308 31,028 116,336 Adjustments related to prior period sales 836 5,350 6,186 Payments/returns relating to current period sales (44,633 ) — (44,633 ) Payments/returns relating to prior period sales (39,441 ) (25,149 ) (64,590 ) Balance at March 31, 2018 $ 64,234 $ 61,827 $ 126,061 The following table provides information about assets and liabilities from contracts with customers (in thousands): March 31, 2018 At Adoption Short-term contract assets (sales commissions) $ 97 $ 79 Long-term contract assets (sales commissions) $ 1,700 $ 1,400 Short-term contract liabilities (deferred revenue) $ 42,510 $ 42,494 Long-term contract liabilities (deferred revenue) $ 27,398 $ 24,387 We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred contract acquisition costs, which will be amortized along with the associated revenue. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. We had no asset impairment charges related to contract assets in the three months ended March 31, 2018 . The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2018 (in thousands): Balance at January 1, 2018 Additions Deductions Balance at March 31, 2018 Contract assets (sales commissions) $ 1,479 $ 340 $ (22 ) $ 1,797 Contract liabilities (deferred revenue) $ 66,881 $ 21,727 $ (18,700 ) $ 69,908 Performance Obligations At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. We determined that the following distinct goods and services represent separate performance obligations: • Supply of Makena product • Supply of Feraheme product • Supply of Intrarosa product • CBR collection and processing services • CBR storage services Product Revenue For performance obligations related to products (i.e. Makena, Feraheme and Intrarosa), we principally sell our products to wholesalers, specialty distributors, specialty pharmacies and other customers (collectively, “Customers”), who purchase products directly from us. Our Customers subsequently resell the products to healthcare providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payers that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products. For the majority of our Customers, we transfer control at the point in time when the goods are delivered. In instances when we perform shipping and handling activities, these are considered fulfillment activities, and accordingly, the costs are accrued when the related revenue is recognized. Taxes collected from Customers and remitted to governmental authorities are excluded from revenues. Variable Consideration Under ASC 606, we are required to make estimates of the net sales price, including estimates of variable consideration (such as rebates, chargebacks, discounts, co-pay assistance and other deductions), and recognize the estimated amount as revenue, when we transfer control of the product to our customers. Variable consideration must be determined using either an “expected value” or a “most likely amount” method. We record product revenues net of certain allowances and accruals in our condensed consolidated statements of operations. Product sales allowances and accruals are primarily comprised of both direct and indirect fees, discounts and rebates and provisions for estimated product returns. Direct fees, discounts and rebates are contractual fees and price adjustments payable to Customers that purchase products directly from us. Indirect fees, discounts and rebates are contractual price adjustments payable to healthcare providers and organizations, such as certain physicians, clinics, hospitals, group purchasing organizations (“GPOs”), and dialysis organizations that typically do not purchase products directly from us but rather from wholesalers and specialty distributors. Consideration payable to a Customer, or other parties that purchase goods from the Customer, are considered to be a reduction of the transaction price, and therefore, of revenue. Product sales allowances and accruals are based on definitive contractual agreements or legal requirements (such as Medicaid laws and regulations) related to the purchase and/or utilization of the product by these entities and are recorded in the same period that the related revenue is recognized. We use the expected value method for estimating variable consideration. We estimate product sales allowances and accruals using either historical, actual and/or other data, including estimated patient usage, applicable contractual rebate rates, contract performance by the benefit providers, other current contractual and statutory requirements, historical market data based upon experience of our products and other products similar to them, specific known market events and trends such as competitive pricing and new product introductions, current and forecasted Customer buying patterns and inventory levels, and the shelf life of our products. As part of this evaluation, we also review changes to federal and other legislation, changes to rebate contracts, changes in the level of discounts, and changes in product sales trends. Although allowances and accruals are recorded at the time of product sale, rebates are typically paid out in arrears, one to three months after the sale. The estimate of variable consideration, which is included in the transaction price, may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved in a future period. Estimating variable consideration and the related constraint requires the use of significant management judgment and actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. No amounts were constrained as of March 31, 2018 . Discounts We typically offer a 2% prompt payment discount to certain customers as an incentive to remit payment in accordance with the stated terms of the invoice, generally 30 days . Because we anticipate that those customers who are offered this discount will take advantage of the discount, 100% of the prompt payment discount at the time of sale are accrued, based on the gross amount of each invoice. We adjust the accrual quarterly to reflect actual experience. Chargebacks Chargeback reserves represent the estimated obligations resulting from the difference between the prices at which we sell our products to wholesalers and the sales price ultimately paid to wholesalers under fixed price contracts by third-party payers, including governmental agencies. The chargeback estimates are determined based on actual product sales data and forecasted customer buying patterns. Actual chargeback amounts are determined at the time of resale to the qualified healthcare provider, and we generally issue credits for such amounts within several weeks of receiving notification from the wholesaler. Estimated chargeback amounts are recorded at the time of sale and adjusted quarterly to reflect actual experience. Distributor/Wholesaler and Group Purchasing Organization Fees Fees under the arrangements with distributors and wholesalers are usually based upon units of product purchased during the prior month or quarter and are usually paid by us within several weeks of the receipt of an invoice from the wholesaler or distributor, as the case may be. Fees under the arrangements with GPOs are usually based upon member purchases during the prior quarter and are generally billed by the GPO within 30 days after period end. In accordance with ASC 606, since the consideration given to the Customer is not for a distinct good or service, the consideration is a reduction of the transaction price of the vendor’s products or services. We have included these fees in contractual adjustments in the table above. We generally pay such amounts within several weeks of the receipt of an invoice from the distributor, wholesaler or GPO. Accordingly, we accrue the estimated fee due at the time of sale, based on the contracted price invoiced to the Customer. We adjust the accrual quarterly to reflect actual experience. Product Returns Consistent with industry practice, we generally offer wholesalers, specialty distributors and other customers a limited right to return our products based on the product’s expiration date. Currently the expiration dates for Feraheme, Makena and Intrarosa have a range of three to five years . Product returns are estimated based on the historical return patterns and known or expected changes in the marketplace. We track actual returns by individual production lots. Returns on lots eligible for credits under our returned goods policy are monitored and compared with historical return trends and rates. We expect that wholesalers and healthcare providers will not stock significant inventory due to the cost of the product, the expense to store our products, and/or that our products are readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available and for known or expected changes in the marketplace. We did not significantly adjust our reserve for product returns during the three months ended March 31, 2018 . To date, our product returns have been relatively limited; however, returns experience may change over time. We may be required to make future adjustments to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant. Sales Rebates We contract with various private payer organizations, primarily pharmacy benefit managers, for the payment of rebates with respect to utilization of our products. We determine our estimates for rebates, if applicable, based on actual product sales data and our historical product claims experience. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the provider. We regularly assess our reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant. Governmental Rebates Governmental rebate reserves relate to our reimbursement arrangements with state Medicaid programs. We determine our estimates for Medicaid rebates, if applicable, based on actual product sales data and our historical product claims experience. In estimating these reserves, we provide for a Medicaid rebate associated with both those expected instances where Medicaid will act as the primary insurer as well as in those instances where we expect Medicaid will act as the secondary insurer. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the Medicaid or provider entity. We regularly assess our Medicaid reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current Medicaid accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant. Other Incentives Other incentives which we offer include voluntary patient assistance programs, such as co-pay assistance programs, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue. Service Revenue The CBR Services include the collection, processing, and storage of both umbilical cord blood and cord tissue. We market and sell the CBR Services directly to consumers at the prices that are known at contract inception. The discounts offered to the customer are known at the time of enrollment and thereby do not result in variable consideration. CBR Services include the following two performance obligations: collection and processing and storage services, further described below. Collection and Processing Services Enrollment services, including the provision of a collection kit and cord blood and cord tissue unit processing, are delivered at the beginning of the relationship. The revenue for this performance obligation is recognized at the point in time after the collection and successful processing of the cord blood and cord tissue. When purchasing collection and processing services, the customer can (a) pay for the service upfront, when the service is provided; (b) finance the processing fee with us over six or twelve months; or (c) finance the processing fee through a third-party provider, and therefore not finance the arrangement with us. We elected to apply the practical expedient and therefore we have not adjusted the promised consideration for the effects of financing for either the six or twelve month payment plans. Storage Services Payment options for storage services of newborn cord blood and cord tissue units include either (a) an annual fee or (b) a prepayment of 18 years or for the lifetime of the newborn donor (the “lifetime option”). The revenue for this performance obligation is recognized ratably over the storage period on a straight-line basis, which is consistent with how the services are provided. 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. We determined that the 18 year and lifetime prepayment options do not include a significant financing component as the payment terms were structured primarily for reasons other than for the provision of financing and to maximize profitability. As of March 31, 2018 , the total aggregate transaction price allocated to the unsatisfied performance obligations was recorded as deferred revenue, which will be recognized ratably on a straight-line basis over the contractual period, as described above, of which $42.5 million will be recognized over the next twelve months . Allocation of Transaction Price We have selected an adjusted market assessment approach to estimate the stand-alone selling prices of the collection and processing services and storage services and concluded that the published list price is the price that a customer in that market would be willing to pay for those goods or services. We also considered the fact that all customers are charged the list prices current at the time of their enrollment where we have separately stated list prices for processing and storage. The discounts provided to the customers at the time of entering into the contract are allocated proportionally to both performance obligations (i.e. processing and storage). Cost to Obtain a Contract We pay commissions to internal sales representatives as compensation for obtaining contract enrollments for the CBR Services. We capitalize commissions that are incremental as a result of obtaining customer contracts and costs incurred to fulfill a customer contract if those costs are not within the scope of another topic within the accounting literature and meet the specified criteria. These costs are deferred in other current or long-term assets and are expensed to selling, general and administrative expenses as we satisfy the performance obligations by transferring the service to the customer. These assets will be periodically assessed for impairment. As of January 1, 2018, the date we adopted ASC 606, we capitalized $1.5 million in incremental contract acquisition costs related to contracts that were not completed. In the three months ended March 31, 2018 we amortized an immaterial amount of these acquisition costs, and did no t record any impairment losses in relation to costs capitalized. |
Marketable Securities
