Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
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, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity common stock outstanding (shares) | 21,105,476 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 32,739 | $ 18,752 |
Short-term investments | 169,520 | 122,296 |
Accounts receivable | 12,816 | 14,700 |
Note receivable from Viking | 3,007 | 3,207 |
Inventory | 5,007 | 1,923 |
Other current assets | 1,112 | 2,175 |
Total current assets | 224,201 | 163,053 |
Deferred income taxes | 134,939 | 123,891 |
Investment in Viking | 5,137 | 8,345 |
Intangible assets, net | 196,578 | 204,705 |
Goodwill | 72,207 | 72,207 |
Commercial license rights, net | 23,721 | 25,821 |
Property and equipment, net | 3,526 | 1,819 |
Other assets | 2,028 | 1,744 |
Total assets | 662,337 | 601,585 |
Current liabilities: | ||
Accounts payable | 3,617 | 2,734 |
Accrued liabilities | 6,423 | 6,397 |
Current contingent liabilities | 86 | 5,088 |
2019 Convertible Senior Notes, net | 221,557 | 212,910 |
Total current liabilities | 231,683 | 227,129 |
Long-term contingent liabilities | 5,196 | 2,916 |
Other long-term liabilities | 695 | 687 |
Total liabilities | 237,574 | 230,732 |
Commitments and Contingencies | ||
Equity component of currently redeemable convertible notes (Note 3) | 21,597 | 29,563 |
Stockholders' equity: | ||
Common stock, $0.001 par value; 33,333,333 shares authorized; 21,094,836 and 20,909,301 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 21 | 21 |
Additional paid-in capital | 793,724 | 769,653 |
Accumulated other comprehensive income | 3,335 | 2,743 |
Accumulated deficit | (393,914) | (431,127) |
Total stockholders' equity | 403,166 | 341,290 |
Total liabilities and stockholders' equity | $ 662,337 | $ 601,585 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (shares) | 33,333,333 | 33,333,333 |
Common stock, shares issued (shares) | 21,094,836 | 20,909,301 |
Common stock, shares outstanding (shares) | 21,094,836 | 20,909,301 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Revenues: | |||||
Royalties | $ 21,931 | $ 15,698 | $ 60,372 | $ 39,842 | |
Material sales | 7,664 | 4,219 | 14,336 | 13,445 | |
License fees, milestones and other revenues | 3,780 | 1,702 | 15,930 | 17,500 | |
Total revenues | 33,375 | 21,619 | 90,638 | 70,787 | |
Operating costs and expenses: | |||||
Cost of sales | [1] | 2,385 | 999 | 3,628 | 2,674 |
Amortization of intangibles | 2,706 | 2,706 | 8,126 | 7,912 | |
Research and development | 4,759 | 5,898 | 18,254 | 14,813 | |
General and administrative | 7,032 | 6,550 | 20,904 | 20,858 | |
Total operating costs and expenses | 16,882 | 16,153 | 50,912 | 46,257 | |
Income from operations | 16,493 | 5,466 | 39,726 | 24,530 | |
Other (expense) income: | |||||
Interest expense, net | (2,822) | (3,116) | (8,625) | (9,172) | |
Increase in contingent liabilities | (1,336) | (958) | (2,302) | (2,595) | |
Loss from Viking | (1,019) | (1,396) | (3,350) | (14,139) | |
Other income, net | 755 | 1,215 | 1,117 | 2,107 | |
Total other expense, net | (4,422) | (4,255) | (13,160) | (23,799) | |
Income before income taxes | 12,071 | 1,211 | 26,566 | 731 | |
Income tax (expense) benefit | (3,645) | (160) | (7,000) | 28 | |
Income from operations | 8,426 | 1,051 | 19,566 | 759 | |
Gain on sale of Oncology Product Line before income taxes | 0 | 0 | 0 | 1,139 | |
Income tax expense on discontinued operations | 0 | 0 | 0 | (408) | |
Income from discontinued operations | 0 | 0 | 0 | 731 | |
Net income | $ 8,426 | $ 1,051 | $ 19,566 | $ 1,490 | |
Basic earnings per share data | |||||
Income from continuing operations (in usd per share) | [2] | $ 0.40 | $ 0.05 | $ 0.93 | $ 0.04 |
Income from discontinued operations (in usd per share) | [2] | 0 | 0 | 0 | 0.04 |
Net income (in usd per share) | [2] | 0.40 | 0.05 | 0.93 | 0.07 |
Diluted earnings per share data | |||||
Income from continuing operations (in usd per share) | [2] | 0.36 | 0.05 | 0.84 | 0.03 |
Income from discontinued operations (in usd per share) | [2] | 0 | 0 | 0 | 0.03 |
Net income (USD per share) | [2] | $ 0.36 | $ 0.05 | $ 0.84 | $ 0.07 |
Shares used for computation | |||||
Basic (in shares) | 21,071,000 | 20,887,000 | 21,007,000 | 20,806,000 | |
Diluted (in shares) | 23,551,245 | 22,997,279 | 23,261,857 | 22,742,249 | |
[1] | Excludes amortization of intangibles. | ||||
[2] | The sum of net income per share amounts may not equal the totals due to rounding. |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income: | $ 8,426 | $ 1,051 | $ 19,566 | $ 1,490 |
Unrealized net gain on available-for-sale securities, net of tax | 605 | 978 | 628 | 367 |
Less: Reclassification of net realized gain included in net income, net of tax | (329) | (1,071) | (36) | (1,670) |
Comprehensive income | $ 8,702 | $ 958 | $ 20,158 | $ 187 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities | ||
Net income | $ 19,566 | $ 1,490 |
Less: income from discontinued operations | 0 | 731 |
Income from continuing operations | 19,566 | 759 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Non-cash change in estimated fair value of contingent liabilities | 2,302 | 2,595 |
Realized gain on sale of short-term investment | (371) | (1,776) |
Gain on disposal of assets | 0 | (183) |
Depreciation and amortization | 7,581 | 8,322 |
Amortization of premium (discount) on investments, net | 88 | 510 |
Amortization of debt discount and issuance fees | 8,647 | 8,130 |
Stock-based compensation | 15,917 | 13,690 |
Deferred income taxes | 6,855 | 347 |
Change in fair value of the Viking convertible debt receivable and warrants | (426) | (464) |
Loss from equity method investment | 3,350 | 14,139 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,909 | (411) |
Inventory | (1,985) | (2,394) |
Other current assets | 399 | (9) |
Other long-term assets | 0 | (31) |
Accounts payable and accrued liabilities | (2,649) | (3,079) |
Other | 1,075 | 1,497 |
Net cash provided by operating activities | 62,258 | 42,008 |
Investing activities | ||
Purchase of commercial license rights | 0 | (17,695) |
Payments to CVR holders and other contingency payments | (4,998) | (7,055) |
Purchases of property and equipment | (220) | (1,783) |
Cash paid for acquisition, net of cash acquired | 0 | (92,504) |
Purchase of short-term investments | (205,121) | (73,109) |
Proceeds received from repayment of Viking note receivable | 200 | 300 |
Proceeds received from repayment of commercial license rights | 2,859 | 0 |
Proceeds from sale of short-term investments | 83,390 | 23,387 |
Proceeds from maturity of short-term investments | 75,887 | 113,694 |
Net cash used in investing activities | (48,003) | (56,465) |
Financing activities | ||
Net proceeds from stock option exercises and ESPP | 3,864 | 4,608 |
Taxes paid related to net share settlement of equity awards | (4,132) | (999) |
Net cash (used in) provided by financing activities | (268) | 3,609 |
Net increase (decrease) in cash and cash equivalents | 13,987 | (10,848) |
Cash and cash equivalents at beginning of period | 18,752 | 97,428 |
Cash and cash equivalents at end of period | 32,739 | 86,580 |
Supplemental disclosure of cash flow information | ||
Interest paid | 1,838 | 1,838 |
Taxes paid | 145 | 36 |
Supplemental schedule of non-cash activity | ||
Stock issued for acquisition, net of issuance cost | 0 | (77,330) |
Unsettled repurchase of common stock | 0 | (1,554) |
Stock and warrant received for repayment of Viking notes receivable | 0 | 1,200 |
Accrued fixed asset purchases | 1,700 | 0 |
Accrued inventory purchases | 499 | 0 |
Unrealized gain (loss) on AFS investments | 628 | (271) |
Purchase of Common Stock | ||
Investing activities | ||
Purchase of Viking common stock and warrants | 0 | (1,000) |
Viking Therapeutics, Inc. | ||
Investing activities | ||
