Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 24, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | UNITED THERAPEUTICS Corp | |
Entity Central Index Key | 0001082554 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 43,810,915 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 790.6 | $ 669.2 |
Marketable investments | 814.5 | 746.7 |
Accounts receivable, no allowance for 2019 and 2018 | 159.8 | 175.7 |
Inventories, net | 96.2 | 101 |
Other current assets | 81.4 | 75.4 |
Total current assets | 1,942.5 | 1,768 |
Marketable investments | 411.3 | 442.6 |
Goodwill and other intangible assets, net | 170.8 | 170.8 |
Property, plant and equipment, net | 701.2 | 699.7 |
Deferred tax assets, net | 265.5 | 95.7 |
Other non-current assets | 235.4 | 224.2 |
Total assets | 3,726.7 | 3,401 |
Current liabilities: | ||
Accounts payable and accrued expenses | 139.4 | 166.1 |
Share tracking awards plan | 77.5 | 72.2 |
Other current liabilities | 53.1 | 38.3 |
Total current liabilities | 270 | 276.6 |
Line of credit | 1,050 | 250 |
Other non-current liabilities | 68.5 | 66.6 |
Total liabilities | 1,388.5 | 593.2 |
Commitments and contingencies | ||
Temporary equity | 19.2 | 19.2 |
Stockholders' equity: | ||
Common stock, par value $.01, 245,000,000 shares authorized, 70,424,937 and 70,207,581 shares issued, and 43,805,721 and 43,588,365 shares outstanding at March 31, 2019 and December 31, 2018, respectively | 0.7 | 0.7 |
Additional paid-in capital | 1,967.6 | 1,940.2 |
Accumulated other comprehensive loss | (5.2) | (7.9) |
Treasury stock, 26,619,216 shares at March 31, 2019 and December 31, 2018 | (2,579.2) | (2,579.2) |
Retained earnings | 2,935.1 | 3,434.8 |
Total stockholders' equity | 2,319 | 2,788.6 |
Total liabilities and stockholders' equity | 3,726.7 | 3,401 |
Preferred stock | ||
Stockholders' equity: | ||
Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued | ||
Series A junior participating preferred stock | ||
Stockholders' equity: | ||
Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts receivable, allowance (in dollars) | $ 0 | $ 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 245,000,000 | 245,000,000 |
Common stock, shares issued | 70,424,937 | 70,207,581 |
Common stock, shares outstanding | 43,805,721 | 43,588,365 |
Treasury stock, shares | 26,619,216 | 26,619,216 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Series A junior participating preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Total revenues | $ 362.6 | $ 389.2 |
Operating expenses: | ||
Cost of product sales | 29.1 | 53.2 |
Research and development | 897.4 | 35.7 |
Selling, general and administrative | 92 | (6.6) |
Total operating expenses | 1,018.5 | 82.3 |
Operating (loss) income | (655.9) | 306.9 |
Other income (expense): | ||
Interest income | 9.8 | 5.3 |
Interest expense | (10.3) | (2.6) |
Other, net | 5.8 | (0.6) |
Total other income, net | 5.3 | 2.1 |
(Loss) income before income taxes | (650.6) | 309 |
Income tax benefit (expense) | 156 | (64.5) |
Net (loss) income | $ (494.6) | $ 244.5 |
Net (loss) income per common share: | ||
Basic (in dollars per share) | $ (11.32) | $ 5.65 |
Diluted (in dollars per share) | $ (11.32) | $ 5.57 |
Weighted average number of common shares outstanding: | ||
Basic (in shares) | 43.7 | 43.3 |
Diluted (in shares) | 43.7 | 43.9 |
Net product sales | ||
Revenues: | ||
Total revenues | $ 362.6 | $ 389.2 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Comprehensive income: | ||
Net (loss) income | $ (494.6) | $ 244.5 |
Defined benefit pension plan: | ||
Amortization of actuarial gain and prior service cost included in net periodic pension cost, net of tax | 0.1 | 0.3 |
Total defined benefit pension plan, net of tax | 0.1 | 0.3 |
Unrealized gain (loss) on available-for-sale securities, net of tax | 2.6 | (2.4) |
Other comprehensive income (loss), net of tax | 2.7 | (2.1) |
Comprehensive (loss) income | $ (491.9) | $ 242.4 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Treasury Stock | Retained Earnings | Total |
Balance at Dec. 31, 2017 | $ 0.7 | $ 1,854.3 | $ (19.6) | $ (2,579.2) | $ 2,845.6 | $ 2,101.8 |
Balance (in shares) at Dec. 31, 2017 | 69.9 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net (loss) income | 244.5 | 244.5 | ||||
Unrealized gain (loss) on available-for-sale securities | (2.4) | (2.4) | ||||
Defined benefit pension plan | 0.3 | 0.3 | ||||
Shares issued under employee stock purchase plan | 2.1 | 2.1 | ||||
Exercise of stock options | 9.2 | 9.2 | ||||
Exercise of stock options (in shares) | 0.2 | |||||
Share-based compensation | 13.9 | 13.9 | ||||
Balance at Mar. 31, 2018 | $ 0.7 | 1,879.5 | (21.7) | (2,579.2) | 3,090.1 | 2,369.4 |
Balance (in shares) at Mar. 31, 2018 | 70.1 | |||||
Balance at Dec. 31, 2018 | $ 0.7 | 1,940.2 | (7.9) | (2,579.2) | 3,434.8 | 2,788.6 |
Balance (in shares) at Dec. 31, 2018 | 70.2 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net (loss) income | (494.6) | (494.6) | ||||
Unrealized gain (loss) on available-for-sale securities | 2.6 | 2.6 | ||||
Defined benefit pension plan | 0.1 | 0.1 | ||||
Shares issued under employee stock purchase plan | 2.2 | 2.2 | ||||
Restricted stock units withheld for taxes | (1.9) | (1.9) | ||||
Exercise of stock options | 8.8 | 8.8 | ||||
Exercise of stock options (in shares) | 0.2 | |||||
Share-based compensation | 18.3 | 18.3 | ||||
Cumulative effect of accounting change | (5.1) | (5.1) | ||||
Balance at Mar. 31, 2019 | $ 0.7 | $ 1,967.6 | $ (5.2) | $ (2,579.2) | $ 2,935.1 | $ 2,319 |
Balance (in shares) at Mar. 31, 2019 | 70.4 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (494.6) | $ 244.5 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 10.3 | 7.9 |
Share-based compensation expense (benefit) | 29.2 | (101.1) |
Other | 6.7 | (0.1) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 16 | 86 |
Inventories | 1.7 | 6.4 |
Accounts payable and accrued expenses | (27.7) | 22 |
Other assets and liabilities | (169) | 10.1 |
Net cash (used in) provided by operating activities | (627.4) | 275.7 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (25.1) | (37.6) |
Purchases of held-to-maturity and other investments | (26.9) | |
Sales/maturities of held-to-maturity investments | 37.4 | 26.8 |
Purchases of available-for-sale investments | (379.5) | (86) |
Sales/maturities of available-for-sale investments | 313.9 | 70 |
Purchase of investments in privately-held companies | (7) | (5) |
Net cash used in investing activities | (60.3) | (58.7) |
Cash flows from financing activities: | ||
Proceeds from line of credit | 800 | |
Payments of debt issuance costs | (0.7) | |
Proceeds from the exercise of stock options | 8.8 | 9.2 |
Proceeds from the issuance of stock under employee stock purchase plan | 2.2 | 2.1 |
Restricted stock units withheld for taxes | (1.9) | |
Net cash provided by financing activities | 809.1 | 10.6 |
Net increase in cash and cash equivalents | 121.4 | 227.6 |
Cash and cash equivalents, beginning of period | 669.2 | 705.1 |
Cash and cash equivalents, end of period | 790.6 | 932.7 |
Supplemental cash flow information: | ||
Cash paid for interest | 9.2 | 2.3 |
Cash paid for income taxes | 0.9 | 0.2 |
Non-cash investing and financing activities: | ||
Non-cash additions to property, plant and equipment | $ 5.8 | $ 13.9 |
Organization and Business Descr
Organization and Business Description | 3 Months Ended |
Mar. 31, 2019 | |
Organization and Business Description | |
Organization and Business Description | 1. Organization and Business Description United Therapeutics Corporation is a biotechnology company focused on the development and commercialization of innovative products to address the unmet medical needs of patients with chronic and life-threatening conditions. We have approval from the U.S. Food and Drug Administration (FDA) to market the following therapies: Remodulin® (treprostinil) Injection (Remodulin), Tyvaso® (treprostinil) Inhalation Solution (Tyvaso), Orenitram® (treprostinil) Extended-Release Tablets (Orenitram), Unituxin® (dinutuximab) Injection (Unituxin) and Adcirca® (tadalafil) Tablets (Adcirca). Our only significant revenues outside the United States are derived from sales of Remodulin in Europe. As used in these notes to the consolidated financial statements, unless the context otherwise requires, the terms “we”, “us”, “our”, and similar terms refer to United Therapeutics Corporation and its consolidated subsidiaries. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information required by U.S. generally accepted accounting principles (GAAP) for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on February 27, 2019 (our “Annual Report”). In our management’s opinion, the accompanying consolidated financial statements contain all adjustments, including normal, recurring adjustments, necessary to fairly present our financial position as of March 31, 2019 and December 31, 2018, statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2019 and 2018. Interim results are not necessarily indicative of results for an entire year. Recently Issued Accounting Standards Accounting Standards Adopted During the Period In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (ASU 2016-02), which requires that assets and liabilities arising under leases be recognized on the balance sheets. ASU 2016-02 also requires additional quantitative and qualitative disclosures of the amount, timing and uncertainty of cash flows relating to lease arrangements. ASU 2016-02 was effective for annual reporting periods beginning after December 15, 2018. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842)—Targeted Improvements (ASU 2018-11). ASU 2018-11 allowed entities to elect a simplified transition method, allowing for application of ASU 2016-02 at the adoption date, with recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted this standard on January 1, 2019 using the simplified transition method, allowing us to not restate comparative periods and apply ASC 842 on a prospective basis, resulting in a balance sheet presentation that is not comparable to the prior period in the first year of adoption. We elected the practical expedient package permitted under the transition guidance within the new standard, which among other things, allows us to carry forward historical lease classifications. We also elected the lessee component election, allowing us to account for the lease and non-lease components as a single lease component. As the majority of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. We made an accounting policy election to keep leases with an initial term of 12 months or less off of our consolidated balance sheets. We recognize lease payments for such leases in the consolidated statements of operations on a straight-line basis over the lease term. We adopted this standard on a prospective basis and, as such, prior periods have not been restated. Upon adoption, we recognized a right-of-use asset and lease liability, each of $8.2 million and related to our operating leases as of January 1, 2019. In addition, we recognized a cumulative-effect adjustment for the de-recognition of our build-to-suit leases as these leases no longer qualify for build-to-suit accounting and have instead been recognized as operating leases under ASC 842. The adjustment resulted in a decrease to retained earnings of $5.1 million, which is net of a tax benefit. At adoption, our weighted-average remaining lease term was 3.0 years and our weighted-average discount rate was 4.9%. Supplemental balance sheet information related to operating leases was as follows (in millions): Financial Statement Line Item March 31, January 1, Operating Leases on the Consolidated Balance Sheets 2019 2019 Right-of-use assets Other non-current assets $ 7.1 $ 8.2 Current lease liabilities Other current liabilities $ 3.4 $ 4.1 Non-current lease liabilities Other non-current liabilities 3.7 4.1 Total operating lease liabilities $ 7.1 $ 8.2 We recorded $1.4 million and $1.2 million in operating lease expense during the three months ended March 31, 2019 and 2018, respectively. The amounts recorded in operating lease expense include short-term leases and variable lease costs, which are immaterial. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The standard provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect (or portion thereof) of the change in the U.S. federal corporate income tax rate under the Tax Cuts and Jobs Act (Tax Reform) is recorded. We adopted the new standard on January 1, 2019. Adoption of this standard did not have a material impact on our financial statements. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, to eliminate or modify certain disclosure rules that are redundant, outdated, or duplicative of U.S. GAAP or other regulatory requirements. Among other changes, the amendments eliminated the annual requirement to disclose the high and low trading prices of our common stock. In addition, the amendments expanded the disclosure requirements related to the analysis of shareholders’ equity for interim financial statements. An analysis of the changes in each caption of shareholders' equity presented in the balance sheet must be provided in a note or separate statement, and we have provided this disclosure in a separate statement (Consolidated Statements of Stockholders’ Equity) beginning in the first quarter of 2019. Accounting Standards Not Yet Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies how an entity is required to test goodwill for impairment. A goodwill impairment will be measured by the amount by which a reporting unit’s carrying value exceeds its fair value, with the amount of impairment not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, and must be adopted on a prospective basis. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements. In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Topic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14). The standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. ASU 2018-14 is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments | |
Investments | 3. Investments Available-for-Sale Investments Marketable investments classified as available-for-sale consisted of the following (in millions): Gross Gross Amortized Unrealized Unrealized Fair As of March 31, 2019 Cost Gains Losses Value U.S. government and agency securities $ 1,111.8 $ 1.3 $ (2.0) $ 1,111.1 Corporate debt securities 111.2 0.5 — 111.7 Total $ 1,223.0 $ 1.8 $ (2.0) $ 1,222.8 Reported under the following captions on the consolidated balance sheet: Cash and cash equivalents $ 5.9 Current marketable investments 806.4 Non-current marketable investments 410.5 Total $ 1,222.8 Gross Gross Amortized Unrealized Unrealized Fair As of December 31, 2018 Cost Gains Losses Value U.S. government and agency securities $ 1,077.4 $ 0.7 $ (3.9) $ 1,074.2 Corporate debt securities 72.3 — (0.3) 72.0 Total $ 1,149.7 $ 0.7 $ (4.2) $ 1,146.2 Reported under the following captions on the consolidated balance sheet: Cash and cash equivalents $ — Current marketable investments 705.8 Non-current marketable investments 440.4 Total $ 1,146.2 The following table summarizes the contractual maturities of available-for-sale marketable investments (in millions): As of March 31, 2019 Amortized Fair Cost Value Due within one year $ 813.4 $ 812.3 Due in one to three years 409.6 410.5 Total $ 1,223.0 $ 1,222.8 As of December 31, 2018 Amortized Fair Cost Value Due within one year $ 708.2 $ 705.8 Due in one to three years 441.5 440.4 Total $ 1,149.7 $ 1,146.2 Investments in Privately-Held Companies As of March 31, 2019, we maintained non-controlling equity investments in privately-held companies of approximately $142.5 million in the aggregate. Upon adoption of ASU 2016-01 on January 1, 2018, we began to measure these investments using the measurement alternative because the fair values of these investments are not readily determinable. Under this alternative, the investments are measured at cost, less any impairment, adjusted for any observable price changes. There were no observable price changes in our investments in privately-held companies during the three months ended March 31, 2019. We include our investments in privately-held companies within other non-current assets on our consolidated balance sheets. These investments are subject to a periodic impairment review and if impaired, the investment is measured and recorded at fair value in accordance with ASC 820, Fair Value Measurements . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 4. Fair Value Measurements We account for certain assets and liabilities at fair value and classify these assets and liabilities within a fair value hierarchy (Level 1, Level 2 or Level 3). Our other current assets and other current liabilities have fair values that approximate their carrying values. Assets and liabilities subject to fair value measurements are as follows (in millions): As of March 31, 2019 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ 437.6 $ — $ — $ 437.6 Time deposits (2) — 38.4 — 38.4 U.S. government and agency securities (3) — 1,111.1 — 1,111.1 Corporate debt securities (3) — 111.7 — 111.7 Equity securities (4) 6.5 — — 6.5 Total assets $ 444.1 $ 1,261.2 $ — $ 1,705.3 Liabilities Contingent consideration (5) — — 13.4 13.4 Total liabilities $ — $ — $ 13.4 $ 13.4 As of December 31, 2018 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ 247.6 $ — $ — $ 247.6 Time deposits (2) — 35.9 — 35.9 U.S. government and agency securities (3) — 1,074.2 — 1,074.2 Corporate debt securities (3) — 75.7 — 75.7 Equity securities (4) 3.5 — — 3.5 Total assets $ 251.1 $ 1,185.8 $ — $ 1,436.9 Liabilities Contingent consideration (5) — — 13.4 13.4 Total liabilities $ — $ — $ 13.4 $ 13.4 (1) Included in cash and cash equivalents on the accompanying consolidated balance sheets. (2) Included in cash equivalents and current and non-current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is principally measured or corroborated by trade data for identical securities in which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. (3) Included in cash equivalents and current and non-current marketable investments on the accompanying consolidated balance sheets. Refer to Note 3— Investments—Available-for-Sale Investments for further information. The fair value of these securities is principally measured or corroborated by trade data for identical securities for which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. (4) Included in current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is based on quoted market prices for identical instruments in active markets. (5) Included in non-current liabilities on the accompanying consolidated balance sheets. The fair value of contingent consideration has been estimated using probability-weighted discounted cash flow models (DCFs). The DCFs incorporate Level 3 inputs including estimated discount rates that we believe market participants would consider relevant in pricing and the projected timing and amount of cash flows, which are estimated and developed, in part, based on the requirements specific to each acquisition agreement. The change in the fair value of contingent consideration for the three months ended March 31, 2019 was not material. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The fair values of our marketable investments are reported above within the fair value hierarchy. Refer to Note 3— Investments . The carrying value of our debt is a reasonable estimate of the fair value of the outstanding debt based on the variable interest rate of the debt . |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventories | |
Inventories | 5. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following, net of reserves (in millions): March 31, December 31, 2019 2018 Raw materials $ 22.3 $ 24.3 Work-in-progress 26.3 28.0 Finished goods 47.6 48.7 Total inventories $ 96.2 $ 101.0 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 6. Goodwill and Other Intangible Assets Goodwill and other intangible assets comprise the following (in millions): As of March 31, 2019 As of December 31, 2018 Accumulated Accumulated Gross Amortization Net Gross Amortization Net Goodwill $ 31.5 $ — $ 31.5 $ 31.5 $ — $ 31.5 Other intangible assets: Technology, patents and trade names 6.7 (5.1) 1.6 6.7 (5.1) 1.6 In-process research and development 137.7 — 137.7 137.7 — 137.7 Total $ 175.9 $ (5.1) $ 170.8 $ 175.9 $ (5.1) $ 170.8 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt | |
Debt | 7. Debt Unsecured Revolving Credit Facility -- Credit Agreement In June 2018, we entered into a credit agreement (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo), as administrative agent and a swingline lender, and various other lender parties, providing for (1) an unsecured revolving credit facility of up to $1.0 billion; and (2) a second unsecured revolving credit facility of up to $500.0 million (which facilities may, at our request, be increased by up to $300 million in the aggregate subject to obtaining commitments from existing or new lenders for such increase and other conditions). The facilities will mature five years after the closing date of the Credit Agreement, subject to the lenders’ ability to extend the maturity date by one year if we request such an extension in accordance with the terms of the Credit Agreement, up to a maximum of two such extensions. At our option, amounts borrowed under the Credit Agreement bear interest at either the LIBOR rate or a fluctuating base rate, in each case, plus an applicable margin determined on a quarterly basis based on our consolidated ratio of total indebtedness to EBITDA (as calculated in accordance with the Credit Agreement). To date, we have elected to calculate interest on the outstanding balance at LIBOR plus an applicable margin. In connection with the Credit Agreement, we incurred debt issuance costs in June 2018 of $13.2 million, $12.6 million of which were capitalized and are being amortized over the term of the Credit Agreement. On January 24, 2019, we paid an upfront payment of $800.0 million related to our exclusive license agreement with Arena Pharmaceuticals, Inc. (Arena) and funded the payment by borrowing $800.0 million under the Credit Agreement. This brought our aggregate outstanding balance under the Credit Agreement to $1,050.0 million as of March 31, 2019. As we do not intend to repay the full outstanding balance within one year, the outstanding balance has been classified as long-term within the consolidated balance sheet. The Credit Agreement contains customary events of default and customary affirmative and negative covenants. As of March 31, 2019, we were in compliance with these covenants. Lung Biotechnology PBC is our only subsidiary that guarantees our obligations under the Credit Agreement though, from time to time, one or more of our other subsidiaries may be required to guarantee our obligations. During the three months ended March 31, 2019, we recorded $10.3 million of interest expense related to the Credit Agreement. During the same period in 2018, we recorded $2.6 million of interest expense related to a prior credit agreement. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Share-Based Compensation | |
Share-Based Compensation | 8. Share-Based Compensation As of March 31, 2019, we have two shareholder-approved equity incentive plans: the United Therapeutics Corporation Amended and Restated Equity Incentive Plan (the 1999 Plan) and the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (the 2015 Plan). The 2015 Plan and an amendment and restatement of the 2015 Plan were approved by our shareholders in June 2015 and June 2018, respectively. The 2015 Plan, as amended, provides for the issuance of up to 9,050,000 shares of our common stock pursuant to awards granted under the 2015 Plan. As a result of the approval of the 2015 Plan, no further awards have been or will be granted under the 1999 Plan. We also have one equity incentive plan, the United Therapeutics Corporation 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), that has not been approved by our shareholders, in accordance with Nasdaq Stock Market rules. The 2019 Inducement Plan was approved by our Board of Directors in February 2019 and provides for the issuance of up to 99,000 shares of our common stock under awards granted to newly-hired employees. Currently, we grant equity-based awards to employees and members of our Board of Directors in the form of stock options and restricted stock units under the 2015 Plan, and we grant restricted stock units to newly-hired employees under the 2019 Inducement Plan. Refer to the sections entitled Stock Options and Restricted Stock Units below. We previously issued awards under the United Therapeutics Corporation Share Tracking Awards Plan (2008 STAP) and the United Therapeutics Corporation 2011 Share Tracking Awards Plan (2011 STAP). We refer to the 2008 STAP and the 2011 STAP collectively as the “STAP” and awards outstanding under either of these plans as “STAP awards.” Refer to the section entitled Share Tracking Awards Plans below. We discontinued the issuance of STAP awards in June 2015. In 2012, our shareholders approved the United Therapeutics Corporation Employee Stock Purchase Plan (ESPP), which is structured to comply with Section 423 of the Internal Revenue Code. Refer to the section entitled Employee Stock Purchase Plan below. The following table reflects the components of share-based compensation expense (benefit) recognized in our consolidated statements of operations (in millions): Three Months Ended 2019 2018 Stock options $ 15.7 $ 12.7 Restricted stock units 2.2 0.9 STAP awards 11.0 (115.0) Employee stock purchase plan 0.3 0.3 Total share-based compensation expense (benefit) before tax $ 29.2 $ (101.1) Stock Options We estimate the fair value of stock options using the Black-Scholes-Merton valuation model, which requires us to make certain assumptions that can materially impact the estimation of fair value and related compensation expense. The assumptions used to estimate fair value include the price of our common stock, the expected volatility of our common stock, the risk-free interest rate, the expected term of stock option awards and the expected dividend yield. The table below includes the weighted-average assumptions used to measure the fair value of all stock options granted during the three-month periods ended March 31, 2019 and March 31, 2018: March 31, March 31, 2019 2018 Expected volatility 33.9 % 36.1 % Risk-free interest rate 2.4 % 2.7 % Expected term of awards (in years) 5.8 6.3 Expected dividend yield 0.0 % 0.0 % A summary of the activity and status of stock options under our equity incentive plans during the three-month period ended March 31, 2019 is presented below: Weighted Weighted- Average Aggregate Average Remaining Intrinsic Number of Exercise Contractual Value Options Price Term (Years) (in millions) Outstanding at January 1, 2019 6,299,803 $ 120.78 Granted 2,011,667 126.54 Exercised (166,508) 53.10 Forfeited/canceled (77,200) 130.73 Outstanding at March 31, 2019 8,067,762 $ 123.52 7.0 $ 38.6 Exercisable at March 31, 2019 3,885,475 $ 119.05 5.8 $ 32.8 Unvested at March 31, 2019 4,182,287 $ 127.67 8.1 $ 5.8 The weighted average fair value of a stock option granted during each of the three-month periods ended March 31, 2019 and March 31, 2018, was $40.03 and $45.00, respectively. These stock options have an aggregate grant date fair value of $80.5 million and $42.5 million, respectively. The total fair value of stock options that vested during the three-month periods ended March 31, 2019 and March 31, 2018 was $33.7 million and $31.1 million, respectively. Total share-based compensation expense relating to stock options is recorded as follows (in millions): Three Months Ended March 31, 2019 2018 Cost of product sales $ 0.2 $ 0.3 Research and development 0.9 0.9 Selling, general and administrative 14.6 11.5 Share-based compensation expense before taxes 15.7 12.7 Related income tax benefit (3.5) (2.9) Share-based compensation expense, net of taxes $ 12.2 $ 9.8 As of March 31, 2019, unrecognized compensation cost relating to stock options was $143.4 million. Unvested outstanding stock options as of March 31, 2019 had a weighted average remaining vesting period of 2.8 years. Stock option exercise data is summarized below (dollars in millions): Three Months Ended March 31, 2019 2018 Number of options exercised 166,508 174,295 Cash received $ 8.8 $ 9.2 Total intrinsic value of options exercised $ 10.3 $ 10.4 Restricted Stock Units Each restricted stock unit entitles the recipient to one share of our common stock upon vesting. We measure the fair value of restricted stock units using the stock price on the date of grant. Share-based compensation expense for the restricted stock units is recorded ratably over their vesting period. A summary of the activity with respect to, and status of, restricted stock units under the 2015 Plan during the three-month period ended March 31, 2019 is presented below: Weighted Weighted- Average Aggregate Number of Average Remaining Intrinsic Restricted Grant Contractual Value Stock Units Price Term (Years) (in millions) Unvested at January 1, 2019 186,255 $ 112.48 Granted 196,489 117.75 Vested (46,027) 111.04 Forfeited/canceled (4,373) 119.39 Unvested at March 31, 2019 332,344 $ 115.71 9.6 $ 39.0 Total share-based compensation expense relating to restricted stock units is recorded as follows (in millions): Three Months Ended 2019 2018 Cost of product sales $ 0.2 $ — Research and development 0.7 0.1 Selling, general and administrative 1.3 0.8 Share-based compensation expense before taxes 2.2 0.9 Related income tax benefit (0.5) (0.2) Share-based compensation expense, net of taxes $ 1.7 $ 0.7 As of March 31, 2019, unrecognized compensation cost related to the grant of restricted stock units was $35.6 million. Unvested outstanding restricted stock units as of March 31, 2019 had a weighted average remaining vesting period of 2.6 years. Share Tracking Awards Plans STAP awards convey the right to receive in cash an amount equal to the appreciation of our common stock, which is measured as the increase in the closing price of our common stock between the dates of grant and exercise. STAP awards expire on the tenth anniversary of the grant date, and in most cases they vest in equal increments on each anniversary of the grant date over a four-year period. The STAP liability includes vested