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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2017	Jul. 27, 2017
Document and Entity Information
Entity Registrant Name	SUPERNUS PHARMACEUTICALS INC
Entity Central Index Key	0001356576
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		50,699,110
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 61,737	$ 66,398
Marketable securities	31,229	23,723
Accounts receivable, net	51,157	41,527
Inventories, net	16,623	16,801
Prepaid expenses and other current assets	4,746	2,955
Total current assets	165,492	151,404
Long term marketable securities	104,632	75,410
Property and equipment, net	4,572	4,344
Deferred legal fees	11,887	19,860
Intangible assets, net	28,989	16,490
Other non-current assets	349	331
Deferred income taxes	30,449	41,729
Total assets	346,370	309,568
Current liabilities:
Accounts payable	7,577	8,055
Accrued sales deductions	47,621	41,943
Accrued expenses	23,434	27,427
Accrued income taxes payable	1,608	7
Non-recourse liability related to sale of future royalties, current portion	4,997	3,101
Deferred licensing revenue	287	209
Total current liabilities	85,524	80,742
Deferred licensing revenue, net of current portion	1,293	1,501
Convertible notes, net	1,472	4,165
Non-recourse liability related to sale of future royalties, long term	24,184	27,289
Other non-current liabilities	4,500	4,002
Derivative liabilities		114
Total liabilities	116,973	117,813
Stockholders' equity:
Common stock, $0.001 par value, 130,000,000 shares authorized at June 30, 2017 and December 31, 2016; 50,733,662 and 49,971,267 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	51	50
Additional paid-in capital	285,572	276,127
Accumulated other comprehensive income (loss), net of tax	216	(134)
Accumulated deficit	(56,442)	(84,288)
Total stockholders' equity	229,397	191,755
Total liabilities and stockholders' equity	$ 346,370	$ 309,568

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	130,000,000	130,000,000
Common stock, shares issued	50,733,662	49,971,267
Common stock, shares outstanding	50,733,662	49,971,267

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue
Net product sales	$ 73,328	$ 50,335	$ 129,697	$ 93,360
Royalty revenue	1,179	1,205	2,328	2,324
Licensing revenue	1,322	86	1,380	135
Total revenue	75,829	51,626	133,405	95,819
Costs and expenses
Cost of product sales	3,861	2,751	6,809	4,786
Research and development	10,823	11,109	20,425	21,671
Selling, general and administrative	35,078	26,121	63,316	51,281
Total costs and expenses	49,762	39,981	90,550	77,738
Operating income	26,067	11,645	42,855	18,081
Other income (expense)
Interest income	656	365	1,187	693
Interest expense	(58)	(196)	(147)	(375)
Interest expense-nonrecourse liability related to sale of future royalties	(160)	(1,281)	(1,119)	(2,560)
Changes in fair value of derivative liabilities	23	123	76	224
Loss on extinguishment of debt	(103)		(204)	(382)
Total other income (expense)	358	(989)	(207)	(2,400)
Earnings before income taxes	26,425	10,656	42,648	15,681
Income tax expense	9,057	405	14,983	605
Net income	$ 17,368	$ 10,251	$ 27,665	$ 15,076
Earnings per share:
Basic (in dollars per share)	$ 0.34	$ 0.21	$ 0.55	$ 0.31
Diluted (in dollars per share)	$ 0.32	$ 0.18	$ 0.52	$ 0.28
Weighted-average number of common shares outstanding:
Basic (in shares)	50,530,968	49,427,825	50,345,830	49,333,962
Diluted (in shares)	53,223,714	51,745,342	53,026,323	51,484,686

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Comprehensive Income
Net income	$ 17,368	$ 10,251	$ 27,665	$ 15,076
Other comprehensive income:
Unrealized net gain on marketable securities, net of tax	184	381	350	1,037
Other comprehensive income:	184	381	350	1,037
Comprehensive income	$ 17,552	$ 10,632	$ 28,015	$ 16,113

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities
Net income	$ 27,665	$ 15,076
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on extinguishment of debt	204	382
Change in fair value of derivative liability	(76)	(224)
Depreciation and amortization	2,084	1,117
Non-cash interest expense, net/ interest (income), net	(277)	405
Non-cash interest expense on non-recourse liability related to sale of future royalties	1,119	2,560
Non-cash royalty revenue	(2,328)	(2,324)
Share-based compensation expense	4,087	2,971
Deferred income tax provision	11,672
Changes in operating assets and liabilities:
Accounts receivable	(9,630)	(8,373)
Inventories	178	(3,786)
Prepaid expenses and other current assets	(1,791)	1,989
Accounts payable	50	(2,071)
Accrued sales deductions	5,678	8,225
Accrued expenses	(1,283)	(2,585)
Accrued income taxes payable	1,601	29
Deferred licensing revenue	(130)	248
Other non-current liabilities	477	(4)
Net cash provided by (used in) operating activities	39,300	13,635
Cash flows from investing activities
Purchases of marketable securities	(48,468)	(23,039)
Sales and maturities of marketable securities	12,419	15,658
Purchases of property, plant and equipment	(852)	(903)
Deferred legal fees	(9,224)	(3,688)
Net cash used in investing activities	(46,125)	(11,972)
Cash flows from financing activities
Proceeds from issuance of common stock	2,164	995
Net cash provided by financing activities	2,164	995
Net change in cash and cash equivalents	(4,661)	2,658
Cash and cash equivalents at beginning of period	66,398	33,498
Cash and cash equivalents at end of period	61,737	36,156
Supplemental cash flow information:
Cash paid for interest	134	247
Noncash financial activity:
Conversion of convertible notes and interest make-whole	2,984	2,138
Deferred legal fees included in accounts payable and accrued expenses	$ 1,884	$ 5,537

Organization and Business	6 Months Ended
Organization and Business	Jun. 30, 2017
Organization and Business
Organization and Business	1. Organization and Business Supernus Pharmaceuticals, Inc. (the Company) was incorporated in Delaware and commenced operations in 2005. The Company is a specialty 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 treatment of migraine and epilepsy, and has several proprietary product candidates in clinical development that address the psychiatry market. The Company launched Oxtellar XR and Trokendi XR in 2013 for the treatment of epilepsy and launched Trokendi XR for the prophylaxsis of migraine in adolescents and adults April 2017.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s consolidated financial statements include the accounts of Supernus Pharmaceuticals, Inc. and Supernus Europe 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 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 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 Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC.

In the opinion of management, the consolidated financial statements reflect all adjustments necessary to fairly present the Company’s financial position, results of operations, and cash flows for the periods presented. These adjustments are of a normal recurring nature. The Company currently operates in one business segment.

The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the Company’s future financial results.

Marketable Securities

Marketable securities consist of investments in U.S. Treasuries, certificates of deposit, various U.S. governmental agency debt securities, corporate and municipal bonds and other fixed income securities. The Company places all investments with government, industrial, or financial institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets.

The Company’s investments are classified as available-for-sale and are carried at estimated fair value. Any unrealized holding gains or losses are reported, net of any tax effects reported, as accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity.

Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method.

The Company established the Supernus Supplemental Executive Retirement Plan (SERP) for the sole purpose of receiving funds for executives from a previous SERP and providing a continuing deferral program under the Supernus SERP. As of June 30, 2017 and December 31, 2016, the fair value of the SERP was $294,000 and $275,000, respectively. The fair value of these assets is included within other non-current assets on the consolidated balance sheets. A corresponding non-current liability is also included in the consolidated balance sheets to reflect the Company’s obligation for the SERP. The Company has not made, and has no plans to make, contributions to the SERP. The securities are restricted in nature and can only be used for purposes of paying benefits under the SERP.

Accounts Receivable, net

Accounts receivable are reported on the consolidated balance sheets at outstanding amounts, less an allowance for doubtful accounts and discounts. The Company extends credit without requiring collateral. The Company writes off uncollectible receivables when the likelihood of collection is remote. The Company evaluates the collectability of accounts receivable on a regular basis. An allowance, when needed, is based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience.