Purchase of Viking common stock and warrants | $ 0 | $ (700) |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The Company’s accompanying unaudited condensed consolidated financial statements have been prepared in accordance with 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. Interim financial results are not necessarily indicative of the results that may be expected for the full year. 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, 2016 filed on February 28, 2017. The accompanying condensed consolidated financial statements include Ligand and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation Significant Accounting Policies The Company describes its significant accounting policies in Note 1 to the financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2016. Use of Estimates The preparation of condensed consolidated financial statements in conformity with 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. Accounting Pronouncements Recently Adopted In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which is intended to simplify several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted ASU 2016-09 in the first quarter of fiscal year 2017. As a result of the adoption, the Company recorded a $17.9 million cumulative-effect adjustment to retained earnings for the recognition of excess tax benefits generated by the settlement of stock-based awards in prior periods and a discrete income tax benefit of $0.9 million to the income tax provision for excess tax benefits generated by the settlement, in the first quarter of fiscal year 2017, of stock-based awards. As allowed by the new guidance, the Company has elected to account for equity award forfeitures as they occur, and recorded a $0.3 million cumulative-effect adjustment to retained earnings for this accounting change in prior periods. Recent Accounting Pronouncements In May 2014, the FASB issued new guidance related to revenue recognition, ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”) , which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASC 606 defines a five-step approach for recognizing revenue, which may require a company to use more judgment and make more estimates than under the current guidance. Two methods of adoption are permitted: (a) full retrospective adoption, meaning the standard is applied to all periods presented; or (b) modified retrospective adoption, meaning the cumulative effect of applying the new guidance is recognized at the date of initial application as an adjustment to the opening retained earnings balance. We are undertaking a substantial effort to be ready for adoption of ASC 606. Some of our contracts have distinct terms which will need to be evaluated separately. We anticipate that this standard will have a material impact on our consolidated financial statements by accelerating the timing of revenue recognition for revenues related to royalties, and potentially certain contingent milestone based payments. We intend to adopt ASC 606 starting as of January 1, 2018 using the modified retrospective method. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017. We do not expect the adoption of this standard to have a material impact on our financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for us in the first quarter of 2018. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business , which changes the definition of a business to assist entities with evaluating when a set of assets acquired or disposed of should be considered a business. The new standard requires an entity to evaluate if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set would not be considered a business. The new standard also requires a business to include at least one substantive process and narrows the definition of outputs. We expect that these provisions will reduce the number of transactions that will be considered a business. The new standard is effective for interim and annual periods beginning on January 1, 2018, and may be adopted earlier. The standard would be applied prospectively to any transaction occurring on or after the adoption date. We are currently evaluating the impact that this new standard will have on our consolidated financial statements. Short-term Investments The Company's investments consist of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Short-term investments Bank deposits $ 77,307 $ 12 $ (5 ) $ 77,314 $ 40,715 $ 19 $ — $ 40,734 Corporate bonds 50,833 3 (34 ) 50,802 11,031 — (5 ) 11,026 Commercial paper 23,176 3 (2 ) 23,177 33,074 2 (9 ) 33,067 U.S. Government bonds 8,490 2 (6 ) 8,486 7,508 — (1 ) 7,507 Agency bonds 4,977 — — 4,977 7,294 1 — 7,295 Municipal bonds 2,020 — (8 ) 2,012 19,624 — (11 ) 19,613 Corporate equity securities 254 2,498 — 2,752 1,512 1,542 — 3,054 $ 167,057 $ 2,518 $ (55 ) $ 169,520 $ 120,758 $ 1,564 $ (26 ) $ 122,296 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. Goodwill and Other Identifiable Intangible Assets Goodwill and other identifiable intangible assets consist of the following (in thousands): September 30, December 31, 2017 2016 Indefinite lived intangible assets IPR&D $ 12,246 $ 12,246 Goodwill 72,207 72,207 Definite lived intangible assets Complete technology 182,577 182,577 Less: Accumulated amortization (19,710 ) (12,792 ) Trade name 2,642 2,642 Less: Accumulated amortization (883 ) (784 ) Customer relationships 29,600 29,600 Less: Accumulated amortization (9,894 ) (8,784 ) Total goodwill and other identifiable intangible assets, net $ 268,785 $ 276,912 Commercial License Rights Commercial license rights consist of the following (in thousands): September 30, December 31, 2017 2016 CorMatrix $ 15,190 $ 17,284 Selexis 8,531 8,537 $ 23,721 $ 25,821 Commercial license rights represent a portfolio of future milestone and royalty payment rights acquired from Selexis in April 2013 and April 2015 and CorMatrix in May 2016. Individual commercial license rights acquired are carried at allocated cost and approximate fair value. In May 2017, the Company entered into a Royalty Agreement with Aziyo pursuant to which the Company will receive royalties from certain marketed products that Aziyo acquired from CorMatrix. Pursuant to the Royalty Agreement, the Company received $5 million in June 2017 and is scheduled to receive another $5 million by the end of 2017 from Aziyo to buydown the royalty rates on the products CorMatrix sold to Aziyo. The Royalty Agreement closed on May 31, 2017, in connection with the closing of the asset sale from CorMatrix to Aziyo (the “CorMatrix Asset Sale”). Pursuant to the Royalty Agreement, the Company will receive a 5% royalty on the products Aziyo acquired in the CorMatrix Asset Sale, reduced from the original 20% royalty from CorMatrix pursuant to the previously disclosed Interest Purchase Agreement, dated May 3, 2016 (the “Original Interest Purchase Agreement”) between CorMatrix and the Company. In addition, Aziyo has agreed to pay the Company up to $10 million of additional milestones tied to cumulative net sales of the products Aziyo acquired in the CorMatrix Asset Sale and to extend the term on these royalties by one year. The Royalty Agreement will terminate on May 31, 2027. In addition, in May 2017, the Company entered into an amended and restated interest purchase agreement (the “Amended Interest Purchase Agreement”) with CorMatrix, which supersedes in its entirety the Original Interest Purchase Agreement. Other than removing the commercial products sold to Aziyo in the CorMatrix Sale, the terms of the Amended Interest Purchase Agreement remain unchanged with respect to the CorMatrix developmental pipeline products, including the royalty rate of 5% on such pipeline products. The Amended Interest Purchase Agreement will terminate 10 years from the date of the first commercial sale of such products. The Company accounts for the CorMatrix commercial license right as a financial asset in accordance with ASC 310 and amortizes the commercial license right using the 'effective interest' method whereby the Company forecasts expected cash flows over the term of the arrangement to arrive at an annualized effective interest. The annual effective interest associated with the forecasted cash flows from the Royalty Agreement with Aziyo as of September 30, 2017 is 26% . Revenue is calculated by multiplying the carrying value of the commercial license right by the effective interest. The royalty payments received for the three and nine months ended September 30, 2017, including the $5 million received in June 2017, were accordingly allocated between revenue and the amortization of the commercial license rights. During the financial statement close process for the three and six months ended June 30, 2017 the Company identified and corrected an immaterial error related to 2016 and the first quarter of 2017. The adjustment related to an error in the recognition of the income associated with this financial asset. In the second quarter of 2017, the Company determined the 'effective interest' method should have been used to recognize income associated with the financial asset and that the method utilized previously was incorrect. The error had the impact of understating Commercial License Rights, revenue and net income in 2016 and the first quarter of 2017. Management evaluated the effect of the adjustment on previously issued interim and annual consolidated financial statements in accordance with SAB No. 99 and SAB No. 108 and concluded that it was qualitatively and quantitatively immaterial to the historical interim and annual periods. Management also concluded that the correcting the error in the second quarter of 2017 would not have a material impact on the 2017 annual expected financial results. As a result, in accordance with SAB No. 108, we corrected our Consolidated Balance Sheets as of June 30, 2017. The error resulted in an understatement of 2016 and Q1 2017 revenue of $1.3 million and $0.4 million respectively, and an understatement of 2016 and Q1 2017 net income of $0.8 million , or $0.04 per diluted share, and net income of $0.3 million , or $0.01 per diluted share, respectively. The correction of the error in Q2 2017 does not have any impact for the three months ended September 30, 2017, however it resulted in an overstatement of revenue of $1.3 million , and $0.8 million or $0.04 per diluted share for the nine months ended September 30, 2017. Equity-Method Investment The Company has approximately 22.1% equity ownership in Viking as of September 30, 2017 . 