x | Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 77-0160744 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3911 Sorrento Valley Boulevard, Suite 110 San Diego, CA | 92121 (Zip Code) |
(Address of principal executive offices) |
Large Accelerated Filer | x | Accelerated Filer | o | |
Non-Accelerated Filer | o | (Do not check if a smaller reporting company) | Smaller Reporting Company | o |
Emerging growth company | o |
PART I. FINANCIAL INFORMATION | ||
PART II. OTHER INFORMATION | ||
GLOSSARY OF TERMS AND ABBREVIATIONS | |
Abbreviation | Definition |
2019 Convertible Senior Notes | $245.0 million aggregate principal amount of convertible senior unsecured notes due 2019 |
Amgen | Amgen, Inc. |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
Company | Ligand Pharmaceuticals Incorporated, including subsidiaries |
CorMatrix | CorMatrix Cardiovascular, Inc. |
CVR | Contingent value right |
CyDex | CyDex Pharmaceuticals, Inc. |
Amended ESPP | Employee Stock Purchase Plan, as amended and restated |
FASB | Financial Accounting Standards Board |
FDA | Food and Drug Administration |
GAAP | Generally accepted accounting principles in the United States |
IPR&D | In-Process Research and Development |
Ligand | Ligand Pharmaceuticals Incorporated, including subsidiaries |
LSA | Loan and Security Agreement |
Metabasis | Metabasis Therapeutics, Inc. |
MLA | Master License Agreement |
NOLs | Net Operating Losses |
OMT | OMT, Inc. or Open Monoclonal Technology, Inc. |
Par | Par Pharmaceuticals, Inc. |
Retrophin | Retrophin Inc. |
Q1 2017 | The Company's fiscal quarter ended March 31, 2017 |
Q1 2016 | The Company's fiscal quarter ended March 31, 2016 |
SEC | Securities and Exchange Commission |
Selexis | Selexis, SA |
Viking | Viking Therapeutics |
PART I. | FINANCIAL INFORMATION |
ITEM 1. | FINANCIAL STATEMENTS |
March 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 10,641 | $ | 18,752 | |||
Short-term investments | 148,733 | 122,296 | |||||
Accounts receivable | 7,057 | 14,700 | |||||
Note receivable from Viking | — | 3,207 | |||||
Inventory | 7,629 | 1,923 | |||||
Other current assets | 641 | 2,175 | |||||
Total current assets | 174,701 | 163,053 | |||||
Deferred income taxes | 141,007 | 123,891 | |||||
Investment in Viking | 7,262 | 8,345 | |||||
Note receivable from Viking | 3,207 | — | |||||
Intangible assets, net | 201,990 | 204,705 | |||||
Goodwill | 72,207 | 72,207 | |||||
Commercial license rights, net | 25,630 | 25,821 | |||||
Property and equipment, net | 1,898 | 1,819 | |||||
Other assets | 1,821 | 1,744 | |||||
Total assets | $ | 629,723 | $ | 601,585 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 6,456 | $ | 2,734 | |||
Accrued liabilities | 4,680 | 6,397 | |||||
Current contingent liabilities | 111 | 5,088 | |||||
2019 Convertible Senior Notes, net | 215,748 | 212,910 | |||||
Total current liabilities | 226,995 | 227,129 | |||||
Long-term contingent liabilities | 3,035 | 2,916 | |||||
Other long-term liabilities | 915 | 687 | |||||
Total liabilities | 230,945 | 230,732 | |||||
Commitments and Contingencies | |||||||
Equity component of currently redeemable convertible notes (Note 5) | 26,948 | 29,563 | |||||
Stockholders' equity: | |||||||
Common stock, $0.001 par value; 33,333,333 shares authorized; 20,996,049 and 20,909,301 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 21 | 21 | |||||
Additional paid-in capital | 777,102 | 769,653 | |||||
Accumulated other comprehensive income | 3,105 | 2,743 | |||||
Accumulated deficit | (408,398 | ) | (431,127 | ) | |||
Total stockholders' equity | 371,830 | 341,290 | |||||
Total liabilities and stockholders' equity | $ | 629,723 | $ | 601,585 |
Three months ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Revenues: | |||||||
Royalties | $ | 24,230 | $ | 14,390 | |||
Material sales | 1,121 | 5,341 | |||||
License fees, milestones and other revenues | 3,916 | 9,917 | |||||
Total revenues | 29,267 | 29,648 | |||||
Operating costs and expenses: | |||||||
Cost of sales (1) | 341 | 955 | |||||
Amortization of intangibles | 2,715 | 2,524 | |||||
Research and development | 8,673 | 4,004 | |||||
General and administrative | 7,322 | 7,069 | |||||
Total operating costs and expenses | 19,051 | 14,552 | |||||
Income from operations | 10,216 | 15,096 | |||||
Other (expense) income: | |||||||
Interest expense, net | (2,941 | ) | (3,005 | ) | |||
Increase in contingent liabilities | (140 | ) | (1,306 | ) | |||
Loss from Viking | (1,083 | ) | (1,605 | ) | |||
Other income, net | 141 | 391 | |||||
Total other expense, net | (4,023 | ) | (5,525 | ) | |||
Income before income taxes | 6,193 | 9,571 | |||||
Income tax expense | (1,114 | ) | (3,694 | ) | |||
Income from operations | 5,079 | 5,877 | |||||
Discontinued operations: | |||||||
Gain on sale of Oncology Product Line before income taxes | — | 1,139 | |||||
Income tax expense on discontinued operations | — | (408 | ) | ||||
Income from discontinued operations | — | 731 | |||||
Net income | $ | 5,079 | $ | 6,608 | |||
Per share amounts attributable to Ligand common shareholders: | |||||||
Basic earnings per share data(2) | |||||||
Income from continuing operations | $ | 0.24 | $ | 0.28 | |||
Income from discontinued operations | — | 0.04 | |||||
Net income | $ | 0.24 | $ | 0.32 | |||
Diluted earnings per share data (2) | |||||||
Income from continuing operations | $ | 0.22 | $ | 0.26 | |||
Income from discontinued operations | — | 0.03 | |||||
Net income | $ | 0.22 | $ | 0.30 | |||
Shares used for computation (in thousands) | |||||||
Basic | 20,938 | 20,708 | |||||
Diluted | 23,019 | 22,284 |
Three months ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Net income: | $ | 5,079 | $ | 6,608 | |||
Unrealized net gain on available-for-sale securities, net of tax | (66 | ) | (1,098 | ) | |||
Less: Reclassification of net realized (gain)/loss included in net income, net of tax of $202 | 428 | (236 | ) | ||||
Comprehensive income | $ | 5,441 | $ | 5,274 |
Three months ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Operating activities | |||||||
Net income | $ | 5,079 | $ | 6,608 | |||
Less: income from discontinued operations | — | 731 | |||||
Income from continuing operations | 5,079 | 5,877 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Non-cash change in estimated fair value of contingent liabilities | 140 | 1,306 | |||||
Realized gain on sale of short-term investment | (66 | ) | (406 | ) | |||
Depreciation and amortization | 2,979 | 2,575 | |||||
Amortization of premium (discount) on investments, net | (46 | ) | 320 | ||||
Amortization of debt discount and issuance fees | 2,838 | 2,668 | |||||
Stock-based compensation | 6,045 | 4,118 | |||||
Deferred income taxes | 1,018 | 4,101 | |||||
Change in fair value of the Viking convertible debt receivable and warrants | (76 | ) | 15 | ||||
Loss from Viking | 1,083 | 1,605 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 7,643 | (5,604 | ) | ||||
Inventory | (1,197 | ) | 853 | ||||
Other current assets | 745 | 16 | |||||
Accounts payable and accrued liabilities | (1,963 | ) | (4,302 | ) | |||
Other | — | (28 | ) | ||||
Net cash provided by operating activities | 24,222 | 13,114 | |||||
Investing activities | |||||||
Payments to CVR holders and other contingency payments | (4,998 | ) | (5,446 | ) | |||
Purchases of property and equipment | (87 | ) | (238 | ) | |||
Cash paid for acquisition, net of cash acquired | — | (92,855 | ) | ||||
Purchase of short-term investments | (73,352 | ) | (49,892 | ) | |||
Proceeds from sale of short-term investments | 17,719 | 20,270 | |||||
Proceeds from maturity of short-term investments | 30,052 | 48,401 | |||||
Net cash used in investing activities | (30,666 | ) | (79,760 | ) | |||
Financing activities | |||||||
Net proceeds from stock option exercises and ESPP | 355 | 1,013 | |||||
Taxes paid related to net share settlement of equity awards | (2,022 | ) | — | ||||
Share repurchase | — | (502 | ) | ||||
Net cash (used in) provided by financing activities | (1,667 | ) | 511 | ||||
Net decrease in cash and cash equivalents | (8,111 | ) | (66,135 | ) | |||
Cash and cash equivalents at beginning of period | 18,752 | 97,428 | |||||
Cash and cash equivalents at end of period | $ | 10,641 | $ | 31,293 |
Supplemental disclosure of cash flow information | |||||||
Interest paid | $ | 919 | $ | 919 | |||
Taxes paid | 96 | 1 | |||||
Supplemental schedule of non-cash activity | |||||||
Stock issued for acquisition, net of issuance cost | — | (77,615 | ) | ||||
Accrued inventory purchases | 3,909 | 600 | |||||
Unrealized loss on AFS investments | (66 | ) | (1,834 | ) |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||||||||||
Bank deposits | $ | 61,605 | $ | 23 | $ | (10 | ) | $ | 61,618 | $ | 40,715 | $ | 19 | $ | — | $ | 40,734 | ||||||||||||||
Corporate bonds | 32,237 | 2 | (17 | ) | 32,222 | 11,031 | — | (5 | ) | 11,026 | |||||||||||||||||||||
Commercial paper | 23,328 | 1 | (5 | ) | 23,324 | 33,074 | 2 | (9 | ) | 33,067 | |||||||||||||||||||||
Agency bonds | — | — | — | — | 7,294 | 1 | — | 7,295 | |||||||||||||||||||||||
U.S Government Bonds | 11,020 | — | (6 | ) | 11,014 | 7,508 | — | (1 | ) | 7,507 | |||||||||||||||||||||
Municipal Bonds | 18,143 | 2 | (1 | ) | 18,144 | 19,624 | — | (11 | ) | 19,613 | |||||||||||||||||||||
Corporate equity securities | 300 | 2,111 | — | 2,411 | 1,512 | 1,542 | — | 3,054 | |||||||||||||||||||||||