The Company recorded an allowance for expected sales discounts of approximately $8.3 million and $5.6 million as of June 30, 2017 and December 31, 2016, respectively.

Inventories

Inventories, which are recorded at the lower of cost or market, include materials, labor, and other direct and indirect costs and are valued using the first-in, first-out method. The Company capitalizes inventories produced in preparation for commercial launches when it becomes probable that the related product candidates will receive regulatory approval and that the related costs will be recoverable through the commercial sale of the product.

Property and Equipment

Property and equipment are stated at cost. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred. Depreciation and amortization are computed using the straight-line method over the following useful lives:

Computer equipment		3 years
Software		3 years
Lab equipment and furniture		5 - 10 years
Leasehold improvements		Shorter of lease term or useful life

Deferred Legal Fees

Legal fees have been incurred in connection with legal proceedings related to the defense of patents for Oxtellar XR and Trokendi XR (see Note 6). Amortization of the deferred legal fees will begin upon successful outcome of the ongoing litigation. Deferred legal fees will be charged to expense in the event of an unsuccessful outcome of the ongoing litigation.

Intangible Assets

Intangible assets consist of deferred legal fees related to patents. Patents are carried at cost less accumulated amortization, which is calculated on a straight-line basis over the estimated useful lives of the patents. The carrying value of the patents and deferred legal fees are assessed for impairment annually during the fourth quarter of each year, or more frequently if impairment indicators exist. There were no indicators of impairment identified as of June 30, 2017.

Impairment of Long-Lived Assets

Long-lived assets consist primarily of patent defense costs, deferred legal fees, and property and equipment. The Company assesses the recoverability of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If indications of impairment exist, projected future undiscounted cash flows associated with the asset are compared to the carrying amount to determine whether the asset’s value is recoverable. Evaluation of impairment requires judgment, including the estimation of future cash flows, future growth rates and profitability and the expected life over which cash flows will occur. Changes in the Company’s business strategy or adverse changes in market conditions could impact impairment analyses and could require the recognition of an impairment charge equal to the excess of the carrying value of the long-lived assets over its estimated fair value.

There were no indicators of impairment identified for the Company’s long-lived assets as of June 30, 2017.

Deferred Financing Costs

Deferred financing costs consist of financing costs incurred by the Company in connection with the closing of the Company’s 7.50% Convertible Senior Secured Notes due 2019 (the Notes). The Company amortizes deferred financing costs over the term of the related debt using the effective interest method. When extinguishing debt, the related deferred financing costs are written off.

Preclinical Study and Clinical Trial Accruals

We estimate preclinical study and clinical trial expenses based on the services performed pursuant to contracts with research institutions, investigators, and clinical research organizations (CROs) that conduct these activities on our behalf. In recording service fees, the Company estimates the time period over which the related services will be performed and compares the level of effort expended through the end of each period to the cumulative expenses recorded and payments made for such services. As appropriate, we accrue additional service fees or defer 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 will adjust its accrual or deferred advance payment accordingly. If the Company later determines that it no longer expects the services associated with a nonrefundable advance payment to be rendered, the advance payment will be charged to expense in the period that such determination is made.

Revenue from Product Sales

Revenue from product sales is recognized when persuasive evidence of an arrangement exists; delivery has occurred and title to the product and associated risk of loss has passed to the customer; the price is fixed or determinable; collection from the customer has been reasonably assured; all performance obligations have been met; and returns and allowances can be reasonably estimated. Product sales are recorded net of estimated rebates, chargebacks, allowances, discounts, co-pay assistance and other deductions as well as estimated product returns (collectively, “sales deductions”).

Our products are distributed through wholesalers and pharmaceutical distributors. Each of these wholesalers and distributors takes title and ownership to the product upon physical receipt of the product and then distributes our products to pharmacies.

Sales Deductions

Allowances for estimated sales deductions are provided for the following:

Rebates: Rebates include mandated discounts under the Medicaid Drug Rebate Program, the Medicare coverage gap program, as well as negotiated discounts with commercial healthcare providers. Rebates are amounts owed after the final dispensing of product to a benefit plan participant has occurred and are based upon contractual agreements or legal requirements with the public sector (e.g., Medicaid) and with private sector benefit providers (e.g., commercial managed care). The allowance for rebates is based on statutory and contractual discount rates and expected claimed rebates paid based on a plan provider’s utilization. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. If actual rebates vary from estimates, we may need to adjust balances of such rebates to reflect the actual expenditures of the Company with respect to these programs, which would affect revenue in the period of adjustment.

Co-pay assistance: Patients who pay in cash or have commercial insurance and meet certain eligibility requirements may receive co-pay assistance from the Company. The intent of this program is to reduce the patient’s out of pocket costs when filling a prescription. Liabilities for co-pay assistance are based on actual program participation as well as estimates of program activity using data provided by third-party administrators.

Distributor/Wholesaler deductions and discounts: U.S. specialty distributors and wholesalers are offered various forms of consideration including allowances, service fees and prompt payment discounts as consideration for distributing our products. Distributor allowances and service fees arise from contractual agreements with distributors and are generally a percentage of the purchase price paid by the distributors and wholesalers. Wholesale customers are offered a prompt pay discount for payment within a specified period.

Returns: Sales of our products are not subject to a general right of return; however, the Company will accept product that is damaged or defective when shipped directly from our warehouse. The Company will accept expired product six months prior to and up to 12 months subsequent to its expiry date. Product that has been used to fill patient prescriptions is no longer subject to any right of return.

Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from an intermediary distributor or wholesaler. Contracted customers, which currently consist primarily of Public Health Service institutions and federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The distributor or wholesaler, in turn, charges back the difference between the price initially paid by the distributor or wholesaler and the discounted price paid to the distributor or wholesaler by the customer. The allowance for distributor/wholesaler chargebacks is based on sales to contracted customers.

Revenue Recognition of License Revenue

License and Collaboration Agreements

We have entered into collaboration agreements to commercialize both Oxtellar XR and Trokendi XR outside of the U.S. These agreements generally include an up-front license fee and ongoing milestone payments upon the achievement of specific events. We believe that when milestones meet all of the necessary criteria to be considered substantive, these should be recognized as revenue when achieved. For up-front license fees, we have estimated the service period of the contract and are recognizing revenue on a straight-line basis over the respective service period.

Milestone Payments

Milestone payments on licensing agreements are recognized as revenue when the collaborative partner acknowledges completion of the milestone and substantive effort was necessary to achieve the milestone. Management may recognize milestone revenue in its entirety in the period in which the milestone is achieved only if the milestone meets all the criteria to be considered substantive. Substantive milestone payments are recognized upon achievement only if all of the following conditions are met:

the milestone payments are non-refundable;

achievement of the milestone involves a degree of risk and was not reasonably assured at the inception of the arrangement;

substantive effort on the partner’s part is involved in achieving the milestone; and

the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with achievement of the milestone.

Determination as to whether a payment meets the aforementioned conditions involves management’s judgment. If any of these conditions are not met, the resulting payment would not be considered a substantive milestone. Therefore, the resulting payment would be considered part of the consideration for the single unit of accounting and amortized over the appropriate period.

The Company recorded $1.3 million of milestone revenue during both the three and six month periods ended June 30, 2017. No milestone revenue was recorded during the three and six months ended June 30, 2016.

Royalty Revenue

We recognize non-cash royalty revenue for royalty amounts earned pursuant to a royalty agreement with United Therapeutics. In 2014, the Company sold certain of these royalty rights to Healthcare Royalty Partners III, L.P. (HC Royalty) (see Note 14). Accordingly, the Company records non-cash royalty revenue when payments are made from United Therapeutics to HC Royalty in connection with these agreements.

