ACORDA THERAPEUTICS INC, 10-Q filed on 11/6/2020
Quarterly Report
v3.20.2
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2020
Oct. 30, 2020
Cover [Abstract]    
Entity Registrant Name ACORDA THERAPEUTICS, INC.  
Entity Central Index Key 0001008848  
Document Type 10-Q  
Document Period End Date Sep. 30, 2020  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Document Quarterly Report true  
Document Transition Report false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q3  
Trading Symbol ACOR  
Title of each class Common Stock $0.001 par value  
Name of each exchange on which registered NASDAQ  
Entity Common Stock, Shares Outstanding   47,962,400
Entity File Number 001-31938  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 13-3831168  
Entity Address, Address Line One 420 Saw Mill River Road  
Entity Address, City or Town Ardsley  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10502  
City Area Code 914  
Local Phone Number 347-4300  
v3.20.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 57,910 $ 62,085
Restricted cash 13,200 12,836
Short term investments 5,347 63,754
Trade accounts receivable, net of allowances of $635 and $682, as of September 30, 2020 and December 31, 2019, respectively 13,385 22,083
Prepaid expenses 15,382 11,574
Inventory, net 30,120 25,221
Other current assets 16,470 3,560
Total current assets 151,814 201,113
Property and equipment, net of accumulated depreciation 139,255 142,527
Intangible assets, net of accumulated amortization 374,743 402,329
Right of use asset, net of accumulated amortization 19,805 23,450
Restricted cash 24,819 30,270
Other assets 11 29
Total assets 710,447 799,718
Current liabilities:    
Accounts payable 10,361 26,257
Accrued expenses and other current liabilities 41,430 39,077
Current portion of loans payable 68,050 603
Current portion of liability related to sale of future royalties 8,624 10,836
Current portion of lease liabilities 7,893 7,746
Current portion of acquired contingent consideration 2,391 1,866
Total current liabilities 138,749 86,385
Convertible senior notes 134,622 192,774
Derivative liability 832 59,409
Non-current portion of acquired contingent consideration 43,709 78,434
Non-current portion of lease liabilities 18,747 22,996
Non-current portion of loans payable 26,978 25,495
Deferred tax liability 23,120 9,581
Non-current portion of liability related to sale of future royalties 9,147 13,565
Other non-current liabilities 1,012 259
Commitments and contingencies
Stockholders’ equity:    
Preferred stock, $0.001 par value. Authorized 1,000,000 shares at September 30, 2020 and December 31, 2019; no shares issued as of September 30, 2020 and December 31, 2019, respectively
Common stock, $0.001 par value. Authorized 370,000,000 shares at September 30, 2020 and 80,000,000 at December 31, 2019; issued 47,734,146 and 47,730,396 shares, including those held in treasury, as of September 30, 2020 and December 31, 2019, respectively 48 48
Treasury stock at cost (29,304 shares at September 30, 2020 and December 31, 2019) (638) (638)
Additional paid-in capital 999,762 979,388
Accumulated deficit (683,355) (666,809)
Accumulated other comprehensive (loss) income (2,286) (1,169)
Total stockholders’ equity 313,531 310,820
Total liabilities and stockholders’ equity $ 710,447 $ 799,718
v3.20.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Statement Of Financial Position [Abstract]    
Trade accounts receivable, allowances (in dollars) $ 635 $ 682
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, Authorized shares 1,000,000 1,000,000
Preferred stock, issued shares 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, Authorized shares 370,000,000 80,000,000
Common stock, issued shares 47,734,146 47,730,396
Treasury stock, shares 29,304 29,304
v3.20.2
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Revenues:        
Total net revenues $ 53,090 $ 47,722 $ 114,807 $ 141,911
Costs and expenses:        
Cost of sales 12,170 7,986 22,670 26,183
Research and development 5,729 16,073 18,689 51,060
Selling, general and administrative 39,935 48,702 119,700 151,622
Amortization of intangible assets 7,691 7,692 23,073 17,945
Asset impairment   277,561 4,131 277,561
Change in fair value of derivative liability (4,864)   (40,320)  
Changes in fair value of acquired contingent consideration (23,608) (50,942) (33,455) (56,342)
Total operating expenses 37,053 307,072 114,488 468,029
Operating income (loss) 16,037 (259,350) 319 (326,118)
Other income (expense), net:        
Interest and amortization of debt discount expense (7,760) (4,500) (22,810) (16,302)
