0001558370-21-001814 | 10-K | XBRL Viewer | Collegium Pharmaceutical INC

As of December 31,

Lease Term and Discount Rate:

Weighted-average remaining lease term — operating leases (years)

Weighted-average discount rate — operating leases

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2020	Jan. 31, 2021	Jun. 30, 2020
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2020
Document Transition Report	false
Entity File Number	001-37372
Entity Registrant Name	Collegium Pharmaceutical, Inc
Entity Incorporation, State or Country Code	VA
Entity Tax Identification Number	03-0416362
Entity Address, Address Line One	100 Technology Center Drive
Entity Address, City or Town	Stoughton
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02072
City Area Code	781
Local Phone Number	713-3699
Title of 12(b) Security	Common stock
Trading Symbol	COLL
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
ICFR Auditor Attestation Flag	true
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 598.6
Entity Common Stock, Shares Outstanding		34,756,311
Entity Central Index Key	0001267565
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 174,116	$ 170,019
Accounts receivable	83,320	72,953
Inventory	15,614	9,643
Prepaid expenses and other current assets	4,838	3,105
Total current assets	277,888	255,720
Property and equipment, net	18,988	11,854
Operating lease assets	8,391	9,047
Intangible asset, net	335,904	29,503
Restricted cash	2,547	0
Other noncurrent assets	123	178
Total assets	643,841	306,302
Current liabilities
Accounts payable	10,016	6,247
Accrued expenses	24,656	33,480
Accrued rebates, returns and discounts	156,554	157,549
Current portion of term notes payable	47,495	3,833
Current portion of operating lease liabilities	730	656
Total current liabilities	239,451	201,765
Term notes payable, net of current portion	110,019	7,667
Convertible senior notes	99,575
Operating lease liabilities, net of current portion	8,765	9,438
Total liabilities	457,810	218,870
Commitments and contingencies (see Note 11)
Shareholders' equity:
Preferred stock, $0.001 par value; authorized shares - 5,000,000 at December 31, 2020 and December 31, 2019; issued and outstanding shares - none at December 31, 2020 and December 31, 2019
Common stock, $0.001 par value; authorized shares - 100,000,000 at December 31, 2020 and December 31, 2019; issued and outstanding shares - 34,612,054 at December 31, 2020 and 33,678,840 at December 31, 2019	35	34
Additional paid-in capital	519,143	447,297
Accumulated deficit	(333,147)	(359,899)
Total shareholders' equity	186,031	87,432
Total liabilities and shareholders' equity	$ 643,841	$ 306,302

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenues
Product revenues, net	$ 76,271	$ 79,176	$ 78,058	$ 76,511	$ 74,203	$ 72,942	$ 75,040	$ 74,516	$ 310,016	$ 296,701	$ 280,413
Cost of product revenues
Cost of product revenues (excluding intangible asset amortization)	15,184	14,188	12,899	27,229	45,400	43,066	44,966	45,476	69,500	178,908	55,843
Intangible asset amortization									60,680	14,752	109,834
Total cost of products revenues	31,979	30,983	29,694	37,524	49,088	46,754	48,654	49,164	130,180	193,660	165,677
Gross profit	44,292	48,193	48,364	38,987	25,115	26,188	26,386	25,352	179,836	103,041	114,736
Operating expenses
Research and development	2,472	2,141	2,493	2,666	2,398	2,491	2,459	2,992	9,772	10,340	8,661
Selling, general and administrative	26,824	26,426	29,322	31,260	25,090	30,072	28,935	32,352	113,832	116,449	126,760
Total operating expenses	29,296	28,567	31,815	33,926	27,488	32,563	31,394	35,344	123,604	126,789	135,421
Income (loss) from operations	14,996	19,626	16,549	5,061	(2,373)	(6,375)	(5,008)	(9,992)	56,232	(23,748)	(20,685)
Interest expense	(7,737)	(8,063)	(8,259)	(4,823)	(211)	(228)	(236)	(234)	(28,882)	(909)	(20,130)
Interest income	3	3	14	212	383	494	532	526	232	1,935	1,687
Income (loss) before income taxes	7,262	11,566	8,304	450					27,582	(22,722)	(39,128)
Provision for income taxes	304	280	246						830
Net income (loss)	$ 6,958	$ 11,286	$ 8,058	$ 450	$ (2,201)	$ (6,109)	$ (4,712)	$ (9,700)	$ 26,752	$ (22,722)	$ (39,128)
Earnings (loss) per share - basic (in dollars per share)	$ 0.20	$ 0.33	$ 0.23	$ 0.01					$ 0.78	$ (0.68)	$ (1.19)
Weighted-average shares - basic (in shares)	34,592,277	34,540,126	34,395,266	34,100,688					34,407,959	33,453,844	32,953,808
Earnings (loss) per share - diluted (in dollars per share)	$ 0.20	$ 0.32	$ 0.23	$ 0.01					$ 0.76	$ (0.68)	$ (1.19)
Weighted-average shares - diluted (in shares)	35,417,623	35,069,188	35,091,906	35,069,693					35,151,353	33,453,844	32,953,808

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at beginning of year at Dec. 31, 2017	$ 33	$ 402,096	$ (298,049)	$ 104,080
Balance at beginning of year, shares at Dec. 31, 2017	32,770,678
Increase (decrease) in convertible redeemable preferred stock
Exercise of common stock options		4,255		4,255
Exercise of common stock options, shares	349,777
Issuance for employee stock purchase plan		1,117		1,117
Issuance for employee stock purchase plan, shares	86,929
Vesting of RSUs, shares	85,119
Shares withheld for employee taxes upon vesting of RSUs		(560)		(560)
Shares withheld for employee taxes upon vesting of RSUs, shares	(26,874)
Stock-based compensation		13,778		13,778
Issuance of warrant		8,043		8,043
Net income (loss)			(39,128)	(39,128)
Balance at end of year at Dec. 31, 2018	$ 33	428,729	(337,177)	91,585
Balance at end of year, shares at Dec. 31, 2018	33,265,629
Increase (decrease) in convertible redeemable preferred stock
Exercise of common stock options		2,046		2,046
Exercise of common stock options, shares	201,308
Issuance for employee stock purchase plan	$ 1	816		817
Issuance for employee stock purchase plan, shares	74,142
Vesting of RSUs, shares	196,139
Shares withheld for employee taxes upon vesting of RSUs		(822)		(822)
Shares withheld for employee taxes upon vesting of RSUs, shares	(58,378)
Stock-based compensation		16,528		16,528
Net income (loss)			(22,722)	(22,722)
Balance at end of year at Dec. 31, 2019	$ 34	447,297	(359,899)	$ 87,432
Balance at end of year, shares at Dec. 31, 2019	33,678,840			33,678,840
Increase (decrease) in convertible redeemable preferred stock
Exercise of common stock options	$ 1	6,656		$ 6,657
Exercise of common stock options, shares	637,924			637,924
Issuance for employee stock purchase plan		758		$ 758
Issuance for employee stock purchase plan, shares	67,512
Vesting of RSUs, shares	335,524
Shares withheld for employee taxes upon vesting of RSUs		(2,255)		(2,255)
Shares withheld for employee taxes upon vesting of RSUs, shares	(107,746)
Stock-based compensation		21,910		21,910
Equity component of 2020 Convertible Notes, net of issuance costs of $1,773		44,777		44,777
Net income (loss)			26,752	26,752
Balance at end of year at Dec. 31, 2020	$ 35	$ 519,143	$ (333,147)	$ 186,031
Balance at end of year, shares at Dec. 31, 2020	34,612,054			34,612,054

