| 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, evaluating the need for valuation allowances for
deferred tax assets, and assessing the Company’s ability to
continue as a going concern. 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 or its customers, 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 has contracts
with its primary Distributors and delivery generally 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. 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 generally
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 pay or 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: 18-month
Other
Incentives: co-pay co-pay co-pay co-pay co-pay co-pay co-pay The following table
summarizes activity in each of the net product revenue allowance
and reserve categories described above for the years ended
December 31, 2016 and 2015:
In
thousands Trade Allowances Rebates, Chargebacks and Discounts Product Returns Other Incentives Total
Balance as of
January 1, 2015 $ 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
Provision related to
current period sales 22,952 69,370 583 11,696 104,601
Provision related to prior
period sales (87 ) (450 ) — — (537 )
Credits/payments made for
current period sales (19,213 ) (48,719 ) — (9,815 ) (77,747 )
Credits/payments made for
prior period sales (4,205 ) (9,167 ) (259 ) (1,284 ) (14,915 )
Balance as of
December 31, 2016 $ 3,743 $ 20,915 $ 859 $ 1,681 $ 27,198
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 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
primarily 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
recognizes an allowance for losses on accounts receivable in an
amount equal to the estimated probable losses net of any
recoveries. The allowance is based primarily on assessment of
specific identifiable customer accounts considered at risk or
uncollectible, as well as an analysis of current receivables aging
and expected future write-offs. The expense associated with the
allowance for doubtful accounts is recognized as selling, general,
and administrative expense. The Company 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, 2016 and
2015:
In
thousands December 31, 2016 December 31, 2015
Gross trade accounts
receivable $ 24,127 $ 18,270
Trade allowances (3,743 ) (4,296 )
Chargebacks (387 ) (148 )
Allowance for doubtful
accounts (12 ) —
Accounts receivable,
net $ 19,985 $ 13,826
Inventory Effective April 2016, the
Company adopted Accounting Standards Update (“ASU”)
No. 2015-11, Inventory (Topic 330)—Simplifying the Measurement of
Inventory
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 consolidated 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 S-3
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
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 its ability to realize 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. In April 2016, the Company
adopted ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements
to Employee Share-Based Payment Accounting, paid-in The Company’s and its
subsidiaries’ income tax returns are periodically examined by
various tax authorities. The Company is currently under audit by
the United States Internal Revenue Service (IRS) for the years 2013
to 2014. Although the outcome of tax audits is always uncertain and
could result in significant cash tax payments, the Company does not
believe the outcome of these audits will have a material adverse
effect on the Company’s consolidated financial position or
results of operations.
Derivative Instruments Derivative financial
liabilities are recorded at fair value, with gains and losses
arising for changes in fair value recognized in the consolidated
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 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
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” The Company’s
preferred stock is entitled to receive dividends on an as-if-converted two-class two-class two-class 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, 2016, 2015 and 2014
are as follows:
In thousands 2016 2015 2014
Net loss $ (86,350 ) $ (115,204 ) $ (56,364 )
Preferred stock purchase
option (see Note 10—Equity) — (868 ) —
Preferred stock beneficial
conversion features (see Note 10—Equity) — (32,987 ) —
Net loss applicable to
common shareholders—basic (86,350 ) (149,059 ) (56,364 )
Gain on warrant derivative
liability — — (6,775 )
Net
loss—diluted (86,350 ) (149,059 ) (63,139 )
Net loss per
share—basic $ (0.41 ) $ (0.83 ) $ (0.32 )
Weighted average shares
outstanding—basic 211,874 180,654 173,719
Effect of dilutive
warrants — — 105
Weighted average shares
outstanding—diluted 211,874 180,654 173,824
Net loss per
share—diluted $ (0.41 ) $ (0.83 ) $ (0.36 )
For the years ended
December 31, 2016, 2015 and 2014, 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 2016 2015 2014
Stock options 21,188 17,818 10,670
Restricted stock and
restricted stock units 10,143 10,887 2,256
Exchangeable senior notes
(if converted) 1,714 59,407 49,215
Preferred stock (if
converted) 32,818 32,818 —
Debt
Instruments Debt instruments are
initially recorded at fair value, with coupon interest and
amortization of debt issuance discounts recognized in the
consolidated 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 815-40. 470-20. 470-20, The conversion feature in
the 2012 Notes, continues to be evaluated on a quarterly basis to
determine if it still receives an exception from derivative
accounting in accordance with ASC 815-40.
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, 2016 and 2015, and represented 96%
and 95% of the gross accounts receivable balance as of
December 31, 2016 and 2015, 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 in a timely fashion, 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
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
Debt
Issuance Costs Prior to January 2016, debt
issuance costs were initially recorded as a deferred cost and
amortized to interest expense using the effective interest method
over the expected term of the related debt. Effective January 2016,
the Company adopted ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): long-term
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, 2016 and 2015 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,
2016
In thousands Total Level 1 Level 2 Level 3
Asset:
Cash
equivalents—money markets $ 14,238 $ 14,238 $ — $ —
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
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, 2016 and 2015 are as follows:
December 31,
2016 December 31,
2015
In thousands Carrying Value Estimated Fair
Value Carrying Value Estimated Fair
Value
Long-term debt from
royalty-bearing instrument $ 85,155 $ 90,500 $ 91,512 $ 87,700
2012 Notes 15,107 15,174 15,107 13,637
2014 Notes — — 96,364 108,034
2015 Notes — — 27,134 28,448 The estimated fair value of
the long-term debt from royalty-bearing instrument 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, 2016 and 2015 does not include a debt
discount, as it had been fully amortized as non-cash non-cash non-cash No. 2015-03
Derivative Liabilities
Warrant
Derivative Liability The Company’s warrant
derivative liability (discussed in Note 7—Warrants and
Warrant Derivative Liability) was carried at fair value and was
classified as Level 3 in the fair value hierarchy due to the
use of significant unobservable inputs. During the year ended
December 31, 2015 of the 8,087,388 warrants outstanding as of
December 31, 2014, 1,844,585 warrants were exercised while the
remaining 6,242,803 warrants expired and the related derivative
liability was extinguished. As such, no warrants were outstanding
as of December 31, 2016.
