Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 07, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | LIGAND PHARMACEUTICALS INC | |
Entity Central Index Key | 886,163 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 19,925,754 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 93,770 | $ 160,203 |
Short-term investments | 93,528 | 7,133 |
Accounts receivable | 5,517 | 12,634 |
Deferred income taxes | 7,517 | 0 |
Note receivable from Viking Therapeutics | 5,547 | 0 |
Inventory | 1,221 | 269 |
Capitalized expenses (Viking IPO) | 0 | 2,268 |
Current debt issuance costs | 847 | 809 |
Restricted investments | 600 | 1,261 |
Other current assets | 1,777 | 1,842 |
Total current assets | 210,324 | 186,419 |
Deferred income taxes | 206,423 | 0 |
Investment in Viking Therapeutics | 31,826 | 0 |
Intangible assets, net | 48,941 | 50,723 |
Goodwill | 12,238 | 12,238 |
Commercial license rights | 8,598 | 4,568 |
Long-term debt issuance costs | 2,747 | 3,388 |
Property and equipment, net | 355 | 486 |
Other assets | 248 | 207 |
Total assets | 521,700 | 258,029 |
Current liabilities: | ||
Accounts payable | 3,143 | 7,698 |
Accrued liabilities | 4,156 | 4,866 |
Current contingent liabilities | 7,620 | 6,796 |
Current lease exit obligations | 1,300 | 2,356 |
Other current liabilities | 34 | 1,063 |
Total current liabilities | 16,253 | 22,779 |
Long-term debt, net | 202,951 | 195,908 |
Long-term contingent liabilities | 7,589 | 8,353 |
Long-term lease exit obligations | 0 | 934 |
Deferred income taxes | 0 | 2,792 |
Long-term deferred revenue, net | 2,083 | 2,085 |
Other long-term liabilities | 643 | 770 |
Total liabilities | $ 229,519 | $ 233,621 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 33,333,333 shares authorized; 19,918,334 and 19,575,150 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively | $ 20 | $ 20 |
Additional paid-in capital | 697,061 | 680,660 |
Accumulated other comprehensive income | 5,558 | 4,953 |
Accumulated deficit | (410,458) | (659,315) |
Total stockholders' equity attributable to Ligand Pharmaceuticals | 292,181 | 26,318 |
Noncontrolling interests | 0 | (1,910) |
Total liabilities and stockholders' equity | $ 521,700 | $ 258,029 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 33,333,333 | 33,333,333 |
Common stock, shares issued | 19,918,334 | 19,575,150 |
Common stock, shares outstanding | 19,918,334 | 19,575,150 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Royalties | $ 9,755 | $ 7,482 | $ 26,648 | $ 20,573 |
Material sales | 6,046 | 6,334 | 20,456 | 15,525 |
Collaborative research and development and other revenues | 1,900 | 1,157 | 3,618 | 5,441 |
Total revenues | 17,701 | 14,973 | 50,722 | 41,539 |
Operating costs and expenses: | ||||
Cost of goods | 1,250 | 1,496 | 4,923 | 5,133 |
Research and development | 2,538 | 3,021 | 10,510 | 8,842 |
General and administrative | 4,971 | 6,742 | 18,190 | 17,053 |
Lease exit and termination costs | 345 | 182 | 786 | 522 |
Total operating costs and expenses | 9,104 | 11,441 | 34,409 | 31,550 |
Income from operations | 8,597 | 3,532 | 16,313 | 9,989 |
Other (expense) income: | ||||
Interest expense, net | (2,930) | (1,516) | (8,875) | (1,946) |
Decrease (increase) in contingent liabilities | 2,301 | (1,620) | (4,976) | (4,880) |
Gain on deconsolidation of Viking Therapeutics | 0 | 0 | 28,190 | 0 |
Equity in net losses from Viking Therapeutics | (2,169) | 0 | (3,040) | 0 |
Other, net | 1,485 | 505 | 1,889 | 1,128 |
Total other (expense) income, net | (1,313) | (2,631) | 13,188 | (5,698) |
Income before income taxes | 7,284 | 901 | 29,501 | 4,291 |
Income tax benefit (expense) | 217,255 | (124) | 216,976 | (131) |
Net income including noncontrolling interests: | 224,539 | 777 | 246,477 | 4,160 |
Less: Net loss attributable to noncontrolling interests | 0 | (503) | (2,380) | (809) |
Net income | $ 224,539 | $ 1,280 | $ 248,857 | $ 4,969 |
Per share amounts attributable to Ligand common shareholders: | ||||
Basic net income per share (in usd per share) | $ 11.29 | $ 0.06 | $ 12.61 | $ 0.24 |
Diluted net income per share (in usd per share) | $ 10.46 | $ 0.06 | $ 11.78 | $ 0.23 |
Weighted average number of common shares-basic (in shares) | 19,886,877 | 20,417,187 | 19,741,081 | 20,584,469 |
Weighted average number of common shares-diluted (in shares) | 21,459,648 | 21,345,311 | 21,121,972 | 21,632,521 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income: | $ 224,539 | $ 1,280 | $ 248,857 | $ 4,969 |
Unrealized net (loss) gain on available-for-sale securities, net of tax | (3,059) | (1,224) | 1,978 | 1,870 |
Less: Reclassification of net realized (gains) losses included in net income, net of tax | (606) | (274) | (1,591) | 1,241 |
Comprehensive income (loss) | $ 220,874 | $ (218) | $ 249,244 | $ 8,080 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities | ||
Net income including noncontrolling interests | $ 246,477 | $ 4,160 |
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: | ||
Non-cash change in estimated fair value of contingent liabilities | 4,976 | 4,880 |
Realized gain on sale of short-term investment | (1,988) | (1,241) |
Gain on write-off of assets | 0 | (16) |
Depreciation and amortization | 1,940 | 1,998 |
Amortization of discount on investments, net | 73 | 0 |
Amortization of debt discount and issuance fees | 7,646 | 1,223 |
Stock-based compensation | 9,511 | 8,795 |
Non-cash upfront fee | 0 | (1,211) |
Deferred income taxes | (216,989) | 116 |
Accretion of note payable | 16 | 225 |
Gain on deconsolidation of Viking Therapeutics, Inc. | (28,190) | 0 |
Loss on equity investment in Viking Therapeutics, Inc. | 3,040 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 7,142 | (3,590) |
Inventory | (158) | 321 |
Other current assets | (438) | (615) |
Other long-term assets | (546) | (1,245) |
Accounts payable and accrued liabilities | (4,993) | (3,478) |
Restricted investments | 661 | 0 |
Deferred revenue | (118) | (2) |
Net cash provided by operating activities | 28,062 | 10,320 |
Investing activities | ||
Purchase of commercial license rights | (4,030) | 0 |
Payments to CVR holders and other contingency payments | (4,941) | (1,936) |
Purchases of property and equipment | (27) | 0 |
Purchase of short-term investments | (111,788) | 0 |
Purchase of Viking common stock | (9,000) | 0 |
Proceeds from sale of property and equipment | 1 | 124 |
Reduction of cash due to deconsolidation of Viking Therapeutics, Inc. | (247) | 0 |
Proceeds from sale of short-term investments | 5,680 | 1,496 |
Proceeds from maturity of short-term investments | 22,967 | 0 |
Net cash used in investing activities | (101,385) | (316) |
Financing activities | ||
Repayment of debt | 0 | (9,364) |
Gross proceeds from issuance of 2019 Convertible Senior Notes | 0 | 245,000 |
Payment of debt issuance costs | 0 | (5,711) |
Proceeds from issuance of warrants | 0 | 11,637 |
Purchase of convertible bond hedge | 0 | (48,143) |
Net proceeds from stock option exercises and ESPP | 7,379 | 4,124 |
Share repurchase | (489) | (38,523) |
Net cash provided by financing activities | 6,890 | 159,020 |
Net (decrease) increase in cash and cash equivalents | (66,433) | 169,024 |
Cash and cash equivalents at beginning of period | 160,203 | 11,639 |
Cash and cash equivalents at end of period | 93,770 | 180,663 |
Supplemental disclosure of cash flow information | ||
Interest paid | 1,822 | 494 |
Taxes paid | 19 | 3 |
Supplemental schedule of non-cash activity | ||
Unrealized gain on AFS investments | $ 3,082 | $ 1,870 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Business Ligand Pharmaceuticals Incorporated (including its subsidiaries, referred to as the "Company" or "Ligand") is a biopharmaceutical company with a business model based on developing or acquiring assets which generate royalty, milestone, or other passive revenue for Ligand and using a lean corporate cost structure. The Company operates in the United States in two business segments: biopharmaceutical asset development and licensing, and manufacturing and licensing Captisol, a formulation technology platform. Principles of Consolidation The accompanying consolidated financial statements include Ligand and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation The Company’s accompanying unaudited condensed consolidated financial statements as of September 30, 2015 and for the three and nine months ended September 30, 2015 and 2014 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company and its subsidiaries, have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 . These financial statements should be read in conjunction with the consolidated financial statements and notes therein included in the Company’s annual report on Form 10-K for the year ended December 31, 2014 . Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results may differ from those estimates. Revision of Immaterial Error During the three and nine months ended September 30, 2015 , a clerical error was identified in the calculation of the projections used in the June 30, 2015 and September 30, 2015 valuation of contingent liabilities related to Cydex contingent value right holders. The error in the June 30, 2015 projection resulted in an understatement of short-term contingent liabilities of $0.6 million as of June 30, 2015, and an overstatement of net income of $0.6 million , or $0.03 per share for the three and six months ended June 30, 2015, respectively. No other error was identified in the other interim period(s) in 2015 or 2014 based on the Company's review in those periods. The impact of correcting the error resulted in an understatement of net income of $0.6 million , or $0.03 per share for the three months ended September 30, 2015 . Based on a qualitative and quantitative analysis of the error, the Company concluded that it is immaterial to the interim condensed consolidated financial statements for the three and six months ended June 30, 2015 and had no effect on the trend of financial results. As such, the Company has corrected the error in the condensed consolidated financial statements for the period ended September 30, 2015 . Income Per Share Basic income per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed by dividing net income by the weighted-average number of common shares and common stock equivalents of all dilutive securities calculated using the treasury stock method and the if-converted method. The total number of potentially dilutive securities including stock options and warrants excluded from the computation of diluted income per share because their inclusion would have been anti-dilutive was 3.3 million and 5.0 million , as of September 30, 2015 and 2014 , respectively. The following table presents the computation of basic and diluted net income per share for the periods indicated (in thousands, except per share amounts): Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Net income $ 224,539 $ 1,280 $ 248,857 $ 4,969 Shares used to compute basic income per share 19,886,877 20,417,187 19,741,081 20,584,469 Dilutive potential common shares: Restricted stock 63,324 22,531 55,899 37,387 Stock options 763,856 905,593 922,051 1,010,665 0.75% Convertible Senior Notes, Due 2019 745,591 — 402,941 — Shares used to compute diluted income per share 21,459,648 21,345,311 21,121,972 21,632,521 Basic net income per share $ 11.29 $ 0.06 $ 12.61 $ 0.24 Diluted net income per share $ 10.46 $ 0.06 $ 11.78 $ 0.23 Cash Equivalents Cash equivalents consist of all investments with maturities of three months or less from the date of acquisition. Short-term Investments Short-term investments primarily consist of investments in debt securities that have effective maturities greater than three months and less than twelve months from the date of acquisition. The Company classifies its short-term investments as "available-for-sale". Such investments are carried at fair value, with unrealized gains and losses included in the statement of comprehensive income (loss). The Company determines the cost of investments based on the specific identification method. Restricted Investments Restricted investments consist of certificates of deposit held with a financial institution as collateral under a facility lease and third-party service provider arrangements. The following table summarizes the various investment categories at September 30, 2015 and December 31, 2014 (in thousands): Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value September 30, 2015 Short-term investments Bank deposits $ 38,712 $ 4 $ (1 ) $ 38,715 Corporate bonds 29,347 2 (5 ) 29,344 Commercial paper 2,000 — — 2,000 Asset backed securities 15,995 — (4 ) 15,991 Corporate equity securities 1,917 5,561 — 7,478 Restricted investments 600 — — 600 $ 88,571 $ 5,567 $ (10 ) $ 94,128 December 31, 2014 Short-term investments Corporate equity securities $ 2,179 $ 4,954 $ — $ 7,133 Restricted investments 1,261 — — 1,261 $ 3,440 $ 4,954 $ — $ 8,394 Inventory Inventory, which consists of finished goods, is stated at the lower of cost or market value. The Company determines cost using the first-in, first-out method. Inventory levels are analyzed periodically and written down to its net realizable value if it has become obsolete, has a cost basis in excess of its expected net realizable value or is in excess of expected requirements. There were no write downs related to obsolete inventory recorded for the three and nine months ended September 30, 2015 and 2014 . Goodwill and Other Identifiable Intangible Assets Goodwill and other identifiable intangible assets consist of the following (in thousands): September 30, December 31, 2015 2014 Indefinite lived intangible assets Acquired in-process research and development ("IPR&D") $ 12,556 $ 12,556 Goodwill 12,238 12,238 Definite lived intangible assets Complete technology 15,267 15,267 Less: Accumulated amortization (3,571 ) (2,999 ) Trade name 2,642 2,642 Less: Accumulated amortization (619 ) (519 ) Customer relationships 29,600 29,600 Less: Accumulated amortization (6,934 ) (5,824 ) Total goodwill and other identifiable intangible assets, net $ 61,179 $ 62,961 Amortization of definite-lived intangible assets is computed using the straight-line method over the estimated useful life of the asset of 20 years . Amortization expense of $0.6 million and $1.8 million was recognized for each of the three and nine months ended September 30, 2015 and 2014 , respectively. Estimated amortization expense for the years ending December 31, 2015 through 2019 is $2.4 million per year. For each of the three and nine months ended September 30, 2015 and 2014, there was no impairment of IPR&D or goodwill. Commercial License Rights Commercial license rights represent a portfolio of future milestone and royalty payment rights acquired from Selexis SA ("Selexis") in April 2013 and April 2015. Individual commercial license rights acquired under the agreement are carried at allocated cost and approximate fair value. The carrying value of the license rights will be reduced on a pro-rata basis as revenue is realized over the term of the agreement. Declines in the fair value of individual license rights below their carrying value that are deemed to be other than temporary are reflected in earnings in the period such determination is made. As of September 30, 2015 , management does not believe there have been any events or circumstances indicating that the carrying amount of its commercial license rights may not be recoverable. Property and Equipment Property and equipment is stated at cost and consists of the following (in thousands): September 30, December 31, 2015 2014 Lab and office equipment $ 2,182 $ 2,232 Leasehold improvements 273 273 Computer equipment and software 632 624 3,087 3,129 Less accumulated depreciation and amortization (2,732 ) (2,643 ) Total property and equipment, net $ 355 $ 486 Depreciation of equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from three to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives or the related lease term. Depreciation expense of $0.1 million and $0.2 million was recognized for each of the three and nine months ended September 30, 2015 and 2014 , respectively, which is included in operating expenses. Other Current Assets Other current assets consist of the following (in thousands): September 30, December 31, 2015 2014 Prepaid expenses $ 1,494 $ 835 Other receivables 283 685 Co-promote receivable — 322 Total other current assets $ 1,777 $ 1,842 Accrued Liabilities Accrued liabilities consist of the following (in thousands): September 30, December 31, 2015 2014 Compensation $ 1,485 $ 1,708 Professional fees 443 459 Amounts owed to former licensees 956 925 Royalties owed to third parties 798 705 Other 474 1,069 Total accrued liabilities $ 4,156 $ 4,866 Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): September 30, December 