þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 27-4842691 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
12255 El Camino Real, Suite 250, San Diego, CA | 92130 |
(Address of Principal Executive Offices) | (Zip code) |
Title of each class | Name of exchange on which registered |
Common Stock, par value $0.0001 per share | The NASDAQ Global Market |
Large Accelerated Filer þ | Accelerated Filer r | |
Non-Accelerated Filer r | Smaller Reporting Company r |
Page | ||
• | our ability to produce, sustain and expand sales of our products; |
• | our ability to develop, acquire and/or introduce new products; |
• | our projected future sales, profitability and other financial metrics; |
• | our future financing plans; |
• | our anticipated needs for working capital; |
• | the anticipated trends in our industry; |
• | acquisitions of other companies or assets that we might undertake in the future; |
• | our operations in the United States and abroad, and the domestic and foreign regulatory, economic and political conditions; and |
• | competition existing today or that will likely arise in the future. |
• | Chenodal® (chenodeoxycholic acid) is approved in the United States for the treatment of patients suffering from gallstones in whom surgery poses an unacceptable health risk due to disease or advanced age. Chenodal® has also been the standard of care for cerebrotendinous xanthomatosis (“CTX”) patients for more than three decades and the Company is currently pursuing adding this indication to the label. |
• | Cholbam® (cholic acid) is approved in the United States for the treatment of bile acid synthesis disorders due to single enzyme defects and is further indicated for adjunctive treatment of patients with peroxisomal disorders. |
• | Thiola® (tiopronin) is approved in the United States for the prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria. |
• | Expand our product pipeline. We intend to expand our product pipeline by pursuing additional acquisitions of pharmaceutical products that have the potential to have a profound impact on patients’ lives. We believe that there are multiple drugs for treating life-threatening diseases that may be neglected by other pharmaceutical companies. We believe that we can create value by acquiring certain of these products. |
• | Focus on developing products to treat rare diseases characterized by severe unmet medical needs. We focus on potentially transformational orphan drug candidates in order to leverage our development and commercialization capabilities in rare disease. We believe that drug development for orphan drug markets is particularly attractive because relatively small clinical trials can demonstrate the large clinical effects expected with transformational therapies. Furthermore, the regulatory and commercial models for orphan drugs are well established. Finally, we believe that our research, development, and commercialization capabilities are well suited to the orphan drug market and represent distinct competitive advantages. |
• | Develop a sustainable pipeline by employing disciplined decision criteria in the evaluation of potential in-licensing candidates. We seek to build a sustainable product pipeline by employing multiple therapeutic approaches and by developing or acquiring orphan drug candidates. We will seek to augment our internally developed pipeline projects by selectively and strategically acquiring pipeline assets that will add value to the portfolio. We intend to mitigate risk by employing rigorous decision criteria, favoring drug candidates that have undergone at least some clinical study. Our decision to acquire rights to a drug candidate also depends on the scientific merits of the available clinical data; the identifiable orphan patient population; the economic terms of any proposed acquisition of rights; the amount of capital required to develop the asset; and the economic potential of the drug candidate, should it be commercialized. We believe this strategy minimizes our clinical development risk and allows us to accelerate the development and potential commercialization of current and future drug candidates. |
• | Evaluate the commercialization strategies on a product-by-product basis to maximize the value of each. As we move our drug candidates through development toward regulatory approval, we will evaluate several options for each drug candidate’s commercialization strategy. These options include building our own internal sales force; entering into joint marketing partnerships with other pharmaceutical or biotechnology companies, whereby we jointly sell and market the product; and out-licensing our products, whereby other pharmaceutical or biotechnology companies sell and market our product and pay us a royalty on sales. Our decision will be made separately for each product and will be based on a number of factors including capital necessary to execute on each option, size of the market and terms of potential offers from other pharmaceutical and biotechnology companies. |
• | sterol 27-hydroxylase (presenting as cerebrotendinous xanthomatosis, CTX) deficiency; |
• | 2- (or alpha-) methylacyl-CoA racemase (AMACR) deficiency; |
• | cholesterol 7 alpha-hydroxylase (CYP7A1) deficiency. |
• | serve patients living with rare disease that have limited treatment options; |
• | drive optimum performance of its marketed products; |
• | educate and train healthcare providers about our products and the diseases for which they are approved to treat; |
• | support access to and reimbursement coverage for our products in the U.S. without significant restrictions; and |
• | minimize the number of patients who discontinue treatment or have low compliance with our products by providing patients with support services and disease education, to the extent and in the manner permitted under applicable laws, to help them maximize the benefits of treatment. |
• | completion of extensive pre-clinical laboratory tests, animal studies, and formulation studies in accordance with the FDA’s GLP regulations; |
• | submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin; |
• | performance of adequate and well-controlled human clinical trials in accordance with GCP requirements to establish the safety and efficacy of the drug for each proposed indication; |
• | submission to the FDA of an NDA after completion of all pivotal clinical trials; |
• | satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the active pharmaceutical ingredient, or API, and finished drug product are produced and tested to assess compliance with cGMPs; and |
• | FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States. |
• | More frequent meetings with FDA to discuss the drug's development plan and ensure collection of appropriate data needed to support drug approval; |
• | More frequent written communication from FDA about such things as the design of the proposed clinical trials and use of biomarkers; |
• | Eligibility for Accelerated Approval and Priority Review, if relevant criteria are met; and |
• | Rolling Review, which means that a drug company can submit completed sections of its Biologic License Application (BLA) or NDA for review by FDA, rather than waiting until every section is completed before the entire application can be reviewed. BLA or NDA review usually does not begin until the drug company has submitted the entire application to the FDA. |
• | restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; |
• | fines, warning letters or holds on post-approval clinical trials; |
• | refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals; |
• | product seizure or detention, or refusal to permit the import or export of products; or |
• | injunctions or the imposition of civil or criminal penalties. |
• | lower demonstrated efficacy, safety and/or tolerability compared to other drugs; |
• | prevalence and severity of adverse side-effects; |
• | lack of cost-effectiveness; |
• | lack of coverage and adequate reimbursement availability from third-party payers; |
• | a decision to wait for the approval of other therapies in development that have significant perceived advantages over our drug; |
• | convenience and ease of administration; |
• | other potential advantages of alternative treatment methods; and |
• | ineffective marketing and/or distribution support. |
• | our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical testing or clinical trials or we may abandon projects that we expect to be promising; |
• | regulators may require us to conduct studies of the long-term effects associated with the use of our product candidates; |
• | regulators or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site; |
• | the FDA or any non-United States regulatory authority may impose conditions on us regarding the scope or design of our clinical trials or may require us to resubmit our clinical trial protocols to institutional review boards for re-inspection due to changes in the regulatory environment; |
• | the number of patients required for our clinical trials may be larger than we anticipate or participants may drop out of our clinical trials at a higher rate than we anticipate; |
• | our third-party contractors or clinical investigators may fail to comply with regulatory requirements or fail to meet their contractual obligations to us in a timely manner; |
• | we might have to suspend or terminate one or more of our clinical trials if we, regulators or institutional review boards determine that the participants are being exposed to unacceptable health risks; |
• | regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements; |
• | the cost of our clinical trials may be greater than we anticipate; |
• | the supply or quality of our product candidates or other materials necessary to conduct our clinical trials may be insufficient or inadequate or we may not be able to reach agreements on acceptable terms with prospective clinical research organizations; and |
• | the effects of our product candidates may not be the desired effects or may include undesirable side effects or the product candidates may have other unexpected characteristics. |
• | be delayed in obtaining, or may not be able to obtain, marketing approval for one or more of our product candidates; |
• | obtain approval for indications that are not as broad as intended or entirely different than those indications for which we sought approval; and |
• | have the product removed from the market after obtaining marketing approval. |
• | obtaining supplies of sparsentan, RE-024 and subsequent product candidates for completion of our clinical trials on a timely basis; |
• | successful completion of pre-clinical and clinical studies; |
• | obtaining marketing approvals from the FDA and similar regulatory authorities outside the United States; |
• | establishing commercial-scale manufacturing arrangements with third-party manufacturers whose manufacturing facilities are operated in compliance with cGMP regulations; |
• | launching commercial sales of the product, whether alone or in collaboration with others; |
• | acceptance of the product by patients, the medical community and third-party payers; |
• | competition from other companies; |
• | successful protection of our intellectual property rights from competing products in the United States and abroad; and |
• | a continued acceptable safety and efficacy profile of our product candidates following approval. |
• | regulatory authorities may require the addition of restrictive labeling statements; |
• | regulatory authorities may withdraw their approval of the product; and |
• | we may be required to change the way the product is administered or conduct additional clinical trials. |
• | the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling; |
• | the efficacy and potential advantages over alternative treatments; |
• | the pricing of our product candidates; |
• | relative convenience and ease of administration; |
• | the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; |
• | the strength of marketing and distribution support and timing of market introduction of competitive products; |
• | publicity concerning our products or competing products and treatments; and |
• | sufficient third-party insurance coverage or reimbursement. |
• | we or our licensors were the first to make the inventions covered by each of our pending patent applications; |
• | we or our licensors were the first to file patent applications for these inventions; |
• | others will not independently develop similar or alternative technologies or duplicate any of our technologies; |
• | any patents issued to us or our licensors that provide a basis for commercially viable products will provide us with any competitive advantages or will not be challenged by third parties; |
• | we will develop additional proprietary technologies that are patentable; |
• | we will file patent applications for new proprietary technologies promptly or at all; |
• | the claims we make in our patents will be upheld by patent offices in the United States and elsewhere; |
• | our patents will not expire prior to or shortly after commencing commercialization of a product; and |
• | the patents of others will not have a negative effect on our ability to do business. |
• | a covered benefit under its health plan; |
• | safe, effective and medically necessary; |
• | appropriate for the specific patient; |
• | cost-effective; and |
• | neither experimental nor investigational. |
• | reliance on the third party for regulatory compliance and quality assurance; |
• | limitations on supply availability resulting from capacity and scheduling constraints of the third parties; |
• | impact on our reputation in the marketplace if manufacturers of our products fail to meet the demands of our customers; |
• | the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and |
• | the possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us. |
• | our inability to recruit and retain adequate numbers of effective sales and marketing personnel; |
• | the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our products; |
• | the lack of complementary products to be offered by our sales personnel, which may put us at a competitive disadvantage against companies with broader product lines; |
• | unforeseen costs associated with expanding our own sales and marketing team for new products or with entering into a partnering agreement with an independent sales and marketing organization; and |
• | efforts by our competitors to commercialize competitive products. |
• | complete enrollment in the Phase 2 DUET trial of sparsentan for the treatment of FSGS; |
• | continue our ongoing clinical development of RE-024 for the treatment of PKAN; |
• | continue our ongoing clinical development of RE-034; |
• | continue the research and development of additional product candidates; |
• | expand our sales and marketing infrastructure to commercialize Cholbam and any new products for which we may obtain regulatory approval; and |
• | expand operational, financial, and management information systems and personnel, including personnel to support product development efforts and our obligations as a public company. |
• | the progress and results of our pre-clinical and clinical studies of sparsentan, RE-024 and RE-034 and other drug candidates; |
• | the costs, timing and outcome of regulatory review of our product candidates; |
• | the number and development requirements of other product candidates that we pursue; |
• | the costs of commercialization activities, including product marketing, sales and distribution; |
• | the emergence of competing technologies and other adverse market developments; |
• | the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property related claims; |
• | the extent to which we acquire or invest in businesses, products and technologies; and |
• | our ability to establish collaborations and obtain milestone, royalty or other payments from any such collaborators. |
• | results of clinical trials of our product candidates or those of our competitors; |
• | our entry into or the loss of a significant collaboration; |
• | regulatory or legal developments in the United States and other countries, including changes in the health care payment systems; |
• | our ability to obtain and maintain marketing approvals from the FDA or similar regulatory authorities outside the United States; |
• | variations in our financial results or those of companies that are perceived to be similar to us; |
• | changes in the structure of healthcare payment systems; |
• | market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations; |
• | general economic, industry and market conditions; |
• | results of clinical trials conducted by others on drugs that would compete with our product candidates; |
• | developments or disputes concerning patents or other proprietary rights; |
• | public concern over our product candidates or any products approved in the future; |
• | litigation; |
• | future sales or anticipated sales of our common stock by us or our stockholders; and |
• | the other factors described in this “Risk Factors” section. |
• | integrating personnel, operations and systems, while maintaining focus on producing and delivering consistent, high quality products; |
• | coordinating geographically dispersed organizations; |
• | distracting employees from operations; |
• | retaining existing customers and attracting new customers; and |
• | managing inefficiencies associated with integrating the operations of the Company. |
• | inability of sales personnel to obtain access to or convince adequate numbers of physicians to prescribe our products; |
• | inability to recruit, retain and effectively manage adequate numbers of effective sales personnel; |
• | lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies that have more extensive product lines; and |
• | unforeseen delays, costs and expenses associated with maintaining our sales organization. |
• | decreased demand for any product candidates or products that we may develop; |
• | damage to our reputation; |
• | regulatory investigations that could require costly recalls or product modifications; |
• | withdrawal of clinical trial participants; |
• | costs to defend the related litigation; |
• | substantial monetary awards to trial participants or patients, including awards that substantially exceed our product liability insurance, which we would then be required to pay from other sources, if available, and would damage our ability to obtain liability insurance at reasonable costs, or at all, in the future; |
• | loss of revenue; |
• | the diversion of management’s attention from managing our business; and |
• | the inability to commercialize any products that we may develop. |
• | our failure to demonstrate to the satisfaction of the FDA or comparable regulatory authorities that a product candidate is safe and effective for a particular indication; |
• | the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable regulatory authorities for approval; |
• | our inability to demonstrate that a product candidate’s benefits outweigh its risks; |
• | our inability to demonstrate that the product candidate presents an advantage over existing therapies; |
• | the FDA’s or comparable regulatory authorities’ disagreement with the manner in which we interpret the data from preclinical studies or clinical trials; |
• | failure of the third-party manufacturers with which we contract for clinical or commercial supplies to satisfactorily complete an FDA pre-approval inspection of the facility or facilities at which the product is manufactured to assess compliance with the FDA’s cGMP regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and |
• | a change in the approval policies or regulations of the FDA or comparable regulatory authorities or a change in the laws governing the approval process. |
• | make it more difficult for us to satisfy our obligations with respect to any other debt we may incur in the future; |
• | increase our vulnerability to general adverse economic and industry conditions; |
• | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness and related interest, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; |
• | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
• | increase our cost of borrowing; |
• | place us at a competitive disadvantage compared to our competitors that may have less debt; and |
• | limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes. |
• | failure to pay (for more than 30 days) interest when due; |
• | failure to pay principal when due; |
• | failure to deliver shares of Common Stock upon conversion of a Note; |
• | failure to provide notice of a fundamental change; |
• | acceleration on other indebtedness of the Company in excess of $10 million (other than indebtedness that is non-recourse to the Company); or |
• | certain types of bankruptcy or insolvency involving the Company. |
Location | Address | Lease Expiration | Square Feet |
San Diego, California (Principal Executive Office) | 12255 El Camino Real, Suite 250 | December 31, 2017 | 11,397 |
Cambridge, Massachusetts | 301 Binney Street | December 31, 2016 | 13,985 |
New York, New York | 777 Third Avenue, 22 Floor Suites B & C | November 30, 2018 | 7,661 |
Quarter Ending | High | Low | ||||||
Fiscal Year 2015 | ||||||||
First Quarter | $ | 24.71 | $ | 11.87 | ||||
Second Quarter | $ | 34.68 | $ | 21.12 | ||||
Third Quarter | $ | 37.04 | $ | 18.34 | ||||
Fourth Quarter | $ | 23.04 | $ | 17.20 | ||||
Fiscal Year 2014 | ||||||||
First Quarter | $ | 21.84 | $ | 7.19 | ||||
Second Quarter | $ | 24.25 | $ | 10.17 | ||||
Third Quarter | $ | 14.49 | $ | 8.85 | ||||
Fourth Quarter | $ | 14.36 | $ | 7.85 |
Consolidated Statement of Operations: | December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||||||
Net product sales | $ | 99,892 | $ | 28,203 | $ | — | |||||
Total operating expenses | 150,640 | 108,011 | 24,773 | ||||||||
Operating loss | (50,748 | ) | (79,808 | ) | (24,773 | ) | |||||
Total other income (expenses), net | 156,215 | (33,590 | ) | (9,776 | ) | ||||||
Income (Loss) before benefit (provision) for income taxes | 105,467 | (113,398 | ) | (34,549 | ) | ||||||
Income tax benefit (provision) | 11,770 | 2,460 | (76 | ) | |||||||
