Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 27, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-30739 | |
Entity Registrant Name | INSMED INC | |
Entity Incorporation, State or Country Code | VA | |
Entity Tax Identification Number | 54-1972729 | |
Entity Address, Address Line One | 700 US Highway 202/206 | |
Entity Address, City or Town | Bridgewater | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08807 | |
City Area Code | 908 | |
Local Phone Number | 977-9900 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | INSM | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding (in shares) | 89,878,296 | |
Entity Central Index Key | 0001104506 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 428,942 | $ 487,429 |
Accounts receivable | 17,154 | 19,232 |
Inventory | 30,645 | 28,313 |
Prepaid expenses and other current assets | 15,769 | 20,220 |
Total current assets | 492,510 | 555,194 |
Intangibles, net | 52,433 | 53,682 |
Fixed assets, net | 58,638 | 60,180 |
Finance lease right-of-use assets | 14,896 | 15,256 |
Operating lease right-of-use assets | 36,137 | 37,673 |
Other assets | 21,911 | 20,314 |
Total assets | 676,525 | 742,299 |
Current liabilities: | ||
Accounts payable | 18,188 | 13,184 |
Accrued expenses | 32,687 | 40,375 |
Accrued compensation | 8,949 | 19,140 |
Finance lease liabilities | 1,263 | 1,221 |
Operating lease liabilities | 10,367 | 11,040 |
Other current liabilities | 78 | 280 |
Total current liabilities | 71,532 | 85,240 |
Debt, long-term | 340,939 | 335,940 |
Finance lease liabilities, long-term | 19,196 | 19,529 |
Operating lease liabilities, long-term | 27,197 | 29,308 |
Other long-term liabilities | 10,960 | 10,608 |
Total liabilities | 469,824 | 480,625 |
Shareholders’ equity: | ||
Common stock, $0.01 par value; 500,000,000 authorized shares, 89,859,549 and 89,682,387 issued and outstanding shares at March 31, 2020 and December 31, 2019, respectively | 899 | 897 |
Additional paid-in capital | 1,808,712 | 1,797,286 |
Accumulated deficit | (1,602,863) | (1,536,499) |
Accumulated other comprehensive loss | (47) | (10) |
Total shareholders’ equity | 206,701 | 261,674 |
Total liabilities and shareholders’ equity | $ 676,525 | $ 742,299 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 500,000,000 | 500,000,000 |
Common stock, issued shares (in shares) | 89,859,549 | 89,682,387 |
Common stock, outstanding shares (in shares) | 89,859,549 | 89,682,387 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Revenues, net | $ 36,860 | $ 21,902 |
Cost of product revenues (excluding amortization of intangible assets) | 8,438 | 4,150 |
Gross profit | 28,422 | 17,752 |
Operating expenses: | ||
Research and development | 36,184 | 31,203 |
Selling, general and administrative | 51,346 | 54,810 |
Amortization of intangible assets | 1,249 | 1,248 |
Total costs and expenses | 88,779 | 87,261 |
Operating loss | (60,357) | (69,509) |
Investment income | 1,404 | 2,416 |
Interest expense | (7,411) | (6,726) |
Other income (expense), net | 36 | (119) |
Loss before income taxes | (66,328) | (73,938) |
Provision for income taxes | 36 | 215 |
Net loss | $ (66,364) | $ (74,153) |
Basic and diluted net loss per share (in dollars per share) | $ (0.74) | $ (0.96) |
Weighted average basic and diluted common shares outstanding | 89,779 | 77,541 |
Net loss | $ (66,364) | $ (74,153) |
Other comprehensive income (loss): | ||
Foreign currency translation (losses) gains | (37) | 39 |
Total comprehensive loss | $ (66,401) | $ (74,114) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Balance at Dec. 31, 2018 | $ 208,266 | $ 773 | $ 1,489,664 | $ (1,282,162) | $ (9) |
Balance (in shares) at Dec. 31, 2018 | 77,308 | ||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||
Net loss | (74,153) | (74,153) | |||
Other comprehensive income (loss) | 39 | 39 | |||
Exercise of stock options and ESPP shares | 3,049 | $ 3 | 3,046 | ||
Exercise of stock options and ESPP shares (in shares) | 253 | ||||
Issuance of common stock for vesting of RSUs | 0 | ||||
Issuance of common stock for vesting of RSUs (in shares) | 35 | ||||
Stock compensation expense | 6,936 | 6,936 | |||
Balance at Mar. 31, 2019 | 144,137 | $ 776 | 1,499,646 | (1,356,315) | 30 |
Balance (in shares) at Mar. 31, 2019 | 77,596 | ||||
Balance at Dec. 31, 2019 | 261,674 | $ 897 | 1,797,286 | (1,536,499) | (10) |
Balance (in shares) at Dec. 31, 2019 | 89,682 | ||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||
Net loss | (66,364) | (66,364) | |||
Other comprehensive income (loss) | (37) | (37) | |||
Exercise of stock options and ESPP shares | 2,426 | $ 2 | 2,424 | ||
Exercise of stock options and ESPP shares (in shares) | 151 | ||||
Issuance of common stock for vesting of RSUs | 0 | ||||
Issuance of common stock for vesting of RSUs (in shares) | 27 | ||||
Stock compensation expense | 9,002 | 9,002 | |||
Balance at Mar. 31, 2020 | $ 206,701 | $ 899 | $ 1,808,712 | $ (1,602,863) | $ (47) |
Balance (in shares) at Mar. 31, 2020 | 89,860 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities | ||
Net loss | $ (66,364) | $ (74,153) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 2,266 | 1,069 |
Amortization of intangible assets | 1,249 | 1,248 |
Stock-based compensation expense | 9,002 | 6,936 |
Amortization of debt issuance costs | 349 | 349 |
Accretion of debt discount and back-end fee on debt | 4,650 | 4,406 |
Finance lease amortization expense | 360 | 0 |
Noncash operating lease expense | 1,536 | 2,276 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,078 | (3,832) |
Inventory | (2,332) | (5,650) |
Prepaid expenses and other current assets | 4,341 | (1,061) |
Other assets | (1,568) | (7,044) |
Accounts payable | 4,169 | 9,499 |
Accrued expenses and other | (7,480) | (1,953) |
Accrued compensation | (10,191) | (5,937) |
Net cash used in operating activities | (57,935) | (73,847) |
Investing activities | ||
Purchase of fixed assets | (2,679) | (4,028) |
Net cash used in investing activities | (2,679) | (4,028) |
Financing activities | ||
Proceeds from exercise of stock options, ESPP, and RSU vesting | 2,426 | 3,049 |
Payments of finance lease principal | (292) | 0 |
Net cash provided by financing activities | 2,134 | 3,049 |
Effect of exchange rates on cash and cash equivalents | (7) | (15) |
Net decrease in cash and cash equivalents | (58,487) | (74,841) |
Cash and cash equivalents at beginning of period | 487,429 | 495,072 |
Cash and cash equivalents at end of period | 428,942 | 420,231 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 4,381 | 3,939 |
Cash paid for income taxes | $ 414 | $ 178 |
The Company and Basis of Presen
The Company and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Basis of Presentation | The Company and Basis of Presentation Insmed is a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. The Company's first commercial product, ARIKAYCE (amikacin liposome inhalation suspension), received accelerated approval in the United States (US) in September 2018 for the treatment of Mycobacterium avium complex (MAC) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options. Nontuberculous mycobacterial (NTM) lung disease caused by MAC (which the Company refers to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. The Company's clinical-stage pipeline includes brensocatib (formerly known as INS1007) and treprostinil palmitil (formerly known as INS1009). Brensocatib is a novel oral, reversible inhibitor of dipeptidyl peptidase 1 (DPP1) with therapeutic potential in non-cystic fibrosis bronchiectasis and other inflammatory diseases. Treprostinil palmitil is an inhaled formulation of a treprostinil prodrug that may offer a differentiated product profile for rare pulmonary disorders, including pulmonary arterial hypertension (PAH). The Company was incorporated in the Commonwealth of Virginia on November 29, 1999 and its principal executive offices are in Bridgewater, New Jersey. The Company has legal entities in the US, France, Germany, Ireland, Italy, the Netherlands, the United Kingdom (UK), Switzerland, Japan and Bermuda. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the US for complete consolidated financial statements are not included herein. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 . The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. The unaudited interim consolidated financial information presented herein reflects all normal adjustments that are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. All intercompany transactions and balances have been eliminated in consolidation and certain prior year amounts have been reclassified to conform to the current year presentation. The Company had $428.9 million in cash and cash equivalents as of March 31, 2020 and reported a net loss of $66.4 million for the three months ended March 31, 2020. Historically, the Company has funded its operations through public offerings of equity securities and debt financings. The Company commenced commercial shipments of ARIKAYCE in October 2018. The Company expects to continue to incur operating losses both at its US and certain international entities while funding research and development (R&D) activities for ARIKAYCE and its other pipeline programs, continuing commercialization activities for ARIKAYCE in the US, continuing to invest in pre-commercial and regulatory activities for ARIKAYCE in Europe and Japan, and funding other general and administrative activities. The Company expects its future cash requirements to be substantial, and the Company may need to raise additional capital to fund operations, including the continued commercialization of ARIKAYCE and additional clinical trials related to ARIKAYCE, to develop brensocatib and treprostinil palmitil and to develop, acquire, in-license or co-promote other products or product candidates, including those that address orphan or rare diseases. The source, timing and availability of any future financing or other transaction will depend principally upon continued progress in the Company's commercial, regulatory and development activities. Any equity or debt financing will also be contingent upon equity and debt market conditions and interest rates at the time. If the Company is unable to obtain sufficient additional funds when required, the Company may be forced to delay, restrict or eliminate all or a portion of its development programs, commercialization or business development efforts. The Company believes it currently has sufficient funds to meet its financial needs for at least the next 12 months. Risks and Uncertainties - There are many uncertainties regarding the novel coronavirus (COVID-19) pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how the pandemic will impact its patients, employees, suppliers, vendors, business partners and distribution channels. While the pandemic did not materially affect the Company's financial results and business operations in the Company's first quarter ended March 31, 2020, the Company is unable to predict the impact that COVID-19 will have on its financial position and operating results in future periods due to numerous uncertainties. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The following are the required interim disclosure updates to the Company's significant accounting policies described in Note 2 of the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 : Fair Value Measurements - The Company categorizes its financial assets and liabilities measured and reported at fair value in the financial statements on a recurring basis based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities, are as follows: • Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Each major category of financial assets and liabilities measured at fair value on a recurring basis is categorized based upon the lowest level of significant input to the valuations. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Financial instruments in Level 1 generally include US treasuries and mutual funds listed in active markets. The Company's only financial assets and liabilities which were measured at fair value as of March 31, 2020 and December 31, 2019 were Level 1 assets comprised of cash and cash equivalents. The Company's cash and cash equivalents permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions. The following table shows assets and liabilities that are measured at fair value on a recurring basis and their carrying value (in millions): As of March 31, 2020 Fair Value Carrying Value Level 1 Level 2 Level 3 Cash and cash equivalents $ 428.9 $ 428.9 $ — $ — As of December 31, 2019 Fair Value Carrying Value Level 1 Level 2 Level 3 Cash and cash equivalents $ 487.4 $ 487.4 $ — $ — The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no transfers in or out of Level 1, Level 2 or Level 3 during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, the Company held no securities that were in an unrealized gain or loss position. The Company reviews the status of each security quarterly to determine whether an other-than-temporary impairment has occurred. In making its determination, the Company considers a number of factors, including: (1) the significance of the decline; (2) whether the securities were rated below investment grade; (3) how long the securities have been in an unrealized loss position; and (4) the Company's ability and intent to retain the investment for a sufficient period of time for it to recover. The estimated fair value of the liability component of the Company's 1.75% convertible senior notes due 2025 (the Convertible Notes) (categorized as a Level 2 liability for fair value measurement purposes) as of March 31, 2020 was $376.8 million, determined using current market factors and the ability of the Company to obtain debt on comparable terms to the Convertible Notes. The $340.9 million carrying value of the Convertibles Notes as of March 31, 2020 excludes the $102.4 million of the unamortized portion of the debt discount. Net Loss Per Share - Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of common shares and other dilutive securities outstanding during the period. Potentially dilutive securities from stock options, restricted stock, restricted stock units (RSUs) and convertible debt securities would be anti-dilutive as the Company incurred a net loss. Potentially dilutive common shares resulting from the assumed exercise of outstanding stock options and from the assumed conversion of the Convertible Notes are determined based on the treasury stock method. The following table sets forth the reconciliation of the weighted average number of common shares used to compute basic and diluted net loss per share for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 (in thousands, except per share amounts) Numerator: Net loss $ (66,364) $ (74,153) Denominator: Weighted average common shares used in calculation of basic net loss per share: 89,779 77,541 Effect of dilutive securities: Common stock options — — Restricted stock and RSUs — — Convertible debt securities — — Weighted average common shares outstanding used in calculation of diluted net loss per share 89,779 77,541 Net loss per share: Basic and diluted $ (0.74) $ (0.96) The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding as of March 31, 2020 and 2019 as their effect would have been anti-dilutive (in thousands): As of March 31, 2020 2019 Common stock options 13,144 11,903 Unvested restricted stock and RSUs 930 170 Convertible debt securities 11,492 11,492 Concentration of Credit Risk —Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash equivalents with high credit-quality financial institutions and may invest its short-term investments in US treasury securities, mutual funds and government agency bonds. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity. The Company is exposed to risks associated with extending credit to customers related to the sale of products. The Company does not require collateral to secure amounts due from its customers. The Company uses an expected loss methodology to calculate allowances for trade receivables. The Company's measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company does not currently have a material allowance for collectible trade receivables. The following table presents the percentage of gross product revenue represented by the Company's three largest customers as of the three months ended March 31, 2020 and March 31, 2019. Percentage of Total Gross Product Revenue March 31, 2020 March 31, 2019 Customer A 27% 33% Customer B 26% 15% Customer C 25% 31% The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its products. The inability of the suppliers or manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business, could materially impact future operating results. Revenue Recognition —In accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies a performance obligation. At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. For all contracts that fall into the scope of ASC 606, the Company has identified one performance obligation: the sale of ARIKAYCE to its customers. The Company has not incurred or capitalized any incremental costs associated with obtaining contracts with customers. Product revenues consist primarily of sales of ARIKAYCE in the US. Product revenues are recognized once the Company performs and satisfies all five steps mentioned above. The Company's customers in the US include specialty pharmacies and specialty distributors. Revenue is recorded at net selling price (transaction price), which includes estimates of variable consideration for which reserves are established for (a) customer credits, such as invoice discounts for prompt pay and specialty pharmacies fees, (b) estimated government rebates, such as Medicaid and Medicare Part D reimbursements, and estimated managed care rebates, (c) estimated chargebacks, and (d) estimated costs of co-payment assistance. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (prompt pay discounts and chargebacks), prepaid expenses (co-payment assistance), or as a current liability (rebates). Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company's historical experience, current contractual and statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known. Customer credits: The Company's customers are offered various forms of consideration, including fees for enhanced services and prompt payment discounts. The payment terms for sales to specialty pharmacies for prompt payment discounts and fees for services are based on contractual rates agreed with the respective specialty pharmacies. The Company anticipates that its customers will earn these discounts and fees and, therefore, deducts the full amount of these discounts and fees from total gross product revenues at the time such revenues are recognized. Rebates: The Company contracts with government agencies and managed care organizations or collectively, third-party payors, so that ARIKAYCE will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. The Company estimates the rebates it will provide to third-party payors and deducts these estimated amounts from total gross product revenues at the time the revenues are recognized. These reserves are recorded in the same period in which the revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. The current liability is included in accrued expenses on the consolidated balance sheets. The Company estimates the rebates that it will provide to third-party payors based upon (i) the Company's contracts with these third-party payors, (ii) the government mandated discounts applicable to government-funded programs, (iii) a range of possible outcomes that are probability-weighted for the estimated payor mix, and (iv) information obtained from the Company's specialty pharmacies. Chargebacks: Chargebacks are discounts that occur when certain contracted customers, currently public health service institutions and federal government entities purchasing via the Federal Supply Schedule, purchase directly from the Company's specialty distributor. Contracted customers generally purchase the product at a discounted price and the specialty distributor, in turn, charges back to the Company the difference between the price the specialty distributor initially paid and the discounted price paid by the contracted customers. The Company estimates chargebacks provided to the specialty distributor and deducts these estimated amounts from gross product revenues, and from accounts receivable, at the time revenues are recognized. Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. Based upon the terms of the program and information regarding programs provided for similar specialty pharmaceutical products, the Company estimates the average co-pay mitigation amounts and the percentage of patients that it expects to participate in the program in order to establish accruals for co-payment assistance. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue. The Company adjusts its accruals for co-pay assistance based on actual redemption activity and estimates of future redemptions related to sales in the current period. If any, or all, of the Company's actual experience varies from the estimates above, the Company may need to adjust prior period accruals, affecting revenue in the period of adjustment. The Company also recognizes revenue related to early access programs (EAPs) in Europe, consisting of sales to the French National Agency for Medicines and Health Products Safety, which granted ARIKAYCE a Temporary Authorization for Use (Autorisation Temporaire d'Utilisation or ATU) and from the named patient program in Germany. EAPs are intended to make products available on a named patient basis before they are commercially available in accordance with local regulations. Inventory and Cost of product revenues (excluding amortization of intangible assets) - Inventory is stated at the lower of cost and net realizable value. The Company began capitalizing inventory costs following FDA approval of ARIKAYCE in September 2018. Inventory is sold on a first-in, first-out (FIFO) basis. The Company periodically reviews inventory for expiry and obsolescence and, if necessary, writes down accordingly. If quality specifications are not met during the manufacturing process, such inventory is written off to cost of product revenues (excluding amortization of intangible assets) in the period identified. Cost of product revenues (excluding amortization of intangible assets) consist primarily of direct and indirect costs related to the manufacturing of ARIKAYCE sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs, in addition to royalty expenses and revenue-based milestone payments. Cost is determined using a standard cost method, which approximates actual cost, and assumes a FIFO flow of goods. Prior to FDA approval of ARIKAYCE, the Company expensed all inventory related costs in the period incurred. Inventory used for clinical development purposes is expensed to research and development (R&D) expense when consumed. Leases - In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous generally accepted accounting principles. ASU 2016-02 requires a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use (ROU) asset representing its right to use the underlying asset for the lease term on the balance sheet. A lease is a contract, or part of a contract, that conveys the right to control the use of explicitly or implicitly identified property, plant or equipment in exchange for consideration. Control of an asset is conveyed to the Company if the Company obtains the right to obtain substantially all of the economic benefits of the asset or the right to direct the use of the asset. The Company recognizes ROU assets and lease liabilities at the lease commencement date based on the present value of future, fixed lease payments over the term of the arrangement. ROU assets are generally amortized on a straight-line basis over the term of the lease. Lease liabilities accrete to yield and are reduced at the time when the lease payment is payable to the vendor. Variable lease payments are recognized at the time when the event giving rise to the payment occurs and are recognized in the statement of comprehensive income in the same line item as expenses arising from fixed lease payments. In accordance with Topic 842, leases are measured at present value using the rate implicit in the lease or, if the implicit rate is not determinable, the lessee's implicit borrowing rate. As the implicit rate is not typically available, the Company uses its implicit borrowing rate based on the information available at the lease commencement date to determine the present value of future lease payments. The implicit borrowing rate approximates the rate the Company would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments. Refer to Note 7 - Leases for details about the Company's lease portfolio, including Topic 842 required disclosures. Recently Adopted Accounting Pronouncements - In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses which requires financial assets measured at an amortized cost basis to be presented at the net amount expected to be collected. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables. The Company's measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted ASU 2016-13 effective January 1, 2020. Different aspects of the guidance required modified retrospective or prospective adoption. Adoption of the standard did not have a material impact on the Company's consolidated financial statements. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory As of March 31, 2020 and December 31, 2019, the Company's inventory balance consists of the following (in thousands): March 31, 2020 December 31, 2019 Raw materials $ 16,992 $ 16,048 Work-in-process 6,761 6,420 Finished goods 6,892 5,845 $ 30,645 $ 28,313 |
Intangibles, Net
Intangibles, Net | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles, Net | Intangibles, Net As of March 31, 2020, the Company's identifiable intangible assets consisted of acquired ARIKAYCE R&D and a milestone paid to PARI for the license to use PARI's Lamira® Nebulizer System for the delivery of ARIKAYCE to patients as a result of the FDA approval of ARIKAYCE in September 2018. Total intangible assets, net was $52.4 million and $53.7 million as of March 31, 2020 and December 31, 2019, respectively. The Company began amortizing its intangible assets in October 2018, over ARIKAYCE's initial regulatory exclusivity period of 12 years. Amortization of intangible assets during each of the next five years is estimated to be approximately $5.0 million per year. A rollforward of the Company's intangible assets for the three months ended March 31, 2020 follows (in thousands): 2020 Intangible Asset January 1, Additions Amortization March 31, Acquired ARIKAYCE R&D $ 52,139 $ — $ (1,213) $ 50,926 PARI milestone upon FDA approval 1,543 — (36) 1,507 $ 53,682 $ — $ (1,249) $ 52,433 |
Fixed Assets, Net
Fixed Assets, Net | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets, Net | Fixed Assets, Net Fixed assets are stated at cost and depreciated using the straight-line method, based on useful lives as follows (in thousands): Asset Description Estimated As of Mach 31, 2020 As of December 31, 2019 Lab equipment 7 $ 9,984 $ 9,634 Furniture and fixtures 7 5,917 5,908 Computer hardware and software 3-5 7,053 6,806 Office equipment 7 89 154 Manufacturing equipment 7 1,567 1,567 Leasehold improvements lease term 34,643 33,852 Construction in Progress (CIP) — 20,863 21,526 80,116 79,447 Less: accumulated depreciation (21,478) (19,267) Fixed assets, net $ 58,638 $ 60,180 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses As of March 31, 2020 and December 31, 2019, the Company's accrued expenses balance consists of the following (in thousands): March 31, 2020 December 31, 2019 Accrued clinical trial expenses $ 4,521 $ 5,598 Accrued professional fees 13,233 12,581 Accrued technical operation expenses 1,836 6,446 Accrued royalty and milestone payments 2,732 3,117 Accrued interest payable 1,663 3,631 Accrued sales allowances and related costs 7,235 5,267 Accrued construction costs 815 2,689 Other accrued expenses 652 1,046 $ 32,687 $ 40,375 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases A lease is a contract, or part of a contract, that conveys the right to control the use of explicitly or implicitly identified property, plant or equipment in exchange for consideration. Control of an asset is conveyed to the Company if the Company obtains the right to obtain substantially all of the economic benefits of the asset or the right to direct the use of the asset. In its consolidated balance sheets, the Company recognizes a liability to make lease payment (the lease liability) and a ROU asset representing its right to use the underlying asset for the lease term. The Company recognizes ROU assets and lease liabilities at the lease commencement date based on the present value of future, fixed lease payments over the term of the arrangement. ROU assets are generally amortized on a straight-line basis over the term of the lease. Lease liabilities accrete to yield and are reduced at the time when the lease payment is payable to the vendor. Variable lease payments are recognized at the time when the event giving rise to the payment occurs and are recognized in the statement of comprehensive loss in the same line item as expenses arising from fixed lease payments The Company's lease portfolio consists primarily of office space, manufacturing facilities and fleet vehicles. All of the Company's leases are classified as operating leases, except for the Company's corporate headquarters lease, which is classified as a finance lease. The terms of the Company's lease agreements that have commenced range from less than one year to ten years, ten months. In its assessment of the term of each such lease, the Company has not included any options to extend or terminate the lease due to the absence of economic incentives in its lease agreements. Leases that qualify for treatment as a short-term lease are expensed as incurred. These short-term leases are not material to the Company's financial position. Furthermore, the Company does not separate lease and non-lease components for all classes of underlying assets. The Company's leases do not contain residual value guarantees and it does not sublease any of its leased assets. The Company outsources its manufacturing operations to CMOs. Upon review of the agreements with its CMOs, the Company determined that these contracts contain embedded leases for dedicated manufacturing facilities. The Company obtains substantially all of the economic benefits from the use of the manufacturing facilities, has the right to direct how and for what purpose the facility is used throughout the period of use, and the supplier does not have the right to change the operating instructions of the facility. The operating lease right-of-use assets and corresponding lease liabilities associated with the manufacturing facilities is the sum of the minimum guarantees over the life of the production contracts. The table below summarizes the Company's total lease costs included in its consolidated financial statements, as well as other required quantitative disclosures (in thousands). Three Months Ended March 31, 2020 Finance lease cost Amortization of right-of-use assets $ 360 Interest on lease liabilities 439 Total finance lease cost $ 799 Operating lease cost 2,807 Total lease cost $ 3,606 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for finance leases $ 439 Operating cash flows for operating leases $ 2,838 Financing cash flows from finance leases $ 292 Weighted average remaining lease term - finance leases 10.3 years Weighted average remaining lease term - operating leases 4.9 years Weighted average discount rate - finance leases 8.6 % Weighted average discount rate - operating leases 7.4 % The table below summarizes the supplemental noncash disclosures of the Company's leases included in its consolidated financial statements (in thousands). Three Months Ended March 31, 2020 March 31, 2019 Finance right-of-use assets obtained in exchange for lease obligations $ — $ — Operating right-of-use assets obtained in exchange for lease $ 22 $ 47,396 |
