Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 07, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Teligent, Inc. | |
Entity Central Index Key | 352,998 | |
Document Period End Date | Jun. 30, 2017 | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,017 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Trading Symbol | TLGT | |
Entity Common Stock, Shares Outstanding | 53,391,948 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 50,216 | $ 66,006 | |
Accounts receivable, net | 27,272 | 21,735 | |
Inventories | 14,437 | 12,708 | |
Prepaid expenses and other receivables | 3,084 | 2,847 | |
Total current assets | 95,009 | 103,296 | |
Property, plant and equipment, net | 45,072 | 26,215 | |
Intangible assets, net | 55,064 | 52,465 | |
Goodwill | 456 | 446 | |
Other | 784 | 804 | |
Total assets | 196,385 | 183,226 | |
Current liabilities: | |||
Accounts payable | 9,709 | 4,614 | |
Accrued expenses | 12,019 | 10,349 | |
Total current liabilities | 21,728 | 14,963 | |
Convertible 3.75% senior notes, net of debt discount and debt issuance costs (face of $143,750) | 116,030 | 111,391 | |
Deferred tax liability | 219 | 205 | |
Total liabilities | 137,977 | 126,559 | |
Stockholders’ equity: | |||
Common stock, $0.01 par value, 100,000,000 shares authorized; 53,391,948 and 53,148,441 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 554 | 551 | |
Additional paid-in capital | 104,695 | 102,624 | |
Accumulated deficit | (44,991) | (44,903) | |
Accumulated other comprehensive loss | (1,850) | (1,605) | |
Total stockholders’ equity | 58,408 | 56,667 | |
Total liabilities and stockholders' equity | $ 196,385 | $ 183,226 | |
[1] | Derived from the audited December 31, 2016 financial statements |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 | [1] |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | |
Common stock, shares issued (in shares) | 53,391,948 | 53,148,441 | |
Common stock, shares outstanding (in shares) | 53,391,948 | 53,148,441 | |
Convertible Notes Payable | |||
Stated interest rate | 3.75% | 3.75% | |
Face amount of the Notes | $ 143,750,000 | $ 143,750,000 | |
[1] | Derived from the audited December 31, 2016 financial statements |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Product sales, net | $ 18,295 | $ 17,025 | $ 38,148 | $ 32,447 |
Research and development services and other income | 113 | 113 | 151 | 348 |
Total revenues | 18,408 | 17,138 | 38,299 | 32,795 |
Costs and Expenses: | ||||
Cost of revenues | 10,371 | 7,582 | 19,328 | 15,284 |
Selling, general and administrative expenses | 4,706 | 3,712 | 9,005 | 7,119 |
Product development and research expenses | 5,113 | 4,768 | 8,781 | 8,479 |
Total costs and expenses | 20,190 | 16,062 | 37,114 | 30,882 |
Operating income (loss) | (1,782) | 1,076 | 1,185 | 1,913 |
Other Income (Expense): | ||||
Foreign currency exchange gain (loss) | 3,822 | (622) | 4,901 | 931 |
Interest and other expense, net | (2,936) | (3,332) | (6,068) | (6,650) |
(Loss) Income before income tax expense | (896) | (2,878) | 18 | (3,806) |
Income tax expense | 23 | 23 | 106 | 45 |
Net loss | $ (919) | $ (2,901) | $ (88) | $ (3,851) |
Basic and diluted (loss) per share (in dollars per share) | $ (0.02) | $ (0.05) | $ 0 | $ (0.07) |
Weighted average shares of common stock outstanding: | ||||
Basic and diluted shares (in shares) | 53,304,407 | 53,059,799 | 53,250,109 | 53,045,576 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (919) | $ (2,901) | $ (88) | $ (3,851) |
Other comprehensive loss, net of tax; | ||||
Foreign currency translation adjustment | (163) | (666) | (245) | (710) |
Other comprehensive loss | (163) | (666) | (245) | (710) |
Comprehensive loss | $ (1,082) | $ (3,567) | $ (333) | $ (4,561) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | |
Balance (in shares) at Dec. 31, 2016 | 53,148,441 | |||||
Balance at Dec. 31, 2016 | $ 56,667 | [1] | $ 551 | $ 102,624 | $ (1,605) | $ (44,903) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock based compensation expense | 1,805 | 1,805 | ||||
Stock options exercised (in shares) | 171,566 | |||||
Stock options exercised | 269 | $ 2 | 267 | |||
Issuance of stock for vested restricted stock units (in shares) | 71,941 | |||||
Issuance of stock for vested restricted stock units | 0 | $ 1 | (1) | |||
Cumulative translation adjustment | (245) | (245) | ||||
Net loss | (88) | (88) | ||||
Balance (in shares) at Jun. 30, 2017 | 53,391,948 | |||||
Balance at Jun. 30, 2017 | $ 58,408 | $ 554 | $ 104,695 | $ (1,850) | $ (44,991) | |
[1] | Derived from the audited December 31, 2016 financial statements |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | ||
Cash flows from operating activities: | |||
Net loss | $ (88) | $ (3,851) | |
Reconciliation of net loss to net cash (used in) provided by operating activities | |||
Depreciation and amortization of fixed assets | 822 | 396 | |
Provision for write down of inventory | 918 | 777 | |
Stock based compensation | 1,739 | 1,509 | |
Amortization of debt issuance costs | 456 | 400 | |
Amortization of intangibles | 1,396 | 1,437 | |
Foreign currency exchange gain | (4,901) | (931) | |
Amortization of debt discount on convertible 3.75% senior notes | 4,183 | 3,678 | |
Changes in operating assets and liabilities | |||
Accounts receivable | (5,504) | (1,427) | |
Inventories | (2,554) | (2,688) | |
Prepaid expenses and other current receivables | (208) | 4,083 | |
Other assets | 20 | (12) | |
Accounts payable and accrued expenses | 2,414 | (302) | |
Deferred income | 0 | (475) | |
Net cash (used in) provided by operating activities | (1,307) | 2,594 | |
Cash flows from investing activities: | |||
Capital expenditures | (15,286) | (5,102) | |
Product acquisition costs | 0 | (3,422) | |
Net cash used in investing activities | (15,286) | (8,524) | |
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 267 | 13 | |
Principal payments on capital lease obligations | 0 | (70) | |
Recovery from stockholder, net | 0 | (36) | |
Net cash provided by (used in) financing activities | 267 | (93) | |
Effect of exchange rate on cash and cash equivalents | 536 | 33 | |
Net decrease in cash and cash equivalents | (16,326) | (6,023) | |
Cash and cash equivalents at beginning of period | 66,006 | [1] | 87,191 |
Cash and cash equivalents at end of period | 50,216 | 81,201 | |
Supplemental Cash flow information: | |||
Cash payments for interest | 2,695 | 2,698 | |
Cash payments for income taxes | 93 | 38 | |
Non cash investing and financing transactions: | |||
Issuance of stock to a consultant | 0 | 36 | |
Acquisition of capital expenditures in accounts payable and accrued expenses | 4,260 | 2,944 | |
Capitalized stock compensation in capital expenditures | $ 66 | $ 18 | |
[1] | Derived from the audited December 31, 2016 financial statements |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | Jun. 30, 2017 | Jun. 30, 2016 |
Senior Notes | ||
Stated interest rate | 3.75% | 3.75% |
Organization and Business
Organization and Business | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Teligent, Inc. and its subsidiaries (collectively the “Company”), is a specialty generic pharmaceutical company. Our mission is to become a leader in the specialty generic pharmaceutical market. Under our own label, we currently market and sell generic topical and generic and branded generic injectable pharmaceutical products in the United States and Canada. In the United States, we currently market 19 generic topical pharmaceutical products and four branded generic injectable pharmaceutical products. In Canada, we sell a total of 30 generic and branded generic injectable products and medical devices. Generic pharmaceutical products are bioequivalent to their brand name counterparts. We also provide contract manufacturing services to the pharmaceutical, over-the-counter ("OTC"), and cosmetic markets. We operate our business under one segment. Our common stock is trading on the NASDAQ Global Select Market under the trading symbol “TLGT.” Our principal executive office, laboratories and manufacturing facilities are located at 105 Lincoln Avenue, Buena, New Jersey. We have additional offices located in Iselin, New Jersey, Toronto, Canada, and Tallinn, Estonia. |
Liquidity
Liquidity | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | Liquidity The Company’s principal sources of liquidity have historically been cash and cash equivalents of approximately $ 50.2 million at June 30, 2017 and historical cash from operations. The Company terminated its $ 10 million credit facility with General Electric Capital Corporation, as agent, and GE Capital Bank and certain other institutions, as lenders, in February 2016. The Company may require additional funding and this funding will depend, in part, on the timing and structure of potential business arrangements. If necessary, the Company may continue to seek to raise additional capital through the sale of its equity or through a strategic alliance with a third party. There may also be additional acquisition and growth opportunities that may require external financing. There can be no assurance that such financing will be available on terms acceptable to the Company, or at all. The Company also has the ability to defer certain product development and other programs, if necessary. The Company believes that its existing capital resources will be sufficient to support its current business plan and operations beyond August, 2018. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include sales returns and allowances (“SRA”), allowances for excess and obsolete inventories, allowances for doubtful accounts, provisions for income taxes and related deferred tax asset valuation allowances, stock based compensation, the impairment of long-lived assets (including intangibles, in-process research and development and goodwill) and accruals for environmental cleanup and remediation costs. Actual results could differ from those estimates. Stock Based Compensation ASC 718-10 defines the fair-value-based method of accounting for stock-based employee compensation plans and transactions used by the Company to account for its issuances of equity instruments to record compensation cost for stock-based employee compensation plans at fair value as well as to acquire goods or services from non-employees. Transactions in which the Company issues stock-based compensation to employees, directors and advisors and for goods or services received from non-employees are accounted for based on the fair value of the equity instruments issued. The Company utilizes pricing models in determining the fair values of options and warrants issued as stock-based compensation. These pricing models utilize the market price of the Company’s common stock and the exercise price of the option or warrant, as well as time value and volatility factors underlying the positions. Stock-based compensation expense is recognized over the vesting period of the grant. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, trade receivables, notes payable, accounts payable and other accrued liabilities at June 30, 2017 approximate their fair value for all periods presented. The Company measures fair value in accordance with ASC 820-10, "Fair Value Measurements and Disclosures". ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. 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. As of June 30, 2017 , the net carrying value of the Notes (discussed in Note 6) was approximately $ 116.0 million compared to their face value of $ 143.75 million . However, this variance is due to the conversion feature in the Notes rather than to changes in market interest rates. The Notes carry a fixed interest rate and therefore do not subject the Company to interest rate risk. Earnings (Loss) Per Share Basic earnings (loss) per share of common stock is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share of common stock is computed using the weighted average number of shares of common stock and potential dilutive common stock equivalents outstanding during the period. Potential dilutive common stock equivalents include shares issuable upon the conversion of the Notes, the exercise of options, and the vesting of restricted stock units ("RSU's"). For the three and six months ended June 30, 2017 , the potential dilutive common stock equivalents have been excluded from the computation of diluted earnings (loss) per share, as their effect would have been anti-dilutive. (in thousands except shares and per share data) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Basic earnings (loss) per share computation: Net loss - basic $ (919 ) $ (2,901 ) $ (88 ) $ (3,851 ) Weighted average common shares - basic 53,304,407 53,059,799 53,250,109 53,045,576 Basic and diluted loss per share $ (0.02 ) $ (0.05 ) $ 0.00 $ (0.07 ) Revenue Recognition The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred or contractual services rendered, the sales price is fixed or determinable, and collection is reasonably assured in conformity with ASC 605, “Revenue Recognition”. The Company derives its revenues from three basic types of transactions: sales of its own pharmaceutical products, sales of manufactured product for its customers included in product sales, and research and product development services and other services performed for third parties. Due to differences in the substance of these transaction types, the transactions require, and the Company utilizes, different revenue recognition policies for each. Product Sales, net, include Company