Net income (loss) | $ | 117,237 | $ | (110,938 | ) | $ | (34,625 | ) | |||
Per Share Data: | |||||||||||
Net Income (loss) per common share, basic | $ | 3.49 | $ | (4.43 | ) | $ | (2.44 | ) | |||
Net Income (loss) per common share, diluted | $ | 3.17 | $ | (4.43 | ) | $ | (2.44 | ) | |||
Weighted average common shares outstanding, basic | 33,560,249 | 25,057,509 | 14,205,264 | ||||||||
Weighted average common shares outstanding, diluted | 37,581,439 | 25,057,509 | 14,205,264 |
Balance Sheet data: | December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||||||
Cash, cash equivalents and marketable securities | $ | 229,604 | $ | 27,760 | $ | 6,130 | |||||
Working capital (deficit) | 216,134 | (70,205 | ) | (29,064 | ) | ||||||
Total assets | 512,400 | 135,471 | 20,499 | ||||||||
Long-term debt | 43,902 | 43,288 | — | ||||||||
Total stockholders’ equity (deficit) | $ | 299,971 | $ | (37,251 | ) | $ | (19,667 | ) |
• | Chenodal (chenodeoxycholic acid) is approved in the United States for the treatment of patients suffering from gallstones in whom surgery poses an unacceptable health risk due to disease or advanced age. Chenodal has been the standard of care for cerebrotendinous xanthomatosis (“CTX”) patients for more than three decades and the Company is currently pursuing adding this indication to the label. |
• | Cholbam (cholic acid) is approved in the United States for the treatment of bile acid synthesis disorders due to single enzyme defects and is further indicated for adjunctive treatment of patients with peroxisomal disorders. |
• | Thiola (tiopronin) is approved in the United States for the prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria. |
For the Year Ended December 31, | |||||||||||
(in thousands) | |||||||||||
2015 | 2014 | 2013 | |||||||||
External service provider costs: | |||||||||||
Sparsentan | $ | 11,179 | $ | 7,449 | $ | 2,443 | |||||
RE-024 | 7,631 | 11,175 | 1,549 | ||||||||
Syntocinon | — | 3,353 | 251 | ||||||||
RE-034 | 357 | 3,237 | 230 | ||||||||
General | 6,754 | 7,077 | 159 | ||||||||
Other product candidates | 696 | 1,829 | 1,118 | ||||||||
Total external service provider costs: | 26,617 | 34,120 | 5,750 | ||||||||
Internal personnel costs: | 23,809 | 13,675 | 1,334 | ||||||||
Total research and development | $ | 50,426 | $ | 47,795 | $ | 7,084 |
Year Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Net product sales | $ | 99,892 | $ | 28,203 | $ | — |
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2015 | 2014 | Increase | 2014 | 2013 | Increase | ||||||||||||||||||
Cost of goods sold | $ | 2,185 | $ | 571 | $ | 1,614 | $ | 571 | $ | — | $ | 571 | |||||||||||
Research and development | 50,426 | 47,795 | 2,631 | 47,795 | 7,084 | 40,711 | |||||||||||||||||
Selling, general and administrative | 79,541 | 59,645 | 19,896 | 59,645 | 17,689 | 41,956 | |||||||||||||||||
Change in valuation of contingent consideration | 13,778 | — | 13,778 | — | — | — | |||||||||||||||||
Impairment of intangible assets | 4,710 | — | 4,710 | — | — | — | |||||||||||||||||
$ | 150,640 | $ | 108,011 | $ | 42,629 | $ | 108,011 | $ | 24,773 | $ | 83,238 |
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2015 | 2014 | Variance | 2014 | 2013 | Variance | ||||||||||||||||||
Litigation settlement gain | $ | 15,500 | $ | — | $ | 15,500 | $ | — | $ | — | $ | — | |||||||||||
Other income (expense), net | (296 | ) | 2,352 | (2,648 | ) | 2,352 | 370 | 1,982 | |||||||||||||||
Interest expense, net | (7,748 | ) | (7,435 | ) | (313 | ) | (7,435 | ) | (46 | ) | (7,389 | ) | |||||||||||
Debt early payment penalty | (2,250 | ) | — | (2,250 | ) | — | — | — | |||||||||||||||
Loss on extinguishment of debt | (4,151 | ) | — | (4,151 | ) | — | — | — | |||||||||||||||
Finance expense | (600 | ) | (4,721 | ) | 4,121 | (4,721 | ) | — | (4,721 | ) | |||||||||||||
Change in fair value of derivative instruments | (33,307 | ) | (23,786 | ) | (9,521 | ) | (23,786 | ) | (10,100 | ) | (13,686 | ) | |||||||||||
Gain on sale of assets | 140,004 | — | 140,004 | — | — | — | |||||||||||||||||
Bargain purchase gain | 49,063 | — | 49,063 | — | — | — | |||||||||||||||||
$ | 156,215 | $ | (33,590 | ) | $ | 189,805 | $ | (33,590 | ) | $ | (9,776 | ) | $ | (23,814 | ) |
December 31, 2015 | December 31, 2014 | ||||||
Revenue | $ | 99,892 | $ | 28,203 | |||
Net Income (Loss) | 117,237 | (110,938 | ) | ||||
Cash & Cash Equivalents | 37,805 | 18,204 | |||||
Short Term Investments | 191,799 | 9,556 | |||||
Accumulated Deficit | (65,153 | ) | (179,175 | ) | |||
Stockholders' Equity (Deficit) | 299,971 | (37,251 | ) | ||||
Net Working Capital (Deficit) | $ | 216,134 | $ | (70,205 | ) | ||
Net Working Capital Ratio | 3.52 | 0.35 |
• | revenue growth of our marketed products; |
• | the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities; |
• | the timing of, and costs involved in, seeking and obtaining marketing approvals for our products, and in maintaining quality systems standards for our products; |
• | our ability to manufacture sufficient quantities of our products to meet expected demand; |
• | the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, litigation costs and the results of litigation; |
• | our ability to enter into collaboration, licensing or distribution arrangements and the terms and timing of these arrangements; |
• | the potential need to expand our business, resulting in additional payroll and other overhead expenses; |
• | the potential acquisition or in-licensing of other products or technologies; and |
• | the emergence of competing technologies or other adverse market or technological developments. |
2015 | 2014 | 2013 | |||||||||
Net cash used in operating activities | $ | (554 | ) | $ | (45,850 | ) | $ | (17,589 | ) | ||
Net cash used in investing activities | (80,602 | ) | (37,263 | ) | (5,406 | ) | |||||
Net cash provided by financing activities | 100,767 | 95,320 | 28,981 | ||||||||
Net increase in cash | 19,611 | 12,207 | 5,986 | ||||||||
Effect of exchange rate changes on cash | (10 | ) | — | — | |||||||
Cash & cash equivalents, beginning of period | 18,204 | 5,997 | 11 | ||||||||
Cash & cash equivalents, end of period | $ | 37,805 | $ | 18,204 | $ | 5,997 |
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating leases | $ | 2,671 | $ | 1,026 | $ | 1,645 | $ | — | $ | — | |||||||||
Note payable | 53,073 | 2,070 | 4,140 | 46,863 | — | ||||||||||||||
Sales support services | 3,470 | 312 | 937 | 833 | 1,388 | ||||||||||||||
Product supply contracts | 5,221 | 3,923 | 1,298 | — | — | ||||||||||||||
Purchase order commitments | 596 | 258 | 338 | — | — | ||||||||||||||
$ | 65,031 | $ | 7,589 | $ | 8,358 | $ | 47,696 | $ | 1,388 |
Vesting Terms | |
Stock Options | 1 to 3 years |
Restricted Stock Units | 1 to 3 years |
December 31, 2015 | December 31, 2014 | ||||||
Raw material | $ | 289 | $ | 315 | |||
Finished goods | 2,247 | 486 | |||||
Total inventory | $ | 2,536 | $ | 801 |
Computer equipment | 3 years |
Furniture and fixtures | 7 years |
Leasehold improvements | Shorter of length of lease or life of the asset |
• | We have hired additional staff with expertise in applying complex accounting and financial reporting and disclosure rules required under U.S. GAAP and SEC reporting regulations, as well as allowing for segregation of duties. |
• | We appointed Gary A. Lyons, Timothy Coughlin, John Kozarich and Jeffrey Meckler as independent members of the Board of Directors. |
• | On November 10, 2014, Stephen Aselage became our Chief Executive Officer. Mr. Aselage has more than 30 years of pharmaceutical and biotechnology experience. |
• | On November 17, 2014, Laura Clague became our Chief Financial Officer. Mrs. Clague has extensive experience in accounting and finance, and pharmaceutical and biotechnology experience. |
• | On November 17, 2014, Margaret Valeur-Jensen, Ph.D. became our General Counsel. Ms. Valeur-Jensen has more than 25 years of experience working with public pharmaceutical and biotechnology companies. |
• | On February 3, 2015, the Company held a Special Meeting of Stockholders at which the Company’s stockholders voted to approve a proposal ratifying the prior issuance of stock options to purchase 1,928,000 shares of common stock and 230,000 restricted shares of common stock granted to employees between February 24, 2014 and August 18, 2014. |
• | In fiscal 2015, the Company instituted controls over the granting and tracking of stock options. |
(a) | (1) The financial statements at page F-1 are incorporated by reference to a part of this Annual Report on Form 10-K. |
(b) | Description of Exhibits |
Exhibit No. | Description | |
2.1 | Membership Interest Purchase Agreement, dated as of March 26, 2014, by and among Retrophin, Inc., on the one hand, and Loring Creek Holdings LLC, Lloyd Glenn and Matthias Kurth, on the other hand (incorporated by reference to Exhibit 10.2 to Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2014). | |
2.2 | Asset Purchase Agreement, dated May 22, 2015, by and between Retrophin, Inc. and Sanofi (incorporated by reference to Exhibit 2.1 to the Company's Current report on Form 8-K filed with the SEC on May 27, 2015). | |
3.1 | Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Company’s General Form for Registration of Securities on Form 10-12G, filed with the SEC on October 28, 2010). | |
3.2 | Certificate of Amendment of Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2015). | |
3.3 | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2015). | |
4.1 | Form of Warrant Certificate, dated June 30, 2014, issued to the Lenders under the Credit Agreement (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 7, 2014). | |
4.2 | Form of Warrant issued to the purchasers in the private placement of 3,045,929 shares of common stock, dated February 14, 2013 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 19, 2013). | |
4.3 | Form of Common Stock Purchase Warrant, dated August 15, 2013, issued to the purchasers of securities in the private placement of the Company closed on August 15, 2013 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 20, 2013). | |
4.4 | Form of Note Purchase Agreement for principal senior convertible notes with an interest rate of 4.50% due 2019 (“2019 Notes”), dated May 29, 2014, by and among the Company and the investors identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 4, 2014). | |
4.5 | Form of Indenture for 2019 Notes, dated May 30, 2014 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 4, 2014). | |
4.6 | Form of Note for 2019 Notes, dated May 30, 2014 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on May 29, 2014). | |
4.7 | Registration Rights Agreement, dated February 12, 2013, by and among the Company and the February 2013 Purchasers (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on February 19, 2013). | |
4.8 | Registration Rights Agreement, dated August 15, 2013, by and among the Company and the August 2013 Purchasers (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on August 20, 2013). | |
4.90 | First Amendment to Registration Rights Agreement, dated August 14, 2013, by and among the Company and the purchasers signatory thereto (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the SEC on August 20, 2013). | |
4.1 | Form of Indenture for Senior Debt Securities (incorporated by reference to Exhibit 4.10 to the Company’s Registration Statement on Form S-8, filed with the SEC on September 9, 2014). | |
4.11 | Form of Indenture for Subordinated Debt Securities (incorporated by reference to Exhibit 4.11 to the Company’s Registration Statement on Form S-8, filed with the SEC on September 9, 2014). | |
10.1 | Separation Agreement and Release, dated September 15, 2014, by and between Retrophin, Inc. and Marc Panoff (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on September 16, 2014). | |
10.2 | Form of Credit Agreement, dated as of June 30, 2014, among Retrophin, Inc., the lenders from time to time party thereto and U.S. Bank National Association, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 13, 2014). | |
10.3 | Form of Guarantee and Collateral Agreement, dated as of June 30, 2014, among Retrophin, Inc., the Guarantors from time to time party thereto and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 7, 2014). | |
10.4 | First Amendment to Thiola® Trademark License and Supply Agreement, dated July 28, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 29, 2014). |
10.5 | Amendment No. 1 to Credit Agreement, dated July 16, 2014, among Retrophin, Inc., the lenders from time to time party thereto and U.S. Bank National Association, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 13, 2014). | |
10.6 | Amendment No. 2 to Credit Agreement, dated November 13, 2014, among Retrophin, Inc., the lenders from time to time party thereto and U.S. Bank National Association, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 13, 2014). | |
10.7 | License Agreement, dated May 29, 2014, by and among Retrophin, Inc. and Mission Pharmacal Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 4, 2014). | |
10.8 | First Amendment to Trademark License and Supply Agreement, effective as of July 28, 2014, by and between Mission Pharmacal Company and Retrophin, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 29, 2014). | |
10.90 | International Rights Purchase Agreement, dated as of March 26, 2014, by and between Manchester Pharmaceuticals LLC and Retrophin Therapeutics International, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 31, 2014). | |
10.10 | Secured Promissory Note, dated March 26, 2014, made by Retrophin, Inc. in favor of Loring Creek Holdings LLC, Lloyd Glenn and Matthias Kurth (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on March 31, 2014). | |
10.1 | Membership Interest Pledge Agreement, dated as of March 26, 2014, by and between Retrophin, Inc., on the one hand, and Loring Creek Holdings LLC, Lloyd Glenn and Matthias Kurth, on the other hand (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the SEC on March 31, 2014). | |
10.12 | Security Agreement, dated as of March 26, 2014, by and between Manchester Pharmaceuticals LLC, on the one hand, and Loring Creek Holdings LLC, Lloyd Glenn and Matthias Kurth, on the other hand. (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the SEC on March 31, 2014). | |
10.13+ | Sublicense Agreement, dated February 16, 2012, by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation, Pharmacopeia, Inc., a Delaware limited liability company, and Retrophin, LLC, a Delaware limited liability company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 19, 2012). | |
10.14 | Employment Agreement, dated April 24, 2013, by and between Retrophin, Inc. and Horacio Plotkin, M.D. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 26, 2013). | |
10.15 | Amendment to Employment Agreement, dated June 30, 2013, by and between Retrophin, Inc. and Marc Panoff (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 30, 2013). | |
10.16 | Employment Agreement, dated March 2, 2015, by and between Retrophin, Inc. and Laura M. Clague (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 11, 2015). | |
10.17 | Employment Agreement, dated March 2, 2015, by and between Retrophin, Inc. and Margaret Valeur-Jensen (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 11, 2015). | |
10.18 | Employment Agreement, dated March 2, 2015, by and between Retrophin, Inc. and Stephen Aselage (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 11, 2015). | |
10.19 | Summary Separation Proposal, dated October 13, 2014, by and between Retrophin, Inc. and Martin Shkreli (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 11, 2015). | |
10.2 | Retrophin, Inc. 2014 Incentive Compensation Plan as amended (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 9, 2015). | |
10.21 | Retirement and Transition Agreement, dated February 1, 2016, by and between Retrophin, Inc. and Margaret Valeur-Jensen, Ph.D. (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 2, 2016). | |
10.22+ | Amendment No. 4 to Sublicense Agreement dated as of September 17, 2015, between Retrophin, Inc. and Ligand Pharmaceuticals Incorporated (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q/A, filed with the SEC on December 22, 2015). | |
10.23 | Addendum to Trademark License and Supply Agreement, dated October 19, 2015, by and between to Company and Mission Pharmacal (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 6, 2015). | |
10.24 | 2015 Retrophin Inc. Executive/Designated Officer Annual Bonus Plan (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the SEC on July 29, 2015). | |
10.25 | Retrophin, Inc. 2015 Equity Incentive Plan, Form of Stock Option Grant Notice, Option Agreement and Notice of Exercise, and Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement for use thereunder (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the SEC on June 11, 2015). | |
10.26 | Asset Purchase Agreement dated as of January 9, 2015, between Retrophin, Inc. and Turing Pharmaceuticals AG (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.27 | Asset Purchase Agreement dated as of February 12, 2015, among Retrophin, Inc., Manchester Pharmaceuticals LLC and Turing Pharmaceuticals AG (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.28 | Asset Purchase Agreement dated as of February 12, 2015, between Retrophin, Inc. and Turing Pharmaceuticals AG (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.29 | Amendment No. 3 to Credit Agreement dated January 12, 2015, among Retrophin, Inc., the lenders from time to time thereto and U.S. Bank National Association, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). |
10.30+ | Amendment No. 3 to Sublicense Agreement dated as of February 27, 2015, between Retrophin, Inc. and Ligand Pharmaceuticals Incorporated (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.31+ | Asset Purchase Agreement dated January 10, 2015 by and between Retrophin, Inc. and Asklepion Pharmaceuticals, LLC (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.32 | Amendment No. 4 to Credit Agreement, dated March 24, 2015, among Retrophin, Inc., the lenders from time to time thereto and U.S. Bank National Association, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.33 | Employment Agreement, dated May 7, 2015, by and between Retrophin, Inc. and Alvin Shih (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.34 | Purchase Agreement dated as of February 12, 2015 among Retrophin Inc., Manchester Pharmaceuticals LLC and Waldun Pharmaceuticals LLC (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2015). | |
10.35 | 2016 Retrophin, Inc. Executive Officer Annual Bonus Plan (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed with the SEC on February 25, 2016). | |
21.1 | List of subsidiaries of the Company. | |
23.1 | Consent of Marcum LLP. | |
23.2 | Consent of BDO USA, LLP. | |
24.1 | Power of Attorney (see signature page hereto). | |
31.1 | Chief Executive Officer's Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Chief Financial Officer's Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Chief Executive Officer’s Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002. | |
32.2 | Chief Financial Officer’s Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Taxonomy Extension Presentation Linkbase Document. |
+ | We have received confidential treatment of certain portions of this agreement, which have been omitted and filed separately with the SEC pursuant to Rule 406 under the Securities Act of 1933, as amended, or Rule 24b-2 of the Securities Exchange Act of 1934, as amended. |
Date: February 26, 2016 | RETROPHIN, INC. | |
By: | /s/ Stephen Aselage | |
Name: Stephen Aselage | ||
Title: Chief Executive Officer | ||
By: | /s/ Laura Clague | |
Name: Laura Clague | ||
Title: Chief Financial Officer |
Signature | Title | Date | ||
/s/ Stephen Aselage | Chief Executive Officer and Director (Principal Executive Officer) | February 26, 2016 | ||
Stephen Aselage | ||||
/s/ Laura Clague | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 26, 2016 | ||
Laura Clague | ||||
/s/ Timothy Coughlin | Director | |||
Timothy Coughlin | February 26, 2016 | |||
/s/ Cornelius Golding | Director | |||
Cornelius Golding | February 26, 2016 | |||
/s/ Jeffrey A. Meckler | Director | |||
Jeffrey A. Meckler | February 26, 2016 | |||
/s/ Gary Lyons | Director | |||
Gary Lyons | February 26, 2016 | |||
/s/ John Kozarich | Director | |||
John Kozarich | February 26, 2016 |
Page | |
Financial Statements | |
December 31, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 37,805 | $ | 18,204 | |||
Marketable securities | 191,799 | 9,556 | |||||
Accounts receivable, net | 12,458 | 7,960 | |||||
Inventory, net | 2,536 | 801 | |||||
Prepaid expenses and other current assets | 2,378 | 813 | |||||
Prepaid taxes | 8,107 | — | |||||
Note receivable, current | 46,849 | — | |||||
Total current assets | 301,932 | 37,334 | |||||
Property and equipment, net | 428 | 671 | |||||
Other asset | 1,995 | 2,265 | |||||
Intangible assets, net | 161,536 | 94,265 | |||||
Goodwill | 936 | 936 | |||||
Note receivable, long-term | 45,573 | — | |||||
Total assets | $ | 512,400 | $ | 135,471 | |||
Liabilities and Stockholders' Deficit | |||||||
Current liabilities: | |||||||
Deferred technology purchase liability | $ | — | $ | 1,000 | |||
Accounts payable | 7,639 | 7,124 | |||||
Accrued expenses | 23,820 | 27,883 | |||||
Guaranteed minimum royalty, short term | 817 | 732 | |||||
Other current liabilities | 958 | 206 | |||||
Business combination-related contingent consideration | 13,754 | 2,118 | |||||
Derivative financial instruments, warrants | 38,810 | 27,990 | |||||
Note payable | — | 40,486 | |||||
Total current liabilities | 85,798 | 107,539 | |||||
Convertible debt | 43,902 | 43,288 | |||||
Other noncurrent liabilities | 3,066 | 1,617 | |||||
Guaranteed minimum royalty, long term | 10,068 | 10,617 | |||||
Business combination-related contingent consideration, less current portion | 45,267 | 9,520 | |||||
Deferred income tax liability, net | 24,328 | 141 | |||||
Total liabilities | 212,429 | 172,722 | |||||
Stockholders' Equity (Deficit): | |||||||
Preferred stock Series A $0.001 par value; 20,000,000 shares authorized; 0 issued and outstanding as of December 31, 2015 and 2014, respectively | — | — | |||||
