0001356576-19-000025 | 10-Q | XBRL Viewer | Supernus Pharmaceuticals INC

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of common stock equivalents excluded in the calculation of diluted earnings per share



	Three Months ended June 30,		Six Months ended June 30,
	2019	2018	2019	2018
	(unaudited)		(unaudited)
Stock options	1,030,370	137,565	300,342	184,760

Schedule of computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted EPS for the three and six month periods ended June 30, 2019 and 2018, in thousands of dollars, except share and per share amounts:



	Three Months ended June 30,				Six Months ended June 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Numerator, in thousands:
Net earnings used for calculation of basic and diluted EPS	$	32,727	$	30,737	$	51,067	$	57,089

Denominator:
Weighted average shares outstanding, basic	52,385,590		51,919,894		52,361,149		51,729,243

Effect of dilutive potential common shares:
Stock options and SAR	1,527,387		2,283,414		1,586,685		2,292,698
Weighted average shares outstanding, diluted	53,912,977		54,203,308		53,947,834		54,021,941

Earnings per share, basic	$	0.62	$	0.59	$	0.98	$	1.10
Earnings per share, diluted	$	0.61	$	0.57	$	0.95	$	1.06

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 87,344	$ 192,248
Marketable securities	171,222	163,770
Accounts receivable, net	84,564	102,922
Inventories, net	26,024	25,659
Prepaid expenses and other current assets	21,757	8,888
Total current assets	390,911	493,487
Long term marketable securities	593,754	418,798
Property and equipment, net	4,028	4,095
Intangible assets, net	28,787	31,368
Lease assets	19,639
Deferred income taxes	25,975	29,683
Other assets	581	380
Total assets	1,063,675	977,811
Current liabilities
Accounts payable	4,081	3,195
Accrued product returns and rebates	95,934	107,063
Accrued expenses and other current liabilities	38,614	36,535
Income taxes payable	2,674	12,377
Non-recourse liability related to sale of future royalties, current portion	2,668	2,183
Total current liabilities	143,971	161,353
Convertible notes, net	337,210	329,462
Non-recourse liability related to sale of future royalties, long term	21,100	22,575
Lease liabilities, long term	27,535
Other liabilities	10,955	11,398
Total liabilities	540,771	524,788
Stockholders’ equity
Common stock, $0.001 par value, 130,000,000 shares authorized 52,449,036 and 52,316,583 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	52	52
Additional paid-in capital	379,369	369,637
Accumulated other comprehensive earnings (loss), net of tax	5,924	(3,158)
Retained earnings	137,559	86,492
Total stockholders’ equity	522,904	453,023
Total liabilities and stockholders’ equity	$ 1,063,675	$ 977,811

Condensed Consolidated Statements of Comprehensive Earnings - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net earnings	$ 32,727	$ 30,737	$ 51,067	$ 57,089
Other comprehensive earnings (loss)
Unrealized gain (loss) on marketable securities, net of tax	4,497	(1,828)	9,082	(3,372)
Other comprehensive earnings (loss)	4,497	(1,828)	9,082	(3,372)
Comprehensive earnings	$ 37,224	$ 28,909	$ 60,149	$ 53,717

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Intangible Assets
Less accumulated amortization	$ (15,968)		$ (15,968)		$ (13,356)
Total	28,787		28,787		31,368
Additional disclosures
Amortization expense	1,300	$ 1,300	2,600	$ 2,600
Capitalized patent defense costs
Intangible Assets
Capitalized patent defense costs	$ 44,755		$ 44,755		$ 44,724
Capitalized patent defense costs \| Minimum
Intangible Assets
Weighted- Average Life			3 years 6 months 3 days		3 years 6 months 3 days
Capitalized patent defense costs \| Maximum
Intangible Assets
Weighted- Average Life			7 years 9 months 3 days		7 years 9 months 3 days

Organization and Business	6 Months Ended
Organization and Business	Jun. 30, 2019
Organization and Nature of Operations
Organization and Business	Organization and Business Supernus Pharmaceuticals, Inc. (the Company) was incorporated in Delaware and commenced operations in 2005. The Company is a pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases. The Company markets two products: Oxtellar XR for the treatment of epilepsy and Trokendi XR for the prophylaxis of migraine headache and treatment of epilepsy. The Company has several proprietary product candidates in clinical development that address the CNS market. The Company launched Oxtellar XR and Trokendi XR for the treatment of epilepsy in 2013, launched Trokendi XR for the prophylaxis of migraine headache in adolescents and adults in April 2017 and launched Oxtellar XR with an expanded indication to include monotherapy for partial seizures in January 2019.

Leases - Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Leases [Abstract]
Rent expense	$ 3,600	$ 2,700	$ 2,700
Year ending December 31:
2019	3,400
2020	2,287
Thereafter	1,840
Total	$ 7,527

Fair Value of Financial Instruments - Financial Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Fair value of financial instruments
Carrying Value	$ 337,210	$ 329,462
0.625% Convertible Senior Notes due 2023 \| Significant Other Observable Inputs (Level 2)
Fair value of financial instruments
Carrying Value	337,210	329,462
Fair Value (Level 2)	$ 392,689	$ 375,834

Accrued Product Returns and Rebates

6 Months Ended

Jun. 30, 2019

Accrued Product Returns and Rebates

Accrued Product Returns and Rebates

Accrued product returns and rebates consist of the following, in thousands of dollars:



	June 30, 2019		December 31, 2018
	(unaudited)
Accrued rebates	$	74,362	$	85,003
Accrued product returns	21,572		22,060
Total	$	95,934	$	107,063

Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate Information (Details)	Jun. 30, 2019
Leases [Abstract]
Operating leases, Weighted-average remaining lease term in years	13 years 4 months 6 days
Operating leases, Weighted-average discount rate	4.36%

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued clinical trial and clinical supply costs	$ 17,398	$ 14,034
Accrued compensation	11,339	13,546
Accrued professional fees	3,703	3,706
Lease liabilities and related accrued interest, current	3,357	0
Accrued interest expense	629	650
Accrued product costs	13	38
Other accrued expenses	2,175	4,561
Total	$ 38,614	$ 36,535

Disaggregated Revenues Summary of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Total revenues	$ 104,695	$ 99,538	$ 190,169	$ 189,967
Trokendi XR
Disaggregation of Revenue [Line Items]
Total revenues	78,964	76,474	142,657	147,029
Oxtellar XR
Disaggregation of Revenue [Line Items]
Total revenues	23,394	20,556	42,800	39,121
Net product sales
Disaggregation of Revenue [Line Items]
Total revenues	102,358	97,030	185,457	186,150
Royalty revenues
Disaggregation of Revenue [Line Items]
Total revenues	2,337	1,758	4,712	3,067
Licensing revenues
Disaggregation of Revenue [Line Items]
Total revenues	$ 0	$ 750	$ 0	$ 750

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Product Licenses The Company has obtained exclusive licenses from third parties for proprietary rights to support the product candidates in the Company’s neurology and psychiatry portfolio. Under these license agreements, the Company may be required to pay certain amounts upon the achievement of certain milestones. If these products are ultimately commercialized, the Company is also obligated to pay royalties to third parties, as percentage of net product sales, for each respective product under license agreement. Royalty Agreement In the third quarter of 2014, the Company received a $30.0 million payment pursuant to a Royalty Interest Acquisition Agreement related to the purchase by HC Royalty of certain of the Company’s rights under the Company’s agreement with United Therapeutics related to the commercialization of Orenitram (treprostinil) Extended-Release Tablets. The Company will retain full ownership of the royalty rights if and when a certain cumulative payment threshold is reached, per the terms of the agreement. The Company recorded a non-recourse liability related to this transaction, and amortizes this amount as non-cash royalty revenue. The Company also recognizes non-cash interest expense related to this liability and accrues interest expense at an effective interest rate. The interest rate is determined based on projections of HC Royalty’s rate of return (see Notes 10 and 16).

Summary of Significant Accounting Policies - Accounting Pronouncements Adopted (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Recently Issued Accounting Pronouncements
Lease assets	$ 19,639
Operating lease liabilities	$ 30,892
ASU 2016 - 02 \| Restatement Adjustment
Recently Issued Accounting Pronouncements
Lease assets		$ 4,000
Operating lease liabilities		$ 4,000

Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Operating leases
2019 (remaining)	$ 1,704
2020	3,054
2021	2,687
2022	2,526
2023	2,537
Thereafter	29,371
Total future minimum lease payments	41,879
Less: Imputed interest	(10,987)
Present value of lease liabilities	$ 30,892

Disaggregated Revenues

6 Months Ended

Jun. 30, 2019

Disaggregation of Revenue [Abstract]

Disaggregated Revenues

The following table summarizes the disaggregation of revenues by nature, in thousands of dollars:



	Three Months ended June 30,				Six Months ended June 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Net product sales
Trokendi XR	$	78,964	$	76,474	$	142,657	$	147,029
Oxtellar XR	23,394		20,556		42,800		39,121
Total net product sales	$	102,358	$	97,030	$	185,457	$	186,150
Royalty revenues	2,337		1,758		4,712		3,067
Licensing revenues	—		750		—		750
Total revenues	$	104,695	$	99,538	$	190,169	$	189,967

The majority of the Company’s product sales are to pharmaceutical wholesalers/distributors who, in turn, sell the Company's products to chain and independent pharmacies, hospitals and other customers. Three pharmaceutical wholesalers/distributors collectively accounted for more than 90% of the Company’s total net product sales and accounts receivables as of and for the three and six month periods ended June 30, 2019 and 2018, respectively.