Product Sales and Contract Manufacturing Sales, as follows: Product Sales, Net (in thousands) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Company product sales $ 15,888 $ 11,093 $ 32,324 $ 20,284 Contract manufacturing sales 2,407 5,932 5,824 12,163 Product sales, net $ 18,295 $ 17,025 $ 38,148 $ 32,447 Company Product Sales : The Company records revenue from Company product sales when title and risk of ownership have been transferred to the customer, which is typically upon delivery of products to the customer. As is customary in the pharmaceutical industry, the Company’s gross product sales from Company label products are subject to a variety of deductions in arriving at reported net product sales. When the Company recognizes revenue from the sale of products, an estimate of SRA is recorded, which reduces product sales. Accounts receivable and/or accrued expenses are also reduced and/or increased by the SRA amount. These adjustments include estimates for chargebacks, rebates, cash discounts and returns and other allowances. These provisions are estimates based on historical payment experience, historical relationship to revenues, estimated customer inventory levels and current contract sales terms with direct and indirect customers. The estimation process used to determine our SRA provision has been applied on a consistent basis and no material adjustments have been necessary to increase or decrease our reserves for SRA as a result of a significant change in underlying estimates. The Company will use a variety of methods to assess the adequacy of our SRA reserves to ensure that our financial statements are fairly stated. These will include periodic reviews of customer inventory data, customer contract programs, subsequent actual payment experience, and product pricing trends to analyze and validate the SRA reserves. The provision for chargebacks is our most significant sales allowance. A chargeback represents an amount payable in the future to a wholesaler for the difference between the invoice price paid to the Company by our wholesale customer for a particular product and the negotiated contract price that the wholesaler’s customer pays for that product. The Company’s chargeback provision and related reserve varies with changes in product mix, changes in customer pricing and changes to estimated wholesaler inventories. The provision for chargebacks also takes into account an estimate of the expected wholesaler sell-through levels to indirect customers at contract prices. The Company will validate the chargeback accrual quarterly through a review of the inventory reports obtained from our largest wholesale customers. This customer inventory information is used to verify the estimated liability for future chargeback claims based on historical chargeback and contract rates. These large wholesalers represent 90% - 95% of the Company’s chargeback payments. The Company continually monitors current pricing trends and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated. Net revenues and accounts receivable balances in the Company’s consolidated financial statements are presented net of SRA estimates. Certain SRA balances are included in accounts payable and accrued expenses. Gross-To-Net Sales Deductions (in thousands) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Gross Company product sales $ 66,744 $ 44,563 $ 121,044 $ 71,386 Reduction to gross Company product sales: Chargebacks and billbacks 44,090 27,059 74,105 39,404 Sales discounts and other allowances 6,766 6,411 14,615 11,698 Total reduction to gross product sales 50,856 33,470 88,720 51,102 Company product sales, net $ 15,888 $ 11,093 $ 32,324 $ 20,284 Net Company product sales of $15.9 million and $11.1 million for the three months ended June 30, 2017 and 2016 , respectively, are included in product sales, net in the Condensed Consolidated Statements of Operations. Net Company product sales of $32.3 million and $20.3 million for the six months ended June 30, 2017 and 2016 , respectively, are included in product sales, net in the Condensed Consolidated Statements of Operations. Accounts receivable are presented net of SRA balances of $30.9 million and $14.6 million at June 30, 2017 and 2016 , respectively. Accounts payable and accrued expenses include $5.5 million and $1.9 million at June 30, 2017 and 2016 , respectively, for certain fees related to services provided by the wholesalers. Wholesale fees of $2.0 million and $0.7 million for the three months ended June 30, 2017 and 2016 , respectively, were included in cost of goods sold. Wholesale fees of $4.2 million and $1.3 million for the six months ended June 30, 2017 and 2016 , respectively, were included in cost of goods sold. In addition, in connection with four of the 22 products the Company currently markets and distributes in its own label in the U.S., in accordance with an agreement entered into in December 2011, the Company is required to pay a royalty calculated based on net sales to one of its pharmaceutical partners. The royalty is calculated based on contracted terms of 40% of net sales for the four products, which is to be paid quarterly to the pharmaceutical partner. In accordance with the agreement, net sales exclude fees related to services provided by the wholesalers. Accounts payable and accrued expenses include $0.4 million and $0.6 million at June 30, 2017 and 2016 , respectively, related to these royalties. Royalty expense of $0.4 million and $0.8 million was included in cost of goods sold for the three months ended June 30, 2017 and 2016 , respectively. Royalty expense of $0.9 million and $1.3 million was included in cost of goods sold for the six months ended June 30, 2017 and 2016 , respectively. The Company includes significant estimates to arrive at net product sales arising from wholesaler chargebacks, Medicaid and Medicare rebates, allowances and other pricing and promotional programs. Contract Manufacturing Sales : The Company recognizes revenue when title transfers to its customers, which is generally upon shipment of products. These shipments are made in accordance with sales commitments and related sales orders entered into with customers either verbally or in written form. The revenues associated with these transactions, net of appropriate cash discounts, product returns and sales reserves, are recorded upon shipment of the products and are included in product sales, net on the Company’s Condensed Consolidated Statement of Operations. Contract manufacturing sales were $2.4 million and $5.9 million for the three months ended June 30, 2017 and June 30, 2016 , respectively. Contract manufacturing sales were $5.8 million and $12.2 million for the six months ended June 30, 2017 and 2016 , respectively. Research and Development Services and Other Income : The Company establishes agreed upon product development agreements with its customers to perform product development services. Product development revenues are recognized in accordance with the product development agreement upon the completion of the phases of development and when the Company has no future performance obligations relating to that phase of development. Revenue recognition requires the Company to assess progress against contracted obligations to assure completion of each stage. These payments are generally non-refundable and are reported as deferred until they are recognizable as revenue. If no such arrangement exists, product development fees are recognized ratably over the entire period during which the services are performed. Other types of revenue include royalty or licensing revenue, and would be recognized based upon the contractual agreement upon completion of the earnings process. Property, Plant and Equipment Depreciation and amortization of property, plant and equipment is provided for under the straight-line method over the assets’ estimated useful lives as follows: Useful Lives Buildings and Improvements 10 - 30 years Machinery and Equipment 3 - 10 years Repair and maintenance costs are charged to operations as incurred while major improvements are capitalized. When assets are retired or disposed, the related cost and accumulated depreciation thereon are removed and any gains or losses are included in operating results. Interest expense and related payroll costs are capitalized on the portion of debt that is attributable to the expenditures for the plant expansion, related equipment and direct personnel costs. Concentration of Credit Risk Major customers of the Company are defined as those constituting greater than 10% of our total revenue. For the three months ended June 30, 2017 , three of the Company’s customers accounted for 55% of the Company’s revenue, consisting of 26% , 17% , and 12% , respectively. For the three months ended June 30, 2016 , two of the Company’s customers accounted for 29% of the Company’s revenue, consisting of 12% and 17% , respectively. For the six months ended June 30, 2017 , three of the Company's customers accounted for 57% of the Company's revenue, consisting of 26% , 16% , and 15% . For the six months ended June 30, 2016, two of the Company's customers accounted for 35% of the Company's revenue. Accounts receivable related to the Company’s major customers comprised 82% of all accounts receivable as of June 30, 2017 , and 29% of all accounts receivable as of June 30, 2016 . The loss of one or more of these customers could have a significant impact on our revenues and harm our business and results of operations . For the three months ended June 30, 2017 , domestic net revenues were $14.8 million and foreign net revenues were $3.6 million . For the six months ended June 30, 2017 , domestic net revenues were $31.8 million and foreign net revenues were $6.5 million . As of June 30, 2017 , domestic assets were $127.4 million and foreign assets were $69.0 million . Foreign Currency Translation The net assets of international subsidiaries where the local currencies have been determined to be the functional currencies are translated into U.S. dollars using current exchange rates. The U.S. dollar effects that arise from translating the net assets of these subsidiaries at changing rates are recorded in the foreign currency translation account, which is included in Accumulated Other Comprehensive Income (Loss) (AOCI) and reflected as a separate component of equity. For those subsidiaries where the U.S. dollar has been determined to be the functional currency, non-monetary foreign currency assets and liabilities are translated using historical rates, while monetary assets and liabilities are translated at current rates, with the U.S. dollar effects of rate changes included in Foreign currency exchange gain (loss) line item under the Other (income) expense, net section of the Income Statement. Reclassification Certain prior year amounts were reclassified to conform to current year presentation. In addition, the Company has reclassified certain non-cash transactions related to the capital expenditures, in the amount of $3.0 million , for the six months ended June 30, 2016 , reducing both cash from operating activities and cash used in investing activities. For the year ended December 31, 2016, the impact of such reclassification of the non-cash portion of the capital expenditures would have been a reduction of both cash from operating activities and cash used in investing activities, in the amount of $1.8 million . Debt Issuance Costs Expenses related to debt financing activities are capitalized and amortized on an effective interest method, over the term of the loan. See detailed amounts per year in Note 6. ASU 2015-3 specifies that debt issuance costs are to be netted against the carrying value of the financial liability. Under prior guidance, debt issuance costs were recognized as a deferred charge and reported as a separate asset on the balance sheet. The updated guidance aligns the treatment of debt issuance costs and debt discounts in that both reduce the carrying value of the liability. Amortization of debt issuance costs is to be recorded as interest expense on the income statement. Adoption of Recent Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update ("ASU") 2015-03, Interest—Imputation of Interest (Subtopic 835-30): "Simplifying the Presentation of Debt Issuance Costs". The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2015. The Company's adoption of this ASU, effective January 1, 2016, did not have any significant impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory”. ASU 2015-11 requires inventory measured using any method other than last-in, first out (“LIFO”) or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. The Company's adoption of this ASU, effective January 1, 2017, did not have any significant impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): “Improvements to Employee Share-Based Payment Accounting”. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has adopted this ASU, effective January 1, 2017, and will recognize windfall tax benefits in additional paid in capital on a prospective basis. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842): “Recognition and Measurement of Financial Assets and Financial Liabilities”. The update supersedes Topic 840, Leases and requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. Topic 842 retains a distinction between finance leases and operating leases, with cash payments from operating leases classified within operating activities in the statement of cash flows. The amendments in this update are effective for fiscal years beginning after December 15, 2018 for public business entities, which for the Company means January 1, 2019. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): “Clarifying the Definition of a Business”. The update clarifies the definition of a business, specifically for companies to better evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For the Company, the amendments are effective January 1, 2018. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): “Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings”. The update shows amendments to two SEC Announcements made late in 2016 regarding four specific standards as follows: ASU 2014-09, Revenue from Contracts with Customers (Topic 606), ASU 2016-02, Leases (Topic 842), ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), and ASU 2014-01, Investments - Equity Method and Joint Ventures (Topic 323). The amendments in this update require changes to the U.S. GAAP Financial Reporting Taxonomy and the changes will be incorporated into the proposed 2018 Taxonomy which are available for public comment and finalized as part of the annual release process. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment”. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. It affects public entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. A public entity that is a U.S. Securities and Exchange Commission ("SEC") filer should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For the Company, the amendments are effective January 1, 2020. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”. This update addresses guidance for partial sales of nonfinancial assets. It affects (i) an entity that enters into a contract to transfer to a customer a nonfinancial asset, group of nonfinancial assets, or ownership interest in a consolidated subsidiary that is not a business or nonprofit entity, (ii) an entity that historically had transactions within the scope of the real estate-specific derecognition guidance, and (iii) an entity that contributes nonfinancial assets that are not a business or a nonprofit activity to a joint venture or other noncontrolled investee. The amendments are effective at the same time as the amendments in ASU 2014-09. Therefore, for the Company, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Public entities may apply the guidance earlier but only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not currently expect to enter into any such nonfinancial asset or ownership interest in its consolidated subsidiaries agreements but will refer to the guidance in ASU 2017-05 should that occur. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): “Scope of Modification Accounting”. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments affect any entity that changes the terms or conditions of a share-based payment award. The amendments are effective for fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. The Company has not made any changes to the terms or conditions of share-based payment awards but will refer to the guidance in ASU 2017-09 should that occur. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. Revenue Topic 606 Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update discusses the creation of the new Topic 606, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. Topic 606 is established in order to improve financial reporting by creating common revenue recognition guidance for both U.S. GAAP and IFRS. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The key focus of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this key focus, there is a five step approach outlined in the standard. The amendments are effective for fiscal years beginning after December 15, 2016. For the Company, the amendments are effective January 1, 2017. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): "Deferral of the Effective Date". This update defers the effective date of Update 2014-09 for all entities by one year. Therefore, the Company should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): "Principal versus Agent Considerations (Reporting Revenue Gross versus Net)". This update clarifies the implementation guidance on principal versus agent considerations. A specified good or service is a distinct good or service (or a distinct bundle of goods or services) to be provided to the customer. If a contract with a customer includes more than one specified good or service, an entity could be a principal for some specified goods or services and an agent for others. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): "Identifying Performance Obligations and Licensing". This update clarifies the following two aspects, identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): “Narrow-Scope Improvements and Practical Expedients”. The update addresses issues identified by the FASB-IASB Joint Transition Resource Group (TRG), a group formed in June 2014 in order to inform the Boards about potential implementation issues that could arise as a result of organizations implementing the May 2014 revenue guidance. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In December 2016, the FASB issued ASU 2016-20, "Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers". This update affects narrow aspects of the guidance issued in Update 2014-09. This update discusses the following general topics: loan guarantee fees, impairment testing of contract costs, provisions for losses on contracts, contract modifications, scope exceptions of topic 606, and disclosure requirements. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. We are currently evaluating the impact of ASU 2014-09, as amended, on our condensed consolidated financial statements, including whether to elect the full retrospective or modified retrospective method. Entities are permitted to apply the new standard either retrospectively, subject to certain practical expedients, or the modified retrospective method that requires the application of the guidance only to contracts that are uncompleted on the date of initial application. We expect to apply the new standard on January 1, 2018. We do not believe that the adoption of the standard will have a |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value, using the first-in-first-out method and consist of the following: June 30, 2017 December 31, 2016 (Unaudited) (Audited) (in thousands) Raw materials $ 7,104 $ 6,834 Work in progress 352 — Finished goods 8,309 6,284 Reserve (1,328 ) (410 ) Total $ 14,437 $ 12,708 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consists of the following: June 30, 2017 December 31, 2016 (Unaudited) (Audited) (in thousands) Land $ 257 $ 257 Building and improvements 8,535 8,515 Machinery and equipment 11,535 8,583 Construction in progress 32,203 15,496 52,530 32,851 Less accumulated depreciation and amortization (7,458 ) (6,636 ) Property, plant and equipment, net $ 45,072 $ 26,215 The Company recorded depreciation expense of $822,000 and $396,000 for the six months ended June 30, 2017 and June 30, 2016 , respectively. During the three months ended June 30, 2017 and June 30, 2016 , there was $741,000 of interest and $75,000 of interest, respectively, capitalized into construction in progress. For the six months ended June 30, 2017 and June 30, 2016 , there was $1,227,000 of interest and $98,000 of interest, respectively, capitalized into construction in progress. |
Convertible 3.75% Senior Notes
Convertible 3.75% Senior Notes | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Convertible 3.75% Senior Notes | Convertible 3.75% Senior Notes On December 16, 2014, the Company issued $125 million aggregate principal amount of 3.75% Convertible Senior Notes due 2019 (the “Notes”). On December 22, 2014, the Company announced the closing of the initial purchasers’ exercise in full of their option to purchase an additional $18.75 million aggregate principal amount of Notes. The Notes were offered and sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The net proceeds from the sale of the Notes were approximately $139 million , after deducting underwriting fees and other related expenses of approximately $4.8 million . Accrued interest in the amount of $0.2 million related to the Notes was included in accrued expenses as of June 30, 2017 . The Notes bear interest at a fixed rate of 3.75% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2015, and mature on December 15, 2019, unless earlier repurchased, redeemed or converted. The Notes are convertible into shares of the Company’s common stock, cash or a combination thereof. The Notes are convertible at an initial conversion price of approximately $11.29 per share, which is equivalent to an initial conversion rate of 88.5716 shares per $1,000 principal amount of Notes, subject to adjustment in certain events, such as distributions of dividends or stock splits. Holders may convert their Notes at their option prior to September 15, 2019, when or if certain conditions have been met or circumstances have occurred, such as if the Company’s stock price exceeds 130% of the conversion price under the Notes for a designated period of time, or if the trading price of the Notes is, for a designated period of time, less than 98% of the closing sale price of the Company’s common stock multiplied by the then-current conversion rate of the Notes, or if the Company calls Notes for redemption, or if certain specified corporate events occur. Holders may also convert their Notes at their option at any time on or after September 15, 2019 and prior to the close of business on the business day immediately preceding the stated maturity date. In addition, following the occurrence of certain changes of control of the Company described in the Indenture governing the Notes or termination of trading of the Company’s common stock or other securities into which the Notes are convertible (a “make-whole fundamental change”) or the delivery by the Company of a notice of redemption, the conversion rate for a holder who elects to convert its Notes in connection with such make-whole fundamental change or such notice of redemption will increase in certain circumstances. Additionally, subject to certain conditions, the Company may redeem for cash any or all outstanding Notes on or after December 19, 2017 in an amount equal to the outstanding principal amount of such Notes, plus accrued and unpaid interest. The Notes and any common stock issuable upon conversion of the Notes have not been registered under the Securities Act, applicable state securities laws or the securities laws of any other jurisdiction, and may not be offered or sold in the United States without registration or an applicable exemption from registration requirements. The Company does not intend to file a registration statement for the resale of the Notes or any common stock issuable upon conversion of the Notes, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful. The remaining unamortized discount and unamortized debt financing costs will be amortized over the remaining term of the debt of 2.50 years. At June 30, 2017 and December 31, 2016 , the net carrying amount of the Notes and the remaining unamortized debt discount were as follows: June 30, December 31, (in thousands) Face amount of the Notes $ 143,750 $ 143,750 Unamortized discount (24,977 ) (29,160 ) Debt issuance costs $ (2,743 ) $ (3,199 ) Carrying amount of the Notes $ 116,030 $ 111,391 Debt issuance costs associated with the Notes include fees of $2.7 million at June 30, 2017 and $3.2 million at December 31, 2016 . For the three and the six months ended June 30, 2017 and 2016 , the Company recorded the following expenses in relation to the Notes: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Interest Expense at 3.75% coupon rate $ 1,347 $ 1,348 $ 2,695 $ 2,695 Debt discount amortization 2,126 1,868 4,183 3,677 Amortization of deferred financing costs 232 204 456 401 Total interest expense (1) $ 3,705 $ 3,420 $ 7,334 $ 6,773 (1) Included within "Interest and other expense, net" on the Consolidated Statements of Operations, offset by interest income and capitalized interest |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The Company assesses the recoverability of the carrying value of goodwill in the fourth quarter of each year, and whenever events occur or circumstances change that would, more likely than not, reduce the fair value of our reporting unit below its carrying value. There have been no events or changes in circumstances that would have reduced the fair value of our reporting unit below its carrying value from December 31, 2016 , through June 30, 2017 . No impairment losses were recognized during the six months ended June 30, 2017 . Changes in goodwill during the six months ended June 30, 2017 were as follows (in thousands): Goodwill Goodwill balance at December 31, 2016 $ 446 Foreign currency translation 10 Goodwill balance at June 30, 2017 $ 456 Intangible Assets The following sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2017 and December 31, 2016 . June 30, 2017 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization Period Trademarks and Technology $ 38,687 $ (4,338 ) $ 34,349 13.3 In process research and development ("IPR&D") 17,630 — 17,630 N/A - Indefinite lived Customer relationships 3,670 (585 ) 3,085 8.4 Total $ 59,987 $ (4,923 ) $ 55,064 December 31, 2016 Gross Carrying Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization Period Trademarks and Technology 35,403 (3,123 ) 32,280 13.8 In-process research and development ("IPR&D") 17,024 — 17,024 N/A - Indefinite lived Customer relationships 3,565 (404 ) 3,161 8.9 Total 55,992 (3,527 ) 52,465 Changes in intangibles during the six months ended June 30, 2017 were as follows (in thousands): Trademarks and Technology IPR&D Customer Relationships Balance at January 1, 2017 $ 32,280 $ 17,024 $ 3,161 Acquisition Amortization (1,216 ) — (180 ) Foreign currency translation 3,285 606 104 Balance at June 30, 2017 $ 34,349 $ 17,630 $ 3,085 Assuming no additions, disposals or adjustments are made to the carrying values and/or useful lives of the intangible assets, annual amortization expense on product rights and other related intangibles as of June 30, 2017 over the remainder of 2017 and each of the next five years is estimated to be as follows ($ in thousands): Amortization Expense * 2017 (for the remainder of the year) $ 1,474 2018 2,971 2019 2,971 2020 2,971 2021 2,971 2022 2,971 Thereafter 18,617 *IPR&D amounts are assessed for impairment at least annually and will be amortized once products become saleable. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock Options The 1999 Director Stock Option Plan, as amended (the “Director Plan”), provides for the grant of stock options to non-employee directors of the Company at an exercise price equal to the fair market value per share on the date of the grant. An aggregate of 1,975,000 shares have been approved and authorized for issuance pursuant to the Director Plan. A total of 2,634,798 options have been granted to non-employee directors through June 30, 2017 , and 807,782 of those have been forfeited through June 30, 2017 and returned to the option pool for future issuance. The options granted under the Director Plan vest in full one year after their respective grant dates and have a maximum term of ten years . As of June 30, 2017 , there were 500,000 shares of common stock options outstanding under the Director Plan. As of June 30, 2017 , the 147,984 options available were transferred to the 2016 Plan that has superseded the Director Plan, as discussed further in this section. The 1999 Stock Incentive Plan, as amended (“1999 Plan”), replaced all previously authorized employee stock option plans, and no additional options may be granted under those previous plans. Under the 1999 Plan, options or stock awards may be granted to all of the Company’s employees, officers, directors, consultants and advisors to purchase a maximum of 3,200,000 shares of common stock. However, pursuant to the terms of the 1999 Plan, no awards may be granted after March 16, 2009. A total of 2,892,500 options, having a maximum term of ten years , have been granted at 100% of the fair market value of the Company’s common stock at the date of grant. Options outstanding under the 1999 Plan are generally exercisable in cumulative increments over four years commencing one year from date of grant. On June 26, 2009, the Board of Directors adopted, and the Company’s stockholders subsequently approved by written consent, the IGI Laboratories, Inc. 2009 Equity Incentive Plan (the “2009 Plan”). The 2009 Plan became effective on July 29, 2009. The 2009 Plan allows the Company to continue to grant options and restricted stock, as under the 1999 Plan, but also authorizes the Board of Directors to grant a broad range of other equity-based awards, including stock appreciation rights, restricted stock units (“RSUs”) and performance awards. The 2009 Plan has been created, pursuant to and consistent with the Company's current compensation philosophy, to assist the Company in attracting, retaining and rewarding designated employees, directors, consultants and other service providers of the Company and its subsidiaries and affiliates, in a manner that will be cost efficient to the Company from both an economic and financial accounting perspective. On April 12, 2010, the Board of Directors adopted, and the Company’s stockholders subsequently approved, an amendment and restatement of the 2009 Plan to increase the number of shares of Common Stock available for grant under such plan by adding 2,000,000 shares of Common Stock. The 2009 Plan, as amended on May 29, 2010, authorizes up to 5,000,000 shares of the Company’s common stock for issuance pursuant to the terms of the 2009 Plan. The maximum number of shares that may be subject to awards made to any individual in any single calendar year under the 2009 Plan is 1,000,000 shares. As of June 30, 2017 , there were 107,959 RSUs outstanding, 1,413,687 shares of stock outstanding, and options to purchase 3,163,968 shares of common stock outstanding under the 2009 Plan. As of June 30, 2017 , the 123,718 options available were transferred to the 2016 Plan that has superseded the 2009 Plan, as discussed further in this section. On May 25, 2016, the Board of Directors approved the Company’s 2016 Equity Incentive Plan (the “ 2016 Plan”). The 2016 Plan provides for the issuance of awards of up to 2,000,000 shares of the Company’s common stock, plus any shares of common stock that are represented by awards granted under our Director Plan and 2009 Plan that are forfeited, expire or are canceled without delivery of shares of common stock or which result in the forfeiture of shares of common stock back to the Company on or after May 25, 2016. Generally, shares of common stock reserved for awards under the 2016 Plan that lapse or are canceled, will be added back to the share reserve available for future awards. However, shares of common stock tendered in payment for an award or shares of common stock withheld for taxes will not be available again for grant. The 2016 Plan provides that no participant may receive awards for more than 1,000,000 shares of common stock in any fiscal year. As the 2016 Plan supersedes both the Director Plan and the 2009 Plan, any available shares from both are now incorporated into the 2016 Plan. As of June 30, 2017 , there were 84,538 RSUs outstanding, 20,000 shares of common stock outstanding and options to purchase 666,145 shares of common stock outstanding under the 2016 Plan. As of June 30, 2017 , there were a total of 1,501,019 shares of common stock available under the 2016 Plan. As of June 30, 2017 , there were options to purchase 4,330,113 shares of common stock outstanding collectively in the Director Plan, 2009 Plan, and the 2016 Plan. In the interest of maintaining consistency with the Company's 2016 Equity Incentive Plan, on March 13, 2017, the Company entered into (i) an amendment to the option agreements governing each option grant currently outstanding under the Company's 2009 Equity Incentive Plan, and (ii) an amendment to the RSU, agreements governing each RSU grant currently outstanding under the 2009 Plan. The amendments provide for the automatic vesting upon a change of control of the Company of each option grant and RSU grant, as applicable, outstanding under the 2009 Plan. The amendments had a de minimis value to the holders as of June 30, 2017 , and therefore no additional stock compensation expense was recognized. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the following table. Expected volatilities and risk-free interest rates are based upon the expected life of the grant. Six months ended Assumptions June 30, 2017 June 30, 2016 Expected dividends — % — % Risk-free rate 1.55 % 1.13 % Expected volatility 58.0% - 69.7% 68.0% - 70.4% Expected term (in years) 3.2 - 3.3 3.1 - 3.3 Expected volatility was calculated using the historical volatility of the Company's stock over the expected life of the options. The expected life of the options was estimated based on the Company's historical data. The risk free interest rate is based on U.S. Treasury yields for securities with terms approximating the terms of the grants. Forfeitures are recognized in the period they occur. The assumptions used in the Black-Scholes options valuation model are highly subjective, and can materially affect the resulting valuation. Based upon application of the Black-Scholes option-pricing formula described above, the weighted-average grant-date fair value of options granted during the six months ended June 30, 2017 and June 30, 2016 , were $3.45 per share of common stock and $3.41 per share of common stock, respectively. A summary of option activity under the Director Plan, the 2009 Plan and the 2016 Plan as of June 30, 2017 and changes during the period are presented below: Number of Options Weighted Average Exercise Price Outstanding as of January 1, 2017 4,105,369 $ 4.76 Issued 464,895 7.31 Exercised (171,566 ) 1.56 Forfeited (68,585 ) 7.28 Expired — — Outstanding as of June 30, 2017 4,330,113 $ 5.12 Exercisable as of June 30, 2017 2,949,806 $ 3.87 The following table summarizes information regarding options outstanding and exercisable at June 30, 2017 : Outstanding: Stock Options Weighted Average Weighted Average Remaining Range of Exercise Prices Outstanding Exercise Price Contractual Life $0.79 - $1.00 25,000 $ 0.79 2.51 $1.01 - $1.50 1,721,000 1.06 4.64 $1.51 - $10.67 2,584,113 7.86 8.20 Total 4,330,113 $ 5.12 6.75 Exercisable: Stock Options Weighted Average Range of Exercise Prices Exercisable Exercise Price $0.79 - $1.00 25,000 $ 0.79 $1.01 - $1.50 1,721,000 1.06 $1.51 - $10.67 1,203,806 7.94 Total 2,949,806 $ 3.87 As of June 30, 2017 , the intrinsic value of the options outstanding was $18.3 million and the intrinsic value of the options exercisable was $16.1 million . As of June 30, 2017 , there was $3.6 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. The costs will be recognized through March 2019. Restricted Stock and RSUs The Company periodically grants restricted stock and RSU awards to certain officers and other employees that typically vest one to three years from their grant date. The Company recognized $245,000 and $192,000 of compensation expense during the three months ended June 30, 2017 and 2016 , respectively, and $ 468,000 and $ 372,000 during the six months ended June 30, 2017 and 2016, respectively related to restricted stock and RSU awards. Stock compensation expense is recognized over the vesting period of the restricted stock and RSUs. At June 30, 2017 , the Company had approximately $1.3 million of total unrecognized compensation cost related to non-vested restricted stock and RSUs, all of which will be recognized through April 2020. The following table summarizes the number of unvested RSUs and their weighted average exercise price for the six month period ended June 30, 2017. Number of Weighted Average Non-vested balance at January 1, 2017 179,900 $ 9.35 Changes during the period: Shares granted 84,538 7.28 Shares vested (71,941 ) 9.82 Shares forfeited — — Non-vested balance at June 30, 2017 192,497 $ 8.26 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company conducts operations in the United States and certain foreign countries. It is the intent of the Company to permanently reinvest any earnings and profits generated by its foreign affiliates. One of its foreign affiliates is subject to tax in Estonia. Estonia has a dual tax rate: 0% for earnings and profits as they are generated and 20% for earnings and profits that are distributed to shareholders. The Company has taken the position that the 20% tax rate applies only when dividends have been declared and recognized as a liability. Accordingly, the Company has provided no taxes on the current earnings generated by its Estonian affiliate. Income tax expense for the three and six months ended June 30, 2017 and the three and six months ended June 30, 2016 , is recognized based on the Company’s estimated annual effective tax rate, which is based upon the tax rate expected for the full calendar year applied to the pre-tax income of the interim period adjusted for discrete items. The Company excludes from the calculation of the annual effective tax rate those jurisdictions that are projected to operate at a loss and in which a tax benefit will not be recognized or which operate in a zero tax rate jurisdiction. The Company evaluates the recoverability of its net deferred tax assets based on its history of operating results, its expectations for the future, and the expiration dates of the net operating loss carry forwards. Based on the preponderance of the evidence, the Company has concluded that it is more likely than not that it will be unable to realize the net deferred tax assets in the immediate future and has established a valuation allowance for all such net deferred tax assets. At December 31, 2016 , the Company’s U.S. federal net operating loss carryforwards totaled $34.6 million . The Company’s ability to use net operating loss carry forwards is subject to substantial limitation in future periods under certain provisions of Section 382 of the Internal Revenue Code of 1986, as amended, which limit the utilization of net operating losses upon a more than 50% change in ownership of the Company’s stock that is held by 5% or greater stockholders. The Company examined the application of Section 382 with respect to an ownership change that took place during 2010, as well as the limitation on the application of net operating loss carry forwards. The Company believes that operating losses subsequent to the change date in 2010 (aggregating $15.3 million ) are not subject to Section 382 limitations. The Company has estimated that the annual limitation starting in 2010 aggregates from $1.0 million to $2.3 million per year including the effect of amortization of built in gains. The Company’s loss carryforwards may be further limited in the future if additional ownership changes occur. In accordance with ASU 2016-09 “Improvements to Employee Share-Based Payment Accounting” issued by FASB, the Company has recognized windfall profits as an increase in deferred tax assets resulting from an increase in net operating loss carryforwards. The Company has provided a full valuation allowance for these deferred tax assets. The Company is subject to the provisions of ASC 740-10-25, “ Income Taxes” . ASC 740 prescribes a more likely-than-not threshold for the financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. On a quarterly basis, the Company undergoes a process to evaluate whether income tax accruals are in accordance with ASC 740 guidance on uncertain tax positions. For federal purposes, post 1998 tax years remain open to examination as a result of net operating loss carryforwards. The Company is currently open to audit by the appropriate state income taxing authorities for tax years 2012 to 2015. The Company has not recorded any liability for uncertain tax positions at June 30, 2017 or December 31, 2016. The U.S. Internal Revenue Service (“IRS”) is currently auditing the Company’s 2015 income tax return. The audit is currently in the discovery phase and no issues have been raised by the IRS. |