Interest income 317 333 807 3,327
Other income (expense) 19   (16)  
Gain on disposal of property and equipment 200   200  
Realized loss on foreign currency transactions (1) (1) (8) (17)
Total other expense, net (7,225) (4,168) (21,827) (12,992)
Income (loss) before taxes 8,812 (263,518) (21,508) (339,110)
Benefit from (Provision for) income taxes (1,465) (17) 4,962 484
Net income (loss) $ 7,347 $ (263,535) $ (16,546) $ (338,626)
Net income (loss) per share—basic $ 0.15 $ (5.55) $ (0.35) $ (7.13)
Net income (loss) per share—diluted $ 0.05 $ (5.55) $ (0.35) $ (7.13)
Weighted average common shares outstanding used in computing net income (loss) per share—basic 47,705 47,511 47,704 47,491
Weighted average common shares outstanding used in computing net income (loss) per share—diluted 166,145 47,511 47,704 47,491
Net Product Revenues        
Revenues:        
Total net revenues $ 34,687 $ 44,800 $ 90,153 $ 133,325
Milestone Revenues        
Revenues:        
Total net revenues 15,000   15,000  
Royalty Revenues        
Revenues:        
Total net revenues $ 3,403 $ 2,922 $ 9,654 $ 8,586
v3.20.2
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Statement Of Income And Comprehensive Income [Abstract]        
Net income (loss) $ 7,347 $ (263,535) $ (16,546) $ (338,626)
Other comprehensive income (loss), net of tax:        
Foreign currency translation adjustment (1,018) (3,190) (1,096) (3,671)
Unrealized (loss) income on available for sale debt securities (45) (63) (21) 229
Other comprehensive loss, net of tax (1,063) (3,253) (1,117) (3,442)
Comprehensive income (loss) $ 6,284 $ (266,788) $ (17,663) $ (342,068)
v3.20.2
Consolidated Statements of Changes in Stockholders' Equity - USD ($)
$ in Thousands
Total
Common stock
Treasury stock
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Balance at Dec. 31, 2018 $ 611,983 $ 48 $ (2,133) $ 1,005,105 $ (393,843) $ 2,806
Balance (in shares) at Dec. 31, 2018   47,508,000        
Compensation expense for issuance of stock options to employees 2,745     2,745    
Compensation expense for issuance of restricted stock to employees 922     922    
Compensation expense for issuance of restricted stock to employees (in shares)   49,000        
Exercise of stock options 24     24    
Exercise of stock options (in shares)   2,000        
Purchase of Treasury Stock (52)   (52)      
Purchase of Treasury Stock ,Shares   4,000        
Other comprehensive (loss) income,net of tax (1,431)         (1,431)
Net income (loss) (47,605)       (47,605)  
Balance at Mar. 31, 2019 566,586 $ 48 (2,185) 1,008,796 (441,448) 1,375
Balance (in shares) at Mar. 31, 2019   47,563,000        
Balance at Dec. 31, 2018 611,983 $ 48 (2,133) 1,005,105 (393,843) 2,806
Balance (in shares) at Dec. 31, 2018   47,508,000        
Net income (loss) (338,626)          
Balance at Sep. 30, 2019 281,342 $ 48 (638) 1,015,037 (732,469) (636)
Balance (in shares) at Sep. 30, 2019   47,540,000        
Balance at Mar. 31, 2019 566,586 $ 48 (2,185) 1,008,796 (441,448) 1,375
Balance (in shares) at Mar. 31, 2019   47,563,000        
Compensation expense for issuance of stock options to employees 3,180     3,180    
Compensation expense for issuance of restricted stock to employees 1,354     1,354    
Compensation expense for issuance of restricted stock to employees (in shares)   34,000        
Adjustments to Treasury Stock     1,586 (1,586)    
Adjustments to Treasury Stock (in share)   (65,000)        
Purchase of Treasury Stock (39)   (39)      
Purchase of Treasury Stock ,Shares   3,000        
Other comprehensive (loss) income,net of tax 1,242         1,242
Net income (loss) (27,486)       (27,486)  
Balance at Jun. 30, 2019 544,837 $ 48 (638) 1,011,744 (468,934) 2,617
Balance (in shares) at Jun. 30, 2019   47,535,000        
Compensation expense for issuance of stock options to employees 2,057     2,057    
Compensation expense for issuance of restricted stock to employees 1,236     1,236    
Compensation expense for issuance of restricted stock to employees (in shares)   5,000        
Other comprehensive (loss) income,net of tax (3,253)         (3,253)
Net income (loss) (263,535)       (263,535)  
Balance at Sep. 30, 2019 281,342 $ 48 (638) 1,015,037 (732,469) (636)
Balance (in shares) at Sep. 30, 2019   47,540,000        
Balance at Dec. 31, 2019 310,820 $ 48 (638) 979,388 (666,809) (1,169)
Balance (in shares) at Dec. 31, 2019   47,730,000        
Compensation expense for issuance of stock options to employees 1,976     1,976    