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Operating activities
Net income (loss)	$ 26,752	$ (22,722)	$ (39,128)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization expense	60,680	14,752	109,834
Depreciation expense	870	731	1,074
Stock-based compensation expense	21,910	16,528	13,778
Non-cash lease expense	57	313
Non-cash interest expense for amortization of debt discount and issuance costs	8,972
Non-cash interest expense for Nucynta asset acquisition			19,281
Changes in operating assets and liabilities:
Accounts receivable	(10,367)	4,993	(68,231)
Inventory	(8,270)	(1,826)	219
Prepaid expenses and other assets	(1,598)	2,037	(166)
Accounts payable	3,769	(5,903)	6,465
Accrued expenses	(7,838)	6,056	18,995
Accrued rebates, returns and discounts	(995)	12,766	106,593
Operating lease assets and liabilities		734
Other long-term liabilities		(676)	676
Net cash provided by operating activities	93,942	27,783	169,390
Investing activities
Purchase of intangible asset	(368,226)		(18,877)
Purchases of property and equipment	(5,546)	(6,438)	(5,477)
Net cash used in investing activities	(373,772)	(6,438)	(24,354)
Financing activities
Proceeds from issuances of common stock from employee stock purchase plans	758	817	1,117
Proceeds from the exercise of stock options	6,577	2,046	4,255
Payments made for employee restricted stock tax withholdings	(2,255)	(822)	(560)
Proceeds from issuance of term note, net of issuance costs of $2,456	192,117
Proceeds from convertible senior notes, net of issuance costs of $5,473	138,277
Repayment of term notes	(37,500)
Repayment of term loan	(11,500)
Proceeds from issuance of common stock from public offerings, net of issuance costs of $-, $- and $30, respectively			(30)
Proceeds from term loan amendment, net of repayment of amended term loan			10,021
Repayment of asset acquisition obligations			(132,000)
Net cash provided by (used in) financing activities	286,474	2,041	(117,197)
Net increase in cash, cash equivalents and restricted cash	6,644	23,386	27,839
Cash, cash equivalents and restricted cash at beginning of period	170,019	146,633	118,794
Cash, cash equivalents and restricted cash at end of period	176,663	170,019	146,633
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets:
Total cash, cash equivalents and restricted cash	176,663	146,633	118,794
Supplemental disclosure of cash flow information
Cash paid for offering costs			30
Cash paid for income taxes	483
Supplemental disclosure of non-cash activities
Acquisition of property and equipment in accounts payable and accrued expenses	293	134	3,261
Accrued royalties discharged upon closing of asset acquisition	1,145
Inventory used in the construction and installation of property and equipment	2,299
Receivable from stock option exercises in other current assets	$ 80
Operating lease assets assumed		9,957
Operating lease liabilities assumed		$ 10,691
Liabilities assumed from Nucynta asset acquisition included in accrued rebates, returns and discounts			22,406
Liabilities assumed from Nucynta asset acquisition included as a reduction to accounts receivable			$ 254
Warrant issued in connection with Nucynta asset acquisition			8,043

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The consolidated financial statements include the accounts of Collegium Pharmaceutical, Inc. as well as the accounts of its subsidiaries Collegium Securities Corp. (a Massachusetts corporation), incorporated in December 2015, and Collegium NF LLC (a Delaware limited liability company), incorporated in December 2017, both wholly owned subsidiaries requiring consolidation. The consolidated financial statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Estimates in the Company’s consolidated financial statements include revenue recognition, including the estimates of product returns, units prescribed, discounts and allowances related to commercial sales of products, estimates of useful lives with respect to intangible assets, accounting for stock based compensation, contingencies, impairment of intangible assets and tax valuation allowances. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions.

Fair Value Measurements

Disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for financial instruments with respect to which it is practicable to estimate that value. Fair value measurements and disclosures describe the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:


Level 1 inputs:	Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 inputs:	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 inputs:	Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability

Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2020 and 2019.

The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at December 31, 2020 and 2019.


						Significant
				Quoted Prices		other		Significant
				in active		observable		unobservable
				markets		inputs		inputs
		Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2020
Money market funds, included in cash equivalents	$	45,069	$	45,069	$	—	$	—

December 31, 2019
Money market funds, included in cash equivalents	$	94,841	$	94,841	$	—	$	—

The Company’s convertible senior notes fall into the Level 2 category within the fair value level hierarchy. The fair value was determined using broker quotes in a non-active market for valuation. As of December 31, 2020, the convertible senior notes had a fair value of approximately $139,643 and a net carrying value of $99,575.

The Company’s term notes fall into the Level 2 category within the fair value level hierarchy and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals.

As of December 31, 2020, and December 31, 2019, the carrying amounts of the cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, accrued rebates, returns and discounts, and term notes payable reasonably approximated their estimated fair values.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash deposits primarily with one reputable and nationally recognized financial institution. In addition, as of December 31, 2020, the Company’s cash equivalents were invested in money market funds. The Company has not experienced any material losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the financial institutions in which those deposits are held.

Three customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2020. These customers comprised 46%, 34% and 17% of the accounts receivable balance, respectively. The same three customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2020. These customers comprised 34%, 31% and 31% of revenue, respectively. To date, the Company has not experienced any losses with respect to the collection of its accounts receivable and believes that its entire accounts receivable balance is collectible as of December 31, 2020. The Company has no financial instruments with off-balance sheet risk of loss.

Cash and Cash Equivalents

Cash and cash equivalents include cash in readily available checking and savings accounts and money market funds. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis. As of December 31, 2020 and 2019, the carrying amount of cash equivalents was $45,069 and $94,841, respectively, which approximates fair value and was determined based upon Level 1 inputs. Money market funds are valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1.

Restricted Cash

Restricted cash is reported as non-current unless the restrictions are expected to be released in the next twelve months. As of December 31, 2020, the Company had restricted cash of $2,547, which represents cash held in a depository account at a financial institution to collateralize conditional stand by letters of credit for the Company’s corporate credit card program, its lease of its corporate headquarters, and its leases of vehicles for its field-based employees. The Company had no restricted cash as of December 31, 2019.

Inventory

Inventories are stated at the lower of cost or net realizable value. Inventory costs consist of costs related to the manufacturing of the Company’s products, which are primarily the costs of contract manufacturing and active pharmaceutical ingredient. The Company determines the cost of its inventories on a specific identification basis, and removes amounts from inventories on a first-in, first-out basis. If the Company identifies excess, obsolete or unsalable items, inventories are written down to their realizable value in the period in which the impairment is identified. These adjustments are recorded based upon various factors, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected demand and the expected shelf-life of the inventory components. As of December 31, 2020, cumulative estimates of excess inventory recorded as a component of cost of product revenues were immaterial.

The Company outsources the manufacturing of Xtampza ER and the Nucynta Products to contract manufacturers that produce the finished product. In addition, the Company currently relies on a sole supplier for the active pharmaceutical ingredient in Xtampza ER and the Nucynta Products. Accordingly, the Company has concentration risk associated with its commercial manufacturing of Xtampza ER and the Nucynta Products.

The Company has capitalized $15,614 of inventory as of December 31, 2020. The Company expects sales of the capitalized units to occur during the next twelve months.

Property and Equipment

Property and equipment, including leasehold improvements, are recorded at cost. Maintenance and repair costs are expensed as incurred. Costs which materially improve or extend the lives of existing assets are capitalized. Property and equipment are depreciated when placed into service using the straight-line method based on their estimated useful lives as follows:


Asset Category		Estimated Useful Life
Computers and office equipment		3-5 years
Laboratory equipment		5 years
Furniture and fixtures		7 years
Manufacturing equipment		5-13 years
Leasehold improvements		Lesser of remaining lease term and estimated useful life

Costs for capital assets not yet placed into service have been capitalized as construction-in-progress, and will be depreciated in accordance with the above guidelines once placed into service.

Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in the statements of operations.

Intangible Assets

The Company records the fair value of finite-lived intangible assets as of the transaction date. Intangible assets are then amortized over their estimated useful lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. The Company tests intangible assets for

potential impairment whenever triggering events or circumstances present an indication of impairment. If the sum of expected undiscounted future cash flows of the intangible assets is less than the carrying amount of such assets, the intangible assets would be written down to the estimated fair value, calculated based on the present value of expected future cash flows.

Revenue Recognition

The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to distributors, which in turn sell the product to pharmacies for the treatment of patients. In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Please see Note 3 for further detail.

Research and Development Costs

Research and development costs are charged to expense as incurred and consist of costs incurred to further the Company’s research and development activities. These costs include compensation and employee related costs, including stock based compensation; costs associated with conducting our clinical and non-clinical activities, including clinical and non-clinical trials that the Company conducts for post-marketing requirements; and costs for laboratory supplies, depreciation of lab equipment, and other expenses including allocated expenses for rent and maintenance of facilities.

Patent Costs

Costs related to filing and pursuing patent applications are recorded as selling, general and administrative expense as incurred since the recoverability of such expenditures is uncertain.

Advertising and Product Promotion Costs

Advertising and product promotion costs are included in selling, general and administrative expenses and were $5,368, $9,527 and $17,497 in the years ended December 31, 2020, 2019, and 2018 respectively. Advertising and product promotion costs are expensed as incurred.

Stock-Based Compensation

The Company accounts for grants of stock options, restricted stock units and performance share units to employees, as well as to the Board of Directors, based on their grant date fair value and recognizes compensation expense over their vesting period, net of actual forfeitures. For employee awards with service conditions, the Company recognizes compensation expense on a straight-line basis. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option pricing model. The Company estimates restricted stock units based on the fair value of the underlying common stock as determined by management. For awards with performance conditions, the Company estimates the number of shares that will vest based upon the probability of achieving performance metrics.

Income Taxes

The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence,

including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and the absence of carryback available from results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future, in excess of its net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company will recognize interest and penalties related to uncertain tax positions within income tax expense. Any accrued interest and penalties will be included within the related tax liability. As of December 31, 2020 and December 31, 2019, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations.

