Quarterly report pursuant to Section 13 or 15(d)

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

v3.19.1
Basis of Presentation and Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Revenue by Source
The following table represents disaggregation of Royalties, Material Sales and License fees, milestone and other (in thousands):

Three months ended
March 31,
2019 2018
Royalties
Promacta $ 14,193  $ 15,573 
Kyprolis 3,833  3,262 
Evomela 911  1,600 
Other 601  385 
$ 19,538  $ 20,820 
Material Sales
Captisol $ 8,959  $ 4,391 
License fees, milestones and other
License Fees $ 850  $ 26,955 
Milestone 11,932  2,825 
Other 2,205  1,166 
$ 14,987  $ 30,946 
Total $ 43,484  $ 56,157 
Schedule of Investment Categories
Our investments consist of the following at March 31, 2019 and December 31, 2018 (in thousands):
March 31, 2019 December 31, 2018
Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value
Short-term investments
Bank deposits $ 673,988  $ 184  $ (20) $ 674,152  $ 311,066  $ 26  $ (29) $ 311,063 
Corporate bonds 74,875  56  (1) 74,930  53,223  (45) 53,179 
Commercial paper 563,585  60  (112) 563,533  225,731  (76) 225,663 
U.S. Government bonds 3,013  —  (3) 3,010  7,982  —  (9) 7,973 
Municipal bonds —  —  —  —  2,017  —  (4) 2,013 
Corporate equity securities(1)
4,525  2,915  —  7,440  135  1,191  —  1,326 
Warrants —  510  —  510  —  —  —  — 
$ 1,319,986  $ 3,725  $ (136) $ 1,323,575  $ 600,154  $ 1,226  $ (163) $ 601,217 
(1) The amortized cost for corporate equity securities represents the original purchase cost of the equity securities.
Schedule of Goodwill and Other Identifiable Intangible Assets
Goodwill and other identifiable intangible assets consist of the following (in thousands):
March 31, December 31,
2019 2018
Goodwill $ 86,809  $ 86,646 
Definite lived intangible assets
Complete technology 235,413  235,413 
Less: accumulated amortization (38,169) (35,070)
Trade name 2,642  2,642 
Less: accumulated amortization (1,081) (1,048)
Customer relationships 29,600  29,600 
Less: accumulated amortization (12,115) (11,744)
Total goodwill and other identifiable intangible assets, net $ 303,099  $ 306,439 
Schedule of Commercial License Rights
Commercial license and other economic rights consist of the following (in thousands):

March 31, December 31,
2019 2018
Aziyo and CorMatrix $ 17,696  $ 17,696 
Palvella 10,000  10,000 
Selexis 8,602  8,602 
Dianomi 2,000  — 
38,298  36,298 
Less: accumulated amortization attributed to principal or research and development (7,275) (4,838)
Total commercial license and other economic rights, net $ 31,023  $ 31,460 
Schedule of Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
March 31, December 31,
2019 2018
Compensation $ 2,384  $ 4,045 
Professional fees 1,022  942 
Amounts owed to former licensees 427  428 
Royalties owed to third parties 1,084  1,025 
Payments due to broker for share repurchases —  4,613 
Return reserve 2,813  3,590 
Restructuring 287  1,093 
Current lease liabilities 1,187  — 
Other 5,567  3,464 
 Total accrued liabilities
$ 14,771  $ 19,200 
Schedule of Accounting for Share-Based Compensation The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands):
Three months ended
March 31,
2019 2018
Share-based compensation expense as a component of:
Research and development expenses $ 2,127  $ 1,767 
General and administrative expenses 3,220  2,788 
$ 5,347  $ 4,555 
Schedule of Fair-Value Options Awarded to Employees and Directors
The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:
Three months ended
March 31,
2019 2018
Risk-free interest rate 2.5%    2.7%   
Dividend yield —    —   
Expected volatility 44%    33%   
Expected term 5.1 5.7
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 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 March 31, 2019
Common stock price $125.71 
Exercise price, conversion premium and bond hedge $75.05 
Risk-free interest rate 2.46%   
Volatility 35%   
Dividend yield —   
Annual coupon rate 0.75%   
Remaining contractual term (in years) 0.38
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):
Three months ended
March 31,
2019 2018
Weighted average shares outstanding: 20,447  21,209 
Dilutive potential common shares:
Restricted stock 45  64 
Stock options 785  1,119 
2019 Convertible Senior Notes —  1,719 
Warrants —  689 
Shares used to compute diluted income per share 21,277  24,800 
Potentially dilutive shares excluded from calculation due to anti-dilutive effect 7,015  148