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. The market value of the Company's equity investment in Viking was $12.0 million as of September 30, 2017 . The Company also has outstanding warrants to purchase 1.5 million shares of Viking's common stock at an exercise price of $1.50 per share at September 30, 2017 . The Company recorded the warrants at the fair value of $1.1 million and $0.7 million at September 30, 2017 and December 31, 2016 , respectively. See Note 2 Fair Value Measurement for details. In addition, the Company currently has an active MLA with Viking, under which the Company licensed to Viking the rights to five programs. The Company is entitled to receive contingent event-based payments and royalties from Viking based on the progression and eventual sale of any products being developed by Viking under the MLA. No such payment was earned or recognized during the three and nine months ended September 30, 2017 and 2016 . The Company also has a convertible note receivable from Viking under the LSA. Under the terms of the LSA, the principal amount outstanding accrues interest at a fixed rate of 2.5% . On May 8, 2017, the Company entered into an amendment to the LSA, which amends to, among other things, (i) extend the maturity date of the outstanding convertible notes receivable under the LSA from May 21, 2017 to May 21, 2018 and (ii) caused Viking to pay the Company $0.2 million , which reduced first the accrued and unpaid interest and second the unpaid principal amount on the Viking Note by $0.50 for each $1.00 of value. The Company elected to record the convertible notes at fair value, which was $3.0 million and $3.2 million at September 30, 2017 and December 31, 2016 , respectively. See Note 2 Fair Value Measurement for details. Accrued Liabilities Accrued liabilities consist of the following (in thousands): September 30, December 31, 2017 2016 Compensation $ 2,479 $ 2,603 Professional fees 634 829 Amounts owed to former licensees 457 899 Royalties owed to third parties 1,000 942 Deferred revenue 1,075 — Other 778 1,124 Total accrued liabilities $ 6,423 $ 6,397 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, 2017 2016 2017 2016 Stock-based compensation expense as a component of: Research and development expenses $ 2,394 $ 2,845 $ 8,260 $ 6,112 General and administrative expenses 2,854 2,486 7,657 7,578 $ 5,248 $ 5,331 $ 15,917 $ 13,690 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, 2017 2016 2017 2016 Risk-free interest rate 2.0% 1.3% 2.1% 1.5% Dividend yield — — — — Expected volatility 47% 49% 47% 50% Expected term 6.5 6.7 6.8 6.6 Lease Obligations The Company describes its operating lease obligations in Note 5 to the financial statements in Item 8 of its Annual Report on Form 10-K for the year ended December 31, 2016. There were no significant changes in the Company's operating lease commitments during the first nine months of 2017. Convertible Debt In August 2014, the Company completed a $245.0 million offering of 2019 Convertible Senior Notes, which bear interest at 0.75% . The Company accounted 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. Upon the occurrence of certain circumstances, holders of the 2019 Convertible Senior Notes may redeem all or a portion of their notes, which may require the use of a substantial amount of cash. At September 30, 2017 , we had a working capital deficit of $7.5 million , which includes the 2019 Convertible Senior notes that are currently redeemable as of September 30, 2017 but excludes another $21.6 million that is classified as mezzanine equity. As noted in Note 3, the debt may change from current to non-current period over period, primarily as a result of changes in the Company’s stock price. Management believes that it is remote that holders of the notes would choose to convert their notes early because the fair value of the security that a noteholder can currently realize in an active market is greater than the conversion value the noteholder would realize upon early conversion. In the unlikely event that all the debt was converted, we have three business days following a 50 trading day observation period from the convert date to pay the principal in cash. We have positive operating income and positive cash flow from operations since December 31, 2013 and, accordingly, while there can be no assurance, we believe we have the ability to raise additional capital through an S-3 registration or via alternative financing arrangements such as convertible or straight debt. 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 based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable under 2019 Convertible Senior Notes and the associated warrants, stock options and restricted stock. The 2019 Convertible Senior Notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the notes. The warrants have a dilutive effect to the extent the market price per share of common stock exceeds the applicable exercise price of the warrants. Potentially dilutive common shares from stock options and restricted stock are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of stock options and the average amount of unrecognized compensation expense for restricted stock are assumed to be used to repurchase shares. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded. The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share: Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Weighted average shares outstanding: 21,070,678 20,886,705 21,006,718 20,805,604 Dilutive potential common shares: Restricted stock 79,222 134,008 140,340 102,282 Stock options 1,019,342 792,474 980,461 788,106 2019 Convertible Senior Notes 1,334,357 1,184,092 1,118,456 1,046,257 Warrants 47,646 — 15,882 — Shares used to compute diluted income per share 23,551,245 22,997,279 23,261,857 22,742,249 Potentially dilutive shares excluded from calculation due to anti-dilutive effect 255,101 3,540,806 2,531,219 3,522,063 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table presents the Company's hierarchy for assets and liabilities measured at fair value. September 30, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments (1) $ 2,753 $ 166,767 $ — $ 169,520 $ 3,054 $ 119,242 $ — $ 122,296 Note receivable Viking (2) — — 3,007 3,007 — — 3,207 3,207 Investment in warrants (3) 1,110 — — 1,110 684 — — 684 Total assets $ 3,863 $ 166,767 $ 3,007 $ 173,637 $ 3,738 $ 119,242 $ 3,207 $ 126,187 Liabilities: Current contingent liabilities-CyDex (4) $ — $ — $ 86 $ 86 $ — $ — $ 101 $ 101 Long-term contingent liabilities-CyDex (4) — — 1,503 1,503 — — 1,503 1,503 Long-term contingent liabilities-Metabasis (5) — 3,693 — 3,693 — 1,413 — 1,413 Liability for amounts owed to former licensees (6) 413 — — 413 371 — — 371 Total liabilities $ 413 $ 3,693 $ 1,589 $ 5,695 $ 371 $ 1,413 $ 1,604 $ 3,388 (1) 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. (2) 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 75% at September 30, 2017 . Changes in these assumptions may materially affect the fair value estimate. (3) Investment in warrants, which the Company received as a result of Viking’s partial repayment of the Viking note receivable and the Company’s purchase of Viking common stock and warrants in April 2016 , are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. The change of the fair value is recorded in the other income or expenses in the Company's condensed consolidated statement of operations. (4) The fair value of the liabilities for CyDex contingent liabilities were determined based on the income approach. To the extent the estimated future income may vary significantly given the long-term nature of the estimate, the Company utilizes a Monte Carlo model. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s 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. Changes in these assumptions can materially affect the fair value estimate. (5) The liability for CVRs for Metabasis are determined using quoted prices in a market that is not active 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. The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex: September 30, 2017 December 31, 2016 Revenue volatility 25% 25% Average probability of commercialization 12.5% 12.5% Market price of risk 0.03 0.03 Credit rating BB BB Equity risk premium 6% 6% We received a $0.2 million repayment on the Viking note in Q3 2017. There was no other significant change in estimated fair value of the Viking note receivable and contingent consideration during the nine months ended September 30, 2017 . 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 rate in a market that is not active, 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 $447.0 million as of September 30, 2017 . The carrying value of the notes does not reflect the market rate. Additionally, at the time of the convertible notes issuance, the Company entered into convertible bond hedges, which is not required to be measured or disclosed at fair value, to offset the impact of potential dilution to the Company's common stock upon the conversion of the notes. See Note 3 Convertible Senior Notes for additional information about the convertible notes and the bond hedges. Viking The Company records its investment in Viking under the equity method of accounting. See Note 1 Significant Accounting Policies for the fair value of the Company's equity investment in Viking. |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes As of September 30, 2017 , the Company had outstanding $245.0 million principal amount of 0.75% Convertible Senior Notes due August 15, 2019. 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 10 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. As of September 30, 2017 , the Company's last reported sale price has exceeded the 130% threshold described above and accordingly the Convertible Notes have been classified as a current liability as of September 30, 2017 . As a result, the related unamortized discount of $21.6 million was classified as temporary equity component of currently redeemable convertible notes on the Company's Condensed Consolidated Balance Sheet. The determination of whether or not the Convertible Notes are convertible as described above is made each quarter until maturity, conversion or repurchase. It is possible that the Convertible Notes may not be convertible in future periods, in which case the Convertible Notes would be classified as long-term debt, unless one of the other conversion events described above were to occur. 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, the Company must deliver cash to settle the principal and may deliver cash or shares of common stock, at its option, to settle any premium due upon conversion. The 2019 Convertible Senior Notes will have a dilutive effect to the extent the average market price per share of the Company's common stock for a given reporting period exceeds the conversion price of $75.05 per share. As of September 30, 2017 , the “if-converted value” exceeded the principal amount of the 2019 Convertible Senior Notes by $199.5 million . Convertible Bond Hedge and Warrant Transactions In August 2014, the Company entered into convertible bond hedges and sold warrants covering 3,264,643 shares of its common stock to minimize the impact of potential dilution to the Company's common stock upon conversion of the 2019 Convertible Senior Notes. 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 registering the issuance of the shares under the warrants. The following table summarizes information about the equity and liability components of the 2019 Convertible Senior Notes (in thousands). September 30, 2017 December 31, 2016 2019 Convertible Senior Notes Principal amount outstanding $ 245,000 $ 245,000 Unamortized discount (including unamortized debt issuance cost) (23,443 ) (32,090 ) Total current portion of notes payable $ 221,557 $ 212,910 |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Income Tax The Company’s effective tax rate may vary from the U.S. federal statutory tax rate due to the change in the mix of earnings in various state jurisdictions with different statutory rates, benefits related to tax credits, and the tax impact of non-deductible expenses, stock award activities and other permanent differences between income before income taxes and taxable income. The effective tax rate for the three and nine months ended September 30, 2017 was 30% and 26% . The variance from the U.S. federal statutory tax rate of 35% was primarily attributable to tax deductions related to stock award activities which were recorded as discrete items in the quarter. For the three and nine months ended September 30, 2016, the variance from the U.S. federal statutory rate of 35% was primarily as a result of significant permanent book-to-tax differences and state taxes. The permanent differences include non-taxable contingent consideration income (expense) recorded related to the change in market value of contingent liabilities. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
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 8, Stockholders' Equity, of Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The following is a summary of the Company’s stock option and restricted stock activity and related information: Stock Options Restricted Stock Awards Shares Weighted- Average Exercise Price Shares Weighted- Average Grant Date Fair Value Balance as of December 31, 2016 1,754,275 $ 42.12 308,700 $ 86.61 Granted 202,553 102.43 69,064 101.97 Options exercised/RSUs vested (120,823 ) 31.85 (102,810 ) 81.74 Forfeited (3,044 ) 79.74 (966 ) 89.01 Balance as of September 30, 2017 1,832,961 $ 49.41 273,988 $ 92.30 As of September 30, 2017 , outstanding options to purchase 1.4 million shares were exercisable with a weighted average exercise price per share of $37.49 . Employee Stock Purchase Plan The price at which common stock is purchased under the Amended ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. During the nine months ended September 30, 2017, approximately 2,232 shares were issued under the Amended ESPP. As of September 30, 2017 , 68,065 shares were available for future purchases under the Amended ESPP. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2017 | |
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 FASB 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 In 2012, a federal securities class action and shareholder derivative lawsuit was filed in 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 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 in March 2015. The district court granted the motion to dismiss on November 11, 2015. The plaintiff has appealed that ruling to the Third Circuit. The Company intends to continue to vigorously defend against the claims against the Company and its CEO. The outcome of the matter is not presently determinable. Class Action Lawsuit In November 2016, a putative shareholder class action lawsuit was filed in the United States District Court for the Southern District of California against the Company, its chief executive officer and chief financial officer. The complaint was voluntarily dismissed without prejudice on May 15, 2017. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Acquisition of Crystal In October 2017, the Company acquired Crystal, a biotech company focused in avian genetics and the generation of fully-human therapeutic engineering of animals for the generation of fully-human therapeutic antibodies. Crystal is specialized in the area of antibody research with its HuMab technology. The acquisition is expected to provide additional transgenic antibody discovery platform complementary to Ligand’s OmniAb technology and with an in-house antibody discovery laboratory to service R&D needs through contracted service. Under the terms of the agreement, Ligand paid Crystal shareholders $25 million in cash and up to an additional $10.5 million based on Crystal’s achievement of certain research and business milestones prior to December 31, 2019. In addition, Crystal’s shareholders will receive ten percent ( 10% ) of revenues above $15 million generated between the closing date and December 31, 2022 by three existing collaboration agreements between Crystal and three of its collaborators, and Crystal’s shareholders will receive twenty percent ( 20% ) of revenues above $1.5 million generated between the closing date and December 31, 2022 pursuant to a four th existing collaboration agreement with a large pharmaceutical company. Due to the close proximity of the acquisition date and the Company’s filing of its interim report on Form 10-Q for the three- and nine-month periods ended September 30, 2017, the initial accounting for the business combination is incomplete, and therefore the Company is unable to disclose the information required by ASC 805, Business Combinations. Such information will be included in the Company’s subsequent annual report on Form 10-K for the year ending December 31, 2017. |