Cost of Product Sales

The cost of product sales consists primarily of materials, third-party manufacturing costs, freight and distribution costs, allocation of labor, quality control and assurance, and other manufacturing overhead costs.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs primarily consist of employee-related expenses, including salaries and benefits; share-based compensation expense; expenses incurred under agreements with CROs; payments to investigators and consultants that conduct the Company’s clinical trials; the cost of acquiring and manufacturing clinical trial materials; the cost of manufacturing materials used in process validation, to the extent that those materials are manufactured prior to receiving regulatory approval for those products and are not expected to be sold commercially; facilities costs that do not have an alternative future use; related depreciation and other allocated expenses; license fees for, and milestone payments related to, in-licensed products and technologies; and costs associated with animal testing activities and regulatory approvals.

Advertising Expense

The costs of the Company’s advertising efforts are expensed as incurred. The Company incurred approximately $9.8 million and $16.5 million in advertising costs for the three and six months ended June 30, 2017 and approximately $5.0 million and $11.4 million in advertising costs for the three and six months ended June 30, 2016, respectively. These expenses are recorded in the selling, general and administrative expense line of the Statement of Operations.

Share-Based Compensation

Employee share-based compensation is measured based on the estimated fair value on the grant date. The grant date fair value is calculated using the Black-Scholes option-pricing model, which requires the use of subjective assumptions including volatility, expected term, risk-free rate, and the fair value of the underlying common stock. The Company recognizes expense using the straight-line method.

The Company records the expense for stock option grants to non-employees based on the estimated fair value of the stock option using the Black-Scholes option-pricing model. The fair value of non-employee awards is re-measured at each reporting period. As a result, stock compensation expense for non-employee awards with vesting is affected by subsequent changes in the fair value of the Company’s common stock.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. When appropriate, valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized.

The Company accounts for uncertain tax positions in its consolidated financial statements when it is more-likely-than-not that the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority, assuming full knowledge of the position and relevant facts. The Company’s policy is to recognize any interest and penalties related to income taxes as income tax expense.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted in 2017

In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company adopted ASU 2016-09 on January 1, 2017 using the modified retrospective approach. As a result, the Company recorded a cumulative effect adjustment of $211,000 to increase the 2017 beginning of period additional paid-in capital balance, with an offset to accumulated deficit for historical forfeiture assumptions. Additionally, the Company recorded an opening balance sheet adjustment of $392,000 to increase its deferred tax asset, with an offset to accumulated deficit, primarily to recognize excess tax benefits (i.e. windfalls) from stock option exercises in prior years combined with the impact of the $211,000 adjustment to historical forfeiture expense.

New Accounting Pronouncements Not Yet Adopted

In July 2017, the FASB issued ASU 2017-11, “Earnings per share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.” The amendments in Part I change the classification analysis of certain equity-linked financial instruments (embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments in Part II recharacterize the indefinite deferral of certain provisions of Topic 480 with a scope exception and do not have an accounting effect. The amendments in Part I of ASU 2017-11 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ASU 2017-09 is effective for all annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on the consolidated financial statements and disclosures, but does not expect it to have a material impact.

In March 2017, the FASB issued ASU 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.” The amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount, as the discount continues to be amortized to maturity. ASU 2017-08 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 and early adoption is permitted. The amendments should be applied on a modified retrospective basis, with a cumulative-effect adjustment recorded directly to retained earnings as of the beginning of the period of adoption. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” The standard eliminates diversity in the practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We expect the ASU to have a material impact on our assets and liabilities due to the addition of previously classified operating leases, but we do not expect it to have a material impact on our cash flows or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 will eliminate transaction-and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principles-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, with early adoption being permitted for periods ending after December 15, 2016. The guidance permits two methods of adoption: full retrospective method (retrospective application to each prior reporting period presented) or modified retrospective method (retrospective application with the cumulative effect of initially applying the guidance recognized at the date of initial application and providing certain additional disclosures).

As the ASU supersedes substantially all existing revenue recognition guidance affecting us under the current standard, it could impact revenue and cost recognition across our business processes. We commenced our evaluation of the impact of the ASU by selecting and reviewing contracts to develop a baseline understanding. Based on our preliminary assessment, the most likely impact from the adoption of the new ASU is to our revenue recognition practices on our product sales with regards to the accounting for variable considerations such as incentives and sales deductions. In addition, the new ASU may also impact the timing of revenue recognition for our licensing and collaboration agreements with regards to variable considerations that have significant uncertainties; for example, milestone achievement. Currently, the Company is in process of assessing the impact that this standard will have on its consolidated financial statements, and has not selected an adoption methodology.

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value of Financial Instruments

Fair Value of Financial Instruments

3. Fair Value of Financial Instruments

The fair value of an asset or liability should represent the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Such transactions to sell an asset or transfer a liability are assumed to occur in the principal or most advantageous market for the asset or liability. Accordingly, fair value is determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant rather than from a reporting entity’s perspective.

The Company reports assets and liabilities that are measured at fair value using a three level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. 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 at 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 (interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (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.

In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value, in thousands:

	Fair Value Measurements at
	June 30, 2017
	(unaudited)
					Significant
	Total Carrying		Quoted Prices		Other		Significant
	Value at		in Active		Observable		Unobservable
	June 30,		Markets		Inputs		Inputs
	2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	61,737	$	61,737	$	—	$	—
Marketable securities	31,229		656		30,573		—
Long term marketable securities	104,632		—		104,632		—
Marketable securities - restricted (SERP)	294		—		294		—

Total assets at fair value	$	197,892	$	62,393	$	135,499	$	—


Liabilities:

Derivative liabilities	$	—	$	—	$	—	$	—

	Fair Value Measurements at
	December 31, 2016
					Significant
	Total Carrying		Quoted Prices		Other		Significant
	Value at		in Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	66,398	$	66,398	$	—	$	—
Marketable securities	23,723		656		23,067		—
Long term marketable securities	75,410		—		75,410		—
Marketable securities - restricted (SERP)	275		—		275		—

Total assets at fair value	$	165,806	$	67,054	$	98,752	$	—


Liabilities:

Derivative liabilities	$	114	$	—	$	—	$	114

The fair value of the restricted marketable securities is included within other non-current assets in the consolidated balance sheets.

The Company’s Level 1 assets include cash held with banks, certificate of deposits, and money market funds.

Level 2 assets include the SERP assets, commercial paper and investment grade corporate bonds and other fixed income securities. Level 2 securities are valued using third-party pricing sources that apply applicable inputs and other relevant data into their models to estimate fair value.

Level 3 liabilities include the estimated fair value of the interest make-whole liability associated with the Notes, which are recorded as derivative liabilities. The “make-whole fundamental change” provision (as defined in the Notes Indenture Agreement) expired on May 1, 2017.

Changes in the fair value of the interest make-whole liability are recognized as a component of other income (expense) in the Consolidated Statements of Operations. The following table presents information about the Company’s Level 3 liabilities as of June 30, 2017 and December 31, 2016 that are included in the non-current liabilities section of the Consolidated Balance Sheets, in thousands:

	Six Months ended June 30,
	June 30, 2017
	(unaudited)

Balance at December 31, 2016	114
Changes in fair value of derivative liabilities included in earnings	(76		)
Reduction due to conversion of debt to equity	(38		)


Balance at June 30, 2017	$	—

The carrying value, face value and estimated fair value of the Notes was approximately $1.5 million, $1.6 million and $12.8 million, respectively, as of June 30, 2017. The fair value was estimated based on actual trade information as well as quoted prices provided by bond traders, which would be characterized within Level 2 of the fair value hierarchy.

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

Unrestricted marketable securities held by the Company were as follows, in thousands:

At June 30, 2017 (unaudited):

Available for Sale		Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities		$	135,864		229		(232	)	$	135,861

At December 31, 2016:

Available for Sale		Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities		$	99,487		86		(440	)	$	99,133

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

	June 30,
	2017
	(unaudited)
Less Than 1 Year	$	31,229
1 year to 2 years	33,124
3 years to 4 years	71,508
Greater Than 4 Years	—

Total	$	135,861

The Company has not experienced any other-than-temporary losses on its marketable securities and restricted marketable securities. The cost of securities sold is calculated using the specific identification method.