Legal and U.S. Regulatory Proce
Legal and U.S. Regulatory Proceedings | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal and U.S. Regulatory Proceedings | Legal and U.S. Regulatory Proceedings The Company is involved from time to time in claims which arise in the ordinary course of business. In the opinion of management, the Company has made adequate provision for potential liabilities, if any, arising from any such matters. However, litigation is inherently unpredictable, and the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in any such matters, and developments or assertions by or against the Company relating to intellectual property rights and intellectual property licenses, could have a material adverse effect on its business, financial condition and operating results. To date, eleven putative class action antitrust lawsuits have been filed against the Company along with co-defendants, including Taro Pharmaceuticals U.S.A., Inc., Perrigo Company PLC, Fougera Pharmaceuticals Inc., and Sandoz Inc. regarding the pricing of econazole nitrate cream. The actions have been transferred by the Judicial Panel on Multidistrict Litigation to the Eastern District of Pennsylvania for pre-trial proceedings as part of the In re Generic Pharmaceuticals Pricing Antitrust Litigation matter. The class plaintiffs seek to represent nationwide or state classes consisting of persons who directly purchased, indirectly purchased or reimbursed patients for the purchase of generic econazole from any of the defendants from as early as October 1, 2012 (or later in most complaints) until the time the defendants’ allegedly unlawful conduct ceased or will cease. The plaintiffs allege a conspiracy to fix prices for generic econazole in violation of federal antitrust laws or state antitrust, consumer protection, and other laws. Plaintiffs seek treble damages for alleged price overcharges for generic econazole during the alleged period of conspiracy, and the indirect purchaser class plaintiffs also seek injunctive relief against the defendants. All of these cases are in their initial stages and motions to dismiss have not yet been filed. Due to the early stage of these cases, we are unable to form a judgment at this time as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss. We believe these cases are without merit, and we intend to vigorously defend against these claims. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include sales returns and allowances (“SRA”), allowances for excess and obsolete inventories, allowances for doubtful accounts, provisions for income taxes and related deferred tax asset valuation allowances, stock based compensation, the impairment of long-lived assets (including intangibles, in-process research and development and goodwill) and accruals for environmental cleanup and remediation costs. Actual results could differ from those estimates. |
Stock Based Compensation | Stock Based Compensation ASC 718-10 defines the fair-value-based method of accounting for stock-based employee compensation plans and transactions used by the Company to account for its issuances of equity instruments to record compensation cost for stock-based employee compensation plans at fair value as well as to acquire goods or services from non-employees. Transactions in which the Company issues stock-based compensation to employees, directors and advisors and for goods or services received from non-employees are accounted for based on the fair value of the equity instruments issued. The Company utilizes pricing models in determining the fair values of options and warrants issued as stock-based compensation. These pricing models utilize the market price of the Company’s common stock and the exercise price of the option or warrant, as well as time value and volatility factors underlying the positions. Stock-based compensation expense is recognized over the vesting period of the grant. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, trade receivables, notes payable, accounts payable and other accrued liabilities at June 30, 2017 approximate their fair value for all periods presented. The Company measures fair value in accordance with ASC 820-10, "Fair Value Measurements and Disclosures". ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. 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. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share of common stock is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share of common stock is computed using the weighted average number of shares of common stock and potential dilutive common stock equivalents outstanding during the period. Potential dilutive common stock equivalents include shares issuable upon the conversion of the Notes, the exercise of options, and the vesting of restricted stock units ("RSU's"). |
Revenue Recognition | Research and Development Services and Other Income : The Company establishes agreed upon product development agreements with its customers to perform product development services. Product development revenues are recognized in accordance with the product development agreement upon the completion of the phases of development and when the Company has no future performance obligations relating to that phase of development. Revenue recognition requires the Company to assess progress against contracted obligations to assure completion of each stage. These payments are generally non-refundable and are reported as deferred until they are recognizable as revenue. If no such arrangement exists, product development fees are recognized ratably over the entire period during which the services are performed. Other types of revenue include royalty or licensing revenue, and would be recognized based upon the contractual agreement upon completion of the earnings process. Contract Manufacturing Sales : The Company recognizes revenue when title transfers to its customers, which is generally upon shipment of products. These shipments are made in accordance with sales commitments and related sales orders entered into with customers either verbally or in written form. The revenues associated with these transactions, net of appropriate cash discounts, product returns and sales reserves, are recorded upon shipment of the products and are included in product sales, net on the Company’s Condensed Consolidated Statement of Operations. Company Product Sales : The Company records revenue from Company product sales when title and risk of ownership have been transferred to the customer, which is typically upon delivery of products to the customer. As is customary in the pharmaceutical industry, the Company’s gross product sales from Company label products are subject to a variety of deductions in arriving at reported net product sales. When the Company recognizes revenue from the sale of products, an estimate of SRA is recorded, which reduces product sales. Accounts receivable and/or accrued expenses are also reduced and/or increased by the SRA amount. These adjustments include estimates for chargebacks, rebates, cash discounts and returns and other allowances. These provisions are estimates based on historical payment experience, historical relationship to revenues, estimated customer inventory levels and current contract sales terms with direct and indirect customers. The estimation process used to determine our SRA provision has been applied on a consistent basis and no material adjustments have been necessary to increase or decrease our reserves for SRA as a result of a significant change in underlying estimates. The Company will use a variety of methods to assess the adequacy of our SRA reserves to ensure that our financial statements are fairly stated. These will include periodic reviews of customer inventory data, customer contract programs, subsequent actual payment experience, and product pricing trends to analyze and validate the SRA reserves. The provision for chargebacks is our most significant sales allowance. A chargeback represents an amount payable in the future to a wholesaler for the difference between the invoice price paid to the Company by our wholesale customer for a particular product and the negotiated contract price that the wholesaler’s customer pays for that product. The Company’s chargeback provision and related reserve varies with changes in product mix, changes in customer pricing and changes to estimated wholesaler inventories. The provision for chargebacks also takes into account an estimate of the expected wholesaler sell-through levels to indirect customers at contract prices. The Company will validate the chargeback accrual quarterly through a review of the inventory reports obtained from our largest wholesale customers. This customer inventory information is used to verify the estimated liability for future chargeback claims based on historical chargeback and contract rates. These large wholesalers represent 90% - 95% of the Company’s chargeback payments. The Company continually monitors current pricing trends and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated. Net revenues and accounts receivable balances in the Company’s consolidated financial statements are presented net of SRA estimates. Certain SRA balances are included in accounts payable and accrued expenses. Revenue Recognition The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred or contractual services rendered, the sales price is fixed or determinable, and collection is reasonably assured in conformity with ASC 605, “Revenue Recognition”. The Company derives its revenues from three basic types of transactions: sales of its own pharmaceutical products, sales of manufactured product for its customers included in product sales, and research and product development services and other services performed for third parties. Due to differences in the substance of these transaction types, the transactions require, and the Company utilizes, different revenue recognition policies for each. |
Property, Plant and Equipment | Property, Plant and Equipment Depreciation and amortization of property, plant and equipment is provided for under the straight-line method over the assets’ estimated useful lives as follows: Useful Lives Buildings and Improvements 10 - 30 years Machinery and Equipment 3 - 10 years Repair and maintenance costs are charged to operations as incurred while major improvements are capitalized. When assets are retired or disposed, the related cost and accumulated depreciation thereon are removed and any gains or losses are included in operating results. Interest expense and related payroll costs are capitalized on the portion of debt that is attributable to the expenditures for the plant expansion, related equipment and direct personnel costs. |
Concentration of Credit Risk | Concentration of Credit Risk Major customers of the Company are defined as those constituting greater than 10% of our total revenue. |
Foreign Currency Translation | Foreign Currency Translation The net assets of international subsidiaries where the local currencies have been determined to be the functional currencies are translated into U.S. dollars using current exchange rates. The U.S. dollar effects that arise from translating the net assets of these subsidiaries at changing rates are recorded in the foreign currency translation account, which is included in Accumulated Other Comprehensive Income (Loss) (AOCI) and reflected as a separate component of equity. For those subsidiaries where the U.S. dollar has been determined to be the functional currency, non-monetary foreign currency assets and liabilities are translated using historical rates, while monetary assets and liabilities are translated at current rates, with the U.S. dollar effects of rate changes included in Foreign currency exchange gain (loss) line item under the Other (income) expense, net section of the Income Statement. |
Reclassification | Reclassification Certain prior year amounts were reclassified to conform to current year presentation. |