Common stock $0.0001 par value; 100,000,000 shares authorized; 36,465,853 and 26,428,071 issued and 36,465,853 and 26,048,480 outstanding as of December 31, 2015 and 2014, respectively | 4 | 3 | |||||
Additional paid-in capital | 365,802 | 140,851 | |||||
Treasury stock, at cost, 0 and 379,591, respectively | — | (3,215 | ) | ||||
Accumulated deficit | (65,153 | ) | (179,175 | ) | |||
Accumulated other comprehensive income (loss) | (682 | ) | 4,285 | ||||
Total stockholders' equity (deficit) | 299,971 | (37,251 | ) | ||||
Total liabilities and stockholders' equity (deficit) | $ | 512,400 | $ | 135,471 |
Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Net product sales | $ | 99,892 | $ | 28,203 | $ | — | |||||
Operating expenses: | |||||||||||
Cost of goods sold | 2,185 | 571 | — | ||||||||
Research and development | 50,426 | 47,795 | 7,084 | ||||||||
Selling, general and administrative | 79,541 | 59,645 | 17,689 | ||||||||
Change in fair value of contingent consideration | 13,778 | — | — | ||||||||
Impairment of intangible assets | 4,710 | — | — | ||||||||
Total operating expenses | 150,640 | 108,011 | 24,773 | ||||||||
Operating loss | (50,748 | ) | (79,808 | ) | (24,773 | ) | |||||
Other expenses, net: | |||||||||||
Litigation settlement gain | 15,500 | — | — | ||||||||
Other income (expense), net | (296 | ) | 2,352 | 370 | |||||||
Interest expense, net | (7,748 | ) | (7,435 | ) | (46 | ) | |||||
Debt early payment penalty | (2,250 | ) | — | — | |||||||
Loss on extinguishment of debt | (4,151 | ) | — | — | |||||||
Finance expense | (600 | ) | (4,721 | ) | — | ||||||
Change in fair value of derivative instruments | (33,307 | ) | (23,786 | ) | (10,100 | ) | |||||
Gain on sale of assets | 140,004 | — | — | ||||||||
Bargain purchase gain | 49,063 | — | — | ||||||||
Total other income (expense), net | 156,215 | (33,590 | ) | (9,776 | ) | ||||||
Income (loss) before benefit (provision) for income taxes | 105,467 | (113,398 | ) | (34,549 | ) | ||||||
Income tax benefit (provision) | 11,770 | 2,460 | (76 | ) | |||||||
Net income (loss) | $ | 117,237 | $ | (110,938 | ) | $ | (34,625 | ) | |||
Net income (loss) per common share, basic | $ | 3.49 | $ | (4.43 | ) | $ | (2.44 | ) | |||
Net income (loss) per common share, diluted | $ | 3.17 | $ | (4.43 | ) | $ | (2.44 | ) | |||
Weighted average common shares outstanding, basic | 33,560,249 | 25,057,509 | 14,205,264 | ||||||||
Weighted average common shares outstanding, diluted | 37,581,439 | 25,057,509 | 14,205,264 | ||||||||
Comprehensive income (loss): | |||||||||||
Net income (loss) | $ | 117,237 | $ | (110,938 | ) | $ | (34,625 | ) | |||
Foreign currency translation loss | (40 | ) | — | — | |||||||
Unrealized gain (loss) on sale of marketable securities | (4,927 | ) | 4,396 | (110 | ) | ||||||
Comprehensive income (loss) | $ | 112,270 | $ | (106,542 | ) | $ | (34,735 | ) |
Common Stock | Common Stock in Treasury | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Additional paid in capital | Accumulated other comprehensive income (loss) | Accumulated deficit | Total Stockholders' equity (deficit) | ||||||||||||||||||||||
Balance - December 31, 2012 | 8,952,905 | $ | 1 | — | $ | — | $ | 30,203 | $ | — | $ | (33,612 | ) | $ | (3,408 | ) | |||||||||||||
Incentive shares granted-employees | 135,000 | — | — | — | — | — | — | — | |||||||||||||||||||||
Share based compensation-employees | — | — | — | — | 1,424 | — | — | 1,424 | |||||||||||||||||||||
Share based compensation-non employees | 177,500 | — | — | — | 1,485 | — | — | 1,485 | |||||||||||||||||||||
Consultants settlement | 181,500 | — | — | — | 1,180 | — | — | 1,180 | |||||||||||||||||||||
Incentive shares forfeited-employees | (20,833 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||
Incentive shares forfeited- non employees | (37,500 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||
Issuance of common stock in connection with January 2013 private placement at $3.00 per share, net of fees of $0 | 272,221 | — | — | — | 817 | — | — | 817 | |||||||||||||||||||||
Issuance of common stock in connection with February 2013 private placement at $3.00 per share, net of fees of $0.9 million and registration payment obligation of $.04 million | 3,045,929 | — | — | — | 2,441 | — | — | 2,441 | |||||||||||||||||||||
Issuance of common stock in connection with August 2013 private placement at $4.50 per share, net of fees of $2.8 million and payment made to February investors for inducement to participate in August financing of $2.2 million | 5,531,401 | 1 | — | — | 10,670 | — | — | 10,671 | |||||||||||||||||||||
Issuance of common stock in connection with payment made to February investors for inducement to participate in August financing, 271,222 shares at $4.50 per share and 20,685 shares at $5.00 per share | 291,907 | — | — | — | 1,324 | — | — | 1,324 | |||||||||||||||||||||
Treasury stock | — | — | (130,790 | ) | (957 | ) | — | — | — | (957 | ) | ||||||||||||||||||
Shares issued on behalf of related party | 11,000 | — | — | — | 81 | — | — | 81 | |||||||||||||||||||||
Adjustment to existing shareholders | 5,333 | — | — | — | 10 | — | — | 10 | |||||||||||||||||||||
Unrealized loss on marketable securities | — | — | — | — | — | (110 | ) | — | (110 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | — | (34,625 | ) | (34,625 | ) | |||||||||||||||||||
Balance - December 31, 2013 | 18,546,363 | 2 | (130,790 | ) | (957 | ) | 49,635 | (110 | ) | (68,237 | ) | (19,667 | ) | ||||||||||||||||
Share based payments | 730,774 | — | — | — | 16,639 | — | — | 16,639 | |||||||||||||||||||||
Kyalin payments | 96,628 | — | — | — | 1,000 | — | — | 1,000 | |||||||||||||||||||||
Issuance of common stock in connection with January 2014 public offering at $8.50 per share, net of fees of $3.2 million | 4,705,882 | 1 | — | — | 36,835 | — | — | 36,836 | |||||||||||||||||||||
Exercise of warrants and reclassification of derivative liability | 1,947,377 | — | — | — | 31,762 | — | — | 31,762 | |||||||||||||||||||||
August 2013 private placement settlement | — | — | — | — | 272 | — | — | 272 | |||||||||||||||||||||
Treasury stock | — | — | (248,801 | ) | (2,258 | ) | — | — | — | (2,258 | ) | ||||||||||||||||||
Issuance of common stock to convertible debt holders | 401,047 | — | — | — | 4,708 | — | — | 4,708 | |||||||||||||||||||||
Unrealized gain/(loss) on marketable securities | — | — | — | — | — | 4,395 | — | 4,395 | |||||||||||||||||||||
Net loss | — | — | — | — | — | — | (110,938 | ) | (110,938 | ) | |||||||||||||||||||
Balance - December 31, 2014 | 26,428,071 | 3 | (379,591 | ) | (3,215 | ) | 140,851 | 4,285 | (179,175 | ) | (37,251 | ) |
Share based payments | — | — | — | — | 25,900 | — | — | 25,900 | |||||||||||||||||||||
Vesting of stock for accrued severance | — | — | — | — | 2,126 | — | — | 2,126 | |||||||||||||||||||||
Issuance of common stock in connection with March 2015 public offering at $19.00 per share, net of fees of $9 million | 7,866,000 | 1 | — | — | 139,986 | — | — | 139,987 | |||||||||||||||||||||
Exercise of warrants and reclassification of derivative liability | 870,306 | — | — | — | 28,012 | — | — | 28,012 | |||||||||||||||||||||
Retirement of treasury stock | (379,591 | ) | — | 379,591 | 3,215 | — | — | (3,215 | ) | — | |||||||||||||||||||
Unrealized gain/(loss) on marketable securities | — | — | — | — | — | (4,927 | ) | — | (4,927 | ) | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | (40 | ) | — | (40 | ) | |||||||||||||||||||
Option inducement liability reversal and adjustments | — | — | — | — | 3,840 | — | — | 3,840 | |||||||||||||||||||||
Issuance of common shares under the equity incentive plan | 478,334 | — | — | — | — | — | — | — | |||||||||||||||||||||
Shares issued in connection with Cholbam acquisition | 661,279 | — | — | — | 15,844 | — | — | 15,844 | |||||||||||||||||||||
Stock option exercises | 541,454 | — | — | — | 6,818 | — | — | 6,818 | |||||||||||||||||||||
Excess tax benefits of stock option exercises | — | — | — | — | 2,425 | — | — | 2,425 | |||||||||||||||||||||
Net Income | — | — | — | — | — | — | 117,237 | 117,237 | |||||||||||||||||||||
Balance - December 31, 2015 | 36,465,853 | $ | 4 | — | $ | — | $ | 365,802 | $ | (682 | ) | $ | (65,153 | ) | $ | 299,971 |
For the year ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Cash Flows From Operating Activities: | |||||||||||
Net income (loss) | $ | 117,237 | $ | (110,938 | ) | $ | (34,625 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 13,392 | 5,401 | 216 | ||||||||
Realized (gain) loss on marketable securities | 293 | (2,349 | ) | (374 | ) | ||||||
Gain upon divestiture of Pediatric Priority Review Voucher | (140,004 | ) | — | ||||||||
Gain upon divestiture of assets to Turing Pharmaceuticals | (914 | ) | — | ||||||||
Deferred income tax | (15,573 | ) | (2,460 | ) | 76 | ||||||
Settlement expense | — | 5,746 | — | ||||||||
Loss on extinguishment of debt | 4,151 | — | |||||||||
Impairment of intangible assets | 4,710 | — | |||||||||
Loss on disposal of fixed assets | 112 | — | |||||||||
Derivative financial instruments, warrants, issued, recorded in interest expense | 1,050 | — | — | ||||||||
Interest receivable from notes receivable | (1,267 | ) | — | — | |||||||
Non-Cash interest expense | 2,461 | ||||||||||
Amortization of debt discount and deferred financing costs | 1,340 | 1,084 | — | ||||||||
Amortization of premiums on investments | 398 | — | — | ||||||||
2013 private placement settlement | — | 272 | — | ||||||||
Non-cash financing cost | — | 4,708 | — | ||||||||
Loss on impairment of cost method purchase | — | 400 | — | ||||||||
Share based compensation | 25,900 | 15,900 | 5,444 | ||||||||
Shares issued on behalf of related party | — | — | 81 | ||||||||
Registration payment obligation expense | — | — | 360 | ||||||||
Reversal of registration payment obligation liability | — | — | (360 | ) | |||||||
Bargain purchase gain | (49,063 | ) | — | — | |||||||
Change in estimated fair value of contingent consideration, net of payments | 13,288 | — | — | ||||||||
Change in estimated fair value of liability classified warrants | 33,307 | 23,786 | 10,100 | ||||||||
Changes in operating assets and liabilities, net of business acquisitions: | |||||||||||
Accounts receivable | (4,504 | ) | (7,959 | ) | — | ||||||
Inventory | (1,174 | ) | (282 | ) | — | ||||||
Prepaid expenses and other current assets | (966 | ) | 237 | (1,349 | ) | ||||||
Prepaid income taxes | (8,107 | ) | — | — | |||||||
Accounts payable and accrued expenses | 3,379 | 20,604 | 2,842 | ||||||||
Net cash used in operating activities | (554 | ) | (45,850 | ) | (17,589 | ) | |||||
Cash Flows From Investing Activities: | |||||||||||
Purchase of fixed assets | (22 | ) | (663 | ) | (117 | ) | |||||
Purchase of intangible assets | (7,008 | ) | (3,301 | ) | (5,433 | ) | |||||
Security deposits | — | (93 | ) | (106 | ) | ||||||
Repayment of technology license liability | — | — | (1,300 | ) | |||||||
Proceeds from the sale/maturity of marketable securities | 9,977 | 6,493 | 4,385 | ||||||||
Purchase of marketable securities | (198,530 | ) | (10,149 | ) | (4,124 | ) | |||||
Proceeds from securities sold, not yet purchased | — | 7,500 | 4,194 | ||||||||
Securities sold, not yet purchased | — | (7,500 | ) | (2,865 | ) | ||||||
Increase in restricted cash | — | — | (40 | ) | |||||||
Cash received upon sale of assets, net | 148,411 | — | — | ||||||||
Cash paid for investment | — | (400 | ) | — | |||||||
Cash paid upon acquisition, net of cash acquired | (33,430 | ) | (29,150 | ) | — | ||||||
Net cash used in investing activities | (80,602 | ) | (37,263 | ) | (5,406 | ) | |||||
Cash Flows From Financing Activities: | |||||||||||
Repayment of net amounts due to related parties | — | — | (13 | ) | |||||||
Payment of acquisition-related contingent consideration | (3,938 | ) | (1,163 | ) | — | ||||||
Payment of other liability | (2,000 | ) | (500 | ) | — | ||||||
Payment of guaranteed minimum royalty | (2,000 | ) | — | — | |||||||
Repayment of note payable - related party | — | — | (885 | ) | |||||||
Investors' deposits | — | — | (100 | ) |
Proceeds from credit agreement | — | 42,366 | — | ||||||||
Proceeds from Note Purchase Agreement | — | 42,924 | — | ||||||||
Proceeds from exercise of warrants | 4,475 | 8,398 | — | ||||||||
Proceeds from exercise of stock options | 6,818 | — | — | ||||||||
Repayment of Manchester note payable | — | (31,283 | ) | — | |||||||
Excess tax benefit related to stock compensation | 2,425 | — | — | ||||||||
Proceeds received from issuance of common stock | 149,487 | 40,000 | 30,937 | ||||||||
Financing costs from issuance of common stock | (9,500 | ) | (3,165 | ) | — | ||||||
Repayment of credit facility | (45,000 | ) | — | — | |||||||
Purchase of treasury stock, at cost | — | (2,257 | ) | (958 | ) | ||||||
Net cash provided by financing activities | 100,767 | 95,320 | 28,981 | ||||||||
Effect of exchange rate changes on cash | (10 | ) | — | — | |||||||
Net increase in cash and cash equivalents | 19,601 | 12,207 | 5,986 | ||||||||
Cash and cash equivalents, beginning of year | 18,204 | 5,997 | 11 | ||||||||
Cash and cash equivalents, end of year | $ | 37,805 | $ | 18,204 | $ | 5,997 | |||||
Supplemental Disclosure of Cash Flow Information: | |||||||||||
Cash paid for interest | $ | 5,838 | $ | 4,080 | $ | 28 | |||||
Cash paid for income taxes | $ | 9,610 | $ | 5 | $ | — | |||||
Non-cash Investing and financing activities: | |||||||||||
Accrued royalty in excess of minimum payable to the sellers of Thiola | $ | 8,219 | $ | — | $ | — | |||||
Present value of contingent consideration payable to sellers of Asklepion Pharmaceuticals LLC | $ | 42,010 | $ | — | $ | — | |||||
Shares issued in connection with Cholbam acquisition | $ | 15,844 | $ | — | $ | — | |||||
Reclassification of derivative liability to equity due to exercise of warrants | $ | 23,537 | $ | 23,365 | $ | — | |||||
Present value of contingent consideration payable to sellers of Manchester Pharmaceuticals, LLC. | $ | — | $ | 12,800 | $ | — | |||||
Present value of guaranteed minimum royalty payable to sellers of Thiola | $ | — | $ | 11,850 | $ | — | |||||
Note payable entered into upon consummation of Manchester Pharmaceuticals, LLC. | $ | — | $ | 31,283 | $ | — | |||||
Unrealized loss on securities sold, not yet purchased | $ | — | $ | — | $ | (113 | ) | ||||
Adjustment to existing shareholders | $ | — | $ | — | $ | 10 | |||||
Purchase of Kyalin in exchange for future consideration | $ | — | $ | 1,000 | $ | 2,635 | |||||
Affiliate receivable applied to security deposit | $ | — | $ | — | $ | 138 | |||||
Share based payment made to investors for inducement to participate in financing | $ | — | $ | — | $ | 1,324 | |||||
Offering expense liability | $ | — | $ | — | $ | 747 | |||||
Increase in basis of indefinite lived intangible assets acquired from Kyalin due to accrual of deferred tax liability | $ | — | $ | — | $ | 2,525 |
• | Chenodal® (chenodeoxycholic acid) is approved in the United States for the treatment of patients suffering from gallstones in whom surgery poses an unacceptable health risk due to disease or advanced age. Chenodal has been the standard of care for cerebrotendinous xanthomatosis (“CTX”) patients for more than three decades and the Company is currently pursuing adding this indication to the label. |
• | Cholbam (cholic acid) is approved in the United States for the treatment of bile acid synthesis disorders due to single enzyme defects and is further indicated for adjunctive treatment of patients with peroxisomal disorders. |
• | Thiola (tiopronin) is approved in the United States for the prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria. |
Vesting Term | |
Stock Options | 1 to 3 years |
Restricted Stock Units | 1 to 3 years |
December 31, 2015 | December 31, 2014 | ||||||
Raw material | $ | 289 | $ | 315 | |||
Finished goods | 2,247 | 486 | |||||
Total inventory | $ | 2,536 | $ | 801 |
Computer equipment | 3 years |
Furniture and fixtures | 7 years |
Leasehold improvements | Shorter of length of lease or life of the asset |
Cash paid upon consummation | $ | 33,430 | |
Present value of contingent consideration and service fees | 42,010 | ||
Fair Value of 661,279 shares issued to Asklepion | 15,844 | ||
Total Purchase Price | $ | 91,284 | |
Fair Value of Assets Acquired and Liabilities Assumed | |||
Acquired product rights-Cholbam (Intangible Asset) | $ | 83,200 | |
Pediatric Priority Review Voucher | 96,250 | ||
Inventory | 777 | ||
Deferred tax liability | (39,880 | ) | |
Total Allocation of Purchase Price | $ | 140,347 | |
Bargain Purchase Gain | (49,063 | ) | |
Total Purchase Price | $ | 91,284 |
Amount (in thousands) | |||
Cash paid upon consummation, net | $ | 29,150 | |
Secured promissory note | 31,283 | ||
Fair value of business combination-related contingent consideration | 12,800 | ||
Total purchase price | $ | 73,233 | |
Prepaid expenses | $ | 116 | |
Inventory | 517 | ||
Product rights | 71,372 | ||
Trade names | 175 | ||
Customer relationship | 403 | ||
Goodwill | 936 | ||
Other asset | 1,522 | ||
Accounts payable and accrued expenses | (286 | ) | |
Other liability | (1,522 | ) | |
Total allocation of purchase price consideration | $ | 73,233 |
December 31, | |||||||
2015 | 2014 | ||||||
Marketable Equity Securities: | |||||||
Common Stock | $ | — | $ | 9,556 | |||
Marketable Other than Equity Securities: | |||||||
Commercial paper | 31,864 | — | |||||
Corporate debt securities | 125,547 | — | |||||
Securities of government sponsored entities | 34,388 | — | |||||
Total Marketable Securities: | $ | 191,799 | $ | 9,556 |
Contractual Maturity (in years) | Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate Estimated Fair Value | |||||||||||||
Marketable Other than Equity Securities: | |||||||||||||||||
Commercial paper | Less than 1 | $ | 31,899 | $ | 6 | $ | (41 | ) | $ | 31,864 | |||||||
Corporate debt securities | Less than 1 | 43,464 | — | (78 | ) | 43,386 | |||||||||||
Total maturity less than 1 year | 75,363 | 6 | (119 | ) | 75,250 | ||||||||||||
Corporate debt securities | 1 to 2 | 82,557 | — | (396 | ) | 82,161 | |||||||||||
Securities of government-sponsored entities | 1 to 2 | 34,522 | 2 | (136 | ) | 34,388 | |||||||||||
Total maturity 1 to 2 years | 117,079 | 2 | (532 | ) | 116,549 | ||||||||||||
Total available-for-sale securities | $ | 192,442 | $ | 8 | $ | (651 | ) | $ | 191,799 |
Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||
Marketable Equity Securities: | |||||||||||||||
Common Stock | $ | 5,160 | $ | 4,499 | $ | (103 | ) | $ | 9,556 | ||||||
Total available-for-sale securities | $ | 5,160 | $ | 4,499 | $ | (103 | ) | $ | 9,556 |
Risk free rate | 1.39 | % | |
Expected volatility | 85 | % | |
Expected life (in years), represents the weighted average period until next liquidity event | 0.3 | ||
Expected dividend yield | — | ||
Exercise Price | $ | 13.25 |
Risk free rate | 1.62 | % | |
Expected volatility | 85 | % | |
Expected life (in years), represents the weighted average period until next liquidity event | 0.36 | ||
Expected dividend yield | — | ||
Exercise Price | $ | 12.76 |
As of | |||||||
December 31, 2015 | December 31, 2014 | ||||||
Fair value of common stock | $ | 19.29 | $ | 12.24 | |||
Expected life (in years), represents the weighted average period until next liquidity event | n/a** | 0.33 years | |||||
Remaining Life (in years) of the Warrants | 2.1 – 4.0 years | 3.1 – 4.9 years | |||||
Risk-free interest rate | 1.11 – 1.59% | 1.13 – 1.69% | |||||
Expected volatility | 75 – 85% | 85 | % | ||||
Dividend yield | — | % | — | % |
Weighted Average | ||||||||||
Warrants | Exercise Price | Grant Date Fair Value | ||||||||
Outstanding at December 31, 2013 | 4,782,249 | $ | 5.04 | $ | 3.13 | |||||
Issued | 637,500 | 11.44 | 6.49 | |||||||
Canceled | — | — | — | |||||||
Exercised | 1,998,394 | 4.70 | 3.05 | |||||||
Outstanding at December 31, 2014 | 3,421,355 | $ | 6.43 | $ | 3.79 | |||||
Issued | 125,000 | 13.25 | 8.40 | |||||||
Canceled | — | — | — | |||||||
Exercised | 880,807 | 5.35 | 3.23 | |||||||
Outstanding at December 31, 2015 | 2,665,548 | $ | 7.05 | $ | 4.20 |
Exercise Price | Number of Warrants | Weighted Average Remaining Contractual Life (years) | Number Exercisable | |||||||
$ | 3.60 | 660,036 | 2.12 | 660,036 | ||||||
$ | 6.00 | 1,243,012 | 2.62 | 1,243,012 | ||||||
$ | 12.76 | 337,500 | 3.5 | 337,500 | ||||||
$ | 9.96 | 300,000 | 3.87 | 300,000 | ||||||
$ | 13.25 | 125,000 | 4.03 | 125,000 |
As of December, 2015 | Fair Value Hierarchy at December 31, 2015 | ||||||||||||||
Total carrying and estimated fair value | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
Asset: | |||||||||||||||
Marketable securities, available-for-sale | $ | 191,799 | $ | — | $ | 191,799 | $ | — | |||||||
Liabilities: | |||||||||||||||
Derivative liability related to warrants | $ | 38,810 | $ | — | $ | — | $ | 38,810 | |||||||
Business combination-related contingent consideration | $ | 59,021 | $ | — | $ | — | $ | 59,021 |
As of December, 2014 | Fair Value Hierarchy at December 31, 2014 | ||||||||||||||
Total carrying and estimated fair value | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
Asset: | |||||||||||||||
Marketable securities, available-for-sale | $ | 9,556 | $ | 9,556 | $ | — | $ | — | |||||||
Liabilities: | |||||||||||||||
Derivative liability related to warrants | $ | 27,990 | $ | — | $ | — | $ | 27,990 | |||||||
Business combination-related contingent consideration | $ | 11,637 | $ | — | $ | — | $ | 11,637 |
Fair Value Measurements of Common Stock Warrants Using Significant Unobservable Inputs (Level 3) | |||
Balance at January 1, 2015 | $ | 27,990 | |
Issuance of common stock warrants | 1,050 | ||
Reclassification of derivative liability to equity upon exercise of warrants | (23,537 | ) | |
Change in estimated fair value of liability classified warrants | 33,307 | ||
Balance at December 31, 2015 | $ | 38,810 |
Fair Value Measurements of Common Stock Warrants Using Significant Unobservable Inputs (Level 3) | |||
Balance at January 1, 2014 | $ | 25,037 | |
Issuance of common stock warrants | 2,531 | ||
Reclassification of derivative liability to equity upon exercise of warrants | (23,364 | ) | |
Change in estimated fair value of liability classified warrants | 23,786 | ||
Balance at December 31, 2014 | $ | 27,990 |
Fair Value Measurements of Acquisition-Related Contingent Consideration (Level 3) | |||