- 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

Inventories

6 Months Ended

Jun. 30, 2017

Inventories

Inventories

4. Inventories

Inventories consist of the following, in thousands:

	June 30,		December 31,
	2017		2016
	(unaudited)
Raw materials	$	2,972	$	2,091
Work in process	8,646		8,874
Finished goods	5,005		5,836

	$	16,623	$	16,801

Property and Equipment

6 Months Ended

Jun. 30, 2017

Property and Equipment

Property and Equipment

5. Property and Equipment

Property and equipment consist of the following, in thousands:

	June 30,			December 31,
	2017			2016
	(unaudited)
Computer equipment	$	1,214		$	1,206
Software	1,939			1,807
Lab equipment and furniture	7,411			6,758
Leasehold improvements	2,729			2,642
Construction in progress	—			28

	13,293			12,441
Less accumulated depreciation and amortization	(8,721		)	(8,097		)

	$	4,572		$	4,344

Depreciation and amortization expense on property and equipment was approximately $0.3 million and $0.6 million for the three and six months ended June 30, 2017, and $0.3 million and $0.6 million for the three and six months ended June 30, 2016, respectively.

Deferred Legal Fees and Intangible Assets

6 Months Ended

Jun. 30, 2017

Deferred Legal Fees and Intangible Assets

Deferred Legal Fees and Intangible Assets

6. Deferred Legal Fees and Intangible Assets

Deferred legal fees have been incurred in conjunction with defending patents for Oxtellar XR and Trokendi XR. As of June 30, 2017 and December 31, 2016, the Company had deferred legal fees of $11.9 million and $19.9 million, respectively.

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

	Weighted-	June 30,			December 31,
	Average Life	2017			2016
	(unaudited)
Capitalized patent defense costs	5.9 - 11 years	$	31,732		$	17,773

Less accumulated amortization		(2,743		)	(1,283		)

		$	28,989		$	16,490

In March 2017, the Company entered into two settlements with various companies related to Trokendi XR patent litigation, at which time the Company reduced deferred legal fees by $12.6 million and transferred these amounts to intangible assets. The Company amortizes the cost of litigation through the settlement date of January 1, 2023.

The net book value of intangible assets was $29.0 million as of June 30, 2017 and $16.5 million as of December 31, 2016. The increase in intangible assets reflects the settlement of lawsuits related to Trokendi XR patents during the first quarter of 2017.

Amortization expense related to intangible assets was approximately $1.0 million and $1.4 million for the three and six months ended June 30, 2017, and approximately $0.4 million and $0.5 million for the three and six months ended June 30, 2016, respectively.

There were no indicators of impairment identified.

Accrued Expenses

6 Months Ended

Jun. 30, 2017

Accrued Expenses

Accrued Expenses

7. Accrued Expenses

Accrued expenses are comprised of the following, in thousands:

	June 30,		December 31,
	2017		2016
	(unaudited)

Accrued compensation	$	9,996	$	9,145
Accrued professional fees	3,579		6,447
Accrued clinical trial and clinical supply costs	5,241		4,350
Accrued product costs	155		1,794
Accrued interest expense	20		61
Other accrued expenses	4,443		5,630

	$	23,434	$	27,427

Convertible Senior Secured Notes

6 Months Ended

Jun. 30, 2017

Convertible Senior Secured Notes

Convertible Senior Secured Notes

8. Convertible Senior Secured Notes

The table below summarizes activity related to the Notes from issuance on May 3, 2013 through June 30, 2017, in thousands:

Gross proceeds	$	90,000
Initial value of interest make-whole derivative reported as debt discount	(9,270		)
Conversion option reported as debt discount and APIC	(22,336		)
Conversion of debt to equity - principal	(85,425		)
Conversion of debt to equity - accretion of debt discount and deferred financing costs	25,767
Accretion of debt discount and deferred financing costs	5,429

December 31, 2016 carrying value	4,165

Conversion of debt to equity - principal	(3,000		)
Conversion of debt to equity - accretion of debt discount and deferred financing costs	257
Accretion of debt discount and deferred financing costs	50

June 30, 2017 carrying value, unaudited	$	1,472

During the six month period ended June 30, 2017, approximately $3.0 million of the Notes were presented to the Company for conversion. Accordingly, the Company issued approximately 0.6 million shares of common stock in conversion of the principal amount of the Notes. The Company issued an additional 2,000 shares of common stock in settlement of the interest make-whole provision related to the converted Notes. As a result of the conversions, the Company incurred a loss of approximately $0.2 million on extinguishment of debt during the six month period ended June 30, 2017, which is included as a separate component of other income (expense) on the Consolidated Statement of Operations. During the six month period ended June 30, 2016, as a result of approximately $2.0 million in note conversions, the Company incurred a loss of approximately $0.4 million on extinguishment of debt.

Summary Stockholders' Equity

6 Months Ended

Jun. 30, 2017

Summary Stockholders' Equity

Summary Stockholders' Equity

9. Summary Stockholders’ Equity

The following summary table provides details related to the activity in certain captions within Stockholders’ Equity for the six month period ended June 30, 2017, in thousands.

	Common Stock		Additional Paid-in Capital		Accumulated Deficit
	(unaudited)

Balance, December 31, 2016	$	50	$	276,127	$	(84,288	)
Cumulative-effect adjustment	—		211		181

Balance at January 1, 2017	50		276,338		(84,107		)

Share-based compensation	—		4,087		—
Issuance of ESPP shares	—		907
Exercise of stock options	1		1,256		—
Equity issued on note conversion	—		2,984		—
Net income	—		—		27,665

Balance, June 30, 2017	$	51	$	285,572	$	(56,442	)

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

Share-Based Payments

6 Months Ended

Jun. 30, 2017

Share-Based Payments

Share-Based Payments

10. Share-Based Payments

The Company has adopted the Supernus Pharmaceuticals, Inc. 2012 Equity Incentive Plan (the 2012 Plan), which is stockholder approved, and provides for the grant of stock options and certain other awards, including stock appreciation rights (SAR), restricted and unrestricted stock, stock units, performance awards, cash awards and other awards that are convertible into or otherwise based on the Company’s common stock, to the Company’s key employees, directors, and consultants and advisors. The 2012 Plan is administered by the Company’s Board of Directors and provides for the issuance of up to 8,000,000 shares of the Company’s Common Stock. Option awards are granted with an exercise price equal to the estimated fair value of the Company’s Common Stock at the grant date. Option awards granted to employees, consultants and advisors generally vest in four annual installments, starting on the first anniversary of the date of grant and have ten-year contractual terms. Option awards granted to the directors generally vest over a one year term.

Share-based compensation recognized related to the grant of employee and non-employee stock options, SAR, Employee Stock Purchase Plan (ESPP) awards and non-vested stock was as follows, in thousands:

	Three Months ended				Six Months ended June 30,
	2017		2016		2017		2016
	(unaudited)				(unaudited)
Research and development	$	398	$	340	$	715	$	628
Selling, general and administrative	1,862		1,272		3,372		2,343

Total	$	2,260	$	1,612	$	4,087	$	2,971

The following table summarizes stock option and SAR activity:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)

Outstanding, December 31, 2016	3,644,088		$	10.25	7.59
Granted	1,063,255		$	25.71
Exercised	(152,453	)	$	8.24
Forfeited or expired	(45,286	)	$	16.84

Outstanding, June 30, 2017	4,509,604		$	13.89	7.71


As of December 31, 2016:
Vested and expected to vest	3,591,528		$	10.22	7.57
Exercisable	1,503,004		$	8.62	6.49

As of June 30, 2017:
Vested and expected to vest	4,509,604		$	13.89	7.71
Exercisable	2,164,607		$	9.31	6.51

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Earnings per Share

6 Months Ended

Jun. 30, 2017

Earnings per Share

Earnings per Share

11. Earnings per Share

Basic income per common share is determined by dividing income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted income per share is computed by dividing the income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants, SAR, and potential ESPP awards, and the if-converted method is used to determine the dilutive effect of the Company’s Notes.