Basis of Presentation and Sum14
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s accompanying unaudited condensed consolidated financial statements have been prepared in accordance with 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. Interim financial results are not necessarily indicative of the results that may be expected for the full year. 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, 2016 filed on February 28, 2017. The accompanying condensed consolidated financial statements include Ligand and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with 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. |
Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which is intended to simplify several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted ASU 2016-09 in the first quarter of fiscal year 2017. As a result of the adoption, the Company recorded a $17.9 million cumulative-effect adjustment to retained earnings for the recognition of excess tax benefits generated by the settlement of stock-based awards in prior periods and a discrete income tax benefit of $0.9 million to the income tax provision for excess tax benefits generated by the settlement, in the first quarter of fiscal year 2017, of stock-based awards. As allowed by the new guidance, the Company has elected to account for equity award forfeitures as they occur, and recorded a $0.3 million cumulative-effect adjustment to retained earnings for this accounting change in prior periods. Recent Accounting Pronouncements In May 2014, the FASB issued new guidance related to revenue recognition, ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”) , which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASC 606 defines a five-step approach for recognizing revenue, which may require a company to use more judgment and make more estimates than under the current guidance. Two methods of adoption are permitted: (a) full retrospective adoption, meaning the standard is applied to all periods presented; or (b) modified retrospective adoption, meaning the cumulative effect of applying the new guidance is recognized at the date of initial application as an adjustment to the opening retained earnings balance. We are undertaking a substantial effort to be ready for adoption of ASC 606. Some of our contracts have distinct terms which will need to be evaluated separately. We anticipate that this standard will have a material impact on our consolidated financial statements by accelerating the timing of revenue recognition for revenues related to royalties, and potentially certain contingent milestone based payments. We intend to adopt ASC 606 starting as of January 1, 2018 using the modified retrospective method. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017. We do not expect the adoption of this standard to have a material impact on our financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for us in the first quarter of 2018. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business , which changes the definition of a business to assist entities with evaluating when a set of assets acquired or disposed of should be considered a business. The new standard requires an entity to evaluate if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set would not be considered a business. The new standard also requires a business to include at least one substantive process and narrows the definition of outputs. We expect that these provisions will reduce the number of transactions that will be considered a business. The new standard is effective for interim and annual periods beginning on January 1, 2018, and may be adopted earlier. The standard would be applied prospectively to any transaction occurring on or after the adoption date. We are currently evaluating the impact that this new standard will have on our consolidated financial statements. |
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. |
Equity-Method Investment | Equity-Method Investment The Company has approximately 22.1% equity ownership in Viking as of September 30, 2017 . 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. |
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. |
Convertible Debt | Convertible Debt In August 2014, the Company completed a $245.0 million offering of 2019 Convertible Senior Notes, which bear interest at 0.75% . The Company accounted 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. Upon the occurrence of certain circumstances, holders of the 2019 Convertible Senior Notes may redeem all or a portion of their notes, which may require the use of a substantial amount of cash. At September 30, 2017 , we had a working capital deficit of $7.5 million , which includes the 2019 Convertible Senior notes that are currently redeemable as of September 30, 2017 but excludes another $21.6 million that is classified as mezzanine equity. As noted in Note 3, the debt may change from current to non-current period over period, primarily as a result of changes in the Company’s stock price. Management believes that it is remote that holders of the notes would choose to convert their notes early because the fair value of the security that a noteholder can currently realize in an active market is greater than the conversion value the noteholder would realize upon early conversion. In the unlikely event that all the debt was converted, we have three business days following a 50 trading day observation period from the convert date to pay the principal in cash. We have positive operating income and positive cash flow from operations since December 31, 2013 and, accordingly, while there can be no assurance, we believe we have the ability to raise additional capital through an S-3 registration or via alternative financing arrangements such as convertible or straight debt. |
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 based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable under 2019 Convertible Senior Notes and the associated warrants, stock options and restricted stock. The 2019 Convertible Senior Notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the notes. The warrants have a dilutive effect to the extent the market price per share of common stock exceeds the applicable exercise price of the warrants. Potentially dilutive common shares from stock options and restricted stock are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of stock options and the average amount of unrecognized compensation expense for restricted stock are assumed to be used to repurchase shares. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded. |
Basis of Presentation and Sum15
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of investment categories | The Company's investments consist of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Short-term investments Bank deposits $ 77,307 $ 12 $ (5 ) $ 77,314 $ 40,715 $ 19 $ — $ 40,734 Corporate bonds 50,833 3 (34 ) 50,802 11,031 — (5 ) 11,026 Commercial paper 23,176 3 (2 ) 23,177 33,074 2 (9 ) 33,067 U.S. Government bonds 8,490 2 (6 ) 8,486 7,508 — (1 ) 7,507 Agency bonds 4,977 — — 4,977 7,294 1 — 7,295 Municipal bonds 2,020 — (8 ) 2,012 19,624 — (11 ) 19,613 Corporate equity securities 254 2,498 — 2,752 1,512 1,542 — 3,054 $ 167,057 $ 2,518 $ (55 ) $ 169,520 $ 120,758 $ 1,564 $ (26 ) $ 122,296 |
Summary of goodwill and other identifiable intangible assets | Goodwill and other identifiable intangible assets consist of the following (in thousands): September 30, December 31, 2017 2016 Indefinite lived intangible assets IPR&D $ 12,246 $ 12,246 Goodwill 72,207 72,207 Definite lived intangible assets Complete technology 182,577 182,577 Less: Accumulated amortization (19,710 ) (12,792 ) Trade name 2,642 2,642 Less: Accumulated amortization (883 ) (784 ) Customer relationships 29,600 29,600 Less: Accumulated amortization (9,894 ) (8,784 ) Total goodwill and other identifiable intangible assets, net $ 268,785 $ 276,912 |
Schedule of commercial license rights | Commercial license rights consist of the following (in thousands): September 30, December 31, 2017 2016 CorMatrix $ 15,190 $ 17,284 Selexis 8,531 8,537 $ 23,721 $ 25,821 |
Summary of accrued liabilities | Accrued liabilities consist of the following (in thousands): September 30, December 31, 2017 2016 Compensation $ 2,479 $ 2,603 Professional fees 634 829 Amounts owed to former licensees 457 899 Royalties owed to third parties 1,000 942 Deferred revenue 1,075 — Other 778 1,124 Total accrued liabilities $ 6,423 $ 6,397 |
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, 2017 2016 2017 2016 Stock-based compensation expense as a component of: Research and development expenses $ 2,394 $ 2,845 $ 8,260 $ 6,112 General and administrative expenses 2,854 2,486 7,657 7,578 $ 5,248 $ 5,331 $ 15,917 $ 13,690 |