31, 2015 2014 Deposits $ 319 $ 411 Deferred rent 291 327 Other 33 32 Total other long-term liabilities $ 643 $ 770 Contingent Liabilities In connection with the Company’s acquisition of CyDex in January 2011, the Company recorded a contingent liability, for amounts potentially due to holders of the CyDex contingent value rights ("CVRs") and former license holders. The liability is periodically assessed based on events and circumstances related to the underlying milestones, royalties and material sales. Any change in fair value is recorded in the Company’s consolidated statement of operations. The carrying amount of the liability may fluctuate significantly and actual amounts paid under the CVR agreements may be materially different than the carrying amount of the liability. The fair value of the liability at September 30, 2015 and December 31, 2014 was $10.5 million and $11.5 million , respectively. The Company recorded a fair-value adjustment to increase the liability by $0.9 million and $3.1 million for the three and nine months ended September 30, 2015 , respectively. There was a revenue-sharing payment of $0.8 million and $3.9 million to CyDex CVR holders during the three and nine months ended September 30, 2015 , respectively. For the three and nine months ended September 30, 2014 , the Company recorded a fair-value adjustment to increase the liability by $2.8 million and $5.6 million , respectively. There was no revenue sharing payment made for the three months ended September 30, 2014 and a revenue-sharing payment of $1.6 million was made during the nine months ended September 30, 2014 . In connection with the Company’s acquisition of Metabasis Therapeutics, Inc. ("Metabasis") in January 2010 , the Company issued to Metabasis stockholders four tradable CVRs, one CVR from each of four respective series of CVR, for each Metabasis share. The CVRs will entitle Metabasis stockholders to cash payments as frequently as every six months as cash is received by the Company from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. The fair values of the CVRs are remeasured at each reporting date through the term of the related agreement. Any change in fair value is recorded in the Company’s consolidated statement of operations. The carrying amount of the liability may fluctuate significantly based upon quoted market prices and actual amounts paid under the agreements may be materially different than the carrying amount of the liability. The fair value of the liability was estimated to be $4.7 million and $3.7 million as of September 30, 2015 and December 31, 2014 , respectively. The Company recorded a decrease in the liability for Metabasis-related CVRs of $3.2 million and an increase of $1.9 million for the three and nine months ended September 30, 2015 , respectively. The Company recorded a decrease in the liability for Metabasis-related CVRs of $1.2 million and an increase in the liability of $0.7 million for the three and nine months ended September 30, 2014 , respectively. The Company paid Metabasis CVR holders $0.5 million and $0.8 million for the three and nine months ended September 30, 2015 , respectively. Revenue Recognition Royalties on sales of products commercialized by the Company’s partners are recognized in the quarter reported to Ligand by the respective partner. Generally, the Company receives royalty reports from its licensees approximately one quarter in arrears due to the fact that its agreements require partners to report product sales between 30 and 60 days after the end of the quarter. The Company recognizes royalty revenues when it can reliably estimate such amounts and collectability is reasonably assured. Under this accounting policy, the royalty revenues reported are not based upon estimates and such royalty revenues are typically reported to the Company by its partners in the same period in which payment is received. Revenue from material sales of Captisol is recognized upon transfer of title, which normally passes upon shipment to the customer, provided all other revenue recognition criteria have been met. All product returns are subject to the Company's credit and exchange policy, approval by the Company and a 20% restocking fee. To date, product returns by customers have not been material to net material sales in any related period. The Company records revenue net of product returns, if any, and sales tax collected and remitted to government authorities during the period. The Company analyzes its revenue arrangements and other agreements to determine whether there are multiple elements that should be separated and accounted for individually or as a single unit of accounting. For multiple element contracts, arrangement consideration is allocated at the inception of the arrangement to all deliverables on the basis of relative selling price, using a hierarchy to determine selling price. Management first considers vendor-specific objective evidence ("VSOE"), then third-party evidence ("TPE") and if neither VSOE nor TPE exist, the Company uses its best estimate of selling price. Many of the Company's revenue arrangements for Captisol involve a license agreement with the supply of manufactured Captisol product. Licenses may be granted to pharmaceutical companies for the use of Captisol product in the development of pharmaceutical compounds. The supply of the Captisol product may be for all phases of clinical trials and through commercial availability of the host drug or may be limited to certain phases of the clinical trial process. Management believes that the Company's licenses have stand-alone value at the outset of an arrangement because the customer obtains the right to use Captisol in its formulations without any additional input by the Company. Other nonrefundable, upfront license fees are recognized as revenue upon delivery of the license, if the license is determined to have standalone value that is not dependent on any future performance by the Company under the applicable collaboration agreement. Nonrefundable contingent event-based payments are recognized as revenue when the contingent event is met, which is usually the earlier of when payments are received or collections are assured, provided that it does not require future performance by the Company. The Company occasionally has sub-license obligations related to arrangements for which it receives license fees, milestones and royalties. The Company evaluates the determination of gross versus net reporting based on each individual agreement. Sales-based contingent payments from partners are accounted for similarly to royalties, with revenue recognized upon achievement of the sales targets assuming all other revenue recognition criteria for milestones are met. Revenue from development and regulatory milestones is recognized when earned, as evidenced by written acknowledgement from the collaborator, provided that (1) the milestone event is substantive, its achievability was not reasonably assured at the inception of the agreement, and the Company has no further performance obligations relating to that event, and (2) collectability is reasonably assured. If these criteria are not met, the milestone payment is recognized over the remaining period of the Company’s performance obligations under the arrangement. Revenue from research funding under our collaboration agreements is earned and recognized on a percentage-of completion basis as research hours are incurred in accordance with the provisions of each agreement. In May 2014, the Company entered into a licensing agreement and research collaboration with Omthera Pharmaceuticals, a wholly-owned subsidiary of AstraZeneca. The research collaboration targets the development of novel products that utilize the proprietary Ligand developed LTP TECHNOLOGY™ to improve lipid-lowering activity of certain omega-3 fatty acids. The Company is eligible to receive compensation and reimbursement from Omthera for internal research efforts and external costs incurred, as well as development and regulatory event-based payments. The completion of a proof of concept under the development program would trigger a $1.0 million payment which is determined to be a milestone under the milestone method of accounting as (1) it is an event that can only be achieved in part on the Company's past performance, (2) there was substantive uncertainty at the date the arrangement was entered into that the event would be achieved and (3) it results in additional payment being due to the Company. None of the other event-based payments represents a milestone under the milestone method of accounting. The Company received $0.5 million from Omthera in 2014 under the agreement and recognized $0.4 million as collaborative revenue based on the percentage of completion of the research program at December 31, 2014. No milestone payment or contingent payment was received in 2014 or in the nine months ended September 30, 2015. Stock-Based Compensation Stock-based compensation expense for awards to employees and non-employee directors is recognized on a straight-line basis over the vesting period until the last tranche vests. The following table summarizes stock-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands): Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Stock-based compensation expense as a component of: Research and development expenses $ 957 $ 1,169 $ 3,131 $ 2,814 General and administrative expenses 1,879 2,533 6,380 5,981 $ 2,836 $ 3,702 $ 9,511 $ 8,795 The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions: Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Risk-free interest rate 2.0% 1.9% 1.7%-2.0% 1.9% Dividend yield — — — — Expected volatility 50% 67% 50%-58% 68% Expected term 6.5 6.4 6.6 6.4 Forfeiture rate 8.5% 8.6% 8.5% 8.6%-9.7% Income Taxes Income taxes are accounted for under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the consolidated financial statements. The Company provides a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before we are able to realize their benefit. The Company calculates the valuation allowance in accordance with the authoritative guidance relating to income taxes under ASC 740, Income Taxes, which requires an assessment of both positive and negative evidence that is available regarding the reliability of these deferred tax assets, when measuring the need for a valuation allowance. Developing the provision for income taxes requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and, if necessary, any valuation allowances that may be required for deferred tax assets. The Company's judgments and tax strategies are subject to audit by various taxing authorities. While management believes the Company has provided adequately for its income tax liabilities in its consolidated financial statements, adverse determinations by these taxing authorities could have a material adverse effect on the Company's consolidated financial condition and results of operations. Segment Reporting Under ASC 280, Segment Reporting , operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the entity’s chief operating decision maker, in deciding how to allocate resources and in assessing performance. The Company has evaluated this codification and has identified two reportable segments: the development and commercialization of drugs using Captisol technology and the biopharmaceutical company with a business model based on developing or acquiring royalty revenue generating assets and coupling them with a lean corporate cost structure. Variable Interest Entities The Company identifies an entity as a variable interest entity ("VIE") if either: (1) the entity does not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support, or (2) the entity's equity investors lack the essential characteristics of a controlling financial interest. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in any VIE and therefore is the primary beneficiary. If the Company is the primary beneficiary of a VIE, it consolidates the VIE under applicable accounting guidance. If the Company is no longer the primary of a VIE or the entity is no longer considered as a VIE as facts and circumstances changed, it deconsolidates the entity under the applicable accounting guidance. Beginning May 2015, the Company deconsolidated Viking Therapeutics ("Viking") a previously reported VIE, and elected to record its investment in Viking under the equity method of accounting as Viking is no longer considered a VIE and the Company does not have voting control or other elements of control that would require consolidation. The investment is subsequently adjusted for the Company’s share of Viking's operating results, and if applicable, cash contributions and distributions, which is reported on a separate line in our condensed consolidated statement of operations called “Equity in net losses of Viking Therapeutics”. On the condensed consolidated balance sheet, the Company reports its investment in Viking on a separate line in the non-current assets section called “Investment in Viking Therapeutics”. See Note 3, Investment in Viking Therapeutics, Inc. , for additional details. Convertible Debt In August 2014, the Company completed a $245.0 million offering of convertible senior notes, which mature in 2019 and bear interest at 0.75% (the "2019 Convertible Senior Notes"). The Company accounts for the 2019 Convertible Senior Notes by separating the liability and equity components of the instrument in a manner that reflects the Company's nonconvertible debt borrowing rate. As a result, the Company assigned a value to the debt component of the 2019 Convertible Senior Notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in the Company recording the debt instrument at a discount. The Company is amortizing the debt discount over the life of the 2019 Convertible Senior Notes as additional non-cash interest expense utilizing the effective interest method. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers . ASU 2014-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, (5) recognize revenue when (or as) the entity satisfies a performance obligation. Management is currently evaluating the effect the adoption of this standard will have on the Company's financial statements. In February 2015, FASB issued ASU 2015-02 Consolidation (Topic 810): Amendments to the Consolidation Analysis . ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impact of the adoption of ASU 2015-02 on our consolidated financial statements. In April 2015, FASB issued ASU 2015-03, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. This update was issued to simplify the presentation for debt issuance costs. Upon adoption, such costs shall be presented on our consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability and not as a deferred charge presented in Other assets on our consolidated balance sheets. This amendment will be effective for interim and annual periods beginning on January 1, 2016, and is required to be retrospectively adopted. Management expects to change the presentation on our consolidated balance sheets accordingly for all periods impacted upon the required adoption date. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. The Company establishes a three-level hierarchy to prioritize the inputs used in measuring fair value. The levels are described below with level 1 having the highest level input that is significant to the measurement and level 3 having the lowest: Level 1 - Quoted prices in active markets; Level 2 - Inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3 - Unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions. The following table provides a summary of the carrying value of assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2015 (in thousands), and there were no transfers between Level 1 and Level 2 securities during the three and nine months ended September 30, 2015 : Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents (1) $ 62,637 $ — $ 62,637 $ — Short-term investments (2) 95,587 7,543 88,044 — Note receivable Viking Therapeutics, Inc. (3) 5,547 — — 5,547 Total assets $ 163,771 $ 7,543 $ 150,681 $ 5,547 Liabilities: Current contingent liabilities-CyDex (4) $ 5,018 $ — $ — $ 5,018 Current contingent liabilities-Metabasis (5) 2,602 — 2,602 — Long-term contingent liabilities-CyDex (4) 5,469 — — 5,469 Long-term contingent liabilities-Metabasis (5) 2,120 — 2,120 — Liability for amounts owed to former licensees (6) 1,577 1,577 — — Total liabilities $ 16,786 $ 1,577 $ 4,722 $ 10,487 The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2014 (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs * Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents (1) $ 69,261 $ — $ 69,261 $ — Current co-promote termination payments receivable (7) 322 — — 322 Short-term investments (2) 7,133 7,133 — — Total assets $ 76,716 $ 7,133 $ 69,261 $ 322 Liabilities: Current contingent liabilities-CyDex (4) $ 6,796 $ — $ — $ 6,796 Current co-promote termination liability (7) 322 — — 322 Long-term contingent liabilities-Metabasis (5) 3,652 — 3,652 — Long-term contingent liabilities-CyDex (4) 4,701 — — 4,701 Liability for amounts owed to former licensees (6) 773 773 — — Total liabilities $ 16,244 $ 773 $ 3,652 $ 11,819 *Adjusted to correct an error in disclosure that was deemed immaterial to the financial statements taken as a whole. Contingent liabilities related to Metabasis were reclassified from Level 1 to Level 2 as market is deemed inactive. Additionally, certain certificates of deposit with maturities less than 90 days were not previously disclosed in the table above. (1) Highly liquid investments with maturities less than 90 days from the purchase date are recorded as cash equivalents that are classified as Level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. (2) Investments in equity securities, which the Company received as a result of event-based and upfront payments from licensees, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. Short-term investments in marketable securities with maturities greater than 90 days are classified as level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. (3) The fair value of the convertible note receivable from Viking was determined using a probability weighted option pricing model using a lattice methodology. The fair value is subjective and is affected by certain significant input to the valuation model such as the estimated volatility of the common stock, which was estimated to be 50% at September 30, 2015 . Changes in these assumptions may materially affect the fair value estimate. (4) The fair value of the liabilities for CyDex contingent liabilities were determined based on the income approach using a Monte Carlo analysis. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s assumptions regarding revenue volatility, probability of commercialization of products, estimates of timing and probability of achievement of certain revenue thresholds and developmental and regulatory milestones which may be achieved and affect amounts owed to former license holders and CVR holders. Changes in these assumptions can materially affect the fair value estimate. (5) The liability for CVRs for Metabasis are determined using quoted market prices in an inactive market for the underlying CVR. (6) The liability for amounts owed to former licensees are determined using quoted market prices in active markets for the underlying investment received from a partner, a portion of which is owed to former licensees. (7) The co-promote termination payments receivable represents a receivable for future payments to be made by Pfizer related to product sales and is recorded at its fair value. The receivable and liability will remain equal. The fair value is determined based on a valuation model using an income approach. The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex: September 30, 2015 December 31, 2014 Range of annual revenue subject to revenue sharing (1) $20.7 million-$24.6 million $17.2 million-$17.3 million Revenue volatility 25% 25% Average probability of commercialization 88% 81% Sales beta 0.50 0.60 Credit rating B B Equity risk premium 6% 6% (1) Revenue subject to revenue sharing represent management’s estimate of the range of total annual revenue subject to revenue sharing (i.e. annual revenues in excess of $15 million ) through December 31, 2016 , which is the term of the CVR agreement. A reconciliation of the level 3 financial instruments as of September 30, 2015 is as follows (in thousands): Assets: Fair value of level 3 financial instrument assets as of December 31, 2014 $ 322 Assumed payments made by Pfizer or assignee (390 ) Fair value adjustments to co-promote termination liability 68 Viking note receivable 5,547 Fair value of level 3 financial instrument assets as of September 30, 2015 $ 5,547 Liabilities: Fair value of level 3 financial instrument liabilities as of December 31, 2014 $ 11,819 Assumed payments made by Pfizer or assignee (390 ) Payments to CVR and other former license holders (4,074 ) Fair value adjustments to contingent liabilities 3,064 Fair value adjustments to co-promote termination liability 68 Fair value of level 3 financial instrument liabilities as of September 30, 2015 $ 10,487 Other Fair Value Measurements 2019 Convertible Senior Notes In August 2014, the Company issued $245.0 million aggregate principal amount of its 2019 Convertible Senior Notes. The Company uses a quoted market rate in an inactive market, which is classified as a Level 2 input, to estimate the current fair value of its 2019 Convertible Senior Notes. The estimated fair value of the 2019 Senior Convertible Notes was $318.6 million as of September 30, 2015 . The carrying value of the notes does not reflect the market rate. See Note 7 Financing Arrangements for additional information. Viking Therapeutics, Inc. The Company records its investment in Viking under the equity method of accounting. The investment is subsequently adjusted for the Company’s share of Viking's operating results, and if applicable, cash contributions and distributions. See Note 3 Investment in Viking Therapeutics, Inc . for additional information. The market value of the Company's investment in Viking was $28.0 million as of September 30, 2015 . The carrying value of the investment in Viking does not reflect the market value. |
Investment in Viking Therapeuti
Investment in Viking Therapeutics, Inc. | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Investment in Viking Therapeutics, Inc. | Investment in Viking Therapeutics, Inc. Transaction History In May 2014, the Company entered into a Master License Agreement ("MLA") to license rights to five programs to Viking, an unrelated clinical-stage biopharmaceutical company. Upon the consummation of Viking's initial public offering (the "Viking IPO"), Viking agreed to issue to the Company shares of Viking common stock having an aggregate value of approximately $29.2 million . In addition, Viking agreed to pay the Company royalties and milestone payments based on the progression and eventual sale of any products developed under the rights and licenses granted under the MLA. As part of this transaction, the Company extended a $2.5 million loan to Viking under a Loan and Security Agreement ("LSA"). The loan accrues interest at a fixed rate equal to 5% . In April 2015, the Company entered into an amendment to the MLA with Viking (the "MLA Amendment") which among other things, capped the Company’s aggregate ownership of Viking common stock to 49.9% of the Viking capital stock outstanding following the closing of the Viking IPO. Additionally, the Company and Viking entered into an amendment to the LSA (the "LSA Amendment"), pursuant to which, the loans were no longer due and payable upon completion of the Viking IPO, but were extended to become due upon the earlier of: (i) a certain private qualified financing transaction with aggregate net proceeds to Viking of at least $20.0 million or (ii) a public offering subsequent to the Viking IPO with aggregate net proceeds to Viking of at least $20.0 million or (iii) one year after the closing of the Viking IPO. The Company may elect to receive equity of Viking common stock or cash equal to 200% of the principal amount plus accrued and unpaid interest. As of September 30, 2015 , the aggregate fair market value of the note receivable was $5.5 million . In May 2015, Viking completed the Viking IPO selling 3.5 million shares of its common stock at an initial offering price of $8.00 per share for an aggregate offering price of $27.6 million before underwriting discounts and commissions. In connection with the Viking IPO, the Company purchased 1.1 million shares of Viking common stock for an aggregate price of $9.0 million at the initial public offering price. In addition, pursuant to the amended MLA Amendment, the Company received approximately 3.7 million shares of Viking common stock having an aggregate value of approximately $29.2 million based on the initial public offering price of $8.00 per share. As a result, the Company including its related parties owned an aggregate of 48.8% of the outstanding common stock of Viking, based on the shares of outstanding Viking common stock at September 30, 2015 . As of September 30, 2015 , the carrying value of the Company's investment in Viking was $31.8 million . Accounting Consideration In May 2014, the Company determined it held a variable interest in Viking. The Company's variable interests in Viking included the convertible note issued pursuant to the LSA and the Company’s potential upfront payment of equity pursuant to the MLA. The Company considered certain criteria, including risk and reward sharing, experience and financial condition of its partner, voting rights, involvement in day-to-day operating decisions, the Company’s representation on Viking's executive committee, and level of economics between the Company and Viking. Based on these criteria, and using its judgment, the Company determined that it was the primary beneficiary of Viking and, as a result, the Company consolidated Viking on its financial statements. From May 21, 2014 through May 4, 2015, the date of Viking’s initial public offering (the “Viking IPO”), the Company recorded 100% of the losses incurred as net loss attributable to noncontrolling interest because it was a primary beneficiary with no equity interest in the VIE. The loans issued pursuant to the LSA were included as notes payable by Viking and were eliminated as long as the Company consolidated Viking on its financial statements. Upon completion of the Viking IPO in May 2015, the Company determined that Viking was no longer a VIE. The Company also determined that it does not have voting control or other elements of control that would require consolidation of Viking. As a result of this assessment, the Company deconsolidated Viking on May 4, 2015 by derecognizing its assets, liabilities, and noncontrolling interest from the Company's consolidated financial statements. Applying deconsolidation accounting guidance, the Company determined, based on an independent valuation, the fair value of its equity investment in Viking upon deconsolidation was approximately $34.9 million after applying a discount on the Viking IPO price due to applicable transfer restrictions applicable to the Company as an affiliate of Viking pursuant to Rule 144 under the Securities Act of 1933. Based on a separate independent valuation, the Company determined that the fair value of the convertible notes receivable was approximately $5.5 million upon deconsolidation. The Company recorded a $28.2 million gain on deconsolidation of Viking in its consolidated statement of operations for the nine month period ending September 30, 2015 . Following the deconsolidation, the Company accounts for its equity investment in Viking under the equity method. For each of the three and nine months ended September 30, 2015 , the Company reported approximately $2.2 million and $3.0 million , respectively, as equity in net losses from Viking. The Company has opted to account for the Viking convertible notes receivable at fair value. For each of the three and nine months ended September 30, 2015 , the Company recorded no change in the fair value of the Viking convertible notes since the deconsolidation date. See Note 2, Fair Value Measurements for additional details. Viking's Assets and Liabilities As of September 30, 2015 , Viking's total assets were $ 19.0 million , total liabilities were $ 5.7 million and net losses for the three and nine months ended September 30, 2015 were $4.7 million and $18.3 million , respectively. As of December 31, 2014 Viking's assets and liabilities which were consolidated for the period shown were as follows (in thousands): December 31, 2014 Cash and cash equivalents $ 756 Other current assets 18 Capitalized IPO expenses 2,268 Total current assets $ 3,042 Other assets $ 1 Total assets $ 3,043 Accounts payable $ 2,211 Accrued liabilities 77 Current portion of notes payable 334 Total current liabilities $ 2,622 Long-term portion of notes payable 2,331 Total liabilities $ 4,953 Metabasis CVR payouts In connection with the shares of Viking common stock received pursuant to the MLA, the Company will make a cash payment to the holders of certain Metabasis CVRs. The Company made a cash payment to certain holders of Metabasis CVRs of $0.5 million and $0.8 million during the three and nine months ended September 30, 2015 , respectively. The Company estimates that the remaining cash payment, expected to be made in January 2016, will be approximately $2.6 million . See Note 1. Basis of Presentation-Contingent Liabilities for additional information on the Metabasis CVRs. |
Lease Obligations
Lease Obligations | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Lease Obligations | Lease Obligations The Company leases office and laboratory facilities in California, Kansas and New Jersey. These leases expire between 2016 and 2019 , some of which are subject to annual rent increases which range from 3.0% to 3.5% . The Company currently subleases office and laboratory space in California and New Jersey. The following table provides a summary of operating lease obligations and payments expected to be received from sublease agreements as of September 30, 2015 (in thousands): Operating lease obligations: Lease Termination Date Less than 1 year 1 year 2 years 3 years 4 years Total Corporate headquarters- San Diego, CA June 2019 $ 695 $ 713 $ 732 $ 560 $ — $ 2,700 Bioscience and Technology Business Center- Lawrence, KS December 2017 54 54 14 — — 122 Vacated office and research facility- Cranbury, NJ August 2016 2,397 — — — — 2,397 Total operating lease obligations $ 3,146 $ 767 $ 746 $ 560 $ — $ 5,219 Sublease payments expected to be received: Corporate headquarters- June 2019 $ 438 $ 449 $ 460 $ 351 $ — $ 1,698 Office and research facility- Cranbury, NJ August 2016 194 — — — — 194 Net operating lease obligations $ 2,514 $ 318 $ 286 $ 209 $ — $ 3,327 As of September 30, 2015 and December 31, 2014 , the Company had lease exit obligations of $1.3 million and $3.3 million , respectively. For the three and nine months ended September 30, 2015 , the Company made cash payments, net of sublease payments received of $0.8 million and $2.7 million , respectively. The Company recognized adjustments for accretion and changes in leasing assumptions of $0.3 million and $0.8 million for the three and nine months ended September 30, 2015 , respectively. For the three and nine months ended September 30, 2014 , the Company made cash payments, net of sublease payments received of $0.8 million and $2.6 million , respectively. The Company recognized adjustments for accretion and changes in leasing assumptions of $0.2 million and $0.4 million for the three and nine months ended September 30, 2014 , respectively. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company evaluates performance based on the operating income (loss) of the respective business segments. The segment results may not represent actual results that would be expected if they were independent, stand-alone businesses. Segment information is as follows (in thousands): Balance Sheet Data: As of September 30, 2015 Ligand Captisol Total Total assets $ 449,388 $ 72,312 $ 521,700 As of December 31, 2014 Ligand Captisol Total Total assets $ 184,215 $ 73,814 $ 258,029 Operating Data: For the three months ended September 30, 2015 Ligand Captisol Total Net revenues from external customers $ 8,885 $ 8,816 $ 17,701 Depreciation and amortization expense $ (45 ) $ (598 ) $ (643 ) Operating income $ 2,670 $ 5,927 $ 8,597 Interest expense, net $ (2,930 ) $ — $ (2,930 ) Income tax benefit (expense) $ 228,101 $ (10,846 ) $ 217,255 For the three months ended September 30, 2014 Ligand Captisol Total Net revenues from external customers $ 6,424 $ 8,549 $ 14,973 Depreciation and amortization expense $ (61 ) $ (601 ) $ (662 ) Operating (loss) income $ (1,683 ) $ 5,215 $ 3,532 Interest expense, net $ (1,516 ) $ — $ (1,516 ) Income tax expense $ (115 ) $ (9 ) $ (124 ) For the nine months ended September 30, 2015 Ligand Captisol Total Net revenues from external customers $ 23,092 $ 27,630 $ 50,722 Depreciation and amortization expense $ (148 ) $ (1,792 ) $ (1,940 ) Operating (loss) income $ (1,336 ) $ 17,649 $ 16,313 Interest expense, net $ (8,875 ) $ — $ (8,875 ) Income tax benefit (expense) $ 227,808 $ (10,832 ) $ 216,976 For the nine months ended September 30, 2014 Ligand Captisol Total Net revenues from external customers $ 18,907 $ 22,632 $ 41,539 Depreciation and amortization expense $ (194 ) $ (1,804 ) $ (1,998 ) Operating (loss) income $ (2,622 ) $ 12,611 $ 9,989 Interest expense, net $ (1,946 ) $ — $ (1,946 ) Income tax expense $ (123 ) $ (8 ) $ (131 ) |
