ACORDA THERAPEUTICS INC, 10-Q filed on 5/9/2017
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2017
Apr. 30, 2017
Document And Entity Information [Abstract]
 
 
Entity Registrant Name
ACORDA THERAPEUTICS INC 
 
Entity Central Index Key
0001008848 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2017 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
46,659,426 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
ACOR 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 133,619 
$ 158,537 
Restricted cash
61 
79 
Trade accounts receivable, net of allowances of $938 and $964, as of March 31, 2017 and December 31, 2016, respectively
50,238 
52,239 
Prepaid expenses
13,615 
12,907 
Finished goods inventory
46,054 
43,135 
Other current assets
4,565 
5,760 
Total current assets
248,152 
272,657 
Property and equipment, net of accumulated depreciation
37,132 
34,310 
Goodwill
278,069 
280,599 
Deferred tax asset
4,400 
4,400 
Intangible assets, net of accumulated amortization
740,838 
742,242 
Non-current portion of deferred cost of license revenue
2,113 
2,272 
Other assets
9,138 
5,855 
Total assets
1,319,842 
1,342,335 
Current liabilities:
 
 
Accounts payable
21,378 
26,933 
Accrued expenses and other current liabilities
88,146 
104,890 
Current portion of deferred license revenue
9,057 
9,057 
Current portion of loans payable
754 
6,256 
Current portion of convertible notes payable
 
765 
Total current liabilities
119,335 
147,901 
Convertible senior notes (due 2021)
301,706 
299,395 
Acquired contingent consideration
82,900 
72,100 
Non-current portion of deferred license revenue
30,191 
32,456 
Non-current portion of loans payable
24,660 
24,635 
Deferred tax liability
76,130 
92,807 
Other non-current liabilities
8,793 
8,830 
Commitments and contingencies
   
   
Stockholders’ equity:
 
 
Common stock, $0.001 par value. Authorized 80,000,000 shares at March 31, 2017 and December 31, 2016; issued 46,770,661 and 46,182,738 shares, including those held in treasury, as of March 31, 2017 and December 31, 2016, respectively
47 
46 
Treasury stock at cost (12,420 shares at March 31, 2017 and December 31, 2016)
(329)
(329)
Additional paid-in capital
937,665 
921,365 
Accumulated deficit
(250,757)
(243,970)
Accumulated other comprehensive loss
(10,499)
(12,901)
Total stockholders’ equity
676,127 
664,211 
Total liabilities and stockholders’ equity
$ 1,319,842 
$ 1,342,335 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]
 
 
Trade accounts receivable, allowances (in dollars)
$ 938 
$ 964 
Common stock, par value (in dollars per share)
$ 0.001 
$ 0.001 
Common stock, Authorized shares
80,000,000 
80,000,000 
Common stock, issued shares
46,770,661 
46,182,738 
Treasury stock, shares
12,420 
12,420 
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Revenues:
 
 
Net product revenues
$ 112,593 
$ 110,148 
Royalty revenues
4,528 
3,492 
License revenue
2,265 
2,264 
Total net revenues
119,386 
115,904 
Costs and expenses:
 
 
Cost of sales
25,183 
23,186 
Cost of license revenue
159 
159 
Research and development
46,493 
44,570 
Selling, general and administrative
52,024 
58,980 
Changes in fair value of acquired contingent consideration
10,800 
6,200 
Total operating expenses
134,659 
133,095 
Operating loss
(15,273)
(17,191)
Other (expense) income, (net):
 
 
Interest and amortization of debt discount expense
(4,143)
(3,723)
Interest income
38 
215 
Realized loss on foreign currency transactions
(444)
 
Other income
 
10,442 
Total other (expense) income, (net)
(4,549)
6,934 
Loss before taxes
(19,822)
(10,257)
Benefit from income taxes
918 
9,737 
Net loss
$ (18,904)
$ (520)
Net loss per share—basic
$ (0.41)
$ (0.01)
Net loss per share—diluted
$ (0.41)
$ (0.01)
Weighted average common shares outstanding used in computing net loss per share—basic
45,808 
44,815 
Weighted average common shares outstanding used in computing net loss per share—diluted
45,808 
44,815 
Consolidated Statements of Comprehensive Loss (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Statement Of Income And Comprehensive Income [Abstract]
 
 
Net loss
$ (18,904)
$ (520)
Other comprehensive income, net of tax:
 
 
Foreign currency translation adjustment
2,402 
 
Reclassification of net losses to net income
 
119 
Other comprehensive income, net of tax
2,402 
119 
Comprehensive loss
$ (16,502)
$ (401)
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Cash flows from operating activities:
 
 
Net loss
$ (18,904)
$ (520)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
Share-based compensation expense
7,872 
8,159 
Amortization of net premiums and discounts on investments
 
495 
Amortization of debt discount and debt issuance costs
2,580 
2,204 
Depreciation and amortization expense
5,647 
3,949 
Changes in fair value of acquired contingent consideration
10,800 
6,200 
Unrealized foreign currency transaction loss (gain)
247 
(10,289)
Deferred tax benefit
(4,673)
(10,172)
Changes in assets and liabilities:
 
 
Decrease (Increase) in accounts receivable
2,011 
(10,156)
Decrease in prepaid expenses and other current assets
497 
4,308 
Increase in inventory
(2,918)
(3,191)
Decrease in non-current portion of deferred cost of license revenue
159 
159 
Increase in other assets
(3,415)
 
(Decrease) increase in accounts payable, accrued expenses, other current liabilities
(23,093)
11,969 
Decrease in non-current portion of deferred license revenue
(2,264)
(2,264)
Increase in other non-current liabilities
35 
Decrease in restricted cash
18 
5,842 
Net cash (used in) provided by operating activities
(25,401)
6,697 
Cash flows from investing activities:
 
 
Purchases of property and equipment
(5,773)
(1,037)
Purchases of intangible assets
(76)
(406)
Purchases of investments
 
(40,214)
Proceeds from maturities of investments
 
239,966 
Net cash (used in) provided by investing activities
(5,849)
198,309 
Cash flows from financing activities:
 
 
Proceeds from issuance of common stock and option exercises
5,474 
73,229 
Refund of deposit for purchase of noncontrolling interest
2,722 
 
Repayments of revenue interest liability
 
(25)
Repayment of loans payable
(2,225)
 
Net cash provided by financing activities
5,971 
73,204 
Effect of exchange rate changes on cash and cash equivalents
361 
 
Net (decrease) increase in cash and cash equivalents
(24,918)
278,210 
Cash and cash equivalents at beginning of period
158,537 
153,204 
Cash and cash equivalents at end of period
133,619 
431,414 
Supplemental disclosure:
 
 
Cash paid for interest
29 
21 
Cash paid for taxes
$ 1,915 
$ 157 
Organization and Business Activities
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, they 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-month period ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. When used in these notes, the terms “Acorda” or “the Company” mean Acorda Therapeutics, Inc.  The December 31, 2016 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, 2016.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

(2) Summary of Significant Accounting Policies

Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 31, 2016. Effective January 1, 2017, the Company adopted ASU 2016-09, “Compensation – Stock Compensation” (Topic 718) and ASU 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11). Other than the adoption of the new accounting guidance, our critical accounting policies have not changed materially from December 31, 2016.

