QUARTERLY 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 |
(State or other Jurisdiction of | (I.R.S. Employer Identification No.) | ||||
incorporation or organization) | |||||
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | ¨ | ☑ | ||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ||||||||||||
Emerging growth company |
June 30, 2019 (unaudited) | December 31, 2018 | |||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||||||||
Inventories | ||||||||||||||
Prepaid expenses and other receivables | ||||||||||||||
Total current assets | ||||||||||||||
Property, plant and equipment, net | ||||||||||||||
Intangible assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued expenses | ||||||||||||||
Deferred income | ||||||||||||||
Convertible | ||||||||||||||
Other current liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Convertible | ||||||||||||||
Revolver (face of $ | ||||||||||||||
2023 Term Loans, net of debt issuance costs (face of $ | ||||||||||||||
Deferred tax liability | ||||||||||||||
Other long term liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and Contingencies | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Total stockholders’ equity | ||||||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Revenue, net | $ | $ | $ | $ | ||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Cost of revenues | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Product development and research expenses | ||||||||||||||||||||||||||
Total costs and expenses | ||||||||||||||||||||||||||
Operating loss | ( | ( | ( | |||||||||||||||||||||||
Other (Expense) Income: | ||||||||||||||||||||||||||
Foreign currency exchange gain/ (loss) | ( | ( | ( | |||||||||||||||||||||||
Debt partial extinguishment of 2019 Notes | ( | ( | ( | |||||||||||||||||||||||
Interest and other expense, net | ( | ( | ( | ( | ||||||||||||||||||||||
Loss before income tax expense | ( | ( | ( | ( | ||||||||||||||||||||||
Income tax expense | ||||||||||||||||||||||||||
Net loss attributable to common shareholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Basic and diluted loss per share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||||||||||||
Basic and diluted shares |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive income loss, net of tax: | ||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | ||||||||||||||||||||||||
Other comprehensive income loss | ( | ( | ||||||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Additional | Accumulated Other | Total | ||||||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||||||||||||||||
Balance, December 31, 2018 (audited) | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Issuance of stock for vested restricted stock units | ( | — | — | — | ||||||||||||||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | — | ||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance, June 30, 2019 (unaudited) | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
Six months ended June 30, | ||||||||||||||
2019 | 2018 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Reconciliation of net loss to net cash (used in) provided by operating activities: | ||||||||||||||
Depreciation of fixed assets and leases | ||||||||||||||
Provision for bad debt | ||||||||||||||
Provision for write down of inventory | ( | |||||||||||||
Stock based compensation | ||||||||||||||
Amortization of debt costs and debt discount | ||||||||||||||
Amortization of intangible assets | ||||||||||||||
Non cash lease expense | ||||||||||||||
Foreign currency exchange loss | ||||||||||||||
Partial extinguishment of Convertible | ||||||||||||||
Loss on impairment of intangible assets | ||||||||||||||
Non cash interest expense | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Inventories | ( | ( | ||||||||||||
Prepaid expenses, other current receivables and assets | ||||||||||||||
Accounts payable and accrued expenses | ( | ( | ||||||||||||
Operating liabilities | ( | |||||||||||||
Deferred income | ( | |||||||||||||
Net cash used in operating activities | ( | ( | ||||||||||||
Cash flows from investing activities: | ||||||||||||||
Capital expenditures | ( | ( | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from exercise of common stock options | ||||||||||||||
Proceeds from Revolver | ||||||||||||||
Proceeds from 2021 Term Loan | ||||||||||||||
Debt issuance costs | ( | ( | ||||||||||||
Repurchase of | ( | |||||||||||||
Principal paid on lease obligation | ( | |||||||||||||
Net cash provided by financing activities | ||||||||||||||
Effect of exchange rate on cash and cash equivalents | ( | ( | ||||||||||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | ||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||||||||
Supplemental Cash flow information: | ||||||||||||||
Cash payments for interest | $ | $ | ||||||||||||
Cash payments for income taxes | ||||||||||||||
Non-cash operating, investing and financing transactions: | ||||||||||||||
Acquisition of capital expenditures in accounts payable and accrued expenses | ||||||||||||||
Capitalized interest in capital expenditures | ||||||||||||||
Capitalized stock compensation in capital expenditures |
June 30, 2019 | June 30, 2018 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Restricted cash in other assets | |||||||||||
Cash, cash equivalents and restricted cash in the statement of cash flows | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
Basic loss per share computation: | |||||||||||||||||||||||
Net loss - basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average common shares - basic and diluted | |||||||||||||||||||||||
Basic and diluted loss per share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
Company product sales | $ | $ | $ | $ | |||||||||||||||||||
Contract manufacturing sales | |||||||||||||||||||||||
Research and development services and other income | $ | $ | |||||||||||||||||||||
Revenue, net | $ | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
Company Product Sales | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||
Topical | $ | $ | $ | $ | ||||||||||||||||||||||
Injectables | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
Gross product sales | $ | $ | $ | $ | |||||||||||||||||||
Deduction to gross product sales: | |||||||||||||||||||||||
Chargebacks and billbacks | |||||||||||||||||||||||
Wholesaler fees for service | |||||||||||||||||||||||
Sales discounts and other allowances | |||||||||||||||||||||||
Total reduction to gross product sales | $ | $ | $ | $ | |||||||||||||||||||
Company product sales, net | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||
Raw materials | $ | $ | |||||||||
Work in progress | |||||||||||
Finished goods | |||||||||||
Inventories reserve | ( | ( | |||||||||
Inventories, net | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||
Land | $ | $ | |||||||||
Building and improvements | |||||||||||
Machinery and equipment | |||||||||||
Computer hardware and software | |||||||||||
Furniture and fixtures | |||||||||||
Construction in progress | |||||||||||
Less accumulated depreciation and amortization | ( | ( | |||||||||
Property, plant and equipment, net | $ | $ |
Three months ended June 30, 2019 | Six months ended June 30, 2019 | ||||||||||
Operating lease cost | $ | $ | |||||||||
Finance lease cost: | |||||||||||
Amortization of right-of-use assets | $ | $ | |||||||||
Interest on lease liabilities | $ | $ | |||||||||
Total finance lease cost | $ | $ | |||||||||
June 30, 2019 | |||||
Operating Leases | |||||
Other assets | $ | ||||
Other current liabilities | |||||
Other long-term liabilities | |||||
Total operating lease liabilities | |||||
Finance Leases | |||||
Property, plant, and equipment | |||||
Accumulated depreciation | ( | ||||
Property, plant, and equipment, net | |||||
Other current liabilities | |||||
Other long-term liabilities | |||||
Total finance lease liabilities | $ |
Operating | Financing | |||||||
Year Ending December 31, | Leases | Leases | ||||||
2019 (excluding the six months ended June 30, 2019) | $ | $ | ||||||
2020 | ||||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
Thereafter | ||||||||
Total lease payments | ||||||||
Less imputed interest | ||||||||
Total | $ | $ |
Commitments | |||||
2019 | $ | ||||
2020 | |||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
$ |
June 30, 2019 | December 31, 2018 | ||||||||||
Face amount of the 2019 Notes (due December 2019) | $ | $ | |||||||||
Less unamortized discounts and debt issuance costs | ( | ( | |||||||||
Total net carrying value | $ | $ | |||||||||
June 30, 2019 | December 31, 2018 | ||||||||||
Face amount of the 2023 Notes (due May 2023) | $ | $ | |||||||||
Face amount of the Revolver Credit Facility (due December 2022) | |||||||||||
Face amount of the 2023 Loan (due February 2023) | |||||||||||
Total carrying value, non-current | |||||||||||
Less unamortized discounts and debt issuance costs | ( | ( | |||||||||
Total net carrying value, non-current | $ | $ |
Goodwill | |||||
Goodwill balance at December 31, 2017 | $ | ||||
Foreign currency translation | ( | ||||
Goodwill balance at December 31, 2018 | $ | ||||
Foreign currency translation | |||||
Goodwill balance at June 30, 2019 | $ |
June 30, 2019 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Amortization Period (Years) | ||||||||||||||||||||
Trademarks and Technology | $ | $ | ( | $ | |||||||||||||||||||
Product acquisition costs | — | N/A- See description below | |||||||||||||||||||||
In process research and development ("IPR&D") | — | N/A- See description below | |||||||||||||||||||||
Customer relationships | ( | ||||||||||||||||||||||
Total | $ | $ | ( | $ |
December 31, 2018 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Amortization Period (Years) | ||||||||||||||||||||
Trademarks and Technology | $ | $ | ( | $ | |||||||||||||||||||
Product acquisition costs | — | N/A- See description below | |||||||||||||||||||||
In-process research and development ("IPR&D") | — | N/A- See description below | |||||||||||||||||||||
Customer relationships | ( | ||||||||||||||||||||||
Total | $ | $ | ( | $ |
Intangibles Category | Amortizable Life | ||||
Product Acquisition Costs | |||||
Trademarks and Technology | |||||
Customer Relationships |
Six Months Ended June 30, | |||||||||||
Assumptions | 2019 | 2018 | |||||||||
Expected dividends | |||||||||||
Risk-free rate | 1.68% - 2.47% | % | |||||||||
Expected volatility | 64.3% - 74.5% | 60.5% - 62.3% | |||||||||
Expected term (in years) | 3.2 - 3.3 years | 3.2 - 3.3 years |
Number of Options | Weighted Average Exercise Price | ||||||||||
Outstanding as of January 1, 2019 | $ | ||||||||||
Issued | |||||||||||
Exercised | |||||||||||
Forfeited | ( | ||||||||||
Expired | ( | ||||||||||
Outstanding as of June 30, 2019 | $ | ||||||||||
Exercisable as of June 30, 2019 | $ |
Stock Options | Weighted Average | Weighted Average Remaining | |||||||||||||||
Range of Exercise Prices | Outstanding | Exercise Price | Contractual Life | ||||||||||||||
$0.00 - $0.78 | $ | ||||||||||||||||
$0.79 - $1.50 | |||||||||||||||||
$1.51 - $5.50 | |||||||||||||||||
$5.51 - $10.67 | |||||||||||||||||
Total | $ |
Range of Exercise Prices | Stock Options Exercisable | Weighted Average Exercise Price | ||||||||||||
$0.79 - $1.50 | $ | |||||||||||||
$1.51 - $5.50 | ||||||||||||||
$5.51 - $10.67 | ||||||||||||||
Total | $ |
Number of RSUs | Weighted Average Grant Date Fair Value | |||||||||||||
Non-vested balance at January 1, 2019 | $ | |||||||||||||
Changes during the period: | ||||||||||||||
Shares granted | ||||||||||||||
Shares vested | ( | |||||||||||||
Shares forfeited | ( | |||||||||||||
Non-vested balance at June 30, 2019 | $ |
June 30, 2019 | December 31, 2018 | ||||||||||
Professional fees | $ | $ | |||||||||
Payroll | |||||||||||
Interest expense | |||||||||||
Medicaid and Medicare rebates | |||||||||||
Wholesaler fees | |||||||||||
Royalties | |||||||||||
Clinical studies | |||||||||||
Rebates | |||||||||||
Inventory and Supplies | |||||||||||
Capital expenditures | |||||||||||
Income Tax | |||||||||||
Other | |||||||||||
$ | $ | ||||||||||
Three months ended June 30, | Increase/(Decrease) | |||||||||||||||||||||||||
Components of Revenue: | 2019 | 2018 | $ | % | ||||||||||||||||||||||
Product sales, net | $ | 18,256 | $ | 16,127 | $ | 2,129 | 13 | % | ||||||||||||||||||
Research and development services and other income | 85 | 122 | (37) | (30) | % | |||||||||||||||||||||
Total Revenues | $ | 18,341 | $ | 16,249 | $ | 2,092 | 13 | % |
Three months ended June 30, | Increase/(Decrease) | |||||||||||||||||||||||||
2019 | 2018 | $ | % | |||||||||||||||||||||||
Cost of revenues | $ | 9,800 | $ | 11,465 | $ | (1,665) | (15) | % | ||||||||||||||||||
Selling, general and administrative expenses | 5,187 | 5,727 | (540) | (9) | % | |||||||||||||||||||||
Product development and research expenses | 2,668 | 3,967 | (1,299) | (33) | % | |||||||||||||||||||||
Totals costs and expenditures | $ | 17,655 | $ | 21,159 | $ | (3,504) | (17) | % |
Three months ended June 30, | (Increase)/Decrease | |||||||||||||||||||||||||
2019 | 2018 | $ | % | |||||||||||||||||||||||
Interest and other expense, net | $ | (5,155) | $ | (2,499) | $ | (2,656) | (106) | % | ||||||||||||||||||
Foreign currency exchange gain / (loss) | 553 | (3,220) | 3,773 | (117) | % | |||||||||||||||||||||
Debt partial extinguishment of 2019 Notes | — | (2,467) | 2,467 | — | % | |||||||||||||||||||||
$ | (4,602) | $ | (8,186) | $ | 3,584 | (44) | % |
Three months ended June 30, | Increase/(Decrease) | ||||||||||||||||||||||
2019 | 2018 | $ | % | ||||||||||||||||||||
Net loss attributable to common stockholders | $ | (3,989) | $ | (13,119) | $ | (9,130) | (70) | % | |||||||||||||||
Basic and diluted loss per share | $ | (0.08) | $ | (0.25) | $ | (0.17) | 68 | % |