Earnings per Share

Earnings per share is calculated by dividing the net income (loss) attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock accounting method. For purposes of the diluted net loss per share calculation, stock options, warrants, unvested restricted stock units and performance share units are considered potentially dilutive securities. Because the Company has reported a net loss for the years ended December 31, 2019 and 2018, diluted net loss per common share is the same as basic net loss per common share for those periods.

Embedded Derivatives

The Company accounts for derivative financial instruments as either equity or liabilities in accordance with Accounting Standards Codification Topic 815, Derivatives and Hedging, based on the characteristics and provisions of each instrument. Embedded derivatives are required to be bifurcated from the host instruments and recorded at fair value if the derivatives are not clearly and closely related to the host instruments on the date of issuance. The Company’s term notes and convertible notes (see Note 12) contain certain features that, in accordance with ASC 815, are not clearly and closely related to the host instrument and represent derivatives that are required to be re-measured at fair value each reporting period. The Company determined that the estimated fair value of the derivatives at issuance and as of December 31, 2020 were not material based on a scenario-based cash flow model that uses unobservable inputs that reflect the Company’s own assumptions. Should the Company’s assessment of the probabilities around these scenarios change, including due to changes in market conditions, there could be a change to the fair value.

Reclassifications

The Company has reclassified certain amounts in its Consolidated Statements of Operations for the years ended December 31, 2019 and 2018 to conform to the 2020 presentation. Specifically, the Company disaggregated previously reported cost of product revenues of $193,660 for the year ended December 31, 2019 into the captions Cost of product revenues (excluding intangible asset amortization) of $178,908 and Intangible asset amortization of $14,752. In addition, the Company disaggregated previously reported cost of product revenues of $165,677 for the year ended December 31, 2018 into the captions Cost of product revenues (excluding intangible asset amortization) of $55,843 and Intangible asset amortization of $109,834. The reclassifications relate to the presentation of the Company’s gross profit and amortization expense and were made to provide the readers of the Company’s consolidated financial statements with additional insight into how the Company and its management view and evaluate its performance and profitability. This reclassification within the consolidated statements of operations for the years ended December 31, 2019 and 2018 had no impact on previously reported total consolidated revenues or consolidated results of operations.

Recently Adopted Accounting Pronouncements

New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective dates.

The Company adopted Accounting Standard Updated (“ASU”) 2016-13, Financial Instruments – Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Subsequent to issuance, the FASB issued ASUs 2019-04, 2019-05, 2019-10, 2019-11 and 2020-03 to provide additional guidance on the adoption of ASU 2016-13. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to ease the potential burden in accounting for reference rate reform. The amendments in ASU 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The new standard became effective immediately and may be applied prospectively to contracts and transactions through December 31, 2022. Subsequent to issuance, the FASB issued ASU 2021-01 in January 2021 to refine and clarify some its guidance on ASU 2020-04. Upon the transition of the Company’s contracts and transactions to new reference rates in connection with reference rate reform, the Company will prospectively apply the standard and disclose the effect on its consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 affect a wide variety of income tax accounting standards with the objective of reducing their complexity. The new standard is effective for annual and interim periods beginning after December 15, 2020. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in ASU 2020-06 aim to reduce the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The new standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the standard’s effect on the Company’s consolidated financial statements.

Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the consolidated financial statements upon future adoption.

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2020

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to distributors (“customers”), which in turn sell the product to pharmacies for the treatment of patients (“end users”).

Revenue Recognition

In accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Performance Obligations

The Company determined that performance obligations are satisfied and revenue is recognized when a customer takes control of the Company’s product, which occurs at a point in time. This generally occurs upon delivery of the products to customers, at which point the Company recognizes revenue and records accounts receivable. Payment is typically received 30 to 90 days after satisfaction of the Company’s performance obligations. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the assets is one year or less.

Transaction Price and Variable Consideration

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). The transaction price for product sales includes variable consideration related to sales deductions, including (1) rebates and incentives, including managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances; (2) product returns, including return estimates for both the Xtampza ER and the Nucynta Products; and, (3) trade allowances and chargebacks, including fees for distribution service fees, prompt pay discounts, and chargebacks. The Company will estimate the amount of variable consideration that should be included in the transaction price under the expected value method for all sales deductions other than trade allowances, which are estimated under the most likely amount method. These provisions reflect the expected amount of consideration to which the Company is entitled based on the terms of the contract. In addition, the Company made a policy election to exclude from the measurement of the transaction price all taxes that are assessed by a governmental authority that are imposed on revenue-producing transactions.

Provisions for rebates and incentives are based on the estimated amount of rebates and incentives to be claimed on the related sales from the period. As the Company’s rebates and incentives are based on products dispensed to patients, the Company is required to estimate the expected value of claims at the time of product delivery to distributors. Given that distributors sell the product to pharmacies, which in turn dispense the product to patients, claims can be submitted significantly after the related sales are recognized. The Company’s estimates of these claims are based on the historical experience of existing or similar programs, including current contractual and statutory requirements, specific known market events and trends, industry data, and estimated distribution channel inventory levels. Accruals and related reserves required for rebates and incentives are adjusted as new information becomes available, including actual claims. If actual results vary, the Company may need to adjust these estimates, which could have an effect on earnings in the period of the adjustment.

Provisions for product returns are based on product-level historical trends, as well as relevant market events and other factors. For Xtampza ER, since the product has only been commercially sold since June 2016, estimates of product returns are based on a combination of historical returns processed to date, taking into consideration the expiration date of the product upon delivery to customers, as well as forecasted customer buying patterns, shipment and prescription trends, channel inventory levels, and other specifically known market events and trends. For the Nucynta Products, estimates of product returns are primarily based on historical trends as the Nucynta Products have been commercially sold for a number of years.

Provisions for trade allowances and chargebacks are primarily based on customer-level contractual terms. Accruals and related reserves are adjusted as new information becomes available, which generally consists of actual trade allowances and chargebacks processed relating to sales recognized in the period.

The amount of variable consideration that is included in the transaction price may be constrained and is included in net sales only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. In general, performance obligations do not include any estimated amounts of variable consideration that are constrained. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known

The following tables summarize activity in each of the Company’s product revenue provision and allowance categories for the years ended December 31, 2020 and 2019, respectively:


					Trade
	Rebates and		Product		Allowances and
	Incentives (1)		Returns (2)		Chargebacks (3)
Balance at December 31, 2018	$	129,318	$	15,465	$	14,841
Provision related to current period sales		263,315		14,991		65,155
Changes in estimate related to prior period sales		(2,865)		—		—
Credits/payments made		(259,867)		(2,808)		(65,679)
Balance at December 31, 2019	$	129,901	$	27,648	$	14,020
Provision related to current period sales		326,280		10,900		75,554
Changes in estimate related to prior period sales		(539)		—		(403)
Credits/payments made		(322,867)		(14,769)		(70,116)
Balance at December 31, 2020	$	132,775	$	23,779	$	19,055

(1)

Provisions for rebates and incentives includes managed care rebates, government rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets.

(2)

Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets.

(3)

Provisions for trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Consolidated Balance Sheets.

As of December 31, 2020, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial.

Disaggregation of Revenue

The Company disaggregates its product revenue, net from contracts with customers into the categories included in the

table below. These categories depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors:


	Year ended December 31,
	2020		2019		2018
Xtampza ER	$	127,984	$	105,012	$	69,383
Nucynta Products⁽¹⁾		182,032		191,689		211,030
Total product revenues, net	$	310,016	$	296,701	$	280,413

For the year ended December 31, 2020, the Company recognized Nucynta IR and Nucynta ER product revenues, net of $116,318 and $65,714 respectively. For the year ended December 31, 2019, the Company recognized Nucynta IR and Nucynta ER product revenues, net of $117,680 and $74,009, respectively. For the year ended December 31, 2018, the Company recognized Nucynta IR and Nucynta ER product revenues, net of $129,917 and $81,113, respectively.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2020

EARNINGS PER SHARE

Earnings Per Share

5. EARNINGS PER SHARE

Basic net earnings per share is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock, plus potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock accounting method. Potentially dilutive securities

outstanding include stock options, unvested restricted stock units, performance share units, warrants, and shares related to the convertible senior notes, but are only included to the extent that their addition is dilutive.