The Company recognized non-cash royalty revenue of $1.8 million and $3.4 million for the three and six month periods ended June 30, 2019, respectively. The Company recorded non-cash royalty revenue of $1.5 million and $2.8 million for the three and six month periods ended June 30, 2018, respectively.

No milestone revenue was recorded for the three and six month periods ended June 30, 2019. The Company recorded $0.8 million in milestone revenue for both the three and six month periods ended June 30, 2018.

For the three and six month periods ended June 30, 2019, revenues recognized from performance obligations related to prior periods (e.g., due to changes in transaction price) were not material, in the aggregate, to either Net product sales or Royalty revenues.

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 4,953	$ 5,742
Work in process	7,527	7,275
Finished goods	13,544	12,642
Total inventories	$ 26,024	$ 25,659

Convertible Senior Notes Due 2023 - Narrative (Details) - USD ($)	1 Months Ended	6 Months Ended
	Mar. 31, 2018	Jun. 30, 2019
Notes payable
Strike price of the warrant transactions (in dollars per share)	$ 80.9063
2023 Notes
Notes payable
Interest rate	0.625%
Conversion rate for the notes (in shares)	16.8545
Conversion ratio, principal amount	$ 1,000,000
Conversion price, per share of common stock (in dollars per share)	$ 59.33
Convertible note hedge options issued (in shares)	402,500
Common stock issued upon conversion of notes (in shares)	6,800,000
Warrants issued (in shares)	6,783,939
Number of shares per warrant entitled to holder (in shares)	1
Conversion of debt to equity		$ 0

Convertible Senior Notes Due 2023 - Summary of liability component of 2023 Notes (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total carrying value	$ 337,210	$ 329,462
2023 Notes
Debt Instrument [Line Items]
Principal amount of the 2023 Notes	402,500	402,500
Debt discount	(76,434)	(76,434)
Deferred financing costs	(8,452)	(8,452)
Accretion of debt discount and deferred financing costs	19,596	11,848
Total carrying value	$ 337,210	$ 329,462

Fair Value of Financial Instruments - Narrative (Details)	Jun. 30, 2019 USD ($)
Recurring \| Fair Value (Level 3)
Fair value of financial instruments
Total assets at fair value	$ 0

Leases - New Headquarters Lease (Details) - Advent Key West, LLC (Landlord) - USD ($)		2 Months Ended
	Feb. 01, 2019	Mar. 31, 2019
Leases
Optional lease renewal term	10 years
Initial fixed monthly rental rate		$ 195,000
Increase in fixed monthly rental payments	2.00%
Required security deposit	$ 195,000
Tenant improvement allowance	$ 10,200,000

Share-Based Payments

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Payments

Share-based compensation expense is as follows, in thousands of dollars:



	Three Months ended June 30,				Six Months ended June 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Research and development	$	700	$	534	$	1,274	$	952
Selling, general and administrative	3,322		2,534		6,035		4,751
Total	$	4,022	$	3,068	$	7,309	$	5,703

The following table summarizes stock options and SAR activities:



	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)
Outstanding, December 31, 2018	3,916,963		$	19.98	7.10
Granted (unaudited)	840,435		$	36.76
Exercised (unaudited)	(83,503	)	$	12.53
Forfeited (unaudited)	(28,024	)	$	36.13
Outstanding, June 30, 2019 (unaudited)	4,645,871		$	23.05	7.15

As of December 31, 2018:
Vested and expected to vest	3,916,963		$	19.98	7.10
Exercisable	1,889,947		$	12.47	5.96

As of June 30, 2019:
Vested and expected to vest (unaudited)	4,645,871		$	23.05	7.15
Exercisable (unaudited)	2,593,729		$	15.48	5.98

Label	Element	Value
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	$ 269,802,000
Retained Earnings [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	(24,501,000)
Common Stock [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	$ 51,000
Stockholders Equity Including Portion Attributable To Noncontrolling Interest Adjusted Balance	supn_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance	51,314,850
Additional Paid-in Capital [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	$ 294,999,000
AOCI Attributable to Parent [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	$ (747,000)

Fair Value of Financial Instruments - Unrestricted Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Amortized cost	$ 757,206	$ 586,726
Gross unrealized gains	7,966	55
Gross unrealized losses	(196)	(4,213)
Contractual maturities of the unrestricted available for sale marketable securities held
Less than 1 year	171,222
1 year to 2 years	192,488
2 years to 3 years	200,597
3 years to 4 years	200,669
Greater than 4 years	0
Total	$ 764,976	$ 582,568

Intangible Assets

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets consist of patent defense costs, which are legal fees incurred in conjunction with defending patents for Oxtellar XR and Trokendi XR. The Company amortizes those costs over the useful life of the respective patents.

The following sets forth the gross carrying amount and related accumulated amortization of the intangible assets, in thousands of dollars:



	Weighted- Average Life	June 30, 2019			December 31, 2018
	(unaudited)
Capitalized patent defense costs	3.51 - 7.76 years	$	44,755		$	44,724
Less accumulated amortization		(15,968		)	(13,356		)
Total		$	28,787		$	31,368

Amortization expense on intangible assets was approximately $1.3 million and $2.6 million for the three and six month periods ended June 30, 2019, respectively, essentially unchanged as compared to $1.3 million and $2.6 million for the three and six month periods ended June 30, 2018, respectively.

The Company performs its annual impairment assessment in the fourth quarter, or earlier, if impairment indicators exist. As of June 30, 2019, there were no identified indicators of impairment.

Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

The Company determines if an arrangement is a lease at inception. Some leases include options to terminate or to extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

The Company has lease arrangements that contain lease components (e.g., minimum rent payments) and non-lease components (e.g., maintenance, labor charges, etc.). It accounts for these components as a single lease component. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating leases are included in Lease assets, Accrued expenses and other current liabilities, and Lease liabilities, long term on the condensed consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the

balance sheet. Operating lease assets and lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. The Company calculates the present value of future payments by using an incremental borrowing rate which approximates the rate at which the Company would borrow, on a secured basis and over a similar term. This rate is based on information available at commencement date of the lease and may differs for individual leases or for portfolios of leased assets. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Lease expense for operating leases is recognized as an operating cost.

The Company has operating leases for its current headquarters office and lab space at 1550 East Gude Drive in Rockville, MD and for its fleet vehicles. The Company’s existing leases for its current headquarters office and lab space run through April 2020. Given the volume of individual leases involved in the overall arrangement, the Company applies a portfolio approach for the fleet vehicle leases to effectively account for the operating lease assets and liabilities.

New Headquarters Lease

The Company entered into a new lease agreement, effective January 31, 2019, with Advent Key West, LLC (Landlord), for its new headquarters in Rockville, MD (Premises). The term of the new headquarters lease commenced on February 1, 2019 (the Commencement Date) and will continue until April 30, 2034, unless earlier terminated in accordance with the terms of the lease. The lease includes options to extend the lease for up to 10 years. Fixed rent with respect to the Premises begins on the Commencement Date; however, the Landlord agreed to a rent abatement from the Commencement Date through April 30, 2020. The initial fixed rental rate is approximately $195,000 per month for the first 12 months. The rate will automatically increase by 2% on each anniversary of the Commencement Date. Under the terms of the Lease, the Company provided a security deposit of approximately $195,000 and will be required to pay all utility charges for the Premises and its pro rata share of any operating expenses and real estate taxes. The Company will occupy the Premises upon completion of the build-out of the Premises.

The lease also provides for a tenant improvement allowance of approximately $10.2 million, in aggregate. Any unspent tenant improvement allowance as of January 31, 2020 will be forfeited. The full amount of the tenant improvement allowance was initially recorded in Prepaid expenses and other current assets in the condensed consolidated balance sheets.

Lease assets, lease-related assets and lease liabilities are as follows, in thousands of dollars:



		June 30, 2019
		(unaudited)
Assets	Balance Sheet Classification
Operating leases	Lease assets	$	19,639
Tenant receivable	Prepaid expenses and other current assets	9,720
Total lease and lease-related assets		$	29,359

Liabilities
Current
Operating leases	Accrued expenses and other current liabilities	$	3,357
Non-current
Operating leases	Lease liabilities, long term	27,535
Total lease liabilities		$	30,892

Lease costs for the three and six month periods ended June 30, 2019 are as follows, in thousands of dollars:



	Three Months ended June 30,		Six Months ended June 30,
	2019
	(unaudited)
Operating leases cost
Fixed lease cost	$	987	$	2,019
Variable lease cost	518		983
Total operating leases cost	$	1,505	$	3,002

Weighted average lease term and discount rate for operating leases as of June 30, 2019 are as follows, unaudited:



Weighted-average remaining lease term (years)	13.35
Weighted-average discount rate	4.36	%

Future minimum lease payments under non-cancellable operating leases as of June 30, 2019 are as follows, in thousands of dollars, unaudited:



Year ending December 31:
2019 (remaining)	$	1,704
2020	3,054
2021	2,687
2022	2,526
2023	2,537
Thereafter	29,371
Total future minimum lease payments	$	41,879
Less: Imputed interest ⁽¹⁾	(10,987		)
Present value of lease liabilities	$	30,892

________________________________________________________________

⁽¹⁾ Calculated using the interest rate for each lease.