Financing Arrangements
Financing Arrangements | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Financing Arrangements 0.75% Convertible Senior Notes Due 2019 In August 2014, the Company issued $245.0 million aggregate principal amount of its 2019 Convertible Senior Notes, resulting in net proceeds of $239.3 million . The 2019 Convertible Senior Notes are convertible into common stock at an initial conversion rate of 13.3251 shares per $1,000 principal amount of convertible notes, subject to adjustment upon certain events, which is equivalent to an initial conversion price of approximately $75.05 per share of common stock. The notes bear cash interest at a rate of 0.75% per year, payable semi-annually. Holders of the 2019 Convertible Senior Notes may convert the notes at any time prior to the close of business on the business day immediately preceding May 15, 2019, under any of the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter) commencing after December 31, 2014, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of the Company's common stock on such trading day is greater than 130% of the conversion price on such trading day; (2) during the five business day period immediately following any ten consecutive trading day period, in which the trading price per $1,000 principal amount of notes was less than 98% of the product of the last reported sale price of the Company's common stock on such trading day and the conversion rate on each such trading day; or (3) upon the occurrence of certain specified corporate events as specified in the indenture governing the notes. On or after May 15, 2019 until the close of business on the second scheduled trading day immediately preceding August 15, 2019, holders of the notes may convert all or a portion of their notes at any time, regardless of the foregoing circumstances. Upon conversion, Ligand must deliver cash to settle the principal and may deliver cash or shares of common stock, at the option of the Company, to settle any premium due upon conversion. In accordance with accounting guidance for debt related to conversion and other options, the Company separately accounted for the debt and equity components of the 2019 Convertible Senior Notes by allocating the $245.0 million total proceeds between the debt component and the embedded conversion option, or equity component, due to Ligand's ability to settle the 2019 Convertible Senior Notes in cash for the principal portion and to settle any premium in cash or common stock, at the Company's election. The debt allocation was performed in a manner that reflected the Company's non-convertible borrowing rate for similar debt of 5.83% derived from independent valuation analysis. The initial debt value of $192.5 million accretes at 5.83% to reach $245.0 million at the maturity date. The equity component of the 2019 Convertible Senior Notes was recognized as a debt discount and represents the difference between the $245.0 million proceeds at issuance of the 2019 Convertible Senior Notes and the fair value of the debt allocation on their respective issuance dates. The debt discount is amortized to interest expense using the effective interest method over the expected life of a similar liability without an equity component. The notes will have a dilutive effect to the extent the average market price per share of common stock for a given reporting period exceeds the conversion price of $75.05 . As of September 30, 2015 , the “if-converted value” exceeded the principal amount of the 2019 Convertible Senior Notes by $29.0 million . In connection with the issuance of the 2019 Convertible Senior Notes, the Company incurred $5.7 million of issuance costs, which primarily consisted of underwriting, legal and other professional fees. The portions of these costs allocated to the equity components totaling $1.2 million were recorded as a reduction to additional paid-in capital. The portions of these costs allocated to the liability components totaling $4.5 million were recorded as assets on the balance sheet. The portions allocated to the liability components are amortized to interest expense using the effective interest method over the expected life of the 2019 Convertible Senior Notes. The Company determined the expected life of the debt discount for the 2019 Convertible Senior Notes to be equal to the original five -year term of the notes. The carrying value of the equity component related to the 2019 Convertible Senior Notes as of September 30, 2015 and December 31, 2014 , net of issuance costs, was $51.3 million . Convertible Bond Hedge and Warrant Transactions In August 2014, in connection with the issuance of the 2019 Convertible Senior Notes, to minimize the impact of potential dilution to the Company's common stock upon conversion of such notes, the Company entered into convertible bond hedges and sold warrants covering approximately 3,264,643 shares of its common stock. The convertible bond hedges have an exercise price of $75.05 per share and are exercisable when and if the 2019 Convertible Senior Notes are converted. If upon conversion of the 2019 Convertible Senior Notes, the price of the Company's common stock is above the exercise price of the convertible bond hedges, the counterparties will deliver shares of common stock and/or cash with an aggregate value approximately equal to the difference between the price of common stock at the conversion date and the exercise price, multiplied by the number of shares of common stock related to the convertible bond hedge transaction being exercised. The convertible bond hedges and warrants described below are separate transactions entered into by the Company and are not part of the terms of the 2019 Convertible Senior Notes. Holders of the 2019 Convertible Senior Notes and warrants will not have any rights with respect to the convertible bond hedges. The Company paid $48.1 million for these convertible bond hedges and recorded the amount as a reduction to additional paid-in capital. Concurrently with the convertible bond hedge transactions, the Company entered into warrant transactions whereby it sold warrants to acquire, approximately 3,264,643 shares of common stock with an exercise price of approximately $125.08 per share, subject to certain adjustments. The warrants have various expiration dates ranging from November 13, 2019 to April 22, 2020. The warrants will have a dilutive effect to the extent the market price per share of common stock exceeds the applicable exercise price of the warrants, as measured under the terms of the warrant transactions. The Company received $11.6 million for these warrants and recorded this amount to additional paid-in capital. The common stock issuable upon exercise of the warrants will be in unregistered shares, and the Company does not have the obligation and does not intend to file any registration statement with the Securities and Exchange Commission (the "SEC") registering the issuance of the shares under the warrants. The carrying values and the fixed contractual coupon rates of the Company's financing arrangements as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, 2015 December 31, 2014 2019 Convertible Senior Notes Principal amount outstanding $ 245,000 $ 245,000 Unamortized discount (42,049 ) (49,092 ) Net carrying amount 202,951 195,908 Convertible notes payable, Viking Therapeutics, Inc. — 334 Total notes payable $ 202,951 $ 196,242 |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Income Tax As of December 31, 2014 , due to a history of operating losses and other key operating factors, the Company concluded that a full valuation allowance was necessary to offset its deferred tax assets. As of September 30, 2015 , the Company concluded that it was more likely than not that a substantial portion of its deferred tax assets would be realized through future taxable income. The Company's income tax provision of $217.3 million , or $10.12 per diluted share, and $217.0 million , or $10.27 per diluted share for the three and nine months ended September 30, 2015 , respectively, included income tax expense and a discrete income tax benefit related to the release of a majority of the Company’s valuation allowance and various adjustments to its deferred tax assets, including studies validating the Company’s tax attributes and adjustments resulting from the tax return filings during the quarter. The Company estimates its annual effective income tax rate for continuing operations to be approximately (596)% for 2015, compared to the 3% effective income tax rate for 2014. The primary difference relates to the release of the Company’s valuation allowance. The Company's effective tax rate for the three and nine months ended September 30, 2015 was (2,983)% and 681% compared to 9% and 3% for the same periods in 2014. For the period ended on September 30, 2015 , the primary driver of the effective tax rate for both the three and nine month periods was the valuation allowance release. Aside from significant one-time items such as the valuation allowance release, the effective rate fluctuates primarily due to the significant permanent book-to-tax differences. These permanent differences include non-taxable contingent consideration income (expense) recorded related to the change in market value of CVRs. Any significant contingent consideration expense or income will result in a significantly higher or lower effective tax rate because contingent consideration expense is largely not deductible for tax purposes and contingent consideration income is not taxable. Other permanent differences between financial statement income and taxable income relate to items such as stock compensation, meals and entertainment charges, and compensation of officers. The Company maintains a valuation allowance in the amount of $9.1 million against certain U.S. state NOLs, federal NOLs arising from Pre-ASC 718 excess stock compensation benefits and federal research and development tax credits. Each reporting period, the Company evaluates the need for a valuation allowance on our deferred tax assets by jurisdiction and adjusts our estimates as more information becomes available. The Company will reassess the ability to realize the deferred tax assets on a quarterly basis. If it is more likely than not that it will not realize the recognized deferred tax assets, then all or a portion of the valuation allowance may need to be re-established, which would result in a charge to tax expense. Conversely if new events indicate that it is more likely than not that we will realize additional deferred tax assets, then all or a portion of the remaining valuation allowance may be released, which would result in a tax benefit. As of September 30, 2015 , the Company had unrecognized tax benefits of approximately $8.3 million related to uncertain tax positions that, if recognized, would result in adjustments to the related deferred tax assets and reduce our annual effective tax rate, subject to the remaining valuation allowance. The Company files income tax returns in the U.S. and in various state jurisdictions with varying statutes of limitations. The Company is no longer subject to income tax examination by tax authorities for years prior to 2010; however, its net operating loss and research credit carry-forwards arising prior to that year are subject to adjustment. It is the Company's policy to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of September 30, 2015 , there was no material accrued interest related to uncertain tax positions. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity The Company grants options and awards to employees and non-employee directors pursuant to a stockholder approved stock incentive plan, which is described in further detail in Note 10, Stockholders' Equity, of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The following is a summary of the Company’s stock option and restricted stock activity and related information: Stock Options Restricted Stock Award Shares Weighted- Average Exercise Price Shares Weighted- Average Grant Date Fair Value Balance as of December 31, 2014 1,800,697 $ 28.78 82,673 $ 45.76 Granted 287,747 $ 62.82 112,954 $ 63.5 Exercised (297,040 ) $ 24.43 (48,066 ) $ 44.78 Forfeited (78,685 ) $ 45.75 (15,512 ) $ 54.91 Balance as of September 30, 2015 1,712,719 $ 34.47 132,049 $ 60.22 Net cash received from options exercised during the nine months ended September 30, 2015 and 2014 was approximately $7.3 million and $4.1 million , respectively. Tax deductions for stock options and restricted stock which have exceeded stock based compensation expense in previous years have not been recognized by the Company. The Company will monitor the utilization of the net operating losses and recognize the excess tax deduction when that deduction reduces taxes payable. As of September 30, 2015 , 0.8 million shares were available for future option grants or direct issuance under the Company's 2002 Stock Incentive Plan, as amended. Employee Stock Purchase Plan The Company's Employee Stock Purchase Plan, as amended and restated (the "Amended ESPP") allows participating employees to purchase up to 1,250 shares of Ligand common stock during each offering period, but in no event may a participant purchase more than 1,250 shares of common stock during any calendar year. The length of each offering period is six months, and employees are eligible to participate in the first offering period beginning after their hire date. This plan is described in further detail in Note 10, Stockholders' Equity, of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. There were 2,654 and 2,230 shares of common stock issued under the amended ESPP during the nine months ended September 30, 2015 and 2014 , respectively. As of September 30, 2015 , 73,087 shares were available for future purchases under the Amended ESPP. Corporate Share Repurchases In September 2015 , the Company's Board of Directors authorized the Company to repurchase up to $200 million of its common stock for a period of up to three years. During the three and nine months ended September 30, 2015 , the Company repurchased 6,120 common shares pursuant to the repurchase program for an aggregate purchase price of approximately $0.5 million . During the three and nine months ended September 30, 2014 , the Company repurchased 692,800 common shares pursuant to its repurchase plan effective in August 2014 for aggregate purchase price of approximately $38.5 million . |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation The Company records an estimate of a loss when the loss is considered probable and estimable. Where a liability is probable and there is a range of estimated loss and no amount in the range is more likely than any other number in the range, the Company records the minimum estimated liability related to the claim in accordance with ASC Topic 450-Contingencies. As additional information becomes available, the Company assesses the potential liability related to its pending litigation and revises its estimates. Revisions in the Company's estimates of potential liability could materially impact its results of operations. Securities Litigation On June 8, 2012, a federal securities class action and shareholder derivative lawsuit was filed in the Eastern District of Pennsylvania alleging that the Company and its CEO assisted various breaches of fiduciary duties based on the Company’s purchase of a licensing interest in a development-stage pharmaceutical program from the Genaera Liquidating Trust in May 2010 and the Company’s subsequent sale of half of its interest in the transaction to Biotechnology Value Fund, Inc. Plaintiff filed a second amended complaint in February 2015, which the Company moved to dismiss on March 20, 2015. The court heard oral arguments on September 30, 2015. The Company intends to continue to vigorously defend against the claims against the Company and its CEO. Due to the complex nature of the legal and factual issues involved, however, the outcome of the matter is not presently determinable. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent event | Subsequent event In November, 2015, the Company entered into a lease termination agreement with its current lessor for the corporate headquarters facility located in La Jolla, California. The termination agreement accelerated the expiration date of the lease to April 30, 2016, through which date, the Company is obligated to pay all base rent, operating expenses and other obligations due under the current lease. In addition, contingent upon the Company's surrender of the leased space in compliance with the termination agreement on or before April 30, 2016, the Company is entitled to receive from the lessor a one-time lease buy-out payment equal to the base rent and the operating expenses paid for last six months of the revised lease term. In conjunction with the execution of the termination agreement, the Company entered into a new lease agreement with a different lessor for its corporate headquarters located in San Diego, California. The new lease has an initial term of approximately 7 years and is expected to commence in May 2016. The base rent under the new facility lease agreement is approximately $125,000 per year for the first year, escalating 3.0% annually thereafter over the initial term. The Company has an option to extend the term of the lease for an additional five years. The lease is subject to additional charges for property management, common area maintenance and other costs. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include Ligand and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation The Company’s accompanying unaudited condensed consolidated financial statements as of September 30, 2015 and for the three and nine months ended September 30, 2015 and 2014 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company and its subsidiaries, have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 . These financial statements should be read in conjunction with the consolidated financial statements and notes therein included in the Company’s annual report on Form 10-K for the year ended December 31, 2014 . |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results may differ from those estimates. |
