Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 30, 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 | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 34,472,817 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 212,499 | $ 162,855 |
Marketable securities | 138,672 | 136,593 |
Accounts receivable, net | 103,353 | 91,460 |
Inventories | 30,674 | 34,443 |
Prepaid and other current assets | 12,465 | 11,009 |
Assets held for sale | 77,161 | 45,508 |
Total current assets | 574,824 | 481,868 |
Property and equipment, net | 7,340 | 7,904 |
Goodwill | 422,513 | 422,513 |
Intangible assets, net | 261,692 | 375,479 |
Deferred tax assets | 1,151 | 47,120 |
Restricted cash | 495 | 495 |
Other long-term assets | 103 | 266 |
Assets held for sale, net of current portion | 559,300 | 564,711 |
Total assets | 1,827,418 | 1,900,356 |
Current liabilities: | ||
Accounts payable | 10,738 | 7,717 |
Accrued expenses | 194,053 | 166,732 |
Current portion of convertible notes, net | 20,727 | 0 |
Current portion of acquisition-related contingent consideration | 210 | 49,399 |
Deferred revenues | 182 | 0 |
Liabilities held for sale | 52,962 | 53,870 |
Total current liabilities | 278,872 | 277,718 |
Long-term liabilities: | ||
Long-term debt, net | 466,906 | 466,291 |
Convertible notes, net | 254,902 | 268,392 |
Acquisition-related contingent consideration | 631 | 686 |
Other long-term liabilities | 918 | 1,204 |
Liabilities held for sale, net of current portion | 98,285 | 95,821 |
Total liabilities | 1,100,514 | 1,110,112 |
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; 34,390,068 and 34,083,112 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 344 | 341 |
Additional paid-in capital | 1,281,858 | 1,271,628 |
Accumulated other comprehensive loss | (4,295) | (3,908) |
Accumulated deficit | (551,003) | (477,817) |
Total stockholders’ equity | 726,904 | 790,244 |
Total liabilities and stockholders’ equity | $ 1,827,418 | $ 1,900,356 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 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 (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 117,500,000 | 117,500,000 |
Common stock, shares issued (in shares) | 34,390,068 | 34,083,112 |
Common stock, shares outstanding (in shares) | 34,390,068 | 34,083,112 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Revenues | $ 146,254 | $ 130,371 | $ 263,642 | $ 242,912 |
Costs and expenses: | ||||
Research and development expenses | 11,693 | 30,258 | 22,502 | 46,747 |
Acquired in-process research and development | 0 | 5,845 | 20,000 | 65,845 |
Selling, general and administrative expenses | 15,898 | 58,900 | 89,329 | 107,523 |
Total costs and expenses | 104,367 | 127,104 | 272,519 | 279,790 |
Operating income (loss) | 41,887 | 3,267 | (8,877) | (36,878) |
Other (expense) income: | ||||
Interest expense | (16,056) | (17,256) | (32,034) | (35,556) |
Loss on debt extinguishment | 0 | (9,516) | 0 | (9,516) |
Interest and dividend income | 952 | 663 | 1,595 | 1,695 |
Other expense | (44) | (69) | (44) | (43) |
Total other expense, net | (15,148) | (26,178) | (30,483) | (43,420) |
Income (loss) from continuing operations before income taxes | 26,739 | (22,911) | (39,360) | (80,298) |
Income tax expense (benefit) | 52,556 | (8,659) | 44,556 | (30,120) |
Net loss from continuing operations | (25,817) | (14,252) | (83,916) | (50,178) |
Discontinued operations: | ||||
Income from discontinued operations | 7,158 | 373 | 13,036 | 494 |
Income tax expense | 1,422 | 187 | 3,444 | 942 |
Net income (loss) from discontinued operations | 5,736 | 186 | 9,592 | (448) |
Net loss | $ (20,081) | $ (14,066) | $ (74,324) | $ (50,626) |
Basic and diluted net (loss) income per share: | ||||
Loss from continuing operations (in dollars per share) | $ (0.75) | $ (0.41) | $ (2.45) | $ (1.44) |
Income (loss) from discontinued operations (in dollars per share) | 0.17 | 0.01 | 0.28 | (0.01) |
Basic and diluted net loss per share (in dollars per share) | $ (0.58) | $ (0.40) | $ (2.17) | $ (1.45) |
Weighted average shares outstanding used to compute net loss per share: | ||||
Weighted average shares outstanding used to compute net loss per share (basic and diluted) (in shares) | 34,358 | 35,145 | 34,261 | 34,764 |
Product Sales | ||||
Revenues: | ||||
Revenues | $ 146,219 | $ 130,342 | $ 263,567 | $ 242,859 |
Costs and expenses: | ||||
Cost of product sales | 76,776 | 32,101 | 140,688 | 59,675 |
Other revenues | ||||
Revenues: | ||||
Revenues | $ 35 | $ 29 | $ 75 | $ 53 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss from continuing operations | $ (20,081) | $ (14,066) | $ (74,324) | $ (50,626) |
Other comprehensive (loss) income: | ||||
Holding gains (losses) arising during period, net of tax | 67 | 113 | (387) | 205 |
Total comprehensive loss | $ (20,014) | $ (13,953) | $ (74,711) | $ (50,421) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (74,324) | $ (50,626) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 126,183 | 59,563 |
Provision for bad debt expense | 856 | 2,681 |
Amortization of premium/discount on purchased securities | 93 | 168 |
Gain on disposal of fixed assets | (99) | 0 |
Non-cash equity-based compensation expense | 11,122 | 11,669 |
Non-cash IPR&D expense | 0 | 945 |
Loss on debt extinguishment | 0 | 9,516 |
Amortization of debt discount and debt issuance costs | 7,851 | 6,679 |
Gains on marketable securities, net | 0 | (249) |
Change in fair value of contingent consideration | (49,184) | 2,786 |
Deferred income taxes | 42,372 | (29,677) |
Prepaid transaction costs | (3,865) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (11,265) | 233 |
Inventories | 1,223 | (1,145) |
Prepaid and other current assets | (756) | (1,178) |
Accounts payable and accrued expenses | 27,475 | 40,716 |
Deferred revenues | 7,329 | 7,380 |
Other assets and liabilities | 117 | (1,029) |
Net cash provided by operating activities | 85,128 | 58,432 |
Cash flows from investing activities: | ||
Proceeds from sales or maturities of marketable securities | 44,038 | 251,017 |
Purchase of marketable securities | (46,726) | (85,249) |
Acquisition of Intrarosa intangible asset | 0 | (46,500) |
Capital expenditures | (1,553) | (2,672) |
Net cash (used in) provided by investing activities | (4,241) | 116,596 |
Cash flows from financing activities: | ||
Long-term debt principal payments | 0 | (328,125) |
Proceeds from 2022 Convertible Notes | 0 | 320,000 |
Payment to repurchase 2019 Convertible Notes | 0 | (170,371) |
Proceeds to settle warrants | 0 | 323 |
Payment of convertible debt issuance costs | 0 | (9,553) |
Payments of contingent consideration | (60) | (119) |
Proceeds from the exercise of common stock options | 1,473 | 1,130 |
Payments of employee tax withholding related to equity-based compensation | (2,362) | (2,439) |
Net cash used in financing activities | (949) | (189,154) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 79,938 | (14,126) |
Cash, cash equivalents, and restricted cash related to discontinued operations | (59,714) | (62,622) |
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 | 212,994 | 200,150 |
Supplemental data for cash flow information: | ||
Cash paid for taxes | 4,181 | 3,191 |
Cash paid for interest | 24,171 | 29,173 |
Non-cash investing and financing activities: | ||
Fair value of common stock issued in connection with the acquisition of the Intrarosa intangible asset | 0 | 12,555 |
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | $ 0 | $ 18,600 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 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 bringing innovative products to patients with unmet medical needs. We do this by leveraging our development and commercial expertise to invest in and grow our pharmaceutical products across a range of therapeutic areas, including women’s health. In addition, we seek to collaborate on and acquire promising therapies at various stages of development, and advance them through the clinical and regulatory process to deliver new treatment options to patients. 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. Since August 2015, we have provided services related to the preservation of umbilical cord blood stem cell and cord tissue units operated through Cord Blood Registry ® (“CBR”). On June 14, 2018, we entered into a Stock Purchase Agreement with GI Chill Acquisition LLC, an affiliate of GI Partners, a private equity investment firm (together “GI”), pursuant to which we agreed to sell our wholly-owned subsidiary, CBR Acquisition Holdings Corp, and the CBR business to GI for $530.0 million in cash, subject to ordinary purchase price adjustments. The transaction is expected to close in mid-August 2018, subject to, among other things, no material adverse events occurring prior to closing, delivery by us of certain property-related items, and other customary conditions. For additional information, see Note C “ Discontinued Operations and Held for Sale ” . 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 | 6 Months Ended |
Jun. 30, 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. As of June 30, 2018, our CBR business met all of the conditions to be classified as held for sale and represented a discontinued operation, as we consider the disposal of the CBR business to be a strategic shift that will have a major effect on our operations and financial results. All assets and liabilities associated with CBR were therefore classified as assets and liabilities held for sale in our condensed consolidated balance sheets for the periods presented. Further, all historical operating results for CBR are reflected within discontinued operations in the condensed consolidated statements of operations for all periods presented. For additional information, see Note C, “ Discontinued Operations and Held for Sale. ” 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 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 We classified $0.5 million of our cash as restricted cash, a non-current asset on the balance sheet, as of June 30, 2018 and December 31, 2017 . 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 June 30, 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. We perform ongoing credit evaluations of our customers and generally do not require collateral. The following table sets forth customers who represented 10% or more of our total revenues for the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 AmerisourceBergen Drug Corporation 27% 23% 27% 25% McKesson Corporation 26% 26% 27% 22% Our net accounts receivable primarily represent amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies. Accounts receivable for our products 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 June 30, 2018 and December 31, 2017 were as follows: June 30, 2018 December 31, 2017 McKesson Corporation 27% 26% AmerisourceBergen Drug Corporation 29% 31% 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 currently have a single supplier for Makena drug substance, which is used for each of our intramuscular and auto-injector products, and a single supplier of finished drug product for our Makena multi-dose vial and auto-injector product. We would be exposed to a significant loss of revenue from the sale of our products 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 revenue. Reclassifications Certain amounts in prior periods have been reclassified to reflect the impact of the held for sale and discontinued operations treatment of the CBR business in order to conform to the current period presentation. |
Discontinued Operations and Hel
Discontinued Operations and Held For Sale | 6 Months Ended |