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, 2017 2016 2017 2016 Risk-free interest rate 2.0% 1.3% 2.1% 1.5% Dividend yield — — — — Expected volatility 47% 49% 47% 50% Expected term 6.5 6.7 6.8 6.6 |
Summary of computation of basic and diluted net income (loss) per share | The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share: Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Weighted average shares outstanding: 21,070,678 20,886,705 21,006,718 20,805,604 Dilutive potential common shares: Restricted stock 79,222 134,008 140,340 102,282 Stock options 1,019,342 792,474 980,461 788,106 2019 Convertible Senior Notes 1,334,357 1,184,092 1,118,456 1,046,257 Warrants 47,646 — 15,882 — Shares used to compute diluted income per share 23,551,245 22,997,279 23,261,857 22,742,249 Potentially dilutive shares excluded from calculation due to anti-dilutive effect 255,101 3,540,806 2,531,219 3,522,063 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of the assets and liabilities measured at fair value on recurring basis | The following table presents the Company's hierarchy for assets and liabilities measured at fair value. September 30, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments (1) $ 2,753 $ 166,767 $ — $ 169,520 $ 3,054 $ 119,242 $ — $ 122,296 Note receivable Viking (2) — — 3,007 3,007 — — 3,207 3,207 Investment in warrants (3) 1,110 — — 1,110 684 — — 684 Total assets $ 3,863 $ 166,767 $ 3,007 $ 173,637 $ 3,738 $ 119,242 $ 3,207 $ 126,187 Liabilities: Current contingent liabilities-CyDex (4) $ — $ — $ 86 $ 86 $ — $ — $ 101 $ 101 Long-term contingent liabilities-CyDex (4) — — 1,503 1,503 — — 1,503 1,503 Long-term contingent liabilities-Metabasis (5) — 3,693 — 3,693 — 1,413 — 1,413 Liability for amounts owed to former licensees (6) 413 — — 413 371 — — 371 Total liabilities $ 413 $ 3,693 $ 1,589 $ 5,695 $ 371 $ 1,413 $ 1,604 $ 3,388 (1) 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. (2) 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 75% at September 30, 2017 . Changes in these assumptions may materially affect the fair value estimate. (3) Investment in warrants, which the Company received as a result of Viking’s partial repayment of the Viking note receivable and the Company’s purchase of Viking common stock and warrants in April 2016 , are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. The change of the fair value is recorded in the other income or expenses in the Company's condensed consolidated statement of operations. (4) The fair value of the liabilities for CyDex contingent liabilities were determined based on the income approach. To the extent the estimated future income may vary significantly given the long-term nature of the estimate, the Company utilizes a Monte Carlo model. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s 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. Changes in these assumptions can materially affect the fair value estimate. (5) The liability for CVRs for Metabasis are determined using quoted prices in a market that is not active 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. |
Summary of 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, 2017 December 31, 2016 Revenue volatility 25% 25% Average probability of commercialization 12.5% 12.5% Market price of risk 0.03 0.03 Credit rating BB BB Equity risk premium 6% 6% |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of carrying values and coupon rates on financing arrangements | The following table summarizes information about the equity and liability components of the 2019 Convertible Senior Notes (in thousands). September 30, 2017 December 31, 2016 2019 Convertible Senior Notes Principal amount outstanding $ 245,000 $ 245,000 Unamortized discount (including unamortized debt issuance cost) (23,443 ) (32,090 ) Total current portion of notes payable $ 221,557 $ 212,910 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of 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 Awards Shares Weighted- Average Exercise Price Shares Weighted- Average Grant Date Fair Value Balance as of December 31, 2016 1,754,275 $ 42.12 308,700 $ 86.61 Granted 202,553 102.43 69,064 101.97 Options exercised/RSUs vested (120,823 ) 31.85 (102,810 ) 81.74 Forfeited (3,044 ) 79.74 (966 ) 89.01 Balance as of September 30, 2017 1,832,961 $ 49.41 273,988 $ 92.30 |
Schedule of 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 Awards Shares Weighted- Average Exercise Price Shares Weighted- Average Grant Date Fair Value Balance as of December 31, 2016 1,754,275 $ 42.12 308,700 $ 86.61 Granted 202,553 102.43 69,064 101.97 Options exercised/RSUs vested (120,823 ) 31.85 (102,810 ) 81.74 Forfeited (3,044 ) 79.74 (966 ) 89.01 Balance as of September 30, 2017 1,832,961 $ 49.41 273,988 $ 92.30 |
Basis of Presentation and Sum19
Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017USD ($) | Sep. 30, 2017USD ($)programd$ / sharesshares | May 08, 2017USD ($) | Dec. 31, 2016USD ($) | Aug. 31, 2014USD ($)$ / sharesshares | |
Property, Plant and Equipment [Line Items] | |||||
Discrete income tax benefit | $ 900,000 | ||||
Outstanding warrants to purchase shares of Viking's common stock (shares) | shares | 3,264,643 | ||||
Warrant exercise price (USD per share) | $ / shares | $ 125.08 | ||||
Note receivable, interest and principal reduction per dollar of value | 0.50 | ||||
Working capital deficit | $ 7,500,000 | ||||
Equity component of currently redeemable convertible notes | $ 21,597,000 | $ 29,563,000 | |||
Business days for repayment of principal | 3 days | ||||
Consecutive trading days | d | 50 | ||||
2019 convertible senior notes | |||||
Property, Plant and Equipment [Line Items] | |||||
Principal amount outstanding | $ 245,000,000 | 245,000,000 | |||
2019 convertible senior notes | Senior Notes | |||||
Property, Plant and Equipment [Line Items] | |||||
Principal amount outstanding | $ 245,000,000 | ||||
Interest rate (as a percent) | 0.75% | ||||
Retained Earnings | Accounting Standards Update 2016-09 | |||||
Property, Plant and Equipment [Line Items] | |||||
Cumulative effect of new accounting principle in period of adoption | 17,900,000 | ||||
Retained Earnings | Accounting Standards Update 2016-09, Forfeiture Rate Component | |||||
Property, Plant and Equipment [Line Items] | |||||
Cumulative effect of new accounting principle in period of adoption | $ 300,000 | ||||
Viking Therapeutics, Inc. | |||||
Property, Plant and Equipment [Line Items] | |||||
Equity method investment, ownership (percent) | 22.10% | ||||
Market value of investment in Viking | $ 12,000,000 | ||||
Outstanding warrants to purchase shares of Viking's common stock (shares) | shares | 1,500,000 | ||||
Warrant exercise price (USD per share) | $ / shares | $ 1.50 | ||||
Number of programs licensed to Viking | program | 5 | ||||
Note receivable, stated interest rate (percent) | 2.50% | ||||
Note Receivable, Cash Repayment Due | $ 200,000 | ||||
Fair Value, Measurements, Recurring [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | $ 173,637,000 | 126,187,000 | |||
Fair Value, Measurements, Recurring [Member] | Investment in warrants | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | 1,110,000 | 684,000 | |||
Fair Value, Measurements, Recurring [Member] | Note receivable Viking Therapeutics, Inc. | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | 3,007,000 | 3,207,000 | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | 3,863,000 | 3,738,000 | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 | Investment in warrants | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | 1,100,000 | 700,000 | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 | Note receivable Viking Therapeutics, Inc. | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | 0 | 0 | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | 3,007,000 | 3,207,000 | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 | Investment in warrants | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | 0 | 0 | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 | Note receivable Viking Therapeutics, Inc. | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets, fair value | $ 3,000,000 | $ 3,207,000 |
Basis of Presentation and Sum20
Basis of Presentation and Summary of Significant Accounting Policies (Investment Categories) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of investment categories | ||
Amortized cost | $ 167,057 | $ 120,758 |
Gross unrealized gains | 2,518 | 1,564 |
Gross unrealized losses | (55) | (26) |
Estimated fair value | 169,520 | 122,296 |
Bank deposits | ||
Summary of investment categories | ||
Amortized cost | 77,307 | 40,715 |
Gross unrealized gains | 12 | 19 |
Gross unrealized losses | (5) | 0 |