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; and 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 gains and losses are charged to 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. 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 to date are derived from the sales of Ampyra, Zanaflex and Qutenza in the U.S.

Intangible Assets

The Company has finite lived intangible assets related to Ampyra. These intangible assets are amortized on a straight line basis over the period in which the Company expects to receive economic benefit and are reviewed for impairment when facts and circumstances indicate that the carrying value of the asset may not be recoverable. The determination of the expected life will be dependent upon the use and underlying characteristics of the intangible asset. In the Company’s evaluation of the intangible assets, it considers the term of the underlying asset life and the expected life of the related product line. If the carrying value is not recoverable, impairment is measured as the amount by which the carrying value exceeds its estimated fair value. Fair value is generally estimated based on either appraised value or other valuation techniques.

On March 31, 2017, the United States District Court for the District of Delaware upheld U.S. Patent No. 5,540,938 (the ‘938 patent), which is set to expire in July 2018. The claims of the ‘938 patent relate to methods for treating a neurological disease, such as MS, and cover the use of a sustained release dalfampridine formulation, such as AMPYRA (dalfampridine) Extended Release Tablets, 10 mg for improving walking in people with MS. The District Court invalidated U.S. Patent Nos. 8,663,685 , 8,007,826, 8,440,703, and 8,354,437, which pertain to Ampyra. The Company intends to appeal the ruling on these patents. As a result of the District Court’s decision, the Company performed an interim impairment test for the intangible assets related to Ampyra in connection with the preparation of the unaudited interim condensed consolidated financial statements for the first quarter of 2017. Based on the impairment test performed, the Company determined that these intangible assets were not impaired. Accordingly, the Company did not record an impairment loss during the three-month period ended March 31, 2017.

In accordance with the Company’s policy, the estimated remaining useful lives of the Ampyra intangible assets were reviewed to determine if there was a change in the estimated useful lives of these assets. Based on the review, the Company determined that there was a change in the estimated useful lives of these assets that would require an acceleration of the amortization expense. The Company estimates that the estimated useful lives of these intangible assets will coincide with the expiration of the ‘938 patent. The Company will account for this change prospectively as a change in an accounting estimate following the period ended March 31, 2017. The change in the estimated remaining useful lives of these intangible assets did not have a material impact on the Company’s statement of operations for the three-month period ended March 31, 2017.

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 the following subsequent events required disclosure in these financial statements.

In April 2017, the Company implemented a corporate restructuring to reduce its cost structure and focus its resources on its two late stage Parkinson’s disease programs, INBRIJA and tozadenant, as well as on maximizing Ampyra value and ensuring continued patient access to Ampyra. The adoption of the restructuring plan follows the previously-announced decision by the United States District Court for the District of Delaware in litigation with certain generic drug manufacturers upholding our Ampyra Orange Book-listed patent set to expire on July 30, 2018, but invalidating our four other Orange Book-listed patents pertaining to Ampyra that were set to expire between 2025 and 2027. Under this decision, we expect to maintain patent exclusivity with respect to Ampyra at least through July 30, 2018, although the other parties to the lawsuit may appeal the District Court’s decision upholding the patent that expires in July 2018.. As part of the restructuring, the Company announced plans to reduce headcount by approximately 20%, with the majority of the reduction in personnel occurring in April 2017.

On June 1, 2016, the Company and certain of its subsidiaries entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as the sole initial lender and the administrative agent for the lenders. On May 4, 2017, the Company voluntarily terminated the Credit Agreement because it no longer served the Company’s needs. The Company did not incur any early termination penalties in connection with the termination. Prior to its termination, the Credit Agreement provided the Company with a three-year senior secured revolving credit facility in the maximum amount of $60 million. The restrictive covenants, as well as the lenders' security interests in collateral, under the Credit Agreement and the related loan documents terminate in connection with the termination of the facility.

As of March 31, 2017, there was approximately $1.1 million of debt issuance costs recorded on the consolidated balance sheets associated with the Credit Agreement that will be written off in May 2017.

 

Recently Issued / Adopted Accounting Pronouncements

In March 2016, the FASB issued Accounting Standards Update 2016-09, “Compensation – Stock Compensation” (Topic 718). The main objective of this update is to simplify the accounting, and reporting classifications for certain aspects of share-based payment transactions. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.

The Company adopted this guidance effective January 1, 2017 on a prospective basis. The new guidance requires that excess tax benefits or deficiencies that arise upon the vesting or exercise of share-based payments be recognized as income tax benefit or expense in the income statement. Previously, these amounts were recorded as additional paid-in-capital. As a result of the adoption of ASU 2016-09, the Company recorded an adjustment to accumulated deficit of $12.1 million to recognize net operating loss carryforwards, attributable to excess tax benefits on stock compensation that was not previously recognized in additional paid in capital. The new guidance also permits the accounting for forfeitures based on either an estimate of the number of shares expected to vest (current GAAP) or on the actual forfeitures as they occur. The Company elected to continue estimating forfeitures for determining compensation costs. The new guidance also provides for excess tax benefits to be classified as an operating activity in the statement of cash flows. Previously, excess tax benefits were classified as a financing activity. The Company did not have any excess tax benefits in the three-month period ended March 31, 2017.

In July 2015, the FASB issued Accounting Standards Update 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11), which requires the measurement of inventory at the lower of cost and net realizable value. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and interim periods therein with early adoption permitted. The Company adopted this guidance effective January 1, 2017. The adoption of this guidance did not have an impact on the consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-06, “Derivatives and Hedging” (Topic 815): Contingent Put and Call Options in Derivative Contracts (ASU 2016-06), which clarifies the requirements for assessing whether contingent options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This ASU is effective for fiscal years beginning after December 15, 2016 and interim periods therein. The Company adopted this guidance effective January 1, 2017. The adoption of this guidance did not have an impact on the consolidated financial statements.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (Topic 606) (ASU 2014-09). This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. In July 2015, the FASB deferred the effective date of the new revenue standard for interim and annual periods beginning after December 15, 2017 (previously December 15, 2016). The Company expects to adopt this guidance on January 1, 2018. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. The Company is evaluating the transition method that will be elected and the potential effects of adopting the provisions of ASU No. 2014-09.

The new guidance requires the application of a five-step model to determine the amount and timing of revenue to be recognized. The underlying principle is that revenue is to be recognized for the transfer of goods or services to customers that reflects the amount of consideration that the Company expects to be entitled to in exchange for those goods or services.