The following common stock equivalents were excluded in the calculation of diluted income per share because their effect would be anti-dilutive as applied to the income from continuing operations applicable to common stockholders for the three and six months ended June 30, 2017 and 2016:

	Three Months ended June 30,		Six Months ended June 30,
	2017	2016	2017	2016
	(unaudited)		(unaudited)
Shares underlying Convertible Senior Secured Notes	—	—	—	—
Stock options, stock appreciation rights, and ESPP awards	122,666	1,124,100	206,448	1,159,100

The following table sets forth the computation of basic and diluted net income per share for the three and six months ended June 30, 2017 and 2016, in thousands, except share and per share amounts:

	Three Months ended June 30,						Six Months ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Numerator, in thousands:
Net income used for calculation of basic EPS	$	17,368		$	10,251		$	27,665		$	15,076

Interest expense on convertible debt	58			196			147			375
Changes in fair value of derivative liabilities	(23		)	(123		)	(76		)	(224		)
Loss on extinguishment of debt	103			—			204			382
Loss on extinguishment of outstanding debt, as if converted	(258		)	(849		)	(321		)	(1,183		)

Total adjustments	(120		)	(776		)	(46		)	(650		)

Net income used for calculation of diluted EPS	$	17,248		$	9,475		$	27,619		$	14,426


Denominator:
Weighted average shares outstanding, basic	50,530,968			49,427,825			50,345,830			49,333,962

Effect of dilutive potential common shares:
Shares underlying Convertible Senior Secured Notes	421,708			1,240,814			551,235			1,301,885
Shares issuable to settle interest make-whole derivatives	4,631			52,563			7,013			71,537
Stock options and stock appreciation rights	2,266,407			1,024,140			2,122,245			777,302

Total potential dilutive common shares	2,692,746			2,317,517			2,680,493			2,150,724

Weighted average shares outstanding, diluted	53,223,714			51,745,342			53,026,323			51,484,686


Net income per share, basic	$	0.34		$	0.21		$	0.55		$	0.31
Net income per share, diluted	$	0.32		$	0.18		$	0.52		$	0.28

Income Taxes

6 Months Ended

Jun. 30, 2017

Income Taxes

Income Taxes

12. Income Taxes

The following table provides a comparative summary of our income tax expense and effective tax rate for the three and six months ended June 30, 2017 and 2016, in thousands:

	Three Months ended June 30,						Six Months ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Income tax expense	$	9,057		$	405		$	14,983		$	605
Effective tax rate	34.3		%	3.8		%	35.1		%	3.9		%

The income tax expense for the three and six months ended June 30, 2017 is attributed to the U.S. federal and state income tax. The increase in the income tax expense and the effective tax rate for the three and six months ended June 30, 2017 as compared to the same period in the prior year is primarily attributable to the release of the valuation allowance on the deferred tax assets during the third quarter of 2016.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies

Commitments and Contingencies

13. Commitments and Contingencies

The Company has concurrent leases for office and lab space that extend through April 2020. The Company may elect to extend the term of the leases for an additional five-year term. The leases provide for a tenant improvement allowance of approximately $2.1 million in aggregate. During the three and six months ended June 30, 2017, $49,000 and $79,000 of the allowance was utilized. During the three and six months ended June 30, 2016, none of the allowance was utilized. As of June 30, 2017, $0.4 million remains available for tenant improvements. Rent expense for the leased facilities and leased vehicles for the three and six months ended June 30, 2017 was $0.5 million and $1.2 million, respectively. Rent expense for the leased facilities and leased vehicles for the Company’s sales representatives for the three and six months ended June 30, 2016 was approximately $0.7 million and $1.3 million, respectively.

Future minimum lease payments under non-cancelable operating leases as of June 30, 2017 are as follows, in thousands, unaudited:

Year ending December 31:
2017 (remaining)	1,468
2018	1,487
2019	1,344
Thereafter	454

	$	4,753

The Company has obtained exclusive licenses from third parties for proprietary rights to support the product candidates in the Company’s psychiatry portfolio. Under license agreements with Afecta Pharmaceuticals, Inc. (Afecta), the Company has exclusive worldwide rights to selected product candidates, including an exclusive license to SPN-810. The Company does not owe any future milestone payments for SPN-810. The Company is obligated to pay royalties to Afecta as a low single digit percentage of worldwide net product sales.

The Company has also entered into a purchase and sale agreement with Rune HealthCare Limited (Rune), where the Company obtained the exclusive worldwide rights to a product concept from Rune. There are no future milestone payments due to Rune under this agreement. If the Company receives approval to market and sell any products based on the Rune product concept for SPN-809, the Company is obligated to pay royalties to Rune as a low single digit percentage of worldwide net product sales.

Collaboration Agreement	6 Months Ended
Collaboration Agreement	Jun. 30, 2017
Collaboration Agreement
Collaboration Agreement	14. Collaboration Agreement Royalty Revenue 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 agreement with United Therapeutics Corporation related to the commercialization of Orenitram (treprostinil) Extended-Release Tablets. We will retain full ownership of the royalty rights if and when a certain threshold is reached per the terms of the Agreement. We have recorded a non-recourse liability related to this transaction and have begun to amortize this amount to recognize non-cash royalty revenue as royalties are received by HC Royalty from United Therapeutics. We also recognized non-cash interest expense related to this liability that accrues at an effective interest rate, which is determined based on projections of HC Royalty’s rate of return. We recognized royalty revenue of $1.2 million for the three months ended June 30, 2017 and $1.2 million for the three months ended June 30, 2016, respectively. We recognized non-cash interest expense of $0.2 million for the three months ended June 30, 2017 and $1.3 million for the three months ended June 30, 2016, respectively. We recognized royalty revenue of $2.3 million for the six months ended June 30, 2017 and $2.3 million for the six months ended June 30, 2016, respectively. We recognized non-cash interest expense of $1.1 million for the six months ended June 30, 2017 and $2.6 million for the six months ended June 30, 2016, respectively.

Subsequent Event	6 Months Ended
Subsequent Event	Jun. 30, 2017
Subsequent Event
Subsequent Event	15. Subsequent Event Subsequent to June 30, 2017, holders of the Notes converted approximately $1.6 million of the Notes. We issued a total of approximately 297,000 shares of common stock in conversion of the principal amount of the Notes and accrued interest thereon. Subsequent to these conversions, the principal amount of the Notes outstanding was zero. Our obligations under the Indenture governing the Notes were satisfied and discharged.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Summary of Significant Accounting Policies

Basis of Presentation

The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the Company’s future financial results.

Marketable Securities

Accounts Receivable, net

The Company recorded an allowance for expected sales discounts of approximately $8.3 million and $5.6 million as of June 30, 2017 and December 31, 2016, respectively.

Inventories

Property and Equipment

Computer equipment		3 years
Software		3 years
Lab equipment and furniture		5 - 10 years
Leasehold improvements		Shorter of lease term or useful life

Deferred Legal Fees

Intangible Assets

Impairment of Long-Lived Assets

There were no indicators of impairment identified for the Company’s long-lived assets as of June 30, 2017.

Deferred Financing Costs

Preclinical Study and Clinical Trial Accruals

Revenue from Product Sales

Sales Deductions

Allowances for estimated sales deductions are provided for the following:

Revenue Recognition of License Revenue

License and Collaboration Agreements

Milestone Payments

the milestone payments are non-refundable;

achievement of the milestone involves a degree of risk and was not reasonably assured at the inception of the arrangement;

substantive effort on the partner’s part is involved in achieving the milestone; and

the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with achievement of the milestone.