Income Per Share | Income Per Share Basic income per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed by dividing net income by the weighted-average number of common shares and common stock equivalents of all dilutive securities calculated using the treasury stock method and the if-converted method. |
Cash Equivalents and Short-term Investments | Cash Equivalents Cash equivalents consist of all investments with maturities of three months or less from the date of acquisition. Short-term Investments Short-term investments primarily consist of investments in debt securities that have effective maturities greater than three months and less than twelve months from the date of acquisition. The Company classifies its short-term investments as "available-for-sale". Such investments are carried at fair value, with unrealized gains and losses included in the statement of comprehensive income (loss). The Company determines the cost of investments based on the specific identification method. |
Restricted Investments | Restricted Investments Restricted investments consist of certificates of deposit held with a financial institution as collateral under a facility lease and third-party service provider arrangements. |
Inventory | Inventory Inventory, which consists of finished goods, is stated at the lower of cost or market value. The Company determines cost using the first-in, first-out method. Inventory levels are analyzed periodically and written down to its net realizable value if it has become obsolete, has a cost basis in excess of its expected net realizable value or is in excess of expected requirements. |
Goodwill and Other Identifiable Intangible Assets | Amortization of definite-lived intangible assets is computed using the straight-line method over the estimated useful life of the asset of 20 years . |
Commercial license rights | Commercial License Rights Commercial license rights represent a portfolio of future milestone and royalty payment rights acquired from Selexis SA ("Selexis") in April 2013 and April 2015. Individual commercial license rights acquired under the agreement are carried at allocated cost and approximate fair value. The carrying value of the license rights will be reduced on a pro-rata basis as revenue is realized over the term of the agreement. Declines in the fair value of individual license rights below their carrying value that are deemed to be other than temporary are reflected in earnings in the period such determination is made. As of September 30, 2015 , management does not believe there have been any events or circumstances indicating that the carrying amount of its commercial license rights may not be recoverable. |
Property and Equipment | Depreciation of equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from three to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives or the related lease term. |
Contingent Liabilities | Contingent Liabilities In connection with the Company’s acquisition of CyDex in January 2011, the Company recorded a contingent liability, for amounts potentially due to holders of the CyDex contingent value rights ("CVRs") and former license holders. The liability is periodically assessed based on events and circumstances related to the underlying milestones, royalties and material sales. Any change in fair value is recorded in the Company’s consolidated statement of operations. The carrying amount of the liability may fluctuate significantly and actual amounts paid under the CVR agreements may be materially different than the carrying amount of the liability. The fair value of the liability at September 30, 2015 and December 31, 2014 was $10.5 million and $11.5 million , respectively. The Company recorded a fair-value adjustment to increase the liability by $0.9 million and $3.1 million for the three and nine months ended September 30, 2015 , respectively. There was a revenue-sharing payment of $0.8 million and $3.9 million to CyDex CVR holders during the three and nine months ended September 30, 2015 , respectively. For the three and nine months ended September 30, 2014 , the Company recorded a fair-value adjustment to increase the liability by $2.8 million and $5.6 million , respectively. There was no revenue sharing payment made for the three months ended September 30, 2014 and a revenue-sharing payment of $1.6 million was made during the nine months ended September 30, 2014 . In connection with the Company’s acquisition of Metabasis Therapeutics, Inc. ("Metabasis") in January 2010 , the Company issued to Metabasis stockholders four tradable CVRs, one CVR from each of four respective series of CVR, for each Metabasis share. The CVRs will entitle Metabasis stockholders to cash payments as frequently as every six months as cash is received by the Company from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. The fair values of the CVRs are remeasured at each reporting date through the term of the related agreement. Any change in fair value is recorded in the Company’s consolidated statement of operations. The carrying amount of the liability may fluctuate significantly based upon quoted market prices and actual amounts paid under the agreements may be materially different than the carrying amount of the liability. |
Revenue Recognition | Revenue Recognition Royalties on sales of products commercialized by the Company’s partners are recognized in the quarter reported to Ligand by the respective partner. Generally, the Company receives royalty reports from its licensees approximately one quarter in arrears due to the fact that its agreements require partners to report product sales between 30 and 60 days after the end of the quarter. The Company recognizes royalty revenues when it can reliably estimate such amounts and collectability is reasonably assured. Under this accounting policy, the royalty revenues reported are not based upon estimates and such royalty revenues are typically reported to the Company by its partners in the same period in which payment is received. Revenue from material sales of Captisol is recognized upon transfer of title, which normally passes upon shipment to the customer, provided all other revenue recognition criteria have been met. All product returns are subject to the Company's credit and exchange policy, approval by the Company and a 20% restocking fee. To date, product returns by customers have not been material to net material sales in any related period. The Company records revenue net of product returns, if any, and sales tax collected and remitted to government authorities during the period. The Company analyzes its revenue arrangements and other agreements to determine whether there are multiple elements that should be separated and accounted for individually or as a single unit of accounting. For multiple element contracts, arrangement consideration is allocated at the inception of the arrangement to all deliverables on the basis of relative selling price, using a hierarchy to determine selling price. Management first considers vendor-specific objective evidence ("VSOE"), then third-party evidence ("TPE") and if neither VSOE nor TPE exist, the Company uses its best estimate of selling price. Many of the Company's revenue arrangements for Captisol involve a license agreement with the supply of manufactured Captisol product. Licenses may be granted to pharmaceutical companies for the use of Captisol product in the development of pharmaceutical compounds. The supply of the Captisol product may be for all phases of clinical trials and through commercial availability of the host drug or may be limited to certain phases of the clinical trial process. Management believes that the Company's licenses have stand-alone value at the outset of an arrangement because the customer obtains the right to use Captisol in its formulations without any additional input by the Company. Other nonrefundable, upfront license fees are recognized as revenue upon delivery of the license, if the license is determined to have standalone value that is not dependent on any future performance by the Company under the applicable collaboration agreement. Nonrefundable contingent event-based payments are recognized as revenue when the contingent event is met, which is usually the earlier of when payments are received or collections are assured, provided that it does not require future performance by the Company. The Company occasionally has sub-license obligations related to arrangements for which it receives license fees, milestones and royalties. The Company evaluates the determination of gross versus net reporting based on each individual agreement. Sales-based contingent payments from partners are accounted for similarly to royalties, with revenue recognized upon achievement of the sales targets assuming all other revenue recognition criteria for milestones are met. Revenue from development and regulatory milestones is recognized when earned, as evidenced by written acknowledgement from the collaborator, provided that (1) the milestone event is substantive, its achievability was not reasonably assured at the inception of the agreement, and the Company has no further performance obligations relating to that event, and (2) collectability is reasonably assured. If these criteria are not met, the milestone payment is recognized over the remaining period of the Company’s performance obligations under the arrangement. Revenue from research funding under our collaboration agreements is earned and recognized on a percentage-of completion basis as research hours are incurred in accordance with the provisions of each agreement. In May 2014, the Company entered into a licensing agreement and research collaboration with Omthera Pharmaceuticals, a wholly-owned subsidiary of AstraZeneca. The research collaboration targets the development of novel products that utilize the proprietary Ligand developed LTP TECHNOLOGY™ to improve lipid-lowering activity of certain omega-3 fatty acids. The Company is eligible to receive compensation and reimbursement from Omthera for internal research efforts and external costs incurred, as well as development and regulatory event-based payments. The completion of a proof of concept under the development program would trigger a $1.0 million payment which is determined to be a milestone under the milestone method of accounting as (1) it is an event that can only be achieved in part on the Company's past performance, (2) there was substantive uncertainty at the date the arrangement was entered into that the event would be achieved and (3) it results in additional payment being due to the Company. None of the other event-based payments represents a milestone under the milestone method of accounting. The Company received $0.5 million from Omthera in 2014 under the agreement and recognized $0.4 million as collaborative revenue based on the percentage of completion of the research program at December 31, 2014. No milestone payment or contingent payment was received in 2014 or in the nine months ended September 30, 2015. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense for awards to employees and non-employee directors is recognized on a straight-line basis over the vesting period until the last tranche vests. |
Income Taxes | Income Taxes Income taxes are accounted for under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the consolidated financial statements. The Company provides a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before we are able to realize their benefit. The Company calculates the valuation allowance in accordance with the authoritative guidance relating to income taxes under ASC 740, Income Taxes, which requires an assessment of both positive and negative evidence that is available regarding the reliability of these deferred tax assets, when measuring the need for a valuation allowance. Developing the provision for income taxes requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and, if necessary, any valuation allowances that may be required for deferred tax assets. The Company's judgments and tax strategies are subject to audit by various taxing authorities. While management believes the Company has provided adequately for its income tax liabilities in its consolidated financial statements, adverse determinations by these taxing authorities could have a material adverse effect on the Company's consolidated financial condition and results of operations. |
Segment Reporting | Segment Reporting Under ASC 280, Segment Reporting , operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the entity’s chief operating decision maker, in deciding how to allocate resources and in assessing performance. The Company has evaluated this codification and has identified two reportable segments: the development and commercialization of drugs using Captisol technology and the biopharmaceutical company with a business model based on developing or acquiring royalty revenue generating assets and coupling them with a lean corporate cost structure. |
Variable Interest Entities | Variable Interest Entities The Company identifies an entity as a variable interest entity ("VIE") if either: (1) the entity does not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support, or (2) the entity's equity investors lack the essential characteristics of a controlling financial interest. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in any VIE and therefore is the primary beneficiary. If the Company is the primary beneficiary of a VIE, it consolidates the VIE under applicable accounting guidance. If the Company is no longer the primary of a VIE or the entity is no longer considered as a VIE as facts and circumstances changed, it deconsolidates the entity under the applicable accounting guidance. Beginning May 2015, the Company deconsolidated Viking Therapeutics ("Viking") a previously reported VIE, and elected to record its investment in Viking under the equity method of accounting as Viking is no longer considered a VIE and the Company does not have voting control or other elements of control that would require consolidation. The investment is subsequently adjusted for the Company’s share of Viking's operating results, and if applicable, cash contributions and distributions, which is reported on a separate line in our condensed consolidated statement of operations called “Equity in net losses of Viking Therapeutics”. On the condensed consolidated balance sheet, the Company reports its investment in Viking on a separate line in the non-current assets section called “Investment in Viking Therapeutics”. See Note 3, Investment in Viking Therapeutics, Inc. , for additional details. |
Convertible Debt | Convertible Debt In August 2014, the Company completed a $245.0 million offering of convertible senior notes, which mature in 2019 and bear interest at 0.75% (the "2019 Convertible Senior Notes"). The Company accounts for the 2019 Convertible Senior Notes by separating the liability and equity components of the instrument in a manner that reflects the Company's nonconvertible debt borrowing rate. As a result, the Company assigned a value to the debt component of the 2019 Convertible Senior Notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in the Company recording the debt instrument at a discount. The Company is amortizing the debt discount over the life of the 2019 Convertible Senior Notes as additional non-cash interest expense utilizing the effective interest method. |