Marketable Securities | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | MARKETABLE SECURITIES As of March 31, 2018 and December 31, 2017 , our marketable securities were classified as available-for-sale in accordance with accounting standards which provide guidance related to accounting and classification of certain investments in marketable securities. Available-for-sale marketable securities are those securities which we view as available for use in current operations, if needed. We generally classify our available-for-sale marketable 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 marketable securities as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term marketable securities:* Corporate debt securities $ 58,981 $ — $ (215 ) $ 58,766 Certificates of deposit 10,150 — — 10,150 U.S. treasury and government agency securities 5,996 — (57 ) 5,939 Commercial paper 5,962 — — 5,962 Total short-term marketable securities $ 81,089 $ — $ (272 ) $ 80,817 Long-term marketable securities:** Corporate debt securities $ 52,408 $ 1 $ (725 ) $ 51,684 U.S. treasury and government agency securities 6,381 — (62 ) 6,319 Total long-term marketable securities 58,789 1 (787 ) 58,003 Total marketable securities $ 139,878 $ 1 $ (1,059 ) $ 138,820 * Represents marketable securities with a remaining maturity of less than one year. ** Represents marketable securities with a remaining maturity of one to three years. December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term marketable securities:* Corporate debt securities $ 57,257 $ — $ (68 ) 57,189 Certificates of deposit 9,151 — — 9,151 U.S. treasury and government agency securities 1,999 — (13 ) 1,986 Commercial paper 1,999 — — 1,999 Total short-term marketable securities $ 70,406 $ — $ (81 ) $ 70,325 Long-term marketable securities:** Corporate debt securities $ 59,282 $ 1 $ (320 ) $ 58,963 U.S. treasury and government agency securities 7,381 — (76 ) 7,305 Total long-term marketable securities 66,663 1 (396 ) 66,268 Total marketable securities $ 137,069 $ 1 $ (477 ) $ 136,593 * Represents marketable securities with a remaining maturity of less than one year. ** Represents marketable securities with a remaining maturity of one to three years. Impairments and Unrealized Gains and Losses on Marketable Securities We did no t recognize any other-than-temporary impairment losses in our condensed consolidated statements of operations related to our marketable securities during the three months ended March 31, 2018 and 2017 . We considered various factors, including the length of time that each security was in an unrealized loss position and our ability and intent to hold these securities until the recovery of their amortized cost basis occurs. As of March 31, 2018 , we had no material losses in an unrealized loss position for more than one year. Future events may occur, or additional information may become available, which may cause us to identify credit losses where we do not expect to receive cash flows sufficient to recover the entire amortized cost basis of a security and may necessitate the recording of future realized losses on securities in our portfolio. Significant losses in the estimated fair values of our marketable securities could have a material adverse effect on our earnings in future periods |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following tables represent the fair value hierarchy as of March 31, 2018 and December 31, 2017 , for those assets and liabilities that we measure at fair value on a recurring basis (in thousands): Fair Value Measurements at March 31, 2018 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 $ 2,255 $ 2,255 $ — $ — Corporate debt securities 110,450 — 110,450 — U.S. treasury and government agency securities 12,258 — 12,258 — Certificates of deposit 10,150 10,150 — Commercial paper $ 5,962 $ — $ 5,962 $ — Total Assets $ 141,075 $ 2,255 $ 138,820 $ — Liabilities: Contingent consideration - Lumara Health $ 49,797 $ — $ — $ 49,797 Contingent consideration - MuGard 870 — — 870 Total Liabilities $ 50,667 $ — $ — $ 50,667 Fair Value Measurements at December 31, 2017 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents $ 4,591 $ 4,591 $ — $ — Corporate debt securities 116,152 — 116,152 — U.S. treasury and government agency securities 9,291 — 9,291 — Certificates of deposit 9,151 — 9,151 — Commercial paper 1,999 — 1,999 — Total Assets $ 141,184 $ 4,591 $ 136,593 $ — Liabilities: Contingent consideration - Lumara Health $ 49,187 $ — $ — $ 49,187 Contingent consideration - MuGard 898 — — 898 Total Liabilities $ 50,085 $ — $ — $ 50,085 Marketable Securities Our cash equivalents, are classified as Level 1 assets under the fair value hierarchy as these assets have been valued using quoted market prices in active markets and do not have any restrictions on redemption. Our marketable securities 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 March 31, 2018 . In addition, there were no transfers or reclassifications of any securities between Level 1 and Level 2 during the three months ended March 31, 2018 . Contingent Consideration 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 March 31, 2018 , $10.0 million of contingent consideration was recorded in accrued expenses and is required to be paid to Endoceutics, Inc. (“Endoceutics”) in connection with the first anniversary of the closing pursuant to the agreement entered into with Endoceutics (the “Endoceutics License Agreement”). In addition, as of March 31, 2018 , we recorded an accrual for acquired in-process research and development (“IPR&D”) expense of $20.0 million in anticipation of the regulatory milestone payment to Palatin Technologies, Inc. (“Palatin”) due upon the FDA acceptance of the bremelanotide NDA, pursuant to the terms of a license agreement we entered into with Palatin in January 2017 (the “Palatin License Agreement”). We also 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® Mucoadhesive Oral Wound Rinse (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 (related to our Makena product) and the MuGard Rights (in thousands): Balance as of December 31, 2017 $ 50,085 Payments made (44 ) Adjustments to fair value of contingent consideration 626 Balance as of March 31, 2018 $ 50,667 During the three months ended March 31, 2018 , we adjusted the fair value of our contingent consideration liability by approximately $0.6 million , due to an increase of approximately $0.6 million to the Makena contingent consideration. We have classified $49.8 million of the Makena contingent consideration and $0.2 million of the MuGard contingent consideration as short-term liabilities in our consolidated balance sheet as of March 31, 2018 . The fair value of the contingent milestone payments payable by us to the former stockholders of Lumara Health was determined based on our probability-adjusted discounted cash flows estimated to be realized from the net sales of Makena from December 1, 2014 through December 31, 2019. As of March 31, 2018 , the total potential undiscounted milestone payment amount we could pay in connection with the Lumara Health acquisition was $200.0 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 14% . As of March 31, 2018 , we estimated that the undiscounted royalty amounts we could pay under the MuGard License Agreement, based on current projections, may range from approximately $2.0 million to $6.0 million over the remainder of the ten year period, which commenced on June 6, 2013, the acquisition date, which is our best estimate of the period over which we expect the majority of the asset’s cash flows to be derived. We believe the estimated fair values of Lumara Health and the MuGard Rights are based on reasonable assumptions; however; our actual results may vary significantly from the estimated results. Debt We estimate the fair value of our debt obligations by using quoted market prices obtained from third-party pricing services, which is classified as a Level 2 input. As of March 31, 2018 , the estimated fair value of our 2023 Senior Notes, 2022 Convertible Notes and 2019 Convertible Notes (each as defined below) was $470.3 million , $323.3 million and $20.7 million , respectively, which differed from their carrying values. See Note Q, “ Debt ” for additional information on our debt obligations. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Our major classes of inventories were as follows as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 December 31, 2017 Raw materials $ 12,578 $ 12,418 Work in process 5,417 4,146 Finished goods 13,603 20,792 Total inventories $ 31,598 $ 37,356 Total inventories decreased by $5.8 million from December 31, 2017 primarily due to sales of the Makena intramuscular product and Feraheme finished goods. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 December 31, 2017 Land $ 700 $ 700 Land improvements 300 300 Building and improvements 9,552 9,552 Computer equipment and software 14,072 14,073 Furniture and fixtures 2,513 2,512 Leasehold improvements 4,959 4,959 Laboratory and production equipment 13,286 8,030 Construction in progress 1,025 5,360 46,407 45,486 Less: accumulated depreciation (20,486 ) (19,490 ) Property, plant and equipment, net $ 25,921 $ 25,996 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill Our $639.5 million goodwill balance consisted of $198.1 million of goodwill acquired through the November 2014 Lumara Health acquisition and $441.4 million acquired through the August 2015 CBR acquisition. As of March 31, 2018 , we had no accumulated impairment losses related to goodwill. We test goodwill at the reporting unit level for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Events that could indicate impairment and trigger an interim impairment assessment include, but are not limited to, an adverse change in current economic and market conditions, including a significant prolonged decline in market capitalization, a significant adverse change in legal factors, unexpected adverse business conditions, and an adverse action or assessment by a regulator. Our annual impairment test date is October 31. We have determined that we operate in a single operating segment and have a single reporting unit. Intangible Assets As of March 31, 2018 and December 31, 2017 , our identifiable intangible assets consisted of the following (in thousands): March 31, 2018 December 31, 2017 Accumulated Cumulative Accumulated Cumulative Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 306,242 $ 319,246 $ 171,612 $ 797,100 $ 255,754 $ 319,246 $ 222,100 CBR customer relationships 297,000 33,209 — 263,791 297,000 29,309 — 267,691 Makena auto-injector developed technology 79,100 188 — 78,912 — — — — Intrarosa developed technology 77,655 5,064 — 72,591 77,655 3,376 — 74,279 1,250,855 344,703 319,246 586,906 1,171,755 288,439 319,246 564,070 Indefinite-lived intangible assets: Makena IPR&D — — — — 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 $ 344,703 $ 322,946 $ 648,206 $ 1,315,855 $ 288,439 $ 322,946 $ 704,470 During the first quarter of 2018, following the FDA approval of the Makena auto-injector, we reclassified the Makena IPR&D as the Makena auto-injector developed technology, and placed it into service. Amortization of the Makena auto-injector developed technology, is being recognized on a straight-line basis over 8.8 years . As of March 31, 2018 , the weighted average remaining amortization period for our finite-lived intangible assets was approximately 11.7 years. Total amortization expense for the three months ended March 31, 2018 and 2017 was $56.3 million and $24.8 million , respectively. Amortization expense for the Makena base technology, Makena auto-injector developed technology, and Intrarosa developed technology is recorded in cost of product sales in our condensed consolidated statements of operations. Amortization expense for the CBR related intangible assets is recorded in selling, general and administrative expenses in our condensed consolidated statements of operations. We expect amortization expense related to our finite-lived intangible assets to be as follows (in thousands): Estimated Amortization Period Expense Remainder of Year Ending December 31, 2018 $ 139,239 Year Ending December 31, 2019 48,552 Year Ending December 31, 2020 40,930 Year Ending December 31, 2021 40,718 Year Ending December 31, 2022 40,663 Thereafter 276,804 Total $ 586,906 |
Current and Long- Term Liabilit
Current and Long- Term Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Current and Long-Term Liabilities | CURRENT AND LONG-TERM LIABILITIES Accrued Expenses Accrued expenses consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 December 31, 2017 Commercial rebates, fees and returns $ 114,884 $ 102,357 Professional, license, and other fees and expenses 29,033 28,692 Salaries, bonuses, and other compensation 14,034 19,099 Interest expense 6,639 13,525 Bremelanotide milestone payment 20,000 — Intrarosa-related license fees 10,000 10,000 Accrued research and development 4,481 1,817 Total accrued expenses $ 199,071 $ 175,490 Deferred Revenues Our deferred revenue balances as of March 31, 2018 and December 31, 2017 of $69.9 million and $66.9 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 | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The following table summarizes our effective tax rate and income tax benefit for the three months ended March 31, 2018 and 2017 (in thousands except for percentages): Three Months Ended March 31, 2018 2017 Effective tax rate 10 % 36 % Income tax benefit $ (5,979 ) $ (20,706 ) For the three months ended March 31, 2018 , we recognized an income tax benefit of $6.0 million , representing an effective tax rate of 10% . The difference between the expected 2018 statutory federal tax rate of 21% and the 10% effective tax rate for the three months ended March 31, 2018 was primarily attributable to the impact of the establishment of a valuation allowance related to certain deferred tax assets, the impact of non-deductible stock compensation, and other non-deductible expenses, partially offset by state income taxes and orphan drug tax credits. We have 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. On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted. The 2017 Tax Act included significant changes to the U.S. corporate income tax system, including a reduction of the federal corporate income tax rate from 35% to 21% , effective January 1, 2018. Deferred tax assets and liabilities are measured using enacted rates in effect for the year in which those temporary differences are expected to be recovered or settled. As a result of the reduction in the federal tax rate from 35% to 21% , we revalued our ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $17.6 million tax benefit. We are still assessing the implications of the 2017 Tax Act on both a federal and state level. Any additional impacts will be recorded as they are identified during the measurement period as provided for in accordance with Staff Accounting Bulletin No. 118, which addresses the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. For the three months ended March 31, 2017 , we recognized an income tax benefit of $20.7 million representing an effective tax rate of 36% . The difference between the expected 2017 statutory federal tax rate of 35% and the effective tax rate for the three months ended March 31, 2017 was primarily attributable to the impact of state income taxes and the federal research and development tax credit, partially offset by non-deductible stock compensation and other non-deductible expenses. The primary drivers of the decrease in tax benefit for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017 include a decrease in the federal tax benefit primarily attributable to the decrease in the statutory federal tax rate from 35% to 21% , and an increase in valuation allowance, primarily on tax credits, partially offset by an increase in orphan drug tax credits. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2018 | |
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 months ended March 31, 2018 and 2017 (in thousands): Three Months Ended March 31, 2018 2017 Beginning balance $ (3,908 ) $ (3,838 ) Holding (losses) gains arising during period, net of tax (454 ) 92 Ending balance $ (4,362 ) $ (3,746 ) |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) per Share | 3 Months Ended |
Mar. 31, 2018 | |