Six months ended June 30, 2019 | Increase/(Decrease) | |||||||||||||||||||||||||
Components of Revenue: | 2019 | 2018 | $ | % | ||||||||||||||||||||||
Product sales, net | $ | 31,293 | $ | 30,661 | $ | 632 | 2 | % | ||||||||||||||||||
Research and development services and other income | 170 | 133 | 37 | 28 | % | |||||||||||||||||||||
Total Revenues | $ | 31,463 | $ | 30,794 | $ | 669 | 2 | % |
Six months ended June 30, 2019 | Increase/(Decrease) | |||||||||||||||||||||||||
2019 | 2018 | $ | % | |||||||||||||||||||||||
Cost of revenues | $ | 17,160 | $ | 20,790 | $ | (3,630) | (17) | % | ||||||||||||||||||
Selling, general and administrative expenses | 10,700 | 11,087 | (387) | (3) | % | |||||||||||||||||||||
Product development and research expenses | 5,657 | 7,358 | (1,701) | (23) | % | |||||||||||||||||||||
Totals costs and expenditures | $ | 33,517 | $ | 39,235 | $ | (5,718) | (15) | % |
Six months ended June 30, 2019 | (Increase)/Decrease | |||||||||||||||||||||||||
2019 | 2018 | $ | % | |||||||||||||||||||||||
Interest and other expense, net | $ | (10,102) | $ | (5,071) | $ | (5,031) | 99 | % | ||||||||||||||||||
Foreign currency exchange loss | (291) | (1,895) | 1,604 | (85) | % | |||||||||||||||||||||
Debt partial extinguishment of 2019 Notes | (185) | (2,467) | 2,282 | (93) | % | |||||||||||||||||||||
$ | (10,578) | $ | (9,433) | $ | (1,145) | 12 | % |
Six months ended June 30, | Increase/(Decrease) | ||||||||||||||||||||||
2019 | 2018 | $ | % | ||||||||||||||||||||
Net loss attributable to common stockholders | $ | (12,713) | $ | (17,921) | $ | (5,208) | (29) | % | |||||||||||||||
Basic and diluted loss per share | $ | (0.24) | $ | (0.34) | $ | (0.10) | (29) | % |
Six months ended June 30, | |||||||||||
2019 | 2018 | ||||||||||
Net cash provided by (used in) | |||||||||||
Operating Activities | $ | (10,288) | $ | (12,510) | |||||||
Investing Activities | $ | (5,101) | $ | (12,523) | |||||||
Financing Activities | $ | 7,199 | $ | 12,555 |
Exhibit Number | Description | |||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101* | The following financial information from this Quarterly Report on Form 10-Q for the period ended June 30, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statement of Comprehensive Income(Loss); (v) the Condensed Consolidated Statement of Equity; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. |
Exhibit Number | Description | |||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101* | The following financial information from this Quarterly Report on Form 10-Q for the period ended June 30, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statement of Comprehensive Income(Loss); (v) the Condensed Consolidated Statement of Equity; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. |
/s/ Jason Grenfell-Gardner | |||||
Jason Grenfell Gardner | |||||
President and Chief Executive Officer |
/s/ Damian Finio | |||||
Damian Finio | |||||
Chief Financial Officer |
/s/ Jason Grenfell-Gardner | |||||
Jason Grenfell Gardner | |||||
President and Chief Executive Officer |
/s/ Damian Finio | |||||
Damian Finio | |||||
Chief Financial Officer |
Cover Page - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Aug. 05, 2019 |
|
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-08568 | |
Entity Registrant Name | Teligent, Inc. | |
Entity Central Index Key | 0000352998 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 01-0355758 | |
Entity Address, Address Line One | 105 Lincoln Avenue | |
Entity Address, City or Town | Buena | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08310 | |
City Area Code | 856 | |
Local Phone Number | 697-1441 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 53,850,427 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Allowance for doubtful accounts | $ 2,689,000 | $ 2,636,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 53,850,427 | 53,774,221 |
Common stock, shares outstanding (in shares) | 53,850,427 | 53,774,221 |
Convertible Notes Payable | ||
Face amount of the Notes | $ 174,318,000 | $ 160,090,000 |
Senior Notes, due December 2019 | Convertible Notes Payable | ||
Stated interest rate | 4.75% | 4.75% |
Face amount of the Notes | $ 75,090,000 | $ 75,090,000 |
Senior Notes, due December 2019 | Convertible Notes Payable | ||
Stated interest rate | 3.75% | 3.75% |
Face amount of the Notes | $ 13,022,000 | $ 15,702,000 |
Revolving Credit Facility | Line of Credit | ||
Face amount of the Notes | 25,000,000 | 15,000,000 |
Term Loan | 2023 Term Loan | Line of Credit | ||
Face amount of the Notes | $ 74,228,000 | $ 70,000,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Revenues: | ||||
Revenue, net | $ 18,341 | $ 16,249 | $ 31,463 | $ 30,794 |
Costs and expenses: | ||||
Cost of revenues | 9,800 | 11,465 | 17,160 | 20,790 |
Selling, general and administrative expenses | 5,187 | 5,727 | 10,700 | 11,087 |
Product development and research expenses | 2,668 | 3,967 | 5,657 | 7,358 |
Total costs and expenses | 17,655 | 21,159 | 33,517 | 39,235 |
Operating loss | 686 | (4,910) | (2,054) | (8,441) |
Other (Expense) Income: | ||||
Foreign currency exchange gain/ (loss) | 553 | (3,220) | (291) | (1,895) |
Debt partial extinguishment of 2019 Notes | 0 | (2,467) | (185) | (2,467) |
Interest and other expense, net | (5,155) | (2,499) | (10,102) | (5,071) |
Loss before income tax expense | (3,916) | (13,096) | (12,632) | (17,874) |
Income tax expense | 73 | 23 | 81 | 47 |
Net loss attributable to common shareholders | $ (3,989) | $ (13,119) | $ (12,713) | $ (17,921) |
Basic and diluted loss per share (in dollars per share) | $ (0.08) | $ (0.25) | $ (0.24) | $ (0.34) |
Weighted average shares of common stock outstanding: | ||||
Basic and diluted shares (in shares) | 53,849,108 | 53,510,712 | 53,827,665 | 53,484,756 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (3,989) | $ (13,119) | $ (12,713) | $ (17,921) |
Other comprehensive income loss, net of tax: | ||||
Foreign currency translation adjustment | 148 | (28) | 295 | (332) |
Other comprehensive income loss | 148 | (28) | 295 | (332) |
Comprehensive loss | $ (3,841) | $ (13,147) | $ (12,418) | $ (18,253) |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2019 - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|
Balance at Dec. 31, 2018 | $ 18,421 | $ 557 | $ 116,864 | $ (96,350) | $ (2,650) |
Balance (in shares) at Dec. 31, 2018 | 53,774,221 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock based compensation expense | 700 | 700 | |||
Issuance of stock for vested restricted stock units | $ 1 | (1) | |||
Issuance of stock for vested restricted stock units (in shares) | 76,206 | ||||
Cumulative translation adjustment | 295 | 295 | |||
Net loss | (12,713) | (12,713) | |||
Balance (in shares) at Jun. 30, 2019 | 53,850,427 | ||||
Balance at Jun. 30, 2019 | $ 6,703 | $ 558 | $ 117,563 | $ (109,063) | $ (2,355) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) |
Jun. 30, 2019 |
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3.75% Senior Note | Senior Notes | |
Stated interest rate | 3.75% |
Nature of the Business and Liquidity |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business and Liquidity | Nature of the Business and Liquidity Nature of the Business Teligent, Inc. and its subsidiaries (collectively the “Company”), is a specialty generic pharmaceutical company. Our mission is to become a leader in the specialty generic pharmaceutical market in alternate dosage forms. Under our own label, we currently market and sell generic topical and generic and branded generic injectable pharmaceutical products in the United States and Canada. In the United States, we currently market 36 generic topical pharmaceutical products and four branded generic injectable pharmaceutical products. In Canada, we sell 32 generic and branded generic injectable products and medical devices. Generic pharmaceutical products are bioequivalent to their brand name counterparts. We also provide contract manufacturing services to the pharmaceutical, over the counter ("OTC"), and cosmetic markets. We operate our business under one reportable segment. Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TLGT.” Our principal executive office, laboratories and manufacturing facilities are located at 105 Lincoln Avenue, Buena, New Jersey. We have additional offices located in Iselin, New Jersey, Mississauga, Canada, and Tallinn, Estonia. Liquidity On December 13, 2018, the Company and Ares Management LLC entered into: (i) a First Lien Revolving Credit Agreement, by and among the Company, as the borrower, certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, and ACF Finco I LP, as administrative agent (the “Revolver Credit Agreement”) and (ii) a Second Lien Credit Agreement, by and among us, as the borrower, certain subsidiaries of ours, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent (the “Second Lien Credit Agreement” and, together with the Revolver Credit Agreement, the “Senior Credit Facilities”). The Senior Credit Facilities consist of (i) a $25.0 million senior revolving credit facility governed by the Revolver Credit Agreement (the “Revolver”); (ii) a $50.0 million second lien initial term loan (the “Initial Term Loan”); (iii) a $30.0 million second lien delayed draw term loan A (the “Delayed Draw Term Loan A”) and (iv) a $15.0 million second lien delayed draw term loan B (the “Delayed Draw Term Loan B” and the “Delayed Draw Term Loan A”, are hereto referred to as the “Delayed Draw Term Loans” and the Delayed Draw Term Loans together with the Initial Term Loan, hereto referred to as the “2023 Term Loans”). The Term Loans are governed by the Second Lien Credit Agreement. The Company's ability to borrow under the Revolver is subject to a “borrowing base” to be determined based upon eligible inventory, eligible equipment, eligible real estate and eligible receivables. As of June 30, 2019, the Company has an additional $25.0 million available on its 2023 Term Loans, as part of the credit facilities executed with Ares Capital Management, of which $15.0 million relates to funding earmarked to further increase manufacturing capacity in the newly expanded Buena manufacturing facility. The Senior Credit Facilities contain financial covenants consisting of a minimum revenue test, a minimum adjusted EBITDA test and a maximum total net leverage ratio. The minimum adjusted EBITDA test increases each quarter for the next five consecutive quarters. A material change in the Company’s results from operations compared to forecasted results could impact its ability to meet the financial covenants within the next 12 month period. The Company's capital resources were comprised of cash and cash equivalents of $4.1 million and $9.7 million as of June 30, 2019 and December 31, 2018, respectively. The reduction in cash and cash equivalents during the six months ended June 30, 2019 was largely due to the additional year-to-date investment of $5.1 million for the new manufacturing facility located in Buena, New Jersey and the hiring and training of employees needed for the anticipated FDA prior approval inspection later this year. The negative cash flows from operating activities were primarily driven by the timing of collections from lower than typical revenues realized in the first quarter of 2019. The Company had an accumulated deficit of $109.1 million as of June 30, 2019, incurred a $12.7 million net loss and used $10.3 million in net cash from operating activities during the six months ended June 30, 2019. The Company has incurred losses and negative cash flows from operations in recent years. The Company's liquidity needs have typically arisen from the funding of our new manufacturing facility, product manufacturing costs, research and development programs and the launch of new products. In the past, we have met these cash requirements through cash inflows from operations, working capital management, and proceeds from borrowings such as our Convertible Senior Notes and credit facilities with Ares Capital Management discussed in Note 7. We expect to continue to incur significant expenditures for the development of new products in our pipeline, and the manufacturing and sales and marketing of our existing products. While we rely heavily on cash flows from operating activities and borrowings from outside sources to execute our operational strategy and meet our financial commitments and other short-term financial needs, we cannot be certain that sufficient capital will be generated through operations or will be available to the Company to the extent required and on acceptable terms over the next 12 months. In June 2019, the Company received a de-listing notice from the NASDAQ due to its share price being below $1 for 30 consecutive trading days. The Company believes that successful execution of its business plan will increase the share price above $1 for ten consecutive trading days, bringing the Company back into compliance with the NASDAQ share price requirements. If the share price does not increase for ten consecutive trading days within the 180 day period or until December 2, 2019, the Company can request an additional 180 day extension to achieve compliance with the share price requirement. If the share price still has not increased above $1 for ten consecutive trading days within that extended time period or if the extension request is denied, the Company has additional potential remedies. Notwithstanding these matters, the Company continues to evaluate various actions, including the following: •The Company is closely managing its recurring operating expenses and limiting its non-recurring operating expenses over the next twelve-month period. •The Company has the ability to delay capital projects until such time that its liquidity improves, or it receives funding from its outside sources. •The Company is nearing the end of its preparation for the FDA’s prior approval inspection of its injectable facility. Depending on the timing of the inspection and obtaining the FDA's approval, the Company intends to launch its first US manufactured injectable product before year end. •The Company's second-lien credit facility with Ares Capital Management provides the option to defer interest payments until December 13, 2020. •The Company continually receives and is willing to entertain unsolicited inbound interest to convert its tangible and intangible assets into cash via contract manufacturing, private label, outright sales and licensing agreements. •The Company was unable to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 with the SEC by the required filing date. The delayed filing suspended the Company's ability to offer up to $50.0 million in debt or equity securities through its existing shelf registration statement on file with the SEC for a period of twelve months. This period ends in December 2019, at which time the Company will again have the ability to utilize its shelf registration and to raise cash in the equity markets, if necessary. •The Company has a variety of options available for it to collaborate with unsecured bondholders interested in assisting the Company in maintaining the short-term liquidity needed to maintain ongoing operations.