awards and awards that are expected to vest. The aggregate STAP liability balance was $77.5 million and $72.2 million at March 31, 2019 and December 31, 2018, respectively, all of which was classified as a current liability on our consolidated balance sheets because all STAP awards are either vested or expected to vest within one year based on their vesting terms. Estimating the fair value of STAP awards requires the use of certain inputs that can materially impact the determination of fair value and the amount of compensation expense (benefit) we recognize. Inputs used in estimating fair value include the price of our common stock, the expected volatility of the price of our common stock, the risk-free interest rate, the expected term of STAP awards, and the expected dividend yield. Prior to December 31, 2018, we used historical data to develop the expected term input for our STAP awards. As of December 31, 2018, we no longer believed historical exercise data was a reasonable approach to determine the expected exercise behavior of outstanding STAPs given the prolonged volatility of the price of our common stock. As such, we determined the expected term assumption as of March 31, 2019 using the weighted average midpoint of the remaining contractual term for outstanding awards and expect to continue to use this methodology until circumstances dictate otherwise. The fair value of the STAP awards is measured at the end of each financial reporting period because the awards are settled in cash. The table below includes the weighted-average assumptions used to measure the fair value of outstanding STAP awards: March 31, March 31, 2019 2018 Expected volatility 29.3 % 33.3 % Risk-free interest rate 2.2 % 2.1 % Expected term of awards (in years) 2.4 1.2 Expected dividend yield — % — % The closing price of our common stock was $117.37 and $112.36 on March 31, 2019 and March 31, 2018, respectively. The closing price of our common stock was $108.90 on December 31, 2018. A summary of the activity and status of STAP awards during the three-month period ended March 31, 2019 is presented below: Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Number of Exercise Term Value Awards Price (in Years) (in millions) Outstanding at January 1, 2019 2,867,979 $ 107.85 Granted — — Exercised (109,667) 61.19 Forfeited (65,067) 163.22 Outstanding at March 31, 2019 2,693,245 $ 108.42 4.8 $ 72.9 Exercisable at March 31, 2019 2,675,745 $ 108.41 4.8 $ 72.3 Unvested at March 31, 2019 17,500 $ 109.29 4.8 $ 0.6 Share-based compensation expense (benefit) recognized in connection with STAP awards is as follows (in millions): Three Months Ended March 31, 2019 2018 Cost of product sales $ 0.7 $ (6.2) Research and development 1.9 (23.6) Selling, general and administrative 8.4 (85.2) Share-based compensation expense (benefit) before taxes 11.0 (115.0) Related income tax (benefit) expense (2.5) 26.3 Share-based compensation expense (benefit), net of taxes $ 8.5 $ (88.7) Cash paid to settle STAP exercises during the three-month periods ended March 31, 2019 and March 31, 2018 was $5.8 million and $43.6 million, respectively. Employee Stock Purchase Plan In June 2012, our shareholders approved the United Therapeutics Corporation Employee Stock Purchase Plan (ESPP), which is structured to comply with Section 423 of the Internal Revenue Code. The ESPP provides eligible employees with the right to purchase shares of our common stock at a discount through elective accumulated payroll deductions at the end of each offering period. Offering periods, which began in 2012, occur in consecutive six-month periods commencing on September 5th and March 5th of each year. Eligible employees may contribute up to 15 percent of their base salary, subject to certain annual limitations as defined in the ESPP. The purchase price of the shares is equal to the lower of 85 percent of the closing price of our common stock on either the first or last trading day of a given offering period. In addition, the ESPP provides that no eligible employee may purchase more than 4,000 shares during any offering period. The ESPP has a 20-year term and limits the aggregate number of shares that can be issued under the ESPP to 3.0 million. |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Common Share | |
Earnings Per Common Share | 9. Earnings Per Common Share Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period, adjusted for the potential dilutive effect of our outstanding stock options, as if such options were exercised. For the three months ended March 31, 2019, we had a net loss, and as such, all outstanding stock options and restricted stock units were excluded from our calculation of diluted (loss) earnings per share. The components of basic and diluted (loss) earnings per common share comprised the following (in millions, except per share amounts): Three Months Ended March 31, 2019 2018 Numerator: Net (loss) income $ (494.6) $ 244.5 Denominator: Weighted average outstanding shares - basic 43.7 43.3 Effect of dilutive securities (1) : Stock options, restricted stock units and employee stock purchase plan — 0.6 Weighted average shares - diluted (2) 43.7 43.9 Net (loss) income per common share: Basic $ (11.32) $ 5.65 Diluted $ (11.32) $ 5.57 Stock options and restricted stock units excluded from calculation (2) 5.3 3.9 (1) Calculated using the treasury stock method. (2) The common shares underlying certain stock options and restricted stock units have been excluded from the computation of diluted earnings per share because their impact would be anti-dilutive for the three-month periods ended March 31, 2019 and March 31, 2018. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Income Taxes | 10. Income Taxes Our effective income tax rate (ETR) for the three months ended March 31, 2019 and 2018 was 24 percent and 21 percent, respectively. We recognized a loss before income taxes, and a corresponding income tax benefit, for the three months ended March 31, 2019, as a result of the one-time $800 million payment to Arena in January 2019. As a result of this loss, our anticipated tax credits, partially offset by non-deductible compensation expense, increased our tax benefit and resulting ETR for the three months ended March 31, 2019 compared to the three months ended March 31, 2018. Deferred tax assets increased by $169.8 million as of March 31, 2019 compared to December 31, 2018 primarily due to the amount of the Arena payment that will not be deductible for tax purposes in 2019. As of March 31, 2019 and 2018, our unrecognized tax benefits were $0.5 million, and included $0.3 million of tax benefits that, if recognized, would impact our ETR. We record interest and penalties related to uncertain tax positions as a component of income tax expense. As of March 31, 2019 and 2018, we have not accrued any material interest expense related to uncertain tax positions. We are unaware of any material positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Information | |
Segment Information | 11. Segment Information We currently operate as one operating segment with a focus on the development and commercialization of products to address the unmet needs of patients with chronic and life-threatening conditions. Our Chief Executive Officer, as our chief operating decision maker, manages and allocates resources to the operations of our company on a consolidated basis. This enables our Chief Executive Officer to assess our overall level of available resources and determine how best to deploy these resources across functions, therapeutic areas, and research and development projects in line with our long-term company-wide strategic goals. Net product sales, cost of product sales and gross profit for each of our commercial products were as follows (in millions): Three Months Ended March 31, 2019 Remodulin Tyvaso Orenitram Unituxin Adcirca Total Net product sales $ 155.5 $ 103.8 $ 58.4 $ 24.9 $ 20.0 $ 362.6 Cost of product sales 6.1 4.4 4.8 5.1 8.7 29.1 Gross profit $ 149.4 $ 99.4 $ 53.6 $ 19.8 $ 11.3 $ 333.5 2018 Net product sales $ 126.8 $ 94.6 $ 52.2 $ 18.0 $ 97.6 $ 389.2 Cost of product sales 3.0 3.0 3.0 2.3 41.9 53.2 Gross profit $ 123.8 $ 91.6 $ 49.2 $ 15.7 $ 55.7 $ 336.0 Geographic revenues are determined based on the country in which our customers (distributors) are located. Total revenues from external customers by geographic area are as follows (in millions): Three Months Ended March 31, 2019 2018 United States $ 329.5 $ 365.8 Rest-of-World (1) 33.1 23.4 Total $ 362.6 $ 389.2 (1) We recorded revenue from two specialty pharmaceutical distributors in the United States comprising 58 percent and 20 percent, respectively, of total revenues during the three-month period ended March 31, 2019 and 48 percent and 16 percent, respectively, of total revenues during the three-month period ended March 31, 2018. All of our revenues for Adcirca are generated by sales made through Lilly’s pharmaceutical wholesaler network. |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2019 | |
Litigation | |
Litigation | 12. Litigation On April 16, 2019, Sandoz Inc. (Sandoz) and RareGen, LLC (RareGen) filed a complaint in the U.S. District Court for the District of New Jersey against us and Smiths Medical ASD, Inc. (Smiths Medical), alleging that we and Smiths Medical engaged in anticompetitive conduct in connection with plaintiffs’ efforts to launch their generic version of Remodulin. In particular, the complaint alleges that we and Smiths Medical unlawfully impeded competition by entering into an agreement to produce CADD-MS ® 3 cartridges specifically for the delivery of subcutaneous Remodulin, without making these cartridges available for the delivery of Sandoz’s generic version of Remodulin. The lawsuit seeks, among other things, injunctive relief, unspecified damages, treble damages and attorneys’ fees. Plaintiffs have filed a motion to expedite discovery in anticipation of a forthcoming motion seeking unspecified preliminary injunctive relief. We believe these claims to be meritless and intend to vigorously defend the litigation. However, due to the inherent uncertainty in any litigation, we cannot guarantee that an adverse outcome will not result. Any litigation of this nature could involve substantial cost, and an adverse outcome could result in substantial monetary damages and/or injunctive relief adverse to our business. |