Royalty Revenue

Cost of Product Sales

Research and Development Costs

Advertising Expense

Share-Based Compensation

Income Taxes

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted in 2017

New Accounting Pronouncements Not Yet Adopted

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2017

Summary of Significant Accounting Policies

Schedule of useful lives used to compute depreciation and amortization

Computer equipment		3 years
Software		3 years
Lab equipment and furniture		5 - 10 years
Leasehold improvements		Shorter of lease term or useful life

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value of Financial Instruments

Schedule of fair value of the financial assets and liabilities

	Fair Value Measurements at
	June 30, 2017
	(unaudited)
					Significant
	Total Carrying		Quoted Prices		Other		Significant
	Value at		in Active		Observable		Unobservable
	June 30,		Markets		Inputs		Inputs
	2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	61,737	$	61,737	$	—	$	—
Marketable securities	31,229		656		30,573		—
Long term marketable securities	104,632		—		104,632		—
Marketable securities - restricted (SERP)	294		—		294		—

Total assets at fair value	$	197,892	$	62,393	$	135,499	$	—


Liabilities:

Derivative liabilities	$	—	$	—	$	—	$	—

	Fair Value Measurements at
	December 31, 2016
					Significant
	Total Carrying		Quoted Prices		Other		Significant
	Value at		in Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	66,398	$	66,398	$	—	$	—
Marketable securities	23,723		656		23,067		—
Long term marketable securities	75,410		—		75,410		—
Marketable securities - restricted (SERP)	275		—		275		—

Total assets at fair value	$	165,806	$	67,054	$	98,752	$	—


Liabilities:

Derivative liabilities	$	114	$	—	$	—	$	114

Schedule of Level 3 liabilities included in the non-current liabilities section of the consolidated balance sheets

The following table presents information about the Company’s Level 3 liabilities as of June 30, 2017 and December 31, 2016 that are included in the non-current liabilities section of the Consolidated Balance Sheets, in thousands:

	Six Months ended June 30,
	June 30, 2017
	(unaudited)

Balance at December 31, 2016	114
Changes in fair value of derivative liabilities included in earnings	(76		)
Reduction due to conversion of debt to equity	(38		)


Balance at June 30, 2017	$	—

Schedule of unrestricted marketable securities

Unrestricted marketable securities held by the Company were as follows, in thousands:

At June 30, 2017 (unaudited):

Available for Sale		Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities		$	135,864		229		(232	)	$	135,861

At December 31, 2016:

Available for Sale		Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities		$	99,487		86		(440	)	$	99,133

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 were as follows, in thousands:

	June 30,
	2017
	(unaudited)
Less Than 1 Year	$	31,229
1 year to 2 years	33,124
3 years to 4 years	71,508
Greater Than 4 Years	—

Total	$	135,861

Inventories (Tables)

6 Months Ended

Jun. 30, 2017

Inventories

Schedule of inventories

Inventories consist of the following, in thousands:

	June 30,		December 31,
	2017		2016
	(unaudited)
Raw materials	$	2,972	$	2,091
Work in process	8,646		8,874
Finished goods	5,005		5,836

	$	16,623	$	16,801

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Property and Equipment

Schedule of property and equipment

Property and equipment consist of the following, in thousands:

	June 30,			December 31,
	2017			2016
	(unaudited)
Computer equipment	$	1,214		$	1,206
Software	1,939			1,807
Lab equipment and furniture	7,411			6,758
Leasehold improvements	2,729			2,642
Construction in progress	—			28

	13,293			12,441
Less accumulated depreciation and amortization	(8,721		)	(8,097		)

	$	4,572		$	4,344

Deferred Legal Fees and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Deferred Legal Fees and Intangible Assets

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

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

	Weighted-	June 30,			December 31,
	Average Life	2017			2016
	(unaudited)
Capitalized patent defense costs	5.9 - 11 years	$	31,732		$	17,773

Less accumulated amortization		(2,743		)	(1,283		)

		$	28,989		$	16,490

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2017

Accrued Expenses

Schedule of accrued expenses

Accrued expenses are comprised of the following, in thousands:

	June 30,		December 31,
	2017		2016
	(unaudited)

Accrued compensation	$	9,996	$	9,145
Accrued professional fees	3,579		6,447
Accrued clinical trial and clinical supply costs	5,241		4,350
Accrued product costs	155		1,794
Accrued interest expense	20		61
Other accrued expenses	4,443		5,630

	$	23,434	$	27,427

Convertible Senior Secured Notes (Tables)

6 Months Ended

Jun. 30, 2017

Convertible Senior Secured Notes

Summary of issuance of Notes reflected in balance sheet

The table below summarizes activity related to the Notes from issuance on May 3, 2013 through June 30, 2017, in thousands:

Gross proceeds	$	90,000
Initial value of interest make-whole derivative reported as debt discount	(9,270		)
Conversion option reported as debt discount and APIC	(22,336		)
Conversion of debt to equity - principal	(85,425		)
Conversion of debt to equity - accretion of debt discount and deferred financing costs	25,767
Accretion of debt discount and deferred financing costs	5,429

December 31, 2016 carrying value	4,165

Conversion of debt to equity - principal	(3,000		)
Conversion of debt to equity - accretion of debt discount and deferred financing costs	257
Accretion of debt discount and deferred financing costs	50

June 30, 2017 carrying value, unaudited	$	1,472

Summary Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2017

Summary Stockholders' Equity

Schedule of activity in certain captions within Stockholders' Equity

The following summary table provides details related to the activity in certain captions within Stockholders’ Equity for the six month period ended June 30, 2017, in thousands.

	Common Stock		Additional Paid-in Capital		Accumulated Deficit
	(unaudited)

Balance, December 31, 2016	$	50	$	276,127	$	(84,288	)
Cumulative-effect adjustment	—		211		181

Balance at January 1, 2017	50		276,338		(84,107		)

Share-based compensation	—		4,087		—
Issuance of ESPP shares	—		907
Exercise of stock options	1		1,256		—
Equity issued on note conversion	—		2,984		—
Net income	—		—		27,665

Balance, June 30, 2017	$	51	$	285,572	$	(56,442	)

Share-Based Payments (Tables)

6 Months Ended

Jun. 30, 2017

Share-Based Payments

Schedule of share-based compensation recognized related to the grant of employee and non-employee stock options, SAR, Employee Stock Purchase Plan (ESPP) awards and non-vested stock

Share-based compensation recognized related to the grant of employee and non-employee stock options, SAR, Employee Stock Purchase Plan (ESPP) awards and non-vested stock was as follows, in thousands:

	Three Months ended				Six Months ended June 30,
	2017		2016		2017		2016
	(unaudited)				(unaudited)
Research and development	$	398	$	340	$	715	$	628
Selling, general and administrative	1,862		1,272		3,372		2,343

Total	$	2,260	$	1,612	$	4,087	$	2,971

Summary of stock option and SAR activity

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)

Outstanding, December 31, 2016	3,644,088		$	10.25	7.59
Granted	1,063,255		$	25.71
Exercised	(152,453	)	$	8.24
Forfeited or expired	(45,286	)	$	16.84

Outstanding, June 30, 2017	4,509,604		$	13.89	7.71


As of December 31, 2016:
Vested and expected to vest	3,591,528		$	10.22	7.57
Exercisable	1,503,004		$	8.62	6.49

As of June 30, 2017:
Vested and expected to vest	4,509,604		$	13.89	7.71
Exercisable	2,164,607		$	9.31	6.51

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings per Share

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

	Three Months ended June 30,		Six Months ended June 30,
	2017	2016	2017	2016
	(unaudited)		(unaudited)
Shares underlying Convertible Senior Secured Notes	—	—	—	—
Stock options, stock appreciation rights, and ESPP awards	122,666	1,124,100	206,448	1,159,100

Schedule of computation of basic and diluted net income per share

The following table sets forth the computation of basic and diluted net income per share for the three and six months ended June 30, 2017 and 2016, in thousands, except share and per share amounts:

	Three Months ended June 30,						Six Months ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Numerator, in thousands:
Net income used for calculation of basic EPS	$	17,368		$	10,251		$	27,665		$	15,076

Interest expense on convertible debt	58			196			147			375
Changes in fair value of derivative liabilities	(23		)	(123		)	(76		)	(224		)
Loss on extinguishment of debt	103			—			204			382
Loss on extinguishment of outstanding debt, as if converted	(258		)	(849		)	(321		)	(1,183		)

Total adjustments	(120		)	(776		)	(46		)	(650		)