The following table presents the computations of basic and dilutive earnings (loss) per common share:


	Years ended December 31,
		2020		2019		2018
Numerator:
Net income (loss)	$	26,752	$	(22,722)	$	(39,128)
Denominator:
Weighted-average shares outstanding — basic		34,407,959		33,453,844		32,953,808
Effect of dilutive securities:
Stock options		431,524		—		—
Restricted stock units		271,542		—		—
Performance share units		27,002		—		—
Employee stock purchase plan		567		—		—
Warrants		12,759		—		—

Weighted average shares outstanding — diluted		35,151,353		33,453,844		32,953,808

Earnings (loss) per share — basic	$	0.78	$	(0.68)	$	(1.19)
Earnings (loss) per share — diluted	$	0.76	$	(0.68)	$	(1.19)

The Company has the option to settle the conversion obligation for its convertible senior notes due in 2026 in cash, shares or a combination of the two. Since the Company intends to settle the principal amount of the convertible senior notes in cash, the Company used the treasury stock method for determining the potential dilution in the diluted earnings per share computation.

The following table presents dilutive securities excluded from the calculation of diluted earnings per share:


	Years ended December 31,
	2020	2019	2018
Stock options	2,294,961	3,955,887	3,585,856
Restricted stock units	4,809	849,679	514,603
Performance share units	211,618	99,400	—
Warrants	—	1,041,667	1,041,667
Convertible senior notes	4,925,134	—	—
Unvested restricted stock	—	—	3,018

For performance share units, these securities were excluded from the calculation of diluted earnings per share as the performance-based or market-based vesting conditions were not met as of the end of the reporting period. For all other securities, these securities were excluded from the calculation of diluted earnings per share as their inclusion would have had an antidilutive effect.

INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2020

INTANGIBLE ASSETS

INTANGIBLE ASSETS

9. INTANGIBLE ASSETS

As of December 31, 2020 and 2019, the Company’s only intangible asset (“Nucynta Intangible Asset”) is related to the Nucynta Acquisition and the Nucynta Commercialization Agreement. The gross carrying amount and accumulated amortization of the Nucynta Intangible Asset were as follows:


	As of December 31,
	2020		2019
Gross carrying amount	$	521,170	$	154,089
Accumulated amortization		(185,266)		(124,586)
Intangible asset, net	$	335,904	$	29,503

Nucynta Acquisitions

In February 2020, the Company entered into the Nucynta Purchase Agreement with Assertio, pursuant to which the Company acquired certain intellectual property and manufacturing rights related to the Nucynta Products, including U.S. commercialization rights, U.S. manufacturing rights, and inventory, for an aggregate purchase price of $375,000, subject to certain closing and post-closing adjustments. The Company also agreed to assume certain regulatory and supply chain contracts, and obligations related to Nucynta Products (see Note 4). In February 2020, the Company entered into a loan agreement (see Note 10) and issued convertible senior notes (see Note 10) to finance a portion of the purchase price paid pursuant to the Nucynta Purchase Agreement.

The consideration transferred in the asset acquisition was measured at cost, including transaction costs, assets transferred by the Company, and royalty obligations discharged by the seller. The table below represents the costs accumulated to acquire the commercial rights for the Nucynta Products based on the terms of the Nucynta Purchase Agreement, as amended:


Acquisition consideration:
Base purchase price	$	375,000
Cash paid for inventory		6,030
Transaction costs		6,297
Reduction for 2020 cash transferred to Assertio under the prior Nucynta Commercialization Agreement₍₁₎		(13,071)
Reduction for accrued royalty obligation discharged upon closing₍₁₎		(1,145)
Total acquisition consideration:	$	373,111

(1)

Represents $14,216 total reduction to the base purchase price comprising of $13,071 of cash payments transferred to Assertio under the prior Nucynta Commercialization Agreement as well as a reduction for $1,145 of discharged pre-acquisition accrued royalties based on sales from January 1, 2020 through closing.

The Company then allocated the consideration transferred to the individual assets acquired on a relative fair value basis as summarized in the table below:


Assets acquired:
Nucynta Intangible Asset	$	367,081
Inventory		6,030
Total consideration allocated to assets acquired:	$	373,111

The Company concluded that the consideration allocable to the Nucynta Intangible Asset for the additional intellectual

property and manufacturing rights it acquired as part of the Nucynta Acquisition were incremental costs associated with the pre-existing intangible asset from the former Nucynta Commercialization Agreement, as such costs result in probable future economic benefits. Specifically, the additional intellectual property rights acquired in the Nucynta Acquisition enable the Company to eliminate royalty obligations otherwise payable to Assertio under the former Nucynta Commercialization Agreement.

Nucynta Commercialization Agreement

The Company determined that the Nucynta Commercialization Agreement, which closed in January 2018, should be accounted for as an asset acquisition in accordance with ASC Topic 805-50, as substantially all of the fair value of the gross assets acquired was concentrated in the sublicense of the Nucynta Products, which is a single identifiable asset. The Company concluded that the fair value estimates of the assets surrendered, liabilities incurred, and equity interests issued were more clearly evident than the fair value of the assets received, and therefore followed a cost accumulation model to determine the consideration transferred in the asset acquisition.

Under the original terms of the Nucynta Commercialization Agreement, the Company was obligated to make guaranteed annual minimum royalty payments of $537,000 to Assertio, which consisted of scheduled payments of $132,000 in 2018, $135,000 in 2019, $135,000 in 2020, and $135,000 in 2021. Due to the nature of the guaranteed minimum royalty payment obligation and the fact that it was required to be settled in cash, the Company determined that the future minimum royalty payments represented a liability that should be recorded at its fair value as of the Nucynta Commercialization Closing Date. The Company calculated the fair value of the future minimum royalty payments to be $482,300 using a discount rate of 5.7%. The discount rate was determined based on a review of observable market data relating to similar liabilities. The Company determined the $54,700 discount should be recognized as interest expense in the Statement of Operations using the effective interest method and over the repayment period from January 9, 2018 through December 2021. Prior to the Third Amendment to the Nucynta Commercialization Agreement in November 2018, the Company recognized interest expense of $19,281 relating to the minimum royalty payments and amortization expense of $107,662 related to the intangible asset.

Effective November 8, 2018 (the “Third Amendment Date”), the Company entered into the Third Amendment to the Nucynta Commercialization Agreement, which eliminated the guaranteed minimum royalty payment obligations for years 2019, 2020 and 2021. As a result, the Company remeasured the remaining contractual obligation as of the Third Amendment Date and recorded a reduction of the acquired intangible asset and obligation. As of December 31, 2018, the Company had paid all of the $132,000 of minimum royalty payment obligation owed under the Nucynta Commercialization Agreement for 2018. In connection with the Third Amendment to the Nucynta Commercialization Agreement, the Company issued a warrant to Assertio to purchase 1,041,667 shares of common stock of the Company at an exercise price of $19.20 per share. The Company estimated the fair value of the warrant on the date of issuance to be approximately $8,043 using the Black-Scholes option-pricing model. See Note 14 for further detail regarding the warrant issued to Assertio.

Effective February 13, 2020, upon the closing of the Nucynta Acquisition, the Nucynta Commercialization Agreement was effectively terminated and the Company’s royalty payment obligations to Assertio thereunder ceased. Following the closing, the Company no longer pay royalties to Assertio and the Company’s only remaining royalty obligation is to pay 14% of net sales of the Nucynta Products directly to Grünenthal.

A summary of the gross carrying amount, accumulated amortization, and net book value of the Nucynta Intangible Asset from the execution of the Nucynta Commercialization Agreement through period end are as follows:


		Gross Carrying Value		Accumulated Amortization		Net Book Value
Intangible Asset, net
Cost basis as of acquisition date	$	515,627	$	—	$	515,627
Amortization expense from acquisition date through Third Amendment Date		—		(107,662)		(107,662)
Adjustment due to the remeasurement of liability as of Third Amendment Date		(369,581)		—		(369,581)
Additional costs incurred as of Third Amendment Date₍₁₎		8,043		—		8,043
Amortization expense from Amendment Date through fiscal year end		—		(2,172)		(2,172)
Balance as of December 31, 2018	$	154,089	$	(109,834)	$	44,255
Amortization expense		—		(14,752)		(14,752)
Balance as of December 31, 2019	$	154,089	$	(124,586)	$	29,503
Amortization expense through Nucynta Acquisition		—		(1,754)		(1,754)
Additional cost incurred from Nucynta Acquisition		367,081		—		367,081
Amortization expense from Nucynta Acquisition through period end		—		(58,926)		(58,926)
Balance as of December 31, 2020	$	521,170	$	(185,266)	$	335,904

(1)

Represents fair value of warrant issued in connection with the Amendment to the Nucynta Commercialization Agreement.