Arena License Agreement
Arena License Agreement | 3 Months Ended |
Mar. 31, 2019 | |
Arena License Agreement | |
Arena License Agreement | 13. Arena License Agreement On November 15, 2018, we entered into an exclusive license agreement with Arena related to ralinepag, a next-generation, oral, selective and potent prostacyclin receptor agonist being developed for the treatment of PAH. On January 24, 2019, in connection with the closing of the transactions contemplated by the license agreement, (1) Arena granted to us perpetual, irrevocable and exclusive rights throughout the universe to develop, manufacture and commercialize ralinepag; (2) Arena transferred to us certain other assets related to ralinepag, including, among others, related domain names and trademarks, permits, certain contracts, inventory, regulatory documentation, Investigational New Drug (IND) Application No. 109021 (related to ralinepag) and non-clinical, pre-clinical and clinical trial data; (3) we assumed certain limited liabilities from Arena, including, among others, all obligations arising after the closing under the assumed contracts and the IND described above; and (4) we paid Arena an upfront payment of $800.0 million, which was expensed as acquired in-process research and development and included within research and development expenses on our consolidated statements of operations for the three months ended March 31, 2019. We will also pay Arena (1) a one-time payment of $250.0 million for the first, if any, marketing approval we receive in the United States for an inhaled version of ralinepag to treat PAH; (2) a one-time payment of $150.0 million for the first, if any, marketing approval we receive in any of Japan, France, Italy, the United Kingdom, Spain or Germany for an oral version of ralinepag to treat any indication; and (3) low double-digit, tiered royalties on net sales of any pharmaceutical product containing ralinepag as an active ingredient, subject to certain adjustments for third party license payments. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Accounting Standards Adopted During the Period In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (ASU 2016-02), which requires that assets and liabilities arising under leases be recognized on the balance sheets. ASU 2016-02 also requires additional quantitative and qualitative disclosures of the amount, timing and uncertainty of cash flows relating to lease arrangements. ASU 2016-02 was effective for annual reporting periods beginning after December 15, 2018. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842)—Targeted Improvements (ASU 2018-11). ASU 2018-11 allowed entities to elect a simplified transition method, allowing for application of ASU 2016-02 at the adoption date, with recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted this standard on January 1, 2019 using the simplified transition method, allowing us to not restate comparative periods and apply ASC 842 on a prospective basis, resulting in a balance sheet presentation that is not comparable to the prior period in the first year of adoption. We elected the practical expedient package permitted under the transition guidance within the new standard, which among other things, allows us to carry forward historical lease classifications. We also elected the lessee component election, allowing us to account for the lease and non-lease components as a single lease component. As the majority of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. We made an accounting policy election to keep leases with an initial term of 12 months or less off of our consolidated balance sheets. We recognize lease payments for such leases in the consolidated statements of operations on a straight-line basis over the lease term. We adopted this standard on a prospective basis and, as such, prior periods have not been restated. Upon adoption, we recognized a right-of-use asset and lease liability, each of $8.2 million and related to our operating leases as of January 1, 2019. In addition, we recognized a cumulative-effect adjustment for the de-recognition of our build-to-suit leases as these leases no longer qualify for build-to-suit accounting and have instead been recognized as operating leases under ASC 842. The adjustment resulted in a decrease to retained earnings of $5.1 million, which is net of a tax benefit. At adoption, our weighted-average remaining lease term was 3.0 years and our weighted-average discount rate was 4.9%. Supplemental balance sheet information related to operating leases was as follows (in millions): Financial Statement Line Item March 31, January 1, Operating Leases on the Consolidated Balance Sheets 2019 2019 Right-of-use assets Other non-current assets $ 7.1 $ 8.2 Current lease liabilities Other current liabilities $ 3.4 $ 4.1 Non-current lease liabilities Other non-current liabilities 3.7 4.1 Total operating lease liabilities $ 7.1 $ 8.2 We recorded $1.4 million and $1.2 million in operating lease expense during the three months ended March 31, 2019 and 2018, respectively. The amounts recorded in operating lease expense include short-term leases and variable lease costs, which are immaterial. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The standard provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect (or portion thereof) of the change in the U.S. federal corporate income tax rate under the Tax Cuts and Jobs Act (Tax Reform) is recorded. We adopted the new standard on January 1, 2019. Adoption of this standard did not have a material impact on our financial statements. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, to eliminate or modify certain disclosure rules that are redundant, outdated, or duplicative of U.S. GAAP or other regulatory requirements. Among other changes, the amendments eliminated the annual requirement to disclose the high and low trading prices of our common stock. In addition, the amendments expanded the disclosure requirements related to the analysis of shareholders’ equity for interim financial statements. An analysis of the changes in each caption of shareholders' equity presented in the balance sheet must be provided in a note or separate statement, and we have provided this disclosure in a separate statement (Consolidated Statements of Stockholders’ Equity) beginning in the first quarter of 2019. Accounting Standards Not Yet Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies how an entity is required to test goodwill for impairment. A goodwill impairment will be measured by the amount by which a reporting unit’s carrying value exceeds its fair value, with the amount of impairment not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, and must be adopted on a prospective basis. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements. In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Topic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14). The standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. ASU 2018-14 is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Schedule of Supplemental balance sheet information related to operating leases | Supplemental balance sheet information related to operating leases was as follows (in millions): Financial Statement Line Item March 31, January 1, Operating Leases on the Consolidated Balance Sheets 2019 2019 Right-of-use assets Other non-current assets $ 7.1 $ 8.2 Current lease liabilities Other current liabilities $ 3.4 $ 4.1 Non-current lease liabilities Other non-current liabilities 3.7 4.1 Total operating lease liabilities $ 7.1 $ 8.2 |
Investments (Tables)
Investments (Tables) - Available-for-Sale Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments | |
Schedule of marketable investments classified as available-for-sale | Marketable investments classified as available-for-sale consisted of the following (in millions): Gross Gross Amortized Unrealized Unrealized Fair As of March 31, 2019 Cost Gains Losses Value U.S. government and agency securities $ 1,111.8 $ 1.3 $ (2.0) $ 1,111.1 Corporate debt securities 111.2 0.5 — 111.7 Total $ 1,223.0 $ 1.8 $ (2.0) $ 1,222.8 Reported under the following captions on the consolidated balance sheet: Cash and cash equivalents $ 5.9 Current marketable investments 806.4 Non-current marketable investments 410.5 Total $ 1,222.8 Gross Gross Amortized Unrealized Unrealized Fair As of December 31, 2018 Cost Gains Losses Value U.S. government and agency securities $ 1,077.4 $ 0.7 $ (3.9) $ 1,074.2 Corporate debt securities 72.3 — (0.3) 72.0 Total $ 1,149.7 $ 0.7 $ (4.2) $ 1,146.2 Reported under the following captions on the consolidated balance sheet: Cash and cash equivalents $ — Current marketable investments 705.8 Non-current marketable investments 440.4 Total $ 1,146.2 |
Summary of the contractual maturities | The following table summarizes the contractual maturities of available-for-sale marketable investments (in millions): As of March 31, 2019 Amortized Fair Cost Value Due within one year $ 813.4 $ 812.3 Due in one to three years 409.6 410.5 Total $ 1,223.0 $ 1,222.8 As of December 31, 2018 Amortized Fair Cost Value Due within one year $ 708.2 $ 705.8 Due in one to three years 441.5 440.4 Total $ 1,149.7 $ 1,146.2 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Measurements | |
