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Acquisitions
12 Months Ended
Dec. 31, 2021
Business Combinations [Abstract]  
USWM Acquisition Acquisitions
Adamas Acquisition
On November 24, 2021 (the Adamas Closing Date), the Company completed its purchase of all of the outstanding equity of Adamas, a publicly-held pharmaceutical company, pursuant to the Agreement and Plan of Merger among the Company, Adamas and Supernus Reef, Inc., a wholly owned subsidiary of the Company, dated October 10, 2021 (the Adamas Agreement). On the Adamas Closing Date, Adamas owned two marketed products: GOCOVRI (amantadine) extended release capsules, the first and only U.S. FDA-approved medicine indicated for the treatment of both "off" episodes and dyskinesia in patients with PD receiving levodopa-based therapy and as an adjunctive treatment to levodopa/carbidopa in patients with PD experiencing "off" episodes; and Osmolex ER (amantadine) extended release tablets, approved for the treatment of PD and drug-induced extrapyramidal reactions in adult patients. Adamas also owns the right to receive royalties from Allergan plc for sales of Namzaric (memantine hydrochloride extended release and donepezil hydrochloride) in the United States.

The Company paid the Seller $400.8 million and two non-tradable contingent value rights (CVRs) each of which represents the contractual right to receive a contingent payment of $0.50 per share in cash, less any applicable withholding taxes and without interest, upon the achievement of the applicable milestone (each such amount, a Milestone Payment) in accordance with the terms of a Contingent Value Rights Agreement entered into among the Company and American Stock Transfer & Trust Company, LLC, as rights agent, (CVR Agreement). One Milestone Payment is payable (subject to certain terms and conditions) upon the first occurrence of the achievement of aggregate worldwide net sales of GOCOVRI in excess of $150 million during any consecutive 12-month period ending on or before December 31, 2024 (Milestone 2024). Another Milestone Payment is payable (subject to certain terms and conditions) upon the first occurrence of the achievement of aggregate worldwide net sales of
GOCOVRI in excess of $225 million during any consecutive 12-month period ending on or before December 31, 2025 (Milestone 2025 and, together with Milestone 2024, the Milestones). Each Milestone may only be achieved once.

In connection with the two CVRs, the Company recorded a contingent consideration liability of $10.3 million as of the date of the acquisition, to reflect the estimated fair value of the contingent consideration. The estimated fair value of the contingent consideration was determined using the Monte Carlo simulation for the sales-based milestones. The fair value measurement of the contingent consideration liability was determined based on significant unobservable inputs and thus represents a Level 3 fair value measurement. The key assumptions considered include the estimated amount and timing of projected cash flows, volatility, estimated discount rates and risk-free interest rate. In each reporting period after the acquisition, the Company will revalue the contingent consideration liability and will record increases or decreases in the fair value of the liability in its consolidated statements of earnings. Changes in fair value will result from changes in actual and projected milestone achievement, as well as changes to forecasts. The inputs and assumptions may not be observable in the market, but reflect the assumptions the Company believes would be made by a market participant. The possible outcomes for the contingent consideration range from $0 to $50.9 million on an undiscounted basis.

The acquisition is being accounted for as a business combination under the acquisition method of accounting, in accordance with ASC 805, Business Combinations. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. The estimated fair values of the assets acquired and liabilities assumed, including goodwill, have been included in the Company's consolidated financial statements since the Adamas Closing Date.

The Company's accounting for this acquisition is preliminary and fair value estimates for the assets acquired and liabilities assumed and the Company's estimates and assumptions are subject to change as the Company obtains additional information for its estimates during the measurement period. During the measurement period, if the Company obtains new information regarding facts and circumstances that existed as of the Adamas Closing Date that, if known, would have resulted in revised estimated values of those assets or liabilities, the Company will accordingly revise its estimates of fair values and purchase price allocation. The effect of measurement period adjustments on the estimated fair value elements will be reflected as if the adjustments had been made as of the Adamas Closing Date. The impact of all changes that do not qualify as measurement period adjustments will be included in current period earnings.

The Company expects to finalize its purchase price allocation within one year of the Adamas Closing Date. In addition, the Company continues to analyze and assess relevant information necessary to determine, recognize and record at fair value the assets acquired and liabilities assumed in the following areas: intangible assets, lease assets and liabilities, tax assets and liabilities, and certain existing or potential reserves, including those for legal or contract-related matters. The activities the Company is currently undertaking, include but are not limited to the following: review of acquired contracts and other contract-related and legal matters; review and evaluation of the accounting policies, tax positions, and other tax-related matters. Further, the Company is in the process of obtaining input from third party valuation firms with respect to the fair value of the acquired tangible and intangible assets, and other information necessary to record and measure the assets acquired and liabilities assumed. Accordingly, the preliminary recognition and measurement of assets acquired and liabilities assumed as of Adamas Closing Date are subject to change.