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 is computed assuming the impact of the conversion of the 2.5% 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 the two. Our current policy is to settle the principal balance of the Convertible Notes in cash. As such, 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 dilutive effect of the warrants, stock options and RSUs has been calculated using the treasury stock method. The components of basic and diluted net income (loss) per share for the three months ended March 31, 2018 and 2017 were as follows (in thousands, except per share data): Three Months Ended March 31, 2018 2017 Net loss $ (54,242 ) $ (36,560 ) Weighted average common shares outstanding 34,162 34,378 Shares used in calculating dilutive net loss per share 34,162 34,378 Net loss per share: Basic and diluted $ (1.59 ) $ (1.06 ) 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 (loss) income per share because their inclusion would have been anti-dilutive (in thousands): Three Months Ended March 31, 2018 2017 Options to purchase shares of common stock 3,771 2,406 Shares of common stock issuable upon the vesting of RSUs 1,401 775 Warrants 1,008 7,382 2022 Convertible Notes 11,695 — 2019 Convertible Notes 790 7,382 Total 18,665 17,945 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. During the three months ended March 31, 2018 and 2017 , our average common stock price was below the exercise price of the warrants. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity-Based Compensation | EQUITY‑BASED COMPENSATION We currently maintain three equity compensation plans; our Fourth Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Lumara Health 2013 Plan”) and our 2015 Employee Stock Purchase Plan (“2015 ESPP”). All outstanding stock options granted under each of our equity compensation plans other than our 2015 ESPP have an exercise price equal to the closing price of a share of our common stock on the grant date. Stock Options The following table summarizes stock option activity for the three months ended March 31, 2018 : 2007 Equity 2013 Lumara Inducement Plan Equity Plan Grants Total Outstanding at December 31, 2017 2,590,373 125,536 815,450 3,531,359 Granted 451,411 — — 451,411 Exercised (7,782 ) — — (7,782 ) Expired or terminated (160,797 ) (15,436 ) (27,875 ) (204,108 ) Outstanding at March 31, 2018 2,873,205 110,100 787,575 3,770,880 Restricted Stock Units The following table summarizes RSU activity for the three months ended March 31, 2018 : 2007 Equity 2013 Lumara Inducement Plan Equity Plan Grants Total Outstanding at December 31, 2017 966,623 11,611 91,541 1,069,775 Granted 712,781 — — 712,781 Vested (317,638 ) (10,150 ) (15,666 ) (343,454 ) Expired or terminated (38,078 ) (460 ) — (38,538 ) Outstanding at March 31, 2018 1,323,688 1,001 75,875 1,400,564 In March 2018, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 206,250 shares of common stock. These performance-based RSUs will vest, if at all, on March 1, 2021, based on our total shareholder return performance measured against the median total shareholder return of a defined group of companies over a three -year period. The maximum aggregate total fair value of these RSUs is $3.8 million , which is being recognized as expense over a period of three years from the date of grant, net of any estimated and actual forfeitures. Equity-Based Compensation Expense Equity-based compensation expense for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands): Three Months Ended March 31, 2018 2017 Cost of product sales and services $ 347 $ 129 Research and development 720 756 Selling, general and administrative 4,466 4,893 Total equity-based compensation expense 5,533 5,778 Income tax effect (942 ) (1,605 ) After-tax effect of equity-based compensation expense $ 4,591 $ 4,173 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. Under current accounting guidance, 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. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Change in Stockholders’ Equity Total stockholders’ equity decreased by $50.2 million during the three months ended March 31, 2018 . This decrease was primarily driven by the following: • $54.2 million due to the net loss for the three months ended March 31, 2018 ; • $5.5 million increase related to equity-based compensation expense; • $1.1 million increase related to the cumulative effect adjustment to our accumulated deficit from the adoption of ASC 606, net of tax; and • $2.3 million decrease due to the payment of employee tax withholdings related to equity-based compensation. 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 March 31, 2018 , we repurchased and retired a cumulative total of 2,198,010 shares of common stock under this repurchase program for $39.5 million at an average purchase price of $17.97 per share. As of March 31, 2018 , $20.5 million remains available for the repurchase of shares under the program. We did no t repurchase any of our common stock during the first quarter of 2018 . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
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, debt obligations, and other purchase obligations. Purchase Obligations Purchase obligations primarily represent minimum purchase commitments for inventory. As of March 31, 2018 , our minimum purchase commitments totaled $29.9 million . Contingent Consideration Related to Business Combinations In connection with our acquisition of Lumara Health in November 2014, we agreed to pay up to $350.0 million based on the achievement of certain sales milestones, of which $150.0 million has been paid. As of March 31, 2018 , the total potential undiscounted milestone payment amount we could pay in connection with the Lumara Health acquisition was $200.0 million through December 31, 2019. As of March 31, 2018, $50.0 million has been accrued based on our estimates, which are reliant on a number of external factors as well as the exercise of judgment. As we update our analysis in future periods, we may determine that the payment of this milestone is no longer probable, resulting in the reversal of the $50.0 million liability at that time, which could occur in the near-term. Contingent Regulatory and Commercial Milestone Payments In connection with the Endoceutics License Agreement, we are required to pay Endoceutics $10.0 million in connection with 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 vulvar and vaginal atrophy ("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 license agreement we entered into with Palatin in January 2017, 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 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. In July 2015, we entered into an option agreement with Velo Bio, LLC, a privately-held life-sciences company (“Velo”) that granted us an option to acquire the global rights (the “DIF Rights”) to an orphan drug candidate, digoxin immune fab (“DIF”), a poly clonal antibody in clinical development for the treatment of severe preeclampsia in pregnant woman. If we exercise the option to acquire the DIF Rights, 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 . See Note P, “Collaboration, License and Other Strategic Agreements,” for more information on the Velo option. Velo began its Phase 2b/3a clinical study in the second quarter of 2017, and until we exercise our option, no contingent amounts related to this agreement have been recorded in our consolidated financial statements as of March 31, 2018 . In connection with a development and license agreement (the “Antares Agreement”) with Antares Pharma, Inc. (“Antares”), we are required to pay royalties to Antares on net sales of the auto-injection system for use with hydroxyprogesterone caproate (the “Makena auto-injector”) commencing on the launch of the Makena auto-injector in a particular country until the Makena auto-injector is no longer sold or offered for sale in such country (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 also entitled to sales-based milestone payments. 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 In March 2016, we initiated a patent infringement suit 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. On March 23, 2018, we and Sandoz entered a stipulation of dismissal in the United States District Court for the District of New Jersey pursuant to a settlement agreement that dismissed and resolved this action. According to the terms of the settlement, if Sandoz receives FDA approval by a certain date, Sandoz may launch its generic version of Feraheme on July 15, 2021, or earlier under certain circumstances customary for settlement agreements of this nature. Sandoz will pay a royalty on the sales of its generic version of Feraheme to us until the expiration of the last Feraheme patent listed in the Orange Book. If Sandoz is unable to secure approval by such date, Sandoz will launch an authorized generic version of Feraheme on July 15, 2022 for up to twelve months. Sandoz’s right to distribute, and our obligation to supply, the authorized generic product shall be in accordance with standard commercial terms and profit splits. 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. We have provided the FTC with a response providing a brief overview of the DQSA for context, which we believe was helpful, 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 we have had no further interactions with the FTC on this matter since we provided our response to the FTC in August 2015. On or about April 6, 2016, we received Notice of a Lawsuit and Request to Waive Service of a Summons in a case entitled Plumbers’ Local Union No. 690 Health Plan v. Actavis Group et. al. (“Plumbers’ Union”), which was filed in the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania and, after removal to federal court, is now pending in the United States District Court for the Eastern District of Pennsylvania (Civ. Action No. 16-65-AB). Thereafter, we were also made aware of a related complaint entitled Delaware Valley Health Care Coalition v. Actavis Group et. al. (“Delaware Valley”), which was filed with the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania District Court of Pennsylvania (Case ID: 160200806). The complaints name K-V Pharmaceutical Company (“KV”) (Lumara Health’s predecessor company), certain of its successor entities, subsidiaries and affiliate entities (the “Subsidiaries”), along with a number of other pharmaceutical companies. We acquired Lumara Health in November 2014, a year after KV emerged from bankruptcy protection, at which time it, along with its then existing subsidiaries, became our wholly-owned subsidiary. We have not been served with process or waived service of summons in either case. The actions are being brought alleging unfair and deceptive trade practices with regard to certain pricing practices that allegedly resulted in certain payers overpaying for certain of KV’s generic products. On July 21, 2016, the Plaintiff in the Plumbers’ Union case dismissed KV with prejudice to refiling and on October 6, 2016, all claims against the Subsidiaries were dismissed without prejudice. We are in discussions with Plaintiff’s counsel to similarly dismiss all claims in the Delaware Valley case. Because the Delaware Valley case is in the earliest stages and we have not been served with process in this case, we are currently unable to predict the outcome or reasonably estimate the range of potential loss associated with this matter, if any. We may periodically become subject to other legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which we are focused. Other than the above actions, we are not aware of any material claims against us as of March 31, 2018 . |
Collaboration, License and Othe
Collaboration, License and Other Strategic Agreements | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Collaboration, License and Other Strategic Agreements | COLLABORATION, LICENSE AND OTHER STRATEGIC AGREEMENTS Our commercial strategy includes expanding our portfolio through the in-license or acquisition of additional pharmaceutical products or companies, including revenue-generating commercial products and late-state development assets. As of March 31, 2018 , 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 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 ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . 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 were 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 connection with the first anniversary of the closing. The anniversary payment is reflected in accrued expenses at March 31, 2018 . 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. In the third quarter of 2017, Endoceutics initiated a clinical study to support an application for U.S. regulatory approval for Intrarosa for the treatment of hypoactive sexual desire disorder (“HSDD”) in post-menopausal women. 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 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, 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, if approved, FSD in the U.S. Endoceutics has the right to directly conduct additional commercialization activities for Intrarosa for the treatment of VVA and FSD in the U.S. and has the right to conduct activities related generally to the field of intracrinology, in each case, subject to our review and approval and our right to withhold approval in certain instances. Each party's commercialization activities and budget are described in a commercialization plan, which is updated annually. In April 2017, we entered into an exclusive commercial supply agreement with Endoceutics pursuant to which Endoceutics, itself or through affiliates or contract manufacturers, agreed to manufacture and supply Intrarosa to us (the “Endoceutics 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 Endoceutics Supply Agreement). Under the Endoceutics Supply Agreement, Endoceutics has agreed to maintain at all times a second source supplier for the manufacture of DHEA and the drug product and to identify, validate and transfer manufacturing intellectual property to the second source supplier by April 2019. The Endoceutics 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 the Palatin License Agreement with 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 and develop (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 ASU No. 2017-01. Under the terms of the Palatin License Agreement, in February 2017 we paid Palatin $60.0 million as a one-time upfront payment subject to agreed-upon deductions reimbursed Palatin approximately $25.0 million for 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. During 2017, we 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 March 2018, we submitted an NDA to the FDA for bremelanotide, the regulatory acceptance of which will trigger a milestone payment (discussed below), which we recorded within accrued liabilities and IPR&D expense at March 31, 2018. 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 in North America 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: (a) we must license additional third-party intellectual property in order to develop, manufacture or commercialize a Bremelanotide Product or (b) 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, a privately held life-sciences company that granted us an option to acquire the rights to an orphan drug candidate, 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 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 Through our acquisition of Lumara Health, we are party to a development and license agreement with Antares (the “Antares License Agreement”), which 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. Under the Antares License 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 in a particular country until the Makena auto-injector is no longer sold or offered for sale in such country or the Antares License Agreement is terminated (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. In addition, we are required to pay Antares sales milestone payments upon the achievement of certain annual net sales. The Antares License Agreement terminates at the end of the Antares Royalty Term, but is subject to early termination by us for convenience and by either party upon an uncured breach by or bankruptcy of the other party. In March 2018, the Antares License Agreement was amended to, among other things, transfer the agreement to AMAG from our subsidiary, amend certain confidentiality provisions, and to provide for co-termination with the Antares Manufacturing Agreement (described below). In March 2018, we also entered into a Manufacturing Agreement with Antares (the “Antares Manufacturing Agreement”) to set forth the terms and conditions pursuant to which Antares agreed to sell to us on an exclusive basis, and we agreed to purchase, the fully packaged Makena auto-injector for commercial distribution. 