Estimated fair value | 77,314 | 40,734 |
Corporate bonds | ||
Summary of investment categories | ||
Amortized cost | 50,833 | 11,031 |
Gross unrealized gains | 3 | 0 |
Gross unrealized losses | (34) | (5) |
Estimated fair value | 50,802 | 11,026 |
Commercial paper | ||
Summary of investment categories | ||
Amortized cost | 23,176 | 33,074 |
Gross unrealized gains | 3 | 2 |
Gross unrealized losses | (2) | (9) |
Estimated fair value | 23,177 | 33,067 |
U.S. Government bonds | ||
Summary of investment categories | ||
Amortized cost | 8,490 | 7,508 |
Gross unrealized gains | 2 | 0 |
Gross unrealized losses | (6) | (1) |
Estimated fair value | 8,486 | 7,507 |
Agency bonds | ||
Summary of investment categories | ||
Amortized cost | 4,977 | 7,294 |
Gross unrealized gains | 0 | 1 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 4,977 | 7,295 |
Municipal Bonds | ||
Summary of investment categories | ||
Amortized cost | 2,020 | 19,624 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | (8) | (11) |
Estimated fair value | 2,012 | 19,613 |
Corporate equity securities | ||
Summary of investment categories | ||
Amortized cost | 254 | 1,512 |
Gross unrealized gains | 2,498 | 1,542 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | $ 2,752 | $ 3,054 |
Basis of Presentation and Sum21
Basis of Presentation and Summary of Significant Accounting Policies (Goodwill and Other Identifiable Intangible Assets) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Jun. 30, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | May 03, 2016 | ||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Goodwill | $ 72,207,000 | $ 72,207,000 | $ 72,207,000 | ||||||
Total goodwill and other identifiable intangible assets, net | 268,785,000 | 268,785,000 | 276,912,000 | ||||||
Revenue | 33,375,000 | $ 21,619,000 | 90,638,000 | $ 70,787,000 | |||||
Net income (loss) | $ 8,426,000 | $ 1,051,000 | $ 19,566,000 | $ 1,490,000 | |||||
Net income (USD per share) | [1] | $ 0.36 | $ 0.05 | $ 0.84 | $ 0.07 | ||||
Complete technology | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Definite lived intangible assets | $ 182,577,000 | $ 182,577,000 | 182,577,000 | ||||||
Less: Accumulated amortization | (19,710,000) | (19,710,000) | (12,792,000) | ||||||
Trade name | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Definite lived intangible assets | 2,642,000 | 2,642,000 | 2,642,000 | ||||||
Less: Accumulated amortization | (883,000) | (883,000) | (784,000) | ||||||
Customer relationships | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Definite lived intangible assets | 29,600,000 | 29,600,000 | 29,600,000 | ||||||
Less: Accumulated amortization | (9,894,000) | (9,894,000) | (8,784,000) | ||||||
Commercial license rights | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Definite lived intangible assets | 23,721,000 | 23,721,000 | 25,821,000 | ||||||
Royalty agreements | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Royalties (percent) | 20.00% | ||||||||
Acquired in-process research and development | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
IPR&D | 12,246,000 | 12,246,000 | 12,246,000 | ||||||
Aziyo | Royalty agreements | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Royalties received | $ 5,000,000 | 5,000,000 | |||||||
Royalties receivable | $ 5,000,000 | $ 5,000,000 | |||||||
Royalties (percent) | 5.00% | 5.00% | |||||||
Additional royalties receivable under sales-based milestones | $ 10,000,000 | $ 10,000,000 | |||||||
Royalties, extended term | 1 year | ||||||||
Forecasted Cash Flows, Effective Interest Rate, Percent | 26.00% | ||||||||
CorMatrix | Commercial license rights | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Definite lived intangible assets | $ 15,190,000 | $ 15,190,000 | 17,284,000 | ||||||
CorMatrix | Royalty agreements | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Royalties (percent) | 5.00% | 5.00% | |||||||
Royalty agreement, expiration period | 10 years | ||||||||
Selexis | Commercial license rights | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Definite lived intangible assets | $ 8,531,000 | $ 8,531,000 | 8,537,000 | ||||||
Previously reported understatement | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Revenue | $ 400,000 | 1,300,000 | |||||||
Net income (loss) | $ 300,000 | $ 800,000 | |||||||
Net income (USD per share) | $ 0.01 | $ 0.04 | |||||||
Current period overstatement | |||||||||
Summary of Goodwill and Other Identifiable Intangible Assets | |||||||||
Revenue | 1,300,000 | ||||||||
Net income (loss) | $ 800,000 | ||||||||
Net income (USD per share) | $ 0.04 | ||||||||
[1] | The sum of net income per share amounts may not equal the totals due to rounding. |
Basis of Presentation and Sum22
Basis of Presentation and Summary of Significant Accounting Policies (Accrued Liabilities and Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accrued Liabilities | ||
Compensation | $ 2,479 | $ 2,603 |
Professional fees | 634 | 829 |
Amounts owed to former licensees | 457 | 899 |
Royalties owed to third parties | 1,000 | 942 |
Deferred revenue | 1,075 | 0 |
Other | 778 | 1,124 |
Total accrued liabilities | $ 6,423 | $ 6,397 |
Basis of Presentation and Sum23
Basis of Presentation and Summary of Significant Accounting Policies (Accounting for Share-Based Compensation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Basis of Presentation [Line Items] | ||||
Share-based compensation expense total | $ 5,248 | $ 5,331 | $ 15,917 | $ 13,690 |
Research and development expenses | ||||
Basis of Presentation [Line Items] | ||||
Share-based compensation expense total | 2,394 | 2,845 | 8,260 | 6,112 |
General and administrative expenses | ||||
Basis of Presentation [Line Items] | ||||
Share-based compensation expense total | $ 2,854 | $ 2,486 | $ 7,657 | $ 7,578 |
Basis of Presentation and Sum24
Basis of Presentation and Summary of Significant Accounting Policies (Fair Value Valuation Assumptions) (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Risk-free interest rate (as a percent) | 2.00% | 1.30% | 2.10% | 1.50% |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 47.00% | 49.00% | 47.00% | 50.00% |
Expected term | 6 years 6 months | 6 years 8 months 12 days | 6 years 9 months 18 days | 6 years 7 months 6 days |
Basis of Presentation and Sum25
Basis of Presentation and Summary of Significant Accounting Policies (Earnings (Loss) Per Share) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary of computation of basic and diluted net income (loss) per share | ||||
Weighted average shares outstanding (shares) | 21,070,678 | 20,886,705 | 21,006,718 | 20,805,604 |
Dilutive potential common shares: | ||||
Restricted stock (shares) | 79,222 | 134,008 | 140,340 | 102,282 |
Stock options (shares) | 1,019,342 | 792,474 | 980,461 | 788,106 |
2019 convertible senior notes (shares) | 1,334,357 | 1,184,092 | 1,118,456 | 1,046,257 |
Warrants (shares) | 47,646 | 0 | 15,882 | 0 |
Shares used to compute diluted income per share (shares) | 23,551,245 | 22,997,279 | 23,261,857 | 22,742,249 |
Potentially dilutive shares excluded from calculation due to anti-dilutive effect (shares) | 255,101 | 3,540,806 | 2,531,219 | 3,522,063 |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurement - Additional Information (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Aug. 31, 2014 | |
Liabilities: | ||||
Receipt of repayment on note receivable | $ 200,000 | $ 300,000 | ||
2019 convertible senior notes | ||||
Liabilities: | ||||
Principal amount outstanding | 245,000,000 | $ 245,000,000 | ||
2019 convertible senior notes | Senior Notes | ||||
Liabilities: | ||||
Principal amount outstanding | $ 245,000,000 | |||
Estimated fair value of debt | 447,000,000 | |||
Recurring | ||||
Assets: | ||||
Assets, fair value | 173,637,000 | 126,187,000 | ||
Liabilities: | ||||
Liabilities, fair value | 5,695,000 | 3,388,000 | ||
Recurring | Current contingent liabilities-CyDex | ||||
Liabilities: | ||||
Liabilities, fair value | 86,000 | 101,000 | ||
Recurring | Long-term contingent liabilities-CyDex | ||||
Liabilities: | ||||
Liabilities, fair value | 1,503,000 | 1,503,000 | ||
Recurring | Long-term contingent liabilities-Metabasis | ||||
Liabilities: | ||||
Liabilities, fair value | 3,693,000 | 1,413,000 | ||
Recurring | Liability for amounts owed to former licensees | ||||
Liabilities: | ||||
Liabilities, fair value | 413,000 | 371,000 | ||
Recurring | Short-term investments | ||||
Assets: | ||||
Assets, fair value | 169,520,000 | 122,296,000 | ||
Recurring | Note receivable Viking Therapeutics, Inc. | ||||
Assets: | ||||
Assets, fair value | $ 3,007,000 | 3,207,000 | ||
Liabilities: | ||||
Volatility of common stock (as a percent) | 75.00% | |||
Recurring | Investment in warrants | ||||
Assets: | ||||
Assets, fair value | $ 1,110,000 | 684,000 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Assets: | ||||