The following preliminary purchase price allocation table presents the Company's preliminary estimates of the fair value of assets acquired and liabilities assumed as of the Adamas Closing Date (dollars in thousands):
Amount (in thousands)
Cash and cash equivalents$90,064 
Accounts receivable11,156 
Inventories20,200 
Prepaid expenses and other current assets5,077 
Property and equipment1,254 
Intangibles450,100 
Other assets (1)
6,442 
Total fair value of assets acquired584,293 
Accounts payable(4,592)
Accrued expenses and other current liabilities (1)
(8,014)
Current debt(138,315)
Operating lease liability, long-term (1)
(5,224)
Deferred income tax liabilities, net (2)
(56,588)
Total fair value of liabilities assumed(212,733)
Total identifiable net assets371,560 
Goodwill39,553 
Total purchase price$411,113 
Cash consideration paid$400,806 
Fair value of contingent consideration 10,307 
Total purchase price$411,113 
(1) Acquired operating lease asset was $6.4 million and corresponding assumed operating lease liability was $7.2 million. Refer to Note 12, Leases, for further discussion of the acquired lease asset and assumed lease liability.
(2)    Includes tax attributes that are subject to tax limitations.
Acquired Inventory
The estimated fair value of the inventory was determined using the comparative sales method, which estimated the expected sales price of the product, reduced by all costs expected to be incurred to complete or dispose of the inventory, as well as a profit on the sale.
Acquired Intangible Assets
The acquired intangible assets include the acquired developed technology and product rights to GOCOVRI and Osmolex ER, as well as the right to receive royalties from Allergan plc for sales of Namzaric. The Company determined the estimated fair values for the acquired intangible assets as of the Adamas Closing Date using the income approach. This is a valuation technique that provides an estimate of fair value of the assets, based on the market participant's expectations of the cash flows that the assets are forecasted to generate. The cash flows were discounted at a rate commensurate with the level of risk associated with its projected cash flows. The Company believes the assumptions are representative of those a market participant would use in estimating fair value.
The fair value measurements of the acquired intangible assets were determined based on significant unobservable inputs and thus represents a Level 3 fair value measurement. Some of the more significant inputs and assumptions used in the intangible assets valuation includes: the estimated future cash flows from product sales, the timing and projection of costs and expenses, discount rates and tax rates.
Acquired intangible assets consist of developed technology and property rights and are amortized over their estimated useful lives on a straight-line basis. The following table summarizes the preliminary purchase price allocation, and the average remaining useful lives for identifiable intangible assets (dollars in thousands):
Estimated Fair ValueEstimated Useful Life as of Closing Date (in years)
Acquired developed technology and property rights$450,100 
3.1 - 8.1
Goodwill
Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. Goodwill is primarily attributable to the anticipated cost synergies, additional growth platforms, and an expanded revenue base with the addition of the assets from the Adamas Acquisition. The goodwill is not expected to be deductible for tax purposes.
Acquired Deferred Income Tax Liabilities, net
The deferred income tax liabilities, net relates to the difference between the financial statement carrying amount and the tax basis of acquired intangible assets and inventory, partially offset by acquired net operating loss carryforwards and other temporary differences. The acquired federal and state net operating loss carryforwards is reduced by a valuation allowance for amounts that are not expected to be realizable in the future. Refer to Note 11, Income Taxes.
Acquisition-related Costs
For the year ended December 31, 2021, the Company incurred acquisition-related costs of $22.3 million of which the majority were included in the Selling, general and administrative expense in the consolidated statements of earnings. These costs include, $15.6 million of employee-related expenses and $6.7 million in transaction costs, which primarily consisted of regulatory fees, advertisement fees, financial advisory and legal fees, and other consulting fees, to complete the acquisition.
Revenue and Net Earnings of Adamas
The operations of Adamas and its subsidiaries have been included in the Company's consolidated statements of earnings for the period subsequent to the Adamas Closing Date, and through December 31, 2021. Total revenues of $10.9 million and net loss of $18.1 million were recorded for the year ended December 31, 2021.
