On April 2, 2015, the Company issued $575.0 million aggregate principal amount of senior secured notes (the Senior Notes) for aggregate gross proceeds of approximately $562.0 million pursuant to a Note Purchase Agreement dated March 12, 2015 (Note Purchase Agreement), among the Company and Deerfield Private Design Fund III, L.P., Deerfield Partners, L.P., Deerfield International Master Fund, L.P., Deerfield Special Situations Fund, L.P., Deerfield Private Design Fund II, L.P., Deerfield Private Design International II, L.P., BioPharma Secured Investments III Holdings Cayman LP, Inteligo Bank Ltd. and Phemus Corporation (collectively, the Purchasers) and Deerfield Private Design Fund III, L.P., as collateral agent. The Company used $550.0 million of the net proceeds received upon the sale of the Senior Notes to fund a portion of the Purchase Price paid to Janssen Pharma in connection with the NUCYNTA acquisition.

The Senior Notes had a maturity date of April 14, 2021 (unless earlier prepaid or repurchased), were secured by substantially all of the assets of the Company and any subsidiary guarantors, and bore interest at the rate equal to the lesser of (i) 9.75% over the three month London Inter-Bank Offer Rate (LIBOR), subject to a floor of 1.0% and (ii) 11.95% (through the third anniversary of the purchase date) and 12.95% (thereafter). The interest rate was determined at the first business day of each fiscal quarter, commencing with the first such date following April 2, 2015. The interest rate for the three months ended March 31, 2020 and 2019 was 11.65% and 12.54%, respectively.

As of February 13, 2020, the Company had repaid in full all outstanding indebtedness, and terminated all commitments and obligations, under its Note Purchase Agreement. The Company used proceeds from the sale of Gralise and NUCYNTA to repay the outstanding principal of $162.5 million. In addition, the Company paid approximately $4.9 million and $4.4 million in prepayment premiums and accrued exit fees, respectively, plus accrued but unpaid interest. In connection with the termination of the Note Purchase Agreement, the Company was released from all security interests, liens and encumbrances under the Note Purchase Agreement.

During the three months ended March 31, 2020, the Company recognized a loss on debt extinguishment of $8.2 million, composed of the $4.9 million prepayment fee and $3.3 million of unamortized debt discount and debt issuance costs, recognized as part of Loss on debt extinguishment in the Company’s Consolidated Statement of Comprehensive Income.

Debt discount and debt issuance costs were amortized as interest expense using the effective interest method. The following is a summary of interest expense for the three months ended March 31, 2020 and 2019 (in thousands):



	Three Months Ended March 31,
	2020		2019
Contractual interest expense	$	1,648	$	8,206
Amortization of debt discount and debt issuance costs	2,699		1,357
Total interest expense Senior Notes	$	4,347	$	9,563

On September 9, 2014, the Company issued $345.0 million aggregate principal amount of 2.50% Convertible Senior Notes Due 2021 (the 2021 Notes) which mature on September 1, 2021 and bear interest at the rate of 2.50% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning March 1, 2015.

On August 13, 2019, the Company exchanged (the Convertible Note Exchange) $200.0 million aggregate principal amount of the 2021 Notes for a combination of (a) its new $120.0 million aggregate principal amount of 5.00% Convertible

Senior Notes due August 15, 2024 (the 2024 Notes), (b) an aggregate cash payment of $30.0 million, and (c) an aggregate of 15.8 million shares of the Company’s common stock. The Company did not receive any cash proceeds from the issuance of the 2024 Notes or the issuance of the shares of its common stock. Upon completion of the Convertible Note Exchange, the aggregate principal amount of the 2021 Notes was reduced by $200.0 million to $145.0 million, the unamortized debt discount and debt issuance costs was reduced by $26.1 million to $18.9 million and the carrying amount of the equity component was reduced by $6.2 million to $112.8 million.

