Quarterly report pursuant to Section 13 or 15(d)

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

v3.19.3
Basis of Presentation and Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 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 Nine months ended
September 30, September 30,
2019 2018 2019 2018
Royalties
Promacta $ —    $ 27,812    $ 14,193    $ 68,191   
Kyprolis 7,602    6,286    16,317    14,411   
Evomela 1,515    1,356    3,570    4,116   
Other 650    673    1,851    1,625   
$ 9,767    $ 36,127    $ 35,931    $ 88,343   
Material Sales
Captisol $ 6,849    $ 7,027    $ 24,357    $ 19,030   
License fees, milestones and other
License Fees $ 243    $ 265    $ 3,083    $ 75,201   
Milestone 4,790    1,308    20,897    6,052   
Other 3,159    936    9,011    3,237   
$ 8,192    $ 2,509    $ 32,991    $ 84,490   
Total $ 24,808    $ 45,663    $ 93,279    $ 191,863   
Schedule of Investment Categories
Our investments consist of the following at September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019 December 31, 2018
Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value
Short-term investments
     Bank deposits $ 490,828    $ 294    $ (11)   $ 491,111    $ 311,066    $ 26    $ (29)   $ 311,063   
     Corporate bonds 58,581    240    —    58,821    53,223      (45)   53,179   
     Commercial paper 322,160    86    (29)   322,217    225,731      (76)   225,663   
     U.S. Government bonds —    —    —    —    7,982    —    (9)   7,973   
     Municipal bonds —    —    —    —    2,017    —    (4)   2,013   
     Corporate equity securities(1)
4,505    325    (2,661)   2,169    135    1,191    —    1,326   
     Warrants —    65    —    65    —    —    —    —   
$ 876,074    $ 1,010    $ (2,701)   $ 874,383    $ 600,154    $ 1,226    $ (163)   $ 601,217   
(1) The amortized cost for corporate equity securities represents the original purchase cost of the equity securities.
Schedule of Goodwill and Other Identifiable Intangible Assets
Goodwill and other identifiable intangible assets consist of the following (in thousands):
September 30, December 31,
2019 2018
     Goodwill $ 93,513    $ 86,646   
Definite lived intangible assets
     Complete technology 242,813    235,413   
          Less: accumulated amortization(1)
(44,786)   (35,070)  
     Trade name 2,642    2,642   
          Less: accumulated amortization (1,147)   (1,048)  
     Customer relationships 29,600    29,600   
          Less: accumulated amortization (12,854)   (11,744)  
Total goodwill and other identifiable intangible assets, net $ 309,781    $ 306,439   
(1) accumulated amortization for complete technology includes immaterial amount of foreign currency translation adjustments for the complete technology acquired from the Vernalis acquisition.
Schedule of Commercial License Rights
Commercial license and other economic rights consist of the following (in thousands):

September 30, December 31,
2019 2018
Aziyo and CorMatrix $ 17,696    $ 17,696   
Novan 12,000    —   
Palvella 10,000    10,000   
Selexis 8,602    8,602   
Dianomi 2,000    —   
50,298    36,298   
Less: accumulated amortization attributed to principal or research and development (14,885)   (4,838)  
   Total commercial license and other economic rights, net $ 35,413    $ 31,460   
Schedule of Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
September 30, December 31,
2019 2018
Compensation $ 3,605    $ 4,045   
Professional fees 771    942   
Amounts owed to former licensees 367    428   
Royalties owed to third parties 1,049    1,025   
Payments due to broker for share repurchases —    4,613   
Return reserve 3,157    3,590   
Restructuring   1,093   
Current operating lease liabilities 926    —   
Other 3,178    3,464   
     Total accrued liabilities
$ 13,060    $ 19,200   
Schedule of Accounting for Share-Based Compensation The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands):
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
Share-based compensation expense as a component of:
Research and development expenses $ 2,481    $ 2,257    $ 7,136    $ 6,120   
General and administrative expenses 3,816    3,213    11,079    8,717   
$ 6,297    $ 5,470    $ 18,215    $ 14,837   
Schedule of Fair-Value Options Awarded to Employees and Directors
The fair-value for options that were awarded to employees and directors was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
Risk-free interest rate 1.6%    N/A    2.4%    2.8%   
Dividend yield —    N/A    —    —   
Expected volatility 41%    N/A    43%    34%   
Expected term 5.3 N/A 5.2 5.7
Schedule of Computation of Basic and Diluted Earnings per Share
The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in thousands):
Three months ended Nine months ended
September 30, September 30,
2019 2018 2019 2018
Weighted average shares outstanding: 18,770    21,148    19,586    21,189   
Dilutive potential common shares:
     Restricted stock —    83    35    69   
     Stock options —    1,248    728    1,167   
     2019 Convertible Senior Notes —    —    —    924   
     Warrants —    1,573    —    1,081   
Shares used to compute diluted income per share 18,770    24,052    20,349    24,430   
Potentially dilutive shares excluded from calculation due to anti-dilutive effect 11,549    3,126    8,694    1,789