Disclosure Related to Periods Prior to Adoption of the New Lease Standard

Rent expense for the leased facilities and leased vehicles for the years ended December 31, 2018, 2017 and 2016 was approximately $3.6 million, $2.7 million and $2.7 million, respectively.

Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 are as follows, in thousands of dollars:



Year ending December 31:
2019	$	3,400
2020	2,287
Thereafter	1,840
Total	$	7,527

Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following, in thousands of dollars:



	June 30, 2019		December 31, 2018
	(unaudited)
Accrued clinical trial and clinical supply costs	$	17,398	$	14,034
Accrued compensation	11,339		13,546
Accrued professional fees	3,703		3,706
Lease liabilities and related accrued interest, current	3,357		—
Accrued interest expense	629		650
Accrued product costs	13		38
Other accrued expenses	2,175		4,561
Total	$	38,614	$	36,535

Accrued Product Returns and Rebates (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Accrued Product Returns and Rebates
Accrued rebates	$ 74,362	$ 85,003
Accrued product returns	21,572	22,060
Total	$ 95,934	$ 107,063

Organization and Business (Details)	6 Months Ended
Organization and Business (Details)	Jun. 30, 2019 product
Organization and Nature of Operations
Number of commercial products	2

Share-Based Payments (Tables)

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of share-based compensation expense

Share-based compensation expense is as follows, in thousands of dollars:



	Three Months ended June 30,				Six Months ended June 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Research and development	$	700	$	534	$	1,274	$	952
Selling, general and administrative	3,322		2,534		6,035		4,751
Total	$	4,022	$	3,068	$	7,309	$	5,703

Summary of stock options and SAR activities

The following table summarizes stock options and SAR activities:



	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)
Outstanding, December 31, 2018	3,916,963		$	19.98	7.10
Granted (unaudited)	840,435		$	36.76
Exercised (unaudited)	(83,503	)	$	12.53
Forfeited (unaudited)	(28,024	)	$	36.13
Outstanding, June 30, 2019 (unaudited)	4,645,871		$	23.05	7.15

As of December 31, 2018:
Vested and expected to vest	3,916,963		$	19.98	7.10
Exercisable	1,889,947		$	12.47	5.96

As of June 30, 2019:
Vested and expected to vest (unaudited)	4,645,871		$	23.05	7.15
Exercisable (unaudited)	2,593,729		$	15.48	5.98

Summary of Significant Accounting Policies - Revenue Recognition (Details)	6 Months Ended
	Jun. 30, 2019 USD ($) product
Revenue Recognition
Contract assets	$ 0
Contract liabilities	$ 0
Sales return period prior to expiry date	6 months
Sales return period subsequent to expiry date	12 months
Number of commercial products \| product	2
Maximum
Revenue Recognition
Product shelf life	48 months
License and collaboration agreements
Revenue Recognition
Guaranteed minimum amounts	$ 0
Royalty revenue agreements
Revenue Recognition
Guaranteed minimum amounts	$ 0

Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2019	Aug. 05, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2019
Document Transition Report	false
Entity File Number	001-35518
Entity Registrant Name	SUPERNUS PHARMACEUTICALS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-2590184
Entity Address, Address Line One	1550 East Gude Drive
Entity Address, City or Town	Rockville
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	20850
City Area Code	301
Local Phone Number	838-2500
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, $0.001 par value per share
Entity Common Stock, Shares Outstanding		52,449,036
Trading Symbol	SUPN
Security Exchange Name	NASDAQ
Entity Central Index Key	0001356576
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2

Accrued Product Returns and Rebates (Tables)

6 Months Ended

Jun. 30, 2019

Accrued Product Returns and Rebates

Schedule of accrued product returns and rebates

Accrued product returns and rebates consist of the following, in thousands of dollars:



	June 30, 2019		December 31, 2018
	(unaudited)
Accrued rebates	$	74,362	$	85,003
Accrued product returns	21,572		22,060
Total	$	95,934	$	107,063

Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

The following table provides information regarding the Company’s income tax expense and effective tax rate for the three and six month periods ended June 30, 2019 and 2018, including percent change (dollar amounts in thousands):



	Three Months ended June 30,					Six Months ended June 30,
	2019			2018		2019			2018
	(unaudited)					(unaudited)
Income tax expense	$	10,019		$	3,119	$	15,918		$	7,949
Effective tax rate	23.40		%	9.20%		23.80		%	12.20%

The increase in income tax expense and the increase in the effective tax rate for the three and six month periods ended June 30, 2019, as compared to the same periods in the prior year, was primarily attributable to the larger tax benefits realized in 2018 related to exercises of employee stock options.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Common stock shares authorized (in shares)	130,000,000	130,000,000
Common stock shares issued (in shares)	52,449,036	52,316,583
Common stock shares outstanding (in shares)	52,449,036	52,316,583

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net earnings	$ 51,067	$ 57,089
Adjustments to reconcile net earnings to net cash provided by operating activities:
Realized loss on sales of securities	(93)	0
Depreciation and amortization	3,355	3,487
Amortization of operating lease assets	1,230
Amortization of deferred financing costs and debt discount	7,748	4,307
Amortization of premium/discount on marketable securities	(1,625)	(1,835)
Non-cash interest expense	2,851	1,905
Non-cash royalty revenue	(3,368)	(2,780)
Share-based compensation expense	7,309	5,703
Deferred income tax (benefit) provision	861	(395)
Changes in operating assets and liabilities:
Accounts receivable	18,439	(7,776)
Inventories	(365)	(4,376)
Prepaid expenses and other current assets	(3,581)	(8,060)
Other non-current assets	(140)	(342)
Accounts payable	886	(3,838)
Accrued product returns and rebates	(11,129)	1,701
Accrued expenses and other current liabilities	(1,307)	2,964
Income taxes payable	(9,703)	(15,938)
Other non-current liabilities	(755)	1,873
Net cash provided by operating activities	61,680	33,689
Cash flows from investing activities
Purchases of marketable securities	(264,926)	(491,655)
Sales and maturities of marketable securities	96,165	19,466
Purchases of property and equipment	(245)	(557)
Deferred legal fees	(1)	(401)
Net cash used in investing activities	(169,007)	(473,147)
Cash flows from financing activities
Proceeds from issuance of convertible notes	0	402,500
Convertible notes issuance financing costs	0	(10,435)
Proceeds from issuance of warrants	0	65,688
Purchases of convertible note hedges	0	(92,897)
Proceeds from issuance of common stock	2,423	9,503
Net cash provided by financing activities	2,423	374,359
Net change in cash and cash equivalents	(104,904)	(65,099)
Cash and cash equivalents at beginning of year	192,248	100,304
Cash and cash equivalents at end of period	87,344	35,205
Supplemental cash flow information
Cash paid for interest on convertible notes	1,258	0
Income taxes paid	24,795	29,279
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	2,704	2,707
Non-cash investing and financing activities
Deferred legal fees included in accounts payable and accrued expenses	280	$ 480
Lease assets and tenant receivable obtained for new operating leases	$ 31,727

Disaggregated Revenues (Tables)

6 Months Ended

Jun. 30, 2019

Disaggregation of Revenue [Abstract]

Summary of disaggregation of revenues by nature

The following table summarizes the disaggregation of revenues by nature, in thousands of dollars:



	Three Months ended June 30,				Six Months ended June 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Net product sales
Trokendi XR	$	78,964	$	76,474	$	142,657	$	147,029
Oxtellar XR	23,394		20,556		42,800		39,121
Total net product sales	$	102,358	$	97,030	$	185,457	$	186,150
Royalty revenues	2,337		1,758		4,712		3,067
Licensing revenues	—		750		—		750
Total revenues	$	104,695	$	99,538	$	190,169	$	189,967

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

The Company’s condensed consolidated financial statements include the accounts of Supernus Pharmaceuticals, Inc., Supernus Europe Ltd., Biscayne Neurotherapeutics, Inc. and its wholly-owned subsidiary, Biscayne Neurotherapeutics Australia Pty Ltd., collectively referred to herein as “Supernus” or “the Company.” All significant intercompany transactions and balances have been eliminated in consolidation.

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) for interim financial information. As permitted under Generally Accepted Accounting Principles in the United States (U.S. GAAP), certain notes and other information have been omitted from the interim unaudited condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC.

In management’s opinion, the condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows. The results of operations for any interim period are not necessarily indicative of the Company’s future quarterly or annual results.

The Company, which is primarily located in the United States (U.S.), operates in one operating segment.

Use of Estimates

The Company bases its estimates on: historical experience; various forecasts; information received from its service providers; and other assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from the Company’s estimates. The Company evaluates the methodologies employed in its estimates on an ongoing basis.

Revenue Recognition

The Company recognizes revenue when physical control of goods or provision of services are transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company does not adjust revenue for any financing effects for transactions where the Company expects the period between the transfer of the goods or services and collection to be less than one year.

There were no contract assets or liabilities recorded as of June 30, 2019.