Leases | Leases A lease is a contract, or part of a contract, that conveys the right to control the use of explicitly or implicitly identified property, plant or equipment in exchange for consideration. Control of an asset is conveyed to the Company if the Company obtains the right to obtain substantially all of the economic benefits of the asset or the right to direct the use of the asset. In its consolidated balance sheets, the Company recognizes a liability to make lease payment (the lease liability) and a ROU asset representing its right to use the underlying asset for the lease term. The Company recognizes ROU assets and lease liabilities at the lease commencement date based on the present value of future, fixed lease payments over the term of the arrangement. ROU assets are generally amortized on a straight-line basis over the term of the lease. Lease liabilities accrete to yield and are reduced at the time when the lease payment is payable to the vendor. Variable lease payments are recognized at the time when the event giving rise to the payment occurs and are recognized in the statement of comprehensive loss in the same line item as expenses arising from fixed lease payments The Company's lease portfolio consists primarily of office space, manufacturing facilities and fleet vehicles. All of the Company's leases are classified as operating leases, except for the Company's corporate headquarters lease, which is classified as a finance lease. The terms of the Company's lease agreements that have commenced range from less than one year to ten years, ten months. In its assessment of the term of each such lease, the Company has not included any options to extend or terminate the lease due to the absence of economic incentives in its lease agreements. Leases that qualify for treatment as a short-term lease are expensed as incurred. These short-term leases are not material to the Company's financial position. Furthermore, the Company does not separate lease and non-lease components for all classes of underlying assets. The Company's leases do not contain residual value guarantees and it does not sublease any of its leased assets. The Company outsources its manufacturing operations to CMOs. Upon review of the agreements with its CMOs, the Company determined that these contracts contain embedded leases for dedicated manufacturing facilities. The Company obtains substantially all of the economic benefits from the use of the manufacturing facilities, has the right to direct how and for what purpose the facility is used throughout the period of use, and the supplier does not have the right to change the operating instructions of the facility. The operating lease right-of-use assets and corresponding lease liabilities associated with the manufacturing facilities is the sum of the minimum guarantees over the life of the production contracts. The table below summarizes the Company's total lease costs included in its consolidated financial statements, as well as other required quantitative disclosures (in thousands). Three Months Ended March 31, 2020 Finance lease cost Amortization of right-of-use assets $ 360 Interest on lease liabilities 439 Total finance lease cost $ 799 Operating lease cost 2,807 Total lease cost $ 3,606 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for finance leases $ 439 Operating cash flows for operating leases $ 2,838 Financing cash flows from finance leases $ 292 Weighted average remaining lease term - finance leases 10.3 years Weighted average remaining lease term - operating leases 4.9 years Weighted average discount rate - finance leases 8.6 % Weighted average discount rate - operating leases 7.4 % The table below summarizes the supplemental noncash disclosures of the Company's leases included in its consolidated financial statements (in thousands). Three Months Ended March 31, 2020 March 31, 2019 Finance right-of-use assets obtained in exchange for lease obligations $ — $ — Operating right-of-use assets obtained in exchange for lease $ 22 $ 47,396 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt In January 2018, the Company completed an underwritten public offering of the Convertible Notes, in which the Company sold $450.0 million aggregate principal amount of Convertible Notes, including the exercise in full of the underwriters' option to purchase additional Convertible Notes of $50.0 million. The Company's net proceeds from the offering, after deducting underwriting discounts and commissions and other offering expenses of $14.2 million, were approximately $435.8 million. The Convertible Notes bear interest payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2018. The Convertible Notes mature on January 15, 2025, unless earlier converted, redeemed, or repurchased. On or after October 15, 2024, until the close of business on the second scheduled trading day immediately preceding January 15, 2025, holders may convert their Convertible Notes at any time. Upon conversion, holders may receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's option. The initial conversion rate is 25.5384 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $39.16 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. Holders may convert their Convertible Notes prior to October 15, 2024, only under the following circumstances, subject to the conditions set forth in an indenture, dated as of January 26, 2018, between the Company and Wells Fargo Bank, National Association (Wells Fargo), as trustee, as supplemented by the first supplemental indenture, dated January 26, 2018, between the Company and Wells Fargo (as supplemented, the Indenture): (i) during the five business day period immediately after any five consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of convertible notes, as determined following a request by a holder of the convertible notes, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on such trading day, (ii) the Company elects to distribute to all or substantially all holders of the common stock (a) any rights, options or warrants (other than in connection with a stockholder rights plan for so long as the rights issued under such plan have not detached from the associated shares of common stock) entitling them, for a period of not more than 45 days from the declaration date for such distribution, to subscribe for or purchase shares of common stock at a price per share that is less than the average of the last reported sale prices of the common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the declaration date for such distribution, or (b) the Company's assets, debt securities or rights to purchase securities of the Company, which distribution has a per share value, as reasonably determined by the board of directors, exceeding 10% of the last reported sale price of the common stock on the trading day immediately preceding the declaration date for such distribution, (iii) if a transaction or event that constitutes a fundamental change or a make-whole fundamental change occurs, or if the Company is a party to (a) a consolidation, merger, combination, statutory or binding share exchange or similar transaction, pursuant to which the common stock would be converted into, or exchanged for, cash, securities or other property or assets, or (b) any sale, conveyance, lease or other transfer or similar transaction in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, all or any portion of the Convertible Notes may be surrendered by a holder for conversion at any time from or after the date that is 30 scheduled trading days prior to the anticipated effective date of the transaction, (iv) if during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter), the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day, or, (v) if the Company sends a notice of redemption, a holder may surrender all or any portion of its Convertible Notes, to which the notice of redemption relates, for conversion at any time on or after the date the applicable notice of redemption was sent until the close of business on (a) the second business day immediately preceding the related redemption date or (b) if the Company fails to pay the redemption price on the redemption date as specified in such notice of redemption, such later date on which the redemption price is paid. The Convertible Notes can be settled in cash, common stock, or a combination of cash and common stock at the Company's option, and thus, the Company determined the embedded conversion options in the convertible notes are not required to be separately accounted for as a derivative. However, since the Convertible Notes are within the scope of the accounting guidance for cash convertible instruments, the Company is required to separate the Convertible Notes into liability and equity components. The carrying amount of the liability component as of the date of issuance was calculated by measuring the fair value of a similar liability that did not have an associated equity component. The fair value was based on data from readily available pricing sources which utilize market observable inputs and other characteristics for similar types of instruments. The carrying amount of the equity component representing the embedded conversion option was determined by deducting the fair value of the liability component from the gross proceeds of the Convertible Notes. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the expected life of a similar liability that does not have an associated equity component using the effective interest method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification in the accounting guidance for contracts in an entity’s own equity. The fair value of the liability component of the Convertible Notes on the date of issuance was estimated at $309.1 million using an effective interest rate of 7.6%, and accordingly, the residual equity component on the date of issuance was $140.9 million. The discount is being amortized to interest expense over the term of the Convertible Notes and has a remaining period of approximately 4.79 years. The following table presents the carrying value of the Company's debt balance (in thousands): March 31, 2020 December 31, 2019 1.75% convertible senior notes due 2025 $ 450,000 $ 450,000 Debt issuance costs, unamortized (6,694) (7,043) Discount on debt (102,367) (107,017) Debt, long-term $ 340,939 $ 335,940 As of March 31, 2020, future principal repayments of the debt for each of the fiscal years through maturity were as follows (in thousands): Year Ending December 31: 2020 $ — 2021 — 2022 — 2023 — 2024 — 2025 450,000 $ 450,000 Interest Expense Interest expense related to the Convertible Notes for the three months ended March 31, 2020 and March 31, 2019, which includes the contractual interest coupon payable semi-annually in cash, the amortization of the issuance costs, accretion of debt discount and finance lease interest expense is as follows (in thousands): Three Months Ended 2020 2019 Contractual interest expense $ 1,973 $ 1,971 Amortization of debt issuance costs 349 349 Accretion of debt discount 4,650 4,406 Total convertible debt interest expense $ 6,972 $ 6,726 Finance lease interest expense 439 — Total interest expense $ 7,411 $ 6,726 |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Common Stock — As of March 31, 2020, the Company had 500,000,000 shares of common stock authorized with a par value of $0.01 per share and 89,859,549 shares of common stock issued and outstanding. In addition, as of March 31, 2020, the Company had reserved 13,144,026 shares of common stock for issuance upon the exercise of outstanding stock options and 930,384 shares of common stock for issuance upon the vesting of RSUs. The Company has also reserved 11,492,280 shares of common stock for issuance upon conversion of the Convertible Notes, subject to adjustment in accordance with the Indenture. In the second quarter of 2019, the Company completed an underwritten public offering of 10,657,692 shares of the Company's common stock, which included the underwriters' exercise in full of their over-allotment option of 1,042,307 shares from the Company a t a price to the public of $26.00, less underwriting discounts and commissions. The Company's net proceeds from the sale of the shares, after deducting the underwriting discounts and commissions and offering expenses of $16.0 million, were $261.1 million. The offering also included the sale of 400,000 shares from the Company's Chairman and Chief Executive Officer, from which the Company received no proceeds . Preferred Stock — As of March 31, 2020, the Company had 200,000,000 shares of preferred stock authorized with a par value of $0.01 per share and no shares of preferred stock were issued and outstanding. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company's current equity compensation plan, the 2019 Incentive Plan, was approved by shareholders at the Company's Annual Meeting of Shareholders on May 16, 2019. The 2019 Incentive Plan is administered by the Compensation Committee of the Board of Directors of the Company. Under the terms of the 2019 Incentive Plan, the Company is authorized to grant a variety of incentive awards based on its common stock, including stock options (both incentive stock options and non-qualified stock options), RSUs, performance options/shares and other stock awards to eligible employees and non-employee directors. On May 16, 2019, upon the approval of the 2019 Incentive Plan by shareholders, 3,500,000 shares were authorized for issuance thereunder, plus any shares subject to then-outstanding awards under the 2017 Incentive Plan, 2015 Incentive Plan and the 2013 Incentive Plan that subsequently were canceled, terminated unearned, expired, were forfeited, lapsed for any reason or were settled in cash without the delivery of shares. As of March 31, 2020, 747,761 shares remained for future issuance under the 2019 Incentive Plan. The 2019 Incentive Plan will terminate on May 16, 2029 unless it is extended or terminated earlier pursuant to its terms. In addition, from time to time, the Company makes inducement grants of stock options to new hires, which awards are made pursuant to the NASDAQ inducement grant exception. During the three months ended March 31, 2020, the Company granted inducement stock options covering 329,260 shares of the Company's common stock to new employees. On May 15, 2018, the 2018 Employee Stock Purchase Plan (2018 ESPP) was approved by shareholders at the Company's Annual Meeting of Shareholders. The Company has reserved the following for issuance under the 2018 ESPP: (i) 1,000,000 shares of common stock, plus (ii) commencing on January 1, 2019 and ending on December 31, 2023, an additional number of shares to be added on the first day of each calendar year equal to the lesser of (A) 1,200,000 shares of common stock, (B) 2% of the number of outstanding shares of common stock on such date and (C) an amount determined by the administrator. Stock Options - As of March 31, 2020, there was $69.8 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of 3.0 years. As of March 31, 2020, there were no performance-condition options outstanding. Restricted Stock Units — As of March 31, 2020, there was $19.9 million of unrecognized compensation expense related to unvested RSU awards, which is expected to be recognized over a weighted average period of 3.1 years. The following table summarizes the aggregate stock-based compensation expense recorded in the consolidated statements of comprehensive loss related to stock options and RSUs during the three months ended March 31, 2020 and 2019, respectively (in millions): Three Months Ended March 31, 2020 2019 Research and development $ 2.8 $ 2.2 Selling, general and administrative 6.2 4.7 Total $ 9.0 $ 6.9 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's provision for income taxes was $0.0 million and $0.2 million for the three months ended March 31, 2020 and March 31, 2019, respectively. The provision for income taxes in both periods was a result of certain of the Company's international subsidiaries, which had taxable income during the three months ended March 31, 2020 and 2019. In jurisdictions where the Company has net losses, there was a full valuation allowance recorded against the Company's deferred tax assets and therefore no tax benefit was recorded. The Company is subject to US federal and state income taxes and the statute of limitations for tax audit is open for the Company's federal tax returns for the years ended 2016 and later, and is generally open for certain states for the years 2015 and later. The Company has incurred net operating losses since inception, except for the year ended December 31, 2009. Such loss carryforwards would be subject to audit in any tax year in which those losses are utilized, notwithstanding the year of origin. As of March 31, 2020 and December 31, 2019, the Company had recorded reserves for unrecognized income tax benefits against certain deferred tax assets in the United States. However, given the Company’' valuation allowance position, these reserves do not have an impact on the balance sheet as of March 31, 2020 and December 31, 2019 or the income statement for the three months ended March 31, 2020 and March 31, 2019. The Company has not recorded any accrued interest or penalties related to uncertain tax positions. The Company does not anticipate any material changes in the amount of unrecognized tax positions over the next 12 months. On March 27, 2020, the US government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which includes numerous modifications to income tax provisions, including a limitation on business interest expense and net operating loss provisions and the acceleration of alternative minimum tax credits. Given the Company's history of losses, the CARES Act is not expected to have a material impact on its income tax positions. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Rent expense charged to operations was $0.8 million and $0.8 million for the three months ended March 31, 2020 and 2019, respectively. Legal Proceedings From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Fair Value Measurements | Fair Value Measurements - The Company categorizes its financial assets and liabilities measured and reported at fair value in the financial statements on a recurring basis based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities, are as follows: • Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Each major category of financial assets and liabilities measured at fair value on a recurring basis is categorized based upon the lowest level of significant input to the valuations. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Financial instruments in Level 1 generally include US treasuries and mutual funds listed in active markets. The Company's only financial assets and liabilities which were measured at fair value as of March 31, 2020 and December 31, 2019 were Level 1 assets comprised of cash and cash equivalents. The Company's cash and cash equivalents permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions. The following table shows assets and liabilities that are measured at fair value on a recurring basis and their carrying value (in millions): As of March 31, 2020 Fair Value Carrying Value Level 1 Level 2 Level 3 Cash and cash equivalents $ 428.9 $ 428.9 $ — $ — As of December 31, 2019 Fair Value Carrying Value Level 1 Level 2 Level 3 Cash and cash equivalents $ 487.4 $ 487.4 $ — $ — The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no transfers in or out of Level 1, Level 2 or Level 3 during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, the Company held no securities that were in an unrealized gain or loss position. The Company reviews the status of each security quarterly to determine whether an other-than-temporary impairment has occurred. In making its determination, the Company considers a number of factors, including: (1) the significance of the decline; (2) whether the securities were rated below investment grade; (3) how long the securities have been in an unrealized loss position; and (4) the Company's ability and intent to retain the investment for a sufficient period of time for it to recover. |
Net Loss Per Share | Net Loss Per Share - Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of common shares and other dilutive securities outstanding during the period. Potentially dilutive securities from stock options, restricted stock, restricted stock units (RSUs) and convertible debt securities would be anti-dilutive as the Company incurred a net loss. Potentially dilutive common shares resulting from the assumed exercise of outstanding stock options and from the assumed conversion of the Convertible Notes are determined based on the treasury stock method. The following table sets forth the reconciliation of the weighted average number of common shares used to compute basic and diluted net loss per share for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 (in thousands, except per share amounts) Numerator: Net loss $ (66,364) $ (74,153) Denominator: Weighted average common shares used in calculation of basic net loss per share: 89,779 77,541 Effect of dilutive securities: Common stock options — — Restricted stock and RSUs — — Convertible debt securities — — Weighted average common shares outstanding used in calculation of diluted net loss per share 89,779 77,541 Net loss per share: Basic and diluted $ (0.74) $ (0.96) The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding as of March 31, 2020 and 2019 as their effect would have been anti-dilutive (in thousands): As of March 31, 2020 2019 Common stock options 13,144 11,903 Unvested restricted stock and RSUs 930 170 Convertible debt securities 11,492 11,492 |
