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Long-Term Related Party Payable
 12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Long-Term Related Party Payable
Long-Term Related Party Payable 
Long-term related party payable and related activity are reported at fair value and consist of the following at December 31, 2019 and 2018, respectively:
 
 
 
 
Activity during the Twelve Months Ended December 31, 2019
 
 
 
 
 
 
 
 
Changes in Fair Value of
Related Party Payable
 
 
 
 
Balance,
December 31, 2018
 
Payments to
Related Parties
 
Operating Expense
 
Other
Expense
 
Balance,
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related contingent consideration:
 
 

 
 

 
 

 
 

 
 

Earn-out payments - Éclat Pharmaceuticals (a)
 
$
25,615

 
$
(10,988
)
 
$
845

 
$
—

 
$
15,472

Financing-related:
 
 

 
 

 
 
 
 

 


Royalty agreement - Deerfield (b)
 
2,184

 
(1,183
)
 
—

 
250

 
1,251

Royalty agreement - Broadfin (c)
 
1,041

 
(565
)
 
—

 
128

 
604

Total related party payable
 
28,840

 
$
(12,736
)
 
$
845

 
$
378

 
17,327

Less: Current portion
 
(9,439
)
 
 

 
 

 
 

 
(5,554
)
Total long-term related party payable
 
$
19,401

 
 

 
 

 
 

 
$
11,773

 
Each of the above items is associated with related parties as further described in Note 23: Related Party Transactions. 
(a)
In March 2012, the Company acquired all of the membership interests of Éclat from Breaking Stick Holdings, L.L.C. (“Breaking Stick”, formerly Éclat Holdings), an affiliate of Deerfield. Breaking Stick is majority owned by Deerfield, with a minority interest owned by certain current and former employees. As part of the consideration, the Company committed to provide quarterly earn-out payments equal to 20% of any gross profit generated by certain Éclat products. These payments will continue in perpetuity, to the extent gross profit of the related products also continue in perpetuity.
(b)
As part of a February 2013 debt financing transaction conducted with Deerfield, the Company received cash of $2,600 in exchange for entering into a royalty agreement whereby the Company shall pay quarterly a 1.75% royalty on the net sales of certain Éclat products until December 31, 2024. In connection with such debt financing transaction, the Company granted Deerfield a security interest in the product registration rights of the Éclat Pharmaceuticals products.
(c)
As part of a December 2013 debt financing transaction conducted with Broadfin Healthcare Master Fund, a related party and current shareholder, the Company received cash of $2,200 in exchange for entering into a royalty agreement whereby the Company shall pay quarterly a 0.834% royalty on the net sales of certain Éclat products until December 31, 2024.
At December 31, 2019, the fair value of each related party payable listed in (a), (b) and (c) above was estimated using a discounted cash flow model based on estimated and projected annual net revenues or gross profit, as appropriate, of each of the specified Éclat products using an appropriate risk-adjusted discount rate of 14%. These fair value measurements are based on significant inputs not observable in the market and thus represent a level 3 measurement as defined in ASC 820. Subsequent changes in the fair value of the acquisition-related related party payables, resulting primarily from management’s revision of key assumptions, will be recorded in the consolidated statements of (loss) income in the line items entitled “Changes in fair value of related party contingent consideration” for items noted in (b) above and in “Other (expense) income - changes in fair value of related party payable” for items (b) and (c) above. See Note 1: Summary of Significant Accounting Policies under the caption Acquisition-related Contingent Consideration and Financing-related Royalty Agreements for more information on key assumptions used to determine the fair value of these liabilities. 
We have chosen to make a fair value election pursuant to ASC 825, “Financial Instruments” for its royalty agreements detailed in items (b) and (c) above. These financing-related liabilities are recorded at fair market value on the consolidated balance sheets and the periodic change in fair market value is recorded as a component of “Other (expense) income – changes in fair value of related party payable” on the consolidated statements of (loss) income.

The following table summarizes changes to the related party payables, a recurring Level 3 measurement, for the twelve-month periods ended December 31, 2019, 2018 and 2017:
Related Party Payable:
 
Balance
 
 
 
Balance at December 31, 2016
 
$
169,347

Payments of related party payable
 
(37,311
)
Fair value adjustments (1)
 
(33,111
)
Balance at December 31, 2017
 
98,925

Payments of related party payable
 
(22,951
)
Fair value adjustments (1)
 
(24,630
)
Expiration of warrants
 
(2,167
)
Disposition of the pediatrics assets
 
(20,337
)
Balance at December 31, 2018
 
28,840

Payments of related party payable
 
(12,736
)
Fair value adjustments (1)
 
1,223

Balance at December 31, 2019
 
$
17,327

(1) Fair value adjustments are reported as “Changes in fair value of related party contingent consideration” and “Other (expense) income - changes in fair value of related party payable” in the consolidated statements of (loss) income.