10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to

Commission file number 001-10865

AMAG Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	04-2742593 (I.R.S. Employer Identification No.)
1100 Winter Street Waltham, Massachusetts (Address of Principal Executive Offices)	02451 (Zip Code)

(617) 498-3300

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May 1, 2018, there were 34,326,636 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.

AMAG PHARMACEUTICALS, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2018

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION (Unaudited)	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2018 and 2017	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION	43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	45
Signatures		46

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements:

AMAG PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(Unaudited)

	March 31, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	231,737		$	192,114
Marketable securities	138,820			136,593
Accounts receivable, net	99,945			103,501
Inventories	31,598			37,356
Prepaid and other current assets	16,345			12,304
Total current assets	518,445			481,868
Property, plant and equipment, net	25,921			25,996
Goodwill	639,484			639,484
Intangible assets, net	648,206			704,470
Restricted cash	656			656
Other long-term assets	2,238			762
Total assets	$	1,834,950		$	1,853,236
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	17,371		$	10,335
Accrued expenses	199,071			175,490
Current portion of convertible notes, net	20,460			—
Current portion of acquisition-related contingent consideration	50,007			49,399
Deferred revenues	42,510			42,494
Total current liabilities	329,419			277,718
Long-term liabilities:
Long-term debt, net	466,595			466,291
Convertible notes, net	251,508			268,392
Acquisition-related contingent consideration	660			686
Deferred tax liabilities	17,497			23,927
Deferred revenues	27,398			24,387
Other long-term liabilities	1,878			1,591
Total liabilities	1,094,955			1,062,992
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized; none issued	—			—
Common stock, par value $0.01 per share, 117,500,000 shares authorized; 34,322,193 and 34,083,112 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	343			341
Additional paid-in capital	1,274,935			1,271,628
Accumulated other comprehensive loss	(4,362		)	(3,908		)
Accumulated deficit	(530,921		)	(477,817		)
Total stockholders’ equity	739,995			790,244
Total liabilities and stockholders’ equity	$	1,834,950		$	1,853,236

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMAG PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Revenues:
Product sales, net	$	117,348		$	112,517
Service revenues, net	28,969			26,931
Other revenues	39			24
Total revenues	146,356			139,472
Costs and expenses:
Cost of product sales	63,912			27,573
Cost of services	5,473			5,010
Research and development expenses	10,809			16,489
Acquired in-process research and development	20,000			60,000
Selling, general and administrative expenses	91,050			70,424
Total costs and expenses	191,244			179,496
Operating loss	(44,888		)	(40,024		)
Other (expense) income:
Interest expense	(15,977		)	(18,300		)
Interest and dividend income	644			1,031
Gains on investments, net	—			27
Total other expense, net	(15,333		)	(17,242		)
Loss before income taxes	(60,221		)	(57,266		)
Income tax benefit	(5,979		)	(20,706		)
Net loss	$	(54,242	)	$	(36,560	)
Net loss per share:
Basic and diluted	$	(1.59	)	$	(1.06	)
Weighted average shares outstanding used to compute net loss per share:
Basic and diluted	34,162			34,378

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMAG PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(IN THOUSANDS)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Net loss	$	(54,242	)	$	(36,560	)
Other comprehensive (loss) income:
Holding (losses) gains arising during period, net of tax	(454		)	92
Total comprehensive loss	$	(54,696	)	$	(36,468	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMAG PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(54,242	)	$	(36,560	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	59,485			27,994
Provision for bad debt expense	463			590
Amortization of premium/discount on purchased securities	67			113
Non-cash equity-based compensation expense	5,533			5,778
Amortization of debt discount and debt issuance costs	3,880			3,209
Gains on marketable securities, net	—			(143		)
Change in fair value of contingent consideration	626			1,043
Deferred income taxes	(6,643		)	(21,192		)
Changes in operating assets and liabilities:
Accounts receivable, net	3,093			6,553
Inventories	3,534			(403		)
Prepaid and other current assets	(3,720		)	1,523
Accounts payable and accrued expenses	30,374			(4,622		)
Deferred revenues	3,027			2,067
Other assets and liabilities	215			(486		)
Net cash provided by (used in) operating activities	45,692			(14,536		)
Cash flows from investing activities:
Proceeds from sales or maturities of marketable securities	18,225			128,512
Purchase of marketable securities	(21,102		)	(129,241		)
Capital expenditures	(923		)	(658		)
Net cash used in investing activities	(3,800		)	(1,387		)
Cash flows from financing activities:
Long-term debt principal payments	—			(4,375		)
Payments of contingent consideration	(44		)	(83		)
Proceeds from the exercise of common stock options	123			152
Payments of employee tax withholding related to equity-based compensation	(2,348		)	(1,322		)
Net cash used in financing activities	(2,269		)	(5,628		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	39,623			(21,551		)
Cash, cash equivalents, and restricted cash at beginning of the period	192,770			276,898
Cash, cash equivalents, and restricted cash at end of the period	$	232,393		$	255,347
Supplemental data for cash flow information:
Cash paid for taxes	$	136		$	208
Cash paid for interest	$	18,971		$	26,195

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMAG PHARMACEUTICALS, INC.

NOTES TOCONDENSEDCONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A.     DESCRIPTION OF BUSINESS

AMAG Pharmaceuticals, Inc., a Delaware corporation, was founded in 1981. We are a biopharmaceutical company focused on developing and delivering important therapeutics, conducting clinical research in areas of unmet need and creating education and support programs for the patients and families we serve. Our currently marketed products support the health of patients in the areas of maternal and women’s health, anemia management and cancer supportive care, including Makena^® (hydroxyprogesterone caproate injection), Intrarosa^® (prasterone) vaginal inserts, Feraheme^® (ferumoxytol injection) for intravenous (“IV”) use, and MuGard^® Mucoadhesive Oral Wound Rinse. In addition, we have the rights to research, develop and commercialize bremelanotide in North America. Through services related to the preservation of umbilical cord blood stem cell and cord tissue units (the “CBR Services”) operated through Cord Blood Registry^® (“CBR”), we also help families to preserve newborn stem cells, which are used today in transplant medicine for certain cancers and blood, immune and metabolic disorders, and which we believe have the potential to play a valuable role in the ongoing development of regenerative medicine.

Throughout this Quarterly Report on Form 10-Q, AMAG Pharmaceuticals, Inc. and our consolidated subsidiaries are collectively referred to as “the Company,” “AMAG,” “we,” “us,” or “our.”

B.     BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments necessary for a fair statement of the financial position and results of operations of the Company for the interim periods presented. Such adjustments consisted only of normal recurring items. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP for interim financial reports and the instructions for Form 10-Q and the rules of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. Our accounting policies are described in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2017 (our “Annual Report”). Interim results are not necessarily indicative of the results of operations for the full year. These interim financial statements should be read in conjunction with our Annual Report.

Principles of Consolidation

The accompanying condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates and Assumptions

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. The most significant estimates and assumptions are used to determine amounts and values of, but are not limited to: revenue recognition related to product sales and services revenue; product sales allowances and accruals; allowance for doubtful accounts; marketable securities; inventory; acquisition date fair value and subsequent fair value estimates used to assess impairment of long-lived assets, including goodwill, in-process research and development (“IPR&D”) and other intangible assets; contingent consideration; debt obligations; certain accrued liabilities, including clinical trial accruals; income taxes, inclusive of valuation allowances; and equity-based compensation expense. Actual results could differ materially from those estimates.

Restricted Cash

As of March 31, 2018 and December 31, 2017, we classified $0.7 million of our cash as restricted cash, a non-current asset on the balance sheet. This amount represented the security deposit delivered to the landlord of our Waltham, Massachusetts headquarters in the form of an irrevocable letter of credit.

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Concentrations and Significant Customer Information

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities, and accounts receivable. We currently hold our excess cash primarily in institutional money market funds, corporate debt securities, U.S. treasury and government agency securities, commercial paper and certificates of deposit. As of March 31, 2018, we did not have a material concentration in any single investment.

Our operations are located entirely within the U.S. We focus primarily on developing, manufacturing, and commercializing our products and product candidates and marketing and selling the CBR Services. We perform ongoing credit evaluations of our product sales customers and generally do not require collateral. The following table sets forth customers who represented 10% or more of our total revenues for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018		2017
AmerisourceBergen Drug Corporation	22	%	22	%
McKesson Corporation	22	%	14	%

Our net accounts receivable primarily represent amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies and amounts due for CBR Services sold to consumers who pay for the services directly. Accounts receivable for our products and services are recorded net of reserves for estimated chargeback obligations, prompt payment discounts and any allowance for doubtful accounts.

Customers which represented greater than 10% of our accounts receivable balances as of March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018		December 31, 2017
McKesson Corporation	26	%	22	%
AmerisourceBergen Drug Corporation	24	%	27	%

We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities) and finished drug product as well as for drug substance and final packaging services for Intrarosa. In addition, we rely on single sources for certain materials required to support the CBR Services. We would be exposed to a significant loss of revenue from the sale of our products and services if our suppliers and/or manufacturers could not fulfill demand for any reason.

Revenue Recognition

Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. We recognized the cumulative effect of applying the new revenue standard to all contracts with customers that were not completed as of January 1, 2018 as an adjustment to the opening balance of stockholders' equity at the beginning of 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The adoption of ASC 606 did not have an impact on the amount of reported revenues with respect to our product or service revenue. In connection with the adoption of ASC 606, we are required to capitalize certain contract acquisition costs consisting primarily of commissions paid when contracts are signed and amortize these costs over the expected contractual relationship with the customer. As of January 1, 2018, we capitalized $1.5 million in incremental contract acquisition costs (specifically sales commissions related to the CBR Services) related to contracts that were not completed.

8

The Impact of ASC 606 Adoption

As a result of applying the modified retrospective transition method to adopt ASC 606, the following financial statement line items for the three months ended March 31, 2018 were affected (in thousands):

Condensed Consolidated Balance Sheet	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Assets:
Prepaid and other current assets	$	16,345		$	16,248		$	97
Other long-term assets	$	2,238		$	538		$	1,700
Total assets	$	1,834,950		$	1,833,153		$	1,797
Liabilities and stockholders' equity:
Deferred tax liabilities	$	17,497		$	17,156		$	341
Accumulated deficit	$	(530,921	)	$	(532,377	)	$	1,456
Total liabilities and stockholders' equity	$	1,834,950		$	1,833,153		$	1,797

Condensed Consolidated Statement of Operations	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Costs and expenses:
Selling, general and administrative expenses	$	91,050		$	91,368		$	(318	)
Net loss	$	(54,242	)	$	(54,560	)	$	318

Condensed Consolidated Statement of Cash Flows	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Operating activities:
Net loss	$	(54,242	)	$	(54,560	)	$	318
Changes in operating assets and liabilities:
Prepaid and other current assets	$	(3,720	)	$	(3,702	)	$	(18	)
Other assets and liabilities	$	215		$	515		$	(300	)

Reclassifications

Certain amounts in prior periods have been reclassified in order to conform to the current period presentation.

C.     REVENUE RECOGNITION

On January 1, 2018, we adopted ASC 606 applying the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for prior periods. We recorded a net increase to opening stockholders' equity of $1.1 million as of January 1, 2018, reflecting the cumulative impact of adopting ASC 606 primarily related to the capitalization of incremental direct costs of obtaining a contract, which consisted of sales commissions related to the CBR Services. There was no impact to revenue for the three months ended March 31, 2018.

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Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:

a.Identify the contract(s) with a customer;

b.Identify the performance obligations in the contract;

c.Determine the transaction price;

d.Allocate the transaction price to the performance obligations in the contract; and

e.Recognize revenue when (or as) the performance obligations are satisfied.

We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, if the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Our major sources of revenue during the reporting periods were: (a) product revenues from Makena and Feraheme; and (b) service revenues associated with the CBR Services. The adoption of ASC 606 did not have an impact on our product or service revenue.

Revenue and Allowances

The following table provides information about disaggregated revenue by products and services (in thousands):

	Three Months Ended March 31,
	2018		2017
Product sales, net
Makena	$	89,983	$	86,455
Feraheme	25,135		25,922
Intrarosa	2,165		—
MuGard	65		140
Total	$	117,348	$	112,517
Service revenues, net	$	28,969	$	26,931

Total gross product sales were offset by product sales allowances and accruals for the three months ended March 31, 2018 and 2017 as follows (in thousands, except for percentages):

	Three Months Ended March 31,
	2018		Percent of gross product sales		2017		Percent of gross product sales
Gross product sales	$	239,870			$	206,724
Provision for product sales allowances and accruals:
Contractual adjustments	86,144		36	%	69,829		34	%
Governmental rebates	36,378		15	%	24,378		12	%
Total	122,522		51	%	94,207		46	%
Product sales, net	$	117,348			$	112,517

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The following table summarizes the product revenue allowance and accrual activity for the three months ended March 31, 2018 (in thousands):

	Contractual			Governmental
	Adjustments			Rebates			Total
Balance at December 31, 2017	$	62,164		$	50,598		$	112,762
Provisions related to current period sales	85,308			31,028			116,336
Adjustments related to prior period sales	836			5,350			6,186
Payments/returns relating to current period sales	(44,633		)	—			(44,633		)
Payments/returns relating to prior period sales	(39,441		)	(25,149		)	(64,590		)
Balance at March 31, 2018	$	64,234		$	61,827		$	126,061

The following table provides information about assets and liabilities from contracts with customers (in thousands):

	March 31, 2018		At Adoption
Short-term contract assets (sales commissions)	$	97	$	79
Long-term contract assets (sales commissions)	$	1,700	$	1,400
Short-term contract liabilities (deferred revenue)	$	42,510	$	42,494
Long-term contract liabilities (deferred revenue)	$	27,398	$	24,387

We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred contract acquisition costs, which will be amortized along with the associated revenue. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. We had no asset impairment charges related to contract assets in the three months ended March 31, 2018.

The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2018 (in thousands):

	Balance at January 1, 2018		Additions		Deductions			Balance at March 31, 2018
Contract assets (sales commissions)	$	1,479	$	340	$	(22	)	$	1,797
Contract liabilities (deferred revenue)	$	66,881	$	21,727	$	(18,700	)	$	69,908

Performance Obligations

At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. We determined that the following distinct goods and services represent separate performance obligations:

•Supply of Makena product

•Supply of Feraheme product

•Supply of Intrarosa product

•CBR collection and processing services

•CBR storage services

Product Revenue

For performance obligations related to products (i.e. Makena, Feraheme and Intrarosa), we principally sell our products to wholesalers, specialty distributors, specialty pharmacies and other customers (collectively, “Customers”), who purchase products directly from us. Our Customers subsequently resell the products to healthcare providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payers that provide for

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government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products.

For the majority of our Customers, we transfer control at the point in time when the goods are delivered. In instances when we perform shipping and handling activities, these are considered fulfillment activities, and accordingly, the costs are accrued when the related revenue is recognized. Taxes collected from Customers and remitted to governmental authorities are excluded from revenues.

Variable Consideration

Under ASC 606, we are required to make estimates of the net sales price, including estimates of variable consideration (such as rebates, chargebacks, discounts, co-pay assistance and other deductions), and recognize the estimated amount as revenue, when we transfer control of the product to our customers. Variable consideration must be determined using either an “expected value” or a “most likely amount” method.

We record product revenues net of certain allowances and accruals in our condensed consolidated statements of operations. Product sales allowances and accruals are primarily comprised of both direct and indirect fees, discounts and rebates and provisions for estimated product returns. Direct fees, discounts and rebates are contractual fees and price adjustments payable to Customers that purchase products directly from us. Indirect fees, discounts and rebates are contractual price adjustments payable to healthcare providers and organizations, such as certain physicians, clinics, hospitals, group purchasing organizations (“GPOs”), and dialysis organizations that typically do not purchase products directly from us but rather from wholesalers and specialty distributors. Consideration payable to a Customer, or other parties that purchase goods from the Customer, are considered to be a reduction of the transaction price, and therefore, of revenue.

Product sales allowances and accruals are based on definitive contractual agreements or legal requirements (such as Medicaid laws and regulations) related to the purchase and/or utilization of the product by these entities and are recorded in the same period that the related revenue is recognized. We use the expected value method for estimating variable consideration. We estimate product sales allowances and accruals using either historical, actual and/or other data, including estimated patient usage, applicable contractual rebate rates, contract performance by the benefit providers, other current contractual and statutory requirements, historical market data based upon experience of our products and other products similar to them, specific known market events and trends such as competitive pricing and new product introductions, current and forecasted Customer buying patterns and inventory levels, and the shelf life of our products. As part of this evaluation, we also review changes to federal and other legislation, changes to rebate contracts, changes in the level of discounts, and changes in product sales trends. Although allowances and accruals are recorded at the time of product sale, rebates are typically paid out in arrears, one to three months after the sale. 

The estimate of variable consideration, which is included in the transaction price, may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved in a future period. Estimating variable consideration and the related constraint requires the use of significant management judgment and actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. No amounts were constrained as of March 31, 2018.

Discounts

We typically offer a 2% prompt payment discount to certain customers as an incentive to remit payment in accordance with the stated terms of the invoice, generally 30 days. Because we anticipate that those customers who are offered this discount will take advantage of the discount, 100% of the prompt payment discount at the time of sale are accrued, based on the gross amount of each invoice. We adjust the accrual quarterly to reflect actual experience.

Chargebacks

Chargeback reserves represent the estimated obligations resulting from the difference between the prices at which we sell our products to wholesalers and the sales price ultimately paid to wholesalers under fixed price contracts by third-party payers, including governmental agencies. The chargeback estimates are determined based on actual product sales data and forecasted customer buying patterns. Actual chargeback amounts are determined at the time of resale to the qualified healthcare provider, and we generally issue credits for such amounts within several weeks of receiving notification from the wholesaler. Estimated chargeback amounts are recorded at the time of sale and adjusted quarterly to reflect actual experience.

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Distributor/Wholesaler and Group Purchasing Organization Fees

Fees under the arrangements with distributors and wholesalers are usually based upon units of product purchased during the prior month or quarter and are usually paid by us within several weeks of the receipt of an invoice from the wholesaler or distributor, as the case may be. Fees under the arrangements with GPOs are usually based upon member purchases during the prior quarter and are generally billed by the GPO within 30 days after period end. In accordance with ASC 606, since the consideration given to the Customer is not for a distinct good or service, the consideration is a reduction of the transaction price of the vendor’s products or services. We have included these fees in contractual adjustments in the table above. We generally pay such amounts within several weeks of the receipt of an invoice from the distributor, wholesaler or GPO. Accordingly, we accrue the estimated fee due at the time of sale, based on the contracted price invoiced to the Customer. We adjust the accrual quarterly to reflect actual experience.

Product Returns

Consistent with industry practice, we generally offer wholesalers, specialty distributors and other customers a limited right to return our products based on the product’s expiration date. Currently the expiration dates for Feraheme, Makena and Intrarosa have a range of three to five years. Product returns are estimated based on the historical return patterns and known or expected changes in the marketplace. We track actual returns by individual production lots. Returns on lots eligible for credits under our returned goods policy are monitored and compared with historical return trends and rates. We expect that wholesalers and healthcare providers will not stock significant inventory due to the cost of the product, the expense to store our products, and/or that our products are readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available and for known or expected changes in the marketplace. We did not significantly adjust our reserve for product returns during the three months ended March 31, 2018. To date, our product returns have been relatively limited; however, returns experience may change over time. We may be required to make future adjustments to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant.

Sales Rebates

We contract with various private payer organizations, primarily pharmacy benefit managers, for the payment of rebates with respect to utilization of our products. We determine our estimates for rebates, if applicable, based on actual product sales data and our historical product claims experience. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the provider. We regularly assess our reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant.

Governmental Rebates

Governmental rebate reserves relate to our reimbursement arrangements with state Medicaid programs. We determine our estimates for Medicaid rebates, if applicable, based on actual product sales data and our historical product claims experience. In estimating these reserves, we provide for a Medicaid rebate associated with both those expected instances where Medicaid will act as the primary insurer as well as in those instances where we expect Medicaid will act as the secondary insurer. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the Medicaid or provider entity. We regularly assess our Medicaid reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current Medicaid accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant.

Other Incentives

Other incentives which we offer include voluntary patient assistance programs, such as co-pay assistance programs, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue.

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Service Revenue

The CBR Services include the collection, processing, and storage of both umbilical cord blood and cord tissue. We market and sell the CBR Services directly to consumers at the prices that are known at contract inception. The discounts offered to the customer are known at the time of enrollment and thereby do not result in variable consideration. CBR Services include the following two performance obligations: collection and processing and storage services, further described below.

Collection and Processing Services

Enrollment services, including the provision of a collection kit and cord blood and cord tissue unit processing, are delivered at the beginning of the relationship. The revenue for this performance obligation is recognized at the point in time after the collection and successful processing of the cord blood and cord tissue.

When purchasing collection and processing services, the customer can (a) pay for the service upfront, when the service is provided; (b) finance the processing fee with us over six or twelve months; or (c) finance the processing fee through a third-party provider, and therefore not finance the arrangement with us. We elected to apply the practical expedient and therefore we have not adjusted the promised consideration for the effects of financing for either the six or twelve month payment plans.

Storage Services

Payment options for storage services of newborn cord blood and cord tissue units include either (a) an annual fee or (b) a prepayment of 18 years or for the lifetime of the newborn donor (the “lifetime option”). The revenue for this performance obligation is recognized ratably over the storage period on a straight-line basis, which is consistent with how the services are provided. For the lifetime option, storage fees are not charged during the lifetime of the newborn donor. However, revenue is recognized based on the average of male and female life expectancies using lifetime actuarial tables published by the Social Security Administration in effect at the time of the newborn’s birth. We determined that the 18 year and lifetime prepayment options do not include a significant financing component as the payment terms were structured primarily for reasons other than for the provision of financing and to maximize profitability.

As of March 31, 2018, the total aggregate transaction price allocated to the unsatisfied performance obligations was recorded as deferred revenue, which will be recognized ratably on a straight-line basis over the contractual period, as described above, of which $42.5 million will be recognized over the next twelve months.

Allocation of Transaction Price

We have selected an adjusted market assessment approach to estimate the stand-alone selling prices of the collection and processing services and storage services and concluded that the published list price is the price that a customer in that market would be willing to pay for those goods or services. We also considered the fact that all customers are charged the list prices current at the time of their enrollment where we have separately stated list prices for processing and storage. The discounts provided to the customers at the time of entering into the contract are allocated proportionally to both performance obligations (i.e. processing and storage).

Cost to Obtain a Contract

We pay commissions to internal sales representatives as compensation for obtaining contract enrollments for the CBR Services. We capitalize commissions that are incremental as a result of obtaining customer contracts and costs incurred to fulfill a customer contract if those costs are not within the scope of another topic within the accounting literature and meet the specified criteria. These costs are deferred in other current or long-term assets and are expensed to selling, general and administrative expenses as we satisfy the performance obligations by transferring the service to the customer. These assets will be periodically assessed for impairment.

As of January 1, 2018, the date we adopted ASC 606, we capitalized $1.5 million in incremental contract acquisition costs related to contracts that were not completed. In the three months ended March 31, 2018 we amortized an immaterial amount of these acquisition costs, and did not record any impairment losses in relation to costs capitalized.

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D.    MARKETABLE SECURITIES

As of March 31, 2018 and December 31, 2017, our marketable securities were classified as available-for-sale in accordance with accounting standards which provide guidance related to accounting and classification of certain investments in marketable securities. Available-for-sale marketable securities are those securities which we view as available for use in current operations, if needed. We generally classify our available-for-sale marketable securities as short-term investments even though the stated maturity date may be one year or more beyond the current balance sheet date.

The following is a summary of our marketable securities as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term marketable securities:*
Corporate debt securities	$	58,981	$	—	$	(215	)	$	58,766
Certificates of deposit	10,150		—		—			10,150
U.S. treasury and government agency securities	5,996		—		(57		)	5,939
Commercial paper	5,962		—		—			5,962
Total short-term marketable securities	$	81,089	$	—	$	(272	)	$	80,817
Long-term marketable securities:**
Corporate debt securities	$	52,408	$	1	$	(725	)	$	51,684
U.S. treasury and government agency securities	6,381		—		(62		)	6,319
Total long-term marketable securities	58,789		1		(787		)	58,003
Total marketable securities	$	139,878	$	1	$	(1,059	)	$	138,820

* Represents marketable securities with a remaining maturity of less than one year.

** Represents marketable securities with a remaining maturity of one to three years.

	December 31, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term marketable securities:*
Corporate debt securities	$	57,257	$	—	$	(68	)	57,189
Certificates of deposit	9,151		—		—			9,151
U.S. treasury and government agency securities	1,999		—		(13		)	1,986
Commercial paper	1,999		—		—			1,999
Total short-term marketable securities	$	70,406	$	—	$	(81	)	$	70,325
Long-term marketable securities:**
Corporate debt securities	$	59,282	$	1	$	(320	)	$	58,963
U.S. treasury and government agency securities	7,381		—		(76		)	7,305
Total long-term marketable securities	66,663		1		(396		)	66,268
Total marketable securities	$	137,069	$	1	$	(477	)	$	136,593

* Represents marketable securities with a remaining maturity of less than one year.

** Represents marketable securities with a remaining maturity of one to three years.

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Impairments and Unrealized Gains and Losses on Marketable Securities

We did not recognize any other-than-temporary impairment losses in our condensed consolidated statements of operations related to our marketable securities during the three months ended March 31, 2018 and 2017. We considered various factors, including the length of time that each security was in an unrealized loss position and our ability and intent to hold these securities until the recovery of their amortized cost basis occurs. As of March 31, 2018, we had no material losses in an unrealized loss position for more than one year. Future events may occur, or additional information may become available, which may cause us to identify credit losses where we do not expect to receive cash flows sufficient to recover the entire amortized cost basis of a security and may necessitate the recording of future realized losses on securities in our portfolio. Significant losses in the estimated fair values of our marketable securities could have a material adverse effect on our earnings in future periods

E.     FAIR VALUE MEASUREMENTS

The following tables represent the fair value hierarchy as of March 31, 2018 and December 31, 2017, for those assets and liabilities that we measure at fair value on a recurring basis (in thousands):

	Fair Value Measurements at March 31, 2018 Using:
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	2,255	$	2,255	$	—	$	—
Corporate debt securities	110,450		—		110,450		—
U.S. treasury and government agency securities	12,258		—		12,258		—
Certificates of deposit	10,150				10,150		—
Commercial paper	$	5,962	$	—	$	5,962	$	—
Total Assets	$	141,075	$	2,255	$	138,820	$	—
Liabilities:
Contingent consideration - Lumara Health	$	49,797	$	—	$	—	$	49,797
Contingent consideration - MuGard	870		—		—		870
Total Liabilities	$	50,667	$	—	$	—	$	50,667

	Fair Value Measurements at December 31, 2017 Using:
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	4,591	$	4,591	$	—	$	—
Corporate debt securities	116,152		—		116,152		—
U.S. treasury and government agency securities	9,291		—		9,291		—
Certificates of deposit	9,151		—		9,151		—
Commercial paper	1,999		—		1,999		—
Total Assets	$	141,184	$	4,591	$	136,593	$	—
Liabilities:
Contingent consideration - Lumara Health	$	49,187	$	—	$	—	$	49,187
Contingent consideration - MuGard	898		—		—		898
Total Liabilities	$	50,085	$	—	$	—	$	50,085

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Marketable Securities

Our cash equivalents, are classified as Level 1 assets under the fair value hierarchy as these assets have been valued using quoted market prices in active markets and do not have any restrictions on redemption. Our marketable securities are classified as Level 2 assets under the fair value hierarchy as these assets were primarily determined from independent pricing services, which normally derive security prices from recently reported trades for identical or similar securities, making adjustments based upon other significant observable market transactions. At the end of each reporting period, we perform quantitative and qualitative analysis of prices received from third parties to determine whether prices are reasonable estimates of fair value. After completing our analysis, we did not adjust or override any fair value measurements provided by our pricing services as of March 31, 2018. In addition, there were no transfers or reclassifications of any securities between Level 1 and Level 2 during the three months ended March 31, 2018.

Contingent Consideration

For asset acquisitions, such as Intrarosa, we record contingent consideration for obligations we consider to be probable and estimable and these liabilities are not adjusted to fair value. As of March 31, 2018, $10.0 million of contingent consideration was recorded in accrued expenses and is required to be paid to Endoceutics, Inc. (“Endoceutics”) in connection with the first anniversary of the closing pursuant to the agreement entered into with Endoceutics (the “Endoceutics License Agreement”). In addition, as of March 31, 2018, we recorded an accrual for acquired in-process research and development (“IPR&D”) expense of $20.0 million in anticipation of the regulatory milestone payment to Palatin Technologies, Inc. (“Palatin”) due upon the FDA acceptance of the bremelanotide NDA, pursuant to the terms of a license agreement we entered into with Palatin in January 2017 (the “Palatin License Agreement”). We also recorded contingent consideration related to the November 2014 acquisition of Lumara Health, Inc. (“Lumara Health”) and related to our June 2013 license agreement for MuGard® Mucoadhesive Oral Wound Rinse (the “MuGard License Agreement”) with Abeona Therapeutics, Inc. (“Abeona”), under which we acquired the U.S. commercial rights for the management of oral mucositis and stomatitis (the “MuGard Rights”).

The fair value measurements of contingent consideration obligations and the related intangible assets arising from business combinations are classified as Level 3 assets under the fair value hierarchy as these assets have been valued using unobservable inputs. These inputs include: (a) the estimated amount and timing of projected cash flows; (b) the probability of the achievement of the factors on which the contingency is based; and (c) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement.

The following table presents a reconciliation of contingent consideration obligations related to the acquisition of Lumara Health (related to our Makena product) and the MuGard Rights (in thousands):

Balance as of December 31, 2017	$	50,085
Payments made	(44		)
Adjustments to fair value of contingent consideration	626
Balance as of March 31, 2018	$	50,667

During the three months ended March 31, 2018, we adjusted the fair value of our contingent consideration liability by approximately $0.6 million, due to an increase of approximately $0.6 million to the Makena contingent consideration. We have classified $49.8 million of the Makena contingent consideration and $0.2 million of the MuGard contingent consideration as short-term liabilities in our consolidated balance sheet as of March 31, 2018.

The fair value of the contingent milestone payments payable by us to the former stockholders of Lumara Health was determined based on our probability-adjusted discounted cash flows estimated to be realized from the net sales of Makena from December 1, 2014 through December 31, 2019. As of March 31, 2018, the total potential undiscounted milestone payment amount we could pay in connection with the Lumara Health acquisition was $200.0 million through December 31, 2019.

The fair value of the contingent royalty payments payable by us to Abeona under the MuGard License Agreement was determined based on various market factors, including an analysis of estimated sales using a discount rate of approximately 14%. As of March 31, 2018, we estimated that the undiscounted royalty amounts we could pay under the MuGard License Agreement, based on current projections, may range from approximately $2.0 million to $6.0 million over the remainder of the ten year period, which commenced on June 6, 2013, the acquisition date, which is our best estimate of the period over which we expect the majority of the asset’s cash flows to be derived.  

We believe the estimated fair values of Lumara Health and the MuGard Rights are based on reasonable assumptions; however; our actual results may vary significantly from the estimated results.

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Debt

We estimate the fair value of our debt obligations by using quoted market prices obtained from third-party pricing services, which is classified as a Level 2 input. As of March 31, 2018, the estimated fair value of our 2023 Senior Notes, 2022 Convertible Notes and 2019 Convertible Notes (each as defined below) was $470.3 million, $323.3 million and $20.7 million, respectively, which differed from their carrying values. See Note Q, “Debt” for additional information on our debt obligations.

F.     INVENTORIES

Our major classes of inventories were as follows as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018		December 31, 2017
Raw materials	$	12,578	$	12,418
Work in process	5,417		4,146
Finished goods	13,603		20,792
Total inventories	$	31,598	$	37,356

Total inventories decreased by $5.8 million from December 31, 2017 primarily due to sales of the Makena intramuscular product and Feraheme finished goods.  

G.     PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018			December 31, 2017
Land	$	700		$	700
Land improvements	300			300
Building and improvements	9,552			9,552
Computer equipment and software	14,072			14,073
Furniture and fixtures	2,513			2,512
Leasehold improvements	4,959			4,959
Laboratory and production equipment	13,286			8,030
Construction in progress	1,025			5,360
	46,407			45,486
Less: accumulated depreciation	(20,486		)	(19,490		)
Property, plant and equipment, net	$	25,921		$	25,996

H.     GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

Our $639.5 million goodwill balance consisted of $198.1 million of goodwill acquired through the November 2014 Lumara Health acquisition and $441.4 million acquired through the August 2015 CBR acquisition. As of March 31, 2018, we had no accumulated impairment losses related to goodwill.

We test goodwill at the reporting unit level for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Events that could indicate impairment and trigger an interim impairment assessment include, but are not limited to, an adverse change in current economic and market conditions, including a significant prolonged decline in market capitalization, a significant adverse change in legal factors, unexpected adverse business conditions, and an adverse action or assessment by a regulator. Our annual impairment test date is October 31. We have determined that we operate in a single operating segment and have a single reporting unit.

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Intangible Assets

As of March 31, 2018 and December 31, 2017, our identifiable intangible assets consisted of the following (in thousands):

	March 31, 2018								December 31, 2017
			Accumulated		Cumulative						Accumulated		Cumulative
	Cost		Amortization		Impairments		Net		Cost		Amortization		Impairments		Net
Amortizable intangible assets:
Makena base technology	$	797,100	$	306,242	$	319,246	$	171,612	$	797,100	$	255,754	$	319,246	$	222,100
CBR customer relationships	297,000		33,209		—		263,791		297,000		29,309		—		267,691
Makena auto-injector developed technology	79,100		188		—		78,912		—		—		—		—
Intrarosa developed technology	77,655		5,064		—		72,591		77,655		3,376		—		74,279
	1,250,855		344,703		319,246		586,906		1,171,755		288,439		319,246		564,070
Indefinite-lived intangible assets:
Makena IPR&D	—		—		—		—		79,100		—		—		79,100
CBR trade names and trademarks	65,000		—		3,700		61,300		65,000		—		3,700		61,300
Total intangible assets	$	1,315,855	$	344,703	$	322,946	$	648,206	$	1,315,855	$	288,439	$	322,946	$	704,470

During the first quarter of 2018, following the FDA approval of the Makena auto-injector, we reclassified the Makena IPR&D as the Makena auto-injector developed technology, and placed it into service. Amortization of the Makena auto-injector developed technology, is being recognized on a straight-line basis over 8.8 years.

As of March 31, 2018, the weighted average remaining amortization period for our finite-lived intangible assets was approximately 11.7 years. Total amortization expense for the three months ended March 31, 2018 and 2017 was $56.3 million and $24.8 million, respectively. Amortization expense for the Makena base technology, Makena auto-injector developed technology, and Intrarosa developed technology is recorded in cost of product sales in our condensed consolidated statements of operations. Amortization expense for the CBR related intangible assets is recorded in selling, general and administrative expenses in our condensed consolidated statements of operations. We expect amortization expense related to our finite-lived intangible assets to be as follows (in thousands):

	Estimated
	Amortization
Period	Expense
Remainder of Year Ending December 31, 2018	$	139,239
Year Ending December 31, 2019	48,552
Year Ending December 31, 2020	40,930
Year Ending December 31, 2021	40,718
Year Ending December 31, 2022	40,663
Thereafter	276,804
Total	$	586,906

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I.     CURRENT AND LONG-TERM LIABILITIES

Accrued Expenses

Accrued expenses consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018		December 31, 2017
Commercial rebates, fees and returns	$	114,884	$	102,357
Professional, license, and other fees and expenses	29,033		28,692
Salaries, bonuses, and other compensation	14,034		19,099
Interest expense	6,639		13,525
Bremelanotide milestone payment	20,000		—
Intrarosa-related license fees	10,000		10,000
Accrued research and development	4,481		1,817
Total accrued expenses	$	199,071	$	175,490

Deferred Revenues

Our deferred revenue balances as of March 31, 2018 and December 31, 2017 of $69.9 million and $66.9 million, respectively, were primarily related to our CBR Services revenues and included: (a) amounts collected in advance of unit processing and (b) amounts associated with unearned storage fees collected at the beginning of the storage contract term, net of allocated discounts.

J.     INCOME TAXES

The following table summarizes our effective tax rate and income tax benefit for the three months ended March 31, 2018 and 2017 (in thousands except for percentages):

	Three Months Ended March 31,
	2018			2017
Effective tax rate	10		%	36		%
Income tax benefit	$	(5,979	)	$	(20,706	)

 For the three months ended March 31, 2018, we recognized an income tax benefit of $6.0 million, representing an effective tax rate of 10%. The difference between the expected 2018 statutory federal tax rate of 21% and the 10% effective tax rate for the three months ended March 31, 2018 was primarily attributable to the impact of the establishment of a valuation allowance related to certain deferred tax assets, the impact of non-deductible stock compensation, and other non-deductible expenses, partially offset by state income taxes and orphan drug tax credits. We have established a valuation allowance on certain deferred tax assets to the extent that our existing taxable temporary differences would not be available as a source of income to realize the benefits of those deferred tax assets.

On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted. The 2017 Tax Act included significant changes to the U.S. corporate income tax system, including a reduction of the federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Deferred tax assets and liabilities are measured using enacted rates in effect for the year in which those temporary differences are expected to be recovered or settled. As a result of the reduction in the federal tax rate from 35% to 21%, we revalued our ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $17.6 million tax benefit. We are still assessing the implications of the 2017 Tax Act on both a federal and state level. Any additional impacts will be recorded as they are identified during the measurement period as provided for in accordance with Staff Accounting Bulletin No. 118, which addresses the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act.

For the three months ended March 31, 2017, we recognized an income tax benefit of $20.7 million representing an effective tax rate of 36%. The difference between the expected 2017 statutory federal tax rate of 35% and the effective tax rate for the three months ended March 31, 2017 was primarily attributable to the impact of state income taxes and the federal research and development tax credit, partially offset by non-deductible stock compensation and other non-deductible expenses.

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The primary drivers of the decrease in tax benefit for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017 include a decrease in the federal tax benefit primarily attributable to the decrease in the statutory federal tax rate from 35% to 21%, and an increase in valuation allowance, primarily on tax credits, partially offset by an increase in orphan drug tax credits.

K.     ACCUMULATED OTHERCOMPREHENSIVE LOSS

The table below presents information about the effects of net income (loss) of significant amounts reclassified out of accumulated other comprehensive income (loss), net of tax, associated with unrealized gains (losses) on securities during the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018			2017
Beginning balance	$	(3,908	)	$	(3,838	)
Holding (losses) gains arising during period, net of tax	(454		)	92
Ending balance	$	(4,362	)	$	(3,746	)

L.     BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

We compute basic net income (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding during the relevant period. Diluted net income (loss) per common share has been computed by dividing net income (loss) by the diluted number of common shares outstanding during the period. Except where the result would be antidilutive to net income, diluted net income per common share is computed assuming the impact of the conversion of the 2.5% convertible senior notes due 2019 (the “2019 Convertible Notes”) and the 3.25% convertible senior notes due 2022 (the “2022 Convertible Notes”), the exercise of outstanding stock options, the vesting of restricted stock units (“RSUs”), and the exercise of warrants.

We have a choice to settle the conversion obligation of our 2022 Convertible Notes and the 2019 Convertible Notes (together, the “Convertible Notes”) in cash, shares, or any combination of the two. Our current policy is to settle the principal balance of the Convertible Notes in cash. As such, we apply the treasury stock method to these securities and the dilution related to the conversion premium, if any, of the Convertible Notes is included in the calculation of diluted weighted-average shares outstanding to the extent each issuance is dilutive based on the average stock price during each reporting period being greater than the conversion price of the respective Convertible Notes. The dilutive effect of the warrants, stock options and RSUs has been calculated using the treasury stock method.

The components of basic and diluted net income (loss) per share for the three months ended March 31, 2018 and 2017 were as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2018			2017
Net loss	$	(54,242	)	$	(36,560	)
Weighted average common shares outstanding	34,162			34,378
Shares used in calculating dilutive net loss per share	34,162			34,378
Net loss per share:
Basic and diluted	$	(1.59	)	$	(1.06	)

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The following table sets forth the potential common shares issuable upon the exercise of outstanding options, the vesting of RSUs, the exercise of warrants (prior to consideration of the treasury stock method), and the conversion of the Convertible Notes, which were excluded from our computation of diluted net (loss) income per share because their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended March 31,
	2018	2017
Options to purchase shares of common stock	3,771	2,406
Shares of common stock issuable upon the vesting of RSUs	1,401	775
Warrants	1,008	7,382
2022 Convertible Notes	11,695	—
2019 Convertible Notes	790	7,382
Total	18,665	17,945

In connection with the issuance of the 2019 Convertible Notes, in February 2014, we entered into convertible bond hedges. The convertible bond hedges are not included for purposes of calculating the number of diluted shares outstanding, as their effect would be anti-dilutive. The convertible bond hedges are generally expected, but not guaranteed, to reduce the potential dilution and/or offset the cash payments we are required to make upon conversion of the remaining 2019 Convertible Notes.  During the three months ended March 31, 2018 and 2017, our average common stock price was below the exercise price of the warrants. 

M.     EQUITY‑BASED COMPENSATION

We currently maintain three equity compensation plans; our Fourth Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Lumara Health 2013 Plan”) and our 2015 Employee Stock Purchase Plan (“2015 ESPP”). All outstanding stock options granted under each of our equity compensation plans other than our 2015 ESPP have an exercise price equal to the closing price of a share of our common stock on the grant date.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2018:

	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	2,590,373		125,536		815,450		3,531,359
Granted	451,411		—		—		451,411
Exercised	(7,782	)	—		—		(7,782	)
Expired or terminated	(160,797	)	(15,436	)	(27,875	)	(204,108	)
Outstanding at March 31, 2018	2,873,205		110,100		787,575		3,770,880

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2018:

	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	966,623		11,611		91,541		1,069,775
Granted	712,781		—		—		712,781
Vested	(317,638	)	(10,150	)	(15,666	)	(343,454	)
Expired or terminated	(38,078	)	(460	)	—		(38,538	)
Outstanding at March 31, 2018	1,323,688		1,001		75,875		1,400,564

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In March 2018, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 206,250 shares of common stock. These performance-based RSUs will vest, if at all, on March 1, 2021, based on our total shareholder return performance measured against the median total shareholder return of a defined group of companies over a three-year period. The maximum aggregate total fair value of these RSUs is $3.8 million, which is being recognized as expense over a period of three years from the date of grant, net of any estimated and actual forfeitures.

Equity-Based Compensation Expense

Equity-based compensation expense for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands):

	Three Months Ended March 31,
	2018			2017
Cost of product sales and services	$	347		$	129
Research and development	720			756
Selling, general and administrative	4,466			4,893
Total equity-based compensation expense	5,533			5,778
Income tax effect	(942		)	(1,605		)
After-tax effect of equity-based compensation expense	$	4,591		$	4,173

We reduce the compensation expense being recognized to account for estimated forfeitures, which we estimate based primarily on historical experience, adjusted for unusual events such as corporate restructurings, which may result in higher than expected turnover and forfeitures. Under current accounting guidance, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We adopted ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) during the first quarter of 2017. We will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur.

N.     STOCKHOLDERS’ EQUITY

Change in Stockholders’ Equity

Total stockholders’ equity decreased by $50.2 million during the three months ended March 31, 2018. This decrease was primarily driven by the following:

• $54.2 million due to the net loss for the three months ended March 31, 2018;

• $5.5 million increase related to equity-based compensation expense;

• $1.1 million increase related to the cumulative effect adjustment to our accumulated deficit from the adoption of ASC 606, net of tax; and

• $2.3 million decrease due to the payment of employee tax withholdings related to equity-based compensation.

Share Repurchase Program

In January 2016, we announced that our Board authorized a program to repurchase up to $60.0 million in shares of our common stock. The repurchase program does not have an expiration date and may be suspended for periods or discontinued at any time. Under the program, we may purchase our stock from time to time at the discretion of management in the open market or in privately negotiated transactions. The number of shares repurchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, along with working capital requirements, general business conditions and other factors. We may also from time to time establish a trading plan under Rule 10b5-1 of the Securities and Exchange Act of 1934 to facilitate purchases of our shares under this program. As of March 31, 2018, we repurchased and retired a cumulative total of 2,198,010 shares of common stock under this repurchase program for $39.5 million at an average purchase price of $17.97 per share. As of March 31, 2018, $20.5 million remains available for the repurchase of shares under the program. We did not repurchase any of our common stock during the first quarter of 2018.

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O.     COMMITMENTS AND CONTINGENCIES

Commitments

Our long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These include commitments related to our facility leases, purchases of inventory, debt obligations, and other purchase obligations.

Purchase Obligations

Purchase obligations primarily represent minimum purchase commitments for inventory. As of March 31, 2018, our minimum purchase commitments totaled $29.9 million.

Contingent Consideration Related to Business Combinations

In connection with our acquisition of Lumara Health in November 2014, we agreed to pay up to $350.0 million based on the achievement of certain sales milestones, of which $150.0 million has been paid. As of March 31, 2018, the total potential undiscounted milestone payment amount we could pay in connection with the Lumara Health acquisition was $200.0 million through December 31, 2019. As of March 31, 2018, $50.0 million has been accrued based on our estimates, which are reliant on a number of external factors as well as the exercise of judgment. As we update our analysis in future periods, we may determine that the payment of this milestone is no longer probable, resulting in the reversal of the $50.0 million liability at that time, which could occur in the near-term.

Contingent Regulatory and Commercial Milestone Payments

In connection with the Endoceutics License Agreement, we are required to pay Endoceutics $10.0 million in connection with the first anniversary of the closing. In addition, we are required to pay Endoceutics certain sales milestone payments, including a first sales milestone payment of $15.0 million, which would be triggered when Intrarosa annual net U.S. sales exceed $150.0 million, and a second milestone payment of $30.0 million, which would be triggered when annual net U.S. sales of Intrarosa exceed $300.0 million. If annual net U.S. sales of Intrarosa exceed $500.0 million, there are additional sales milestone payments totaling up to $850.0 million, which would be triggered at various sales thresholds. We are also obligated to pay tiered royalties to Endoceutics equal to a percentage of net sales of Intrarosa in the U.S. ranging from mid-teens for calendar year net sales up to $150.0 million to mid twenty percent for any calendar year net sales that exceed $1.0 billion for the commercial life of Intrarosa, with deductions (a) after the later of (i) the expiration date of the last to expire of a licensed patent containing a valid patent claim or (ii) ten years after the first commercial sale of Intrarosa for the treatment of vulvar and vaginal atrophy ("VVA") or female sexual dysfunction (“FSD”) in the U.S. (as applicable), (b) for generic competition and (c) for third party payments, subject to an aggregate cap on such deductions of royalties otherwise payable to Endoceutics.