Jun. 30, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations and Held For Sale | DISCONTINUED OPERATIONS AND HELD FOR SALE On June 14, 2018, we entered into a Stock Purchase Agreement with GI pursuant to which we agreed to sell the CBR business to GI for $530.0 million in cash plus cash acquired, subject to ordinary purchase price adjustments. Although we will be providing limited transitional services related to GI for certain agreed-upon sales and marketing, technology, human resources and finance functions for several months post-closing, we will not have further significant involvement in the operations of the CBR business following the close of the sale, which is expected to occur in mid-August 2018. Closing of the transaction is subject to, among other things, no material adverse events occurring prior to closing, delivery by us of certain property-related items, and other customary conditions. The Company determined that the sale of CBR represents a strategic shift that will have a major effect on our business and therefore met the criteria for classification as discontinued operations at June 30, 2018. All historical operating results for CBR were reflected within discontinued operations in the condensed consolidated statements of operations for all periods presented. Further, all assets and liabilities associated with CBR were classified as assets and liabilities held for sale in our condensed consolidated balance sheets for the periods presented. We determined that CBR meets the definition of a business and as a result, considered goodwill, allocated on a relative fair value basis, in the carrying value of CBR for purposes of estimating the gain or loss on disposal. We expect to recognize a gain on the sale of CBR upon closing. Assets and liabilities held for sale were reflected separately in our condensed consolidated balance sheets and were comprised of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Assets Current assets: Cash $ 59,554 $ 29,259 Accounts receivable, net 10,558 12,042 Prepaid transaction costs 3,865 — Inventories (raw materials) 2,268 2,913 Prepaid and other current assets 916 1,294 Total current assets held for sale $ 77,161 $ 45,508 Property, plant and equipment, net $ 18,256 $ 18,092 Intangible assets, net 321,841 328,991 Goodwill 216,971 216,971 Other long-term assets 2,071 496 Restricted cash 161 161 Total long-term assets held for sale $ 559,300 $ 564,711 Liabilities Current liabilities: Accounts payable $ 1,260 $ 2,618 Accrued expenses 7,498 8,758 Deferred revenues, short term 44,204 42,494 Total current liabilities held for sale $ 52,962 $ 53,870 Deferred revenues, long-term 29,823 24,387 Deferred tax liabilities 67,664 71,046 Other long-term liabilities 798 388 Total long-term liabilities held for sale $ 98,285 $ 95,821 The results of operations of the CBR business were classified as discontinued operations for all periods presented in our condensed consolidated financial statements. The following is a summary of net income (loss) from discontinued operations for the three and six months ended June 30, 2018 and 2017: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Service revenues, net $ 30,085 $ 28,023 $ 59,054 $ 54,955 Costs and expenses: Cost of services 5,509 5,562 10,983 10,572 Selling, general and administrative expenses 17,531 22,088 35,150 43,889 Total costs and expenses 23,040 27,650 46,133 54,461 Operating income 7,045 373 12,921 494 Other income 113 — 115 — Income from discontinued operations 7,158 373 13,036 494 Income tax expense (1,422 ) (187 ) (3,444 ) (942 ) Net income (loss) from discontinued operations $ 5,736 $ 186 $ 9,592 $ (448 ) The following table summarizes significant cash activity of the CBR business that were included within the unaudited condensed consolidated statements of cash flows for the respective periods: Six Months Ended June 30, 2018 2017 Net cash provided by operating activities $ 31,642 $ 11,637 Net cash used in investing activities (1,347 ) (1,131 ) Net increase in cash, cash equivalents and restricted cash 30,295 10,506 Cash, cash equivalents and restricted cash at beginning of period 29,419 52,116 Cash, cash equivalents and restricted cash at end of period $ 59,714 $ 62,622 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 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. There was no impact to revenue for the three and six months ended June 30, 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 product revenues from Makena, Feraheme and Intrarosa. The adoption of ASC 606 did not have an impact on our product revenue. Revenue and Allowances The following table provides information about disaggregated revenue by products for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Product sales, net Makena $ 105,172 $ 102,681 $ 195,156 $ 189,136 Feraheme 37,699 27,475 62,833 53,397 Intrarosa 3,241 — 5,406 — MuGard 107 186 172 326 Total $ 146,219 $ 130,342 $ 263,567 $ 242,859 Total gross product sales were offset by product sales allowances and accruals for the three and six months ended June 30, 2018 and 2017 as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Gross product sales $ 297,732 $ 234,354 $ 537,602 $ 441,078 Provision for product sales allowances and accruals: Contractual adjustments 111,539 75,684 197,683 145,512 Governmental rebates 39,974 28,328 76,352 52,707 Total 151,513 104,012 274,035 198,219 Product sales, net $ 146,219 $ 130,342 $ 263,567 $ 242,859 The following table summarizes the product revenue allowance and accrual activity for the three and six months ended June 30, 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 Provisions related to current period sales 114,408 40,486 154,894 Adjustments related to prior period sales (2,870 ) (513 ) (3,383 ) Payments/returns relating to current period sales (87,985 ) (2,453 ) (90,438 ) Payments/returns relating to prior period sales (16,532 ) (25,993 ) (42,525 ) Balance at June 30, 2018 $ 71,255 $ 73,354 $ 144,609 We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Performance Obligations and Product Revenue At contract inception, we assess the goods promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good (or bundle of goods) that is distinct. To identify the performance obligations, we consider all of the goods 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 represent separate performance obligations: • Supply of Makena product • Supply of Feraheme product • Supply of Intrarosa product 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 a 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 June 30, 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 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 periods 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 and six months ended June 30, 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. |
Marketable Securities
Marketable Securities | 6 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | MARKETABLE SECURITIES As of June 30, 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 on our condensed consolidated balance sheets 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 June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term marketable securities:* Corporate debt securities $ 55,303 $ 1 $ (197 ) $ 55,107 Certificates of deposit 9,450 — — 9,450 U.S. treasury and government agency securities 5,998 — (43 ) 5,955 Commercial paper 7,452 — — 7,452 Total short-term marketable securities $ 78,203 $ 1 $ (240 ) $ 77,964 Long-term marketable securities:** Corporate debt securities $ 55,079 $ 5 $ (685 ) $ 54,399 U.S. treasury and government agency securities 6,383 — (74 ) 6,309 Total long-term marketable securities 61,462 5 (759 ) 60,708 Total marketable securities $ 139,665 $ 6 $ (999 ) $ 138,672 * 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 and six months ended June 30, 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 June 30, 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 | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The following tables represent the fair value hierarchy as of June 30, 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 June 30, 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 $ 3,158 $ 3,158 $ — $ — Corporate debt securities 109,506 — 109,506 — U.S. treasury and government agency securities 12,264 — 12,264 — Certificates of deposit 9,450 — 9,450 — Commercial paper 7,452 — 7,452 — Total assets $ 141,830 $ 3,158 $ 138,672 $ — Liabilities: Contingent consideration - MuGard $ 841 $ — $ — $ 841 Total liabilities $ 841 $ — $ — $ 841 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 are 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 June 30, 2018 . In addition, there were no transfers or reclassifications of any securities between Level 1 and Level 2 during the six months ended June 30, 2018 . Contingent Consideration We recorded contingent consideration related to the November 2014 acquisition of Lumara Health, Inc. (“Lumara Health”) and related to our June 2013 license agreement for MuGard (the “MuGard License Agreement”) with Abeona Therapeutics, Inc. (“Abeona”), under which we acquired the U.S. commercial rights for the management of oral mucositis and stomatitis (the “MuGard Rights”). The fair value measurements of contingent consideration obligations and the related intangible assets arising from business combinations are classified as Level 3 assets under the fair value hierarchy as these assets have been valued using unobservable inputs. These inputs include: (a) the estimated amount and timing of projected cash flows; (b) the probability of the achievement of the factors on which the contingency is based; and (c) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement. The following table presents a reconciliation of contingent consideration obligations related to the acquisition of Lumara Health (related to our Makena product) and the MuGard Rights (in thousands): Balance as of December 31, 2017 $ 50,085 Payments made (60 ) Adjustments to fair value of contingent consideration (49,184 ) Balance as of June 30, 2018 $ 841 During the six months ended June 30, 2018 , we reduced the fair value of our contingent consideration liability by approximately $49.2 million based primarily on actual Makena net sales to date and our expectations for future performance, which indicated that achievement of future milestones is not probable. This adjustment was based on our estimates, which are reliant on a number of external factors as well as the exercise of judgment. The fair value of the contingent milestone payments payable by us to the former stockholders of Lumara Health has been 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. 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 June 30, 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 June 30, 2018 , the estimated fair value of our 2023 Senior Notes, 2022 Convertible Notes and 2019 Convertible Notes (each as defined below) was $504.8 million , $335.5 million and $21.3 million , respectively, which differed from their carrying values. See Note R, “ Debt ” for additional information on our debt obligations. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Our major classes of inventories were as follows as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Raw materials $ 11,285 $ 9,505 Work in process 1,380 4,146 Finished goods 18,009 20,792 Total inventories $ 30,674 $ 34,443 Total inventories decreased by $3.8 million from December 31, 2017 primarily due to increased sales. |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Computer equipment and software $ 1,401 $ 1,401 Furniture and fixtures 1,442 1,442 Leasehold improvements 2,938 2,938 Laboratory and production equipment 5,907 654 Construction in progress 21 5,068 11,709 11,503 Less: accumulated depreciation (4,369 ) (3,599 ) Property and equipment, net $ 7,340 $ 7,904 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill Our $422.5 million goodwill balance represents goodwill of the continuing business following the goodwill allocation required by the CBR transaction discussed in Note C “ Discontinued Operations and Held for Sale.” We determined that CBR met the definition of a business and as a result, in accordance with ASC 350 - Intangibles - Goodwill and Other , allocated goodwill on a relative fair value basis between CBR and the continuing business for the purposes of determining the carrying value of CBR. Further, we performed a qualitative goodwill impairment test for our continuing business at June 30, 2018 to assess whether there were indicators that its fair value was less than its carrying value. As a result of this evaluation, we determined that there was no impairment of the goodwill of our continuing business at June 30, 2018. 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 June 30, 2018 and December 31, 2017 , our identifiable intangible assets consisted of the following (in thousands): June 30, 2018 December 31, 2017 Accumulated Cumulative Accumulated Cumulative Cost Amortization Impairments Net Cost Amortization Impairments Net Finite-lived intangible assets: Makena base technology $ 797,100 $ 363,721 $ 319,246 $ 114,133 $ 797,100 $ 255,754 $ 319,246 $ 222,100 Makena auto-injector developed technology 79,100 2,443 — 76,657 — — — — Intrarosa developed technology 77,655 6,753 — 70,902 77,655 3,376 — 74,279 953,855 372,917 319,246 261,692 874,755 259,130 319,246 296,379 Indefinite-lived intangible assets: Makena IPR&D — — — — 79,100 — — 79,100 Total intangible assets $ 953,855 $ 372,917 $ 319,246 $ 261,692 $ 953,855 $ 259,130 $ 319,246 $ 375,479 During the first quarter of 2018, following the U.S. Food and Drug Administration (the “FDA”) approval of Makena for administration via a pre-filled subcutaneous auto-injector (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 June 30, 2018 , the weighted average remaining amortization period for our finite-lived intangible assets was approximately 7.7 years. Total amortization expense for the six months ended June 30, 2018 and 2017 was $113.8 million and $45.9 million , respectively. Amortization expense is recorded in cost of product sales 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 $ 57,532 Year Ending December 31, 2019 35,713 Year Ending December 31, 2020 27,033 Year Ending December 31, 2021 26,879 Year Ending December 31, 2022 26,860 Thereafter 87,675 Total $ 261,692 |
Current and Long-Term Liabiliti
Current and Long-Term Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Current and Long-Term Liabilities | CURRENT AND LONG-TERM LIABILITIES Accrued expenses consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Commercial rebates, fees and returns $ 133,087 $ 101,852 Professional, license, and other fees and expenses 26,403 23,657 Salaries, bonuses, and other compensation 17,501 15,882 Interest expense 13,525 13,525 Intrarosa-related license fees — 10,000 Research and development expense 3,537 1,816 Total accrued expenses $ 194,053 $ 166,732 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The following table summarizes our effective tax rate and income tax expense (benefit) for the three and six months ended June 30, 2018 and 2017 (in thousands except for percentages): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Effective tax rate 197 % 38 % (113 )% 38 % Income tax expense (benefit) $ 52,556 $ (8,659 ) $ 44,556 $ (30,120 ) For the three and six months ended June 30, 2018 , we recognized an income tax expense of $52.6 million and $44.6 million , respectively, representing an effective tax rate of 197% and (113)% , respectively. The difference between the 2018 statutory federal tax rate of 21% and the effective tax rates for the three and six months ended June 30, 2018 , was primarily attributable to the establishment of a valuation allowance on net deferred tax assets other than refundable alternative minimum tax (“AMT”) credits, the impact of non-deductible stock compensation and other non-deductible expenses, partially offset by a benefit from contingent consideration, state income taxes and orphan drug credits. We have established a valuation allowance on our deferred tax assets other than refundable credits 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. Our valuation allowance on our deferred tax assets, other than refundable AMT credits, increased during the three and six months ended June 30, 2018 primarily because the deferred tax liabilities associated with the CBR business, which was reclassified to discontinued operations for the three and six months ended June 30, 2018 , are no longer expected to be available as a source of income to realize the benefits of the net 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 and six months ended June 30, 2017 , we recognized an income tax benefit of $8.7 million and $30.1 million , respectively, representing an effective tax rate of 38% and 38% , respectively. The difference between the expected 2017 statutory federal tax rate of 35% and the effective tax rates for the three and six months ended June 30, 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. The primary drivers of the increase in tax expense for the three and six months ended June 30, 2018 as compared to the three and six months ended June 30, 2017 is primarily attributable to an increase in valuation allowance on net deferred tax assets other than refundable AMT credits and a decrease in the federal tax benefit attributable to the decrease in the statutory federal rate from 35% to 21%, as well as an increase in nondeductible expenses, partially offset by contingent consideration. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 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 loss, net of tax, associated with unrealized gains (losses) on securities during the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Beginning balance $ (4,362 ) $ (3,746 ) $ (3,908 ) $ (3,838 ) Holding gains (losses) arising during period, net of tax 67 113 (387 ) 205 Ending balance $ (4,295 ) $ (3,633 ) $ (4,295 ) $ (3,633 ) |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) per Share | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 2018 and 2017 were as follows (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net loss from continuing operations $ (25,817 ) $ (14,252 ) $ (83,916 ) $ (50,178 ) Net income (loss) from discontinued operations 5,736 186 9,592 (448 ) Net loss $ (20,081 ) $ (14,066 ) $ (74,324 ) $ (50,626 ) Weighted average common shares outstanding 34,358 35,145 34,261 34,764 Basic and diluted net (loss) income per share: Loss from continuing operations $ (0.75 ) $ (0.41 ) $ (2.45 ) $ (1.44 ) Income (loss) from discontinued operations $ 0.17 $ 0.01 $ 0.28 $ (0.01 ) Basic and diluted net loss per share: $ (0.58 ) $ (0.40 ) $ (2.17 ) $ (1.45 ) 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): Six Months Ended June 30, 2018 2017 Options to purchase shares of common stock 3,893 2,939 Shares of common stock issuable upon the vesting of RSUs 1,415 1,073 Warrants 1,008 1,515 2022 Convertible Notes 11,695 11,695 2019 Convertible Notes 790 1,515 Total 18,801 18,737 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 and six months ended June 30, 2018 and 2017 , our average common stock price was below the exercise price of the warrants. |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jun. 30, 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”). In June 2018 at our annual meeting of stockholders, our stockholders approved (a) an amendment to our 2007 Plan to, among other things, increase the number of shares of our common stock available for issuance thereunder by 1,043,000 shares and (b) an amendment to our 2015 ESPP to increase the maximum number of shares of our common stock that will be made available for sale thereunder by 500,000 shares. 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 six months ended June 30, 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 669,212 35,400 62,393 767,005 Exercised (71,631 ) (2,375 ) — (74,006 ) Expired or terminated (237,948 ) (19,061 ) (74,375 ) (331,384 ) Outstanding at June 30, 2018 2,950,006 139,500 803,468 3,892,974 Restricted Stock Units The following table summarizes RSU activity for the six months ended June 30, 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 742,527 1,600 28,418 772,545 Vested (319,367 ) (10,150 ) (16,265 ) (345,782 ) Expired or terminated (81,093 ) (460 ) — (81,553 ) Outstanding at June 30, 2018 1,308,690 2,601 103,694 1,414,985 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. As of June 30, 2018 , the maximum shares of common stock that may be issued under these awards is 206,250 . 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 and six months ended June 30, 2018 and 2017 consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Cost of product sales $ 107 $ 129 $ 307 $ 258 Research and development 608 1,095 1,328 1,851 Selling, general and administrative 4,077 3,781 7,948 7,626 Total equity-based compensation expense 4,792 5,005 9,583 9,735 Income tax effect 835 (1,529 ) — (2,895 ) After-tax effect of equity-based compensation expense $ 5,627 $ 3,476 $ 9,583 $ 6,840 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 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 | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Change in Stockholders’ Equity Total stockholders’ equity decreased by $63.3 million during the six months ended June 30, 2018 . This decrease was primarily driven by the following: • $74.3 million due to our net loss for the six months ended June 30, 2018 ; • $11.1 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; • $2.3 million decrease due to the payment of employee tax withholdings related to equity-based compensation; and • $1.5 million increase from net shares issued related to the exercise of stock options. 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 June 30, 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 June 30, 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 half of 2018 . |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 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 June 30, 2018 , our minimum purchase commitments totaled $27.1 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 June 30, 2018 , we have reversed the accrual for a $50.0 million milestone payment based on actual Makena net sales to date and our expectations for future performance, which indicated that achievement of the future milestone is not probable. As we update our analysis in future periods, actual results may vary significantly from the estimated results, which are reliant on a number of external factors as well as the exercise of judgment. Contingent Regulatory and Commercial Milestone Payments In connection with an agreement (the “Endoceutics License Agreement”) entered into with Endoceutics, Inc. (“Endoceutics”), 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 a license agreement we entered into with Palatin Technologies, Inc. (“Palatin”) in January 2017 (the “Palatin License Agreement”), we are required to pay Palatin up to $380.0 million in regulatory and commercial milestone payments, of which $20.0 million was paid in the second quarter of 2018 following the acceptance by the FDA of our New Drug Application (“NDA”) for bremelanotide. As of June 30, 2018 , the remaining potential milestone payments include $60.0 million upon FDA approval of bremelanotide 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 bremelanotide and any other products containing bremelanotide (collectively, the “Bremelanotide Products”), 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 Q, “ 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 condensed consolidated financial statements as of June 30, 2018 . In connection with a development and license agreement (the “Antares License Agreement”) with Antares Pharma, Inc. (“Antares”), 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. Antares is also entitled to sales-based milestone payments upon the achievement of certain annual net sales. 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 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 June 30, 2018 . |
