Annual report pursuant to Section 13 and 15(d)

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

v3.10.0.1
Basis of Presentation and Summary of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Major Customers Revenue from significant partners, which is defined as 10% or more of our total revenue, was as follows:
December 31,
2018 2017 2016
Partner A 40  % 46  % 41  %
Partner B 13  % 19  % 14  %
Partner C 20  % < 10%  < 10% 
Schedule of Commercial License Rights
Commercial license rights consist of the following (in thousands):
December 31, December 31,
2018 2017
Aziyo & CorMatrix $ 17,696  $ 17,696 
Palvella 10,000  — 
Selexis 8,602  8,602 
36,298  26,298 
Less: accumulated amortization (4,838) (6,772)
Total commercial license rights, net $ 31,460  $ 19,526 
Schedule of Disaggregation of Revenue
The following table represents disaggregation of Material Sales and License fees, milestone and other (in thousands), which are not affected by the adoption of ASC 606:

Year ended December 31, 
2018 2017 2016
Material Sales 
Captisol  $ 29,123  $ 22,070  $ 22,502 
License fees, milestones and other 
License fees  78,195  13,665  10,570 
Milestones  6,577  11,093  16,091 
Other  9,002  5,589  387 
$ 93,774  $ 30,347  $ 27,048 
Schedule of Inputs and Assumptions Used to Calculate Fair Value of Derivatives The following table summarizes the inputs and assumptions used in the Black-Scholes model to calculate the fair value of the assets and the inputs and assumptions used in the Binomial model to calculate the fair value of the derivative liabilities associated with the 2023 Notes:
As of May 22, 2018  As of June 19, 2018 
Common stock price  $187.09  $195.91 
Exercise price, conversion premium and bond hedge  $248.48  $248.48 
Exercise price, warrant  315.38  315.38 
Risk-free interest rate  2.9%    2.8%   
Volatility  30%-35%  30%-35% 
Dividend yield  —  — 
Annual coupon rate  0.75%    0.75%   
Remaining contractual term (in years)  5.05  4.98 

In connection with our 2019 Notes, which we issued in August 2014 for $245.0 million aggregate principal amount, on May 22, 2018, we amended it making an irrevocable election to settle the entire note in cash. As a result, we reclassified from equity to derivative liability the fair value of the conversion premium as of May 22, 2018. Amounts paid in excess of the principal amount will be offset by an equal receipt of cash under the corresponding convertible bond hedge. As a result, we reclassified from equity to derivative asset the fair value of the bond hedge as of May 22, 2018. Changes in the fair value of these derivatives are reflected in other expense, net, in our condensed consolidated statements of operations.

The following table summarizes the inputs and assumptions used in the Black-Scholes model to calculate the fair value of the derivative assets and the inputs and assumptions used in the Binomial model to calculate the fair value of the derivative liability associated with the 2019 Notes:
 

As of May 22, 2018  As of December 31, 2018 
Common stock price  $187.09  $135.70 
Exercise price, conversion premium and bond hedge  $75.05  $75.05 
Risk-free interest rate  2.47%    2.60%   
Volatility  30%-35%  30%-35% 
Dividend yield  —  — 
Annual coupon rate  0.75%    0.75%   
Remaining contractual term (in years)  1.25  0.63 
Schedule of Computation of Basic and Diluted Net Income (Loss) per Share
The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in thousands):
Year Ended December 31,
  2018 2017 2016
Weighted average shares outstanding: 21,160  21,032  20,831 
Dilutive potential common shares:
Restricted stock 72  141  — 
Stock options 1,125  1,000  — 
Warrants associated with 2019 Notes 1,017  94  — 
2019 Convertible Senior Notes 693  1,214  — 
Shares used to compute diluted income per share 24,067  23,481  20,831 
Potentially dilutive shares excluded from calculation due to anti-dilutive effect 2,845  335  3,544