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the fiscal years ending December 31, 2019 and 2018. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Company’s Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on April 1, 2019. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have a material effect on the Company's financial condition, results of operations, or cash flows as previously reported. Principles of Consolidation The condensed consolidated financial statements include the accounts of Teligent, Inc. and its wholly owned and majority-owned subsidiaries. All inter-company accounts and transactions have been eliminated. The Company consolidated the following entities: Igen, Inc., Teligent Pharma. Inc., Teligent Luxembourg S.à.r.l., Teligent OÜ, Teligent Canada Inc., and Teligent Jersey Limited., in addition to the following inactive entities: Microburst Energy, Inc., Blood Cells, Inc. and Flavorsome, Ltd. Use of Estimates The preparation of financial statements in conformity with GAAP requires management 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 and the reported amounts of revenues and expenses during the reporting period. Significant estimates include sales returns and allowances, allowances for excess and obsolete inventories, allowances for doubtful accounts, provisions for income taxes and related valuation allowances, stock based compensation, the assessment for the impairment of long-lived assets (including intangibles, goodwill and property, plant and equipment) and legal accruals for environmental cleanup and remediation costs. Actual results could differ from those estimates. Cash Equivalents The Company considers all highly liquid instruments purchased with the original maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. Cash and cash equivalents include cash on hand and bank demand deposits used in the Company’s cash management program. The Company has restricted cash, consisting of escrow accounts and letter of credits, which is included within other assets, non-current on the Company's Condensed Consolidated Balance Sheet. In addition, pursuant to the Credit Facilities agreement, proceeds from the 2023 Term Loans are deposited in a blocked bank account and restricted for use with the exception of repurchasing remaining 2019 Notes. During the first quarter of 2019, the Company used a total of $2.7 million of restricted cash to repurchase a portion of the remaining 2019 Notes (Note 7). The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheet to the total amounts in the Condensed Consolidated Statement of Cash Flows as follows:
Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, trade receivables, restricted cash, accounts payable and other accrued liabilities at June 30, 2019 approximate their fair value for all periods presented. The Company measures fair value in accordance with ASC 820-10, “Fair Value Measurements and Disclosures”. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of June 30, 2019, based on level 2 inputs, the fair value of our Notes (2019 Notes and 2023 Notes) was approximately $52.0 million compared to their carrying value of $71.1 million. In addition, the value of our Senior Credit Facilities was stated at carrying value at June 30, 2019. The Company believes it could obtain borrowings at June 30, 2019 with comparable terms as the December 31, 2018 Senior Credit Facilities, therefore, the carrying value approximates fair value. Loss Per Common Share Basic loss per share of common stock is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted loss per share of common stock is computed using the weighted average number of shares of common stock and potential dilutive common stock equivalents outstanding during the period. Potential dilutive common stock equivalents include shares issuable upon the conversion of the notes and the exercise of options and warrants. For the three and six months ended June 30, 2019, the potential dilutive common stock equivalents have been excluded from the computation of diluted loss per share, as their effect would have been anti-dilutive. (in thousands except shares and per share data)
Concentration of Credit Risk Major customers of the Company are defined as those constituting greater than 10% of the Company's total revenue. For the three months ended June 30, 2019, two of the Company’s customers accounted for 53% of the Company’s revenue, consisting of 22% and 31%, respectively. For the three months ended June 30, 2018, two of the Company’s customers accounted for 49% of the Company’s revenue, consisting of 35% and 14%, respectively. For the six months ended June 30, 2019, two of the Company’s customers accounted for 50% of the Company’s revenue, consisting of 25% each respectively. For the six months ended June 30, 2018, two of the Company’s customers accounted for 48% of the Company’s revenue, consisting of 35% and 13%, respectively. Accounts receivable related to the Company’s major customers comprised 64% of all accounts receivable as of June 30, 2019, and 49% of all accounts receivable as of June 30, 2018. The loss of one or more of these major customers could have a significant impact on our revenues and harm our business and results of operations. For the three months ended June 30, 2019, domestic net revenues were $13.4 million and foreign net revenues were $4.9 million. For the six months ended June 30, 2019, domestic net revenues were $23.1 million and foreign net revenues were $8.4 million. As of June 30, 2019, domestic assets were $138.4 million and foreign assets were $56.7 million. For the three months ended June 30, 2018, domestic net revenues were $11.4 million and foreign net revenues were $4.9 million. For the six months ended June 30, 2018, domestic net revenues were $21.6 million and foreign net revenues were $9.2 million. As of June 30, 2018, domestic assets were $125.9 million and foreign assets were $60.9 million. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing lease guidance under Topic 840. The new standard requires lessees to recognize Right-of-Use ("ROU") assets and lease liabilities for all leases with terms greater than 12 months, including those leases that were previously classified as operating leases. Topic 842 retains a distinction between finance leases and operating leases, with measurement and presentation of expenses and cash flows being dependent upon the classification. The Company adopted the new standard effective January 1, 2019 utilizing the optional transition method allowed under ASU 2018-11, Leases (Topic 842): Targeted Improvements. See Note 6 for the Company's additional required disclosures under Topic 842. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. This guidance is effective for all entities for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The amendments in ASU 2018-02 should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company's adoption of this ASU, effective January 1, 2019, did not have a material impact on its condensed consolidated financial statements. Recently Issued Not Yet Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment”. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. For the Company, the amendments are effective January 1, 2020. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): “Clarifying the Interaction between Topic 808 and Topic 606”. The guidance clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer. For the Company, the amendment will be effective January 1, 2020. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
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Revenues, Recognition and Allowances |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues, Recognition and Allowances | Revenues, Recognition and Allowances Revenue Recognition The Company derives its revenues from three types of transactions: sales of its own pharmaceutical products (Company product sales), sales of manufactured product for its customers (contract manufacturing sales), and research and product development services performed for third parties. Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method based on historical experience as well as applicable information currently available. Company Product Sales Revenue from Company product sales is recognized upon transfer of control of a product to a customer at a point in time, generally as the Company's products are sold on an FOB destination basis and because inventory risk and risk of ownership passes to the customer upon delivery. Company product sales are recorded net of accruals for estimated chargebacks, rebates, cash discounts, other allowances, and returns. Contract Manufacturing Sales The Company recognizes revenue for contract manufacturing sales over-time, as milestones are achieved. Shipments are made in accordance with sales commitments and related sales orders entered into with customers either verbally or in written form. Contract manufacturing sales are recognized net of accruals for cash discounts which are established at the time of sale, and are included in Revenue, net in the Company's Condensed Consolidated Statement of Operations. Research and Development Services and Other Income The Company establishes agreed upon product development agreements with its customers to perform product development services. Revenues are recognized in accordance with the agreement upon the completion of the phases of development and when the Company has no future performance obligations relating to that phase of development. Other types of revenue include royalty or licensing revenue, and would be recognized over time, or at a point in time, based upon the contractual term upon completion of the earnings process. Judgments are required to evaluate contingencies such as potential variances in schedule and the costs, the impact of change orders, liability claims, contract disputes and achievement of contractual performance standards. Revenues by Transaction Type The Company operates in one reportable segment and, therefore, the results of the Company's operations are reported on a consolidated basis, consistent with internal management reporting for the chief decision maker. Net revenues for the three and six months ended June 30, 2019 and 2018 were as follows:
Disaggregated information for the Company product sales revenue has been recognized in the accompanying unaudited interim Condensed Consolidated Statements of Operations, and is presented below according to contract type:
In the six months ended June 30, 2019, the Company did not incur, and therefore did not defer, any material incremental costs to obtain contracts. Sales Returns and Allowances As is customary in the pharmaceutical industry, the Company’s product sales are subject to a variety of deductions including chargebacks, rebates, cash discounts, other allowances, and returns. Product sales are recorded net of accruals for returns and allowances, which are established at the time of sale. The Company analyzes the adequacy of its accruals for returns and allowances quarterly. Amounts accrued for sales deductions are adjusted when trends or significant events indicate that an adjustment is appropriate. Accruals are also adjusted to reflect actual results. These provisions are estimates based on historical payment experience, historical relationship to revenues, estimated customer inventory levels and current contract sales terms with direct and indirect customers. The Company uses a variety of methods to assess the adequacy of its returns and allowances reserves to ensure that its financial statements are fairly stated. These include periodic reviews of customer inventory data, customer contract programs, subsequent actual payment experience, and product pricing trends to analyze and validate the return and allowances reserves. The sales returns and allowances were $15.5 million and $18.1 million at June 30, 2019 and December 31, 2018 respectively. In addition, the allowance for doubtful accounts was $2.7 million and $2.6 million at June 30, 2019 and December 31, 2018, respectively. The allowance for doubtful accounts was primarily related to one specific customer in the amount of $1.7 million. Chargebacks are one of the Company's most significant estimates for recognition of product sales. A chargeback represents an amount payable in the future to a wholesaler for the difference between the invoice price paid to the Company by its wholesale customer for a particular product and the negotiated contract price that the wholesaler’s customer pays for that product. The Company’s chargeback provision and related reserve varies with changes in product mix, changes in customer pricing and changes to estimated wholesaler inventories. The provision for chargebacks also takes into account an estimate of the expected wholesaler sell-through levels to indirect customers at contract prices. The Company validates the chargeback accrual quarterly through a review of the inventory reports obtained from its largest wholesale customers. This customer inventory information is used to establish the estimated liability for future chargeback claims based on historical chargeback and contract rates. These large wholesalers represent a majority of the Company’s chargeback payments. The Company continually monitors current pricing trends and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated. Rebates are used for various discounts which can be programs or one-time events. The Company reviews the percentage of products sold through these programs by reviewing chargeback data and uses the appropriate percentages to calculate the rebate accrual. Rebates are invoiced monthly, quarterly or annually and reviewed against the accruals. Other items that could be included in accrued rebates would be price protection fees, shelf stock adjustments (SSAs), or other various amounts that would serve as one-time discounts on specific products. Consistent with its cash management strategy, the Company reduced the price paid by wholesalers (also referred to as the “WAC” or wholesaler acquisition cost) on several of its products in the second and third quarters of 2018. As a result, its gross product sales and related chargebacks and billbacks are reduced accordingly. The Company's adjustments for the deductions to gross product sales are as follows:
Financing and Payment The Company's payment terms vary by the type of the customer and the products or services offered. The term between invoicing and when payment is due is not significant. Generally, the Company does not incur incremental costs to obtain contracts. The Company does not adjust revenue for the effects of a significant financing component as the Company's customers generally pay within 100 days. Costs to Obtain or Fulfill a Customer Contract Costs related to shipping and handling are comprised of outbound freight and associated labor. The Company accounts for shipping and handling activities related to contracts with customers as fulfillment costs which are included in cost of sales in the Condensed Consolidated Statements of Operations. The Company is required to pay a 40% royalty on certain product net sales to a pharmaceutical partner. There are currently 4 products manufactured and distributed under the Company’s label in the U.S. which are subject to this agreement. Payments are made quarterly. Royalty expense of $0.3 million and $0.7 million was included in cost of sales in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2019 and 2018, respectively. Royalty expense of $0.6 million and $1.5 million was included in cost of sales in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2019 and 2018, respectively.
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Inventories | Inventories Inventories are valued at the lower of cost or net realizable value, using the first-in-first-out method and consist of the following:
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Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consists of the following:
The Company recorded depreciation expense of $0.9 million and $0.5 million for the three months ended June 30, 2019 and June 30, 2018, respectively. The Company recorded depreciation expense of $1.8 million and $1.1 million for the six months ended June 30, 2019 and June 30, 2018, respectively. There was no interest expense capitalized as construction in progress during the three and six months ended June 30, 2019. Interest expense of $1.5 million and $2.8 million during the three and six months ended June 30, 2018 respectively was capitalized as construction in progress. In addition, during the three months ended June 30, 2019 and June 30, 2018, there was $0.3 million and $0.7 million of payroll costs, respectively, capitalized as construction in progress. For the six months ended June 30, 2019 and June 30, 2018, there was $0.6 million and $1.1 million of payroll costs, respectively, capitalized as construction in progress.
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing lease guidance under Topic 840. The new standard requires lessees to recognize Right-of-Use ("ROU") assets and lease liabilities for all leases with terms greater than 12 months, including those leases that were previously classified as operating leases. Topic 842 retains a distinction between finance leases and operating leases, with measurement and presentation of expenses and cash flows being dependent upon the classification. The Company adopted the new standard on January 1, 2019 utilizing the optional transition method allowed under ASU 2018-11, Leases (Topic 842): Targeted Improvements. The Company elected to adopt the package of practical expedients allowed under the new accounting guidance, which allows the Company to not reassess previous conclusions regarding 1) whether existing or expired leases are or contain leases 2) the lease classification of existing or expired leases and 3) initial direct costs for existing leases. In addition, the Company adopted the practical expedient to combine lease and non-lease components for all classes of underlying assets. The Company reviewed its portfolio of lease agreements, and other service contracts to identify embedded leases, and reached conclusions on key accounting assessments related to the standard and finalized the related accounting policies. As a result of the implementation of the new standard, all leases with a term greater than 12 months previously classified as operating leases and only expensed through the Consolidated Statements of Operations are now recorded on the Consolidated Balance Sheets. Per the requirements of the standard, the Company has recorded a ROU asset and a lease liability representing the present value of future lease payments to be paid in exchange of the use of an asset of $1.9 million and $2.0 million respectively as of January 1, 2019. However, there was no cumulative effect adjustment to the opening balance of retained earnings as the assets and the liabilities recorded upon adoption off-set each other. We have operating and finance leases for our corporate, manufacturing and international facilities as well as certain equipment. Our leases have remaining terms of less than year to up to 10 years, including available options to extend some of our lease terms for up to 5 years. One of our lease agreements has an early termination option within one year. As the interest rates implicit in our leases are typically not readily determinable, the Company has elected to utilize an incremental borrowing rate as the discount rate, determined based on the expected term of the lease, the Company’s credit risk and existing borrowings. The discount rates utilized ranged from 4.86% to 8.60% and were utilized to determine the present value of the lease liabilities. The components of lease expense were as follows:
Right-of-use assets obtained in exchange for new operating lease liabilities were $1.0 million as of June 30, 2019. Cash paid for amounts included in the measurement of operating lease liabilities during the three and six months ended June 30, 2019 was $0.2 million and $0.3 million respectively. Cash paid for amounts included in the measurement of finance lease liabilities during the three and six months ended June 30, 2019 was not material. Supplemental balance sheet information related to leases were as follows:
The weighted average remaining lease terms for operating and financing leases are 6.6 years and 5.2 years, respectively. The weighted average discount rates for operating and finance leases are 8.2% and 8.0%, respectively. As of June 30, 2019 maturities of lease liabilities were as follows:
As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for operating leases having initial or remaining noncancellable lease terms in excess of one year would have been as follows:
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Leases | Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing lease guidance under Topic 840. The new standard requires lessees to recognize Right-of-Use ("ROU") assets and lease liabilities for all leases with terms greater than 12 months, including those leases that were previously classified as operating leases. Topic 842 retains a distinction between finance leases and operating leases, with measurement and presentation of expenses and cash flows being dependent upon the classification. The Company adopted the new standard on January 1, 2019 utilizing the optional transition method allowed under ASU 2018-11, Leases (Topic 842): Targeted Improvements. The Company elected to adopt the package of practical expedients allowed under the new accounting guidance, which allows the Company to not reassess previous conclusions regarding 1) whether existing or expired leases are or contain leases 2) the lease classification of existing or expired leases and 3) initial direct costs for existing leases. In addition, the Company adopted the practical expedient to combine lease and non-lease components for all classes of underlying assets. The Company reviewed its portfolio of lease agreements, and other service contracts to identify embedded leases, and reached conclusions on key accounting assessments related to the standard and finalized the related accounting policies. As a result of the implementation of the new standard, all leases with a term greater than 12 months previously classified as operating leases and only expensed through the Consolidated Statements of Operations are now recorded on the Consolidated Balance Sheets. Per the requirements of the standard, the Company has recorded a ROU asset and a lease liability representing the present value of future lease payments to be paid in exchange of the use of an asset of $1.9 million and $2.0 million respectively as of January 1, 2019. However, there was no cumulative effect adjustment to the opening balance of retained earnings as the assets and the liabilities recorded upon adoption off-set each other. We have operating and finance leases for our corporate, manufacturing and international facilities as well as certain equipment. Our leases have remaining terms of less than year to up to 10 years, including available options to extend some of our lease terms for up to 5 years. One of our lease agreements has an early termination option within one year. As the interest rates implicit in our leases are typically not readily determinable, the Company has elected to utilize an incremental borrowing rate as the discount rate, determined based on the expected term of the lease, the Company’s credit risk and existing borrowings. The discount rates utilized ranged from 4.86% to 8.60% and were utilized to determine the present value of the lease liabilities. The components of lease expense were as follows:
Right-of-use assets obtained in exchange for new operating lease liabilities were $1.0 million as of June 30, 2019. Cash paid for amounts included in the measurement of operating lease liabilities during the three and six months ended June 30, 2019 was $0.2 million and $0.3 million respectively. Cash paid for amounts included in the measurement of finance lease liabilities during the three and six months ended June 30, 2019 was not material. Supplemental balance sheet information related to leases were as follows:
The weighted average remaining lease terms for operating and financing leases are 6.6 years and 5.2 years, respectively. The weighted average discount rates for operating and finance leases are 8.2% and 8.0%, respectively. As of June 30, 2019 maturities of lease liabilities were as follows:
As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for operating leases having initial or remaining noncancellable lease terms in excess of one year would have been as follows:
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Debt |