$ | 146,633 | $ | 2,139 | $ | (39 | ) | $ | 148,733 | $ | 120,758 | $ | 1,564 | $ | (26 | ) | $ | 122,296 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Indefinite lived intangible assets | |||||||
IPR&D | $ | 12,246 | $ | 12,246 | |||
Goodwill | 72,207 | 72,207 | |||||
Definite lived intangible assets | |||||||
Complete technology | 182,577 | 182,577 | |||||
Less: Accumulated amortization | (15,104 | ) | (12,792 | ) | |||
Trade name | 2,642 | 2,642 | |||||
Less: Accumulated amortization | (817 | ) | (784 | ) | |||
Customer relationships | 29,600 | 29,600 | |||||
Less: Accumulated amortization | (9,154 | ) | (8,784 | ) | |||
Total goodwill and other identifiable intangible assets, net | $ | 274,197 | $ | 276,912 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
CorMatrix | $ | 17,696 | $ | 17,696 | |||
Selexis | 8,602 | 8,602 | |||||
26,298 | 26,298 | ||||||
Less: accumulated amortization | (668 | ) | (477 | ) | |||
Total commercial license rights, net | $ | 25,630 | $ | 25,821 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Compensation | $ | 1,356 | $ | 2,603 | |||
Professional fees | 799 | 829 | |||||
Amounts owed to former licensees | 890 | 899 | |||||
Royalties owed to third parties | 989 | 942 | |||||
Other | 646 | 1,124 | |||||
Total accrued liabilities | $ | 4,680 | $ | 6,397 |
Three months ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Stock-based compensation expense as a component of: | |||||||
Research and development expenses | $ | 3,939 | $ | 1,585 | |||
General and administrative expenses | 2,106 | 2,533 | |||||
$ | 6,045 | $ | 4,118 |
Three months ended | |||
March 31, | |||
2017 | 2016 | ||
Risk-free interest rate | 2.1% | 1.5% | |
Dividend yield | — | — | |
Expected volatility | 47% | 50% | |
Expected term | 6.9 | 6.6 |
Three months ended | |||||
March 31, | |||||
2017 | 2016 | ||||
Weighted average shares outstanding: | 20,937,627 | 20,707,926 | |||
Dilutive potential common shares: | |||||
Restricted stock | 185,745 | 66,736 | |||
Stock options | 954,509 | 759,581 | |||
2019 Convertible Senior Notes | 941,308 | 749,736 | |||
Shares used to compute diluted income per share | 23,019,189 | 22,283,979 | |||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 3,711,067 | 3,493,425 | |||
March 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Short-term investments(1) | $ | 2,410 | $ | 146,323 | $ | — | $ | 148,733 | $ | 3,054 | $ | 119,242 | $ | — | $ | 122,296 | ||||||||||||||||
Note receivable Viking (2) | — | — | 3,207 | 3,207 | — | — | 3,207 | 3,207 | ||||||||||||||||||||||||
Investment in warrants (3) | 760 | — | — | 760 | 684 | — | — | 684 | ||||||||||||||||||||||||
Total assets | $ | 3,170 | $ | 146,323 | $ | 3,207 | $ | 152,700 | $ | 3,738 | $ | 119,242 | $ | 3,207 | $ | 126,187 | ||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Current contingent liabilities-CyDex (4) | $ | — | $ | — | $ | 111 | $ | 111 | $ | — | $ | — | $ | 101 | $ | 101 | ||||||||||||||||
Long-term contingent liabilities-CyDex (4) | — | — | 1,503 | 1,503 | — | — | 1,503 | 1,503 | ||||||||||||||||||||||||
Long-term contingent liabilities-Metabasis (5) | — | 1,532 | — | 1,532 | — | 1,413 | — | 1,413 | ||||||||||||||||||||||||
Liability for amounts owed to former licensees(6) | 362 | — | — | 362 | 371 | — | — | 371 | ||||||||||||||||||||||||
Total liabilities | $ | 362 | $ | 1,532 | $ | 1,614 | $ | 3,508 | $ | 371 | $ | 1,413 | $ | 1,604 | $ | 3,388 |
(1) | Investments in equity securities, which the Company received as a result of event-based and upfront payments from licensees, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. Short-term investments in marketable securities with maturities greater than 90 days are classified as level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
(2) | The fair value of the convertible note receivable from Viking was determined using a probability weighted option pricing model using a lattice methodology. The fair value is subjective and is affected by certain significant input to the valuation model such as the estimated volatility of the common stock, which was estimated to be 75% at March 31, 2017. Changes in these assumptions may materially affect the fair value estimate. |
(3) | Investment in warrants, which the Company received as a result of Viking’s partial repayment of the Viking note receivable and the Company’s purchase of Viking common stock and warrants in April 2016, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. The change of the fair value is recorded in the other income or expenses in the Company's condensed consolidated statement of operations. |
(4) | The fair value of the liabilities for CyDex contingent liabilities were determined based on the income approach. To the extent the estimated future income may vary significantly given the long-term nature of the estimate, the Company utilizes a Monte Carlo model. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s estimates of timing and probability of achievement of certain revenue thresholds and developmental and regulatory milestones which may be achieved and affect amounts owed to former license holders. Changes in these assumptions can materially affect the fair value estimate. |
(5) | The liability for CVRs for Metabasis are determined using quoted prices in a market that is not active for the underlying CVR. |
(6) | The liability for amounts owed to former licensees are determined using quoted market prices in active markets for the underlying investment received from a partner, a portion of which is owed to former licensees. |
March 31, 2017 | December 31, 2016 | ||
Revenue volatility | 25% | 25% | |
Average probability of commercialization | 12.5% | 12.5% | |
Market price of risk | 0.03 | 0.03 | |
Credit rating | BB | BB | |
Equity risk premium | 6% | 6% |
March 31, 2017 | December 31, 2016 | ||||||
2019 Convertible Senior Notes | |||||||
Principal amount outstanding | $ | 245,000 | $ | 245,000 | |||
Unamortized discount | (29,252 | ) | (32,090 | ) | |||
Total current portion of notes payable | $ | 215,748 | $ | 212,910 |
Stock Options | Restricted Stock Awards | ||||||||||||
Shares | Weighted- Average Exercise Price | Shares | Weighted- Average Grant Date Fair Value | ||||||||||
Balance as of December 31, 2016 | 1,754,275 | $ | 42.12 | 308,700 | $ | 86.61 | |||||||
Granted | 180,765 | 100.81 | 64,155 | 100.91 | |||||||||
Exercised | (29,412 | ) | 17.42 | (96,744 | ) | 79.68 | |||||||
Forfeited | — | — | (300 | ) | 97.92 | ||||||||
Balance as of March 31, 2017 | 1,905,628 | $ | 48.07 | 275,811 | $ | 92.36 |
ITEM 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
• | Novartis reported first quarter 2017 net sales of Promacta/Revolade (eltrombopag) of $175 million, a $44 million or 34% increase over the same period in 2016. |
• | Novartis reported Revolade (eltrombopag) was approved in Canada for the treatment of pediatric (≥1 years to <18 years) chronic immune thrombocytopenia purpura to increase platelet counts in patients who have had an insufficient response to corticosteroids or immunoglobulins. |
• | Novartis announced the publication of a study conducted by the National Institutes of Health demonstrating that 58% of patients with treatment-naïve severe aplastic anemia achieved complete response at six months when treated with eltrombopag at the initiation of and concurrent with standard immunosuppressive treatment. The data are published in the latest issue of The New England Journal of Medicine. |
• | On April 26, 2017, Amgen reported first quarter 2017 net sales of Kyprolis (carfilzomib) of $190 million, a $36 million or 23% increase over the same period in 2016. |
• | On February 28, 2017, Amgen announced positive results from a planned overall survival (OS) interim analysis of the Phase 3 head-to-head ENDEAVOR trial. The study met the key secondary endpoint of OS, demonstrating that patients with relapsed or refractory multiple myeloma treated with Kyprolis (carfilzomib) and dexamethasone (Kd) lived 7.6 |
• | On March 1, 2017, Amgen announced that new data from the Kyprolis (carfilzomib) clinical development program would be presented at the 16th International Myeloma Workshop, March 1-4, 2017, in New Delhi. |
• | Melinta Therapeutics announced that the new drug applications (NDAs) for IV and oral Baxdela™ (delafloxacin) for the treatment of patients with acute bacterial skin and skin structure infections (ABSSSI) were accepted for filing by the Food and Drug Administration (FDA) and were granted a Prescription Drug User Fee Act (PDUFA) date of June 19, 2017. Additionally, Melinta announced that the FDA does not plan to hold an Advisory Committee meeting for the NDAs. If approved, Ligand is entitled to receive a 2.5% royalty on net sales of the IV formulation of Baxdela and a $1.5 million approval milestone payment. |
• | Melinta Therapeutics announced signing a development and commercialization agreement with Menarini Group, granting Menarini exclusive rights to commercialize delafloxacin under its own brands in 68 countries in Europe, Asia-Pacific including China, South Korea and Australia (excluding Japan), and the Commonwealth of Independent States including Russia. |
• | Retrophin announced plans to initiate a single Phase 3 clinical trial to enable an NDA filing for sparsentan for the treatment of focal segmental glomerulosclerosis. The trial will include an interim analysis of proteinuria as a surrogate endpoint to serve as the basis for an NDA filing for Subpart H accelerated approval of sparsentan. Retrophin expects to initiate the trial in the second half of 2017. |