Collaboration, License and Othe
Collaboration, License and Other Strategic Agreements | 6 Months Ended |
Jun. 30, 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 well as forming alliances with other companies to facilitate the sale and distribution of our products. As of June 30, 2018 , we were a party to the following collaborations and license agreements: Prasco In anticipation of the entry of generic competition to our branded Makena intramuscular product following the February 2018 expiration of Makena’s orphan drug exclusivity, we entered into a Distribution and Supply Agreement (the “Prasco Agreement”) with Prasco, LLC (“Prasco”). The Prasco Agreement grants Prasco an exclusive, non-sublicensable, nontranferable license to purchase, distribute and sell a generic version of Makena in the U.S. In July 2018, following the approval by the FDA of a generic version of the Makena single-dose intramuscular injection in late June 2018, in order to participate in the generic market, we authorized Prasco to launch the authorized generic of both the single-dose and multi-dose intramuscular injection of Makena. Under the Prasco Agreement, we are responsible for the manufacture and supply of the generic Makena product to Prasco at a predetermined supply price and Prasco is also required to pay us a certain percentage of the net distributable profits from the sale of the generic Makena product. Pursuant to the terms of the Prasco Agreement, in certain circumstances we may be required to pay penalties if we fail to supply a certain percentage of product ordered by Prasco. The Prasco Agreement will continue for a set period of time, including mutually agreed to additional renewals, but is subject to early termination by us for convenience after a certain period of time or if Prasco is subject to a change of control or by either party for, among other things, uncured breach by or bankruptcy of the other party or for lack of commercial viability, FDA notice, or by mutual agreement. Antares Through our acquisition of Lumara Health, we are party to 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 for 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). We are also party to a Manufacturing Agreement with Antares (the “Antares Manufacturing Agreement”) that sets 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. 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. In addition, we paid Endoceutics $10.0 million in the third quarter of 2017 upon the delivery by Endoceutics of Intrarosa launch quantities and $10.0 million in the second quarter of 2018 following the first anniversary of the closing. 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 also 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 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 and 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 June 2018, our NDA submission to the FDA for bremelanotide was accepted, which triggered the payment of a $20.0 million milestone obligation, which we paid in the second quarter of 2018 and recorded as an IPR&D expense in the first quarter of 2018 when acceptance was deemed probable. In addition, the Palatin License Agreement requires us to make contingent payments of (a) $60.0 million upon FDA approval of bremelanotide, 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 conduct 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 clinical, regulatory and other 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. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Our outstanding debt obligations as of June 30, 2018 and December 31, 2017 consisted of the following (in thousands): June 30, 2018 December 31, 2017 2023 Senior Notes $ 466,906 $ 466,291 2022 Convertible Notes 254,902 248,194 2019 Convertible Notes 20,727 20,198 Total long-term debt 742,535 734,683 Less: current maturities 20,727 — Long-term debt, net of current maturities $ 721,808 $ 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 June 30, 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 $466.9 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 June 30, 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 65,098 690 65,788 Net carrying amount $ 254,902 $ 20,727 $ 275,629 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 condensed consolidated balance sheets. 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 June 30, 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 June 30, 2018 . As of June 30, 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 , 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. Beginning 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. The 2019 Convertible Notes were convertible as of June 30, 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 June 30, 2018 . As of June 30, 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 and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Contractual interest expense $ 2,734 $ 1,943 $ 5,468 $ 3,193 Amortization of debt issuance costs 347 321 685 596 Amortization of debt discount 3,313 2,716 6,550 4,644 Total interest expense $ 6,394 $ 4,980 $ 12,703 $ 8,433 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 June 30, 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 June 30, 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 June 30, 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 | 6 Months Ended |
Jun. 30, 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 | 6 Months Ended |
Jun. 30, 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 consolidated 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 or 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 Sum27
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 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. As of June 30, 2018, our CBR business met all of the conditions to be classified as held for sale and represented a discontinued operation, as we consider the disposal of the CBR business to be a strategic shift that will have a major effect on our operations and financial results. All assets and liabilities associated with CBR were therefore classified as assets and liabilities held for sale in our condensed consolidated balance sheets for the periods presented. Further, all historical operating results for CBR are reflected within discontinued operations in the condensed consolidated statements of operations for all periods presented. For additional information, see Note C, “ Discontinued Operations and Held for Sale. ” |
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 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 We classified $0.5 million of our cash as restricted cash, a non-current asset on the balance sheet, as of June 30, 2018 and December 31, 2017 . 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 | 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. Our operations are located entirely within the U.S. We focus primarily on developing, manufacturing, and commercializing our products and product candidates. We perform ongoing credit evaluations of our customers and generally do not require collateral. Our net accounts receivable primarily represent amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies. Accounts receivable for our products are recorded net of reserves for estimated chargeback obligations, prompt payment discounts and any allowance for doubtful accounts. 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 currently have a single supplier for Makena drug substance, which is used for each of our intramuscular and auto-injector products, and a single supplier of finished drug product for our Makena multi-dose vial and auto-injector product. We would be exposed to a significant loss of revenue from the sale of our products if our suppliers and/or manufacturers could not fulfill demand for any reason. |
Revenue Recognition | 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. Performance Obligations and Product Revenue At contract inception, we assess the goods promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good (or bundle of goods) that is distinct. To identify the performance obligations, we consider all of the goods 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 represent separate performance obligations: • Supply of Makena product • Supply of Feraheme product • Supply of Intrarosa product 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 a 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 June 30, 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 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 periods 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 and six months ended June 30, 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. |
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. There was no impact to revenue for the three and six months ended June 30, 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 consolidated 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 or 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 Sum28
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 AmerisourceBergen Drug Corporation 27% 23% 27% 25% McKesson Corporation 26% 26% 27% 22% Customers which represented greater than 10% of our accounts receivable balances as of June 30, 2018 and December 31, 2017 were as follows: June 30, 2018 December 31, 2017 McKesson Corporation 27% 26% AmerisourceBergen Drug Corporation 29% 31% |
Discontinued Operations and H29