Balance at January 1, 2015 | $ | 11,637 | |
Present value of contingent consideration related to Cholbam acquisition, upon acquisition | 39,107 | ||
Increase from revaluation of contingent consideration | 13,778 | ||
Decrease of contingent consideration, asset divestiture | (604 | ) | |
Contractual Payments | (3,938 | ) | |
Contractual Payments accrued at December 31, 2015 | (959 | ) | |
Balance at December 31, 2015 | $ | 59,021 |
Fair Value Measurements of Acquisition-Related Contingent Consideration | |||
Balance at January 1, 2014 | $ | — | |
Present value of contingent consideration related to Manchester acquisition, upon acquisition | 12,800 | ||
Contractual Payments | (1,163 | ) | |
Balance at December 31, 2014 | $ | 11,637 |
As of December 31, 2015 | ||||||||||||
Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||
Chenodal Product Rights | 16 | $ | 67,849 | $ | (7,489 | ) | $ | 60,360 | ||||
Thiola License | 10 | 24,133 | (2,793 | ) | 21,340 | |||||||
Economic Interest - U.S. revenue Cholbam | 10 | 75,900 | (5,715 | ) | 70,185 | |||||||
Economic Interest - Int'l revenue Cholbam | 10 | 7,336 | (552 | ) | 6,784 | |||||||
Ligand License | 11 | 3,300 | (765 | ) | 2,535 | |||||||
Manchester Customer Relationships | 10 | 403 | (71 | ) | 332 | |||||||
Manchester Trade Name | 1 | 175 | (175 | ) | — | |||||||
Total | $ | 179,096 | $ | (17,560 | ) | $ | 161,536 |
As of December 31, 2014 | ||||||||||||
Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||
Chenodal and Vecamyl Product Rights | 16 | $ | 71,372 | $ | (3,420 | ) | $ | 67,952 | ||||
Thiola License | 10 | 15,049 | (870 | ) | 14,179 | |||||||
Syntocinon License | 20 | 5,000 | (190 | ) | 4,810 | |||||||
Carbetocin Assets | 10 | 5,568 | (430 | ) | 5,138 | |||||||
Ligand License | 11 | 2,300 | (527 | ) | 1,773 | |||||||
Manchester Customer Relationships | 10 | 403 | (31 | ) | 372 | |||||||
Manchester Trade Name | 1 | 175 | (134 | ) | 41 | |||||||
Total | $ | 99,867 | $ | (5,602 | ) | $ | 94,265 |
Twelve months ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Research and development | $ | 697 | $ | 823 | $ | 324 | |||||
Selling, general and administrative | 12,534 | 4,455 | — | ||||||||
Total amortization expense | $ | 13,231 | $ | 5,278 | $ | 324 |
2016 | $ | 15,517 | |
2017 | 15,474 | ||
2018 | 15,474 | ||
2019 | 15,474 | ||
2020 | 15,476 | ||
Thereafter | 84,121 | ||
Total | $ | 161,536 |
December 31, 2015 | December 31, 2014 | ||||||
Compensation related costs | $ | 7,143 | $ | 8,163 | |||
Severance related costs | 315 | 5,710 | |||||
Research and development | 4,281 | 3,720 | |||||
License fee | — | 3,000 | |||||
Legal fees | 882 | 1,208 | |||||
Interest | 259 | 2,318 | |||||
Government rebate reserves | 3,158 | 1,353 | |||||
Selling, general and administrative | 2,703 | 2,411 | |||||
Royalty/contingent consideration | 4,688 | — | |||||
Miscellaneous | 391 | — | |||||
$ | 23,820 | $ | 27,883 |
As of December 31, | |||||||
2015 | 2014 | ||||||
Aggregate principle amount of Notes | $ | 46,000 | $ | 46,000 | |||
Unamortized debt discount | (2,098 | ) | (2,712 | ) | |||
$ | 43,902 | $ | 43,288 |
Risk free rate | 1.62 | % | |
Expected volatility | 85 | % | |
Expected life (in years), represents the weighted average period until next liquidity event | 0.36 | ||
Expected dividend yield | — | ||
Exercise Price | $ | 12.76 |
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating leases | $ | 2,671 | $ | 1,026 | $ | 1,645 | $ | — | $ | — | |||||||||
Note payable | 53,073 | 2,070 | 4,140 | 46,863 | — | ||||||||||||||
Sales support services | 3,470 | 312 | 937 | 833 | 1,388 | ||||||||||||||
Product supply contracts | 5,221 | 3,923 | 1,298 | — | — | ||||||||||||||
Purchase order commitments | 596 | 258 | 338 | — | — | ||||||||||||||
$ | 65,031 | $ | 7,589 | $ | 8,358 | $ | 47,696 | $ | 1,388 |
Year Ended December 31, 2015 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | ||||||
Risk free rate | 1.53 | % | 1.55 | % | 1.51 | % | ||
Expected volatility | 83 | % | 85 | % | 102 | % | ||
Expected life (in years) | 5.8 | 5.8 | 5.8 | |||||
Expected dividend yield | — | — | — |
Weighted Average | |||||||||||||
Shares Underlying Options | Exercise Price | Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Exercisable at December 31, 2014 | 1,225,833 | $ | 9.73 | 7.96 | $ | 3,395 | |||||||
Outstanding at December 31, 2014 | 4,892,208 | $ | 10.93 | 8.57 | $ | 8,353 | |||||||
Granted | 2,285,000 | $ | 27.15 | — | — | ||||||||
Forfeited and expired | (970,170 | ) | 14.91 | — | — | ||||||||
Exercised | (541,454 | ) | 13.10 | — | — | ||||||||
Outstanding at December 31, 2015 | 5,665,584 | $ | 17.05 | 8.75 | $ | 31,542 | |||||||
Exercisable at December 31, 2015 | 2,036,906 | $ | 12.55 | 8.34 | $ | 15,582 |
Number of shares | Weighted Average Grant Date Fair Value | |||||
Unvested December 31, 2014 | 691,668 | $ | 10.83 | |||
Granted | 273,000 | 26.97 | ||||
Vested | (478,334 | ) | 11.56 | |||
Forfeited/cancelled | (56,668 | ) | 13.97 | |||
Unvested December 31, 2015 | 429,666 | $ | 20.38 |
Year Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Selling, general and administrative expenses | $ | 16,483 | $ | 10,940 | $ | 2,651 | |||||
Research and development expenses | 9,417 | 4,960 | 259 | ||||||||
Total | $ | 25,900 | $ | 15,900 | $ | 2,910 |
For the year ended December 31, | ||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||
Shares | Net Income | EPS | Shares | Net Income | EPS | Shares | Net Income | EPS | ||||||||||||||||||||||||
Basic Earnings per Share | 33,560,249 | $ | 117,237 | $ | 3.49 | 25,057,509 | $ | (110,938 | ) | $ | (4.43 | ) | 14,205,264 | $ | (34,625 | ) | $ | (2.44 | ) | |||||||||||||
Convertible Debt | 2,642,160 | 1,881 | — | — | — | — | ||||||||||||||||||||||||||
Restricted Stock | 290,966 | — | — | — | — | — | ||||||||||||||||||||||||||
Stock Options | 1,088,064 | — | — | — | — | — | ||||||||||||||||||||||||||
Dilutive Earnings per Share | 37,581,439 | $ | 119,118 | $ | 3.17 | 25,057,509 | $ | (110,938 | ) | $ | (4.43 | ) | 14,205,264 | $ | (34,625 | ) | $ | (2.44 | ) |
For the year ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Restricted Stock | 22,069 | — | — | |||||
Options | 1,049,375 | 1,132,500 | 172,667 | |||||
Warrants | 2,665,548 | 3,083,855 | 4,462,426 | |||||
Total Anti-Dilutive Shares | 3,736,992 | 4,216,355 | 4,635,093 |
Year Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
United States | $ | 107,038 | $ | (112,558 | ) | $ | (34,549 | ) | |||
Foreign | (1,571 | ) | (840 | ) | — | ||||||
Total | $ | 105,467 | $ | (113,398 | ) | $ | (34,549 | ) |
2015 | 2014 | 2013 | |||||||||
Current | |||||||||||
Federal | $ | 2,094 | $ | — | $ | — | |||||
State | 1,709 | — | — | ||||||||
3,803 | — | — | |||||||||
Deferred | |||||||||||
Federal | (8,296 | ) | (1,886 | ) | (6,293 | ) | |||||
State | (7,277 | ) | (574 | ) | (3,435 | ) | |||||
(15,573 | ) | (2,460 | ) | (9,728 | ) | ||||||
Change in valuation allowance | — | — | 9,804 | ||||||||
Total tax provision (benefit) | $ | (11,770 | ) | $ | (2,460 | ) | $ | 76 |
2015 | 2014 | 2013 | ||||||
Statutory rate - federal | 35.00 | % | (35.00 | )% | (35.00 | )% | ||
State taxes, net of federal benefit | 1.53 | % | (6.77 | )% | (6.70 | )% | ||
Change in FV of derivative liability (warrants) | 10.89 | % | 7.40 | % | 10.46 | % | ||
Stock Based Compensation | — | % | 5.51 | % | 2.30 | % | ||
Bargain purchase gain | (16.04 | )% | ||||||
Other permanent differences | 3.68 | % | ||||||
Tax credits | (7.85 | )% | ||||||
Return to provision adjustments and other true-ups | (10.40 | )% | ||||||
Other | (0.79 | )% | — | % | 0.17 | % | ||
Change in valuation allowance | (27.02 | )% | 26.63 | % | 29.00 | % | ||
Income tax provision (benefit) | (11.00 | )% | (2.23 | )% | 0.23 | % |
2015 | 2014 | ||||||
Deferred Tax Assets: | |||||||
Net operating loss | $ | 2,870 | $ | 42,280 | |||
Contingent consideration | 21,575 | ||||||
Other accrued expenses | 3,160 | ||||||
Stock based compensation | 9,484 | ||||||
Other | — | 1,427 | |||||
37,089 | 43,707 | ||||||
Deferred Tax Liabilities: | |||||||
Intangible assets | (25,124 | ) | (7,830 | ) | |||
Deferred gain on installment sale | (29,095 | ) | |||||
Tax basis depreciation less than book depreciation | (218 | ) | |||||
(54,437 | ) | (7,830 | ) | ||||
Net deferred tax assets before valuation allowance | (17,348 | ) | 35,877 | ||||
Valuation allowance | (6,980 | ) | (36,018 | ) | |||
Total deferred tax liability | $ | (24,328 | ) | $ | (141 | ) |
2015 | 2014 | ||||||
Balance as of January 1: | $ | 1,500 | $ | — | |||
Increase in current period positions | 1,424 | 1,500 | |||||
Increase in prior period positions | 400 | — | |||||
Balance as of December 31: | $ | 3,324 | $ | 1,500 |
For the year ended December 31, | |||||||||||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
2015: | |||||||||||||||
Net product sales | $ | 30,447 | $ | 28,005 | $ | 24,068 | $ | 17,372 | |||||||
Total operating expenses | 45,651 | 48,501 | 31,012 | 25,476 | |||||||||||
Operating loss | (15,204 | ) | (20,496 | ) | (6,944 | ) | (8,104 | ) | |||||||
Total other income (expense), net | 2,210 | 164,835 | (18,568 | ) | 7,738 | ||||||||||
Income (loss) before provision for income taxes | (12,994 | ) | 144,339 | (25,512 | ) | (366 | ) | ||||||||
Income tax benefit(provision) | 10,525 | (38,761 | ) | (15 | ) | 40,021 | |||||||||
Net income (loss) | $ | (2,469 | ) | $ | 105,578 | $ | (25,527 | ) | $ | 39,655 | |||||
Per Share Data: | |||||||||||||||
Net income (loss) per common share, basic | $ | (0.07 | ) | $ | 2.95 | $ | (0.73 | ) | $ | 1.46 | |||||
Net income (loss) per common share, diluted | $ | (0.14 | ) | $ | 1.78 | $ | (0.73 | ) | $ | 1.32 | |||||
2014: | |||||||||||||||
Net product sales | $ | 14,085 | $ | 8,348 | $ | 5,742 | $ | 28 | |||||||
Total operating expenses | 32,782 | 30,215 | 22,924 | 22,090 | |||||||||||
Operating loss | (18,697 | ) | (21,867 | ) | (17,182 | ) | (22,062 | ) | |||||||
Total other income (expense), net | (10,330 | ) | 3,887 | 26,462 | (53,609 | ) | |||||||||
Income (loss) before provision for income taxes | (29,027 | ) | (17,980 | ) | 9,280 | (75,671 | ) | ||||||||
Income tax benefit(provision) | — | — | 2,525 | (65 | ) | ||||||||||
Net income (loss) | $ | (29,027 | ) | $ | (17,980 | ) | $ | 11,805 | $ | (75,736 | ) | ||||
Per Share Data: | |||||||||||||||
Net income (loss) per common share, basic | $ | (1.10 | ) | $ | (0.67 | ) | $ | 0.46 | $ | (3.25 | ) | ||||
Net income (loss) per common share, diluted | $ | (1.10 | ) | $ | (0.84 | ) | $ | (0.77 | ) | $ | (3.25 | ) |
No. | Name | |
1 | Retrophin Pharmaceutical, Inc. | |
2 | Retrophin Therapeutics I, Inc. | |
3 | Retrophin Therapeutics II, Inc. | |
4 | Retrophin Europe Ltd | |
5 | Retrophin International Holdings Ltd | |
6 | RTRX International CV | |
7 | Retrophin Therapeutics International LLC | |
8 | Retrophin Therapeutics International Cooperatief | |
9 | US LLC 2 | |
10 | Retrophin Therapeutics International I, BV | |
11 | Retrophin Therapeutics International II, BV |
1. | I have reviewed this Annual Report on Form 10-K of Retrophin, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 26, 2016 | /s/ Stephen Aselage |
Stephen Aselage | |
Chief Executive Officer | |
(Principal Executive Officer) |
1. | I have reviewed this Annual Report on Form 10-K of Retrophin, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 26, 2016 | /s/ Laura Clague |
Laura Clague | |
Chief Financial Officer | |
(Principal Financial Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 26, 2016 | /s/ Stephen Aselage |
Stephen Aselage | |
Chief Executive Officer | |
(Principal Executive Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 26, 2016 | /s/ Laura Clague |
Laura Clague | |
Chief Financial Officer | |
(Principal Financial Officer) |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Feb. 24, 2016 |
Jun. 30, 2015 |
|
Document And Entity Information | |||
Entity Registrant Name | Retrophin, Inc. | ||
Entity Central Index Key | 0001438533 | ||
Trading Symbol | rtrx | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding | 36,508,852 | ||
Entity Public Float | $ 1,146,903,448 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 36,465,853 | 26,428,071 |
Common stock, shares outstanding | 36,465,853 | 26,048,480 |
Treasury stock, shares | 0 | 379,591 |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (Parentheticals) |
1 Months Ended |
---|---|
Aug. 31, 2013
USD ($)
$ / shares
shares
| |
Statement of Stockholders' Equity [Abstract] | |
Issuance of common stock, per share amount (in dollars per share) | $ 4.50 |
Underwriting fees and other offering costs | $ | $ 2,800,000 |
Payment made to investors for inducement to participate in financing | $ | $ 2,200,000 |
Issuance of common stock to investors, per share amount (in shares) | $ 4.50 |
Shares issued to investors for inducement to participate in financing | shares | 20,685 |
Shares issued to investors for inducement to participate in financing | shares | 271,222 |
Issuance of common stock to investors, per share amount (in shares) | $ 5.00 |
DESCRIPTION OF BUSINESS |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Organization and Description of Business Retrophin, Inc. (“we”, “our”, “us”, “Retrophin” and the “Company”) refers to Retrophin, Inc., a Delaware corporation, as well as our direct and indirect subsidiaries. Retrophin is a fully integrated biopharmaceutical company headquartered in San Diego, California focused on the development, acquisition and commercialization of therapies for the treatment of serious, catastrophic or rare diseases. We regularly evaluate and, where appropriate, act on opportunities to expand our product pipeline through licenses and acquisitions of products in areas that will serve patients with serious, catastrophic or rare diseases and that we believe offer attractive growth characteristics. During the first quarter of 2015, the Company completed the acquisition of all worldwide rights, titles, and ownership of Cholbam (cholic acid), the first FDA approved treatment for pediatric and adult patients with bile acid synthesis disorders due to single enzyme defects, and for patients with peroxisomal disorders (including Zellweger spectrum disorders). The Company generated the first sales from Cholbam (known as Kolbam in the European Union) in April 2015. See Note 3. for further discussion. We currently sell the following three products:
We are currently developing the following pipeline products: Sparsentan, also known as RE-021, is an investigational therapeutic agent which acts as both a potent angiotensin receptor blocker (“ARB”), as well as a selective endothelin receptor antagonist (“ERA”), with selectivity toward endothelin receptor type A. We have secured a license to sparsentan from Ligand and Bristol-Myers Squibb (who referred to it as DARA). We are developing sparsentan as a treatment for FSGS, which is a leading cause of end-stage renal disease. We are currently enrolling patients for the DUET Phase 2 clinical study of sparsentan for the treatment of FSGS and we anticipate having a top line data read out in the third quarter of 2016. Depending on the data obtained in the DUET study, we may be able to support an application for accelerated approval for sparsentan on the basis of proteinuria as a surrogate endpoint. Sparsentan was granted fast track designation in June 2015 and orphan drug designation in the U.S. and EU in January and November 2015, respectively. RE-024, a novel small molecule, is being developed as a potential treatment for pantothenate kinase-associated neurodegeneration (“PKAN”). PKAN is a genetic neurodegenerative disorder that is typically diagnosed in the first decade of life. Consequences of PKAN include parkinsonism, dystonia, and other severe systemic manifestations. There are currently no viable treatment options for patients with PKAN. RE-024 is a phosphopantothenate prodrug therapy that aims to restore levels of this key substrate in PKAN patients. Certain international health regulators have approved the initiation of dosing RE-024 in PKAN under physician-initiated studies in accordance with local regulations in their respective countries. The Company filed a U.S. IND for RE-024 with the FDA in the first quarter of 2015 to support the commencement of a Company-sponsored Phase 1 study, which initiated in April 2015. RE-024 was granted orphan drug designation from the FDA in May 2015 and was granted fast track designation in June 2015. RE-034 is a synthetic hormone analog of the first 24 amino acids of the 39 amino acids contained in adrenocorticotropic hormone (“ACTH”) incorporated into a novel formulation developed by the Company. RE-034 exhibits similar physiological actions as endogenous ACTH by binding to melanocortin receptors, resulting in its anti-inflammatory and immunomodulatory effects. The Company has successfully manufactured RE-034 at proof-of-concept scale using a novel formulation that allows modulation of the release of the active ingredient from the site of administration. The Company intends to continue preclinical development of RE-034 to enable multiple strategic options. 2015 Public Offering On March 24, 2015, we completed a public offering of 7,866,000 shares of common stock at a price of $19.00 per share. We received net proceeds from the offering of $140.0 million, after deducting underwriting fees and other offering costs of $9.5 million. The shares of common stock were offered by us pursuant to a shelf registration statement that was declared effective by the SEC on March 13, 2015. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows: Principles of Consolidation The consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include revenue recognition, valuing equity securities in share-based payments, estimating fair value of equity instruments recorded as derivative liabilities, estimating the fair value of net assets acquired in business combinations, estimating the useful lives of depreciable and amortizable assets, goodwill impairment, estimating of contingent consideration, estimating of valuation allowances and uncertain tax positions, and estimating the fair value of long-lived assets to assess whether impairment charges may apply. Revenue Recognition Product sales for the year ended December 31, 2015 consisted of sales of Chenodal, Vecamyl (divested in 2015), Cholbam and Thiola. Product sales for the year ended December 31, 2014 consisted of sales of Chenodal, Vecamyl and Thiola. Revenue from product sales is recognized when persuasive evidence of an arrangement exists, title to product and associated risk of loss have passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured, the Company has no further performance obligations, and returns can be reasonably estimated. The Company sells in the United States and Canada through a direct-to-patient distributor. Under this distribution model, the Company records revenues when the distributor ships products to customers and such customers take title of the product. The Company sells internationally, but these revenues are immaterial. Revenue from product sales is recorded net of applicable provisions for rebates under government programs (including Medicaid), prompt pay discounts, and other sales-related deductions. We review our estimates of rebates and other applicable provisions each period and record any necessary adjustments in the current period. Deductions from Revenue Government Rebates and Chargebacks: The Company estimates the rebates that we will be obligated to provide to government programs and deducts these estimated amounts from our gross product sales at the time the revenues are recognized. Allowances for government rebates and discounts are established based on actual payer information, which is reasonably estimated at the time of delivery, and the government-mandated discounts applicable to government-funded programs. Prompt Pay Discounts: The Company offers discounts to certain customers for prompt payments. The Company estimates these discounts based on customer terms and historical trends. The Company accrues for the estimated prompt pay discount based on the gross amount of each invoice for those customers at the time of sale. Product Returns: Consistent with industry practice, the Company offers its customers a limited right to return product purchased directly from the Company, which is principally based upon the product’s expiration date. Generally, shipments are only made upon a patient prescription so returns are immaterial. Research and Development Costs Research and development costs are expensed as incurred and include: salaries, benefits, bonus, stock-based compensation, license fees, milestone payments due under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, and develop drug materials and delivery devices, and associated overhead and facilities costs. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors, and clinical research organizations (“CRO’s"). Invoicing from third-party contractors for services performed can lag several months. We accrue the costs of services rendered in connection with third-party contractor activities based on our estimate of management fees, and costs associated with site monitoring and data management. Employee Stock-Based Compensation The Company recognizes all employee share-based compensation as a cost in the financial statements. Equity-classified awards principally related to stock options, restricted stock units (“RSUs”) and performance stock units ("PSUs"), are measured at the grant date fair value of the award. The Company determines grant date fair value of stock option awards using the Black-Scholes option-pricing model. The fair value of RSUs are determined using the closing price of the Company’s common stock on the grant date. For service based vesting grants, expense is recognized over the requisite service period based on the number of options or shares expected to ultimately vest. For PSUs, expense is recognized over the implicit period until the performance obligation is met, assuming that it is probable. No expense is recognized for PSUs until it is probable the vesting criteria will be satisfied. Forfeitures are estimated at the date of grant and revised when actual or expected forfeiture activity differs materially from original estimates.