In connection with the license agreement we entered into with Palatin in January 2017, we are required to pay Palatin up to $380.0 million in regulatory and commercial milestone payments including up to $80.0 million upon achievement of certain regulatory milestones, including $20.0 million upon the acceptance by the FDA of our New Drug Application (“NDA”) for bremelanotide and $60.0 million upon FDA approval, and up to $300.0 million of aggregate sales milestone payments upon the achievement of certain annual net sales milestones over the course of the license. We are also obligated to pay Palatin tiered royalties on annual net sales of the Bremelanotide Products(as defined below), on a product-by-product basis, in the Palatin Territory ranging from the high-single digits to the low double-digits.

In July 2015, we entered into an option agreement with Velo Bio, LLC, a privately-held life-sciences company (“Velo”) that granted us an option to acquire the global rights (the “DIF Rights”) to an orphan drug candidate, digoxin immune fab (“DIF”), a poly clonal antibody in clinical development for the treatment of severe preeclampsia in pregnant woman. If we exercise the option to acquire the DIF Rights, we will be responsible for payments totaling up to $65.0 million (including the payment of the option exercise price and the regulatory milestone payments) and up to an additional $250.0 million in sales milestone payments based on the achievement of annual sales milestones at targets ranging from $100.0 million to $900.0 million. See Note P, “Collaboration, License and Other Strategic Agreements,” for more information on the Velo option. Velo began its Phase 2b/3a clinical study in the second quarter of 2017, and until we exercise our option, no contingent amounts related to this agreement have been recorded in our consolidated financial statements as of March 31, 2018.

In connection with a development and license agreement (the “Antares Agreement”) with Antares Pharma, Inc. (“Antares”), we are required to pay royalties to Antares on net sales of the auto-injection system for use with hydroxyprogesterone caproate (the “Makena auto-injector”) commencing on the launch of the Makena auto-injector in a particular country until the Makena auto-injector is no longer sold or offered for sale in such country (the “Antares Royalty Term”). The royalty rates range from high single digit to low double digits and are tiered based on levels of net sales of the

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Makena auto-injector and decrease after the expiration of licensed patents or where there are generic equivalents to the Makena auto-injector being sold in a particular country. Antares is also entitled to sales-based milestone payments.

Contingencies

Legal Proceedings

We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. For certain matters referenced below, the liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. In addition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible, we will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, we will provide disclosure to that effect. We expense legal costs as they are incurred.

Sandoz Patent Infringement Lawsuit

In March 2016, we initiated a patent infringement suit regarding an Abbreviated New Drug Application (“ANDA”) submitted to the FDA by Sandoz Inc. (“Sandoz”) requesting approval to engage in commercial manufacture, use and sale of a generic version of ferumoxytol. On March 23, 2018, we and Sandoz entered a stipulation of dismissal in the United States District Court for the District of New Jersey pursuant to a settlement agreement that dismissed and resolved this action. According to the terms of the settlement, if Sandoz receives FDA approval by a certain date, Sandoz may launch its generic version of Feraheme on July 15, 2021, or earlier under certain circumstances customary for settlement agreements of this nature. Sandoz will pay a royalty on the sales of its generic version of Feraheme to us until the expiration of the last Feraheme patent listed in the Orange Book. If Sandoz is unable to secure approval by such date, Sandoz will launch an authorized generic version of Feraheme on July 15, 2022 for up to twelve months. Sandoz’s right to distribute, and our obligation to supply, the authorized generic product shall be in accordance with standard commercial terms and profit splits.

Other

On July 20, 2015, the Federal Trade Commission (the “FTC”) notified us that it was conducting an investigation into whether Lumara Health or its predecessor engaged in unfair methods of competition with respect to Makena or any hydroxyprogesterone caproate product. The FTC noted in its letter that the existence of the investigation does not indicate that the FTC has concluded that Lumara Health or its predecessor has violated the law and we believe that our contracts and practices comply with relevant law and policy, including the federal Drug Quality and Security Act (the “DQSA”), which was enacted in November 2013, and public statements from and enforcement actions by the FDA regarding its implementation of the DQSA. We have provided the FTC with a response providing a brief overview of the DQSA for context, which we believe was helpful, including: (a) how the statute outlined that large-scale compounding of products that are copies or near-copies of FDA-approved drugs (like Makena) is not in the interests of public safety; (b) our belief that the DQSA has had a significant impact on the compounding of hydroxyprogesterone caproate; and (c) how our contracts with former compounders allow those compounders to continue to serve physicians and patients with respect to supplying medically necessary alternative/altered forms of hydroxyprogesterone caproate. We believe we have fully cooperated with the FTC and we have had no further interactions with the FTC on this matter since we provided our response to the FTC in August 2015.

On or about April 6, 2016, we received Notice of a Lawsuit and Request to Waive Service of a Summons in a case entitled Plumbers’ Local Union No. 690 Health Plan v. Actavis Group et. al. (“Plumbers’ Union”), which was filed in the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania and, after removal to federal court, is now pending in the United States District Court for the Eastern District of Pennsylvania (Civ. Action No. 16-65-AB). Thereafter, we were also made aware of a related complaint entitled Delaware Valley Health Care Coalition v. Actavis Group et. al. (“Delaware Valley”), which was filed with the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania District Court of Pennsylvania (Case ID: 160200806). The complaints name K-V Pharmaceutical Company (“KV”) (Lumara Health’s predecessor company), certain of its successor entities, subsidiaries and affiliate entities (the “Subsidiaries”), along with a number of other pharmaceutical companies. We acquired Lumara Health in November 2014, a year after KV emerged from bankruptcy protection, at which time it, along with its then existing subsidiaries, became our wholly-owned subsidiary. We have not been served with process or waived service of summons in either case. The actions are being brought alleging unfair and deceptive trade practices with regard to certain pricing practices that allegedly resulted in certain payers overpaying for certain of KV’s generic products. On July 21, 2016, the Plaintiff in the Plumbers’ Union case dismissed KV with prejudice to refiling and on October 6, 2016, all claims against the Subsidiaries were dismissed without

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prejudice. We are in discussions with Plaintiff’s counsel to similarly dismiss all claims in the Delaware Valley case. Because the Delaware Valley case is in the earliest stages and we have not been served with process in this case, we are currently unable to predict the outcome or reasonably estimate the range of potential loss associated with this matter, if any.

We may periodically become subject to other legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which we are focused. Other than the above actions, we are not aware of any material claims against us as of March 31, 2018.

P.     COLLABORATION, LICENSE AND OTHER STRATEGIC AGREEMENTS

Our commercial strategy includes expanding our portfolio through the in-license or acquisition of additional pharmaceutical products or companies, including revenue-generating commercial products and late-state development assets. As of March 31, 2018, we were a party to the following collaborations and license agreements:

Endoceutics

In February 2017, we entered into the Endoceutics License Agreement with Endoceutics. Pursuant to the Endoceutics License Agreement, Endoceutics granted us the right to develop and commercialize pharmaceutical products containing dehydroepiandrosterone (“DHEA”), including Intrarosa, at dosage strengths of 13 mg or less per dose and formulated for intravaginal delivery, excluding any combinations with other active pharmaceutical ingredients, in the U.S. for the treatment of VVA and FSD. The transactions contemplated by the Endoceutics License Agreement closed on April 3, 2017. We accounted for the Endoceutics License Agreement as an asset acquisition under ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.

Upon the closing of the Endoceutics License Agreement, we made an upfront payment of $50.0 million and issued 600,000 shares of unregistered common stock to Endoceutics, which had a value of $13.5 million, as measured on April 3, 2017, the date of closing. Of these 600,000 shares, 300,000 were subject to a 180-day lock-up provision, and the other 300,000 were subject to a one-year lock-up provision. In addition, we paid Endoceutics $10.0 million in the third quarter of 2017 upon the delivery by Endoceutics of Intrarosa launch quantities and have agreed to make a payment of $10.0 million in connection with the first anniversary of the closing. The anniversary payment is reflected in accrued expenses at March 31, 2018. In the second quarter of 2017, we recorded a total of $83.5 million of consideration, of which $77.7 million was allocated to the Intrarosa developed technology intangible asset and $5.8 million was recorded as IPR&D expense based on their relative fair values.

In addition, we have also agreed to pay tiered royalties to Endoceutics equal to a percentage of net sales of Intrarosa in the U.S. ranging from mid-teens for calendar year net sales up to $150.0 million to mid twenty percent for any calendar year net sales that exceed $1.0 billion for the commercial life of Intrarosa, with deductions (a) after the later of (i) the expiration date of the last to expire of a licensed patent containing a valid patent claim or (ii) ten years after the first commercial sale of Intrarosa for the treatment of VVA or FSD in the U.S. (as applicable), (b) for generic competition and (c) for third party payments, subject to an aggregate cap on such deductions of royalties otherwise payable to Endoceutics. Endoceutics is also eligible to receive certain sales milestone payments, including a first sales milestone payment of $15.0 million, which would be triggered when Intrarosa annual net U.S. sales exceed $150.0 million, and a second milestone payment of $30.0 million, which would be triggered when annual net U.S. sales of Intrarosa exceed $300.0 million. If annual net U.S. sales of Intrarosa exceed $500.0 million, there are additional sales milestone payments totaling up to $850.0 million, which would be triggered at various sales thresholds.

In the third quarter of 2017, Endoceutics initiated a clinical study to support an application for U.S. regulatory approval for Intrarosa for the treatment of hypoactive sexual desire disorder (“HSDD”) in post-menopausal women. We and Endoceutics have agreed to share the direct costs related to such studies based upon a negotiated allocation with us funding up to $20.0 million. We may, with Endoceutics’ consent (not to be unreasonably withheld, conditioned or delayed), conduct any other studies of Intrarosa for the treatment of VVA and FSD anywhere in the world for the purpose of obtaining or maintaining regulatory approval of or commercializing Intrarosa for the treatment of VVA or FSD in the U.S. All data generated in connection with the above described studies would be owned by Endoceutics and licensed to us pursuant to the Endoceutics License Agreement.

We have the exclusive right to commercialize Intrarosa for the treatment of VVA and FSD in the U.S., subject to the terms of the Endoceutics License Agreement, including having final decision making authority with respect to commercial strategy, pricing and reimbursement and other commercialization matters. We have agreed to use commercially reasonable efforts to market, promote and otherwise commercialize Intrarosa for the treatment of VVA and, if approved, FSD in the U.S. Endoceutics has the right to directly conduct additional commercialization activities for Intrarosa for the treatment of VVA and FSD in the U.S. and has the right to conduct activities related generally to the field of intracrinology, in each case, subject to

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our review and approval and our right to withhold approval in certain instances. Each party's commercialization activities and budget are described in a commercialization plan, which is updated annually.

In April 2017, we entered into an exclusive commercial supply agreement with Endoceutics pursuant to which Endoceutics, itself or through affiliates or contract manufacturers, agreed to manufacture and supply Intrarosa to us (the “Endoceutics Supply Agreement”) and will be our exclusive supplier of Intrarosa in the U.S., subject to certain rights for us to manufacture and supply Intrarosa in the event of a cessation notice or supply failure (as such terms are defined in the Endoceutics Supply Agreement). Under the Endoceutics Supply Agreement, Endoceutics has agreed to maintain at all times a second source supplier for the manufacture of DHEA and the drug product and to identify, validate and transfer manufacturing intellectual property to the second source supplier by April 2019. The Endoceutics Supply Agreement will remain in effect until the termination of the Endoceutics License Agreement, unless terminated earlier by either party for an uncured material breach or insolvency of the other party, or by us if we exercise our rights to manufacture and supply Intrarosa following a cessation notice or supply failure.

The Endoceutics License Agreement expires on the date of expiration of all royalty obligations due thereunder unless earlier terminated in accordance with the Endoceutics License Agreement.

Palatin

In January 2017, we entered into the Palatin License Agreement with Palatin under which we acquired (a) an exclusive license in all countries of North America (the “Palatin Territory”), with the right to grant sub-licenses, to research, develop and commercialize bremelanotide and any other products containing bremelanotide (collectively, the “Bremelanotide Products”), an investigational product designed to be a treatment for HSDD in pre-menopausal women, (b) a worldwide non-exclusive license, with the right to grant sub-licenses, to manufacture the Bremelanotide Products, and (c) a non-exclusive license in all countries outside the Palatin Territory, with the right to grant sub-licenses, to research and develop (but not commercialize) the Bremelanotide Products. Following the satisfaction of the conditions to closing under the Palatin License Agreement, the transaction closed in February 2017. We accounted for the Palatin License Agreement as an asset acquisition under ASU No. 2017-01.

Under the terms of the Palatin License Agreement, in February 2017 we paid Palatin $60.0 million as a one-time upfront payment subject to agreed-upon deductions reimbursed Palatin approximately $25.0 million for reasonable, documented, out-of-pocket expenses incurred by Palatin in connection with the development and regulatory activities necessary to submit an NDA in the U.S. for bremelanotide for the treatment of HSDD in pre-menopausal women. During 2017, we fulfilled these payment obligations to Palatin. The $60.0 million upfront payment made in February 2017 to Palatin was recorded as IPR&D expense as the product candidate had not received regulatory approval. In March 2018, we submitted an NDA to the FDA for bremelanotide, the regulatory acceptance of which will trigger a milestone payment (discussed below), which we recorded within accrued liabilities and IPR&D expense at March 31, 2018.

In addition, the Palatin License Agreement requires us to make future contingent payments of (a) up to $80.0 million upon achievement of certain regulatory milestones, including $20.0 million upon the acceptance by the FDA of our NDA for bremelanotide and $60.0 million upon FDA approval, and (b) up to $300.0 million of aggregate sales milestone payments upon the achievement of certain annual net sales milestones over the course of the license. The first sales milestone payment of $25.0 million will be triggered when bremelanotide annual net sales exceed $250.0 million. We are also obligated to pay Palatin tiered royalties on annual net sales in North America of the Bremelanotide Products, on a product-by-product basis, in the Palatin Territory ranging from the high-single digits to the low double-digits. The royalties will expire on a product-by-product and country-by-country basis upon the latest to occur of (a) the earliest date on which there are no valid claims of Palatin patent rights covering such Bremelanotide Product in such country, (b) the expiration of the regulatory exclusivity period for such Bremelanotide Product in such country and (c) 10 years following the first commercial sale of such Bremelanotide Product in such country. These royalties are subject to reduction in the event that: (a) we must license additional third-party intellectual property in order to develop, manufacture or commercialize a Bremelanotide Product or (b) generic competition occurs with respect to a Bremelanotide Product in a given country, subject to an aggregate cap on such deductions of royalties otherwise payable to Palatin. After the expiration of the applicable royalties for any Bremelanotide Product in a given country, the license for such Bremelanotide Product in such country would become a fully paid-up, royalty-free, perpetual and irrevocable license. The Palatin License Agreement expires on the date of expiration of all royalty obligations due thereunder, unless earlier terminated in accordance with the Palatin License Agreement.

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Velo

In July 2015, we entered into an option agreement with Velo, a privately held life-sciences company that granted us an option to acquire the rights to an orphan drug candidate, DIF, a polyclonal antibody in clinical development for the treatment of severe preeclampsia in pregnant women. We made an upfront payment of $10.0 million in 2015 for the option to acquire the DIF Rights. DIF has been granted both orphan drug and fast-track review designations by the FDA for use in treating severe preeclampsia. Under the option agreement, Velo will complete a Phase 2b/3a clinical study, which began in the second quarter of 2017. Following the conclusion of the DIF Phase 2b/3a study, we may terminate, or, for additional consideration, exercise or extend, our option to acquire the DIF Rights. If we exercise the option to acquire the DIF Rights, we would be responsible for additional costs in pursuing FDA approval, and would be obligated to pay to Velo certain milestone payments and single-digit royalties based on regulatory approval and commercial sales of the product. If we exercise the option, we will be responsible for payments totaling up to $65.0 million (including the payment of the option exercise price and the regulatory milestone payments) and up to an additional $250.0 million in sales milestone payments based on the achievement of annual sales milestones at targets ranging from $100.0 million to $900.0 million. In the event the royalty rate applicable to the quarter in which a milestone payment threshold is first achieved is zero, the applicable milestone payment amount will increase by 50%.

We have determined that Velo is a variable interest entity (“VIE”) as it does not have enough equity to finance its activities without additional financial support. As we do not have the power to direct the activities of the VIE that most significantly affect its economic performance, which we have determined to be the Phase 2b/3a clinical study, we are not the primary beneficiary of and do not consolidate the VIE.

Antares

Through our acquisition of Lumara Health, we are party to a development and license agreement with Antares (the “Antares License Agreement”), which grants us an exclusive, worldwide, royalty-bearing license, with the right to sublicense, to certain intellectual property rights, including know-how, patents and trademarks, to develop, use, sell, offer for sale and import and export the Makena auto-injector. Under the Antares License Agreement, we are responsible for the clinical development and preparation, submission and maintenance of all regulatory applications in each country where we desire to market and sell the Makena auto-injector, including the U.S. We are required to pay royalties to Antares on net sales of the Makena auto-injector commencing on the launch of the Makena auto-injector in a particular country until the Makena auto-injector is no longer sold or offered for sale in such country or the Antares License Agreement is terminated (the “Antares Royalty Term”). The royalty rates range from high single digit to low double digits and are tiered based on levels of net sales of the Makena auto-injector and decrease after the expiration of licensed patents or where there are generic equivalents to the Makena auto-injector being sold in a particular country. In addition, we are required to pay Antares sales milestone payments upon the achievement of certain annual net sales. The Antares License Agreement terminates at the end of the Antares Royalty Term, but is subject to early termination by us for convenience and by either party upon an uncured breach by or bankruptcy of the other party. In March 2018, the Antares License Agreement was amended to, among other things, transfer the agreement to AMAG from our subsidiary, amend certain confidentiality provisions, and to provide for co-termination with the Antares Manufacturing Agreement (described below).

In March 2018, we also entered into a Manufacturing Agreement with Antares (the “Antares Manufacturing Agreement”) to set forth the terms and conditions pursuant to which Antares agreed to sell to us on an exclusive basis, and we agreed to purchase, the fully packaged Makena auto-injector for commercial distribution. Antares remains responsible for the manufacture and supply of the device components and assembly of the Makena auto-injector. We are responsible for the supply of the drug to be used in the assembly of the finished auto-injector product. The Antares Manufacturing Agreement terminates at the expiration or earlier termination of the Antares License Agreement, but is subject to early termination by us for certain supply failure situations, and by either party upon an uncured breach by or bankruptcy of the other party or our permanent cessation of commercialization of the Makena auto-injector for efficacy or safety reasons.

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Q.     DEBT

Our outstanding debt obligations as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31, 2018		December 31, 2017
2023 Senior Notes	$	466,595	$	466,291
2022 Convertible Notes	251,508		248,194
2019 Convertible Notes	20,460		20,198
Total long-term debt	738,563		734,683
Less: current maturities	20,460		—
Long-term debt, net of current maturities	$	718,103	$	734,683

2023 Senior Notes

In August 2015, in connection with the CBR acquisition, we completed a private placement of $500.0 million aggregate principal amount of 7.875% Senior Notes due 2023 (the “2023 Senior Notes”). The 2023 Senior Notes were issued pursuant to an Indenture, dated as of August 17, 2015 (the “Indenture”), by and among us, certain of our subsidiaries acting as guarantors of the 2023 Senior Notes and Wilmington Trust, National Association, as trustee. The Indenture contains certain customary negative covenants, which are subject to a number of limitations and exceptions. Certain of the covenants will be suspended during any period in which the 2023 Senior Notes receive investment grade ratings.

In October 2017, we repurchased $25.0 million of the 2023 Senior Notes in a privately negotiated transaction, resulting in a loss on extinguishment of debt of $1.1 million. At March 31, 2018, the principal amount of the outstanding borrowings was $475.0 million and the carrying value of the outstanding borrowings, net of issuance costs and other lender fees and expenses, was $466.6 million.

The 2023 Senior Notes, which are senior unsecured obligations of the Company, will mature on September 1, 2023 and bear interest at a rate of 7.875% per year, with interest payable semi-annually on September 1 and March 1 of each year beginning in March 2016. We may redeem some or all of the 2023 Senior Notes at any time, or from time to time, on or after September 1, 2018 at the redemption prices listed in the Indenture, plus accrued and unpaid interest to, but not including, the date of redemption. In addition, prior to September 1, 2018, we may redeem up to 35% of the aggregate principal amount of the 2023 Senior Notes utilizing the net cash proceeds from certain equity offerings, at a redemption price of 107.875% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption; provided that at least 65% of the aggregate amount of the 2023 Senior Notes originally issued under the Indenture remain outstanding after such redemption. We may also redeem all or some of the 2023 Senior Notes at any time, or from time to time, prior to September 1, 2018, at a price equal to 100% of the principal amount of the 2023 Senior Notes to be redeemed, plus a “make-whole” premium plus accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a “change of control,” as defined in the Indenture, we are required to offer to repurchase the 2023 Senior Notes at 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to, but not including, the repurchase date. The Indenture contains customary events of default, which allow either the trustee or the holders of not less than 25% in aggregate principal amount of the then-outstanding 2023 Senior Notes to accelerate, or in certain cases, which automatically cause the acceleration of, the amounts due under the 2023 Senior Notes.

Convertible Notes

The outstanding balances of our Convertible Notes as of March 31, 2018 consisted of the following (in thousands):

	2022 Convertible Notes		2019 Convertible Notes		Total
Liability component:
Principal	$	320,000	$	21,417	$	341,417
Less: debt discount and issuance costs, net	68,492		957		69,449
Net carrying amount	$	251,508	$	20,460	$	271,968
Equity Component	$	72,576	$	9,905	$	82,481

In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of our Convertible Notes by allocating the proceeds between the liability component and the embedded

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conversion option (the “Equity Component”) due to our ability to settle the Convertible Notes in cash, common stock or a combination of cash and common stock, at our option. The carrying amount of the liability components was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The Equity Component of the Convertible Notes was recognized as a debt discount and represents the difference between the proceeds from the issuance of the Convertible Notes and the fair value of the liability of the Convertible Notes on their respective dates of issuance. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense using the effective interest method over five years. The Equity Component is not remeasured as long as it continues to meet the conditions for equity classification.

2022 Convertible Notes

In the second quarter of 2017, we issued $320.0 million aggregate principal amount of convertible senior notes due in 2022 (the “2022 Convertible Notes”) and received net proceeds of $310.4 million from the sale of the 2022 Convertible Notes, after deducting fees and expenses of $9.6 million. The approximate $9.6 million of debt issuance costs primarily consisted of underwriting, legal and other professional fees, and we allocated these costs to the liability and equity components based on the allocation of the proceeds. Of the total $9.6 million of debt issuance costs, $2.2 million was allocated to the Equity Component and recorded as a reduction to additional paid-in capital and $7.4 million was allocated to the liability component and is now recorded as a reduction of the 2022 Convertible Notes in our consolidated balance sheet. The portion allocated to the liability component is amortized to interest expense using the effective interest method over five years.

The 2022 Convertible Notes are governed by the terms of an indenture between us, as issuer, and Wilmington Trust, National Association, as the trustee. The 2022 Convertible Notes are senior unsecured obligations and bear interest at a rate of 3.25% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2017. The 2022 Convertible Notes will mature on June 1, 2022, unless earlier repurchased or converted. Upon conversion of the 2022 Convertible Notes, such 2022 Convertible Notes will be convertible into, at our election, cash, shares of our common stock, or a combination thereof, at a conversion rate of 36.5464 shares of common stock per $1,000 principal amount of the 2022 Convertible Notes, which corresponds to an initial conversion price of approximately $27.36 per share of our common stock.

The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding March 1, 2022, holders may convert their 2022 Convertible Notes at their option only under the following circumstances:

1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the 2022 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or

3) upon the occurrence of specified corporate events.

On or after March 1, 2022, until the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Convertible Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. The 2022 Convertible Notes were not convertible as of March 31, 2018.

We determined the expected life of the debt was equal to the five-year term on the 2022 Convertible Notes. The effective interest rate on the liability component was 9.49% for the period from the date of issuance through March 31, 2018. As of March 31, 2018, the “if-converted value” did not exceed the remaining principal amount of the 2022 Convertible Notes.

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2019 Convertible Notes

In February 2014, we issued $200.0 million aggregate principal amount of the 2019 Convertible Notes. We received net proceeds of $193.3 million from the sale of the 2019 Convertible Notes, after deducting fees and expenses of $6.7 million. We used $14.1 million of the net proceeds from the sale of the 2019 Convertible Notes to pay the cost of the convertible bond hedges, as described below (after such cost was partially offset by the proceeds to us from the sale of warrants in the warrant transactions described below). In May 2017 and September 2017, we entered into privately negotiated transactions with certain investors to repurchase approximately $158.9 million and $19.6 million, respectively, aggregate principal amount of the 2019 Convertible Notes for an aggregate repurchase price of approximately $171.3 million and $21.4 million, respectively, including accrued interest. Pursuant to ASC Topic 470, Debt (“ASC 470”), the accounting for the May 2017 repurchase of the 2019 Convertible Notes was evaluated on a creditor-by-creditor basis with regard to the 2022 Convertible Notes to determine modification versus extinguishment accounting. We concluded that the May 2017 repurchase of the 2019 Convertible Notes should be accounted for as an extinguishment and we recorded a debt extinguishment gain of $0.2 million related to the difference between the consideration paid, the fair value of the liability component and carrying values at the repurchase date. As a result of the September 2017 repurchase of the 2019 Convertible Notes, we recorded a debt extinguishment loss of $0.3 million related to the difference between the consideration paid, the fair value of the liability component and carrying value at the repurchase date.

The 2019 Convertible Notes are governed by the terms of an indenture between us, as issuer, and Wilmington Trust, National Association, as the trustee. The 2019 Convertible Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on February 15 and August 15 of each year. The 2019 Convertible Notes will mature on February 15, 2019 repurchased or converted. Upon conversion of the remaining 2019 Convertible Notes, such 2019 Convertible Notes will be convertible into, at our election, cash, shares of our common stock, or a combination thereof, at a conversion rate of 36.9079 shares of common stock per $1,000 principal amount of the 2019 Convertible Notes, which corresponds to an initial conversion price of approximately $27.09 per share of our common stock.

The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding May 15, 2018, holders may convert their 2019 Convertible Notes, at their option, only under the following circumstances:

1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

2) during the measurement period in which the trading price per $1,000 principal amount of the 2019 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or

3) upon the occurrence of specified corporate events.

On or after May 15, 2018 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2019 Convertible Notes, in multiples of $1,000 principal amount, at the option of the holder, regardless of the foregoing circumstances. The 2019 Convertible Notes were not convertible as of March 31, 2018.

We determined the expected life of the debt was equal to the five-year term of the 2019 Convertible Notes. The effective interest rate on the liability component was 7.79% for the period from the date of issuance through March 31, 2018. As of March 31, 2018, the “if-converted value” did not exceed the remaining principal amount of the 2019 Convertible Notes.

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Convertible Notes Interest Expense

The following table sets forth total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018		2017
Contractual interest expense	$	2,734	$	1,250
Amortization of debt issuance costs	339		274
Amortization of debt discount	3,237		1,929
Total interest expense	$	6,310	$	3,453

Convertible Bond Hedge and Warrant Transactions

In connection with the pricing of the 2019 Convertible Notes and in order to reduce the potential dilution to our common stock and/or offset cash payments due upon conversion of the 2019 Convertible Notes, in February 2014, we entered into convertible bond hedge transactions and separate warrant transactions of our common stock underlying the aggregate principal amount of the 2019 Convertible Notes with the call spread counterparties. In connection with the May 2017 and September 2017 repurchases of the 2019 Convertible Notes, as discussed above, we entered into agreements with the call spread counterparties to terminate a portion of the then existing convertible bond hedge transactions in an amount corresponding to the amount of such 2019 Convertible Notes repurchased and to terminate a portion of the then-existing warrant transactions.

As of March 31, 2018, the remaining bond hedge transactions covered approximately 0.8 million shares of our common stock underlying the remaining $21.4 million principal amount of the 2019 Convertible Notes. The convertible bond hedges have an exercise price of approximately $27.09 per share, subject to adjustment upon certain events, and are exercisable when and if the 2019 Convertible Notes are converted. If upon conversion of the 2019 Convertible Notes, the price of our common stock is above the exercise price of the convertible bond hedges, the call spread counterparties will deliver shares of our common stock and/or cash with an aggregate value equal to the approximate difference between the price of our common stock at the conversion date and the exercise price, multiplied by the number of shares of our common stock underlying the convertible bond hedges being exercised. The convertible bond hedges were separate transactions entered into by us and were not part of the terms of the 2019 Convertible Notes or the warrants, discussed below. Holders of the 2019 Convertible Notes will not have any rights with respect to the convertible bond hedges.

As of March 31, 2018, the remaining warrant transactions covered approximately 1.0 million shares of our common stock underlying the remaining $21.4 million principal amount of the 2019 Convertible Notes. The initial exercise price of the warrants is $34.12 per share, subject to adjustment upon certain events, which was 70% above the last reported sale price of our common stock of $20.07 on February 11, 2014. The warrants would separately have a dilutive effect to the extent that the market value per share of our common stock, as measured under the terms of the warrants, exceeds the applicable exercise price of the warrants. The warrants were issued to the call spread counterparties pursuant to the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended.

Future Payments

Future annual principal payments on our long-term debt as of March 31, 2018 were as follows (in thousands):

Period	Future Annual Principal Payments
Remainder of Year Ending December 31, 2018	$	—
Year Ending December 31, 2019	21,417
Year Ending December 31, 2020	—
Year Ending December 31, 2021	—
Year Ending December 31, 2022	320,000
Thereafter	475,000
Total	$	816,417

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R.     RECENTLY ISSUED AND PROPOSED ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 will be effective for us for fiscal years beginning on or after January 1, 2020, including interim periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of our adoption of ASU 2016-13 on our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This statement requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. This statement is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods and early adoption is permitted. We have formed a project team to assess the impact of adopting ASU 2016-02 on our condensed consolidated financial statements. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of ASU 2016-02.

S.     RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted the standard on January 1, 2018 using the retrospective approach and modified the presentation of our condensed condensed statements of cash flows in accordance with the standard. The adoption of ASU 2016-18 did not have a material impact on our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. We adopted the standard on January 1, 2018 using the retrospective approach. The adoption of ASU 2016-15 did not have a material impact on our condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).This new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including the requirement that equity investments with readily determinable fair values be measured at fair value with changes in fair value recognized in our results of operations. This new standard does not apply to investments accounted for under the equity method of accounting or those that result in consolidation of the investee. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment adjusted for changes in observable prices. A financial liability that is measured at fair value in accordance with the fair value option is required to be presented separately in other comprehensive income for the portion of the total change in the fair value resulting from change in the instrument-specific credit risk. In addition, a valuation allowance should be evaluated on deferred tax assets related to available-for-sale debt securities in combination with other deferred tax assets. We adopted the standard on January 1, 2018 using the modified retrospective approach. The adoption of ASU 2016-01 did not have a material impact on our condensed consolidated financial statements.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations:

The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 (our “Annual Report”).

Except for the historical information contained herein, the matters discussedin this Quarterly Report on Form 10-Qmay be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In thisQuarterly Report on Form 10-Qterminology such as “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “continue,” “believe,” “plan,” “estimate,” “intend” or other similar words and expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.

Examples of forward-looking statements contained in this report include, without limitation, statements regarding the following:plans to continue to expand the impact of our current and future products and services for patients by delivering on our growth strategy, which includes the pursuit of additional products and companies; beliefs that healthcare professionals and patients will prefer the auto-injector over the IM administration; the timing of generic competition to the Makena IM product; our expected timing for filing an sNDA for the treatment of HSDD in post-menopausal women with Intrarosa; anticipated clinical, developmental, regulatory and other undertakings and cooperation efforts by our licensing parties; expectations regarding our intellectual property, including patent protection and related litigation, and the impact and timing generic and other competition could have on our business; beliefs regarding the intellectual property of our licensing and collaboration partners, and our rights to such property; the market opportunities for each of our products and services; plans regarding our sales and marketing initiatives; expectations regarding our future sales of Feraheme, Intrarosa and Makena; our expectations that we will have sufficient supply of the Makena IM product to meet demands; beliefs that our efforts to increase new enrollments for the CBR Services will increase services revenues for the remainder of 2018; the impact of our license and collaboration agreements on our results of operations; our expectation of costs to be incurred in connection with, and revenue sources to fund, our future operations; our expectations regarding the contribution of revenues from our products or services to the funding of our ongoing operations; expectations regarding the manufacture of all drug substance, drug products and key materials at our third-party manufacturers or suppliers; our expectations regarding customer returns and other revenue-related reserves and accruals; estimates regarding our effective tax rate and our ability to realize our net operating loss carryforwards and other tax attributes; the impact of accounting pronouncements; the impact on our business in connection with the expansion of our commercial team; expectations regarding our financial results, including revenues, product sales allowances and accruals, cost of product sales and services, research and development expenses, selling, general and administrative expenses, amortization and other income (expense); our investing activities and the impact of our operations on our cash, cash equivalents and marketable securities balances; our expectations that cash, cash equivalents and investments will be positively impacted by cash from operations for the remainder of 2018; our belief that we will fund our current and planned operating requirements through our cash flow from operations; our belief that our cash, cash equivalents and marketable securities as of March 31, 2018, and the cash we currently expect to receive, will be sufficient to satisfy our cash flow needs for the foreseeable future (including the remainder of 2018); the timing and amounts of milestone payments to former Lumara Health security holders, Palatin and Endoceutics; estimates and beliefs related to our debt, including our2023 Senior Notes, the 2022 Convertible Notes and the 2019 Convertible Notes; the valuation of certain intangible assets, goodwill, contingent consideration, debt and other assets and liabilities, including our methodology and assumptions regarding fair value measurements; the manner in which we intend or are required to settle the conversion of our 2023 Senior Notes, 2022 Convertible Notes and 2019 Convertible Notes; the timing and amounts (if any) of share repurchases; and our expectations for our cash, revenue, cash equivalents, investments balances, capital needs and information with respect to any other plans and strategies for our business. Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated or indicated in any forward-looking statements.

Any forward-looking statement should be considered in light of the factors discussed in Part II, Item 1A below under “Risk Factors” in thisQuarterly Report on Form 10-Qandin Part I, Item 1A in ourAnnual Report. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the U.S. Securities and Exchange Commission, to publicly update or revise any such statements to reflect any change in company expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

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Overview

AMAG Pharmaceuticals, Inc., a Delaware corporation, was founded in 1981. We are a biopharmaceutical company focused on developing and delivering important therapeutics, conducting clinical research in areas of unmet need and creating education and support programs for the patients and families we serve. Our currently marketed products support the health of patients in the areas of maternal and women’s health, anemia management and cancer supportive care, including Makena^® (hydroxyprogesterone caproate injection), Intrarosa^® (prasterone) vaginal inserts, Feraheme^® (ferumoxytol injection) for intravenous (“IV”) use, and MuGard^® Mucoadhesive Oral Wound Rinse. In addition, we have the rights to research, develop and commercialize bremelanotide in North America. Through services related to the preservation of umbilical cord blood stem cell and cord tissue units (the “CBR Services”) operated through Cord Blood Registry^® (“CBR”), we also help families to preserve newborn stem cells, which are used today in transplant medicine for certain cancers and blood, immune and metabolic disorders, and which we believe have the potential to play a valuable role in the ongoing development of regenerative medicine.

We intend to expand the impact of these and future products and services for patients by delivering on our growth strategy, which includes organic growth, as well as the pursuit of additional products and companies that align with our existing therapeutic areas or that could benefit from our proven core competencies. Currently, our primary sources of revenue are from product sales of Makena, Feraheme and service revenue from the CBR Services.

AMAG’s Portfolio of Products, Product Candidates and Services

Makena

Makena is currently the only FDA-approved drug indicated to reduce the risk of preterm birth in women pregnant with a single baby who have a history of singleton spontaneous preterm birth. We acquired the rights to Makena in connection with our acquisition of Lumara Health Inc. (“Lumara Health”) in November 2014.

Makena was approved by the U.S. Food and Drug Administration (the “FDA”) in February 2011 as an intramuscular (“IM”) injection (the “Makena IM product”) packaged in a multi-dose vial and in February 2016 as a single-dose preservative-free vial. In February 2018, Makena was also approved by the FDA for administration via a pre-filled subcutaneous auto-injector (the “Makena auto-injector”), a drug-device combination product.

The Makena auto-injector was designed with features, such as a shorter, thinner, non-visible needle compared to the Makena IM product, to help address some of the known barriers to treatment of recurrent preterm birth, including the lack of patient acceptance and adherence. As such, based on market research we conducted, we believe that many healthcare professionals and patients will prefer the auto-injector over the IM administration. However, some healthcare professionals and/or patients may continue to employ the IM method of administration. The orphan drug exclusivity period that was granted to the Makena product in 2011 expired in February 2018 and, accordingly, we expect to face generic competition to the Makena IM product in mid-2018, however generics could enter the market at any time. In anticipation of generic competition, we have entered into an agreement with a generic partner and are prepared to launch our own authorized generic upon the first entry of a generic Makena injection in order to participate in the expected generic market for Makena.

CBR Services

CBR is the largest private newborn stem cell bank in the world and offers pregnant women and their families the ability to preserve their newborns’ umbilical cord blood and cord tissue for potential future use (the “CBR Services”). We market and sell the CBR Services directly to consumers, who pay for the services directly, as third-party insurance and reimbursement are not available. The CBR Services include the collection, processing and storage of both umbilical cord blood and cord tissue. We acquired CBR in August 2015. As of December 31, 2017, CBR stored approximately 700,000 umbilical cord blood and cord tissue units, which we estimate to represent nearly 40% of all privately stored cord blood and cord tissue units in the U.S. 

Feraheme

Feraheme was approved for marketing by the FDA in June 2009 for the treatment of iron deficiency anemia (“IDA”) in adult patients with chronic kidney disease (“CKD”) only and was commercially launched shortly thereafter. In February 2018, we received FDA approval to expand the Feraheme label to treat all eligible adult IDA patients who have intolerance to oral iron or have had unsatisfactory response to oral iron in addition to patients who have CKD. IDA is widely prevalent in many different patient populations, such as patients with gastrointestinal disease, cancer and chemotherapy-induced anemia or abnormal uterine bleeding. For many of these patients, treatment with oral iron is unsatisfactory or is not tolerated. It is estimated that more than 4.5 million people in the U.S. have IDA (CKD and non-CKD) and we estimate that a small fraction of the patients who are diagnosed with IDA regardless of the underlying cause are currently being treated with IV iron.

The recently expanded Feraheme label is supported by two positive pivotal Phase 3 trials evaluating Feraheme versus iron

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sucrose or placebo in a broad population of patients with IDA. It was also supported by positive results from a third Phase 3 randomized, double-blind non-inferiority trial that evaluated the incidence of moderate-to-severe hypersensitivity reactions (including anaphylaxis) and moderate-to-severe hypotension with Feraheme compared to Injectafer^® (ferric carboxymaltose injection) (the “Feraheme comparator trial”). This Feraheme comparator trial demonstrated non-inferiority to Injectafer^® based on the primary endpoint of the incidence of moderate-to-severe hypersensitivity reactions (including anaphylaxis) and moderate-to-severe hypotension (Feraheme incidence 0.6%; Injectafer^® incidence 0.7%). Adverse event rates were similar across both treatment groups; however, the incidence of severe hypophosphatemia (defined by blood phosphorous of <0.6 mmol/L at week 2) was less in the patients receiving Feraheme (0.4% of patients) compared to those receiving Injectafer^® (38.7% of patients).

In March 2018, we entered a stipulation of dismissal with Sandoz, Inc. in the United States District Court for the District of New Jersey, pursuant to a settlement agreement, that dismissed and resolved the Feraheme patent litigation described in more detail in Note O, “Commitments and Contingencies” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Intrarosa

In February 2017, we entered into a license agreement (the “Endoceutics License Agreement”) with Endoceutics, Inc. (“Endoceutics”) pursuant to which Endoceutics granted us rights to Intrarosa, an FDA-approved product for the treatment of moderate to severe dyspareunia (pain during sexual intercourse), a symptom of vulvar and vaginal atrophy, due to menopause.

Intrarosa was approved by the FDA in November 2016 and was commercially launched in July 2017. Intrarosa is the only FDA-approved, vaginally administered, daily non-estrogen steroid, which is prescribed for the treatment of moderate to severe dyspareunia, a symptom of VVA, due to menopause. Intrarosacontains prasterone, a synthetic version of the inactive endogenous (i.e. occurring in the body) sex hormone precursor, dehydroepiandrosterone (“DHEA”). Prasterone is converted by enzymes in the body into androgens and estrogens to help restore the vaginal tissue as indicated by improvements in the percentage of superficial cells, parabasal cells, and pH. The mechanism of action of Intrarosa is not fully established. The effectiveness of Intrarosa on moderate to severe dyspareunia in post-menopausal women was examined in two primary 12-week placebo-controlled efficacy trials. All women in both studies were assessed for improvement from baseline to week 12 for four co-primary efficacy endpoints: (a) most bothersome symptom (moderate to severe dyspareunia), (b) the percentage of vaginal superficial cells, (c) the percentage of parabasal cells, and (d) vaginal pH. All primary endpoints were statistically significant. Women taking Intrarosa experienced a significant reduction in moderate to severe dyspareunia, as well as statistically significant improvements in the percentage of vaginal superficial cells, parabasal cells and vaginal pH.

Endoceutics initiated a clinical study in the third quarter of 2017 to support an application for U.S. regulatory approval of Intrarosa for the treatment of hypoactive sexual desire disorder (“HSDD”) in post-menopausal women. We and Endoceutics have agreed to share the direct costs related to two clinical studies based upon a negotiated allocation with us funding up to $20.0 million, including the HSDD trial. If the studies are successful, we will file a supplemental New Drug Application (“sNDA”) with the FDA for the treatment of HSDD in post-menopausal women. Furthermore, each party's commercialization activities and budget are described in a commercialization plan, which is updated annually. Additional details regarding the Endoceutics License Agreement can be found in Note P, “Collaboration, License and Other Strategic Agreements,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Bremelanotide

In January 2017, we entered into a license agreement with Palatin Technologies, Inc. (“Palatin”) pursuant to which Palatin granted us the North American rights to research, develop and commercialize bremelanotide, which is being developed for the treatment of HSDD, the most common type of female sexual dysfunction, in pre-menopausal women. In March 2018, we submitted an NDA to the FDA for the treatment of HSDD in pre-menopausal women. Additional details regarding the license with Palatin (the “Palatin License Agreement”) can be found in Note P, “Collaboration, License and Other Strategic Agreements,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Critical Accounting Policies

Except as described in Note B, “Basis of Presentation and Summary of Significant Accounting Policies,” and Note C, “Revenue Recognition,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, with respect to changes in our revenue recognition policy related to our adoption of the requirements of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, there have been no significant changes to our critical accounting policies and estimates during the three months ended March 31, 2018, compared to the critical accounting policies and estimates disclosed in Part II, Item 7, of our Annual Report.

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Results of Operations - Three Months Ended March 31, 2018 and 2017

Revenues

Total revenues for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands except for percentages): 

	Three Months Ended March 31,				2018 to 2017
	2018		2017		$ Change			% Change
Product sales, net
Makena	$	89,983	$	86,455	$	3,528		4	%
Feraheme	25,135		25,922		(787		)	(3	)%
Intrarosa	2,165		—		2,165			N/A
MuGard	65		140		(75		)	(54	)%
Total	117,348		112,517		4,831			4	%
Service revenues, net	28,969		26,931		2,038			8	%
Other revenues	39		24		15			63	%
Total revenues	$	146,356	$	139,472	$	6,884		5	%

Product Sales

Total gross product sales were offset by product sales allowances and accruals for the three months ended March 31, 2018 and 2017 as follows (in thousands, except for percentages):

	Three Months Ended March 31,								2018 to 2017
	2018		Percent of gross product sales		2017		Percent of gross product sales		$ Change		% Change
Gross product sales	$	239,870			$	206,724			$	33,146	16	%
Provision for product sales allowances and accruals:
Contractual adjustments	86,144		36	%	69,829		34	%	16,315		23	%
Governmental rebates	36,378		15	%	24,378		12	%	12,000		49	%
Total	122,522		51	%	94,207		46	%	28,315		30	%
Product sales, net	$	117,348			$	112,517			$	4,831	4	%

Gross product sales increased by $33.1 million, or approximately 16%, during the three months ended March 31, 2018 as compared to the same period in 2017, primarily due to increases of Makena, Feraheme, and Intrarosa gross sales of $21.6 million, $6.2 million, and $5.4 million, respectively. Of the $21.6 million increase in gross Makena sales, $15.2 million was due to pricing and $6.4 million was due to increased quantities sold. Of the $6.2 million increase in gross Feraheme sales, $7.9 million was due to pricing, partially offset by $1.7 million decrease in volume sold. As anticipated, the decrease in volume for Feraheme was driven by the 2017 hurricane-related shortage of saline, which is used in the administration of Feraheme. The $5.4 million increase for Intrarosa was entirely due to volume given the launch of the product in July 2017. The total increase in gross product sales was partially offset by $28.3 million of additional allowances and accruals for the three months ended March 31, 2018, as compared to the same period in 2017, as discussed below.

Net product sales increased by $4.8 million, or approximately 4%, during the three months ended March 31, 2018 as compared to the same period in 2017 primarily due to a $3.5 millionincrease in net Makena sales and $2.2 million of net sales of Intrarosa, partially offset by a $0.8 milliondecrease in net Feraheme sales. We anticipate that sales of Feraheme and Intrarosa will increase for the remainder of 2018 driven by a combination of volume and price. We also anticipate that sales of the Makena subcutaneous auto-injector will make up a greater proportion of total Makena sales as we continue to commercialize the product. Over the longer term, dependent on the timing, number and behavior of potential generic competitors, we anticipate revenues from the Makena IM product to decline, potentially partially offset by revenues from our authorized generic partner. In addition, although we currently believe we will have sufficient Makena IM product to meet demand, our primary drug product manufacturer has experienced production delays impacting products for multiple companies, including our single-dose vial of Makena. We are currently working with healthcare providers, distribution partners and our manufacturer to minimize the possibility of experiencing a supply limitation of the single-dose vial by encouraging new patient

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starts on either the Makena auto-injector or the intramuscular multi-dose vial, both of which we believe we have sufficient supply to meet demand.