Schedule of assets and liabilities subject to fair value measurements | Assets and liabilities subject to fair value measurements are as follows (in millions): As of March 31, 2019 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ 437.6 $ — $ — $ 437.6 Time deposits (2) — 38.4 — 38.4 U.S. government and agency securities (3) — 1,111.1 — 1,111.1 Corporate debt securities (3) — 111.7 — 111.7 Equity securities (4) 6.5 — — 6.5 Total assets $ 444.1 $ 1,261.2 $ — $ 1,705.3 Liabilities Contingent consideration (5) — — 13.4 13.4 Total liabilities $ — $ — $ 13.4 $ 13.4 As of December 31, 2018 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ 247.6 $ — $ — $ 247.6 Time deposits (2) — 35.9 — 35.9 U.S. government and agency securities (3) — 1,074.2 — 1,074.2 Corporate debt securities (3) — 75.7 — 75.7 Equity securities (4) 3.5 — — 3.5 Total assets $ 251.1 $ 1,185.8 $ — $ 1,436.9 Liabilities Contingent consideration (5) — — 13.4 13.4 Total liabilities $ — $ — $ 13.4 $ 13.4 (1) Included in cash and cash equivalents on the accompanying consolidated balance sheets. (2) Included in cash equivalents and current and non-current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is principally measured or corroborated by trade data for identical securities in which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. (3) Included in cash equivalents and current and non-current marketable investments on the accompanying consolidated balance sheets. Refer to Note 3— Investments—Available-for-Sale Investments for further information. The fair value of these securities is principally measured or corroborated by trade data for identical securities for which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. (4) Included in current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is based on quoted market prices for identical instruments in active markets. (5) Included in non-current liabilities on the accompanying consolidated balance sheets. The fair value of contingent consideration has been estimated using probability-weighted discounted cash flow models (DCFs). The DCFs incorporate Level 3 inputs including estimated discount rates that we believe market participants would consider relevant in pricing and the projected timing and amount of cash flows, which are estimated and developed, in part, based on the requirements specific to each acquisition agreement. The change in the fair value of contingent consideration for the three months ended March 31, 2019 was not material. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventories | |
Schedule of inventories, net of reserves | Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following, net of reserves (in millions): March 31, December 31, 2019 2018 Raw materials $ 22.3 $ 24.3 Work-in-progress 26.3 28.0 Finished goods 47.6 48.7 Total inventories $ 96.2 $ 101.0 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill and other intangible assets | Goodwill and other intangible assets comprise the following (in millions): As of March 31, 2019 As of December 31, 2018 Accumulated Accumulated Gross Amortization Net Gross Amortization Net Goodwill $ 31.5 $ — $ 31.5 $ 31.5 $ — $ 31.5 Other intangible assets: Technology, patents and trade names 6.7 (5.1) 1.6 6.7 (5.1) 1.6 In-process research and development 137.7 — 137.7 137.7 — 137.7 Total $ 175.9 $ (5.1) $ 170.8 $ 175.9 $ (5.1) $ 170.8 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stock Options | |
Share-Based Compensation | |
Schedule of components of share-based compensation expense (benefit) recognized | The following table reflects the components of share-based compensation expense (benefit) recognized in our consolidated statements of operations (in millions): Three Months Ended 2019 2018 Stock options $ 15.7 $ 12.7 Restricted stock units 2.2 0.9 STAP awards 11.0 (115.0) Employee stock purchase plan 0.3 0.3 Total share-based compensation expense (benefit) before tax $ 29.2 $ (101.1) |
Summary of weighted-average assumptions to measure the fair value of stock options | March 31, March 31, 2019 2018 Expected volatility 33.9 % 36.1 % Risk-free interest rate 2.4 % 2.7 % Expected term of awards (in years) 5.8 6.3 Expected dividend yield 0.0 % 0.0 % |
Schedule of activity and status of stock options | Weighted Weighted- Average Aggregate Average Remaining Intrinsic Number of Exercise Contractual Value Options Price Term (Years) (in millions) Outstanding at January 1, 2019 6,299,803 $ 120.78 Granted 2,011,667 126.54 Exercised (166,508) 53.10 Forfeited/canceled (77,200) 130.73 Outstanding at March 31, 2019 8,067,762 $ 123.52 7.0 $ 38.6 Exercisable at March 31, 2019 3,885,475 $ 119.05 5.8 $ 32.8 Unvested at March 31, 2019 4,182,287 $ 127.67 8.1 $ 5.8 |
Schedule of share-based compensation expense (benefit) recognized | Total share-based compensation expense relating to stock options is recorded as follows (in millions): Three Months Ended March 31, 2019 2018 Cost of product sales $ 0.2 $ 0.3 Research and development 0.9 0.9 Selling, general and administrative 14.6 11.5 Share-based compensation expense before taxes 15.7 12.7 Related income tax benefit (3.5) (2.9) Share-based compensation expense, net of taxes $ 12.2 $ 9.8 |
Summary of stock option exercise data | Stock option exercise data is summarized below (dollars in millions): Three Months Ended March 31, 2019 2018 Number of options exercised 166,508 174,295 Cash received $ 8.8 $ 9.2 Total intrinsic value of options exercised $ 10.3 $ 10.4 |
Restricted Stock Units | |
Share-Based Compensation | |
Schedule of restricted stock units activity | Weighted Weighted- Average Aggregate Number of Average Remaining Intrinsic Restricted Grant Contractual Value Stock Units Price Term (Years) (in millions) Unvested at January 1, 2019 186,255 $ 112.48 Granted 196,489 117.75 Vested (46,027) 111.04 Forfeited/canceled (4,373) 119.39 Unvested at March 31, 2019 332,344 $ 115.71 9.6 $ 39.0 |
Schedule of share-based compensation expense (benefit) recognized | Total share-based compensation expense relating to restricted stock units is recorded as follows (in millions): Three Months Ended 2019 2018 Cost of product sales $ 0.2 $ — Research and development 0.7 0.1 Selling, general and administrative 1.3 0.8 Share-based compensation expense before taxes 2.2 0.9 Related income tax benefit (0.5) (0.2) Share-based compensation expense, net of taxes $ 1.7 $ 0.7 |
STAP awards | |
Share-Based Compensation | |
Schedule of share-based compensation expense (benefit) recognized | Share-based compensation expense (benefit) recognized in connection with STAP awards is as follows (in millions): Three Months Ended March 31, 2019 2018 Cost of product sales $ 0.7 $ (6.2) Research and development 1.9 (23.6) Selling, general and administrative 8.4 (85.2) Share-based compensation expense (benefit) before taxes 11.0 (115.0) Related income tax (benefit) expense (2.5) 26.3 Share-based compensation expense (benefit), net of taxes $ 8.5 $ (88.7) |
Schedule of weighted-average assumptions to measure the fair value of outstanding STAP awards | March 31, March 31, 2019 2018 Expected volatility 29.3 % 33.3 % Risk-free interest rate 2.2 % 2.1 % Expected term of awards (in years) 2.4 1.2 Expected dividend yield — % — % |
Summary of the activity and status of STAP awards | Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Number of Exercise Term Value Awards Price (in Years) (in millions) Outstanding at January 1, 2019 2,867,979 $ 107.85 Granted — — Exercised (109,667) 61.19 Forfeited (65,067) 163.22 Outstanding at March 31, 2019 2,693,245 $ 108.42 4.8 $ 72.9 Exercisable at March 31, 2019 2,675,745 $ 108.41 4.8 $ 72.3 Unvested at March 31, 2019 17,500 $ 109.29 4.8 $ 0.6 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Common Share | |
Schedule of components of basic and diluted earnings per common share | The components of basic and diluted (loss) earnings per common share comprised the following (in millions, except per share amounts): Three Months Ended March 31, 2019 2018 Numerator: Net (loss) income $ (494.6) $ 244.5 Denominator: Weighted average outstanding shares - basic 43.7 43.3 Effect of dilutive securities (1) : Stock options, restricted stock units and employee stock purchase plan — 0.6 Weighted average shares - diluted (2) 43.7 43.9 Net (loss) income per common share: Basic $ (11.32) $ 5.65 Diluted $ (11.32) $ 5.57 Stock options and restricted stock units excluded from calculation (2) 5.3 3.9 (1) Calculated using the treasury stock method. (2) The common shares underlying certain stock options and restricted stock units have been excluded from the computation of diluted earnings per share because their impact would be anti-dilutive for the three-month periods ended March 31, 2019 and March 31, 2018. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Information | |
Schedule of net product sales, cost of product sales and gross profit for each commercial products | Net product sales, cost of product sales and gross profit for each of our commercial products were as follows (in millions): Three Months Ended March 31, 2019 Remodulin Tyvaso Orenitram Unituxin Adcirca Total Net product sales $ 155.5 $ 103.8 $ 58.4 $ 24.9 $ 20.0 $ 362.6 Cost of product sales 6.1 4.4 4.8 5.1 8.7 29.1 Gross profit $ 149.4 $ 99.4 $ 53.6 $ 19.8 $ 11.3 $ 333.5 2018 Net product sales $ 126.8 $ 94.6 $ 52.2 $ 18.0 $ 97.6 $ 389.2 Cost of product sales 3.0 3.0 3.0 2.3 41.9 53.2 Gross profit $ 123.8 $ 91.6 $ 49.2 $ 15.7 $ 55.7 $ 336.0 |
Schedule of net revenues from external customers by geographic area | Geographic revenues are determined based on the country in which our customers (distributors) are located. Total revenues from external customers by geographic area are as follows (in millions): Three Months Ended March 31, 2019 2018 United States $ 329.5 $ 365.8 Rest-of-World (1) 33.1 23.4 Total $ 362.6 $ 389.2 (1) |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Leases | |||
Decrease to retained earnings | $ (5.1) | ||
Right-of-use assets | $ 8.2 | $ 7.1 | |
Other non-current assets | us-gaap:OtherAssetsNoncurrent | ||
Current lease liabilities | 4.1 | $ 3.4 | |
Other current liabilities | us-gaap:OtherLiabilitiesCurrent | ||
Non-current lease liabilities | 4.1 | $ 3.7 | |
Other non-current liabilities | us-gaap:OtherLiabilitiesNoncurrent | ||
Total operating lease liabilities | 8.2 | $ 7.1 | |
Operating lease expense | $ 1.4 | $ 1.2 | |
ASU 2016-02 | |||
Leases | |||
Decrease to retained earnings | $ (5.1) | ||
Weighted-average remaining lease term | 3 years | ||
Weighted-average discount rate | 4.90% |
Investments - Available-for-Sal
Investments - Available-for-Sale (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Marketable investments classified as available-for-sale securities: | ||
Amortized Cost | $ 1,223 | $ 1,149.7 |
Gross Unrealized Gains | 1.8 | 0.7 |