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 Manufacturing Agreement terminates at the expiration or earlier termination of the Antares License Agreement, but is subject to early termination by us for certain supply failure situations, and by either party upon an uncured breach by or bankruptcy of the other party or our permanent cessation of commercialization of the Makena auto-injector for efficacy or safety reasons. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Our outstanding debt obligations as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands): March 31, 2018 December 31, 2017 2023 Senior Notes $ 466,595 $ 466,291 2022 Convertible Notes 251,508 248,194 2019 Convertible Notes 20,460 20,198 Total long-term debt 738,563 734,683 Less: current maturities 20,460 — Long-term debt, net of current maturities $ 718,103 $ 734,683 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. In October 2017, we repurchased $25.0 million of the 2023 Senior Notes in a privately negotiated transaction, resulting in a loss on extinguishment of debt of $1.1 million . At March 31, 2018 , the principal amount of the outstanding borrowings was $475.0 million and the carrying value of the outstanding borrowings, net of issuance costs and other lender fees and expenses, was $466.6 million . 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 beginning 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. Convertible Notes The outstanding balances of our Convertible Notes as of March 31, 2018 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 68,492 957 69,449 Net carrying amount $ 251,508 $ 20,460 $ 271,968 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 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 In the second quarter of 2017, we issued $320.0 million aggregate principal amount of convertible senior notes due in 2022 (the “2022 Convertible Notes”) and received net proceeds of $310.4 million from the sale of the 2022 Convertible Notes, after deducting fees and expenses of $9.6 million . The approximate $9.6 million of debt issuance costs primarily consisted of underwriting, legal and other professional fees, and we 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 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), 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. The 2022 Convertible Notes were not convertible as of March 31, 2018 . 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 March 31, 2018 . As of March 31, 2018 , 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 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. The 2019 Convertible Notes were not convertible as of March 31, 2018 . 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 March 31, 2018 . As of March 31, 2018 , 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 months ended March 31, 2018 and 2017 (in thousands): Three Months Ended March 31, 2018 2017 Contractual interest expense $ 2,734 $ 1,250 Amortization of debt issuance costs 339 274 Amortization of debt discount 3,237 1,929 Total interest expense $ 6,310 $ 3,453 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 March 31, 2018 , 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 equal to the approximate 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 underlying 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 March 31, 2018 , 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. Future Payments Future annual principal payments on our long-term debt as of March 31, 2018 were as follows (in thousands): Period Future Annual Principal Payments Remainder of Year Ending December 31, 2018 $ — Year Ending December 31, 2019 21,417 Year Ending December 31, 2020 — Year Ending December 31, 2021 — Year Ending December 31, 2022 320,000 Thereafter 475,000 Total $ 816,417 |
Recently Issued and Proposed Ac
Recently Issued and Proposed Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
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 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 on our condensed consolidated financial statements. 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 have formed a project team to assess the impact of adopting ASU 2016-02 on our condensed consolidated financial statements. 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. |
Recently Adopted Accounting Pro
Recently Adopted Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Adopted Accounting Pronouncements | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted the standard on January 1, 2018 using the retrospective approach and modified the presentation of our condensed condensed statements of cash flows in accordance with the standard. The adoption of ASU 2016-18 did not have a material impact on our condensed consolidated financial statements. 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. We adopted the standard on January 1, 2018 using the retrospective approach. The adoption of ASU 2016-15 did not have a material impact on our condensed consolidated financial statements. 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. We adopted the standard on January 1, 2018 using the modified retrospective approach. The adoption of ASU 2016-01 did not have a material impact on our condensed consolidated financial statements. |
Basis of Presentation and Sum26
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2017 (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; marketable securities; 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, inclusive of valuation allowances; and equity-based compensation expense. Actual results could differ materially from those estimates. |
Restricted Cash | Restricted Cash As of March 31, 2018 and December 31, 2017, we classified $0.7 million of our cash as restricted cash, a non-current asset on the balance sheet. This amount represented the security deposit delivered to the landlord of our Waltham, Massachusetts headquarters in the form of an irrevocable letter of credit. |
Concentrations and Significant Customer Information | Our net accounts receivable primarily represent amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies and amounts due for CBR Services sold to consumers who pay for the services directly. 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, marketable securities, 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. We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities) and finished drug product as well as for drug substance and final packaging services for Intrarosa. 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. |
Recently Issued and Adopted Accounting Pronouncements | On January 1, 2018, we adopted ASC 606 applying the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for prior periods. We recorded a net increase to opening stockholders' equity of $1.1 million as of January 1, 2018, reflecting the cumulative impact of adopting ASC 606 primarily related to the capitalization of incremental direct costs of obtaining a contract, which consisted of sales commissions related to the CBR Services. There was no impact to revenue for the three months ended March 31, 2018. 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 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 on our condensed consolidated financial statements. 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 have formed a project team to assess the impact of adopting ASU 2016-02 on our condensed consolidated financial statements. 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. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted the standard on January 1, 2018 using the retrospective approach and modified the presentation of our condensed condensed statements of cash flows in accordance with the standard. The adoption of ASU 2016-18 did not have a material impact on our condensed consolidated financial statements. 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. We adopted the standard on January 1, 2018 using the retrospective approach. The adoption of ASU 2016-15 did not have a material impact on our condensed consolidated financial statements. 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. We adopted the standard on January 1, 2018 using the modified retrospective approach. The adoption of ASU 2016-01 did not have a material impact on our condensed consolidated financial statements. |
Revenue Recognition | Performance Obligations At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. We determined that the following distinct goods and services represent separate performance obligations: • Supply of Makena product • Supply of Feraheme product • Supply of Intrarosa product • CBR collection and processing services • CBR storage services Product Revenue For performance obligations related to products (i.e. Makena, Feraheme and Intrarosa), we principally sell our products to wholesalers, specialty distributors, specialty pharmacies and other customers (collectively, “Customers”), who purchase products directly from us. Our Customers subsequently resell the products to healthcare providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payers that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products. For the majority of our Customers, we transfer control at the point in time when the goods are delivered. In instances when we perform shipping and handling activities, these are considered fulfillment activities, and accordingly, the costs are accrued when the related revenue is recognized. Taxes collected from Customers and remitted to governmental authorities are excluded from revenues. Variable Consideration Under ASC 606, we are required to make estimates of the net sales price, including estimates of variable consideration (such as rebates, chargebacks, discounts, co-pay assistance and other deductions), and recognize the estimated amount as revenue, when we transfer control of the product to our customers. Variable consideration must be determined using either an “expected value” or a “most likely amount” method. We record product revenues net of certain allowances and accruals in our condensed consolidated statements of operations. Product sales allowances and accruals are primarily comprised of both direct and indirect fees, discounts and rebates and provisions for estimated product returns. Direct fees, discounts and rebates are contractual fees and price adjustments payable to Customers that purchase products directly from us. Indirect fees, discounts and rebates are contractual price adjustments payable to healthcare providers and organizations, such as certain physicians, clinics, hospitals, group purchasing organizations (“GPOs”), and dialysis organizations that typically do not purchase products directly from us but rather from wholesalers and specialty distributors. Consideration payable to a Customer, or other parties that purchase goods from the Customer, are considered to be a reduction of the transaction price, and therefore, of revenue. Product sales allowances and accruals are based on definitive contractual agreements or legal requirements (such as Medicaid laws and regulations) related to the purchase and/or utilization of the product by these entities and are recorded in the same period that the related revenue is recognized. We use the expected value method for estimating variable consideration. We estimate product sales allowances and accruals using either historical, actual and/or other data, including estimated patient usage, applicable contractual rebate rates, contract performance by the benefit providers, other current contractual and statutory requirements, historical market data based upon experience of our products and other products similar to them, specific known market events and trends such as competitive pricing and new product introductions, current and forecasted Customer buying patterns and inventory levels, and the shelf life of our products. As part of this evaluation, we also review changes to federal and other legislation, changes to rebate contracts, changes in the level of discounts, and changes in product sales trends. Although allowances and accruals are recorded at the time of product sale, rebates are typically paid out in arrears, one to three months after the sale. The estimate of variable consideration, which is included in the transaction price, may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved in a future period. Estimating variable consideration and the related constraint requires the use of significant management judgment and actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. No amounts were constrained as of March 31, 2018 . Discounts We typically offer a 2% prompt payment discount to certain customers as an incentive to remit payment in accordance with the stated terms of the invoice, generally 30 days . Because we anticipate that those customers who are offered this discount will take advantage of the discount, 100% of the prompt payment discount at the time of sale are accrued, based on the gross amount of each invoice. We adjust the accrual quarterly to reflect actual experience. Chargebacks Chargeback reserves represent the estimated obligations resulting from the difference between the prices at which we sell our products to wholesalers and the sales price ultimately paid to wholesalers under fixed price contracts by third-party payers, including governmental agencies. The chargeback estimates are determined based on actual product sales data and forecasted customer buying patterns. Actual chargeback amounts are determined at the time of resale to the qualified healthcare provider, and we generally issue credits for such amounts within several weeks of receiving notification from the wholesaler. Estimated chargeback amounts are recorded at the time of sale and adjusted quarterly to reflect actual experience. Distributor/Wholesaler and Group Purchasing Organization Fees Fees under the arrangements with distributors and wholesalers are usually based upon units of product purchased during the prior month or quarter and are usually paid by us within several weeks of the receipt of an invoice from the wholesaler or distributor, as the case may be. Fees under the arrangements with GPOs are usually based upon member purchases during the prior quarter and are generally billed by the GPO within 30 days after period end. In accordance with ASC 606, since the consideration given to the Customer is not for a distinct good or service, the consideration is a reduction of the transaction price of the vendor’s products or services. We have included these fees in contractual adjustments in the table above. We generally pay such amounts within several weeks of the receipt of an invoice from the distributor, wholesaler or GPO. Accordingly, we accrue the estimated fee due at the time of sale, based on the contracted price invoiced to the Customer. We adjust the accrual quarterly to reflect actual experience. Product Returns Consistent with industry practice, we generally offer wholesalers, specialty distributors and other customers a limited right to return our products based on the product’s expiration date. Currently the expiration dates for Feraheme, Makena and Intrarosa have a range of three to five years . Product returns are estimated based on the historical return patterns and known or expected changes in the marketplace. We track actual returns by individual production lots. Returns on lots eligible for credits under our returned goods policy are monitored and compared with historical return trends and rates. We expect that wholesalers and healthcare providers will not stock significant inventory due to the cost of the product, the expense to store our products, and/or that our products are readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available and for known or expected changes in the marketplace. We did not significantly adjust our reserve for product returns during the three months ended March 31, 2018 . To date, our product returns have been relatively limited; however, returns experience may change over time. We may be required to make future adjustments to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant. Sales Rebates We contract with various private payer organizations, primarily pharmacy benefit managers, for the payment of rebates with respect to utilization of our products. We determine our estimates for rebates, if applicable, based on actual product sales data and our historical product claims experience. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the provider. We regularly assess our reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant. Governmental Rebates Governmental rebate reserves relate to our reimbursement arrangements with state Medicaid programs. We determine our estimates for Medicaid rebates, if applicable, based on actual product sales data and our historical product claims experience. In estimating these reserves, we provide for a Medicaid rebate associated with both those expected instances where Medicaid will act as the primary insurer as well as in those instances where we expect Medicaid will act as the secondary insurer. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the Medicaid or provider entity. We regularly assess our Medicaid reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current Medicaid accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant. Other Incentives Other incentives which we offer include voluntary patient assistance programs, such as co-pay assistance programs, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue. Service Revenue The CBR Services include the collection, processing, and storage of both umbilical cord blood and cord tissue. We market and sell the CBR Services directly to consumers at the prices that are known at contract inception. The discounts offered to the customer are known at the time of enrollment and thereby do not result in variable consideration. CBR Services include the following two performance obligations: collection and processing and storage services, further described below. Collection and Processing Services Enrollment services, including the provision of a collection kit and cord blood and cord tissue unit processing, are delivered at the beginning of the relationship. The revenue for this performance obligation is recognized at the point in time after the collection and successful processing of the cord blood and cord tissue. When purchasing collection and processing services, the customer can (a) pay for the service upfront, when the service is provided; (b) finance the processing fee with us over six or twelve months; or (c) finance the processing fee through a third-party provider, and therefore not finance the arrangement with us. We elected to apply the practical expedient and therefore we have not adjusted the promised consideration for the effects of financing for either the six or twelve month payment plans. Storage Services Payment options for storage services of newborn cord blood and cord tissue units include either (a) an annual fee or (b) a prepayment of 18 years or for the lifetime of the newborn donor (the “lifetime option”). The revenue for this performance obligation is recognized ratably over the storage period on a straight-line basis, which is consistent with how the services are provided. 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. We determined that the 18 year and lifetime prepayment options do not include a significant financing component as the payment terms were structured primarily for reasons other than for the provision of financing and to maximize profitability. Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps: a. Identify the contract(s) with a customer; b. Identify the performance obligations in the contract; c. Determine the transaction price; d. Allocate the transaction price to the performance obligations in the contract; and e. Recognize revenue when (or as) the performance obligations are satisfied. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, if the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred contract acquisition costs, which will be amortized along with the associated revenue. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. Allocation of Transaction Price We have selected an adjusted market assessment approach to estimate the stand-alone selling prices of the collection and processing services and storage services and concluded that the published list price is the price that a customer in that market would be willing to pay for those goods or services. We also considered the fact that all customers are charged the list prices current at the time of their enrollment where we have separately stated list prices for processing and storage. The discounts provided to the customers at the time of entering into the contract are allocated proportionally to both performance obligations (i.e. processing and storage). Cost to Obtain a Contract We pay commissions to internal sales representatives as compensation for obtaining contract enrollments for the CBR Services. We capitalize commissions that are incremental as a result of obtaining customer contracts and costs incurred to fulfill a customer contract if those costs are not within the scope of another topic within the accounting literature and meet the specified criteria. These costs are deferred in other current or long-term assets and are expensed to selling, general and administrative expenses as we satisfy the performance obligations by transferring the service to the customer. These assets will be periodically assessed for impairment. |
Basis of Presentation and Sum27
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of customers representing greater than 10% of accounts receivable balances | The following table sets forth customers who represented 10% or more of our total revenues for the three months ended March 31, 2018 and 2017 : Three Months Ended March 31, 2018 2017 AmerisourceBergen Drug Corporation 22 % 22 % McKesson Corporation 22 % 14 % Customers which represented greater than 10% of our accounts receivable balances as of March 31, 2018 and December 31, 2017 were as follows: March 31, 2018 December 31, 2017 McKesson Corporation 26 % 22 % AmerisourceBergen Drug Corporation 24 % 27 % |
Schedule of effect of new accounting pronouncements | As a result of applying the modified retrospective transition method to adopt ASC 606, the following financial statement line items for the three months ended March 31, 2018 were affected (in thousands): Condensed Consolidated Balance Sheet March 31, 2018 As Reported Balances without adoption of Impact of Adoption Assets: Prepaid and other current assets $ 16,345 $ 16,248 $ 97 Other long-term assets $ 2,238 $ 538 $ 1,700 Total assets $ 1,834,950 $ 1,833,153 $ 1,797 Liabilities and stockholders' equity: Deferred tax liabilities $ 17,497 $ 17,156 $ 341 Accumulated deficit $ (530,921 ) $ (532,377 ) $ 1,456 Total liabilities and stockholders' equity $ 1,834,950 $ 1,833,153 $ 1,797 Condensed Consolidated Statement of Operations March 31, 2018 As Reported Balances without adoption of ASC 606 Impact of Adoption Costs and expenses: Selling, general and administrative expenses $ 91,050 $ 91,368 $ (318 ) Net loss $ (54,242 ) $ (54,560 ) $ 318 Condensed Consolidated Statement of Cash Flows March 31, 2018 As Reported Balances without adoption of ASC 606 Impact of Adoption Operating activities: Net loss $ (54,242 ) $ (54,560 ) $ 318 Changes in operating assets and liabilities: Prepaid and other current assets $ (3,720 ) $ (3,702 ) $ (18 ) Other assets and liabilities $ 215 $ 515 $ (300 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated revenue | The following table provides information about disaggregated revenue by products and services (in thousands): Three Months Ended March 31, 2018 2017 Product sales, net Makena $ 89,983 $ 86,455 Feraheme 25,135 25,922 Intrarosa 2,165 — MuGard 65 140 Total $ 117,348 $ 112,517 Service revenues, net $ 28,969 $ 26,931 Total gross product sales were offset by product sales allowances and accruals for the three months ended March 31, 2018 and 2017 as follows (in thousands, except for percentages): Three Months Ended March 31, 2018 Percent of 2017 Percent of Gross product sales $ 239,870 $ 206,724 Provision for product sales allowances and accruals: Contractual adjustments 86,144 36 % 69,829 34 % Governmental rebates 36,378 15 % 24,378 12 % Total 122,522 51 % 94,207 46 % Product sales, net $ 117,348 $ 112,517 |
Product revenue allowance and accrual activity | The following table summarizes the product revenue allowance and accrual activity for the three months ended March 31, 2018 (in thousands): Contractual Governmental Adjustments Rebates Total Balance at December 31, 2017 $ 62,164 $ 50,598 $ 112,762 Provisions related to current period sales 85,308 31,028 116,336 Adjustments related to prior period sales 836 5,350 6,186 Payments/returns relating to current period sales (44,633 ) — (44,633 ) Payments/returns relating to prior period sales (39,441 ) (25,149 ) (64,590 ) Balance at March 31, 2018 $ 64,234 $ 61,827 $ 126,061 |
Receivables, assets and liabilities from contracts with customers | The following table provides information about assets and liabilities from contracts with customers (in thousands): March 31, 2018 At Adoption Short-term contract assets (sales commissions) $ 97 $ 79 Long-term contract assets (sales commissions) $ 1,700 $ 1,400 Short-term contract liabilities (deferred revenue) $ 42,510 $ 42,494 Long-term contract liabilities (deferred revenue) $ 27,398 $ 24,387 The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2018 (in thousands): Balance at January 1, 2018 Additions Deductions Balance at March 31, 2018 Contract assets (sales commissions) $ 1,479 $ 340 $ (22 ) $ 1,797 Contract liabilities (deferred revenue) $ 66,881 $ 21,727 $ (18,700 ) $ 69,908 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of marketable securities | The following is a summary of our marketable securities as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term marketable securities:* Corporate debt securities $ 58,981 $ — $ (215 ) $ 58,766 Certificates of deposit 10,150 — — 10,150 U.S. treasury and government agency securities 5,996 — (57 ) 5,939 Commercial paper 5,962 — — 5,962 Total short-term marketable securities $ 81,089 $ — $ (272 ) $ 80,817 Long-term marketable securities:** Corporate debt securities $ 52,408 $ 1 $ (725 ) $ 51,684 U.S. treasury and government agency securities 6,381 — (62 ) 6,319 Total long-term marketable securities 58,789 1 (787 ) 58,003 Total marketable securities $ 139,878 $ 1 $ (1,059 ) $ 138,820 * Represents marketable securities with a remaining maturity of less than one year. ** Represents marketable securities with a remaining maturity of one to three years. December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term marketable securities:* Corporate debt securities $ 57,257 $ — $ (68 ) 57,189 Certificates of deposit 9,151 — — 9,151 U.S. treasury and government agency securities 1,999 — (13 ) 1,986 Commercial paper 1,999 — — 1,999 Total short-term marketable securities $ 70,406 $ — $ (81 ) $ 70,325 Long-term marketable securities:** Corporate debt securities $ 59,282 $ 1 $ (320 ) $ 58,963 U.S. treasury and government agency securities 7,381 — (76 ) 7,305 Total long-term marketable securities 66,663 1 (396 ) 66,268 Total marketable securities $ 137,069 $ 1 $ (477 ) $ 136,593 * Represents marketable securities with a remaining maturity of less than one year. ** Represents marketable securities with a remaining maturity of one to three years. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following tables represent the fair value hierarchy as of March 31, 2018 and December 31, 2017 , for those assets and liabilities that we measure at fair value on a recurring basis (in thousands): Fair Value Measurements at March 31, 2018 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 $ 2,255 $ 2,255 $ — $ — Corporate debt securities 110,450 — 110,450 — U.S. treasury and government agency securities 12,258 — 12,258 — Certificates of deposit 10,150 10,150 — Commercial paper $ 5,962 $ — $ 5,962 $ — Total Assets $ 141,075 $ 2,255 $ 138,820 $ — Liabilities: Contingent consideration - Lumara Health $ 49,797 $ — $ — $ 49,797 Contingent consideration - MuGard 870 — — 870 Total Liabilities $ 50,667 $ — $ — $ 50,667 Fair Value Measurements at December 31, 2017 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents $ 4,591 $ 4,591 $ — $ — Corporate debt securities 116,152 — 116,152 — U.S. treasury and government agency securities 9,291 — 9,291 — Certificates of deposit 9,151 — 9,151 — Commercial paper 1,999 — 1,999 — Total Assets $ 141,184 $ 4,591 $ 136,593 $ — Liabilities: Contingent consideration - Lumara Health $ 49,187 $ — $ — $ 49,187 Contingent consideration - MuGard 898 — — 898 Total Liabilities $ 50,085 $ — $ — $ 50,085 |
Schedule of reconciliation of contingent consideration obligations | The following table presents a reconciliation of contingent consideration obligations related to the acquisition of Lumara Health (related to our Makena product) and the MuGard Rights (in thousands): Balance as of December 31, 2017 $ 50,085 Payments made (44 ) Adjustments to fair value of contingent consideration 626 Balance as of March 31, 2018 $ 50,667 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of major classes of inventories | Our major classes of inventories were as follows as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 December 31, 2017 Raw materials $ 12,578 $ 12,418 Work in process 5,417 4,146 Finished goods 13,603 20,792 Total inventories $ 31,598 $ 37,356 |
Property, Plant and Equipment32
Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment, net | Property, plant and equipment, net consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 December 31, 2017 Land $ 700 $ 700 Land improvements 300 300 Building and improvements 9,552 9,552 Computer equipment and software 14,072 14,073 Furniture and fixtures 2,513 2,512 Leasehold improvements 4,959 4,959 Laboratory and production equipment 13,286 8,030 Construction in progress 1,025 5,360 46,407 45,486 Less: accumulated depreciation (20,486 ) (19,490 ) Property, plant and equipment, net $ 25,921 $ 25,996 |
Goodwill and Intangible Asset33