Product Sales Allowances and Accruals

We record product revenue net of certain allowances and accruals in our condensed consolidated statements of operations. Our contractual adjustments include provisions for returns, pricing and prompt payment discounts, as well as wholesaler distribution fees, rebates to hospitals that qualify for 340B pricing, and volume-based and other commercial rebates. Governmental rebates relate to our reimbursement arrangements with state Medicaid programs. The increases in contractual adjustments and governmental rebates as a percentage of gross product sales primarily related to a higher mix of business through commercial and Medicaid rebates than historically realized. We expect these adjustments to decrease until the entry of generic competition for the Makena IM product. The impact to allowances and accruals related to the Makena IM product is dependent on the timing, number and behavior of potential generic entrants.

We did not materially adjust our product sales allowances and accruals during the three months ended March 31, 2018 or 2017. If we determine in future periods that our actual experience is not indicative of our expectations, if our actual experience changes, or if other factors affect our estimates, we may be required to adjust our allowances and accruals estimates, which would affect our net product sales in the period of the adjustment and could be significant.

Service Revenues

The $2.0 millionincrease in CBR service revenues recorded in the first quarter of 2018 as compared to the first quarter of 2017 was due to increased recurring revenue from new enrollments. We expect service revenues to increase for the remainder of 2018 due to increasing new enrollments of cord blood and cord tissue units in our storage facility, in particular new family enrollments, which is a leading indicator of long-term growth and recurring revenue from our growing base of stored units.

Costs and Expenses

Cost of Product Sales

Cost of product sales for the three months ended March 31, 2018 and 2017 were as follows (in thousands except for percentages):

	Three Months Ended March 31,						2018 to 2017
	2018			2017			$ Change		% Change
Cost of product sales	$	63,912		$	27,573		$	36,339	>100 %
Percentage of net product sales	54		%	25		%

The $36.3 millionincrease in our cost of product sales for the three months ended March 31, 2018 as compared to the same period in 2017 was primarily attributable to a $31.5 million increase in amortization expense associated with intangible assets with the remaining increase primarily due to reallocation of headcount costs from research and development expenses to cost of product sales following the regulatory approvals related to Feraheme and Makena in February 2018.

We expect our cost of product sales, as a percentage of net product sales, to increase for the remainder of 2018 as compared to the first quarter of 2018 primarily due to increased amortization of our intangible assets, potential pricing pressure associated with generic competition of the Makena IM product and royalty obligations.

Cost of Services

Cost of services for the three months ended March 31, 2018 and 2017 were as follows (in thousands except for percentages): 

	Three Months Ended March 31,						2018 to 2017
	2018			2017			$ Change		% Change
Cost of services	$	5,473		$	5,010		$	463	9	%
Percentage of service revenues	19		%	19		%

We expect our cost of services as a percentage of service revenues to remain relatively constant for the remainder of 2018 as compared to the first quarter of 2018.

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Research and Development Expenses

Research and development expenses for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands except for percentages):

	Three Months Ended March 31,				2018 to 2017
	2018		2017		$ Change			% Change
External research and development expenses
Feraheme-related costs	$	592	$	2,492	$	(1,900	)	(76	)%
Makena-related costs	2,071		4,365		(2,294		)	(53	)%
Bremelanotide-related costs	2,522		4,369		(1,847		)	(42	)%
Intrarosa-related costs	1,458		—		1,458			N/A
Other external costs	111		972		(861		)	(89	)%
Total	6,754		12,198		(5,444		)	(45	)%
Internal research and development expenses	4,055		4,291		(236		)	(5	)%
Total research and development expenses	$	10,809	$	16,489	$	(5,680	)	(34	)%

Total research and development expenses incurred in the three months ended March 31, 2018decreased by $5.7 million, or 34%, as compared to the same period in 2017. Makena-related costs reflect a $2.3 million decline due to the completion of the auto-injector development program in 2017. Feraheme-related costs decreased $1.9 million due to the completion of the IDA study in 2017, partially offset by costs related to the ongoing pediatric study. Bremelanotide-related costs reflect the completion of the agreed-upon Palatin reimbursement costs associated with the recent regulatory submission, partially offset by costs associated with manufacturing process development and the manufacture of drug product for bremelanotide. The decreased spend for Feraheme, Makena, and bremelanotide was partially offset by $1.5 million of Intrarosa-related costs incurred in the first quarter of 2018 in connection with our reimbursement of costs to Endoceutics associated with certain clinical studies associated with Intrarosa.

We expect our research and development expenses to increase during the remainder of 2018, as we invest in studies that could potentially expand the label for Intrarosa as well as costs incurred to prepare for an Advisory Committee meeting for bremelanotide anticipated in late 2018 or early 2019. We cannot determine with certainty the duration and completion costs of our current or future clinical trials of our products or product candidates as the duration, costs and timing of clinical trials depends on a variety of factors including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rates and significant and changing government regulation. Further, we expect to incur increased costs associated with manufacturing process development and the manufacture of drug product for bremelanotide to support its ultimate commercialization.

Acquired In-Process Research and Development

During the three months ended March 31, 2018, we recorded a $20.0 million accrual for acquired in-process research and development (“IPR&D”) to recognize the contingent liability associated with the FDA acceptance of the bremelanotide NDA milestone pursuant to the terms of the Palatin License Agreement.

During the three months ended March 31, 2017, we recorded IPR&D expense of $60.0 million related to the one-time upfront payment pursuant to the terms of the Palatin License Agreement, which closed on February 2, 2017.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands except for percentages):

	Three Months Ended March 31,				2018 to 2017
	2018		2017		$ Change			% Change
Compensation, payroll taxes and benefits	$	35,201	$	21,694	$	13,507		62	%
Professional, consulting and other outside services	46,857		38,864		7,993			21	%
Fair value of contingent consideration liability	626		1,043		(417		)	(40	)%
Amortization expense related to customer relationship intangible	3,900		3,930		(30		)	(1	)%
Equity-based compensation expense	4,466		4,893		(427		)	(9	)%
Total selling, general and administrative expenses	$	91,050	$	70,424	$	20,626		29	%

Total selling, general and administrative expenses, increased by $20.6 million, or approximately 29%, in the three months ended March 31, 2018 as compared to the same period in 2017 for the following reasons:

• $13.5 million increase in compensation, payroll taxes and benefits primarily due to increased costs in the first quarter of 2018 associated with the expansion of our women’s health sales force in the second half of 2017 and related organizational growth; and

• $8.0 million increase in external spending related to the launches of the expanded Feraheme label, the Makena auto-injector and Intrarosa.

We expect that total selling, general and administrative expenses will increase for the remainder of 2018 due to expenses associated with the launches of the Feraheme expanded label, the Makena auto-injector and Intrarosa as well as pre-launch activities for bremelanotide.

Other Expense, Net

Other expense, net for the three months ended March 31, 2018 decreased by $1.9 million compared to the same period in 2017, primarily driven by a $2.3 million decrease in interest expense due to a reduction of our debt obligations during 2017.

Income Tax Benefit

The following table summarizes our effective tax rate and income tax benefit for the three months ended March 31, 2018 and 2017 (in thousands except for percentages):

	Three Months Ended March 31,
	2018			2017
Effective tax rate	10		%	36		%
Income tax benefit	$	(5,979	)	$	(20,706	)

For the three months ended March 31, 2018, we recognized an income tax benefit of $6.0 million, representing an effective tax rate of 10%. The Tax Cuts and Jobs Act, which was enacted in December 2017, has resulted in significant changes to the U.S. corporate income tax system. These changes include a federal statutory rate reduction from 35% to 21%, effective January 1, 2018. The difference between the expected 2018 statutory federal tax rate of 21% and the 10% effective tax rate for the three months ended March 31, 2018, was primarily attributable to the impact of the establishment of a valuation allowance related to certain deferred tax assets, the impact of non-deductible stock compensation, and other non-deductible expenses, partially offset by state income taxes and orphan drug tax credits. We have established a valuation allowance on certain deferred tax assets to the extent that our existing taxable temporary differences would not be available as a source of income to realize the benefits of those deferred tax assets.

For the three months ended March 31, 2017, we recognized an income tax expense of $20.7 million, representing an effective tax rate of 36%. The difference between the expected 2017 statutory federal tax rate of 35% and the 36% effective tax rate for the three months ended March 31, 2017 was primarily attributable to the impact of state income taxes and the federal research and development tax credit, partially offset by non-deductible stock compensation and other non-deductible expenses.

The primary drivers of the decrease in tax benefit for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017 include a decrease in the federal tax benefit primarily attributable to the decrease in the statutory

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federal tax rate from 35% to 21%, and an increase in valuation allowance primarily on tax credits, partially offset by an increase in orphan drug tax credits.

Liquidity and Capital Resources

General

We currently finance our operations primarily from cash generated from our operating activities, including sales of our products and services. We expect to continue to incur significant expenses as we continue to market, sell and contract for the manufacture of our products and sell the CBR Services, and as we seek U.S. regulatory approval for bremelanotide for the treatment of HSDD. For a detailed discussion regarding the risks and uncertainties related to our liquidity and capital resources, please refer to our Risk Factors in Part I, Item 1A of our Annual Report. 

Cash, cash equivalents, marketable securities and certain financial obligations as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands except for percentages):

	March 31, 2018		December 31, 2017		$ Change		% Change
Cash and cash equivalents	$	231,737	$	192,114	$	39,623	21	%
Marketable securities	138,820		136,593		2,227		2	%
Total	$	370,557	$	328,707	$	41,850	13	%
Outstanding principal on 2023 Senior Notes	$	475,000	$	475,000	$	—	—	%
Outstanding principal on 2022 Convertible Notes	320,000		320,000		—		—	%
Outstanding principal on 2019 Convertible Notes	21,417		21,417		—		—	%
Total	$	816,417	$	816,417	$	—	—	%

Cash Flows

The following table presents a summary of our primary sources and uses of cash for the three months ended March 31, 2018 and 2017 (in thousands):

	March 31, 2018			March 31, 2017			$ Change
Net cash provided by (used in) operating activities	$	45,692		$	(14,536	)	$	60,228
Net cash used in investing activities	(3,800		)	(1,387		)	(2,413		)
Net cash used in financing activities	(2,269		)	(5,628		)	3,359
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	39,623		$	(21,551	)	$	61,174

Operating Activities

Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities. We have historically financed our operating and capital expenditures primarily through cash flows earned through our operations.  We expect cash provided from operating activities will continue to be our primary source of funds to finance operating needs and capital expenditures.

Operating cash flow is derived by adjusting our net income (loss) for:

• Non-cash operating items, such as depreciation and amortization, impairment charges, IPR&D and equity-based compensation;

• Changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations;

• Changes in deferred incomes taxes; and

• Changes associated with the fair value of contingent payments associated with our acquisitions of businesses.

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For March 31, 2018 compared to March 31, 2017, net cash flows provided by operations increased by $60.2 million, driven primarily by an increase in net income as adjusted for non-cash charges and a $31.9 millionincrease due to changes in operating assets and liabilities.

Investing Activities

Cash flows used in investing activities was $3.8 million for the three months ended March 31, 2018 due to net purchase of marketable securities of $2.9 million and capital expenditures of $0.9 million. Cash used in investing activities for the three months ended March 31, 2017 was $1.4 million due to net purchase of marketable securities of $0.7 million and $0.7 million of capital expenditures.

Financing Activities

Cash used in financing activities was $2.3 million for the three months ended March 31, 2018 due to the payment of employee tax withholdings related to equity-based compensation of $2.3 million. Cash used in financing activities for the three months ended March 31, 2017 was $5.6 million driven by a principal payment on long term debt of $4.4 million and the payment of employee tax withholdings related to equity-based compensation of $1.3 million.

Future Liquidity Considerations

We expect that our cash, cash equivalents and marketable securities balances will be positively impacted by cash from operations for the remainder of 2018. We expect cash generated from operations could be partially offset by a $50.0 million milestone payment that we may pay in the first half of 2018 to the former Lumara Health security holders contingent on the achievement of a net sales milestone of Makena. In addition, we expect to pay a $20.0 million milestone payment to Palatin upon the acceptance by the FDA of our NDA for bremelanotide, a $10.0 million milestone payment to Endoceutics, and cash interest and taxes, primarily consisting of state taxes due during year. We believe that our cash, cash equivalents and marketable securities as of March 31, 2018, and the cash we currently expect to receive from sales of our products and services, and earnings on our investments, will be sufficient to satisfy our cash flow needs for the foreseeable future.

Borrowings and Other Liabilities

In the second quarter of 2017, we issued $320.0 million aggregate principal amount of convertible senior notes due 2022 (the “2022 Convertible Notes”), as discussed in more detail in Note Q, “Debt,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. We received net proceeds of $310.4 million from the sale of the 2022 Convertible Notes, after deducting fees and expenses of $9.6 million. The 2022 Convertible Notes are senior unsecured obligations and bear interest at a rate of 3.25% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2017. The 2022 Convertible Notes will mature on June 1, 2022, unless earlier repurchased or converted. Upon conversion of the 2022 Convertible Notes, such 2022 Convertible Notes will be convertible into, at our election, cash, shares of our common stock, or a combination thereof, at a conversion rate of 36.5464 shares of common stock per $1,000 principal amount of the 2022 Convertible Notes, which corresponds to an initial conversion price of approximately $27.36 per share of our common stock. The conversion rate is subject to adjustment from time to time. The 2022 Convertible Notes were not convertible as of March 31, 2018.

In August 2015, in connection with the CBR acquisition, we completed a private placement of $500.0 million aggregate principal amount of 7.875% Senior Notes due 2023 (the “2023 Senior Notes”). The 2023 Senior Notes, which are senior unsecured obligations, will mature on September 1, 2023 and will bear interest at a rate of 7.875% per year, with interest payable semi-annually on September 1 and March 1 of each year beginning in March 2016. In October 2017, we repurchased $25.0 million principal of the 2023 Senior Notes in a privately negotiated transaction with cash on hand. For additional information, see Note Q, “Debt,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

In February 2014, we issued $200.0 million aggregate principal amount of 2.5% convertible senior notes due February 15, 2019 (the “2019 Convertible Notes”). In May 2017 and September 2017, we entered into privately negotiated transactions with certain investors to repurchase approximately $158.9 million and $19.6 million, respectively, aggregate principal amount of the 2019 Convertible Notes for an aggregate repurchase price of approximately $171.3 million and $21.4 million, respectively, including accrued interest, as discussed in more detail in Note Q, “Debt,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. The remaining 2019 Convertible Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on February 15 and August 15 of each year. The 2019 Convertible Notes will mature on February 15, 2019, unless repurchased or converted earlier. The 2019 Convertible Notes will be convertible into cash, shares of our common stock, or a combination thereof, at our election, at a conversion rate of 36.9079 shares of common stock per $1,000 principal amount of the 2019 Convertible Notes, which corresponds to a conversion price

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of approximately $27.09 per share of our common stock. The conversion rate is subject to adjustment from time to time. The 2019 Convertible Notes were not convertible as of March 31, 2018.

Share Repurchase Program

In January 2016, we announced that our Board authorized a program to repurchase up to $60.0 million in shares of our common stock. The repurchase program does not have an expiration date and may be suspended for periods or discontinued at any time. Under the program, we may purchase our stock from time to time at the discretion of management in the open market or in privately negotiated transactions. The number of shares repurchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, along with working capital requirements, general business conditions and other factors. We may also from time to time establish a trading plan under Rule 10b5-1 of the Securities and Exchange Act of 1934 to facilitate purchases of our shares under this program. As of March 31, 2018, we repurchased and retired a cumulative total of 2,198,010 shares of common stock under this repurchase program for $39.5 million at an average purchase price of $17.97 per share. As of March 31, 2018, $20.5 million remains available for the repurchase of shares under the program. We did not repurchase any of our common stock during the first quarter of 2018.

Off-Balance Sheet Arrangements

As of March 31, 2018, we did not have any off-balance sheet arrangements as defined in Regulation S-K, Item 303(a)(4)(ii).

Impact of Recently Issued and Proposed Accounting Pronouncements

See Note R, “Recently Issued and Proposed Accounting Pronouncements,” and Note S, “Recently Adopted Accounting Pronouncements,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information regarding new accounting pronouncements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk:

There have been no material changes with respect to the information appearing in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report.

Item 4.  Controls and Procedures:

Managements’ Evaluation of our Disclosure Controls and Procedures

Our principal executive officer and principal financial officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e), or Rule 15d-15(e)), with the participation of our management, have each concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and were designed to ensure that information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. It should be noted that any system of controls is designed to provide reasonable, but not absolute, assurances that the system will achieve its stated goals under all reasonably foreseeable circumstances. Our principal executive officer and principal financial officer have each concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective at a level that provides such reasonable assurances.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended March 31, 2018 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings:

See Note O, “Commitments and Contingencies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information regarding our legal proceedings, including how we accrue liabilities for legal contingencies.

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Item 1A. Risk Factors:

There have been no material changes from the Risk Factors disclosed in Part I, Item 1A, of our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds:

The following table provides certain information with respect to our purchases of shares of our stock during the three months ended March 31, 2018.

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of  Shares Purchased  as Part of Publicly Announced Plans or Programs (2)	Maximum Number  of Shares (or approximate dollar value) That May Yet Be Purchased Under the Plans or Programs (2)
January 1, 2018 through January 31, 2018	—	$	—	—	1,429,021
February 1, 2018 through February 28, 2018	3,922	18.84		—	974,178
March 1, 2018 through March 31, 2018	108,233	20.99		—	1,017,690
Total	112,155	$	20.91	—

_________________________

⁽¹⁾  Represents the surrender of shares of our common stock withheld by us to satisfy the minimum tax withholding obligations in connection with the vesting of restricted stock units held by our employees.

⁽²⁾  We did not repurchase any of our common stock during the first quarter of 2018. We have repurchased and retired $39.5 million of our common stock under our share repurchase program through March 31, 2018. These shares were purchased pursuant to a repurchase program authorized by our Board that was announced in January 2016 to repurchase up to $60.0 million of our common stock, of which $20.5 million remains authorized for repurchase as of March 31, 2018. The repurchase program does not have an expiration date and may be suspended for periods or discontinued at any time.

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Item 6. Exhibits:

Exhibit Number	Description
10.1+	Fourth Amendment to Lease Agreement, dated as of June 10, 2013, by and between AMAG Pharmaceuticals, Inc. and BP BAY COLONY, LLC, dated January 1, 2018
10.2+	First Amendment to Development and License Agreement, dated March 20, 2018, by and between AMAG Pharma USA, Inc. (f/k/a Lumara Health, Inc.), AMAG Pharmaceuticals, Inc. and Antares Pharma, Inc. (Certain confidential information contained in this exhibit was omitted by means of redacting a portion of the text and replacing it with [***]. This exhibit has been filed separately with the SEC without any redactions pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended)
10.3+	Manufacturing Agreement, dated March 20, 2018, by and between AMAG Pharmaceuticals, Inc. and Antares Pharma, Inc. (Certain confidential information contained in this exhibit was omitted by means of redacting a portion of the text and replacing it with [***]. This exhibit has been filed separately with the SEC without any redactions pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended)
31.1+	Certification Pursuant to Rule 13a‑14(a)/15d‑14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification Pursuant to Rule 13a‑14(a)/15d‑14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1++	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2++	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+	XBRL Instance Document
101.SCH+	XBRL Taxonomy Extension Schema Document
101.CAL+	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB+	XBRL Taxonomy Extension Label Linkbase Document
101.PRE+	XBRL Taxonomy Extension Presentation Linkbase Document

+	Exhibits marked with a plus sign (“+”) are filed herewith.
++	Exhibits marked with a double plus sign (“++”) are furnished herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMAG PHARMACEUTICALS, INC.
By:	/s/ William K. Heiden
	William K. Heiden
	President and Chief Executive Officer (Principal Executive Officer)
Date:	May 4, 2018
AMAG PHARMACEUTICALS, INC.
By:	/s/ Edward Myles
	Edward Myles
	Executive Vice President of Finance, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
Date:	May 4, 2018

46

EX-10.1

Exhibit 10.1

FOURTH AMENDMENT TO LEASE

THIS FOURTH AMENDMENT TO LEASE dated as of this 1^st day of January, 2018 is by and between BP BAY COLONY LLC, a Delaware limited liability company (“Landlord”), and AMAG PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

RECITALS

By Lease dated June 10, 2013 (the “Lease”), Landlord did lease to Tenant and Tenant did hire and lease from Landlord certain premises containing 32,217 square feet of rentable floor area (the “Rentable Floor Area of the Original Premises”) located on the third (3^rd) floor of the building (the “Building”) known as and numbered Bay Colony Corporate Center, 1100 Winter Street, Waltham, Massachusetts (referred to herein as the “Original Premises”).

By First Amendment to Lease dated as of March 24, 2015 (the “First Amendment”), Landlord and Tenant (i) increased the size of the Premises by adding thereto an additional 5,934 square feet of rentable floor area (the “Rentable Floor Area of the First Additional Premises”) located on the third (3^rd) floor of the North Wing of the Building, which space is shown on Exhibit A attached to the First Amendment (the “First Additional Premises”) and (ii) extended the Term of the Lease for a period of one (1) year, upon all of the same terms and conditions contained in the Lease except as otherwise provided in the First Amendment.

By Second Amendment to Lease dated as of November 3, 2015 (the “Second Amendment”), Landlord did lease to Tenant and Tenant did hire and lease from Landlord, on a temporary basis which expired on April 30, 2016, certain premises containing 6,452 square feet of rentable floor area on the second (2^nd) floor of the Building, which space is shown on Exhibit A attached to the Second Amendment (the “Temporary Premises”), upon all of the same terms and conditions set forth in the Lease except as otherwise provided in the Second Amendment.

By Third Amendment to Lease dated as of December 7, 2015 (the “Third Amendment”), Landlord and Tenant (i) increased the size of the Premises by adding thereto an additional 21,154 square feet of rentable floor area (the “Rentable Floor Area of the Second Additional Premises”) located on the second (2^nd) floor of the Building, which space is shown on Exhibit A attached to the Third Amendment (the “Second Additional Premises” and together with the Original Premises and the First Additional Premises, the “Existing Premises”), (ii) modified the Temporary Premises Termination Date (as defined in the Second Amendment) and (iii) extended the Term of the Lease for a period of five (5) years from the Second Additional Premises Commencement Date (as defined in the Third Amendment), upon all of the same terms and conditions contained in the Lease except as otherwise provided in the Third Amendment. The Rentable Floor Area of the Original Premises, together with the Rentable Floor Area of the First Additional Premises, and the Rentable Floor Area of the Second Additional Premises contain 59,305 square feet of rentable floor area (collectively referred to herein as the “Rentable Floor Area of the Existing Premises”).

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Exhibit 10.1

By License Agreement dated as of February 17, 2017 (the “License Agreement”), Tenant did license from Landlord certain premises consisting of approximately 6,452 square feet of rentable floor area (the “Rentable Floor Area of the Third Additional Premises”) located on the second (2^nd) floor of the Building, which space is shown as the “Third Additional Premises” on the plan attached hereto as Exhibit A and incorporated by reference herein (referred to in the License Agreement as the “Licensed Premises” and hereinafter referred to as the “Third Additional Premises”), for a term commencing on February 27, 2017 and expiring on December 31, 2017 (the “License Term”).

Landlord and Tenant have agreed, upon the expiration of the License Term, to increase the size of the Premises by adding the Third Additional Premises thereto upon all of the same terms and conditions contained in the Lease except as otherwise provided in this Fourth Amendment to Lease (the “Fourth Amendment”).

Landlord and Tenant are entering into this instrument to set forth said leasing of the Third Additional Premises and to otherwise amend the Lease as set forth herein.

NOW THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration in hand this date paid by each of the parties to the other, the receipt and sufficiency of which are hereby severally acknowledged, and in further consideration of the mutual promises herein contained, Landlord and Tenant hereby agree to and with each other as follows:

1.Incorporation of Third Additional Premises. Effective as of January 1, 2018 (the “Third Additional Premises Commencement Date”), the Third Additional Premises shall constitute a part of the Tenant’s Premises demised to Tenant under the Lease, so that the “Tenant’s Premises” and, by definition the “Premises” (as defined in Sections 1.1 and 2.1 of the Lease), shall include both the Existing Premises and the Third Additional Premises.

2.Term. The Term of the Lease for the Existing Premises and the Third Additional Premises shall be coterminous. Accordingly, the extension option contained in Section 9.18 of the Lease (as amended by Section 2 of the First Amendment and as further amended by Section 2 of the Third Amendment) shall apply to the Existing Premises and the Third Additional Premises collectively and not to either such space independently.

3.Annual Fixed Rent.

(A)    Annual Fixed Rent for the Existing Premises through the Second Extended Term shall continue to be payable as set forth in the Lease.

(B)    From and after April 1, 2018 (the “Third Additional Premises Rent Commencement Date”) through the Second Extended Term, Annual Fixed Rent for the Third Additional Premises shall be payable at the annual rate of $248,402.00 (being the product of (i) $38.50, and (ii) the Rentable Floor Area of the Third Additional Premises (being 6,452 square feet)).

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Exhibit 10.1

(C)    During the Third Extended Term (if exercised), Annual Fixed Rent for the Premises (i.e., the Exiting Premises and the Third Additional Premises) shall be determined as provided in Section 9.18 of the Lease (as amended).

4.Operating Expenses.

(A)     From and after the Third Additional Premises Commencement Date, for the purposes of computing Tenant’s payments for Operating Expenses Allocable to the Premises pursuant to Section 2.6 of the Lease with respect to the Third Additional Premises, the following is hereby added to the definition of “Base Operating Expenses” contained in Section 1.1 of the Lease:

“Base Operating Expenses: With respect to the Third Additional Premises only, Landlord’s Operating Expenses (as hereinafter defined in Section 2.6) for calendar year 2018, being the period from January 1, 2018 through December 31, 2018.”

The definition of Base Operating Expenses shall remain unchanged with respect to the Existing Premises.

(B)    Further, for purposes of determining and calculating Tenant’s payments for Operating Expenses Allocable to the Premises pursuant to Section 2.6 of the Lease respecting the Third Additional Premises, (i) all references in Section 2.6 of the Lease to the “Premises” shall be deemed to be references to the Third Additional Premises, (ii) all references in Section 2.6 of the Lease to the “Rentable Floor Area of the Premises” shall be deemed to be references to the Rentable Floor Area of the Third Additional Premises, and (iii) in the definitions of “Operating Expenses Allocable to the Premises” and “Base Operating Expenses Allocable to the Premises,” the references to the “Rentable Floor Area of the Premises” shall be deemed to be references to the Rentable Floor Area of the Third Additional Premises.

5.Taxes.

(A)    From and after the Third Additional Premises Commencement Date, for the purposes of computing Tenant’s payments for Landlord’s Tax Expenses Allocable to the Premises pursuant to Section 2.7 of the Lease with respect to the Third Additional Premises, the following is hereby added to the definition of “Base Taxes” contained in Section 1.1 of the Lease:

“Base Taxes: With respect to the Third Additional Premises only, Landlord’s Tax Expenses (as hereinafter defined in Section 2.7) for fiscal year 2019, being the period from July 1, 2018 through June 30, 2019.”

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Exhibit 10.1

The definition of Base Taxes shall remain unchanged with respect to the Existing Premises.

(B)    Further, for purposes of determining and calculating the Tenant’s obligations to make payment for Landlord’s Tax Expenses Allocable to the Premises pursuant to Section 2.7 of the Lease respecting the Third Additional Premises, (i) all references in Section 2.7 of the Lease to the “Premises” shall be deemed to be references to the Third Additional Premises, (ii) all references in Section 2.7 to the “Rentable Floor Area of the Premises” shall be deemed to be references to the Rentable Floor Area of the Third Additional Premises, and (iii) in the definitions of “Landlord’s Tax Expenses Allocable to the Premises” and “Base Taxes Allocable to the Premises,” the references to the “Rentable Floor Area of the Premises” shall be deemed to be references to the Rentable Floor Area of the Third Amendment Premises.

6.Parking. Effective as of the Third Additional Premises Commencement Date, the definition of “Number of Parking Privileges” contained in Section 1.1 of the Lease shall be deleted in its entirety and the following shall be substituted therefor:

“Number of Parking Privileges: One hundred and ninety-eight (198) (being three (3) spaces per 1,000 square feet of Rentable Floor Area of the Premises).”

7.Condition of the Third Additional Premises. The condition of the Third Additional Premises upon the Third Additional Premises Commencement Date along with any work to be performed by either Landlord or Tenant shall be as set forth in the Third Additional Premises Work Agreement attached hereto as Exhibit B-1 and made a part hereof.

8.Tenant’s Expansion Option. On the conditions (any one or more of which Landlord may waive, at its election, by written notice to Tenant at any time) that at the time of Tenant’s delivery of the Expansion Notice (as hereinafter defined) (i) there exists no Event of Default, (ii) the Lease is still in full force and effect, and (iii) Tenant has neither assigned the Lease nor sublet more than thirty-three percent (33%) of the Rentable Floor Area of the Premises for all or substantially all of the remainder of the Term of the Lease (except for an assignment or subletting permitted without Landlord’s consent under Section 5.6.4 of the Lease), Tenant shall have the one-time option to lease the space on the second (2^nd) floor of the Building that is identified as the “Expansion Premises” on the plan attached hereto as Exhibit A and incorporated by reference herein (the “Expansion Premises”) on and subject to the terms and provisions herein set forth. The Expansion Premises contain approximately 3,434 square feet of rentable floor area (the “Rentable Floor Area of the Expansion Premises”).

(A)Exercise of Rights to the Expansion Premises. Tenant may exercise its option to lease the Expansion Premises by giving written notice (the “Expansion Notice”) to Landlord not later than April 30, 2018, time being of the essence, of its election to exercise its expansion option for the Expansion Premises. If Tenant fails timely to give such notice, then Tenant shall have no further right to lease the Expansion Premises, time being of the essence of this Section 8. Upon the timely giving of such notice, Landlord shall lease and

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Exhibit 10.1

demise to Tenant, and Tenant shall hire and take from Landlord, the Expansion Premises, without the need for further act or deed by either party, for the term and upon all of the same terms and conditions of this Lease (except as hereinafter set forth in this Section 8) and the Expansion Premises shall become part of the Premises commencing on the Expansion Premises Commencement Date (as hereinafter defined) and continuing for the duration of the Lease Term (as the same may be extended).

(B)Lease Provisions Applicable to the Expansion Premises. The leasing to Tenant of the Expansion Premises shall be upon all the same terms and conditions of the Lease applicable to the Third Additional Premises (including, without limitation, the annual rate of Annual Fixed Rent, the Base Operating Expenses, and the Base Taxes applicable to the Third Additional Premises as set forth in this Fourth Amendment) except as follows:

i.Expansion Premises Commencement Date. If Tenant timely gives Landlord the Expansion Notice, then Landlord shall deliver the Expansion Premises to Tenant on the first (1^st) business day immediately following the date of the Expansion Notice (the “Expansion Premises Commencement Date”), and the Expansion Premises shall be added to and become part of the Premises as of the Expansion Premises Commencement Date.

ii.Expansion Premises Rent Commencement Date.The date on which Tenant’s obligation to pay Annual Fixed Rent in respect of the Expansion Premises shall commence shall be the earlier to occur of (a) the date that is ninety (90) days following the Expansion Premises Commencement Date, and (b) the date Tenant commences occupancy of any portion of the Expansion Premises for the conduct of business.

iii.Term. The Term of the Lease with respect to the Expansion Premises shall be coterminous with the remainder of the Premises (i.e., the Existing Premises and the Third Additional Premises). Accordingly, the extension option contained in Section 9.18 of the Lease (as amended by Section 2 of the First Amendment and as further amended by Section 2 of the Third Amendment) shall apply to the Existing Premises, the Third Additional Premises, and the Expansion Premises collectively and not to any such space or spaces independently.

iv.Condition of the Expansion Premises. Tenant shall accept the Expansion Premises in their then as-is condition (i.e., as of the Expansion Premises Commencement Date) without any obligation on the Landlord’s part to perform any additions, alterations, improvements, demolition or other work therein or pertaining thereto; provided, however, that Landlord shall deliver the Expansion Premises to Tenant broom clean and free of all tenants, occupants and personal property and with all Building systems serving the Expansion Premises in good working order. For the avoidance of doubt, at the expiration or earlier termination of this Lease, Tenant shall not be required to remove any telecommunications cabling or wiring existing in the Expansion Premises as of the Expansion Premises Commencement Date. Tenant, at

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Exhibit 10.1

its sole cost and expense, shall perform all work necessary to prepare the Expansion Premises for Tenant’s occupancy in accordance with the terms and conditions set forth on Exhibit B-1 attached hereto except as the same is hereinafter amended, solely as Exhibit B-1 pertains to the Expansion Premises:

1.All references in Exhibit B-1 to (i) the “Third Additional Premises” shall be replaced with the “Expansion Premises”; (ii) the “Tenant’s Third Additional Premises Work” shall be replaced with the “Tenant’s Expansion Premises Work”; and (iii) the “Tenant’s Third Additional Premises Plans” shall be replaced with the “Tenant’s Expansion Premises Plans; and

2.All references in Section 1.3(iv) of Exhibit B-1 to (i) the “Rentable Floor Area of the Third Additional Premises” shall be replaced with the “Rentable Floor Area of the Expansion Premises”, and (ii) the “Tenant Third Additional Premises Allowance” shall be replaced with the “Tenant Expansion Premises Allowance.”

For the avoidance of doubt, the reference in Section 1.3(iv) of Exhibit B-1 to “March 31, 2019” shall remain unchanged.

(C)Amendment. Notwithstanding the fact that Tenant’s exercise of the above-described expansion option shall be self-executing as aforesaid, the parties hereby agree promptly to execute a lease amendment reflecting the addition of Expansion Premises to the Premises on the terms and conditions set forth in this Section 8.

9.Brokerage.

(A)    Tenant warrants and represents that Tenant has not dealt with any broker in connection with the consummation of this Fourth Amendment except Colliers International (the “Broker”) and in the event any claim is made against Landlord relative to dealings by Tenant with any brokers other than the Broker, Tenant shall defend the claim against Landlord with counsel of Tenant’s selection first approved by Landlord (which approval will not be unreasonably withheld) and save harmless and indemnify Landlord on account of loss, cost or damage which may arise by reason of such claim.

(B)    Landlord warrants and represents that Landlord has not dealt with any broker in connection with the consummation of this Fourth Amendment, other than the Broker, and in the event any claim is made against Tenant relative to dealings by Landlord with brokers other than the Broker, Landlord shall defend the claim against Tenant with counsel of Landlord’s selection first approved by Tenant (which approval will not be unreasonably withheld) and save harmless and indemnify Tenant on account of loss, cost or damage which may arise by reason of such claim.

10.Capitalized Terms. Except as otherwise expressly provided herein, all capitalized terms used herein without definition shall have the same meanings as are set forth in the Lease.

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Exhibit 10.1

11.Ratification. Except as herein amended the Lease shall remain unchanged and in full force and effect. All references to the “Lease” shall be deemed to be references to the Lease as amended by the First Amendment, the Second Amendment, Third Amendment and as herein amended.

12.Authority. Each of Landlord and Tenant hereby represents and warrants to the other that all necessary action has been taken to enter this Fourth Amendment and that the person signing this Fourth Amendment on its behalf has been duly authorized to do so.

13.Electronic Signatures. The parties acknowledge and agree that this Fourth Amendment may be executed by electronic signature, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include faxed versions of an original signature or electronically scanned and transmitted versions (e.g., via pdf) of an original signature.

[Signatures on Following Page]

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Exhibit 10.1

EXECUTED as of the date and year first above written.

	LANDLORD:
WITNESS: /s/ Patrick Kimble	BP BAY COLONY LLC, a Delaware limited liability company BY: BP BAY COLONY HOLDINGS LLC, a Delaware limited liability company, its sole member BY: BOSTON PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership, its member BY: BOSTON PROPERTIES, INC., a Delaware corporation, its general partner

By:	/s/ Bryan J. Koop
Name:	Bryan J. Koop
Title:	Executive Vice President

	TENANT:
WITNESS:
/s/ Chantal Sarmanoukian	AMAG PHARMACEUTICALS, INC., a Delaware corporation

By:	/s/ Edward Myles
Name:	Edward Myles
Title:	EVP & CFO

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Exhibit 10.1

EXHIBIT A

Floor Plan - Third Additional Premises and Expansion Premises

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Exhibit 10.1

EXHIBIT B-1

Third Additional Premises Work Agreement

1.1    Tenant’s Work

(A)    Tenant shall accept the Third Additional Premises in their as-is condition without any obligation on the Landlord’s part to perform any additions, alterations, improvements, demolition or other work therein or pertaining thereto. Tenant, at its sole cost and expense, shall perform all work necessary to prepare the Third Additional Premises for Tenant’s occupancy in accordance with plans and specifications prepared by an architect, licensed by the Commonwealth of Massachusetts and reasonably approved by Landlord, such plans and specifications to be subject to the reasonable approval of the Landlord. Tenant shall submit to Landlord a detailed floor plan layout together with working drawings (the “Tenant’s Submission”) for work to be performed by Tenant to prepare the Third Additional Premises for Tenant’s occupancy (“Tenant’s Third Additional Premises Work”). Such floor plan layout and working drawings (the “Third Additional Premises Plans”) shall contain at least the information required by, and shall conform to the requirements of, Exhibit B-2 attached hereto and made a part hereof. Provided that the Third Additional Premises Plans contain at least the information required by, and conform to the requirements of, said Exhibit B-2, Landlord’s approval of the Third Additional Premises Plans shall not be unreasonably withheld, conditioned or delayed, and if Landlord does not require third-party review of such Third Additional Premises Plans, Landlord shall respond within fourteen (14) days after Tenant has submitted the Third Additional Premises Plans to Landlord; however, Landlord’s determination of matters relating to aesthetic issues relating to alterations or changes which are visible outside the Premises shall be in Landlord’s sole discretion. If Landlord disapproves of any Third Additional Premises Plans, then Tenant shall promptly have the Third Additional Premises Plans revised by its architect to incorporate all objections and conditions presented by Landlord and shall resubmit such plans to Landlord no later than seven (7) days after Landlord has submitted to Tenant its objections and conditions. Such process shall be followed until the Third Additional Premises Plans shall have been approved by the Landlord without objection or condition.

(B)    Once the Third Additional Premises Plans have been approved by Landlord, Tenant, at its sole cost and expense, shall promptly, and with all due diligence, perform Tenant’s Third Additional Premises Work as set forth on the Third Additional Premises Plans, and, in connection therewith, the Tenant shall obtain all necessary governmental permits and approvals for Tenant’s Third Additional Premises Work. All of Tenant’s Third Additional Premises Work shall be performed strictly in accordance with the Third Additional Premises Plans and in accordance with applicable Legal Requirements (as defined in Section 1.3 of the Lease) and Insurance Requirements (as defined in Section 5.12 of the Lease). Tenant shall have Tenant’s Third Additional Premises Work performed by contractors, reasonably approved by Landlord, which contractors shall provide to Landlord such insurance as required by Section 8.14 of the Lease. Landlord shall have the right to provide such rules and regulations relative to the performance of Tenant’s Third Additional Premises Work and

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Exhibit 10.1

any other work which the Tenant may perform under the Lease and Tenant shall abide by all such reasonable rules and regulations and shall cause all of its contractors to so abide including, without limitation, payment for the costs of using Building services; provided, however, in the event of a conflict between such rules and regulations and the terms of the Lease, the terms of the Lease shall govern. It shall be Tenant’s obligation to obtain a certificate of occupancy or other like governmental approval for the use and occupancy of the Third Additional Premises to the extent required by law, and Tenant shall not occupy any portion of the Third Additional Premises for the conduct of business until and unless it has obtained such approval (to the extent required by law) and has submitted to Landlord a copy of the same together with waivers of lien from all of Tenant’s contractors in form adequate for recording purposes. Tenant shall also prepare and submit to Landlord promptly after Tenant’s Third Additional Premises Work is substantially complete a set of as-built plans in both print and electronic forms showing the work performed by Tenant to the Third Additional Premises including, without limitation, any wiring or cabling installed by Tenant or Tenant’s contractor for Tenant’s computer, telephone and other communication systems.

1.2    Quality and Performance of Work

All construction work required or permitted by the Lease shall be done in a good and workmanlike manner and in compliance with all applicable Legal Requirements and all Insurance Requirements. All of Tenant’s work shall be coordinated with any work being performed by or for Landlord and in such manner as to maintain harmonious labor relations. Landlord may inspect Tenant’s Third Additional Premises Work at reasonable times and shall promptly give notice of observed defects. Landlord authorizes Tenant to rely in connection with design and construction upon approval and other actions on Landlord’s behalf by Landlord’s Construction Representative named herein or any person hereinafter designated in substitution or addition by notice to the Tenant. Landlord hereby designates Kara Must as its Construction Representative.Tenant acknowledges that Tenant is acting for its own benefit and account and that Tenant will not be acting as Landlord’s agent in performing any Tenant Third Additional Premises Work, accordingly, no contractor, subcontractor or supplier shall have a right to lien Landlord’s interest in the Property in connection with any work.

1.3    Special Allowance

Landlord shall provide to Tenant a special allowance in an amount equal to the product of (x) $15.00 and (y) the Rentable Floor Area of the Third Additional Premises (the “Tenant Third Additional Premises Allowance”). The Tenant Third Additional Premises Allowance shall be used and applied by Tenant solely on account of the cost of Tenant’s Third Additional Premises Work. Provided that the Tenant (i) has completed all of such Tenant’s Third Additional Premises Work in accordance with the terms of this Fourth Amendment, has paid for all of such Tenant’s Third Additional Premises Work in full and has delivered to Landlord lien waivers from all persons who might have a lien as a result of such work, in the recordable forms attached to the Third Amendment as Exhibit E, (ii) has delivered to Landlord its certificate specifying the cost of such Tenant’s Third Additional

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Exhibit 10.1

Premises Work and all contractors, subcontractors and suppliers involved with Tenant’s Third Additional Premises Work, together with evidence of such cost in the form of paid invoices, receipts and the like, (iii) has delivered to Landlord a final set of record drawings for Tenant’s Third Additional Premises Work, (iv) has satisfied the requirements of (i) through (iii) above and made request for such payment on or before March 31, 2019, (v) is not otherwise in default under the Lease beyond any applicable notice and cure period, and (vi) there are no liens (unless bonded to the reasonable satisfaction of Landlord) against Tenant’s interest in the Lease or against the Building or the Site arising out of Tenant’s Third Additional Premises Work or any litigation in which Tenant is a party, then within thirty (30) days after the satisfaction of the foregoing conditions, the Landlord shall pay to the Tenant the lesser of the amount of such costs so certified or the amount of the Tenant Third Additional Premises Allowance. For the purposes hereof, the cost to be so reimbursed by Landlord shall include the cost of leasehold improvements, but not the cost of any of Tenant’s personal property, trade fixtures or trade equipment or any so-called soft costs for architectural or engineering fees or for telecommunications and AV wiring above the Soft Costs Cap (hereinafter defined). The total amount of the Tenant Third Amendment Premises Allowance that may be applied towards soft costs for architectural and engineering fees and for telecommunications and AV wiring shall not exceed an amount equal to the product of (x) $4.00 and (y) the Rentable Floor Area of the Third Additional Premises (the “Soft Costs Cap”). Notwithstanding the foregoing, Landlord shall be under no obligation to apply any portion of the Tenant Third Additional Premises Allowance for any purposes other than as provided in this Section 1.3, nor shall Landlord be deemed to have assumed any obligations, in whole or in part, of Tenant to any contractors, subcontractors, suppliers, workers or materialmen. Further, the Tenant Third Additional Premises Allowance shall only be applied towards the cost of leasehold improvements and in no event shall Landlord be required to make application of any portion of the Tenant Third Additional Premises Allowance towards Tenant’s personal property, trade fixtures or moving expenses or on account of any supervisory fees, overhead, management fees or other payments to Tenant, or any partner or affiliate of Tenant. In the event that such cost of Tenant’s Third Additional Premises Work is less than the Tenant Third Additional Premises Allowance, Tenant shall not be entitled to any payment or credit nor shall there be any application of the same toward Annual Fixed Rent or Additional Rent owed by Tenant under the Lease.

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Exhibit 10.1

EXHIBIT B-2

Tenant Plan and Working Drawing Requirements

1. Floor plan indicating location of partitions and doors (details required of partition and door types).

2. Location of standard electrical convenience outlets and telephone outlets.

3. Location and details of special electrical outlets; (e.g. Xerox), including voltage, amperage, phase and NEMA configuration of outlets.

4. Reflected ceiling plan showing layout of standard ceiling and lighting fixtures. Partitions to be shown lightly with switches located indicating fixtures to be controlled.

5. Locations and details of special ceiling conditions, lighting fixtures, speakers, etc.

6. Location and heat load in BTU/Hr. of all special air conditioning and ventilating requirements and all necessary HVAC mechanical drawings.

7. Location and details of special structural requirements, e.g., slab penetrations and areas with floor loadings exceeding a live load of 70 lbs./s.f.

8. Locations and details of all plumbing fixtures; sinks, drinking fountains, etc.

9. Location and specifications of floor coverings, e.g., vinyl tile, carpet, ceramic tile, etc.

10. Finish schedule plan indicating wall covering, paint or paneling with paint colors referenced to standard color system.

11. Details and specifications of special millwork, glass partitions, rolling doors and grilles, blackboards, shelves, etc.

12. Hardware schedule indicating door number keyed to plan, size, hardware required including butts, latchsets or locksets, closures, stops, and any special items such as thresholds, soundproofing, etc. Keying schedule is required.

13. Verified dimensions of all built-in equipment (file cabinets, lockers, plan files, etc.).

14. Location of any special soundproofing requirements.

15. All drawings to be uniform size (30” X 42”) and shall incorporate the standard project electrical and plumbing symbols and be at a scale of 1/8” = 1’ or larger.

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Exhibit 10.1

16. Drawing submittal shall include the appropriate quantity required for Landlord to file for permit along with four half size sets and one full size set for Landlord’s review and use.