Pro Forma Information
The following table presents the unaudited pro forma combined financial information for each of the periods presented, as if the Adamas Acquisition had occurred on January 1, 2020 (dollars in thousands):
Year Ended December 31,
20212020
(unaudited)
Pro forma total revenues$663,729 $594,858 
Pro forma net loss$(28,040)$(16,186)
The unaudited pro forma combined financial information is based on historical financial information and the Company's preliminary allocation of purchase price; therefore, it is subject to subsequent adjustment upon finalization of the purchase price
allocation. In order to reflect the occurrence of the acquisition on January 1, 2020, the unaudited pro forma combined financial information reflects the recognition of additional amortization expense on intangible assets and estimated additional cost of products sold related to the inventory step-up adjustment; the estimated reduction in the Company's interest income generated from marketable securities that were liquidated to fund the purchase price of the Acquisition, and the estimated tax impact of the pro forma adjustments.
The unaudited pro forma combined financial information also reflects the recognition of non-recurring costs incurred directly as a result of the Acquisition for the year ended December 31, 2021 primarily pertaining to the following:
Acquisition-related costs incurred by the Company of $22.3 million and incurred by Adamas of $10.5 million;
Stock-based compensation expense of $12.7 million for Adamas incurred to accelerate the vesting of certain equity awards under the terms of the Merger Agreement.
The unaudited pro forma combined financial information should not necessarily be considered indicative of the results that would have occurred if the acquisition had been consummated on the assumed completion date, nor are they indicative of future results.
USWM Acquisition
On June 9, 2020 (the USWM Closing Date), the Company completed its acquisition of all the outstanding equity of USWM Enterprises, LLC (USWM Enterprises), a privately-held biopharmaceutical company, pursuant to the Sale and Purchase Agreement with US WorldMeds Partners, LLC (Seller), dated April 28, 2020 (the USWM Agreement). Under the terms of the Agreement, the Company acquired the right to further develop and commercialize APOKYN, XADAGO, and the apomorphine infusion device (SPN-830; the IPR&D asset) in the U.S., and MYOBLOC worldwide (the Products) for an upfront cash payment of $297.2 million, subject to working capital adjustments, and the potential for additional contingent consideration payments of up to $230 million.
The potential $230 million in contingent consideration payments includes up to $130 million for the achievement of certain SPN-830 regulatory and commercial activities (regulatory and developmental contingent consideration payments) and up to $100 million related to future sales performance of the Products (sales-based contingent consideration payments). The regulatory and developmental contingent consideration payments include a $25 million milestone due upon the FDA acceptance of the SPN-830 NDA for review. The remaining $105 million of the $130 million contingent consideration payments include payments upon the FDA's regulatory approval and commercial launch of SPN-830. One of the regulatory milestones has a time-based mechanism for full or partial achievement. The $100 million sales-based contingent consideration payments include a $35 million milestone due upon achievement of certain U.S. net product sales of APOKYN. The remaining $65 million of the $100 million sales-based contingent consideration payments relate to the achievement of certain net product sales of the Products in 2022 and 2023. Refer to the contingent consideration discussion in Note 6, Fair Value of Financial Instruments and Contingent Consideration.
In the second quarter of 2021 and within one year from the USWM Closing Date, the Company finalized its accounting for the business combination, including the purchase price allocation; the Company recorded measurement period adjustments related to the purchase price consideration, finalization of the accounting for the lease (refer to Note 12, Leases), the fair values of inventory and intangible assets, and deferred tax liabilities based on refinements to inputs used in the estimates.
Purchase Price Consideration
Amount
Cash consideration$306,485 
Fair value of contingent consideration74,800 
Total purchase consideration$381,285 
Cash consideration to Seller - net of cash acquired$299,491 
The Company paid the Seller $297.2 million in cash at the USWM Closing Date. As of December 31, 2021, the Company paid the Seller an additional $2.3 million for working capital adjustments on the purchase price consistent with the Agreement resulting in an increase to the original cash consideration paid to the Seller. Of the $2.3 million additional payments, $1.0 million was incurred in the second quarter of 2021 and the remainder was reported and paid in 2020.
Contingent Consideration
In addition to the cash paid to the Seller, contingent payments of up to $230 million are also due to the Seller upon the achievement of certain milestones related to the development of SPN-830, the IPR&D asset, and sale of the Products. The possible outcomes for the contingent consideration range from $0, if no milestone is achieved, to $230 million on an undiscounted basis if all milestones are achieved.
