| Significant Accounting Policies | (2) Significant Accounting
Policies
Principles of Consolidation The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All intercompany accounts and transactions have been
eliminated in consolidation.
Use of
Estimates Accounting estimates are
based on historical experience and other factors that are
considered reasonable under the circumstances. Estimates are used
in determining such items as provisions for sales returns, rebates
and incentives, chargebacks, and other sales allowances;
depreciable/amortizable lives; asset impairments; valuation
allowance on deferred taxes; probabilities of achievement of
performance conditions for certain equity awards; amounts recorded
for licensing revenue; contingencies and accruals; and valuations
of derivative and long-term debt instruments. Because of the
uncertainties inherent in such estimates, actual results may differ
from these estimates. Management periodically evaluates estimates
used in the preparation of the consolidated financial statements
for continued reasonableness.
Use of
Forecasted Financial Information in Accounting
Estimates The use of forecasted
financial information is inherent in many of the Company’s
accounting estimates including, but not limited to, determining the
estimated fair values of derivatives, debt instruments and
intangible assets, and evaluating the need for valuation allowances
for deferred tax assets. Such forecasted financial information is
comprised of numerous assumptions regarding the Company’s
future revenues, cash flows, and operational results. Management
believes that its financial forecasts are reasonable and
appropriate based upon current facts and circumstances. Because of
the inherent nature of forecasts, however, actual results may
differ from these forecasts. Management regularly reviews the
information related to these forecasts and adjusts the carrying
amounts of the applicable assets prospectively, if and when actual
results differ from previous estimates.
Revenue Recognition The Company sells Vascepa
principally to a limited number of major wholesalers, as well as
selected regional wholesalers and specialty pharmacy providers, or
collectively, its Distributors, that in turn resell Vascepa to
retail pharmacies for subsequent resale to patients and healthcare
providers. Patients are required to have a prescription in order to
purchase Vascepa. In accordance with GAAP, the Company’s
revenue recognition policy requires that: (i) there is
persuasive evidence that an arrangement exists between the Company
and the Distributor, (ii) delivery has occurred,
(iii) collectability is reasonably assured and (iv) the
price is fixed or determinable.
The Company commenced its
commercial launch in the United States in January 2013. Prior to
2013, the Company recognized no revenue from Vascepa sales. In
accordance with GAAP, until the Company had the ability to reliably
estimate returns of Vascepa from its Distributors, revenue was
recognized based on the resale of Vascepa for the purposes of
filling patient prescriptions, and not based on sales from the
Company to such Distributors. During the three months ended
March 31, 2014, the Company concluded that it had developed
sufficient history such that it can reliably estimate returns and
as a result, began to recognize revenue based on sales to its
Distributors. The change in revenue recognition methodology
resulted in the recognition of previously deferred revenue. As of
December 31, 2013, the Company had deferred approximately $1.7
million in amounts billed to Distributors that was not recognized
as revenue. This change in revenue recognition methodology resulted
in the recognition of such deferred revenues in the three months
ended March 31, 2014. The Company has contracts
with its primary Distributors and delivery occurs when a
Distributor receives Vascepa. The Company evaluates the
creditworthiness of each of its Distributors to determine whether
revenues can be recognized upon delivery, subject to satisfaction
of the other requirements, or whether recognition is required to be
delayed until receipt of payment or when the product is utilized.
In order to conclude that the price is fixed or determinable, the
Company must be able to (i) calculate its gross product
revenues from the sales to Distributors and (ii) reasonably
estimate its net product revenues. The Company calculates gross
product revenues based on the wholesale acquisition cost that the
Company charges its Distributors for Vascepa. The Company estimates
its net product revenues by deducting from its gross product
revenues (a) trade allowances, such as invoice discounts for
prompt payment and distributor fees, (b) estimated government
and private payor rebates, chargebacks and discounts, such as
Medicaid reimbursements, (c) reserves for expected product
returns and (d) estimated costs of incentives offered to
certain indirect customers, including patients.