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Debt | Debt Convertible Notes On December 16, 2014, the Company issued $125.0 million aggregate principal amount of Convertible 3.75% Senior Notes, due 2019 (the “2019 Notes”). On December 22, 2014, the Company announced the closing of the initial purchasers’ exercise in full of their option to purchase an additional $18.75 million aggregate principal amount of 2019 Notes. The 2019 Notes bear interest at a fixed rate of 3.75% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2015, and mature on December 15, 2019, unless earlier repurchased, redeemed or converted. The 2019 Notes are convertible into shares of the Company’s common stock, cash or a combination thereof. On May 20, 2015, the Company received shareholder approval for the increase in the number of shares of common stock authorized and available for issuance upon conversion of the 2019 Notes. On April 27, 2018, the Company entered into separate exchange agreements with certain holders of the 2019 Notes. The agreements gave the holders the right to exchange, in aggregate, $75.1 million of the 2019 Notes for $75.1 million of new Convertible 4.75% Senior Notes due 2023 (the “2023 Notes”). The new 2023 Notes bear a fixed interest rate of 4.75% per year, payable semi-annually with the principal payable in May 2023. At the option of the holders, the 2023 Notes are convertible into shares of the Company’s common stock, cash or a combination thereof. The initial conversion rate is $224.71 per share, subject to certain adjustments, related to either the Company's stock price volatility, or the Company's declaration of a stock dividend, stock distribution, share combination or share split expected dividends or other anti-dilutive activities. In addition, holders will be entitled to receive additional shares of common stock for a potential increase of the conversion rate up to $280.90 per share under a make-whole provision in some circumstances. The Company incurred loan issue costs of $1.6 million upon issuance of the 2023 Notes. In accordance with accounting for convertible debt within the cash conversion guidance of ASC 470-20, we allocated the principal amount of the 2023 Notes between its liability and equity components. The carrying amount of the liability component was determined by measuring the fair value of a similar debt instrument of similar credit quality and maturity that did not have the conversion feature. The carrying amount of the equity component, representing the embedded conversion option, was determined by deducting the fair value of the liability component from the principal amount of the 2023 Notes as a whole. The equity component was recorded to additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the 2023 Notes over the carrying amount of the liability component was recorded as a debt discount of $19.0 million and is being amortized to interest expense using the effective interest method through the maturity date. We allocated the total amount of transaction costs incurred to the liability and equity components using the same proportions as the proceeds from the 2023 Notes. Transaction costs attributable to the liability component were recorded as a direct deduction from the liability component of the 2023 Notes and are being amortized to interest expense using the effective interest method through the maturity date. Transaction costs attributable to the equity component were netted with the equity component of the 2023 Notes in additional paid-in capital. The effective interest rate of the 2023 Notes, inclusive of the debt discount and issuance costs, is 11.90%. The exchange of $75.1 million of the 2019 Notes for the 2023 Notes is considered an extinguishment under ASC 470-50. The 2019 Notes are accounted for under cash conversion guidance ASC 470-20, which requires the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component upon derecognition. In accordance with the aforementioned guidance, the Company recorded $2.5 million of non-cash interest expense as an extinguishment loss related to the 2019 Notes in the Condensed Consolidated Statement of Operations. In addition, the Company recorded a $7.6 million reduction of Additional Paid in Capital in connection with the extinguishment of $75.1 million of the 2019 Notes. In December 2018 the Company used $52.8 million of proceeds from the Senior Credit Facilities (see below) to repurchase the 2019 Notes as well as $0.3 million of proceeds to pay for transaction costs. The repurchase of the 2019 Notes is considered a debt extinguishment under ASC 470-50. The 2019 Notes are accounted for under cash conversion guidance ASC 470-20, which requires the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component upon derecognition. In accordance with the guidance above, the Company allocated a portion of the $52.8 million to the extinguishment of the liability component equal to the fair value of that component immediately before extinguishment and recognized a $1.7 million extinguishment loss in the Consolidated Statement of Operations to measure the difference between (i) the fair value of the liability component and (ii) the net carrying value amount of the liability component (which is net of any unamortized debt issuance costs). In addition, the Company recorded a $2.9 million reduction of Additional Paid in Capital in connection with the extinguishment of the 2019 Notes. During the quarter ended March 31, 2019, the Company used a total of $2.7 million of proceeds from the Senior Credit Facilities to repurchase a portion of the remaining 2019 Notes. The repurchase of the 2019 Notes is considered a debt extinguishment under ASC 470-50. The 2019 Notes are accounted for under cash conversion guidance ASC 470-20, which requires the Company to allocate the fair value of the consideration transferred upon settlement to the extinguishment of the liability component and the reacquisition of the equity component upon derecognition. In accordance with the guidance above, the Company allocated a portion of the $2.7 million to the extinguishment of the liability component equal to the fair value of that component immediately before extinguishment and recognized a $0.2 million extinguishment loss in the Consolidated Statement of Operations to measure the difference between (i) the fair value of the liability component and (ii) the net carrying value amount of the liability component (which is already net of any unamortized debt issuance costs). In addition, the reduction of Additional Paid in Capital in connection with this extinguishment was immaterial. Senior Credit Facilities The Company’s Senior Credit Facilities consist of a $25.0 million revolver (the "Revolver") and three term loans totaling $95.0 million (collectively the "2023 Term Loans") that it entered via an agreement with Ares Management LLC on December 13, 2018. The 2023 Term Loans consist of (i) a $50.0 million Initial Term Loan; (ii) a $30.0 million Delayed Draw Term Loan A; and (iii) a $15.0 million Delayed Draw Term Loan B. The Initial Term Loan matures on the earlier to occur of (a) three months prior to maturity of the 2023 Notes or (b) June 13, 2024. The Company extended commitments related to undrawn amounts of the Delayed Draw Term Loan A from June 30, 2019 to December 13, 2019, pursuant to an amendment the Company entered with Ares Management LLC on July 18, 2019. Drawn amounts under the Delayed Draw Term Loans mature at the same time as the Initial Term Loan. The Revolver matures on the earlier to occur of (a) six months prior to the maturity of the 2023 Notes or (b) December 13, 2023. The Company’s ability to borrow under the Revolver is subject to a borrowing base determined based upon eligible inventory, eligible equipment, eligible real estate and eligible receivables. The Senior Credit Facilities are secured by substantially all of the Company’s assets. All of the Company’s debt is subordinated to the Senior Credit Facilities. The 2023 Term Loans are subordinate to the Revolver. The Senior Credit Facilities have customary financial and non-financial covenants, including affirmative, negative and reporting covenants, representations and warranties, and events of default, including cross-defaults on other material indebtedness, as well as events of default triggered by a change of control and certain actions initiated by the FDA. The financial covenants consist of a minimum revenue test, a minimum adjusted EBITDA test and a maximum total net leverage ratio. The interest rate under the Revolver is calculated, at the option of the Company, at either the one, two, three or six-month London Inter-Bank Offered Rate (or LIBOR) plus 3.75% or the base rate plus 2.75%. The interest rate on the 2023 Term Loans is calculated, at the option of the Company, at either the one, two, three or six-month LIBOR plus 8.75% or the base rate plus 7.75%. Interest on the Senior Credit Facilities is payable in cash except that interest on the 2023 Term Loans is payable, at the option of the Company, in cash or in kind by being added to the principal balance thereof, until the earlier of December 13, 2020 and the date the Company has provided the lenders of the Senior Credit Facilities financial statements demonstrating that the Company has attained twelve months of revenue of at least $125.0 million. A commitment fee of 1.0% per annum is payable by the Company quarterly in arrears on the unused portion of the Delayed Draw Term Loans. Amounts drawn under the Revolver may be prepaid at the option of the Company without premium or penalty, subject, in the case of acceleration of the Revolver or termination of the revolving credit commitments thereunder, to certain call protections which vary depending on the time at which such prepayments are made. Amounts drawn under the Revolver are subject to mandatory prepayment to the extent that aggregate extensions under the Revolver exceed the lesser of the revolving credit commitment then in effect and the borrowing base then in effect, and upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain insurance proceeds and condemnation awards and issuances of certain debt obligations. Amounts outstanding under the 2023 Term Loans may be prepaid at the option of the Company subject to applicable premiums, including a make-whole premium, and certain call protections which vary depending on the time at which such prepayments are made. Subject to payment of outstanding obligations under the Revolver as a result of any corresponding mandatory prepayment requirements thereunder, amounts outstanding under the 2023 Term Loans are subject to mandatory prepayment upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain insurance proceeds and condemnation awards, issuances of certain debt obligations and a change of control transaction. In connection with the Revolver the Company incurred a debt discount of $0.5 million and debt issuance issue costs of $0.3 million. The debt discount relates to annual fees and lender fees paid on the initial drawdown of $15.0 million. The debt issuance costs and debt discount are recorded as an asset on the Consolidated Balance Sheet and are amortized to interest expense using the straight-line method through the estimated Revolver maturity date. The annual fees related to the Revolver and the Initial Term Loan are amortized to interest expense using the straight-line method over the annual period they relate to. In connection with the Initial Term Loan and Delayed Draw Term Loan A, the Company incurred a debt discount of $1.8 million and debt issuance issue costs of $0.8 million. The debt discount is due to lender fees paid on the Initial Term Loan of $50.0 million and drawdown of Delayed Draw Term Loan A of $20.0 million. The debt issuance costs and debt discount costs are amortized to interest expense using the effective interest rate method through the estimated maturity date. In addition, the Company incurred $0.5 million of debt issuance costs related to the commitment fees paid to the lenders for the undrawn amounts of the Delayed Draw Term Loans. These debt issuance costs are recorded as an asset on the balance sheet and amortized on a straight-line basis over the access period of the Delayed Draw Term Loans through June 30, 2019. As of December 31, 2018, the effective interest, inclusive of the debt discounts and issue costs, of the Revolver and Initial Term Loan and Delayed Draw Term Loan A is 9.3% and 12.4%, respectively. The Initial Term Loan of $50.0 million and $15.0 million of the Revolver were drawn by the Company on December 13, 2018. On December 21, 2018, the Company drew $20.0 million of the Delayed Draw Term Loan A. In January 2019, the Company drew $5.0 million and subsequently the remaining $5.0 million under the Revolver were drawn down by the Company in April 2019. As of June 30, 2019, the $10.0 million of the Delayed Draw Term Loan A, $15.0 million of the Delayed Draw Term Loan B remain available to the Company. The 2023 Term Loans include a 24-month paid-in-kind interest option available to the Company should it choose to defer cash payments in order to maintain the liquidity needed to continue launching new products, and preparing for an FDA prior approval inspection of its new injectable manufacturing facility. The Company has elected the paid-in-kind interest option and increased the principal balance of 2023 Term Loans by $2.2 million and $4.2 million for the three and six months periods ended June 30, 2019 respectively. The Ares Senior Credit Facilities require that the Company remains in compliance with certain financial performance covenants including a trailing-twelve-month minimum revenue through June 30, 2019, which then transitions to a trailing-twelve-month EBITDA from September 30, 2019 through September 30, 2020 which then finally transitions to a leverage ratio through expiration of the facility. Pursuant to the Ares Credit Agreement, in the event of a default related to the failure to meet certain covenants, the lender shall have the right, but not the obligation, to permanently reduce the commitment in whole or in part or to declare all or any portion of the outstanding balance to become due and payable. The Company will continuously monitor its compliance with the covenants contained in its Credit Agreement. At June 30, 2019 and December 31, 2018, the net carrying value of the debt and the remaining unamortized debt discounts and debt issuance costs were as follows:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The Company assesses the recoverability of the carrying value of goodwill on a reporting unit basis on October 1 of each year, whenever events occur or changes in circumstances indicate the carrying value of goodwill may not be recoverable. There have been no events or changes in circumstances that would indicate the carrying value of goodwill may not be recoverable through June 30, 2019. Changes in goodwill during the six months ended June 30, 2019 and the year ended December 31, 2018 were as follows:
Intangible Assets The following sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2019 and December 31, 2018.