The Company is continuing to assess the impact of the new guidance on its accounting policies and procedures and is evaluating the new requirements as applied to existing revenue contracts. Although the Company is continuing to assess the impact of the new guidance, the Company believes the most significant impact will relate to the recognition of license revenues associated with its Biogen contract at a point in time rather than over a period of time. The Company is reviewing its revenue contracts and working on its plan for implementation of the new guidance which it expects to adopt beginning in the first quarter of 2018.

In January 2017, the FASB issued Accounting Standards Update 2017-04, “Intangibles – Goodwill and Other” (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. ASU 2017-04 allows for prospective application and is effective for fiscal years beginning after December 15, 2019, and interim periods therein with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating whether it will adopt this guidance early and the impact it may have on its consolidated financial statements.

Acquisitions
Acquisitions

(3) Acquisitions

Biotie Therapies Corp.

On April 18, 2016, the Company acquired a controlling interest in Biotie Therapies Corp. (“Biotie”) pursuant to a combination agreement entered into in January 2016. The acquisition of Biotie positions the Company as a leader in Parkinson’s disease therapeutic development, with three clinical-stage compounds that have the potential to improve the lives of people with Parkinson’s. In accordance with the combination agreement, the Company closed a public tender offer for all of Biotie’s capital stock, pursuant to which the Company acquired approximately 93% of the fully diluted capital stock of Biotie for a cash purchase price of approximately $350 million. On May 4, 2016, the Company acquired an additional approximately 4% of Biotie’s fully diluted capital stock pursuant to a subsequent public offer to Biotie stockholders that did not tender their shares in the initial tender offer. The purchase consideration for the subsequent tender offer was approximately $14.5 million. The acquisition of the additional 4% of Biotie’s fully diluted capital stock resulted in the Company owning approximately 97% of the fully diluted capital stock of Biotie (the “Acquisition”) as of June 30, 2016.

On September 30, 2016, the Company acquired the remaining approximately 3% of Biotie’s fully diluted capital stock in exchange for the payment of a cash security deposit of approximately $13.5 million, as determined by the Finnish arbitral tribunal administering redemption proceedings for the shares not tendered to the Company. Accordingly, the Company owned 100% of the fully diluted capital stock of Biotie as of September 30, 2016.

In the three-month period ended March 31, 2017, the Company received a refund of the cash security deposit of approximately $2.7 million following the final determination and payment of the redemption price for the shares subject to the redemption proceedings.

The Company estimated the preliminary fair value of the assets acquired and liabilities assumed as of the date of acquisition based on the information available at that time. The Company recorded measurement-period adjustments to its preliminary purchase price allocation from the acquisition date through March 31, 2017. During the three-month period ended March 31, 2017, the Company recorded measurement period adjustments of $3.8 million to its preliminary purchase price allocation related to the repurchase of Biotie convertible capital loans as the Company was able to determine the fair market value of these loans, and which reduced current liabilities with a corresponding decrease to goodwill. The valuation of the assets and liabilities is subject to further analysis however, the Company believes that finalization of the valuation of the long-term debt and accounting for deferred taxes are the key remaining outstanding items. As the Company finalizes the fair values of the assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

The following table presents the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date of April 18, 2016, as adjusted through the period ended March 31, 2017:

 

(In thousands)

 

Preliminary

Allocation, as

adjusted through

December 31, 2016

 

 

Measurement

Period

Adjustments

 

 

Preliminary

Allocation, as

adjusted through

March 31, 2017

 

Cash and cash equivalents

 

$

73,854

 

 

$

 

 

$

73,854

 

Other current assets

 

 

1,878

 

 

 

 

 

 

1,878

 

Other long-term assets

 

 

4,962

 

 

 

 

 

 

4,962

 

Intangible assets (indefinite-lived)

 

 

260,500

 

 

 

 

 

 

260,500

 

Intangible assets (definite-lived)

 

 

65,000

 

 

 

 

 

 

65,000

 

Current liabilities

 

 

(18,572

)

 

 

3,837

 

 

 

(14,735

)

Deferred taxes

 

 

(89,908

)

 

 

 

 

 

(89,908

)

Other long-term liabilities

 

 

(25,690

)

 

 

 

 

 

(25,690

)

Fair value of assets and liabilities acquired

 

 

272,024

 

 

 

3,837

 

 

 

275,861

 

Goodwill

 

 

103,876

 

 

 

(3,837

)

 

 

100,039

 

Total purchase price

 

 

375,900

 

 

 

 

 

 

375,900

 

Less: Noncontrolling interests

 

 

(25,736

)

 

 

 

 

 

(25,736

)

Purchase consideration on date of acquisition

 

$

350,164

 

 

$

 

 

$

350,164

 

 

The Company accounted for the Acquisition as a business combination using the acquisition method of accounting. Under the acquisition method of accounting, the total purchase price of the acquisition is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the date of acquisition. The Company incurred approximately $18.6 million in acquisition related expenses to date. For the three-month period ended March 31, 2017, the Company incurred approximately $0.6 million in acquisition related expenses, all of which were expensed and included in selling, general and administrative expenses in the consolidated statements of operations. The results of Biotie’s operations have been included in the consolidated statements of operations from the acquisition date of April 18, 2016.

The definite-lived intangible asset will be amortized on a straight line basis over the period in which the Company expects to receive economic benefit and will be reviewed for impairment when facts and circumstances indicate that the carrying value of the asset may not be recoverable.

The fair value of the indefinite lived intangible assets will be capitalized as of the acquisition date and subsequently accounted for as indefinite-lived intangible assets until disposition of the assets or completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the completion of the acquisition, these assets will not be amortized into earnings; rather, these assets will be subject to periodic impairment testing. Upon successful completion of the development efforts, the useful lives of the indefinite lived intangible assets will be determined and the assets will be considered definite-lived intangible assets and amortized over their expected useful lives.

Goodwill is calculated as the excess of the purchase price and the noncontrolling interest over the estimated fair value of the assets acquired and liabilities assumed. The goodwill recorded is primarily related to establishing a deferred tax liability for the indefinite lived intangible assets which have no tax basis and, therefore, will not result in a future tax deduction. None of the goodwill is deductible for tax purposes.

Goodwill

Changes in the carrying amount of goodwill were as follows:

 

(In thousands)

 

 

 

 

Balance at December 31, 2016

 

$

280,599

 

Decrease to goodwill for measurement period adjustments

 

 

(3,837

)

Foreign currency translation adjustment

 

 

1,307

 

Balance at March 31, 2017

 

$

278,069

 

 

Pro-Forma Financial Information Associated with the Biotie Acquisition (Unaudited)

The following table summarizes certain supplemental pro forma financial information for the three-month periods ended March 31, 2017 and 2016 as if the Acquisition had occurred as of January 1, 2016.