Earnings (Loss) Per Share We calculate our basic earnings per share by dividing net income by the weighted average number of shares outstanding during the period. The diluted earnings per share computation includes the effect, if any, of shares that would be issuable upon the exercise of outstanding stock options, derivative liability, convertable debt and RSUs, reduced by the number of shares which are assumed to be purchased by the Company from the resulting proceeds at the average market price during the year, when such amounts are dilutive to the earnings per share calculation. Cash and Cash Equivalents We consider all highly liquid marketable securities with an original maturity of three months or less to be cash equivalents. Due to the short-term maturity of such investments, the carrying amounts are a reasonable estimate of fair value. Marketable Securities The Company accounts for marketable securities held as “available-for-sale” in accordance with ASC 320, “Investments Debt and Equity Securities” (“ASC 320”). The Company classifies these investments as current assets and carries them at fair value. Unrealized gains and losses are recorded as a separate component of stockholders’ equity as accumulated other comprehensive income (loss). Realized gains or losses on marketable security transactions are reported in the Statements of Operations and Comprehensive Income (Loss). Marketable securities are maintained at one financial institution and are governed by the Company’s investment policy as approved by our Board of Directors. Fair values of marketable securities are based on quoted market prices. Trade and Notes Receivable Trade Receivables, Net Trade accounts receivable are recorded net of allowances for prompt payment and doubtful accounts. Allowances for rebate discounts are included in other current liabilities in the accompanying consolidated balance sheets. Estimates for allowances for doubtful accounts are determined based on existing contractual obligations, historical payment patterns and individual customer circumstances. The allowance for doubtful accounts was $0 and $0.1 million at December 31, 2015 and 2014, respectively. The bad debt expense recorded in the Statement of Operations and Comprehensive Income (Loss) is approximately $0 million and $0.1 million for 2015 and 2014, respectively. Notes Receivable Notes receivable arose from the sale of the pediatric priority review voucher (the "PRV"). On July 2, 2015, the Company sold and transferred the PRV to Sanofi for $245.0 million. $150.0 million was received upon closing, and $47.5 million is due on each of the first and second anniversaries of the closing. In accordance with U.S. GAAP, the Company recorded the future short term and long term notes receivable at their present value of $46.2 million and $44.9 million, respectively, at the date of the sale using a discount rate of 2.8%. The accretion on the notes receivables totaled $1.3 million and is recorded in interest expense, net, in the Consolidated Statements of Operations and Comprehensive Income (Loss) for 2015. As of December 31, 2015, the present value of the current and long-term notes receivable was $46.8 million and $45.6 million, respectively. The Company noted no indications for impairment as of December 31, 2015. Inventories and Related Reserves Inventory is stated at the lower of cost or market. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes down such inventory as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company’s manufacturers perform throughout their manufacturing process. The Company does not directly manufacture any product. The Company has single suppliers for products Chenodal and Thiola, and prospectively arranges for manufacture from contract service providers for its product Cholbam. The value of inventory acquired in 2015 related to single supplier purchases was 63% for Thiola and 4% for Chenodal. The remaining 33% of inventory was related to the Cholbam product and was either related to materials acquired or subsequent third party manufacturing. The inventory reserve was $0.3 million and $0.1 at December 31, 2015 and 2014, respectively. Inventory, net of reserve, consists of the following at December 31, 2015 and 2014 (in thousands):
Property and Equipment, net Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the related estimated useful lives as presented in the table below. Significant additions and improvements are capitalized, while repairs and maintenance are charged to expense as incurred. Property and equipment purchased for specific research and development projects with no alternative uses is expensed as incurred. The major classifications of property and equipment, including their respective expected useful lives, consists of the following:
Intangible Assets, Net Intangible assets with finite useful lives consist primarily of product rights, licenses and customer relationships which are amortized on a straight line basis over 1 to 16 years. Intangible assets with finite useful lives are reviewed for impairment in accordance with ASC 360 and the useful lives are reassessed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. The Company reviews for indications of impairment of intangibles on a quarterly basis. For the year ended December 31, 2015 the company wrote off the intangible asset related to Carbetocin and recorded a loss of $4.7 million. There were no impairments related to intangible assets for 2014 or 2013. Goodwill Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The Company first assesses the qualitative factors for reporting units that carry goodwill. If the qualitative assessment results in a conclusion that it is more likely than not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit. When a qualitative assessment is not used, or if the qualitative assessment is not conclusive and it is necessary to calculate fair value of a reporting unit, then the impairment analysis for goodwill is performed at the reporting unit level using a two-step approach. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill utilizing an enterprise-value based premise approach. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined by using various valuation techniques including income (discounted cash flow), market and/or consideration of recent and similar purchase acquisition transactions. The Company performs its annual impairment review of goodwill in the fourth quarter and when a triggering event occurs between annual impairment tests. The Company has one segment and one reporting unit and as such reviews goodwill as one unit. For the years ended December 31, 2015 and 2014 there were no impairments to goodwill. Income Taxes The Company follows ASC 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company’s policy is to record estimated interest and penalty related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. Reclassifications Certain reclassifications have been made to the prior year financial statements in order to conform to the current year’s presentation. Patents The Company expenses external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent applications pending. The Company also expenses costs associated with maintaining and defending patents subsequent to their issuance in the period incurred. Derivative Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company calculates the fair value of the financial instruments using the Monte Carlo simulation pricing model, however, prior to January 1, 2015, the Company used the Binomial Lattice option pricing model. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity is assessed at inception, the fair value of the warrants is evaluated at the end of each reporting period (see Note 5 and Note 6). Treasury Stock The Company records treasury stock at the cost to acquire it and includes treasury stock as a component of stockholders’ equity until it is retired. Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption. In May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-9, Revenue from Contracts with Customers. Under the new standard, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration for which the entity expects to be entitled for that specific good or service. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption of ASU 2014-9 is permitted but not before the original effective date (annual periods beginning after December 15, 2016). We are currently evaluating the impact, if any, the adoption of this standard will have on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This standard amends Topic 330, Inventory, which currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. When this standard is adopted, an entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently evaluating the impact, if any, the adoption of this standard will have on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, to simplify the presentation of deferred taxes. This amendment requires that all deferred tax assets and liabilities, along with any related valuation allowances, be classified as noncurrent on the balance sheet. However, an entity shall not offset deferred tax liabilities and assets attributable to different tax jurisdictions. ASU 2015-17 is effective for annual and interim reporting periods ending after December 15, 2016. Early adoption is permitted, and the new guidance may be applied either prospectively or retrospectively. We have adopted this guidance prospectively as of December 31, 2015. Therefore, prior periods have not been adjusted to reflect this adoption. This change in accounting principle does not change our results of operations, cash flows or stockholders’ equity. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. |
BUSINESS COMBINATION AND DIVESTITURE OF ASSETS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATION AND DIVESTITURE OF ASSETS | BUSINESS COMBINATION AND DIVESTITURE OF ASSETS Acquisition of Cholic Acid On January 12, 2015, the Company announced the signing of a definitive agreement under which it acquired the exclusive right to purchase from Asklepion, all worldwide rights, titles, and ownership of Cholbam (cholic acid) for the treatment of bile acid synthesis defects, if approved by the FDA. Under the terms of the agreement, Retrophin paid Asklepion an upfront payment of $5.0 million and agreed to pay milestones based on FDA approval and net product sales, plus tiered royalties on future net sales of Cholbam. On March 18, 2015, the Company announced that the FDA had approved Cholbam capsules, the first FDA approved treatment for pediatric and adult patients with bile acid synthesis disorders due to single enzyme defects, and for patients with peroxisomal disorders (including Zellweger spectrum disorders). As a result of the approval, Retrophin exercised its right to purchase from Asklepion all worldwide rights, titles, and ownership of Cholbam and related assets. The FDA also granted Asklepion a Pediatric PRV, awarded to encourage development of new drugs and biologics for the prevention and treatment of rare pediatric diseases. A Pediatric PRV is transferable and provides the bearer with FDA priority review classification for a new drug application. The Pediatric PRV was transferred to Retrophin under the original terms of the agreement with Asklepion. On March 31, 2015, the Company completed its acquisition from Asklepion of all worldwide rights, titles and ownership of Cholbam, including all related contracts, data assets, intellectual property, regulatory assets and the Pediatric PRV, in exchange for a cash payment of $28.4 million, in addition to approximately 661,279 shares of the Company’s common stock (initially valued at $9 million at the time of the definitive agreement with Asklepion, and $15.8 million at the acquisition completion date). The Company is also required to pay contingent consideration consisting of milestones and tiered royalties with a present value of $39.1 million. The original asset value of the Pediatric PRV was recognized at $96.3 million. In this valuation process, we considered various factors which included data from recent sales of similar vouchers. The consideration paid to Asklepion did not value the Pediatric PRV because the issuance of a Pediatric PRV is extremely rare. Therefore when the FDA granted the Pediatric PRV with the Cholbam approval, a bargain purchase gain resulted. The acquisition was accounted for under the purchase method of accounting in accordance with ASC 805. The fair value of assets acquired and liabilities assumed was based upon valuation and the Company’s estimates. Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired product rights-Cholbam, Pediatric PRV, trade names and developed technologies, present value and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. The purchase included $83.2 million of intangible assets with definite lives related to product rights with values of $75.9 million for the U.S. and $7.3 million for the international rights. The useful lives related to the acquired product rights are expected to be approximately 10 years. The contingent consideration of $39.1 million recorded during the year ended December 31, 2015 is related to an agreement to pay an additional cash amount based on the product performance through 2025. The accrued contingent consideration was recorded as a liability at acquisition-date fair value using the income approach with assumed discount rates of 19.0% over the applicable term. The undiscounted amount the Company could pay under the contingent consideration agreement is up to $16.3 million. Service fees with a net present value of $2.9 million were recorded during the year ended December 31, 2015. The net present value is based upon $4.0 million in total payments over a four years period starting as of the acquisition date. As part of the business combination the Company recorded a deferred tax liability of $39.9 million. The deferred tax liability is derived from the difference in the Company's book basis and tax basis in the assets acquired of $88.5 million. Our tax rate utilized is 45.4%. This reduced the Company's deferred tax asset, see Note 14. The purchase price allocation of $91.3 million as of the acquisition completion date of March 31, 2015 is as follows (in thousands):
Unaudited pro forma information for the transaction is not presented, because the effects of such transaction is considered immaterial to the Company. Acquisition of Manchester Pharmaceuticals LLC On March 26, 2014 (the “Manchester Closing Date”), the Company acquired 100% of the outstanding membership interests of Manchester. Under the terms of the agreement, the Company paid $29.2 million upon consummation of the transaction, of which $3.2 million was paid by Retrophin Therapeutics International LLC, an indirect wholly owned subsidiary, for rights of product sales outside of the United States. Acquisition costs amounted to approximately $0.3 million and were recorded as selling, general, and administrative expense in the 2014 consolidated financial statements. The Company entered into a promissory note with Manchester for $33 million which was discounted to $31.3 million to be paid in three equal installments of $11 million within three, six, and nine months after the Manchester Closing Date. On June 30, 2014, the Company paid the sellers of Manchester $33 million in full satisfaction of the outstanding amount owed. In addition, the Company agreed to make contractual payments based on 10% of net sales of the products Chenodal and Vecamyl to the former members of Manchester. Additional contingent payments will be made based on 5% of net sales from any new products derived from Chenodal and Vecamyl. Business combination-related contingent consideration estimated at $12.8 million will be revalued at each reporting period and any change in valuation will be recorded in the Company’s statement of operations. The acquisition was accounted for under the purchase method of accounting in accordance with ASC 805, with the excess purchase price over the fair market value of the assets acquired and liabilities assumed allocated to goodwill. Based on the purchase price allocation, the purchase price of $73.2 million resulted in goodwill of $0.9 million which is primarily attributed to the synergies expected to arise after the acquisition. The $0.9 million of goodwill resulting from the acquisition is deductible for income tax purposes. Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships and developed technology, present value and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. The purchase included $72 million of intangible assets with definite lives related to product rights, trade names, and customer relationships with values of $71.4 million, $0.2 million, and $0.4 million, respectively. The useful lives related to the acquired product rights, trade names, and customer relationships are approximately 16, 1 and 10 years, respectively. Under the terms of the agreement, the sellers agreed to indemnify the Company for uncertain tax liabilities, any breach of any representation or warranty the sellers made to the purchaser, failure of the sellers to perform any covenants or obligations made to the purchaser, and third party claims relating to the operation of the Company and events occurring prior to the Manchester Closing Date. As of December 31, 2014, the Company recorded an indemnification asset with a corresponding liability in the amount of $1.5 million related to uncertain tax liabilities. The purchase price allocation of $73.2 million as of the Manchester Closing Date was as follows:
Divestiture of Assets: Sale of Assets to Sanofi The FDA granted Asklepion Pharmaceuticals, LLC a Rare Pediatric Disease Priority Review Voucher ("Pediatric PRV"), awarded to encourage development of new drugs and biologics for the prevention and treatment of rare pediatric diseases. A Pediatric PRV is transferable and provides the bearer with FDA priority review classification for a new drug application. The Pediatric PRV was transferred to Retrophin under the terms of the asset purchase agreement between the Company and Asklepion dated January 12, 2015, pursuant to which the Company acquired Cholbam. On July 2, 2015, the Company sold and transferred the Pediatric PRV to Sanofi for $245.0 million. $150.0 million was received upon closing, and $47.5 million is due on each of the first and second anniversaries of the closing. In accordance with U.S. GAAP, the Company recorded the future short term and long term notes receivable at their present value of $46.2 million and $44.9 million, respectively, at the date of the sale using a discount rate of 2.8%. The gain from the sale of the asset was approximately $140.0 million, net of $4.9 million in fees contractually due as part of the Cholbam acquisition. Sale of Assets to Turing Pharmaceuticals On October 13, 2014, the Company entered into a binding Summary Separation Proposal with its then-current Chief Executive Officer. Among other things, the Summary Separation Proposal set forth a summary of the terms for the sale of the Company’s Vecamyl, Syntocinon and ketamine licenses and assets to Turing Pharmaceuticals, a company controlled by the former Chief Executive Officer. On January 9, 2015, the Company entered into a purchase agreement with Turing Pharmaceuticals pursuant to which the Company sold Turing Pharmaceuticals the Sold Assets for a purchase price of $1.0 million, and pursuant to which Turing Pharmaceuticals also assumed all future liabilities related to the Sold Assets. On February 13, 2015, the Sellers entered into a purchase agreement with Waldun, pursuant to which the Sellers sold Waldun the Vecamyl Product Rights for a purchase price of $0.7 million. Waldun in turn sold the Vecamyl Product Rights to Turing Pharmaceuticals. In connection therewith, on February 13, 2015, the Company, together with Manchester, entered into an asset purchase agreement with Turing Pharmaceuticals, pursuant to which the Company sold Turing Pharmaceuticals the Inventory for a purchase price of $0.3 million, and pursuant to which Turing Pharmaceuticals also assumed certain liabilities related to the Vecamyl Product Rights and the Inventory. On February 13, 2015, the Company entered into an asset purchase agreement with Turing Pharmaceuticals pursuant to which the Company sold Turing Pharmaceuticals its Oxytocin Assets, including related inventory, for a purchase price of $1.1 million, and pursuant to which Turing Pharmaceuticals also assumed certain liabilities related to the Oxytocin Assets.See Note 16 for further discussion The effect on the Statement of Operations and Comprehensive Income (Loss) for 2015 is a gain of approximately $0.9 million. See Note 9. to the financial statements for more information. |
MARKETABLE SECURITIES |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MARKETABLE SECURITIES | MARKETABLE SECURITIES The Company's marketable securities as of December 31, 2015 were comprised of available-for-sale marketable securities which are carried at fair value, with the unrealized gains and losses reported in accumulated other comprehensive income (loss). The amortized cost of debt securities in this category are adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in other income or expense. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. As of December 31, 2014, the Company owned available-for-sale marketable equity securities that were carried at fair value which have subsequently been sold. Marketable securities consist of the following (in thousands):
The following is a summary of short-term marketable securities classified as available-for-sale as of December 31, 2015 (in thousands):
The following is a summary of short-term marketable securities classified as available-for-sale as of December 31, 2014 (in thousands):
During 2015, 2014 and 2013, the Company recognized a loss of $0.3 million, a gain of $2.3 million and a gain of $0.4 million on marketable securities, respectively. The Company had proceeds from the sale or maturity of marketable securities of $10.0 million, $6.5 million and $4.4 million for 2015, 2014 and 2013, respectively. For the year ended December 31, 2015 the Company reclassifed $0.3 million from Other Comprehensive Income (Loss) to the Statement of Operations The primary objective of the Company’s investment portfolio is to enhance overall returns while preserving capital and liquidity. The Company’s investment policy limits interest-bearing security investments to certain types of instruments issued by institutions with primarily investment grade credit ratings and places restrictions on maturities and concentration by asset class and issuer. The Company reviews the available-for-sale investments for other-than-temporary declines in fair value below cost basis each quarter and whenever events or changes in circumstances indicate that the cost basis of an asset may not be recoverable. This evaluation is based on a number of factors, including the length of time and the extent to which the fair value has been below the cost basis and adverse conditions related specifically to the security, including any changes to the credit rating of the security, and the intent to sell, or whether the Company will more likely than not be required to sell the security before recovery of its amortized cost basis. The assessment of whether a security is other-than-temporarily impaired could change in the future due to new developments or changes in assumptions related to any particular security. As of December 31, 2015 and 2014, the Company believed the cost basis for available-for-sale investments were recoverable in all material respects and there were no investments in an unrealized loss position for longer than 12 months. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Since 2013, the Company has issued 5 tranches of common stock purchase warrants to secure financing, remediate covenant violations related to the Credit Facility (See Note. 10) and provide consideration for Credit Facility amendments. The Company accounts for derivative financial instruments in accordance with ASC 815-40, “Derivative and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”), instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company’s warrants are classified as liability instruments due to an anti-dilution provision that provides for a reduction to the exercise price of the warrants if the Company issues additional equity or equity linked instruments in the future at an effective price per share less than the exercise price then in effect. Issuances 2015 On January 12, 2015, the Company entered into Amendment No. 3 to the Credit Facility discussed in Note 8, in which the Company obtained a commitment letter from Athyrium Capital Management, LLC and Perceptive Credit Opportunities Fund, LP (collectively, the “ Lenders”), the Company’s existing lenders, providing a commitment for a senior secured incremental term loan under the Company’s existing term loan facility in an aggregate principal amount of $30 million, which could have been drawn down at the Company’s option to finance the acquisition of the assets of Asklepion Pharmaceuticals, LLC. As consideration for the commitment letter for the Incremental Loan, the Company made a cash payment to the Lenders and issued the Lenders warrants initially exercisable to purchase up to an aggregate of 125,000 shares of the Company’s common stock. The Company recorded $1.05 million of interest expense related to the warrants upon issuance. The Company calculated the fair value of the warrants using the Monte Carlo Simulation utilizing the following assumptions as of the grant date of the warrants:
2014 In connection with the execution of the Credit Facility, the Company issued warrants to the lenders under the Credit Facility, initially exercisable to purchase up to an aggregate of 337,500 shares of common stock of the Company. The Warrants will be exercisable in whole or in part, at an initial exercise price per share of $12.76 per share, which is subject to weighted-average anti-dilution protections. The Warrants may be exercised at any time upon the election of the holder, beginning on the date of issuance and ending on the fifth anniversary of the date of issuance. The total grant date fair value of the Warrants was $2.5 million, was recorded as a derivative liability, and is included in the debt discount to the Note Payable in the consolidated balance sheets. The Company calculated the fair value of the warrants using the Binomial Lattice pricing model using the following assumptions as of the grant date of the Warrants:
On November 13, 2014, the Company entered into Amendment No. 2 to the Credit Facility which allowed the Company to be in compliance with certain covenants as of September 30, 2014. In addition certain covenants related to the 4th quarter of fiscal 2014 and 2015 were amended. As compensation for Amendment No. 2, the Company agreed to issue additional warrants to the lenders, initially exercisable to purchase an aggregate of 300,000 shares of common stock of the Company which were valued at $2.2 million as of November 13, 2014, with an exercise price of $9.96 per share, and was recorded in change in fair value of derivative instruments in the 2014 consolidated statements of operations. Re-measurement The warrants are re-measured at each balance sheet date based on estimated fair value. Changes in estimated fair value are recorded as non-cash valuation adjustments within other income (expenses) in the Company’s accompanying consolidated statements of operations. The Company recorded a loss on a change in the estimated fair value of warrants of $33.3 million, $23.8 million, and $10.1 million during the years ended December 31, 2015, 2014 and 2013, respectively. The Company calculated the fair value of the warrants using the Monte Carlo Simulation as of December 31, 2015 and the Binomial Lattice options pricing model as of December 31, 2014, using the following assumptions:
**There are no liquidity events expected within the life of the outstanding warrants. Expected volatility is based on analysis of the Company’s volatility, as well as the volatilities of guideline companies. The risk free interest rate is based on the U.S. Treasury security rates for the remaining term of the warrants at the measurement date. The following tables presents the Company’s derivative warrant issuances and balances outstanding during the years ended December 31, 2015 and 2014:
The following information applies to derivative warrants outstanding at December 31, 2015:
The total intrinsic value of derivative warrants outstanding and exercisable as of December 31, 2015 is $32.6 million. The Company’s closing stock price was $19.29 on December 31, 2015. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Financial Instruments and Fair Value The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below: Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. In estimating the fair value of the Company’s derivative liabilities, the Company used the Monte Carlo Simulation as of December 31, 2015 and the Binomial Lattice options pricing model as of December 31, 2014. Based on the fair value hierarchy, the Company classified the derivative liability within Level 3. In estimating the fair value of the Company’s contingent consideration, the Company used the comparable uncontrolled transaction (“CUT”) method for royalty payments based on projected revenues. Based on the fair value hierarchy, the Company classified contingent consideration within Level 3 because valuation inputs are based on projected revenues discounted to a present value. Financial instruments with carrying values approximating fair value include cash and cash equivalents, accounts receivable, notes receivable, deposits on license agreements, and accounts payable, due to their short term nature. The following table presents the Company’s asset and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2015 (in thousands):
The following table presents the Company’s asset and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2014 (in thousands):
The following table sets forth a summary of changes in the estimated fair value of the Company’s Level 3 derivative liability for the period from January 1, 2015 through December 31, 2015:
The following table sets forth a summary of changes in the estimated fair value of the Company’s Level 3 derivative liability for the period from January 1, 2014 through December 31, 2014:
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, the Company performs a detailed analysis of the assets and liabilities that are subject to ASC 820. The following table sets forth a summary of changes in the estimated business combination-related contingent consideration for the period from January 1, 2015 through December 31, 2015:
The following table sets forth a summary of changes in the estimated acquisition-related contingent consideration for the period from January 1, 2014 through December 31, 2014:
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INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS | NTANGIBLE ASSETS Amortizable intangible assets Ligand License Agreement In fiscal 2013, the Company entered into an agreement with Ligand Pharmaceuticals Incorporated for a worldwide sublicense for $2.5 million to develop, manufacture and commercialize a drug technology compound including RE-021 or sparsentan (the “Ligand License Agreement”). The cost of the Ligand License Agreement, which is presented net of amortization in the accompanying consolidated balance sheet in intangible assets, net, is being amortized to research and development on a straight-line basis through September 30, 2023. As consideration for the license, we are required to make substantial payments upon the achievement of certain milestones, totaling up to $105.5 million. Should we commercialize sparsentan or any products containing related compounds, we will be obligated to pay to Ligand an escalating annual royalty between 15% and 17% of net sales of all such products. In September 2015, the license agreement was amended to facilitate sub-licensing in Asia-Pacific. As consideration for the amendment the Company paid $1.0 million. The Company has $3.3 million in intangibles related the Ligand license agreement as December 31, 2015. Carbetocin Technology In September 2015, the Company wrote-off the entire value of intangible assets related to Carbetocin. The write-off was deemed appropriate as the Company elected not to pursue any internal development of the asset and attempts to divest it were unsuccessful. The total charge of $4.7 million was included in operating expenses on the consolidated statement of operations and comprehensive income (loss). Manchester Pharmaceuticals LLC The Company acquired intangible assets with finite lives related to the Chenodal product rights, trade names, and customer relationships with the values of $71.4 million, $0.2 million, and $0.4 million, respectively. The useful lives related to the acquired product rights, trade names, and customer relationships are expected to be approximately 16, 1 and, 10 years, respectively. Amortization of product rights, trade names and customer relationships are being recorded in selling, general and administrative expense over their respective lives. In 2015, the Company divested the assets related to Vecamyl, valued at $3.6 million, to Turing Pharmaceuticals. The remaining product rights from the Manchester business combination relate to Chenodal and are $67.8 million as of December 31, 2015. Thiola License Agreement In 2014, the Company entered into a license agreement with Mission Pharmacal, in which the Company obtained an exclusive, royalty-bearing license to market, sell and commercialize Thiola (Tiopronin) in the United States and Canada, and a non-exclusive license to use know-how relating to Thiola to the extent necessary to market Thiola. The initial term of the license is 10 years and will automatically renew thereafter for periods of one year. The Company paid Mission an up-front license fee of $3 million and will pay guaranteed minimum royalties during each calendar year the greater of $2 million or twenty percent (20%) of the Company’s net sales of Thiola through June 30, 2024. As of December 31, 2015, the present value of guaranteed minimum royalties payable is $10.9 million using a discount rate of approximately 11% based on the Company’s current borrowing rate. As of December 31, 2015, the guaranteed minimum royalty current and long term liability is approximately $0.8 million and $10.1 million, respectively, and is recorded as guaranteed minimum royalty in the consolidated balance sheet. The Company has capitalized $24.1 million related to the Thiola asset which consists of the up-front license fee, professional fees, present value of the guaranteed minimum royalties and any additional payments through 2015 in excess of minimum royalties. There is 8.4 years remaining in the initial term of the license agreement. Cholbam (Kolbam) Asset Purchase On March 31, 2015, the Company completed its acquisition from Asklepion of all worldwide rights, titles and ownership of Cholbam, including all related contracts, data assets, intellectual property, regulatory assets and the PRV. The Company capitalized $75.9 million and approximately $7.3 million for the US and International economic interest, respectively. Amortizable intangible assets as of December 31, 2015 (in thousands):