Gross Unrealized Losses | (2) | (4.2) |
Fair Value | 1,222.8 | 1,146.2 |
U.S. government and agency securities | ||
Marketable investments classified as available-for-sale securities: | ||
Amortized Cost | 1,111.8 | 1,077.4 |
Gross Unrealized Gains | 1.3 | 0.7 |
Gross Unrealized Losses | (2) | (3.9) |
Fair Value | 1,111.1 | 1,074.2 |
Corporate debt securities | ||
Marketable investments classified as available-for-sale securities: | ||
Amortized Cost | 111.2 | 72.3 |
Gross Unrealized Gains | 0.5 | |
Gross Unrealized Losses | (0.3) | |
Fair Value | $ 111.7 | $ 72 |
Investments - Current and Non-c
Investments - Current and Non-current of Available-for-Sale (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Reported under the following captions on the consolidated balance sheet: | ||
Total | $ 1,222.8 | $ 1,146.2 |
Cash and cash equivalents | ||
Reported under the following captions on the consolidated balance sheet: | ||
Total | 5.9 | |
Current marketable investments | ||
Reported under the following captions on the consolidated balance sheet: | ||
Total | 806.4 | 705.8 |
Non-current marketable investments | ||
Reported under the following captions on the consolidated balance sheet: | ||
Total | $ 410.5 | $ 440.4 |
Investments - Contractual Matur
Investments - Contractual Maturities of Available-for-Sale Marketable Investments (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due within one year | $ 813.4 | $ 708.2 |
Due in one to three years | 409.6 | 441.5 |
Total | 1,223 | 1,149.7 |
Fair Value | ||
Due within one year | 812.3 | 705.8 |
Due in one to three years | 410.5 | 440.4 |
Total | $ 1,222.8 | $ 1,146.2 |
Investments - Investments in Pr
Investments - Investments in Privately-Held Companies (Details) - Privately-held Companies $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Investments in Privately-Held Companies | |
Investments in Privately-Held Companies | $ 142.5 |
Upward price changes of investments | 0 |
Downward price changes of investments | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring fair value measurements - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Level 1 | ||
Assets | ||
Total assets | $ 444.1 | $ 251.1 |
Level 1 | Money market funds | ||
Assets | ||
Total assets | 437.6 | 247.6 |
Level 1 | Equity securities | ||
Assets | ||
Total assets | 6.5 | 3.5 |
Level 2 | ||
Assets | ||
Total assets | 1,261.2 | 1,185.8 |
Level 2 | Time deposits | ||
Assets | ||
Total assets | 38.4 | 35.9 |
Level 2 | U.S. government and agency securities | ||
Assets | ||
Total assets | 1,111.1 | 1,074.2 |
Level 2 | Corporate debt securities | ||
Assets | ||
Total assets | 111.7 | 75.7 |
Level 3 | ||
Liabilities | ||
Contingent consideration | 13.4 | 13.4 |
Total liabilities | 13.4 | 13.4 |
Balance | ||
Assets | ||
Total assets | 1,705.3 | 1,436.9 |
Liabilities | ||
Contingent consideration | 13.4 | 13.4 |
Total liabilities | 13.4 | 13.4 |
Balance | Money market funds | ||
Assets | ||
Total assets | 437.6 | 247.6 |
Balance | Time deposits | ||
Assets | ||
Total assets | 38.4 | 35.9 |
Balance | U.S. government and agency securities | ||
Assets | ||
Total assets | 1,111.1 | 1,074.2 |
Balance | Corporate debt securities | ||
Assets | ||
Total assets | 111.7 | 75.7 |
Balance | Equity securities | ||
Assets | ||
Total assets | $ 6.5 | $ 3.5 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Inventories | ||
Raw materials | $ 22.3 | $ 24.3 |
Work-in-progress | 26.3 | 28 |
Finished goods | 47.6 | 48.7 |
Total inventories | $ 96.2 | $ 101 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill and Other Intangible Assets | ||
Goodwill, Gross | $ 31.5 | $ 31.5 |
Goodwill, Net | 31.5 | 31.5 |
Total Goodwill and other intangible assets, Gross | 175.9 | 175.9 |
Other intangible assets, Accumulated Amortization | (5.1) | (5.1) |
Total goodwill and other intangible assets, Net | 170.8 | 170.8 |
Technology, patents and trade names | ||
Goodwill and Other Intangible Assets | ||
Other intangible assets, Gross | 6.7 | 6.7 |
Other intangible assets, Accumulated Amortization | (5.1) | (5.1) |
Other intangible assets, Net | 1.6 | 1.6 |
In-process research and development | ||
Goodwill and Other Intangible Assets | ||
Other intangible assets, Gross | 137.7 | 137.7 |
Other intangible assets, Net | $ 137.7 | $ 137.7 |
Debt (Details)
Debt (Details) $ in Millions | Jan. 24, 2019USD ($) | Jun. 30, 2018USD ($)item | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) |
Debt | ||||
Debt issuance costs | $ 0.7 | |||
Arena Pharmaceuticals, Inc. | ||||
Debt | ||||
Upfront payment | $ 800 | |||
Credit Agreement | ||||
Debt | ||||
Debt, maturity term | 5 years | |||
Period of extension in maturity | 1 year | |||
Number of extensions | item | 2 | |||
Interest expense | $ 10.3 | |||
Debt issuance costs | $ 13.2 | |||
Debt issuance costs capitalized | 12.6 | |||
Credit Agreement | Arena Pharmaceuticals, Inc. | ||||
Debt | ||||
Maximum borrowing capacity | 800 | |||
Upfront payment | $ 800 | |||
Outstanding Balance | $ 1,050 | |||
First unsecured revolving credit facility | ||||
Debt | ||||
Maximum borrowing capacity | 1,000 | |||
Second unsecured revolving credit facility | ||||
Debt | ||||
Maximum borrowing capacity | 500 | |||
Increase in borrowing capacity | $ 300 | |||
Prior credit agreement | ||||
Debt | ||||
Interest expense | $ 2.6 |
Share-Based Compensation - Gene
Share-Based Compensation - General (Details) | 1 Months Ended | 3 Months Ended |
Feb. 28, 2019shares | Mar. 31, 2019itemshares | |
Share-Based Compensation | ||
Number of equity incentive plans | item | 2 | |
2015 Plan | ||
Share-Based Compensation | ||
Maximum number of shares authorized to be issued | 9,050,000 | |
2019 Inducement Plan | Newly-hired employees | ||
Share-Based Compensation | ||
Granted (in shares) | 99,000 | |
Amended and Restated Equity Incentive Plan (The 1999 Plan) | ||
Share-Based Compensation | ||
Granted (in shares) | 0 |
Share-Based Compensation - Allo
Share-Based Compensation - Allocation of Compensation Expense (benefit) by Plan (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-Based Compensation | ||
Share-based compensation expense (benefit) before tax | $ 29.2 | $ (101.1) |
Stock Options | ||
Share-Based Compensation | ||
Share-based compensation expense (benefit) before tax | 15.7 | 12.7 |
Restricted Stock Units | ||
Share-Based Compensation | ||
Share-based compensation expense (benefit) before tax | 2.2 | 0.9 |
STAP awards | ||
Share-Based Compensation | ||
Share-based compensation expense (benefit) before tax | 11 | (115) |
Employee Stock Purchase Plan | ||
Share-Based Compensation | ||
Share-based compensation expense (benefit) before tax | $ 0.3 | $ 0.3 |
Share-Based Compensation - Assu
Share-Based Compensation - Assumptions For Stock Options (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-Based Compensation | ||
Share-based compensation expense (benefit) before tax | $ 29.2 | $ (101.1) |
Stock Options | ||
Share-Based Compensation | ||
Granted (in shares) | 2,011,667 | |
Total fair value of employee stock options that vested | $ 33.7 | 31.1 |
Share-based compensation expense (benefit) before tax | $ 15.7 | $ 12.7 |
Method and assumptions on valuation of stock options | ||
Expected volatility (as a percent) | 33.90% | 36.10% |
Risk-free interest rate (as a percent) | 2.40% | 2.70% |
Expected term of awards (in years) | 5 years 9 months 18 days | 6 years 3 months 18 days |
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock and Status (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Options | ||
Outstanding at beginning of period (in shares) | 6,299,803 | |
Granted (in shares) | 2,011,667 | |
Exercised (in shares) | (166,508) | (174,295) |
Forfeited/cancelled (in shares) | (77,200) | |
Outstanding at the end of period (in shares) | 8,067,762 | |
Exercisable at the end of period (in shares) | 3,885,475 | |
Unvested at the end of period (in shares) | 4,182,287 | |
Weighted-Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 120.78 | |
Granted (in dollars per share) | 126.54 | |
Exercised (in dollars per share) | 53.10 | |
Forfeited (in dollars per share) | 130.73 | |
Outstanding at the end of period (in dollars per share) | 123.52 | |
Exercisable at the end of period (in dollars per share) | 119.05 | |
Unvested at the end of period (in dollars per share) | $ 127.67 | |
Weighted Average Remaining Contractual Term (in Years) | ||
Outstanding at the end of period (in Years) | 7 years | |
Exercisable at the end of period (in Years) | 5 years 9 months 18 days | |
Unvested at the end of period (in Years) | 8 years 1 month 6 days | |
Aggregate Intrinsic Value | ||
Outstanding at the end of period) | $ 38.6 | |
Exercisable at the end of period | 32.8 | |
Unvested at the end of period | $ 5.8 | |
Weighted average grant date fair value of stock options (in dollars per share) | $ 40.03 | $ 45 |
Aggregate grant date fair value | $ 80.5 | $ 42.5 |
Total fair value of employee stock options that vested | $ 33.7 | $ 31.1 |
Share-Based Compensation - Shar
Share-Based Compensation - Share-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | $ 29.2 | $ (101.1) |
Stock Options | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | 15.7 | 12.7 |
Related income tax benefit | (3.5) | (2.9) |
Share-based compensation (benefit) expense, net of tax | 12.2 | 9.8 |
Unrecognized compensation cost | $ 143.4 | |
Recognition of share-based compensation expense (in years) | 2 years 9 months 18 days | |
Restricted Stock Units | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | $ 2.2 | 0.9 |
Restricted Stock Units | 2015 Plan | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | 2.2 | 0.9 |
Related income tax benefit | (0.5) | (0.2) |
Share-based compensation (benefit) expense, net of tax | 1.7 | 0.7 |
Unrecognized compensation cost | $ 35.6 | |
Recognition of share-based compensation expense (in years) | 2 years 7 months 6 days | |
Cost of product sales | Stock Options | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | $ 0.2 | 0.3 |
Cost of product sales | Restricted Stock Units | 2015 Plan | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | 0.2 | |
Research and development | Stock Options | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | 0.9 | 0.9 |