Debt Issuance Costs | Debt Issuance Costs Expenses related to debt financing activities are capitalized and amortized on an effective interest method, over the term of the loan. See detailed amounts per year in Note 6. ASU 2015-3 specifies that debt issuance costs are to be netted against the carrying value of the financial liability. Under prior guidance, debt issuance costs were recognized as a deferred charge and reported as a separate asset on the balance sheet. The updated guidance aligns the treatment of debt issuance costs and debt discounts in that both reduce the carrying value of the liability. Amortization of debt issuance costs is to be recorded as interest expense on the income statement. |
Adoption of Recent Accounting Pronouncements and Recently Issued Accounting Pronouncements | Adoption of Recent Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update ("ASU") 2015-03, Interest—Imputation of Interest (Subtopic 835-30): "Simplifying the Presentation of Debt Issuance Costs". The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2015. The Company's adoption of this ASU, effective January 1, 2016, did not have any significant impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory”. ASU 2015-11 requires inventory measured using any method other than last-in, first out (“LIFO”) or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. The Company's adoption of this ASU, effective January 1, 2017, did not have any significant impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): “Improvements to Employee Share-Based Payment Accounting”. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has adopted this ASU, effective January 1, 2017, and will recognize windfall tax benefits in additional paid in capital on a prospective basis. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842): “Recognition and Measurement of Financial Assets and Financial Liabilities”. The update supersedes Topic 840, Leases and requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. Topic 842 retains a distinction between finance leases and operating leases, with cash payments from operating leases classified within operating activities in the statement of cash flows. The amendments in this update are effective for fiscal years beginning after December 15, 2018 for public business entities, which for the Company means January 1, 2019. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): “Clarifying the Definition of a Business”. The update clarifies the definition of a business, specifically for companies to better evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those annual periods. For the Company, the amendments are effective January 1, 2018. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): “Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings”. The update shows amendments to two SEC Announcements made late in 2016 regarding four specific standards as follows: ASU 2014-09, Revenue from Contracts with Customers (Topic 606), ASU 2016-02, Leases (Topic 842), ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), and ASU 2014-01, Investments - Equity Method and Joint Ventures (Topic 323). The amendments in this update require changes to the U.S. GAAP Financial Reporting Taxonomy and the changes will be incorporated into the proposed 2018 Taxonomy which are available for public comment and finalized as part of the annual release process. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment”. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. It affects public entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. A public entity that is a U.S. Securities and Exchange Commission ("SEC") filer should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For the Company, the amendments are effective January 1, 2020. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”. This update addresses guidance for partial sales of nonfinancial assets. It affects (i) an entity that enters into a contract to transfer to a customer a nonfinancial asset, group of nonfinancial assets, or ownership interest in a consolidated subsidiary that is not a business or nonprofit entity, (ii) an entity that historically had transactions within the scope of the real estate-specific derecognition guidance, and (iii) an entity that contributes nonfinancial assets that are not a business or a nonprofit activity to a joint venture or other noncontrolled investee. The amendments are effective at the same time as the amendments in ASU 2014-09. Therefore, for the Company, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Public entities may apply the guidance earlier but only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not currently expect to enter into any such nonfinancial asset or ownership interest in its consolidated subsidiaries agreements but will refer to the guidance in ASU 2017-05 should that occur. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): “Scope of Modification Accounting”. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments affect any entity that changes the terms or conditions of a share-based payment award. The amendments are effective for fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. The Company has not made any changes to the terms or conditions of share-based payment awards but will refer to the guidance in ASU 2017-09 should that occur. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. Revenue Topic 606 Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update discusses the creation of the new Topic 606, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. Topic 606 is established in order to improve financial reporting by creating common revenue recognition guidance for both U.S. GAAP and IFRS. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The key focus of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this key focus, there is a five step approach outlined in the standard. The amendments are effective for fiscal years beginning after December 15, 2016. For the Company, the amendments are effective January 1, 2017. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): "Deferral of the Effective Date". This update defers the effective date of Update 2014-09 for all entities by one year. Therefore, the Company should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): "Principal versus Agent Considerations (Reporting Revenue Gross versus Net)". This update clarifies the implementation guidance on principal versus agent considerations. A specified good or service is a distinct good or service (or a distinct bundle of goods or services) to be provided to the customer. If a contract with a customer includes more than one specified good or service, an entity could be a principal for some specified goods or services and an agent for others. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): "Identifying Performance Obligations and Licensing". This update clarifies the following two aspects, identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): “Narrow-Scope Improvements and Practical Expedients”. The update addresses issues identified by the FASB-IASB Joint Transition Resource Group (TRG), a group formed in June 2014 in order to inform the Boards about potential implementation issues that could arise as a result of organizations implementing the May 2014 revenue guidance. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. In December 2016, the FASB issued ASU 2016-20, "Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers". This update affects narrow aspects of the guidance issued in Update 2014-09. This update discusses the following general topics: loan guarantee fees, impairment testing of contract costs, provisions for losses on contracts, contract modifications, scope exceptions of topic 606, and disclosure requirements. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The amendments are effective the same date as ASU 2014-09, which due to the issuance of ASU 2015-14, has been deferred to fiscal years beginning after December 15, 2017. For the Company, the amendments are effective January 1, 2018. We are currently evaluating the impact of ASU 2014-09, as amended, on our condensed consolidated financial statements, including whether to elect the full retrospective or modified retrospective method. Entities are permitted to apply the new standard either retrospectively, subject to certain practical expedients, or the modified retrospective method that requires the application of the guidance only to contracts that are uncompleted on the date of initial application. We expect to apply the new standard on January 1, 2018. We do not believe that the adoption of the standard will have a significant impact on our revenue recognition patterns as compared to revenue recognition under the existing revenue guidance, assuming that contract structures similar to those in place are in effect at the time of our adoption. We expect that revenues generated in the future will continue to be recognized over time. However, there are certain industry-specific implementation issues that are still unresolved and, depending on the resolution of these matters, conclusions on the impact on our revenue recognition patterns could change. Through the date of adoption, we will continue to evaluate the impacts of ASU 2014-09 to ensure that our preliminary conclusions continue to remain accurate. Additionally, we will continue our assessment of the impact of ASU 2014-09, as amended, on our financial statement disclosures which are expected to be more extensive based on the requirements of the new standard. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | For the three and six months ended June 30, 2017 , the potential dilutive common stock equivalents have been excluded from the computation of diluted earnings (loss) per share, as their effect would have been anti-dilutive. (in thousands except shares and per share data) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Basic earnings (loss) per share computation: Net loss - basic $ (919 ) $ (2,901 ) $ (88 ) $ (3,851 ) Weighted average common shares - basic 53,304,407 53,059,799 53,250,109 53,045,576 Basic and diluted loss per share $ (0.02 ) $ (0.05 ) $ 0.00 $ (0.07 ) |
Product Sales, Net | Product Sales, net, include Company Product Sales and Contract Manufacturing Sales, as follows: Product Sales, Net (in thousands) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Company product sales $ 15,888 $ 11,093 $ 32,324 $ 20,284 Contract manufacturing sales 2,407 5,932 5,824 12,163 Product sales, net $ 18,295 $ 17,025 $ 38,148 $ 32,447 |
Gross-To-Net Sales Deductions | Gross-To-Net Sales Deductions (in thousands) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Gross Company product sales $ 66,744 $ 44,563 $ 121,044 $ 71,386 Reduction to gross Company product sales: Chargebacks and billbacks 44,090 27,059 74,105 39,404 Sales discounts and other allowances 6,766 6,411 14,615 11,698 Total reduction to gross product sales 50,856 33,470 88,720 51,102 Company product sales, net $ 15,888 $ 11,093 $ 32,324 $ 20,284 |
Schedule Of Property, Plant and Equipment Useful Lives | Depreciation and amortization of property, plant and equipment is provided for under the straight-line method over the assets’ estimated useful lives as follows: Useful Lives Buildings and Improvements 10 - 30 years Machinery and Equipment 3 - 10 years |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are valued at the lower of cost or net realizable value, using the first-in-first-out method and consist of the following: June 30, 2017 December 31, 2016 (Unaudited) (Audited) (in thousands) Raw materials $ 7,104 $ 6,834 Work in progress 352 — Finished goods 8,309 6,284 Reserve (1,328 ) (410 ) Total $ 14,437 $ 12,708 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment consists of the following: June 30, 2017 December 31, 2016 (Unaudited) (Audited) (in thousands) Land $ 257 $ 257 Building and improvements 8,535 8,515 Machinery and equipment 11,535 8,583 Construction in progress 32,203 15,496 52,530 32,851 Less accumulated depreciation and amortization (7,458 ) (6,636 ) Property, plant and equipment, net $ 45,072 $ 26,215 |
Convertible 3.75% Senior Notes
Convertible 3.75% Senior Notes (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Debt | At June 30, 2017 and December 31, 2016 , the net carrying amount of the Notes and the remaining unamortized debt discount were as follows: June 30, December 31, (in thousands) Face amount of the Notes $ 143,750 $ 143,750 Unamortized discount (24,977 ) (29,160 ) Debt issuance costs $ (2,743 ) $ (3,199 ) Carrying amount of the Notes $ 116,030 $ 111,391 |
Interest Income and Interest Expense Disclosure | For the three and the six months ended June 30, 2017 and 2016 , the Company recorded the following expenses in relation to the Notes: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Interest Expense at 3.75% coupon rate $ 1,347 $ 1,348 $ 2,695 $ 2,695 Debt discount amortization 2,126 1,868 4,183 3,677 Amortization of deferred financing costs 232 204 456 401 Total interest expense (1) $ 3,705 $ 3,420 $ 7,334 $ 6,773 (1) Included within "Interest and other expense, net" on the Consolidated Statements of Operations, offset by interest income and capitalized interest |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in goodwill during the six months ended June 30, 2017 were as follows (in thousands): Goodwill Goodwill balance at December 31, 2016 $ 446 Foreign currency translation 10 Goodwill balance at June 30, 2017 $ 456 |