Goodwill and Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | As of March 31, 2018 and December 31, 2017 , our identifiable intangible assets consisted of the following (in thousands): March 31, 2018 December 31, 2017 Accumulated Cumulative Accumulated Cumulative Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 306,242 $ 319,246 $ 171,612 $ 797,100 $ 255,754 $ 319,246 $ 222,100 CBR customer relationships 297,000 33,209 — 263,791 297,000 29,309 — 267,691 Makena auto-injector developed technology 79,100 188 — 78,912 — — — — Intrarosa developed technology 77,655 5,064 — 72,591 77,655 3,376 — 74,279 1,250,855 344,703 319,246 586,906 1,171,755 288,439 319,246 564,070 Indefinite-lived intangible assets: Makena IPR&D — — — — 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 $ 344,703 $ 322,946 $ 648,206 $ 1,315,855 $ 288,439 $ 322,946 $ 704,470 |
Schedule of indefinite-lived intangible assets | As of March 31, 2018 and December 31, 2017 , our identifiable intangible assets consisted of the following (in thousands): March 31, 2018 December 31, 2017 Accumulated Cumulative Accumulated Cumulative Cost Amortization Impairments Net Cost Amortization Impairments Net Amortizable intangible assets: Makena base technology $ 797,100 $ 306,242 $ 319,246 $ 171,612 $ 797,100 $ 255,754 $ 319,246 $ 222,100 CBR customer relationships 297,000 33,209 — 263,791 297,000 29,309 — 267,691 Makena auto-injector developed technology 79,100 188 — 78,912 — — — — Intrarosa developed technology 77,655 5,064 — 72,591 77,655 3,376 — 74,279 1,250,855 344,703 319,246 586,906 1,171,755 288,439 319,246 564,070 Indefinite-lived intangible assets: Makena IPR&D — — — — 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 $ 344,703 $ 322,946 $ 648,206 $ 1,315,855 $ 288,439 $ 322,946 $ 704,470 |
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, 2018 $ 139,239 Year Ending December 31, 2019 48,552 Year Ending December 31, 2020 40,930 Year Ending December 31, 2021 40,718 Year Ending December 31, 2022 40,663 Thereafter 276,804 Total $ 586,906 |
Current and Long- Term Liabil34
Current and Long- Term Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands): March 31, 2018 December 31, 2017 Commercial rebates, fees and returns $ 114,884 $ 102,357 Professional, license, and other fees and expenses 29,033 28,692 Salaries, bonuses, and other compensation 14,034 19,099 Interest expense 6,639 13,525 Bremelanotide milestone payment 20,000 — Intrarosa-related license fees 10,000 10,000 Accrued research and development 4,481 1,817 Total accrued expenses $ 199,071 $ 175,490 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 for the three months ended March 31, 2018 and 2017 (in thousands except for percentages): Three Months Ended March 31, 2018 2017 Effective tax rate 10 % 36 % Income tax benefit $ (5,979 ) $ (20,706 ) |
Accumulated Other Comprehensi36
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 months ended March 31, 2018 and 2017 (in thousands): Three Months Ended March 31, 2018 2017 Beginning balance $ (3,908 ) $ (3,838 ) Holding (losses) gains arising during period, net of tax (454 ) 92 Ending balance $ (4,362 ) $ (3,746 ) |
Basic and Diluted Net Income 37
Basic and Diluted Net Income (Loss) per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 months ended March 31, 2018 and 2017 were as follows (in thousands, except per share data): Three Months Ended March 31, 2018 2017 Net loss $ (54,242 ) $ (36,560 ) Weighted average common shares outstanding 34,162 34,378 Shares used in calculating dilutive net loss per share 34,162 34,378 Net loss per share: Basic and diluted $ (1.59 ) $ (1.06 ) |
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 (loss) income per share because their inclusion would have been anti-dilutive (in thousands): Three Months Ended March 31, 2018 2017 Options to purchase shares of common stock 3,771 2,406 Shares of common stock issuable upon the vesting of RSUs 1,401 775 Warrants 1,008 7,382 2022 Convertible Notes 11,695 — 2019 Convertible Notes 790 7,382 Total 18,665 17,945 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of details regarding stock option activity | The following table summarizes stock option activity for the three months ended March 31, 2018 : 2007 Equity 2013 Lumara Inducement Plan Equity Plan Grants Total Outstanding at December 31, 2017 2,590,373 125,536 815,450 3,531,359 Granted 451,411 — — 451,411 Exercised (7,782 ) — — (7,782 ) Expired or terminated (160,797 ) (15,436 ) (27,875 ) (204,108 ) Outstanding at March 31, 2018 2,873,205 110,100 787,575 3,770,880 |
Summary of details regarding restricted stock activity | The following table summarizes RSU activity for the three months ended March 31, 2018 : 2007 Equity 2013 Lumara Inducement Plan Equity Plan Grants Total Outstanding at December 31, 2017 966,623 11,611 91,541 1,069,775 Granted 712,781 — — 712,781 Vested (317,638 ) (10,150 ) (15,666 ) (343,454 ) Expired or terminated (38,078 ) (460 ) — (38,538 ) Outstanding at March 31, 2018 1,323,688 1,001 75,875 1,400,564 |
Schedule of equity-based compensation expense | Equity-based compensation expense for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands): Three Months Ended March 31, 2018 2017 Cost of product sales and services $ 347 $ 129 Research and development 720 756 Selling, general and administrative 4,466 4,893 Total equity-based compensation expense 5,533 5,778 Income tax effect (942 ) (1,605 ) After-tax effect of equity-based compensation expense $ 4,591 $ 4,173 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt obligations | Our outstanding debt obligations as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands): March 31, 2018 December 31, 2017 2023 Senior Notes $ 466,595 $ 466,291 2022 Convertible Notes 251,508 248,194 2019 Convertible Notes 20,460 20,198 Total long-term debt 738,563 734,683 Less: current maturities 20,460 — Long-term debt, net of current maturities $ 718,103 $ 734,683 |
Schedule of outstanding convertible debt | The outstanding balances of our Convertible Notes as of March 31, 2018 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 68,492 957 69,449 Net carrying amount $ 251,508 $ 20,460 $ 271,968 Equity Component $ 72,576 $ 9,905 $ 82,481 |
Schedule of total interest expense recognized related to the convertible debt | The following table sets forth total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2018 and 2017 (in thousands): Three Months Ended March 31, 2018 2017 Contractual interest expense $ 2,734 $ 1,250 Amortization of debt issuance costs 339 274 Amortization of debt discount 3,237 1,929 Total interest expense $ 6,310 $ 3,453 |
Schedule of future annual principal payments on long-term debt | Future annual principal payments on our long-term debt as of March 31, 2018 were as follows (in thousands): Period Future Annual Principal Payments Remainder of Year Ending December 31, 2018 $ — Year Ending December 31, 2019 21,417 Year Ending December 31, 2020 — Year Ending December 31, 2021 — Year Ending December 31, 2022 320,000 Thereafter 475,000 Total $ 816,417 |
Basis of Presentation and Sum40
Basis of Presentation and Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Restricted cash | $ 656 | $ 656 |
Basis of Presentation and Sum41
Basis of Presentation and Summary of Significant Accounting Policies - Concentration and Significant Customer Information (Details) - facility | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Sales Revenue, Goods, Net | Customer Concentration Risk | AmerisourceBergen Drug Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk | 22.00% | 22.00% | |
Sales Revenue, Goods, Net | Customer Concentration Risk | McKesson Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk | 22.00% | 14.00% | |
Accounts Receivable | Customer Concentration Risk | AmerisourceBergen Drug Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk | 24.00% | 27.00% | |
Accounts Receivable | Customer Concentration Risk | McKesson Corporation | |||
Concentrations and Significant Customer Information | |||
Concentration risk | 26.00% | 22.00% | |
Feraheme | |||
Concentrations and Significant Customer Information | |||
Number of production facilities | 2 |
Basis of Presentation and Sum42
Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition Impact of ASC 606 (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Capitalized contract acquisition costs | $ 1,500 | |||
Assets: | ||||
Prepaid and other current assets | $ 16,345 | $ 12,304 | ||
Other long-term assets | 2,238 | 762 | ||
Total assets | 1,834,950 | 1,853,236 | ||
Liabilities and stockholders' equity: | ||||
Deferred tax liabilities | 17,497 | 23,927 | ||
Accumulated deficit | (530,921) | (477,817) | ||
Total liabilities and stockholders' equity | 1,834,950 | $ 1,853,236 | ||
Costs and expenses: | ||||
Selling, general and administrative expenses | 91,050 | $ 70,424 | ||
Net loss | (54,242) | (36,560) | ||
Changes in operating assets and liabilities: | ||||
Prepaid and other current assets | (3,720) | 1,523 | ||
Other assets and liabilities | 215 | $ (486) | ||
Balances without adoption of ASC 606 | ||||
Assets: | ||||
Prepaid and other current assets | 16,248 | |||
Other long-term assets | 538 | |||
Total assets | 1,833,153 | |||
Liabilities and stockholders' equity: | ||||
Deferred tax liabilities | 17,156 | |||
Accumulated deficit | (532,377) | |||
Total liabilities and stockholders' equity | 1,833,153 | |||
Costs and expenses: | ||||
Selling, general and administrative expenses | 91,368 | |||
Net loss | (54,560) | |||
Changes in operating assets and liabilities: | ||||
Prepaid and other current assets | (3,702) | |||
Other assets and liabilities | 515 | |||
Accounting Standards Update 2014-09 | Impact of Adoption | ||||
Assets: | ||||
Prepaid and other current assets | 97 | |||
Other long-term assets | 1,700 | |||
Total assets | 1,797 | |||
Liabilities and stockholders' equity: | ||||
Deferred tax liabilities | 341 | |||
Accumulated deficit | 1,456 | |||
Total liabilities and stockholders' equity | 1,797 | |||
Costs and expenses: | ||||
Selling, general and administrative expenses | (318) | |||
Net loss | 318 | |||
Changes in operating assets and liabilities: | ||||
Prepaid and other current assets | (18) | |||
Other assets and liabilities | $ (300) |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Revenue By Major Products and Services (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Makena | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 89,983 | $ 86,455 |
Feraheme | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 25,135 | 25,922 |
Intrarosa | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 2,165 | 0 |
MuGard | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 65 | 140 |
Product Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 117,348 | 112,517 |
Service Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 28,969 | $ 26,931 |
Revenue Recognition - Total Gro
Revenue Recognition - Total Gross Product (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Provision for product sales allowances and accruals: | ||
Contractual adjustments, percent of gross product sales | 36.00% | 34.00% |
Governmental rebates, percent of gross product sales | 15.00% | 12.00% |
Total, percent of gross product sales | 51.00% | 46.00% |
Product Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Gross product sales | $ 239,870 | $ 206,724 |
Provision for product sales allowances and accruals: | ||
Contractual adjustments | 86,144 | 69,829 |
Governmental rebates | 36,378 | 24,378 |
Total | 122,522 | 94,207 |
Product sales, net | $ 117,348 | $ 112,517 |
Revenue Recognition - Product R
Revenue Recognition - Product Revenue Allowance and Accrual Activity (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Contractual Adjustments | |
Balance at December 31, 2017 | $ 62,164 |
Provisions related to current period sales | 85,308 |
Adjustments related to prior period sales | 836 |
Payments/returns relating to current period sales | (44,633) |
Payments/returns relating to prior period sales | (39,441) |
Balance at March 31, 2018 | 64,234 |
Governmental Rebates | |
Balance at December 31, 2017 | 50,598 |
Provisions related to current period sales | 31,028 |
Adjustments related to prior period sales | 5,350 |
Payments/returns relating to current period sales | 0 |
Payments/returns relating to prior period sales | (25,149) |
Balance at March 31, 2018 | 61,827 |
Revenue, Allowance [Roll Forward] | |
Balance at December 31, 2017 | 112,762 |
Provisions related to current period sales | 116,336 |
Adjustments related to prior period sales | 6,186 |
Payments/returns relating to current period sales | (44,633) |
Payments/returns relating to prior period sales | (64,590) |
Balance at March 31, 2018 | $ 126,061 |
Revenue Recognition - Receivabl
Revenue Recognition - Receivables, Assets and Liabilities From Contracts With Customers (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Revenue from Contract with Customer [Abstract] | ||
Short-term contract assets (sales commissions) | $ 97 | $ 79 |
Long-term contract assets (sales commissions) | 1,700 | 1,400 |
Short-term contract liabilities (deferred revenue) | 42,510 | 42,494 |
Long-term contract liabilities (deferred revenue) | $ 27,398 | $ 24,387 |
Revenue Recognition - Changes i
Revenue Recognition - Changes in Contract Assets and Liabilities (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Contract assets (sales commissions) | |
Balance at January 1, 2018 | $ 1,479 |
Additions | 340 |
Deductions | (22) |
Balance at March 31, 2018 | 1,797 |
Contract liabilities (deferred revenue) | |
Balance at January 1, 2018 | 66,881 |
Additions | 21,727 |
Deductions | (18,700) |
Balance at March 31, 2018 | $ 69,908 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unsatisfied performance obligations | $ 42.5 |
Unsatisfied performance obligations, remaining term | 12 months |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract asset, impairment charge | $ 0 | ||
Discount percentage | 2.00% | ||
Standard payment term | 30 days | ||
Percentage of discount accrued at time of sale | 100.00% | ||
GPO billing period | 30 days | ||
Capitalized contract acquisition costs | $ 1,500,000 | ||
Capitalized contract costs, amortization | $ 0 | ||
Capitalized contract costs, impairment loss | $ 0 | ||
Collection and processing services | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Available financing period, option one | 6 months | ||
Available financing period, option two | 12 months | ||
Storage service | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Minimum prepayment term | 18 years | ||
Accounting Standards Update 2014-09 | Retained Earnings | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of new accounting principle | $ 1,100,000 | ||
Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Rebate payment term | 1 month | ||
Product return term | 3 years | ||
Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Rebate payment term | 3 months | ||
Product return term | 5 years |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Short-term marketable securities: | |||
Amortized Cost | $ 81,089,000 | $ 70,406,000 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | (272,000) | (81,000) | |
Estimated Fair Value | 80,817,000 | 70,325,000 | |
Long-term marketable securities: | |||
Amortized Cost | 58,789,000 | 66,663,000 | |
Gross Unrealized Gains | 1,000 | 1,000 | |
Gross Unrealized Losses | (787,000) | (396,000) | |
Estimated Fair Value | 58,003,000 | 66,268,000 | |
Amortized Cost | 139,878,000 | 137,069,000 | |
Gross Unrealized Gains | 1,000 | 1,000 | |
Gross Unrealized Losses | (1,059,000) | (477,000) | |
Estimated Fair Value | 138,820,000 | 136,593,000 | |