Net income used for calculation of diluted EPS	$	17,248		$	9,475		$	27,619		$	14,426


Denominator:
Weighted average shares outstanding, basic	50,530,968			49,427,825			50,345,830			49,333,962

Effect of dilutive potential common shares:
Shares underlying Convertible Senior Secured Notes	421,708			1,240,814			551,235			1,301,885
Shares issuable to settle interest make-whole derivatives	4,631			52,563			7,013			71,537
Stock options and stock appreciation rights	2,266,407			1,024,140			2,122,245			777,302

Total potential dilutive common shares	2,692,746			2,317,517			2,680,493			2,150,724

Weighted average shares outstanding, diluted	53,223,714			51,745,342			53,026,323			51,484,686


Net income per share, basic	$	0.34		$	0.21		$	0.55		$	0.31
Net income per share, diluted	$	0.32		$	0.18		$	0.52		$	0.28

Income Taxes (Tables)

6 Months Ended

Jun. 30, 2017

Income Taxes

Summary of our income tax expense and effective tax rate

The following table provides a comparative summary of our income tax expense and effective tax rate for the three and six months ended June 30, 2017 and 2016, in thousands:

	Three Months ended June 30,						Six Months ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Income tax expense	$	9,057		$	405		$	14,983		$	605
Effective tax rate	34.3		%	3.8		%	35.1		%	3.9		%

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies

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

Future minimum lease payments under non-cancelable operating leases as of June 30, 2017 are as follows, in thousands, unaudited:

Year ending December 31:
2017 (remaining)	1,468
2018	1,487
2019	1,344
Thereafter	454

	$	4,753

Organization and Business (Details)	6 Months Ended
Organization and Business (Details)	Jun. 30, 2017 product
Organization and Business
Number of proprietary products in clinical development	2

Summary of Significant Accounting Policies - Segments (Details)	6 Months Ended
	Jun. 30, 2017 segment
Basis of Presentation
Number of operating segments	1

Summary of Significant Accounting Policies - SERP (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
SERP \| Other Non-current Assets
Marketable Securities - Restricted
Marketable securities	$ 294,000	$ 275,000

Summary of Significant Accounting Policies - Accounts Receivable, net (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Accounts Receivable, net
Allowance for expected sales discounts	$ 8.3	$ 5.6
7.50% Convertible Senior Secured Notes due 2019
Deferred Financing Costs
Interest rate (as a percent)	7.50%

Summary of Significant Accounting Policies - Property and Equipment (Details)	6 Months Ended
	Jun. 30, 2017
Computer equipment
Property and equipment
Useful lives	3 years
Software
Property and equipment
Useful lives	3 years
Lab equipment and furniture \| Minimum
Property and equipment
Useful lives	5 years
Lab equipment and furniture \| Maximum
Property and equipment
Useful lives	10 years

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue Recognition
Sales return period prior to expiry date			6 months
Sales return period subsequent to expiry date			12 months
Milestone revenues recorded	$ 1,300,000	$ 0	$ 1,300,000	$ 0
Selling, general and administrative
Advertising Expense
Advertising costs	$ 9,800,000	$ 5,000,000	$ 16,500,000	$ 11,400,000

Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) - USD ($)	Jun. 30, 2017	Jan. 01, 2017	Dec. 31, 2016
Recently Issued Accounting Pronouncements
Additional Paid in Capital	$ 285,572,000		$ 276,127,000
Retained Earnings (Accumulated Deficit)	(56,442,000)		(84,288,000)
Deferred Tax Assets, Net, Noncurrent	$ 30,449,000		$ 41,729,000
ASU 2016-09 \| Cumulative Effect Adjustment
Recently Issued Accounting Pronouncements
Additional Paid in Capital		$ 211,000
Retained Earnings (Accumulated Deficit)		(211,000)
ASU 2016-09 \| Deferred Tax Asset Adjustment
Recently Issued Accounting Pronouncements
Retained Earnings (Accumulated Deficit)		392,000
Deferred Tax Assets, Net, Noncurrent		$ 392,000

Fair Value of Financial Instruments - Carrying Value (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets:
Marketable securities	$ 31,229	$ 23,723
Long term marketable securities	104,632	75,410
Liabilities:
Derivative liabilities		114
Total Carrying Value \| Recurring
Assets:
Cash and cash equivalents	61,737	66,398
Marketable securities	31,229	23,723
Long term marketable securities	104,632	75,410
Marketable securities - restricted (SERP)	294	275
Total assets at fair value	197,892	165,806
Liabilities:
Derivative liabilities		114
Quoted Prices in Active Markets (Level 1) \| Recurring
Assets:
Cash and cash equivalents	61,737	66,398
Marketable securities	656	656
Total assets at fair value	62,393	67,054
Significant Other Observable Inputs (Level 2) \| Recurring
Assets:
Marketable securities	30,573	23,067
Long term marketable securities	104,632	75,410
Marketable securities - restricted (SERP)	294	275
Total assets at fair value	$ 135,499	98,752
Significant Unobservable Inputs (Level 3) \| Recurring
Liabilities:
Derivative liabilities		$ 114

Fair Value of Financial Instruments - Level 3 (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Interest Make-Whole Liability
Carrying value of the convertible notes	$ 1,472	$ 4,165
Face value of the convertible notes	1,600
Estimated fair value of the convertible notes	12,800
Significant Unobservable Inputs (Level 3) \| Derivative Financial Instruments, Liabilities
Interest Make-Whole Liability
Balance at the beginning of the period	114
Changes in fair value of derivative liabilities included in earnings	(76)
Reduction due to conversion of debt to equity	$ (38)

Fair Value of Financial Instruments - Unrestricted Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value of Financial Instruments
Corporate debt securities, Amortized Cost	$ 135,864	$ 99,487
Corporate debt securities, Gross Unrealized Gains	229	86
Corporate debt securities, Gross Unrealized Losses	(232)	(440)
Corporate debt securities, Fair Value	135,861	99,133
Contractual maturities of the unrestricted available for sale marketable securities held
Less Than 1 Year	31,229
1 year to 2 years	33,124
3 years to 4 years	71,508
Corporate debt securities, Fair Value	$ 135,861	$ 99,133

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Inventories
Raw materials	$ 2,972	$ 2,091
Work in process	8,646	8,874
Finished goods	5,005	5,836
Total inventories	$ 16,623	$ 16,801

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Property and equipment
Property and equipment, gross	$ 13,293		$ 13,293		$ 12,441
Less accumulated depreciation and amortization	(8,721)		(8,721)		(8,097)
Property and equipment, net	4,572		4,572		4,344
Depreciation and amortization expense	300	$ 300	600	$ 600
Computer equipment
Property and equipment
Property and equipment, gross	1,214		1,214		1,206
Software
Property and equipment
Property and equipment, gross	1,939		1,939		1,807
Lab equipment and furniture
Property and equipment
Property and equipment, gross	7,411		7,411		6,758
Leasehold improvements
Property and equipment
Property and equipment, gross	$ 2,729		$ 2,729		2,642
Construction in progress
Property and equipment
Property and equipment, gross					$ 28

Deferred Legal Fees and Intangible Assets (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($) item	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Finite lived intangible assets disclosures
Less accumulated Amortization		$ (2,743)		$ (2,743)		$ (1,283)
Net book value of intangible assets		28,989		28,989		16,490
Additional disclosures
Deferred legal fees		11,887		11,887		19,860
Amortization expense		1,000	$ 400	1,400	$ 500
Trokendi XR patent litigation
Additional disclosures
Number of settlements \| item	2
Reduction Of Deferred Legal Cost	$ 12,600
Capitalized patent defense costs
Finite lived intangible assets disclosures
Gross Carrying Amount		$ 31,732		$ 31,732		$ 17,773
Capitalized patent defense costs \| Minimum
Finite lived intangible assets disclosures
Average Life				5 years 10 months 24 days		5 years 10 months 24 days
Capitalized patent defense costs \| Maximum
Finite lived intangible assets disclosures
Average Life				11 years		11 years