Amortization

The Company has been amortizing the Nucynta Intangible Asset over its useful life, which is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The Company had initially determined that the useful life for the intangible asset was approximately 4.0 years from the Nucynta Commercialization Closing Date on the basis of the majority of the cash flows expected to be realized for future product sales under the Nucynta Commercialization Agreement. The Nucynta Acquisition significantly impacted the timing and amount of future cash inflows from the sales of the Nucynta Products, and, therefore, the Company considered it to be a triggering event to remeasure the expected useful life of the Nucynta Intangible Asset. The Company determined that the useful life for the Nucynta Intangible Asset was approximately 5.9 years from the closing date of the Nucynta Acquisition and accordingly, the intangible asset will be amortized prospectively over its revised useful life. The Company will recognize amortization expense as a component of cost of product revenues in the Consolidated Statement of Operations on a straight-line basis over its useful life as it approximates the period of economic benefits expected to be realized from future cash inflows from sales of the Nucynta Products. Prior to the Nucynta Acquisition, the Company had recognized $126,340 of amortization expense related to the Nucynta Intangible Asset. As the accumulated cost basis of the Nucynta Intangible Asset was increased with the Nucynta Acquisition, the Company will continue to prospectively amortize the resulting net intangible asset on a straight-line basis over the remaining useful life.

The following table presents amortization expense recognized for the years ended December 31, 2020, 2019, and 2018:


	Years ended December 31,
		2020		2019		2018
Nucynta amortization expense included in cost of product revenues	$	60,680	$	14,752	$	109,834

As of December 31, 2020, the remaining amortization period is approximately 5.0 years and is expected to be recognized in the following periods:


Years ended December 31,	Amortization Expense
2021		67,181
2022		67,181
2023		67,181
2024		67,181
2025		67,180
Remaining amortization expense:	$	335,904

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2020

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may face legal claims or actions in the normal course of business. Except as disclosed below, the Company is not currently a party to any litigation and, accordingly, does not have any amounts recorded for any litigation related matters.

Xtampza ER Litigation

The Company filed the NDA for Xtampza ER as a 505(b)(2) application, which allows the Company to reference data from an approved drug listed in the FDA’s Orange Book, in this case OxyContin. The 505(b)(2) process requires that the Company certify to the FDA that the Company does not infringe any of the patents listed for OxyContin in the Orange Book, or that the patents are invalid. The process also requires that the Company notify Purdue Pharma, L.P (“Purdue”), as the holder of the NDA, and any other Orange Book-listed patent owners that it has made such a certification. On February 11, 2015, the Company made the required certification documenting why Xtampza ER does not infringe any of the 11 Orange Book listed patents for OxyContin, five of which have been invalidated in court proceedings, and provided the required notice to Purdue. Under the Drug Price Competition and Patent Term Restoration Act of 1984, Purdue had the option to sue the Company for infringement and receive a stay of up to 30 months before the FDA could issue a final approval for Xtampza ER, unless the stay was earlier terminated.

In response to these actions, Purdue sued the Company for infringement in the District of Delaware on March 24, 2015 asserting infringement of three of Purdue’s Orange Book-listed patents (Patent Nos. 7,674,799, 7,674,800, and

7,683,072) and a non-Orange Book-listed patent (Patent No. 8,652,497), and accordingly, received a 30-month stay of FDA approval.

The Delaware court transferred the case to the District of Massachusetts. After the Company filed a partial motion for judgment on the pleadings relating to the Orange Book-listed patents, the District Court of Massachusetts ordered judgment in the Company’s favor on those three patents, and dismissed the claims asserting infringement of those patents with prejudice. Upon dismissal of those claims, the 30-month stay of FDA approval was lifted. As a result, the Company was able to obtain final approval for Xtampza ER and launch the product commercially.

Purdue subsequently filed two follow-on lawsuits asserting infringement of two patents that had been late-listed in the Orange Book and therefore could not trigger any stay of FDA approval: Purdue filed suit asserting infringement of Patent No. 9,073,933 in November 2015, and asserted infringement of Patent No. 9,522,919 in April 2017. In addition, Purdue filed suit on two patents that had not been listed in the Orange Book, filing suit in June 2016 asserting infringement of Patent No. 9,155,717 and in September 2017, asserting infringement of Patent No. 9,693,961.

On March 13, 2018, the Company filed a Petition for Post-Grant Review (“PGR”) of the ʼ961 patent with the Patent Trial and Appeal Board (“PTAB”). The PGR argues that the ʼ961 patent is invalid for lack of a written description, for lack of enablement, for indefiniteness, and as being anticipated by prior art. The PTAB held oral argument on the proceedings on July 10, 2019 and was scheduled to issue a decision on the patentability of the ʼ961 patent by no later than October 4, 2019. On September 15, 2019, Purdue commenced a voluntary case under chapter 11 of title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. On September 24, 2019, Purdue gave the PTAB notice of its bankruptcy filing and sought the imposition of an automatic stay of the PGR proceedings. On October 2, 2019, the PTAB extended the one-year period for issuing its decision by up to six months.

In October 2017, and in response to the filing of the Company’s Supplemental NDA (“sNDA”) seeking to update the drug abuse and dependence section of the Xtampza ER label, Purdue filed another suit asserting infringement of the ʼ933 and ʼ919 patent. The Company filed a motion to dismiss that action, and the Court granted its motion on January 16, 2018.

The suits that remain pending were consolidated by the District of Massachusetts, which has ruled that the Xtampza ER formulation does not infringe the ‘497 and ʼ717 patents. As a result, only the ʼ933, the ʼ919, and the ʼ961 patents remain in dispute. On October 16, 2018, the Company filed a motion to stay proceedings in the district court on the ‘961 patent pending the PGR. Purdue has made a demand for monetary relief but has not quantified its alleged damages. Purdue has also requested a judgment of infringement, an adjustment of the effective date of FDA approval, and an injunction on the sale of the Company’s products accused of infringement. The Company has denied all claims and has requested a judgment that the remaining asserted patents are invalid and/or not infringed; the Company is also seeking a judgment that the case is exceptional and has requested an award of the Company’s attorneys’ fees for defending the case.

A claim construction hearing was held on June 1, 2017. On November 21, 2017, the Court issued its claim construction ruling, construing certain claims of the ʼ933, ʼ497, and ʼ717 patents. No trial date has been scheduled. On September 18, 2019, Purdue gave the Court notice of its bankruptcy filing and sought the imposition of an automatic stay of the proceedings. On September 20, 2019, the matter was stayed pending further order of the Court.

On September 1, 2020, the Bankruptcy Court entered an Order Granting Motions for Relief from the Automatic Stay, lifting the automatic stays in both the District of Massachusetts and PTAB proceedings. The Company appealed the Bankruptcy Court’s Order, in part, and that appeal is stayed, on consent by Purdue, pending the outcome of the PTAB proceedings and any appeal thereto. On September 11, 2020, Purdue filed a motion to terminate the PTAB action on the basis that those proceedings had gone beyond the 18-month statutory period. The Company opposed Purdue’s motion and the parties are awaiting PTAB’s decision. In light of the PTAB proceeding, the entirety of District of Massachusetts proceedings, beyond the single ’961 patent that is also the subject of the PTAB proceeding, had been stayed. During a January 22, 2021 hearing, Purdue asked the District of Massachusetts Court to lift the stay as to the ʼ933 and ʼ919 patents, and advised the Court of its intention to file another patent litigation concerning U.S. Patent No. 10,407,434. The Court set a briefing schedule through mid-March and a hearing for March 18, 2021.

If the stay is lifted, the Company plans to defend this case vigorously. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any.

Nucynta Litigation

On February 7, 2018, Purdue filed a patent infringement suit against the Company in the District of Delaware. Specifically, Purdue argues that the Company’s sale of immediate-release and extended-release Nucynta infringes U.S. Patent Nos. 9,861,583, 9,867,784, and 9,872,836. Purdue has made a demand for monetary relief in its complaint but has not quantified its alleged damages.

On December 6, 2018, the Company filed an Amended Answer asserting an affirmative defense for patent exhaustion. On December 10, 2018, the Court granted the parties’ stipulation for resolution of the Company’s affirmative defense of patent exhaustion and stayed the action, with the exception of briefing on and resolution of the Company’s Motion for Judgment on the Pleadings related to patent exhaustion and any discovery related to that Motion. Also, on December 10, 2018, the Company filed a Rule 12(c) Motion for Judgment on the Pleadings, arguing that the Purdue’s claims were barred by the doctrine of patent exhaustion. On June 18, 2019, the Court heard oral argument on the Company’s Rule 12(c) Motion for Judgment on the Pleadings. On June 19, 2019, the Court issued an order stating that “judgment in Collegium’s favor is warranted under the doctrine of patent exhaustion to the extent Collegium’s alleged infringing activities resulted from sales that fall within the scope of that covenant.” The Court explained, however, that based on the current record, it was not possible “to determine whether title of the Nucynta Products was transferred to Collegium” from sales authorized by Purdue’s covenant not to sue. The Court ordered discovery on this issue and the case remained “stayed with the exception of discovery and briefing on and resolution of the Company’s anticipated motion for summary judgment based on patent exhaustion.”