Schedule of Finite and Indefinite Lived Intangible Assets | The following sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2017 and December 31, 2016 . June 30, 2017 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization Period Trademarks and Technology $ 38,687 $ (4,338 ) $ 34,349 13.3 In process research and development ("IPR&D") 17,630 — 17,630 N/A - Indefinite lived Customer relationships 3,670 (585 ) 3,085 8.4 Total $ 59,987 $ (4,923 ) $ 55,064 December 31, 2016 Gross Carrying Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization Period Trademarks and Technology 35,403 (3,123 ) 32,280 13.8 In-process research and development ("IPR&D") 17,024 — 17,024 N/A - Indefinite lived Customer relationships 3,565 (404 ) 3,161 8.9 Total 55,992 (3,527 ) 52,465 |
Schedule of Changes in Intangible Assets Other Than Goodwill | Changes in intangibles during the six months ended June 30, 2017 were as follows (in thousands): Trademarks and Technology IPR&D Customer Relationships Balance at January 1, 2017 $ 32,280 $ 17,024 $ 3,161 Acquisition Amortization (1,216 ) — (180 ) Foreign currency translation 3,285 606 104 Balance at June 30, 2017 $ 34,349 $ 17,630 $ 3,085 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Assuming no additions, disposals or adjustments are made to the carrying values and/or useful lives of the intangible assets, annual amortization expense on product rights and other related intangibles as of June 30, 2017 over the remainder of 2017 and each of the next five years is estimated to be as follows ($ in thousands): Amortization Expense * 2017 (for the remainder of the year) $ 1,474 2018 2,971 2019 2,971 2020 2,971 2021 2,971 2022 2,971 Thereafter 18,617 *IPR&D amounts are assessed for impairment at least annually and will be amortized once products become saleable. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Valuation Assumptions | The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the following table. Expected volatilities and risk-free interest rates are based upon the expected life of the grant. Six months ended Assumptions June 30, 2017 June 30, 2016 Expected dividends — % — % Risk-free rate 1.55 % 1.13 % Expected volatility 58.0% - 69.7% 68.0% - 70.4% Expected term (in years) 3.2 - 3.3 3.1 - 3.3 |
Schedule of Stock Option Activity | A summary of option activity under the Director Plan, the 2009 Plan and the 2016 Plan as of June 30, 2017 and changes during the period are presented below: Number of Options Weighted Average Exercise Price Outstanding as of January 1, 2017 4,105,369 $ 4.76 Issued 464,895 7.31 Exercised (171,566 ) 1.56 Forfeited (68,585 ) 7.28 Expired — — Outstanding as of June 30, 2017 4,330,113 $ 5.12 Exercisable as of June 30, 2017 2,949,806 $ 3.87 |
Schedule of Stock Options Outstanding and Exercisable | The following table summarizes information regarding options outstanding and exercisable at June 30, 2017 : Outstanding: Stock Options Weighted Average Weighted Average Remaining Range of Exercise Prices Outstanding Exercise Price Contractual Life $0.79 - $1.00 25,000 $ 0.79 2.51 $1.01 - $1.50 1,721,000 1.06 4.64 $1.51 - $10.67 2,584,113 7.86 8.20 Total 4,330,113 $ 5.12 6.75 Exercisable: Stock Options Weighted Average Range of Exercise Prices Exercisable Exercise Price $0.79 - $1.00 25,000 $ 0.79 $1.01 - $1.50 1,721,000 1.06 $1.51 - $10.67 1,203,806 7.94 Total 2,949,806 $ 3.87 |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the number of unvested RSUs and their weighted average exercise price for the six month period ended June 30, 2017. Number of Weighted Average Non-vested balance at January 1, 2017 179,900 $ 9.35 Changes during the period: Shares granted 84,538 7.28 Shares vested (71,941 ) 9.82 Shares forfeited — — Non-vested balance at June 30, 2017 192,497 $ 8.26 |
Organization and Business (Deta
Organization and Business (Details) | 6 Months Ended |
Jun. 30, 2017productsegment | |
Summary of Significant Accounting Policies Details [Line Items] | |
Segments | segment | 1 |
United States | |
Summary of Significant Accounting Policies Details [Line Items] | |
Generic products marketed | 19 |
Branded generic products marketed | 4 |
Canada | |
Summary of Significant Accounting Policies Details [Line Items] | |
Generic and branded products marketed | 30 |
Liquidity (Details Textual)
Liquidity (Details Textual) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 | [1] | Jun. 30, 2016 | Feb. 29, 2016 | Dec. 31, 2015 |
Liquidity Details [Line Items] | ||||||
Cash and cash equivalents | $ 50,216,000 | $ 66,006,000 | $ 81,201,000 | $ 87,191,000 | ||
General Electric Capital Corporation | ||||||
Liquidity Details [Line Items] | ||||||
Line of credit maximum borrowing capacity | $ 10,000,000 | |||||
[1] | Derived from the audited December 31, 2016 financial statements |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details Textual) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)product | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | ||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Product sales, net | $ 18,295 | $ 17,025 | $ 38,148 | $ 32,447 | ||
Accounts payable and accrued expenses | 5,500 | 1,900 | 5,500 | 1,900 | ||
Wholesale fees | 2,000 | $ 700 | $ 4,200 | 1,300 | ||
Percentage of net sales for royalty | 40.00% | |||||
Assets | 196,385 | $ 196,385 | $ 183,226 | [1] | ||
Reclassification of non-cash transactions related to capital expenditures | $ 3,000 | |||||
Pro forma | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Reclassification of non-cash transactions related to capital expenditures | $ 1,800 | |||||
Domestic | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Product sales, net | 14,800 | 31,800 | ||||
Assets | 127,400 | 127,400 | ||||
Foreign | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Product sales, net | 3,600 | 6,500 | ||||
Assets | $ 69,000 | $ 69,000 | ||||
Sales Revenue | Customer concentration risk | Three Customers | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 55.00% | 57.00% | ||||
Sales Revenue | Customer concentration risk | Customer One | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 26.00% | |||||
Sales Revenue | Customer concentration risk | Customer Two | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 17.00% | |||||
Sales Revenue | Customer concentration risk | Customer Three | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 12.00% | |||||
Sales Revenue | Customer concentration risk | Two Customers | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 29.00% | 35.00% | ||||
Sales Revenue | Customer concentration risk | Customer Four | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 12.00% | |||||
Sales Revenue | Customer concentration risk | Customer Five | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 17.00% | |||||
Sales Revenue | Customer concentration risk | Customer Six | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 26.00% | |||||
Sales Revenue | Customer concentration risk | Customer Seven | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 16.00% | |||||
Sales Revenue | Customer concentration risk | Customer Eight | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Concentration risk | 15.00% | |||||
Accounts Receivable | Customer concentration risk | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Accounts receivable concentration risk | 82.00% | 29.00% | 82.00% | 29.00% | ||
Contract manufacturing sales | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Product sales, net | $ 2,407 | $ 5,932 | $ 5,824 | $ 12,163 | ||
Product sales, gross | 2,400 | 5,900 | 5,800 | 12,200 | ||
Royalty | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Accounts payable and accrued expenses | 400 | 600 | 400 | 600 | ||
Royalty expense | 400 | 800 | $ 900 | 1,300 | ||
United States | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Products which the company pays royalties | product | 4 | |||||
Products manufactured, marketed and distributed | product | 22 | |||||
IGI Product | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Product sales, net | 15,900 | 11,100 | $ 32,300 | 20,300 | ||
Net Of SRA Balance | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Accounts receivable, net of SRA balances | $ 30,900 | $ 14,600 | $ 30,900 | $ 14,600 | ||
Maximum | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Wholesaler percent of chargeback payments | 95.00% | 95.00% | ||||
Minimum | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Wholesaler percent of chargeback payments | 90.00% | 90.00% | ||||
Convertible Notes Payable | ||||||
Summary of Significant Accounting Policies Details [Line Items] | ||||||
Net carrying value of notes | $ 116,000 | $ 116,000 | ||||
Face value of notes | $ 143,750 | $ 143,750 | ||||
[1] | Derived from the audited December 31, 2016 financial statements |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Basic earnings (loss) per share computation: | ||||
Net loss - basic | $ (919) | $ (2,901) | $ (88) | $ (3,851) |
Weighted average common shares - basic (in shares) | 53,304,407 | 53,059,799 | 53,250,109 | 53,045,576 |
Basic and diluted loss per share (in dollars per share) | $ (0.02) | $ (0.05) | $ 0 | $ (0.07) |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Product sales, net | $ 18,295 | $ 17,025 | $ 38,148 | $ 32,447 |
Company product sales | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Product sales, net | 15,888 | 11,093 | 32,324 | 20,284 |
Contract manufacturing sales | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Product sales, net | $ 2,407 | $ 5,932 | $ 5,824 | $ 12,163 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Reduction to gross Company product sales: | ||||
Company product sales, net | $ 18,295 | $ 17,025 | $ 38,148 | $ 32,447 |
Gross-To-Net Sales Adjustments | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross Company product sales | 66,744 | 44,563 | 121,044 | 71,386 |
Reduction to gross Company product sales: | ||||
Chargebacks and billbacks | 44,090 | 27,059 | 74,105 | 39,404 |
Sales discounts and other allowances | 6,766 | 6,411 | 14,615 | 11,698 |
Total reduction to gross product sales | 50,856 | 33,470 | 88,720 | 51,102 |
Company product sales, net | $ 15,888 | $ 11,093 | $ 32,324 | $ 20,284 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details 3) | 6 Months Ended |
Jun. 30, 2017 | |
Buildings and Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment useful life | 10 years |
Buildings and Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment useful life | 30 years |
Machinery and Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment useful life | 3 years |
Machinery and Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment useful life | 10 years |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 7,104 | $ 6,834 | |
Work in progress | 352 | 0 | |
Finished goods | 8,309 | 6,284 | |
Reserve | (1,328) | (410) | |
Total | $ 14,437 | $ 12,708 | [1] |
[1] | Derived from the audited December 31, 2016 financial statements |
Property, Plant and Equipment34
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment | $ 52,530 | $ 32,851 | |
Less accumulated depreciation and amortization | (7,458) | (6,636) | |
Property, plant and equipment, net | 45,072 | 26,215 | [1] |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment | 257 | 257 | |
Building and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment | 8,535 | 8,515 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment | 11,535 | 8,583 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property plant and equipment | $ 32,203 | $ 15,496 | |
[1] | Derived from the audited December 31, 2016 financial statements |
Property, Plant and Equipment35
Property, Plant and Equipment (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 822 | $ 396 | ||
Interest costs capitalized | $ 741 | $ 75 | $ 1,227 | $ 98 |
Convertible 3.75% Senior Note36
Convertible 3.75% Senior Notes (Details Textual) - USD ($) | Dec. 22, 2014 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 16, 2014 |
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 2,700,000 | $ 3,200,000 | ||
Qualified Institutional Buyers | ||||
Debt Instrument [Line Items] | ||||
Face amount of the Notes | $ 18,750,000 | $ 125,000,000 | ||
Convertible Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 3.75% | 3.75% | ||
Net proceeds from sale of the Notes | 139,000,000 | |||
Underwriting fees and other related expenses | $ 4,800,000 | |||
Accrued interest | $ 200,000 | |||
Conversion price (in dollars per share) | $ 11.29 | |||
Initial conversion rate per $1,000 principal (in shares) | 88.5716 | |||
Conversion conditions, stock price (greater than) | 130.00% | |||
Conversion conditions, trading price (less than) | 98.00% | |||
Remaining term of the debt | 2 years 6 months |
Convertible 3.75% Senior Note37
Convertible 3.75% Senior Notes (Details) - Convertible Notes Payable - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Face amount of the Notes | $ 143,750,000 | $ 143,750,000 |
Unamortized discount | (24,977,000) | (29,160,000) |
Debt issuance costs | (2,743,000) | (3,199,000) |
Carrying amount of the Notes | $ 116,030,000 | $ 111,391,000 |
Convertible 3.75% Senior Note38
Convertible 3.75% Senior Notes (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | [1] | |
Debt Instrument [Line Items] | ||||||
Debt discount amortization | $ 4,183 | $ 3,678 | ||||
Amortization of deferred financing costs | 456 | 400 | ||||
Convertible Notes Payable | ||||||
Debt Instrument [Line Items] | ||||||
Interest Expense at 3.75% coupon rate | $ 1,347 | $ 1,348 | 2,695 | 2,695 | ||
Debt discount amortization | 2,126 | 1,868 | 4,183 | 3,677 | ||