The unaudited pro forma financial information for the three-month period ended March 31, 2016 reflects (i) the net impact to amortization expense based on the fair value adjustments to the intangible assets acquired from Biotie; (ii) the impact to operations resulting from the reversal of transaction costs related to the Acquisition; (iii) the impact to operations resulting from the reversal of the unrealized gain on the foreign currency option; (iv) the impact to interest expense based on the fair value adjustments to the debt acquired from Biotie; (v) the tax effects of those adjustments; and (vi) the net loss attributable to the noncontrolling interests resulting from the Acquisition.

 

 

 

Three-month

period ended

March 31, 2017

 

 

Three-month

period ended

March 31, 2016

 

(In thousands)

 

Reported

 

 

Pro Forma

 

 

Reported

 

 

Pro Forma

 

Net revenues

 

$

119,386

 

 

$

119,386

 

 

$

115,904

 

 

$

116,744

 

Net loss from continuing operations

 

$

(18,904

)

 

$

(18,904

)

 

$

(520

)

 

$

(12,377

)

 

Share-based Compensation
Share-based Compensation

(4) Share-based Compensation

During the three‑month periods ended March 31, 2017 and 2016, the Company recognized share-based compensation expense of $7.8 million and $8.1 million, respectively. Activity in options and restricted stock during the three-month period ended March 31, 2017 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 March 31, 2017 and 2016 were approximately $13.02 and $15.28, respectively.

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

 

 

 

For the three-month

period ended March 31,

 

(In millions)

 

2017

 

 

2016

 

Research and development

 

$

2.5

 

 

$

2.1

 

Selling, general and administrative

 

 

5.3

 

 

 

6.0

 

Total

 

$

7.8

 

 

$

8.1

 

 

A summary of share-based compensation activity for the three-month period ended March 31, 2017 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, 2017

 

 

9,072

 

 

$

31.11

 

 

 

 

 

 

 

 

 

Granted

 

 

607

 

 

 

27.03

 

 

 

 

 

 

 

 

 

Cancelled

 

 

(73

)

 

 

31.80

 

 

 

 

 

 

 

 

 

Exercised

 

 

(250

)

 

 

21.91

 

 

 

 

 

 

 

 

 

Balance at March 31, 2017

 

 

9,356

 

 

$

31.08

 

 

 

6.0

 

 

$

655

 

Vested and expected to vest at March 31,

   2017

 

 

9,257

 

 

$

31.10

 

 

 

6.0

 

 

$

649

 

Vested and exercisable at March 31, 2017

 

 

6,215

 

 

$

30.56

 

 

 

5.0

 

 

$

549

 

 

Restricted Stock and Performance Stock Unit Activity

 

(In thousands)

 

 

 

 

Restricted Stock

 

Number of Shares

 

Nonvested at January 1, 2017

 

 

625

 

Granted

 

 

541

 

Vested

 

 

(5

)

Forfeited

 

 

(5

)

Nonvested at March 31, 2017

 

 

1,156

 

 

Unrecognized compensation cost for unvested stock options, restricted stock awards and performance stock units as of March 31, 2017 totaled $65.7 million and is expected to be recognized over a weighted average period of approximately 2.4 years.

Loss Per Share
Loss Per Share

(5) Loss Per Share

The following table sets forth the computation of basic and diluted loss per share for the three-month periods ended March 31, 2017 and 2016:

 

(In thousands, except per share data)

 

Three-month

period ended

March 31,

2017

 

 

Three-month

period ended

March 31,

2016

 

Basic and diluted

 

 

 

 

 

 

 

 

Net loss

 

$

(18,904

)

 

$

(520

)

Weighted average common shares outstanding used in

   computing net loss per share—basic

 

 

45,808

 

 

 

44,815

 

Plus: net effect of dilutive stock options and restricted

   common shares

 

 

 

 

 

 

Weighted average common shares outstanding used in

   computing net loss per share—diluted

 

 

45,808

 

 

 

44,815

 

Net loss per share—basic

 

$

(0.41

)

 

$

(0.01

)

Net loss per share—diluted

 

$

(0.41

)

 

$

(0.01

)

 

Securities that could potentially be dilutive are excluded from the computation of diluted earnings 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 income per diluted share because their effects were anti-dilutive:

 

(In thousands)

 

Three-month

period ended

March 31,

2017

 

 

Three-month

period ended

March 31,

2016

 

Denominator

 

 

 

 

 

 

 

 

Stock options and restricted common shares

 

 

8,258

 

 

 

4,393

 

Convertible note – Saints Capital

 

 

 

 

 

10

 

 

Additionally, the impact of the convertible debt and the impact of the convertible capital loan assumed from Biotie were determined to be anti-dilutive and excluded from the calculation of net loss per diluted share for the three-month periods ended March 31, 2017 and 2016.

Income Taxes
Income Taxes

(6) Income Taxes

The Company’s effective income tax rate differs from the U.S. statutory rate principally due to state taxes, Federal research and development tax credits, jurisdictions with pretax losses for which no tax benefit can be recognized and certain other permanent tax items. The annual rate depends on a number of factors, including the jurisdiction in which operating profit is earned and the timing and nature of discrete items.

For the three-month periods ended March 31, 2017 and 2016, the Company recorded a $0.9 million and $9.7 million benefit from income taxes, respectively. The benefit from income taxes is based on federal, state and foreign income taxes, net of any tax credits and valuation allowance. The effective income tax rates for the Company for the three-month periods ended March 31, 2017 and 2016 were 5% and 95%, respectively. The variance in the effective tax rates for the three-month period ended March 31, 2017 as compared to the three-month period ended March 31, 2016 was due primarily to the valuation allowance recorded on jurisdictions with Biotie pretax losses for which no tax benefit can be recognized, the tax implications of costs related to the Biotie transaction, the absence of orphan drug development in 2017 and a reduction in foreign tax expense. 

The Company continues to evaluate the realizability of its deferred tax assets and liabilities 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.

Fair Value Measurements
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 March 31, 2017 and December 31, 2016 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 time deposits, money market funds and investments in a Treasury money market fund and the Company’s Level 2 assets consist of high-quality government bonds that are valued using observable market prices. The Company’s Level 3 liabilities represent acquired contingent consideration related to the acquisition of Civitas and are valued using a probability weighted discounted cash flow valuation approach. No changes in valuation techniques occurred during the three-month period ended March 31, 2017. The estimated fair values of all of our financial instruments approximate their carrying values at March 31, 2017, except for the fair value of the Company’s convertible senior notes, which was approximately $293.3 million as of March 31, 2017.  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

 

March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Assets Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

19,862

 

 

$

 

 

$

 

Liabilities Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired contingent consideration

 

 

 

 

 

 

 

 

82,900

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

Assets Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

18,514

 

 

$

 

 

$

 

Liabilities Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired contingent consideration

 

 

 

 

 

 

 

 

72,100

 

 

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

March 31,

2017

 

 

Three-month

period ended

March 31,

2016

 

Acquired contingent consideration:

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

72,100

 