Discontinued Operations and Held For Sale (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued operations held for sale | Assets and liabilities held for sale were reflected separately in our condensed consolidated balance sheets and were comprised of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Assets Current assets: Cash $ 59,554 $ 29,259 Accounts receivable, net 10,558 12,042 Prepaid transaction costs 3,865 — Inventories (raw materials) 2,268 2,913 Prepaid and other current assets 916 1,294 Total current assets held for sale $ 77,161 $ 45,508 Property, plant and equipment, net $ 18,256 $ 18,092 Intangible assets, net 321,841 328,991 Goodwill 216,971 216,971 Other long-term assets 2,071 496 Restricted cash 161 161 Total long-term assets held for sale $ 559,300 $ 564,711 Liabilities Current liabilities: Accounts payable $ 1,260 $ 2,618 Accrued expenses 7,498 8,758 Deferred revenues, short term 44,204 42,494 Total current liabilities held for sale $ 52,962 $ 53,870 Deferred revenues, long-term 29,823 24,387 Deferred tax liabilities 67,664 71,046 Other long-term liabilities 798 388 Total long-term liabilities held for sale $ 98,285 $ 95,821 The results of operations of the CBR business were classified as discontinued operations for all periods presented in our condensed consolidated financial statements. The following is a summary of net income (loss) from discontinued operations for the three and six months ended June 30, 2018 and 2017: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Service revenues, net $ 30,085 $ 28,023 $ 59,054 $ 54,955 Costs and expenses: Cost of services 5,509 5,562 10,983 10,572 Selling, general and administrative expenses 17,531 22,088 35,150 43,889 Total costs and expenses 23,040 27,650 46,133 54,461 Operating income 7,045 373 12,921 494 Other income 113 — 115 — Income from discontinued operations 7,158 373 13,036 494 Income tax expense (1,422 ) (187 ) (3,444 ) (942 ) Net income (loss) from discontinued operations $ 5,736 $ 186 $ 9,592 $ (448 ) The following table summarizes significant cash activity of the CBR business that were included within the unaudited condensed consolidated statements of cash flows for the respective periods: Six Months Ended June 30, 2018 2017 Net cash provided by operating activities $ 31,642 $ 11,637 Net cash used in investing activities (1,347 ) (1,131 ) Net increase in cash, cash equivalents and restricted cash 30,295 10,506 Cash, cash equivalents and restricted cash at beginning of period 29,419 52,116 Cash, cash equivalents and restricted cash at end of period $ 59,714 $ 62,622 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated revenue | The following table provides information about disaggregated revenue by products for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Product sales, net Makena $ 105,172 $ 102,681 $ 195,156 $ 189,136 Feraheme 37,699 27,475 62,833 53,397 Intrarosa 3,241 — 5,406 — MuGard 107 186 172 326 Total $ 146,219 $ 130,342 $ 263,567 $ 242,859 Total gross product sales were offset by product sales allowances and accruals for the three and six months ended June 30, 2018 and 2017 as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Gross product sales $ 297,732 $ 234,354 $ 537,602 $ 441,078 Provision for product sales allowances and accruals: Contractual adjustments 111,539 75,684 197,683 145,512 Governmental rebates 39,974 28,328 76,352 52,707 Total 151,513 104,012 274,035 198,219 Product sales, net $ 146,219 $ 130,342 $ 263,567 $ 242,859 |
Product revenue allowance and accrual activity | The following table summarizes the product revenue allowance and accrual activity for the three and six months ended June 30, 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 Provisions related to current period sales 114,408 40,486 154,894 Adjustments related to prior period sales (2,870 ) (513 ) (3,383 ) Payments/returns relating to current period sales (87,985 ) (2,453 ) (90,438 ) Payments/returns relating to prior period sales (16,532 ) (25,993 ) (42,525 ) Balance at June 30, 2018 $ 71,255 $ 73,354 $ 144,609 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of marketable securities | The following is a summary of our marketable securities as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value Short-term marketable securities:* Corporate debt securities $ 55,303 $ 1 $ (197 ) $ 55,107 Certificates of deposit 9,450 — — 9,450 U.S. treasury and government agency securities 5,998 — (43 ) 5,955 Commercial paper 7,452 — — 7,452 Total short-term marketable securities $ 78,203 $ 1 $ (240 ) $ 77,964 Long-term marketable securities:** Corporate debt securities $ 55,079 $ 5 $ (685 ) $ 54,399 U.S. treasury and government agency securities 6,383 — (74 ) 6,309 Total long-term marketable securities 61,462 5 (759 ) 60,708 Total marketable securities $ 139,665 $ 6 $ (999 ) $ 138,672 * 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) | 6 Months Ended |
Jun. 30, 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 June 30, 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 June 30, 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 $ 3,158 $ 3,158 $ — $ — Corporate debt securities 109,506 — 109,506 — U.S. treasury and government agency securities 12,264 — 12,264 — Certificates of deposit 9,450 — 9,450 — Commercial paper 7,452 — 7,452 — Total assets $ 141,830 $ 3,158 $ 138,672 $ — Liabilities: Contingent consideration - MuGard $ 841 $ — $ — $ 841 Total liabilities $ 841 $ — $ — $ 841 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 (60 ) Adjustments to fair value of contingent consideration (49,184 ) Balance as of June 30, 2018 $ 841 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of major classes of inventories | Our major classes of inventories were as follows as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Raw materials $ 11,285 $ 9,505 Work in process 1,380 4,146 Finished goods 18,009 20,792 Total inventories $ 30,674 $ 34,443 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and equipment, net consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Computer equipment and software $ 1,401 $ 1,401 Furniture and fixtures 1,442 1,442 Leasehold improvements 2,938 2,938 Laboratory and production equipment 5,907 654 Construction in progress 21 5,068 11,709 11,503 Less: accumulated depreciation (4,369 ) (3,599 ) Property and equipment, net $ 7,340 $ 7,904 |
Goodwill and Intangible Asset35
Goodwill and Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | As of June 30, 2018 and December 31, 2017 , our identifiable intangible assets consisted of the following (in thousands): June 30, 2018 December 31, 2017 Accumulated Cumulative Accumulated Cumulative Cost Amortization Impairments Net Cost Amortization Impairments Net Finite-lived intangible assets: Makena base technology $ 797,100 $ 363,721 $ 319,246 $ 114,133 $ 797,100 $ 255,754 $ 319,246 $ 222,100 Makena auto-injector developed technology 79,100 2,443 — 76,657 — — — — Intrarosa developed technology 77,655 6,753 — 70,902 77,655 3,376 — 74,279 953,855 372,917 319,246 261,692 874,755 259,130 319,246 296,379 Indefinite-lived intangible assets: Makena IPR&D — — — — 79,100 — — 79,100 Total intangible assets $ 953,855 $ 372,917 $ 319,246 $ 261,692 $ 953,855 $ 259,130 $ 319,246 $ 375,479 |
Schedule of indefinite-lived intangible assets | As of June 30, 2018 and December 31, 2017 , our identifiable intangible assets consisted of the following (in thousands): June 30, 2018 December 31, 2017 Accumulated Cumulative Accumulated Cumulative Cost Amortization Impairments Net Cost Amortization Impairments Net Finite-lived intangible assets: Makena base technology $ 797,100 $ 363,721 $ 319,246 $ 114,133 $ 797,100 $ 255,754 $ 319,246 $ 222,100 Makena auto-injector developed technology 79,100 2,443 — 76,657 — — — — Intrarosa developed technology 77,655 6,753 — 70,902 77,655 3,376 — 74,279 953,855 372,917 319,246 261,692 874,755 259,130 319,246 296,379 Indefinite-lived intangible assets: Makena IPR&D — — — — 79,100 — — 79,100 Total intangible assets $ 953,855 $ 372,917 $ 319,246 $ 261,692 $ 953,855 $ 259,130 $ 319,246 $ 375,479 |
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 $ 57,532 Year Ending December 31, 2019 35,713 Year Ending December 31, 2020 27,033 Year Ending December 31, 2021 26,879 Year Ending December 31, 2022 26,860 Thereafter 87,675 Total $ 261,692 |
Current and Long-Term Liabili36
Current and Long-Term Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Commercial rebates, fees and returns $ 133,087 $ 101,852 Professional, license, and other fees and expenses 26,403 23,657 Salaries, bonuses, and other compensation 17,501 15,882 Interest expense 13,525 13,525 Intrarosa-related license fees — 10,000 Research and development expense 3,537 1,816 Total accrued expenses $ 194,053 $ 166,732 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 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 expense (benefit) for the three and six months ended June 30, 2018 and 2017 (in thousands except for percentages): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Effective tax rate 197 % 38 % (113 )% 38 % Income tax expense (benefit) $ 52,556 $ (8,659 ) $ 44,556 $ (30,120 ) |
Accumulated Other Comprehensi38
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jun. 30, 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 loss, net of tax, associated with unrealized gains (losses) on securities during the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Beginning balance $ (4,362 ) $ (3,746 ) $ (3,908 ) $ (3,838 ) Holding gains (losses) arising during period, net of tax 67 113 (387 ) 205 Ending balance $ (4,295 ) $ (3,633 ) $ (4,295 ) $ (3,633 ) |
Basic and Diluted Net Income 39
Basic and Diluted Net Income (Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 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 and six months ended June 30, 2018 and 2017 were as follows (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net loss from continuing operations $ (25,817 ) $ (14,252 ) $ (83,916 ) $ (50,178 ) Net income (loss) from discontinued operations 5,736 186 9,592 (448 ) Net loss $ (20,081 ) $ (14,066 ) $ (74,324 ) $ (50,626 ) Weighted average common shares outstanding 34,358 35,145 34,261 34,764 Basic and diluted net (loss) income per share: Loss from continuing operations $ (0.75 ) $ (0.41 ) $ (2.45 ) $ (1.44 ) Income (loss) from discontinued operations $ 0.17 $ 0.01 $ 0.28 $ (0.01 ) Basic and diluted net loss per share: $ (0.58 ) $ (0.40 ) $ (2.17 ) $ (1.45 ) |
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): Six Months Ended June 30, 2018 2017 Options to purchase shares of common stock 3,893 2,939 Shares of common stock issuable upon the vesting of RSUs 1,415 1,073 Warrants 1,008 1,515 2022 Convertible Notes 11,695 11,695 2019 Convertible Notes 790 1,515 Total 18,801 18,737 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 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 six months ended June 30, 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 669,212 35,400 62,393 767,005 Exercised (71,631 ) (2,375 ) — (74,006 ) Expired or terminated (237,948 ) (19,061 ) (74,375 ) (331,384 ) Outstanding at June 30, 2018 2,950,006 139,500 803,468 3,892,974 |
Summary of details regarding restricted stock activity | The following table summarizes RSU activity for the six months ended June 30, 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 742,527 1,600 28,418 772,545 Vested (319,367 ) (10,150 ) (16,265 ) (345,782 ) Expired or terminated (81,093 ) (460 ) — (81,553 ) Outstanding at June 30, 2018 1,308,690 2,601 103,694 1,414,985 |
Schedule of equity-based compensation expense | Equity-based compensation expense for the three and six months ended June 30, 2018 and 2017 consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Cost of product sales $ 107 $ 129 $ 307 $ 258 Research and development 608 1,095 1,328 1,851 Selling, general and administrative 4,077 3,781 7,948 7,626 Total equity-based compensation expense 4,792 5,005 9,583 9,735 Income tax effect 835 (1,529 ) — (2,895 ) After-tax effect of equity-based compensation expense $ 5,627 $ 3,476 $ 9,583 $ 6,840 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt obligations | Our outstanding debt obligations as of June 30, 2018 and December 31, 2017 consisted of the following (in thousands): June 30, 2018 December 31, 2017 2023 Senior Notes $ 466,906 $ 466,291 2022 Convertible Notes 254,902 248,194 2019 Convertible Notes 20,727 20,198 Total long-term debt 742,535 734,683 Less: current maturities 20,727 — Long-term debt, net of current maturities $ 721,808 $ 734,683 |
Schedule of outstanding convertible debt | The outstanding balances of our Convertible Notes as of June 30, 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 65,098 690 65,788 Net carrying amount $ 254,902 $ 20,727 $ 275,629 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 and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Contractual interest expense $ 2,734 $ 1,943 $ 5,468 $ 3,193 Amortization of debt issuance costs 347 321 685 596 Amortization of debt discount 3,313 2,716 6,550 4,644 Total interest expense $ 6,394 $ 4,980 $ 12,703 $ 8,433 |
Schedule of future annual principal payments on long-term debt | Future annual principal payments on our long-term debt as of June 30, 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 |