Compensation expense for issuance of restricted stock to employees (in shares)   4,000        
Other comprehensive (loss) income,net of tax 350         350
Net income (loss) (6,472)       (6,472)  
Balance at Mar. 31, 2020 306,674 $ 48 (638) 981,364 (673,281) (819)
Balance (in shares) at Mar. 31, 2020   47,734,000        
Balance at Dec. 31, 2019 $ 310,820 $ 48 (638) 979,388 (666,809) (1,169)
Balance (in shares) at Dec. 31, 2019   47,730,000        
Purchase of Treasury Stock ,Shares 0          
Net income (loss) $ (16,546)          
Balance at Sep. 30, 2020 313,531 $ 48 (638) 999,762 (683,355) (2,286)
Balance (in shares) at Sep. 30, 2020   47,734,000        
Balance at Mar. 31, 2020 306,674 $ 48 (638) 981,364 (673,281) (819)
Balance (in shares) at Mar. 31, 2020   47,734,000        
Compensation expense for issuance of stock options to employees 2,056     2,056    
Other comprehensive (loss) income,net of tax (404)         (404)
Net income (loss) (17,421)       (17,421)  
Balance at Jun. 30, 2020 290,905 $ 48 (638) 983,420 (690,702) (1,223)
Balance (in shares) at Jun. 30, 2020   47,734,000        
Compensation expense for issuance of stock options to employees $ 2,480     2,480    
Purchase of Treasury Stock ,Shares 0          
Reclassification of derivative liability to equity, net of tax $ 13,862     13,862    
Other comprehensive (loss) income,net of tax (1,063)         (1,063)
Net income (loss) 7,347       7,347  
Balance at Sep. 30, 2020 $ 313,531 $ 48 $ (638) $ 999,762 $ (683,355) $ (2,286)
Balance (in shares) at Sep. 30, 2020   47,734,000        
v3.20.2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical)
$ in Millions
3 Months Ended
Sep. 30, 2020
USD ($)
Statement Of Stockholders Equity [Abstract]  
Reclassification of derivative liability to equity, net of tax amount $ 4.4
v3.20.2
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Mar. 31, 2019
Sep. 30, 2020
Sep. 30, 2019
Dec. 31, 2019
Cash flows from operating activities:              
Net loss $ 7,347 $ (6,472) $ (263,535) $ (47,605) $ (16,546) $ (338,626)  
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:              
Share-based compensation expense         6,512 11,494  
Amortization of net premiums and discounts on investments         (28) (1,325)  
Amortization of debt discount and debt issuance costs         12,219 12,202  
Depreciation and amortization expense         30,919 24,697  
Asset impairment     277,561   4,131 277,561  
Change in acquired contingent consideration obligation         (33,455) (56,342)  
Non-cash royalty revenue         (8,496) (7,556)  
Deferred tax provision (benefit)         8,801 (3,667)  
Change in derivative liability         (40,320)    
Gain on disposal of property and equipment (200)       (200)    
Changes in assets and liabilities:              
Decrease in accounts receivable         8,698 5,877  
(Increase) decrease in prepaid expenses and other current assets         (16,712) 13,725  
(Increase) decrease in inventory         (4,899) 1,619  
Decrease in other assets         17    
Decrease in accounts payable, accrued expenses and other current liabilities         (13,391) (56,141)  
Increase (decrease) in other non-current liabilities         296 (256)  
Net cash used in operating activities         (62,454) (116,738)  
Cash flows from investing activities:              
Purchases of property and equipment         (4,074) (76,414)  
Purchases of investments           (171,431)  
Proceeds from maturities of investments         58,415 191,342  
Net cash provided by (used in) investing activities         54,341 (56,503)  
Cash flows from financing activities:              
Debt issuance costs         (1,071)    
Proceeds from issuance of common stock and option exercises           24  
Purchase of treasury stock           (91)  
Repayment of loans payable         (597) (614)  
Net cash used in financing activities         (1,668) (681)  
Effect of exchange rate changes on cash, cash equivalents and restricted cash         519 (265)  
Net decrease in cash, cash equivalents and restricted cash         (9,262) (174,187)  
Cash, cash equivalents and restricted cash at beginning of period   $ 105,192   $ 294,351 105,192 294,351 $ 294,351
Cash, cash equivalents and restricted cash at end of period $ 95,930   $ 120,164   95,930 120,164 $ 105,192
Supplemental disclosure:              
Cash paid for interest         6,067 3,037  
Cash paid for taxes         $ 250 $ 2,562  
v3.20.2
Organization and Business Activities
9 Months Ended
Sep. 30, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization and Business Activities