Trade
Allowances:
Rebates,
Chargebacks and Discounts:
Product
Returns:
Other
Incentives: The following table
summarizes activity in each of the net product revenue allowance
and reserve categories described above for the years ended
December 31, 2015 and 2014 (in thousands):
Trade Allowances Rebates, Chargebacks and Discounts Product Returns Other Incentives Total
Balance as of
January 1, 2014 $ 1,071 $ 1,137 $ 72 $ 189 $ 2,469
Provision related to
current period sales 8,157 12,753 397 11,153 32,460
Provision related to prior
period sales (29 ) (80 ) 12 (31 ) (128 )
Credits/payments made for
current period sales (5,950 ) (9,143 ) — (10,338 ) (25,431 )
Credits/payments made for
prior period sales (1,042 ) (1,057 ) — (181 ) (2,280 )
Balance as of
December 31, 2014 $ 2,207 $ 3,610 $ 481 $ 792 $ 7,090
Provision related to
current period sales 14,986 32,591 342 8,310 56,229
Provision related to prior
period sales (174 ) (70 ) (205 ) — (449 )
Credits/payments made for
current period sales (10,690 ) (22,710 ) — (7,226 ) (40,626 )
Credits/payments made for
prior period sales (2,033 ) (3,540 ) (83 ) (792 ) (6,448 )
Balance as of
December 31, 2015 $ 4,296 $ 9,881 $ 535 $ 1,084 $ 15,796
Such net product revenue
allowances and reserves are included within accrued expenses and
other current liabilities within the consolidated balance sheets,
with the exception of trade allowances and chargebacks, which are
included within accounts receivable, net as discussed
below.
Multiple-Element Arrangements and Licensing
Revenue When evaluating
multiple-element arrangements, the Company identifies the
deliverables included within the agreement and evaluates which
deliverables represent separate units of accounting based on
whether the delivered element has stand-alone value to the customer
or if the arrangement includes a general right of return for
delivered items. The consideration received
is allocated between each of the separable elements in the
arrangement using the relative selling price method. The selling
price used for each separable element will be based on vendor
specific objective evidence (“VSOE”) if available,
third-party evidence if VSOE is not available, or estimated selling
price if neither VSOE nor third-party evidence is available.
Revenue is then recognized as each of the separable elements to
which the revenue has been allocated is delivered. The Company may receive
up-front, non-refundable payments when licensing its intellectual
property in conjunction with research, development and
commercialization agreements. In determining the units of
accounting, management evaluates whether the license has
stand-alone value from the undelivered elements to the
collaborative partner based on the consideration of the relevant
facts and circumstances for each arrangement. Factors considered in
this determination include the stage of development of the license
delivered, research and development capabilities of the partner and
the ability of partners to develop and commercialize Vascepa
independent of the Company. When management believes
the license to its intellectual property does not have stand-alone
value from the other deliverables to be provided in the
arrangement, the Company generally recognizes revenue attributable
to the license over the Company’s contractual or estimated
performance period. Any unrecognized portion of license revenue is
classified within deferred revenue in the accompanying consolidated
balance sheets. When management believes the license to its
intellectual property has stand-alone value, the Company recognizes
revenue attributed to the license upon delivery. The periods over
which revenue is recognized is subject to estimates by management
and may change over the course of the agreement. Such a change
could have a material impact on the amount of revenue the Company
records in future periods.
Milestones Contingent consideration
from activities that is earned upon the achievement of a
substantive milestone is recognized in its entirety in the period
in which the milestone is achieved. At the inception of each
arrangement that includes milestone payments, the Company evaluates
whether each milestone is substantive. This evaluation includes an
assessment of whether: (a) the consideration is commensurate
with either (1) the entity’s performance to achieve the
milestone, or (2) the enhancement of the value of the
delivered item(s) as a result of a specific outcome resulting from
the entity’s performance to achieve the milestone,
(b) the consideration relates solely to past performance and
(c) the consideration is reasonable relative to all of the
deliverables and payment terms within the arrangement. The Company
evaluates factors such as the scientific, clinical, regulatory,
commercial and other risks that must be overcome to achieve the
respective milestone, the level of effort and investment required
and whether the milestone consideration is reasonable relative to
all deliverables and payment terms in the arrangement in making
this assessment. See Note
17—Development, Commercialization and Supply Agreement for
further information regarding licensing revenue and milestones
related to the Company’s multiple-element arrangement with
Eddingpharm (Asia) Macao Commercial Offshore Limited.
Distribution Costs The Company records
distribution costs related to shipping product to its customers,
primarily through the use of common carriers or external
distribution services, in cost of goods sold.
Cash
and Cash Equivalents and Restricted Cash Cash and cash equivalents
consist of cash, deposits with banks and short-term highly liquid
money market instruments with remaining maturities at the date of
purchase of 90 days or less. Restricted cash represents cash and
cash equivalents pledged to guarantee repayment of certain expenses
which may be incurred for business travel under corporate credit
cards held by employees.