Other-than-temporary impairment losses | 0 | $ 0 | |
Corporate debt securities | |||
Short-term marketable securities: | |||
Amortized Cost | 58,981,000 | 57,257,000 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | (215,000) | (68,000) | |
Estimated Fair Value | 58,766,000 | 57,189,000 | |
Long-term marketable securities: | |||
Amortized Cost | 52,408,000 | 59,282,000 | |
Gross Unrealized Gains | 1,000 | 1,000 | |
Gross Unrealized Losses | (725,000) | (320,000) | |
Estimated Fair Value | 51,684,000 | 58,963,000 | |
Certificates of deposit | |||
Short-term marketable securities: | |||
Amortized Cost | 10,150,000 | 9,151,000 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | |
Estimated Fair Value | 10,150,000 | 9,151,000 | |
U.S. treasury and government agency securities | |||
Short-term marketable securities: | |||
Amortized Cost | 5,996,000 | 1,999,000 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | (57,000) | (13,000) | |
Estimated Fair Value | 5,939,000 | 1,986,000 | |
Long-term marketable securities: | |||
Amortized Cost | 6,381,000 | 7,381,000 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | (62,000) | (76,000) | |
Estimated Fair Value | 6,319,000 | 7,305,000 | |
Commercial paper | |||
Short-term marketable securities: | |||
Amortized Cost | 5,962,000 | 1,999,000 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | |
Estimated Fair Value | $ 5,962,000 | $ 1,999,000 |
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 | Mar. 31, 2018 | Dec. 31, 2017 |
Assets: | ||
Cash equivalents | $ 2,255 | $ 4,591 |
Total assets | 141,075 | 141,184 |
Liabilities: | ||
Total Liabilities | 50,667 | 50,085 |
Lumara Health Inc. | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 49,797 | 49,187 |
MuGard | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 870 | 898 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash equivalents | 2,255 | 4,591 |
Total assets | 2,255 | 4,591 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Lumara Health Inc. | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | MuGard | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Total assets | 138,820 | 136,593 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Lumara Health Inc. | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 0 | 0 |
Significant Other Observable Inputs (Level 2) | MuGard | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Total Liabilities | 50,667 | 50,085 |
Significant Unobservable Inputs (Level 3) | Lumara Health Inc. | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 49,797 | 49,187 |
Significant Unobservable Inputs (Level 3) | MuGard | ||
Liabilities: | ||
Business acquisition, contingent consideration, liability | 870 | 898 |
Corporate debt securities | ||
Assets: | ||
Available-for-sale securities | 110,450 | 116,152 |
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 | 110,450 | 116,152 |
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 | 12,258 | 9,291 |
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 | 12,258 | 9,291 |
U.S. treasury and government agency securities | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Certificates of deposit | ||
Assets: | ||
Available-for-sale securities | 10,150 | 9,151 |
Certificates of deposit | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Available-for-sale securities | 0 | |
Certificates of deposit | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Available-for-sale securities | 10,150 | 9,151 |
Certificates of deposit | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Commercial paper | ||
Assets: | ||
Available-for-sale securities | 5,962 | 1,999 |
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 | 5,962 | 1,999 |
Commercial paper | 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 | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Contingent consideration accrued | $ 199,071 | $ 175,490 | |
Acquired in-process research and development | 20,000 | $ 60,000 | |
Reconciliation of contingent consideration obligations related to acquisitions | |||
Current portion of acquisition-related contingent consideration | 50,007 | $ 49,399 | |
Makena | |||
Reconciliation of contingent consideration obligations related to acquisitions | |||
Current portion of acquisition-related contingent consideration | 49,800 | ||
MuGard | |||
Reconciliation of contingent consideration obligations related to acquisitions | |||
Current portion of acquisition-related contingent consideration | 200 | ||
Estimated undiscounted royalty amounts payable, maximum | $ 6,000 | ||
Discount rate | 14.00% | ||
Estimated undiscounted royalty amounts payable, minimum | $ 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 | $ 50,085 | ||
Payments made | (44) | ||
Adjustments to fair value of contingent consideration | 626 | ||
Balance at end of period | 50,667 | ||
Contingent Consideration | Endoceutics License Agreement | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Contingent consideration accrued | $ 10,000 |
Fair Value Measurements - Debt
Fair Value Measurements - Debt (Details) - Significant Other Observable Inputs (Level 2) $ in Millions | Mar. 31, 2018USD ($) |
Senior Notes Due 2023 | |
Debt | |
Fair value of debt | $ 470.3 |
Senior Convertible Notes Due 2022 | |
Debt | |
Fair value of debt | 323.3 |
Senior Convertible Notes Due 2019 | |
Debt | |
Fair value of debt | $ 20.7 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 12,578 | $ 12,418 |
Work in process | 5,417 | 4,146 |
Finished goods | 13,603 | 20,792 |
Total inventories | 31,598 | $ 37,356 |
Decrease in total inventories | $ 5,800 |
Property, Plant and Equipment55
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Property, plant and equipment, net | ||
Property, plant and equipment, gross | $ 46,407 | $ 45,486 |
Less: accumulated depreciation | (20,486) | (19,490) |
Property, plant and equipment, net | 25,921 | 25,996 |
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 | 9,552 | 9,552 |
Computer equipment and software | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 14,072 | 14,073 |
Furniture and fixtures | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 2,513 | 2,512 |
Leasehold improvements | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 4,959 | 4,959 |
Laboratory and production equipment | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | 13,286 | 8,030 |
Construction in progress | ||
Property, plant and equipment, net | ||
Property, plant and equipment, gross | $ 1,025 | $ 5,360 |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets, Net - Goodwill (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | 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 Asset57
Goodwill and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | $ 1,250,855 | $ 1,171,755 |
Finite-lived intangible assets, accumulated amortization | 344,703 | 288,439 |
Finite-lived intangible assets, cumulative impairments | 319,246 | 319,246 |
Total | 586,906 | 564,070 |
Indefinite-lived intangible assets: | ||
Total intangible assets, cost | 1,315,855 | 1,315,855 |
Total intangible assets, impairments | 322,946 | 322,946 |
Total intangible assets, net | 648,206 | 704,470 |
CBR customer relationships | ||
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | 297,000 | 297,000 |
Finite-lived intangible assets, accumulated amortization | 33,209 | 29,309 |
Finite-lived intangible assets, cumulative impairments | 0 | 0 |
Total | 263,791 | 267,691 |
Makena | Developed technology rights | ||
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | 797,100 | 797,100 |
Finite-lived intangible assets, accumulated amortization | 306,242 | 255,754 |
Finite-lived intangible assets, cumulative impairments | 319,246 | 319,246 |
Total | 171,612 | 222,100 |
Makena Auto-Injector | Developed technology rights | ||
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | 79,100 | 0 |
Finite-lived intangible assets, accumulated amortization | 188 | 0 |
Finite-lived intangible assets, cumulative impairments | 0 | 0 |
Total | 78,912 | 0 |
Intrarosa | Developed technology rights | ||
Amortizable intangible assets: | ||
Finite-lived intangible assets, cost | 77,655 | 77,655 |
Finite-lived intangible assets, accumulated amortization | 5,064 | 3,376 |
Finite-lived intangible assets, cumulative impairments | 0 | 0 |
Total | 72,591 | 74,279 |
Makena IPR&D | ||
Indefinite-lived intangible assets: | ||
Indefinite-lived intangible assets, cost | 0 | 79,100 |
Indefinite-lived intangible assets, cumulative impairments | 0 | 0 |
Indefinite-lived intangible assets, net | 0 | 79,100 |
CBR trade names and trademarks | ||
Indefinite-lived intangible assets: | ||
Indefinite-lived intangible assets, cost | 65,000 | 65,000 |
Indefinite-lived intangible assets, cumulative impairments | 3,700 | 3,700 |
Indefinite-lived intangible assets, net | $ 61,300 | $ 61,300 |
Goodwill and Intangible Asset58
Goodwill and Intangible Assets, Net - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Expected useful life | 11 years 8 months 15 days | |
Amortization of intangible assets | $ 56.3 | $ 24.8 |
Makena Auto-Injector | Developed technology rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Expected useful life | 8 years 9 months |
Goodwill and Intangible Asset59
Goodwill and Intangible Assets, Net - Schedule of Expected Future Annual Amortization Expense related to Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Estimated Amortization Expense | ||
Remainder of Year Ending December 31, 2018 | $ 139,239 | |
Year Ending December 31, 2019 | 48,552 | |
Year Ending December 31, 2020 | 40,930 | |
Year Ending December 31, 2021 | 40,718 | |
Year Ending December 31, 2022 | 40,663 | |
Thereafter | 276,804 | |
Total | $ 586,906 | $ 564,070 |
Current and Long- Term Liabil60
Current and Long- Term Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Commercial rebates, fees and returns | $ 114,884 | $ 102,357 |
Professional, license, and other fees and expenses | 29,033 | 28,692 |
Accrued research and development | 14,034 | 19,099 |
Interest expense | 6,639 | 13,525 |
Bremelanotide milestone payment | 20,000 | 0 |
Interest expense | 10,000 | 10,000 |
Accrued research and development | 4,481 | 1,817 |
Total accrued expenses | 199,071 | 175,490 |
Deferred revenue | $ 69,900 | $ 66,900 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 10.00% | 36.00% | |
Income tax benefit | $ (5,979) | $ (20,706) | |
Tax Cuts and Jobs Act, provisional tax benefit | $ 17,600 |
Accumulated Other Comprehensi62
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | $ 790,244 | |
Holding (losses) gains arising during period, net of tax | (454) | $ 92 |
Ending balance | 739,995 | |
AOCI Attributable to Parent | ||
AOCI Attributable to Parent, Net of Tax | ||
Beginning balance | (3,908) | (3,838) |
Ending balance | $ (4,362) | $ (3,746) |
Basic and Diluted Net Income 63
Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | Feb. 28, 2014 | |
Basic and Diluted Net Income (Loss) per Share | ||||
Net loss | $ (54,242) | $ (36,560) | ||
Weighted average common shares outstanding (in shares) | 34,162 | 34,378 | ||
Shares used in calculating dilutive net loss per share (in shares) | 34,162 | 34,378 | ||
Net loss per share: | ||||
Basic and diluted (in usd per share) | $ (1.59) | $ (1.06) | ||
Anti-dilutive securities (in shares) | 18,665 | 17,945 | ||
Options to purchase shares of common stock | ||||
Net loss per share: | ||||
Anti-dilutive securities (in shares) | 3,771 | 2,406 | ||
Shares of common stock issuable upon the vesting of RSUs | ||||
Net loss per share: | ||||
Anti-dilutive securities (in shares) | 1,401 | 775 | ||
Warrants | ||||
Net loss per share: | ||||
Anti-dilutive securities (in shares) | 1,008 | 7,382 | ||
2019 Convertible Notes | Convertible Debt Securities | ||||
Net loss per share: | ||||
Anti-dilutive securities (in shares) | 790 | 7,382 | ||
2022 Convertible Notes | Convertible Debt Securities | ||||
Net loss per share: | ||||
Anti-dilutive securities (in shares) | 11,695 | 0 | ||
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% |
Equity-Based Compensation - Act
Equity-Based Compensation - Activity Related to Plans (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($)planshares | |
Equity compensation plans | |
Number of equity compensation plans | plan | 3 |
Stock Options | |
Outstanding (in shares) | 3,531,359 |
Granted (in shares) | 451,411 |
Exercised (in shares) | (7,782) |
Expired or terminated (in shares) | (204,108) |
Outstanding (in shares) | 3,770,880 |
Restricted Stock Units | |
Restricted Stock Units | |
Outstanding (in shares) | 1,069,775 |
Granted (in shares) | 712,781 |
Vested (in shares) | (343,454) |
Expired or terminated (in shares) | (38,538) |
Outstanding (in shares) | 1,400,564 |
2007 Equity Plan | |
Stock Options | |
Outstanding (in shares) | 2,590,373 |
Granted (in shares) | 451,411 |
Exercised (in shares) | (7,782) |
Expired or terminated (in shares) | (160,797) |
Outstanding (in shares) | 2,873,205 |
2007 Equity Plan | Restricted Stock Units | |
Restricted Stock Units | |
Outstanding (in shares) | 966,623 |
Granted (in shares) | 712,781 |
Vested (in shares) | (317,638) |
Expired or terminated (in shares) | (38,078) |
Outstanding (in shares) | 1,323,688 |
2007 Equity Plan | Performance Restricted Stock Units (RSUs) | |
Restricted Stock Units | |
Granted (in shares) | 206,250 |
Award vesting period | 3 years |
Fair value, performance- based RSUs | $ | $ 3.8 |
Compensation expense, period for recognition | 3 years |
2013 Lumara Equity Plan | |
Stock Options | |
Outstanding (in shares) | 125,536 |
Granted (in shares) | 0 |
Exercised (in shares) | 0 |
Expired or terminated (in shares) | (15,436) |
Outstanding (in shares) | 110,100 |
2013 Lumara Equity Plan | Restricted Stock Units | |
Restricted Stock Units | |
Outstanding (in shares) | 11,611 |
Granted (in shares) | 0 |
Vested (in shares) | (10,150) |
Expired or terminated (in shares) | (460) |
Outstanding (in shares) | 1,001 |
Inducement Grants | |
Stock Options | |
Outstanding (in shares) | 815,450 |
Granted (in shares) | 0 |
Exercised (in shares) | 0 |
Expired or terminated (in shares) | (27,875) |
Outstanding (in shares) | 787,575 |
Inducement Grants | Restricted Stock Units | |
Restricted Stock Units | |
Outstanding (in shares) | 91,541 |
Granted (in shares) | 0 |
Vested (in shares) | (15,666) |
Expired or terminated (in shares) | 0 |
Outstanding (in shares) | 75,875 |
Equity-Based Compensation - Equ
Equity-Based Compensation - Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Equity-based compensation expense | ||
Total equity-based compensation expense | $ 5,533 | $ 5,778 |
Income tax effect | (942) | (1,605) |
After-tax effect of equity-based compensation expense | 4,591 | 4,173 |
Cost of product sales and services | ||
Equity-based compensation expense | ||
Total equity-based compensation expense | 347 | 129 |
Research and development | ||
Equity-based compensation expense | ||
Total equity-based compensation expense | 720 | 756 |
Selling, general and administrative | ||
Equity-based compensation expense | ||
Total equity-based compensation expense | $ 4,466 | $ 4,893 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 27 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Decease in total stockholders' equity | $ 50,200,000 | ||||
Net income (loss) | (54,242,000) | $ (36,560,000) | |||
Equity-based compensation | 5,500,000 | ||||
Payment of employee tax withholdings related to equity-based compensation | $ 2,300,000 | ||||
Share repurchase program, authorized amount | $ 60,000,000 | ||||
Common stock repurchased and retired (in shares) | 0 | 2,198,010 | |||
Stock repurchased and retired during period, value | $ 39,500,000 | ||||