Revenue from Product Sales

The Company’s products are distributed to its customers through a third party fulfillment center. The Company’s customers, who are primarily pharmaceutical wholesalers and distributors, purchase product to fulfill orders from retail pharmacy chains and independent pharmacies of varying size and purchasing power. The Company recognizes gross revenue when its products are received by its customers after shipment from the fulfillment center. Customers take control of the products, including title and ownership, upon physical receipt of our products at their facilities.

Product sales are recorded net of various forms of variable consideration, including: estimated rebates; an estimated liability for future product returns and discounts; (collectively, “sales deductions”).

As described below, variability in the net transaction price for the Company’s products arises primarily from sales deductions. Significant judgment is required in estimating sales deductions. In making these estimates, the Company considers: historical experience; product price increases; current contract prices under applicable programs; unbilled claims; processing time lags; and inventory levels in the distribution channel. The Company adjusts its estimates of revenue either when the most likely amount of consideration it expects to receive changes, or when the consideration becomes fixed.

If actual results in the future vary from estimates, the Company adjusts these estimates. These adjustments could materially affect net product sales and earnings in the period that such adjustments are recorded.

Sales Deductions

Sales deductions are primarily comprised of: estimated rebates; an estimated liability for future product returns and discounts. The Company records product sales net of the following sales deductions:

•

Rebates: Rebates are discounts which the Company pays under either public sector or private sector health care programs. Public sector rebate programs encompass: various Medicaid Drug Rebate Programs; Medicare Coverage Gap Programs; and programs covering public health service institutions and government entities. All federal employees and agencies purchase drugs under the Federal Supply Schedule. Private sector rebate programs include: contractual agreements with managed care providers, under which the Company pays fees to gain access to that provider’s patient drug formulary; and Company sponsored programs, under which the Company defrays or eliminates patient co-payment charges that the patient would otherwise pay to their managed care provider. Rebates paid under public sector programs are generally mandated under law, whereas private sector rebates are generally contractually negotiated by the Company with managed care providers.

Rebates are owed upon dispensing our product to a patient; i.e., filling a prescription. The accrual balance for rebates consists of three components. First, because rebates are generally invoiced and paid quarterly in arrears, the accrual balance consists of an estimate of the amount expected to be incurred for prescriptions dispensed in the current quarter. Second, the accrual balance also includes an estimate for known or estimated prior quarters’ unpaid rebates, to cover prescriptions dispensed in past quarters. Third, the accrual balance includes an estimate for rebates that will be prospectively owed, for prescriptions filled in future quarters, that is, for product which has been sold to wholesalers or distributors, and which resides either as wholesaler/distributor inventory, or is held as inventory at pharmacies.

The Company’s estimates of expected rebate claims vary by program and by type of customer, because of the period from the date on which the prescription is filled to the date the Company receives and pays the invoice varies, For each of its products, the Company bases its estimates of expected rebate claims on multiple factors, including historical levels of deductions; contractual terms with managed care providers; actual and anticipated changes in product price; prospective changes in managed care fee for service contracts; prospective changes in co-pay assistance programs; and anticipated changes in program utilization rates (i.e., patient participation rates). The Company records an estimated liability for rebates at the time the customer takes title to the product (i.e., at the time of sale to wholesalers/distributors), and records this liability as a reduction to gross product sales and an increase in Accrued product returns and rebates in current liabilities.

The sensitivity of the Company’s estimates varies by program and by type of customer. If actual rebates vary from estimated amounts, the Company may need to adjust the balances of such accrued rebates to reflect actual experience with respect to these programs. These changes could materially affect the estimated liability balance, net product sales and earnings in the period of adjustment.

•

Returns: Sale of the Company’s products are not subject to a general right of return. Product that has been used to fill patient prescriptions is no longer subject to any right of return. However, the Company will accept return of product that is damaged or defective when shipped from its third party fulfillment center. In addition, the Company will accept return of expired product six months prior to and up to 12 months subsequent to the product’s expiry date. Expired or defective returned product cannot be re-sold and is therefore destroyed.

The Company records an estimated liability for product returns at the time the customer takes title to the product (i.e., at time of sale) as a reduction to gross product sales and an increase in Accrued product returns and rebates in current liabilities. The Company estimates the liability for returns based on the actual returns experience for its two commercial products, in conjunction with industry experience for return of similar products (i.e., ambient temperature

storage for oral formulations). Because the Company’s products have not reached maturity, the return rate of its products has and is expected to continue to vary.

The Company’s estimated liability for product returns is also affected by price increases taken subsequent to the date of sale. The Company’s products have a shelf life of 48 months from date of manufacture. Because of the extended shelf life, coupled with its return policy, there typically is a significant time lag between the time at which the product is sold and when the Company issues credit on expired product. The Company’s policy generally permits product returns to be processed at current wholesaler price rather than historical acquisition price. Therefore, price increase(s) taken during the current period increase(s) the liability for product returns because it affects the estimated liability for product returns for both sales made in the current period as well as sales made in prior periods. When the Company adjusts its estimates for product returns, either favorably or unfavorably, this adjustment affects the estimated liability, product sales and earnings in the period of adjustment.

•

Sales discounts: Distributors and wholesalers of pharmaceutical products are generally offered various forms of consideration, including allowances, service fees and prompt payment discounts for distributing our products. Distributor and wholesaler allowances and service fees arise from contractual agreements and are estimated as a percentage of the price at which the Company sells product to them. In addition, they are offered a prompt pay discount for payment within a specified period.

The Company accounts for these discounts at the time of sale, as a reduction to gross product sales, and records these amounts as a valuation allowance against Accounts receivable.

Customer orders are generally fulfilled within a few days of receipt, resulting in minimal order backlog. Open purchase orders for products from customers are expected to be fulfilled within the next 12 months. There are no minimum product purchase requirements.

License Revenues

License and Collaboration Agreements

The Company has entered into collaboration agreements to commercialize both Oxtellar XR and Trokendi XR outside of the U.S., which agreements include the right to use the Company’s intellectual property as a functional license. These agreements generally include an up-front license fee and ongoing milestone payments upon the achievement of specific events. These agreements may also require minimum royalty payments, based on sales of products developed from the applicable intellectual property.

Up-front license fees are recognized once the license has been executed between the Company and its licensee.

Milestones are a form of variable consideration that are recognized when either the underlying events have been achieved (i.e., event-based milestone) or when the sales-based targets have been met by the collaborative partner (i.e., sales-based milestone). Both types of milestone payments are non-refundable. The Company evaluates whether achieving the milestones is considered probable and estimates the amount of the milestone to be included in the transaction price using the most likely amount method. The value of the associated milestone is not included in the transaction price if it is probable that a significant revenue reversal would occur. This estimation can involve management’s judgment that includes assessing factors that are outside of the Company’s influence, such as: likelihood of regulatory success; availability of third party information; and expected duration of time until achievement of the event. These factors are evaluated based on the specific facts and circumstances.

Event-based milestones are recognized in the period that the related event, such as regulatory approval, occurs. Milestone payments that are not within the control of the Company, such as approval from regulatory authorities, or where attainment of the specified event is dependent on the success of a third-party, are not considered probable until the specified event occurs. Sales-based milestones are recognized as revenue when the sales-based target is achieved. Revenue is recognized from the satisfaction of performance obligations in the amount billable to the customer.

Revenue associated with future milestones will be recognized when the related event occurs or the sales-based target is achieved. No guaranteed minimum amounts are owed to the Company related to license and collaboration agreements.

Royalty Revenues

The Company recognizes non-cash royalty revenue for amounts earned pursuant to a royalty agreement with United Therapeutics Corporation (United Therapeutics), which agreement includes the right to use the Company’s intellectual property as

a functional license. In 2014, the Company sold certain of these royalty rights to Healthcare Royalty Partners III, L.P. (HC Royalty) (see Note 17, Commitments and Contingencies). Accordingly, the Company records non-cash royalty revenue based on estimated product sales by United Therapeutics, in which sales of United Therapeutics' product, result in payments made from United Therapeutics to HC Royalty in connection with these agreements.

Royalty revenue also includes royalty amounts received from collaboration partners, including from Shire Plc (Shire) (now a subsidiary of Takeda Pharmaceutical Company Ltd), based on net product sales of Shire’s product, Mydayis, in the current period. Royalty revenue is only recognized when the underlying product sale by Shire occurs. The Shire arrangement also includes Shire's right to use the Company’s intellectual property as a functional license.

There are no guaranteed minimum amounts owed to the Company related to any royalty revenue agreement.

Preclinical Study and Clinical Trial Accruals

The Company estimates preclinical study and clinical trial expenses based on the services performed pursuant to contracts with research institutions, clinical investigators, clinical research organizations (CROs) and other service providers that conduct activities on the Company’s behalf. In recording service fees, the Company estimates the time period over which the related services are performed and compares the level of effort expended through the end of each period with the cumulative expenses recorded and payments made for such services. As appropriate, the Company accrues additional service fees or defers any non-refundable advance payments until the related services are performed. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts its accrued expenses or its deferred advance payments accordingly. If the Company subsequently determines that it no longer expects the services associated with a nonrefundable advance payment to be rendered, the remaining portion of that advance payment is charged to expense in the period in which such determination is made.