On September 19, 2019, Purdue gave the Court notice of its bankruptcy filing and sought the imposition of an automatic stay of the proceedings. The Nucynta litigation is subject to the automatic bankruptcy stay.

Pending resolution of the bankruptcy action, the Company plans to defend this case vigorously. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any.

Teva Litigation

Presently, the Company has nineteen patents listed in the FDA Orange Book as covering the Company’s abuse-deterrent product and methods of using it to treat patients: Patents Nos. 7,399,488; 7,771,707; 8,449,909; 8,557,291; 8,758,813; 8,840,928; 9,044,398; 9,248,195; 9,592,200; 9,682,075; 9,737,530, 9,763,883; 9,968,598; 10,004,729; 10,188,644; 10,525,052; 10,525,053; 10,646,485; and 10,668,060 (the “Orange Book Patents”).

Teva filed an ANDA seeking FDA approval to market generic extended-release oxycodone capsule products (the “proposed ANDA products”). Teva also filed certifications with the FDA that its proposed ANDA products will not infringe the Orange Book Patents and/or that the Orange Book Patents are invalid. Teva sent the Company a Notice Letter indicating that it had made such certification to the FDA.

On February 22, 2018—within the 45-day period that gives the Company a 30-month stay of FDA approval of Teva’s ANDA while the parties have an opportunity to litigate—the Company sued Teva in the District of Delaware on eleven of the twelve Orange Book Patents that were listed at that time. Teva responded to the complaint on May 14, 2018, denying infringement by Teva’s proposed ANDA products and asserting counterclaims of non-infringement and invalidity of the asserted patents. The Company answered Teva’s counterclaims on June 4, 2018.

The Company listed two additional patents in the Orange Book in 2018 and Teva amended its ANDA to include certifications to the FDA of non-infringement and invalidity with respect to those patents. Teva notified the Company of its certification and the Company filed a second lawsuit in the District of Delaware, asserting those two patents, on November 30, 2018. Teva responded to the complaint on January 11, 2019 denying infringement by Teva’s proposed

ANDA products, and asserting counterclaims of non-infringement and invalidity of the asserted patents. The Company answered Teva’s counterclaims on February 1, 2019. The court consolidated the second suit with the first suit, and thus both suits are proceeding on the same schedule.

The parties briefed claim construction and the court heard argument on April 12, 2019. On September 11, 2019, the Court issued a Report and Recommendation construing two of the six terms or sets of terms that are in dispute. The remaining terms will be addressed in one or more forthcoming Report and Recommendations. Fact discovery was scheduled to close on September 20, 2019 and expert discovery was scheduled to close on January 24, 2020.

The Company listed an additional patent in the Orange Book in January 2019 and Teva amended its ANDA to include certifications to the FDA of non-infringement and invalidity with respect to that patent. Teva notified us of its certification and the Company filed a third lawsuit in the District of Delaware, asserting the additional Orange Book Patent, on May 9, 2019. Teva responded to the complaint on June 6, 2019, denying infringement by Teva’s proposed ANDA products, and asserting counterclaims of non-infringement and invalidity of the asserted patent. The Company answered Teva’s counterclaims on June 27, 2019. The parties filed a proposed Scheduling Order, which the Court entered on September 4, 2019.

On September 20, 2019, the parties jointly agreed to stay both litigations.

The Company listed four additional patents in the Orange Book in first half of 2020, which brings the total number of Orange Book Patents for Xtampza ER to nineteen.

Teva and the Company have entered into a Settlement Agreement and License Agreement to resolve the case. On October 7, 2020, the Court entered a Consent Judgment and Order of Permanent Inunction that dismissed with prejudice all affirmative defenses, claims, and counterclaims which have or could have been raised by Teva. The Order states that Teva would infringe each of the Litigated Patents by using, making, offering to sell, selling, and/or importing Teva’s ANDA product in or into the United States. It further states that the Litigated Patents, and all claims contained therein, are valid and enforceable, solely with respect to the Teva ANDA and Teva ANDA Product. It further stated that, except as authorized and licensed by the Company under the License, Teva, its officers, agents, employees, affiliates, successors and all persons in active concert or participation with Teva, are permanently enjoined from using, making, offering for sale, or selling in the United States, or importing into the United States, Teva’s ANDA Product and/or inducing or assisting others to use, make, offer for sale, or sell in the United States, or import into the United States, Teva’s ANDA Product.

On September 29, 2020, the Company entered into a settlement agreement with Teva resolving the patent litigation in the U.S. District Court for the District of Delaware. Pursuant to the terms of the settlement, which is subject to review by the U.S. Federal Trade Commission and the U.S. Department of Justice, the Company will grant Teva a license to market its generic version of Xtampza ER in the United States beginning on or after September 2, 2033 (subject to U.S. Food and Drug Administration approval, and acceleration under certain circumstances). As a result of the settlement, Teva has agreed to a consent judgment confirming that its proposed generic products infringe upon the Company’s asserted patents and that those patents are valid and enforceable with respect to Teva’s proposed generic products. Additional details regarding the settlement are confidential.

Opioid Litigation

As a result of the opioid epidemic, numerous state and local governments, healthcare providers, and other entities have brought suit against manufacturers, wholesale distributors, and pharmacies alleging a variety of claims related to opioid marketing and distribution practices. In late 2017, the U.S. Judicial Panel on Multidistrict Litigation ordered the consolidation of what were then a few hundred cases pending around the country in federal court against opioid manufacturers and distributors into a Multi-District Litigation (MDL) in the Northern District of Ohio. Currently, the Opioid MDL consists of over 2,000 opioid-related cases brought primarily by states, cities, counties, and other local entities. Generally speaking, these suits do not seek damages for injuries to individuals but rather compensation for the cost of public services needed to address the consequences of addicted communities, ranging from emergency response capabilities to rehabilitation services. The Company has been named as a defendant in a small subset of the MDL cases.

Of the 21 MDL cases that have named the Company as a defendant, the allegations against it have been dismissed or withdrawn in 13 cases. In addition, the Company has been dismissed from three non-MDL cases filed in Pennsylvania and Arkansas state courts.

Eight cases that name the Company as a defendant, originally filed in three states, remain pending in the MDL:

●

Virginia. On January 11, 2019, the City of Portsmouth filed a lawsuit in Virginia Circuit Court against the Company and other pharmaceutical manufacturers and distributors. The lawsuit alleges a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, and violations of state consumer protection laws. On October 3, 2019, the City of Portsmouth case was transferred to the MDL.

●

New Jersey. On March 15, 2019, the Company was named in a lawsuit in the MDL by the City of Paterson, New Jersey. The lawsuit alleges violations of fraud, public nuisance, negligent misrepresentation, and violations of state consumer protection laws, and seeks, generally, penalties and/or injunctive relief. On June 14, 2019, the City of Trenton filed a lawsuit in the New Jersey Superior Court against the Company and other pharmaceutical manufacturers and distributors. The lawsuit alleges a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, and violations of state consumer protection laws and the New Jersey Drug Dealer Liability Act. On December 18, 2019, the case was transferred to the MDL.

●

Connecticut. On April 9, 2019, the City of Norwich, Connecticut and the Town of Enfield, Connecticut filed lawsuits that name the Company in Connecticut Superior Court. The lawsuits allege violations of fraud, public nuisance, negligent misrepresentation, and violations of state consumer protection laws. On June 28, 2019, both cases were transferred to the MDL. In October 2019, the Company was named in two additional Connecticut lawsuits: the City of Middletown and the Town of Wethersfield. These cases were both also transferred to the MDL in July 2019. Finally, on January 15, 2020, the Town of Windham, Connecticut filed a lawsuit that names the Company, among other pharmaceutical manufacturers, in Connecticut Superior Court. The lawsuit alleges violations of fraud, public nuisance, negligent misrepresentation, and violations of state consumer protection laws. On March 3, 2020, the lawsuit was transferred to the MDL.

Each of the lawsuits in the MDL naming the Company seeks, generally, penalties and injunctive relief. None of the lawsuits naming the Company are designated as representative cases in the MDL, and therefore, are effectively currently stayed.

Outside of the MDL, there are several cases pending against the Company in state courts in Pennsylvania and Massachusetts:

●

In Pennsylvania, six lawsuits naming the Company have been consolidated for discovery purposes in the Delaware County Court of Common Pleas as part of a consolidated proceeding of similar lawsuits brought by numerous Pennsylvania counties against other pharmaceutical manufacturers and distributors. These include lawsuits filed between May 2018 and July 2019 on behalf of Bucks County, Clinton County, Mercer County, Warrington Township, Warminster Townerhip, and the City of Lock Haven, each of Pennsylvania, alleging claims related to opioid marketing and distribution, including negligence, fraud, unjust enrichment, public nuisance, and violations of state consumer protections laws. None of these cases has been designated a Track One case in which discovery would commence, and therefore they are all effectively stayed at present.