 

$

63,500

 

Fair value change to contingent consideration

   (unrealized) included in the statement of operations

 

 

10,800

 

 

 

6,200

 

Balance, end of period

 

$

82,900

 

 

$

69,700

 

 

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 (CVT-301), a phase 3 candidate for the treatment of OFF periods of Parkinson’s disease and CVT-427, a Phase I candidate. CVT-427 is an inhaled triptan intended for acute treatment of migraine using the ARCUS delivery system. Using this approach, expected future cash flows are calculated over the expected life of the agreement, are discounted, and then exercise scenario probabilities are applied.  Some of the more significant assumptions made in the valuation include (i) the estimated INBRIJA and CVT 427 revenue forecasts, (ii) probabilities of success, and (iii) discount periods and rate. The probability of achievement of revenue milestones ranged from 26.3% to 85% with milestone payment outcomes ranging from $0 to $58 million in the aggregate for INBRIJA and CVT-427. The valuation is performed quarterly. Gains and losses are included in the statement of operations.  For the three-month period ended March 31, 2017, changes in the fair value of the acquired contingent consideration were due to the re-calculation of cash flows for the passage of time and updates to certain other estimated assumptions.

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 probability adjusted sales estimates for INBRIJA and CVT-427 and estimated discount rates, the estimated fair value could be significantly higher or lower than the fair value determined.

Investments
Investments

(8) Investments

Short-term investments with maturities of three months or less from date of purchase have been classified as cash equivalents, and amounted to $19.9 million and $18.5 million as of March 31, 2017 and December 31, 2016, respectively. Short-term investments have original maturities of greater than 3 months but less than 1 year and long-term investments are greater than 1 year. There were no investments classified as long-term at March 31, 2017 and 2016.

Debt Obligations
Debt Obligations

(9) Debt Obligations

Saints Capital Notes

Effective January 2017, the Company paid approximately $0.8 million in full payment of these notes.

Asset Based Loan

On June 1, 2016, the Company and certain of its subsidiaries entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as the sole initial lender and the administrative agent for the lenders. On May 4, 2017, the Company voluntarily terminated the Credit Agreement because it no longer served the Company’s needs. The Company did not incur any early termination penalties in connection with the termination. Prior to its termination, the Credit Agreement provided the Company with a three-year senior secured revolving credit facility in the maximum amount of $60 million. The restrictive covenants, as well as the lenders' security interests in collateral, under the Credit Agreement and the related loan documents terminate in connection with the termination of the facility.

As of March 31, 2017, there was approximately $1.1 million of debt issuance costs recorded on the consolidated balance sheets associated with the Credit Agreement that will be written off in May 2016.

Convertible Capital Loans

Convertible capital loans acquired from Biotie and issued to certain shareholders and venture capital organizations had a fair value of $0.5 million (€0.5 million) and a carrying value of $0.2 million as of March 31, 2017.

In the three-month period ended March 31, 2017, the Company extended an offer to each of the convertible capital loan holders to repurchase the outstanding principal amount of each convertible capital loan. As of March 31, 2017, all but one of the loan holders agreed to the terms of the Company’s offer and agreed to accept payment of the principal amount as payment in full for their respective outstanding loans. The Company paid approximately $1.7 million (€1.5 million) in March 2017 to repurchase the outstanding principal amount of these loans. In April 2017, the final loan holder agreed to accept the Company’s repurchase offer and the Company paid approximately $0.2 million (€0.2 million) to repurchase the outstanding principal amount of this loan.

 

Commitments and Contingencies
Commitments and Contingencies

(10) Commitments and Contingencies

A summary of the Company’s commitments and contingencies was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company’s long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business.

The Company is currently party to various legal proceedings which are principally patent litigation matters. The Company has assessed such legal proceedings and does not believe that it is probable that a liability has been incurred or that the amount of any potential liability or range of losses can be reasonably estimated. As a result, the Company did not record any loss contingencies for any of these matters. Litigation expenses are expensed as incurred.

Summary of Significant Accounting Policies (Policies)

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; and 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 gains and losses are charged to 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. 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 to date are derived from the sales of Ampyra, Zanaflex and Qutenza in the U.S.

Intangible Assets

The Company has finite lived intangible assets related to Ampyra. These intangible assets are amortized on a straight line basis over the period in which the Company expects to receive economic benefit and are reviewed for impairment when facts and circumstances indicate that the carrying value of the asset may not be recoverable. The determination of the expected life will be dependent upon the use and underlying characteristics of the intangible asset. In the Company’s evaluation of the intangible assets, it considers the term of the underlying asset life and the expected life of the related product line. If the carrying value is not recoverable, impairment is measured as the amount by which the carrying value exceeds its estimated fair value. Fair value is generally estimated based on either appraised value or other valuation techniques.

On March 31, 2017, the United States District Court for the District of Delaware upheld U.S. Patent No. 5,540,938 (the ‘938 patent), which is set to expire in July 2018. The claims of the ‘938 patent relate to methods for treating a neurological disease, such as MS, and cover the use of a sustained release dalfampridine formulation, such as AMPYRA (dalfampridine) Extended Release Tablets, 10 mg for improving walking in people with MS. The District Court invalidated U.S. Patent Nos. 8,663,685 , 8,007,826, 8,440,703, and 8,354,437, which pertain to Ampyra. The Company intends to appeal the ruling on these patents. As a result of the District Court’s decision, the Company performed an interim impairment test for the intangible assets related to Ampyra in connection with the preparation of the unaudited interim condensed consolidated financial statements for the first quarter of 2017. Based on the impairment test performed, the Company determined that these intangible assets were not impaired. Accordingly, the Company did not record an impairment loss during the three-month period ended March 31, 2017.

In accordance with the Company’s policy, the estimated remaining useful lives of the Ampyra intangible assets were reviewed to determine if there was a change in the estimated useful lives of these assets. Based on the review, the Company determined that there was a change in the estimated useful lives of these assets that would require an acceleration of the amortization expense. The Company estimates that the estimated useful lives of these intangible assets will coincide with the expiration of the ‘938 patent. The Company will account for this change prospectively as a change in an accounting estimate following the period ended March 31, 2017. The change in the estimated remaining useful lives of these intangible assets did not have a material impact on the Company’s statement of operations for the three-month period ended March 31, 2017.

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 the following subsequent events required disclosure in these financial statements.

In April 2017, the Company implemented a corporate restructuring to reduce its cost structure and focus its resources on its two late stage Parkinson’s disease programs, INBRIJA and tozadenant, as well as on maximizing Ampyra value and ensuring continued patient access to Ampyra. The adoption of the restructuring plan follows the previously-announced decision by the United States District Court for the District of Delaware in litigation with certain generic drug manufacturers upholding our Ampyra Orange Book-listed patent set to expire on July 30, 2018, but invalidating our four other Orange Book-listed patents pertaining to Ampyra that were set to expire between 2025 and 2027. Under this decision, we expect to maintain patent exclusivity with respect to Ampyra at least through July 30, 2018, although the other parties to the lawsuit may appeal the District Court’s decision upholding the patent that expires in July 2018.. As part of the restructuring, the Company announced plans to reduce headcount by approximately 20%, with the majority of the reduction in personnel occurring in April 2017.