• | Sage Therapeutics presented brexanolone data at the American Academy of Neurology 2017 annual meeting. |
• | Aldeyra provided an update on its Phase 3 clinical program of ADX-102 in noninfectious anterior uveitis and anticipates beginning the Phase 3 trial in the second quarter of 2017. |
• | Aldeyra announced the last patient had completed dosing in Aldeyra's multicenter, double-blind, randomized Phase 2b clinical trial of ADX-102 in allergic conjunctivitis. |
• | Biocad announced receiving marketing authorization from the Ministry of Health of the Russian Federation for its interferon beta-1a biosimilar of Merck’s Rebif®. |
• | Merck announced it stopped the Phase 2/3 EPOCH study evaluating verubecestat in people with mild-to-moderate Alzheimer’s disease due to the conclusion that the efficacy endpoint could not be achieved. No safety concerns were noted. Results from EPOCH will be analyzed and presented at an upcoming scientific meeting. The external Data Monitoring Committee recommended that the ongoing Phase 3 APECS study, which is evaluating verubecestat in people with prodromal Alzheimer’s disease, continue unchanged. Results from the APECS study are expected in February 2019. |
• | Novartis announced that it had exercised an option to in-license ECF843 (Lubricin) for ophthalmic indications from Lubris Biopharma. Ligand acquired economic rights to the Lubricin program from Selexis, SA in 2015. |
• | Opthea Limited announced positive results from its Phase 1/2a clinical trial of OPT-302 for wet age-related macular degeneration (wet AMD). Opthea is planning to initiate a Phase 2b trial in wet AMD and a Phase 2a trial in diabetic macular edema in the second half of 2017. |
• | Viking Therapeutics announced positive initial results from a proof-of-concept study of VK2809 in an in vivo model of glycogen storage disease 1a (GSD 1a) and announced funding of initial clinical development of VK2809 for treatment of GSD 1a with plans to file an investigational new drug (IND) application in the second half of 2017. |
• | Janssen filed an IND application for an antibody discovered using Ligand’s OmniAb technology. The IND filing resulted in a $1 million milestone payment to Ligand. Janssen has a royalty-free license to the OmniAb technology (entered into with OMT in October of 2013), but will potentially pay Ligand further development and commercial milestones upon clinical success and regulatory approval of any therapeutic developed using the OmniAb technology. |
• | Marinus Pharmaceuticals presented Phase 1 clinical data showing the safety and tolerability of ganaxolone IV at the 6th London-Innsbruck Colloquium on Status Epilepticus and Acute Seizures. |
• | Merck KGaA announced it licensed rights to develop Captisol-enabled VX-970 from Vertex Pharmaceuticals. Economic terms of the original agreement between Ligand and Vertex remained unchanged. |
• | XTL Biopharmaceuticals announced the receipt of additional preclinical data regarding the role of hCDR1 as a potential treatment for Sjögren's syndrome from Prof. Edna Mozes of The Weizmann Institute of Science and the developer of hCDR1. |
• | Ligand announced a worldwide platform license agreement with bluebird bio, Inc. Under the license, bluebird will be able to use the OmniRat®, OmniMouse® and OmniFlic® platforms to discover fully human mono- and bispecific antibodies and antibody fragments. Ligand is eligible to receive annual platform access payments, development milestone payments |
• | Ligand announced an expansion of its license with Sermonix Pharmaceuticals to include worldwide rights to develop and commercialize oral lasofoxifene. Ligand originally licensed U.S. rights to oral lasofoxifene to Sermonix in February of 2015, and has now expanded the agreement to include the rest of the world. Ligand is entitled to commercial milestones and royalties on net sales ranging from 6-10% upon commercialization of oral lasofoxifene. |
• | Ligand announced a commercial license and supply agreement with Marinus Pharmaceuticals granting rights to use Captisol in the formulation of IV ganaxolone. Ligand is entitled to milestone payments, royalties and revenue from Captisol material sales related to IV ganaxolone. |
• | Ligand entered into a Captisol Clinical Use/Supply Agreement with Eisai. |
• | Ligand announced the completion of enrollment in the Company’s Phase 2 clinical trial with its novel, small-molecule GRA program (LGD-6972) for the treatment of type 2 diabetes mellitus. The Company expects to report topline results in September 2017. |
(Dollars in thousands) | Q1 2017 | Q1 2016 | Change | % Change | |||||||||||
Royalties | $ | 24,230 | $ | 14,390 | $ | 9,840 | 68 | % | |||||||
Material sales | 1,121 | 5,341 | (4,220 | ) | (79 | )% | |||||||||
License fees, milestones and other revenue | 3,916 | 9,917 | (6,001 | ) | (61 | )% | |||||||||
Total revenue | $ | 29,267 | $ | 29,648 | $ | (381 | ) | (1 | )% |
(Dollars in thousands) | Q1 2017 | Q1 2016 | Change | ||||||||
Costs of sales | $ | 341 | $ | 955 | $ | (614 | ) | ||||
Amortization of intangibles | 2,715 | 2,524 | 191 | ||||||||
Research and development | 8,673 | 4,004 | 4,669 | ||||||||
General and administrative | 7,322 | 7,069 | 253 | ||||||||
Total operating costs and expenses | $ | 19,051 | $ | 14,552 | $ | 4,499 |
(Dollars in thousands) | Q1 2017 | Q1 2016 | Change | ||||||||
Interest expense, net | $ | (2,941 | ) | $ | (3,005 | ) | $ | 64 | |||
Increase in contingent liabilities | (140 | ) | (1,306 | ) | 1,166 | ||||||
Loss from Viking | (1,083 | ) | (1,605 | ) | 522 | ||||||
Other income, net | 141 | 391 | (250 | ) | |||||||
Total other expense, net | $ | (4,023 | ) | $ | (5,525 | ) | $ | 1,502 |
(Dollars in thousands) | Q1 2017 | Q1 2016 | Change | ||||||||
Income before income taxes | $ | 6,193 | $ | 9,571 | $ | (3,378 | ) | ||||
Income tax expense | (1,114 | ) | (3,694 | ) | 2,580 | ||||||
Income from operations | $ | 5,079 | $ | 5,877 | $ | (798 | ) | ||||
Effective tax rate | 18.0 | % | 38.6 | % |
(Dollars in thousands) | Q1 2017 | Q1 2016 | Change | ||||||||
Net cash provided by (used in): | |||||||||||
Operating activities | 24,222 | 13,114 | $ | 11,108 | |||||||
Investing activities | (30,666 | ) | (79,760 | ) | 49,094 | ||||||
Financing activities | (1,667 | ) | 511 | (2,178 | ) | ||||||
Net decrease in cash and cash equivalents | $ | (8,111 | ) | $ | (66,135 | ) | $ | (2,178 | ) |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
• | engagement of additional independent third party tax experts to assist or review in the tax accounting for non-routine, complex transactions or provide any acceptable alternative practice on the same transaction |
• | additional training for staff involved in the tax accounting for non-routine, complex transactions |
PART II. | OTHER INFORMATION |
ITEM 1A. | RISK FACTORS |
ITEM 6. | EXHIBITS |
Date: | May 9, 2017 | By: | /s/ Matthew Korenberg | |
Matthew Korenberg | ||||
Vice President, Finance and Chief Financial Officer | ||||
Duly Authorized Officer and Principal Financial Officer |
Exhibit Number | Description |
10.1 | Third Amendment to Loan and Security Agreement with Viking |
31.1 | Certification by Principal Executive Officer, Pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification by Principal Financial Officer, Pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certifications by Principal Executive Officer and Principal Financial Officer, 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 |
Title: | Vice President, Finance and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Ligand Pharmaceuticals Incorporated; |
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 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 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. |
/s/ John L. Higgins |
John L. Higgins |
Chief Executive Officer |
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Ligand Pharmaceuticals Incorporated; |
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 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 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. |
/s/ Matthew Korenberg |
Matthew Korenberg |
Vice President, Finance and Chief Financial Officer |
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. | |||
Date: | May 9, 2017 | /s/ John L. Higgins | ||
John L. Higgins Chief Executive Officer (Principal Executive Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. | |||
Date: | May 9, 2017 | /s/ Matthew Korenberg | ||
Matthew Korenberg Vice President, Finance and Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | LIGAND PHARMACEUTICALS INC | |
Entity Central Index Key | 0000886163 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 20,996,049 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 33,333,333 | 33,333,333 |
Common stock, shares issued | 20,996,049 | 20,909,301 |
Common stock, shares outstanding | 20,996,049 | 20,909,301 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income: | $ 5,079 | $ 6,608 |
Unrealized net gain on available-for-sale securities, net of tax | (66) | (1,098) |
Less: Reclassification of net realized (gain)/loss included in net income, net of tax of $202 | 428 | (236) |