(1) Organization and Business Activities

Acorda Therapeutics, Inc. (“Acorda” or the “Company”) is a biopharmaceutical company focused on developing therapies that restore function and improve the lives of people with neurological disorders.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information, Accounting Standards Codification (ASC) Topic 270-10 and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments considered necessary for a fair presentation have been included in the interim periods presented and all adjustments are of a normal recurring nature. The Company has evaluated subsequent events through the date of this filing. Operating results for the three and nine-month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. When used in these notes, the terms “Acorda” or “the Company” mean Acorda Therapeutics, Inc. The December 31, 2019 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. You should read these unaudited interim condensed consolidated financial statements in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K, for the year ended December 31, 2019.

v3.20.2
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

(2) Summary of Significant Accounting Policies

Our significant accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019. Effective January 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses” (Topic 326), ASU 2018-13, “Fair Value Measurement (Topic 820), ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”, and, ASU 2018-18, “Collaborative Arrangements” (Topic 808). Other than the adoption of the new accounting guidance, our significant accounting policies have not changed materially from December 31, 2019.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same amounts shown in the statement of cash flows:

 

Nine-month period ended September 30, 2020

 

 

Nine-month period ended September 30, 2019

 

(In thousands)

Beginning of period

 

 

End of period

 

 

Beginning of period

 

 

End of period

 

Cash and cash equivalents

$

62,085

 

 

$

57,910

 

 

$

293,564

 

 

$

119,521

 

Restricted cash

 

12,836

 

 

 

13,200

 

 

 

532

 

 

 

387

 

Restricted cash non-current

 

30,270

 

 

 

24,819

 

 

 

255

 

 

 

256

 

Total Cash, cash equivalents and restricted cash per statement of cash flows

$

105,191

 

 

$

95,929

 

 

$

294,351

 

 

$

120,164

 

 

Amounts included in restricted cash represent those amounts in escrow related to the 6% semi-annual interest portion of the convertible note exchange completed in December 2019 payable within the next 12 months and those amounts required to be set aside to cover the Company’s self-funded employee health insurance costs over the next 12 months. Restricted cash non-current represents those amounts in escrow related to the 6% semi-annual interest portion of the convertible note exchange completed in December 2019 payable subsequent to the next twelve months and cash collateralized standby letters of credit in connection with obligations under facility leases due to the long-term nature of the letters of credit. The 6% semi-annual interest portion of the convertible notes is payable in cash or, if permitted by the terms of the notes, stock.

Inventory

The major classes of inventory were as follows:

(In thousands)

 

September 30, 2020

 

 

December 31, 2019

 

Raw materials

 

$

3,366

 

 

$

1,753

 

Work-in-progress

 

 

6,010

 

 

 

13,509

 

Finished goods

 

 

20,744

 

 

 

9,959

 

Total

 

$

30,120

 

 

$

25,221

 

The Company reviews inventory, including inventory purchase commitments, for slow moving or obsolete amounts based on expected product sales volume and provides reserves against the carrying amount of inventory as appropriate.

Foreign Currency Translation

The functional currency of operations outside the United States of America is deemed to be the currency of the local country, unless otherwise determined that the United States dollar would serve as a more appropriate functional currency given the economic operations of the entity. Accordingly, the assets and liabilities of the Company’s foreign subsidiary, Biotie, are translated into United States dollars using the period-end exchange rate; income and expense items are translated using the average exchange rate during the period; and equity transactions are translated at historical rates. Cumulative translation adjustments are reflected as a separate component of equity. Foreign currency transaction losses and gains are recognized in the period incurred and are reported as other (expense) income, net in the statement of operations.

Segment and Geographic Information

The Company is managed and operated as one business which is focused on developing therapies that restore function and improve the lives of people with neurological disorders. The entire business is managed by a single management team that reports to the Chief Executive Officer, who is the chief operating decision maker. The Company does not operate separate lines of business with respect to any of its products or product candidates and the Company does not prepare discrete financial information with respect to separate products or product candidates or by location. Accordingly, the Company views its business as one reportable operating segment. Net product revenues reported are derived from the sales of Inbrija and Ampyra in the U.S. for the three and nine-month periods ended September 30, 2020 and 2019.

Impairment of Long-Lived Assets

The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful lives of its long-lived assets, including identifiable intangible assets subject to amortization and indefinite lived intangible assets not subject to amortization and property plant and equipment, may warrant revision or that the carrying value of the assets may be impaired. Factors the Company considers important that could trigger an impairment review include significant changes in the use of any assets, changes in historical trends in operating performance, changes in projected operating performance, results of clinical trials, stock price, loss of a major customer and significant negative economic trends. Based on the Company’s evaluation for the three-month period ended March 31, 2020, the Company determined that its indefinite lived intangible asset BTT1023 was fully impaired and recorded an asset impairment in its consolidated statement of operations. The Company also determined that its finite lived intangible assets were not impaired for the three and nine-month periods ended September 30, 2020.