Research and development | Restricted Stock Units | 2015 Plan | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | 0.7 | 0.1 |
Selling, general and administrative | Stock Options | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | 14.6 | 11.5 |
Selling, general and administrative | Restricted Stock Units | 2015 Plan | ||
Share-based compensation expense | ||
Share-based compensation expense (benefit) before tax | $ 1.3 | $ 0.8 |
Share-Based Compensation - St_2
Share-Based Compensation - Stock Options Exercise Data (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Summary of stock option exercise data | ||
Cash received from options exercised | $ 8.8 | $ 9.2 |
Stock Options | ||
Summary of stock option exercise data | ||
Number of options exercised (in shares) | 166,508 | 174,295 |
Cash received from options exercised | $ 8.8 | $ 9.2 |
Total intrinsic value of options exercised | $ 10.3 | $ 10.4 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock Options Activity and Status (Details) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($)item$ / sharesshares | Mar. 31, 2018USD ($) | |
Aggregate Intrinsic Value | ||
Share-based compensation expense (benefit) before tax | $ | $ 29.2 | $ (101.1) |
Restricted Stock Units | ||
Share-Based Compensation | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Entitled To Receive For Each Unit Upon Vesting | item | 1 | |
Aggregate Intrinsic Value | ||
Share-based compensation expense (benefit) before tax | $ | $ 2.2 | 0.9 |
Restricted Stock Units | 2015 Plan | ||
Number of Restricted Stock Units | ||
Unvested at beginning of period (in shares) | shares | 186,255 | |
Granted (in shares) | shares | 196,489 | |
Vested (in shares) | shares | (46,027) | |
Forfeited/cancelled (in shares) | shares | (4,373) | |
Unvested at the end of period (in shares) | shares | 332,344 | |
Weighted Average Grant Price | ||
Unvested at beginning of period (in dollars per share) | $ / shares | $ 112.48 | |
Granted (in dollars per share) | $ / shares | 117.75 | |
Vested (in dollars per share) | $ / shares | 111.04 | |
Forfeited/cancelled (in dollars per share) | $ / shares | 119.39 | |
Unvested at the end of period (in dollars per share) | $ / shares | $ 115.71 | |
Weighted Average Remaining Contractual Term (Years) | ||
Outstanding at the end of period (Years) | 9 years 7 months 6 days | |
Aggregate Intrinsic Value | ||
Unvested at the end of period (in dollars) | $ | $ 39 | |
Share-based compensation expense (benefit) before tax | $ | $ 2.2 | $ 0.9 |
Weighted average remaining vesting period (in years) | 2 years 7 months 6 days |
Share-Based Compensation - STAP
Share-Based Compensation - STAP awards (Details) - STAP awards - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Awards granted | |||
Grant expiration period from the grant date | 4 years | ||
Share-based awards, vesting period | 1 year | ||
Aggregate STAP liability | $ 77.5 | $ 72.2 | |
Weighted-average assumptions used to measure the fair value of the outstanding STAP awards: | |||
Expected volatility (as a percent) | 29.30% | 33.30% | |
Risk-free interest rate (as a percent) | 2.20% | 2.10% | |
Expected term of awards (in years) | 2 years 4 months 24 days | 1 year 2 months 12 days | |
Closing price of common stock (in dollars per share) | $ 117.37 | $ 112.36 | $ 108.90 |
Share-based awards activity | |||
Outstanding at January 1, 2018 | 2,867,979 | ||
Exercised (in shares) | (109,667) | ||
Forfeited (in shares) | (65,067) | ||
Outstanding at December 31, 2018 | 2,693,245 | ||
Exercisable at December 31, 2018 | 2,675,745 | ||
Unvested at December 31, 2018 | 17,500 | ||
Share awards, Weighted Average Exercise Price | |||
Outstanding at January 1, 2018 | $ 107.85 | ||
Exercised (in dollars per share) | 61.19 | ||
Forfeited (in dollars per share) | 163.22 | ||
Outstanding at December 31, 2018 | 108.42 | ||
Exercisable at December 31, 2018 | 108.41 | ||
Unvested at December 31, 2018 | $ 109.29 | ||
Share awards, Weighted Average Remaining Contractual Term (in Years) | |||
Outstanding at December 31, 2018 | 4 years 9 months 18 days | ||
Exercisable at December 31, 2018 | 4 years 9 months 18 days | ||
Unvested at December 31, 2018 | 4 years 9 months 18 days | ||
Share awards, Aggregate Intrinsic Value | |||
Outstanding at December 31, 2018 | $ 72.9 | ||
Exercisable at December 31, 2018 | 72.3 | ||
Unvested at December 31, 2018 | $ 0.6 |
Share-Based Compensation - Sh_2
Share-Based Compensation - Share Tracking Awards Plans - Benefit recognized (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share based compensation benefit recognized in connection with the STAP | ||
Share-based compensation expense (benefit) before tax | $ 29.2 | $ (101.1) |
STAP awards | ||
Share based compensation benefit recognized in connection with the STAP | ||
Share-based compensation expense (benefit) before tax | 11 | (115) |
Related income tax expense (benefit) | (2.5) | 26.3 |
Share-based compensation (benefit) expense, net of tax | 8.5 | (88.7) |
Cash payments on awards exercised during the period | 5.8 | 43.6 |
Cost of product sales | STAP awards | ||
Share based compensation benefit recognized in connection with the STAP | ||
Share-based compensation expense (benefit) before tax | 0.7 | (6.2) |
Research and development | STAP awards | ||
Share based compensation benefit recognized in connection with the STAP | ||
Share-based compensation expense (benefit) before tax | 1.9 | (23.6) |
Selling, general and administrative | STAP awards | ||
Share based compensation benefit recognized in connection with the STAP | ||
Share-based compensation expense (benefit) before tax | $ 8.4 | $ (85.2) |
Share-Based Compensation - Empl
Share-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan | 1 Months Ended |
Jun. 30, 2012shares | |
Share-based compensation expense | |
Maximum percentage of compensation employees may contribute for ESPP (in percentage) | 15.00% |
Percentage of the lower of the fair market value of common stock on the first or last trading day of a given offering period (in percentage) | 85.00% |
Maximum number of shares each eligible employees may purchase in any given offering period (in shares) | 4,000 |
Term of ESPP (in years) | 20 years |
Maximum number of shares authorized to be issued (in shares) | 3,000,000 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Numerator: | ||
Net (loss) income | $ (494.6) | $ 244.5 |
Denominator: | ||
Weighted average outstanding shares - basic (in shares) | 43.7 | 43.3 |
Effect of dilutive securities: | ||
Stock options, restricted stock units and employee stock purchase plan (in shares) | 0.6 | |
Weighted average shares - diluted (in shares) | 43.7 | 43.9 |
Net (loss) income per common share: | ||
Basic (in dollars per share) | $ (11.32) | $ 5.65 |
Diluted (in dollars per share) | $ (11.32) | $ 5.57 |
Stock options and restricted stock units excluded from calculation (in shares) | 5.3 | 3.9 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | Jan. 24, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Effective income tax rate (as a percent) | 24.00% | 21.00% | |
Unrecognized tax benefits | $ 0.5 | $ 0.5 | |
Positions of unrecognized tax benefits, if realized, would impact the effective tax rate | 0.3 | $ 0.3 | |
Arena Pharmaceuticals, Inc. | |||
One-time payment | $ 800 | ||
Increase in deferred tax assets | $ 169.8 |
Segment Information - General (
Segment Information - General (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | |
Net product sales, cost of product sales and gross profit by product | ||
Net product sales | $ 362.6 | $ 389.2 |
Cost of product sales | 29.1 | 53.2 |
Gross profit | $ 333.5 | 336 |
Segment disclosures | ||
Number of operating segments | segment | 1 | |
Remodulin | ||
Net product sales, cost of product sales and gross profit by product | ||
Net product sales | $ 155.5 | 126.8 |
Cost of product sales | 6.1 | 3 |
Gross profit | 149.4 | 123.8 |
Tyvaso | ||
Net product sales, cost of product sales and gross profit by product | ||
Net product sales | 103.8 | 94.6 |
Cost of product sales | 4.4 | 3 |
Gross profit | 99.4 | 91.6 |
Orenitram | ||
Net product sales, cost of product sales and gross profit by product | ||
Net product sales | 24.9 | 18 |
Cost of product sales | 5.1 | 2.3 |
Gross profit | 19.8 | 15.7 |
Unituxin | ||
Net product sales, cost of product sales and gross profit by product | ||
Net product sales | 20 | 97.6 |
Cost of product sales | 8.7 | 41.9 |
Gross profit | 11.3 | 55.7 |
Adcirca | ||
Net product sales, cost of product sales and gross profit by product | ||
Net product sales | 58.4 | 52.2 |
Cost of product sales | 4.8 | 3 |
Gross profit | $ 53.6 | $ 49.2 |
Segment Information - Geographi
Segment Information - Geographic Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues from external customers by geographic area | ||
Total revenues | $ 362.6 | $ 389.2 |
United States | ||
Revenues from external customers by geographic area | ||
Total revenues | 329.5 | 365.8 |
Rest-of-World | ||
Revenues from external customers by geographic area | ||
Total revenues | $ 33.1 | $ 23.4 |
Segment Information - Concentra
Segment Information - Concentration Risk (Details) - item | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Information | ||
Number of distributors | 2 | |
Net revenues | Customer concentration | Customer one | ||
Segment Information | ||
Concentration risk, percentage | 58.00% | 48.00% |
Net revenues | Customer concentration | Customer two | ||
Segment Information | ||
Concentration risk, percentage | 20.00% | 16.00% |
Arena License Agreement (Detail
Arena License Agreement (Details) - Arena Pharmaceuticals, Inc. $ in Millions | Jan. 24, 2019USD ($) |
Collaborative Arrangements and Non-collaborative Arrangement Transactions | |
Upfront payment | $ 800 |
Marketing approval in the United States | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions | |
Milestone payment to be made upon marketing approval | 250 |
Marketing approval in any of Japan, France, Italy, the United Kingdom, Spain or Germany | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions | |
Milestone payment to be made upon marketing approval | $ 150 |