Share-Based Compensation

The Company recognizes share-based compensation expense over the service period using the straight-line method. Employee share-based compensation is measured based on estimated fair value as of the grant date. The Company uses the Black-Scholes option-pricing model in calculating the fair value of option grants as of the grant date. The Company uses the following assumptions for estimating fair value of option grants:

Fair Value of Common Stock—The fair value of the common stock underlying the option grants is determined based on observable market prices of the Company’s common stock.

Expected Volatility—Volatility is a measure of the amount by which the Company’s share price has fluctuated (i.e., historical volatility) or is expected to fluctuate (i.e., expected volatility) during a period. Beginning in the first quarter of 2019, the Company began using the historical volatility of its common stock to measure expected volatility for future option grants. Prior to the first quarter of 2019, volatility was estimated using the volatility of the common stock of several public entities of similar size, complexity, and stage of development as well as taking into consideration the Company’s actual volatility since the Company’s IPO in 2012.

Dividend Yield—The Company has never declared or paid dividends, and has no plans to do so in the foreseeable future.

Expected Term—This is the period of time during which options are expected to remain unexercised. Options have a maximum contractual term of ten years. Beginning in the first quarter of 2019, the Company began estimating the average expected life of stock options using its historical experience. Prior to the first quarter of 2019, the Company determined the average expected life of stock options according to the “simplified method”, as described in Staff Accounting Bulletin 110, which is the mid-point between the vesting date and the end of the contractual term.

Risk-Free Interest Rate—This is the U.S. Treasury Note rate as of the week each option grant is issued, with a term that most closely resembles the expected term of the option.

Expected Forfeiture Rate—Forfeitures are accounted for as they occur.

Self-insurance Liabilities

As of January 1, 2019, the Company self-insures its employee medical insurance liability. The self-insurance liability is undiscounted and is determined actuarially. It is based on claims filed, historical and industry claims experience, and an estimate of claims incurred but not yet paid. The Company has established stop-loss amounts that limit the Company’s further exposure

after a claim reaches the designated stop-loss threshold. The stop-loss limit for self-insured employee medical claims is $150,000 per employee per year.

The Company recorded self-insurance liability of approximately $500,000 as of June 30, 2019 in Accrued expenses and other current liabilities in the condensed consolidated balance sheets.

Advertising Expense

Advertising expense includes costs of promotional materials and activities, such as marketing materials, marketing programs and speaker programs. The costs of the Company’s advertising efforts are expensed as incurred.

The Company incurred approximately $11.2 million and $21.2 million in advertising costs for the three and six month periods ended June 30, 2019, respectively, and approximately $11.1 million and $19.0 million in advertising costs for the three and six month periods ended 2018, respectively. These expenses are recorded in Selling, general and administrative in the condensed consolidated statements of earnings.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, “Leases (Topic 842)” and its related amendments (New Lease Standard). The New Lease Standard requires a lessee to recognize a right-of-use lease asset and a corresponding lease liability on the balance sheet. The Company adopted the New Lease Standard on January 1, 2019 using the modified retrospective method, which applies the provision of the New Lease Standard at the effective date without adjusting comparative periods presented. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the New Lease Standard which, among other things, allowed the Company to carry forward the historical lease classification.

The adoption of the New Lease Standard resulted in the recognition of lease assets and lease liabilities for operating leases as of January 1, 2019 of approximately $4.0 million. Financial reporting for periods on or after January 1, 2019 are presented under the new guidance. Prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. The standard did not materially impact the Company’s condensed consolidated net earnings and had no impact on cash flows (see Note 14, Leases).

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires credit losses on financial assets measured on an amortized cost basis to be presented at the net amount expected to be collected, rather than based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance for credit losses, limited to the amount by which fair value is below amortized cost. The new standard also requires enhanced disclosure of credit risk associated with respective assets. The standard is effective for fiscal years beginning after December 15, 2019, for interim and annual periods within those years, with early adoption permitted. The Company is currently assessing the impact of this new standard and does not expect the adoption of the guidance to have a material impact on its condensed consolidated financial statements.

Other Income (Expenses) (Tables)

6 Months Ended

Jun. 30, 2019

Other Income and Expenses [Abstract]

Schedule of other income (expenses)

Other income (expenses) consist of the following, in thousands of dollars:



	Three Months ended June 30,						Six Months ended June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
Interest income	$	5,453		$	3,664		$	10,134		$	4,870
Interest expense	(4,169		)	(4,324		)	(8,879		)	(5,041		)
Interest expense-nonrecourse liability related to sale of future royalties	(1,136		)	(1,204		)	(2,296		)	(1,905		)

Total	$	148		$	(1,864	)	$	(1,041	)	$	(2,076	)

Other Income (Expenses)

6 Months Ended

Jun. 30, 2019

Other Income and Expenses [Abstract]

Other Income (Expenses)

Other income (expenses) consist of the following, in thousands of dollars:



	Three Months ended June 30,						Six Months ended June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
Interest income	$	5,453		$	3,664		$	10,134		$	4,870
Interest expense	(4,169		)	(4,324		)	(8,879		)	(5,041		)
Interest expense-nonrecourse liability related to sale of future royalties	(1,136		)	(1,204		)	(2,296		)	(1,905		)

Total	$	148		$	(1,864	)	$	(1,041	)	$	(2,076	)

Interest expense includes non-cash interest expense related to amortization of deferred financing costs and debt discount in the amount of $3.9 million and $7.7 million for the three and six month periods ended June 30, 2019, respectively, and $3.7 million and $4.3 million respectively, for the three and six month periods ended June 30, 2018.

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of fair value of the financial assets and liabilities

The Company’s financial assets that are required to be measured at fair value on a recurring basis are as follows, in thousands of dollars:



			Fair Value Measurements at June 30, 2019 (unaudited)
	Total Fair Value at June 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	$	87,344	$	87,344	$	—
Marketable securities
Corporate debt securities	171,222		247		170,975
Long term marketable securities
Corporate debt securities	558,755		454		558,301
U.S. government agency debt securities	34,999		—		34,999
Other non-current assets
Marketable securities - restricted (SERP)	387		1		386
Total assets at fair value	$	852,707	$	88,046	$	764,661



			Fair Value Measurements at December 31, 2018
	Total Fair Value at December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	$	192,248	$	192,248	$	—
Marketable securities
Corporate debt securities	163,770		245		163,525
Long term marketable securities
Corporate debt securities	415,650		445		415,205
U.S. government agency debt securities	3,148		—		3,148
Other non-current assets
Marketable securities - restricted (SERP)	326		1		325
Total assets at fair value	$	775,142	$	192,939	$	582,203

Schedule of financial liabilities that are not carried at fair value

The following table sets forth the Company’s financial liabilities that are not carried at fair value, in thousands of dollars:



	June 30, 2019				December 31, 2018
	(unaudited)
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
2023 Notes	$	337,210	$	392,689	$	329,462	$	375,834

Schedule of unrestricted available-for-sale marketable securities

Unrestricted available-for-sale marketable securities held by the Company are as follows, in thousands of dollars:



	June 30, 2019			December 31, 2018
	(unaudited)
Corporate and U.S. government agency debt securities
Amortized cost	$	757,206		$	586,726
Gross unrealized gains	7,966			55
Gross unrealized losses	(196		)	(4,213		)
Total fair value	$	764,976		$	582,568

Schedule of contractual maturities of the unrestricted available-for-sale marketable securities held

The contractual maturities of the unrestricted available-for-sale marketable securities held by the Company are as follows, in thousands of dollars:



	June 30, 2019
	(unaudited)
Less than 1 year	$	171,222
1 year to 2 years	192,488
2 years to 3 years	200,597
3 years to 4 years	200,669
Greater than 4 years	—
Total	$	764,976

Convertible Senior Notes Due 2023

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Convertible Senior Notes Due 2023

The 0.625% Convertible Senior Notes Due 2023 (2023 Notes), which were issued in March 2018, bear interest at an annual rate of 0.625%, payable semi-annually in arrears on April 1 and October 1 of each year. The 2023 Notes will mature on April 1, 2023, unless earlier converted or repurchased by the Company. The Company may not redeem the 2023 Notes at its option before maturity.

The 2023 Notes were issued pursuant to an Indenture between the Company and Wilmington Trust, National Association, as trustee. The Indenture includes customary terms and covenants, including certain events of default upon which the 2023 Notes may be due and payable immediately. The Indenture does not contain any financial or operating covenants or restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at its election, based on the applicable conversion rate. The initial conversion rate is 16.8545 shares per $1,000 principal amount of the 2023 Notes, which represents an initial conversion price of approximately $59.33 per share, and is subject to adjustment as specified in the Indenture. In the event of conversion, if converted in cash, the holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation.

If a “make-whole fundamental change,” as defined in the Indenture, occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. If a “fundamental change,” as defined in the Indenture, occurs, then noteholders may require the Company to repurchase their 2023 Notes at a cash repurchase price equal to the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest, if any.