17. Provide all other information necessary to obtain all permits and approvals for Tenant’s Third Additional Premises Work.

18. Upon completion of the Tenant’s Third Additional Premises Work, Tenant shall provide Landlord with two hard copies and one CAD file of all updated architectural and mechanical drawings to reflect all project sketches and changes.

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EX-10.2

Exhibit 10.2

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

ASSIGNMENT AND

FIRST AMENDMENT TO DEVELOPMENT AND LICENSE AGREEMENT

This Assignment and First Amendment to Development and License Agreement (the “Amendment”) is entered into as of the 20th day of March, 2018 (the “Effective Date”) by and between Antares Pharma, Inc., a Delaware corporation, with offices located at 100 Princeton South, Suite 300, Ewing, NJ 08628 (“Antares”), AMAG Pharma USA, Inc. (f/k/a Lumara Health Inc.), a Delaware corporation (“AMAG USA”), and AMAG Pharmaceuticals, Inc., a Delaware corporation, with a corporate address at 1100 Winter Street, Waltham, MA 02451 (“AMAG”) to amend the terms of that certain Development and License Agreement between Antares and AMAG USA, dated September 30, 2014 (the “Agreement”). Antares, AMAG USA and AMAG are sometimes referred to in this Amendment individually as a “Party” and collectively as the “Parties”.

WHEREAS, AMAG USA and Antares entered into the Agreement under which Antares granted AMAG USA an exclusive, worldwide license to Antares’ VIBEX® QuickShot® (QS) auto-injection system or similar Device for use with HPC, and further under which Antares and AMAG USA agreed to collaborate to develop such a product; and

WHEREAS, AMAG USA was acquired by AMAG on November 12, 2014 and is a wholly-owned subsidiary of AMAG; and

WHEREAS, AMAG USA desires to assign, and AMAG desires to assume, the rights and obligations of AMAG USA under the Agreement (the “Assignment”), effective as of May 22, 2015 (the “Assignment Effective Date”); and

WHEREAS, Antares desires to consent to the Assignment, effective as of the Assignment Effective Date; and

WHEREAS, contemporaneously with the execution of this Amendment, Antares and AMAG are entering into a Manufacturing Agreement pursuant to which Antares agrees to sell, and AMAG agrees to purchase the Products (as defined therein), on the terms set forth therein; and

WHEREAS, Antares, AMAG USA and AMAG mutually desire to amend the terms of the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained herein, the Parties hereto agree to amend the Agreement as follows:

1.Transfer of Agreement to AMAG. In accordance with Section 20.3 of the Agreement, Antares hereby recognizes and consents to the Assignment of the Agreement from AMAG USA to AMAG, effective as of the Assignment Effective Date. AMAG agrees that, effective as of the Assignment Effective Date, it assumed all rights and obligations of AMAG USA under the Agreement and such Agreement is binding on AMAG as AMAG USA’s permitted assignee as of such date, and AMAG USA agrees that, effective as of the Assignment Effective Date, it assigned,

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

transferred and conveyed all of its rights, title, and interests under the Agreement to AMAG. For the avoidance of doubt, all references to “Lumara Health Inc.” or “Lumara” in the Agreement shall refer to “AMAG Pharmaceuticals, Inc.” or “AMAG”, as applicable.

2.Amendment to Agreement.

2.1Confidential Information.

a.Section 17.1 of the Agreement is hereby deleted in its entirety and replaced as follows:

“Confidentiality; Exceptions. Unless otherwise set forth in this Agreement, with respect to all Information disclosed or provided by, or on behalf of, either Party to the other or its designees in connection with this Agreement or the Manufacturing Agreement, whether provided orally, visually, electronically, in writing or in any other form, (“Confidential Information”), the Party receiving such Confidential Information (“Recipient”) shall maintain the confidential and proprietary status of such Confidential Information, keep such Confidential Information and each part thereof within its possession or under its control, use all its reasonable efforts to prevent the disclosure of any Confidential Information to any other person, and use all its reasonable efforts to ensure that such Confidential Information is used only for those purposes specifically authorized by this Agreement. These mutual obligations of confidentiality shall apply until [***] following the expiration or termination of the Agreement, but such obligations shall not apply to any Information to the extent that such Information is:

(i)    independently developed by such Party outside the scope and not in violation of this Agreement (including without access to or use of the Confidential Information), as evidenced by such Party’s contemporaneous written records;

(ii)    in the public domain at the time of its receipt or thereafter becomes part of the public domain through no fault of or breach of this Agreement by the Recipient or by any person to whom the Recipient disclosed such Confidential Information;

(iii)    received without an obligation of confidentiality from a Third Person having the right to disclose such information and provided such information was not obtained by such Third Person directly or indirectly from the disclosing Party on a confidential basis; or

(iv)    released from the restrictions of this Section 17.1 by the express written consent of the disclosing Party.

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Notwithstanding the provisions of Section 17.1 hereof, the Parties may, to the extent necessary, disclose and use Confidential Information to secure patent protection for an invention developed as a result of the Product Development Program or, to obtain regulatory clearance or institutional or government approval to clinically test or market Product Notwithstanding anything to the contrary contained herein, all Confidential Information disclosed by the Parties prior to the date hereof shall be subject to the confidentiality provisions set forth in this Article 17.”

b.Section 17.2(a) of the Agreement is hereby deleted in its entirety and replaced as follows:

“Authorized Disclosures; Permitted Persons. Each Party may disclose Confidential Information of the other Party, without such Party’s prior written consent, to its directors, employees, agents, consultants, advisors, permitted suppliers, and other persons or entities who need to know such Confidential Information to assist the Party in fulfilling its obligations or exploiting its rights hereunder (“Permitted Person”). In addition, each Party may disclose the terms of this Agreement to investors or potential investors, provided the Party ensures that such Third Person is bound by a confidentiality agreement with terms at least as restrictive as the terms herein prior to disclosure of Confidential Information. The Party making such disclosure shall be responsible for any disclosure or use of Confidential Information in violation of this Agreement or the Manufacturing Agreement by any Permitted Person, investor or potential investor to the same extent as if the confidentiality breach was made by the Party.”

c.Section 17.2(b) of the Agreement is hereby deleted in its entirety and replaced as follows:

“Legally Required or Necessary. Each Party may also disclose the Confidential Information of the other Party, without such Party’s prior written consent, to any person, entity, or government or regulatory authority to the extent that the law requires such disclosure. Notwithstanding the foregoing, prior to disclosing the other Party’s Confidential Information under this Subsection, the disclosing Party, must give the other Party prompt written notice of such requirement or order, take all reasonable and lawful actions to avoid or minimize the degree of disclosure of such Confidential Information and cooperate reasonably with the other Party and permit the other Party to participate in any efforts to seek a protective order.”

2.2Authorized Disclosures of Confidential Information. Article 18 of the Agreement is hereby amended by adding the following as a new Section 18.4:

“18.4 Securities Authorities and Stock Exchange Filings. Notwithstanding anything to the contrary herein, the Parties shall coordinate in advance with each other in connection with (i) a Party’s decision to file this

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Agreement or the Manufacturing Agreement, including any amendments or modifications thereto, with any securities authority or with any stock exchange on which securities issued by a Party or its Affiliate are traded, or (ii) any other disclosure of information pertaining to this Agreement as otherwise required by the rules and regulations of the Securities and Exchange Commission or any other securities authority or stock exchange on which securities issued by a Party or its Affiliates are traded, and, in each such instance, (a) the filing Party will provide the other Party at least [***] (unless a shorter period of time is required pursuant to Applicable Law or securities exchange rules) to review and comment on the proposed filing or other disclosure of information, including, if applicable, a draft redacted version of this Agreement, the Manufacturing Agreement, and/or any amendments thereto , and (b) both Parties shall work together in good faith to agree on the disclosure to be made, having due and proper regard to their legal obligations; provided that the filing Party subject to such rules and regulations shall ultimately retain control over what information to disclose to any securities authority or stock exchange. Each filing Party shall use reasonable efforts to seek confidential treatment for terms proposed to be redacted; provided that the Parties shall use their reasonable efforts to file redacted versions with any governing bodies which are consistent with redacted versions previously filed with any other governing bodies. Other than such obligations, neither Party (nor any of its Affiliates) shall be obligated to consult with or obtain approval from the other Party with respect to any filings required by the rules and regulations of the Securities and Exchange Commission or any other securities authority or stock exchange on which securities issued by a Party or its Affiliates are traded.”

2.3Termination of Development and License Agreement and Manufacturing Agreement.

a.Section 19.2(c) of the Agreement is hereby deleted in its entirety and replaced as follows:

“[Intentionally Omitted].”

b.Article 19 of the Agreement is hereby amended by adding the following as a new Section 19.8:

“Co-Termination. Without further action by either Party, this Agreement shall automatically terminate effective immediately upon the termination of the Manufacturing Agreement in its entirety, subject to the provisions that expressly survive the termination thereof.”

2.4Notices. Section 20.6 of the Agreement is hereby deleted in its entirety and replaced as follows:

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“Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by electronic mail or facsimile transmission (receipt verified), telexed, mailed by registered or certified mail (return receipt requested), postage prepaid, or sent by express courier service, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice; provided, that notices of a change of address shall be effective only upon receipt thereof):

If to AMAG, addressed to:	AMAG Pharmaceuticals, Inc.
[***]	1100 Winter Street
	Waltham, MA 02451 [***]
With a copy to: [***]	AMAG Pharmaceuticals, Inc. 1100 Winter Street Waltham, MA 02451 [***]
If to Antares, addressed to:	Antares Pharma, Inc.
[***]	100 Princeton South, Suite 300
	Ewing, NJ 08628
	[***]
with a copy to:	Antares Pharma, Inc.
General Counsel	100 Princeton South, Suite 300
	Ewing, NJ 08628
	[***]

d. Section 20.13 of the Agreement is hereby deleted in its entirety and replaced as follows:

“Entire Agreement of the Parties. This Agreement, including the Exhibits attached hereto (as amended by the Assignment and First Amendment to Development and License Agreement, dated March 20, 2018), the Amended and Restated Quality Agreement between AMAG and Antares, dated March 20, 2018, and the Manufacturing Agreement between AMAG and Antares, dated March 20, 2018,constitute and contain the complete, final and exclusive understanding and agreement of the Parties hereto, and cancels and supersedes any and all prior negotiations, correspondence, understandings and agreements, whether oral or written, between the Parties respecting the subject matter hereof. In the event there is a discrepancy

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between the Exhibits and the Agreement, the Agreement shall control, provided that to the extent there is a discrepancy between the Quality Agreement and the Agreement, the Quality Agreement shall control with respect to quality-related matters; and this Agreement shall control with respect to all other matters. Furthermore, to the extent that any provision of this Agreement is inconsistent with any provision of the Manufacturing Agreement, the Manufacturing Agreement shall control and then only to the extent of the inconsistency. For the avoidance of doubt, the Manufacturing Agreement supersedes and replaces Sections 10.2 and 10.3 of this Agreement.”

3. Effect of Amendment. Except as amended hereby, all provisions of the Agreement, together with all Statements of Work governed by the Agreement, are hereby ratified and confirmed and shall continue in full force and effect and are incorporated herein by reference. This Amendment shall be governed by and construed consistently with the terms of the Agreement.

4. Definitions. All capitalized terms used but not otherwise defined in this Amendment shall have the meanings given to them in the Agreement.

5. Governing Law. This Amendment shall be governed by and interpreted in accordance with the substantive laws of the State of New York, without regard to its choice of law rules.

6. Miscellaneous. This Amendment may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. An executed copy of this Amendment may be delivered by electronic transmission, and electronic copies of executed signature pages shall be binding as originals. The headings of the various sections of this Amendment have been inserted for reference only and shall not be deemed to be a part of this Amendment.

[Signature page follows.]

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IN WITNESS WHEREOF, the duly authorized representatives of each Party have executed this Amendment as of the Effective Date.

AMAG PHARMACEUTICALS, INC.	ANTARES PHARMA, INC.
By: /s/ William K. Heiden	By:_/s/ Robert Apple
Name: William K. Heiden	Name: Robert Apple
Title: President and Chief Executive Officer	Title: President and Chief Executive Officer
AMAG PHARMA USA, INC.
By: /s/ William K. Heiden
Name: William K. Heiden
Title: President and Chief Executive Officer

[Signature Page to Assignment and First Amendment to

Development and License Agreement]

EX-10.3

Exhibit 10.3

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Manufacturing Agreement

Between

Antares Pharma, Inc.

and

AMAG Pharmaceuticals, Inc.

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

MANUFACTURING AGREEMENT

This Manufacturing Agreement (“Agreement”) is made and entered into as of the 20th day of March, 2018 (the “Effective Date”) by and between Antares Pharma, Inc., a Delaware corporation, with offices located at 100 Princeton South, Suite 300, Ewing, NJ 08628 (“Antares”), and AMAG Pharmaceuticals, Inc., a Delaware corporation, with a corporate address at 1100 Winter Street, Waltham, MA 02451 (“AMAG”). Antares and AMAG are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

Recitals

WHEREAS, AMAG is engaged in discovering, developing and marketing pharmaceutical products, including the Drug (as defined below);

WHEREAS, Antares is engaged in the research and development of certain drug delivery devices, including auto-injection systems and the development and marketing of pharmaceutical products;

WHEREAS, AMAG Pharma USA, Inc. (f/k/a Lumara Health, Inc., (“AMAG USA”)), which was acquired by AMAG on November 12, 2014 and is a wholly-owned subsidiary of AMAG, and Antares entered into a certain Development and License Agreement (defined below) under which Antares granted AMAG USA an exclusive, worldwide license to Antares’ VIBEX® QuickShot® (QS) auto-injection system or similar Device (defined below) for use with the Drug, and further under which Antares and AMAG USA agreed to collaborate to develop such a product;

WHEREAS, contemporaneously with the execution of this Agreement, Antares, AMAG and AMAG USA are entering into a First Amendment to Development and License Agreement, pursuant to which, among other amendments set forth therein, AMAG USA assigned, and AMAG assumed, the rights and responsibilities under the Development and License Agreement (the “First Amendment to Development and License Agreement”);

WHEREAS, AMAG (as the permitted assignee of the Development and License Agreement) and Antares agreed under the Development and License Agreement to enter into this Agreement and, whereby it will provide Antares or its Subcontractor (defined below) with Prefilled Syringes (defined below) containing the Drug and Antares or it Subcontractor will incorporate the Prefilled Syringes into Devices to produce finished Products (defined below) and sample Products to supply AMAG’s requirements for such Products and sample Products; and

WHEREAS, AMAG wishes to purchase, and Antares wishes to supply, AMAG’s requirements of the Trainers (defined below) on the terms set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained in this Agreement, the Parties hereto agree as follows:

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ARTICLE 1INTERPRETATION

1.1 Definitions. Capitalized terms used in this Agreement and not otherwise defined in this Section 1.1 shall have the meanings set out in the Development and License Agreement. The following terms shall, unless the context otherwise requires, have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

“[***]” has the meaning specified in Section 3.2(c);

“[***]” has the meaning specified in Section 3.2(c);

[***]

“Agreement” has the meaning specified in the Preamble;

“AMAG” has the meaning specified in the Preamble;

“AMAG Indemnitees” has the meaning specified in Section 9.2;

“AMAG USA” has the meaning specified in the Recitals;

“AMAG Quality Tasks” means AMAG’s quality, testing and release obligations set forth in Section 2.6(b) and in the Quality Agreement;

“Annual Product Review Report”means the annualproduct reviewreportas described in Title 21 of the United States Code of Federal Regulations, Section 211.180(e);

“Annual Report” means the annual report as described in Title 21 of the United States Code of Federal Regulations, Section 314.81(b)(2);

“Antares” has the meaning specified in the Preamble;

“Antares’ Fully Burdened Manufacturing Costs” means those costs actually incurred by Antares related directly to the acquisition of materials and their conversion into Products, sample Products or Trainers, as the case may be. [***];

“Antares Indemnitees” has the meaning specified in Section 9.1;

“Batch Record” means a detailed, step-by-step description of the entire assembly, packaging and labelling process for the Products and sample Products which explains how such Products or sample Products (as the case may be) were assembled, packaged and labelled, indicating specific types and quantities of Components, additional materials, processing parameters, in-process quality controls, and other relevant controls;

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“Binding Forecast” has the meaning specified in Section 3.2(a);

“[***]” has the meaning specified in Section 3.2(c);

“Business Day” means a day other than a Saturday, Sunday or a day that is a federal holiday in the United States;

“Calendar Quarter” means a three-month period ending on March 31, June 30, September 30 or December 31;

“Calendar Year” means a calendar year occurring after the Effective Date; provided, however, the first Calendar Year means the period from the Effective Date up to and including December 31 of the same calendar year in which the Effective Date occurs;

“[***]” has the meaning specified in Section 3.2(c);

“Certificate of Analysis (Device)” means a document signed by an authorized representative of Antares or the Subcontractor that conducted the applicable analysis, in reasonable and customary form, that: (i) describes the specifications for, and testing methods applied to, the quantity of each of the Major Device Components manufactured by or on behalf of Antares pursuant to this Agreement, and the results of such testing, and (ii) certifies that such quantity of each of the Major Device Components was manufactured in accordance with cGMP, all other Applicable Laws, and the Product Specifications;

“Certificate of Analysis (PFS Manufacture)” means a document signed by an authorized representative of AMAG, its agent or its permitted subcontractor that conducted the applicable analysis, in reasonable and customary form, that: (i) describes the specifications for, and testing methods applied to the Drug manufactured by or on behalf of AMAG pursuant to this Agreement, and the results of such testing, and (ii) certifies that such quantity of Drug was manufactured in accordance with cGMP, all other Applicable Laws, and the Product Specifications;

“Certificate of Analysis (PFS ID Testing)” means a document signed by an authorized representative of AMAG, its agent or its permitted subcontractor that conducted the applicable analysis, in reasonable and customary form, that describes the specifications for, and testing methods applied to, the Drug manufactured by or on behalf of AMAG pursuant to this Agreement for identification of the Drug, and the results of such testing;

“Certificate of Analysis (Product)” means a document signed by an authorized representative of AMAG, its agent or its permitted subcontractor that conducted the applicable analysis, in reasonable and customary form, that: (i) describes the specifications for, and testing methods applied to, the quantity of Product and/or sample Product manufactured by or on behalf of Antares pursuant to this Agreement, and the results of such testing, and (ii) certifies that such quantity of Product and/or sample Product was

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manufactured in accordance with cGMP, all other Applicable Laws, and the Product Specifications;

“Certificate of Conformance (Device)” means the document provided to AMAG by Antares or the Subcontractor that conducted the applicable review, as the case may be, that certifies each batch of each of the Major Device Components was manufactured in compliance with the cGMP, all other Applicable Laws, and the Product Specifications;

“Certificate of Conformance (Product)” means the document provided to AMAG by Antares or the Subcontractor that conducted the applicable review, as the case may be, that certifies each batch of Product and/or sample Product was assembled, packaged and labelled in compliance with the cGMP, all other Applicable Laws, and the Product Specifications;

“cGMP” means current good manufacturing practice and standards as provided for (and as amended from time to time) in the “Current Good Manufacturing Practice Regulations” of the U.S. Code of Federal Regulations Title 21 (21CFR§4; 21CFR§210/211 and 21CFR§820) and in European Community Council Directive 93/42/EEC concerning medical devices, any U.S., European, or other applicable laws, regulations or respective guidance documents now or subsequently established by a governmental or regulatory authority, and any arrangements, additions, or clarifications;

“Change Order” has the meaning specified in Section 4.2(b);

“Commercially Reasonable Efforts” means, with respect to each Party, such efforts and commitment of resources in accordance with [***] that such Party [***]. As used in this definition of “Commercially Reasonable Efforts”, “reasonable” shall be measured by [***]. References in this Agreement to “commercially reasonable” and similar formulations shall be deemed to incorporate the standard set forth in this definition of “Commercially Reasonable Efforts”;

“Components” means, collectively, [***];

“Damages” has the meaning specified in Section 9.1;

“Deficiency Notice” has the meaning specified in Section 5.1(a);

“Delivery Date” means the delivery date of a Purchase Order of Products, sample Products or Trainers as agreed upon by the Parties pursuant to Section 3.2(b)(i) or Antares’ proposed date if AMAG does not respond within the [***] set forth in Section 3.2(b)(i);

“Development and License Agreement” means that certain Development and License Agreement entered into by and between the Parties dated as of September 30, 2014, as amended by the First Amendment to the Development and License Agreement, and as further amended by the Parties from time to time;

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“Device” means the VIBEX^® QS auto-injection system device, consisting of the Major Device Components, designed and developed to incorporate a Prefilled Syringe for delivery of the Drug, and any improvements or modifications thereof made pursuant to the Development and License Agreement, or such other Antares-proprietary device as agreed to by Antares designed and developed to deliver the Drug pursuant to the Development and License Agreement, as further set forth on Exhibit B. For greater certainty, the Major Device Components are intended to be assembled with the Prefilled Syringe to produce a finished Product;

“DHF” has the meaning specified in the Development and License Agreement;

“DMF” has the meaning specified in the Development and License Agreement and is expanded to further clarify that a DMF is equivalent to an “MAF” or Master File;

“Drug” means 17-alpha hydroxyprogesterone caproate;

“Effective Date” has the meaning specified in the Preamble;

[***]

“Excess Order” has the meaning specified in Section 3.2(b)(i);

“Firm Orders” means any Purchase Order accepted by Antares pursuant to Section 3.2(b)(i) (as evidenced by an Order Acceptance), including any Excess Orders agreed to by Antares in an Order Acceptance, with the Delivery Date as set forth in Section 3.2(b)(i);

“First Amendment to the Development and License Agreement” has the meaning specified in the Recitals;

“Force Majeure Event” has the meaning specified in Section 12.4;

“Forecast” has the meaning specified in Section 3.2(a);

“[***]” has the meaning specified in Section 4.6;

“[***]” has the meaning specified in Section 3.2(c);

“[***]” has the meaning specified in Section 3.2(c);

“Invoice” has the meaning specified in Section 4.2(a);

“[***]” has the meaning specified in Section 3.2(c);

“Latent Defects” has the meaning specified in Section 5.1(a);

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“Long Lead Time Materials” means [***], a description of which are set forth on Exhibit A (as such exhibit may be amended from time to time by the mutual written agreement of the Parties), [***];

“Major Device Components” means the following Components of the Device: [***].

“Manufacture(d) at Risk” has the meaning specified in Section 3.7(a);

“Manufacturing Services” means the manufacturing, quality control and quality assurance, storage, labelling, packaging, assembly and related services, to be performed by Antares or its Subcontractor as contemplated in this Agreement and described in the Specifications and the Quality Agreement, required to manufacture Devices and produce and supply Trainers, Products and sample Products from such Devices, Prefilled Syringes and Components. For the avoidance of doubt, the “Manufacturing Services” specifically excludes the AMAG Quality Tasks and all other services, activities or tasks to be performed by or on behalf of AMAG set forth in this Agreement or as otherwise described in the Specifications or the Quality Agreement;

“Manufacturing Site” means [***] or such other facility owned and operated by Antares or a Subcontractor on behalf of Antares under this Agreement [***].

“Non-Binding Forecast” has the meaning specified in Section 3.2(a);

“Non-Cancellable Non-Returnable Materials” or “NCNR Materials” means [***];

[***]

“Order Acceptance” has the meaning specified in Section 3.2(b)(i);

“Other Approved Antares Product” has the meaning specified in Section 4.6(a);

“Parties” and “Party” have the meanings specified in the Preamble;

“Person” means any natural person, a corporation, a partnership, a trust, a joint venture, a limited liability company, any Governmental Authority or any other entity or organization;

“[***]” has the meaning specified in Section 2.1(b);

“Prefilled Syringe” means the prefilled syringe containing the formulated Drug for incorporation into the Device, as further set forth in the Product Specifications;

“Prior Orders” has the meaning specified in Section 3.2(c);

“Product(s)” means the fully packaged Device for auto-injection delivery of the Drug incorporating a Prefilled Syringe and other applicable Components listed on Exhibit B

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hereto, as such exhibit may be amended from time to time by the mutual written agreement of the Parties;

“Product Specifications” means, as set forth on Exhibit B hereto, for each Product, with AMAG having primary responsibility with respect to the Drug and Prefilled Syringe, and Antares having primary responsibility with respect to the Devices and Components, the following documents relating to such Product:

(a) specifications for Devices, Prefilled Syringes and Components;

(b) the Product Specifications; and

(c) storage, packaging, prescribing information and label specifications and requirements; and

all as updated, amended and revised from time to time by the Parties in writingin accordance with the terms of this Agreement, and in all cases including compliance with all Applicable Laws and the Quality Agreement;

“Quality Agreement” has the meaning specified in Section 2.6(a);

“Recall” means any action (i) by AMAG to recover title to or possession of quantities of the Products, sample Products and/or Trainers sold or shipped to third parties (including, without limitation, the voluntary withdrawal of Products, sample Products and/or Trainers) from the market); or (ii) by any Regulatory Authorities to detain or destroy any of the Products and/or the sample Products. Recall shall also include any action by either Party to refrain from selling or shipping quantities of the Products, sample Products and/or Trainers to third parties which would have been subject to a Recall if sold or shipped;

“Safety Stock” has the meaning specified in Section 3.6(a);

“Second Source Supplier” has the meaning specified in Section 3.9;

“[***]” has the meaning specified in Section 2.1(b);

“Specifications” means the Product Specifications with respect to the Product and sample Product, and the Trainer Specifications with respect to the Trainers, as the case may be;

“Subcontractor” has the meaning specified in Section 2.1(b);

“Supply Failure” has the meaning specified in Section 3.5(a);

“Supply Failure Remedy Option” has the meaning specified in Section 3.5(b);

[***]

“Term” has the meaning specified in Section 7.1;

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“[***]” has the meaning specified in Section 3.2(c);

“Third Person” means any Person or entity other than AMAG, Antares, or an Affiliate or sublicensee of either Party with respect to this Agreement and/or the Development and License Agreement.

“Third Person Claim” has the meaning specified in Section 9.1;

“Trainer”means a reusable version of the Product that does not incorporate the Prefilled Syringe and that is to be used to demonstrate how to operate the Product;

“Trainer Specifications” means, as set forth on Exhibit C hereto, for each Trainer, the requirements and print/part numbers documents relating to such Trainer, as updated, amended and revised from time to time by or on behalf of the Parties, and in all cases including compliance with all Applicable Laws;

“Transfer Price” has the meaning specified on Exhibit D hereto;

“U.S. GAAP”has the meaning specified in the definition of Antares’ Fully Burdened Manufacturing Costs; and

“VAT” means, in relation to any jurisdiction within the European Union, the value added tax provided for in Council Directive 2006/112/EC and charged under the provisions of any national legislation implementing that directive or Council Directive 77/388/EEC together with legislation supplemental thereto and, in relation to any other jurisdiction, the equivalent tax (if any) in that jurisdiction.

“Yield” has the meaning specified in Section 2.10.

1.2 Currency. Unless otherwise indicated, all monetary amounts are expressed in this Agreement in the lawful currency of the United States of America.

1.3 Sections and Headings. The division of this Agreement into Articles, Sections, subsections and Exhibits and the insertion of headings are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to an Article, Section or Exhibit refers to the specified Article, Section or Exhibit to this Agreement. In this Agreement, the terms “this Agreement”, “hereof”, “herein”, “hereunder” and similar expressions refer to this Agreement and not to any particular part, Section, Exhibit or the provision hereof.

1.4 Singular Terms. Except as otherwise expressly provided herein or unless the context otherwise requires, all references to the singular shall include the plural and vice versa.

1.5 Exhibits. The following Exhibits are attached to, incorporated in and form part of this Agreement:

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

Exhibit A -    Long Lead Time Materials

Exhibit B -    Product Specifications

Exhibit C -    Trainer Specifications

Exhibit D -    Transfer Price

Exhibit E -    Quality Agreement

Exhibit F -    Batch Numbering & Expiration Dates

Exhibit G -    Retained Samples

Exhibit H -    Initial Forecast

Exhibit I -    Redundancy Plan

Exhibit J -    [***]

Exhibit K -    AMAG Equipment

Exhibit L -    Form of Change Order

ARTICLE 2MANUFACTURING AND SUPPLY OBLIGATIONS

2.1 Manufacturing Services.

(a) Starting on the Effective Date, Antares or its Subcontractor shall provide the Manufacturing Services in order to manufacture Devices, Products, sample Products and Trainers exclusively for AMAG for the Territory, all in accordance with the Specifications, Applicable Laws, Quality Agreement and this Agreement. For the avoidance of doubt, subject to, and without limiting or amending the exclusivity restrictions and confidentiality obligations set forth in Section 6.1 and ARTICLE 17 of the Development and License Agreement, respectively, Antares or its Subcontractor may manufacture the VIBEX® QS device or other devices (other than the Device) for itself or other Persons. Antares or its Subcontractor shall conduct all Manufacturing Services at the Manufacturing Site and may change the Manufacturing Site for the Products, sample Products and Trainers only with the prior written consent of AMAG, such consent not to be unreasonably withheld, conditioned or delayed (provided that, Antares or its Subcontractor shall provide a minimum of [***] prior written notice of such change of Manufacturing Site).

(b) [***].

(c) Antares shall have the right to specify the final assembly packaging and labeling process (subject to AMAG’s provision of label content) for Products, sample Products and Trainers, including the combination of the components thereof, in accordance with the Specifications and the Quality Agreement.

2.2 Prefilled Syringes.

(a) AMAG or its designee(s) will be responsible for manufacture, formulation and testing of any Drug and the Prefilled Syringe for assembly with the Device into the Product

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

and sample Product by Antares or its Subcontractor and for final Product and/or sample Product release for sale, commercialization or use by a Third Person. AMAG shall supply Prefilled Syringes to Antares or its Subcontractor in accordance with the terms of this Section 2.2 AMAG will have sole decision-making authority regarding the use of a Third Person to manufacture any aspect of the Drug and the Prefilled Syringes. AMAG shall conduct release testing for Prefilled Syringes. Antares or its Subcontractor shall use and store all Prefilled Syringes provided hereunder in accordance with AMAG’s reasonable instructions, the Quality Agreement, cGMPs and all other Applicable Laws at Antares’ or its Subcontractor’s storage facility at the Manufacturing Site. Antares or its Subcontractor shall conduct a visual inspection of all Prefilled Syringes received at the Manufacturing Site not later than [***] after the date of receipt in accordance with the mutually agreed upon procedures. Antares or its Subcontractor shall promptly (and in any event within [***] following completion of applicable inspection) notify AMAG in writing of any visual inspection failure of the Prefilled Syringes. Antares shall not allow any lien or other security interest to be imposed on the Prefilled Syringes by Antares or its Subcontractor or as a result of Antares or its Subcontractor action or inaction. Antares or its Subcontractor shall use all quantities of Prefilled Syringes provided hereunder for the sole purpose of performing the Manufacturing Services on behalf of AMAG and not for any other use or purpose.

(b) The Parties acknowledge and agree that title to and risk of loss of all Prefilled Syringes shall at all times belong to and remain in AMAG; provided that, subject to the limitations on liability set forth in this Section 2.2(b), in the event of loss or damage of any Prefilled Syringes while they are at the Manufacturing Site, Antares shall be only responsible for the replacement costs (as evidenced by AMAG invoices) of such Prefilled Syringes if the damage, loss, theft or destruction was caused by the negligent act or omission or the willful misconduct of Antares or its Subcontractor. For the avoidance of doubt, Antares shall not be responsible for any damage, loss or destruction to the Prefilled Syringes resulting from damage, loss or destruction caused by the reasonable amount of Prefilled Syringes damaged, lost or destroyed in the manufacturing process (i.e. consistent with the Yield) or obsolescence due to changes in the manufacturing process. Not later than [***] following the end of each Calendar Year, AMAG shall provide Antares with an invoice and accounting of the Prefilled Syringes that were damaged or destroyed during the prior year (following notification from Antares of such damage or destruction). Payment of undisputed portions of such invoice shall be due [***] from Antares’ receipt of such invoice. [***]. All Prefilled Syringes in Antares’ possession shall be subject to disposition by AMAG upon expiration or termination of this Agreement, and in either such event, Antares or its Subcontractor shall deliver the Prefilled Syringes to AMAG or its designee, at AMAG’s

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

reasonable expense. AMAG shall be solely responsible and reimburse Antares for all reasonable costs and expenses associated with the storage of the Prefilled Syringes at Antares’ or its Subcontractor’s storage facility at the Manufacturing Site following the expiration or termination of this Agreement. Antares agrees to reasonably cooperate with AMAG, at AMAG’s expense, in the filing of any UCC financing statements relating to the Prefilled Syringes as may be required under Applicable Laws.

(c) All shipments of Prefilled Syringes made by AMAG or its designee to Antares or its Subcontractor hereunder will be delivered [***] Antares’ or its Subcontractor’s Manufacturing Site unless otherwise mutually agreed. [***].

2.3 Devices. Antares or its Subcontractor shall manufacture and test all Devices as specified by the Product Specifications prior to using such Devices to manufacture Products and sample Products. Antares or its Subcontractor shall properly store the Devices at Antares’ or its Subcontractor’s storage facility at the Manufacturing Site pursuant to cGMP and Applicable Law.

2.4 Components. Antares or its Subcontractor shall purchase and inspect all Components as specified by the Specifications prior to using such Components to manufacture Products, sample Products and Trainers. Antares or its Subcontractor shall properly store the Components at Antares’ or its Subcontractor’s storage facility at the Manufacturing Site pursuant to cGMP and Applicable Law.

2.5 Assembly of Devices, Prefilled Syringes and Components. Antares or its Subcontractor shall assemble Devices, Prefilled Syringes and Components into Products, sample Products and Trainers (as applicable) in accordance with the terms of this Agreement.

2.6 Quality Control and Quality Assurance.

(a) On or about the date hereof, the Parties shall amend and restate the Quality Agreement entered into on May 16, 2016 between the Parties covering the Product, sample Products, Trainers, the Device and the Prefilled Syringes, as set forth in the form of Amended and Restated Quality Agreement attached hereto as Exhibit E (as amended and restated, the “Quality Agreement”). The Parties shall review the Quality Agreement and shall modify the same from time to time as detailed in the Quality Agreement as necessary through a written amendment to the Quality Agreement signed by an authorized representative on behalf of each of the Parties. The Parties shall perform the quality control and quality assurance testing specified in Section 2.6(b) and the Quality Agreement. The Parties shall perform Product, sample Product and Trainer review and final release of the Product, sample Product and Trainers for sale in accordance with Section 2.6(b) and the Quality Agreement, the Specifications and Applicable Laws.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

(b) Subject to, and as more fully set forth in, the Quality Agreement, the Parties agree as follows:

[***].

2.7 Labelling and Packaging. Antares or its Subcontractor shall label and package the Products, sample Products and Trainers as set out in the Specifications. AMAG shall be responsible for the cost of artwork development for the Products, sample Products and Trainers. In addition, Antares or its Subcontractor shall arrange for and implement (a) the imprinting of batch numbers and expiration dates for each batch of Products and sample Products shipped, and (b) the imprinting of batch numbers for each batch of Trainers shipped. Such batch numbers and expiration dates shall be affixed on the Products, sample Products and Trainers and, on the shipping carton of each Product, sample Product and Trainer as outlined in the Specifications and, as required by cGMPs and Applicable Laws. The system used by Antares or its Subcontractor for batch numbering and expiration dates is detailed in Exhibit F hereto. AMAG shall be solely responsible for the content of the labelling and the provision of such content. Notwithstanding anything to the contrary in this Agreement, Antares’ obligation to perform the Manufacturing Services is subject to AMAG’s reasonably timely approval and provision of all labelling content. AMAG may, in its sole discretion, make changes to labels, product inserts and other packaging for the Products, sample Products and Trainers, which changes shall be submitted by AMAG to all applicable Regulatory Authorities from which approval of such changes is required. AMAG shall be responsible for the cost of labeling obsolescence due to changes to such labeling made by AMAG, including the reasonable cost of disposal and replacement of packaging materials. Antares’ name shall appear on the label or anywhere else on the Products, sample Products and Trainers as reasonably agreed upon by the Parties, unless: (i) prohibited by Applicable Laws; or (ii) the Parties otherwise agree in writing.

2.8 Validation Activities. Antares or its Subcontractor will be responsible for the development and approval of the validation protocols for analytical methods and manufacturing processes (including packaging processes) for the Products, sample Products and Trainers as described in the Specifications in accordance with the Quality Agreement and shall be approved by AMAG prior to execution thereof. [***].

2.9 Retained Samples. Antares or its Subcontractor shall retain sufficient quantities of shipped Products, sample Products, Devices and Components as retained repository samples as required under the Quality Agreement and Applicable Laws at AMAG’s sole cost and expense and as set forth in Exhibit G. Such retained samples shall minimally represent [***] the number of samples necessary to re-execute chemical release testing and willbe maintained in a suitable storage facility at Antares’ or its Subcontractors’ Manufacturing Site until [***] or such longer period as may be required by Applicable Laws. All such samples shall be available for inspection by AMAG at reasonable intervals upon reasonable

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

notice. AMAG shall advise Antares of the required quantities of shipped Products, sample Products, Devices and Components that AMAG desires to be retained. Antares shall invoice AMAG for the costs associated with performing these activities.

2.10 Yield. [***].

ARTICLE 3ANTARES’ SUPPLY OF PRODUCT

3.1 Supply of Product.

(a) Commencing on the Effective Date and continuing during the Term, Antares shall manufacture and supply, or have manufactured and supplied by its Subcontractor, all quantities of the Products, sample Products and Trainers ordered by AMAG in the Territory pursuant to this Agreement. Commencing on the Effective Date and during the Term, AMAG shall commit to purchase its entire requirements of Product(s), sample Products and Trainers for sale in the Territory from Antares.

(b) The Parties agree that in the event that AMAG seeks Regulatory Approval for the Product, sample Product or Trainers for a country outside of the United States, the Parties will enter into an amendment to this Agreement setting forth the terms and conditions of supply of Products, sample Products or Trainers for that country.

3.2 Orders and Forecasts.

(a) Rolling Forecasts. On or before the [***] after the Effective Date, AMAG shall provide Antares with an updated written [***] rolling forecast of the volume of Product, sample Product and Trainers that AMAG then anticipates will be required to be produced and delivered to AMAG during [***] (the “Forecast”). The initial Forecast is attached hereto as Exhibit H. [***] of each Forecast shall constitute a firm order and be a binding commitment on AMAG to purchase the volume of Product, sample Product and Trainers set forth therein (the “Binding Forecast”). [***] of each Forecast shall be non-binding (the “Non-binding Forecast”). The Non-binding Forecast shall be prepared in good faith by AMAG and represent AMAG’s reasonable expectation of its requirements of Product, sample Product and Trainers for [***] of such Forecast. Each Forecast shall include an estimated delivery date of the Prefilled Syringes to Antares or its Subcontractor (such estimate to be provided by AMAG in good faith).

(b) Purchase Orders.

(i) To order Products, sample Products and Trainers for supply by Antares or its Subcontractor under this Agreement, AMAG shall submit to Antares a Purchase Order (which is deemed binding on AMAG) complying with the other applicable terms of this Agreement [***]. Not later than [***] after receipt of a Purchase

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

Order, Antares shall confirm in writing its receipt of the Purchase Order (“Order Acceptance”) and the proposed delivery date to AMAG in writing; provided that Antares may reject any Purchase Order not consistent with the requirements set forth in this Agreement, including this Section 3.2(b)(i).  AMAG shall notify Antares within [***] after receipt of the Order Acceptance if such proposed delivery date is unacceptable for AMAG, and in such event, the Parties shall promptly discuss and seek to agree on an alternative delivery date.  If AMAG does not respond within such [***] period, the proposed date will be the confirmed delivery date.  Antares shall not be obligated to fill any portion of any Purchase Order to the extent the volumes in such Purchase Order exceed the volumes set forth in the most recent Binding Forecast (such excess amount, the “Excess Order”). For any Purchase Order that contains an Excess Order, Antares shall notify AMAG in the Order Acceptance whether Antares and/or its Subcontractors will fulfill such Excess Order (or part thereof) and the expected delivery date for fulfillment. The decision to fulfill any Excess Order may be made by Antares in its sole discretion and Antares shall not be liable for any failure to deliver any Product, sample Product or Trainers set forth in any Excess Order; provided that Antares meets its obligations consistent with the Binding Forecast. AMAG’s failure to deliver a Purchase Order consistent with the volumes of Product, sample Product and/or Trainers under any Binding Forecast, shall not relieve AMAG of its obligation to purchase such volumes of Product, sample Product and/or Trainers. The terms of this Agreement shall be controlling and any additional or inconsistent terms or conditions contained on any Forecast, Purchase Order, Order Acceptance, invoice or similar documentation given or received by the Parties shall have no effect and such terms and conditions are expressly disclaimed and excluded.

(ii) AMAG and Antares acknowledge and agree that any minor difference between the quantity of ordered and delivered quantity of Product, sample Product or Trainers (as the case may be) that falls within applicable industry standards shall be accepted by AMAG as delivery in full of the ordered quantities set forth on any Firm Order and shall not be deemed a shortage as set forth in Section 5.1(c), but in no event shall the quantity delivered deviate from the quantity ordered by more than: [***].

(iii) Notwithstanding anything in this Agreement to the contrary, AMAG acknowledges and agrees that Antares shall only be responsible for producing and delivering to AMAG that portion (up to the entire quantity) of Products and sample Products requested pursuant to a Purchase Order for which Antares or its Subcontractor (as the case may be) possesses, at least [***] prior to the Delivery Date, a sufficient stock of inventory of Prefilled Syringes necessary to

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

fulfill such order (including any additional quantity of Prefilled Syringes necessary to account for Prefilled Syringes reasonably expected to be damaged, lost or destroyed in the manufacturing process (i.e. consistent with the Yield)) and the Certificate of Analysis (PFS Manufacture) relating thereto. In the event that Antares or its Subcontractor (as the case may be) has not received a sufficient stock of Prefilled Syringes by the dates set forth in the previous sentence, Antares or its Subcontractor shall (A) manufacture and deliver such number of Products and sample Products for which Antares or its Subcontractor (as the case may be) has Prefilled Syringes in accordance with the schedule set forth in the Firm Order, and (B) as soon as practicable (and no more than [***] following receipt of the Prefilled Syringes required for such Firm Order, Antares or its Subcontractor shall manufacture and deliver the Products and sample Products in such order taking into account any Products and sample Products manufactured and delivered pursuant to subsection (A).

(iv) Notwithstanding anything in this Agreement to the contrary, AMAG acknowledges and agrees that Antares shall not be responsible for delay in the delivery of quantity of Products, sample Products or Trainers (as the case may be) set forth in any Firm Order to the extent such delay is caused primarily due to AMAG’s failure to fulfill the AMAG Quality Tasks to enable Antares and/or its Subcontractor to timely perform the Manufacturing Services.

(c) Prior Orders. [***].

3.3 Minimum Orders. The quantity of Products, sample Products or Trainers (as the case may be) ordered by AMAG from Antares in each shipment (as set forth in a Purchase Order) must be equal to or greater than [***] units for each type of Product, sample Product and Trainers ordered. Such minimum order quantity may be updated from time to time by a mutual written agreement of the Parties. For avoidance of doubt, except for any Purchase Orders placed by AMAG and/or quantities set forth in the Binding Forecast, nothing in this Agreement requires AMAG to purchase any particular quantity of Products from Antares.

3.4 Shipments.

(a) Shipments of Products, sample Product and Trainers shall be made EXW (as such term is defined in INCOTERMS 2010) Antares’ or its Subcontractor’s (as the case may be) designated shipping location unless otherwise mutually agreed. The Parties acknowledge and agree that delivery of Products, samples Products and/or Trainers under this Agreement shall be deemed to be made once the Products, samples Products and/or Trainers (as the case may be) are made available at Antares’ or its Subcontractor’s (as the case may be) designated shipping location. [***]. AMAG shall pay for shipping. AMAG shall arrange for insurance and shall select the freight

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

carrier to ship Products, sample Products and Trainers. Antares shall not be responsible for the payment of such insurance. Products, sample Products and Trainers shall be transported in accordance with the Specifications.

(b) Prior to release for distribution, sale or use by AMAG pursuant to Section 2.6(b)(v)(D), AMAG, its agent or its permitted subcontractor shall test each batch of Products, sample Products and Trainers manufactured under this Agreement in accordance with Section 2.6(b)(v)(D). AMAG, its agent or its permitted subcontractor shall conduct all such testing in accordance with the procedures and using the analytical testing methodologies set forth in the Specifications, the Quality Agreement and Applicable Laws. All Products, sample Products and Trainers shipped by Antares or its Subcontractor to AMAG or AMAG’s designee, including its packaging, shall meet all applicable export and customs laws, regulations and like requirements for the United States.

3.5 Supply Failure.

[***].

3.6 Safety Stock.

(a) At AMAG’s sole cost and expense, Antares or its Subcontractor will maintain and make available to AMAG a safety inventory of the Major Device Components necessary to assemble the Devices in the quantities set forth in this Section 3.6(a)at Antares or its Subcontractor’s Manufacturing Site in accordance with this Section 3.6 (“Safety Stock”).

(i) [***].

(ii) [***].

(b) With respect to the initial Safety Stock (as set forth in Section 3.6(a)(i)) or any increase in Safety Stock pursuant to Section 3.6(a)(ii), upon the completion of the manufacture of such Safety Stock and delivery to AMAG of the Certificate of Analysis (Device) and the Certificate of Conformance (Device) applicable to such Safety Stock, Antares shall invoice AMAG for its [***] pursuant to invoicing and payment terms set forth in Section 4.2.

(c) With respect to any reduction in the Safety Stock pursuant to Sections 3.6(a)(ii) or 3.6(d), to the extent such reduced quantities of Safety Stock are used in the manufacture of fully finished Products and/or sample Products, then Antares shall credit any amount previously paid by AMAG with respect to such reduced quantity in Safety Stock in the Invoice issued to AMAG pursuant to Section 4.2 for such fully finished Product and/or sample Product.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

(d) Antares or its Subcontractor shall manage the Safety Stock as part of its overall inventory and use the Safety Stock to fulfill its obligations pursuant to a Firm Orders on a first in/first out basis. As such inventory of Safety Stock is used as part of the Manufacturing Services of Product and/or sample Product, Antares shall use Commercially Reasonable Efforts to replenish the Safety Stock to the level set forth in Section 3.6(a)(i) (as adjusted pursuant to Section 3.6(a)(ii)) within [***] of receipt of such Firm Order.