Amortizable intangible assets as of December 31, 2014 (in thousands):
The following table summarizes amortization expense for the twelve months ended December 31, 2015, 2014 and 2013 (in thousands):
As of December 31, 2015, amortization expense for the next five years is expected to be as follows (in thousands):
As of December 31, 2015 the remaining weighted average period of amortization is 11.06 years. |
ACCRUED EXPENSES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses consist of the following at December 31, 2015 and 2014:
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RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In the second quarter of 2013, the Company, its then-current Chief Executive Officer and a related party, a former investor in the Company that was previously managed by the Company’s then-current Chief Executive Officer, became party to a series of agreements to settle up to $2.3 million of liabilities, which Company management believes are the primary obligation of the related party. The Company and the related party have entered into indemnification agreements whereby the related party agreed to defend and hold the Company harmless against all such obligations and amounts, whether paid or unpaid, arising from these agreements. Notwithstanding the indemnification, the Company recorded a $2.3 million charge to operations for the year ended December 31, 2013 for the (a) $2.2 million of cash consideration, and (b) 11,000 shares of common stock valued at $0.1 million of non-cash consideration. The $2.3 million is entirely paid as of the date of this filing. In addition, the then-current Chief Executive Officer also agreed to provide one of the counter parties with 47,128 shares of his common stock in the Company as a separate component of one of these settlement agreements. Accordingly, the Company does not believe it is required to record a liability for the share-based component of this specific agreement. There is uncertainty as to whether the related party will have sufficient liquidity to repay the Company or fund the indemnification agreements should it become necessary. Concurrent with the execution of such settlement agreements, the Company and the related party entered into promissory notes whereby the related party agreed to pay the Company the principal amount of $2.3 million plus interest at an annualized rate of 5% as reimbursement of payments that the Company made to settle a portion of the agreements. On October 13, 2014, the Company entered into a binding Summary Separation Proposal with its then-current Chief Executive Officer. Among other matters, the Summary Separation Proposal set forth a summary of the terms for the sale of the Company’s Vecamyl, Syntocinon and ketamine licenses and assets to Turing Pharmaceuticals, a company controlled by the former Chief Executive Officer. On January 9, 2015, the Company entered into a purchase agreement with Turing Pharmaceuticals pursuant to which the Company sold Turing Pharmaceuticals the Sold Assets for a purchase price of $1.0 million, and pursuant to which Turing Pharmaceuticals also assumed all future liabilities related to the Sold Assets. On February 13, 2015, the Sellers entered into a purchase agreement with Waldun, pursuant to which the Sellers sold Waldun the Vecamyl Product Rights for a purchase price of $0.7 million. Waldun in turn sold the Vecamyl Product Rights to Turing Pharmaceuticals. In connection therewith, on February 13, 2015, the Company, together with Manchester, entered into an asset purchase agreement with Turing Pharmaceuticals, pursuant to which the Company sold Turing Pharmaceuticals the Inventory for a purchase price of $0.3 million, and pursuant to which Turing Pharmaceuticals also assumed certain liabilities related to the Vecamyl Product Rights and the Inventory. On February 13, 2015, the Company entered into an asset purchase agreement with Turing Pharmaceuticals pursuant to which the Company sold Turing Pharmaceuticals its Oxytocin Assets, including related inventory, for a purchase price of $1.1 million, and pursuant to which Turing Pharmaceuticals also assumed certain liabilities related to the Oxytocin Assets. The total impact to the Statement of Operations and Comprehensive Income (Loss) related to the divestitures for 2015 was a gain of $0.9 million. |
NOTES PAYABLE |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTES PAYABLE | NOTES PAYABLE Convertible Notes Payable On May 29, 2014, the Company entered into a Note Purchase Agreement relating to a private placement by the Company of $46 million aggregate principal senior convertible notes due 2019 (the “Notes”) which are convertible into shares of the Company’s common stock at an initial conversion price of $17.41 per share. The conversion price is subject to customary anti-dilution protection. The Notes bear interest at a rate of 4.5% per annum, payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2014. The Notes mature on May 30, 2019 unless earlier converted or repurchased in accordance with the terms. The aggregate carrying value of the Notes on their issuance was $43 million, which was net of the $3 million debt discount. On June 30, 2014, the Company issued 401,047 shares of Common Stock to the holders of the Notes and such Noteholders granted the Company a release of certain claims they may have had in connection with the Company's sale of the Notes or certain statements made by the Company in connection with such sale. The Company recorded finance expense as other expense in the amount of $4.7 million for the year ended December 31, 2014 based on the fair market value of the stock on the date of issuance in relation to the shares issued. As of December 31, 2015 the fair value of a share of common stock was $19.29, exceeding the initial conversion price per share. If the debt holders were to convert the Company would be required to issue 2,642,160 shares assuming that no fundamental change in the Company has occurred. The Company has reserved sufficient shares of its Common Stock to satisfy the conversion requirements related to the Notes. As of December 31, 2015, the convert value exceeded the carrying value by approximately $7.1 million. As of December 31, 2015 the fair value of the debt is impractical to estimate. The net carrying amount of the Notes consists of the following (in thousands):
Credit Facility In June 2014, the Company entered into a $45 million Credit Agreement (“Credit Facility”) which was scheduled to mature on June 30, 2018 and bore interest at an annual rate of (i) the Adjusted LIBOR Rate (as such term was defined in the Credit Facility) plus 10.00% or (ii) in certain circumstances, the Base Rate (as such term was defined in the Credit Agreement) plus 9.00% and was payable quarterly. The Credit Facility contained certain financial and non-financial covenants. In connection with the execution of the Credit Facility, the Company issued warrants (the “Warrants”) to the lenders under the Credit Facility, initially exercisable to purchase up to an aggregate of 337,500 shares of common stock of the Company. The Warrants will be exercisable in whole or in part, at an initial exercise price per share of $12.76 per share, which is subject to weighted-average anti-dilution protections. The Warrants may be exercised at any time upon the election of the holder, beginning on the date of issuance and ending on the fifth anniversary of the date of issuance. The issuance of the Warrants was not registered under the Securities Act of 1933, as amended (the “Securities Act”), as such issuance was exempt from registration under Section 4(2) of the Securities Act. The total grant date fair value of the Warrants was $2.5 million, was recorded as a derivative liability, and was included in the debt discount to the Note Payable in the 2014 consolidated balance sheets. The Company calculated the fair value of the warrants using the Binomial Lattice pricing model using the following assumptions as of the grant date of the Warrants:
In November 2014, the Company entered into Amendment No. 2 (“Amendment No. 2”) to the Credit Facility which allowed the Company to be in compliance with certain covenants as of September 30, 2014. In addition certain covenants related to the fourth quarter of fiscal 2014 and 2015 were amended. As compensation for Amendment No. 2, the Company agreed to issue additional warrants to Athyrium Capital Management, LLC and Perceptive Credit Opportunities Fund, LP (collectively, the “Lenders”), initially exercisable to purchase an aggregate of 300,000 shares of common stock of the Company which were valued at $2.2 million and recorded in change in fair value of derivative instruments in the 2014 consolidated statements of operations. On January 12, 2015, the Company entered into Amendment No. 3 (“Amendment No. 3”) to the Credit Facility in which the Company obtained a commitment letter from the Lenders, providing a commitment for a senior secured incremental term loan under the Company’s existing term loan facility in an aggregate principal amount of $30.0 million, which could have been drawn down at the Company’s option to finance the acquisition of the Cholbam assets from Asklepion. As consideration for Amendment No. 3, the Company made a $0.6 million cash payment to the Lenders, recorded in finance expense in the consolidated statements of operations, and issued the Lenders warrants initially exercisable to purchase up to an aggregate of 125,000 shares of the Company’s common stock which were valued at $1.1 million on January 12, 2015 and were recorded in interest expense in the consolidated statements of operations. Due to the closing of its public offering on March 24, 2015, the Company received cash proceeds of $140.0 million, after deducting underwriting fees and other offering costs, which the Company used to make the $27.0 million payment due to Asklepion upon the closing of the Company’s acquisition of the Cholbam assets, and as a result, the Company did not utilize the commitment from the Lenders. On July 1, 2015, the Company paid off the Credit Facility in its entirety including a prepayment premium of $2.3 million, and incurred an additional charge of $4.2 million, included in other expenses on the Company's consolidated statement of operations and comprehensive income (loss), for the write-off of the debt discount and equity issuances for the Credit Facility Note Payable - Manchester Pharmaceuticals, LLC On March 26, 2014, upon the acquisition of Manchester, the Company entered into a note payable in the amount of $33 million. The note is non-interest bearing and therefore the Company recorded the loan at present value of $31.3 million using the effective interest rate of approximately 11%, which was the Company’s current borrowing rate. The note was due and payable in three consecutive payments, each in the amount of $11 million payable on June 26, 2014, September 26, 2014, and December 12, 2014 (the maturity date). On June 30, 2014, the Company paid off the note in its entirety. The Company accelerated interest expense in the amount of $1.7 million for the difference between the present value of the loan, and the loan balance paid was recorded in interest income (expense), net for the year ended December 31, 2014. Total interest expense, net, recognized for the years ended December 31, 2015, 2014 and 2013 was $7.7 million, $7.4 million and $0.0, respectively. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Leases and Sublease Agreements California Office San Diego Office On September 8, 2014, the Company entered into a lease agreement for its corporate headquarters located in San Diego, California. The Company rents its office space for approximately $540,000 per annum plus escalations. The lease began on October 1, 2014 and expires on December 31, 2017. Carlsbad Office - Vacated In October 2014, Retrophin ceased use of this facility and all employees moved into the new headquarters facility in San Diego California. As a result of vacating this location, the Company recorded a loss of $170,811 in the year ended December 31, 2014. On March 27, 2015 the Company was able to sublease a portion of this facility for the remaining lease term. The Company is in a listing agreement with a broker to market the remaining Carlsbad space for sublease. Massachusetts Office On July 31, 2014, the Company entered into a sublease agreement for new office space located in Cambridge, Massachusetts. The Company rents its office space for approximately $815,000 per annum. The sublease expires on December 31, 2016. New York Office On December 30, 2015, the Company amended the lease agreement for its offices in New York, New York to extend the lease term through November 2018 and is responsible for approximately $550,000 per annum in rent plus escalations. Contractual Commitments The following table summarizes our principal contractual commitments, excluding open orders that support normal operations, as of December 31, 2015 (in thousands):
Legal Proceedings On January 7, 2014, the Company sued Questcor Pharmaceuticals, Inc. (“Questcor”) in federal court in the Central District of California (Retrophin, Inc. v. Questcor Pharmaceuticals, Inc., Case No. SACV14-00026-JLS). The Company alleged that Questcor violated antitrust laws in connection with its acquisition of rights to the drug Synacthen, and sought injunctive relief and damages. The Company asserted claims under sections 1 and 2 of the Sherman Act, section 7 of the Clayton Act, California antitrust laws, and California’s unfair competition law. On June 4, 2015, pursuant to the terms of a Confidential Settlement Agreement and Release (the “Settlement Agreement”) the Company and Questcor filed a Stipulation of Dismissal, dismissing the Company’s lawsuit against Questcor. Under the terms of the Settlement Agreement, Questcor paid the Company $15.5 million, recorded as “Litigation Settlement Gain” in 2015, and the Company and Questcor granted a mutual release of all claims against the other. On June 13, 2014, Charles Schwab & Co., Inc. (“Schwab”) sued the Company, Standard Registrar and Transfer Company (“Standard”), Jackson Su (“Su”), and Chun Yi Huang (“Huang”) in federal court in the Southern District of New York (Charles Schwab & Co. v. Retrophin, Inc., Case No. 14-cv-4294). Su and Huang also asserted cross-claims against the Company and Standard for alleged negligent misrepresentation premised upon an alleged failure to inform them of restrictions on the sale of their Company stock, and impleaded Katten Muchin Rosenman LLP as a third-party defendant. Schwab’s claims have been dismissed with prejudice. On September 30, 2015, the Court dismissed Su and Huang’s cross-claims and third party claims. The dismissal was with prejudice with respect to Su, but without prejudice with respect to Huang. Huang did not seek leave to re-plead his claims within the time set by the Court. Accordingly, on November 10, 2015, the Court ordered the case to be closed. On September 19, 2014, purported shareholders of the Company sued Martin Shkreli, the Company’s former Chief Executive Officer, in federal court in the Southern District of New York (Donoghue v. Retrophin, Inc., Case No. 14-cv-7640). The Company is a nominal defendant in this action. The plaintiffs sought, on behalf of the Company, disgorgement of short-swing profits from Mr. Shkreli under section 16(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78(p)(b)). The Court has approved a settlement between the parties, under which Mr. Shkreli is obligated to pay $2,025,000 to the Company and an additional $625,000 to Plaintiffs to compensate them for their legal fees. Shkreli has defaulted on the judgment and the Company and the Plaintiffs are taking steps to collect it. The Company has not recorded anything related the judgment for 2015. Any related amounts received will be recorded against equity when collected. On October 20, 2014, a purported shareholder of the Company filed a putative class action complaint in federal court in the Southern District of New York against the Company, Mr. Shkreli, Marc Panoff, and Jeffrey Paley (Kazanchyan v. Retrophin, Inc., Case No. 14-cv-8376). On December 16, 2014, a second, related complaint was filed in the Southern District of New York against the same defendants (Sandler v. Retrophin, Inc., Case No. 14-cv-9915). The complaints assert violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with defendants’ public disclosures during the period from November 13, 2013 through September 30, 2014. In December 2014, plaintiff Kazanchyan filed a motion to appoint lead plaintiff, to approve lead counsel, and to consolidate the two related actions. On February 10, 2015, the Court consolidated the two actions, appointed lead plaintiff, and approved lead counsel. Lead plaintiff filed a consolidated amended complaint on March 4, 2015, which again named the Company, Mr. Shkreli, Mr. Panoff, and Mr. Paley as defendants, but which also named Steven Richardson, Stephen Aselage, and Cornelius Golding as additional defendants. On May 26, 2015, with the consent of the lead plaintiff, the court ordered that the claims against Mr. Paley be dismissed. The remaining defendants, including the Company, filed motions to dismiss the consolidated amended complaint, which were fully-briefed as of October 29, 2015. On December 1, 2015, counsel jointly informed the Court that the parties had reached a comprehensive settlement, subject to Court approval. On January 29, 2016, the parties filed motion for preliminary approval of the settlement and supporting papers, including a stipulation of settlement. On February 2, 2016, the Court preliminarily approved the settlement and scheduled a final approval hearing for June 10, 2016. Any amounts owed by the Company would be covered by Director and Officer Insurance. In January 2015, the Company received a subpoena relating to a criminal investigation by the U.S. Attorney for the Eastern District of New York. The subpoena requested information regarding, among other things, the Company’s relationship with Mr. Shkreli and individuals or entities that had been investors in investment funds previously managed by Mr. Shkreli. The Company has been informed that it is not a target of the U.S. Attorney’s investigation, and is cooperating with the investigation. On December 17, 2015, an indictment against the Company’s former Chief Executive Officer, Martin Shkreli, and its former outside counsel, Evan Greebel, was unsealed in the United States District Court for the Eastern District of New York. The Company has also been cooperating with a parallel investigation by the U.S. Securities and Exchange Commission (the “SEC”). On December 17, 2015, the SEC filed a civil complaint against Mr. Shkreli, Mr. Greebel, MSMB Capital Management LLC, and MSMB Healthcare Management LLC in the United States District Court for the Eastern District of New York. On August 17, 2015, the Company filed a lawsuit in federal district court for the Southern District of New York against Martin Shkreli, asserting that he breached his fiduciary duty of loyalty during his tenure as the Company’s Chief Executive Officer and a member of its Board of Directors (Retrophin, Inc. v. Shkreli, 15-CV-06451(NRB)). On August 19, 2015, Mr. Shkreli served a demand for JAMS arbitration on Retrophin, claiming that Retrophin had breached his December 2013 employment agreement. In response to Mr. Shkreli’s arbitration demand, the Company has asserted counterclaims in the arbitration that are substantially similar to the claims it previously asserted in the federal lawsuit against Mr. Shkreli. The parties have selected an arbitration panel. On Mr. Shkreli’s application, and with the Company’s consent, the federal Court has granted a stay of the federal lawsuit pending a determination by the arbitration panel whether the Company’s counterclaims will be litigated in the arbitration, as the Company is seeking. As of December 31, 2015 no accruals for loss contingencies have been recorded since these cases are neither probable nor reasonably estimable. From time to time the Company is involved in legal proceedings arising in the ordinary course of business. The Company believes there is no other litigation pending that could have, individually or in the aggregate, a material adverse effect on its results of operations or financial condition. Under the Company's bylaws, current and former officers and directors may seek advancement for certain expenses, including attorneys’ fees. The Company has recently received a number of significant requests for advancement, and is in discussions about how much of the amounts sought the Company is obligated to pay. In addition, for certain of these amounts, the Company’s obligation to pay advancement is eligible for reimbursement under the Company’s insurance policies. Therefore, the Company is unable at this time to estimate the amount of advancement currently sought from the Company that will ultimately be eligible for advancement, nor how much of the amounts eligible for advancement will be eligible for reimbursement under the Company’s insurance policies, and whether or not the amounts could be material. |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY / DEFICIT | STOCKHOLDERS’ EQUITY / DEFICIT Common Stock The Company is currently authorized to issue up to 100,000,000 shares of $0.0001 par value common stock. All issued shares of common stock are entitled to vote on a 1 share/1 vote basis. Preferred Stock The Company is currently authorized to issue up to 20,000,000 shares of $0.001 preferred stock, of which 1,000 shares are designated Class "A" Preferred shares, $0.001 par value. Class A Preferred Shares are not entitled to interest, have certain liquidation preferences, special voting rights and other provisions. No Preferred Shares have been issued to date. Public Offering - 2015 On March 24, 2015, the Company completed a public offering of 7,866,000 shares of common stock at a price of $19.00 per share. We received net proceeds from the offering of $140.0 million after deducting underwriting fees and other offering costs of $9.5 million. The shares of common stock were offered by us pursuant to a shelf registration statement that was declared effective by the SEC on March 13, 2015. 2014 Incentive Compensation Plan On May 9, 2014, the Company’s stockholders approved the 2014 Incentive Compensation Plan (the "Plan"). The Plan authorizes the granting of stock options, stock appreciation rights, restricted stock and restricted stock units, deferred stock, performance units and annual incentive awards covering up to 3.0 million shares of the Company’s common stock. In a special shareholder meeting held February 3, 2015, the Company’s shareholders approved an incremental 1,928,000 shares of common stock and 230,000 restricted shared of common stock. These shares were granted to employees between February 24, 2014 and August 18, 2014. 2015 Equity Incentive Plan On June 8, 2015, the Company's stockholders approved the 2015 Equity Incentive Plan (the "2015 Plan"). The plan is intended as the successor to and continuation of the Plan. Stockholders approved 1.4 million new shares to be issued under the 2015 Plan, in addition to 0.6 million unallocated shares remaining available for issuance under the Plan that were added to the 2015 Plan. Stock Options The fair values of stock option grants during the year ended December 31, 2015, 2014 and 2013 were calculated on the date of grant using the Black-Scholes option pricing model, except for options granted for market and revenue performance criteria. Compensation expense is recognized over the period of service, generally the vesting period. During the year ended December 31, 2015, 2,285,000 stock options were granted by the Company. The following weighted average assumptions were used in the Black-Scholes options pricing model to estimate the fair value of stock options for the specified reporting periods:
The risk-free interest rate was based on rates established by the Federal Reserve. The Company’s expected volatility was based on analysis of the Company’s volatility, as well as the volatilities of guideline companies. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield is based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future. The following table summarizes our stock option activity and related information for the year ended December 31, 2015:
The weighted average grant date fair value of options granted is $19.02, $8.56, and $6.03 during the years ended December 31, 2015, 2014 and 2013, respectively. The aggregate intrinsic value for outstanding options is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock as of December 31, 2015 of $19.29. Unrecognized compensation cost associated with unvested stock options amounts to $47.4 million as of December 31, 2015, which will be expensed over a weighted average remaining vesting period of 1.9 years. Restricted Shares As of December 31, 2015, there was approximately $7.1 million of unrecognized compensation cost related to restricted shares granted. This amount is expected to be recognized over a weighted average period of 1.8 years. Unvested restricted shares consist of the following as of December 31, 2015:
Share Based Compensation Total non-cash stock-based compensation expense consisted of the following for the years ended December 31, 2015 and 2014 (in thousands):
Exercise of Warrants During the twelve months ended December 31, 2015, the Company issued 870,306 shares of common stock upon the exercise of warrants for cash received by the Company in the amount of $4.5 million. The Company reclassified $23.5 million derivative liability as equity for the value of these warrants on the date of exercise. The warrants were revalued immediately prior to exercise and the change in the fair value of $2.8 million was recorded as other expense in the consolidated financial statements of the Company. During the twelve months ended December 31, 2014, the Company issued 1,947,377 shares of common stock upon the exercise of warrants for cash received by the Company in the amount of $8.4 million. The Company reclassified $23.4 million derivative liability as equity for the value of these warrants on the date of exercise. The warrants were revalued immediately prior to exercise and the change in the fair value of the warrants was recorded as other expense in the consolidated financial statements of the Company. Treasury Stock In the fourth quarter of 2013, the Company repurchased 130,790 shares of its common stock for an aggregate purchase price of $957,272. The Company currently recognizes such repurchased common stock as treasury stock. During the year ended December 31, 2014, the Company repurchased 248,801 shares of its common stock for an aggregate purchase price of $2.3 million. The Company recognizes repurchased common stock as treasury stock. In March 2015 the Company retired 379,591 shares of its common stock held as treasury stock. This was the entire holding of treasury stock. No other shares were repurchased during the year. |
EARNINGS (LOSS) PER SHARE |
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EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share (“EPS”) represent net income (loss) attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents net income attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period using the treasury stock method. Basic and diluted net EPS is calculated as follows (net income amounts are stated in thousands):
For the years ended December 31, 2015, 2014 and 2013, the following shares were excluded because they were anti-dilutive:
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INCOME TAXES |
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INCOME TAXES | INCOME TAXES For financial reporting purposes, net income before income taxes includes the following components (in thousands):
For the year ending December 31, 2015, the Company became a taxpayer and is therefore required to pay its estimated Federal and State income taxes quarterly throughout the year. The taxes paid were based upon estimated taxable income, which differed from our final results, so we have prepaid tax of $8.1 million, which we will apply to our 2016 quarterly tax estimates. The components of the provision (benefit) for income taxes, in the consolidated statement of operations are as follows (in thousands):
During the year ended December 31, 2015, in connection with the acquisition of Cholbam, the Company recorded a deferred tax liability of $39.9 million. Based on the fact that the reversal of the deferred tax liability is viewed as a source of future income pursuant to ASC 740, the Company was able to reduce its existing valuation allowance by $39.9 million. The deferred tax liabilities supporting the ability to realize the deferred tax assets in the above acquisition will reverse in the same period, are in the same jurisdiction and are of the same character as the temporary differences that gave rise to those deferred tax assets. Additionally, during the year ended December 31, 2015, the Company recorded tax expense of $28.1 million primarily relating to current and deferred tax expense accrued on the sale of Priority Review Voucher (“PRV”), partially offset by release of valuation allowance pursuant to the utilization of net operating loss carry-forwards primarily related to the PRV sale. The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate expressed as a percentage of income (loss) before income taxes:
The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows (in thousands):
At December 31, 2015, the Company has available unused U.S. federal net operating loss (“NOL”) carryforwards of $8.2 million and a minimal amount of state NOL carryforwards. The U.S. federal NOL carryforwards will expire beginning in 2030. The Company has international subsidiaries whose operations are not material for the year ended December 31, 2015. The Company's utilization of the net operating loss carryforwards may be subject to annual limitations due to the ownership change limitations provided by Internal Revenue Code (“IRC”) Section 382 and similar state provisions. Pursuant to IRC Section 382, the annual use of the Company’s net operating loss carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The annual limitations may result in the expiration of net operating losses prior to utilization. The annual limitation is determined based upon the fair market value of the Company as of the date of such ownership change. Based on the value of the Company at all relevant dates, the computed annual limitation that would result from an ownership change of the Company is not expected to prevent us from utilizing the majority of our remaining net operating losses prior to their expiration. The Company accounts for uncertain tax benefits in accordance with the provisions of ASC 740-10 of the Accounting for Uncertainty in Income Taxes. Of the total unrecognized tax benefits at December 31, 2015, approximately $1.8 million was recorded as a reduction to deferred tax assets. If recognized, $1.8 million of unrecognized tax benefits would affect the Company’s effective tax rate. Additionally, as of December 31, 2015 and 2014 the Company had recorded an indemnification asset with a corresponding liability in the amount of $1.5 million for an uncertain tax position related to the acquisition of Manchester Pharmaceuticals, LLC. The Company is indemnified with respect to the liability. The Company does not anticipate that the amount of unrecognized tax benefits as of December 31, 2015 will change materially within the 12 month period following December 31, 2015. A reconciliation of the Company's unrecognized tax benefits for the years 2015 and 2014 is provided in the following table (in thousands):
The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company’s income tax returns are open to examination by federal, state and foreign tax authorities, generally for the years ended December 31, 2012 and later. The Company’s policy is to record estimated interest and penalties related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. During the years ended 2015, 2014 and 2013, the Company did not recognize any interest or penalties in its statements of operations and there were no accruals recorded for interest or penalties at December 31, 2015 and 2014. |
INVESTIGATIONAL MATTERS |
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Dec. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