Accounts Receivable, net Accounts receivable, net,
comprised of trade receivables, are generally due within 30 days
and are stated at amounts due from customers. The Company does not
currently maintain an allowance for doubtful accounts and has not
historically experienced any credit losses.
The following table
summarizes the impact of accounts receivable reserves on the gross
trade accounts receivable balances as of December 31, 2015 and
2014 (in thousands):
December 31, 2015 December 31, 2014
Gross trade accounts
receivable $ 18,270 $ 10,215
Trade allowances (4,296 ) (2,207 )
Chargebacks (148 ) (166 )
Accounts receivable,
net $ 13,826 $ 7,842
Inventory The Company states
inventories at the lower of cost or market value. Cost is
determined based on actual cost using the average cost method. An
allowance is established when management determines that certain
inventories may not be saleable. If inventory cost exceeds expected
market value due to obsolescence, damage or quantities in excess of
expected demand, the Company will reduce the carrying value of such
inventory to market value. The Company received FDA approval for
Vascepa on July 26, 2012 and after that date began
capitalizing inventory purchases of saleable product from approved
suppliers. Until an active pharmaceutical ingredient, or API,
supplier is approved, all Vascepa API purchased from such supplier
is included as a component of research and development expense.
Upon sNDA approval of each additional supplier, the Company
capitalizes subsequent Vascepa API purchases from such supplier as
inventory. Purchases of Vascepa API received and expensed before
such regulatory approvals is not subsequently capitalized, and all
such purchases are quarantined and not used for commercial supply
until such time as the sNDA for the supplier that produced the API
is approved. The Company expenses inventory identified for use as
marketing samples when they are packaged. The average cost reflects
the actual purchase price of Vascepa API.
Property, Plant and Equipment The Company provides for
depreciation and amortization using the straight-line method by
charges to operations in amounts that depreciate the cost of the
fixed asset over its estimated useful life. The estimated useful
lives, by asset classification, are as follows:
Asset
Classification
Useful Lives
Computer equipment and
software 3 - 5 years
Furniture and
fixtures 5 years
Leasehold
improvements Lesser of useful life or lease term Upon retirement or sale of
assets, the cost of the assets disposed and the related accumulated
depreciation are removed from the balance sheet and any resulting
gain or loss is credited or expensed to operations. Repairs and
maintenance costs are expensed as incurred.
Long-Lived Asset Impairment The Company reviews its
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may
not be recoverable. Recoverability of these assets is determined by
comparing the forecasted undiscounted net cash flows of the
operation to which the assets relate to their carrying amount. If
impairment is indicated, the assets are written down to fair value.
Fair value is determined based on discounted forecasted cash flows
or appraised values, depending on the nature of the
assets.
Intangible Asset, net Intangible asset, net
consists of a milestone payment paid to the former shareholders of
Laxdale Limited related to the 2004 acquisition of the rights to
Vascepa, which is the result of Vascepa receiving marketing
approval for the first indication and is amortized over its
estimated useful life on a straight-line basis. See Note
9—Commitments and Contingencies for further information
regarding other obligations related to the acquisition of Laxdale
Limited.
Beneficial Conversion Features The Company issued Series A
preference shares in a private placement transaction executed in
two tranches that each contain a conversion feature whereby such
shares are convertible into ordinary shares at a fixed rate. The
conversion price on the date of issuance was less than the market
price of the Company’s ordinary shares. It was determined
that these discounts represent contingent beneficial conversion
features, which were valued based on the difference between the
conversion price and the market price of the ordinary shares on the
date of issuance, which is the commitment date. These features are
analogous to preference dividends and were each recorded as a
non-cash return to preferred shareholders through accumulated
deficit upon the earliest possible date of conversion, which
occurred in the three months ended June 30, 2015 upon
effectiveness of the related resale Registration Statement on Form
S-3 and in the three months ended September 30, 2015 upon
shareholder approval received at the Company’s Annual General
Meeting of Shareholders. See Note 10—Equity for further
discussion.
Costs
for Patent Litigation and Legal Proceedings Costs for patent litigation
or other legal proceedings are expensed as incurred and included in
selling, general and administrative expenses.
Research and Development Costs The Company charges
research and development costs to operations as incurred. Research
and development expenses are comprised of costs incurred by the
Company in performing research and development activities,
including: salary and benefits; stock-based compensation expense;
laboratory supplies and other direct expenses; contractual
services, including clinical trial and pharmaceutical development
costs; commercial supply investment in its drug candidates; and
infrastructure costs, including facilities costs and depreciation
expense. In addition, research and development costs include the
costs of product supply received from suppliers when such receipt
by the Company is prior to regulatory approval of the
supplier.