Comprehensive income | $ 5,441 | $ 5,274 |
Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited) (Parenthetical) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Statement of Comprehensive Income [Abstract] | |
Reclassification of net realized (gain)/loss included in net income, tax | $ 202 |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Operating activities | ||
Net income | $ 5,079 | $ 6,608 |
Less: income from discontinued operations | 0 | 731 |
Income from continuing operations | 5,079 | 5,877 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Non-cash change in estimated fair value of contingent liabilities | 140 | 1,306 |
Realized gain on sale of short-term investment | (66) | (406) |
Depreciation and amortization | 2,979 | 2,575 |
Amortization of premium (discount) on investments, net | (46) | 320 |
Amortization of debt discount and issuance fees | 2,838 | 2,668 |
Stock-based compensation | 6,045 | 4,118 |
Deferred income taxes | 1,018 | 4,101 |
Change in fair value of the Viking convertible debt receivable and warrants | (76) | 15 |
Loss from Viking | 1,083 | 1,605 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 7,643 | (5,604) |
Inventory | (1,197) | 853 |
Other current assets | 745 | 16 |
Accounts payable and accrued liabilities | (1,963) | (4,302) |
Other | 0 | (28) |
Net cash provided by operating activities | 24,222 | 13,114 |
Investing activities | ||
Payments to CVR holders and other contingency payments | (4,998) | (5,446) |
Purchases of property and equipment | (87) | (238) |
Cash paid for acquisition, net of cash acquired | 0 | (92,855) |
Purchase of short-term investments | (73,352) | (49,892) |
Proceeds from sale of short-term investments | 17,719 | 20,270 |
Proceeds from maturity of short-term investments | 30,052 | 48,401 |
Net cash used in investing activities | (30,666) | (79,760) |
Financing activities | ||
Net proceeds from stock option exercises and ESPP | 355 | 1,013 |
Taxes paid related to net share settlement of equity awards | (2,022) | 0 |
Share repurchase | 0 | (502) |
Net cash (used in) provided by financing activities | (1,667) | 511 |
Net decrease in cash and cash equivalents | (8,111) | (66,135) |
Cash and cash equivalents at beginning of period | 18,752 | 97,428 |
Cash and cash equivalents at end of period | 10,641 | 31,293 |
Supplemental disclosure of cash flow information | ||
Interest paid | 919 | 919 |
Taxes paid | 96 | 1 |
Supplemental schedule of non-cash activity | ||
Stock issued for acquisition, net of issuance cost | 0 | (77,615) |
Accrued inventory purchases | 3,909 | 600 |
Unrealized loss on AFS investments | $ (66) | $ (1,834) |
Basis of Presentation and Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The Company’s accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company and its subsidiaries, have been included. Interim financial results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and notes therein included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed on February 28, 2017. The accompanying condensed consolidated financial statements include Ligand and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation Upon the occurrence of certain circumstances, holders of the 2019 Convertible Senior Notes may redeem all or a portion of their notes, which may require the use of a substantial amount of cash. At March 31, 2017, we had a working capital deficit of $52.3 million, which includes the 2019 Convertible Senior Notes that are currently redeemable as of March 31, 2017 but excludes another $26.9 million that is classified as mezzanine equity. As noted in Note 3, the debt may change from current to non-current period over period, primarily as a result of changes in the Company’s stock price. Management believes that it is remote that holders of the notes would choose to convert their notes early because the fair value of the security that a noteholder can currently realize in an active market is greater than the conversion value the noteholder would realize upon early conversion. In the unlikely event that all the debt was converted, we have three business days following a 50 trading day observation period from the conversion date to pay the principal in cash. We have positive operating income and positive cash flow from operations since December 31, 2013 and, accordingly, while there can be no assurance, we believe we have the ability to raise additional capital through an S-3 registration or via alternative financing arrangements such as convertible or straight debt. Significant Accounting Policies The Company describes its significant accounting policies in Note 1 to the financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2016. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results may differ from those estimates. Accounting Pronouncements Recently Adopted In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted ASU 2016-09 in the first quarter of fiscal year 2017. As a result of the adoption, the Company recorded a $17.9 million cumulative-effect adjustment to retained earnings for the recognition of excess tax benefits generated by the settlement of stock-based awards in prior periods and a discrete income tax benefit of $0.9 million to the income tax provision for excess tax benefits generated by the settlement, in the first quarter of fiscal year 2017, of stock-based awards. As allowed by the new guidance, the Company has elected to account for equity award forfeitures as they occur, and recorded a $0.3 million cumulative-effect adjustment to retained earnings for this accounting change in prior periods. Recent Accounting Pronouncements In May 2014, the FASB issued new guidance related to revenue recognition, ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASC 606 defines a five-step approach for recognizing revenue, which may require a company to use more judgment and make more estimates than under the current guidance. Two methods of adoption are permitted: (a) full retrospective adoption, meaning the standard is applied to all periods presented; or (b) modified retrospective adoption, meaning the cumulative effect of applying the new guidance is recognized at the date of initial application as an adjustment to the opening retained earnings balance. We are undertaking a substantial effort to be ready for adoption of ASC 606. Some of our contracts have distinct terms which will need to be evaluated separately. Although we have not completed our assessment and are in the process of reviewing our contracts, we anticipate that this standard will have a material impact on our consolidated financial statements by accelerating the timing of revenue recognition for revenues related to royalties, and potentially certain contingent milestone based payments. We intend to adopt ASC 606 starting as of January 1, 2018 using the modified retrospective method. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, and early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for us in the first quarter of 2018. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, which changes the definition of a business to assist entities with evaluating when a set of assets acquired or disposed of should be considered a business. The new standard requires an entity to evaluate if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set would not be considered a business. The new standard also requires a business to include at least one substantive process and narrows the definition of outputs. We expect that these provisions will reduce the number of transactions that will be considered a business. The new standard is effective for interim and annual periods beginning on January 1, 2018, and may be adopted earlier. The standard would be applied prospectively to any transaction occurring on or after the adoption date. We are currently evaluating the impact that this new standard will have on our consolidated financial statements. Short-term Investments The Company's investments consist of the following at March 31, 2017 and December 31, 2016 (in thousands):
Inventory Inventory, which consists of finished goods, is stated at the lower of cost or market value. The Company determines cost using the first-in, first-out method. Goodwill and Other Identifiable Intangible Assets Goodwill and other identifiable intangible assets consist of the following (in thousands):
Commercial License Rights Commercial License Rights consist of the following (in thousands):