The useful lives of the Company’s intangibles are as follows:
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock Options The Company recognized $0.2 million and $0.3 million of compensation expense related to stock options during the three months ended June 30, 2019 and 2018, respectively, and $0.5 million and $0.8 million during the six months ended June 30, 2019 and 2018, respectively. On May 25, 2016, the Board of Directors approved the Company’s 2016 Equity Incentive Plan (the “2016 Plan”). On May 21, 2018, the Board of Directors adopted, and the Company’s stockholders subsequently approved, an amendment and restatement of the 2016 Plan to increase the number of shares of Common Stock available for grant under such plan by adding 2,000,000 shares of Common Stock. The 2016 Plan, as amended, provides for the issuance of awards of up to 4,000,000 shares of the Company’s common stock, plus any shares of common stock that are represented by awards granted under our Director Plan and 2009 Plan that are forfeited, expire or are canceled without delivery of shares of common stock or which result in the forfeiture of shares of common stock back to the Company on or after May 25, 2016, up to 2,500,000 shares. Generally, shares of common stock reserved for awards under the 2016 Plan that lapse or are canceled, will be added back to the share reserve available for future awards. However, shares of common stock tendered in payment for an award or shares of common stock withheld for taxes will not be available again for grant. The 2016 Plan provides that no participant may receive awards for more than 1,000,000 shares of common stock in any fiscal year. As the 2016 Plan supersedes both the Director Plan and the 2009 Plan, any available shares from both are now incorporated into the 2016 Plan. As of June 30, 2019, there were 90,672 RSUs outstanding, 136,496 shares of common stock outstanding and options to purchase 3,363,329 shares of common stock outstanding under the 2016 Plan. As of December 31, 2018, there were 161,214 RSUs outstanding, 74,667 shares of common stock outstanding and options to purchase 1,394,285 shares of common stock outstanding under the 2016 Plan. As of June 30, 2019 and December 31, 2018, there were a total of 1,221,041 shares of common stock and 3,113,374 shares of common stock available under the 2016 Plan, respectively. As of June 30, 2019 and December 31, 2018, there were options to purchase 6,253,437 and 4,352,391 shares of common stock outstanding, respectively, collectively in the Director Plan, 2009 Plan, and the 2016 Plan. In the interest of maintaining consistency with the Company's 2016 Equity Incentive Plan, on March 13, 2017, the Company entered into (i) an amendment to the option agreements governing each option grant currently outstanding under the Company's 2009 Equity Incentive Plan, and (ii) an amendment to the RSU, agreements governing each RSU grant currently outstanding under the 2009 Plan. The amendments provide for the automatic vesting upon a change of control of the Company of each option grant and RSU grant, as applicable, outstanding under the 2009 Plan. The amendments had a de minimis value to the holders as of June 30, 2019, and therefore no additional stock compensation expense was recognized related to the amendments. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the following table. Expected volatilities and risk-free interest rates are based upon the expected life of the grant.
Expected volatility was calculated using the historical volatility of the Company's stock over the expected life of the options. The expected life of the options was estimated based on the Company's historical data. The risk free interest rate is based on U.S. Treasury yields for securities with terms approximating the terms of the grants. Forfeitures are recognized in the period they occur. The assumptions used in the Black-Scholes options valuation model are highly subjective, and can materially affect the resulting valuation. A summary of option activity under the 1999 Director Stock Option Plan, 2009 Equity Incentive Plan, and the 2016 Equity Incentive Plan as of June 30, 2019 and changes during the period are presented below:
The following tables summarize information regarding options outstanding and exercisable at June 30, 2019: Outstanding:
Exercisable:
As of June 30, 2019, the intrinsic value of the options outstanding was $1.1 million and none of the options was exercisable. As of June 30, 2019, there was $1.8 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Plan. The costs will be recognized through June 2022. Restricted Stock and RSUs The Company periodically grants restricted stock and RSU awards to certain officers and other employees that typically vest to three years from their grant date. The Company recognized $0.1 million of compensation expense each during the three months ended June 30, 2019 and 2018, respectively and $0.2 million and $0.3 million of compensation expense during the six months ended June 30, 2019 and 2018, respectively related to restricted stock and RSU awards. Stock compensation expense is recognized over the vesting period of the restricted stock and RSUs. At June 30, 2019, the Company had approximately $0.3 million of total unrecognized compensation cost related to RSUs, all of which will be recognized through June 2022. The following table summarizes the number of unvested RSUs and their weighted average exercise price for the six months ended June 30, 2019.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax expense was $0.07 million and $0.02 million for the three months ended June 30, 2019 and 2018, with effective tax rates of 1.86% and 0.18%, respectively. The Company's income tax expense for the six months ended June 30, 2019 and 2018 was $0.08 million and $0.05 million,with effective tax rates of 0.64% and 0.26%, respectively. The Company excludes from the calculation of the effective tax rate any entities that are projected to operate at a loss, have no tax benefit that can reasonably be expected, and those entities which operate in a zero tax rate jurisdiction. Due to continuing operating losses in the United States, the tax provision is based on minimum U.S. state income taxes and the operations of certain foreign affiliates that are subject to taxes in their respective countries. Beginning in 2018, the Company’s net interest expense became subject to limitations imposed by the Tax Cuts and Jobs Act of 2017 (TCJA). Based on actual and projected operating results, the Company is subject to an interest expense limitation. The limitation serves to reduce the net operating loss and create an additional attribute for the disallowed net interest expense. Therefore, there is no effect on earnings. Also beginning in 2018, TCJA imposed a new tax on the current earnings of controlled foreign subsidiaries called Global Intangible Low-Taxed Income (“GILTI”). The Company continues to monitor the new GLITI tax provisions, associated regulations and rulings as they are issued with the application of ASC 740, Income Taxes. The Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company's measurement of its deferred taxes (the “deferred method”). The Company's selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing its global income to determine whether it expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Whether the Company expects to have future U.S. inclusions in taxable income related to GILTI depends not only on the Company's current structure and estimated future results of global operations, but also on its intent and ability to modify its structure. The Company is currently in the process of analyzing its structure. For 2018, the Company’s foreign entities as a whole generated an operating loss and that loss exceeds the projected foreign entities’ income for 2019. Therefore, the Company has not made any adjustments related to potential GILTI tax in its financial statements and has not yet made a policy decision regarding whether or not to record deferred taxes associated with GILTI. The Company evaluates the recoverability of its net deferred tax assets based on its history of operating results, its expectations for the future and expiration dates of its attributes including operating losses. The Company has concluded that it is more likely than not it will be unable to realize the net deferred tax assets in the immediate future and has established a valuation allowance for all U.S. and foreign net deferred tax assets. At December 31, 2018, the Company’s U.S. federal net operating loss carryforwards totaled $45.1 million. The Company’s ability to use net operating loss carry forwards is subject to limitation in future periods under certain provisions of Section 382 of the Internal Revenue Code of 1986, as amended, which limit the utilization of net operating losses upon a more than 50% change in ownership of the Company’s stock. The Company examined the application of Section 382 with respect to an ownership change that took place during 2010, as well as the limitation on the application of net operating loss carry forwards. The Company believes that net operating losses subsequent to the change date in 2010 (aggregating $26.5 million) are not subject to Section 382 limitations. The Company has estimated that the annual limitation starting in 2010 aggregates from $1.0 million to $2.3 million per year including the effect of amortization of built in gains. The Company’s net loss carryforwards may be further limited in the future if additional ownership changes occur. The Company is subject to the provisions of ASC 740-10-25, “Income Taxes” (ASC 740) which prescribes a more likely-than-not threshold for the financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. On a quarterly basis, the Company undergoes a process to evaluate whether income tax accruals are in accordance with ASC 740 guidance on uncertain tax positions. For federal purposes, post 1998 tax years remain open to examination as a result of net operating loss carryforwards. The Company is currently open to audit by the appropriate state income taxing authorities for tax years 2014 to 2017. The Company has not recorded any liability for uncertain tax positions.