New Accounting Pronouncements | Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers . ASU 2014-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, (5) recognize revenue when (or as) the entity satisfies a performance obligation. Management is currently evaluating the effect the adoption of this standard will have on the Company's financial statements. In February 2015, FASB issued ASU 2015-02 Consolidation (Topic 810): Amendments to the Consolidation Analysis . ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impact of the adoption of ASU 2015-02 on our consolidated financial statements. In April 2015, FASB issued ASU 2015-03, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. This update was issued to simplify the presentation for debt issuance costs. Upon adoption, such costs shall be presented on our consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability and not as a deferred charge presented in Other assets on our consolidated balance sheets. This amendment will be effective for interim and annual periods beginning on January 1, 2016, and is required to be retrospectively adopted. Management expects to change the presentation on our consolidated balance sheets accordingly for all periods impacted upon the required adoption date. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of computation of basic and diluted net income (loss) per share | The following table presents the computation of basic and diluted net income per share for the periods indicated (in thousands, except per share amounts): Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Net income $ 224,539 $ 1,280 $ 248,857 $ 4,969 Shares used to compute basic income per share 19,886,877 20,417,187 19,741,081 20,584,469 Dilutive potential common shares: Restricted stock 63,324 22,531 55,899 37,387 Stock options 763,856 905,593 922,051 1,010,665 0.75% Convertible Senior Notes, Due 2019 745,591 — 402,941 — Shares used to compute diluted income per share 21,459,648 21,345,311 21,121,972 21,632,521 Basic net income per share $ 11.29 $ 0.06 $ 12.61 $ 0.24 Diluted net income per share $ 10.46 $ 0.06 $ 11.78 $ 0.23 |
Summary of investment categories | The following table summarizes the various investment categories at September 30, 2015 and December 31, 2014 (in thousands): Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value September 30, 2015 Short-term investments Bank deposits $ 38,712 $ 4 $ (1 ) $ 38,715 Corporate bonds 29,347 2 (5 ) 29,344 Commercial paper 2,000 — — 2,000 Asset backed securities 15,995 — (4 ) 15,991 Corporate equity securities 1,917 5,561 — 7,478 Restricted investments 600 — — 600 $ 88,571 $ 5,567 $ (10 ) $ 94,128 December 31, 2014 Short-term investments Corporate equity securities $ 2,179 $ 4,954 $ — $ 7,133 Restricted investments 1,261 — — 1,261 $ 3,440 $ 4,954 $ — $ 8,394 |
Summary of goodwill and other identifiable intangible assets | Goodwill and other identifiable intangible assets consist of the following (in thousands): September 30, December 31, 2015 2014 Indefinite lived intangible assets Acquired in-process research and development ("IPR&D") $ 12,556 $ 12,556 Goodwill 12,238 12,238 Definite lived intangible assets Complete technology 15,267 15,267 Less: Accumulated amortization (3,571 ) (2,999 ) Trade name 2,642 2,642 Less: Accumulated amortization (619 ) (519 ) Customer relationships 29,600 29,600 Less: Accumulated amortization (6,934 ) (5,824 ) Total goodwill and other identifiable intangible assets, net $ 61,179 $ 62,961 |
Summary of property and equipment | Property and equipment is stated at cost and consists of the following (in thousands): September 30, December 31, 2015 2014 Lab and office equipment $ 2,182 $ 2,232 Leasehold improvements 273 273 Computer equipment and software 632 624 3,087 3,129 Less accumulated depreciation and amortization (2,732 ) (2,643 ) Total property and equipment, net $ 355 $ 486 |
Summary of other current assets | Other current assets consist of the following (in thousands): September 30, December 31, 2015 2014 Prepaid expenses $ 1,494 $ 835 Other receivables 283 685 Co-promote receivable — 322 Total other current assets $ 1,777 $ 1,842 |
Summary of accrued liabilities | Accrued liabilities consist of the following (in thousands): September 30, December 31, 2015 2014 Compensation $ 1,485 $ 1,708 Professional fees 443 459 Amounts owed to former licensees 956 925 Royalties owed to third parties 798 705 Other 474 1,069 Total accrued liabilities $ 4,156 $ 4,866 |
Summary of other long-term liabilities | Other long-term liabilities consist of the following (in thousands): September 30, December 31, 2015 2014 Deposits $ 319 $ 411 Deferred rent 291 327 Other 33 32 Total other long-term liabilities $ 643 $ 770 |
Schedule for accounting for share-based compensation | The following table summarizes stock-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands): Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Stock-based compensation expense as a component of: Research and development expenses $ 957 $ 1,169 $ 3,131 $ 2,814 General and administrative expenses 1,879 2,533 6,380 5,981 $ 2,836 $ 3,702 $ 9,511 $ 8,795 |
Summary of fair-value options awarded to employees and directors | The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions: Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Risk-free interest rate 2.0% 1.9% 1.7%-2.0% 1.9% Dividend yield — — — — Expected volatility 50% 67% 50%-58% 68% Expected term 6.5 6.4 6.6 6.4 Forfeiture rate 8.5% 8.6% 8.5% 8.6%-9.7% |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Summary of the assets and liabilities measured at fair value on recurring basis | The following table provides a summary of the carrying value of assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2015 (in thousands), and there were no transfers between Level 1 and Level 2 securities during the three and nine months ended September 30, 2015 : Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents (1) $ 62,637 $ — $ 62,637 $ — Short-term investments (2) 95,587 7,543 88,044 — Note receivable Viking Therapeutics, Inc. (3) 5,547 — — 5,547 Total assets $ 163,771 $ 7,543 $ 150,681 $ 5,547 Liabilities: Current contingent liabilities-CyDex (4) $ 5,018 $ — $ — $ 5,018 Current contingent liabilities-Metabasis (5) 2,602 — 2,602 — Long-term contingent liabilities-CyDex (4) 5,469 — — 5,469 Long-term contingent liabilities-Metabasis (5) 2,120 — 2,120 — Liability for amounts owed to former licensees (6) 1,577 1,577 — — Total liabilities $ 16,786 $ 1,577 $ 4,722 $ 10,487 The following table provides a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2014 (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs * Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents (1) $ 69,261 $ — $ 69,261 $ — Current co-promote termination payments receivable (7) 322 — — 322 Short-term investments (2) 7,133 7,133 — — Total assets $ 76,716 $ 7,133 $ 69,261 $ 322 Liabilities: Current contingent liabilities-CyDex (4) $ 6,796 $ — $ — $ 6,796 Current co-promote termination liability (7) 322 — — 322 Long-term contingent liabilities-Metabasis (5) 3,652 — 3,652 — Long-term contingent liabilities-CyDex (4) 4,701 — — 4,701 Liability for amounts owed to former licensees (6) 773 773 — — Total liabilities $ 16,244 $ 773 $ 3,652 $ 11,819 *Adjusted to correct an error in disclosure that was deemed immaterial to the financial statements taken as a whole. Contingent liabilities related to Metabasis were reclassified from Level 1 to Level 2 as market is deemed inactive. Additionally, certain certificates of deposit with maturities less than 90 days were not previously disclosed in the table above. (1) Highly liquid investments with maturities less than 90 days from the purchase date are recorded as cash equivalents that are classified as Level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. (2) Investments in equity securities, which the Company received as a result of event-based and upfront payments from licensees, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. Short-term investments in marketable securities with maturities greater than 90 days are classified as level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. (3) The fair value of the convertible note receivable from Viking was determined using a probability weighted option pricing model using a lattice methodology. The fair value is subjective and is affected by certain significant input to the valuation model such as the estimated volatility of the common stock, which was estimated to be 50% at September 30, 2015 . Changes in these assumptions may materially affect the fair value estimate. (4) The fair value of the liabilities for CyDex contingent liabilities were determined based on the income approach using a Monte Carlo analysis. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s assumptions regarding revenue volatility, probability of commercialization of products, estimates of timing and probability of achievement of certain revenue thresholds and developmental and regulatory milestones which may be achieved and affect amounts owed to former license holders and CVR holders. Changes in these assumptions can materially affect the fair value estimate. (5) The liability for CVRs for Metabasis are determined using quoted market prices in an inactive market for the underlying CVR. (6) The liability for amounts owed to former licensees are determined using quoted market prices in active markets for the underlying investment received from a partner, a portion of which is owed to former licensees. (7) The co-promote termination payments receivable represents a receivable for future payments to be made by Pfizer related to product sales and is recorded at its fair value. The receivable and liability will remain equal. The fair value is determined based on a valuation model using an income approach. |
CyDex Acquisition | The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex: September 30, 2015 December 31, 2014 Range of annual revenue subject to revenue sharing (1) $20.7 million-$24.6 million $17.2 million-$17.3 million Revenue volatility 25% 25% Average probability of commercialization 88% 81% Sales beta 0.50 0.60 Credit rating B B Equity risk premium 6% 6% (1) Revenue subject to revenue sharing represent management’s estimate of the range of total annual revenue subject to revenue sharing (i.e. annual revenues in excess of $15 million ) through December 31, 2016 , which is the term of the CVR agreement. |
Reconciliation of level 3 financial instruments | A reconciliation of the level 3 financial instruments as of September 30, 2015 is as follows (in thousands): Assets: Fair value of level 3 financial instrument assets as of December 31, 2014 $ 322 Assumed payments made by Pfizer or assignee (390 ) Fair value adjustments to co-promote termination liability 68 Viking note receivable 5,547 Fair value of level 3 financial instrument assets as of September 30, 2015 $ 5,547 Liabilities: Fair value of level 3 financial instrument liabilities as of December 31, 2014 $ 11,819 Assumed payments made by Pfizer or assignee (390 ) Payments to CVR and other former license holders (4,074 ) Fair value adjustments to contingent liabilities 3,064 Fair value adjustments to co-promote termination liability 68 Fair value of level 3 financial instrument liabilities as of September 30, 2015 $ 10,487 |
Investment in Viking Therapeu20
Investment in Viking Therapeutics, Inc. (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Equity Method Investments | December 31, 2014 Viking's assets and liabilities which were consolidated for the period shown were as follows (in thousands): December 31, 2014 Cash and cash equivalents $ 756 Other current assets 18 Capitalized IPO expenses 2,268 Total current assets $ 3,042 Other assets $ 1 Total assets $ 3,043 Accounts payable $ 2,211 Accrued liabilities 77 Current portion of notes payable 334 Total current liabilities $ 2,622 Long-term portion of notes payable 2,331 Total liabilities $ 4,953 |
Lease Obligations (Tables)
Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Payments expected to received from sublease agreements | The following table provides a summary of operating lease obligations and payments expected to be received from sublease agreements as of September 30, 2015 (in thousands): Operating lease obligations: Lease Termination Date Less than 1 year 1 year 2 years 3 years 4 years Total Corporate headquarters- San Diego, CA June 2019 $ 695 $ 713 $ 732 $ 560 $ — $ 2,700 Bioscience and Technology Business Center- Lawrence, KS December 2017 54 54 14 — — 122 Vacated office and research facility- Cranbury, NJ August 2016 2,397 — — — — 2,397 Total operating lease obligations $ 3,146 $ 767 $ 746 $ 560 $ — $ 5,219 Sublease payments expected to be received: Corporate headquarters- June 2019 $ 438 $ 449 $ 460 $ 351 $ — $ 1,698 Office and research facility- Cranbury, NJ August 2016 194 — — — — 194 Net operating lease obligations $ 2,514 $ 318 $ 286 $ 209 $ — $ 3,327 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Summary of segment information | Segment information is as follows (in thousands): Balance Sheet Data: As of September 30, 2015 Ligand Captisol Total Total assets $ 449,388 $ 72,312 $ 521,700 As of December 31, 2014 Ligand Captisol Total Total assets $ 184,215 $ 73,814 $ 258,029 Operating Data: For the three months ended September 30, 2015 Ligand Captisol Total Net revenues from external customers $ 8,885 $ 8,816 $ 17,701 Depreciation and amortization expense $ (45 ) $ (598 ) $ (643 ) Operating income $ 2,670 $ 5,927 $ 8,597 Interest expense, net $ (2,930 ) $ — $ (2,930 ) Income tax benefit (expense) $ 228,101 $ (10,846 ) $ 217,255 For the three months ended September 30, 2014 Ligand Captisol Total Net revenues from external customers $ 6,424 $ 8,549 $ 14,973 Depreciation and amortization expense $ (61 ) $ (601 ) $ (662 ) Operating (loss) income $ (1,683 ) $ 5,215 $ 3,532 Interest expense, net $ (1,516 ) $ — $ (1,516 ) Income tax expense $ (115 ) $ (9 ) $ (124 ) For the nine months ended September 30, 2015 Ligand Captisol Total Net revenues from external customers $ 23,092 $ 27,630 $ 50,722 Depreciation and amortization expense $ (148 ) $ (1,792 ) $ (1,940 ) Operating (loss) income $ (1,336 ) $ 17,649 $ 16,313 Interest expense, net $ (8,875 ) $ — $ (8,875 ) Income tax benefit (expense) $ 227,808 $ (10,832 ) $ 216,976 For the nine months ended September 30, 2014 Ligand Captisol Total Net revenues from external customers $ 18,907 $ 22,632 $ 41,539 Depreciation and amortization expense $ (194 ) $ (1,804 ) $ (1,998 ) Operating (loss) income $ (2,622 ) $ 12,611 $ 9,989 Interest expense, net $ (1,946 ) $ — $ (1,946 ) Income tax expense $ (123 ) $ (8 ) $ (131 ) |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Summary of carrying values and coupon rates on financing arrangements | The carrying values and the fixed contractual coupon rates of the Company's financing arrangements as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, 2015 December 31, 2014 2019 Convertible Senior Notes Principal amount outstanding $ 245,000 $ 245,000 Unamortized discount (42,049 ) (49,092 ) Net carrying amount 202,951 195,908 Convertible notes payable, Viking Therapeutics, Inc. — 334 Total notes payable $ 202,951 $ 196,242 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Stock option plan activity | The following is a summary of the Company’s stock option and restricted stock activity and related information: Stock Options Restricted Stock Award Shares Weighted- Average Exercise Price Shares Weighted- Average Grant Date Fair Value Balance as of December 31, 2014 1,800,697 $ 28.78 82,673 $ 45.76 Granted 287,747 $ 62.82 112,954 $ 63.5 Exercised (297,040 ) $ 24.43 (48,066 ) $ 44.78 Forfeited (78,685 ) $ 45.75 (15,512 ) $ 54.91 Balance as of September 30, 2015 1,712,719 $ 34.47 132,049 $ 60.22 |
Restricted stock activity | The following is a summary of the Company’s stock option and restricted stock activity and related information: Stock Options Restricted Stock Award Shares Weighted- Average Exercise Price Shares Weighted- Average Grant Date Fair Value Balance as of December 31, 2014 1,800,697 $ 28.78 82,673 $ 45.76 Granted 287,747 $ 62.82 112,954 $ 63.5 Exercised (297,040 ) $ 24.43 (48,066 ) $ 44.78 Forfeited (78,685 ) $ 45.75 (15,512 ) $ 54.91 Balance as of September 30, 2015 1,712,719 $ 34.47 132,049 $ 60.22 |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