Selling, General and Administrative
Costs The Company charges
selling, general and administrative costs to operations as
incurred. Selling, general and administrative costs include costs
of salaries, programs and infrastructure necessary for the general
conduct of the Company’s business, including those incurred
as a result of the commercialization of Vascepa in the United
States as well as co-promotion fees payable to Kowa Pharmaceuticals
America, Inc.
Income
Taxes Deferred tax assets and
liabilities are recognized for the future tax consequences of
differences between the carrying amounts and tax bases of assets
and liabilities and operating loss carryforwards and other
attributes using enacted rates expected to be in effect when those
differences reverse. Valuation allowances are provided against
deferred tax assets that are not more likely than not to be
realized. The Company provides
reserves for potential payments of tax to various tax authorities
or does not recognize tax benefits related to uncertain tax
positions and other issues. Tax benefits for uncertain tax
positions are based on a determination of whether a tax benefit
taken by the Company in its tax filings or positions is more likely
than not to be realized, assuming that the matter in question will
be decided based on its technical merits. The Company’s
policy is to record interest and penalties in the provision for
income taxes. The Company regularly
assesses the realizability of deferred tax assets. Changes in
historical earnings performance and future earnings projections,
among other factors, may cause the Company to adjust its valuation
allowance on deferred tax assets, which would impact the
Company’s income tax expense in the period in which it is
determined that these factors have changed.
Derivative Instruments Derivative financial
liabilities are recorded at fair value, with gains and losses
arising for changes in fair value recognized in the statement of
operations at each period end while such instruments are
outstanding. If the Company issues shares to discharge the
liability, the derivative financial liability is derecognized and
common stock and additional paid-in capital are recognized on the
issuance of those shares. Warrants are valued using a Black-Scholes
option pricing model. The long-term debt redemption features are
valued using probability-weighted models incorporating management
estimates for potential change in control, and by determining the
fair value of the debt with and without the change in control
provision included. If the terms of warrants
that initially require the warrant to be classified as a derivative
financial liability lapse, the derivative financial liability is
reclassified out of financial liabilities into equity at its fair
value on that date. The cash proceeds received from exercises of
warrants are recorded in common stock and additional paid-in
capital.
Loss
per Share Basic net loss per share is
determined by dividing net loss by the weighted average shares of
common stock outstanding during the period. Diluted net loss per
share is determined by dividing net loss by diluted weighted
average shares outstanding. Diluted weighted average shares
reflects the dilutive effect, if any, of potentially dilutive
common shares, such as common stock options and warrants calculated
using the treasury stock method and convertible notes using the
“if-converted” method. In periods with reported net
operating losses, all common stock options and warrants are deemed
anti-dilutive such that basic net loss per share and diluted net
loss per share are equal. However, in certain periods in which
there is a gain recorded pursuant to the change in fair value of
the warrant derivative liability, for diluted net loss per share
purposes, the impact of such gains is reversed and the treasury
stock method is used to determine diluted net loss per
share. The Company’s
preferred stock is entitled to receive dividends on an
as-if-converted basis in the same form as dividends actually paid
on common shares. Accordingly, the preferred stock is considered a
participating security and the Company is required to apply the
two-class method to consider the impact of the preferred stock on
the calculation of basic and diluted earnings per share. The
Company is currently in a net loss position and is therefore not
required to present the two-class method, however, in the event the
Company is in a net income position, the two-class method must be
applied by allocating all earnings during the period to common
shares and preferred stock based on their contractual entitlements
assuming all earnings were distributed. The calculation of net loss
and the number of shares used to compute basic and diluted net loss
per share for the years ended December 31, 2015, 2014 and 2013
are as follows:
In thousands 2015 2014 2013
Net loss $ (115,204 ) $ (56,364 ) $ (166,227 )
Preferred stock purchase
option (see Note 10) (868 ) — —
Preferred stock beneficial
conversion features (see Note 10) (32,987 ) — —
Net loss applicable to
common shareholders—basic (149,059 ) (56,364 ) (166,227 )
Gain on warrant derivative
liability — (6,775 ) (47,936 )
Net
loss—diluted (149,059 ) (63,139 ) (214,163 )
Net loss per
share—basic $ (0.83 ) $ (0.32 ) $ (1.03 )
Weighted average shares
outstanding—basic 180,654 173,719 161,022
Effect of dilutive
warrants — 105 6,048
Weighted average shares
outstanding—diluted 180,654 173,824 167,070
Net loss per
share—diluted $ (0.83 ) $ (0.36 ) $ (1.28 )