Liquidity

The Company assesses and determines its ability to continue as a going concern in accordance with the provisions of ASC Topic 205-40, “Presentation of Financials Statements—Going Concern” (“ASC Topic 205-40”), which requires the Company to evaluate whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date that its annual and interim consolidated financial statements are issued. Certain additional financial statement disclosures are required if such conditions or events are identified. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting. Determining the extent, if any, to which conditions or events raise substantial doubt about the Company’s ability to continue

as a going concern, or the extent to which mitigating plans sufficiently alleviate any such substantial doubt, as well as whether or not liquidation is imminent, requires significant judgement by management.

The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements contained in this report are issued.

Based on our cash, cash equivalents and short-term investments at September 30, 2020, our recent net losses, and our obligations that are due within the next 12 months, including $69.0 million aggregate principal amount of our 1.75% Convertible Senior Notes due 2021 that mature on June 15, 2021, management has concluded that there is substantial doubt regarding our ability to meet our obligations within one year after the date the consolidated financial statements in this report are issued and, therefore, to continue as a going concern.

Our ability to meet our future operating requirements, repay our liabilities, meet our other obligations, and continue as a going concern are dependent upon a number of factors, including our ability to generate cash from product sales, reduce planned expenditures, and obtain additional financing. If we are unable to generate sufficient cash flow from the sale of our products, we may be required to adopt one or more alternatives, subject to the restrictions contained in the indenture governing our 6.00% Convertible Senior Secured Notes due 2024, such as further reducing expenses, selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous and which are likely to be highly dilutive. Also, our ability to raise additional capital and repay or restructure our indebtedness will depend on the capital markets and our financial condition at such time, among other factors. In addition, financing may not be available when needed, at all, on terms acceptable to us or in accordance with the restrictions described above.

Due to these uncertainties, there is substantial doubt about the Company’s ability to continue as going concern. These unaudited condensed consolidated financial statements and accompanying notes have been prepared on the basis that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

Subsequent Events

Subsequent events are defined as those events or transactions that occur after the balance sheet date, but before the financial statements are filed with the Securities and Exchange Commission. The Company completed an evaluation of the impact of any subsequent events through the date these financial statements were issued, and determined there were no subsequent events that required disclosure in these financial statements. 

Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequently amended by ASU 2019-04 and ASU 2019-05 which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. This new standard amends the current guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model known as current expected credit loss (CECL) model that is based on expected losses rather than incurred losses. Under the new guidance, an entity will recognize as an allowance its estimate of expected credit losses. The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820): “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The amendment in this ASU eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public business entities will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a significant impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The ASU clarifies certain aspects of ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which was issued in April 2015. Specifically, the ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).” The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have an impact on the consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18, Collaborative arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. ASU 2018-18 clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a significant impact on the consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740 and removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years with early adoption permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”: The amendments in this update are to clarify, correct errors in, or make minor improvements to a variety of ASC topics. The changes in ASU 2020-03 are not expected to have a significant effect on current accounting practices. The ASU improves various financial instrument topics in the Codification to increase stakeholder awareness of the amendments and to expedite the improvement process by making the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The ASU is effective for fiscal years beginning after December 15, 2020 with early application permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

v3.20.2
Revenue
9 Months Ended
Sep. 30, 2020
Revenue From Contract With Customer [Abstract]  
Revenue

(3) Revenue

In accordance with ASC 606, the Company recognizes revenue when the customer obtains control of a promised good or service, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the good or service. ASC 606 requires entities to record a contract asset when a performance obligation has been satisfied or partially satisfied, but the amount of consideration has not yet been received because the receipt of the consideration is conditioned on something other than the passage of time. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g. receivable), before the entity transfers a good or service to the customer. We did not have any contract assets or any contract liabilities as of September 30, 2020 and 2019.

The following table disaggregates our revenue by major source:

 

(In thousands)

Three-month period ended September 30, 2020

 

 

Three-month period ended September 30, 2019

 

 

Nine-month period ended September 30, 2020

 

 

Nine-month period ended September 30, 2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net product revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ampyra

$

27,343

 

 

$

39,322

 

 

$

73,546

 

 

$

123,579

 

Inbrija

 

5,833

 

 

 

4,889

 

 

 

14,901

 

 

 

9,164

 

Other

 

1,511

 

 

 

589

 

 

 

1,706

 

 

 

582

 

Total net product revenues

 

34,687

 

 

 

44,800

 

 

 

90,153

 

 

 

133,325

 

Milestone revenues

 

15,000

 

 

 

 

 

 

15,000

 

 

 

 

Royalty revenues

 

3,403

 

 

 

2,922

 