Average share price (in usd per share) | $ 17.97 | ||||
Remaining authorized repurchase amount | $ 20,500,000 | $ 20,500,000 | |||
Accounting Standards Update 2014-09 | Retained Earnings | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of new accounting principle | $ 1,100,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Apr. 03, 2017 | Jul. 31, 2015 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Nov. 30, 2014 |
Commitments | ||||||
Minimum purchase commitments | $ 29,900 | |||||
Contingent consideration paid | 44 | $ 83 | ||||
Asset acquisition, contingent consideration liability | 20,000 | $ 0 | ||||
Endoceutics, Inc. | Intrarosa | Delivery Of Intrarosa Launch Quantities | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | 10,000 | |||||
Endoceutics, Inc. | Intrarosa | First Sales Milestone Achievement | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | $ 15,000 | 15,000 | ||||
Potential milestone payment, triggering event, sales | 150,000 | 150,000 | ||||
Endoceutics, Inc. | Intrarosa | Second Sales Milestone Achievement | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | 30,000 | 30,000 | ||||
Potential milestone payment, triggering event, sales | 300,000 | 300,000 | ||||
Endoceutics, Inc. | Intrarosa | Third Sales Milestone Achievement | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | 850,000 | 850,000 | ||||
Potential milestone payment, triggering event, sales | 500,000 | 500,000 | ||||
Endoceutics, Inc. | Intrarosa | Tiered Royalties | ||||||
Commitments | ||||||
Potential milestone payment, triggering event, sales | $ 150,000 | $ 150,000 | ||||
Royalty percentage, maximum | 20.00% | 20.00% | ||||
Net sales threshold, future contingent payments | $ 1,000,000 | $ 1,000,000 | ||||
Period after first commercial sale | 10 years | 10 years | ||||
Palatin Technologies, Inc. | Bremelanotide Products | First Sales Milestone Achievement | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | $ 25,000 | |||||
Potential milestone payment, triggering event, sales | $ 250,000 | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Tiered Royalties | ||||||
Commitments | ||||||
Period after first commercial sale | 10 years | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory And Commercial Milestone Payments | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | $ 380,000 | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | 80,000 | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement, Acceptance By U.S.Food And Drug Administration Of New Drug Application | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | 20,000 | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement, U.S.Food And Drug Administration Approval | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | 60,000 | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Achievement of Certain Annual Sales Milestones over Course of License Agreement | ||||||
Commitments | ||||||
Asset acquisition, contingent consideration liability | 300,000 | |||||
Velo Bio, LLC | Option Exercise and Regulatory Milestone Achievement | ||||||
Commitments | ||||||
Future contingent payments (up to) | $ 65,000 | |||||
Velo Bio, LLC | Annual Sales Milestone Achievements | ||||||
Commitments | ||||||
Future contingent payments (up to) | 250,000 | |||||
Minimum | Velo Bio, LLC | Annual Sales Milestone Achievements | ||||||
Commitments | ||||||
Sales milestone targets | 100,000 | |||||
Maximum | Velo Bio, LLC | Annual Sales Milestone Achievements | ||||||
Commitments | ||||||
Sales milestone targets | $ 900,000 | |||||
Lumara Health Inc. | ||||||
Commitments | ||||||
Contingent consideration (up to) | 200,000 | $ 350,000 | ||||
Business acquisition, contingent consideration, liability | 50,000 | |||||
Lumara Health Inc. | Annual Net Sales Milestone | ||||||
Commitments | ||||||
Contingent consideration paid | $ 150,000 |
Collaboration, License and Ot68
Collaboration, License and Other Strategic Agreements (Details) - USD ($) $ in Thousands | Apr. 03, 2017 | Feb. 28, 2017 | Jul. 31, 2015 | Mar. 31, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2015 | Dec. 31, 2017 |
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | $ 20,000 | $ 0 | ||||||
Endoceutics, Inc. | ||||||||
Collaborative Agreements | ||||||||
Payments related to collaborative arrangement | $ 50,000 | |||||||
Number of shares issued under arrangement | 600,000 | |||||||
Net shares issued in connection with license agreement, value | $ 13,500 | |||||||
Consideration recorded | $ 83,500 | |||||||
IPR&D expense | 5,800 | |||||||
Endoceutics, Inc. | 180 Day Lock-Up Provision | ||||||||
Collaborative Agreements | ||||||||
Number of shares issued under arrangement | 300,000 | |||||||
Stock issued, lock-up period | 180 days | |||||||
Endoceutics, Inc. | One Year Lock-Up Provision | ||||||||
Collaborative Agreements | ||||||||
Number of shares issued under arrangement | 300,000 | |||||||
Stock issued, lock-up period | 1 year | |||||||
Palatin Technologies, Inc. | ||||||||
Collaborative Agreements | ||||||||
Payments related to collaborative arrangement | $ 60,000 | |||||||
Out-of-pocket expenses (up to) | $ 25,000 | |||||||
Velo Bio, LLC | ||||||||
Collaborative Agreements | ||||||||
Upfront payment, option agreement | $ 10,000 | |||||||
Velo Bio, LLC | Option Exercise and Regulatory Milestone Achievement | ||||||||
Collaborative Agreements | ||||||||
Future contingent payments (up to) | $ 65,000 | |||||||
Velo Bio, LLC | Annual Sales Milestone Achievements | ||||||||
Collaborative Agreements | ||||||||
Future contingent payments (up to) | 250,000 | |||||||
Velo Bio, LLC | Annual Sales Milestone Achievements | Minimum | ||||||||
Collaborative Agreements | ||||||||
Sales milestone targets | 100,000 | |||||||
Velo Bio, LLC | Annual Sales Milestone Achievements | Maximum | ||||||||
Collaborative Agreements | ||||||||
Sales milestone targets | $ 900,000 | |||||||
Velo Bio, LLC | Royalty Threshold Achievement | ||||||||
Collaborative Agreements | ||||||||
Potential milestone payment, triggering event, royalty percentage | 0.00% | |||||||
Potential milestone payment, increased percentage | 50.00% | |||||||
Intrarosa | Endoceutics, Inc. | ||||||||
Collaborative Agreements | ||||||||
Out-of-pocket expenses (up to) | $ 20,000 | |||||||
Intrarosa | Endoceutics, Inc. | Developed technology rights | ||||||||
Collaborative Agreements | ||||||||
Finite-lived intangible assets | $ 77,700 | |||||||
Intrarosa | Endoceutics, Inc. | Delivery Of Intrarosa Launch Quantities | ||||||||
Collaborative Agreements | ||||||||
Payments related to collaborative arrangement | $ 10,000 | |||||||
Asset acquisition, contingent consideration liability | 10,000 | |||||||
Intrarosa | Endoceutics, Inc. | First Anniversary Of Closing | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | 10,000 | |||||||
Intrarosa | Endoceutics, Inc. | Tiered Royalties | ||||||||
Collaborative Agreements | ||||||||
Potential milestone payment, triggering event, sales | $ 150,000 | $ 150,000 | ||||||
Royalty percentage, maximum | 20.00% | 20.00% | ||||||
Net sales threshold, future contingent payments | $ 1,000,000 | $ 1,000,000 | ||||||
Period after first commercial sale | 10 years | 10 years | ||||||
Intrarosa | Endoceutics, Inc. | First Sales Milestone Achievement | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | $ 15,000 | $ 15,000 | ||||||
Potential milestone payment, triggering event, sales | 150,000 | 150,000 | ||||||
Intrarosa | Endoceutics, Inc. | Second Sales Milestone Achievement | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | 30,000 | 30,000 | ||||||
Potential milestone payment, triggering event, sales | 300,000 | 300,000 | ||||||
Intrarosa | Endoceutics, Inc. | Third Sales Milestone Achievement | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | 850,000 | 850,000 | ||||||
Potential milestone payment, triggering event, sales | $ 500,000 | $ 500,000 | ||||||
Bremelanotide Products | Palatin Technologies, Inc. | Tiered Royalties | ||||||||
Collaborative Agreements | ||||||||
Period after first commercial sale | 10 years | |||||||
Bremelanotide Products | Palatin Technologies, Inc. | First Sales Milestone Achievement | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | $ 25,000 | |||||||
Potential milestone payment, triggering event, sales | 250,000 | |||||||
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | 80,000 | |||||||
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement, Acceptance By U.S.Food And Drug Administration Of New Drug Application | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | 20,000 | |||||||
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement, U.S.Food And Drug Administration Approval | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | 60,000 | |||||||
Bremelanotide Products | Palatin Technologies, Inc. | Achievement of Certain Annual Sales Milestones over Course of License Agreement | ||||||||
Collaborative Agreements | ||||||||
Asset acquisition, contingent consideration liability | $ 300,000 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term Debt | $ 738,563 | $ 734,683 |
Less: current maturities | 20,460 | 0 |
Long-term debt, net of current maturities | 718,103 | 734,683 |
Senior Notes | 2023 Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 466,595 | 466,291 |
Convertible Debt | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 271,968 | |
Convertible Debt | 2022 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 251,508 | 248,194 |
Convertible Debt | 2019 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 20,460 | $ 20,198 |
Debt - 2023 Senior Notes (Detai
Debt - 2023 Senior Notes (Details) - USD ($) | 1 Months Ended | |||
Oct. 31, 2017 | Aug. 31, 2015 | Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||||
Carrying value, net | $ 738,563,000 | $ 734,683,000 | ||
Senior Notes | 2023 Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount of debt issued | $ 500,000,000 | 475,000,000 | ||
Interest rate | 7.875% | |||
Repurchased amount | $ 25,000,000 | |||
Gain (loss) on debt extinguishment | $ (1,100,000) | |||
Carrying value, net | $ 466,595,000 | $ 466,291,000 | ||
Aggregate principal that must be held to accelerate amounts due (not less than) | 25.00% | |||
Debt Instrument, Redemption, Period One | Senior Notes | 2023 Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Repurchase price of principal amount of notes plus accrued and unpaid interest | 35.00% | |||
Redemption price | 107.875% | |||
Minimum outstanding percentage of principal after redemption | 65.00% | |||
Debt Instrument, Additional Redemption, Period One | Senior Notes | 2023 Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Redemption price | 100.00% | |||
Debt Instrument, Redemption, Period Two | Senior Notes | 2023 Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Redemption price | 101.00% |
Debt - Outstanding Convertible
Debt - Outstanding Convertible Note Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Liability component: | ||
Principal | $ 816,417 | |
Long-term Debt | 738,563 | $ 734,683 |
Convertible Debt | ||
Liability component: | ||
Principal | 341,417 | |
Less: debt discount and issuance costs, net | 69,449 | |
Long-term Debt | 271,968 | |
Equity Component | 82,481 | |
Convertible Debt | 2022 Convertible Notes | ||
Liability component: | ||
Principal | 320,000 | |
Less: debt discount and issuance costs, net | 68,492 | |
Long-term Debt | 251,508 | 248,194 |
Equity Component | 72,576 | |
Convertible Debt | 2019 Convertible Notes | ||
Liability component: | ||
Principal | 21,417 | |
Less: debt discount and issuance costs, net | 957 | |
Long-term Debt | 20,460 | $ 20,198 |
Equity Component | $ 9,905 |
Debt - Convertible Notes (Detai
Debt - Convertible Notes (Details) - Convertible Debt | 1 Months Ended | 3 Months Ended | ||||
Sep. 30, 2017USD ($) | May 31, 2017USD ($) | Aug. 31, 2015 | Feb. 28, 2014USD ($)day$ / shares | Mar. 31, 2018 | Jun. 30, 2017USD ($)day$ / shares | |
Debt Instrument [Line Items] | ||||||
Period of amortization of debt discount to interest expense using effective interest method | 5 years | |||||
Convertible Notes due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Period of amortization of debt discount to interest expense using effective interest method | 5 years | |||||
Aggregate principal amount of debt issued | $ 320,000,000 | |||||
Proceeds from 2022 Convertible Notes | 310,400,000 | |||||
Payment of convertible debt issuance costs | 9,600,000 | |||||
Debt issuance costs | 9,600,000 | |||||
Debt issuance costs, allocated to equity component | 2,200,000 | |||||
Debt issuance costs allocated to the liability component | $ 7,400,000 | |||||
Interest rate | 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 | |||||
Debt term | 5 years | |||||
Effective interest rate on liability component | 9.49% | |||||
Convertible Notes due 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount of debt issued | $ 200,000,000 | |||||
Proceeds from 2022 Convertible Notes | 193,300,000 | |||||
Payment of convertible debt issuance costs | $ 6,700,000 | |||||
Interest rate | 2.50% | 2.50% | ||||
Debt conversion ratio | 0.0369079 | |||||
Initial conversion price of convertible notes into common stock (in usd per share) | $ / shares | $ 27.09 | |||||
Effective interest rate on liability component | 7.79% | |||||
Proceeds used to pay the cost of the bond hedges | $ 14,100,000 | |||||
Repurchased amount | $ 19,600,000 | $ 158,900,000 | ||||
Repurchase price | 21,400,000 | 171,300,000 | ||||
Gain (loss) on debt extinguishment | $ (300,000) | $ 200,000 | ||||
Debt Instrument, Conversion, Period One | Convertible Notes due 2022 | ||||||
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% | |||||
Debt Instrument, Conversion, Period One | Convertible Notes due 2019 | ||||||
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% | |||||
Debt Instrument, Conversion, Period Two | Convertible Notes due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Consecutive trading period | day | 5 | |||||
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 | 98.00% | |||||
Consecutive business days after any five consecutive trading day period during the note measurement period | day | 5 | |||||
Debt Instrument, Conversion, Period Two | Convertible Notes due 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Closing sales price of the entity's common stock that the conversion price must exceed or be equal in order for the notes to be convertible | 98.00% |
Debt - Total Interest Expense R
Debt - Total Interest Expense Recognized Related to the Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 2,734 | $ 1,250 |
Amortization of debt issuance costs | 339 | 274 |
Amortization of debt discount | 3,237 | 1,929 |
Total interest expense | $ 6,310 | $ 3,453 |
Debt - Convertible Bond Hedge,
Debt - Convertible Bond Hedge, Warrant Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | |
Mar. 31, 2018 | Feb. 11, 2014 | |
Debt Instrument [Line Items] | ||
Remaining principal amount | $ 21,417 | |
Exercise price (in dollars per share) | $ 27.09 | |
Initial exercise price (in dollars per share) | $ 34.12 | |
Exercise price above last reported sale price of common stock | 70.00% | |
Sale price of common stock (in dollars per share) | $ 20.07 | |
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 | |
Convertible Notes due 2019 | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Amount of hedged item | $ 21,400 |
Debt - Future Payments (Details
Debt - Future Payments (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 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 |
Year Ending December 31, 2022 | 320,000 |
Thereafter | 475,000 |
Total | $ 816,417 |