Equity-Method Investment The Company has approximately 26.3% equity ownership in Viking as of March 31, 2017. The Company records its investment in Viking under the equity method of accounting. The investment is subsequently adjusted for the Company’s share of Viking's operating results, and if applicable, cash contributions and distributions. As of March 31, 2017 and December 31, 2016, the carrying amounts of the Company's investment in Viking were $7.3 million and $8.3 million, respectively. The market value of the Company's equity investment in Viking was $9.2 million as of March 31, 2017. The Company also has outstanding warrants to purchase 1.5 million shares of Viking's common stock at an exercise price of $1.50 per share at March 31, 2017. The Company recorded the warrants at the fair value of $0.8 million and $0.7 million at March 31, 2017 and December 31, 2016, respectively. See Note 2 Fair Value Measurement for details. In addition, the Company currently has an active MLA with Viking, under which the Company licensed Viking the rights to five programs. The Company is entitled to receive contingent event-based payments and royalties from Viking based on the progression and eventual sale of any products being developed by Viking under the MLA. No such payment was earned or recognized during three months ended March 31, 2017 and 2016. The Company also has a convertible note receivable from Viking under the LSA. Under the terms of the LSA, the principal amount outstanding accrues interest at a fixed rate of 2.5% with maturity date of May 21, 2017. On May 8, 2017, the Company entered into an amendment to the LSA, which amends to, among other things, (i) extend the maturity date of the outstanding convertible notes receivable under the LSA from May 21, 2017 to May 21, 2018 and (ii) cause Viking to pay to the Company, no later than July 15, 2017, a cash amount of $0.2 million, which payment shall reduce first the accrued and unpaid interest and second the unpaid principal amount on the Viking Note by $0.50 for each $1.00 of value. The Company elected to record the convertible notes at fair value, which was $3.2 million at March 31, 2017 and December 31, 2016. See Note 2 Fair Value Measurement for details. Accrued Liabilities Accrued liabilities consist of the following (in thousands):
Stock-Based Compensation Stock-based compensation expense for awards to employees and non-employee directors is recognized on a straight-line basis over the vesting period until the last tranche vests. The following table summarizes stock-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands):
The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:
Lease Obligations The Company describes its operating lease obligations in Note 5 to the financial statements in Item 8 of its Annual Report on Form 10-K for the year ended December 31, 2016. There were no significant changes in the Company's operating lease commitments during the first three months of 2017. Convertible Debt In August 2014, the Company completed a $245.0 million offering of 2019 Convertible Senior Notes, which bear interest at 0.75%. The Company accounted for the 2019 Convertible Senior Notes by separating the liability and equity components of the instrument in a manner that reflects the Company's nonconvertible debt borrowing rate. As a result, the Company assigned a value to the debt component of the 2019 Convertible Senior Notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in the Company recording the debt instrument at a discount. The Company is amortizing the debt discount over the life of the 2019 Convertible Senior Notes as additional non-cash interest expense utilizing the effective interest method. Upon the occurrence of certain circumstances, holders of the 2019 Convertible Senior Notes may redeem all or a portion of their notes, which may require the use of a substantial amount of cash. At March 31, 2017, we had a working capital deficit of $52.3 million, which includes the 2019 Convertible Senior notes that are currently redeemable as of March 31, 2017 but excludes another $26.9 million that is classified as mezzanine equity. As noted in Note 3, the debt may change from current to non-current period over period, primarily as a result of changes in the Company’s stock price. Management believes that it is remote that holders of the notes would choose to convert their notes early because the fair value of the security that a noteholder can currently realize in an active market is greater than the conversion value the noteholder would realize upon early conversion. In the unlikely event that all the debt was converted, we have three business days following a 50 trading day observation period from the convert date to pay the principal in cash. We have positive operating income and positive cash flow from operations since December 31, 2013 and, accordingly, while there can be no assurance, we believe we have the ability to raise additional capital through an S-3 registration or via alternative financing arrangements such as convertible or straight debt. Income Per Share Basic income per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable under 2019 Convertible Senior Notes, stock options and restricted stock. The 2019 Convertible Senior Notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the notes. Potentially dilutive common shares from stock options and restricted stock are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of stock options and the average amount of unrecognized compensation expense for restricted stock are assumed to be used to repurchase shares. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded. The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The following table presents the Company's hierarchy for assets and liabilities measured at fair value on a recurring basis as of March 31, 2017 (in thousands).
The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex:
There was no significant change in estimated fair value of the Viking note receivable and contingent consideration during the three months ended March 31, 2017. Other Fair Value Measurements 2019 Convertible Senior Notes In August 2014, the Company issued $245.0 million aggregate principal amount of its 2019 Convertible Senior Notes. The Company uses a quoted rate in a market that is not active, which is classified as a Level 2 input, to estimate the current fair value of its 2019 Convertible Senior Notes. The estimated fair value of the 2019 Senior Convertible Notes was $365.1 million as of March 31, 2017. The carrying value of the notes does not reflect the market rate. See Note 3 Convertible Senior Notes for additional information. Viking The Company records its investment in Viking under the equity method of accounting. See Note 1 Significant Accounting Policies for the fair value of the Company's equity investment in Viking. |
Convertible Senior Notes |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Senior Notes | Convertible Senior Notes As of March 31, 2017, the Company had outstanding $245.0 million principal amount of 0.75% Convertible Senior Notes due August 15, 2019. 0.75% Convertible Senior Notes Due 2019 In August 2014, the Company issued $245.0 million aggregate principal amount of its 2019 Convertible Senior Notes, resulting in net proceeds of $239.3 million. The 2019 Convertible Senior Notes are convertible into common stock at an initial conversion rate of 13.3251 shares per $1,000 principal amount of convertible notes, subject to adjustment upon certain events, which is equivalent to an initial conversion price of approximately $75.05 per share of common stock. The notes bear cash interest at a rate of 0.75% per year, payable semi-annually. Holders of the 2019 Convertible Senior Notes may convert the notes at any time prior to the close of business on the business day immediately preceding May 15, 2019, under any of the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter) commencing after December 31, 2014, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of the Company's common stock on such trading day is greater than 130% of the conversion price on such trading day; (2) during the five business day period immediately following any ten consecutive trading day period, in which the trading price per $1,000 principal amount of notes was less than 98% of the product of the last reported sale price of the Company's common stock on such trading day and the conversion rate on each such trading day; or (3) upon the occurrence of certain specified corporate events as specified in the indenture governing the notes. As of March 31, 2017, the Company's last reported sale price has exceeded the 130% threshold described above and accordingly the Convertible Notes have been classified as a current liability as of March 31, 2017. As a result, the related unamortized discount of $26.9 million was classified as temporary equity component of currently redeemable convertible notes on the Company's Condensed Consolidated Balance Sheet. The determination of whether or not the Convertible Notes are convertible as described above is made each quarter until maturity, conversion or repurchase. It is possible that the Convertible Notes may not be convertible in future periods, in which case the Convertible Notes would be classified as long-term debt, unless one of the other conversion events described above were to occur. On or after May 15, 2019 until the close of business on the second scheduled trading day immediately preceding August 15, 2019, holders of the notes may convert all or a portion of their notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company must deliver cash to settle the principal and may deliver cash or shares of common stock, at its option, to settle any premium due upon conversion. The 2019 Convertible Senior Notes will have a dilutive effect to the extent the average market price per share of common stock for a given reporting period exceeds the conversion price of $75.05 per share. As of March 31, 2017, the “if-converted value” exceeded the principal amount of the 2019 Convertible Senior Notes by $100.5 million. The following table summarizes information about the equity and liability components of the 2019 Convertible Senior Notes (in thousands).