On February 19, 2020, the Company entered into separate, privately negotiated purchase agreements (Purchase Agreements) with a limited number of holders of the Company’s currently outstanding 2021 Notes and 2024 Notes. The Company used proceeds from the sale of Gralise and NUCYNTA to repurchase $102.5 million aggregate principal amount of 2021 Notes for a cash payment plus accrued but unpaid interest.

The repurchase of the 2021 Notes was accounted for in accordance with ASC 470-50, Debt Modifications and Extinguishments (ASC 470-50). During the three months ended March 31, 2020, the Company recognized a $10.3 million loss on debt extinguishment, which represented the difference between the carrying value and the fair value of the 2021 Notes just prior to the repurchase plus transaction costs. The Company also recognized reacquisition of $0.3 million in additional paid-in capital related to the equity component of the 2021 Notes based on the excess of the fair value of total considerations provided against the fair value of the 2021 Notes just prior to the repurchase. As a result of the transaction, the aggregate principal amount of the 2021 Notes was reduced to $42.5 million, the unamortized debt discount and debt issuance costs was reduced by $10.3 million to $4.3 million and the carrying amount of the equity component was reduced by $0.3 million to $112.5 million.

The closing price of the Company’s common stock did not exceed 130% of the $19.24 conversion price, for the required period during the quarter ended March 31, 2020. As a result, the 2021 Notes were not convertible as of March 31, 2020.



	March 31, 2020			December 31, 2019
Principal amount of the 2021 Notes	$	42,465		$	145,000
Unamortized discount of the liability component	(3,767		)	(14,963		)
Unamortized debt issuance costs	(184		)	(725		)
Total 2021 Notes	$	38,514		$	129,312

The debt discount and debt issuance costs are being amortized as interest expense using the effective interest method. The following is a summary of interest expense for the three months ended March 31, 2020 and 2019 (in thousands):



	Three Months Ended March 31,
	2020		2019
Stated coupon interest	$	607	$	2,156
Amortization of debt discount and debt issuance costs	1,469		4,807
Total interest expense 2021 Notes	$	2,076	$	6,963

On August 13, 2019, as part of the Convertible Note Exchange, the Company issued $120.0 million aggregate principal of 2024 Notes which mature on August 14, 2024 and bear interest at a rate of 5.0%, payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2020.

On February 19, 2020, the Company entered into separate, privately negotiated purchase agreements (Purchase Agreements) with a limited number of holders of the Company’s currently outstanding 2021 Notes and 2024 Notes. The Company used proceeds from the sale of Gralise and NUCYNTA to repurchase $85.5 million aggregate principal amount of 2024 Notes for a cash payment plus accrued but unpaid interest.

The repurchase of the 2024 Notes was accounted for in accordance with ASC 470-50, Debt Modifications and Extinguishments (ASC 470-50). During the three months ended March 31, 2020 the Company recognized a $21.3 million loss

on debt extinguishment, which represented the difference between the carrying value and the fair value of the 2024 Notes just prior to the repurchase plus transaction costs. The Company also recognized reacquisition of $16.8 million in additional paid-in capital related to the equity component of the 2024 Notes based on the excess of the fair value of total considerations provided against the fair value of the 2024 Notes just prior to the repurchase. As a result of the transaction, the aggregate principal amount of the 2024 Notes was reduced to $34.5 million, the unamortized debt discount and debt issuance costs was reduced by $38.1 million to $15.4 million and the carrying amount of the equity component was reduced by $16.5 million to $16.1 million.

The 2024 Notes are not convertible or redeemable as of March 31, 2020. The following is a summary of the liability component of the 2024 Notes as of March 31, 2020 and December 31, 2019 (in thousands):



	March 31, 2020			December 31, 2019
Principal amount of the 2024 Notes	$	34,522		$	120,000
Unamortized discount of the liability component	(14,373		)	(51,701		)
Unamortized debt issuance costs	(797		)	(2,796		)
Total 2024 Notes	$	19,352		$	65,503

The debt discount and debt issuance costs are being amortized as interest expense using the effective interest method. The following is a summary of interest expense for the 2024 Notes for three months ended March 31, 2020 (in thousands):