On June 1, 2016, the Company and certain of its subsidiaries entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as the sole initial lender and the administrative agent for the lenders. On May 4, 2017, the Company voluntarily terminated the Credit Agreement because it no longer served the Company’s needs. The Company did not incur any early termination penalties in connection with the termination. Prior to its termination, the Credit Agreement provided the Company with a three-year senior secured revolving credit facility in the maximum amount of $60 million. The restrictive covenants, as well as the lenders' security interests in collateral, under the Credit Agreement and the related loan documents terminate in connection with the termination of the facility.

As of March 31, 2017, there was approximately $1.1 million of debt issuance costs recorded on the consolidated balance sheets associated with the Credit Agreement that will be written off in May 2017.

Recently Issued / Adopted Accounting Pronouncements

In March 2016, the FASB issued Accounting Standards Update 2016-09, “Compensation – Stock Compensation” (Topic 718). The main objective of this update is to simplify the accounting, and reporting classifications for certain aspects of share-based payment transactions. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.

The Company adopted this guidance effective January 1, 2017 on a prospective basis. The new guidance requires that excess tax benefits or deficiencies that arise upon the vesting or exercise of share-based payments be recognized as income tax benefit or expense in the income statement. Previously, these amounts were recorded as additional paid-in-capital. As a result of the adoption of ASU 2016-09, the Company recorded an adjustment to accumulated deficit of $12.1 million to recognize net operating loss carryforwards, attributable to excess tax benefits on stock compensation that was not previously recognized in additional paid in capital. The new guidance also permits the accounting for forfeitures based on either an estimate of the number of shares expected to vest (current GAAP) or on the actual forfeitures as they occur. The Company elected to continue estimating forfeitures for determining compensation costs. The new guidance also provides for excess tax benefits to be classified as an operating activity in the statement of cash flows. Previously, excess tax benefits were classified as a financing activity. The Company did not have any excess tax benefits in the three-month period ended March 31, 2017.

In July 2015, the FASB issued Accounting Standards Update 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11), which requires the measurement of inventory at the lower of cost and net realizable value. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and interim periods therein with early adoption permitted. The Company adopted this guidance effective January 1, 2017. The adoption of this guidance did not have an impact on the consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-06, “Derivatives and Hedging” (Topic 815): Contingent Put and Call Options in Derivative Contracts (ASU 2016-06), which clarifies the requirements for assessing whether contingent options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This ASU is effective for fiscal years beginning after December 15, 2016 and interim periods therein. The Company adopted this guidance effective January 1, 2017. The adoption of this guidance did not have an impact on the consolidated financial statements.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (Topic 606) (ASU 2014-09). This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. In July 2015, the FASB deferred the effective date of the new revenue standard for interim and annual periods beginning after December 15, 2017 (previously December 15, 2016). The Company expects to adopt this guidance on January 1, 2018. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. The Company is evaluating the transition method that will be elected and the potential effects of adopting the provisions of ASU No. 2014-09.

The new guidance requires the application of a five-step model to determine the amount and timing of revenue to be recognized. The underlying principle is that revenue is to be recognized for the transfer of goods or services to customers that reflects the amount of consideration that the Company expects to be entitled to in exchange for those goods or services.

The Company is continuing to assess the impact of the new guidance on its accounting policies and procedures and is evaluating the new requirements as applied to existing revenue contracts. Although the Company is continuing to assess the impact of the new guidance, the Company believes the most significant impact will relate to the recognition of license revenues associated with its Biogen contract at a point in time rather than over a period of time. The Company is reviewing its revenue contracts and working on its plan for implementation of the new guidance which it expects to adopt beginning in the first quarter of 2018.

In January 2017, the FASB issued Accounting Standards Update 2017-04, “Intangibles – Goodwill and Other” (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. ASU 2017-04 allows for prospective application and is effective for fiscal years beginning after December 15, 2019, and interim periods therein with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating whether it will adopt this guidance early and the impact it may have on its consolidated financial statements.

Acquisitions (Tables)

 

(In thousands)

 

Preliminary

Allocation, as

adjusted through

December 31, 2016

 

 

Measurement

Period

Adjustments

 

 

Preliminary

Allocation, as

adjusted through

March 31, 2017

 

Cash and cash equivalents

 

$

73,854

 

 

$

 

 

$

73,854

 

Other current assets

 

 

1,878

 

 

 

 

 

 

1,878

 

Other long-term assets

 

 

4,962

 

 

 

 

 

 

4,962

 

Intangible assets (indefinite-lived)

 

 

260,500

 

 

 

 

 

 

260,500

 

Intangible assets (definite-lived)

 

 

65,000

 

 

 

 

 

 

65,000

 

Current liabilities

 

 

(18,572

)

 

 

3,837

 

 

 

(14,735

)

Deferred taxes

 

 

(89,908

)

 

 

 

 

 

(89,908

)

Other long-term liabilities

 

 

(25,690

)

 

 

 

 

 

(25,690

)

Fair value of assets and liabilities acquired

 

 

272,024

 

 

 

3,837

 

 

 

275,861

 

Goodwill

 

 

103,876

 

 

 

(3,837

)

 

 

100,039

 

Total purchase price

 

 

375,900

 

 

 

 

 

 

375,900

 

Less: Noncontrolling interests

 

 

(25,736

)

 

 

 

 

 

(25,736

)

Purchase consideration on date of acquisition

 

$

350,164

 

 

$

 

 

$

350,164

 

 

 

(In thousands)

 

 

 

 

Balance at December 31, 2016

 

$

280,599

 

Decrease to goodwill for measurement period adjustments

 

 

(3,837

)

Foreign currency translation adjustment

 

 

1,307

 

Balance at March 31, 2017

 

$

278,069

 

 

 

 

 

Three-month

period ended

March 31, 2017

 

 

Three-month

period ended

March 31, 2016

 

(In thousands)

 

Reported

 

 

Pro Forma

 

 

Reported

 

 

Pro Forma

 

Net revenues

 

$

119,386

 

 

$

119,386

 

 

$

115,904

 

 

$

116,744

 

Net loss from continuing operations

 

$

(18,904

)

 

$

(18,904

)

 

$

(520

)

 

$

(12,377

)

 

Share-based Compensation (Tables)

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

 

 

 

For the three-month

period ended March 31,

 

(In millions)

 

2017

 

 

2016

 

Research and development

 

$

2.5

 

 

$

2.1

 

Selling, general and administrative

 

 

5.3

 

 

 

6.0

 

Total

 

$

7.8

 