The Company initially recorded a contingent consideration liability of $115.7 million as of the USWM Closing Date to reflect the estimated fair value of the contingent consideration based on information available at that time. The estimated fair value of the contingent consideration was determined using a Monte Carlo simulation for the sales-based contingent consideration payments and an income approach for the regulatory and developmental contingent consideration payments. The key assumptions considered in estimating the fair value include the estimated probability and timing of milestone achievement, such as the probability and timing of obtaining regulatory approval, discount rate, the estimated revenue volatility and the estimated amount and timing of projected revenues from the Products. Subsequent to the Closing Date, the Company adjusted the contingent consideration fair value based on new information related to the facts and circumstances that existed as of the acquisition date related to the timing of meeting the conditions of the milestone payments that are contingent upon regulatory approval and commercial launch of the acquired IPR&D asset as well as the estimated timing of projected revenues from the Products. As a result, the Company recorded in the fourth quarter of 2020, a measurement period adjustment of $40.9 million, which decreased the estimated fair value of the contingent consideration liability as of Closing Date to $74.8 million. Refer to the contingent consideration discussion in Note 6, Fair Value of Financial Instruments and Contingent Consideration.
Fair Value of Net Assets Acquired
The following table presents the total purchase price and the fair value of the assets acquired and liabilities assumed as of the USWM Closing Date (dollars in thousands):
Fair Value
Cash and cash equivalents6,994 
Accounts receivable, net18,474 
Inventories, net11,600 
Prepaid expenses and other current assets3,564 
Property and equipment, net454 
Operating lease asset (1)
11,029 
Intangible assets355,000 
Other assets340 
Total fair value of assets acquired407,455 
Accounts payable(2,573)
Accrued expenses and other current liabilities(23,339)
Operating lease liability (1)
(11,029)
Deferred income tax liabilities, net (2)
(67,192)
Total fair value of liabilities assumed(104,133)
Total identifiable net assets303,322 
Goodwill77,963 
Total purchase price381,285 
(1) Refer to Note 12, Leases, for further discussion of the acquired lease asset and assumed lease liability.
(2)    Includes tax attributes that are subject to tax limitations.
Acquired Inventory
The fair value of the inventory was determined using the comparative sales method, which estimated the expected sales price of the product, reduced by all costs expected to be incurred to complete or to dispose of the inventory, as well as a profit on the sale.
Acquired Intangible Assets
The acquired intangible assets include the acquired IPR&D asset and the acquired developed technology, and product rights. The Company determined the fair value of the acquired intangible assets as of the USWM Closing Date using the income approach. The fair value measurements of the acquired intangible assets were determined based on significant unobservable inputs and therefore, represent a Level 3 fair value measurement. Some of the more significant inputs and assumptions used in the intangible assets valuation include: the timing and probability of success of clinical and regulatory approvals for the IPR&D asset, the estimated future cash flows from Product sales, the timing and projection of costs and expenses, discount rates and tax rates.
The following table summarizes the purchase price allocation, and the average remaining useful lives for identifiable intangible assets (dollars in thousands):
Estimated Fair ValueEstimated Useful Lives as of Closing Date
(in years)
Acquired In-process Research & Development$124,000 n/a
Acquired Developed Technology and Product Rights231,000 
10.5 - 12.5
Total intangible assets$355,000 
Acquired intangible assets, excluding the acquired IPR&D, will be amortized over their estimated useful lives on a straight-line basis. IPR&D assets are considered indefinite-lived, until the successful completion or abandonment of the associated research and development efforts.
Goodwill
Goodwill was calculated as the excess of the consideration paid consequent to completing the acquisition, compared to the net assets recognized. Goodwill represents the future economic benefits arising from the other acquired assets, and which could not be individually identified and separately valued. Goodwill is primarily attributable to the additional acquired growth platforms and an expanded revenue base. Goodwill is not deductible for tax purposes.
Acquisition-related Transaction Costs
Acquisition-related transaction costs, which primarily consisted of regulatory, financial advisory, and legal fees, totaled $8.4 million for the year ended December 31, 2020.
MDD Enterprises Operations
The operations of MDD US Enterprises, LLC ("MDD Enterprises") (formerly USWM Enterprises, LLC) and its subsidiaries have been included in the Company's consolidated statements of earnings for the period subsequent to the USWM Closing Date. The following table summarizes the total revenues for MDD Enterprises (dollars in thousands):
December 31,
20212020
Net product sales$132,134 $90,985 
The Company is unable to provide the results of operations attributable to MDD US Enterprises, LLC and its subsidiaries as those operations were substantially integrated into our business.
Pro forma Information
The following table presents the unaudited pro forma combined financial information for each of the periods presented as if the USWM Acquisition had occurred on January 1, 2019 (dollars in thousands):
December 31,
20202019
(unaudited)
Pro forma total revenues$583,657 $542,807 
Pro forma net earnings133,423 110,842