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Accrued Expenses
Accrued compensation	$ 9,996	$ 9,145
Accrued professional fees	3,579	6,447
Accrued clinical trial and clinical supply costs	5,241	4,350
Accrued product costs	155	1,794
Accrued interest expense	20	61
Other accrued expenses	4,443	5,630
Total	$ 23,434	$ 27,427

Convertible Senior Secured Notes (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended		44 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Details of Notes reflected in balance sheet
Remaining outstanding balance	$ 1,472	$ 1,472		$ 4,165
Loss on extinguishment of debt	103	204	$ 382
7.50% Convertible Senior Secured Notes due 2019
Details of Notes reflected in balance sheet
Gross proceeds				90,000
Initial value of interest make-whole derivative reported as debt discount				(9,270)
Conversion option reported as debt discount and APIC				(22,336)
Conversion of debt to equity - principal		(3,000)	(2,000)	(85,425)
Conversion of debt to equity - accretion of debt discount and deferred financing costs		257		25,767
Accretion of debt discount and deferred financing costs		50		5,429
Remaining outstanding balance	$ 1,472	$ 1,472		$ 4,165
Shares of common stock issued in conversion of Notes		600,000
Shares of common stock issued in settlement of the interest make-whole provision		2,000
Loss on extinguishment of debt		$ 200	$ 400

Summary Stockholders' Equity (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 01, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Beginning balance	$ 191,755			$ 191,755
Net income		$ 17,368	$ 10,251	27,665	$ 15,076
Ending balance		229,397		229,397
Common Stock
Beginning balance	50			50
Exercise of stock options				1
Ending balance	50	51		51
Additional Paid-in Capital
Beginning balance	276,127			276,127
Cumulative-effect adjustment	211
Share-based compensation				4,087
Issuance of ESPP shares				907
Exercise of stock options				1,256
Equity issued on note conversion				2,984
Ending balance	276,338	285,572		285,572
Accumulated Deficit
Beginning balance	(84,288)			(84,288)
Cumulative-effect adjustment	181
Net income				27,665
Ending balance	$ (84,107)	$ (56,442)		$ (56,442)

Share-Based Payments - 2012 Plan (Details) - 2012 Plan	6 Months Ended
Share-Based Payments - 2012 Plan (Details) - 2012 Plan	Jun. 30, 2017 installment shares
Share-based payments
Maximum number of shares of common stock provided for issuance \| shares	8,000,000
Stock Option
Share-based payments
Number of annual installments in which the awards would generally vest starting on the first anniversary of the date of grant \| installment	4
Contractual term	10 years
Stock Option \| Directors
Share-based payments
Vesting period	1 year

Share-Based Payments - Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based Payments
Share-based compensation recognized	$ 2,260	$ 1,612	$ 4,087	$ 2,971
Research and development
Share-based Payments
Share-based compensation recognized	398	340	715	628
Selling, general and administrative
Share-based Payments
Share-based compensation recognized	$ 1,862	$ 1,272	$ 3,372	$ 2,343

Share-Based Payments - Activity (Details) - Stock option and Stock Appreciation Rights - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Number of Options and SAR
Outstanding at the beginning of the period (in shares)	3,644,088
Granted (in shares)	1,063,255
Exercised (in shares)	(152,453)
Forfeited or expired (in shares)	(45,286)
Outstanding at the end of the period (in shares)	4,509,604	3,644,088
Vested and expected to vest (in shares)	4,509,604	3,591,528
Exercisable (in shares)	2,164,607	1,503,004
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 10.25
Granted (in dollars per share)	25.71
Exercised (in dollars per share)	8.24
Forfeited or expired (in dollars per share)	16.84
Outstanding at the end of the period (in dollars per share)	13.89	$ 10.25
Vested and expected to vest (in dollars per share)	13.89	10.22
Exercisable (in dollars per share)	$ 9.31	$ 8.62
Weighted-Average Remaining Contractual Term (in years)
Outstanding at the end of the period	7 years 8 months 16 days	7 years 7 months 2 days
Vested and expected to vest	7 years 8 months 16 days	7 years 6 months 26 days
Exercisable	6 years 6 months 4 days	6 years 5 months 27 days

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator, in thousands:
Net income used for calculation of basic EPS	$ 17,368	$ 10,251	$ 27,665	$ 15,076
Interest expense on convertible debt	58	196	147	375
Changes in fair value of derivative liabilities	(23)	(123)	(76)	(224)
Loss on extinguishment of debt	103		204	382
Loss on extinguishment of outstanding debt, as if converted	(258)	(849)	(321)	(1,183)
Total adjustments	(120)	(776)	(46)	(650)
Net income used for calculation of diluted EPS	$ 17,248	$ 9,475	$ 27,619	$ 14,426
Denominator:
Weighted average shares outstanding, basic	50,530,968	49,427,825	50,345,830	49,333,962
Effect of dilutive potential common shares:
Shares underlying Convertible Senior Secured Notes	421,708	1,240,814	551,235	1,301,885
Shares issuable to settle interest make-whole derivatives	4,631	52,563	7,013	71,537
Stock options and stock appreciation rights	2,266,407	1,024,140	2,122,245	777,302
Total potential dilutive common shares	2,692,746	2,317,517	2,680,493	2,150,724
Weighted average shares outstanding, diluted	53,223,714	51,745,342	53,026,323	51,484,686
Net income per share, basic	$ 0.34	$ 0.21	$ 0.55	$ 0.31
Net income per share, diluted	$ 0.32	$ 0.18	$ 0.52	$ 0.28
Stock options, stock appreciation rights, and ESPP awards
Income per share
Common stock equivalents excluded in the calculation of diluted income per share	122,666	1,124,100	206,448	1,159,100

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Taxes
Income tax expense	$ 9,057	$ 405	$ 14,983	$ 605
Effective tax rate	34.30%	3.80%	35.10%	3.90%

Commitments and Contingencies (Details) - USD ($)	3 Months Ended		6 Months Ended
Commitments and Contingencies (Details) - USD ($)	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Additional period for which the entity may elect to extend the term of the lease			5 years
Additional tenant improvement allowance			$ 2,100,000
Tenant improvement allowance utilized	$ 49,000	$ 0	79,000	$ 0
Amount available for tenant improvements			400,000
Rent expense	500,000	$ 700,000	1,200,000	$ 1,300,000
Future minimum lease payments under non-cancelable operating leases
2017 (remaining)	1,468,000		1,468,000
2018	1,487,000		1,487,000
2019	1,344,000		1,344,000
Thereafter	454,000		454,000
Total	4,753,000		4,753,000
Rune HealthCare Limited
Future minimum lease payments under non-cancelable operating leases
Milestone payments due	$ 0		$ 0

Collaboration Agreement (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
Collaboration Agreement (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2014	Jun. 30, 2017	Jun. 30, 2016
Collaboration agreement
Revenue From Royalty Agreement				$ 2,328	$ 2,324
Royalty Revenue	$ 1,179	$ 1,205		2,328	2,324
Noncash interest expense	$ 160	$ 1,281		$ 1,119	$ 2,560
Collaborative Arrangement \| United Therapeutics
Collaboration agreement
Revenue From Royalty Agreement			$ 30,000

Subsequent Event (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended		44 Months Ended
Subsequent Event (Details) - USD ($) $ in Thousands	Aug. 04, 2017	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Subsequent Event
Remaining outstanding balance		$ 1,472		$ 4,165
7.50% Convertible Senior Secured Notes due 2019
Subsequent Event
Principal amount of the Notes converted		$ 3,000	$ 2,000	85,425
Shares of common stock issued in conversion of Notes and accrued interest thereon		600,000
Remaining outstanding balance		$ 1,472		$ 4,165
Subsequent Event \| 7.50% Convertible Senior Secured Notes due 2019
Subsequent Event
Principal amount of the Notes converted	$ 1,600
Shares of common stock issued in conversion of Notes and accrued interest thereon	297,000
Remaining outstanding balance	$ 0