Contemporaneous with the issuance of the 2023 Notes, the Company also entered into separate privately negotiated convertible note hedge transactions (collectively, the Convertible Note Hedge Transactions) with each of the call spread counterparties. The Company issued 402,500 convertible note hedge options. In the event that shares or cash are deliverable to holders of the 2023 Notes upon conversion at limits defined in the Indenture, counterparties to the convertible note hedges will be required to deliver up to approximately 6.8 million shares of the Company’s common stock or pay cash to the Company in a similar amount as the value that the Company delivers to the holders of the 2023 Notes, based on a conversion price of $59.33 per share.

Concurrently with entering into the Convertible Note Hedge Transactions, the Company also entered into separate privately negotiated warrant transactions (collectively, the Warrant Transactions) with each of the call spread counterparties. The Company issued a total of 6,783,939 warrants. The warrants entitle the holder to one share per warrant at the strike price through 2023. The strike price of the Warrant Transactions will initially be $80.9063 per share of the Company’s common stock, and is subject to adjustment.

The Convertible Note Hedge Transactions are expected to generally reduce the potential dilution with respect to the Company’s common stock upon conversion of the 2023 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2023 Notes, as the case may be. The Warrant Transactions are intended to partially offset the cost to the Company of the purchased Convertible Note Hedge Transactions; however, the Warrant Transactions could have a dilutive effect with respect to the Company’s common stock to the extent that the market price per share of the Company’s common stock, as measured under the terms of the Warrant Transactions, exceeds the strike price of the warrants.

The liability component of the 2023 Notes consists of the following, in thousands of dollars:



	June 30, 2019			December 31, 2018
	(unaudited)
Principal amount of the 2023 Notes	$	402,500		$	402,500
Debt discount	(76,434		)	(76,434		)
Deferred financing costs	(8,452		)	(8,452		)
Accretion of debt discount and deferred financing costs	19,596			11,848
Total carrying value	$	337,210		$	329,462

No 2023 Notes were converted as of June 30, 2019.

Accounts Receivable	6 Months Ended
Accounts Receivable	Jun. 30, 2019
Receivables [Abstract]
Accounts Receivable	Accounts Receivable The Company recorded an allowance of approximately $12.0 million and $11.5 million for expected sales discounts and allowances related to prompt pay discounts and fees in conjunction with contractual service arrangements with the Company’s customers, primarily pharmaceutical wholesalers/distributors, as of June 30, 2019 and December 31, 2018, respectively.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details

Condensed Consolidated Statements of Earnings - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues
Total revenues	$ 104,695	$ 99,538	$ 190,169	$ 189,967
Costs and expenses
Cost of product sales	4,044	3,683	7,728	6,961
Research and development	16,970	20,038	32,364	38,946
Selling, general and administrative	41,083	40,097	82,051	76,946
Total costs and expenses	62,097	63,818	122,143	122,853
Operating earnings	42,598	35,720	68,026	67,114
Other income (expenses), net	148	(1,864)	(1,041)	(2,076)
Earnings before income taxes	42,746	33,856	66,985	65,038
Income tax expense	10,019	3,119	15,918	7,949
Net earnings	$ 32,727	$ 30,737	$ 51,067	$ 57,089
Earnings per share
Basic (in dollars per share)	$ 0.62	$ 0.59	$ 0.98	$ 1.10
Diluted (in dollars per share)	$ 0.61	$ 0.57	$ 0.95	$ 1.06
Weighted-average shares outstanding
Basic (in shares)	52,385,590	51,919,894	52,361,149	51,729,243
Diluted (in shares)	53,912,977	54,203,308	53,947,834	54,021,941
Net product sales
Revenues
Total revenues	$ 102,358	$ 97,030	$ 185,457	$ 186,150
Royalty revenues
Revenues
Total revenues	2,337	1,758	4,712	3,067
Licensing revenues
Revenues
Total revenues	$ 0	$ 750	$ 0	$ 750

Share-Based Payments - Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based payments
Share-based compensation recognized	$ 4,022	$ 3,068	$ 7,309	$ 5,703
Research and development
Share-based payments
Share-based compensation recognized	700	534	1,274	952
Selling, general and administrative
Share-based payments
Share-based compensation recognized	$ 3,322	$ 2,534	$ 6,035	$ 4,751

Disaggregated Revenues (Details) - USD ($)	3 Months Ended		6 Months Ended
Disaggregated Revenues (Details) - USD ($)	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue Recognition
Non-cash royalty revenue	$ 1,800,000	$ 1,500,000	$ 3,368,000	$ 2,780,000
Milestone revenues	104,695,000	99,538,000	190,169,000	189,967,000
Milestone revenue
Revenue Recognition
Milestone revenues	$ 0	$ 800,000	$ 0	$ 800,000
Revenues \| Customer Concentration Risk \| Top Three Wholesale Pharmaceutical Distributors
Revenue Recognition
Concentration risk percentage	90.00%	90.00%	90.00%	90.00%

Earnings per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings per Share

Basic earnings per share (EPS) is calculated using the weighted-average number of common shares outstanding. Diluted EPS is calculated using the weighted-average number of common shares outstanding, including the dilutive effect of the Company’s stock option grants, stock appreciation rights (SAR), warrants, employee stock purchase plan (ESPP) awards and the 2023 Notes, as determined per the treasury stock method.

Effect of Convertible Notes and Related Convertible Note Hedges and Warrants

In connection with the issuance of the 2023 Notes, the Company entered into Convertible Note Hedge and Warrant transactions as described further in Note 9, Convertible Senior Notes Due 2023. The collective impact of the Convertible Note Hedges and Warrants effectively eliminates any economic dilution that may occur from the actual conversion of the 2023 Notes between the conversion price of $59.33 per share and the strike price of the Warrants of $80.9063 per share.

The Convertible Notes and Related Convertible Note Hedges and Warrants are excluded in the calculation of diluted EPS because their inclusion would be anti-dilutive. The denominator of the diluted earnings per share calculation excludes additional shares related to the 2023 Notes and Warrants since the average price of the Company's common stock was less than the conversion price of the 2023 Notes of $59.33 per share and the strike price of the Warrants of $80.9063 per share. Prior to actual conversion, the Convertible Note Hedges are not considered for purposes of the calculation of diluted earnings per share, as their effects would be anti-dilutive.

In addition to the above described effect of the convertible notes and the related convertible note hedges and warrants, the Company also excluded the common stock equivalents for outstanding stock-based awards in the calculation of diluted EPS because their inclusion would be anti-dilutive:



	Three Months ended June 30,		Six Months ended June 30,
	2019	2018	2019	2018
	(unaudited)		(unaudited)
Stock options	1,030,370	137,565	300,342	184,760

The following table sets forth the computation of basic and diluted EPS for the three and six month periods ended June 30, 2019 and 2018, in thousands of dollars, except share and per share amounts:



	Three Months ended June 30,				Six Months ended June 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Numerator, in thousands:
Net earnings used for calculation of basic and diluted EPS	$	32,727	$	30,737	$	51,067	$	57,089

Denominator:
Weighted average shares outstanding, basic	52,385,590		51,919,894		52,361,149		51,729,243

Effect of dilutive potential common shares:
Stock options and SAR	1,527,387		2,283,414		1,586,685		2,292,698
Weighted average shares outstanding, diluted	53,912,977		54,203,308		53,947,834		54,021,941

Earnings per share, basic	$	0.62	$	0.59	$	0.98	$	1.10
Earnings per share, diluted	$	0.61	$	0.57	$	0.95	$	1.06

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Income per share
Strike price of the warrant transactions (in dollars per share)				$ 80.9063
Numerator, in thousands:
Net earnings used for calculation of basic and diluted EPS	$ 32,727	$ 18,340	$ 30,737	$ 26,352	$ 51,067	$ 57,089
Denominator:
Basic (in shares)	52,385,590		51,919,894		52,361,149	51,729,243
Effect of dilutive potential common shares:
Stock options and SAR (in shares)	1,527,387		2,283,414		1,586,685	2,292,698
Diluted (in shares)	53,912,977		54,203,308		53,947,834	54,021,941
Basic (in dollars per share)	$ 0.62		$ 0.59		$ 0.98	$ 1.10
Diluted (in dollars per share)	$ 0.61		$ 0.57		$ 0.95	$ 1.06
Stock options
Income per share
Common stock equivalents excluded in the calculation of diluted income per share (in shares)	1,030,370		137,565		300,342	184,760
2023 Notes
Income per share
Conversion price, per share of common stock (in dollars per share)				$ 59.33

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

Property and equipment consists of the following, in thousands of dollars:



	June 30, 2019			December 31, 2018
	(unaudited)
Lab equipment and furniture	$	9,133		$	8,995
Leasehold improvements	3,163			2,731
Software	2,212			2,181
Computer equipment	1,289			1,313
Construction-in-progress	193			94
	15,990			15,314
Less accumulated depreciation and amortization	(11,962		)	(11,219		)
Total	$	4,028		$	4,095

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

The Company, which is primarily located in the United States (U.S.), operates in one operating segment.

Use of Estimates

Revenue Recognition

There were no contract assets or liabilities recorded as of June 30, 2019.

Revenue from Product Sales

Sales Deductions

•

storage for oral formulations). Because the Company’s products have not reached maturity, the return rate of its products has and is expected to continue to vary.

•

The Company accounts for these discounts at the time of sale, as a reduction to gross product sales, and records these amounts as a valuation allowance against Accounts receivable.