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Accrued Expenses |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses Accrued expenses represent various obligations of the Company including certain operating expenses and taxes payable. As of June 30, 2019 and December 31, 2018, the largest components of accrued expenses were:
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Legal and U.S. Regulatory Proceedings |
6 Months Ended |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal and U.S. Regulatory Proceedings | Legal and U.S. Regulatory Proceedings To date, thirteen putative class action antitrust lawsuits have been filed against the Company along with co-defendants, including Taro Pharmaceuticals U.S.A., Inc. and Perrigo New York Inc., regarding the pricing of generic econazole nitrate cream ("econazole"). The class plaintiffs seek to represent nationwide or state classes consisting of persons who directly purchased, indirectly purchased, paid and/or reimbursed patients for the purchase of generic econazole from July 1, 2014 until the time the defendants' allegedly unlawful conduct ceased or will cease. The class plaintiffs seek treble damages for alleged overcharges for econazole during the alleged period of conspiracy, and certain of the class plaintiffs also seek injunctive relief against the defendants. All actions have been consolidated by the Judicial Panel on Multidistrict Litigation to the Eastern District of Pennsylvania for pre-trial proceedings as part of the In re Generic Pharmaceuticals Pricing Antitrust Litigation matter. On October 16, 2018 the court dismissed the class plaintiffs' claims against the Company with leave to replead. On December 21, 2018 the class plaintiffs filed amended complaints, which the Company moved to dismiss on February 21, 2019. This motion remains pending. Three "opt-out" antitrust lawsuits have been filed against the Company by Humana Inc.; The Kroger Co. et al.; and United HealthCare Services, Inc., and consolidated into the In re Generic Pharmaceuticals Pricing Antitrust Litigation matter by the Judicial Panel on Multidistrict Litigation. Each of the opt-out complaints names between thirty-six and forty-three defendants (including the Company) and involves allegations regarding the pricing of econazole along with between twenty-four and twenty-nine other drug products that were not manufactured or sold by the Company during the period at issue. The opt-out plaintiffs seek treble damages for alleged overcharges for the drug products identified in the complaint during the alleged period of conspiracy, and two of the complaints also seek injunctive relief. A motion to dismiss the Humana Inc. and The Kroger Co., et al. opt-out complaints was filed on February 21, 2019. A motion to dismiss the United HealthCare Services, Inc. opt-out complaint has not yet been filed. Due to the early stage of these cases, we are unable to form a judgment at this time as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss. We believe these cases are without merit, and we intend to vigorously defend against these claims. On October 20, 2017, a Demand for Arbitration was filed with the American Arbitration Association by Stayma Consulting Services, Inc. ("Stayma") against the Company regarding the Company's development and manufacture for Stayma of two generic drug products, one a lotion and one a cream, containing 0.05% of the active pharmaceutical ingredient flurandrenolide. The Company developed the two products and Stayma purchased commercial quantities of each; however, Stayma alleges that the Company breached agreements between the parties by developing an additional and different generic drug product, an ointment, containing flurandrenolide, and failing to meet certain contractual requirements. Stayma seeks monetary damages. At this time, the Company is unable to form a judgment as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss. The Company believes this case is without merit, and the Company intends to vigorously defend against these claims. The Company filed three counter-claims against Stayma for its failure to pay several past due invoices of approximately $1.7 million relating to the development and commercial supply of the two subject products and for breaching the confidentiality provisions and exclusivity provisions of the parties' agreements. On December 13, 2018, Valdepharm SA filed a lawsuit alleging that the Company breached contracts regarding two drug products that the Company had sought to have Valdepharm manufacture. On February 12, 2019 the Company answered the complaint and counterclaimed, alleging that Valdepharm breached the contracts by failing to perform its work in compliance with FDA regulations and current Good Manufacturing Practices. Each party seeks damages associated with the alleged breach and related claims. Due to the early stage of the case we are unable to form a judgment at this time as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss. We believe the claims against Teligent are without merit, and we intend to vigorously defend against them. On April 15, 2019, Mo-Kan Iron Workers Pension Fund, on behalf of itself and all other persons or entities, except defendants, who purchased Teligent common stock between May 2, 2017 and November 7, 2017, commenced a putative class action against the Company and its CEO, Jason Grenfell-Gardner, alleging violations of the securities laws. The complaint alleges that the defendants made materially misleading statements regarding the Company's business, operational and compliance policies. On July 1, 2019, the Oklahoma Police Pension Fund and Retirement System was appointed as lead plaintiff in the case ("Lead Plaintiff"). Lead Plaintiff will file a consolidated amended complaint on or before September 13, 2019, and the defendants will have until November 13, 2019 to answer or move with respect to the consolidated amended complaint. Due to the early stage of the case, we are unable to form a judgment at this time as to whether an unfavorable outcome is either probable or remote or to provide an estimate of the amount or range of potential loss. We believe the claims are without merit, and we intend to vigorously defend against them.
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods of the fiscal years ending December 31, 2019 and 2018. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements contained in the Company’s Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on April 1, 2019. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have a material effect on the Company's financial condition, results of operations, or cash flows as previously reported. Principles of Consolidation The condensed consolidated financial statements include the accounts of Teligent, Inc. and its wholly owned and majority-owned subsidiaries. All inter-company accounts and transactions have been eliminated. The Company consolidated the following entities: Igen, Inc., Teligent Pharma. Inc., Teligent Luxembourg S.à.r.l., Teligent OÜ, Teligent Canada Inc., and Teligent Jersey Limited., in addition to the following inactive entities: Microburst Energy, Inc., Blood Cells, Inc. and Flavorsome, Ltd.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management 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 and the reported amounts of revenues and expenses during the reporting period. Significant estimates include sales returns and allowances, allowances for excess and obsolete inventories, allowances for doubtful accounts, provisions for income taxes and related valuation allowances, stock based compensation, the assessment for the impairment of long-lived assets (including intangibles, goodwill and property, plant and equipment) and legal accruals for environmental cleanup and remediation costs. Actual results could differ from those estimates.
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Cash Equivalents | Cash Equivalents The Company considers all highly liquid instruments purchased with the original maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. Cash and cash equivalents include cash on hand and bank demand deposits used in the Company’s cash management program.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, trade receivables, restricted cash, accounts payable and other accrued liabilities at June 30, 2019 approximate their fair value for all periods presented. The Company measures fair value in accordance with ASC 820-10, “Fair Value Measurements and Disclosures”. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
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Loss Per Common Share | Loss Per Common Share |
Concentration of Credit Risk | Concentration of Credit Risk |
Recently Adopted Accounting Pronouncements/Recently Issued Not Yet Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing lease guidance under Topic 840. The new standard requires lessees to recognize Right-of-Use ("ROU") assets and lease liabilities for all leases with terms greater than 12 months, including those leases that were previously classified as operating leases. Topic 842 retains a distinction between finance leases and operating leases, with measurement and presentation of expenses and cash flows being dependent upon the classification. The Company adopted the new standard effective January 1, 2019 utilizing the optional transition method allowed under ASU 2018-11, Leases (Topic 842): Targeted Improvements. See Note 6 for the Company's additional required disclosures under Topic 842. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. This guidance is effective for all entities for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The amendments in ASU 2018-02 should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company's adoption of this ASU, effective January 1, 2019, did not have a material impact on its condensed consolidated financial statements. Recently Issued Not Yet Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment”. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. For the Company, the amendments are effective January 1, 2020. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): “Clarifying the Interaction between Topic 808 and Topic 606”. The guidance clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer. For the Company, the amendment will be effective January 1, 2020. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheet to the total amounts in the Condensed Consolidated Statement of Cash Flows as follows:
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Schedule of Earnings Per Share, Basic and Diluted | For the three and six months ended June 30, 2019, the potential dilutive common stock equivalents have been excluded from the computation of diluted loss per share, as their effect would have been anti-dilutive. (in thousands except shares and per share data)
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Revenues, Recognition and Allowances (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenues | Net revenues for the three and six months ended June 30, 2019 and 2018 were as follows:
Disaggregated information for the Company product sales revenue has been recognized in the accompanying unaudited interim Condensed Consolidated Statements of Operations, and is presented below according to contract type:
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Schedule of Accounts, Notes, Loans and Financing Receivable | The Company's adjustments for the deductions to gross product sales are as follows:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories are valued at the lower of cost or net realizable value, using the first-in-first-out method and consist of the following:
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Property, Plant and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant and equipment consists of the following:
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Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense | The components of lease expense were as follows:
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Summary of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases were as follows:
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Schedule of Finance Lease Liabilities by Maturity | As of June 30, 2019 maturities of lease liabilities were as follows:
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Summary of Operating Leases by Maturity | As of June 30, 2019 maturities of lease liabilities were as follows:
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Schedule of Operating Lease Liabilities | As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for operating leases having initial or remaining noncancellable lease terms in excess of one year would have been as follows:
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Debt (Tables) |
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Convertible Debt | At June 30, 2019 and December 31, 2018, the net carrying value of the debt and the remaining unamortized debt discounts and debt issuance costs were as follows:
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in goodwill during the six months ended June 30, 2019 and the year ended December 31, 2018 were as follows:
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Schedule of Finite-Lived Intangible Assets | The following sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2019 and December 31, 2018.
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Schedule of Indefinite-Lived Intangible Assets | The following sets forth the major categories of the Company’s intangible assets and the weighted-average remaining amortization period as of June 30, 2019 and December 31, 2018.
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Schedule Of Intangible Assets, Useful Life | The useful lives of the Company’s intangibles are as follows:
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Stock-Based Compensation (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Valuation Assumptions | The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the following table. Expected volatilities and risk-free interest rates are based upon the expected life of the grant.
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Schedule of Stock Option Activity | A summary of option activity under the 1999 Director Stock Option Plan, 2009 Equity Incentive Plan, and the 2016 Equity Incentive Plan as of June 30, 2019 and changes during the period are presented below:
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Schedule of Stock Options Outstanding and Exercisable | The following tables summarize information regarding options outstanding and exercisable at June 30, 2019: Outstanding:
Exercisable:
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Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the number of unvested RSUs and their weighted average exercise price for the six months ended June 30, 2019.