INVESTIGATIONAL MATTERS | INVESTIGATIONAL MATTERS Investigation and Impact on Financial Statements In September 2014, the Company’s board of directors requested that its outside legal counsel conduct an investigation into various matters related to the former Chief Executive Officer of the Company. In January 2015, our board of directors appointed an Oversight Committee to oversee and direct the investigation and make findings and decisions related to the investigation. As a result of the investigation, the Oversight Committee determined that, throughout 2013 and 2014, the former Chief Executive Officer engaged in a series of transactions (the “Prior Transactions”), which involved individuals and entities that had been investors in investment funds previously managed by the former Chief Executive Officer (the “MSMB Entities”), pursuant to which assets of the Company were misappropriated. As a result of the Prior Transactions the financial statements contained in the Company’s Form 10-Q for the three months ended September 30, 2013 (the “2013 Q3 Form 10-Q”), the Company’s Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”) and the Company’s Forms 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (the “2014 Forms 10-Q”) contained errors related to the reporting of certain consulting agreements entered into as part of the Prior Transactions, the predominant purpose of which appears to have been to settle and release claims against the MSMB Entities or the former Chief Executive Officer personally. On February 19, 2015, our board of directors concluded that as a result of the errors related to such consulting agreements, the financial statements contained in the 2013 Q3 Form 10-Q and the 2013 Form 10-K should no longer be relied upon. Accordingly, the Quarterly Report on Form 10-Q for the quarter ending September 30, 2013 and the Annual Report on Form 10-K for the year ended December 31, 2013 were amended and filed with the SEC in July 2015. Stock Option Accounting The Company held a Special Meeting of Stockholders on February 3, 2015, at which its stockholders voted to approve a proposal ratifying the prior issuance of stock options to purchase 1,928,000 shares of common stock and 230,000 restricted shares of common stock granted to employees between February 24, 2014 and August 18, 2014 (the “Ratified Equity Grants”). The 2014 Forms 10-Q contained errors related to the non-cash compensation expense recognized in connection with the Ratified Equity Grants, because the grant/measurement date of the Ratified Equity Grants for financial accounting purposes did not occur until their ratification in 2015. The Company previously accounted for the Ratified Equity Awards as if a grant/measurement date for financial accounting purposes had occurred upon their issuance date, and recognized compensation expense for such Ratified Equity Awards based on the grant/measurement date value, which is amortized ratably to compensation expense and additional paid-in capital over the applicable service periods. The Company should have accounted for the Ratified Equity Awards as equity grants without a grant/measurement date, which are accounted for as “liability awards”, with compensation expense and an offsetting compensation liability recorded over the term of the award, and the liability award revalued at each reporting period based on changes in the Company’s stock price until it is ratified. The Company believes that the errors in the 2014 Forms 10-Q related to the non-cash compensation expense recognized in connection with the Ratified Equity Grants do not cause the financial statements included within the 2014 Forms 10-Q to be misleading, and therefore such financial statements can still be relied upon. The Company corrected such errors, including any related disclosures, in its 2014 Annual Report on Form 10-K, and restated those quarters in 2014 Form 10-Q filings. On February 27, 2015, the Company received a Public Letter of Reprimand from NASDAQ (the “Letter of Reprimand”), in accordance with Nasdaq Listing Rule 5810(c)(4). The Letter of Reprimand communicates NASDAQ’s belief that the interests of the Company’s shareholders were not materially adversely affected by the matters described above, and while not having been cured, the violation described above was remediated to the extent possible. Accordingly, NASDAQ does not believe that the delisting of the Company’s securities is an appropriate sanction, but rather, the circumstances warranted the issuance of the Letter of Reprimand. The issuance of the Letter of Reprimand completes NASDAQ’s review of the matters described above. |
SEVERANCE AGREEMENTS |
12 Months Ended |
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Dec. 31, 2015 | |
Severance Agreements [Abstract] | |
SEVERANCE AGREEMENTS | SEVERANCE AGREEEMENTS On September 15, 2014, the Company entered into a separation agreement and release (the “Separation Agreement”) with Marc Panoff, the Company’s Chief Financial Officer, pursuant to which Mr. Panoff’s employment with the Company was terminated effective as of February 28, 2015. Under the terms of the Separation Agreement, Mr. Panoff will be entitled to receive: (i) severance payments equal to six months of his current base salary; (ii) 100% of his target bonus for 2014; (iii) accelerated vesting of 81,333 shares of restricted common stock of the Company; and (iv) benefits under the Company’s benefit plans, subject to the terms of each such plan. In conjunction with the Separation Agreement, the Company had initially recorded and accrued $0.1 million of severance expense through September 30, 2014 in connection with Mr. Panoff’s severance which was to be expensed ratably over the service period from September 15, 2014 through February 28, 2015. During the 4th quarter of 2014, the Company determined that Mr. Panoff’s service to the Company was substantially completed prior to December 31, 2014 and as a result recorded the remaining unamortized severance expense related to his separation agreement of $1.1 million in the 4th quarter of fiscal 2014 in selling, general and administrative in the consolidated statements of operations. Mr. Panoff’s target bonus which was included as part of his severance agreement was recognized ratably over the course of the fiscal year ended December 31, 2014. On October 13, 2014, Martin Shkreli resigned as a member of the Board and as an employee of the Company, and from any and all other positions that he held with the Company. On October 13, 2014, the Company entered into a resignation letter with Mr. Shkreli (“Separation Agreement”). As part of Mr. Shkreli’s Separation Agreement, Mr. Shkreli has been receiving cash severance, unpaid bonus and health insurance coverage, 12 months of continued vesting of time based stock options and no vesting of performance based stock options. Pursuant to the Separation Agreement, Mr. Shkreli’s market and performance based stock options have been forfeited. As a result, the Company recorded compensation expense in the amount of $0.5 million relating to Mr. Shkreli’s cash severance, unpaid bonus and health insurance coverage and compensation expense of $1.1 million related to the accelerated vesting of Mr. Shkreli’s time based stock options. On October 13, 2014, the Company signed a Letter of Intent for the terms for the sale of the Company’s Vecamyl, Syntocinon and ketamine licenses and assets to Turing Pharmaceuticals AG (“Turing Pharmaceuticals”), which includes an up-front payment to the Company of $3.0 million and the assumption of certain liabilities including license fees and royalties (the “Sale Transaction”). Martin Shkreli, the Company’s former Chief Executive Officer and Director, is the Chief Executive Officer of Turing Pharmaceuticals. The closing of the Sale Transaction was subject to various conditions, including the negotiation and execution of a binding definitive agreement between the Company and Turing Pharmaceuticals and the receipt of necessary third party consents. In connection with the Letter of Intent with Martin Shkreli, the Company recorded severance expense and accrued severance expense of $2.9 million as of and for the year ended December 31, 2014 which is the difference between of the net book value of the assets to be sold, the $3.0 million expected upfront payment, and $3.0 million of liabilities expected to be assumed. As both transactions were contemplated simultaneously, they were both considered in calculating the respective severance expense related to Mr. Shkreli’s termination. The full amount of the severance was recorded as of September 30, 2014 as that was the date that the Board replaced Martin Shkreli as Chief Executive Officer of the Company until a formal separation agreement could be finalized. As of September 30, 2014, it was deemed to be probable and estimable that Mr. Shkreli would enter into a Separation Agreement that would entitle him to severance benefits. Therefore the estimated severance that was booked as of the end of the third quarter is based on the best estimate currently available and the full severance amount was recorded as of September 30, 2014 as Mr. Shkreli was not required to perform any future service for the Company. For the year ended December 31, 2014, the Company recorded a total of $4.5 million severance expense in connection with Mr. Shkreli’s Separation Agreement which has been recorded in selling, general and administrative expenses in the consolidated statements of operations. On January 9, 2015, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Turing Pharmaceuticals pursuant to which the Company sold Turing Pharmaceuticals its ketamine licenses and assets (the “Ketamine Assets”) for a purchase price of $1.0 million. Turing Pharmaceuticals will also assume all future liabilities related to the Ketamine Assets. On February 13, 2015, Retrophin, Inc., its wholly-owned subsidiary Manchester and its other wholly-owned subsidiary Retrophin Therapeutics International, LLC (collectively, the “Sellers”), entered into a Purchase Agreement with Waldun, pursuant to which the Sellers sold Waldun their product rights to mecamylamine hydrochloride (also referred to as Vecamyl) (the “Vecamyl Product Rights”) for a purchase price of $0.7 million. Waldun in turn sold the Vecamyl Product Rights to Turing Pharmaceuticals. In connection therewith, on February 13, 2015, the Company and Manchester entered into an Asset Purchase Agreement with Turing Pharmaceuticals, pursuant to which the Company and Manchester sold Turing Pharmaceuticals their Vecamyl inventory for a purchase price of $0.3 million. Turing Pharmaceuticals will also assume certain liabilities related to the Vecamyl Product Rights and Inventory. Additionally, on February 13, 2015, the Company entered into an Asset Purchase Agreement with Turing Pharmaceuticals pursuant to which the Company sold Turing Pharmaceuticals its Syntocinon licenses and assets, including related inventory, for a purchase price of $1.1 million. Turing Pharmaceuticals will also assume certain liabilities related to the Syntocinon licenses and assets. |
SUBSEQUENT EVENTS |
12 Months Ended |
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Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On January 27, 2016 the Company reached a settlement with its former counsel, Katten Munchin Rosenman, LLP (Katten). Under the terms of the agreement, the parties exchanged general releases, including Katten's claim for $3.0 million in unpaid invoices for Katten legal services incurred during the 2012-2014. The Company will record a $3.0 million reversal of the obligation of the Katten legal invoices during the 1st quarter of 2016. On October 20, 2014, a purported shareholder of the Company filed a putative class action complaint in federal court in the Southern District of New York (Kazanchyan v. Retrophin, Inc., Case No. 14-cv-8376). On December 16, 2014, a second, related complaint was filed in the Southern District of New York (Sandler v. Retrophin, Inc., Case No. 14-cv-9915). On February 10, 2015, the Court consolidated the two actions. On December 1, 2015, counsel jointly informed the Court that the parties had reached a comprehensive settlement, subject to Court approval. On January 29, 2016, the parties filed motion for preliminary approval of the settlement and supporting papers, including a stipulation of settlement. On February 2, 2016, the Court preliminarily approved the settlement of $3.0 million and scheduled a final approval hearing for June 10, 2016. The $3.0 million will be covered by the Company's insurance. On February 17, 2016 Retrophin sued MSMB Capital Management LLC, MSMB Capital Management LP, MSMB Healthcare LP, MSMB Healthcare Investors, LLC, and MSMB Healthcare Management, LLC (the "MSMB Funds"), a series of hedge fund entities founded by Retrophin's former Chief Executive Officer Martin Shkreli to collect on five promissory notes between the MSMB Funds and Retrophin. The Company asked a judge to order the fund to repay $2.18 million in principal and 5 percent interest. The case is Retrophin Inc. v. MSMB Capital Management LLC, 650813/2016, New York State Supreme Court, New York County (Manhattan). On February 24, 2016, the Company announced that the European Commission has granted orphan drug designation to RE-024, the Company's novel investigational phosphopantothenate replacement therapy for pantothenate kinase-associated neurodegeneration (PKAN), a rare and life-threatening genetic disorder with no approved treatment option. |
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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table presents selected Consolidated Statements of Operations data for each quarter for the fiscal year ended December 31, 2015 and 2014.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended |
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Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include revenue recognition, valuing equity securities in share-based payments, estimating fair value of equity instruments recorded as derivative liabilities, estimating the fair value of net assets acquired in business combinations, estimating the useful lives of depreciable and amortizable assets, goodwill impairment, estimating of contingent consideration, estimating of valuation allowances and uncertain tax positions, and estimating the fair value of long-lived assets to assess whether impairment charges may apply. |
Revenue Recognition | Revenue Recognition Product sales for the year ended December 31, 2015 consisted of sales of Chenodal, Vecamyl (divested in 2015), Cholbam and Thiola. Product sales for the year ended December 31, 2014 consisted of sales of Chenodal, Vecamyl and Thiola. Revenue from product sales is recognized when persuasive evidence of an arrangement exists, title to product and associated risk of loss have passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured, the Company has no further performance obligations, and returns can be reasonably estimated. The Company sells in the United States and Canada through a direct-to-patient distributor. Under this distribution model, the Company records revenues when the distributor ships products to customers and such customers take title of the product. The Company sells internationally, but these revenues are immaterial. Revenue from product sales is recorded net of applicable provisions for rebates under government programs (including Medicaid), prompt pay discounts, and other sales-related deductions. We review our estimates of rebates and other applicable provisions each period and record any necessary adjustments in the current period. Deductions from Revenue Government Rebates and Chargebacks: The Company estimates the rebates that we will be obligated to provide to government programs and deducts these estimated amounts from our gross product sales at the time the revenues are recognized. Allowances for government rebates and discounts are established based on actual payer information, which is reasonably estimated at the time of delivery, and the government-mandated discounts applicable to government-funded programs. Prompt Pay Discounts: The Company offers discounts to certain customers for prompt payments. The Company estimates these discounts based on customer terms and historical trends. The Company accrues for the estimated prompt pay discount based on the gross amount of each invoice for those customers at the time of sale. Product Returns: Consistent with industry practice, the Company offers its customers a limited right to return product purchased directly from the Company, which is principally based upon the product’s expiration date. Generally, shipments are only made upon a patient prescription so returns are immaterial. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred and include: salaries, benefits, bonus, stock-based compensation, license fees, milestone payments due under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, and develop drug materials and delivery devices, and associated overhead and facilities costs. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors, and clinical research organizations (“CRO’s"). Invoicing from third-party contractors for services performed can lag several months. We accrue the costs of services rendered in connection with third-party contractor activities based on our estimate of management fees, and costs associated with site monitoring and data management. |
Employee Stock-Based Compensation | Employee Stock-Based Compensation The Company recognizes all employee share-based compensation as a cost in the financial statements. Equity-classified awards principally related to stock options, restricted stock units (“RSUs”) and performance stock units ("PSUs"), are measured at the grant date fair value of the award. The Company determines grant date fair value of stock option awards using the Black-Scholes option-pricing model. The fair value of RSUs are determined using the closing price of the Company’s common stock on the grant date. For service based vesting grants, expense is recognized over the requisite service period based on the number of options or shares expected to ultimately vest. For PSUs, expense is recognized over the implicit period until the performance obligation is met, assuming that it is probable. No expense is recognized for PSUs until it is probable the vesting criteria will be satisfied. Forfeitures are estimated at the date of grant and revised when actual or expected forfeiture activity differs materially from original estimates. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share We calculate our basic earnings per share by dividing net income by the weighted average number of shares outstanding during the period. The diluted earnings per share computation includes the effect, if any, of shares that would be issuable upon the exercise of outstanding stock options, derivative liability, convertable debt and RSUs, reduced by the number of shares which are assumed to be purchased by the Company from the resulting proceeds at the average market price during the year, when such amounts are dilutive to the earnings per share calculation. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid marketable securities with an original maturity of three months or less to be cash equivalents. Due to the short-term maturity of such investments, the carrying amounts are a reasonable estimate of fair value. |
Marketable Securities | Marketable Securities The Company accounts for marketable securities held as “available-for-sale” in accordance with ASC 320, “Investments Debt and Equity Securities” (“ASC 320”). The Company classifies these investments as current assets and carries them at fair value. Unrealized gains and losses are recorded as a separate component of stockholders’ equity as accumulated other comprehensive income (loss). Realized gains or losses on marketable security transactions are reported in the Statements of Operations and Comprehensive Income (Loss). Marketable securities are maintained at one financial institution and are governed by the Company’s investment policy as approved by our Board of Directors. Fair values of marketable securities are based on quoted market prices. |
Trade and Notes Receivable | Trade and Notes Receivable Trade Receivables, Net Trade accounts receivable are recorded net of allowances for prompt payment and doubtful accounts. Allowances for rebate discounts are included in other current liabilities in the accompanying consolidated balance sheets. Estimates for allowances for doubtful accounts are determined based on existing contractual obligations, historical payment patterns and individual customer circumstances. The allowance for doubtful accounts was $0 and $0.1 million at December 31, 2015 and 2014, respectively. The bad debt expense recorded in the Statement of Operations and Comprehensive Income (Loss) is approximately $0 million and $0.1 million for 2015 and 2014, respectively. Notes Receivable Notes receivable arose from the sale of the pediatric priority review voucher (the "PRV"). On July 2, 2015, the Company sold and transferred the PRV to Sanofi for $245.0 million. $150.0 million was received upon closing, and $47.5 million is due on each of the first and second anniversaries of the closing. In accordance with U.S. GAAP, the Company recorded the future short term and long term notes receivable at their present value of $46.2 million and $44.9 million, respectively, at the date of the sale using a discount rate of 2.8%. The accretion on the notes receivables totaled $1.3 million and is recorded in interest expense, net, in the Consolidated Statements of Operations and Comprehensive Income (Loss) for 2015. As of December 31, 2015, the present value of the current and long-term notes receivable was $46.8 million and $45.6 million, respectively. The Company noted no indications for impairment as of December 31, 2015. |
Inventories and Related Reserves | Inventories and Related Reserves Inventory is stated at the lower of cost or market. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes down such inventory as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company’s manufacturers perform throughout their manufacturing process. The Company does not directly manufacture any product. The Company has single suppliers for products Chenodal and Thiola, and prospectively arranges for manufacture from contract service providers for its product Cholbam. The value of inventory acquired in 2015 related to single supplier purchases was 63% for Thiola and 4% for Chenodal. The remaining 33% of inventory was related to the Cholbam product and was either related to materials acquired or subsequent third party manufacturing. The inventory reserve was $0.3 million and $0.1 at December 31, 2015 and 2014, respectively. |
Property and Equipment, net | Property and Equipment, net Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the related estimated useful lives as presented in the table below. Significant additions and improvements are capitalized, while repairs and maintenance are charged to expense as incurred. Property and equipment purchased for specific research and development projects with no alternative uses is expensed as incurred. |
Intangible Assets, Net | Intangible Assets, Net Intangible assets with finite useful lives consist primarily of product rights, licenses and customer relationships which are amortized on a straight line basis over 1 to 16 years. Intangible assets with finite useful lives are reviewed for impairment in accordance with ASC 360 and the useful lives are reassessed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. The Company reviews for indications of impairment of intangibles on a quarterly basis. For the year ended December 31, 2015 the company wrote off the intangible asset related to Carbetocin and recorded a loss of $4.7 million. There were no impairments related to intangible assets for 2014 or 2013. |
Goodwill | Goodwill Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The Company first assesses the qualitative factors for reporting units that carry goodwill. If the qualitative assessment results in a conclusion that it is more likely than not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit. When a qualitative assessment is not used, or if the qualitative assessment is not conclusive and it is necessary to calculate fair value of a reporting unit, then the impairment analysis for goodwill is performed at the reporting unit level using a two-step approach. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill utilizing an enterprise-value based premise approach. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined by using various valuation techniques including income (discounted cash flow), market and/or consideration of recent and similar purchase acquisition transactions. The Company performs its annual impairment review of goodwill in the fourth quarter and when a triggering event occurs between annual impairment tests. The Company has one segment and one reporting unit and as such reviews goodwill as one unit. For the years ended December 31, 2015 and 2014 there were no impairments to goodwill. |
Income Taxes | Income Taxes The Company follows ASC 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company’s policy is to record estimated interest and penalty related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior year financial statements in order to conform to the current year’s presentation. |
Patents | Patents The Company expenses external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent applications pending. The Company also expenses costs associated with maintaining and defending patents subsequent to their issuance in the period incurred. |
Derivative Instruments | Derivative Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company calculates the fair value of the financial instruments using the Monte Carlo simulation pricing model, however, prior to January 1, 2015, the Company used the Binomial Lattice option pricing model. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity is assessed at inception, the fair value of the warrants is evaluated at the end of each reporting period (see Note 5 and Note 6). |
Treasury Stock | Treasury Stock The Company records treasury stock at the cost to acquire it and includes treasury stock as a component of stockholders’ equity until it is retired. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption. In May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-9, Revenue from Contracts with Customers. Under the new standard, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration for which the entity expects to be entitled for that specific good or service. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption of ASU 2014-9 is permitted but not before the original effective date (annual periods beginning after December 15, 2016). We are currently evaluating the impact, if any, the adoption of this standard will have on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This standard amends Topic 330, Inventory, which currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. When this standard is adopted, an entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently evaluating the impact, if any, the adoption of this standard will have on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, to simplify the presentation of deferred taxes. This amendment requires that all deferred tax assets and liabilities, along with any related valuation allowances, be classified as noncurrent on the balance sheet. However, an entity shall not offset deferred tax liabilities and assets attributable to different tax jurisdictions. ASU 2015-17 is effective for annual and interim reporting periods ending after December 15, 2016. Early adoption is permitted, and the new guidance may be applied either prospectively or retrospectively. We have adopted this guidance prospectively as of December 31, 2015. Therefore, prior periods have not been adjusted to reflect this adoption. This change in accounting principle does not change our results of operations, cash flows or stockholders’ equity. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Vesting Award Terms |
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Schedule of inventory, net of reserve | Inventory, net of reserve, consists of the following at December 31, 2015 and 2014 (in thousands):
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Schedule of major classifications of property, equipment and software, including their respective expected useful lives | The major classifications of property and equipment, including their respective expected useful lives, consists of the following:
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BUSINESS COMBINATION AND DIVESTITURE OF ASSETS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of purchase price allocation | The purchase price allocation of $91.3 million as of the acquisition completion date of March 31, 2015 is as follows (in thousands):
The purchase price allocation of $73.2 million as of the Manchester Closing Date was as follows:
The purchase price allocation of $73.2 million as of the Manchester Closing Date was as follows:
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MARKETABLE SECURITIES (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of marketable securities | Marketable securities consist of the following (in thousands):
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Schedule of available for sale securities | The following is a summary of short-term marketable securities classified as available-for-sale as of December 31, 2015 (in thousands):
The following is a summary of short-term marketable securities classified as available-for-sale as of December 31, 2014 (in thousands):
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assumptions for valuation of warrants | The Company calculated the fair value of the warrants using the Monte Carlo Simulation utilizing the following assumptions as of the grant date of the warrants:
The Company calculated the fair value of the warrants using the Binomial Lattice pricing model using the following assumptions as of the grant date of the Warrants:
The Company calculated the fair value of the warrants using the Monte Carlo Simulation as of December 31, 2015 and the Binomial Lattice options pricing model as of December 31, 2014, using the following assumptions:
**There are no liquidity events expected within the life of the outstanding warrants. |
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Schedule of derivative warrant issuances and balances outstanding | The following tables presents the Company’s derivative warrant issuances and balances outstanding during the years ended December 31, 2015 and 2014:
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Schedule of derivative warrants outstanding | The following information applies to derivative warrants outstanding at December 31, 2015:
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value on a recurring basis | The following table presents the Company’s asset and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2015 (in thousands):
The following table presents the Company’s asset and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2014 (in thousands):
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Schedule of fair value measurements of common stock warrants using significant unobservable inputs (Level 3) | The following table sets forth a summary of changes in the estimated fair value of the Company’s Level 3 derivative liability for the period from January 1, 2015 through December 31, 2015:
The following table sets forth a summary of changes in the estimated fair value of the Company’s Level 3 derivative liability for the period from January 1, 2014 through December 31, 2014:
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Schedule of fair value measurements of acquisition-related contingent consideration | The following table sets forth a summary of changes in the estimated business combination-related contingent consideration for the period from January 1, 2015 through December 31, 2015:
The following table sets forth a summary of changes in the estimated acquisition-related contingent consideration for the period from January 1, 2014 through December 31, 2014:
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INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amortizable intangible assets | Amortizable intangible assets as of December 31, 2015 (in thousands):
Amortizable intangible assets as of December 31, 2014 (in thousands):
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Schedule of amortization expense for the next 5 years | The following table summarizes amortization expense for the twelve months ended December 31, 2015, 2014 and 2013 (in thousands):
As of December 31, 2015, amortization expense for the next five years is expected to be as follows (in thousands):
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ACCRUED EXPENSES (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expenses | Accrued expenses consist of the following at December 31, 2015 and 2014:
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NOTES PAYABLE (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net carrying amount of debt | The net carrying amount of the Notes consists of the following (in thousands):
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Schedule of fair value of warrants | The Company calculated the fair value of the warrants using the Binomial Lattice pricing model using the following assumptions as of the grant date of the Warrants:
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COMMITMENTS AND CONTINGENCIES (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of principal contractual commitments, excluding open orders | The following table summarizes our principal contractual commitments, excluding open orders that support normal operations, as of December 31, 2015 (in thousands):
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STOCKHOLDERS’ EQUITY / DEFICIT (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions used in Black-Scholes options pricing model | The following weighted average assumptions were used in the Black-Scholes options pricing model to estimate the fair value of stock options for the specified reporting periods:
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Schedule of stock option activity | The following table summarizes our stock option activity and related information for the year ended December 31, 2015:
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Schedule of share based compensation expenses | Total non-cash stock-based compensation expense consisted of the following for the years ended December 31, 2015 and 2014 (in thousands):
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Schedule of unvested restricted shares | Unvested restricted shares consist of the following as of December 31, 2015:
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EARNINGS (LOSS) PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of basic and diluted net loss per share | Basic and diluted net EPS is calculated as follows (net income amounts are stated in thousands):
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Schedule of common stock options, convertible debt and restricted stock units anti-dilutive | For the years ended December 31, 2015, 2014 and 2013, the following shares were excluded because they were anti-dilutive:
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net income before incomes taxes | For financial reporting purposes, net income before income taxes includes the following components (in thousands):
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Schedule of income tax provision | The components of the provision (benefit) for income taxes, in the consolidated statement of operations are as follows (in thousands):
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Schedule of reconciliation of the statutory federal income tax expense (benefit) | The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate expressed as a percentage of income (loss) before income taxes:
|
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Schedule of deferred tax assets and liabilities | The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows (in thousands):
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Schedule of unrecognized tax benefits | A reconciliation of the Company's unrecognized tax benefits for the years 2015 and 2014 is provided in the following table (in thousands):
|
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consolidated Statements of Operations data for each quarter | The following table presents selected Consolidated Statements of Operations data for each quarter for the fiscal year ended December 31, 2015 and 2014.