 

$

8.1

 

 

 

 

 

Number of

Shares

(In thousands)

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Term

 

 

Intrinsic

Value

(In thousands)

 

Balance at January 1, 2017

 

 

9,072

 

 

$

31.11

 

 

 

 

 

 

 

 

 

Granted

 

 

607

 

 

 

27.03

 

 

 

 

 

 

 

 

 

Cancelled

 

 

(73

)

 

 

31.80

 

 

 

 

 

 

 

 

 

Exercised

 

 

(250

)

 

 

21.91

 

 

 

 

 

 

 

 

 

Balance at March 31, 2017

 

 

9,356

 

 

$

31.08

 

 

 

6.0

 

 

$

655

 

Vested and expected to vest at March 31,

   2017

 

 

9,257

 

 

$

31.10

 

 

 

6.0

 

 

$

649

 

Vested and exercisable at March 31, 2017

 

 

6,215

 

 

$

30.56

 

 

 

5.0

 

 

$

549

 

 

 

(In thousands)

 

 

 

 

Restricted Stock

 

Number of Shares

 

Nonvested at January 1, 2017

 

 

625

 

Granted

 

 

541

 

Vested

 

 

(5

)

Forfeited

 

 

(5

)

Nonvested at March 31, 2017

 

 

1,156

 

 

Loss Per Share (Tables)

 

(In thousands, except per share data)

 

Three-month

period ended

March 31,

2017

 

 

Three-month

period ended

March 31,

2016

 

Basic and diluted

 

 

 

 

 

 

 

 

Net loss

 

$

(18,904

)

 

$

(520

)

Weighted average common shares outstanding used in

   computing net loss per share—basic

 

 

45,808

 

 

 

44,815

 

Plus: net effect of dilutive stock options and restricted

   common shares

 

 

 

 

 

 

Weighted average common shares outstanding used in

   computing net loss per share—diluted

 

 

45,808

 

 

 

44,815

 

Net loss per share—basic

 

$

(0.41

)

 

$

(0.01

)

Net loss per share—diluted

 

$

(0.41

)

 

$

(0.01

)

 

 

(In thousands)

 

Three-month

period ended

March 31,

2017

 

 

Three-month

period ended

March 31,

2016

 

Denominator

 

 

 

 

 

 

 

 

Stock options and restricted common shares

 

 

8,258

 

 

 

4,393

 

Convertible note – Saints Capital

 

 

 

 

 

10

 

 

Fair Value Measurements (Tables)

 

(In thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Assets Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

19,862

 

 

$

 

 

$

 

Liabilities Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired contingent consideration

 

 

 

 

 

 

 

 

82,900

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

Assets Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

18,514

 

 

$

 

 

$

 

Liabilities Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired contingent consideration

 

 

 

 

 

 

 

 

72,100

 

 

 

(In thousands)

 

Three-month

period ended

March 31,

2017

 

 

Three-month

period ended

March 31,

2016

 

Acquired contingent consideration:

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

72,100

 

 

$

63,500

 

Fair value change to contingent consideration

   (unrealized) included in the statement of operations

 

 

10,800

 

 

 

6,200

 

Balance, end of period

 

$

82,900

 

 

$

69,700

 

 

Summary of Significant Accounting Policies - Additional Information (Details) (USD $)
3 Months Ended 0 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended
Mar. 31, 2017
segment
Mar. 31, 2017
Accounting Standards Update 2016-09
Jun. 1, 2016
JPMorgan Chase Bank, N.A.
Senior secured revolving credit facility
Mar. 31, 2017
JPMorgan Chase Bank, N.A.
Senior secured revolving credit facility
Apr. 30, 2017
Subsequent Event
Mar. 31, 2017
Ampyra
Segment and Geographic Information
 
 
 
 
 
 
Number of operating segments
 
 
 
 
 
Number of reportable operating segments
 
 
 
 
 
Impairment loss
 
 
 
 
 
$ 0 
Approximate percentage of headcount reduction
 
 
 
 
20.00% 
 
Term of debt
 
 
3 years 
 
 
 
Maximum borrowing capacity
 
 
60,000,000 
 
 
 
Line of credit facility termination date
 
 
 
May 04, 2017 
 
 
Debt issuance costs
 
 
 
1,100,000 
 
 
Adjustment to accumulated deficit
 
12,100,000 
 
 
 
 
Excess tax benefit from share-based compensation, operating activities
 
$ 0 
 
 
 
 
Acquisitions - Additional Information (Details) (USD $)
0 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended
May 4, 2016
Sep. 30, 2016
Apr. 18, 2016
Mar. 31, 2017
Mar. 31, 2017
Jun. 30, 2016
Acquisitions
 
 
 
 
 
 
Proceeds from refund of cash security deposit
 
 
 
$ 2,722,000 
 
 
Biotie Therapies Corp.
 
 
 
 
 
 
Acquisitions
 
 
 
 
 
 
Voting interest acquired (as a percent)
 
 
93.00% 
 
 
 
Aggregate equity purchase price
 
 
350,000,000 
 
 
 
Additional voting interest acquired (as a percent)
4.00% 
3.00% 
 
 
 
 
Purchase consideration for subsequent acquisition
14,500,000 
 
 
 
 
 
Voting interest acquired including subsequent acquisition (as a percent)
 
100.00% 
 
 
 
97.00% 
Payment of cash security deposit
 
13,500,000 
 
 
 
 
Proceeds from refund of cash security deposit
 
 
 
2,700,000 
 
 
Acquisition-related expenses
 
 
 
600,000 
18,600,000 
 
Goodwill deductible for tax purposes
 
 
 
 
 
Biotie Therapies Corp. |
Measurement Period Adjustments |
Convertible Capital Loans
 
 
 
 
 
 
Acquisitions
 
 
 
 
 
 
Measurement period adjustments
 
 
 
$ 3,800,000 
 
 
Acquisitions - Schedule of Preliminary Allocation of Purchase Price to Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Preliminary allocation of purchase price to estimated fair values of assets acquired and liabilities assumed
 
 
Goodwill
$ 278,069 
$ 280,599 
Biotie Therapies Corp.
 