(e) Title and risk of loss of the Safety Stock shall transfer to AMAG upon the delivery to AMAG of the Certificate of Conformance (Device) and Certificate of Analyses (Device) for the applicable shipment of such Safety Stock from Antares’ Subcontractor that manufactured such Safety Stock. Antares shall not be responsible for any insurance with respect to the risk of loss of such Safety Stock.

(f) In the event any Safety Stock expires, Antares or its Subcontractor shall dispose of or destroy such Safety Stock in accordance with the Quality Agreement. AMAG shall reimburse Antares for any costs or expenses incurred (without markup) in connection with such disposal or destruction.

(g) Notwithstanding the quantities set forth in Section 3.6(a), Antares or its Subcontractor shall maintain and store the Safety Stock during the Term of this Agreement, provided that during the last [***] before expiration or termination of this Agreement, Antares or its Subcontractor is only required to maintain that amount of Safety Stock as is required to deliver amounts set forth in the then-current Forecast(s) until such expiration or termination date. AMAG shall reimburse Antares for any reasonable costs or expenses incurred (without markup) in connection with maintaining or storing the Safety Stock.

3.7 Manufacture at Risk.

(a) In the event AMAG desires for Antares and/or its Subcontractor to initiate Manufacturing Services with respect to any Product or sample Product prior to the receipt of the Certificate of Analysis (PFS Manufacture) and the Certificate of Analysis (PFS ID Testing) (“Manufacture(d) at Risk”), AMAG shall deliver written notice of such to Antares. Notwithstanding anything in this Agreement to the contrary, Antares shall not be required to perform any Manufacturing Services with respect to the Product or sample Product until Antares receives (i) such written notice of AMAG’s intention to Manufacture at Risk as set forth in the first sentence of this Section 3.7(a), or (ii) the Certificate of Analysis (PFS Manufacture) and the Certificate of Analysis (PFS ID Testing).

(b) [***].

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

3.8 Redundancy Plan. Antares shall, at the Party’s respective costs set forth on Exhibit I, develop, implement and maintain an the redundancy plan for molds, tooling and assemblies for the manufacturing of the Devices set forth on Exhibit I.

3.9 Qualification of Second Source Supplier(s). Antares shall, upon AMAG’s written request provided to Antares and at AMAG’s cost (as set forth in this Section 3.9), identify and reasonably verify the suitability of one or more Third Persons as a “backup” supplier of Devices (each, a “Second Source Supplier”) in addition to Antares’ then-current supplier of Devices (whether Antares or its then-current Subcontractor). Within [***] following the receipt of such written request, the Parties will negotiate in good faith a budget for the costs and expenses associated with the Second Source Supplier, including all costs and expenses for the establishment and qualification thereof. Within [***] following the agreement by both Parties of such budget, Antares will use Commercially Reasonable Efforts to establish and qualify such Second Source Supplier; provided, however, that the Joint Project Team under the Development and License Agreement may agree to extend such time periods. AMAG shall have the right to propose a Second Source Supplier and Antares shall have the right to consent to such Second Source Supplier, which consent shall not be unreasonably withheld or delayed. Within [***] of a receipt of an invoice thereof, AMAG shall reimburse Antares for all documented costs and expenses (without markup) associated with the Second Source Supplier, including all documented costs and expense for the establishment and qualification thereof; provide that such costs and expenses, in the aggregate, shall not exceed [***] of the agreed-upon budget (as set forth above).

3.10 Right to Purchase Directly from Subcontractors or Second Source Suppliers.

(a) If (i) a Force Majeure Event affecting solely Antares (specifically excluding its Subcontractors or Second Source Suppliers) lasts for [***] which prevents Antares from fulfilling its financial obligations to a Subcontractor or a Second Source Supplier, or (ii) Antares is otherwise in material breach of its financial obligations to a Subcontractor or a Second Source Supplier for a period of at least [***] then Antares shall promptly deliver to AMAG a written notice of such event or breach. Following the receipt of such notice, or following Antares’ material breach of its obligation to deliver such notice under this Section 3.10(a), AMAG may deliver written notice to Antares of its intention to exercise its rights under this Section 3.10.

(b) For the period commencing on Antares’ receipt of such notice from AMAG as set forth in Section 3.10(a) and ending [***] thereafter, Antares and AMAG shall negotiate in good faith a commercially reasonable agreement with respect to the Force Majeure Event or material breach describe in Section 3.10(a)(i) or 3.10(a)(ii), respectively, which may include, AMAG advancing payment for Manufacturing Services on terms to be negotiated among the Parties (an “Alternate Arrangement”). If, following the expiration of such [***] period, the Parties cannot mutually agree on a commercially

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

reasonable agreement thereof, then, notwithstanding anything to the contrary in this Agreement, Antares shall use Commercially Reasonable Efforts to enable AMAG to commence purchasing Devices, Components, Products, sample Products and/or Trainers directly from Antares’ Subcontractors or Second Source Supplier(s) on substantially similar terms, including price, that Antares has with such Subcontractor or Second Source Supplier(s) (as the case may be). AMAG’s right to purchase Devices, Components, Products, sample Products and/or Trainers directly from Antares’ Subcontractor(s) or Second Source Supplier(s) shall continue to [***].

(c) Provided that (i) AMAG and Antares have agreed to the terms of an Alternate Arrangement, or (ii) AMAG commences purchasing Devices, Components, Products, sample Products and/or Trainers directly from Antares’ Subcontractors or Second Source Supplier(s) pursuant to the terms of Section 3.10(b), AMAG’s election of its right to purchase Devices, Components, Products, sample Products and/or Trainers directly from Antares’ Subcontractor(s) or Second Source Supplier(s) under this Section 3.10 shall be AMAG’s sole and exclusive remedy, and Antares’ sole liability, with respect to Antares’ failure to supply such Devices, Components, Products, sample Products and/or Trainers for the reasons specified in Section 3.10(a); provided, that, if AMAG does not elect such right, AMAG shall not be prohibited from exercising all other rights available to AMAG under this Agreement and at law.

ARTICLE 4PRICE AND PAYMENT

4.1 Prices.

(a) During the Term, Antares or its Subcontractor shall deliver Products, sample Products and Trainers ordered by AMAG in accordance with this Agreement at the Transfer Prices set forth on Exhibit D.

(b) [***].

4.2 Invoices and Payment.

[***].

4.3 Records; Financial Audit Request. With respect to audits of Antares’ records relating to the establishment of the Transfer Price, [***] or any other amounts payable by AMAG hereunder, including, without limitation, pursuant to Section 4.6, Article 11 of the Development and License Agreement is hereby incorporated by reference herein and made a part of this Agreement.

4.4 Taxes.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

(a) The Transfer Price includes all taxes except (i) such sales and use taxes which Antares is required by law to collect from AMAG and (ii) to the extent imposed on the date of this Agreement or as a result of a change in law, VAT. Such VAT and taxes, if any, will be payable in addition to the Transfer Price. Where Antares is required by law to collect and/or account for such VAT and taxes from AMAG, such VAT and taxes will be separately stated in Antares’s Invoice and will be paid by AMAG to Antares unless AMAG provides an exemption to Antares and, in the case of VAT, subject to Antares providing a valid VAT invoice to AMAG in the form and manner required by law to allow AMAG to recover such VAT (to the extent AMAG is allowed to do so by law). For avoidance of doubt, any increase in VAT imposed as a result of any action taken by Antares, and not consented to by AMAG, after the date of this Agreement shall not be paid by AMAG or otherwise included in the Transfer Price.

(b) Except where AMAG is required by Applicable Law to account for any VAT to the applicable Governmental Authority, Antares shall be solely responsible for the timely payment of all such VAT and taxes to the applicable Governmental Authority

(c) Notwithstanding the foregoing in this Section 4.4, AMAG shall be responsible for the payment of all duties, tariffs, VAT, taxes and similar charges payable on the exportation or importation of the Products, sample Products or Trainers. Without limiting any of Antares’s obligations hereunder, Antares shall cooperate with and assist AMAG in all aspects of the shipment, exportation, importation and delivery process in order to ensure the expeditious delivery of the Product to the designated delivery point, including assisting in obtaining any documents that may be required.

4.5 [***].

4.6 [***].

ARTICLE 5PRODUCT CLAIMS AND RECALLS

5.1 Product Claims.

(a) Product Claims. [***].

(b) Determination of Deficiency. [***].

(c) Shortages. [***].

5.2 Product Recalls and Returns.

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(a) Records and Notice. In addition to the requirements of Section 6.2, Antares and AMAG shall each maintain such records in compliance with Applicable Laws as is reasonably necessary to permit a Recall of any Products, sample Products and Trainers delivered to AMAG, AMAG’s designee or customers of AMAG. Each Party shall promptly (but no later than [***] of receipt of such information) notify the other by telephone (to be confirmed in writing) of any information which might affect the marketability, safety, or effectiveness of the Products, sample Products or Trainers and/or which might result in the Recall or seizure of the Products, sample Products, or Trainers. Upon receiving any such notice or upon any such discovery, each Party shall cease and desist from further shipments of such Products, sample Products or Trainers in its possession or control until a decision by AMAG has been made whether a Recall or some other corrective action is necessary.

(b) Recalls. The decision to initiate a Recall or to take some other corrective action, if any, shall be made and implemented by AMAG in its sole discretion after consultation with Antares. AMAG shall be responsible for managing all Recalls and Antares shall cooperate with AMAG as AMAG may reasonably request. Subject to Antares’ obligation to cover the costs set forth in Section 5.3(b), AMAG shall be responsible for all costs incurred due to the Recall of a Product, sample Product or Trainer.

(c) Product Returns. AMAG shall have the responsibility for handling customer returns of the Products, sample Products and Trainers.

5.3 Antares’ Responsibility for Defective and Recalled Products.

(a) Defective Product. [***].

(b) Recalled Product. [***].

5.4 Disposition of Defective or Recalled Products. AMAG shall not dispose of any damaged, defective, returned or Recalled Products, sample Products or Trainers in relation to which it intends to assert a claim against Antares without Antares’ prior written authorization to do so, unless otherwise required by Applicable Laws. Alternatively, Antares may instruct AMAG to return such Products, sample Products and Trainers to Antares at Antares’ expense. Antares shall bear the cost of disposition with respect to any damaged, defective, returned or Recalled Products, sample Products or Trainers in relation to which it bears responsibility under Sections 5.1, 5.2 or 5.3 hereof. In all other circumstances, AMAG shall bear the cost of disposition with respect to any damaged, defective, returned or Recalled Products, sample Products and Trainers.

5.5 Customer Questions or Complaints. AMAG shall have the sole right and responsibility for responding to questions and complaints from AMAG’s customers. Antares shall refer any questions and complaints (including safety and efficacy inquiries, quality complaints

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and adverse event reports) that it receives concerning the Device or the Products, sample Products or Trainers to AMAG (together with all available evidence and other information relating thereto) as soon as practicable and, in any event within [***] of Antares’ receipt of such question or complaint; provided that all complaints concerning Product and sample Product tampering, contamination or mix-up (e.g., wrong ingredients) shall be delivered within [***] of Antares’ receipt thereof. Antares shall not take any further action in connection with any such questions or complaints without the consent of AMAG, but shall cooperate in the investigation and closure of any such questions or complaints at the request of AMAG. Such assistance shall include follow-up investigations, including testing. In addition, Antares shall provide AMAG with all information to enable AMAG to respond properly to questions or complaints relating to the Products and sample Products as provided in the Quality Agreement.

ARTICLE 6CO-OPERATION; QUALITY AUDIT; REGULATORY FILINGS

6.1 Governmental Agencies. Subject to the Regulatory Authority inspection obligations set forth in Section 6.3, Antares and/or its Subcontractor(s) may communicate with any Regulatory Authority regarding the Products, sample Products and Trainers only if, in the reasonable opinion of Antares’ and/or its Subcontractor’s counsel, such communication is necessary to comply with the terms of this Agreement or Applicable Laws; provided, however, that unless, in the reasonable opinion of Antares’ and/or its Subcontractor’s counsel, there is a legal prohibition against doing so, Antares shall notify AMAG reasonably in advance of any such communication and permit AMAG to accompany Antares and/or its Subcontractor and take part in any communications with such Regulatory Authority, and provide AMAG with copies of all such communications from such Regulatory Authority.

6.2 Records and Accounting by Antares. Antares shall keep records of the manufacture, testing and shipping of the Products, sample Products and Trainers and retain samples of such Products, sample Products and Trainers as are necessary to comply with cGMPs, Applicable Laws, the Quality Agreement, and manufacturing regulatory requirements applicable to Antares, as well as to assist with resolving Product, sample Product and Trainer complaints and other similar investigations. Copies of such records and samples shall be retained for the respective periods set forth in the Quality Agreement.

6.3 Regulatory Inspections. Antares shall permit the FDA and other Regulatory Authorities to conduct inspections of each Manufacturing Site as they may request, including pre-approval inspections, and shall cooperate with such Regulatory Authorities with respect to the inspections and any related matters, in each case which is related to the Device, Product or sample Product. Antares shall give AMAG notice within [***] of becoming aware of any such inspections, and keep AMAG reasonably informed about the results and conclusions of each regulatory inspection, including actions taken by Antares or its Subcontractor to

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remedy conditions cited in the inspections, to the extent such results and conclusions relate to the Device, Product or sample Product. In addition, Antares will promptly provide AMAG with copies of any written inspection reports issued by Regulatory Authorities and all correspondence between Antares and Regulatory Authorities, including, but not limited to, FDA Form 483, Notice of Observation, and all related correspondence, in each case only to the extent relating to the Device, Product or sample Product or general manufacturing concerns related to the Device, Product or sample Product, which in all cases may be reasonably redacted by Antares to protect confidential information of Antares or its partners, licensees or licensors. Antares agrees to promptly notify and provide AMAG copies of any request, directive or other communication of the FDA or other Regulatory Authority relating to the Device, Product or sample Product and to reasonably cooperate with AMAG in responding to such requests, directives and communications.

6.4 Quality Audit. The Parties rights and obligations with respect to quality assurance audits are set forth in the Quality Agreement.

6.5 Reports. Antares will promptly supply on an annual basis and when reasonably requested by AMAG from time to time, at no additional charge, all available information and data in its control that AMAG reasonably requires in order to complete any filing for, or apply for, obtain or maintain, regulatory approvals under any applicable regulatory regime (including any Annual Report that AMAG is required to file with the FDA), including without limitation information relating to the Manufacturing Site, Development Report (as described in ICH guidelines), Manufacturing Services, Device, Product, sample Product, Trainers or the process, methodology, raw materials and intermediates used in the manufacture, processing, or packaging of the Device, Product, sample Product or Trainers, release test results, complaint test results, all investigations (in manufacturing, testing and storage), and all information required to be submitted in the CMC (chemistry, manufacturing and controls) section of an IND or a NDA or other regulatory filings, or required or requested to be provided to any Regulatory Authority. At AMAG’s reasonable written request, Antares shall be responsible for supporting AMAG’s Annual Product Review Report, consistent with cGMPs, Applicable Laws, and customary FDA or other Regulatory Authority requirements. Any additional report requested by AMAG beyond the scope of what is required or recommended under cGMPs, Applicable Laws and customary FDA or other Regulatory Authority requirements shall be subject to an additional fee to be agreed upon between Antares and AMAG. In addition, Antares shall cooperate with AMAG with respect to all reporting obligations relevant to the Product, sample Product and Trainers under Applicable Laws.

6.6 Regulatory Filings. Responsibility for regulatory filings shall be as set forth in Section 4.1 of the Development and License Agreement.

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ARTICLE 7TERM AND TERMINATION

7.1 Term. Subject to early termination of this Agreement pursuant to Sections 7.2, 7.3 or 7.4, this Agreement shall become effective as of the Effective Date and shall continue until the expiration or earlier termination of the Development and License Agreement (the “Term”).

7.2 Termination By AMAG. This Agreement may be terminated in its entirety by AMAG, upon AMAG’s prior written notice to Antares:

(a) Subject to Sections 11.1 and 12.4, if Antares commits a material breach of this Agreement and such material breach remains uncured for [***] following written notice of breach by Antares. Notwithstanding the foregoing, AMAG’s termination rights with respect to an Antares’ failure to supply Products, sample Products or Trainers, including a Supply Failure, are not subject this Section 7.2(a) and are set forth in Section 7.2(b);

(b) Subject to Section 12.4, if a Supply Failure remains uncured for [***] following written notice of such failure to Antares; provided, however, that AMAG may not terminate this Agreement if Antares’ failure to supply Products, sample Products or Trainers is a result of Force Majeure Event under Section 12.4 or AMAG’s breach of this Agreement including, but not limited to, failure to provide adequate quantities of Prefilled Syringe;

(c) If Antares is subject to a petition for relief under any bankruptcy legislation, or makes an assignment for the benefit of creditors, or is subject to the appointment of a receiver for all or a substantial part of Antares’ assets, and such petition, assignment or appointment prevents Antares (as a legal or as a practical matter) from performing its obligations under this Agreement, or such petition, assignment or appointment is not otherwise dismissed or vacated within [***]; or

(d) Upon [***] written notice to Antares in the event that AMAG permanently ceases commercializing the Product for efficacy or safety reasons, as evidenced by the placement of the Product on the Discontinued Drug Product List of the FDA Orange Book publication (“Approved Drug Products with Therapeutic Equivalence Evaluations”).

7.3 Termination by Antares. This Agreement may be terminated in its entirety by Antares upon Antares’ prior written notice to AMAG:

(a) Subject to Sections 11.1 and 12.4, if AMAG commits a material breach of this Agreement and such material breach remains uncured for [***] following written notice of breach by Antares;

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(b) If AMAG is subject to a petition for relief under any bankruptcy legislation, or makes an assignment for the benefit of creditors, or is subject to the appointment of a receiver for all or a substantial part of AMAG’s assets, and such petition, assignment or appointment prevents AMAG (as a legal or as a practical matter) from performing its obligations under this Agreement, or such petition, assignment or appointment is not otherwise dismissed or vacated within [***]; or

(c) Upon [***] written notice to AMAG in the event that AMAG permanently ceases commercializing the Product for efficacy or safety reasons, as evidenced by the placement of the Product on the Discontinued Drug Product List of the FDA Orange Book publication (“Approved Drug Products with Therapeutic Equivalence Evaluations”).

7.4 Co-Termination. Without further action by either Party, this Agreement shall automatically terminate effective immediately upon the termination of the Development and License Agreement in its entirety, subject to the provisions that expressly survive the termination thereof.

7.5 Remedies for Material Breach.

(a) Remedies for AMAG. Subject to Sections 11.1 and 12.4, in the event of an uncured material breach by Antares that would entitle AMAG to terminate this Agreement under Section 7.2(a) and Section 7.2(b), in addition to and independent of AMAG’s right to terminate this Agreement, AMAG may seek monetary damages (whether or not this Agreement is terminated) for such material breach and/or equitable relief to prevent such material breach from continuing or occurring again in the future.

(b) Remedies for Antares. Subject to Sections 11.1 and 12.4, in the event of a uncured material breach by AMAG that would entitle Antares to terminate this Agreement under Section 7.3(a), in addition to and independent of Antares’ right to terminate this Agreement, Antares may seek monetary damages (whether or not this Agreement is terminated) for such material breach and/or equitable relief to prevent such material breach from continuing or occurring again in the future.

7.6 Effects of Expiration or Termination of this Agreement.

(a) If this Agreement expires or is terminated for any reason, then (in addition to any other remedies either Party may have in the event of material breach by the other Party):

[***].

(b) [***].

(c) [***].

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(d) [***].

(e) Except with respect to AMAG’s right to sell off existing inventory as set forth in Section 7.6(d), the Parties acknowledge and agree that following any expiration or termination of this Agreement, all rights and licenses granted to AMAG under this Agreement or the Development and License Agreement shall terminate and AMAG shall cease using and selling any Products, sample Products or Trainers.

(f) Any termination or expiration of this Agreement shall not affect any outstanding obligations or payments due hereunder prior to such termination or expiration, nor shall it prejudice any other remedies that the Parties may have under this Agreement or Applicable Laws (except as otherwise provided in this Agreement). For greater certainty, termination of this Agreement for any reason shall not affect the obligations and responsibilities of the Parties pursuant to ARTICLE 1 (Interpretation), ARTICLE 9 (Remedies and Indemnities) (provided that, the obligation to maintain the insurance coverages set forth in Section 9.3 shall only survive for the time period set forth therein), ARTICLE 10 (Confidentiality), ARTICLE 11 (Dispute Resolution), and Sections 2.9 (Retained Samples) (for the period set forth therein), 4.4 (Taxes), 5.2 (Product Recalls and Returns); 5.5 (Customer Questions or Complaints) (for a period of [***] from the date of termination or expiration); 6.2 (Regulatory and Accounting by Antares) (for the period set forth therein), 7.6 (Effects of Expiration or Termination of this Agreement), 12.1 (Agency), 12.2 (Assignment) 12.5 (Notices), 12.6 (Amendment), 12.7 (Waiver) and 12.10 (Governing Law), all of which survive any termination or expiration.

(g) Termination, relinquishment or expiration of the Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to (or as a result of, including, without limitation, rights available under law and equity) such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations that are expressly indicated to survive termination or expiration of the Agreement.

7.7 [***].

ARTICLE 8REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1 Authority. Each Party hereby represents, warrants and covenants to the other Party that: (i) it has the full right and authority to enter into this Agreement and to grant to the other Party the rights granted to such other Party under this Agreement, (ii) it has obtained all necessary corporate approvals to enter and execute this Agreement, and (iii) that it is not aware of any impediment that would inhibit its ability to perform its obligations hereunder.

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8.2 AMAG Warranties. AMAG hereby represents, warrants and covenants to Antares as follows:

(a) AMAG, or a Third Person manufacturing Drug and Pre-Filled Syringes on behalf of AMAG, shall manufacture the Drug and Pre-Filled Syringe in accordance with the Specifications, cGLP, cGCP, cGMP and cQSRs, this Agreement, the Quality Agreement and Applicable Laws including, without limitation, federal, state, or local laws, regulations, or guidelines governing manufacturing at the site where such manufacturing is being conducted;

(b) AMAG, or a Third Person manufacturing Drug and Pre-Filled Syringes on behalf of AMAG, shall obtain and maintain all necessary licenses, permits and approvals required by Applicable Laws in connection with the manufacture the Drug and Pre-Filled Syringe, and supply of Drug and Prefilled Syringes to Antares or its Subcontractor;

(c) That all Drug or Prefilled Syringes manufactured by AMAG, or a Third Person on behalf of AMAG, when delivered to Antares or its Subcontractor (i) will comply with applicable Product Specifications and Certificate of Analysis (PFS Manufacture); (ii) will not be adulterated or misbranded within the meaning of any Applicable Laws effective at the time of delivery and will not be an article which may not be introduced into interstate commerce under any Applicable Laws; (iii) will be delivered to Antares or its Subcontractor (as the case may be) free and clear of all liens and encumbrances, and (iv) will be in compliance with cGMPs and all Applicable Laws;

(d) That all Products and sample Products, when released by AMAG for distribution, sale or use pursuant to Section 2.6(b)(v)(D): (i) will comply with applicable Product Specifications, Batch Record, Certificate of Analysis Certificate of Analysis (PFS Manufacture), the Certificate of Analysis (PFS ID Testing), Certificate of Analysis (Product) and the Certificate of Conformance (Product); (ii) will not be adulterated or misbranded within the meaning of any Applicable Laws effective at the time of delivery and will not be an article which may not be introduced into interstate commerce under any Applicable Laws; and (iii) will be in compliance with cGMPs and all Applicable Laws;

(e) Prior to the first commercial sale by AMAG or a Third Person on behalf of AMAG of Products, sample Product and Trainers in a given market, the Products, sample Product and Trainers, if labelled and manufactured in accordance with the Specifications and in compliance with applicable cGMPs and Applicable Laws, have received the necessary marketing approvals from applicable Regulatory Authorities for sale, distribution and use in such market;

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(f) AMAG has the requisite legal title and ownership under its intellectual property necessary for it to fulfill its obligations under this Agreement, and that there is no pending or threatened litigation, arbitration, government proceeding, or government investigation (and AMAG has not received any communication relating thereto) which alleges that AMAG’s past activities relating to the Drug or activities proposed under this Agreement infringe or misappropriate any of the intellectual property rights of any Third Person, and to AMAG’s actual knowledge, there is no intellectual property of any Third Person that would be infringed or misappropriated by Antares or its Subcontractor carrying out the Manufacturing Services in accordance with this Agreement; and

(g) AMAG agrees that federal securities law may prohibit it, its Affiliates and its representatives from purchasing or selling any securities of Antares while it is in possession of material, non-public information of Antares, and that it will not disclose any material, non-public information, directly or indirectly, to any party for the purpose of encouraging such party to trade in Antares’s securities and that it will comply at all times with the applicable securities laws and regulations.

8.3 Antares Warranties. Antares hereby represents, warrants and covenants to AMAG as follows:

(a) Antares or its Subcontractor shall perform the Manufacturing Services in accordance with the Specifications, cGLP, cGCP, cGMPs and cQSRs, this Agreement, the Quality Agreement and Applicable Laws including, without limitation, federal, state, or local laws, regulations, or guidelines governing manufacturing at the Manufacturing Sites;

(b) Antares or its Subcontractor shall obtain and maintain all necessary licenses, permits and approvals required by Applicable Laws in connection with the Manufacturing Services, manufacture of Devices and supply of Products, sample Products or Trainers to AMAG;

(c) As of the Effective Date, Antares has disclosed to AMAG any and all FDA Form 483’s, warning letters or similar notices relating to the Manufacturing Site and import alerts for any other products manufactured in the Manufacturing Site issued during the last [***];

(d) [***];

(e) Antares has the requisite legal title and ownership of intellectual property necessary for it to fulfill its obligations under this Agreement, and that there is no pending or threatened litigation, arbitration, government proceeding, or government investigation (and Antares has not received any communication relating thereto) which alleges that Antares’ past activities relating to [***] devices or activities proposed under this

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Agreement infringe or misappropriate any of the intellectual property rights of any Third Person, and to Antares’ actual knowledge, there is no intellectual property of any Third Person that would be infringed or misappropriated by AMAG fulfilling any of its obligations or exercising any of its rights under this Agreement; and

(f) Antares agrees that federal securities law may prohibit it, its affiliates and its representatives from purchasing or selling any securities of AMAG while it is in possession of material, non-public information of AMAG, and that it will not disclose any material, non-public information, directly or indirectly, to any party for the purpose of encouraging such party to trade in AMAG’s securities and that it will comply at all times with the applicable Federal Securities Laws and regulations.

(g) [***].

8.4 Debarred Persons. Each of the Parties covenants, represents and warrants that: (i) neither it nor any of its employees or, subcontractors performing Manufacturing Services have been “debarred” by the FDA, or subject to a similar sanction from another Regulatory Authority; nor have debarment proceedings against said Party or any of its employees or subcontractors performing Manufacturing Services been commenced; and (ii) it will not in the performance of its obligations under this Agreement use the services of any person debarred or suspended by the FDA as described in 21 U.S.C. §335(a) or (b). Said Party will promptly notify the other Party in writing if any such debarment proceedings have commenced or if said Party or any of its employees or subcontractors performing Manufacturing Services are debarred by the FDA or other Regulatory Authorities. Each of the Parties further covenants, represents and warrants that it does not currently have, and will not hire, as an officer or an employee any person who has been convicted of a felony under the laws of the United States for conduct relating to the regulation of any drug product under the Federal Food, Drug, and Cosmetic Act.

8.5 Permits. As between the Parties, AMAG shall be solely responsible for obtaining or maintaining, on a timely basis, any permits or other Regulatory Approvals in respect of the Products, sample Products, Trainers, Specifications, including, without limitation, all marketing and post-marketing approvals.

8.6 No Warranty. NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY OR WARRANTY OF NON-INFRINGEMENT OF THIRD PERSON RIGHTS.

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ARTICLE 9REMEDIES AND INDEMNITIES

9.1 Antares’ Right to Indemnification. AMAG shall indemnify each of Antares, its Affiliates, its Subcontractors and their respective successors and assigns, and the directors, officers, employees, and agents thereof (the “Antares Indemnitees”), defend and hold each Antares Indemnitee harmless from and against any and all liabilities, damages, losses, settlements, claims, actions, suits, penalties, fines, costs or expenses (including, without limitation reasonable attorneys’ fees) (any of the foregoing, “Damages”) incurred by or asserted against any Antares Indemnitee of whatever kind or nature, including, without limitation, any claim or liability based upon negligence, warranty, strict liability, violation of government regulation or infringement of patent or other proprietary rights, but only to the extent arising from or occurring as a result of a claim or demand made by a Third Person (a “Third Person Claim”) against any Antares Indemnitee because of (a) breach of any warranty made by AMAG pursuant to Section 8.2 hereof; (b) the Product, sample Product or Trainer (including the content of any labelling and the decision to release the Product, sample Product or Trainer) unless attributable to an item identified in Section 9.2 below which is under the responsibility of Antares or its Subcontractors; (c) the distribution or detailing of any Product, sample Product or Trainer by or on behalf of AMAG or its sublicensees, except to the extent such claim is attributable to an item identified in Section 9.2(f) below which is under the responsibility of Antares; (d) any allegation that the manufacture, use, sale, offer for sale or importation of a Product, sample Product or Trainer infringes any patent, other intellectual property rights or other proprietary rights of a Third Person, except to the extent such infringement relates to the manufacture, use, sale, offer for sale or importation of a Device (including a Device incorporated into a Product) or any delivery system including the Device; or (e) any breach of this Agreement by AMAG, except, in each such case, to the extent that such Damages are finally determined to have resulted from the negligence or misconduct of Antares. Antares shall promptly notify AMAG of any Third Person Claim upon becoming aware thereof, and shall permit AMAG, at AMAG’s cost, to defend against such Third Person Claim and to control the defense and disposition (including, without limitation, selection its counsel and all decisions to litigate, settle or appeal) of such claim, and shall cooperate in the defense thereof. Antares may, at its option and expense, have its own counsel participate in any proceeding that is under the direction of AMAG and shall cooperate with AMAG and its insurer in the disposition of any such matter.

9.2 AMAG’s Right to Indemnification. Antares shall indemnify each of AMAG, its Affiliates, and their respective successors and assigns, and the directors, officers, employees, and agents thereof (the “AMAG Indemnitees”), defend and hold each AMAG Indemnitee harmless from and against any and all Damages incurred by or asserted against any AMAG Indemnitee of whatever kind or nature, including, without limitation, any claim or liability based upon negligence, warranty, strict liability, violation of government regulation or infringement of

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

patent or other proprietary rights, but only to the extent arising from or occurring as a result of a Third Person Claim against any AMAG Indemnitee because of (a) breach of any warranty made by Antares pursuant to Section 8.3 hereof; (b) any alleged defect in the design or functionality of the Device; (c) the failure by Antares or its Subcontractors to provide the Manufacturing Services according to Specifications, except to the extent AMAG approved such failure pursuant to its in process acceptance activities set forth in the Quality Agreement; (d) [***]; (e) the warehousing or shipping of a Product, sample Product or Trainer by Antares, except to the extent such claim alleges infringement of any patent, other intellectual property rights or other proprietary rights of a Third Person; (f) any allegation that the Manufacturing Services performed under this Agreement or the manufacture, use, sale, offer for sale or importation of a Device (including a Device incorporated into a Product) or any delivery system including the Device, in such cases, infringes any patent, other intellectual property rights or other proprietary rights of a Third Person; or (g) any breach of this Agreement by Antares, except, in each such case, to the extent that such Damages are finally determined to have resulted from the negligence or misconduct of AMAG or a sublicensee of AMAG. AMAG shall promptly notify Antares of any Third Person Claim upon becoming aware thereof, and shall permit Antares at Antares’ cost to defend against such Third Person Claim and to control the defense and disposition (including, without limitation, selection its counsel and all decisions to litigate, settle or appeal) of such Third Person Claim and shall cooperate in the defense thereof. AMAG may, at its option and expense, have its own counsel participate in any proceeding that is under the direction of Antares and will cooperate with Antares or its insurer in the disposition of any such matter.

9.3 Insurance. Each Party shall obtain and maintain commercial general liability insurance, including product liability insurance covering the obligations of that Party under this Agreement through the Term and for a period of [***] thereafter, which insurance shall afford limits of not less than (i) $[***] for each occurrence; and (ii) $[***] in the aggregate per annum. Such insurance may be provided in more than one separate insurance policy and/or on claims made or claims made and reported forms as is common in the insurance marketplace for similar risks. If requested each Party will provide the other with a current and valid certificate of insurance evidencing the above and showing the name of the issuing company, the policy number, the effective date, the expiration date and the limits of liability. If a Party is unable to maintain the insurance policies required under this Agreement through no fault on the part of such Party, then such Party shall forthwith notify the other Party in writing and the Parties shall in good faith negotiate appropriate amendments to the insurance provision of this Agreement in order to provide adequate assurances.

9.4 Limitation of Liability.

[***].

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

ARTICLE 10CONFIDENTIALITY

Articles 17 and 18 of the Development and License Agreement are hereby incorporated by reference herein and made a part of this Agreement.

ARTICLE 11DISPUTE RESOLUTION

11.1 Commercial Disputes. In the event of any dispute arising out of or in connection with this Agreement [***], the Parties shall first try to solve it amicably. In this regard, any Party may send a notice of dispute to the other, and each Party shall appoint, within [***] from receipt of such notice of dispute, a senior executive representative having full power and authority to solve the dispute. The representatives so designated shall meet as necessary in order to solve such dispute. If the dispute has not been resolved within [***] after the end of the [***] negotiation period referred to above (which period may be extended by mutual agreement), then such dispute shall be subject to any other remedy available under this Agreement or at law or equity.

11.2 [***].

ARTICLE 12MISCELLANEOUS

12.1 Agency. Neither Party is, nor shall be deemed to be, an employee, agent, co-venturer or legal representative of the other Party for any purpose. Neither Party shall be entitled to enter into any contracts in the name of, or on behalf of the other Party, nor shall either Party be entitled to pledge the credit of the other Party in any way or hold itself out as having the authority to do so.

12.2 Assignment. Except as otherwise provided in this Section 12.2, neither this Agreement nor any interest hereunder shall be assignable by any Party without the prior written consent of the other (which consent shall not be unreasonably withheld, conditioned or delayed); provided, however, that either Party may assign this Agreement to any wholly-owned subsidiary or to any successor by merger or sale of substantially all of its business unit to which this Agreement relates. This Agreement shall be binding upon the successors and permitted assignees of the Parties. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee.

12.3 Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

- 32 -

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

12.4 Force Majeure. Neither Party shall be liable to the other for loss or damages or shall have any right to terminate this Agreement for any default or delay attributable to any force majeure event outside of the affected Party’s reasonable control, including, but not limited to, acts of God, acts of government, war, fire, flood, earthquake, terrorist acts, strike, labor dispute and the like (each, a “Force Majeure Event”), if the Party affected shall give prompt notice of any such cause to the other Party. The Party giving such notice shall thereupon be excused from such of its obligations hereunder as it is disabled by the Force Majeure Event from performing for so long as it is so disabled; provided, however, that such affected Party commences and continues to take reasonable and diligent actions to cure such cause throughout such disability.

12.5 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by electronic mail or facsimile transmission (receipt verified), telexed, mailed by registered or certified mail (return receipt requested), postage prepaid, or sent by express courier service, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice; provided, that notices of a change of address shall be effective only upon receipt thereof):

If to AMAG, addressed to:	AMAG Pharmaceuticals, Inc.
[***]	1100 Winter Street
	Waltham, MA 02451 [***]
With a copy to: [***]	AMAG Pharmaceuticals, Inc. 100 Winter Street Waltham, MA 02451 [***]
If to Antares, addressed to:	Antares Pharma, Inc.
[***]	100 Princeton South, Suite 300
	Ewing, NJ 08628 [***]
with a copy to:
General Counsel	Antares Pharma, Inc.
	100 Princeton South, Suite 300
	Ewing, NJ 08628
	[***]

- 33 -

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

12.1 Amendment. No amendment, modification or supplement of any provision of the Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

12.2 Waiver. No provision of the Agreement shall be waived by any act, omission or knowledge of a Party or its agents or employees except by an instrument in writing expressly waiving such provision and signed by a duly authorized officer of the waiving Party. No waiver of any term, provision or condition of this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition of this Agreement.

12.3 Counterparts; Electronic Copies. The Agreement may be executed simultaneously in two or more counterparts, either one of which need not contain the signature of more than one Party but both such counterparts taken together shall constitute one and the same agreement. A facsimile transmission or portable document format (PDF) electronic transmission of this signed Agreement by a Party’s authorized representative shall be legal and binding upon such Party.

12.4 Descriptive Headings. The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

12.5 Governing Law; Choice of Forum. This Agreement shall be governed by and interpreted in accordance with the substantive laws of the State of New York, without regard to its conflict of law provisions. The Parties agree that the United Nations Convention on Contracts for the International Sale of Goods does not apply to this Agreement. Except as otherwise provided in ARTICLE 11, all claims and proceedings under this Agreement shall be brought exclusively in the state or federal courts of competent subject matter jurisdiction in New York City, State of New York. The Parties hereby waive (i) any objection which it may have at any time to the venue of the proceeding in any such court, (ii) any claim that such proceedings have been brought in an inconvenient forum, and (iii) the right to object, with respect to such proceedings, that such court does not have any jurisdiction over such Party.

12.6 Severability. Whenever possible, each provision of the Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of the Agreement is held to be prohibited by or invalid under Applicable Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of the Agreement. In the event of such invalidity, the Parties shall seek to agree on an alternative enforceable provision that preserves the original purpose of this Agreement.

- 34 -

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

12.7 Entire Agreement of the Parties. This Agreement, including the Exhibits attached hereto, the Quality Agreement and the Development and License Agreement constitute and contain the complete, final and exclusive understanding and agreement of the Parties hereto, and cancels and supersedes any and all prior negotiations, correspondence, understandings and agreements, whether oral or written, between the Parties respecting the subject matter hereof. In the event there is a discrepancy between the Exhibits and the Agreement, the Agreement shall control, provided that to the extent there is a discrepancy between the Quality Agreement and the Agreement, the Quality Agreement shall control with respect to quality-related matters; and this Agreement shall control with respect to all other matters. Furthermore, to the extent that any provision of this Agreement is inconsistent with any provision of the Development and License Agreement, this Agreement shall control and then only to the extent of the inconsistency. For the avoidance of doubt, this Agreement supersedes and replaces Sections 10.2 and 10.3 of the Development and License Agreement.

12.8 Jointly Prepared. This Agreement has been prepared jointly by both Parties and shall not be strictly construed against either Party.

[Signature page follows.]

- 35 -

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Agreement as of the date first written above.

ANTARES PHARMA, INC.

By:/s/ Patrick Madsen

Name: Patrick Madsen

Title: Senior Vice President, Operations

AMAG PHARMACEUTICALS, INC.

By: /s/ William K. Heiden

Name: William K. Heiden

Title: President and Chief Executive Officer

[Signature Page to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT A

LONG LEAD TIME MATERIALS

Part Name	Material Specification	Lead-Time
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]

[Exhibit A to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT B

PRODUCT SPECIFICATIONS

[***]

[Exhibit B to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT C

TRAINER SPECIFICATIONS

[***]

[Exhibit C to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT D

TRANSFER PRICE

The “Transfer Price” to be paid by AMAG to Antares for each Product, sample Product and Trainer delivered to AMAG or AMAG’s designee under this Agreement during the Term shall be determined as follows:

[***]

[Exhibit D to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT E

QUALITY AGREEMENT

[***]

[Exhibit E to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT F

BATCH NUMBERING AND EXPIRATION DATES

[***]

[Exhibit F to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT G

RETAINED SAMPLES

Part Number	Description
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

[Exhibit G to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT H

INITIAL FORECAST

[***]

[Exhibit H to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT I

REDUNDANCY PLAN

Item	Financial Responsibility	Primary	Back-up On Hand
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

[Exhibit I to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT J

[***]

[Exhibit J to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT K

AMAG EQUIPMENT

The following molds:

Part Number	Description
[***]	[***]
[***]	[***]
[***]	[***]

[Exhibit K to Manufacturing Agreement]

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.  ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

EXHIBIT L

FORM OF CHANGE ORDER

[***]

[Exhibit L to Manufacturing Agreement]

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, William K. Heiden, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AMAG Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 4, 2018
		/s/ William K. Heiden
		William K. Heiden
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Edward Myles, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AMAG Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 4, 2018
		/s/ Edward Myles
		Edward Myles
		Executive Vice President of Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AMAG Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William K. Heiden, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ William K. Heiden
	William K. Heiden
	President and Chief Executive Officer
	(Principal Executive Officer)
May 4, 2018

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AMAG Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward Myles, Executive Vice President of Finance, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Edward Myles
	Edward Myles
	Executive Vice President of Finance, Chief Financial Officer and Treasurer
	(Principal Financial Officer)
May 4, 2018

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 01, 2018
Document and Entity Information
Entity Registrant Name	AMAG PHARMACEUTICALS INC.
Entity Central Index Key	0000792977
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		34,326,636

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 231,737	$ 192,114
Marketable securities	138,820	136,593
Accounts receivable, net	99,945	103,501
Inventories	31,598	37,356
Prepaid and other current assets	16,345	12,304
Total current assets	518,445	481,868
Property, plant and equipment, net	25,921	25,996
Goodwill	639,484	639,484
Intangible assets, net	648,206	704,470
Restricted cash	656	656
Other long-term assets	2,238	762
Total assets	1,834,950	1,853,236
Current liabilities:
Accounts payable	17,371	10,335
Accrued expenses	199,071	175,490
Current portion of convertible notes, net	20,460	0
Current portion of acquisition-related contingent consideration	50,007	49,399
Deferred revenues	42,510	42,494
Total current liabilities	329,419	277,718
Long-term liabilities:
Long-term debt, net	466,595	466,291
Convertible notes, net	251,508	268,392
Acquisition-related contingent consideration	660	686
Deferred tax liabilities	17,497	23,927
Deferred revenues	27,398	24,387
Other long-term liabilities	1,878	1,591
Total liabilities	1,094,955	1,062,992
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized; none issued	0	0
Common stock, par value $0.01 per share, 117,500,000 shares authorized; 34,322,193 and 34,083,112 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	343	341
Additional paid-in capital	1,274,935	1,271,628
Accumulated other comprehensive loss	(4,362)	(3,908)
Accumulated deficit	(530,921)	(477,817)
Total stockholders’ equity	739,995	790,244
Total liabilities and stockholders’ equity	$ 1,834,950	$ 1,853,236

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	117,500,000	117,500,000
Common stock, shares issued	34,322,193	34,083,112
Common stock, shares outstanding	34,322,193	34,083,112

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues:
Product sales, net	$ 117,348	$ 112,517
Service revenues, net	28,969	26,931
Other revenues	39	24
Total revenues	146,356	139,472
Costs and expenses:
Cost of product sales	63,912	27,573
Cost of services	5,473	5,010
Research and development expenses	10,809	16,489
Acquired in-process research and development	20,000	60,000
Selling, general and administrative expenses	91,050	70,424
Total costs and expenses	191,244	179,496
Operating loss	(44,888)	(40,024)
Other (expense) income:
Interest expense	(15,977)	(18,300)
Interest and dividend income	644	1,031
Gains on investments, net	0	27
Total other expense, net	(15,333)	(17,242)
Loss before income taxes	(60,221)	(57,266)
Income tax benefit	(5,979)	(20,706)
Net loss	$ (54,242)	$ (36,560)
Net loss per share:
Basic and diluted (in usd per share)	$ (1.59)	$ (1.06)
Weighted average shares outstanding used to compute net loss per share:
Basic and diluted (in shares)	34,162	34,378

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (54,242)	$ (36,560)
Other comprehensive (loss) income:
Holding (losses) gains arising during period, net of tax	(454)	92
Total comprehensive loss	$ (54,696)	$ (36,468)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net loss	$ (54,242)	$ (36,560)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	59,485	27,994
Provision for bad debt expense	463	590
Amortization of premium/discount on purchased securities	67	113
Non-cash equity-based compensation expense	5,533	5,778
Amortization of debt discount and debt issuance costs	3,880	3,209
Gains on marketable securities, net	0	(143)
Change in fair value of contingent consideration	626	1,043
Deferred income taxes	(6,643)	(21,192)
Changes in operating assets and liabilities:
Accounts receivable, net	3,093	6,553
Inventories	3,534	(403)
Prepaid and other current assets	(3,720)	1,523
Accounts payable and accrued expenses	30,374	(4,622)
Deferred revenues	3,027	2,067
Other assets and liabilities	215	(486)
Net cash provided by (used in) operating activities	45,692	(14,536)
Cash flows from investing activities:
Proceeds from sales or maturities of marketable securities	18,225	128,512
Purchase of marketable securities	(21,102)	(129,241)
Capital expenditures	(923)	(658)
Net cash used in investing activities	(3,800)	(1,387)
Cash flows from financing activities:
Long-term debt principal payments	0	(4,375)
Payments of contingent consideration	(44)	(83)
Proceeds from the exercise of common stock options	123	152
Payments of employee tax withholding related to equity-based compensation	(2,348)	(1,322)
Net cash used in financing activities	(2,269)	(5,628)
Net increase (decrease) in cash, cash equivalents, and restricted cash	39,623	(21,551)
Cash, cash equivalents, and restricted cash at beginning of the period	192,770	276,898
Cash, cash equivalents, and restricted cash at end of the period	232,393	255,347
Supplemental data for cash flow information:
Cash paid for taxes	136	208
Cash paid for interest	$ 18,971	$ 26,195

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Description of Business

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

DESCRIPTION OF BUSINESS

AMAG Pharmaceuticals, Inc., a Delaware corporation, was founded in 1981. We are a biopharmaceutical company focused on developing and delivering important therapeutics, conducting clinical research in areas of unmet need and creating education and support programs for the patients and families we serve. Our currently marketed products support the health of patients in the areas of maternal and women’s health, anemia management and cancer supportive care, including Makena^® (hydroxyprogesterone caproate injection), Intrarosa^® (prasterone) vaginal inserts, Feraheme^® (ferumoxytol injection) for intravenous (“IV”) use, and MuGard^® Mucoadhesive Oral Wound Rinse. In addition, we have the rights to research, develop and commercialize bremelanotide in North America. Through services related to the preservation of umbilical cord blood stem cell and cord tissue units (the “CBR Services”) operated through Cord Blood Registry^® (“CBR”), we also help families to preserve newborn stem cells, which are used today in transplant medicine for certain cancers and blood, immune and metabolic disorders, and which we believe have the potential to play a valuable role in the ongoing development of regenerative medicine.