Amortization of deferred financing costs | 232 | 204 | 456 | 401 | ||
Total interest expense | $ 3,705 | $ 3,420 | $ 7,334 | $ 6,773 | ||
Stated interest rate | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | |
[1] | Derived from the audited December 31, 2016 financial statements |
Goodwill and Intangible Asset39
Goodwill and Intangible Assets (Details Textual) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment losses, goodwill | $ 0 |
Goodwill and Intangible Asset40
Goodwill and Intangible Assets (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($) | ||
Goodwill [Roll Forward] | ||
Goodwill beginning balance | $ 446 | [1] |
Foreign currency translation | 10 | |
Goodwill ending balance | $ 456 | |
[1] | Derived from the audited December 31, 2016 financial statements |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, accumulated amortization | $ (4,923) | $ (3,527) | |
Finite-lived intangible assets, net carrying amount | 55,064 | 52,465 | [1] |
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets gross carrying amount | 59,987 | 55,992 | |
Intangible assets net carrying amount | 55,064 | 52,465 | |
In process research and development (IPR&D) | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | 17,630 | 17,024 | |
Trademarks and Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross carrying amount | 38,687 | 35,403 | |
Finite-lived intangible assets, accumulated amortization | (4,338) | (3,123) | |
Finite-lived intangible assets, net carrying amount | $ 34,349 | $ 32,280 | |
Weighted average remaining amortization period | 13 years 3 months 18 days | 13 years 9 months 18 days | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross carrying amount | $ 3,670 | $ 3,565 | |
Finite-lived intangible assets, accumulated amortization | (585) | (404) | |
Finite-lived intangible assets, net carrying amount | $ 3,085 | $ 3,161 | |
Weighted average remaining amortization period | 8 years 4 months 24 days | 8 years 10 months 24 days | |
[1] | Derived from the audited December 31, 2016 financial statements |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | ||
Finite-lived Intangible Assets [Roll Forward] | |||
Finite-lived intangible assets beginning balance | [1] | $ 52,465 | |
Amortization | (1,396) | $ (1,437) | |
Finite-lived intangible assets ending balance | 55,064 | ||
In process research and development (IPR&D) | |||
Indefinite-lived Intangible Assets [Roll Forward] | |||
Indefinite-lived intangible assets, beginning balance | 17,024 | ||
Acquisition | |||
Foreign currency translation | 606 | ||
Indefinite-lived intangible assets, ending balance | 17,630 | ||
Trademarks and Technology | |||
Finite-lived Intangible Assets [Roll Forward] | |||
Finite-lived intangible assets beginning balance | 32,280 | ||
Acquisition | |||
Amortization | (1,216) | ||
Foreign currency translation | 3,285 | ||
Finite-lived intangible assets ending balance | 34,349 | ||
Customer relationships | |||
Finite-lived Intangible Assets [Roll Forward] | |||
Finite-lived intangible assets beginning balance | 3,161 | ||
Acquisition | |||
Amortization | (180) | ||
Foreign currency translation | 104 | ||
Finite-lived intangible assets ending balance | $ 3,085 | ||
[1] | Derived from the audited December 31, 2016 financial statements |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets (Details 3) $ in Thousands | Jun. 30, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2017 (for the remainder of the year) | $ 1,474 |
2,018 | 2,971 |
2,019 | 2,971 |
2,020 | 2,971 |
2,021 | 2,971 |
2,022 | 2,971 |
Thereafter | $ 18,617 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | May 25, 2016 | May 29, 2010 | Apr. 12, 2010 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Stock Based Compensation Details [Line Items] | |||||||||
Common stock, shares outstanding (in shares) | 53,391,948 | 53,391,948 | 53,148,441 | [1] | |||||
Weighted-average grant-date fair value (in dollars per share) | $ 3.45 | $ 3.41 | |||||||
Unrecognized compensation costs | $ 3,600 | $ 3,600 | |||||||
Employee Stock Option | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Number of Options Issued (in shares) | 464,895 | ||||||||
Number of Options Forfeited (in shares) | 68,585 | ||||||||
Shares of common stock options outstanding (in shares) | 4,330,113 | 4,330,113 | 4,105,369 | ||||||
Restricted Stock | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Unrecognized compensation costs | $ 1,300 | $ 1,300 | |||||||
Compensation expense | $ 245 | $ 192 | $ 468 | $ 372 | |||||
Restricted Stock | Minimum | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Vesting period | 1 year | ||||||||
Restricted Stock | Maximum | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Vesting period | 3 years | ||||||||
Director Stock Option Plan - 1999 | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares approved and authorized (in shares) | 1,975,000 | 1,975,000 | |||||||
Number of Options Issued (in shares) | 2,634,798 | ||||||||
Number of Options Forfeited (in shares) | 807,782 | ||||||||
Vesting period | 1 year | ||||||||
Maximum term | 10 years | ||||||||
Shares of common stock options outstanding (in shares) | 500,000 | 500,000 | |||||||
Director Stock Option Plan - 1999 | Employee Stock Option | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares available for grant (in shares) | 147,984 | 147,984 | |||||||
1999 Stock Incentive Plan | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares approved and authorized (in shares) | 3,200,000 | 3,200,000 | |||||||
Number of Options Issued (in shares) | 2,892,500 | ||||||||
Vesting period | 4 years | ||||||||
Maximum term | 10 years | ||||||||
FMV common stock options granted (as a percent) | 100.00% | ||||||||
Service period | 1 year | ||||||||
Plan 2,009 | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares approved and authorized (in shares) | 5,000,000 | ||||||||
Shares of common stock options outstanding (in shares) | 3,163,968 | 3,163,968 | |||||||
Additional shares authorized (in shares) | 2,000,000 | ||||||||
Maximum number of shares to any individual (in shares) | 1,000,000 | ||||||||
Common stock, shares outstanding (in shares) | 1,413,687 | 1,413,687 | |||||||
Plan 2009 | Employee Stock Option | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares available for grant (in shares) | 123,718 | 123,718 | |||||||
Plan 2009 | Restricted Stock | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares of common stock options outstanding (in shares) | 107,959 | 107,959 | |||||||
Plan 2,016 | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares approved and authorized (in shares) | 2,000,000 | ||||||||
Shares of common stock options outstanding (in shares) | 20,000 | 20,000 | |||||||
Shares available for grant (in shares) | 1,501,019 | 1,501,019 | |||||||
Maximum number of shares to any individual (in shares) | 1,000,000 | ||||||||
Plan 2016 | Common Stock | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares of common stock options outstanding (in shares) | 666,145 | 666,145 | |||||||
Plan 2016 | Restricted Stock | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
RSUs outstanding (in shares) | 84,538 | 84,538 | |||||||
Plan 2016, Plan 2009 And Director Plan | Employee Stock Option | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Shares of common stock options outstanding (in shares) | 4,330,113 | 4,330,113 | |||||||
Director Plan And The 2009 Plan | |||||||||
Stock Based Compensation Details [Line Items] | |||||||||
Intrinsic value of options outstanding | $ 18,300 | $ 18,300 | |||||||
Intrinsic value of options exercisable | $ 16,100 | $ 16,100 | |||||||
[1] | Derived from the audited December 31, 2016 financial statements |
Stock-Based Compensation (Det45
Stock-Based Compensation (Details) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Stock Based Compensation [Line Items] | ||
Expected dividends | 0.00% | 0.00% |
Risk-free rate | 1.55% | 1.13% |
Minimum | ||
Stock Based Compensation [Line Items] | ||
Expected volatility | 58.00% | 68.00% |
Expected term (in years) | 3 years 2 months 12 days | 3 years 1 month 6 days |
Maximum | ||
Stock Based Compensation [Line Items] | ||
Expected volatility | 69.70% | 70.40% |
Expected term (in years) | 3 years 3 months 18 days | 3 years 3 months 18 days |
Stock-Based Compensation (Det46
Stock-Based Compensation (Details 1) - Employee Stock Option | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of Options | |
Number of Options Outstanding, Balance Beginning (in shares) | shares | 4,105,369 |
Number of Options Issued (in shares) | shares | 464,895 |
Number of Options Exercised (in shares) | shares | (171,566) |
Number of Options Forfeited (in shares) | shares | (68,585) |
Number of Options Expired (in shares) | shares | 0 |
Number of Options Outstanding, Balance Ending (in shares) | shares | 4,330,113 |
Number of Options Exercisable (in shares) | shares | 2,949,806 |
Weighted Average Exercise Price | |
Shares Outstanding Exercise Price, Balance Beginning (in dollars per share) | $ / shares | $ 4.76 |
Issued, Exercise Price (in dollars per share) | $ / shares | 7.31 |
Exercised, Exercise Price (in dollars per share) | $ / shares | 1.56 |
Forfeited, Exercise Price (in dollars per share) | $ / shares | 7.28 |
Expired, Exercise Price (in dollars per share) | $ / shares | 0 |
Shares Outstanding Exercise Price, Balance Ending (in dollars per share) | $ / shares | 5.12 |
Exercisable, Exercise Price (in dollars per share) | $ / shares | $ 3.87 |
Stock-Based Compensation (Det47
Stock-Based Compensation (Details 2) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Stock Options Outstanding (in shares) | shares | 4,330,113 |
Weighted Average Exercise Price (in dollars per share) | $ 5.12 |
Weighted Average Remaining Contractual Life | 6 years 9 months |
Stock Options Exercisable (in shares) | shares | 2,949,806 |
Weighted Average Exercise Price (in dollars per share) | $ 3.87 |
$0.79 - $1.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 0.79 |
Exercise Price Range, Upper Range Limit (in dollars per share) | $ 1 |
Stock Options Outstanding (in shares) | shares | 25,000 |
Weighted Average Exercise Price (in dollars per share) | $ 0.79 |
Weighted Average Remaining Contractual Life | 2 years 6 months 4 days |
Stock Options Exercisable (in shares) | shares | 25,000 |
Weighted Average Exercise Price (in dollars per share) | $ 0.79 |
$1.01 - $1.50 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 1.01 |
Exercise Price Range, Upper Range Limit (in dollars per share) | $ 1.50 |
Stock Options Outstanding (in shares) | shares | 1,721,000 |
Weighted Average Exercise Price (in dollars per share) | $ 1.06 |
Weighted Average Remaining Contractual Life | 4 years 7 months 21 days |
Stock Options Exercisable (in shares) | shares | 1,721,000 |
Weighted Average Exercise Price (in dollars per share) | $ 1.06 |
$1.51 - $10.67 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 1.51 |
Exercise Price Range, Upper Range Limit (in dollars per share) | $ 10.67 |
Stock Options Outstanding (in shares) | shares | 2,584,113 |
Weighted Average Exercise Price (in dollars per share) | $ 7.86 |
Weighted Average Remaining Contractual Life | 8 years 2 months 12 days |
Stock Options Exercisable (in shares) | shares | 1,203,806 |
Weighted Average Exercise Price (in dollars per share) | $ 7.94 |
Stock-Based Compensation (Det48
Stock-Based Compensation (Details 3) - Restricted Stock Units (RSUs) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested balance at beginning of period (in shares) | shares | 179,900 |
Shares granted (in shares) | shares | 84,538 |
Shares vested (in shares) | shares | (71,941) |
Shares forfeited (in shares) | shares | 0 |
Non-vested balance at end of period (in shares) | shares | 192,497 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted Average Exercise Price, Non-vested Balance Beginning (in dollars per share) | $ / shares | $ 9.35 |
Shares granted - Weighted Average Exercise Price (in dollars per share) | $ / shares | 7.28 |
Shares vested - Weighted Average Exercise Price (in dollars per share) | $ / shares | 9.82 |
Shares forfeited - Weighted Average Exercise Price (in dollars per share) | $ / shares | 0 |
Weighted Average Exercise Price, Non-vested Balance Ending (in dollars per share) | $ / shares | $ 8.26 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) $ in Millions | 6 Months Ended | |
Jun. 30, 2017affiliate | Dec. 31, 2016USD ($) | |
Income Tax Examination [Line Items] | ||
Number of foreign affiliates subject to tax in Estonia | affiliate | 1 | |
Tax rate for earnings and profits as they are generated | 0.00% | |
Tax rate for earnings and profits that are distributed to shareholders | 20.00% | |
Tax rate applied to dividends | 20.00% | |
Operating loss carryforwards | $ 34.6 | |
Change in ownership percent | 50.00% | |
Ownership change (greater than) | 5.00% | |
Not Subject to Limitations | Subsequent To Change Date In 2010 | ||
Income Tax Examination [Line Items] | ||
Operating loss carryforwards | $ 15.3 | |
Subject to Limitations | Minimum | ||
Income Tax Examination [Line Items] | ||
Operating loss carryforwards | 1 | |
Subject to Limitations | Maximum | ||
Income Tax Examination [Line Items] | ||
Operating loss carryforwards | $ 2.3 |
Legal and U.S. Regulatory Pro50
Legal and U.S. Regulatory Proceedings (Details) | 6 Months Ended |
Jun. 30, 2017lawsuit | |
Commitments and Contingencies Disclosure [Abstract] | |
Number of putative class action antitrust lawsuits | 11 |