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Income Tax |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Income Tax The Company’s effective tax rate may vary from the U.S. federal statutory tax rate due to the change in the mix of earnings in various state jurisdictions with different statutory rates, benefits related to tax credits, and the tax impact of non-deductible expenses and other permanent differences between income before income taxes and taxable income. The effective tax rate for the three months ended March 31, 2017 was 18%. The variance from the U.S. federal statutory tax rate of 35% was primarily attributable to tax deductions related to stock award activities which were recorded as discrete items in the quarter. The effective tax rate for the three months ended March 31, 2016 was 39% and is different from the federal statutory rate primarily as a result of significant permanent book-to-tax differences and state taxes. The permanent differences include non-taxable contingent consideration income (expense) recorded related to the change in market value of contingent liabilities. |
Stockholders' Equity |
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Stockholders' Equity | Stockholders’ Equity The Company grants options and awards to employees and non-employee directors pursuant to a stockholder approved stock incentive plan, which is described in further detail in Note 8, Stockholders' Equity, of Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The following is a summary of the Company’s stock option and restricted stock activity and related information:
As of March 31, 2017, outstanding options to purchase 1.3 million shares were exercisable with a weighted average exercise price per share of $33.06. Employee Stock Purchase Plan The price at which common stock is purchased under the Amended ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. During the three months ended March 31, 2017, approximately 829 shares were issued under the Amended ESPP. As of March 31, 2017, 70,297 shares were available for future purchases under the Amended ESPP. |
Litigation |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation The Company records an estimate of a loss when the loss is considered probable and estimable. Where a liability is probable and there is a range of estimated loss and no amount in the range is more likely than any other number in the range, the Company records the minimum estimated liability related to the claim in accordance with FASB ASC Topic 450 Contingencies. As additional information becomes available, the Company assesses the potential liability related to its pending litigation and revises its estimates. Revisions in the Company's estimates of potential liability could materially impact its results of operations. Securities Litigation In 2012, a federal securities class action and shareholder derivative lawsuit was filed in Pennsylvania alleging that the Company and its Chief Executive Officer ("CEO") assisted various breaches of fiduciary duties based on the Company’s purchase of a licensing interest in a development-stage pharmaceutical program from the Genaera Liquidating Trust in 2010 and the Company’s subsequent sale of half of its interest in the transaction to Biotechnology Value Fund, Inc. Plaintiff filed a second amended complaint in February 2015, which the Company moved to dismiss in March 2015. The district court granted the motion to dismiss on November 11, 2015. The plaintiff has appealed that ruling to the Third Circuit. The Company intends to continue to vigorously defend against the claims against the Company and its CEO. The outcome of the matter is not presently determinable. Class Action Lawsuit In November 2016, a putative shareholder class action lawsuit was filed in the United States District Court for the Southern District of California against the Company, its chief executive officer and chief financial officer. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities between November 9, 2015 and November 14, 2016, inclusive. The complaint’s allegations relate generally to the Company’s November 2016 restatement of certain prior period financial statements. In March 2017, the Court appointed a lead plaintiff and lead counsel for lead plaintiff and the class. The lead plaintiff’s amended complaint, or election to designate the previously filed complaint as the operative complaint, is due May 15, 2017, and the Company’s response to the complaint is due thereafter. No trial date has been set. The Company believes that the lawsuit is without merit and intends to vigorously defend against the lawsuit. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of the Company and its subsidiaries, have been included. Interim financial results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and notes therein included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed on February 28, 2017. The accompanying condensed consolidated financial statements include Ligand and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation Upon the occurrence of certain circumstances, holders of the 2019 Convertible Senior Notes may redeem all or a portion of their notes, which may require the use of a substantial amount of cash. At March 31, 2017, we had a working capital deficit of $52.3 million, which includes the 2019 Convertible Senior Notes that are currently redeemable as of March 31, 2017 but excludes another $26.9 million that is classified as mezzanine equity. As noted in Note 3, the debt may change from current to non-current period over period, primarily as a result of changes in the Company’s stock price. Management believes that it is remote that holders of the notes would choose to convert their notes early because the fair value of the security that a noteholder can currently realize in an active market is greater than the conversion value the noteholder would realize upon early conversion. In the unlikely event that all the debt was converted, we have three business days following a 50 trading day observation period from the conversion date to pay the principal in cash. We have positive operating income and positive cash flow from operations since December 31, 2013 and, accordingly, while there can be no assurance, we believe we have the ability to raise additional capital through an S-3 registration or via alternative financing arrangements such as convertible or straight debt. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results may differ from those estimates. |
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted ASU 2016-09 in the first quarter of fiscal year 2017. As a result of the adoption, the Company recorded a $17.9 million cumulative-effect adjustment to retained earnings for the recognition of excess tax benefits generated by the settlement of stock-based awards in prior periods and a discrete income tax benefit of $0.9 million to the income tax provision for excess tax benefits generated by the settlement, in the first quarter of fiscal year 2017, of stock-based awards. As allowed by the new guidance, the Company has elected to account for equity award forfeitures as they occur, and recorded a $0.3 million cumulative-effect adjustment to retained earnings for this accounting change in prior periods. Recent Accounting Pronouncements In May 2014, the FASB issued new guidance related to revenue recognition, ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASC 606 defines a five-step approach for recognizing revenue, which may require a company to use more judgment and make more estimates than under the current guidance. Two methods of adoption are permitted: (a) full retrospective adoption, meaning the standard is applied to all periods presented; or (b) modified retrospective adoption, meaning the cumulative effect of applying the new guidance is recognized at the date of initial application as an adjustment to the opening retained earnings balance. We are undertaking a substantial effort to be ready for adoption of ASC 606. Some of our contracts have distinct terms which will need to be evaluated separately. Although we have not completed our assessment and are in the process of reviewing our contracts, we anticipate that this standard will have a material impact on our consolidated financial statements by accelerating the timing of revenue recognition for revenues related to royalties, and potentially certain contingent milestone based payments. We intend to adopt ASC 606 starting as of January 1, 2018 using the modified retrospective method. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, and early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for us in the first quarter of 2018. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, which changes the definition of a business to assist entities with evaluating when a set of assets acquired or disposed of should be considered a business. The new standard requires an entity to evaluate if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set would not be considered a business. The new standard also requires a business to include at least one substantive process and narrows the definition of outputs. We expect that these provisions will reduce the number of transactions that will be considered a business. The new standard is effective for interim and annual periods beginning on January 1, 2018, and may be adopted earlier. The standard would be applied prospectively to any transaction occurring on or after the adoption date. We are currently evaluating the impact that this new standard will have on our consolidated financial statements. |
Inventory | Inventory Inventory, which consists of finished goods, is stated at the lower of cost or market value. The Company determines cost using the first-in, first-out method. |
Equity Method Investments | Equity-Method Investment The Company has approximately 26.3% equity ownership in Viking as of March 31, 2017. The Company records its investment in Viking under the equity method of accounting. The investment is subsequently adjusted for the Company’s share of Viking's operating results, and if applicable, cash contributions and distributions. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense for awards to employees and non-employee directors is recognized on a straight-line basis over the vesting period until the last tranche vests. |
Convertible Debt | Convertible Debt In August 2014, the Company completed a $245.0 million offering of 2019 Convertible Senior Notes, which bear interest at 0.75%. The Company accounted for the 2019 Convertible Senior Notes by separating the liability and equity components of the instrument in a manner that reflects the Company's nonconvertible debt borrowing rate. As a result, the Company assigned a value to the debt component of the 2019 Convertible Senior Notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in the Company recording the debt instrument at a discount. The Company is amortizing the debt discount over the life of the 2019 Convertible Senior Notes as additional non-cash interest expense utilizing the effective interest method. |
Income Per Share | Income Per Share Basic income per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable under 2019 Convertible Senior Notes, stock options and restricted stock. The 2019 Convertible Senior Notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the notes. Potentially dilutive common shares from stock options and restricted stock are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of stock options and the average amount of unrecognized compensation expense for restricted stock are assumed to be used to repurchase shares. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded. |
Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of investment categories | The Company's investments consist of the following at March 31, 2017 and December 31, 2016 (in thousands):
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Summary of goodwill and other identifiable intangible assets | Goodwill and other identifiable intangible assets consist of the following (in thousands):
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Schedule of commercial license rights | Commercial License Rights consist of the following (in thousands):
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Summary of accrued liabilities | Accrued liabilities consist of the following (in thousands):
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Schedule for accounting for share-based compensation | The following table summarizes stock-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands):
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Summary of fair-value options awarded to employees and directors | The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:
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Summary of computation of basic and diluted net income (loss) per share | The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share:
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the assets and liabilities measured at fair value on recurring basis | The following table presents the Company's hierarchy for assets and liabilities measured at fair value on a recurring basis as of March 31, 2017 (in thousands).