|
DESCRIPTION OF BUSINESS (Details) - USD ($) |
1 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 24, 2015 |
Mar. 31, 2015 |
Jan. 31, 2014 |
Aug. 31, 2013 |
Feb. 28, 2013 |
Jan. 31, 2013 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Subsidiary, Sale of Stock [Line Items] | |||||||||
Price per common share (in dollars per share) | $ 19.00 | $ 8.50 | $ 4.50 | $ 3.00 | $ 3.00 | ||||
Net proceeds from the offering | $ 149,487,000 | $ 40,000,000 | $ 30,937,000 | ||||||
Underwriting fees and other offering costs | $ 9,000,000 | $ 3,200,000 | $ 2,800,000 | $ 900,000 | $ 0 | ||||
Common Stock | Public Offering | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of common stock issued | 7,866,000 | ||||||||
Price per common share (in dollars per share) | $ 19.00 | ||||||||
Net proceeds from the offering | $ 140,000,000 | ||||||||
Underwriting fees and other offering costs | $ 9,500,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Vesting Awards (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Stock Options | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period (in years) | 1 year |
Stock Options | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period (in years) | 3 years |
Restricted Stock Units | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period (in years) | 1 year |
Restricted Stock Units | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period (in years) | 3 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory, Net of Reserve (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounting Policies [Abstract] | ||
Raw material | $ 289 | $ 315 |
Finished goods | 2,247 | 486 |
Total inventory | $ 2,536 | $ 801 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Use life (in years) | 3 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Use life (in years) | 7 years |
MARKETABLE SECURITIES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Schedule of Available-for-sale Securities [Line Items] | |||
Marketable securities | $ 191,799 | $ 9,556 | |
Realized gain (loss) on marketable securities | (293) | 2,349 | $ 374 |
Proceeds from the sale/maturity of marketable securities | 9,977 | 6,493 | $ 4,385 |
Reclassification out of OCI | 300 | ||
Common Stock | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Marketable securities | 0 | 9,556 | |
Commercial paper | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Marketable securities | 31,864 | 0 | |
Corporate debt securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Marketable securities | 125,547 | 0 | |
Securities of government sponsored entities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Marketable securities | $ 34,388 | $ 0 |
FAIR VALUE MEASUREMENTS - Acquisition Related Contingent Consideration (Details) - Recurring basis - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Business Combination, Acquisition Related Contingent Consideration [Roll Forward] | ||
Balance, beginning | $ 11,637 | |
Balance, ending | 59,021 | $ 11,637 |
Significant unobservable inputs (Level 3) | ||
Business Combination, Acquisition Related Contingent Consideration [Roll Forward] | ||
Balance, beginning | 11,637 | 0 |
Present value of contingent consideration related to Chenodal/Manchester acquisition, upon acquisition | 39,107 | 12,800 |
Increase from revaluation of contingent consideration | 13,778 | |
Decrease of contingent consideration, asset divestiture | (604) | |
Contractual Payments | (3,938) | (1,163) |
Contractual Payments accrued at December 31, 2015 | (959) | |
Balance, ending | $ 59,021 | $ 11,637 |
INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 13,231 | $ 5,278 | $ 324 |
Research and development expenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 697 | 823 | 324 |
Selling, general and administrative expenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 12,534 | $ 4,455 | $ 0 |
INTANGIBLE ASSETS - Amortization Expense Next Five Years (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2016 | $ 15,517 | |
2017 | 15,474 | |
2018 | 15,474 | |
2019 | 15,474 | |
2020 | 15,476 | |
Thereafter | 84,121 | |
Net Book Value | $ 161,536 | $ 94,265 |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Payables and Accruals [Abstract] | ||
Compensation related costs | $ 7,143 | $ 8,163 |
Severance related costs | 315 | 5,710 |
Research and development | 4,281 | 3,720 |
License fee | 0 | 3,000 |
Legal fees | 882 | 1,208 |
Interest | 259 | 2,318 |
Government rebate reserves | 3,158 | 1,353 |
Selling, general and administrative | 2,703 | 2,411 |
Royalty/contingent consideration | 4,688 | 0 |
Miscellaneous | 391 | 0 |
Total accrued expenses | $ 23,820 | $ 27,883 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Feb. 13, 2015 |
Jan. 09, 2015 |
Dec. 31, 2015 |
Dec. 31, 2013 |
Jun. 30, 2013 |
|
Related Party Transaction [Line Items] | |||||
Series of agreements to settle | $ 2,300 | ||||
Amount paid at time of filing | $ 2,300 | ||||
Cash consideration | 2,200 | ||||
Shares issued on behalf of related party | $ 81 | ||||
Shares issued for investments (in shares) | 47,128 | ||||
Principal amount | $ 2,300 | ||||
Interest rate percentage | 5.00% | ||||
Impact related to divestitures | $ 900 | ||||
Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Shares issued on behalf of related party (in shares) | 11,000 | ||||
Turing Pharmaceuticals | Purchase Agreement | |||||
Related Party Transaction [Line Items] | |||||
Purchase price | $ 1,100 | $ 1,000 | |||
Manchester Pharmaceuticals LLC | Turing Pharmaceuticals | Purchase Agreement | |||||
Related Party Transaction [Line Items] | |||||
Purchase price | 300 | ||||
Manchester Pharmaceuticals LLC | Waldun Pharmaceuticals, LLC | Purchase Agreement | |||||
Related Party Transaction [Line Items] | |||||
Purchase price | $ 700 |
NOTES PAYABLE (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
May. 29, 2014 |
Jun. 30, 2013 |
|
Debt Instrument [Line Items] | ||||||
Interest rate percentage | 5.00% | |||||
Finance expense as other expense related to issuance | $ 600 | $ 4,721 | $ 0 | |||
Convertible debt (in shares) | 0 | 0 | ||||
Convertible Debt | Note Purchase Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Credit agreement amount | $ 46,000 | |||||
Initial conversion price (in dollars per share) | $ 17.41 | |||||
Interest rate percentage | 4.50% | |||||
Aggregate carrying value | $ 43,000 | |||||
Debt discount | $ 3,000 | |||||
Number of shares issued to investors | 401,047 | |||||
Finance expense as other expense related to issuance | $ 4,700 | |||||
Fair value of common stock (in dollars per share) | $ 19.29 | |||||
Convertible debt (in shares) | 2,642,160 | |||||
If-converted value in excess of carrying amount | $ 7,100 |
NOTES PAYABLE - Schedule of Carrying Amount of Debt (Details) - Convertible Debt - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Debt Instrument [Line Items] | ||
Aggregate principle amount of Notes | $ 46,000 | $ 46,000 |
Unamortized debt discount | (2,098) | (2,712) |
Net carrying amount | $ 43,902 | $ 43,288 |
NOTES PAYABLE - Fair Value of Warrants (Details) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Debt Instrument [Line Items] | ||
Expected volatility | 85.00% | |
Expected life (in years), represents the weighted average period until next liquidity event | 3 months 29 days | |
Expected dividend yield | 0.00% | 0.00% |
Note Payable With Detachable Warrants | ||
Debt Instrument [Line Items] | ||
Risk free rate | 1.62% | |
Expected volatility | 85.00% | |
Expected life (in years), represents the weighted average period until next liquidity event | 4 months 10 days | |
Expected dividend yield | 0.00% | |
Exercise Price (in dollars per share) | $ 12.76 |
NOTES PAYABLE - Notes Payable, Manchester Pharmaceuticals LLC (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Jun. 26, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
Mar. 26, 2014 |
|
Debt Instrument [Line Items] | |||||
Interest expense | $ 7,700,000 | $ 7,400,000 | $ 0 | ||
Note payable | |||||
Debt Instrument [Line Items] | |||||
Credit agreement amount | $ 33,000,000 | ||||
Present value of debt instrument | $ 31,300,000 | ||||
Effective interest rate percentage | 11.00% | ||||
Loan payment | $ 11,000,000 | ||||
Interest expense | $ 1,700,000 |
COMMITMENTS AND CONTINGENCIES - Leases and Sublease Agreements (Details) - Leases and Sublease Agreements - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 30, 2015 |
Sep. 08, 2014 |
Jul. 31, 2014 |
Dec. 31, 2014 |
|
San Diego, California | ||||
Other Commitments [Line Items] | ||||
Annual base rent | $ 540,000 | |||
Loss on exiting lease | $ 170,811 | |||
Cambridge, Massachusetts | ||||
Other Commitments [Line Items] | ||||
Annual base rent | $ 815,000 | |||
New York, New York | ||||
Other Commitments [Line Items] | ||||
Annual base rent | $ 550,000 |
COMMITMENTS AND CONTINGENCIES - Contractual Commitments (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Operating leases | |
Total | $ 2,671 |
Less than 1 year | 1,026 |
1-3 years | 1,645 |
3-5 years | 0 |
More than 5 years | 0 |
Purchase order commitments | |
Purchase order commitments | 596 |
Less than 1 year | 258 |
1-3 years | 338 |
3-5 years | 0 |
More than 5 years | 0 |
Total | |
Total | 65,031 |
Less than 1 year | 7,589 |
1-3 years | 8,358 |
3-5 years | 47,696 |
More than 5 years | 1,388 |
Note payable | |
Other Commitments | |
Total | 53,073 |
Less than 1 year | 2,070 |
1-3 years | 4,140 |
3-5 years | 46,863 |
More than 5 years | 0 |
Sales support services | |
Other Commitments | |
Total | 3,470 |
Less than 1 year | 312 |
1-3 years | 937 |
3-5 years | 833 |
More than 5 years | 1,388 |
Product supply contracts | |
Other Commitments | |
Total | 5,221 |
Less than 1 year | 3,923 |
1-3 years | 1,298 |
3-5 years | 0 |
More than 5 years | $ 0 |
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 19, 2014 |
Jun. 30, 2015 |
|
Questcor Pharmaceuticals, Inc. | ||
Other Commitments [Line Items] | ||
Settlement amount | $ 15,500 | |
Martin Shkreli | ||
Other Commitments [Line Items] | ||
Settlement amount | $ 2,025 | |
Martin Shkreli | Plaintiffs | ||
Other Commitments [Line Items] | ||
Settlement amount | $ 625 |
STOCKHOLDERS’ EQUITY / DEFICIT - Black Scholes Assumptions (Details) - Stock Options |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk free rate | 1.53% | 1.55% | 1.51% |
Expected volatility | 83.00% | 85.00% | 102.00% |
Expected life (in years) | 5 years 9 months 22 days | 5 years 9 months 22 days | 5 years 9 months 22 days |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
STOCKHOLDERS’ EQUITY / DEFICIT - Share Based Compensation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total | $ 25,900 | $ 15,900 | $ 2,910 |
Selling, general and administrative expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total | 16,483 | 10,940 | 2,651 |
Research and development expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total | $ 9,417 | $ 4,960 | $ 259 |
STOCKHOLDERS’ EQUITY / DEFICIT - Unvested Restricted Stock (Details) - Restricted shares |
12 Months Ended |
---|---|
Dec. 31, 2015
$ / shares
shares
| |
Number of shares | |
Unvested beginning balance (in shares) | shares | 691,668 |
Granted (in shares) | shares | 273,000 |
Vested (in shares) | shares | (478,334) |
Forfeited/cancelled (in shares) | shares | (56,668) |
Unvested ending balance (in shares) | shares | 429,666 |
Weighted Average Grant Date Fair Value | |
Unvested beginning balance (in dollars per share) | $ / shares | $ 10.83 |
Granted (in dollars per share) | $ / shares | 26.97 |
Vested (in dollars per share) | $ / shares | 11.56 |
Forfeited/cancelled (in dollars per share) | $ / shares | 13.97 |
Unvested ending balance (in dollars per share) | $ / shares | $ 20.38 |
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Shares | |||||||||||
Basic Earnings per Share (in shares) | 33,560,249 | 25,057,509 | 14,205,264 | ||||||||
Convertible Debt (in shares) | 0 | 0 | |||||||||
Dilutive Earnings per Share (in shares) | 37,581,439 | 25,057,509 | 14,205,264 | ||||||||
Net Income | |||||||||||
Net loss | $ (2,469) | $ 105,578 | $ (25,527) | $ 39,655 | $ (29,027) | $ (17,980) | $ 11,805 | $ (75,736) | $ 117,237 | $ (110,938) | $ (34,625) |
Convertible Debt | 1,881 | 0 | 0 | ||||||||
Dilutive Earnings per Share | $ 119,118 | $ (110,938) | $ (34,625) | ||||||||
Basic Earnings per Share, EPS (in dollars per shares) | $ (0.07) | $ 2.95 | $ (0.73) | $ 1.46 | $ (1.10) | $ (0.67) | $ 0.46 | $ (3.25) | $ 3.49 | $ (4.43) | $ (2.44) |
Dilutive Earnings per Share, EPS (in dollars per shares) | $ (0.14) | $ 1.78 | $ (0.73) | $ 1.32 | $ (1.10) | $ (0.84) | $ (0.77) | $ (3.25) | $ 3.17 | $ (4.43) | $ (2.44) |
Restricted Stock | |||||||||||
Shares | |||||||||||
Dilutive securities (in shares) | 290,966 | 0 | 0 | ||||||||
Net Income | |||||||||||
Dilutive securities | $ 0 | $ 0 | $ 0 | ||||||||
Stock Options | |||||||||||
Shares | |||||||||||
Dilutive securities (in shares) | 1,088,064 | 0 | 0 | ||||||||
Net Income | |||||||||||
Dilutive securities | $ 0 | $ 0 | $ 0 |
EARNINGS (LOSS) PER SHARE - Antidilutive Securities (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive shares excluded from the calculation | 3,736,992 | 4,216,355 | 4,635,093 |
Restricted Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive shares excluded from the calculation | 22,069 | 0 | 0 |
Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive shares excluded from the calculation | 1,049,375 | 1,132,500 | 172,667 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive shares excluded from the calculation | 2,665,548 | 3,083,855 | 4,462,426 |
INCOME TAXES - Components of Net Income Before Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Operating Loss Carryforwards [Line Items] | |||||||||||
Income (loss) before provision for income taxes | $ (12,994) | $ 144,339 | $ (25,512) | $ (366) | $ (29,027) | $ (17,980) | $ 9,280 | $ (75,671) | $ 105,467 | $ (113,398) | $ (34,549) |
United States | |||||||||||
Operating Loss Carryforwards [Line Items] | |||||||||||
Income (loss) before provision for income taxes | 107,038 | (112,558) | (34,549) | ||||||||
Foreign | |||||||||||
Operating Loss Carryforwards [Line Items] | |||||||||||
Income (loss) before provision for income taxes | $ (1,571) | $ (840) | $ 0 |
INCOME TAXES - Components of Income Tax Expense(Benefit) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Current | |||||||||||
Federal | $ 2,094 | $ 0 | $ 0 | ||||||||
State | 1,709 | 0 | 0 | ||||||||
Total | 3,803 | 0 | 0 | ||||||||
Deferred | |||||||||||
Federal | (8,296) | (1,886) | (6,293) | ||||||||
State | (7,277) | (574) | (3,435) | ||||||||
Total | (15,573) | (2,460) | (9,728) | ||||||||
Change in valuation allowance | 0 | 0 | 9,804 | ||||||||
Total tax provision (benefit) | $ (10,525) | $ 38,761 | $ 15 | $ (40,021) | $ 0 | $ 0 | $ (2,525) | $ 65 | $ (11,770) | $ (2,460) | $ 76 |
INCOME TAXES - Reconciliation of Federal Income Tax Rate (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Statutory rate - federal | 35.00% | (35.00%) | (35.00%) |
State taxes, net of federal benefit | 1.53% | (6.77%) | (6.70%) |
Change in FV of derivative liability (warrants) | 10.89% | 7.40% | 10.46% |
Stock Based Compensation | 0.00% | 5.51% | 2.30% |
Bargain purchase gain | (16.04%) | ||
Other permanent differences | 3.68% | ||
Tax credits | (7.85%) | ||
Return to provision adjustments and other true-ups | (10.40%) | ||
Other | (0.79%) | 0.00% | 0.17% |
Change in valuation allowance | (27.02%) | 26.63% | 29.00% |
Income tax provision (benefit) | (11.00%) | (2.23%) | 0.23% |
INCOME TAXES - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Tax Assets: | ||
Net operating loss | $ 2,870 | $ 42,280 |
Contingent consideration | 21,575 | |
Other accrued expenses | 3,160 | |
Stock based compensation | 9,484 | |
Other | 0 | 1,427 |
Deferred tax assets | 37,089 | 43,707 |
Deferred Tax Liabilities: | ||
Intangible assets | (25,124) | (7,830) |
Deferred gain on installment sale | (29,095) | |
Tax basis depreciation less than book depreciation | (218) | |
Deferred tax liabilities | (54,437) | (7,830) |
Net deferred tax assets before valuation allowance | (17,348) | 35,877 |
Valuation allowance | (6,980) | (36,018) |
Total deferred tax liability | $ (24,328) | $ (141) |
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning Balance | $ 1,500 | $ 0 |
Increase in current period positions | 1,424 | 1,500 |
Increase in prior period positions | 400 | 0 |
Ending Balance | $ 3,324 | $ 1,500 |
INVESTIGATIONAL MATTERS (Details) |
6 Months Ended |
---|---|
Aug. 18, 2014
shares
| |
Common Stock | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Issuance of stock options to purchase shares (in shares) | 1,928,000 |
Restricted Stock | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Issuance of stock options to purchase shares (in shares) | 230,000 |
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ in Thousands |
Feb. 17, 2016 |
Feb. 02, 2016 |
Jan. 27, 2016 |
---|---|---|---|
Katten Munchin Rosenman, LLP | |||
Subsequent Event [Line Items] | |||
Damages sought | $ 3,000 | ||
MSMB Funds | |||
Subsequent Event [Line Items] | |||
Damages sought | $ 2,180 | ||
Interest of damages sought, percentage | 5.00% | ||
Pending | Kazanchyan v. Retrophin, Inc., Case No. 14-cv-8376 | |||
Subsequent Event [Line Items] | |||
Settlement amount | $ 3,000 |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net product sales | $ 30,447 | $ 28,005 | $ 24,068 | $ 17,372 | $ 14,085 | $ 8,348 | $ 5,742 | $ 28 | $ 99,892 | $ 28,203 | $ 0 |
Total operating expenses | 45,651 | 48,501 | 31,012 | 25,476 | 32,782 | 30,215 | 22,924 | 22,090 | 150,640 | 108,011 | 24,773 |
Operating loss | (15,204) | (20,496) | (6,944) | (8,104) | (18,697) | (21,867) | (17,182) | (22,062) | (50,748) | (79,808) | (24,773) |
Total other income (expense), net | 2,210 | 164,835 | (18,568) | 7,738 | (10,330) | 3,887 | 26,462 | (53,609) | (296) | 2,352 | 370 |
Income (loss) before provision for income taxes | (12,994) | 144,339 | (25,512) | (366) | (29,027) | (17,980) | 9,280 | (75,671) | 105,467 | (113,398) | (34,549) |
Income tax benefit(provision) | 10,525 | (38,761) | (15) | 40,021 | 0 | 0 | 2,525 | (65) | 11,770 | 2,460 | (76) |
Net income (loss) | $ (2,469) | $ 105,578 | $ (25,527) | $ 39,655 | $ (29,027) | $ (17,980) | $ 11,805 | $ (75,736) | $ 117,237 | $ (110,938) | $ (34,625) |
Per Share Data: | |||||||||||
Net loss per common share, basic (in dollars per shares) | $ (0.07) | $ 2.95 | $ (0.73) | $ 1.46 | $ (1.10) | $ (0.67) | $ 0.46 | $ (3.25) | $ 3.49 | $ (4.43) | $ (2.44) |
Net loss per common share, diluted (in dollars per shares) | $ (0.14) | $ 1.78 | $ (0.73) | $ 1.32 | $ (1.10) | $ (0.84) | $ (0.77) | $ (3.25) | $ 3.17 | $ (4.43) | $ (2.44) |
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