Throughout this Quarterly Report on Form 10-Q, AMAG Pharmaceuticals, Inc. and our consolidated subsidiaries are collectively referred to as “the Company,” “AMAG,” “we,” “us,” or “our.”

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Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments necessary for a fair statement of the financial position and results of operations of the Company for the interim periods presented. Such adjustments consisted only of normal recurring items. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP for interim financial reports and the instructions for Form 10-Q and the rules of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. Our accounting policies are described in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2017 (our “Annual Report”). Interim results are not necessarily indicative of the results of operations for the full year. These interim financial statements should be read in conjunction with our Annual Report.

Principles of Consolidation

The accompanying condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates and Assumptions

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. The most significant estimates and assumptions are used to determine amounts and values of, but are not limited to: revenue recognition related to product sales and services revenue; product sales allowances and accruals; allowance for doubtful accounts; marketable securities; inventory; acquisition date fair value and subsequent fair value estimates used to assess impairment of long-lived assets, including goodwill, in-process research and development (“IPR&D”) and other intangible assets; contingent consideration; debt obligations; certain accrued liabilities, including clinical trial accruals; income taxes, inclusive of valuation allowances; and equity-based compensation expense. Actual results could differ materially from those estimates.

Restricted Cash

As of March 31, 2018 and December 31, 2017, we classified $0.7 million of our cash as restricted cash, a non-current asset on the balance sheet. This amount represented the security deposit delivered to the landlord of our Waltham, Massachusetts headquarters in the form of an irrevocable letter of credit.

Concentrations and Significant Customer Information

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities, and accounts receivable. We currently hold our excess cash primarily in institutional money market funds, corporate debt securities, U.S. treasury and government agency securities, commercial paper and certificates of deposit. As of March 31, 2018, we did not have a material concentration in any single investment.

Our operations are located entirely within the U.S. We focus primarily on developing, manufacturing, and commercializing our products and product candidates and marketing and selling the CBR Services. We perform ongoing credit evaluations of our product sales customers and generally do not require collateral. The following table sets forth customers who represented 10% or more of our total revenues for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018		2017
AmerisourceBergen Drug Corporation	22	%	22	%
McKesson Corporation	22	%	14	%

Our net accounts receivable primarily represent amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies and amounts due for CBR Services sold to consumers who pay for the services directly. Accounts receivable for our products and services are recorded net of reserves for estimated chargeback obligations, prompt payment discounts and any allowance for doubtful accounts.

Customers which represented greater than 10% of our accounts receivable balances as of March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018		December 31, 2017
McKesson Corporation	26	%	22	%
AmerisourceBergen Drug Corporation	24	%	27	%

We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities) and finished drug product as well as for drug substance and final packaging services for Intrarosa. In addition, we rely on single sources for certain materials required to support the CBR Services. We would be exposed to a significant loss of revenue from the sale of our products and services if our suppliers and/or manufacturers could not fulfill demand for any reason.

Revenue Recognition

Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method. We recognized the cumulative effect of applying the new revenue standard to all contracts with customers that were not completed as of January 1, 2018 as an adjustment to the opening balance of stockholders' equity at the beginning of 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The adoption of ASC 606 did not have an impact on the amount of reported revenues with respect to our product or service revenue. In connection with the adoption of ASC 606, we are required to capitalize certain contract acquisition costs consisting primarily of commissions paid when contracts are signed and amortize these costs over the expected contractual relationship with the customer. As of January 1, 2018, we capitalized $1.5 million in incremental contract acquisition costs (specifically sales commissions related to the CBR Services) related to contracts that were not completed.

The Impact of ASC 606 Adoption

As a result of applying the modified retrospective transition method to adopt ASC 606, the following financial statement line items for the three months ended March 31, 2018 were affected (in thousands):

Condensed Consolidated Balance Sheet	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Assets:
Prepaid and other current assets	$	16,345		$	16,248		$	97
Other long-term assets	$	2,238		$	538		$	1,700
Total assets	$	1,834,950		$	1,833,153		$	1,797
Liabilities and stockholders' equity:
Deferred tax liabilities	$	17,497		$	17,156		$	341
Accumulated deficit	$	(530,921	)	$	(532,377	)	$	1,456
Total liabilities and stockholders' equity	$	1,834,950		$	1,833,153		$	1,797

Condensed Consolidated Statement of Operations	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Costs and expenses:
Selling, general and administrative expenses	$	91,050		$	91,368		$	(318	)
Net loss	$	(54,242	)	$	(54,560	)	$	318

Condensed Consolidated Statement of Cash Flows	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Operating activities:
Net loss	$	(54,242	)	$	(54,560	)	$	318
Changes in operating assets and liabilities:
Prepaid and other current assets	$	(3,720	)	$	(3,702	)	$	(18	)
Other assets and liabilities	$	215		$	515		$	(300	)

Reclassifications

Certain amounts in prior periods have been reclassified in order to conform to the current period presentation.

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Revenue Recognition

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

REVENUE RECOGNITION

On January 1, 2018, we adopted ASC 606 applying the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for prior periods. We recorded a net increase to opening stockholders' equity of $1.1 million as of January 1, 2018, reflecting the cumulative impact of adopting ASC 606 primarily related to the capitalization of incremental direct costs of obtaining a contract, which consisted of sales commissions related to the CBR Services. There was no impact to revenue for the three months ended March 31, 2018.

Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:

a.Identify the contract(s) with a customer;

b.Identify the performance obligations in the contract;

c.Determine the transaction price;

d.Allocate the transaction price to the performance obligations in the contract; and

e.Recognize revenue when (or as) the performance obligations are satisfied.

We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, if the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Our major sources of revenue during the reporting periods were: (a) product revenues from Makena and Feraheme; and (b) service revenues associated with the CBR Services. The adoption of ASC 606 did not have an impact on our product or service revenue.

Revenue and Allowances

The following table provides information about disaggregated revenue by products and services (in thousands):

	Three Months Ended March 31,
	2018		2017
Product sales, net
Makena	$	89,983	$	86,455
Feraheme	25,135		25,922
Intrarosa	2,165		—
MuGard	65		140
Total	$	117,348	$	112,517
Service revenues, net	$	28,969	$	26,931

Total gross product sales were offset by product sales allowances and accruals for the three months ended March 31, 2018 and 2017 as follows (in thousands, except for percentages):

	Three Months Ended March 31,
	2018		Percent of gross product sales		2017		Percent of gross product sales
Gross product sales	$	239,870			$	206,724
Provision for product sales allowances and accruals:
Contractual adjustments	86,144		36	%	69,829		34	%
Governmental rebates	36,378		15	%	24,378		12	%
Total	122,522		51	%	94,207		46	%
Product sales, net	$	117,348			$	112,517

The following table summarizes the product revenue allowance and accrual activity for the three months ended March 31, 2018 (in thousands):

	Contractual			Governmental
	Adjustments			Rebates			Total
Balance at December 31, 2017	$	62,164		$	50,598		$	112,762
Provisions related to current period sales	85,308			31,028			116,336
Adjustments related to prior period sales	836			5,350			6,186
Payments/returns relating to current period sales	(44,633		)	—			(44,633		)
Payments/returns relating to prior period sales	(39,441		)	(25,149		)	(64,590		)
Balance at March 31, 2018	$	64,234		$	61,827		$	126,061

The following table provides information about assets and liabilities from contracts with customers (in thousands):

	March 31, 2018		At Adoption
Short-term contract assets (sales commissions)	$	97	$	79
Long-term contract assets (sales commissions)	$	1,700	$	1,400
Short-term contract liabilities (deferred revenue)	$	42,510	$	42,494
Long-term contract liabilities (deferred revenue)	$	27,398	$	24,387

We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred contract acquisition costs, which will be amortized along with the associated revenue. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. We had no asset impairment charges related to contract assets in the three months ended March 31, 2018.

The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2018 (in thousands):

	Balance at January 1, 2018		Additions		Deductions			Balance at March 31, 2018
Contract assets (sales commissions)	$	1,479	$	340	$	(22	)	$	1,797
Contract liabilities (deferred revenue)	$	66,881	$	21,727	$	(18,700	)	$	69,908

Performance Obligations

At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. We determined that the following distinct goods and services represent separate performance obligations:

•Supply of Makena product

•Supply of Feraheme product

•Supply of Intrarosa product

•CBR collection and processing services

•CBR storage services

Product Revenue

For performance obligations related to products (i.e. Makena, Feraheme and Intrarosa), we principally sell our products to wholesalers, specialty distributors, specialty pharmacies and other customers (collectively, “Customers”), who purchase products directly from us. Our Customers subsequently resell the products to healthcare providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payers that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products.

For the majority of our Customers, we transfer control at the point in time when the goods are delivered. In instances when we perform shipping and handling activities, these are considered fulfillment activities, and accordingly, the costs are accrued when the related revenue is recognized. Taxes collected from Customers and remitted to governmental authorities are excluded from revenues.

Variable Consideration

Under ASC 606, we are required to make estimates of the net sales price, including estimates of variable consideration (such as rebates, chargebacks, discounts, co-pay assistance and other deductions), and recognize the estimated amount as revenue, when we transfer control of the product to our customers. Variable consideration must be determined using either an “expected value” or a “most likely amount” method.

We record product revenues net of certain allowances and accruals in our condensed consolidated statements of operations. Product sales allowances and accruals are primarily comprised of both direct and indirect fees, discounts and rebates and provisions for estimated product returns. Direct fees, discounts and rebates are contractual fees and price adjustments payable to Customers that purchase products directly from us. Indirect fees, discounts and rebates are contractual price adjustments payable to healthcare providers and organizations, such as certain physicians, clinics, hospitals, group purchasing organizations (“GPOs”), and dialysis organizations that typically do not purchase products directly from us but rather from wholesalers and specialty distributors. Consideration payable to a Customer, or other parties that purchase goods from the Customer, are considered to be a reduction of the transaction price, and therefore, of revenue.

Product sales allowances and accruals are based on definitive contractual agreements or legal requirements (such as Medicaid laws and regulations) related to the purchase and/or utilization of the product by these entities and are recorded in the same period that the related revenue is recognized. We use the expected value method for estimating variable consideration. We estimate product sales allowances and accruals using either historical, actual and/or other data, including estimated patient usage, applicable contractual rebate rates, contract performance by the benefit providers, other current contractual and statutory requirements, historical market data based upon experience of our products and other products similar to them, specific known market events and trends such as competitive pricing and new product introductions, current and forecasted Customer buying patterns and inventory levels, and the shelf life of our products. As part of this evaluation, we also review changes to federal and other legislation, changes to rebate contracts, changes in the level of discounts, and changes in product sales trends. Although allowances and accruals are recorded at the time of product sale, rebates are typically paid out in arrears, one to three months after the sale. 

The estimate of variable consideration, which is included in the transaction price, may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved in a future period. Estimating variable consideration and the related constraint requires the use of significant management judgment and actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. No amounts were constrained as of March 31, 2018.

Discounts

We typically offer a 2% prompt payment discount to certain customers as an incentive to remit payment in accordance with the stated terms of the invoice, generally 30 days. Because we anticipate that those customers who are offered this discount will take advantage of the discount, 100% of the prompt payment discount at the time of sale are accrued, based on the gross amount of each invoice. We adjust the accrual quarterly to reflect actual experience.

Chargebacks

Chargeback reserves represent the estimated obligations resulting from the difference between the prices at which we sell our products to wholesalers and the sales price ultimately paid to wholesalers under fixed price contracts by third-party payers, including governmental agencies. The chargeback estimates are determined based on actual product sales data and forecasted customer buying patterns. Actual chargeback amounts are determined at the time of resale to the qualified healthcare provider, and we generally issue credits for such amounts within several weeks of receiving notification from the wholesaler. Estimated chargeback amounts are recorded at the time of sale and adjusted quarterly to reflect actual experience.

Distributor/Wholesaler and Group Purchasing Organization Fees

Fees under the arrangements with distributors and wholesalers are usually based upon units of product purchased during the prior month or quarter and are usually paid by us within several weeks of the receipt of an invoice from the wholesaler or distributor, as the case may be. Fees under the arrangements with GPOs are usually based upon member purchases during the prior quarter and are generally billed by the GPO within 30 days after period end. In accordance with ASC 606, since the consideration given to the Customer is not for a distinct good or service, the consideration is a reduction of the transaction price of the vendor’s products or services. We have included these fees in contractual adjustments in the table above. We generally pay such amounts within several weeks of the receipt of an invoice from the distributor, wholesaler or GPO. Accordingly, we accrue the estimated fee due at the time of sale, based on the contracted price invoiced to the Customer. We adjust the accrual quarterly to reflect actual experience.

Product Returns

Consistent with industry practice, we generally offer wholesalers, specialty distributors and other customers a limited right to return our products based on the product’s expiration date. Currently the expiration dates for Feraheme, Makena and Intrarosa have a range of three to five years. Product returns are estimated based on the historical return patterns and known or expected changes in the marketplace. We track actual returns by individual production lots. Returns on lots eligible for credits under our returned goods policy are monitored and compared with historical return trends and rates. We expect that wholesalers and healthcare providers will not stock significant inventory due to the cost of the product, the expense to store our products, and/or that our products are readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available and for known or expected changes in the marketplace. We did not significantly adjust our reserve for product returns during the three months ended March 31, 2018. To date, our product returns have been relatively limited; however, returns experience may change over time. We may be required to make future adjustments to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant.

Sales Rebates

We contract with various private payer organizations, primarily pharmacy benefit managers, for the payment of rebates with respect to utilization of our products. We determine our estimates for rebates, if applicable, based on actual product sales data and our historical product claims experience. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the provider. We regularly assess our reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant.

Governmental Rebates

Governmental rebate reserves relate to our reimbursement arrangements with state Medicaid programs. We determine our estimates for Medicaid rebates, if applicable, based on actual product sales data and our historical product claims experience. In estimating these reserves, we provide for a Medicaid rebate associated with both those expected instances where Medicaid will act as the primary insurer as well as in those instances where we expect Medicaid will act as the secondary insurer. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the Medicaid or provider entity. We regularly assess our Medicaid reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current Medicaid accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant.

Other Incentives

Other incentives which we offer include voluntary patient assistance programs, such as co-pay assistance programs, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue.

Service Revenue

The CBR Services include the collection, processing, and storage of both umbilical cord blood and cord tissue. We market and sell the CBR Services directly to consumers at the prices that are known at contract inception. The discounts offered to the customer are known at the time of enrollment and thereby do not result in variable consideration. CBR Services include the following two performance obligations: collection and processing and storage services, further described below.

Collection and Processing Services

Enrollment services, including the provision of a collection kit and cord blood and cord tissue unit processing, are delivered at the beginning of the relationship. The revenue for this performance obligation is recognized at the point in time after the collection and successful processing of the cord blood and cord tissue.

When purchasing collection and processing services, the customer can (a) pay for the service upfront, when the service is provided; (b) finance the processing fee with us over six or twelve months; or (c) finance the processing fee through a third-party provider, and therefore not finance the arrangement with us. We elected to apply the practical expedient and therefore we have not adjusted the promised consideration for the effects of financing for either the six or twelve month payment plans.

Storage Services

Payment options for storage services of newborn cord blood and cord tissue units include either (a) an annual fee or (b) a prepayment of 18 years or for the lifetime of the newborn donor (the “lifetime option”). The revenue for this performance obligation is recognized ratably over the storage period on a straight-line basis, which is consistent with how the services are provided. For the lifetime option, storage fees are not charged during the lifetime of the newborn donor. However, revenue is recognized based on the average of male and female life expectancies using lifetime actuarial tables published by the Social Security Administration in effect at the time of the newborn’s birth. We determined that the 18 year and lifetime prepayment options do not include a significant financing component as the payment terms were structured primarily for reasons other than for the provision of financing and to maximize profitability.

As of March 31, 2018, the total aggregate transaction price allocated to the unsatisfied performance obligations was recorded as deferred revenue, which will be recognized ratably on a straight-line basis over the contractual period, as described above, of which $42.5 million will be recognized over the next twelve months.

Allocation of Transaction Price

We have selected an adjusted market assessment approach to estimate the stand-alone selling prices of the collection and processing services and storage services and concluded that the published list price is the price that a customer in that market would be willing to pay for those goods or services. We also considered the fact that all customers are charged the list prices current at the time of their enrollment where we have separately stated list prices for processing and storage. The discounts provided to the customers at the time of entering into the contract are allocated proportionally to both performance obligations (i.e. processing and storage).

Cost to Obtain a Contract

We pay commissions to internal sales representatives as compensation for obtaining contract enrollments for the CBR Services. We capitalize commissions that are incremental as a result of obtaining customer contracts and costs incurred to fulfill a customer contract if those costs are not within the scope of another topic within the accounting literature and meet the specified criteria. These costs are deferred in other current or long-term assets and are expensed to selling, general and administrative expenses as we satisfy the performance obligations by transferring the service to the customer. These assets will be periodically assessed for impairment.

As of January 1, 2018, the date we adopted ASC 606, we capitalized $1.5 million in incremental contract acquisition costs related to contracts that were not completed. In the three months ended March 31, 2018 we amortized an immaterial amount of these acquisition costs, and did not record any impairment losses in relation to costs capitalized.

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Marketable Securities

3 Months Ended

Mar. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

MARKETABLE SECURITIES

As of March 31, 2018 and December 31, 2017, our marketable securities were classified as available-for-sale in accordance with accounting standards which provide guidance related to accounting and classification of certain investments in marketable securities. Available-for-sale marketable securities are those securities which we view as available for use in current operations, if needed. We generally classify our available-for-sale marketable securities as short-term investments even though the stated maturity date may be one year or more beyond the current balance sheet date.

The following is a summary of our marketable securities as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term marketable securities:*
Corporate debt securities	$	58,981	$	—	$	(215	)	$	58,766
Certificates of deposit	10,150		—		—			10,150
U.S. treasury and government agency securities	5,996		—		(57		)	5,939
Commercial paper	5,962		—		—			5,962
Total short-term marketable securities	$	81,089	$	—	$	(272	)	$	80,817
Long-term marketable securities:**
Corporate debt securities	$	52,408	$	1	$	(725	)	$	51,684
U.S. treasury and government agency securities	6,381		—		(62		)	6,319
Total long-term marketable securities	58,789		1		(787		)	58,003
Total marketable securities	$	139,878	$	1	$	(1,059	)	$	138,820

* Represents marketable securities with a remaining maturity of less than one year.

** Represents marketable securities with a remaining maturity of one to three years.

	December 31, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term marketable securities:*
Corporate debt securities	$	57,257	$	—	$	(68	)	57,189
Certificates of deposit	9,151		—		—			9,151
U.S. treasury and government agency securities	1,999		—		(13		)	1,986
Commercial paper	1,999		—		—			1,999
Total short-term marketable securities	$	70,406	$	—	$	(81	)	$	70,325
Long-term marketable securities:**
Corporate debt securities	$	59,282	$	1	$	(320	)	$	58,963
U.S. treasury and government agency securities	7,381		—		(76		)	7,305
Total long-term marketable securities	66,663		1		(396		)	66,268
Total marketable securities	$	137,069	$	1	$	(477	)	$	136,593

* Represents marketable securities with a remaining maturity of less than one year.

** Represents marketable securities with a remaining maturity of one to three years.

Impairments and Unrealized Gains and Losses on Marketable Securities

We did not recognize any other-than-temporary impairment losses in our condensed consolidated statements of operations related to our marketable securities during the three months ended March 31, 2018 and 2017. We considered various factors, including the length of time that each security was in an unrealized loss position and our ability and intent to hold these securities until the recovery of their amortized cost basis occurs. As of March 31, 2018, we had no material losses in an unrealized loss position for more than one year. Future events may occur, or additional information may become available, which may cause us to identify credit losses where we do not expect to receive cash flows sufficient to recover the entire amortized cost basis of a security and may necessitate the recording of future realized losses on securities in our portfolio. Significant losses in the estimated fair values of our marketable securities could have a material adverse effect on our earnings in future periods

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Fair Value Measurements

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The following tables represent the fair value hierarchy as of March 31, 2018 and December 31, 2017, for those assets and liabilities that we measure at fair value on a recurring basis (in thousands):

	Fair Value Measurements at March 31, 2018 Using:
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	2,255	$	2,255	$	—	$	—
Corporate debt securities	110,450		—		110,450		—
U.S. treasury and government agency securities	12,258		—		12,258		—
Certificates of deposit	10,150				10,150		—
Commercial paper	$	5,962	$	—	$	5,962	$	—
Total Assets	$	141,075	$	2,255	$	138,820	$	—
Liabilities:
Contingent consideration - Lumara Health	$	49,797	$	—	$	—	$	49,797
Contingent consideration - MuGard	870		—		—		870
Total Liabilities	$	50,667	$	—	$	—	$	50,667

	Fair Value Measurements at December 31, 2017 Using:
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	4,591	$	4,591	$	—	$	—
Corporate debt securities	116,152		—		116,152		—
U.S. treasury and government agency securities	9,291		—		9,291		—
Certificates of deposit	9,151		—		9,151		—
Commercial paper	1,999		—		1,999		—
Total Assets	$	141,184	$	4,591	$	136,593	$	—
Liabilities:
Contingent consideration - Lumara Health	$	49,187	$	—	$	—	$	49,187
Contingent consideration - MuGard	898		—		—		898
Total Liabilities	$	50,085	$	—	$	—	$	50,085

Marketable Securities

Our cash equivalents, are classified as Level 1 assets under the fair value hierarchy as these assets have been valued using quoted market prices in active markets and do not have any restrictions on redemption. Our marketable securities are classified as Level 2 assets under the fair value hierarchy as these assets were primarily determined from independent pricing services, which normally derive security prices from recently reported trades for identical or similar securities, making adjustments based upon other significant observable market transactions. At the end of each reporting period, we perform quantitative and qualitative analysis of prices received from third parties to determine whether prices are reasonable estimates of fair value. After completing our analysis, we did not adjust or override any fair value measurements provided by our pricing services as of March 31, 2018. In addition, there were no transfers or reclassifications of any securities between Level 1 and Level 2 during the three months ended March 31, 2018.

Contingent Consideration

For asset acquisitions, such as Intrarosa, we record contingent consideration for obligations we consider to be probable and estimable and these liabilities are not adjusted to fair value. As of March 31, 2018, $10.0 million of contingent consideration was recorded in accrued expenses and is required to be paid to Endoceutics, Inc. (“Endoceutics”) in connection with the first anniversary of the closing pursuant to the agreement entered into with Endoceutics (the “Endoceutics License Agreement”). In addition, as of March 31, 2018, we recorded an accrual for acquired in-process research and development (“IPR&D”) expense of $20.0 million in anticipation of the regulatory milestone payment to Palatin Technologies, Inc. (“Palatin”) due upon the FDA acceptance of the bremelanotide NDA, pursuant to the terms of a license agreement we entered into with Palatin in January 2017 (the “Palatin License Agreement”). We also recorded contingent consideration related to the November 2014 acquisition of Lumara Health, Inc. (“Lumara Health”) and related to our June 2013 license agreement for MuGard® Mucoadhesive Oral Wound Rinse (the “MuGard License Agreement”) with Abeona Therapeutics, Inc. (“Abeona”), under which we acquired the U.S. commercial rights for the management of oral mucositis and stomatitis (the “MuGard Rights”).

The fair value measurements of contingent consideration obligations and the related intangible assets arising from business combinations are classified as Level 3 assets under the fair value hierarchy as these assets have been valued using unobservable inputs. These inputs include: (a) the estimated amount and timing of projected cash flows; (b) the probability of the achievement of the factors on which the contingency is based; and (c) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement.

The following table presents a reconciliation of contingent consideration obligations related to the acquisition of Lumara Health (related to our Makena product) and the MuGard Rights (in thousands):

Balance as of December 31, 2017	$	50,085
Payments made	(44		)
Adjustments to fair value of contingent consideration	626
Balance as of March 31, 2018	$	50,667

During the three months ended March 31, 2018, we adjusted the fair value of our contingent consideration liability by approximately $0.6 million, due to an increase of approximately $0.6 million to the Makena contingent consideration. We have classified $49.8 million of the Makena contingent consideration and $0.2 million of the MuGard contingent consideration as short-term liabilities in our consolidated balance sheet as of March 31, 2018.

The fair value of the contingent milestone payments payable by us to the former stockholders of Lumara Health was determined based on our probability-adjusted discounted cash flows estimated to be realized from the net sales of Makena from December 1, 2014 through December 31, 2019. As of March 31, 2018, the total potential undiscounted milestone payment amount we could pay in connection with the Lumara Health acquisition was $200.0 million through December 31, 2019.

The fair value of the contingent royalty payments payable by us to Abeona under the MuGard License Agreement was determined based on various market factors, including an analysis of estimated sales using a discount rate of approximately 14%. As of March 31, 2018, we estimated that the undiscounted royalty amounts we could pay under the MuGard License Agreement, based on current projections, may range from approximately $2.0 million to $6.0 million over the remainder of the ten year period, which commenced on June 6, 2013, the acquisition date, which is our best estimate of the period over which we expect the majority of the asset’s cash flows to be derived.  

We believe the estimated fair values of Lumara Health and the MuGard Rights are based on reasonable assumptions; however; our actual results may vary significantly from the estimated results.

Debt

We estimate the fair value of our debt obligations by using quoted market prices obtained from third-party pricing services, which is classified as a Level 2 input. As of March 31, 2018, the estimated fair value of our 2023 Senior Notes, 2022 Convertible Notes and 2019 Convertible Notes (each as defined below) was $470.3 million, $323.3 million and $20.7 million, respectively, which differed from their carrying values. See Note Q, “Debt” for additional information on our debt obligations.

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Inventories

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Our major classes of inventories were as follows as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018		December 31, 2017
Raw materials	$	12,578	$	12,418
Work in process	5,417		4,146
Finished goods	13,603		20,792
Total inventories	$	31,598	$	37,356

Total inventories decreased by $5.8 million from December 31, 2017 primarily due to sales of the Makena intramuscular product and Feraheme finished goods.

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Property, Plant and Equipment, Net

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018			December 31, 2017
Land	$	700		$	700
Land improvements	300			300
Building and improvements	9,552			9,552
Computer equipment and software	14,072			14,073
Furniture and fixtures	2,513			2,512
Leasehold improvements	4,959			4,959
Laboratory and production equipment	13,286			8,030
Construction in progress	1,025			5,360
	46,407			45,486
Less: accumulated depreciation	(20,486		)	(19,490		)
Property, plant and equipment, net	$	25,921		$	25,996

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Goodwill and Intangible Assets, Net

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

Our $639.5 million goodwill balance consisted of $198.1 million of goodwill acquired through the November 2014 Lumara Health acquisition and $441.4 million acquired through the August 2015 CBR acquisition. As of March 31, 2018, we had no accumulated impairment losses related to goodwill.

We test goodwill at the reporting unit level for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Events that could indicate impairment and trigger an interim impairment assessment include, but are not limited to, an adverse change in current economic and market conditions, including a significant prolonged decline in market capitalization, a significant adverse change in legal factors, unexpected adverse business conditions, and an adverse action or assessment by a regulator. Our annual impairment test date is October 31. We have determined that we operate in a single operating segment and have a single reporting unit.

Intangible Assets

As of March 31, 2018 and December 31, 2017, our identifiable intangible assets consisted of the following (in thousands):

	March 31, 2018								December 31, 2017
			Accumulated		Cumulative						Accumulated		Cumulative
	Cost		Amortization		Impairments		Net		Cost		Amortization		Impairments		Net
Amortizable intangible assets:
Makena base technology	$	797,100	$	306,242	$	319,246	$	171,612	$	797,100	$	255,754	$	319,246	$	222,100
CBR customer relationships	297,000		33,209		—		263,791		297,000		29,309		—		267,691
Makena auto-injector developed technology	79,100		188		—		78,912		—		—		—		—
Intrarosa developed technology	77,655		5,064		—		72,591		77,655		3,376		—		74,279
	1,250,855		344,703		319,246		586,906		1,171,755		288,439		319,246		564,070
Indefinite-lived intangible assets:
Makena IPR&D	—		—		—		—		79,100		—		—		79,100
CBR trade names and trademarks	65,000		—		3,700		61,300		65,000		—		3,700		61,300
Total intangible assets	$	1,315,855	$	344,703	$	322,946	$	648,206	$	1,315,855	$	288,439	$	322,946	$	704,470

During the first quarter of 2018, following the FDA approval of the Makena auto-injector, we reclassified the Makena IPR&D as the Makena auto-injector developed technology, and placed it into service. Amortization of the Makena auto-injector developed technology, is being recognized on a straight-line basis over 8.8 years.

As of March 31, 2018, the weighted average remaining amortization period for our finite-lived intangible assets was approximately 11.7 years. Total amortization expense for the three months ended March 31, 2018 and 2017 was $56.3 million and $24.8 million, respectively. Amortization expense for the Makena base technology, Makena auto-injector developed technology, and Intrarosa developed technology is recorded in cost of product sales in our condensed consolidated statements of operations. Amortization expense for the CBR related intangible assets is recorded in selling, general and administrative expenses in our condensed consolidated statements of operations. We expect amortization expense related to our finite-lived intangible assets to be as follows (in thousands):

	Estimated
	Amortization
Period	Expense
Remainder of Year Ending December 31, 2018	$	139,239
Year Ending December 31, 2019	48,552
Year Ending December 31, 2020	40,930
Year Ending December 31, 2021	40,718
Year Ending December 31, 2022	40,663
Thereafter	276,804
Total	$	586,906

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Current and Long- Term Liabilities

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Current and Long-Term Liabilities

CURRENT AND LONG-TERM LIABILITIES

Accrued Expenses

Accrued expenses consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018		December 31, 2017
Commercial rebates, fees and returns	$	114,884	$	102,357
Professional, license, and other fees and expenses	29,033		28,692
Salaries, bonuses, and other compensation	14,034		19,099
Interest expense	6,639		13,525
Bremelanotide milestone payment	20,000		—
Intrarosa-related license fees	10,000		10,000
Accrued research and development	4,481		1,817
Total accrued expenses	$	199,071	$	175,490

Deferred Revenues

Our deferred revenue balances as of March 31, 2018 and December 31, 2017 of $69.9 million and $66.9 million, respectively, were primarily related to our CBR Services revenues and included: (a) amounts collected in advance of unit processing and (b) amounts associated with unearned storage fees collected at the beginning of the storage contract term, net of allocated discounts.

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Income Taxes

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The following table summarizes our effective tax rate and income tax benefit for the three months ended March 31, 2018 and 2017 (in thousands except for percentages):

	Three Months Ended March 31,
	2018			2017
Effective tax rate	10		%	36		%
Income tax benefit	$	(5,979	)	$	(20,706	)

 For the three months ended March 31, 2018, we recognized an income tax benefit of $6.0 million, representing an effective tax rate of 10%. The difference between the expected 2018 statutory federal tax rate of 21% and the 10% effective tax rate for the three months ended March 31, 2018 was primarily attributable to the impact of the establishment of a valuation allowance related to certain deferred tax assets, the impact of non-deductible stock compensation, and other non-deductible expenses, partially offset by state income taxes and orphan drug tax credits. We have established a valuation allowance on certain deferred tax assets to the extent that our existing taxable temporary differences would not be available as a source of income to realize the benefits of those deferred tax assets.

On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted. The 2017 Tax Act included significant changes to the U.S. corporate income tax system, including a reduction of the federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Deferred tax assets and liabilities are measured using enacted rates in effect for the year in which those temporary differences are expected to be recovered or settled. As a result of the reduction in the federal tax rate from 35% to 21%, we revalued our ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $17.6 million tax benefit. We are still assessing the implications of the 2017 Tax Act on both a federal and state level. Any additional impacts will be recorded as they are identified during the measurement period as provided for in accordance with Staff Accounting Bulletin No. 118, which addresses the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act.

For the three months ended March 31, 2017, we recognized an income tax benefit of $20.7 million representing an effective tax rate of 36%. The difference between the expected 2017 statutory federal tax rate of 35% and the effective tax rate for the three months ended March 31, 2017 was primarily attributable to the impact of state income taxes and the federal research and development tax credit, partially offset by non-deductible stock compensation and other non-deductible expenses.

The primary drivers of the decrease in tax benefit for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017 include a decrease in the federal tax benefit primarily attributable to the decrease in the statutory federal tax rate from 35% to 21%, and an increase in valuation allowance, primarily on tax credits, partially offset by an increase in orphan drug tax credits.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Accumulated Other Comprehensive Loss

ACCUMULATED OTHERCOMPREHENSIVE LOSS

The table below presents information about the effects of net income (loss) of significant amounts reclassified out of accumulated other comprehensive income (loss), net of tax, associated with unrealized gains (losses) on securities during the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018			2017
Beginning balance	$	(3,908	)	$	(3,838	)
Holding (losses) gains arising during period, net of tax	(454		)	92
Ending balance	$	(4,362	)	$	(3,746	)

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Basic and Diluted Net Income (Loss) per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Basic and Diluted Net Income (Loss) per Share

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

We compute basic net income (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding during the relevant period. Diluted net income (loss) per common share has been computed by dividing net income (loss) by the diluted number of common shares outstanding during the period. Except where the result would be antidilutive to net income, diluted net income per common share is computed assuming the impact of the conversion of the 2.5% convertible senior notes due 2019 (the “2019 Convertible Notes”) and the 3.25% convertible senior notes due 2022 (the “2022 Convertible Notes”), the exercise of outstanding stock options, the vesting of restricted stock units (“RSUs”), and the exercise of warrants.

We have a choice to settle the conversion obligation of our 2022 Convertible Notes and the 2019 Convertible Notes (together, the “Convertible Notes”) in cash, shares, or any combination of the two. Our current policy is to settle the principal balance of the Convertible Notes in cash. As such, we apply the treasury stock method to these securities and the dilution related to the conversion premium, if any, of the Convertible Notes is included in the calculation of diluted weighted-average shares outstanding to the extent each issuance is dilutive based on the average stock price during each reporting period being greater than the conversion price of the respective Convertible Notes. The dilutive effect of the warrants, stock options and RSUs has been calculated using the treasury stock method.

The components of basic and diluted net income (loss) per share for the three months ended March 31, 2018 and 2017 were as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2018			2017
Net loss	$	(54,242	)	$	(36,560	)
Weighted average common shares outstanding	34,162			34,378
Shares used in calculating dilutive net loss per share	34,162			34,378
Net loss per share:
Basic and diluted	$	(1.59	)	$	(1.06	)

The following table sets forth the potential common shares issuable upon the exercise of outstanding options, the vesting of RSUs, the exercise of warrants (prior to consideration of the treasury stock method), and the conversion of the Convertible Notes, which were excluded from our computation of diluted net (loss) income per share because their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended March 31,
	2018	2017
Options to purchase shares of common stock	3,771	2,406
Shares of common stock issuable upon the vesting of RSUs	1,401	775
Warrants	1,008	7,382
2022 Convertible Notes	11,695	—
2019 Convertible Notes	790	7,382
Total	18,665	17,945

In connection with the issuance of the 2019 Convertible Notes, in February 2014, we entered into convertible bond hedges. The convertible bond hedges are not included for purposes of calculating the number of diluted shares outstanding, as their effect would be anti-dilutive. The convertible bond hedges are generally expected, but not guaranteed, to reduce the potential dilution and/or offset the cash payments we are required to make upon conversion of the remaining 2019 Convertible Notes.  During the three months ended March 31, 2018 and 2017, our average common stock price was below the exercise price of the warrants.

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Equity-Based Compensation

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

EQUITY‑BASED COMPENSATION

We currently maintain three equity compensation plans; our Fourth Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Lumara Health 2013 Plan”) and our 2015 Employee Stock Purchase Plan (“2015 ESPP”). All outstanding stock options granted under each of our equity compensation plans other than our 2015 ESPP have an exercise price equal to the closing price of a share of our common stock on the grant date.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2018:

	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	2,590,373		125,536		815,450		3,531,359
Granted	451,411		—		—		451,411
Exercised	(7,782	)	—		—		(7,782	)
Expired or terminated	(160,797	)	(15,436	)	(27,875	)	(204,108	)
Outstanding at March 31, 2018	2,873,205		110,100		787,575		3,770,880

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2018:

	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	966,623		11,611		91,541		1,069,775
Granted	712,781		—		—		712,781
Vested	(317,638	)	(10,150	)	(15,666	)	(343,454	)
Expired or terminated	(38,078	)	(460	)	—		(38,538	)
Outstanding at March 31, 2018	1,323,688		1,001		75,875		1,400,564

In March 2018, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 206,250 shares of common stock. These performance-based RSUs will vest, if at all, on March 1, 2021, based on our total shareholder return performance measured against the median total shareholder return of a defined group of companies over a three-year period. The maximum aggregate total fair value of these RSUs is $3.8 million, which is being recognized as expense over a period of three years from the date of grant, net of any estimated and actual forfeitures.

Equity-Based Compensation Expense

Equity-based compensation expense for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands):

	Three Months Ended March 31,
	2018			2017
Cost of product sales and services	$	347		$	129
Research and development	720			756
Selling, general and administrative	4,466			4,893
Total equity-based compensation expense	5,533			5,778
Income tax effect	(942		)	(1,605		)
After-tax effect of equity-based compensation expense	$	4,591		$	4,173

We reduce the compensation expense being recognized to account for estimated forfeitures, which we estimate based primarily on historical experience, adjusted for unusual events such as corporate restructurings, which may result in higher than expected turnover and forfeitures. Under current accounting guidance, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We adopted ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) during the first quarter of 2017. We will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

Change in Stockholders’ Equity

Total stockholders’ equity decreased by $50.2 million during the three months ended March 31, 2018. This decrease was primarily driven by the following:

• $54.2 million due to the net loss for the three months ended March 31, 2018;

• $5.5 million increase related to equity-based compensation expense;

• $1.1 million increase related to the cumulative effect adjustment to our accumulated deficit from the adoption of ASC 606, net of tax; and

• $2.3 million decrease due to the payment of employee tax withholdings related to equity-based compensation.

Share Repurchase Program

In January 2016, we announced that our Board authorized a program to repurchase up to $60.0 million in shares of our common stock. The repurchase program does not have an expiration date and may be suspended for periods or discontinued at any time. Under the program, we may purchase our stock from time to time at the discretion of management in the open market or in privately negotiated transactions. The number of shares repurchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, along with working capital requirements, general business conditions and other factors. We may also from time to time establish a trading plan under Rule 10b5-1 of the Securities and Exchange Act of 1934 to facilitate purchases of our shares under this program. As of March 31, 2018, we repurchased and retired a cumulative total of 2,198,010 shares of common stock under this repurchase program for $39.5 million at an average purchase price of $17.97 per share. As of March 31, 2018, $20.5 million remains available for the repurchase of shares under the program. We did not repurchase any of our common stock during the first quarter of 2018.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Commitments

Our long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These include commitments related to our facility leases, purchases of inventory, debt obligations, and other purchase obligations.

Purchase Obligations

Purchase obligations primarily represent minimum purchase commitments for inventory. As of March 31, 2018, our minimum purchase commitments totaled $29.9 million.

Contingent Consideration Related to Business Combinations

In connection with our acquisition of Lumara Health in November 2014, we agreed to pay up to $350.0 million based on the achievement of certain sales milestones, of which $150.0 million has been paid. As of March 31, 2018, the total potential undiscounted milestone payment amount we could pay in connection with the Lumara Health acquisition was $200.0 million through December 31, 2019. As of March 31, 2018, $50.0 million has been accrued based on our estimates, which are reliant on a number of external factors as well as the exercise of judgment. As we update our analysis in future periods, we may determine that the payment of this milestone is no longer probable, resulting in the reversal of the $50.0 million liability at that time, which could occur in the near-term.

Contingent Regulatory and Commercial Milestone Payments

In connection with the Endoceutics License Agreement, we are required to pay Endoceutics $10.0 million in connection with the first anniversary of the closing. In addition, we are required to pay Endoceutics certain sales milestone payments, including a first sales milestone payment of $15.0 million, which would be triggered when Intrarosa annual net U.S. sales exceed $150.0 million, and a second milestone payment of $30.0 million, which would be triggered when annual net U.S. sales of Intrarosa exceed $300.0 million. If annual net U.S. sales of Intrarosa exceed $500.0 million, there are additional sales milestone payments totaling up to $850.0 million, which would be triggered at various sales thresholds. We are also obligated to pay tiered royalties to Endoceutics equal to a percentage of net sales of Intrarosa in the U.S. ranging from mid-teens for calendar year net sales up to $150.0 million to mid twenty percent for any calendar year net sales that exceed $1.0 billion for the commercial life of Intrarosa, with deductions (a) after the later of (i) the expiration date of the last to expire of a licensed patent containing a valid patent claim or (ii) ten years after the first commercial sale of Intrarosa for the treatment of vulvar and vaginal atrophy ("VVA") or female sexual dysfunction (“FSD”) in the U.S. (as applicable), (b) for generic competition and (c) for third party payments, subject to an aggregate cap on such deductions of royalties otherwise payable to Endoceutics.

In connection with the license agreement we entered into with Palatin in January 2017, we are required to pay Palatin up to $380.0 million in regulatory and commercial milestone payments including up to $80.0 million upon achievement of certain regulatory milestones, including $20.0 million upon the acceptance by the FDA of our New Drug Application (“NDA”) for bremelanotide and $60.0 million upon FDA approval, and up to $300.0 million of aggregate sales milestone payments upon the achievement of certain annual net sales milestones over the course of the license. We are also obligated to pay Palatin tiered royalties on annual net sales of the Bremelanotide Products(as defined below), on a product-by-product basis, in the Palatin Territory ranging from the high-single digits to the low double-digits.

In July 2015, we entered into an option agreement with Velo Bio, LLC, a privately-held life-sciences company (“Velo”) that granted us an option to acquire the global rights (the “DIF Rights”) to an orphan drug candidate, digoxin immune fab (“DIF”), a poly clonal antibody in clinical development for the treatment of severe preeclampsia in pregnant woman. If we exercise the option to acquire the DIF Rights, we will be responsible for payments totaling up to $65.0 million (including the payment of the option exercise price and the regulatory milestone payments) and up to an additional $250.0 million in sales milestone payments based on the achievement of annual sales milestones at targets ranging from $100.0 million to $900.0 million. See Note P, “Collaboration, License and Other Strategic Agreements,” for more information on the Velo option. Velo began its Phase 2b/3a clinical study in the second quarter of 2017, and until we exercise our option, no contingent amounts related to this agreement have been recorded in our consolidated financial statements as of March 31, 2018.

In connection with a development and license agreement (the “Antares Agreement”) with Antares Pharma, Inc. (“Antares”), we are required to pay royalties to Antares on net sales of the auto-injection system for use with hydroxyprogesterone caproate (the “Makena auto-injector”) commencing on the launch of the Makena auto-injector in a particular country until the Makena auto-injector is no longer sold or offered for sale in such country (the “Antares Royalty Term”). The royalty rates range from high single digit to low double digits and are tiered based on levels of net sales of the Makena auto-injector and decrease after the expiration of licensed patents or where there are generic equivalents to the Makena auto-injector being sold in a particular country. Antares is also entitled to sales-based milestone payments.

Contingencies

Legal Proceedings

We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. For certain matters referenced below, the liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. In addition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible, we will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, we will provide disclosure to that effect. We expense legal costs as they are incurred.

Sandoz Patent Infringement Lawsuit

In March 2016, we initiated a patent infringement suit regarding an Abbreviated New Drug Application (“ANDA”) submitted to the FDA by Sandoz Inc. (“Sandoz”) requesting approval to engage in commercial manufacture, use and sale of a generic version of ferumoxytol. On March 23, 2018, we and Sandoz entered a stipulation of dismissal in the United States District Court for the District of New Jersey pursuant to a settlement agreement that dismissed and resolved this action. According to the terms of the settlement, if Sandoz receives FDA approval by a certain date, Sandoz may launch its generic version of Feraheme on July 15, 2021, or earlier under certain circumstances customary for settlement agreements of this nature. Sandoz will pay a royalty on the sales of its generic version of Feraheme to us until the expiration of the last Feraheme patent listed in the Orange Book. If Sandoz is unable to secure approval by such date, Sandoz will launch an authorized generic version of Feraheme on July 15, 2022 for up to twelve months. Sandoz’s right to distribute, and our obligation to supply, the authorized generic product shall be in accordance with standard commercial terms and profit splits.

Other

On July 20, 2015, the Federal Trade Commission (the “FTC”) notified us that it was conducting an investigation into whether Lumara Health or its predecessor engaged in unfair methods of competition with respect to Makena or any hydroxyprogesterone caproate product. The FTC noted in its letter that the existence of the investigation does not indicate that the FTC has concluded that Lumara Health or its predecessor has violated the law and we believe that our contracts and practices comply with relevant law and policy, including the federal Drug Quality and Security Act (the “DQSA”), which was enacted in November 2013, and public statements from and enforcement actions by the FDA regarding its implementation of the DQSA. We have provided the FTC with a response providing a brief overview of the DQSA for context, which we believe was helpful, including: (a) how the statute outlined that large-scale compounding of products that are copies or near-copies of FDA-approved drugs (like Makena) is not in the interests of public safety; (b) our belief that the DQSA has had a significant impact on the compounding of hydroxyprogesterone caproate; and (c) how our contracts with former compounders allow those compounders to continue to serve physicians and patients with respect to supplying medically necessary alternative/altered forms of hydroxyprogesterone caproate. We believe we have fully cooperated with the FTC and we have had no further interactions with the FTC on this matter since we provided our response to the FTC in August 2015.