May. 31, 2014USD ($) | Jan. 31, 2010right | Sep. 30, 2015USD ($)$ / shares | Jun. 30, 2015USD ($)$ / shares | Sep. 30, 2014USD ($)$ / shares | Jun. 30, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)segment$ / sharesshares | Sep. 30, 2014USD ($)$ / sharesshares | Dec. 31, 2014USD ($) | Aug. 31, 2014USD ($) | |
Revision of Immaterial Error | ||||||||||
Current contingent liabilities | $ 7,620,000 | $ 7,620,000 | $ 6,796,000 | |||||||
Net income (loss) | $ 224,539,000 | $ 1,280,000 | $ 248,857,000 | $ 4,969,000 | ||||||
Net income (loss) (in usd per share) | $ / shares | $ 11.29 | $ 0.06 | $ 12.61 | $ 0.24 | ||||||
Earnings (Loss) Per Share | ||||||||||
Common shares excluded from computation | shares | 3.3 | 5 | ||||||||
Cash, Cash Equivalents and Short-term Investments | ||||||||||
Maturity period of cash and cash equivalents, maximum | 3 months | |||||||||
Maturity period of short term investments, minimum | 3 months | |||||||||
Inventory, Net [Abstract] | ||||||||||
Inventory write downs | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Goodwill and Other Identifiable Intangible Assets | ||||||||||
Finite-lived intangible asset, useful life | 20 years | |||||||||
Amortization expense | 600,000 | 600,000 | $ 1,800,000 | 1,800,000 | ||||||
Impairment of goodwill | 0 | 0 | 0 | 0 | ||||||
Amortization Expense | ||||||||||
Amortization expense 2015 | 2,400,000 | 2,400,000 | ||||||||
Amortization expense 2016 | 2,400,000 | 2,400,000 | ||||||||
Amortization expense 2017 | 2,400,000 | 2,400,000 | ||||||||
Amortization expense 2018 | 2,400,000 | 2,400,000 | ||||||||
Amortization expense 2019 | 2,400,000 | 2,400,000 | ||||||||
Property and Equipment | ||||||||||
Depreciation | 100,000 | 100,000 | $ 200,000 | 200,000 | ||||||
Revenue Recognition | ||||||||||
Restocking fee (percent) | 20.00% | |||||||||
Segment Reporting | ||||||||||
Number of reportable segments | segment | 2 | |||||||||
Minimum | ||||||||||
Revenue Recognition | ||||||||||
Period when partner sales reports are received after end of quarter | 30 days | |||||||||
Maximum | ||||||||||
Revenue Recognition | ||||||||||
Period when partner sales reports are received after end of quarter | 60 days | |||||||||
Equipment | Minimum | ||||||||||
Property and Equipment | ||||||||||
Estimated useful life of assets | 3 years | |||||||||
Equipment | Maximum | ||||||||||
Property and Equipment | ||||||||||
Estimated useful life of assets | 10 years | |||||||||
Cydex Pharmaceuticals, Inc | ||||||||||
Contingent Liabilities | ||||||||||
Fair value of liability | 10,500,000 | $ 10,500,000 | 11,500,000 | |||||||
Contingent liability change in amount | 900,000 | 2,800,000 | 3,100,000 | 5,600,000 | ||||||
Cydex Pharmaceuticals, Inc | Revenue Sharing | ||||||||||
Contingent Liabilities | ||||||||||
Purchase of commercial license rights | 800,000 | 0 | 3,900,000 | 1,600,000 | ||||||
Metabasis Therapeutics | ||||||||||
Contingent Liabilities | ||||||||||
Fair value of liability | 4,700,000 | 4,700,000 | 3,700,000 | |||||||
Contingent liability change in amount | (3,200,000) | (1,200,000) | 1,900,000 | 700,000 | ||||||
Number of contingent value rights | right | 4 | |||||||||
Number of contingent value rights per series of contingent value rights | right | 1 | |||||||||
Number of contingent value rights issued for each share | right | 4 | |||||||||
Contingent value rights, frequency of cash payment | 6 months | |||||||||
Contingent liability, cash payment | 500,000 | 800,000 | ||||||||
Omthera Pharmaceuticals | ||||||||||
Milestone Payments | ||||||||||
Event-based payment | $ 1,000,000 | |||||||||
Proceeds from Collaborators | 500,000 | |||||||||
Milestone payment received | 0 | 0 | ||||||||
Collaborative Arrangement, Product | Omthera Pharmaceuticals | ||||||||||
Milestone Payments | ||||||||||
Event-based payment | 400,000 | |||||||||
2019 convertible senior notes | ||||||||||
Convertible Debt | ||||||||||
Principal amount outstanding | 245,000,000 | 245,000,000 | $ 245,000,000 | |||||||
2019 convertible senior notes | Senior Notes | ||||||||||
Convertible Debt | ||||||||||
Principal amount outstanding | $ 245,000,000 | |||||||||
Interest rate | 0.75% | |||||||||
Acquired in-process research and development | ||||||||||
Goodwill and Other Identifiable Intangible Assets | ||||||||||
Impairment of IPR&D | 0 | $ 0 | $ 0 | $ 0 | ||||||
Previously Reported Understatement | ||||||||||
Revision of Immaterial Error | ||||||||||
Current contingent liabilities | $ 600,000 | $ 600,000 | ||||||||
Previously Reported Overstatement | ||||||||||
Revision of Immaterial Error | ||||||||||
Net income (loss) | $ 600,000 | $ 600,000 | ||||||||
Net income (loss) (in usd per share) | $ / shares | $ 0.03 | $ 0.03 | ||||||||
Impact of Correction | ||||||||||
Revision of Immaterial Error | ||||||||||
Net income (loss) | $ (600,000) | |||||||||
Net income (loss) (in usd per share) | $ / shares | $ (0.03) |
Basis of Presentation (Earnings
Basis of Presentation (Earnings (Loss) Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Summary of computation of basic and diluted net income (loss) per share | ||||
Net income: | $ 224,539 | $ 1,280 | $ 248,857 | $ 4,969 |
Shares used to compute basic income per share | 19,886,877 | 20,417,187 | 19,741,081 | 20,584,469 |
Dilutive potential common shares: | ||||
Restricted stock | 63,324 | 22,531 | 55,899 | 37,387 |
Stock options | 763,856 | 905,593 | 922,051 | 1,010,665 |
0.75% Convertible Senior Notes, Due 2019 | 745,591 | 0 | 402,941 | 0 |
Shares used to compute diluted income per share | 21,459,648 | 21,345,311 | 21,121,972 | 21,632,521 |
Basic per share amounts: | ||||
Net income (in usd per share) | $ 11.29 | $ 0.06 | $ 12.61 | $ 0.24 |
Diluted per share amounts: | ||||
Net income (in usd per share) | $ 10.46 | $ 0.06 | $ 11.78 | $ 0.23 |
Basis of Presentation (Investme
Basis of Presentation (Investment Categories) (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Summary of investment categories | ||
Amortized cost | $ 88,571 | $ 3,440 |
Gross unrealized gains | 5,567 | 4,954 |
Gross unrealized losses | (10) | 0 |
Estimated fair value | 94,128 | 8,394 |
Bank deposits | ||
Summary of investment categories | ||
Amortized cost | 38,712 | |
Gross unrealized gains | 4 | |
Gross unrealized losses | (1) | |
Estimated fair value | 38,715 | |
Corporate bonds | ||
Summary of investment categories | ||
Amortized cost | 29,347 | |
Gross unrealized gains | 2 | |
Gross unrealized losses | (5) | |
Estimated fair value | 29,344 | |
Commercial paper | ||
Summary of investment categories | ||
Amortized cost | 2,000 | |
Gross unrealized gains | 0 | |
Gross unrealized losses | 0 | |
Estimated fair value | 2,000 | |
Asset backed securities | ||
Summary of investment categories | ||
Amortized cost | 15,995 | |
Gross unrealized gains | 0 | |
Gross unrealized losses | (4) | |
Estimated fair value | 15,991 | |
Corporate equity securities | ||
Summary of investment categories | ||
Amortized cost | 1,917 | 2,179 |
Gross unrealized gains | 5,561 | 4,954 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 7,478 | 7,133 |
Restricted investments | ||
Summary of investment categories | ||
Amortized cost | 600 | 1,261 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | $ 600 | $ 1,261 |
Basis of Presentation (Goodwill
Basis of Presentation (Goodwill and Other Identifiable Intangible Assets) (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Goodwill | $ 12,238 | $ 12,238 |
Total goodwill and other identifiable intangible assets, net | 61,179 | 62,961 |
Complete technology | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 15,267 | 15,267 |
Less: Accumulated amortization | (3,571) | (2,999) |
Trade name | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 2,642 | 2,642 |
Less: Accumulated amortization | (619) | (519) |
Customer relationships | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 29,600 | 29,600 |
Less: Accumulated amortization | (6,934) | (5,824) |
Acquired in-process research and development | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Acquired in-process research and development | $ 12,556 | $ 12,556 |
Basis of Presentation (Property
Basis of Presentation (Property and Equipment) (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Summary of Property and equipment | ||
Property and equipment , gross | $ 3,087 | $ 3,129 |
Less accumulated depreciation and amortization | (2,732) | (2,643) |
Total property and equipment, net | 355 | 486 |
Lab and office equipment | ||
Summary of Property and equipment | ||
Property and equipment , gross | 2,182 | 2,232 |
Leasehold improvements | ||
Summary of Property and equipment | ||
Property and equipment , gross | 273 | 273 |
Computer equipment and software | ||
Summary of Property and equipment | ||
Property and equipment , gross | $ 632 | $ 624 |
Basis of Presentation (Other Cu
Basis of Presentation (Other Current Assets) (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Summary of other current assets | ||
Prepaid expenses | $ 1,494 | $ 835 |
Other receivables | 283 | 685 |
Co-promote receivable | 0 | 322 |
Total current assets | $ 1,777 | $ 1,842 |
Basis of Presentation (Accrued
Basis of Presentation (Accrued Liabilities and Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accrued Liabilities | ||
Compensation | $ 1,485 | $ 1,708 |
Professional fees | 443 | 459 |
Amounts owed to former licensees | 956 | 925 |
Royalties owed to third parties | 798 | 705 |
Other | 474 | 1,069 |
Total accrued liabilities | 4,156 | 4,866 |
Other Long-Term Liabilities | ||
Deposits | 319 | 411 |
Deferred rent | 291 | 327 |
Other | 33 | 32 |
Total other long-term liabilities | $ 643 | $ 770 |
Basis of Presentation (Accounti
Basis of Presentation (Accounting for Share-Based Compensation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Basis of Presentation [Line Items] | ||||
Share-based compensation expense total | $ 2,836 | $ 3,702 | $ 9,511 | $ 8,795 |
Research and development expenses | ||||
Basis of Presentation [Line Items] | ||||
Share-based compensation expense total | 957 | 1,169 | 3,131 | 2,814 |
General and administrative expenses | ||||
Basis of Presentation [Line Items] | ||||
Share-based compensation expense total | $ 1,879 | $ 2,533 | $ 6,380 | $ 5,981 |
Basis of Presentation (Fair Val
Basis of Presentation (Fair Value Valuation Assumptions) (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Summary of fair-value options awarded to employees and directors | ||||
Risk-free interest rate | 2.00% | 1.90% | 1.90% | |
Risk-free interest rate, minimum | 1.70% | |||
Risk-free interest rate, maximum | 2.00% | |||
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility | 50.00% | 67.00% | 68.00% | |
Expected volatility, minimum | 50.00% | |||
Expected volatility, maximum | 58.00% | |||
Expected term | 6 years 6 months | 6 years 4 months 24 days | 6 years 6 months 26 days | 6 years 4 months 24 days |
Forfeiture rate | 8.50% | 8.60% | 8.50% | |
Minimum | ||||
Summary of fair-value options awarded to employees and directors | ||||
Forfeiture rate | 8.60% | |||
Maximum | ||||
Summary of fair-value options awarded to employees and directors | ||||
Forfeiture rate | 9.70% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Aug. 31, 2014 | |
2019 convertible senior notes | |||
Liabilities: | |||
Principal amount outstanding | $ 245,000,000 | $ 245,000,000 | |
2019 convertible senior notes | Senior Notes | |||
Liabilities: | |||
Estimated fair value of debt | 318,600,000 | ||
Principal amount outstanding | $ 245,000,000 | ||
Recurring | |||
Assets: | |||
Assets, fair value | 163,771,000 | 76,716,000 | |
Liabilities: | |||
Liabilities, fair value | 16,786,000 | 16,244,000 | |
Recurring | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 5,018,000 | 6,796,000 | |
Recurring | Current contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 2,602,000 | ||
Recurring | Current co-promote termination liability | |||
Liabilities: | |||
Liabilities, fair value | 322,000 | ||
Recurring | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 2,120,000 | 3,652,000 | |
Recurring | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 5,469,000 | 4,701,000 | |
Recurring | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 1,577,000 | 773,000 | |
Recurring | Cash Equivalents | |||
Assets: | |||
Assets, fair value | 62,637,000 | 69,261,000 | |
Recurring | Short-term investments | |||
Assets: | |||
Assets, fair value | $ 95,587,000 | 7,133,000 | |
Recurring | Note receivable Viking Therapeutics, Inc. | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Estimated volatility of common stock | 50.00% | ||
Assets: | |||
Assets, fair value | $ 5,547,000 | ||
Recurring | Current co-promote termination payments receivable | |||
Assets: | |||
Assets, fair value | 322,000 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Assets: | |||
Assets, fair value | 7,543,000 | 7,133,000 | |
Liabilities: | |||
Liabilities, fair value | 1,577,000 | 773,000 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Current contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 0 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Current co-promote termination liability | |||
Liabilities: | |||
Liabilities, fair value | 0 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 1,577,000 | 773,000 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash Equivalents | |||
Assets: | |||
Assets, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | |||
Assets: | |||
Assets, fair value | 7,543,000 | 7,133,000 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Note receivable Viking Therapeutics, Inc. | |||
Assets: | |||
Assets, fair value | 0 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Current co-promote termination payments receivable | |||
Assets: | |||
Assets, fair value | 0 | ||
Recurring | Significant Other Observable Inputs (Level 2) | |||
Assets: | |||
Assets, fair value | 150,681,000 | 69,261,000 | |
Liabilities: | |||
Liabilities, fair value | 4,722,000 | 3,652,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Current contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 2,602,000 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Current co-promote termination liability | |||
Liabilities: | |||
Liabilities, fair value | 0 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 2,120,000 | 3,652,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Cash Equivalents | |||
Assets: | |||
Assets, fair value | 62,637,000 | 69,261,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | Short-term investments | |||
Assets: | |||
Assets, fair value | 88,044,000 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Note receivable Viking Therapeutics, Inc. | |||
Assets: | |||
Assets, fair value | 0 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Current co-promote termination payments receivable | |||
Assets: | |||
Assets, fair value | 0 | ||
Recurring | Significant Unobservable Inputs (Level 3) | |||
Assets: | |||
Assets, fair value | 5,547,000 | 322,000 | |
Liabilities: | |||
Liabilities, fair value | 10,487,000 | 11,819,000 | |
Recurring | Significant Unobservable Inputs (Level 3) | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 5,018,000 | 6,796,000 | |
Recurring | Significant Unobservable Inputs (Level 3) | Current contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 0 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Current co-promote termination liability | |||
Liabilities: | |||
Liabilities, fair value | 322,000 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 5,469,000 | 4,701,000 | |
Recurring | Significant Unobservable Inputs (Level 3) | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | Cash Equivalents | |||
Assets: | |||
Assets, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | Short-term investments | |||
Assets: | |||
Assets, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | Note receivable Viking Therapeutics, Inc. | |||
Assets: | |||
Assets, fair value | 5,547,000 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Current co-promote termination payments receivable | |||
Assets: | |||
Assets, fair value | $ 322,000 | ||
Viking Therapeutics, Inc. | |||
Liabilities: | |||
Market value of investment in Viking | $ 28,000,000 |
Fair Value Measurements (Acquis
Fair Value Measurements (Acquisition of CyDex) (Details) - Cydex Pharmaceuticals, Inc - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Credit Derivatives [Line Items] | ||
Amount Of Revenue For Contingent Consideration | $ 15 | |
Contingent Consideration Classified as Equity | ||
Credit Derivatives [Line Items] | ||
Revenue volatility | 25.00% | 25.00% |
Average of probability of commercialization | 88.00% | 81.00% |
Sales beta | 0.50 | 0.60 |
Credit rating | B | B |
Equity risk premium | 6.00% | 6.00% |
Minimum | Contingent Consideration Classified as Equity | ||