For the years ended
December 31, 2015, 2014 and 2013, the following potentially
dilutive securities were not included in the computation of net
loss per share because the effect would be
anti-dilutive:
In thousands 2015 2014 2013
Stock options 17,818 10,670 9,330
Restricted stock and
restricted stock units 10,887 2,256 196
Warrants — — 1,702
Exchangeable senior notes
(if converted) 59,407 49,215 17,021
Preferred stock (if
converted) 32,818 — —
Debt
Instruments Debt instruments are
initially recorded at fair value, with coupon interest and
amortization of debt issuance discounts recognized in the statement
of operations as interest expense each period in which such
instruments are outstanding. If the Company issues shares to
discharge the liability, the debt obligation is derecognized and
common stock and additional paid-in capital are recognized on the
issuance of those shares. The conversion features in the 2012
Notes, the 2014 Notes and the 2015 Notes qualify for the exception
from derivative accounting in accordance with ASC 815-40. The 2012
Notes may be settled, at the Company’s discretion, in any
combination of ADSs or cash upon conversion and have been accounted
for in accordance with ASC 470-20. Under ASC 470-20, the fair value
of the liability component of the 2012 Notes was determined and
deducted from the initial proceeds to determine the proceeds
allocated to the conversion option, which has been recorded in
equity. The difference between the initial fair value of the
liability component and the amount repayable is amortized over the
expected term of the instrument. The conversion features in the
2014 Notes and 2015 Notes may only be settled in ADSs upon
conversion and have been accounted for as part of the debt
host. The conversion options in
the 2012 Notes, 2014 Notes and 2015 Notes continue to be evaluated
on a quarterly basis to determine if they still receive an
exception from derivative accounting in accordance with ASC 815-40.
The 2014 Notes were recognized initially at fair value as part of
an extinguishment of a portion of the 2012 Notes. As a result, the
2014 Notes were initially recognized at a discount of $27.9
million. The 2015 Notes were recognized initially at fair value as
part of the issuance of new debt in November 2015. As a result, the
2015 Notes were initially recognized at a discount of $3.8 million.
These discounts are being amortized through interest expense over
the expected terms of the 2014 Notes and 2015 Notes, which is
through January 2019 for each. See Note 8—Debt for further
discussion.
Stock-Based Compensation Stock-based compensation
cost is generally measured at the grant date, based on the fair
value of the award, and is recognized as compensation expense over
the requisite service period. For awards with performance
conditions, if the achievement of the performance conditions is
deemed probable, the Company recognizes compensation expense based
on the fair value of the award over the estimated service period.
The Company reassesses the probability of achievement of the
performance conditions for such awards each reporting
period.
Concentration of Credit Risk Financial instruments that
potentially subject the Company to credit risk consist primarily of
cash and cash equivalents and accounts receivable. The Company
maintains substantially all of its cash and cash equivalents in
financial institutions believed to be of high-credit
quality. A significant portion of
the Company’s sales are to wholesalers in the pharmaceutical
industry. The Company monitors the creditworthiness of customers to
whom it grants credit terms and has not experienced any credit
losses. The Company does not require collateral or any other
security to support credit sales. The Company’s top three
customers accounted for 95% of gross product sales for each of the
years ending December 31, 2015 and 2014, and represented 95%
and 96% of the gross accounts receivable balance as of
December 31, 2015 and 2014, respectively. The Company has not
experienced any write-offs of its accounts receivable.
Concentration of Suppliers The Company has contractual
freedom to source the API for Vascepa and has entered into supply
agreements with multiple suppliers. The Company’s supply of
product for commercial sale and clinical trials is dependent upon
relationships with third-party manufacturers and key suppliers, in
particular three suppliers of API for Vascepa. The Company cannot provide
assurance that its efforts to procure uninterrupted supply of
Vascepa API to meet market demand will continue to be successful or
that it will be able to renew current API supply agreements on
favorable terms or at all. Significant alteration to or termination
of the Company’s current API supply chain or its failure to
enter into new and similar agreements, if needed, could have a
material adverse effect on its business, condition (financial and
other), prospects or results of operations. The Company currently has
manufacturing agreements with three FDA-approved commercial API
encapsulators for Vascepa manufacturing. Each of these companies
has qualified its manufacturing processes and is capable of
manufacturing Vascepa. There can be no guarantee that these or
other suppliers with which the Company may contract in the future
to encapsulate API will continue to be qualified to manufacture the
product to its specifications or that these and any future
suppliers will have the manufacturing capacity to meet anticipated
demand for Vascepa.