On or about April 6, 2016, we received Notice of a Lawsuit and Request to Waive Service of a Summons in a case entitled Plumbers’ Local Union No. 690 Health Plan v. Actavis Group et. al. (“Plumbers’ Union”), which was filed in the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania and, after removal to federal court, is now pending in the United States District Court for the Eastern District of Pennsylvania (Civ. Action No. 16-65-AB). Thereafter, we were also made aware of a related complaint entitled Delaware Valley Health Care Coalition v. Actavis Group et. al. (“Delaware Valley”), which was filed with the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania District Court of Pennsylvania (Case ID: 160200806). The complaints name K-V Pharmaceutical Company (“KV”) (Lumara Health’s predecessor company), certain of its successor entities, subsidiaries and affiliate entities (the “Subsidiaries”), along with a number of other pharmaceutical companies. We acquired Lumara Health in November 2014, a year after KV emerged from bankruptcy protection, at which time it, along with its then existing subsidiaries, became our wholly-owned subsidiary. We have not been served with process or waived service of summons in either case. The actions are being brought alleging unfair and deceptive trade practices with regard to certain pricing practices that allegedly resulted in certain payers overpaying for certain of KV’s generic products. On July 21, 2016, the Plaintiff in the Plumbers’ Union case dismissed KV with prejudice to refiling and on October 6, 2016, all claims against the Subsidiaries were dismissed without prejudice. We are in discussions with Plaintiff’s counsel to similarly dismiss all claims in the Delaware Valley case. Because the Delaware Valley case is in the earliest stages and we have not been served with process in this case, we are currently unable to predict the outcome or reasonably estimate the range of potential loss associated with this matter, if any.

We may periodically become subject to other legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which we are focused. Other than the above actions, we are not aware of any material claims against us as of March 31, 2018.

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Collaboration, License and Other Strategic Agreements

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration, License and Other Strategic Agreements

COLLABORATION, LICENSE AND OTHER STRATEGIC AGREEMENTS

Our commercial strategy includes expanding our portfolio through the in-license or acquisition of additional pharmaceutical products or companies, including revenue-generating commercial products and late-state development assets. As of March 31, 2018, we were a party to the following collaborations and license agreements:

Endoceutics

In February 2017, we entered into the Endoceutics License Agreement with Endoceutics. Pursuant to the Endoceutics License Agreement, Endoceutics granted us the right to develop and commercialize pharmaceutical products containing dehydroepiandrosterone (“DHEA”), including Intrarosa, at dosage strengths of 13 mg or less per dose and formulated for intravaginal delivery, excluding any combinations with other active pharmaceutical ingredients, in the U.S. for the treatment of VVA and FSD. The transactions contemplated by the Endoceutics License Agreement closed on April 3, 2017. We accounted for the Endoceutics License Agreement as an asset acquisition under ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.

Upon the closing of the Endoceutics License Agreement, we made an upfront payment of $50.0 million and issued 600,000 shares of unregistered common stock to Endoceutics, which had a value of $13.5 million, as measured on April 3, 2017, the date of closing. Of these 600,000 shares, 300,000 were subject to a 180-day lock-up provision, and the other 300,000 were subject to a one-year lock-up provision. In addition, we paid Endoceutics $10.0 million in the third quarter of 2017 upon the delivery by Endoceutics of Intrarosa launch quantities and have agreed to make a payment of $10.0 million in connection with the first anniversary of the closing. The anniversary payment is reflected in accrued expenses at March 31, 2018. In the second quarter of 2017, we recorded a total of $83.5 million of consideration, of which $77.7 million was allocated to the Intrarosa developed technology intangible asset and $5.8 million was recorded as IPR&D expense based on their relative fair values.

In addition, we have also agreed to pay tiered royalties to Endoceutics equal to a percentage of net sales of Intrarosa in the U.S. ranging from mid-teens for calendar year net sales up to $150.0 million to mid twenty percent for any calendar year net sales that exceed $1.0 billion for the commercial life of Intrarosa, with deductions (a) after the later of (i) the expiration date of the last to expire of a licensed patent containing a valid patent claim or (ii) ten years after the first commercial sale of Intrarosa for the treatment of VVA or FSD in the U.S. (as applicable), (b) for generic competition and (c) for third party payments, subject to an aggregate cap on such deductions of royalties otherwise payable to Endoceutics. Endoceutics is also eligible to receive certain sales milestone payments, including a first sales milestone payment of $15.0 million, which would be triggered when Intrarosa annual net U.S. sales exceed $150.0 million, and a second milestone payment of $30.0 million, which would be triggered when annual net U.S. sales of Intrarosa exceed $300.0 million. If annual net U.S. sales of Intrarosa exceed $500.0 million, there are additional sales milestone payments totaling up to $850.0 million, which would be triggered at various sales thresholds.

In the third quarter of 2017, Endoceutics initiated a clinical study to support an application for U.S. regulatory approval for Intrarosa for the treatment of hypoactive sexual desire disorder (“HSDD”) in post-menopausal women. We and Endoceutics have agreed to share the direct costs related to such studies based upon a negotiated allocation with us funding up to $20.0 million. We may, with Endoceutics’ consent (not to be unreasonably withheld, conditioned or delayed), conduct any other studies of Intrarosa for the treatment of VVA and FSD anywhere in the world for the purpose of obtaining or maintaining regulatory approval of or commercializing Intrarosa for the treatment of VVA or FSD in the U.S. All data generated in connection with the above described studies would be owned by Endoceutics and licensed to us pursuant to the Endoceutics License Agreement.

We have the exclusive right to commercialize Intrarosa for the treatment of VVA and FSD in the U.S., subject to the terms of the Endoceutics License Agreement, including having final decision making authority with respect to commercial strategy, pricing and reimbursement and other commercialization matters. We have agreed to use commercially reasonable efforts to market, promote and otherwise commercialize Intrarosa for the treatment of VVA and, if approved, FSD in the U.S. Endoceutics has the right to directly conduct additional commercialization activities for Intrarosa for the treatment of VVA and FSD in the U.S. and has the right to conduct activities related generally to the field of intracrinology, in each case, subject to our review and approval and our right to withhold approval in certain instances. Each party's commercialization activities and budget are described in a commercialization plan, which is updated annually.

In April 2017, we entered into an exclusive commercial supply agreement with Endoceutics pursuant to which Endoceutics, itself or through affiliates or contract manufacturers, agreed to manufacture and supply Intrarosa to us (the “Endoceutics Supply Agreement”) and will be our exclusive supplier of Intrarosa in the U.S., subject to certain rights for us to manufacture and supply Intrarosa in the event of a cessation notice or supply failure (as such terms are defined in the Endoceutics Supply Agreement). Under the Endoceutics Supply Agreement, Endoceutics has agreed to maintain at all times a second source supplier for the manufacture of DHEA and the drug product and to identify, validate and transfer manufacturing intellectual property to the second source supplier by April 2019. The Endoceutics Supply Agreement will remain in effect until the termination of the Endoceutics License Agreement, unless terminated earlier by either party for an uncured material breach or insolvency of the other party, or by us if we exercise our rights to manufacture and supply Intrarosa following a cessation notice or supply failure.

The Endoceutics License Agreement expires on the date of expiration of all royalty obligations due thereunder unless earlier terminated in accordance with the Endoceutics License Agreement.

Palatin

In January 2017, we entered into the Palatin License Agreement with Palatin under which we acquired (a) an exclusive license in all countries of North America (the “Palatin Territory”), with the right to grant sub-licenses, to research, develop and commercialize bremelanotide and any other products containing bremelanotide (collectively, the “Bremelanotide Products”), an investigational product designed to be a treatment for HSDD in pre-menopausal women, (b) a worldwide non-exclusive license, with the right to grant sub-licenses, to manufacture the Bremelanotide Products, and (c) a non-exclusive license in all countries outside the Palatin Territory, with the right to grant sub-licenses, to research and develop (but not commercialize) the Bremelanotide Products. Following the satisfaction of the conditions to closing under the Palatin License Agreement, the transaction closed in February 2017. We accounted for the Palatin License Agreement as an asset acquisition under ASU No. 2017-01.

Under the terms of the Palatin License Agreement, in February 2017 we paid Palatin $60.0 million as a one-time upfront payment subject to agreed-upon deductions reimbursed Palatin approximately $25.0 million for reasonable, documented, out-of-pocket expenses incurred by Palatin in connection with the development and regulatory activities necessary to submit an NDA in the U.S. for bremelanotide for the treatment of HSDD in pre-menopausal women. During 2017, we fulfilled these payment obligations to Palatin. The $60.0 million upfront payment made in February 2017 to Palatin was recorded as IPR&D expense as the product candidate had not received regulatory approval. In March 2018, we submitted an NDA to the FDA for bremelanotide, the regulatory acceptance of which will trigger a milestone payment (discussed below), which we recorded within accrued liabilities and IPR&D expense at March 31, 2018.

In addition, the Palatin License Agreement requires us to make future contingent payments of (a) up to $80.0 million upon achievement of certain regulatory milestones, including $20.0 million upon the acceptance by the FDA of our NDA for bremelanotide and $60.0 million upon FDA approval, and (b) up to $300.0 million of aggregate sales milestone payments upon the achievement of certain annual net sales milestones over the course of the license. The first sales milestone payment of $25.0 million will be triggered when bremelanotide annual net sales exceed $250.0 million. We are also obligated to pay Palatin tiered royalties on annual net sales in North America of the Bremelanotide Products, on a product-by-product basis, in the Palatin Territory ranging from the high-single digits to the low double-digits. The royalties will expire on a product-by-product and country-by-country basis upon the latest to occur of (a) the earliest date on which there are no valid claims of Palatin patent rights covering such Bremelanotide Product in such country, (b) the expiration of the regulatory exclusivity period for such Bremelanotide Product in such country and (c) 10 years following the first commercial sale of such Bremelanotide Product in such country. These royalties are subject to reduction in the event that: (a) we must license additional third-party intellectual property in order to develop, manufacture or commercialize a Bremelanotide Product or (b) generic competition occurs with respect to a Bremelanotide Product in a given country, subject to an aggregate cap on such deductions of royalties otherwise payable to Palatin. After the expiration of the applicable royalties for any Bremelanotide Product in a given country, the license for such Bremelanotide Product in such country would become a fully paid-up, royalty-free, perpetual and irrevocable license. The Palatin License Agreement expires on the date of expiration of all royalty obligations due thereunder, unless earlier terminated in accordance with the Palatin License Agreement.

Velo

In July 2015, we entered into an option agreement with Velo, a privately held life-sciences company that granted us an option to acquire the rights to an orphan drug candidate, DIF, a polyclonal antibody in clinical development for the treatment of severe preeclampsia in pregnant women. We made an upfront payment of $10.0 million in 2015 for the option to acquire the DIF Rights. DIF has been granted both orphan drug and fast-track review designations by the FDA for use in treating severe preeclampsia. Under the option agreement, Velo will complete a Phase 2b/3a clinical study, which began in the second quarter of 2017. Following the conclusion of the DIF Phase 2b/3a study, we may terminate, or, for additional consideration, exercise or extend, our option to acquire the DIF Rights. If we exercise the option to acquire the DIF Rights, we would be responsible for additional costs in pursuing FDA approval, and would be obligated to pay to Velo certain milestone payments and single-digit royalties based on regulatory approval and commercial sales of the product. If we exercise the option, we will be responsible for payments totaling up to $65.0 million (including the payment of the option exercise price and the regulatory milestone payments) and up to an additional $250.0 million in sales milestone payments based on the achievement of annual sales milestones at targets ranging from $100.0 million to $900.0 million. In the event the royalty rate applicable to the quarter in which a milestone payment threshold is first achieved is zero, the applicable milestone payment amount will increase by 50%.

We have determined that Velo is a variable interest entity (“VIE”) as it does not have enough equity to finance its activities without additional financial support. As we do not have the power to direct the activities of the VIE that most significantly affect its economic performance, which we have determined to be the Phase 2b/3a clinical study, we are not the primary beneficiary of and do not consolidate the VIE.

Antares

Through our acquisition of Lumara Health, we are party to a development and license agreement with Antares (the “Antares License Agreement”), which grants us an exclusive, worldwide, royalty-bearing license, with the right to sublicense, to certain intellectual property rights, including know-how, patents and trademarks, to develop, use, sell, offer for sale and import and export the Makena auto-injector. Under the Antares License Agreement, we are responsible for the clinical development and preparation, submission and maintenance of all regulatory applications in each country where we desire to market and sell the Makena auto-injector, including the U.S. We are required to pay royalties to Antares on net sales of the Makena auto-injector commencing on the launch of the Makena auto-injector in a particular country until the Makena auto-injector is no longer sold or offered for sale in such country or the Antares License Agreement is terminated (the “Antares Royalty Term”). The royalty rates range from high single digit to low double digits and are tiered based on levels of net sales of the Makena auto-injector and decrease after the expiration of licensed patents or where there are generic equivalents to the Makena auto-injector being sold in a particular country. In addition, we are required to pay Antares sales milestone payments upon the achievement of certain annual net sales. The Antares License Agreement terminates at the end of the Antares Royalty Term, but is subject to early termination by us for convenience and by either party upon an uncured breach by or bankruptcy of the other party. In March 2018, the Antares License Agreement was amended to, among other things, transfer the agreement to AMAG from our subsidiary, amend certain confidentiality provisions, and to provide for co-termination with the Antares Manufacturing Agreement (described below).

In March 2018, we also entered into a Manufacturing Agreement with Antares (the “Antares Manufacturing Agreement”) to set forth the terms and conditions pursuant to which Antares agreed to sell to us on an exclusive basis, and we agreed to purchase, the fully packaged Makena auto-injector for commercial distribution. Antares remains responsible for the manufacture and supply of the device components and assembly of the Makena auto-injector. We are responsible for the supply of the drug to be used in the assembly of the finished auto-injector product. The Antares Manufacturing Agreement terminates at the expiration or earlier termination of the Antares License Agreement, but is subject to early termination by us for certain supply failure situations, and by either party upon an uncured breach by or bankruptcy of the other party or our permanent cessation of commercialization of the Makena auto-injector for efficacy or safety reasons.

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Debt

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Debt

DEBT

Our outstanding debt obligations as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31, 2018		December 31, 2017
2023 Senior Notes	$	466,595	$	466,291
2022 Convertible Notes	251,508		248,194
2019 Convertible Notes	20,460		20,198
Total long-term debt	738,563		734,683
Less: current maturities	20,460		—
Long-term debt, net of current maturities	$	718,103	$	734,683

2023 Senior Notes

In August 2015, in connection with the CBR acquisition, we completed a private placement of $500.0 million aggregate principal amount of 7.875% Senior Notes due 2023 (the “2023 Senior Notes”). The 2023 Senior Notes were issued pursuant to an Indenture, dated as of August 17, 2015 (the “Indenture”), by and among us, certain of our subsidiaries acting as guarantors of the 2023 Senior Notes and Wilmington Trust, National Association, as trustee. The Indenture contains certain customary negative covenants, which are subject to a number of limitations and exceptions. Certain of the covenants will be suspended during any period in which the 2023 Senior Notes receive investment grade ratings.

In October 2017, we repurchased $25.0 million of the 2023 Senior Notes in a privately negotiated transaction, resulting in a loss on extinguishment of debt of $1.1 million. At March 31, 2018, the principal amount of the outstanding borrowings was $475.0 million and the carrying value of the outstanding borrowings, net of issuance costs and other lender fees and expenses, was $466.6 million.

The 2023 Senior Notes, which are senior unsecured obligations of the Company, will mature on September 1, 2023 and bear interest at a rate of 7.875% per year, with interest payable semi-annually on September 1 and March 1 of each year beginning in March 2016. We may redeem some or all of the 2023 Senior Notes at any time, or from time to time, on or after September 1, 2018 at the redemption prices listed in the Indenture, plus accrued and unpaid interest to, but not including, the date of redemption. In addition, prior to September 1, 2018, we may redeem up to 35% of the aggregate principal amount of the 2023 Senior Notes utilizing the net cash proceeds from certain equity offerings, at a redemption price of 107.875% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption; provided that at least 65% of the aggregate amount of the 2023 Senior Notes originally issued under the Indenture remain outstanding after such redemption. We may also redeem all or some of the 2023 Senior Notes at any time, or from time to time, prior to September 1, 2018, at a price equal to 100% of the principal amount of the 2023 Senior Notes to be redeemed, plus a “make-whole” premium plus accrued and unpaid interest, if any, to the date of redemption. Upon the occurrence of a “change of control,” as defined in the Indenture, we are required to offer to repurchase the 2023 Senior Notes at 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to, but not including, the repurchase date. The Indenture contains customary events of default, which allow either the trustee or the holders of not less than 25% in aggregate principal amount of the then-outstanding 2023 Senior Notes to accelerate, or in certain cases, which automatically cause the acceleration of, the amounts due under the 2023 Senior Notes.

Convertible Notes

The outstanding balances of our Convertible Notes as of March 31, 2018 consisted of the following (in thousands):

	2022 Convertible Notes		2019 Convertible Notes		Total
Liability component:
Principal	$	320,000	$	21,417	$	341,417
Less: debt discount and issuance costs, net	68,492		957		69,449
Net carrying amount	$	251,508	$	20,460	$	271,968
Equity Component	$	72,576	$	9,905	$	82,481

In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of our Convertible Notes by allocating the proceeds between the liability component and the embedded conversion option (the “Equity Component”) due to our ability to settle the Convertible Notes in cash, common stock or a combination of cash and common stock, at our option. The carrying amount of the liability components was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The Equity Component of the Convertible Notes was recognized as a debt discount and represents the difference between the proceeds from the issuance of the Convertible Notes and the fair value of the liability of the Convertible Notes on their respective dates of issuance. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense using the effective interest method over five years. The Equity Component is not remeasured as long as it continues to meet the conditions for equity classification.

2022 Convertible Notes

In the second quarter of 2017, we issued $320.0 million aggregate principal amount of convertible senior notes due in 2022 (the “2022 Convertible Notes”) and received net proceeds of $310.4 million from the sale of the 2022 Convertible Notes, after deducting fees and expenses of $9.6 million. The approximate $9.6 million of debt issuance costs primarily consisted of underwriting, legal and other professional fees, and we allocated these costs to the liability and equity components based on the allocation of the proceeds. Of the total $9.6 million of debt issuance costs, $2.2 million was allocated to the Equity Component and recorded as a reduction to additional paid-in capital and $7.4 million was allocated to the liability component and is now recorded as a reduction of the 2022 Convertible Notes in our consolidated balance sheet. The portion allocated to the liability component is amortized to interest expense using the effective interest method over five years.

The 2022 Convertible Notes are governed by the terms of an indenture between us, as issuer, and Wilmington Trust, National Association, as the trustee. The 2022 Convertible Notes are senior unsecured obligations and bear interest at a rate of 3.25% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2017. The 2022 Convertible Notes will mature on June 1, 2022, unless earlier repurchased or converted. Upon conversion of the 2022 Convertible Notes, such 2022 Convertible Notes will be convertible into, at our election, cash, shares of our common stock, or a combination thereof, at a conversion rate of 36.5464 shares of common stock per $1,000 principal amount of the 2022 Convertible Notes, which corresponds to an initial conversion price of approximately $27.36 per share of our common stock.

The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding March 1, 2022, holders may convert their 2022 Convertible Notes at their option only under the following circumstances:

1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the 2022 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or

3) upon the occurrence of specified corporate events.

On or after March 1, 2022, until the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Convertible Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. The 2022 Convertible Notes were not convertible as of March 31, 2018.

We determined the expected life of the debt was equal to the five-year term on the 2022 Convertible Notes. The effective interest rate on the liability component was 9.49% for the period from the date of issuance through March 31, 2018. As of March 31, 2018, the “if-converted value” did not exceed the remaining principal amount of the 2022 Convertible Notes.

2019 Convertible Notes

In February 2014, we issued $200.0 million aggregate principal amount of the 2019 Convertible Notes. We received net proceeds of $193.3 million from the sale of the 2019 Convertible Notes, after deducting fees and expenses of $6.7 million. We used $14.1 million of the net proceeds from the sale of the 2019 Convertible Notes to pay the cost of the convertible bond hedges, as described below (after such cost was partially offset by the proceeds to us from the sale of warrants in the warrant transactions described below). In May 2017 and September 2017, we entered into privately negotiated transactions with certain investors to repurchase approximately $158.9 million and $19.6 million, respectively, aggregate principal amount of the 2019 Convertible Notes for an aggregate repurchase price of approximately $171.3 million and $21.4 million, respectively, including accrued interest. Pursuant to ASC Topic 470, Debt (“ASC 470”), the accounting for the May 2017 repurchase of the 2019 Convertible Notes was evaluated on a creditor-by-creditor basis with regard to the 2022 Convertible Notes to determine modification versus extinguishment accounting. We concluded that the May 2017 repurchase of the 2019 Convertible Notes should be accounted for as an extinguishment and we recorded a debt extinguishment gain of $0.2 million related to the difference between the consideration paid, the fair value of the liability component and carrying values at the repurchase date. As a result of the September 2017 repurchase of the 2019 Convertible Notes, we recorded a debt extinguishment loss of $0.3 million related to the difference between the consideration paid, the fair value of the liability component and carrying value at the repurchase date.

The 2019 Convertible Notes are governed by the terms of an indenture between us, as issuer, and Wilmington Trust, National Association, as the trustee. The 2019 Convertible Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on February 15 and August 15 of each year. The 2019 Convertible Notes will mature on February 15, 2019 repurchased or converted. Upon conversion of the remaining 2019 Convertible Notes, such 2019 Convertible Notes will be convertible into, at our election, cash, shares of our common stock, or a combination thereof, at a conversion rate of 36.9079 shares of common stock per $1,000 principal amount of the 2019 Convertible Notes, which corresponds to an initial conversion price of approximately $27.09 per share of our common stock.

The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding May 15, 2018, holders may convert their 2019 Convertible Notes, at their option, only under the following circumstances:

1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

2) during the measurement period in which the trading price per $1,000 principal amount of the 2019 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or

3) upon the occurrence of specified corporate events.

On or after May 15, 2018 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2019 Convertible Notes, in multiples of $1,000 principal amount, at the option of the holder, regardless of the foregoing circumstances. The 2019 Convertible Notes were not convertible as of March 31, 2018.

We determined the expected life of the debt was equal to the five-year term of the 2019 Convertible Notes. The effective interest rate on the liability component was 7.79% for the period from the date of issuance through March 31, 2018. As of March 31, 2018, the “if-converted value” did not exceed the remaining principal amount of the 2019 Convertible Notes.

Convertible Notes Interest Expense

The following table sets forth total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018		2017
Contractual interest expense	$	2,734	$	1,250
Amortization of debt issuance costs	339		274
Amortization of debt discount	3,237		1,929
Total interest expense	$	6,310	$	3,453

Convertible Bond Hedge and Warrant Transactions

In connection with the pricing of the 2019 Convertible Notes and in order to reduce the potential dilution to our common stock and/or offset cash payments due upon conversion of the 2019 Convertible Notes, in February 2014, we entered into convertible bond hedge transactions and separate warrant transactions of our common stock underlying the aggregate principal amount of the 2019 Convertible Notes with the call spread counterparties. In connection with the May 2017 and September 2017 repurchases of the 2019 Convertible Notes, as discussed above, we entered into agreements with the call spread counterparties to terminate a portion of the then existing convertible bond hedge transactions in an amount corresponding to the amount of such 2019 Convertible Notes repurchased and to terminate a portion of the then-existing warrant transactions.

As of March 31, 2018, the remaining bond hedge transactions covered approximately 0.8 million shares of our common stock underlying the remaining $21.4 million principal amount of the 2019 Convertible Notes. The convertible bond hedges have an exercise price of approximately $27.09 per share, subject to adjustment upon certain events, and are exercisable when and if the 2019 Convertible Notes are converted. If upon conversion of the 2019 Convertible Notes, the price of our common stock is above the exercise price of the convertible bond hedges, the call spread counterparties will deliver shares of our common stock and/or cash with an aggregate value equal to the approximate difference between the price of our common stock at the conversion date and the exercise price, multiplied by the number of shares of our common stock underlying the convertible bond hedges being exercised. The convertible bond hedges were separate transactions entered into by us and were not part of the terms of the 2019 Convertible Notes or the warrants, discussed below. Holders of the 2019 Convertible Notes will not have any rights with respect to the convertible bond hedges.

As of March 31, 2018, the remaining warrant transactions covered approximately 1.0 million shares of our common stock underlying the remaining $21.4 million principal amount of the 2019 Convertible Notes. The initial exercise price of the warrants is $34.12 per share, subject to adjustment upon certain events, which was 70% above the last reported sale price of our common stock of $20.07 on February 11, 2014. The warrants would separately have a dilutive effect to the extent that the market value per share of our common stock, as measured under the terms of the warrants, exceeds the applicable exercise price of the warrants. The warrants were issued to the call spread counterparties pursuant to the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended.

Future Payments

Future annual principal payments on our long-term debt as of March 31, 2018 were as follows (in thousands):

Period	Future Annual Principal Payments
Remainder of Year Ending December 31, 2018	$	—
Year Ending December 31, 2019	21,417
Year Ending December 31, 2020	—
Year Ending December 31, 2021	—
Year Ending December 31, 2022	320,000
Thereafter	475,000
Total	$	816,417

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Recently Issued and Proposed Accounting Pronouncements

3 Months Ended

Mar. 31, 2018

Accounting Changes and Error Corrections [Abstract]

Recently Issued and Proposed Accounting Pronouncements

RECENTLY ISSUED AND PROPOSED ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 will be effective for us for fiscal years beginning on or after January 1, 2020, including interim periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of our adoption of ASU 2016-13 on our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This statement requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. This statement is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods and early adoption is permitted. We have formed a project team to assess the impact of adopting ASU 2016-02 on our condensed consolidated financial statements. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of ASU 2016-02.

XML

Recently Adopted Accounting Pronouncements

3 Months Ended

Mar. 31, 2018

Accounting Changes and Error Corrections [Abstract]

Recently Adopted Accounting Pronouncements

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted the standard on January 1, 2018 using the retrospective approach and modified the presentation of our condensed condensed statements of cash flows in accordance with the standard. The adoption of ASU 2016-18 did not have a material impact on our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. We adopted the standard on January 1, 2018 using the retrospective approach. The adoption of ASU 2016-15 did not have a material impact on our condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).This new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including the requirement that equity investments with readily determinable fair values be measured at fair value with changes in fair value recognized in our results of operations. This new standard does not apply to investments accounted for under the equity method of accounting or those that result in consolidation of the investee. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment adjusted for changes in observable prices. A financial liability that is measured at fair value in accordance with the fair value option is required to be presented separately in other comprehensive income for the portion of the total change in the fair value resulting from change in the instrument-specific credit risk. In addition, a valuation allowance should be evaluated on deferred tax assets related to available-for-sale debt securities in combination with other deferred tax assets. We adopted the standard on January 1, 2018 using the modified retrospective approach. The adoption of ASU 2016-01 did not have a material impact on our condensed consolidated financial statements.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments necessary for a fair statement of the financial position and results of operations of the Company for the interim periods presented. Such adjustments consisted only of normal recurring items. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP for interim financial reports and the instructions for Form 10-Q and the rules of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. Our accounting policies are described in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2017 (our “Annual Report”). Interim results are not necessarily indicative of the results of operations for the full year. These interim financial statements should be read in conjunction with our Annual Report.

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates and Assumptions

Use of Estimates and Assumptions

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. The most significant estimates and assumptions are used to determine amounts and values of, but are not limited to: revenue recognition related to product sales and services revenue; product sales allowances and accruals; allowance for doubtful accounts; marketable securities; inventory; acquisition date fair value and subsequent fair value estimates used to assess impairment of long-lived assets, including goodwill, in-process research and development (“IPR&D”) and other intangible assets; contingent consideration; debt obligations; certain accrued liabilities, including clinical trial accruals; income taxes, inclusive of valuation allowances; and equity-based compensation expense. Actual results could differ materially from those estimates.

Restricted Cash

Restricted Cash

As of March 31, 2018 and December 31, 2017, we classified $0.7 million of our cash as restricted cash, a non-current asset on the balance sheet. This amount represented the security deposit delivered to the landlord of our Waltham, Massachusetts headquarters in the form of an irrevocable letter of credit.

Concentrations and Significant Customer Information

Our net accounts receivable primarily represent amounts due for products sold directly to wholesalers, distributors, and specialty pharmacies and amounts due for CBR Services sold to consumers who pay for the services directly. Accounts receivable for our products and services are recorded net of reserves for estimated chargeback obligations, prompt payment discounts and any allowance for doubtful accounts.

Concentrations and Significant Customer Information

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities, and accounts receivable. We currently hold our excess cash primarily in institutional money market funds, corporate debt securities, U.S. treasury and government agency securities, commercial paper and certificates of deposit.

We are currently dependent on a single supplier for Feraheme drug substance (produced in two separate facilities) and finished drug product as well as for drug substance and final packaging services for Intrarosa. In addition, we rely on single sources for certain materials required to support the CBR Services. We would be exposed to a significant loss of revenue from the sale of our products and services if our suppliers and/or manufacturers could not fulfill demand for any reason.

Our operations are located entirely within the U.S. We focus primarily on developing, manufacturing, and commercializing our products and product candidates and marketing and selling the CBR Services. We perform ongoing credit evaluations of our product sales customers and generally do not require collateral.

Recently Issued and Adopted Accounting Pronouncements

On January 1, 2018, we adopted ASC 606 applying the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for prior periods. We recorded a net increase to opening stockholders' equity of $1.1 million as of January 1, 2018, reflecting the cumulative impact of adopting ASC 606 primarily related to the capitalization of incremental direct costs of obtaining a contract, which consisted of sales commissions related to the CBR Services. There was no impact to revenue for the three months ended March 31, 2018.

RECENTLY ISSUED AND PROPOSED ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 will be effective for us for fiscal years beginning on or after January 1, 2020, including interim periods within those annual reporting periods and early adoption is permitted. We are currently evaluating the impact of our adoption of ASU 2016-13 on our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This statement requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. This statement is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods and early adoption is permitted. We have formed a project team to assess the impact of adopting ASU 2016-02 on our condensed consolidated financial statements. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of ASU 2016-02.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted the standard on January 1, 2018 using the retrospective approach and modified the presentation of our condensed condensed statements of cash flows in accordance with the standard. The adoption of ASU 2016-18 did not have a material impact on our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. We adopted the standard on January 1, 2018 using the retrospective approach. The adoption of ASU 2016-15 did not have a material impact on our condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).This new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including the requirement that equity investments with readily determinable fair values be measured at fair value with changes in fair value recognized in our results of operations. This new standard does not apply to investments accounted for under the equity method of accounting or those that result in consolidation of the investee. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment adjusted for changes in observable prices. A financial liability that is measured at fair value in accordance with the fair value option is required to be presented separately in other comprehensive income for the portion of the total change in the fair value resulting from change in the instrument-specific credit risk. In addition, a valuation allowance should be evaluated on deferred tax assets related to available-for-sale debt securities in combination with other deferred tax assets. We adopted the standard on January 1, 2018 using the modified retrospective approach. The adoption of ASU 2016-01 did not have a material impact on our condensed consolidated financial statements.

Revenue Recognition

Performance Obligations

At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. We determined that the following distinct goods and services represent separate performance obligations:

•Supply of Makena product

•Supply of Feraheme product

•Supply of Intrarosa product

•CBR collection and processing services

•CBR storage services

Product Revenue

For performance obligations related to products (i.e. Makena, Feraheme and Intrarosa), we principally sell our products to wholesalers, specialty distributors, specialty pharmacies and other customers (collectively, “Customers”), who purchase products directly from us. Our Customers subsequently resell the products to healthcare providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payers that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products.

For the majority of our Customers, we transfer control at the point in time when the goods are delivered. In instances when we perform shipping and handling activities, these are considered fulfillment activities, and accordingly, the costs are accrued when the related revenue is recognized. Taxes collected from Customers and remitted to governmental authorities are excluded from revenues.

Variable Consideration

Under ASC 606, we are required to make estimates of the net sales price, including estimates of variable consideration (such as rebates, chargebacks, discounts, co-pay assistance and other deductions), and recognize the estimated amount as revenue, when we transfer control of the product to our customers. Variable consideration must be determined using either an “expected value” or a “most likely amount” method.

We record product revenues net of certain allowances and accruals in our condensed consolidated statements of operations. Product sales allowances and accruals are primarily comprised of both direct and indirect fees, discounts and rebates and provisions for estimated product returns. Direct fees, discounts and rebates are contractual fees and price adjustments payable to Customers that purchase products directly from us. Indirect fees, discounts and rebates are contractual price adjustments payable to healthcare providers and organizations, such as certain physicians, clinics, hospitals, group purchasing organizations (“GPOs”), and dialysis organizations that typically do not purchase products directly from us but rather from wholesalers and specialty distributors. Consideration payable to a Customer, or other parties that purchase goods from the Customer, are considered to be a reduction of the transaction price, and therefore, of revenue.

Product sales allowances and accruals are based on definitive contractual agreements or legal requirements (such as Medicaid laws and regulations) related to the purchase and/or utilization of the product by these entities and are recorded in the same period that the related revenue is recognized. We use the expected value method for estimating variable consideration. We estimate product sales allowances and accruals using either historical, actual and/or other data, including estimated patient usage, applicable contractual rebate rates, contract performance by the benefit providers, other current contractual and statutory requirements, historical market data based upon experience of our products and other products similar to them, specific known market events and trends such as competitive pricing and new product introductions, current and forecasted Customer buying patterns and inventory levels, and the shelf life of our products. As part of this evaluation, we also review changes to federal and other legislation, changes to rebate contracts, changes in the level of discounts, and changes in product sales trends. Although allowances and accruals are recorded at the time of product sale, rebates are typically paid out in arrears, one to three months after the sale. 

The estimate of variable consideration, which is included in the transaction price, may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved in a future period. Estimating variable consideration and the related constraint requires the use of significant management judgment and actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. No amounts were constrained as of March 31, 2018.

Discounts

We typically offer a 2% prompt payment discount to certain customers as an incentive to remit payment in accordance with the stated terms of the invoice, generally 30 days. Because we anticipate that those customers who are offered this discount will take advantage of the discount, 100% of the prompt payment discount at the time of sale are accrued, based on the gross amount of each invoice. We adjust the accrual quarterly to reflect actual experience.

Chargebacks

Chargeback reserves represent the estimated obligations resulting from the difference between the prices at which we sell our products to wholesalers and the sales price ultimately paid to wholesalers under fixed price contracts by third-party payers, including governmental agencies. The chargeback estimates are determined based on actual product sales data and forecasted customer buying patterns. Actual chargeback amounts are determined at the time of resale to the qualified healthcare provider, and we generally issue credits for such amounts within several weeks of receiving notification from the wholesaler. Estimated chargeback amounts are recorded at the time of sale and adjusted quarterly to reflect actual experience.

Distributor/Wholesaler and Group Purchasing Organization Fees

Fees under the arrangements with distributors and wholesalers are usually based upon units of product purchased during the prior month or quarter and are usually paid by us within several weeks of the receipt of an invoice from the wholesaler or distributor, as the case may be. Fees under the arrangements with GPOs are usually based upon member purchases during the prior quarter and are generally billed by the GPO within 30 days after period end. In accordance with ASC 606, since the consideration given to the Customer is not for a distinct good or service, the consideration is a reduction of the transaction price of the vendor’s products or services. We have included these fees in contractual adjustments in the table above. We generally pay such amounts within several weeks of the receipt of an invoice from the distributor, wholesaler or GPO. Accordingly, we accrue the estimated fee due at the time of sale, based on the contracted price invoiced to the Customer. We adjust the accrual quarterly to reflect actual experience.

Product Returns

Consistent with industry practice, we generally offer wholesalers, specialty distributors and other customers a limited right to return our products based on the product’s expiration date. Currently the expiration dates for Feraheme, Makena and Intrarosa have a range of three to five years. Product returns are estimated based on the historical return patterns and known or expected changes in the marketplace. We track actual returns by individual production lots. Returns on lots eligible for credits under our returned goods policy are monitored and compared with historical return trends and rates. We expect that wholesalers and healthcare providers will not stock significant inventory due to the cost of the product, the expense to store our products, and/or that our products are readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available and for known or expected changes in the marketplace. We did not significantly adjust our reserve for product returns during the three months ended March 31, 2018. To date, our product returns have been relatively limited; however, returns experience may change over time. We may be required to make future adjustments to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant.

Sales Rebates

We contract with various private payer organizations, primarily pharmacy benefit managers, for the payment of rebates with respect to utilization of our products. We determine our estimates for rebates, if applicable, based on actual product sales data and our historical product claims experience. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the provider. We regularly assess our reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant.

Governmental Rebates

Governmental rebate reserves relate to our reimbursement arrangements with state Medicaid programs. We determine our estimates for Medicaid rebates, if applicable, based on actual product sales data and our historical product claims experience. In estimating these reserves, we provide for a Medicaid rebate associated with both those expected instances where Medicaid will act as the primary insurer as well as in those instances where we expect Medicaid will act as the secondary insurer. Rebate amounts generally are invoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the Medicaid or provider entity. We regularly assess our Medicaid reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, if actual claims experience changes, or if other factors affect estimated claims rates, we may be required to adjust our current Medicaid accumulated reserve estimate, which would affect net product sales in the period of the adjustment and could be significant.

Other Incentives

Other incentives which we offer include voluntary patient assistance programs, such as co-pay assistance programs, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue.

Service Revenue

The CBR Services include the collection, processing, and storage of both umbilical cord blood and cord tissue. We market and sell the CBR Services directly to consumers at the prices that are known at contract inception. The discounts offered to the customer are known at the time of enrollment and thereby do not result in variable consideration. CBR Services include the following two performance obligations: collection and processing and storage services, further described below.

Collection and Processing Services

Enrollment services, including the provision of a collection kit and cord blood and cord tissue unit processing, are delivered at the beginning of the relationship. The revenue for this performance obligation is recognized at the point in time after the collection and successful processing of the cord blood and cord tissue.

When purchasing collection and processing services, the customer can (a) pay for the service upfront, when the service is provided; (b) finance the processing fee with us over six or twelve months; or (c) finance the processing fee through a third-party provider, and therefore not finance the arrangement with us. We elected to apply the practical expedient and therefore we have not adjusted the promised consideration for the effects of financing for either the six or twelve month payment plans.

Storage Services

Payment options for storage services of newborn cord blood and cord tissue units include either (a) an annual fee or (b) a prepayment of 18 years or for the lifetime of the newborn donor (the “lifetime option”). The revenue for this performance obligation is recognized ratably over the storage period on a straight-line basis, which is consistent with how the services are provided. For the lifetime option, storage fees are not charged during the lifetime of the newborn donor. However, revenue is recognized based on the average of male and female life expectancies using lifetime actuarial tables published by the Social Security Administration in effect at the time of the newborn’s birth. We determined that the 18 year and lifetime prepayment options do not include a significant financing component as the payment terms were structured primarily for reasons other than for the provision of financing and to maximize profitability.

Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:

a.Identify the contract(s) with a customer;

b.Identify the performance obligations in the contract;

c.Determine the transaction price;

d.Allocate the transaction price to the performance obligations in the contract; and

e.Recognize revenue when (or as) the performance obligations are satisfied.

We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, if the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred contract acquisition costs, which will be amortized along with the associated revenue. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract.

Allocation of Transaction Price

We have selected an adjusted market assessment approach to estimate the stand-alone selling prices of the collection and processing services and storage services and concluded that the published list price is the price that a customer in that market would be willing to pay for those goods or services. We also considered the fact that all customers are charged the list prices current at the time of their enrollment where we have separately stated list prices for processing and storage. The discounts provided to the customers at the time of entering into the contract are allocated proportionally to both performance obligations (i.e. processing and storage).

Cost to Obtain a Contract

We pay commissions to internal sales representatives as compensation for obtaining contract enrollments for the CBR Services. We capitalize commissions that are incremental as a result of obtaining customer contracts and costs incurred to fulfill a customer contract if those costs are not within the scope of another topic within the accounting literature and meet the specified criteria. These costs are deferred in other current or long-term assets and are expensed to selling, general and administrative expenses as we satisfy the performance obligations by transferring the service to the customer. These assets will be periodically assessed for impairment.

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Basis of Presentation and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Schedule of customers representing greater than 10% of accounts receivable balances

The following table sets forth customers who represented 10% or more of our total revenues for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018		2017
AmerisourceBergen Drug Corporation	22	%	22	%
McKesson Corporation	22	%	14	%

Customers which represented greater than 10% of our accounts receivable balances as of March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018		December 31, 2017
McKesson Corporation	26	%	22	%
AmerisourceBergen Drug Corporation	24	%	27	%

Schedule of effect of new accounting pronouncements

As a result of applying the modified retrospective transition method to adopt ASC 606, the following financial statement line items for the three months ended March 31, 2018 were affected (in thousands):

Condensed Consolidated Balance Sheet	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Assets:
Prepaid and other current assets	$	16,345		$	16,248		$	97
Other long-term assets	$	2,238		$	538		$	1,700
Total assets	$	1,834,950		$	1,833,153		$	1,797
Liabilities and stockholders' equity:
Deferred tax liabilities	$	17,497		$	17,156		$	341
Accumulated deficit	$	(530,921	)	$	(532,377	)	$	1,456
Total liabilities and stockholders' equity	$	1,834,950		$	1,833,153		$	1,797

Condensed Consolidated Statement of Operations	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Costs and expenses:
Selling, general and administrative expenses	$	91,050		$	91,368		$	(318	)
Net loss	$	(54,242	)	$	(54,560	)	$	318

Condensed Consolidated Statement of Cash Flows	March 31, 2018 Impact of changes in accounting policies
	As Reported			Balances without adoption of ASC 606			Impact of Adoption
Operating activities:
Net loss	$	(54,242	)	$	(54,560	)	$	318
Changes in operating assets and liabilities:
Prepaid and other current assets	$	(3,720	)	$	(3,702	)	$	(18	)
Other assets and liabilities	$	215		$	515		$	(300	)

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregated revenue

The following table provides information about disaggregated revenue by products and services (in thousands):

	Three Months Ended March 31,
	2018		2017
Product sales, net
Makena	$	89,983	$	86,455
Feraheme	25,135		25,922
Intrarosa	2,165		—
MuGard	65		140
Total	$	117,348	$	112,517
Service revenues, net	$	28,969	$	26,931

Total gross product sales were offset by product sales allowances and accruals for the three months ended March 31, 2018 and 2017 as follows (in thousands, except for percentages):

	Three Months Ended March 31,
	2018		Percent of gross product sales		2017		Percent of gross product sales
Gross product sales	$	239,870			$	206,724
Provision for product sales allowances and accruals:
Contractual adjustments	86,144		36	%	69,829		34	%
Governmental rebates	36,378		15	%	24,378		12	%
Total	122,522		51	%	94,207		46	%
Product sales, net	$	117,348			$	112,517

Product revenue allowance and accrual activity

The following table summarizes the product revenue allowance and accrual activity for the three months ended March 31, 2018 (in thousands):

	Contractual			Governmental
	Adjustments			Rebates			Total
Balance at December 31, 2017	$	62,164		$	50,598		$	112,762
Provisions related to current period sales	85,308			31,028			116,336
Adjustments related to prior period sales	836			5,350			6,186
Payments/returns relating to current period sales	(44,633		)	—			(44,633		)
Payments/returns relating to prior period sales	(39,441		)	(25,149		)	(64,590		)
Balance at March 31, 2018	$	64,234		$	61,827		$	126,061

Receivables, assets and liabilities from contracts with customers

The following table provides information about assets and liabilities from contracts with customers (in thousands):

	March 31, 2018		At Adoption
Short-term contract assets (sales commissions)	$	97	$	79
Long-term contract assets (sales commissions)	$	1,700	$	1,400
Short-term contract liabilities (deferred revenue)	$	42,510	$	42,494
Long-term contract liabilities (deferred revenue)	$	27,398	$	24,387

The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2018 (in thousands):

	Balance at January 1, 2018		Additions		Deductions			Balance at March 31, 2018
Contract assets (sales commissions)	$	1,479	$	340	$	(22	)	$	1,797
Contract liabilities (deferred revenue)	$	66,881	$	21,727	$	(18,700	)	$	69,908

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Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Summary of marketable securities

The following is a summary of our marketable securities as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term marketable securities:*
Corporate debt securities	$	58,981	$	—	$	(215	)	$	58,766
Certificates of deposit	10,150		—		—			10,150
U.S. treasury and government agency securities	5,996		—		(57		)	5,939
Commercial paper	5,962		—		—			5,962
Total short-term marketable securities	$	81,089	$	—	$	(272	)	$	80,817
Long-term marketable securities:**
Corporate debt securities	$	52,408	$	1	$	(725	)	$	51,684
U.S. treasury and government agency securities	6,381		—		(62		)	6,319
Total long-term marketable securities	58,789		1		(787		)	58,003
Total marketable securities	$	139,878	$	1	$	(1,059	)	$	138,820

* Represents marketable securities with a remaining maturity of less than one year.

** Represents marketable securities with a remaining maturity of one to three years.

	December 31, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term marketable securities:*
Corporate debt securities	$	57,257	$	—	$	(68	)	57,189
Certificates of deposit	9,151		—		—			9,151
U.S. treasury and government agency securities	1,999		—		(13		)	1,986
Commercial paper	1,999		—		—			1,999
Total short-term marketable securities	$	70,406	$	—	$	(81	)	$	70,325
Long-term marketable securities:**
Corporate debt securities	$	59,282	$	1	$	(320	)	$	58,963
U.S. treasury and government agency securities	7,381		—		(76		)	7,305
Total long-term marketable securities	66,663		1		(396		)	66,268
Total marketable securities	$	137,069	$	1	$	(477	)	$	136,593

* Represents marketable securities with a remaining maturity of less than one year.