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CyDex Acquisition | The following table represents significant unobservable inputs used in determining the fair value of contingent liabilities assumed in the acquisition of CyDex:
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Convertible Senior Notes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of carrying values and coupon rates on financing arrangements | The following table summarizes information about the equity and liability components of the 2019 Convertible Senior Notes (in thousands).
|
Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option plan activity | The following is a summary of the Company’s stock option and restricted stock activity and related information:
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Restricted stock activity | The following is a summary of the Company’s stock option and restricted stock activity and related information:
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Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) $ / shares in Units, shares in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017
USD ($)
program
$ / shares
shares
|
Dec. 31, 2016
USD ($)
|
May 08, 2017
USD ($)
|
Aug. 31, 2014
USD ($)
|
|
Property, Plant and Equipment [Line Items] | ||||
Working capital deficit | $ 52,300,000 | |||
Equity component of currently redeemable convertible notes | 26,948,000 | $ 29,563,000 | ||
Consecutive trading days | 50 days | |||
Discrete income tax benefit | 900,000 | |||
Investment in Viking | $ 7,262,000 | $ 8,345,000 | ||
Note Receivable, Interest and Principal Reduction per Dollar of Value | 0.50 | |||
2019 convertible senior notes | ||||
Property, Plant and Equipment [Line Items] | ||||
Principal amount outstanding | $ 245,000,000 | 245,000,000 | ||
2019 convertible senior notes | Senior Notes | ||||
Property, Plant and Equipment [Line Items] | ||||
Principal amount outstanding | $ 245,000,000.0 | |||
Interest rate (percent) | 0.75% | |||
Retained Earnings | Accounting Standards Update 2016-09 | ||||
Property, Plant and Equipment [Line Items] | ||||
Cumulative effect of new accounting principle in period of adoption | 17,900,000 | |||
Retained Earnings | Accounting Standards Update 2016-09, Forfeiture Rate Component | ||||
Property, Plant and Equipment [Line Items] | ||||
Cumulative effect of new accounting principle in period of adoption | 300,000 | |||
Recurring | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 152,700,000 | 126,187,000 | ||
Recurring | Investment in warrants | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 760,000 | 684,000 | ||
Recurring | Note receivable Viking Therapeutics, Inc. | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 3,207,000 | 3,207,000 | ||
Recurring | Fair Value, Inputs, Level 1 | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 3,170,000 | 3,738,000 | ||
Recurring | Fair Value, Inputs, Level 1 | Investment in warrants | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 760,000 | 684,000 | ||
Recurring | Fair Value, Inputs, Level 1 | Note receivable Viking Therapeutics, Inc. | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 0 | 0 | ||
Recurring | Fair Value, Inputs, Level 3 | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 3,207,000 | 3,207,000 | ||
Recurring | Fair Value, Inputs, Level 3 | Investment in warrants | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | 0 | 0 | ||
Recurring | Fair Value, Inputs, Level 3 | Note receivable Viking Therapeutics, Inc. | ||||
Property, Plant and Equipment [Line Items] | ||||
Assets, fair value | $ 3,207,000 | $ 3,207,000 | ||
Viking Therapeutics, Inc. | ||||
Property, Plant and Equipment [Line Items] | ||||
Equity method investment, ownership (percent) | 26.30% | |||
Market value of investment in Viking | $ 9,200,000 | |||
Outstanding warrants to purchase shares of Viking's common stock (shares) | shares | 1.5 | |||
Warrant exercise price (USD per share) | $ / shares | $ 1.50 | |||
Number of programs licensed to Viking | program | 5 | |||
Note receivable, stated interest rate (percent) | 2.50% | |||
Subsequent Event | Viking Therapeutics, Inc. | ||||
Property, Plant and Equipment [Line Items] | ||||
Note Receivable, Cash Repayment Due | $ 200,000 |
Basis of Presentation and Summary of Significant Accounting Policies (Investment Categories) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Summary of investment categories | ||
Amortized cost | $ 146,633 | $ 120,758 |
Gross unrealized gains | 2,139 | 1,564 |
Gross unrealized losses | (39) | (26) |
Estimated fair value | 148,733 | 122,296 |
Bank deposits | ||
Summary of investment categories | ||
Amortized cost | 61,605 | 40,715 |
Gross unrealized gains | 23 | 19 |
Gross unrealized losses | (10) | 0 |
Estimated fair value | 61,618 | 40,734 |
Corporate bonds | ||
Summary of investment categories | ||
Amortized cost | 32,237 | 11,031 |
Gross unrealized gains | 2 | 0 |
Gross unrealized losses | (17) | (5) |
Estimated fair value | 32,222 | 11,026 |
Commercial paper | ||
Summary of investment categories | ||
Amortized cost | 23,328 | 33,074 |
Gross unrealized gains | 1 | 2 |
Gross unrealized losses | (5) | (9) |
Estimated fair value | 23,324 | 33,067 |
Agency bonds | ||
Summary of investment categories | ||
Amortized cost | 0 | 7,294 |
Gross unrealized gains | 0 | 1 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 0 | 7,295 |
U.S Government Bonds | ||
Summary of investment categories | ||
Amortized cost | 11,020 | 7,508 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | (6) | (1) |
Estimated fair value | 11,014 | 7,507 |
Municipal Bonds | ||
Summary of investment categories | ||
Amortized cost | 18,143 | 19,624 |
Gross unrealized gains | 2 | 0 |
Gross unrealized losses | (1) | (11) |
Estimated fair value | 18,144 | 19,613 |
Corporate equity securities | ||
Summary of investment categories | ||
Amortized cost | 300 | 1,512 |
Gross unrealized gains | 2,111 | 1,542 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | $ 2,411 | $ 3,054 |
Basis of Presentation and Summary of Significant Accounting Policies (Goodwill and Other Identifiable Intangible Assets) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Goodwill | $ 72,207 | $ 72,207 |
Total goodwill and other identifiable intangible assets, net | 274,197 | 276,912 |
Complete technology | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 182,577 | 182,577 |
Less: Accumulated amortization | (15,104) | (12,792) |
Trade name | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 2,642 | 2,642 |
Less: Accumulated amortization | (817) | (784) |
Customer relationships | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 29,600 | 29,600 |
Less: Accumulated amortization | (9,154) | (8,784) |
Commercial license rights | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 26,298 | 26,298 |
Less: Accumulated amortization | (668) | (477) |
Total goodwill and other identifiable intangible assets, net | 25,630 | 25,821 |
Acquired in-process research and development | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Acquired in-process research and development | 12,246 | 12,246 |
CorMatrix | Commercial license rights | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | 17,696 | 17,696 |
Selexis | Commercial license rights | ||
Summary of Goodwill and Other Identifiable Intangible Assets | ||
Definite lived intangible assets | $ 8,602 | $ 8,602 |
Basis of Presentation and Summary of Significant Accounting Policies (Accrued Liabilities and Other Long-Term Liabilities) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Accrued Liabilities | ||
Compensation | $ 1,356 | $ 2,603 |
Professional fees | 799 | 829 |
Amounts owed to former licensees | 890 | 899 |
Royalties owed to third parties | 989 | 942 |
Other | 646 | 1,124 |
Total accrued liabilities | $ 4,680 | $ 6,397 |
Basis of Presentation and Summary of Significant Accounting Policies (Accounting for Share-Based Compensation) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Basis of Presentation [Line Items] | ||
Share-based compensation expense total | $ 6,045 | $ 4,118 |
Research and development expenses | ||
Basis of Presentation [Line Items] | ||
Share-based compensation expense total | 3,939 | 1,585 |
General and administrative expenses | ||
Basis of Presentation [Line Items] | ||
Share-based compensation expense total | $ 2,106 | $ 2,533 |
Basis of Presentation and Summary of Significant Accounting Policies (Fair Value Valuation Assumptions) (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Summary of fair-value options awarded to employees and directors | ||
Risk-free interest rate | 2.10% | 1.50% |
Dividend yield | 0.00% | 0.00% |