●

In Massachusetts, there are lawsuits by the City of Worcester, the City of Salem, the City of Framingham, the Town of Lynfield, the City of Springfield, the City of Haverhill, the City of Gloucester, the Town of Canton, the Town of Wakefield, the City of Chicopee, the Town of Natick, the City of Cambridge and the Town of Randolp, all of which have been consolidated before the Business Litigation Session of the Superior Court. The actions allege a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, violations of Mass Gen. Laws ch. 93A, Section 11, unjust enrichment and civil conspiracy. The case brought by the City of Springfield was selected to advance for the purpose of motion practice, defendants’ motions to dismiss were denied on January 3, 2020. There is no trial date set for this case.

The Company disputes the allegations in these lawsuits and intends to vigorously defend these actions. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any.

Opioid-Related Request and Subpoenas

The Company, like a number of other pharmaceutical companies, has received subpoenas or civil investigative demands related to opioid sales and marketing. The Company has received such subpoenas or civil investigative demands from the Offices of the Attorney General of each of Washington, New Hampshire, Maryland and Massachusetts. The Company is currently cooperating with each of the foregoing states in their respective investigations.

DEBT

12 Months Ended

Dec. 31, 2020

DEBT

DEBT

12. DEBT

Pharmakon Term Notes

On February 6, 2020, in connection with the execution of the Nucynta Purchase Agreement, the Company, together with its subsidiary, Collegium Securities Corporation, entered into a Loan Agreement (the “Loan Agreement”) with BioPharma Credit PLC, as collateral agent and lender, and BioPharma Credit Investments V (Master) LP, as lender (collectively “Pharmakon”). The Loan Agreement provides for a $200,000 secured term loan (the “term notes”), the proceeds of which were used to finance a portion of the purchase price paid pursuant to the Nucynta Purchase Agreement. On February 13, 2020 (the “Closing Date”), the Company received the net proceeds.

The term notes bear interest at a rate based upon the three-month LIBOR rate, subject to a LIBOR floor of 2.0%, plus a margin of 7.5% per annum, payable quarterly in arrears. The Company is required to repay the term notes by making equal quarterly payments of principal beginning in the first quarter immediately following the third month anniversary of the Closing Date. The term notes will mature on the calendar quarter end immediately following the 48-month anniversary of the Closing Date and is guaranteed by the Company’s material domestic subsidiaries and also secured by substantially all of the Company’s material assets. On the Closing Date, the Company paid to Pharmakon a facility fee equal to 2.50% of the aggregate principal amount of the term notes, or $5,000, in addition to $427 of other expenses incurred by Pharmakon and reimbursed by the Company (together, the “discount”). Net proceeds of $194,573 were transferred to Assertio by the Company as agent in partial satisfaction of the Nucynta Purchase Agreement. In addition, the Company capitalized $2,456 of term notes issuance costs, related to legal and advisory fees.

Except with respect to certain prepayments made with the proceeds from new equity issuances as described below, the Loan Agreement permits voluntary prepayment at any time, subject to a prepayment premium. The prepayment premium is equal to 3.00% of the principal amount being prepaid prior to the second-year anniversary of the Closing Date, 2.00% of the principal amount being prepaid on or after the second-year anniversary, but on or prior to the third-year anniversary, of the Closing Date, and 1.00% of the principal amount being prepaid on or after the third-year anniversary of the Closing Date, but prior to the fourth-year anniversary of the Closing Date. The Loan Agreement also includes a make-whole premium if there is a voluntary prepayment, a prepayment due to a change in control or acceleration following an Event of Default on or prior to the second-year anniversary of the Closing Date in an amount equal to foregone interest from the date of prepayment through the second-year anniversary of the Closing Date. A change of control triggers a mandatory prepayment of the term notes.

The Loan Agreement also permits single voluntary prepayments of the Loan Agreement of less than or equal to $50,000 made solely from the proceeds of an equity issuance by the Company. If equity prepayment occurs prior to the second-year anniversary of the Closing Date, a prepayment premium of 5.00% would apply, with no make-whole premium.

The Loan Agreement contains certain covenants and obligations of the parties, including, without limitation, covenants that require the Company to maintain $200,000 in annual net sales and covenants that limit the Company’s ability to incur additional indebtedness or liens, make acquisitions or other investments or dispose of assets outside the ordinary

course of business, restrictions which limit the Company’s ability to pay dividends and restrictions of net assets of subsidiaries. The Loan Agreement also contains customary events of default, including payment defaults, breaches of covenants, change of control and a material adverse change default. Failure to comply with these covenants would constitute an event of default under the Loan Agreement, notwithstanding the Company’s ability to meet its debt service obligations. The Loan Agreement also includes various customary remedies for Pharmakon following an event of default, including the acceleration of repayment of outstanding amounts under the Loan Agreement and execution upon the collateral securing obligations under the Loan Agreement. Under certain circumstances, a default interest rate will apply on outstanding obligations during the occurrence and continuance of an event of default.

During the year ended December 31, 2020 the Company recognized interest expense of $19,034 related to the term notes.

As of December 31, 2020, principal repayments under the term notes are estimated to be paid as follows:


Years ended December 31,	Principal Payments
2021	$	50,000
2022		50,000
2023		50,000
2024		12,500
Total before unamortized discount and issuance costs	$	162,500
Less: unamortized discount and issuance costs		(4,986)
Total term notes	$	157,514

Silicon Valley Bank Term Loan Facility

From August 2012 until January 2020, the Company maintained a term loan facility with Silicon Valley Bank (“SVB”), which was amended in connection with, and as a condition to, consummation of the transactions contemplated by the Nucynta Commercialization Agreement. Under the amended term loan (“Consent and Amendment”), the Company had a term loan facility in an amount of $11,500, which replaced the Company’s previously existing term loan facility. The proceeds of the Consent and Amendment were used to finance certain payment obligations under the Nucynta Commercialization Agreement and to repay the balance of the previously existing term loan.

The Consent and Amendment bore interest at a rate per annum of 0.75% above the prime rate (as defined in the Consent and Amendment). The Company was eligible to repay the Consent and Amendment in equal consecutive monthly installments of principal plus monthly payments of accrued interest, commencing in January 2020.

In January 2020, the Company prepaid the outstanding principal and accrued interest on the Consent and Amendment along with the required prepayment fees. The loss on extinguishment of the term loan was immaterial and was recorded as a component of interest expense.

Convertible Senior Notes

On February 13, 2020, the Company issued 2.625% convertible senior notes due in 2026 (the “convertible notes”) in the aggregate principal amount of $143,750, in a public offering registered under the Securities Act of 1933, as amended. The convertible notes were issued in connection with funding the Nucynta Acquisition, and the proceeds of the convertible notes were used to finance a portion of the purchase price payable pursuant to the Nucynta Purchase Agreement. Some of the Company’s existing investors participated in the convertible notes offering.

The Company may, at its option, settle the convertible notes in cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock. Accordingly, the Company separately accounted for the liability component (the “Liability Component”) and the embedded derivative conversion option (the “Equity Component”) of the convertible notes by allocating the proceeds between the Liability Component and the Equity Component. In connection with the issuance of the convertible notes, the Company incurred approximately $5,473 of

debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs between the Liability Component and the Equity Component based on the allocation of the proceeds. Of the total debt issuance costs, $1,773 was allocated to the Equity Component and recorded as a reduction to additional paid-in capital and $3,700 was allocated to the Liability Component and recorded as a debt discount of the convertible notes. The portion allocated to the Liability Component is amortized to interest expense using the effective interest method over six years.

The convertible notes are the Company’s senior unsecured obligations and bear interest at a rate of 2.625% per year payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. Before August 15, 2025, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after August 15, 2025, noteholders may convert their notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. 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 the Company’s election. The notes will mature on February 15, 2026, unless earlier repurchased, redeemed or converted. The initial conversion rate is 34.2618 shares of common stock per $1 principal amount of notes, which represents an initial conversion price of approximately $29.19 per share of common stock. The conversion rate and conversion price are subject to adjustment upon the occurrence of certain events.

Holders of the convertible notes may convert all or any portion of their convertible notes, in multiples of $1 principal amount, at their option only under the following circumstances:

(1)

during any calendar quarter commencing after the calendar quarter ending on March 31, 2020, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2)

during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the “trading price” per $1 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day;

(3)

upon the occurrence of certain corporate events or distributions on the Company’s common stock;

(4)

if the Company calls the convertible notes for redemption; or

(5)

at any time from, and including, August 15, 2025 until the close of business on the scheduled trading day immediately before the maturity date.

As of December 31, 2020, none of the above circumstances had occurred and as such, the convertible notes could not have been converted.

