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Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following table represents disaggregation of Royalties, Material Sales and License fees, milestone and other (in thousands):


		Three months ended												Nine months ended
		September 30,												September 30,
		2019				2018				2019				2018
Royalties
	Promacta	$	—			$	27,812			$	14,193			$	68,191
	Kyprolis	7,602				6,286				16,317				14,411
	Evomela	1,515				1,356				3,570				4,116
	Other	650				673				1,851				1,625
		$	9,767			$	36,127			$	35,931			$	88,343
Material Sales
	Captisol	$	6,849			$	7,027			$	24,357			$	19,030
License fees, milestones and other
	License Fees	$	243			$	265			$	3,083			$	75,201
	Milestone	4,790				1,308				20,897				6,052
	Other	3,159				936				9,011				3,237
		$	8,192			$	2,509			$	32,991			$	84,490

Total				$	24,808			$	45,663			$	93,279			$	191,863

Schedule of Investment Categories

Our investments consist of the following at September 30, 2019 and December 31, 2018 (in thousands):


	September 30, 2019														December 31, 2018
	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	$	490,828	$	294	$	(11)	$	491,111	$	311,066	$	26	$	(29)	$	311,063
Corporate bonds	58,581		240		—		58,821		53,223		1		(45)		53,179
Commercial paper	322,160		86		(29)		322,217		225,731		8		(76)		225,663
U.S. Government bonds	—		—		—		—		7,982		—		(9)		7,973
Municipal bonds	—		—		—		—		2,017		—		(4)		2,013
Corporate equity securities⁽¹⁾	4,505		325		(2,661)		2,169		135		1,191		—		1,326
Warrants	—		65		—		65		—		—		—		—
	$	876,074	$	1,010	$	(2,701)	$	874,383	$	600,154	$	1,226	$	(163)	$	601,217

(1) The amortized cost for corporate equity securities represents the original purchase cost of the equity securities.

Schedule of Goodwill and Other Identifiable Intangible Assets

Goodwill and other identifiable intangible assets consist of the following (in thousands):


	September 30,		December 31,
	2019		2018
Goodwill	$	93,513	$	86,646
Definite lived intangible assets
Complete technology	242,813		235,413
Less: accumulated amortization⁽¹⁾	(44,786)		(35,070)
Trade name	2,642		2,642
Less: accumulated amortization	(1,147)		(1,048)
Customer relationships	29,600		29,600
Less: accumulated amortization	(12,854)		(11,744)
Total goodwill and other identifiable intangible assets, net	$	309,781	$	306,439

(1) accumulated amortization for complete technology includes immaterial amount of foreign currency translation adjustments for the complete technology acquired from the Vernalis acquisition.

Schedule of Commercial License Rights

Commercial license and other economic rights consist of the following (in thousands):


	September 30,		December 31,
	2019		2018
Aziyo and CorMatrix	$	17,696	$	17,696
Novan	12,000		—
Palvella	10,000		10,000
Selexis	8,602		8,602
Dianomi	2,000		—
	50,298		36,298
Less: accumulated amortization attributed to principal or research and development	(14,885)		(4,838)
Total commercial license and other economic rights, net	$	35,413	$	31,460

Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	September 30,		December 31,
	2019		2018
Compensation	$	3,605	$	4,045
Professional fees	771		942
Amounts owed to former licensees	367		428
Royalties owed to third parties	1,049		1,025
Payments due to broker for share repurchases	—		4,613
Return reserve	3,157		3,590
Restructuring	7		1,093
Current operating lease liabilities	926		—
Other	3,178		3,464
Total accrued liabilities	$	13,060	$	19,200

Schedule of Accounting for Share-Based Compensation

The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands):


	Three months ended						Nine months ended
	September 30,						September 30,
	2019		2018		2019		2018
Share-based compensation expense as a component of:
Research and development expenses	$	2,481	$	2,257	$	7,136	$	6,120
General and administrative expenses	3,816		3,213		11,079		8,717
	$	6,297	$	5,470	$	18,215	$	14,837

Schedule 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:


	Three months ended			Nine months ended
	September 30,			September 30,
	2019	2018	2019	2018
Risk-free interest rate	1.6%	N/A	2.4%	2.8%
Dividend yield	—	N/A	—	—
Expected volatility	41%	N/A	43%	34%
Expected term	5.3	N/A	5.2	5.7

Schedule of Computation of Basic and Diluted Earnings per Share

The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in thousands):


	Three months ended			Nine months ended
	September 30,			September 30,
	2019	2018	2019	2018
Weighted average shares outstanding:	18,770	21,148	19,586	21,189
Dilutive potential common shares:
Restricted stock	—	83	35	69
Stock options	—	1,248	728	1,167
2019 Convertible Senior Notes	—	—	—	924
Warrants	—	1,573	—	1,081
Shares used to compute diluted income per share	18,770	24,052	20,349	24,430
Potentially dilutive shares excluded from calculation due to anti-dilutive effect	11,549	3,126	8,694	1,789