Note 9 - Accrued Expenses

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Note 9—Accrued Expenses:

Accrued expenses consisted of the following (in thousands):

	September 30, 2021		December 31, 2020
Current:
Accrued legal verdict expense	$	57,328	$	22,724
Accrued royalties		7,699		8,604
Accrued CRO services		2,969		3,474
Accrued variable consideration		8,281		9,014
Accrued bonus		5,054		7,788
Accrued compensation		4,374		4,820
Accrued other clinical development		1,277		1,904
Accrued professional fees		1,926		1,420
Accrued legal fees		919		383
Accrued manufacturing costs		376		752
Other		579		442
		90,782		61,325
Long-term:
Accrued legal verdict expense		—		24,822
Accrued CRO services		1,006		908
Accrued other		206		233
		1,212		25,963
Totals	$	91,994	$	87,288

Accrued CRO services, accrued other clinical development expenses, and accrued legal fees represent the Company’s estimates of such costs and are recognized as incurred. Accrued royalties represent royalties incurred in connection with the Company’s license agreement with Pfizer. Accrued compensation includes accrued commissions and accrued vacation, which is accrued at the rate the employee earns vacation and reduced as vacation is used by the employee. Accrued variable consideration represents estimates of adjustments to product revenue, net for which reserves are established.

Current accrued legal verdict expense includes an estimate of $2.8 million that may be owed to the plaintiff as a result of the jury verdict in Eshelman v. Puma Biotechnology, Inc., et al. The Company's best estimates of potential damages in the matter could be approximately $2.8 million, which also represents our estimate as the most likely outcome; however, the actual amount of damages payable by the Company is still uncertain and will be ascertained only after completion of the appeal process and subsequent proceedings on remand, and such amount could be greater than the amount of expense already recognized or the high end of the estimate. During the nine months ended September 30, 2021, the Company revised its estimate from $22.9 million to $2.8 million, a decrease of $20.1 million, based on changes in the facts and circumstances surrounding this case and recent developments. The Company continues to classify the accrual as a current liability due to the uncertainty of the timing and amount of the payment. See Part II Item 1. “Legal Proceedings” of this Quarterly Report for a more detailed description of recent developments.

Additionally, current accrued legal verdict expense includes the Company’s estimate of $54.2 million that may be owed to class action participants as a result of the jury verdict in Hsu v. Puma Biotechnology, Inc., et al. During the nine months ended September 30, 2021 the Company revised its estimate from $24.8 million to $54.5 million, an increase of $29.7 million, based on changes in the facts and circumstances surrounding this case and recent developments. See Part II Item 1. “Legal Proceedings” of this Quarterly Report for a more detailed description of recent developments.

Other current accrued expenses consist primarily of business license fees, one half of the portion of employer Social Security payroll taxes deferred under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and other taxes, insurance and marketing fees.

Other long-term accrued expenses consist primarily of one half of the portion of employer Social Security payroll taxes deferred under the CARES Act, accrued compensation and deposit from a sublessee.

All accrued expenses are adjusted in the period the actual costs become known.