 

 

9,654

 

 

 

8,586

 

Total net revenues

$

53,090

 

 

$

47,722

 

 

$

114,807

 

 

$

141,911

 

 

v3.20.2
Share-based Compensation
9 Months Ended
Sep. 30, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Share-based Compensation

(4) Share-based Compensation

During the three‑month periods ended September 30, 2020 and 2019, the Company recognized share-based compensation expense of $2.5 million and $3.3 million, respectively. During the nine-month periods ended September 30, 2020 and 2019, the Company recognized share-based compensation expense of $6.5 million and $11.5 million, respectively. Activity in options and restricted stock during the nine-month period ended September 30, 2020 and related balances outstanding as of that date are reflected below. The weighted average fair value per share of options granted to employees for the three-month periods ended September 30, 2020 and 2019 were approximately $0.39 and $2.69, respectively. The weighted average fair value per share of options granted to employees for the nine-month periods ended September 30, 2020 and 2019 were approximately $0.66 and $6.49, respectively.

The following table summarizes share-based compensation expense included within the consolidated statements of operations:

 

 

 

For the three-month period ended September 30,

 

 

For the nine-month period ended September 30,

 

(In thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Research and development expense

 

$

555

 

 

$

719

 

 

$

1,418

 

 

$

2,203

 

Selling, general and administrative expense

 

 

1,832

 

 

 

2,424

 

 

 

4,834

 

 

 

8,785

 

Cost of Sales

 

 

93

 

 

 

149

 

 

 

260

 

 

 

505

 

Total

 

$

2,480

 

 

$

3,292

 

 

$

6,512

 

 

$

11,493

 

 

A summary of share-based compensation activity for the nine-month period ended September 30, 2020 is presented below:

Stock Option Activity

 

 

 

Number of

Shares

(In thousands)

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Term

 

 

Intrinsic

Value

(In thousands)

 

Balance at January 1, 2020

 

 

10,469

 

 

$

22.96

 

 

 

 

 

 

 

 

 

Granted

 

 

237

 

 

 

1.00

 

 

 

 

 

 

 

 

 

Cancelled

 

 

(2,339

)

 

 

27.41

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

8,366

 

 

$

21.09

 

 

 

6.0

 

 

$

 

Vested and expected to vest at

    September 30, 2020

 

 

8,342

 

 

$

21.14

 

 

 

6.0

 

 

$

 

Vested and exercisable at

    September 30, 2020

 

 

6,482

 

 

$

25.72

 

 

 

4.7

 

 

$

 

Restricted Stock and Performance Stock Unit Activity

 

(In thousands)

 

 

 

 

Restricted Stock and Performance Stock Units

 

Number of Shares

 

Nonvested at January 1, 2020

 

 

425

 

Granted

 

 

 

Vested

 

 

(4

)

Forfeited

 

 

(60

)

Nonvested at September 30, 2020

 

 

361

 

 

Unrecognized compensation cost for unvested stock options, restricted stock awards and performance stock units as of September 30, 2020 totaled $7.8 million and is expected to be recognized over a weighted average period of approximately 1.4 years.

During the three and nine‑month periods ended September 30, 2020, the Company did not make any repurchases of shares.

v3.20.2
Income (Loss) Per Share
9 Months Ended
Sep. 30, 2020
Earnings Per Share [Abstract]  
Income (Loss) Per Share

(5) Income (Loss) Per Share

The following table sets forth the computation of basic and diluted loss per share for the three and nine-month periods ended September 30, 2020 and 2019:

 

(In thousands, except per share data)

 

Three-month period ended September 30, 2020

 

 

Three-month period ended September 30, 2019

 

 

Nine-month period ended September 30, 2020

 

 

Nine-month period ended September 30, 2019

 

Basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)—basic

 

$

7,347

 

 

$

(263,535

)

 

$

(16,546

)

 

$

(338,626

)

Plus: Dilutive effect of convertible notes, net of tax

 

 

1,476

 

 

 

 

 

 

 

 

 

 

Net income (loss)—diluted

 

$

8,823

 

 

$

(263,535

)

 

$

(16,546

)

 

$

(338,626

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used in

   computing net income (loss) per share—basic

 

 

47,705

 

 

 

47,511

 

 

 

47,704

 

 

 

47,491

 

Plus: Dilutive effect of convertible notes

 

 

118,440

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used in

   computing net income (loss) per share—diluted

 

 

166,145

 

 

 

47,511

 

 

 

47,704

 

 

 

47,491

 

Net income (loss) per share—basic

 

$

0.15

 

 

$

(5.55

)

 

$

(0.35

)

 

$

(7.13

)

Net income (loss) per share—diluted

 

$

0.05

 

 

$

(5.55

)

 

$

(0.35

)

 

$

(7.13

)

 

Securities that could potentially be dilutive are excluded from the computation of diluted loss per share when a loss from continuing operations exists or when the exercise price exceeds the average closing price of the Company’s common stock during the period, because their inclusion would result in an anti-dilutive effect on per share amounts.