Foreign Currency All subsidiaries use the
U.S. dollar as the functional currency. Monetary assets and
liabilities denominated in a foreign currency are remeasured into
U.S. dollars at period-end exchange rates. Gains and losses from
the remeasurement are included in other (expense) income, net in
the consolidated statements of operations. For transactions settled
during the applicable period, gains and losses are included in
other (expense) income, net in the consolidated statements of
operations. Certain amounts payable pursuant to supply contracts
are denominated in currencies other than the U.S.
dollar.
Debt
Issuance Costs Debt issuance costs are
initially recorded as a deferred cost and amortized to interest
expense using the effective interest method over the expected term
of the related debt. Unamortized debt issuance costs related to the
extinguishment of debt are expensed at the time the debt is
extinguished and recorded in other (expense) income, net in the
consolidated statements of operations.
Fair
Value of Financial Instruments The Company provides
disclosure of financial assets and financial liabilities that are
carried at fair value based on the price that would be received
upon sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Fair value measurements may be classified based on the amount of
subjectivity associated with the inputs to fair valuation of these
assets and liabilities using the following three levels: Level 1—Inputs are
unadjusted quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access at the
measurement date. Level 2—Inputs
include quoted prices for similar assets and liabilities in active
markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than
quoted prices that are observable for the asset or liability (i.e.,
interest rates, yield curves, etc.) and inputs that are derived
principally from or corroborated by observable market data by
correlation or other means (market corroborated inputs). Level 3—Unobservable
inputs that reflect the Company’s estimates of the
assumptions that market participants would use in pricing the asset
or liability. The Company develops these inputs based on the best
information available, including its own data.
The following tables
present information about the Company’s assets and
liabilities as of December 31, 2015 and 2014 that are measured
at fair value on a recurring basis and indicate the fair value
hierarchy of the valuation techniques the Company utilized to
determine such fair value:
December 31,
2015
In thousands Total Level 1 Level 2 Level 3
Asset:
Cash
equivalents—money markets $ 14,184 $ 14,184 $ — $ —
Liabilities:
Long-term debt derivative
liabilities $ 8,170 $ — $ — $ 8,170
December 31,
2014
In thousands Total Level 1 Level 2 Level 3
Asset:
Cash
equivalents—money markets $ 65,156 $ 65,156 $ — $ —
Liabilities:
Warrant derivative
liability $ 119 $ — $ — $ 119
Long-term debt derivative
liabilities $ 7,400 $ — $ — $ 7,400
The carrying amounts of
cash, cash equivalents, accounts payable and accrued liabilities
approximate fair value because of their short-term nature. The
carrying amounts and the estimated fair values of debt instruments
as of December 31, 2015 and 2014 are as follows:
December 31,
2015 December 31,
2014
In
thousands Carrying Estimated Carrying Estimated
Long-term
debt—December 2012 financing $ 91,512 $ 87,700 $ 89,617 $ 81,000
2012 Notes 15,107 13,637 31,266 25,689
2014 Notes 96,364 108,034 90,580 75,533
2015 Notes 27,134 28,448 — — The estimated fair value of
the long-term debt pursuant to the December 2012 financing is
calculated utilizing the same Level 3 inputs utilized in valuing
the related derivative liability (see Long-Term Debt Redemption
Features below). The estimated fair value of the 2012 Notes and
2014 Notes is calculated based on Level 1 quoted bond prices, while
the estimated fair value of the 2015 Notes is calculated based on
Level 2 quoted bond prices for the 2014 Notes. The carrying value
of the 2012 Notes as of December 31, 2015 and 2014 does not
include a debt discount, as it had been fully amortized as non-cash
interest expense over the expected term of the 2012 Notes. The
carrying value of the 2014 Notes as of December 31, 2015 and
2014 includes a debt discount of $22.4 million and $28.2 million,
respectively, which is being amortized as non-cash interest expense
over the expected term of the 2014 Notes, through January 2019. The
carrying value of the 2015 Notes as of December 31, 2015
includes a debt discount of $4.1 million, which is being amortized
as non-cash interest expense over the expected term of the 2015
Notes, through January 2019. The change in the estimated fair
values of these liabilities from Decembe |