Expected volatility | 47.00% | 50.00% |
Expected term | 6 years 10 months 24 days | 6 years 7 months 6 days |
Basis of Presentation and Summary of Significant Accounting Policies (Earnings (Loss) Per Share) (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Summary of computation of basic and diluted net income (loss) per share | ||
Weighted average shares outstanding: | 20,937,627 | 20,707,926 |
Dilutive potential common shares: | ||
Restricted stock | 185,745 | 66,736 |
Stock options | 954,509 | 759,581 |
2019 convertible senior notes | 941,308 | 749,736 |
Shares used to compute diluted income per share | 23,019,189 | 22,283,979 |
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 3,711,067 | 3,493,425 |
Fair Value Measurements (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
Aug. 31, 2014 |
|
2019 convertible senior notes | |||
Liabilities: | |||
Principal amount outstanding | $ 245,000,000 | $ 245,000,000 | |
2019 convertible senior notes | Senior Notes | |||
Liabilities: | |||
Principal amount outstanding | $ 245,000,000.0 | ||
Estimated fair value of debt | 365,100,000 | ||
Recurring | |||
Assets: | |||
Assets, fair value | 152,700,000 | 126,187,000 | |
Liabilities: | |||
Liabilities, fair value | 3,508,000 | 3,388,000 | |
Recurring | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 111,000 | 101,000 | |
Recurring | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 1,503,000 | 1,503,000 | |
Recurring | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 1,532,000 | 1,413,000 | |
Recurring | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 362,000 | 371,000 | |
Recurring | Short-term Investments [Member] | |||
Assets: | |||
Assets, fair value | 148,733,000 | 122,296,000 | |
Recurring | Note receivable Viking Therapeutics, Inc. | |||
Assets: | |||
Assets, fair value | $ 3,207,000 | 3,207,000 | |
Liabilities: | |||
Volatility of common stock | 75.00% | ||
Recurring | Investment in warrants | |||
Assets: | |||
Assets, fair value | $ 760,000 | 684,000 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Assets: | |||
Assets, fair value | 3,170,000 | 3,738,000 | |
Liabilities: | |||
Liabilities, fair value | 362,000 | 371,000 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 362,000 | 371,000 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term Investments [Member] | |||
Assets: | |||
Assets, fair value | 2,410,000 | 3,054,000 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Note receivable Viking Therapeutics, Inc. | |||
Assets: | |||
Assets, fair value | 0 | 0 | |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Investment in warrants | |||
Assets: | |||
Assets, fair value | 760,000 | 684,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | |||
Assets: | |||
Assets, fair value | 146,323,000 | 119,242,000 | |
Liabilities: | |||
Liabilities, fair value | 1,532,000 | 1,413,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 1,532,000 | 1,413,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Short-term Investments [Member] | |||
Assets: | |||
Assets, fair value | 146,323,000 | 119,242,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | Note receivable Viking Therapeutics, Inc. | |||
Assets: | |||
Assets, fair value | 0 | 0 | |
Recurring | Significant Other Observable Inputs (Level 2) | Investment in warrants | |||
Assets: | |||
Assets, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | |||
Assets: | |||
Assets, fair value | 3,207,000 | 3,207,000 | |
Liabilities: | |||
Liabilities, fair value | 1,614,000 | 1,604,000 | |
Recurring | Significant Unobservable Inputs (Level 3) | Current contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 111,000 | 101,000 | |
Recurring | Significant Unobservable Inputs (Level 3) | Long-term contingent liabilities-CyDex | |||
Liabilities: | |||
Liabilities, fair value | 1,503,000 | 1,503,000 | |
Recurring | Significant Unobservable Inputs (Level 3) | Long-term contingent liabilities-Metabasis | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | Liability for amounts owed to former licensees | |||
Liabilities: | |||
Liabilities, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | Short-term Investments [Member] | |||
Assets: | |||
Assets, fair value | 0 | 0 | |
Recurring | Significant Unobservable Inputs (Level 3) | Note receivable Viking Therapeutics, Inc. | |||
Assets: | |||
Assets, fair value | 3,207,000 | 3,207,000 | |
Recurring | Significant Unobservable Inputs (Level 3) | Investment in warrants | |||
Assets: | |||
Assets, fair value | $ 0 | $ 0 |
Fair Value Measurements (Acquisition of CyDex) (Details) - Cydex Pharmaceuticals, Inc - Contingent Consideration Classified as Equity |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Credit Derivatives [Line Items] | ||
Revenue volatility | 25.00% | 25.00% |
Average probability of commercialization | 12.50% | 12.50% |
Market price of risk | 0.03 | 0.03 |
Credit rating | BB | BB |
Equity risk premium | 6.00% | 6.00% |
Convertible Senior Notes (Narrative) (Details) |
1 Months Ended | 3 Months Ended | 12 Months Ended |
---|---|---|---|
Aug. 31, 2014
USD ($)
d
$ / shares
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Debt Instrument [Line Items] | |||
Consecutive trading days | 50 days | ||
Equity component of currently redeemable convertible notes (Note 5) | $ 26,948,000 | $ 29,563,000 | |
2019 convertible senior notes | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount outstanding | 245,000,000 | $ 245,000,000 | |
Senior Notes | 2019 convertible senior notes | |||
Debt Instrument [Line Items] | |||
Interest rate (percent) | 0.75% | ||
Aggregate principal amount outstanding | $ 245,000,000.0 | ||
Net proceeds from note after debt issuance costs | $ 239,300,000 | ||
Initial conversion rate | 0.0133251 | ||
Initial conversion price (in USD per share) | $ / shares | $ 75.05 | ||
If-converted value in excess of principal | $ 100,500,000 | ||
Senior Notes | 2019 convertible senior notes | Debt Instrument, Redemption, Period One | |||
Debt Instrument [Line Items] | |||
Threshold trading days | d | 20 | ||
Consecutive trading days | 30 days | ||
Percentage of stock price trigger to classify convertible debt as current | 130.00% | 130.00% | |
Senior Notes | 2019 convertible senior notes | Debt Instrument, Redemption, Period Two | |||
Debt Instrument [Line Items] | |||
Threshold trading days | d | 5 | ||
Consecutive trading days | 10 days | ||
Maximum threshold percentage of debt trading price trigger | 98.00% |
Convertible Senior Notes (Notes Payable) (Details) - 2019 convertible senior notes - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Notes Payable, Current and Noncurrent [Abstract] | ||
Principal amount outstanding | $ 245,000 | $ 245,000 |
Unamortized discount | (29,252) | (32,090) |
Total current portion of notes payable | $ 215,748 | $ 212,910 |
Income Tax (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (percent) | 18.00% | 39.00% |
Federal statutory tax rate (percent) | 35.00% |
Stockholders' Equity (Stock Option Plan and Restricted Stock Activity) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
$ / shares
shares
| |
Stock Options: | |
Balance as of December 31, 2016 (shares) | shares | 1,754,275 |
Granted (shares) | shares | 180,765 |
Exercised (shares) | shares | (29,412) |
Forfeited (shares) | shares | 0 |
Balance as of March 31, 2017 (shares) | shares | 1,905,628 |
Weighted Average Exercise Price (in USD per share) | |
Balance as of December 31, 2016 | $ / shares | $ 42.12 |
Granted | $ / shares | 100.81 |
Exercised | $ / shares | 17.42 |
Forfeited | $ / shares | 0.00 |
Balance as of March 31, 2017 | $ / shares | $ 48.07 |
Restricted Stock [Member] | |
Restricted Shares: | |
Nonvested at December 31, 2015 (shares) | shares | 308,700 |
Granted (shares) | shares | 64,155 |
Exercised (shares) | shares | (96,744) |
Forfeited (shares) | shares | (300) |
Nonvested at June 30, 2016 (shares) | shares | 275,811 |
Weighted- Average Grant Date Fair Value (in USD per share) | |
Nonvested at December 31, 2015 | $ / shares | $ 86.61 |
Granted | $ / shares | 100.91 |
Exercised | $ / shares | 79.68 |
Forfeited | $ / shares | 97.92 |
Nonvested at March 31, 2016 | $ / shares | $ 92.36 |
Stockholders' Equity (Narrative) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding options that are exercisable (shares) | 1,300,000 |
Outstanding options that are exercisable, weighted average exercise price (in USD per share) | $ / shares | $ 33.06 |
Employee Stock Purchase Plan | |
Employee Stock Purchase Plan | |
Share purchase price as percent of market price (percent) | 85.00% |
Shares issued in period (shares) | 829 |
Shares available for future purchases (shares) | 70,297 |
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