The following amounts were not included in the calculation of net loss per diluted share because their effects were anti-dilutive:

 

(In thousands)

 

Three-month period ended September 30, 2020

 

 

Three-month period ended September 30, 2019

 

 

Nine-month period ended September 30, 2020

 

 

Nine-month period ended September 30, 2019

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options and restricted common shares

 

 

8,784

 

 

 

8,988

 

 

 

8,532

 

 

 

8,968

 

 

Performance share units are excluded from the calculation of net loss per diluted share as the performance criteria has not been met for the three and nine-month periods ended September 30, 2020 and 2019. Additionally, for the three and nine-month periods ended September 30, 2020, the impact of our outstanding convertible notes was determined to be dilutive and anti-dilutive, respectively. As a result, for the three-month period ended September 30, 2020 the Company adjusted the

numerator amount used in the calculation of net income per diluted share to add back the interest expense associated with convertible notes of $6.8 million, which is partially offset by the derivative liability gain of $4.9 million and $0.5 tax impact. Additionally, the 118,440 million common shares required to fully convert the outstanding convertible notes were included and excluded from the denominator in the calculation of net loss per diluted share under the if converted method for the three and nine-month periods ended September 30, 2020, respectively.

v3.20.2
Income Taxes
9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

(6) Income Taxes

On March 27, 2020, the CARES Act was signed into law, which enacted several tax favorable, business-related provisions. The Company reviewed the enacted provisions to determine which provisions should be considered for the three-month period ended September 30, 2020. Under the new law, the CARES Act provides that NOLs arising in a taxable year beginning after December 31, 2017, and before January 1, 2021, can be carried back to each of the five taxable years preceding the taxable year of such loss. The Company has considered the impact to the tax provision for the carryback of net operating losses to prior periods of taxable income incurred within the period allowed under the CARES Act. The result of carrying back these losses allowed the Company to realize certain deferred tax assets and a corresponding release of the valuation allowance of approximately $1.8 million. In July 2020, the Company received an income tax refund of $12.7 million including interest from the Internal Revenue Service, related to the 2019 net operating loss carryback. The Company recorded a tax receivable of $1.4 million for the anticipated 2020 net operating loss carryback claim as of September 30, 2020.

The Company’s effective income tax rate differs from the U.S. statutory rate primarily due to an increase in the valuation allowance, and expense recorded on the equity forfeitures, offset by the benefit of net operating loss carryback under the CARES act recorded at 21% to recover taxes paid at the previous statutory rate of 35%.

For the three-month periods ended September 30, 2020 and 2019, the Company recorded a provision of $(1.5) million and $(0.02) million for income taxes, respectively. The effective income tax rates for the Company for the three-month periods ended September 30, 2020 and 2019 were 16.6% and 0%, respectively. The variances in the effective tax rates for the three-month period ended September 30, 2020 as compared to the three-month period ended September 30, 2019 was due primarily to the valuation allowance recorded on deferred tax assets for which no tax benefit can be recognized, goodwill impairment for which no tax benefit can be recognized, and the benefit recorded on the net operating loss carryback under the CARES act recorded at 21% to recover taxes paid at the previous statutory rate of 35%.

For the nine-month periods ended September 30, 2020 and 2019, the Company recorded a benefit of $5.0 million and $0.5 million for income taxes, respectively. The effective income tax rates for the Company for the nine-month periods ended September 30, 2020 and 2019 were 23.1% and 0.14%, respectively. The variance in effective tax rates for the nine-month period ended September 30, 2020 as compared to the nine-month period ended September 30, 2019 was due primarily to the valuation allowance recorded on deferred tax assets for which no tax benefit can be recognized, goodwill impairment for which no tax benefit can be recognized, and the benefit recorded on the net operating loss carryback under the CARES act recorded at 21% to recover taxes paid at the previous statutory rate of 35%.

The Company continues to evaluate the realizability of its deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any changes to the valuation allowance or deferred tax assets and liabilities in the future would impact the Company's income taxes.

The Company’s state examination by the state of Massachusetts for the tax periods 2016 and 2017 was completed during the period ended September 30, 2020. The Company was assessed a tax of approximately $0.2 million.