** Represents marketable securities with a remaining maturity of one to three years.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities measured at fair value on a recurring basis

The following tables represent the fair value hierarchy as of March 31, 2018 and December 31, 2017, for those assets and liabilities that we measure at fair value on a recurring basis (in thousands):

	Fair Value Measurements at March 31, 2018 Using:
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	2,255	$	2,255	$	—	$	—
Corporate debt securities	110,450		—		110,450		—
U.S. treasury and government agency securities	12,258		—		12,258		—
Certificates of deposit	10,150				10,150		—
Commercial paper	$	5,962	$	—	$	5,962	$	—
Total Assets	$	141,075	$	2,255	$	138,820	$	—
Liabilities:
Contingent consideration - Lumara Health	$	49,797	$	—	$	—	$	49,797
Contingent consideration - MuGard	870		—		—		870
Total Liabilities	$	50,667	$	—	$	—	$	50,667

	Fair Value Measurements at December 31, 2017 Using:
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	4,591	$	4,591	$	—	$	—
Corporate debt securities	116,152		—		116,152		—
U.S. treasury and government agency securities	9,291		—		9,291		—
Certificates of deposit	9,151		—		9,151		—
Commercial paper	1,999		—		1,999		—
Total Assets	$	141,184	$	4,591	$	136,593	$	—
Liabilities:
Contingent consideration - Lumara Health	$	49,187	$	—	$	—	$	49,187
Contingent consideration - MuGard	898		—		—		898
Total Liabilities	$	50,085	$	—	$	—	$	50,085

Schedule of reconciliation of contingent consideration obligations

The following table presents a reconciliation of contingent consideration obligations related to the acquisition of Lumara Health (related to our Makena product) and the MuGard Rights (in thousands):

Balance as of December 31, 2017	$	50,085
Payments made	(44		)
Adjustments to fair value of contingent consideration	626
Balance as of March 31, 2018	$	50,667

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Inventories (Tables)

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

Schedule of major classes of inventories

Our major classes of inventories were as follows as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018		December 31, 2017
Raw materials	$	12,578	$	12,418
Work in process	5,417		4,146
Finished goods	13,603		20,792
Total inventories	$	31,598	$	37,356

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Property, Plant and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment, net

Property, plant and equipment, net consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018			December 31, 2017
Land	$	700		$	700
Land improvements	300			300
Building and improvements	9,552			9,552
Computer equipment and software	14,072			14,073
Furniture and fixtures	2,513			2,512
Leasehold improvements	4,959			4,959
Laboratory and production equipment	13,286			8,030
Construction in progress	1,025			5,360
	46,407			45,486
Less: accumulated depreciation	(20,486		)	(19,490		)
Property, plant and equipment, net	$	25,921		$	25,996

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Goodwill and Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of finite-lived intangible assets

As of March 31, 2018 and December 31, 2017, our identifiable intangible assets consisted of the following (in thousands):

	March 31, 2018								December 31, 2017
			Accumulated		Cumulative						Accumulated		Cumulative
	Cost		Amortization		Impairments		Net		Cost		Amortization		Impairments		Net
Amortizable intangible assets:
Makena base technology	$	797,100	$	306,242	$	319,246	$	171,612	$	797,100	$	255,754	$	319,246	$	222,100
CBR customer relationships	297,000		33,209		—		263,791		297,000		29,309		—		267,691
Makena auto-injector developed technology	79,100		188		—		78,912		—		—		—		—
Intrarosa developed technology	77,655		5,064		—		72,591		77,655		3,376		—		74,279
	1,250,855		344,703		319,246		586,906		1,171,755		288,439		319,246		564,070
Indefinite-lived intangible assets:
Makena IPR&D	—		—		—		—		79,100		—		—		79,100
CBR trade names and trademarks	65,000		—		3,700		61,300		65,000		—		3,700		61,300
Total intangible assets	$	1,315,855	$	344,703	$	322,946	$	648,206	$	1,315,855	$	288,439	$	322,946	$	704,470

Schedule of indefinite-lived intangible assets

As of March 31, 2018 and December 31, 2017, our identifiable intangible assets consisted of the following (in thousands):

	March 31, 2018								December 31, 2017
			Accumulated		Cumulative						Accumulated		Cumulative
	Cost		Amortization		Impairments		Net		Cost		Amortization		Impairments		Net
Amortizable intangible assets:
Makena base technology	$	797,100	$	306,242	$	319,246	$	171,612	$	797,100	$	255,754	$	319,246	$	222,100
CBR customer relationships	297,000		33,209		—		263,791		297,000		29,309		—		267,691
Makena auto-injector developed technology	79,100		188		—		78,912		—		—		—		—
Intrarosa developed technology	77,655		5,064		—		72,591		77,655		3,376		—		74,279
	1,250,855		344,703		319,246		586,906		1,171,755		288,439		319,246		564,070
Indefinite-lived intangible assets:
Makena IPR&D	—		—		—		—		79,100		—		—		79,100
CBR trade names and trademarks	65,000		—		3,700		61,300		65,000		—		3,700		61,300
Total intangible assets	$	1,315,855	$	344,703	$	322,946	$	648,206	$	1,315,855	$	288,439	$	322,946	$	704,470

Schedule of expected future annual amortization expense related to intangible assets

We expect amortization expense related to our finite-lived intangible assets to be as follows (in thousands):

	Estimated
	Amortization
Period	Expense
Remainder of Year Ending December 31, 2018	$	139,239
Year Ending December 31, 2019	48,552
Year Ending December 31, 2020	40,930
Year Ending December 31, 2021	40,718
Year Ending December 31, 2022	40,663
Thereafter	276,804
Total	$	586,906

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Current and Long- Term Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Schedule of accrued expenses

Accrued expenses consisted of the following as of March 31, 2018 and December 31, 2017 (in thousands):

	March 31, 2018		December 31, 2017
Commercial rebates, fees and returns	$	114,884	$	102,357
Professional, license, and other fees and expenses	29,033		28,692
Salaries, bonuses, and other compensation	14,034		19,099
Interest expense	6,639		13,525
Bremelanotide milestone payment	20,000		—
Intrarosa-related license fees	10,000		10,000
Accrued research and development	4,481		1,817
Total accrued expenses	$	199,071	$	175,490

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of effective income tax rate and income tax expense (benefit)

The following table summarizes our effective tax rate and income tax benefit for the three months ended March 31, 2018 and 2017 (in thousands except for percentages):

	Three Months Ended March 31,
	2018			2017
Effective tax rate	10		%	36		%
Income tax benefit	$	(5,979	)	$	(20,706	)

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Schedule of changes in accumulated other comprehensive income (loss), net of tax

The table below presents information about the effects of net income (loss) of significant amounts reclassified out of accumulated other comprehensive income (loss), net of tax, associated with unrealized gains (losses) on securities during the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018			2017
Beginning balance	$	(3,908	)	$	(3,838	)
Holding (losses) gains arising during period, net of tax	(454		)	92
Ending balance	$	(4,362	)	$	(3,746	)

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Basic and Diluted Net Income (Loss) per Share (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Schedule of components of basic and diluted net income (loss) per share

The components of basic and diluted net income (loss) per share for the three months ended March 31, 2018 and 2017 were as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2018			2017
Net loss	$	(54,242	)	$	(36,560	)
Weighted average common shares outstanding	34,162			34,378
Shares used in calculating dilutive net loss per share	34,162			34,378
Net loss per share:
Basic and diluted	$	(1.59	)	$	(1.06	)

Schedule of anti-dilutive securities from computation of diluted net income (loss) per share

The following table sets forth the potential common shares issuable upon the exercise of outstanding options, the vesting of RSUs, the exercise of warrants (prior to consideration of the treasury stock method), and the conversion of the Convertible Notes, which were excluded from our computation of diluted net (loss) income per share because their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended March 31,
	2018	2017
Options to purchase shares of common stock	3,771	2,406
Shares of common stock issuable upon the vesting of RSUs	1,401	775
Warrants	1,008	7,382
2022 Convertible Notes	11,695	—
2019 Convertible Notes	790	7,382
Total	18,665	17,945

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Equity-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of details regarding stock option activity

The following table summarizes stock option activity for the three months ended March 31, 2018:

	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	2,590,373		125,536		815,450		3,531,359
Granted	451,411		—		—		451,411
Exercised	(7,782	)	—		—		(7,782	)
Expired or terminated	(160,797	)	(15,436	)	(27,875	)	(204,108	)
Outstanding at March 31, 2018	2,873,205		110,100		787,575		3,770,880

Summary of details regarding restricted stock activity

The following table summarizes RSU activity for the three months ended March 31, 2018:

	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	966,623		11,611		91,541		1,069,775
Granted	712,781		—		—		712,781
Vested	(317,638	)	(10,150	)	(15,666	)	(343,454	)
Expired or terminated	(38,078	)	(460	)	—		(38,538	)
Outstanding at March 31, 2018	1,323,688		1,001		75,875		1,400,564

Schedule of equity-based compensation expense

Equity-based compensation expense for the three months ended March 31, 2018 and 2017 consisted of the following (in thousands):

	Three Months Ended March 31,
	2018			2017
Cost of product sales and services	$	347		$	129
Research and development	720			756
Selling, general and administrative	4,466			4,893
Total equity-based compensation expense	5,533			5,778
Income tax effect	(942		)	(1,605		)
After-tax effect of equity-based compensation expense	$	4,591		$	4,173

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Debt (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of outstanding debt obligations

Our outstanding debt obligations as of March 31, 2018 and December 31, 2017 consisted of the following (in thousands):

	March 31, 2018		December 31, 2017
2023 Senior Notes	$	466,595	$	466,291
2022 Convertible Notes	251,508		248,194
2019 Convertible Notes	20,460		20,198
Total long-term debt	738,563		734,683
Less: current maturities	20,460		—
Long-term debt, net of current maturities	$	718,103	$	734,683

Schedule of outstanding convertible debt

The outstanding balances of our Convertible Notes as of March 31, 2018 consisted of the following (in thousands):

	2022 Convertible Notes		2019 Convertible Notes		Total
Liability component:
Principal	$	320,000	$	21,417	$	341,417
Less: debt discount and issuance costs, net	68,492		957		69,449
Net carrying amount	$	251,508	$	20,460	$	271,968
Equity Component	$	72,576	$	9,905	$	82,481

Schedule of total interest expense recognized related to the convertible debt

The following table sets forth total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018		2017
Contractual interest expense	$	2,734	$	1,250
Amortization of debt issuance costs	339		274
Amortization of debt discount	3,237		1,929
Total interest expense	$	6,310	$	3,453

Schedule of future annual principal payments on long-term debt

Future annual principal payments on our long-term debt as of March 31, 2018 were as follows (in thousands):

Period	Future Annual Principal Payments
Remainder of Year Ending December 31, 2018	$	—
Year Ending December 31, 2019	21,417
Year Ending December 31, 2020	—
Year Ending December 31, 2021	—
Year Ending December 31, 2022	320,000
Thereafter	475,000
Total	$	816,417

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Basis of Presentation and Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Restricted cash	$ 656	$ 656

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Basis of Presentation and Summary of Significant Accounting Policies - Concentration and Significant Customer Information (Details) - facility	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Sales Revenue, Goods, Net | Customer Concentration Risk | AmerisourceBergen Drug Corporation
Concentrations and Significant Customer Information
Concentration risk	22.00%	22.00%
Sales Revenue, Goods, Net | Customer Concentration Risk | McKesson Corporation
Concentrations and Significant Customer Information
Concentration risk	22.00%	14.00%
Accounts Receivable | Customer Concentration Risk | AmerisourceBergen Drug Corporation
Concentrations and Significant Customer Information
Concentration risk	24.00%		27.00%
Accounts Receivable | Customer Concentration Risk | McKesson Corporation
Concentrations and Significant Customer Information
Concentration risk	26.00%		22.00%
Feraheme
Concentrations and Significant Customer Information
Number of production facilities	2

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Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition Impact of ASC 606 (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Jan. 01, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Capitalized contract acquisition costs			$ 1,500
Assets:
Prepaid and other current assets	$ 16,345			$ 12,304
Other long-term assets	2,238			762
Total assets	1,834,950			1,853,236
Liabilities and stockholders' equity:
Deferred tax liabilities	17,497			23,927
Accumulated deficit	(530,921)			(477,817)
Total liabilities and stockholders' equity	1,834,950			$ 1,853,236
Costs and expenses:
Selling, general and administrative expenses	91,050	$ 70,424
Net loss	(54,242)	(36,560)
Changes in operating assets and liabilities:
Prepaid and other current assets	(3,720)	1,523
Other assets and liabilities	215	$ (486)
Balances without adoption of ASC 606
Assets:
Prepaid and other current assets	16,248
Other long-term assets	538
Total assets	1,833,153
Liabilities and stockholders' equity:
Deferred tax liabilities	17,156
Accumulated deficit	(532,377)
Total liabilities and stockholders' equity	1,833,153
Costs and expenses:
Selling, general and administrative expenses	91,368
Net loss	(54,560)
Changes in operating assets and liabilities:
Prepaid and other current assets	(3,702)
Other assets and liabilities	515
Accounting Standards Update 2014-09 | Impact of Adoption
Assets:
Prepaid and other current assets	97
Other long-term assets	1,700
Total assets	1,797
Liabilities and stockholders' equity:
Deferred tax liabilities	341
Accumulated deficit	1,456
Total liabilities and stockholders' equity	1,797
Costs and expenses:
Selling, general and administrative expenses	(318)
Net loss	318
Changes in operating assets and liabilities:
Prepaid and other current assets	(18)
Other assets and liabilities	$ (300)

XML

Revenue Recognition - Disaggregated Revenue By Major Products and Services (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Makena
Disaggregation of Revenue [Line Items]
Revenue	$ 89,983	$ 86,455
Feraheme
Disaggregation of Revenue [Line Items]
Revenue	25,135	25,922
Intrarosa
Disaggregation of Revenue [Line Items]
Revenue	2,165	0
MuGard
Disaggregation of Revenue [Line Items]
Revenue	65	140
Product Revenue
Disaggregation of Revenue [Line Items]
Revenue	117,348	112,517
Service Revenue
Disaggregation of Revenue [Line Items]
Revenue	$ 28,969	$ 26,931

XML

Revenue Recognition - Total Gross Product (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Provision for product sales allowances and accruals:
Contractual adjustments, percent of gross product sales	36.00%	34.00%
Governmental rebates, percent of gross product sales	15.00%	12.00%
Total, percent of gross product sales	51.00%	46.00%
Product Revenue
Disaggregation of Revenue [Line Items]
Gross product sales	$ 239,870	$ 206,724
Provision for product sales allowances and accruals:
Contractual adjustments	86,144	69,829
Governmental rebates	36,378	24,378
Total	122,522	94,207
Product sales, net	$ 117,348	$ 112,517

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Revenue Recognition - Product Revenue Allowance and Accrual Activity (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Contractual Adjustments
Balance at December 31, 2017	$ 62,164
Provisions related to current period sales	85,308
Adjustments related to prior period sales	836
Payments/returns relating to current period sales	(44,633)
Payments/returns relating to prior period sales	(39,441)
Balance at March 31, 2018	64,234
Governmental Rebates
Balance at December 31, 2017	50,598
Provisions related to current period sales	31,028
Adjustments related to prior period sales	5,350
Payments/returns relating to current period sales	0
Payments/returns relating to prior period sales	(25,149)
Balance at March 31, 2018	61,827
Revenue, Allowance [Roll Forward]
Balance at December 31, 2017	112,762
Provisions related to current period sales	116,336
Adjustments related to prior period sales	6,186
Payments/returns relating to current period sales	(44,633)
Payments/returns relating to prior period sales	(64,590)
Balance at March 31, 2018	$ 126,061

XML

Revenue Recognition - Receivables, Assets and Liabilities From Contracts With Customers (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Revenue from Contract with Customer [Abstract]
Short-term contract assets (sales commissions)	$ 97	$ 79
Long-term contract assets (sales commissions)	1,700	1,400
Short-term contract liabilities (deferred revenue)	42,510	42,494
Long-term contract liabilities (deferred revenue)	$ 27,398	$ 24,387

XML

Revenue Recognition - Changes in Contract Assets and Liabilities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Contract assets (sales commissions)
Balance at January 1, 2018	$ 1,479
Additions	340
Deductions	(22)
Balance at March 31, 2018	1,797
Contract liabilities (deferred revenue)
Balance at January 1, 2018	66,881
Additions	21,727
Deductions	(18,700)
Balance at March 31, 2018	$ 69,908

XML

Revenue Recognition - Remaining Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unsatisfied performance obligations	$ 42.5
Unsatisfied performance obligations, remaining term	12 months

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Revenue Recognition - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract asset, impairment charge	$ 0
Discount percentage	2.00%
Standard payment term	30 days
Percentage of discount accrued at time of sale	100.00%
GPO billing period	30 days
Capitalized contract acquisition costs		$ 1,500,000
Capitalized contract costs, amortization	$ 0
Capitalized contract costs, impairment loss	$ 0
Collection and processing services
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Available financing period, option one	6 months
Available financing period, option two	12 months
Storage service
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Minimum prepayment term	18 years
Accounting Standards Update 2014-09 | Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting principle			$ 1,100,000
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Rebate payment term	1 month
Product return term	3 years
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Rebate payment term	3 months
Product return term	5 years

XML

Marketable Securities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Short-term marketable securities:
Amortized Cost	$ 81,089,000		$ 70,406,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	(272,000)		(81,000)
Estimated Fair Value	80,817,000		70,325,000
Long-term marketable securities:
Amortized Cost	58,789,000		66,663,000
Gross Unrealized Gains	1,000		1,000
Gross Unrealized Losses	(787,000)		(396,000)
Estimated Fair Value	58,003,000		66,268,000
Amortized Cost	139,878,000		137,069,000
Gross Unrealized Gains	1,000		1,000
Gross Unrealized Losses	(1,059,000)		(477,000)
Estimated Fair Value	138,820,000		136,593,000
Other-than-temporary impairment losses	0	$ 0
Corporate debt securities
Short-term marketable securities:
Amortized Cost	58,981,000		57,257,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	(215,000)		(68,000)
Estimated Fair Value	58,766,000		57,189,000
Long-term marketable securities:
Amortized Cost	52,408,000		59,282,000
Gross Unrealized Gains	1,000		1,000
Gross Unrealized Losses	(725,000)		(320,000)
Estimated Fair Value	51,684,000		58,963,000
Certificates of deposit
Short-term marketable securities:
Amortized Cost	10,150,000		9,151,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Estimated Fair Value	10,150,000		9,151,000
U.S. treasury and government agency securities
Short-term marketable securities:
Amortized Cost	5,996,000		1,999,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	(57,000)		(13,000)
Estimated Fair Value	5,939,000		1,986,000
Long-term marketable securities:
Amortized Cost	6,381,000		7,381,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	(62,000)		(76,000)
Estimated Fair Value	6,319,000		7,305,000
Commercial paper
Short-term marketable securities:
Amortized Cost	5,962,000		1,999,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Estimated Fair Value	$ 5,962,000		$ 1,999,000

XML

Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair value, measurements, recurring - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Assets:
Cash equivalents	$ 2,255	$ 4,591
Total assets	141,075	141,184
Liabilities:
Total Liabilities	50,667	50,085
Lumara Health Inc.
Liabilities:
Business acquisition, contingent consideration, liability	49,797	49,187
MuGard
Liabilities:
Business acquisition, contingent consideration, liability	870	898
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash equivalents	2,255	4,591
Total assets	2,255	4,591
Liabilities:
Total Liabilities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Lumara Health Inc.
Liabilities:
Business acquisition, contingent consideration, liability	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | MuGard
Liabilities:
Business acquisition, contingent consideration, liability	0	0
Significant Other Observable Inputs (Level 2)
Assets:
Cash equivalents	0	0
Total assets	138,820	136,593
Liabilities:
Total Liabilities	0	0
Significant Other Observable Inputs (Level 2) | Lumara Health Inc.
Liabilities:
Business acquisition, contingent consideration, liability	0	0
Significant Other Observable Inputs (Level 2) | MuGard
Liabilities:
Business acquisition, contingent consideration, liability	0	0
Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	0	0
Total assets	0	0
Liabilities:
Total Liabilities	50,667	50,085
Significant Unobservable Inputs (Level 3) | Lumara Health Inc.
Liabilities:
Business acquisition, contingent consideration, liability	49,797	49,187
Significant Unobservable Inputs (Level 3) | MuGard
Liabilities:
Business acquisition, contingent consideration, liability	870	898
Corporate debt securities
Assets:
Available-for-sale securities	110,450	116,152
Corporate debt securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Available-for-sale securities	0	0
Corporate debt securities | Significant Other Observable Inputs (Level 2)
Assets:
Available-for-sale securities	110,450	116,152
Corporate debt securities | Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	0	0
U.S. treasury and government agency securities
Assets:
Available-for-sale securities	12,258	9,291
U.S. treasury and government agency securities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Available-for-sale securities	0	0
U.S. treasury and government agency securities | Significant Other Observable Inputs (Level 2)
Assets:
Available-for-sale securities	12,258	9,291
U.S. treasury and government agency securities | Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	0	0
Certificates of deposit
Assets:
Available-for-sale securities	10,150	9,151
Certificates of deposit | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Available-for-sale securities		0
Certificates of deposit | Significant Other Observable Inputs (Level 2)
Assets:
Available-for-sale securities	10,150	9,151
Certificates of deposit | Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	0	0
Commercial paper
Assets:
Available-for-sale securities	5,962	1,999
Commercial paper | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Available-for-sale securities	0	0
Commercial paper | Significant Other Observable Inputs (Level 2)
Assets:
Available-for-sale securities	5,962	1,999
Commercial paper | Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$ 0	$ 0

XML

Fair Value Measurements - Contingent Consideration (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Contingent consideration accrued	$ 199,071		$ 175,490
Acquired in-process research and development	20,000	$ 60,000
Reconciliation of contingent consideration obligations related to acquisitions
Current portion of acquisition-related contingent consideration	50,007		$ 49,399
Makena
Reconciliation of contingent consideration obligations related to acquisitions
Current portion of acquisition-related contingent consideration	49,800
MuGard
Reconciliation of contingent consideration obligations related to acquisitions
Current portion of acquisition-related contingent consideration	200
Estimated undiscounted royalty amounts payable, maximum	$ 6,000
Discount rate	14.00%
Estimated undiscounted royalty amounts payable, minimum	$ 2,000
Period over which estimated undiscounted royalty amounts could be paid	10 years
Contingent Consideration
Reconciliation of contingent consideration obligations related to acquisitions
Balance at beginning of period	$ 50,085
Payments made	(44)
Adjustments to fair value of contingent consideration	626
Balance at end of period	50,667
Contingent Consideration | Endoceutics License Agreement
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Contingent consideration accrued	$ 10,000

XML

Fair Value Measurements - Debt (Details) - Significant Other Observable Inputs (Level 2) $ in Millions	Mar. 31, 2018 USD ($)
Senior Notes Due 2023
Debt
Fair value of debt	$ 470.3
Senior Convertible Notes Due 2022
Debt
Fair value of debt	323.3
Senior Convertible Notes Due 2019
Debt
Fair value of debt	$ 20.7

XML

Inventories (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 12,578	$ 12,418
Work in process	5,417	4,146
Finished goods	13,603	20,792
Total inventories	31,598	$ 37,356
Decrease in total inventories	$ 5,800

XML

Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Property, plant and equipment, net
Property, plant and equipment, gross	$ 46,407	$ 45,486
Less: accumulated depreciation	(20,486)	(19,490)
Property, plant and equipment, net	25,921	25,996
Land
Property, plant and equipment, net
Property, plant and equipment, gross	700	700
Land improvements
Property, plant and equipment, net
Property, plant and equipment, gross	300	300
Building and improvements
Property, plant and equipment, net
Property, plant and equipment, gross	9,552	9,552
Computer equipment and software
Property, plant and equipment, net
Property, plant and equipment, gross	14,072	14,073
Furniture and fixtures
Property, plant and equipment, net
Property, plant and equipment, gross	2,513	2,512
Leasehold improvements
Property, plant and equipment, net
Property, plant and equipment, gross	4,959	4,959
Laboratory and production equipment
Property, plant and equipment, net
Property, plant and equipment, gross	13,286	8,030
Construction in progress
Property, plant and equipment, net
Property, plant and equipment, gross	$ 1,025	$ 5,360

XML

Goodwill and Intangible Assets, Net - Goodwill (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017	Aug. 31, 2015	Nov. 30, 2014
Goodwill [Line Items]
Goodwill	$ 639,484,000	$ 639,484,000
Accumulated impairment losses	$ 0
Lumara Health Inc.
Goodwill [Line Items]
Goodwill				$ 198,100,000
CBR
Goodwill [Line Items]
Goodwill			$ 441,400,000

XML

Goodwill and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Amortizable intangible assets:
Finite-lived intangible assets, cost	$ 1,250,855	$ 1,171,755
Finite-lived intangible assets, accumulated amortization	344,703	288,439
Finite-lived intangible assets, cumulative impairments	319,246	319,246
Total	586,906	564,070
Indefinite-lived intangible assets:
Total intangible assets, cost	1,315,855	1,315,855
Total intangible assets, impairments	322,946	322,946
Total intangible assets, net	648,206	704,470
CBR customer relationships
Amortizable intangible assets:
Finite-lived intangible assets, cost	297,000	297,000
Finite-lived intangible assets, accumulated amortization	33,209	29,309
Finite-lived intangible assets, cumulative impairments	0	0
Total	263,791	267,691
Makena | Developed technology rights
Amortizable intangible assets:
Finite-lived intangible assets, cost	797,100	797,100
Finite-lived intangible assets, accumulated amortization	306,242	255,754
Finite-lived intangible assets, cumulative impairments	319,246	319,246
Total	171,612	222,100
Makena Auto-Injector | Developed technology rights
Amortizable intangible assets:
Finite-lived intangible assets, cost	79,100	0
Finite-lived intangible assets, accumulated amortization	188	0
Finite-lived intangible assets, cumulative impairments	0	0
Total	78,912	0
Intrarosa | Developed technology rights
Amortizable intangible assets:
Finite-lived intangible assets, cost	77,655	77,655
Finite-lived intangible assets, accumulated amortization	5,064	3,376
Finite-lived intangible assets, cumulative impairments	0	0
Total	72,591	74,279
Makena IPR&D
Indefinite-lived intangible assets:
Indefinite-lived intangible assets, cost	0	79,100
Indefinite-lived intangible assets, cumulative impairments	0	0
Indefinite-lived intangible assets, net	0	79,100
CBR trade names and trademarks
Indefinite-lived intangible assets:
Indefinite-lived intangible assets, cost	65,000	65,000
Indefinite-lived intangible assets, cumulative impairments	3,700	3,700
Indefinite-lived intangible assets, net	$ 61,300	$ 61,300

XML

Goodwill and Intangible Assets, Net - Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Expected useful life	11 years 8 months 15 days
Amortization of intangible assets	$ 56.3	$ 24.8
Makena Auto-Injector | Developed technology rights
Finite-Lived Intangible Assets [Line Items]
Expected useful life	8 years 9 months

XML

Goodwill and Intangible Assets, Net - Schedule of Expected Future Annual Amortization Expense related to Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Estimated Amortization Expense
Remainder of Year Ending December 31, 2018	$ 139,239
Year Ending December 31, 2019	48,552
Year Ending December 31, 2020	40,930
Year Ending December 31, 2021	40,718
Year Ending December 31, 2022	40,663
Thereafter	276,804
Total	$ 586,906	$ 564,070

XML

Current and Long- Term Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Commercial rebates, fees and returns	$ 114,884	$ 102,357
Professional, license, and other fees and expenses	29,033	28,692
Accrued research and development	14,034	19,099
Interest expense	6,639	13,525
Bremelanotide milestone payment	20,000	0
Interest expense	10,000	10,000
Accrued research and development	4,481	1,817
Total accrued expenses	199,071	175,490
Deferred revenue	$ 69,900	$ 66,900

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Effective tax rate	10.00%	36.00%
Income tax benefit	$ (5,979)	$ (20,706)
Tax Cuts and Jobs Act, provisional tax benefit			$ 17,600

XML

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
AOCI Attributable to Parent, Net of Tax
Beginning balance	$ 790,244
Holding (losses) gains arising during period, net of tax	(454)	$ 92
Ending balance	739,995
AOCI Attributable to Parent
AOCI Attributable to Parent, Net of Tax
Beginning balance	(3,908)	(3,838)
Ending balance	$ (4,362)	$ (3,746)

XML

Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2017	Feb. 28, 2014
Basic and Diluted Net Income (Loss) per Share
Net loss	$ (54,242)	$ (36,560)
Weighted average common shares outstanding (in shares)	34,162	34,378
Shares used in calculating dilutive net loss per share (in shares)	34,162	34,378
Net loss per share:
Basic and diluted (in usd per share)	$ (1.59)	$ (1.06)
Anti-dilutive securities (in shares)	18,665	17,945
Options to purchase shares of common stock
Net loss per share:
Anti-dilutive securities (in shares)	3,771	2,406
Shares of common stock issuable upon the vesting of RSUs
Net loss per share:
Anti-dilutive securities (in shares)	1,401	775
Warrants
Net loss per share:
Anti-dilutive securities (in shares)	1,008	7,382
2019 Convertible Notes | Convertible Debt Securities
Net loss per share:
Anti-dilutive securities (in shares)	790	7,382
2022 Convertible Notes | Convertible Debt Securities
Net loss per share:
Anti-dilutive securities (in shares)	11,695	0
Convertible Debt | 2019 Convertible Notes
Basic and Diluted Net Income (Loss) per Share
Interest rate	2.50%			2.50%
Convertible Debt | 2022 Convertible Notes
Basic and Diluted Net Income (Loss) per Share
Interest rate	3.25%		3.25%

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Equity-Based Compensation - Activity Related to Plans (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($) plan shares
Equity compensation plans
Number of equity compensation plans | plan	3
Stock Options
Outstanding (in shares)	3,531,359
Granted (in shares)	451,411
Exercised (in shares)	(7,782)
Expired or terminated (in shares)	(204,108)
Outstanding (in shares)	3,770,880
Restricted Stock Units
Restricted Stock Units
Outstanding (in shares)	1,069,775
Granted (in shares)	712,781
Vested (in shares)	(343,454)
Expired or terminated (in shares)	(38,538)
Outstanding (in shares)	1,400,564
2007 Equity Plan
Stock Options
Outstanding (in shares)	2,590,373
Granted (in shares)	451,411
Exercised (in shares)	(7,782)
Expired or terminated (in shares)	(160,797)
Outstanding (in shares)	2,873,205
2007 Equity Plan | Restricted Stock Units
Restricted Stock Units
Outstanding (in shares)	966,623
Granted (in shares)	712,781
Vested (in shares)	(317,638)
Expired or terminated (in shares)	(38,078)
Outstanding (in shares)	1,323,688
2007 Equity Plan | Performance Restricted Stock Units (RSUs)
Restricted Stock Units
Granted (in shares)	206,250
Award vesting period	3 years
Fair value, performance- based RSUs | $	$ 3.8
Compensation expense, period for recognition	3 years
2013 Lumara Equity Plan
Stock Options
Outstanding (in shares)	125,536
Granted (in shares)	0
Exercised (in shares)	0
Expired or terminated (in shares)	(15,436)
Outstanding (in shares)	110,100
2013 Lumara Equity Plan | Restricted Stock Units
Restricted Stock Units
Outstanding (in shares)	11,611
Granted (in shares)	0
Vested (in shares)	(10,150)
Expired or terminated (in shares)	(460)
Outstanding (in shares)	1,001
Inducement Grants
Stock Options
Outstanding (in shares)	815,450
Granted (in shares)	0
Exercised (in shares)	0
Expired or terminated (in shares)	(27,875)
Outstanding (in shares)	787,575
Inducement Grants | Restricted Stock Units
Restricted Stock Units
Outstanding (in shares)	91,541
Granted (in shares)	0
Vested (in shares)	(15,666)
Expired or terminated (in shares)	0
Outstanding (in shares)	75,875

XML

Equity-Based Compensation - Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Equity-based compensation expense
Total equity-based compensation expense	$ 5,533	$ 5,778
Income tax effect	(942)	(1,605)
After-tax effect of equity-based compensation expense	4,591	4,173
Cost of product sales and services
Equity-based compensation expense
Total equity-based compensation expense	347	129
Research and development
Equity-based compensation expense
Total equity-based compensation expense	720	756
Selling, general and administrative
Equity-based compensation expense
Total equity-based compensation expense	$ 4,466	$ 4,893

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Stockholders' Equity (Details) - USD ($)	3 Months Ended		27 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Dec. 31, 2017	Jan. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decease in total stockholders' equity	$ 50,200,000
Net income (loss)	(54,242,000)	$ (36,560,000)
Equity-based compensation	5,500,000
Payment of employee tax withholdings related to equity-based compensation	$ 2,300,000
Share repurchase program, authorized amount					$ 60,000,000.0
Common stock repurchased and retired (in shares)	0		2,198,010
Stock repurchased and retired during period, value			$ 39,500,000
Average share price (in usd per share)			$ 17.97
Remaining authorized repurchase amount	$ 20,500,000		$ 20,500,000
Accounting Standards Update 2014-09 | Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting principle				$ 1,100,000

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended
	Apr. 03, 2017	Jul. 31, 2015	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Nov. 30, 2014
Commitments
Minimum purchase commitments			$ 29,900
Contingent consideration paid			44	$ 83
Asset acquisition, contingent consideration liability			20,000		$ 0
Endoceutics, Inc. | Intrarosa | Delivery Of Intrarosa Launch Quantities
Commitments
Asset acquisition, contingent consideration liability			10,000
Endoceutics, Inc. | Intrarosa | First Sales Milestone Achievement
Commitments
Asset acquisition, contingent consideration liability	$ 15,000		15,000
Potential milestone payment, triggering event, sales	150,000		150,000
Endoceutics, Inc. | Intrarosa | Second Sales Milestone Achievement
Commitments
Asset acquisition, contingent consideration liability	30,000		30,000
Potential milestone payment, triggering event, sales	300,000		300,000
Endoceutics, Inc. | Intrarosa | Third Sales Milestone Achievement
Commitments
Asset acquisition, contingent consideration liability	850,000		850,000
Potential milestone payment, triggering event, sales	500,000		500,000
Endoceutics, Inc. | Intrarosa | Tiered Royalties
Commitments
Potential milestone payment, triggering event, sales	$ 150,000		$ 150,000
Royalty percentage, maximum	20.00%		20.00%
Net sales threshold, future contingent payments	$ 1,000,000		$ 1,000,000
Period after first commercial sale	10 years		10 years
Palatin Technologies, Inc. | Bremelanotide Products | First Sales Milestone Achievement
Commitments
Asset acquisition, contingent consideration liability			$ 25,000
Potential milestone payment, triggering event, sales			$ 250,000
Palatin Technologies, Inc. | Bremelanotide Products | Tiered Royalties
Commitments
Period after first commercial sale			10 years
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory And Commercial Milestone Payments
Commitments
Asset acquisition, contingent consideration liability			$ 380,000
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement
Commitments
Asset acquisition, contingent consideration liability			80,000
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement, Acceptance By U.S.Food And Drug Administration Of New Drug Application
Commitments
Asset acquisition, contingent consideration liability			20,000
Palatin Technologies, Inc. | Bremelanotide Products | Regulatory Milestone Achievement, U.S.Food And Drug Administration Approval
Commitments
Asset acquisition, contingent consideration liability			60,000
Palatin Technologies, Inc. | Bremelanotide Products | Achievement of Certain Annual Sales Milestones over Course of License Agreement
Commitments
Asset acquisition, contingent consideration liability			300,000
Velo Bio, LLC | Option Exercise and Regulatory Milestone Achievement
Commitments
Future contingent payments (up to)		$ 65,000
Velo Bio, LLC | Annual Sales Milestone Achievements
Commitments
Future contingent payments (up to)		250,000
Minimum | Velo Bio, LLC | Annual Sales Milestone Achievements
Commitments
Sales milestone targets		100,000
Maximum | Velo Bio, LLC | Annual Sales Milestone Achievements
Commitments
Sales milestone targets		$ 900,000
Lumara Health Inc.
Commitments
Contingent consideration (up to)			200,000			$ 350,000
Business acquisition, contingent consideration, liability			50,000
Lumara Health Inc. | Annual Net Sales Milestone
Commitments
Contingent consideration paid			$ 150,000

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Collaboration, License and Other Strategic Agreements (Details) - USD ($) $ in Thousands		1 Months Ended		3 Months Ended			12 Months Ended
	Apr. 03, 2017	Feb. 28, 2017	Jul. 31, 2015	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2015	Dec. 31, 2017
Collaborative Agreements
Asset acquisition, contingent consideration liability				$ 20,000				$ 0
Endoceutics, Inc.
Collaborative Agreements
Payments related to collaborative arrangement	$ 50,000
Number of shares issued under arrangement	600,000
Net shares issued in connection with license agreement, value	$ 13,500
Consideration recorded						$ 83,500
IPR&D expense						5,800
Endoceutics, Inc. | 180 Day Lock-Up Provision
Collaborative Agreements
Number of shares issued under arrangement	300,000
Stock issued, lock-up period	180 days
Endoceutics, Inc. | One Year Lock-Up Provision
Collaborative Agreements
Number of shares issued under arrangement	300,000
Stock issued, lock-up period	1 year
Palatin Technologies, Inc.
Collaborative Agreements
Payments related to collaborative arrangement		$ 60,000
Out-of-pocket expenses (up to)		$ 25,000
Velo Bio, LLC
Collaborative Agreements
Upfront payment, option agreement							$ 10,000
Velo Bio, LLC | Option Exercise and Regulatory Milestone Achievement
Collaborative Agreements
Future contingent payments (up to)			$ 65,000
Velo Bio, LLC | Annual Sales Milestone Achievements
Collaborative Agreements
Future contingent payments (up to)			250,000
Velo Bio, LLC | Annual Sales Milestone Achievements | Minimum
Collaborative Agreements
Sales milestone targets			100,000
Velo Bio, LLC | Annual Sales Milestone Achievements | Maximum
Collaborative Agreements
Sales milestone targets			$ 900,000
Velo Bio, LLC | Royalty Threshold Achievement
Collaborative Agreements
Potential milestone payment, triggering event, royalty percentage			0.00%
Potential milestone payment, increased percentage			50.00%
Intrarosa | Endoceutics, Inc.
Collaborative Agreements
Out-of-pocket expenses (up to)					$ 20,000
Intrarosa | Endoceutics, Inc. | Developed technology rights
Collaborative Agreements
Finite-lived intangible assets						$ 77,700
Intrarosa | Endoceutics, Inc. | Delivery Of Intrarosa Launch Quantities
Collaborative Agreements
Payments related to collaborative arrangement					$ 10,000
Asset acquisition, contingent consideration liability				10,000
Intrarosa | Endoceutics, Inc. | First Anniversary Of Closing
Collaborative Agreements
Asset acquisition, contingent consideration liability				10,000
Intrarosa | Endoceutics, Inc. | Tiered Royalties
Collaborative Agreements
Potential milestone payment, triggering event, sales	$ 150,000			$ 150,000
Royalty percentage, maximum	20.00%			20.00%
Net sales threshold, future contingent payments	$ 1,000,000			$ 1,000,000
Period after first commercial sale	10 years			10 years
Intrarosa | Endoceutics, Inc. | First Sales Milestone Achievement
Collaborative Agreements
Asset acquisition, contingent consideration liability	$ 15,000			$ 15,000
Potential milestone payment, triggering event, sales	150,000			150,000
Intrarosa | Endoceutics, Inc. | Second Sales Milestone Achievement
Collaborative Agreements
Asset acquisition, contingent consideration liability	30,000			30,000
Potential milestone payment, triggering event, sales	300,000			300,000
Intrarosa | Endoceutics, Inc. | Third Sales Milestone Achievement
Collaborative Agreements
Asset acquisition, contingent consideration liability	850,000			850,000
Potential milestone payment, triggering event, sales	$ 500,000			$ 500,000
Bremelanotide Products | Palatin Technologies, Inc. | Tiered Royalties
Collaborative Agreements
Period after first commercial sale				10 years
Bremelanotide Products | Palatin Technologies, Inc. | First Sales Milestone Achievement
Collaborative Agreements
Asset acquisition, contingent consideration liability				$ 25,000
Potential milestone payment, triggering event, sales				250,000
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement
Collaborative Agreements
Asset acquisition, contingent consideration liability				80,000
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement, Acceptance By U.S.Food And Drug Administration Of New Drug Application
Collaborative Agreements
Asset acquisition, contingent consideration liability				20,000
Bremelanotide Products | Palatin Technologies, Inc. | Regulatory Milestone Achievement, U.S.Food And Drug Administration Approval
Collaborative Agreements
Asset acquisition, contingent consideration liability				60,000
Bremelanotide Products | Palatin Technologies, Inc. | Achievement of Certain Annual Sales Milestones over Course of License Agreement
Collaborative Agreements
Asset acquisition, contingent consideration liability				$ 300,000

XML

Debt - Schedule of Outstanding Debt Obligations (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term Debt	$ 738,563	$ 734,683
Less: current maturities	20,460	0
Long-term debt, net of current maturities	718,103	734,683
Senior Notes | 2023 Senior Notes
Debt Instrument [Line Items]
Long-term Debt	466,595	466,291
Convertible Debt
Debt Instrument [Line Items]
Long-term Debt	271,968
Convertible Debt | 2022 Convertible Notes
Debt Instrument [Line Items]
Long-term Debt	251,508	248,194
Convertible Debt | 2019 Convertible Notes
Debt Instrument [Line Items]
Long-term Debt	$ 20,460	$ 20,198

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Debt - 2023 Senior Notes (Details) - USD ($)	1 Months Ended
	Oct. 31, 2017	Aug. 31, 2015	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Carrying value, net			$ 738,563,000	$ 734,683,000
Senior Notes | 2023 Senior Notes
Debt Instrument [Line Items]
Aggregate principal amount of debt issued		$ 500,000,000	475,000,000
Interest rate		7.875%
Repurchased amount	$ 25,000,000
Gain (loss) on debt extinguishment	$ (1,100,000)
Carrying value, net			$ 466,595,000	$ 466,291,000
Aggregate principal that must be held to accelerate amounts due (not less than)		25.00%
Debt Instrument, Redemption, Period One | Senior Notes | 2023 Senior Notes
Debt Instrument [Line Items]
Repurchase price of principal amount of notes plus accrued and unpaid interest		35.00%
Redemption price		107.875%
Minimum outstanding percentage of principal after redemption		65.00%
Debt Instrument, Additional Redemption, Period One | Senior Notes | 2023 Senior Notes
Debt Instrument [Line Items]
Redemption price		100.00%
Debt Instrument, Redemption, Period Two | Senior Notes | 2023 Senior Notes
Debt Instrument [Line Items]
Redemption price		101.00%

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Debt - Outstanding Convertible Note Balances (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Liability component:
Principal	$ 816,417
Long-term Debt	738,563	$ 734,683
Convertible Debt
Liability component:
Principal	341,417
Less: debt discount and issuance costs, net	69,449
Long-term Debt	271,968
Equity Component	82,481
Convertible Debt | 2022 Convertible Notes
Liability component:
Principal	320,000
Less: debt discount and issuance costs, net	68,492
Long-term Debt	251,508	248,194
Equity Component	72,576
Convertible Debt | 2019 Convertible Notes
Liability component:
Principal	21,417
Less: debt discount and issuance costs, net	957
Long-term Debt	20,460	$ 20,198
Equity Component	$ 9,905

XML

Debt - Convertible Notes (Details) - Convertible Debt	1 Months Ended				3 Months Ended
	Sep. 30, 2017 USD ($)	May 31, 2017 USD ($)	Aug. 31, 2015	Feb. 28, 2014 USD ($) day $ / shares	Mar. 31, 2018	Jun. 30, 2017 USD ($) day $ / shares
Debt Instrument [Line Items]
Period of amortization of debt discount to interest expense using effective interest method			5 years
Convertible Notes due 2022
Debt Instrument [Line Items]
Period of amortization of debt discount to interest expense using effective interest method						5 years
Aggregate principal amount of debt issued						$ 320,000,000
Proceeds from 2022 Convertible Notes						310,400,000
Payment of convertible debt issuance costs						9,600,000
Debt issuance costs						9,600,000
Debt issuance costs, allocated to equity component						2,200,000
Debt issuance costs allocated to the liability component						$ 7,400,000
Interest rate					3.25%	3.25%
Debt conversion ratio					0.0365464
Initial conversion price of convertible notes into common stock (in usd per share) | $ / shares						$ 27.36
Debt term						5 years
Effective interest rate on liability component					9.49%
Convertible Notes due 2019
Debt Instrument [Line Items]
Aggregate principal amount of debt issued				$ 200,000,000
Proceeds from 2022 Convertible Notes				193,300,000
Payment of convertible debt issuance costs				$ 6,700,000
Interest rate				2.50%	2.50%
Debt conversion ratio					0.0369079
Initial conversion price of convertible notes into common stock (in usd per share) | $ / shares				$ 27.09
Effective interest rate on liability component					7.79%
Proceeds used to pay the cost of the bond hedges				$ 14,100,000
Repurchased amount	$ 19,600,000	$ 158,900,000
Repurchase price	21,400,000	171,300,000
Gain (loss) on debt extinguishment	$ (300,000)	$ 200,000
Debt Instrument, Conversion, Period One | Convertible Notes due 2022
Debt Instrument [Line Items]
Trading period | day						20
Consecutive trading period | day						30
Closing sales price of the entity's common stock that the conversion price must exceed or be equal in order for the notes to be convertible						130.00%
Debt Instrument, Conversion, Period One | Convertible Notes due 2019
Debt Instrument [Line Items]
Trading period | day				20
Consecutive trading period | day				30
Closing sales price of the entity's common stock that the conversion price must exceed or be equal in order for the notes to be convertible				130.00%
Debt Instrument, Conversion, Period Two | Convertible Notes due 2022
Debt Instrument [Line Items]
Consecutive trading period | day						5
Closing sales price of the entity's common stock that the conversion price must exceed or be equal in order for the notes to be convertible						98.00%
Consecutive business days after any five consecutive trading day period during the note measurement period | day						5
Debt Instrument, Conversion, Period Two | Convertible Notes due 2019
Debt Instrument [Line Items]
Closing sales price of the entity's common stock that the conversion price must exceed or be equal in order for the notes to be convertible				98.00%

XML

Debt - Total Interest Expense Recognized Related to the Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Debt Instrument [Line Items]
Contractual interest expense	$ 2,734	$ 1,250
Amortization of debt issuance costs	339	274
Amortization of debt discount	3,237	1,929
Total interest expense	$ 6,310	$ 3,453

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Debt - Convertible Bond Hedge, Warrant Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions	3 Months Ended
	Mar. 31, 2018	Feb. 11, 2014
Debt Instrument [Line Items]
Remaining principal amount	$ 21,417
Exercise price (in dollars per share)	$ 27.09
Initial exercise price (in dollars per share)	$ 34.12
Exercise price above last reported sale price of common stock	70.00%
Sale price of common stock (in dollars per share)		$ 20.07
Bond Option
Debt Instrument [Line Items]
Common stock covered under convertible bond hedge/warrants (in shares)	0.8
Warrants
Debt Instrument [Line Items]
Common stock covered under convertible bond hedge/warrants (in shares)	1.0
Convertible Notes due 2019 | Convertible Debt
Debt Instrument [Line Items]
Amount of hedged item	$ 21,400

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Debt - Future Payments (Details) $ in Thousands	Mar. 31, 2018 USD ($)
Debt Disclosure [Abstract]
Remainder of Year Ending December 31, 2018	$ 0
Year Ending December 31, 2019	21,417
Year Ending December 31, 2020	0
Year Ending December 31, 2021	0
Year Ending December 31, 2022	320,000
Thereafter	475,000
Total	$ 816,417