Concentration of Credit Risk | Concentration of Credit Risk —Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash equivalents with high credit-quality financial institutions and may invest its short-term investments in US treasury securities, mutual funds and government agency bonds. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity. The Company is exposed to risks associated with extending credit to customers related to the sale of products. The Company does not require collateral to secure amounts due from its customers. The Company uses an expected loss methodology to calculate allowances for trade receivables. The Company's measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company does not currently have a material allowance for collectible trade receivables. The following table presents the percentage of gross product revenue represented by the Company's three largest customers as of the three months ended March 31, 2020 and March 31, 2019. Percentage of Total Gross Product Revenue March 31, 2020 March 31, 2019 Customer A 27% 33% Customer B 26% 15% Customer C 25% 31% The Company relies on third-party manufacturers and suppliers for manufacturing and supply of its products. The inability of the suppliers or manufacturers to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with the suppliers or manufacturer, or an adverse change in their business, could materially impact future operating results. |
Revenue Recognition | Revenue Recognition —In accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for the goods or services provided. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies a performance obligation. At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied. For all contracts that fall into the scope of ASC 606, the Company has identified one performance obligation: the sale of ARIKAYCE to its customers. The Company has not incurred or capitalized any incremental costs associated with obtaining contracts with customers. Product revenues consist primarily of sales of ARIKAYCE in the US. Product revenues are recognized once the Company performs and satisfies all five steps mentioned above. The Company's customers in the US include specialty pharmacies and specialty distributors. Revenue is recorded at net selling price (transaction price), which includes estimates of variable consideration for which reserves are established for (a) customer credits, such as invoice discounts for prompt pay and specialty pharmacies fees, (b) estimated government rebates, such as Medicaid and Medicare Part D reimbursements, and estimated managed care rebates, (c) estimated chargebacks, and (d) estimated costs of co-payment assistance. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (prompt pay discounts and chargebacks), prepaid expenses (co-payment assistance), or as a current liability (rebates). Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company's historical experience, current contractual and statutory requirements, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company's best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known. Customer credits: The Company's customers are offered various forms of consideration, including fees for enhanced services and prompt payment discounts. The payment terms for sales to specialty pharmacies for prompt payment discounts and fees for services are based on contractual rates agreed with the respective specialty pharmacies. The Company anticipates that its customers will earn these discounts and fees and, therefore, deducts the full amount of these discounts and fees from total gross product revenues at the time such revenues are recognized. Rebates: The Company contracts with government agencies and managed care organizations or collectively, third-party payors, so that ARIKAYCE will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. The Company estimates the rebates it will provide to third-party payors and deducts these estimated amounts from total gross product revenues at the time the revenues are recognized. These reserves are recorded in the same period in which the revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. The current liability is included in accrued expenses on the consolidated balance sheets. The Company estimates the rebates that it will provide to third-party payors based upon (i) the Company's contracts with these third-party payors, (ii) the government mandated discounts applicable to government-funded programs, (iii) a range of possible outcomes that are probability-weighted for the estimated payor mix, and (iv) information obtained from the Company's specialty pharmacies. Chargebacks: Chargebacks are discounts that occur when certain contracted customers, currently public health service institutions and federal government entities purchasing via the Federal Supply Schedule, purchase directly from the Company's specialty distributor. Contracted customers generally purchase the product at a discounted price and the specialty distributor, in turn, charges back to the Company the difference between the price the specialty distributor initially paid and the discounted price paid by the contracted customers. The Company estimates chargebacks provided to the specialty distributor and deducts these estimated amounts from gross product revenues, and from accounts receivable, at the time revenues are recognized. Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. Based upon the terms of the program and information regarding programs provided for similar specialty pharmaceutical products, the Company estimates the average co-pay mitigation amounts and the percentage of patients that it expects to participate in the program in order to establish accruals for co-payment assistance. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue. The Company adjusts its accruals for co-pay assistance based on actual redemption activity and estimates of future redemptions related to sales in the current period. If any, or all, of the Company's actual experience varies from the estimates above, the Company may need to adjust prior period accruals, affecting revenue in the period of adjustment. The Company also recognizes revenue related to early access programs (EAPs) in Europe, consisting of sales to the French National Agency for Medicines and Health Products Safety, which granted ARIKAYCE a Temporary Authorization for Use (Autorisation Temporaire d'Utilisation or ATU) and from the named patient program in Germany. EAPs are intended to make products available on a named patient basis before they are commercially available in accordance with local regulations. |
Inventory and Cost of product revenues (excluding amortization of intangible assets) | Inventory and Cost of product revenues (excluding amortization of intangible assets) - Inventory is stated at the lower of cost and net realizable value. The Company began capitalizing inventory costs following FDA approval of ARIKAYCE in September 2018. Inventory is sold on a first-in, first-out (FIFO) basis. The Company periodically reviews inventory for expiry and obsolescence and, if necessary, writes down accordingly. If quality specifications are not met during the manufacturing process, such inventory is written off to cost of product revenues (excluding amortization of intangible assets) in the period identified. Cost of product revenues (excluding amortization of intangible assets) consist primarily of direct and indirect costs related to the manufacturing of ARIKAYCE sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs, in addition to royalty expenses and revenue-based milestone payments. Cost is determined using a standard cost method, which approximates actual cost, and assumes a FIFO flow of goods. Prior to FDA approval of ARIKAYCE, the Company expensed all inventory related costs in the period incurred. Inventory used for clinical development purposes is expensed to research and development (R&D) expense when consumed. |
Leases | Leases - In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous generally accepted accounting principles. ASU 2016-02 requires a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use (ROU) asset representing its right to use the underlying asset for the lease term on the balance sheet. A lease is a contract, or part of a contract, that conveys the right to control the use of explicitly or implicitly identified property, plant or equipment in exchange for consideration. Control of an asset is conveyed to the Company if the Company obtains the right to obtain substantially all of the economic benefits of the asset or the right to direct the use of the asset. The Company recognizes ROU assets and lease liabilities at the lease commencement date based on the present value of future, fixed lease payments over the term of the arrangement. ROU assets are generally amortized on a straight-line basis over the term of the lease. Lease liabilities accrete to yield and are reduced at the time when the lease payment is payable to the vendor. Variable lease payments are recognized at the time when the event giving rise to the payment occurs and are recognized in the statement of comprehensive income in the same line item as expenses arising from fixed lease payments. In accordance with Topic 842, leases are measured at present value using the rate implicit in the lease or, if the implicit rate is not determinable, the lessee's implicit borrowing rate. As the implicit rate is not typically available, the Company uses its implicit borrowing rate based on the information available at the lease commencement date to determine the present value of future lease payments. The implicit borrowing rate approximates the rate the Company would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments. Refer to Note 7 - Leases for details about the Company's lease portfolio, including Topic 842 required disclosures. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements - In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses which requires financial assets measured at an amortized cost basis to be presented at the net amount expected to be collected. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables. The Company's measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted ASU 2016-13 effective January 1, 2020. Different aspects of the guidance required modified retrospective or prospective adoption. Adoption of the standard did not have a material impact on the Company's consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Carrying Value and Fair Value of Assets and Liabilities | The following table shows assets and liabilities that are measured at fair value on a recurring basis and their carrying value (in millions): As of March 31, 2020 Fair Value Carrying Value Level 1 Level 2 Level 3 Cash and cash equivalents $ 428.9 $ 428.9 $ — $ — As of December 31, 2019 Fair Value Carrying Value Level 1 Level 2 Level 3 Cash and cash equivalents $ 487.4 $ 487.4 $ — $ — |