The Company has ongoing state examinations in New Jersey and Minnesota which cover a range of tax periods, 2015 – 2018. There have been no proposed adjustments at this stage of the examinations.

v3.20.2
Fair Value Measurements
9 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements

(7) Fair Value Measurements

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices

(unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, exchange rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability. The Company’s Level 1 assets consist of investments in a Treasury money market fund and U.S. government securities. The Company’s level 2 assets consist of investments in corporate bonds and commercial paper which are categorized as short-term investments for investments with original maturities between three months and one year. The Company’s Level 3 liabilities represent acquired contingent consideration related to the acquisition of Civitas which are valued using a probability weighted discounted cash flow valuation approach and derivative liabilities related to conversion options for the convertible senior notes due December 2024 which are valued using a binomial model. For assets and liabilities not accounted for at fair value, the carrying values of these accounts approximates their fair values at September 30, 2020, except for the fair value of the Company’s convertible senior notes due June 2021, which was approximately $55.3 million and the fair value of the Company’s convertible senior notes due December 2024, which was approximately $119.3 million as of September 30, 2020. The Company estimates the fair value of its notes utilizing market quotations for the debt (Level 2).

 

(In thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Assets Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

31,283

 

 

$

 

 

$

 

Corporate bonds

 

 

 

 

 

5,347

 

 

 

 

Liabilities Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability - conversion option

 

 

 

 

 

 

 

 

832

 

Acquired contingent consideration

 

 

 

 

 

 

 

 

46,100

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Assets Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

2,219

 

 

$

 

 

$

 

Commercial paper

 

 

 

 

 

26,569

 

 

 

 

Corporate bonds

 

 

 

 

 

37,185

 

 

 

 

Liabilities Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability - conversion option

 

 

 

 

 

 

 

 

59,409

 

Acquired contingent consideration

 

 

 

 

 

 

 

 

80,300

 

 

The following table presents additional information about liabilities measured at fair value on a recurring basis and for which the Company utilizes Level 3 inputs to determine fair value.

Acquired contingent consideration

 

(In thousands)

 

Three-month period ended September 30, 2020

 

 

Three-month period ended September 30, 2019

 

 

Nine-month period ended September 30, 2020

 

 

Nine-month period ended September 30, 2019

 

Acquired contingent consideration:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

70,000

 

 

$

162,537

 

 

$

80,300

 

 

$

168,000

 

Fair value change to contingent consideration

   included in the statement of operations

 

 

(23,608

)

 

 

(50,942

)

 

 

(33,455

)

 

 

(56,342

)

Royalty payments

 

 

(292

)

 

 

(395

)

 

 

(745

)

 

 

(458

)

Balance, end of period

 

$

46,100

 

 

$

111,200

 

 

$

46,100

 

 

$

111,200

 

 

The Company estimates the fair value of its acquired contingent consideration using a probability weighted discounted cash flow valuation approach based on estimated future sales expected from Inbrija (levodopa inhalation powder), an FDA approved drug for the treatment of OFF periods in Parkinson’s disease. Using this approach, expected probability adjusted future cash flows are calculated over the expected life of the agreement and discounted to estimate the current value of the liability at the period end date. Some of the more significant assumptions made in the valuation include (i) the estimated revenue forecast for Inbrija, (ii) probabilities of success, and (iii) discount periods and rate. The milestone payments ranged from $1.0 million to $22.0 million for Inbrija. The estimated revenue forecast for Inbrija is based on peak annual sales of $300 to $500 million. The discount rate used in the valuation was 20.5% for the three and nine-month periods ended September 30, 2020. The valuation is performed quarterly and changes in the fair value of the contingent consideration are included in the statement of operations. For the three and nine-month periods ended September 30, 2020 and 2019, changes in the fair value of the acquired contingent consideration were primarily due to updates to certain revenue and expense forecast assumptions. Additionally, for the nine-month periods ended September 30, 2020 and 2019, changes in the fair value of the acquired contingent consideration were partially offset by a reduction in the discount rate and a reduction in the forecast periods for the passage of time.

The acquired contingent consideration is classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market. If different assumptions were used for the various inputs to the valuation approach, including but not limited to, assumptions involving sales estimates for Inbrija and estimated discount rates, the estimated fair value could be significantly higher or lower than the fair value determined.

Derivative Liability-Conversion Option

The following table represents a reconciliation of the derivative liability recorded in connection with the issuance of the convertible senior secured notes due 2024 acquired:

(In thousands)

September 30, 2020

 

 

June 30, 2020

 

 

March 31, 2020

 

 

December 31, 2019

 

Derivative Liability-Conversion Option

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

$

23,953

 

 

$

32,881

 

 

$

59,409

 

 

$

 

Fair value recognized upon issuance of Convertible Senior Notes

 

 

 

 

 

 

 

 

 

 

59,409

 

Fair value adjustment

 

(4,864

)

 

 

(8,928

)

 

 

(26,528

)

 

 

 

Fair value re-classification to shareholder's equity

 

(18,257

)