Long-Term
Debt Redemption Features The Company’s
December 2012 financing agreement with BioPharma Secured Debt Fund
II Holdings Cayman LP (discussed in Note 8—Debt) contains a
redemption feature whereby, upon a change of control, the Company
would be required to repay $150.0 million, less any previously
repaid amount. The Company determined this redemption feature to be
an embedded derivative, which is carried at fair value and is
classified as Level 3 in the fair value hierarchy due to the
use of significant unobservable inputs. The fair value of the
embedded derivative was calculated using a probability-weighted
model incorporating management estimates of future revenues and for
a potential change in control, and by determining the fair value of
the debt with and without the change in control provision included.
The difference between the two was determined to be the fair value
of the embedded derivative. As of December 31, 2016, the fair
value of the derivative was determined to be nil based on current
assumptions, and the debt was valued by comparing debt issues of
similar companies with (i) remaining terms of between 2.4 and
5.0 years, (ii) coupon rates of between 8.1% and 11.1% and
(iii) market yields of between 11.9% and 18.4%. As of
December 31, 2015, the fair value of the derivative was
determined to be $5.5 million, and the debt was valued by
comparing debt issues of similar companies with (i) remaining
terms of between 2.0 and 7.3 years, (ii) coupon rates of
between 6.6% and 12.5% and (iii) market yields of between
13.0% and 30.7%. As such, the Company recognized a
$5.5 million gain on change in fair value of derivative
liability for the year ended December 31, 2016. The Company’s 2014
Notes and 2015 Notes each contained a redemption feature whereby,
upon occurrence of a change in control, the Company would have been
required to repurchase the notes. The Company determined these
redemption features to be embedded derivatives, requiring
bifurcation in accordance with ASC 815. The derivatives were
carried at fair value and were classified as Level 3 in the fair
value hierarchy due to the use of significant unobservable inputs.
The fair value of each embedded derivative was calculated using a
probability-weighted model incorporating management estimates of
the probability of a change in control occurring, and by
determining the fair value of the debt with and without the change
in control provision included. The difference between the two was
determined to be the fair value of the embedded derivative. As of
December 31, 2016, derivatives related to the 2014 Notes and
2015 Notes were each derecognized, as the related debt hosts were
exchanged into equity in September 2016. As of December 31,
2015, the fair values of the derivatives related to the 2014 Notes
and 2015 Notes were determined to be $2.1 million and
$0.6 million, respectively, and the debts were valued by using
(i) the estimated remaining term of the notes, (ii) a
bond yield of 25.6%, (iii) a risk-free interest rate of 2.9%
and (iv) volatility of 89.0%. As such, the Company recognized
a gain on change in fair value of derivative liability for the 2014
Notes and 2015 Notes of $2.1 million and $0.6 million,
respectively, for the year ended December 31, 2016.
Preferred
Stock Purchase Option Derivative Liability Pursuant to a pre-existing Any changes in the
assumptions used to value the derivative liabilities, including the
probability of a change in control, could result in a material
change to the carrying value of such liabilities. The change in the fair
value of derivative liabilities for the years ended
December 31, 2016 and 2015 is as follows:
In thousands October 2009 Warrants Long-Term Debt
Derivative Liabilities Preferred
Stock Purchase Option Total
Balance as of
January 1, 2015 $ 119 $ 7,400 $ — $ 7,519
Record initial fair value
of derivative liability — 500 868 1,368
(Gain) loss on change in
fair value of derivative liabilities (110 ) 270 946 1,106
Compensation income for
change in fair value of warrants issued to former
employees (9 ) — — (9 )
Transfer derivative
liability to equity — — (1,814 ) (1,814 )
Balance as of
December 31, 2015 $ — $ 8,170 $ — $ 8,170
Gain on change in fair
value of derivative liabilities — (8,170 ) — (8,170 )
Balance as of
December 31, 2016 $ — $ — $ — $ —
Segment and Geographical
Information Operating segments are
defined as components of an enterprise about which separate
financial information is available that is evaluated on a regular
basis by the chief operating decision-maker, or decision making
group, in deciding how to allocate resources to an individual
segment and in assessing performance of the segment. The Company
currently operates in one business segment, which is the
development and commercialization of Vascepa. A single management
team that reports to the Company’s chief decision-maker, who
is the Chief Executive Officer, comprehensively manages the
business. Accordingly, the Company does not have separately
reportable segments.
Recent
Accounting Pronouncements From time to time, new
accounting pronouncements are issued by the Financial Accounting
Standards Board, or FASB, and are early adopted by the Company or
adopted as of the specified effective date. In January 2016, the
Company adopted ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): No. 2015-03 No. 2015-03, — In April 2016, the Company
adopted ASU No. 2015-11, Inventory (Topic
330): Simplifying the Measurement of Inventory No. 2015-11, Also in April 2016, the
Company adopted ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements
to Employee Share-Based Payment Accounting, paid-in In December 2016, the
Company adopted ASU No. 2014-15, Presentation of
Financial Statements—Going Concern (Subtopic 205-40): No. 2014-15 REDUCE-IT mid-2018. The Company also considered
the following recent accounting pronouncements which were not yet
adopted as of December 31, 2016: In May 2014, the FASB
issued ASU No. 2014-09, No. 2014-09 The Company has
substantially completed an initial impact assessme |