Description of Business (Detail
Description of Business (Details) $ in Millions | Jun. 14, 2018USD ($) |
CBR business | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Cash consideration for sale of wholly-owned subsidiary | $ 530 |
Basis of Presentation and Sum43
Basis of Presentation and Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Restricted cash | $ 495 | $ 495 |
Basis of Presentation and Sum44
Basis of Presentation and Summary of Significant Accounting Policies - Concentration and Significant Customer Information (Details) - facility | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Sales Revenue, Goods, Net | Customer Concentration Risk | AmerisourceBergen Drug Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 27.00% | 23.00% | 27.00% | 25.00% | |
Sales Revenue, Goods, Net | Customer Concentration Risk | McKesson Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 26.00% | 26.00% | 27.00% | 22.00% | |
Accounts Receivable | Customer Concentration Risk | AmerisourceBergen Drug Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 29.00% | 31.00% | |||
Accounts Receivable | Customer Concentration Risk | McKesson Corporation | |||||
Concentrations and Significant Customer Information | |||||
Concentration risk | 27.00% | 26.00% | |||
Feraheme | |||||
Concentrations and Significant Customer Information | |||||
Number of production facilities | 2 |
Discontinued Operations and H45
Discontinued Operations and Held For Sale - Narrative (Details) - CBR business $ in Millions | Jun. 14, 2018USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Cash consideration for sale of wholly-owned subsidiary | $ 530 |
Discontinued Operations, Held-for-sale or Disposed of by Sale | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Cash consideration for sale of wholly-owned subsidiary | $ 530 |
Discontinued Operations and H46
Discontinued Operations and Held For Sale - Assets and Liabilities Held For Sale (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Total current assets held for sale | $ 77,161 | $ 45,508 |
Total long-term assets held for sale | 559,300 | 564,711 |
Current liabilities: | ||
Total current liabilities held for sale | 52,962 | 53,870 |
Total long-term liabilities held for sale | 98,285 | 95,821 |
CBR business | Discontinued Operations, Held-for-sale or Disposed of by Sale | ||
Current assets: | ||
Cash | 59,554 | 29,259 |
Accounts receivable, net | 10,558 | 12,042 |
Prepaid transaction costs | 3,865 | 0 |
Inventories (raw materials) | 2,268 | 2,913 |
Prepaid and other current assets | 916 | 1,294 |
Total current assets held for sale | 77,161 | 45,508 |
Property, plant and equipment, net | 18,256 | 18,092 |
Intangible assets, net | 321,841 | 328,991 |
Goodwill | 216,971 | 216,971 |
Other long-term assets | 2,071 | 496 |
Restricted cash | 161 | 161 |
Total long-term assets held for sale | 559,300 | 564,711 |
Current liabilities: | ||
Accounts payable | 1,260 | 2,618 |
Accrued expenses | 7,498 | 8,758 |
Deferred revenues, short term | 44,204 | 42,494 |
Total current liabilities held for sale | 52,962 | 53,870 |
Deferred revenues, long-term | 29,823 | 24,387 |
Deferred tax liabilities | 67,664 | 71,046 |
Other long-term liabilities | 798 | 388 |
Total long-term liabilities held for sale | $ 98,285 | $ 95,821 |
Discontinued Operations and H47
Discontinued Operations and Held For Sale - Summary of Net Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Costs and expenses: | ||||
Income from discontinued operations | $ 7,158 | $ 373 | $ 13,036 | $ 494 |
Income tax expense | (1,422) | (187) | (3,444) | (942) |
CBR business | Discontinued Operations, Held-for-sale or Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Service revenues, net | 30,085 | 28,023 | 59,054 | 54,955 |
Costs and expenses: | ||||
Cost of services | 5,509 | 5,562 | 10,983 | 10,572 |
Selling, general and administrative expenses | 17,531 | 22,088 | 35,150 | 43,889 |
Total costs and expenses | 23,040 | 27,650 | 46,133 | 54,461 |
Operating income | 7,045 | 373 | 12,921 | 494 |
Other income | 113 | 0 | 115 | 0 |
Income from discontinued operations | 7,158 | 373 | 13,036 | 494 |
Income tax expense | (1,422) | (187) | (3,444) | (942) |
Net income (loss) from discontinued operations | $ 5,736 | $ 186 | $ 9,592 | $ (448) |
Discontinued Operations and H48
Discontinued Operations and Held For Sale - Summary of Cash and Non-cash Activity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash, cash equivalents and restricted cash at end of period | $ 59,714 | $ 62,622 |
CBR business | Discontinued Operations, Held-for-sale or Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net cash provided by operating activities | 31,642 | 11,637 |
Net cash used in investing activities | (1,347) | (1,131) |
Net increase in cash, cash equivalents and restricted cash | 30,295 | 10,506 |
Cash, cash equivalents and restricted cash at beginning of period | 29,419 | 52,116 |
Cash, cash equivalents and restricted cash at end of period | $ 59,714 | $ 62,622 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Revenue By Major Products and Services (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 146,254 | $ 130,371 | $ 263,642 | $ 242,912 |
Makena | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 105,172 | 102,681 | 195,156 | 189,136 |
Feraheme | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 37,699 | 27,475 | 62,833 | 53,397 |
Intrarosa | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,241 | 0 | 5,406 | 0 |
MuGard | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 107 | 186 | 172 | 326 |
Product Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 146,219 | $ 130,342 | $ 263,567 | $ 242,859 |
Revenue Recognition - Total Gro
Revenue Recognition - Total Gross Product (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Provision for product sales allowances and accruals: | ||||
Product sales, net | $ 146,254 | $ 130,371 | $ 263,642 | $ 242,912 |
Product Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Gross product sales | 297,732 | 234,354 | 537,602 | 441,078 |
Provision for product sales allowances and accruals: | ||||
Contractual adjustments | 111,539 | 75,684 | 197,683 | 145,512 |
Governmental rebates | 39,974 | 28,328 | 76,352 | 52,707 |
Total | 151,513 | 104,012 | 274,035 | 198,219 |
Product sales, net | $ 146,219 | $ 130,342 | $ 263,567 | $ 242,859 |
Revenue Recognition - Product R
Revenue Recognition - Product Revenue Allowance and Accrual Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Mar. 31, 2018 | Jun. 30, 2018 | |
Contractual Adjustments | ||
Balance at Beginning of Period | $ 62,164 | $ 62,164 |
Provisions related to current period sales | 85,308 | 114,408 |
Adjustments related to prior period sales | 836 | (2,870) |
Payments/returns relating to current period sales | (44,633) | (87,985) |
Payments/returns relating to prior period sales | (39,441) | (16,532) |
Balance at End of Period | 64,234 | 71,255 |
Governmental Rebates | ||
Balance at Beginning of Period | 50,598 | 50,598 |
Provisions related to current period sales | 31,028 | 40,486 |
Adjustments related to prior period sales | 5,350 | (513) |
Payments/returns relating to current period sales | 0 | (2,453) |
Payments/returns relating to prior period sales | (25,149) | (25,993) |
Balance at End of Period | 61,827 | 73,354 |
Revenue, Allowance [Roll Forward] | ||
Balance at Beginning of Period | 112,762 | 112,762 |
Provisions related to current period sales | 116,336 | 154,894 |
Adjustments related to prior period sales | 6,186 | (3,383) |
Payments/returns relating to current period sales | (44,633) | (90,438) |
Payments/returns relating to prior period sales | (64,590) | (42,525) |
Balance at End of Period | $ 126,061 | $ 144,609 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | |
Discount percentage | 2.00% |
Standard payment term | 30 days |
Percentage of discount accrued at time of sale | 100.00% |
GPO billing period | 30 days |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Rebate payment term | 1 month |
Product return term | 3 years |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Rebate payment term | 3 months |
Product return term | 5 years |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Short-term marketable securities: | |||||
Amortized Cost | $ 78,203,000 | $ 78,203,000 | $ 70,406,000 | ||
Gross Unrealized Gains | 1,000 | 1,000 | 0 | ||
Gross Unrealized Losses | (240,000) | (240,000) | (81,000) | ||
Estimated Fair Value | 77,964,000 | 77,964,000 | 70,325,000 | ||
Long-term marketable securities: | |||||
Amortized Cost | 61,462,000 | 61,462,000 | 66,663,000 | ||
Gross Unrealized Gains | 5,000 | 5,000 | 1,000 | ||
Gross Unrealized Losses | (759,000) | (759,000) | (396,000) | ||
Estimated Fair Value | 60,708,000 | 60,708,000 | 66,268,000 | ||
Amortized Cost | 139,665,000 | 139,665,000 | 137,069,000 | ||
Gross Unrealized Gains | 6,000 | 6,000 | 1,000 | ||
Gross Unrealized Losses | (999,000) | (999,000) | (477,000) | ||
Estimated Fair Value | 138,672,000 | 138,672,000 | 136,593,000 | ||
Other-than-temporary impairment losses | 0 | $ 0 | 0 | $ 0 | |
Corporate debt securities | |||||
Short-term marketable securities: | |||||
Amortized Cost | 55,303,000 | 55,303,000 | 57,257,000 | ||
Gross Unrealized Gains | 1,000 | 1,000 | 0 | ||
Gross Unrealized Losses | (197,000) | (197,000) | (68,000) | ||
Estimated Fair Value | 55,107,000 | 55,107,000 | 57,189,000 | ||
Long-term marketable securities: | |||||
Amortized Cost | 55,079,000 | 55,079,000 | 59,282,000 | ||
Gross Unrealized Gains | 5,000 | 5,000 | 1,000 | ||
Gross Unrealized Losses | (685,000) | (685,000) | (320,000) | ||
Estimated Fair Value | 54,399,000 | 54,399,000 | 58,963,000 | ||
Certificates of deposit | |||||
Short-term marketable securities: | |||||
Amortized Cost | 9,450,000 | 9,450,000 | 9,151,000 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | 0 | ||
Estimated Fair Value | 9,450,000 | 9,450,000 | 9,151,000 | ||
U.S. treasury and government agency securities | |||||
Short-term marketable securities: | |||||
Amortized Cost | 5,998,000 | 5,998,000 | 1,999,000 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | (43,000) | (43,000) | (13,000) | ||
Estimated Fair Value | 5,955,000 | 5,955,000 | 1,986,000 | ||
Long-term marketable securities: | |||||
Amortized Cost | 6,383,000 | 6,383,000 | 7,381,000 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | (74,000) | (74,000) | (76,000) | ||
Estimated Fair Value | 6,309,000 | 6,309,000 | 7,305,000 | ||
Commercial paper | |||||
Short-term marketable securities: | |||||
Amortized Cost | 7,452,000 | 7,452,000 | 1,999,000 | ||
Gross Unrealized Gains | 0 | 0 | 0 | ||
Gross Unrealized Losses | 0 | 0 | 0 | ||
Estimated Fair Value | $ 7,452,000 | $ 7,452,000 | $ 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 | Jun. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Cash equivalents | $ 3,158 | $ 4,591 |
Total assets | 141,830 | 141,184 |
Liabilities: | ||
Total liabilities | 841 | 50,085 |
Lumara Health Inc. | ||
Liabilities: | ||
Contingent consideration | 49,187 | |
MuGard | ||
Liabilities: | ||
Contingent consideration | 841 | 898 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash equivalents | 3,158 | 4,591 |
Total assets | 3,158 | 4,591 |
Liabilities: | ||
Total liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Lumara Health Inc. | ||
Liabilities: | ||
Contingent consideration | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | MuGard | ||
Liabilities: | ||
Contingent consideration | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Total assets | 138,672 | 136,593 |
Liabilities: | ||
Total liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Lumara Health Inc. | ||
Liabilities: | ||