|
Accrued Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | As of June 30, 2019 and December 31, 2018, the largest components of accrued expenses were:
|
Summary of Significant Accounting Policies - Reconciliation of Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 4,121 | $ 9,705 | $ 13,675 | |
Restricted cash | 206 | 2,892 | 0 | |
Restricted cash in other assets | 472 | 472 | ||
Cash, cash equivalents and restricted cash in the statement of cash flows | $ 4,799 | $ 13,069 | $ 14,147 | $ 27,165 |
Summary of Significant Accounting Policies - Computation of Earnings (Loss) per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Basic loss per share computation: | ||||
Net loss | $ (3,989) | $ (13,119) | $ (12,713) | $ (17,921) |
Weighted average common shares - basic and diluted (in shares) | 53,849,108 | 53,510,712 | 53,827,665 | 53,484,756 |
Basic and diluted loss per share (in dollars per share) | $ (0.08) | $ (0.25) | $ (0.24) | $ (0.34) |
Revenues, Recognition and Allowances - Narrative (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
transaction_type
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
segment
product
transaction_type
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Disaggregation of Revenue [Line Items] | |||||
Types of transactions | transaction_type | 3 | 3 | |||
Segments | segment | 1 | ||||
Allowance for doubtful accounts | $ 2.7 | $ 2.7 | $ 2.6 | ||
Allowance for doubtful accounts related to one customer | 1.7 | $ 1.7 | |||
Accounts receivable, terms of customer credit | 100 days | ||||
Percentage of net sales for royalty | 40.00% | ||||
Royalty expense | 0.3 | $ 0.7 | $ 0.6 | $ 1.5 | |
United States | |||||
Disaggregation of Revenue [Line Items] | |||||
Products manufactured, marketed and distributed | product | 4 | ||||
Net Of SRA Balance | |||||
Disaggregation of Revenue [Line Items] | |||||
Accounts receivable | $ 15.5 | $ 15.5 | $ 18.1 |
Revenues, Recognition and Allowances - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 18,341 | $ 16,249 | $ 31,463 | $ 30,794 |
Company product sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | 17,868 | 14,677 | 30,363 | 27,913 |
Contract manufacturing sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | 388 | 1,450 | 930 | 2,748 |
Research and development services and other income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | 85 | 122 | 170 | 133 |
Topical | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | 12,937 | 7,888 | 21,969 | 15,795 |
Injectables | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 4,931 | $ 6,789 | $ 8,394 | $ 12,118 |
Revenues, Recognition and Allowances - Adjustments to Gross Product Sales (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Gross product sales | $ 39,322 | $ 48,142 | $ 66,736 | $ 84,690 |
Deduction to gross product sales: | ||||
Chargebacks and billbacks | 11,826 | 21,449 | 22,712 | 38,364 |
Wholesaler fees for service | 2,182 | 477 | 3,948 | 1,112 |
Sales discounts and other allowances | 7,446 | 11,539 | 9,713 | 17,301 |
Total reduction to gross product sales | 21,454 | 33,465 | 36,373 | 56,777 |
Company product sales, net | 18,341 | 16,249 | 31,463 | 30,794 |
Company product sales | ||||
Deduction to gross product sales: | ||||
Company product sales, net | $ 17,868 | $ 14,677 | $ 30,363 | $ 27,913 |
Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 12,961 | $ 10,456 |
Work in progress | 203 | 116 |
Finished goods | 11,472 | 8,391 |
Inventories reserve | (2,398) | (2,667) |
Inventories, net | $ 22,238 | $ 16,296 |
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | $ 108,022 | $ 102,268 |
Less accumulated depreciation and amortization | (12,269) | (10,493) |
Property, plant and equipment, net | 95,753 | 91,775 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 401 | 401 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 53,816 | 53,813 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 12,566 | 12,229 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 4,702 | 4,182 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | 698 | 694 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment | $ 35,839 | $ 30,949 |
Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 900 | $ 500 | $ 1,778 | $ 1,133 |
Interest costs capitalized | 0 | 477 | ||
Construction in progress | ||||
Property, Plant and Equipment [Line Items] | ||||
Interest costs capitalized | 1,500 | 2,800 | ||
Payroll costs | $ 300 | $ 700 | $ 600 | $ 1,100 |
Leases - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
Jan. 01, 2019 |
|
Lessee, Lease, Description [Line Items] | |||
Operating lease right-of-use asset | $ 2,656 | $ 2,656 | $ 1,900 |
Operating lease liability | 2,830 | $ 2,830 | $ 2,000 |
Lease renewal term | 5 years | ||
Right-of-use assets obtained in exchange for operating lease liabilities | $ 1,000 | ||
Operating lease payments | $ 200 | $ 300 | |
Operating lease, weighted average remaining lease term | 6 years 7 months 6 days | 6 years 7 months 6 days | |
Finance lease, weighted average remaining lease term | 5 years 2 months 12 days | 5 years 2 months 12 days | |
Operating lease, weighted average discount rate | 8.20% | 8.20% | |
Finance lease, weighted average discount rate | 8.00% | 8.00% | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 1 year | ||
Weighted average discount rate | 4.86% | 4.86% | |
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 10 years | ||
Weighted average discount rate | 8.60% | 8.60% |
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Operating lease cost | $ 158 | $ 317 |
Amortization of right-of-use assets | 3 | 6 |
Interest on lease liabilities | 2 | 4 |
Total finance lease cost | $ 5 | $ 10 |
Leases - Balance Sheet Information (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
Leases [Abstract] | ||
Operating lease right-of-use asset | $ 2,656 | $ 1,900 |
Other current liabilities | 409 | |
Operating lease liabilities | 2,421 | |
Total operating lease liabilities | 2,830 | $ 2,000 |
Property, plant, and equipment | 81 | |
Accumulated depreciation | (6) | |
Property, plant, and equipment, net | 75 | |
Other current liabilities | 12 | |
Other long-term liabilities | 64 | |
Total finance lease liabilities | $ 76 |
Leases - Schedule of Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Operating Lease Liabilities, Payments Due [Abstract] | |||
2019 (excluding the six months ended June 30, 2019) | $ 313 | ||
2020 | 634 | ||
2021 | 608 | ||
2022 | 549 | ||
2023 | 549 | ||
2024 | 236 | ||
Thereafter | 843 | ||
Total lease payments | 3,732 | ||
Less imputed interest | 902 | ||
Total | 2,830 | $ 2,000 | |
Finance Lease Liabilities, Payments, Due [Abstract] | |||
2019 (excluding the six months ended June 30, 2019) | 9 | ||
2020 | 18 | ||
2021 | 18 | ||
2022 | 18 | ||
2023 | 18 | ||
2024 | 12 | ||
Thereafter | 0 | ||
Financing Leases | 93 | ||
Less imputed interest | 17 | ||
Total Finance Lease liability | $ 76 | ||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
2019 | $ 573 | ||
2020 | 611 | ||
2021 | 633 | ||
2022 | 610 | ||
2023 | 607 | ||
2024 | 200 | ||
Total | $ 3,234 |
Debt - Net Carrying Amount of Liability Component of Debt Discount (Details) - Convertible Notes Payable - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Face amount of the Notes | $ 174,318,000 | $ 160,090,000 |
Less unamortized discounts and debt issuance costs | (18,624,000) | (20,519,000) |
Total net carrying value, non-current | 155,694,000 | 139,571,000 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Face amount of the Notes | 25,000,000 | 15,000,000 |
Senior Notes, due December 2019 | ||
Debt Instrument [Line Items] | ||
Face amount of the Notes | 13,022,000 | 15,702,000 |
Less unamortized discounts and debt issuance costs | (531,000) | (1,291,000) |
Total net carrying value | 12,491,000 | 14,411,000 |
Senior Notes, due May 2023 | ||
Debt Instrument [Line Items] | ||
Face amount of the Notes | 75,090,000 | 75,090,000 |
Senior Notes, due February 2023 | ||
Debt Instrument [Line Items] | ||
Face amount of the Notes | $ 74,228,000 | $ 70,000,000 |
Goodwill and Intangible Assets - Schedule of Changes in Goodwill (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Goodwill [Roll Forward] | ||
Goodwill beginning balance | $ 470 | $ 471 |
Foreign currency translation | 19 | (1) |
Goodwill ending balance | $ 489 | $ 470 |
Goodwill and Intangible Assets - Useful Lives of Intangibles (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Product acquisition costs | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 10 years |
Trademarks and Technology | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 15 years |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 10 years |
Stock-Based Compensation - Schedule of Valuation Assumptions (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Stock Based Compensation [Line Items] | ||
Expected dividends | 0.00% | 0.00% |
Risk-free rate | 2.36% | |
Minimum | ||
Stock Based Compensation [Line Items] | ||
Risk-free rate | 1.68% | |
Expected volatility | 64.30% | 60.50% |
Expected term (in years) | 3 years 2 months 12 days | 3 years 2 months 12 days |
Maximum | ||
Stock Based Compensation [Line Items] | ||
Risk-free rate | 2.47% | |
Expected volatility | 74.50% | 62.30% |
Expected term (in years) | 3 years 3 months 18 days | 3 years 3 months 18 days |
Stock-Based Compensation - Summary and Changes of Non-Vested Restricted Stock (Details) - Restricted Stock Units (RSUs) |
6 Months Ended |
---|---|
Jun. 30, 2019
$ / shares
shares
| |
Number of RSUs | |
Non-vested balance at beginning of period (in shares) | shares | 175,591 |
Shares granted (in shares) | shares | 0 |
Shares vested (in shares) | shares | (76,206) |
Shares forfeited (in shares) | shares | (8,713) |
Non-vested balance at end of period (in shares) | shares | 90,672 |
Weighted Average Exercise Price | |
Weighted average exercise price, non-vested balance beginning (in dollars per share) | $ / shares | $ 4.78 |
Shares granted - weighted average exercise price (in dollars per share) | $ / shares | 0 |
Shares vested - weighted average exercise price (in dollars per share) | $ / shares | 5.39 |
Shares forfeited - weighted average exercise price (in dollars per share) | $ / shares | 4.14 |
Weighted average exercise price, non-vested balance ending (in dollars per share) | $ / shares | $ 4.33 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Income Tax Examination [Line Items] | |||||
Income tax expense | $ 73 | $ 23 | $ 81 | $ 47 | |
Effective income tax rate reconciliation, percent | 1.86% | 0.18% | 0.64% | 0.26% | |
Operating loss carryforwards | $ 45,100 | ||||
Not Subject to Limitations | Subsequent To Change Date In 2010 | |||||
Income Tax Examination [Line Items] | |||||
Operating loss carryforwards | 26,500 | ||||
Subject to Limitations | Minimum | |||||
Income Tax Examination [Line Items] | |||||
Operating loss carryforwards | 1,000 | ||||
Subject to Limitations | Maximum | |||||
Income Tax Examination [Line Items] | |||||
Operating loss carryforwards | $ 2,300 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Income and Expenses [Abstract] | ||
Professional fees | $ 1,661 | $ 2,153 |
Payroll | 1,353 | 1,908 |
Interest expense | 1,097 | 1,042 |
Medicaid and Medicare rebates | 827 | 383 |
Wholesaler fees | 794 | 203 |
Royalties | 418 | 222 |
Clinical studies | 334 | 334 |
Rebates | 187 | 714 |
Inventory and Supplies | 129 | 1,809 |
Capital expenditures | 30 | 275 |
Income Tax | 49 | 45 |
Other | 655 | 754 |
Accrued expenses | $ 7,534 | $ 9,842 |
Legal and U.S. Regulatory Proceedings (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Oct. 20, 2017
USD ($)
|
Jun. 30, 2019
drug
defendant
lawsuit
|
|
Anti-Trust Lawsuit | ||
Loss Contingencies [Line Items] | ||
Number of putative class action antitrust lawsuits | lawsuit | 13 | |
Stayma | ||
Loss Contingencies [Line Items] | ||
Damages sought | $ | $ 1.7 | |
Minimum | ||
Loss Contingencies [Line Items] | ||
Number of defendants | defendant | 36 | |
Minimum | Opt Out | Anti-Trust Lawsuit | ||
Loss Contingencies [Line Items] | ||
Number of drugs involved | drug | 24 | |
Maximum | ||
Loss Contingencies [Line Items] | ||
Number of defendants | defendant | 43 | |
Maximum | Opt Out | Anti-Trust Lawsuit | ||
Loss Contingencies [Line Items] | ||
Number of drugs involved | drug | 29 |
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