License Revenues

License and Collaboration Agreements

Up-front license fees are recognized once the license has been executed between the Company and its licensee.

Royalty Revenues

There are no guaranteed minimum amounts owed to the Company related to any royalty revenue agreement.

Preclinical Study and Clinical Trial Accruals

Share-Based Compensation

Fair Value of Common Stock—The fair value of the common stock underlying the option grants is determined based on observable market prices of the Company’s common stock.

Dividend Yield—The Company has never declared or paid dividends, and has no plans to do so in the foreseeable future.

Risk-Free Interest Rate—This is the U.S. Treasury Note rate as of the week each option grant is issued, with a term that most closely resembles the expected term of the option.

Expected Forfeiture Rate—Forfeitures are accounted for as they occur.

Self-insurance Liabilities

after a claim reaches the designated stop-loss threshold. The stop-loss limit for self-insured employee medical claims is $150,000 per employee per year.

The Company recorded self-insurance liability of approximately $500,000 as of June 30, 2019 in Accrued expenses and other current liabilities in the condensed consolidated balance sheets.

Advertising Expense

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted

New Accounting Pronouncements Not Yet Adopted

Inventories

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories consist of the following, in thousands of dollars:



	June 30, 2019		December 31, 2018
	(unaudited)
Raw materials	$	4,953	$	5,742
Work in process	7,527		7,275
Finished goods	13,544		12,642
Total	$	26,024	$	25,659

Share-Based Payments - Activity (Details) - Stock option and Stock Appreciation Rights - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Number of Options and SAR
Outstanding at the beginning of the period (in shares)	3,916,963
Granted (in shares)	840,435
Exercised (in shares)	(83,503)
Forfeited (in shares)	(28,024)
Outstanding at the end of the period (in shares)	4,645,871	3,916,963
Vested and expected to vest (in shares)	4,645,871	3,916,963
Exercisable (in shares)	2,593,729	1,889,947
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 19.98
Granted (in dollars per share)	36.76
Exercised (in dollars per share)	12.53
Forfeited (in dollars per share)	36.13
Outstanding at the end of the period (in dollars per share)	23.05	$ 19.98
Vested and expected to vest (in dollars per share)	23.05	19.98
Exercisable (in dollars per share)	$ 15.48	$ 12.47
Weighted-Average Remaining Contractual Term (in years)
Outstanding at the end of the period	7 years 1 month 24 days	7 years 1 month 6 days
Vested and expected to vest	7 years 1 month 24 days	7 years 1 month 6 days
Exercisable	5 years 11 months 23 days	5 years 11 months 15 days

Fair Value of Financial Instruments - Carrying Value (Details) - Recurring - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and cash equivalents	$ 87,344	$ 192,248
Marketable securities
Corporate debt securities	247	245
Long term marketable securities
Corporate debt securities	454	445
U.S. government agency debt securities	0	0
Other non-current assets
Marketable securities - restricted (SERP)	1	1
Total assets at fair value	88,046	192,939
Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	0	0
Marketable securities
Corporate debt securities	170,975	163,525
Long term marketable securities
Corporate debt securities	558,301	415,205
U.S. government agency debt securities	34,999	3,148
Other non-current assets
Marketable securities - restricted (SERP)	386	325
Total assets at fair value	764,661	582,203
Total Fair Value
Assets:
Cash and cash equivalents	87,344	192,248
Marketable securities
Corporate debt securities	171,222	163,770
Long term marketable securities
Corporate debt securities	558,755	415,650
U.S. government agency debt securities	34,999	3,148
Other non-current assets
Marketable securities - restricted (SERP)	387	326
Total assets at fair value	$ 852,707	$ 775,142

Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of gross carrying amount and related accumulated amortization of the intangible assets

The following sets forth the gross carrying amount and related accumulated amortization of the intangible assets, in thousands of dollars:



	Weighted- Average Life	June 30, 2019			December 31, 2018
	(unaudited)
Capitalized patent defense costs	3.51 - 7.76 years	$	44,755		$	44,724
Less accumulated amortization		(15,968		)	(13,356		)
Total		$	28,787		$	31,368

Other Income (Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Other Income (Expenses) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Other Income and Expenses [Abstract]
Interest income	$ 5,453	$ 3,664	$ 10,134	$ 4,870
Interest expense	(4,169)	(4,324)	(8,879)	(5,041)
Interest expense-nonrecourse liability related to sale of future royalties	(1,136)	(1,204)	(2,296)	(1,905)
Total	148	(1,864)	(1,041)	(2,076)
Non-cash interest expense	$ 3,900	$ 3,700	$ 7,748	$ 4,307

Inventories (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Schedule of inventories

Inventories consist of the following, in thousands of dollars:



	June 30, 2019		December 31, 2018
	(unaudited)
Raw materials	$	4,953	$	5,742
Work in process	7,527		7,275
Finished goods	13,544		12,642
Total	$	26,024	$	25,659

Condensed Consolidated Statements of Changes in Stockholder's Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Earnings (Loss)	Retained Earnings (Accumulated Deficit)
Increase (Decrease) in Stockholders' Equity
Cumulative-effect of adoption of ASC 606 \| ASU 606	$ 2,322				$ 2,322
Balance (in shares) at Dec. 31, 2017		51,314,850
Balance at Dec. 31, 2017	267,480	$ 51	$ 294,999	$ (747)	(26,823)
Increase (Decrease) in Stockholders' Equity
Share-based compensation	2,635		2,635
Exercise of stock options (in shares)		319,141
Exercise of stock options	2,858	$ 1	2,857
Equity component of convertible notes, net of tax	56,215		56,215
Purchase of convertible note hedges, net of tax	(70,137)		(70,137)
Issuance of warrants	65,688		65,688
Net earnings	26,352				26,352
Unrealized gain (loss) on marketable securities, net of tax	(1,544)			(1,544)
Balance (in shares) at Mar. 31, 2018		51,633,991
Balance at Mar. 31, 2018	351,869	$ 52	352,257	(2,291)	1,851
Balance (in shares) at Dec. 31, 2017		51,314,850
Balance at Dec. 31, 2017	267,480	$ 51	294,999	(747)	(26,823)
Increase (Decrease) in Stockholders' Equity
Net earnings	57,089
Unrealized gain (loss) on marketable securities, net of tax	(3,372)
Balance (in shares) at Jun. 30, 2018		52,179,334
Balance at Jun. 30, 2018	390,492	$ 52	361,971	(4,119)	32,588
Balance (in shares) at Mar. 31, 2018		51,633,991
Balance at Mar. 31, 2018	351,869	$ 52	352,257	(2,291)	1,851
Increase (Decrease) in Stockholders' Equity
Share-based compensation	3,068		3,068
Issuance of ESPP (in shares)		34,676
Issuance of ESPP shares	1,184		1,184
Exercise of stock options (in shares)		510,667
Exercise of stock options	5,462		5,462
Net earnings	30,737				30,737
Unrealized gain (loss) on marketable securities, net of tax	(1,828)			(1,828)
Balance (in shares) at Jun. 30, 2018		52,179,334
Balance at Jun. 30, 2018	390,492	$ 52	361,971	(4,119)	32,588
Balance (in shares) at Dec. 31, 2018		52,316,583
Balance at Dec. 31, 2018	453,023	$ 52	369,637	(3,158)	86,492
Increase (Decrease) in Stockholders' Equity
Share-based compensation	3,287		3,287
Exercise of stock options (in shares)		57,665
Exercise of stock options	783		783
Net earnings	18,340				18,340
Unrealized gain (loss) on marketable securities, net of tax	4,585			4,585
Balance (in shares) at Mar. 31, 2019		52,374,248
Balance at Mar. 31, 2019	480,018	$ 52	373,707	1,427	104,832
Balance (in shares) at Dec. 31, 2018		52,316,583
Balance at Dec. 31, 2018	453,023	$ 52	369,637	(3,158)	86,492
Increase (Decrease) in Stockholders' Equity
Net earnings	51,067
Unrealized gain (loss) on marketable securities, net of tax	9,082
Balance (in shares) at Jun. 30, 2019		52,449,036
Balance at Jun. 30, 2019	522,904	$ 52	379,369	5,924	137,559
Balance (in shares) at Mar. 31, 2019		52,374,248
Balance at Mar. 31, 2019	480,018	$ 52	373,707	1,427	104,832
Increase (Decrease) in Stockholders' Equity
Share-based compensation	4,022		4,022
Issuance of ESPP (in shares)		48,950
Issuance of ESPP shares	1,377		1,377
Exercise of stock options (in shares)		25,838
Exercise of stock options	263		263
Net earnings	32,727				32,727
Unrealized gain (loss) on marketable securities, net of tax	4,497			4,497
Balance (in shares) at Jun. 30, 2019		52,449,036
Balance at Jun. 30, 2019	$ 522,904	$ 52	$ 379,369	$ 5,924	$ 137,559

Summary of Significant Accounting Policies - Basis of Presentation (Details)	6 Months Ended
	Jun. 30, 2019 segment
Accounting Policies [Abstract]
Number of operating segments	1

Convertible Senior Notes Due 2023 (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Summary of liability component of 2023 Notes

The liability component of the 2023 Notes consists of the following, in thousands of dollars:



	June 30, 2019			December 31, 2018
	(unaudited)
Principal amount of the 2023 Notes	$	402,500		$	402,500
Debt discount	(76,434		)	(76,434		)
Deferred financing costs	(8,452		)	(8,452		)
Accretion of debt discount and deferred financing costs	19,596			11,848
Total carrying value	$	337,210		$	329,462

Summary of Significant Accounting Policies - Share-based Compensation and Self-insurance Liabilities (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Accounting Policies [Abstract]
Maximum contractual term of share-based grants	10 years
Stop-loss limit per employee, per year, for self-insured employee medical claims	$ 150,000
Self-insurance liability	$ 500,000

Leases - Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
Leases - Lease Costs (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2019
Operating leases cost
Fixed lease cost	$ 987	$ 2,019
Variable lease cost	518	983
Total operating leases cost	$ 1,505	$ 3,002

Income Taxes (Tables)

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of reconciliation of income tax expense at the U.S Federal statutory income tax rate to the entity's effective income tax rate



	Three Months ended June 30,					Six Months ended June 30,
	2019			2018		2019			2018
	(unaudited)					(unaudited)
Income tax expense	$	10,019		$	3,119	$	15,918		$	7,949
Effective tax rate	23.40		%	9.20%		23.80		%	12.20%

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Property and equipment
Property and equipment, gross	$ 15,990		$ 15,990		$ 15,314
Less accumulated depreciation and amortization	(11,962)		(11,962)		(11,219)
Property and equipment, net	4,028		4,028		4,095
Depreciation and amortization expense	400	$ 500	700	$ 900
Lab equipment and furniture
Property and equipment
Property and equipment, gross	9,133		9,133		8,995
Leasehold improvements
Property and equipment
Property and equipment, gross	3,163		3,163		2,731
Software
Property and equipment
Property and equipment, gross	2,212		2,212		2,181
Computer equipment
Property and equipment
Property and equipment, gross	1,289		1,289		1,313
Construction-in-progress
Property and equipment
Property and equipment, gross	$ 193		$ 193		$ 94

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Income tax expense	$ 10,019	$ 3,119	$ 15,918	$ 7,949
Effective tax rate	23.40%	9.20%	23.80%	12.20%

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

The fair value of an asset or liability represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between arm's length market participants.

The Company reports assets and liabilities measured at fair value using a three level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:


•	Level 1—Inputs are unadjusted quoted prices in active markets for identical assets that the Company has the ability to access as of the measurement date.

•

Level 2—Inputs are: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.); and inputs that are derived principally from or corroborated by observable market data by correlation or other means (i.e., market corroborated inputs).


•	Level 3—Unobservable inputs that reflect the Company’s own assumptions, based on the best information available, including the Company’s own data.

Financial Assets

The Company’s financial assets that are required to be measured at fair value on a recurring basis are as follows, in thousands of dollars:



			Fair Value Measurements at June 30, 2019 (unaudited)
	Total Fair Value at June 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	$	87,344	$	87,344	$	—
Marketable securities
Corporate debt securities	171,222		247		170,975
Long term marketable securities
Corporate debt securities	558,755		454		558,301
U.S. government agency debt securities	34,999		—		34,999
Other non-current assets
Marketable securities - restricted (SERP)	387		1		386
Total assets at fair value	$	852,707	$	88,046	$	764,661



			Fair Value Measurements at December 31, 2018
	Total Fair Value at December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	$	192,248	$	192,248	$	—
Marketable securities
Corporate debt securities	163,770		245		163,525
Long term marketable securities
Corporate debt securities	415,650		445		415,205
U.S. government agency debt securities	3,148		—		3,148
Other non-current assets
Marketable securities - restricted (SERP)	326		1		325
Total assets at fair value	$	775,142	$	192,939	$	582,203

Level 1 assets include cash held at banks, certificates of deposit, money market funds, and investment grade corporate and government debt securities.

Level 2 assets include the SERP (Supplemental Executive Retirement Plan) assets, commercial paper and investment grade corporate and U.S. government agency debt securities and other fixed income securities. Level 2 securities are valued using third-party pricing sources that apply applicable inputs and other relevant data in their models to estimate fair value. The fair value of the restricted marketable securities is recorded in Other assets in the condensed consolidated balance sheets.

No amount was recorded for level 3 assets as of June 30, 2019.

The carrying amounts of other financial instruments, including accounts receivable, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

Financial Liabilities

The following table sets forth the Company’s financial liabilities that are not carried at fair value, in thousands of dollars:



	June 30, 2019				December 31, 2018
	(unaudited)
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
2023 Notes	$	337,210	$	392,689	$	329,462	$	375,834

The fair value is estimated based on actual trade information as well as quoted prices provided by bond traders.

Unrestricted available-for-sale marketable securities held by the Company are as follows, in thousands of dollars:



	June 30, 2019			December 31, 2018
	(unaudited)
Corporate and U.S. government agency debt securities
Amortized cost	$	757,206		$	586,726
Gross unrealized gains	7,966			55
Gross unrealized losses	(196		)	(4,213		)
Total fair value	$	764,976		$	582,568

The contractual maturities of the unrestricted available-for-sale marketable securities held by the Company are as follows, in thousands of dollars:



	June 30, 2019
	(unaudited)
Less than 1 year	$	171,222
1 year to 2 years	192,488
2 years to 3 years	200,597
3 years to 4 years	200,669
Greater than 4 years	—
Total	$	764,976

The Company has not experienced any other-than-temporary losses on its marketable securities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of balance sheet information related to leases

Lease assets, lease-related assets and lease liabilities are as follows, in thousands of dollars:



		June 30, 2019
		(unaudited)
Assets	Balance Sheet Classification
Operating leases	Lease assets	$	19,639
Tenant receivable	Prepaid expenses and other current assets	9,720
Total lease and lease-related assets		$	29,359

Liabilities
Current
Operating leases	Accrued expenses and other current liabilities	$	3,357
Non-current
Operating leases	Lease liabilities, long term	27,535
Total lease liabilities		$	30,892

Schedule of lease costs

Lease costs for the three and six month periods ended June 30, 2019 are as follows, in thousands of dollars:



	Three Months ended June 30,		Six Months ended June 30,
	2019
	(unaudited)
Operating leases cost
Fixed lease cost	$	987	$	2,019
Variable lease cost	518		983
Total operating leases cost	$	1,505	$	3,002

Schedule of weighted average remaining lease term and discount rate information

Weighted average lease term and discount rate for operating leases as of June 30, 2019 are as follows, unaudited:



Weighted-average remaining lease term (years)	13.35
Weighted-average discount rate	4.36	%

Schedule of maturities of operating lease liabilities

Future minimum lease payments under non-cancellable operating leases as of June 30, 2019 are as follows, in thousands of dollars, unaudited:



Year ending December 31:
2019 (remaining)	$	1,704
2020	3,054
2021	2,687
2022	2,526
2023	2,537
Thereafter	29,371
Total future minimum lease payments	$	41,879
Less: Imputed interest ⁽¹⁾	(10,987		)
Present value of lease liabilities	$	30,892

________________________________________________________________

⁽¹⁾ Calculated using the interest rate for each lease.

Schedule of future minimum lease payments under non-cancelable operating leases

Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 are as follows, in thousands of dollars:



Year ending December 31:
2019	$	3,400
2020	2,287
Thereafter	1,840
Total	$	7,527

Accounts Receivable (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Allowance for expected sales discounts and allowances	$ 12.0	$ 11.5

Leases - Leases Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Balance sheet information related to leases
Lease assets	$ 19,639
Tenant receivable, assets	9,720
Total lease assets	29,359
Lease liabilities, current	3,357	$ 0
Lease liabilities, long term	27,535
Total lease liabilities	$ 30,892

Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following, in thousands of dollars:



	June 30, 2019		December 31, 2018
	(unaudited)
Accrued clinical trial and clinical supply costs	$	17,398	$	14,034
Accrued compensation	11,339		13,546
Accrued professional fees	3,703		3,706
Lease liabilities and related accrued interest, current	3,357		—
Accrued interest expense	629		650
Accrued product costs	13		38
Other accrued expenses	2,175		4,561
Total	$	38,614	$	36,535

Property and Equipment

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consists of the following, in thousands of dollars:



	June 30, 2019			December 31, 2018
	(unaudited)
Lab equipment and furniture	$	9,133		$	8,995
Leasehold improvements	3,163			2,731
Software	2,212			2,181
Computer equipment	1,289			1,313
Construction-in-progress	193			94
	15,990			15,314
Less accumulated depreciation and amortization	(11,962		)	(11,219		)
Total	$	4,028		$	4,095

Depreciation and amortization expense on property and equipment was approximately $0.4 million and $0.7 million for the three and six month periods ended June 30, 2019, respectively, and approximately $0.5 million and $0.9 million for the three and six month periods ended June 30, 2018, respectively.

The Company performs its annual impairment assessment in the fourth quarter, or earlier if impairment indicators exist. As of June 30, 2019, there were no identified indicators of impairment.

Summary of Significant Accounting Policies - Advertising Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Selling, general and administrative
Advertising Expense
Advertising costs	$ 11.2	$ 11.1	$ 21.2	$ 19.0

Commitments and Contingencies (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Non-recourse liability related to sale of future royalties, long term	$ 21,100	$ 22,575	$ 30,000