Reconciliation of the Weighted Average Number of Shares Used to Compute Basic and Diluted Net Loss per Share | The following table sets forth the reconciliation of the weighted average number of common shares used to compute basic and diluted net loss per share for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 (in thousands, except per share amounts) Numerator: Net loss $ (66,364) $ (74,153) Denominator: Weighted average common shares used in calculation of basic net loss per share: 89,779 77,541 Effect of dilutive securities: Common stock options — — Restricted stock and RSUs — — Convertible debt securities — — Weighted average common shares outstanding used in calculation of diluted net loss per share 89,779 77,541 Net loss per share: Basic and diluted $ (0.74) $ (0.96) |
Potentially Dilutive Securities Excluded from Computations of Diluted Weighted Average Common Shares Outstanding | The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding as of March 31, 2020 and 2019 as their effect would have been anti-dilutive (in thousands): As of March 31, 2020 2019 Common stock options 13,144 11,903 Unvested restricted stock and RSUs 930 170 Convertible debt securities 11,492 11,492 |
Schedules of Concentration of Risk, by Risk Factor | The following table presents the percentage of gross product revenue represented by the Company's three largest customers as of the three months ended March 31, 2020 and March 31, 2019. Percentage of Total Gross Product Revenue March 31, 2020 March 31, 2019 Customer A 27% 33% Customer B 26% 15% Customer C 25% 31% |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | As of March 31, 2020 and December 31, 2019, the Company's inventory balance consists of the following (in thousands): March 31, 2020 December 31, 2019 Raw materials $ 16,992 $ 16,048 Work-in-process 6,761 6,420 Finished goods 6,892 5,845 $ 30,645 $ 28,313 |
Intangibles, Net (Tables)
Intangibles, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | A rollforward of the Company's intangible assets for the three months ended March 31, 2020 follows (in thousands): 2020 Intangible Asset January 1, Additions Amortization March 31, Acquired ARIKAYCE R&D $ 52,139 $ — $ (1,213) $ 50,926 PARI milestone upon FDA approval 1,543 — (36) 1,507 $ 53,682 $ — $ (1,249) $ 52,433 |
Fixed Assets, Net (Tables)
Fixed Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Fixed assets are stated at cost and depreciated using the straight-line method, based on useful lives as follows (in thousands): Asset Description Estimated As of Mach 31, 2020 As of December 31, 2019 Lab equipment 7 $ 9,984 $ 9,634 Furniture and fixtures 7 5,917 5,908 Computer hardware and software 3-5 7,053 6,806 Office equipment 7 89 154 Manufacturing equipment 7 1,567 1,567 Leasehold improvements lease term 34,643 33,852 Construction in Progress (CIP) — 20,863 21,526 80,116 79,447 Less: accumulated depreciation (21,478) (19,267) Fixed assets, net $ 58,638 $ 60,180 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | As of March 31, 2020 and December 31, 2019, the Company's accrued expenses balance consists of the following (in thousands): March 31, 2020 December 31, 2019 Accrued clinical trial expenses $ 4,521 $ 5,598 Accrued professional fees 13,233 12,581 Accrued technical operation expenses 1,836 6,446 Accrued royalty and milestone payments 2,732 3,117 Accrued interest payable 1,663 3,631 Accrued sales allowances and related costs 7,235 5,267 Accrued construction costs 815 2,689 Other accrued expenses 652 1,046 $ 32,687 $ 40,375 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lease, Costs | The table below summarizes the Company's total lease costs included in its consolidated financial statements, as well as other required quantitative disclosures (in thousands). Three Months Ended March 31, 2020 Finance lease cost Amortization of right-of-use assets $ 360 Interest on lease liabilities 439 Total finance lease cost $ 799 Operating lease cost 2,807 Total lease cost $ 3,606 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for finance leases $ 439 Operating cash flows for operating leases $ 2,838 Financing cash flows from finance leases $ 292 Weighted average remaining lease term - finance leases 10.3 years Weighted average remaining lease term - operating leases 4.9 years Weighted average discount rate - finance leases 8.6 % Weighted average discount rate - operating leases 7.4 % The table below summarizes the supplemental noncash disclosures of the Company's leases included in its consolidated financial statements (in thousands). Three Months Ended March 31, 2020 March 31, 2019 Finance right-of-use assets obtained in exchange for lease obligations $ — $ — Operating right-of-use assets obtained in exchange for lease $ 22 $ 47,396 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Components of Debt Balance | The following table presents the carrying value of the Company's debt balance (in thousands): March 31, 2020 December 31, 2019 1.75% convertible senior notes due 2025 $ 450,000 $ 450,000 Debt issuance costs, unamortized (6,694) (7,043) Discount on debt (102,367) (107,017) Debt, long-term $ 340,939 $ 335,940 |
Schedule of Future Principal Repayments of Debt | As of March 31, 2020, future principal repayments of the debt for each of the fiscal years through maturity were as follows (in thousands): Year Ending December 31: 2020 $ — 2021 — 2022 — 2023 — 2024 — 2025 450,000 $ 450,000 |
Summary of Interest Expense | Interest expense related to the Convertible Notes for the three months ended March 31, 2020 and March 31, 2019, which includes the contractual interest coupon payable semi-annually in cash, the amortization of the issuance costs, accretion of debt discount and finance lease interest expense is as follows (in thousands): Three Months Ended 2020 2019 Contractual interest expense $ 1,973 $ 1,971 Amortization of debt issuance costs 349 349 Accretion of debt discount 4,650 4,406 Total convertible debt interest expense $ 6,972 $ 6,726 Finance lease interest expense 439 — Total interest expense $ 7,411 $ 6,726 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Allocation of Employee Stock-Based Compensation | The following table summarizes the aggregate stock-based compensation expense recorded in the consolidated statements of comprehensive loss related to stock options and RSUs during the three months ended March 31, 2020 and 2019, respectively (in millions): Three Months Ended March 31, 2020 2019 Research and development $ 2.8 $ 2.2 Selling, general and administrative 6.2 4.7 Total $ 9.0 $ 6.9 |
The Company and Basis of Pres_2
The Company and Basis of Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Cash and cash equivalents | $ 428,942 | $ 487,429 | |
Net loss | $ (66,364) | $ (74,153) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Fair Value Measurements (Details) | 3 Months Ended | |||
Mar. 31, 2020USD ($)security | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)security | Jan. 31, 2018USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Fair value transfers in or out of Level 1, Level 2, or Level 3 | $ 0 | $ 0 | ||
Securities in an unrealized gain or loss position | security | 0 | 0 | ||
Unamortized portion of debt discount | $ 102,367,000 | $ 107,017,000 | ||
Convertible Notes | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Unamortized portion of debt discount | 102,400,000 | |||
Recurring basis | Carrying Value | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | 428,900,000 | 487,400,000 | ||
Recurring basis | Carrying Value | Level 2 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Convertible Notes ($450.0 face value) | 340,900,000 | |||
Recurring basis | Fair Value | Level 1 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | 428,900,000 | 487,400,000 | ||
Recurring basis | Fair Value | Level 2 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | 0 | 0 | ||
Convertible Notes ($450.0 face value) | 376,800,000 | |||
Recurring basis | Fair Value | Level 3 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Cash and cash equivalents | $ 0 | $ 0 | ||
1.75 convertible senior notes due 2025 | Convertible Notes | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Interest rate (as a percent) | 1.75% | |||
Convertible Notes ($450.0 face value) | $ 309,100,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net loss | $ (66,364) | $ (74,153) |
Denominator: | ||
Weighted average common shares used in calculation of basic net loss per share (in shares) | 89,779 | 77,541 |
Effect of dilutive securities: | ||
Dilutive securities, convertible debt (in shares) | 0 | 0 |
Weighted average common shares outstanding used in calculation of diluted net loss per share (in shares) | 89,779 | 77,541 |
Net loss per share: | ||
Basic and diluted (in dollars per share) | $ (0.74) | $ (0.96) |
Common stock options | ||
Effect of dilutive securities: | ||
Dilutive securities, share-based payment (in shares) | 0 | 0 |
Restricted stock and RSUs | ||
Effect of dilutive securities: | ||
Dilutive securities, share-based payment (in shares) | 0 | 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Common stock options | ||
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding | ||
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares) | 13,144 | 11,903 |
Unvested restricted stock and RSUs | ||
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding | ||
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares) | 930 | 170 |
Convertible debt securities | ||
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding | ||
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares) | 11,492 | 11,492 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Concentration Risk (Details) - Sales Revenue, Product Line - Customer Concentration Risk | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Customer A | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 27.00% | 33.00% |
Customer B | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 26.00% | 15.00% |
Customer C | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 25.00% | 31.00% |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory, Current (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 16,992 | $ 16,048 |
Work-in-process | 6,761 | 6,420 |
Finished goods | 6,892 | 5,845 |
Inventory, Net | $ 30,645 | $ 28,313 |
Intangibles, Net (Details)