 
Preliminary allocation of purchase price to estimated fair values of assets acquired and liabilities assumed
 
 
Cash and cash equivalents
73,854 
73,854 
Other current assets
1,878 
1,878 
Other long-term assets
4,962 
4,962 
Intangible assets (indefinite-lived)
260,500 
260,500 
Intangible assets (definite-lived)
65,000 
65,000 
Current liabilities
(14,735)
(18,572)
Deferred taxes
(89,908)
(89,908)
Other long-term liabilities
(25,690)
(25,690)
Fair value of assets and liabilities acquired
275,861 
272,024 
Goodwill
100,039 
103,876 
Total purchase price
375,900 
375,900 
Less: Noncontrolling interests
(25,736)
(25,736)
Purchase consideration on date of acquisition
350,164 
350,164 
Biotie Therapies Corp. |
Measurement Period Adjustments
 
 
Preliminary allocation of purchase price to estimated fair values of assets acquired and liabilities assumed
 
 
Current liabilities
3,837 
 
Fair value of assets and liabilities acquired
3,837 
 
Goodwill
$ (3,837)
 
Acquisitions - Schedule of Changes in Carrying Amount of Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Changes in carrying amount of goodwill
 
Beginning balance
$ 280,599 
Decrease to goodwill for measurement period adjustments
(3,837)
Foreign currency translation adjustment
1,307 
Ending balance
$ 278,069 
Acquisitions - Summary of Supplemental Pro Forma Financial Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Acquisitions
 
 
Net revenues
$ 119,386 
$ 115,904 
Net loss
(18,904)
(520)
Biotie Therapies Corp.
 
 
Acquisitions
 
 
Net revenues
119,386 
116,744 
Net loss from continuing operations
(18,904)
(12,377)
Net revenues
119,386 
115,904 
Net loss
$ (18,904)
$ (520)
Share-based Compensation - Additional Information (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
Share-based compensation expense recognized
$ 7.8 
$ 8.1 
Weighted average fair value of options granted (in dollars per share)
$ 13.02 
$ 15.28 
Share based compensation, other disclosures
 
 
Total unrecognized compensation costs related to unvested stock options and restricted stock awards that the company expects to recognize
$ 65.7 
 
Weighted average period
2 years 4 months 24 days 
 
Share-based Compensation - Schedule of Share-based Compensation Expense (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Share-based compensation expense recognized
$ 7.8 
$ 8.1 
Research and development
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Share-based compensation expense recognized
2.5 
2.1 
Selling, general, and administrative
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Share-based compensation expense recognized
$ 5.3 
$ 6.0 
Share-based Compensation - Schedule of Stock Options Activity (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Stock Option Activity
 
Beginning balance (in shares)
9,072 
Granted (in shares)
607 
Cancelled (in shares)
(73)
Exercised (in shares)
(250)
Ending balance (in shares)
9,356 
Vested and expected to vest at the end of the period
9,257 
Vested and exercisable at the end of the period
6,215 
Weighted Average Exercise Price
 
Balance at the beginning of the period (in dollars per share)
$ 31.11 
Granted (in dollars per share)
$ 27.03 
Cancelled (in dollars per share)
$ 31.80 
Exercised (in dollars per share)
$ 21.91 
Balance at the end of the period (in dollars per share)
$ 31.08 
Vested and expected to vest at the end of the period (in dollars per share)
$ 31.10 
Vested and exercisable at the end of the period (in dollars per share)
$ 30.56 
Weighted Average Remaining Contractual Term
 
Balance at the end of the period
6 years 
Vested and expected to vest at the end of the period
6 years 
Vested and exercisable at the end of the period
5 years 
Intrinsic Value
 
Balance at the end of the period
$ 655 
Vested and expected to vest at the end of the period
649 
Vested and exercisable at the end of the period
$ 549 
Share-based Compensation - Schedule of Restricted Stock and Performance Stock Unit Activity (Details) (Restricted Stock and Performance Stock Unit)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Restricted Stock and Performance Stock Unit
 
Restricted Stock and Performance Stock Unit Activity
 
Nonvested at the beginning of the period (in shares)
625 
Granted (in shares)
541 
Vested (in shares)
(5)
Forfeited (in shares)
(5)
Nonvested at the end of the period (in shares)
1,156 
Loss Per Share - Schedule of Computation of Basic and Diluted Loss Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Basic and diluted
 
 
Net loss
$ (18,904)
$ (520)
Weighted average common shares outstanding used in computing net loss per share—basic
45,808 
44,815 
Weighted average common shares outstanding used in computing net loss per share—diluted
45,808 
44,815 
Net loss per share—basic
$ (0.41)
$ (0.01)
Net loss per share—diluted
$ (0.41)
$ (0.01)
Loss Per Share - Schedule of Antidilutive Securities Excluded from Calculation of Net Income Per Diluted Share (Details)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Stock options and restricted common shares
 
 
Antidilutive Securities
 
 
Anti-dilutive securities excluded from computation of earnings per share (in shares)
8,258 
4,393 
Convertible note - Saints Capital
 
 
Antidilutive Securities
 
 
Anti-dilutive securities excluded from computation of earnings per share (in shares)
 
10 
Income Taxes - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Reconciliation of statutory federal income tax rate to effective income tax rate
 
 
Benefit from income taxes
$ 918 
$ 9,737 
Effective income tax rate (as a percent)
5.00% 
95.00% 
Fair Value Measurements - Additional Information (Details) (USD $)
Mar. 31, 2017
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
 
Milestone payment, minimum (as a percent)
26.30% 
Milestone payment, maximum (as a percent)
85.00% 
Milestone payment, minimum
$ 0 
Milestone payment, maximum
58,000,000 
Level 2
 
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
 
Convertible senior notes
$ 293,300,000 
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Liabilities Carried at Fair Value:
 
 
Acquired contingent consideration
$ 82,900 
$ 72,100 
Level 1 |
Recurring basis
 
 
Assets Carried at Fair Value:
 
 
Cash equivalents
19,862 
18,514 
Level 3 |
Recurring basis
 
 
Liabilities Carried at Fair Value:
 
 
Acquired contingent consideration
$ 82,900 
$ 72,100 
Fair Value Measurements - Schedule of Contingent Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Fair Value Disclosures [Abstract]
 
 
Balance, beginning of period
$ 72,100 
$ 63,500 
Fair value change to contingent consideration (unrealized) included in the statement of operations
10,800 
6,200 
Balance, end of period
$ 82,900 
$ 69,700 
Investments - Additional Information (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Available For Sale Securities Current [Abstract]
 
 
 
Long-term Investments
$ 0 
 
$ 0 
Short-term investments classified as cash equivalents
$ 19,900,000 
$ 18,500,000 
 
Debt Obligations - Additional Information (Details)
0 Months Ended 1 Months Ended
Mar. 31, 2017
Biotie Therapies Corp.
Convertible Capital Loans
USD ($)
Mar. 31, 2017
Biotie Therapies Corp.
Convertible Capital Loans
EUR (€)
Apr. 30, 2017
Biotie Therapies Corp.
Convertible Capital Loans
Subsequent Event
USD ($)
Apr. 30, 2017
Biotie Therapies Corp.
Convertible Capital Loans
Subsequent Event
EUR (€)
Jun. 1, 2016
JPMorgan Chase Bank, N.A.
Senior secured revolving credit facility
USD ($)
Mar. 31, 2017
JPMorgan Chase Bank, N.A.
Senior secured revolving credit facility
USD ($)
Jan. 31, 2017
Saints Capital Notes
USD ($)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
Convertible notes paid
 
 
 
 
 
 
$ 800,000 
Term of debt