Credit Derivatives [Line Items] | ||
Range of annual revenue subject to revenue sharing | $ 20.7 | $ 17.2 |
Maximum | Contingent Consideration Classified as Equity | ||
Credit Derivatives [Line Items] | ||
Range of annual revenue subject to revenue sharing | $ 24.6 | $ 17.3 |
Fair Value Measurements (Level
Fair Value Measurements (Level 3 Reconciliation) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Assets: | |
Fair value of level 3 financial instrument assets as of December 31, 2014 | $ 322 |
Assumed payments made by Pfizer or assignee | (390) |
Fair value adjustments to co-promote termination liability | 68 |
Viking note receivable | 5,547 |
Fair value of level 3 financial instrument assets as of September 30, 2015 | 5,547 |
Liabilities: | |
Fair value of level 3 financial instrument liabilities as of December 31, 2014 | 11,819 |
Assumed payments made by Pfizer or assignee | (390) |
Payments to CVR and other former license holders | (4,074) |
Fair value adjustments to contingent liabilities | 3,064 |
Fair value adjustments to co-promote termination liability | 68 |
Fair value of level 3 financial instrument liabilities as of September 30, 2015 | $ 10,487 |
Investment in Viking Therapeu37
Investment in Viking Therapeutics, Inc. (Details) $ / shares in Units, $ in Thousands, shares in Millions | Jan. 01, 2016USD ($) | May. 31, 2015USD ($)$ / sharesshares | Apr. 30, 2015USD ($) | May. 31, 2014USD ($)program | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | May. 04, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
Schedule of Equity Method Investments [Line Items] | |||||||||||
Payments to acquire IPO shares | $ 9,000 | $ 0 | |||||||||
Investment in Viking Therapeutics | $ 31,826 | 31,826 | $ 0 | ||||||||
Note receivable from Viking Therapeutics | 5,547 | 5,547 | 0 | ||||||||
Loss percentage recorded | 100.00% | ||||||||||
Gain on deconsolidation of Viking Therapeutics | 0 | $ 0 | 28,190 | 0 | |||||||
Equity in net losses from Viking Therapeutics | (2,169) | 0 | (3,040) | 0 | |||||||
Net losses | 224,539 | 1,280 | 248,857 | 4,969 | |||||||
Viking's Assets and Liabilities [Abstract] | |||||||||||
Cash and cash equivalents | 93,770 | 180,663 | 93,770 | 180,663 | 160,203 | $ 11,639 | |||||
Other current assets | 1,777 | 1,777 | 1,842 | ||||||||
Capitalized IPO expenses | 0 | 0 | 2,268 | ||||||||
Total current assets | 210,324 | 210,324 | 186,419 | ||||||||
Other assets | 248 | 248 | 207 | ||||||||
Total assets | 521,700 | 521,700 | 258,029 | ||||||||
Accounts payable | 3,143 | 3,143 | 7,698 | ||||||||
Accrued liabilities | 4,156 | 4,156 | 4,866 | ||||||||
Total current liabilities | 16,253 | 16,253 | 22,779 | ||||||||
Total liabilities | 229,519 | 229,519 | 233,621 | ||||||||
Viking | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Number of programs licensed | program | 5 | ||||||||||
Contingencies for repayment of debt | $ 20,000 | ||||||||||
Period after close of IPO when debt becomes due | 1 year | ||||||||||
Viking's Assets and Liabilities [Abstract] | |||||||||||
Cash and cash equivalents | 756 | ||||||||||
Other current assets | 18 | ||||||||||
Capitalized IPO expenses | 2,268 | ||||||||||
Total current assets | 3,042 | ||||||||||
Other assets | 1 | ||||||||||
Total assets | 3,043 | ||||||||||
Accounts payable | 2,211 | ||||||||||
Accrued liabilities | 77 | ||||||||||
Current portion of notes payable | 334 | ||||||||||
Total current liabilities | 2,622 | ||||||||||
Long-term portion of notes payable | 2,331 | ||||||||||
Total liabilities | $ 4,953 | ||||||||||
Debt | Viking | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Convertible loan facility | $ 2,500 | ||||||||||
Interest accrual rate, less than | 5.00% | ||||||||||
Repayment in equity percentage | 200.00% | ||||||||||
Metabasis Therapeutics | |||||||||||
Viking's Assets and Liabilities [Abstract] | |||||||||||
Contingent liability change in amount | (3,200) | $ (1,200) | 1,900 | $ 700 | |||||||
Metabasis Therapeutics | Forecast | |||||||||||
Viking's Assets and Liabilities [Abstract] | |||||||||||
Contingent liability change in amount | $ (2,600) | ||||||||||
IPO | Viking | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Ownership after close of IPO (percent) | 49.90% | ||||||||||
Viking Therapeutics, Inc. | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Investment in Viking Therapeutics | $ 34,900 | ||||||||||
Net losses | 4,700 | 18,300 | |||||||||
Viking's Assets and Liabilities [Abstract] | |||||||||||
Total assets | 19,000 | 19,000 | |||||||||
Total liabilities | $ 5,700 | $ 5,700 | |||||||||
Common Stock | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
IPO shares purchased by the Company (shares) | shares | 1.1 | ||||||||||
Payments to acquire IPO shares | $ 9,000 | ||||||||||
IPO shares received pursuant to amended MLA (shares) | shares | 3.7 | ||||||||||
Aggregate value of shares received under licensing agreement | $ 29,200 | ||||||||||
Equity interest in outstanding common stock of Viking (percent) | 48.80% | 48.80% | |||||||||
Common Stock | Viking Therapeutics, Inc. | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
IPO share price (USD per share) | $ / shares | $ 8 | ||||||||||
Common Stock | Viking Therapeutics, Inc. | IPO | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Shares issued in IPO (shares) | shares | 3.5 | ||||||||||
IPO share price (USD per share) | $ / shares | $ 8 | ||||||||||
IPO aggregate offering price | $ 27,600 | ||||||||||
Common Stock Received Pursuant to Master License Agreement | Metabasis Therapeutics | |||||||||||
Viking's Assets and Liabilities [Abstract] | |||||||||||
Contingent liability change in amount | $ 500 | $ 800 | |||||||||
Viking Therapeutics, Inc. | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Note receivable from Viking Therapeutics | $ 5,500 | $ 5,500 | $ 5,500 |
Lease Obligations (Narrative) (
Lease Obligations (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Operating Leased Assets [Line Items] | |||||
Lease expiration year, minimum | 2,016 | ||||
Lease expiration year, maximum | 2,019 | ||||
Percentage of increase in annual base rent, minimum | 3.00% | 3.00% | |||
Percentage of increase in annual base rent, maximum | 3.50% | 3.50% | |||
Lease exit costs | $ 345 | $ 182 | $ 786 | $ 522 | |
Rent expense, net sublease income | 800 | 800 | 2,700 | 2,600 | |
Adjustment for accretion and changes in lease assumptions | $ 300 | $ 200 | 800 | $ 400 | |
Contract Termination | |||||
Operating Leased Assets [Line Items] | |||||
Lease exit costs | $ 1,300 | $ 3,300 |
Lease Obligations (Lease Obliga
Lease Obligations (Lease Obligations) (Details) $ in Thousands | Sep. 30, 2015USD ($) |
Operating Leased Assets [Line Items] | |
Operating lease obligations, Less than 1 year | $ 3,146 |
Operating lease obligations, 1 year | 767 |
Operating lease obligations, 2 years | 746 |
Operating lease obligations, 3 years | 560 |
Operating lease obligations, 4 years | 0 |
Total | 5,219 |
Payments expected to received from sublease agreements | |
Sublease payments expected to be received, Less than 1 year | 2,514 |
Sublease payments expected to be received, 1 year | 318 |
Sublease payments expected to be received, 2 years | 286 |
Sublease payments expected to be received, 3 years | 209 |
Sublease payments expected to be received, 4 years | 0 |
Total | 3,327 |
Corporate Headquarters - San Diego, CA | |
Operating Leased Assets [Line Items] | |
Operating lease obligations, Less than 1 year | 695 |
Operating lease obligations, 1 year | 713 |
Operating lease obligations, 2 years | 732 |
Operating lease obligations, 3 years | 560 |
Operating lease obligations, 4 years | 0 |
Total | 2,700 |
Payments expected to received from sublease agreements | |
Sublease payments expected to be received, Less than 1 year | 438 |
Sublease payments expected to be received, 1 year | 449 |
Sublease payments expected to be received, 2 years | 460 |
Sublease payments expected to be received, 3 years | 351 |
Sublease payments expected to be received, 4 years | 0 |
Total | 1,698 |
Bioscience and Technology Business Center - Lawrence, KS | |
Operating Leased Assets [Line Items] | |
Operating lease obligations, Less than 1 year | 54 |
Operating lease obligations, 1 year | 54 |
Operating lease obligations, 2 years | 14 |
Operating lease obligations, 3 years | 0 |
Operating lease obligations, 4 years | 0 |
Total | 122 |
Vacated Office Office and Research Facility - Cranbury, NJ | |
Operating Leased Assets [Line Items] | |
Operating lease obligations, Less than 1 year | 2,397 |
Operating lease obligations, 1 year | 0 |
Operating lease obligations, 2 years | 0 |
Operating lease obligations, 3 years | 0 |
Operating lease obligations, 4 years | 0 |
Total | 2,397 |
Payments expected to received from sublease agreements | |
Sublease payments expected to be received, Less than 1 year | 194 |
Sublease payments expected to be received, 1 year | 0 |
Sublease payments expected to be received, 2 years | 0 |
Sublease payments expected to be received, 3 years | 0 |
Sublease payments expected to be received, 4 years | 0 |
Total | $ 194 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Summary of segment information | |||||
Total assets | $ 521,700 | $ 521,700 | $ 258,029 | ||
Net revenues from external customers | 17,701 | $ 14,973 | 50,722 | $ 41,539 | |
Depreciation and amortization expense | (643) | (662) | (1,940) | (1,998) | |
Operating (loss) income | 8,597 | 3,532 | 16,313 | 9,989 | |
Interest expense, net | (2,930) | (1,516) | (8,875) | (1,946) | |
Income tax benefit (expense) | 217,255 | (124) | 216,976 | (131) | |
Operating Segments | Ligand | |||||
Summary of segment information | |||||
Total assets | 449,388 | 449,388 | 184,215 | ||
Net revenues from external customers | 8,885 | 6,424 | 23,092 | 18,907 | |
Depreciation and amortization expense | (45) | (61) | (148) | (194) | |
Operating (loss) income | 2,670 | (1,683) | (1,336) | (2,622) | |
Interest expense, net | (2,930) | (1,516) | (8,875) | (1,946) | |
Income tax benefit (expense) | 228,101 | (115) | 227,808 | (123) | |
Operating Segments | Captisol | |||||
Summary of segment information | |||||
Total assets | 72,312 | 72,312 | $ 73,814 | ||
Net revenues from external customers | 8,816 | 8,549 | 27,630 | 22,632 | |
Depreciation and amortization expense | (598) | (601) | (1,792) | (1,804) | |
Operating (loss) income | 5,927 | 5,215 | 17,649 | 12,611 | |
Interest expense, net | 0 | 0 | 0 | 0 | |
Income tax benefit (expense) | $ (10,846) | $ (9) | $ (10,832) | $ (8) |
Financing Arrangements (Narrati
Financing Arrangements (Narrative) (Details) | 1 Months Ended | 9 Months Ended | ||
Aug. 31, 2014USD ($)d$ / sharesshares | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Debt Instrument [Line Items] | ||||
Initial debt value | $ 202,951,000 | $ 195,908,000 | ||
Long-term debt issuance costs | 2,747,000 | 3,388,000 | ||
Common stock, shares available to be issued | shares | 3,264,643 | |||
Exercise price of convertible bond hedge | $ / shares | $ 75.05 | |||
Payment for convertible bond hedges | 0 | $ 48,143,000 | ||
Exercise price | $ / shares | $ 125.08 | |||
Proceeds from issuance of warrants | $ 11,600,000 | |||
2019 convertible senior notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount outstanding | 245,000,000 | 245,000,000 | ||
Initial debt value | 202,951,000 | 195,908,000 | ||
Convertible notes payable, Viking Therapeutics, Inc. | ||||
Debt Instrument [Line Items] | ||||
Current notes payable | 0 | 334,000 | ||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Payment for convertible bond hedges | $ 48,100,000 | |||
Senior Notes | 2019 convertible senior notes | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 0.75% | |||
Aggregate principal amount outstanding | $ 245,000,000 | |||
Net proceeds from note after debt issuance costs | $ 239,300,000 | |||
Initial conversion rate | 0.0133251 | |||
Initial conversion price | $ / shares | $ 75.05 | |||
Proceeds from issuance of debt | $ 245,000,000 | |||
Debt discount rate | 5.83% | |||
Initial debt value | $ 192,500,000 | |||
If-converted value in excess of principal | 29,000,000 | |||
Debt issuance costs | 5,700,000 | |||
Equity component of convertible debt recorded as a reduction to additional paid-in capital | 1,200,000 | |||
Long-term debt issuance costs | $ 4,500,000 | |||
Term of notes | 5 years | |||
Carrying value of the equity component of debt, net of issuance costs | $ 51,300,000 | $ 51,300,000 | ||
Senior Notes | 2019 convertible senior notes | Debt Instrument, Redemption, Period One | ||||
Debt Instrument [Line Items] | ||||
Threshold trading days | d | 20 | |||
Consecutive trading days | 30 days | |||
Percentage of stock price trigger | 130.00% | |||
Senior Notes | 2019 convertible senior notes | Debt Instrument, Redemption, Period Two | ||||
Debt Instrument [Line Items] | ||||
Threshold trading days | d | 5 | |||
Consecutive trading days | 10 days | |||
Maximum threshold percentage of debt trading price trigger | 98.00% |
Financing Arrangements (Notes P
Financing Arrangements (Notes Payable) (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Notes Payable, Current and Noncurrent [Abstract] | ||
Net carrying amount | $ 202,951 | $ 195,908 |
Total notes payable | 202,951 | 196,242 |
2019 convertible senior notes | ||
Notes Payable, Current and Noncurrent [Abstract] | ||
Principal amount outstanding | 245,000 | 245,000 |
Unamortized discount | (42,049) | (49,092) |
Net carrying amount | 202,951 | 195,908 |
Convertible notes payable, Viking Therapeutics, Inc. | ||
Notes Payable, Current and Noncurrent [Abstract] | ||
Current notes payable | $ 0 | $ 334 |
Income Tax (Details)
Income Tax (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision | $ 217,255 | $ (124) | $ 216,976 | $ (131) |
Income tax provision, per diluted share (in USD per share) | $ 10.12 | $ 10.27 | ||
Effective income tax rate, continuing operations (percent) | (596.00%) | 3.00% | ||
Effective income tax rate (percent) | (2983.00%) | 9.00% | 681.00% | 3.00% |
Valuation allowance | $ 9,100 | $ 9,100 | ||
Unrecognized tax benefits | $ 8,300 | $ 8,300 |
Stockholders' Equity (Stock Opt
Stockholders' Equity (Stock Option Plan and Restricted Stock Activity) (Details) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Stock Options: | |
Balance as of December 31, 2014 | shares | 1,800,697 |
Granted | shares | 287,747 |
Exercised | shares | (297,040) |
Forfeited | shares | (78,685) |
Balance as of September 30, 2015 | shares | 1,712,719 |
Weighted Average Exercise Price (in USD per share) | |
Balance as of December 31, 2014 | $ 28.78 |
Granted | 62.82 |
Exercised | 24.43 |
Forfeited | 45.75 |
Balance as of September 30, 2015 | $ 34.47 |
Restricted Stock [Member] | |
Restricted Shares: | |
Nonvested at December 31, 2014 | shares | 82,673 |
Granted | shares | 112,954 |
Exercised | shares | (48,066) |
Forfeited | shares | (15,512) |
Nonvested at September 30, 2015 | shares | 132,049 |
Weighted- Average Grant Date Fair Value (in USD per share) | |
Nonvested at December 31, 2014 | $ 45.76 |
Granted | 63.50 |
Exercised | 44.78 |
Forfeited | 54.91 |
Nonvested at September 30, 2015 | $ 60.22 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
September 2015 Share Repurchase Program | |||||
Corporate Share Repurchase [Abstract] | |||||
Share repurchase program, authorized amount | $ 200,000,000 | $ 200,000,000 | $ 200,000,000 | ||
Share repurchase program, period in force (maximum) | 3 years | ||||
Shares repurchased during period (shares) | 6,120 | ||||
Shares repurchased during period, value | $ 500,000 | $ 500,000 | |||
August 2014 Share Repurchase Program | |||||
Corporate Share Repurchase [Abstract] | |||||
Shares repurchased during period (shares) | 692,800 | 692,800 | |||
Shares repurchased during period, value | $ 38,500,000 | $ 38,500,000 | |||
2002 Stock Incentive Plan | Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares available for future option grants | 800,000 | 800,000 | 800,000 | ||
Employee Stock Purchase Plan | |||||
Employee Stock Purchase Plan | |||||
Shares allowed to purchase in employee stock purchase plan | 1,250 | ||||
Shares issued in period | 2,654 | 2,230 | |||
Shares available for future purchases | 73,087 | ||||
Employee Stock Purchase Plan | Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Net proceeds from employee stock purchase plan | $ 7,300,000 | $ 4,100,000 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | Nov. 05, 2015 | Sep. 30, 2015 |
Subsequent Event [Line Items] | ||
Percentage of increase in annual base rent, minimum | 3.00% | |
Corporate Headquarters - San Diego, CA | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Initial term of operating lease | 7 years | |
Base annual rent | $ 125,000 | |
Percentage of increase in annual base rent, minimum | 3.00% | |
Length of renewal term for operating lease | 5 years |