Intangibles, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Intangibles, net | $ 52,433 | $ 53,682 | |
Intangible assets estimated useful life | 12 years | ||
Amortization of intangible assets, 2020 | $ 5,000 | ||
Amortization of intangible assets, 2021 | 5,000 | ||
Amortization of intangible assets, 2022 | 5,000 | ||
Amortization of intangible assets, 2023 | 5,000 | ||
Amortization of intangible assets, 2024 | 5,000 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Intangibles, gross | $ 53,682 | ||
Additions | 0 | ||
Amortization | (1,249) | ||
Intangibles, net | 52,433 | $ 53,682 | |
Acquired ARIKAYCE R&D | |||
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Intangibles, net | 50,926 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Intangibles, gross | 52,139 | ||
Additions | 0 | ||
Amortization | (1,213) | ||
Intangibles, net | 50,926 | ||
PARI milestone upon FDA approval | |||
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Intangibles, net | 1,507 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Intangibles, gross | $ 1,543 | ||
Additions | 0 | ||
Amortization | (36) | ||
Intangibles, net | $ 1,507 |
Fixed Assets, Net (Details)
Fixed Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 80,116 | $ 79,447 |
Less: accumulated depreciation | (21,478) | (19,267) |
Property, Plant and Equipment, Net, Total | 58,638 | 60,180 |
Lab equipment | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 9,984 | 9,634 |
Estimated Useful Life (years) | 7 years | |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 5,917 | 5,908 |
Estimated Useful Life (years) | 7 years | |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 7,053 | 6,806 |
Computer hardware and software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (years) | 3 years | |
Computer hardware and software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (years) | 5 years | |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 89 | 154 |
Estimated Useful Life (years) | 7 years | |
Manufacturing equipment | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 1,567 | 1,567 |
Estimated Useful Life (years) | 7 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 34,643 | 33,852 |
Construction in Progress (CIP) | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 20,863 | $ 21,526 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued clinical trial expenses | $ 4,521 | $ 5,598 |
Accrued professional fees | 13,233 | 12,581 |
Accrued technical operation expenses | 1,836 | 6,446 |
Accrued royalty and milestone payments | 2,732 | 3,117 |
Accrued interest payable | 1,663 | 3,631 |
Accrued sales allowances and related costs | 7,235 | 5,267 |
Accrued construction costs | 815 | 2,689 |
Other accrued expenses | 652 | 1,046 |
Total accrued expenses | $ 32,687 | $ 40,375 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Lessee, Lease, Description [Line Items] | |
Lease cost, future right-of-use asset | $ 20.4 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 10 years 10 months |
Leases - Lease, costs (Details)
Leases - Lease, costs (Details) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lease, Cost [Abstract] | ||
Finance lease amortization expense | $ 360 | $ 0 |
Finance lease interest expense | 439 | 0 |
Total finance lease cost | 799 | |
Operating lease cost | 2,807 | |
Total lease cost | 3,606 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows for finance leases | 439 | |
Operating cash flows for operating leases | 2,838 | |
Financing cash flows from finance leases | $ 292 | 0 |
Weighted average remaining lease term - finance leases | 10 years 3 months 18 days | |
Weighted average remaining lease term - operating leases | 4 years 10 months 24 days | |
Weighted average discount rate - finance leases | 8.60% | |
Weighted average discount rate - operating leases | 7.40% | |
Finance right-of-use assets obtained in exchange for lease obligations | $ 0 | 0 |
Operating right-of-use assets obtained in exchange for lease | $ 22 | $ 47,396 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 1 Months Ended | ||
Jan. 31, 2018USD ($)day$ / shares | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Debt Instrument [Line Items] | |||
Underwriting discounts and commissions and other offering expenses | $ | $ 6,694,000 | $ 7,043,000 | |
1.75 convertible senior notes due 2025 | |||
Debt Instrument [Line Items] | |||
Initial conversion rate | 0.0255384 | ||
Convertible Notes | 1.75 convertible senior notes due 2025 | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ | $ 450,000,000 | ||
Option to purchase additional debt | $ | 50,000,000 | ||
Underwriting discounts and commissions and other offering expenses | $ | 14,200,000 | ||
Net proceeds | $ | $ 435,800,000 | ||
Initial conversion price (in dollars per share) | $ / shares | $ 39.16 | ||
Convertible Notes ($450.0 face value) | $ | $ 309,100,000 | ||
Effective interest rate | 7.60% | ||
Equity component of convertible debt | $ | $ 140,900,000 | ||
Remaining discount amortization period | 4 years 9 months 14 days | ||
Convertible Notes | Conversion Term (i) | 1.75 convertible senior notes due 2025 | |||
Debt Instrument [Line Items] | |||
Threshold trading days | day | 5 | ||
Threshold consecutive trading days | day | 5 | ||
Threshold percent of stock price trigger | 98.00% | ||
Convertible Notes | Conversion Term (ii) | 1.75 convertible senior notes due 2025 | |||
Debt Instrument [Line Items] | |||
Threshold trading days | day | 45 | ||
Threshold consecutive trading days | day | 10 | ||
Threshold percent of stock price trigger | 10.00% | ||
Convertible Notes | Conversion Term (iii) | 1.75 convertible senior notes due 2025 | |||
Debt Instrument [Line Items] | |||
Threshold trading days following fundamental change | day | 30 | ||
Convertible Notes | Conversion Term (iv) | 1.75 convertible senior notes due 2025 | |||
Debt Instrument [Line Items] | |||
Threshold trading days | day | 20 | ||
Threshold consecutive trading days | day | 30 | ||
Threshold percent of stock price trigger | 130.00% |
Debt - Components of Debt (Deta
Debt - Components of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Jan. 31, 2018 |
Debt Instrument [Line Items] | |||
1.75% convertible senior notes due 2025 | $ 450,000 | $ 450,000 | |
Debt issuance costs, unamortized | (6,694) | (7,043) | |
Discount on debt | (102,367) | (107,017) | |
Debt, long-term | 340,939 | $ 335,940 | |
Convertible Notes | |||
Debt Instrument [Line Items] | |||
Discount on debt | $ (102,400) | ||
Convertible Notes | 1.75 convertible senior notes due 2025 | |||
Debt Instrument [Line Items] | |||
Interest rate (as a percent) | 1.75% | ||
Debt issuance costs, unamortized | $ (14,200) |
Debt - Future Principal Repayme
Debt - Future Principal Repayments of Debt (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Year Ending December 31: | |
2020 | $ 0 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 450,000 |
Total | $ 450,000 |
Debt - Interest Expense (Detail
Debt - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Contractual interest expense | $ 1,973 | $ 1,971 |
Amortization of debt issuance costs | 349 | 349 |
Accretion of debt discount | 4,650 | 4,406 |
Total convertible debt interest expense | 6,972 | 6,726 |
Finance lease interest expense | 439 | 0 |
Total interest expense | $ 7,411 | $ 6,726 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | May 24, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | |||
Common stock, authorized shares (in shares) | 500,000,000 | 500,000,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, issued shares (in shares) | 89,859,549 | 89,682,387 | |
Common stock, outstanding shares (in shares) | 89,859,549 | 89,682,387 | |
Preferred stock, authorized (in shares) | 200,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | ||
Preferred stock, shares issued (in shares) | 0 | ||
Preferred stock, shares outstanding (in shares) | 0 | ||
Convertible debt securities | |||
Class of Stock [Line Items] | |||
Common stock shares reserved for issuance (in shares) | 11,492,280 | ||
Common stock options | |||
Class of Stock [Line Items] | |||
Common stock shares reserved for issuance (in shares) | 13,144,026 | ||
Unvested restricted stock and RSUs | |||
Class of Stock [Line Items] | |||
Common stock shares reserved for issuance (in shares) | 930,384 | ||
IPO | |||
Class of Stock [Line Items] | |||
Shares issued in period (in shares) | 10,657,692 | ||
Stock options exercised (in dollars per share) | $ 26 | ||
Underwriters' discount and offering costs | $ 16 | ||
Proceeds from issuance IPO | $ 261.1 | ||
Over-Allotment Option | |||
Class of Stock [Line Items] | |||
Stock options exercised (in shares) | 1,042,307 | ||
Chief Executive Officer | |||
Class of Stock [Line Items] | |||
Stock options exercised (in shares) | 400,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions | May 15, 2018 | Mar. 31, 2020 | May 16, 2019 |
Stock-Based Compensation | |||
Inducement stock options granted to new employees (in shares) | 329,260 | ||
Common stock options | |||
Stock-Based Compensation | |||
Unrecognized compensation expense related to unvested stock options | $ 69.8 | ||
Expected weighted average period for recognized and unrecognized compensation expense | 3 years | ||
Performance options | |||
Stock-Based Compensation | |||
Options outstanding (in shares) | 0 | ||
Unvested restricted stock and RSUs | |||
Stock-Based Compensation | |||
Expected weighted average period for recognized and unrecognized compensation expense | 3 years 1 month 6 days | ||
Unrecognized compensation expense related to unvested RSU awards | $ 19.9 | ||
2019 Incentive Plan | |||
Stock-Based Compensation | |||
Shares of common stock, maximum authorized for issuance (in shares) | 3,500,000 | ||
Shares available for grant (in shares) | 747,761 | ||
2018 Employee Stock Purchase Plan | |||
Stock-Based Compensation | |||
Shares of common stock, maximum authorized for issuance (in shares) | 1,000,000 | ||
Number of additional shares authorized (in shares) | 1,200,000 | ||
Percentage of outstanding shares | 2.00% |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock and Restricted Stock Units (Details) - Stock options and RSUs - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock-Based Compensation | ||
Allocated share-based compensation expense | $ 9 | $ 6.9 |
Research and development | ||
Stock-Based Compensation | ||
Allocated share-based compensation expense | 2.8 | 2.2 |
Selling, general and administrative | ||
Stock-Based Compensation | ||
Allocated share-based compensation expense | $ 6.2 | $ 4.7 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 36,000 | $ 215,000 |
Deferred tax benefit | 0 | |
Unrecognized tax benefits, interest and penalties accrued | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense charged to operations | $ 0.8 | $ 0.8 |