Contingent consideration | 0 | |
Significant Other Observable Inputs (Level 2) | MuGard | ||
Liabilities: | ||
Contingent consideration | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Total liabilities | 841 | 50,085 |
Significant Unobservable Inputs (Level 3) | Lumara Health Inc. | ||
Liabilities: | ||
Contingent consideration | 49,187 | |
Significant Unobservable Inputs (Level 3) | MuGard | ||
Liabilities: | ||
Contingent consideration | 841 | 898 |
Corporate debt securities | ||
Assets: | ||
Available-for-sale securities | 109,506 | 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 | 109,506 | 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 | 12,264 | 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 | 12,264 | 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 | 9,450 | 9,151 |
Certificates of deposit | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Certificates of deposit | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Available-for-sale securities | 9,450 | 9,151 |
Certificates of deposit | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Commercial paper | ||
Assets: | ||
Available-for-sale securities | 7,452 | 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 | 7,452 | 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) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018USD ($) | Nov. 30, 2014USD ($) | |
MuGard | ||
Reconciliation of contingent consideration obligations related to acquisitions | ||
Estimated undiscounted royalty amounts payable, minimum | $ 2,000 | |
Estimated undiscounted royalty amounts payable, maximum | $ 6,000 | |
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 | (60) | |
Adjustments to fair value of contingent consideration | (49,184) | |
Balance at end of period | $ 841 | |
Lumara Health Inc. | ||
Reconciliation of contingent consideration obligations related to acquisitions | ||
Estimated undiscounted royalty amounts payable, maximum | $ 350,000 | |
Measurement Input, Discount Rate | MuGard | ||
Reconciliation of contingent consideration obligations related to acquisitions | ||
Discount rate | 0.14 |
Fair Value Measurements - Debt
Fair Value Measurements - Debt (Details) - Significant Other Observable Inputs (Level 2) $ in Millions | Jun. 30, 2018USD ($) |
Senior Notes Due 2023 | |
Debt | |
Fair value of debt | $ 504.8 |
Senior Convertible Notes Due 2022 | |
Debt | |
Fair value of debt | 335.5 |
Senior Convertible Notes Due 2019 | |
Debt | |
Fair value of debt | $ 21.3 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 11,285 | $ 9,505 |
Work in process | 1,380 | 4,146 |
Finished goods | 18,009 | 20,792 |
Total inventories | 30,674 | $ 34,443 |
Decrease in total inventories | $ 3,800 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Property, plant and equipment, net | ||
Property and equipment, gross | $ 11,709 | $ 11,503 |
Less: accumulated depreciation | (4,369) | (3,599) |
Property and equipment, net | 7,340 | 7,904 |
Computer equipment and software | ||
Property, plant and equipment, net | ||
Property and equipment, gross | 1,401 | 1,401 |
Furniture and fixtures | ||
Property, plant and equipment, net | ||
Property and equipment, gross | 1,442 | 1,442 |
Leasehold improvements | ||
Property, plant and equipment, net | ||
Property and equipment, gross | 2,938 | 2,938 |
Laboratory and production equipment | ||
Property, plant and equipment, net | ||
Property and equipment, gross | 5,907 | 654 |
Construction in progress | ||
Property, plant and equipment, net | ||
Property and equipment, gross | $ 21 | $ 5,068 |
Goodwill and Intangible Asset59
Goodwill and Intangible Assets, Net - Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 422,513 | $ 422,513 |
Goodwill and Intangible Asset60
Goodwill and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Finite-lived intangible assets: | ||
Finite-lived intangible assets, cost | $ 953,855 | $ 874,755 |
Finite-lived intangible assets, accumulated amortization | 372,917 | 259,130 |
Finite-lived intangible assets, cumulative impairments | 319,246 | 319,246 |
Total | 261,692 | 296,379 |
Indefinite-lived intangible assets: | ||
Total intangible assets, cost | 953,855 | 953,855 |
Total intangible assets, impairments | 319,246 | 319,246 |
Total intangible assets, net | 261,692 | 375,479 |
Makena | Developed technology rights | ||
Finite-lived intangible assets: | ||
Finite-lived intangible assets, cost | 797,100 | 797,100 |
Finite-lived intangible assets, accumulated amortization | 363,721 | 255,754 |
Finite-lived intangible assets, cumulative impairments | 319,246 | 319,246 |
Total | 114,133 | 222,100 |
Makena Auto-Injector | Developed technology rights | ||
Finite-lived intangible assets: | ||
Finite-lived intangible assets, cost | 79,100 | 0 |
Finite-lived intangible assets, accumulated amortization | 2,443 | 0 |
Finite-lived intangible assets, cumulative impairments | 0 | 0 |
Total | 76,657 | 0 |
Intrarosa | Developed technology rights | ||
Finite-lived intangible assets: | ||
Finite-lived intangible assets, cost | 77,655 | 77,655 |
Finite-lived intangible assets, accumulated amortization | 6,753 | 3,376 |
Finite-lived intangible assets, cumulative impairments | 0 | 0 |
Total | 70,902 | 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 |
Goodwill and Intangible Asset61
Goodwill and Intangible Assets, Net - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Expected useful life | 7 years 8 months 26 days | ||
Amortization of intangible assets | $ 113.8 | $ 45.9 | |
Makena Auto-Injector | Developed technology rights | |||
Finite-Lived Intangible Assets [Line Items] | |||
Expected useful life | 8 years 9 months |
Goodwill and Intangible Asset62
Goodwill and Intangible Assets, Net - Schedule of Expected Future Annual Amortization Expense related to Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Estimated Amortization Expense | ||
Remainder of Year Ending December 31, 2018 | $ 57,532 | |
Year Ending December 31, 2019 | 35,713 | |
Year Ending December 31, 2020 | 27,033 | |
Year Ending December 31, 2021 | 26,879 | |
Year Ending December 31, 2022 | 26,860 | |
Thereafter | 87,675 | |
Total | $ 261,692 | $ 296,379 |
Current and Long-Term Liabili63
Current and Long-Term Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Commercial rebates, fees and returns | $ 133,087 | $ 101,852 |
Professional, license, and other fees and expenses | 26,403 | 23,657 |
Salaries, bonuses, and other compensation | 17,501 | 15,882 |
Interest expense | 13,525 | 13,525 |
Intrarosa-related license fees | 0 | 10,000 |
Research and development expense | 3,537 | 1,816 |
Total accrued expenses | $ 194,053 | $ 166,732 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 197.00% | 38.00% | (113.00%) | 38.00% | |
Income tax expense (benefit) | $ (52,556) | $ 8,659 | $ (44,556) | $ 30,120 | |
Tax Cuts and Jobs Act, provisional tax benefit | $ 17,600 |
Accumulated Other Comprehensi65
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
AOCI Attributable to Parent, Net of Tax | ||||
Beginning balance | $ 790,244 | |||
Holding gains (losses) arising during period, net of tax | $ 67 | $ 113 | (387) | $ 205 |
Ending balance | 726,904 | 726,904 | ||
AOCI Attributable to Parent | ||||
AOCI Attributable to Parent, Net of Tax | ||||
Beginning balance | (4,362) | (3,746) | (3,908) | (3,838) |
Ending balance | $ (4,295) | $ (3,633) | $ (4,295) | $ (3,633) |
Basic and Diluted Net Income 66
Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Feb. 28, 2014 | |
Basic and Diluted Net Income (Loss) per Share | |||||
Net loss from continuing operations | $ (25,817) | $ (14,252) | $ (83,916) | $ (50,178) | |
Net income (loss) from discontinued operations | 5,736 | 186 | 9,592 | (448) | |
Net loss | $ (20,081) | $ (14,066) | $ (74,324) | $ (50,626) | |
Weighted average common shares outstanding (in shares) | 34,358 | 35,145 | 34,261 | 34,764 | |
Net loss per share: | |||||
Loss from continuing operations (in dollars per share) | $ (0.75) | $ (0.41) | $ (2.45) | $ (1.44) | |
Income (loss) from discontinued operations (in dollars per share) | 0.17 | 0.01 | 0.28 | (0.01) | |
Basic and diluted net loss per share (in dollars per share) | $ (0.58) | $ (0.40) | $ (2.17) | $ (1.45) | |
Anti-dilutive securities (in shares) | 18,801 | 18,737 | |||
Options to purchase shares of common stock | |||||
Net loss per share: | |||||
Anti-dilutive securities (in shares) | 3,893 | 2,939 | |||
Shares of common stock issuable upon the vesting of RSUs | |||||
Net loss per share: | |||||
Anti-dilutive securities (in shares) | 1,415 | 1,073 | |||
Warrants | |||||
Net loss per share: | |||||
Anti-dilutive securities (in shares) | 1,008 | 1,515 | |||
2022 Convertible Notes | Convertible Debt Securities | |||||
Net loss per share: | |||||
Anti-dilutive securities (in shares) | 11,695 | 11,695 | |||
2019 Convertible Notes | Convertible Debt Securities | |||||
Net loss per share: | |||||
Anti-dilutive securities (in shares) | 790 | 1,515 | |||
Convertible Debt | 2022 Convertible Notes | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Interest rate | 3.25% | 3.25% | 3.25% | 3.25% | |
Convertible Debt | 2019 Convertible Notes | |||||
Basic and Diluted Net Income (Loss) per Share | |||||
Interest rate | 2.50% | 2.50% | 2.50% |
Equity-Based Compensation - Act
Equity-Based Compensation - Activity Related to Plans (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Mar. 31, 2018shares | Jun. 30, 2018USD ($)shares | Jun. 30, 2018USD ($)planshares | |
Equity compensation plans | |||
Number of equity compensation plans | plan | 3 | ||
Stock Options | |||
Outstanding (in shares) | 3,531,359 | ||
Granted (in shares) | 767,005 | ||
Exercised (in shares) | (74,006) | ||
Expired or terminated (in shares) | (331,384) | ||
Outstanding (in shares) | 3,892,974 | 3,892,974 | |
Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 1,069,775 | ||
Granted (in shares) | 772,545 | ||
Vested (in shares) | (345,782) | ||
Expired or terminated (in shares) | (81,553) | ||
Outstanding (in shares) | 1,414,985 | 1,414,985 | |
2007 Equity Plan | |||
Equity compensation plans | |||
Increase in stock available for issuance | 1,043,000 | ||
Stock Options | |||
Outstanding (in shares) | 2,590,373 | ||
Granted (in shares) | 669,212 | ||
Exercised (in shares) | (71,631) | ||
Expired or terminated (in shares) | (237,948) | ||
Outstanding (in shares) | 2,950,006 | 2,950,006 | |
2007 Equity Plan | Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 966,623 | ||
Granted (in shares) | 742,527 | ||
Vested (in shares) | (319,367) | ||
Expired or terminated (in shares) | (81,093) | ||
Outstanding (in shares) | 1,308,690 | 1,308,690 | |
2007 Equity Plan | Performance Restricted Stock Units (RSUs) | |||
Restricted Stock Units | |||
Granted (in shares) | 206,250 | ||
Award vesting period | 3 years | ||
Maximum shares that may be issued | 206,250 | 206,250 | |
Fair value, performance- based RSUs | $ | $ 3.8 | $ 3.8 | |
Compensation expense, period for recognition | 3 years | ||
2015 ESPP | |||
Equity compensation plans | |||
Increase in stock available for issuance | 500,000 | ||
2013 Lumara Equity Plan | |||
Stock Options | |||
Outstanding (in shares) | 125,536 | ||
Granted (in shares) | 35,400 | ||
Exercised (in shares) | (2,375) | ||
Expired or terminated (in shares) | (19,061) | ||
Outstanding (in shares) | 139,500 | 139,500 | |
2013 Lumara Equity Plan | Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 11,611 | ||
Granted (in shares) | 1,600 | ||
Vested (in shares) | (10,150) | ||
Expired or terminated (in shares) | (460) | ||
Outstanding (in shares) | 2,601 | 2,601 | |
Inducement Grants | |||
Stock Options | |||
Outstanding (in shares) | 815,450 | ||
Granted (in shares) | 62,393 | ||
Exercised (in shares) | 0 | ||