Assets, fair value | 3,863,000 | 3,738,000 | ||
Liabilities: | ||||
Liabilities, fair value | 413,000 | 371,000 | ||
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) | Long-term contingent liabilities-CyDex | ||||
Liabilities: | ||||
Liabilities, fair value | 0 | 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) | Liability for amounts owed to former licensees | ||||
Liabilities: | ||||
Liabilities, fair value | 413,000 | 371,000 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | ||||
Assets: | ||||
Assets, fair value | 2,753,000 | 3,054,000 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Note receivable Viking Therapeutics, Inc. | ||||
Assets: | ||||
Assets, fair value | 0 | 0 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Investment in warrants | ||||
Assets: | ||||
Assets, fair value | 1,100,000 | 700,000 | ||
Recurring | Significant Other Observable Inputs (Level 2) | ||||
Assets: | ||||
Assets, fair value | 166,767,000 | 119,242,000 | ||
Liabilities: | ||||
Liabilities, fair value | 3,693,000 | 1,413,000 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Current contingent liabilities-CyDex | ||||
Liabilities: | ||||
Liabilities, fair value | 0 | 0 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Long-term contingent liabilities-CyDex | ||||
Liabilities: | ||||
Liabilities, fair value | 0 | 0 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Long-term contingent liabilities-Metabasis | ||||
Liabilities: | ||||
Liabilities, fair value | 3,693,000 | 1,413,000 | ||
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) | Short-term investments | ||||
Assets: | ||||
Assets, fair value | 166,767,000 | 119,242,000 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Note receivable Viking Therapeutics, Inc. | ||||
Assets: | ||||
Assets, fair value | 0 | 0 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Investment in warrants | ||||
Assets: | ||||
Assets, fair value | 0 | 0 | ||
Recurring | Significant Unobservable Inputs (Level 3) | ||||
Assets: | ||||
Assets, fair value | 3,007,000 | 3,207,000 | ||
Liabilities: | ||||
Liabilities, fair value | 1,589,000 | 1,604,000 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Current contingent liabilities-CyDex | ||||
Liabilities: | ||||
Liabilities, fair value | 86,000 | 101,000 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Long-term contingent liabilities-CyDex | ||||
Liabilities: | ||||
Liabilities, fair value | 1,503,000 | 1,503,000 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Long-term contingent liabilities-Metabasis | ||||
Liabilities: | ||||
Liabilities, fair value | 0 | 0 | ||
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) | Short-term investments | ||||
Assets: | ||||
Assets, fair value | 0 | 0 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Note receivable Viking Therapeutics, Inc. | ||||
Assets: | ||||
Assets, fair value | 3,000,000 | 3,207,000 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Investment in warrants | ||||
Assets: | ||||
Assets, fair value | $ 0 | $ 0 |
Fair Value Measurements (Acquis
Fair Value Measurements (Acquisition of CyDex) (Details) - Cydex Pharmaceuticals, Inc - Contingent Consideration Classified as Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Credit Derivatives [Line Items] | ||
Revenue volatility (as a percent) | 25.00% | 25.00% |
Average probability of commercialization (as a percent) | 12.50% | 12.50% |
Market price of risk | 0.03 | 0.03 |
Credit rating | BB | BB |
Equity risk premium (as a percent) | 6.00% | 6.00% |
Convertible Senior Notes (Narra
Convertible Senior Notes (Narrative) (Details) | 1 Months Ended | 9 Months Ended | |
Aug. 31, 2014USD ($)d$ / sharesshares | Sep. 30, 2017USD ($)d | Dec. 31, 2016USD ($) | |
Debt Instrument [Line Items] | |||
Initial conversion rate (shares per $1,000) | 13.3251 | ||
Consecutive trading days | d | 50 | ||
Equity component of currently redeemable convertible notes (Note 3) | $ 21,597,000 | $ 29,563,000 | |
Warrants issued in public offering (shares) | shares | 3,264,643 | ||
Exercise price of convertible bond hedge (USD per share) | $ / shares | $ 75.05 | ||
Payments for convertible bond hedges | $ 48,100,000 | ||
Warrant exercise price (USD per share) | $ / shares | $ 125.08 | ||
Value of warrants issued | $ 11,600,000 | ||
2019 convertible senior notes | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount outstanding | 245,000,000 | $ 245,000,000 | |
Senior Notes | 2019 convertible senior notes | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount outstanding | $ 245,000,000 | ||
Interest rate (as a percent) | 0.75% | ||
Net proceeds from note after debt issuance costs | $ 239,300,000 | ||
Initial conversion price (in USD per share) | $ / shares | $ 75.05 | ||
If-converted value in excess of principal | $ 199,500,000 | ||
Senior Notes | 2019 convertible senior notes | Debt Instrument, Redemption, Period One | |||
Debt Instrument [Line Items] | |||
Threshold trading days | d | 20 | ||
Consecutive trading days | d | 30 | ||
Percentage of stock price trigger to classify convertible debt as current | 130.00% | 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 | d | 10 | ||
Maximum threshold percentage of debt trading price trigger | 98.00% |
Convertible Senior Notes (Notes
Convertible Senior Notes (Notes Payable) (Details) - 2019 convertible senior notes - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Notes Payable, Current and Noncurrent [Abstract] | ||
Principal amount outstanding | $ 245,000,000 | $ 245,000,000 |
Unamortized discount (including unamortized debt issuance cost) | (23,443,000) | (32,090,000) |
Total current portion of notes payable | $ 221,557,000 | $ 212,910,000 |
Income Tax (Details)
Income Tax (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate (as a percent) | 30.00% | 26.00% | |
Federal statutory tax rate (as a percent) | 35.00% | 35.00% |
Stockholders' Equity (Stock Opt
Stockholders' Equity (Stock Option Plan and Restricted Stock Activity) (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Stock Options: | |
Balance at beginning of period (shares) | shares | 1,754,275 |
Granted (shares) | shares | 202,553 |
Options exercised/RSUs vested (shares) | shares | (120,823) |
Forfeited (shares) | shares | (3,044) |
Balance at end of period (shares) | shares | 1,832,961 |
Weighted Average Exercise Price (in USD per share) | |
Balance at beginning of period (in USD per share) | $ / shares | $ 42.12 |
Granted (in USD per share) | $ / shares | 102.43 |
Options exercised/RSUs vested (in USD per share) | $ / shares | 31.85 |
Forfeited (in USD per share) | $ / shares | 79.74 |
Balance at end of period (in USD per share) | $ / shares | $ 49.41 |
Restricted Stock | |
Restricted Shares: | |
Nonvested at beginning of period (shares) | shares | 308,700 |
Granted (shares) | shares | 69,064 |
Exercised (shares) | shares | (102,810) |
Forfeited (shares) | shares | (966) |
Nonvested at end of period (shares) | shares | 273,988 |
Weighted- Average Grant Date Fair Value (in USD per share) | |
Nonvested at beginning of period (in USD per share) | $ / shares | $ 86.61 |
Granted (in USD per share) | $ / shares | 101.97 |
Options exercised/RSUs vested (in USD per share) | $ / shares | 81.74 |
Forfeited (in USD per share) | $ / shares | 89.01 |
Nonvested at end of period (in USD per share) | $ / shares | $ 92.30 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding options that are exercisable (shares) | 1,400,000 |
Outstanding options that are exercisable, weighted average exercise price (in USD per share) | $ / shares | $ 37.49 |
Employee Stock Purchase Plan | |
Employee Stock Purchase Plan | |
Share purchase price as percent of market price (as a percent) | 85.00% |
Shares issued in period (shares) | 2,232 |
Shares available for future purchases (shares) | 68,065 |
Subsequent Event - Narrative (D
Subsequent Event - Narrative (Details) - Subsequent event | 1 Months Ended |
Oct. 31, 2017USD ($)collaboratorcollaboration_agreement | |
Subsequent Event [Line Items] | |
Cash consideration | $ 25,000,000 |
Total share consideration | $ 10,500,000 |
Number of collaborators | collaborator | 3 |
Threshold of revenues above $15 million with three collaboration agreements | |
Subsequent Event [Line Items] | |
Revenue royalty to acquiree shareholders (as a percent) | 10.00% |
Threshold revenue amount to trigger royalty payments | $ 15,000,000 |
Number of collaboration agreements | collaboration_agreement | 3 |
Threshold of revenues above $1.5 million with four collaboration agreements | |
Subsequent Event [Line Items] | |
Revenue royalty to acquiree shareholders (as a percent) | 20.00% |
Threshold revenue amount to trigger royalty payments | $ 1,500,000 |
Number of collaboration agreements | collaboration_agreement | 4 |