Expired or terminated (in shares) | (74,375) | ||
Outstanding (in shares) | 803,468 | 803,468 | |
Inducement Grants | Restricted Stock Units | |||
Restricted Stock Units | |||
Outstanding (in shares) | 91,541 | ||
Granted (in shares) | 28,418 | ||
Vested (in shares) | (16,265) | ||
Expired or terminated (in shares) | 0 | ||
Outstanding (in shares) | 103,694 | 103,694 |
Equity-Based Compensation - Equ
Equity-Based Compensation - Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Equity-based compensation expense | ||||
Total equity-based compensation expense | $ 4,792 | $ 5,005 | $ 9,583 | $ 9,735 |
Income tax effect | 835 | (1,529) | 0 | (2,895) |
After-tax effect of equity-based compensation expense | 5,627 | 3,476 | 9,583 | 6,840 |
Cost of product sales | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | 107 | 129 | 307 | 258 |
Research and development | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | 608 | 1,095 | 1,328 | 1,851 |
Selling, general and administrative | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | $ 4,077 | $ 3,781 | $ 7,948 | $ 7,626 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 30 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jan. 01, 2018 | Jan. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Decease in total stockholders' equity | $ 63,300,000 | ||||||
Net loss | $ (20,081,000) | $ (14,066,000) | (74,324,000) | $ (50,626,000) | |||
Equity-based compensation | 11,100,000 | ||||||
Payment of employee tax withholdings related to equity-based compensation | 2,300,000 | ||||||
Net shares issued related to the exercise of stock options | $ 1,500,000 | ||||||
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 | $ 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 | Feb. 28, 2017 | Jul. 31, 2015 | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Nov. 30, 2014 |
Commitments | |||||||
Minimum purchase commitments | $ 27,100 | $ 27,100 | |||||
Contingent consideration paid | 60 | $ 119 | |||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 0 | 0 | $ 18,600 | ||||
Endoceutics, Inc. | |||||||
Commitments | |||||||
Payments related to collaborative arrangement | $ 50,000 | ||||||
Endoceutics, Inc. | Intrarosa | First Sales Milestone Achievement | |||||||
Commitments | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 15,000 | 15,000 | 15,000 | ||||
Potential milestone payment, triggering event, sales | 150,000 | 150,000 | |||||
Endoceutics, Inc. | Intrarosa | Second Sales Milestone Achievement | |||||||
Commitments | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 30,000 | 30,000 | 30,000 | ||||
Potential milestone payment, triggering event, sales | 300,000 | 300,000 | |||||
Endoceutics, Inc. | Intrarosa | Third Sales Milestone Achievement | |||||||
Commitments | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 850,000 | 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. | |||||||
Commitments | |||||||
Payments related to collaborative arrangement | $ 60,000 | ||||||
Palatin Technologies, Inc. | Bremelanotide Products | First Sales Milestone Achievement | |||||||
Commitments | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 25,000 | $ 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 | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 380,000 | $ 380,000 | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement, Acceptance By U.S.Food And Drug Administration Of New Drug Application | |||||||
Commitments | |||||||
Payments related to collaborative arrangement | 20,000 | ||||||
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement, U.S.Food And Drug Administration Approval | |||||||
Commitments | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 60,000 | 60,000 | |||||
Palatin Technologies, Inc. | Bremelanotide Products | Achievement of Certain Annual Sales Milestones over Course of License Agreement | |||||||
Commitments | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 300,000 | 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) | $ 350,000 | ||||||
Business acquisition, contingent consideration, liability | $ 50,000 | 50,000 | |||||
Lumara Health Inc. | Annual Net Sales Milestone | |||||||
Commitments | |||||||
Contingent consideration paid | $ 150,000 |
Collaboration, License and Ot71
Collaboration, License and Other Strategic Agreements (Details) - USD ($) $ in Thousands | Apr. 03, 2017 | Feb. 28, 2017 | Jul. 31, 2015 | Jun. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2015 |
Collaborative Agreements | |||||||||
Net shares issued in connection with license agreement, value | $ 0 | $ 12,555 | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | $ 0 | $ 18,600 | 0 | 18,600 | |||||
Endoceutics, Inc. | |||||||||
Collaborative Agreements | |||||||||
Payments related to collaborative arrangement | $ 50,000 | ||||||||
Number of shares issued under arrangement (in shares) | 600,000 | ||||||||
Net shares issued in connection with license agreement, value | $ 13,500 | ||||||||
Consideration recorded | 83,500 | ||||||||
IPR&D expense | 5,800 | 5,800 | |||||||
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 | $ 77,700 | |||||||
Intrarosa | Endoceutics, Inc. | Delivery Of Intrarosa Launch Quantities | |||||||||
Collaborative Agreements | |||||||||
Payments related to collaborative arrangement | $ 10,000 | ||||||||
Intrarosa | Endoceutics, Inc. | First Anniversary Of Closing | |||||||||
Collaborative Agreements | |||||||||
Payments related to collaborative arrangement | 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 | |||||||||
Potential milestone payment, triggering event, sales | $ 150,000 | $ 150,000 | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 15,000 | 15,000 | 15,000 | ||||||
Intrarosa | Endoceutics, Inc. | Second Sales Milestone Achievement | |||||||||
Collaborative Agreements | |||||||||
Potential milestone payment, triggering event, sales | 300,000 | 300,000 | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 30,000 | 30,000 | 30,000 | ||||||
Intrarosa | Endoceutics, Inc. | Third Sales Milestone Achievement | |||||||||
Collaborative Agreements | |||||||||
Potential milestone payment, triggering event, sales | 500,000 | 500,000 | |||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | $ 850,000 | 850,000 | $ 850,000 | ||||||
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 | |||||||||
Potential milestone payment, triggering event, sales | $ 250,000 | ||||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 25,000 | 25,000 | |||||||
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement, Acceptance By U.S.Food And Drug Administration Of New Drug Application | |||||||||
Collaborative Agreements | |||||||||
Payments related to collaborative arrangement | 20,000 | ||||||||
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement, U.S.Food And Drug Administration Approval | |||||||||
Collaborative Agreements | |||||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | 60,000 | 60,000 | |||||||
Bremelanotide Products | Palatin Technologies, Inc. | Achievement of Certain Annual Sales Milestones over Course of License Agreement | |||||||||
Collaborative Agreements | |||||||||
Contingent consideration accrued for the acquisition of the Intrarosa intangible asset | $ 300,000 | $ 300,000 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term Debt | $ 742,535 | $ 734,683 |
Less: current maturities | 20,727 | 0 |
Long-term debt, net of current maturities | 721,808 | 734,683 |
Senior Notes | 2023 Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 466,906 | 466,291 |
Convertible Debt | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 275,629 | |
Convertible Debt | 2022 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 254,902 | 248,194 |
Convertible Debt | 2019 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 20,727 | $ 20,198 |
Debt - 2023 Senior Notes (Detai
Debt - 2023 Senior Notes (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Oct. 31, 2017 | Aug. 31, 2015 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||||||
Gain (loss) on debt extinguishment | $ 0 | $ (9,516,000) | $ 0 | $ (9,516,000) | |||
Carrying value, net | 742,535,000 | 742,535,000 | $ 734,683,000 | ||||
Senior Notes | 2023 Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount of debt issued | $ 500,000,000 | 475,000,000 | 475,000,000 | ||||
Interest rate | 7.875% | ||||||
Repurchased amount | $ 25,000,000 | ||||||
Gain (loss) on debt extinguishment | $ (1,100,000) | ||||||
Carrying value, net | $ 466,906,000 | $ 466,906,000 | $ 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 | Jun. 30, 2018 | Dec. 31, 2017 |
Liability component: | ||
Principal | $ 816,417 | |
Long-term Debt | 742,535 | $ 734,683 |
Convertible Debt | ||
Liability component: | ||
Principal | 341,417 | |
Less: debt discount and issuance costs, net | 65,788 | |
Long-term Debt | 275,629 | |
Equity Component | 82,481 | |
Convertible Debt | 2022 Convertible Notes | ||
Liability component: | ||
Principal | 320,000 | |
Less: debt discount and issuance costs, net | 65,098 | |
Long-term Debt | 254,902 | 248,194 |
Equity Component | 72,576 | |
Convertible Debt | 2019 Convertible Notes | ||
Liability component: | ||
Principal | 21,417 | |
Less: debt discount and issuance costs, net | 690 | |
Long-term Debt | 20,727 | $ 20,198 |
Equity Component | $ 9,905 |
Debt - Convertible Notes (Detai
Debt - Convertible Notes (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Sep. 30, 2017USD ($) | May 31, 2017USD ($) | Aug. 31, 2015 | Feb. 28, 2014USD ($)$ / shares | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($)day$ / shares | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($)$ / shares | |
Debt Instrument [Line Items] | ||||||||
Proceeds from 2022 Convertible Notes | $ 0 | $ 320,000,000 | ||||||
Payment of convertible debt issuance costs | 0 | 9,553,000 | ||||||
Gain (loss) on debt extinguishment | $ 0 | $ (9,516,000) | $ 0 | (9,516,000) | ||||
Convertible Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Period of amortization of debt discount to interest expense using effective interest method | 5 years | |||||||
Convertible Notes due 2022 | Convertible Debt | ||||||||
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 | 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 | $ 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% | 3.25% | 3.25% | ||||
Debt conversion ratio | 0.0365464 | |||||||
Initial conversion price of convertible notes into common stock (in usd per share) | $ / shares | $ 27.36 | $ 27.36 | ||||||
Debt term | 5 years | |||||||
Effective interest rate on liability component | 9.49% | 9.49% | ||||||
Convertible Notes due 2019 | Convertible Debt | ||||||||
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% | 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% | 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 | Convertible Debt | ||||||||
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 | Convertible Debt | ||||||||
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 - Total Interest Expense R
Debt - Total Interest Expense Recognized Related to the Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 2,734 | $ 1,943 | $ 5,468 | $ 3,193 |
Amortization of debt issuance costs | 347 | 321 | 685 | 596 |
Amortization of debt discount | 3,313 | 2,716 | 6,550 | 4,644 |
Total interest expense | $ 6,394 | $ 4,980 | $ 12,703 | $ 8,433 |
Debt - Convertible Bond Hedge,
Debt - Convertible Bond Hedge, Warrant Transactions (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Feb. 11, 2014 | |
Debt Instrument [Line Items] | ||
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 | $ 21.4 |
Debt - Future Payments (Details
Debt - Future Payments (Details) $ in Thousands | Jun. 30, 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 |