The Company may not redeem the convertible notes prior to February 15, 2023. On or after February 15, 2023, the Company may redeem the convertible notes, in whole and not in part, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on:

(1)

each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and

(2)

the trading day immediately before the date the Company sends such notice.

Calling any convertible note for redemption will constitute a make-whole fundamental change with respect to that convertible note, in which case the conversion rate applicable to the conversion of that convertible note, if it is converted in connection with the redemption, will be increased in certain circumstances for a specified period of time.

The convertible notes have customary default provisions, including (i) a default in the payment when due (whether at maturity, upon redemption or repurchase upon fundamental change or otherwise) of the principal of, or the redemption

price or fundamental change repurchase price for, any note; (ii) a default for 30 days in the payment when due of interest on any note; (iii) a default in the Company’s obligation to convert a note in accordance with the indenture; (iv) a default with respect to the Company’s obligations under the indenture related to consolidations, mergers and asset sales; (v) certain payment or other defaults by the Company or certain subsidiaries with respect to mortgages, agreements or other instruments for indebtedness for money borrowed of at least $20,000; and (vi) certain events of bankruptcy, insolvency and reorganization with respect to the Company or any of its significant subsidiaries.

The initial carrying amount of the Liability Component of $97,200 was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected the Company’s non-convertible borrowing rate for similar debt. The Equity Component of the Notes of $46,550 was recognized as a debt discount. The excess of the principal amount of the Liability Component over its carrying amount is amortized to interest expense using the effective interest method over six years. The Equity Component, which is included in the additional paid in capital portion of stockholders’ equity on the Company’s consolidated balance sheet, is not remeasured as long as it continues to meet the conditions for equity classification.

As of December 31, 2020, the convertible notes outstanding consisted of the following:


Liability component:
Principal	$	143,750
Less: unamortized debt discount and issuance costs		(44,175)
Net carrying amount	$	99,575

Equity component, net of issuance costs of $1,773	$	44,777

The Company determined the expected life of the convertible notes was equal to its six-year term. The effective interest rate on the Liability Component of the convertible notes was 10.27%. As of December 31, 2020, the “if-converted value” did not exceed the remaining principal amount of the convertible notes. The fair value of the convertible notes was determined based on data points other than quoted prices that are observable, either directly or indirectly, and has been classified as Level 2 within the fair value hierarchy. The fair value of the convertible notes, which differs from their carrying value, is influenced by market interest rates, the Company’s stock price and stock price volatility.

The following table presents the total interest expense recognized related to the convertible notes during the year ended December 31, 2020:


	Year ended December 31,
	2020
Contractual interest expense	$	3,323
Amortization of debt discount		5,628
Amortization of debt issuance costs		447
Total interest expense	$	9,398

As of December 31, 2020, the future minimum payments on the convertible notes were as follows:


Years ended December 31,	Future Minimum Payments
2021		3,773
2022		3,773
2023		3,773
2024		3,773
2025		3,773
Thereafter		145,639
Total minimum payments	$	164,504
Less: interest		(20,754)
Less: unamortized debt discount and issuance costs		(44,175)
Convertible senior notes	$	99,575

LEASES

12 Months Ended

Dec. 31, 2020

LEASES

LEASES

13. LEASES

In accordance with ASC Topic 842, Lease Accounting, the Company records lease assets and liabilities for lease arrangements exceeding a 12-month initial term. For operating leases, the Company records a beginning lease liability equal to the present value of minimum lease payments to be made over the lease term discounted using the Company’s incremental borrowing rate and a corresponding lease asset adjusted for incentives received and indirect costs. After lease commencement, the Company remeasures the operating liability at the present value of the remaining lease payments discounted using the original incremental borrowing rate and corresponding lease asset adjusted for incentives received, indirect costs and uneven lease payments. The Company records operating lease rent expense in the Statements of Operations on a straight-line basis over the lease term. Variable lease costs, that are primarily associated with non-lease components are not included in the measurement of the operating lease liability, are recognized in the period in which they are incurred. Leases with an initial term of 12 months or less, or short-term leases, are not recorded on the balance sheet. Short-term lease expense is recognized on a straight-line basis over the lease term. The Company does not have any financing lease arrangements.

As of December 31, 2020, the Company had operating lease assets of $8,391 and operating lease liabilities of $9,495 primarily related to operating lease agreements for its corporate headquarters.

Operating Lease Arrangements

In March 2018, the Company entered into an operating lease for its new corporate headquarters (the “Stoughton Lease”) pursuant to which the Company leases approximately 50,678 of rentable square feet of space, in Stoughton, Massachusetts. The Stoughton Lease commenced in August 2018 when the Company took possession of the space. After the initial four-month free rent period following possession of the space, the operating lease will continue for a term of 10 years. The Company has the right to extend the term of the Stoughton Lease for two additional five-year terms, provided that written notice is provided to the landlord no later than 12 months prior to the expiration of the then current Stoughton Lease term. The Company does not believe the exercise of the extension to be reasonably certain as of the balance sheet date and therefore did not include the extension as part of its recognized lease asset and lease liability. The annual base rent is $1,214, or $23.95 per rentable square foot, and will increase annually by 2.5% to 3.1% over the subsequent years.

In September 2019, the Company determined it had ceased use of its lease for the remaining 9,660 square feet at its former corporate headquarters in Canton, Massachusetts (“Canton Lease”). The Company impaired the operating lease asset and adjusted the operating lease liability to the fair value of cost that will continue to be incurred under the Canton Lease. In December 2019, the Company terminated the Canton Lease and the operating lease liability was reduced to zero.

In January 2016, the Company entered a non-cancellable contract with the contract manufacturing organization (“CMO”) of Xtampza ER. The contract term continues through December 2022 and automatically renews for successive two-year terms unless either party gives written notice of termination two-years in advance. Xtampza ER production is

currently conducted in an area of the manufacturing plant that is shared with other clients. Pursuant to the terms of the agreement, since 2016 the CMO has reserved 3,267 square feet of existing manufacturing space for a dedicated production suite for Xtampza ER, which was put into service in the year ended December 31, 2020. As the Company can direct the use of the dedicated space and obtain substantially all the economic benefits of the dedicated space, the Company determined that the arrangement was an embedded operating lease. The Company expects the lease term to continue at least through December 2026 and separated the agreement’s lease and non-lease components in determining the operating lease assets and liabilities. The Company determined its best estimate of stand-alone prices for each of the lease and nonlease components by considering observable information including gross margins expected to be recovered from the Company’s service provider and terms of similar lease contracts.

Short-Term Lease Arrangements

In December 2018, the Company began entering into 12-month, non-cancelable vehicle leases for its field-based employees. Each vehicle lease is executed separately and expires at varying times with automatic renewal options that are cancelable at any time. The rent expense for these leases is therefore recognized on a straight-line basis over the lease term in the period in which it is incurred.

Variable Lease Costs

Variable lease costs associated with non-lease components primarily include utilities, property taxes, and other operating costs that are passed on from the lessor.

The components of lease cost for the years ended December 31, 2020 and 2019 are as follows:


	Year ended December 31,
	2020		2019
Lease Cost
Operating lease cost	$	1,305	$	1,446
Short-term lease cost		1,312		752
Variable lease cost		331		283
Total lease cost	$	2,948	$	2,481

The lease term and discount rate for operating leases for the years ended December 31, 2020 and 2019 are as follows:

Other information related to operating leases for the years ended December 31, 2020 and 2019 is as follows:


	Year ended December 31,
Other Information:	2020		2019
Cash paid for amounts included in the measurement of operating leases liabilities	$	1,249	$	1,133
Leased assets obtained in exchange for new operating lease liabilities		—		—

The Company’s aggregate future minimum lease payments for its operating leases, including embedded operating lease arrangements, as of December 31, 2020, are as follows:



2021	$	1,287
2022		1,325
2023		1,363
2024		1,401
2025		1,439
After 2025		5,537
Total minimum lease payments	$	12,352
Less: Present value discount		2,857
Present value of lease liabilities	$	9,495

STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2020

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

15. STOCK-BASED COMPENSATION

Performance Share Units, Restricted Stock Units and Stock Options

Performance Share Units

The Company periodically grants performance share units (“PSUs”) to certain members of the Company's senior management team. PSUs vest subject to the satisfaction of annual and cumulative performance and/or market conditions established by the Compensation Committee.

In January 2019, the Company granted PSUs with performance conditions related to 2019, 2020, 2021 and three-year cumulative revenue goals for Xtampza ER. The PSUs were to vest following a three-year performance period, subject to the satisfaction of the performance criteria and the executive’s continued employment through the performance period. PSUs may vest in a range between 0% and 200%, based on the satisfaction of performance criteria, and no shares will be issued if the minimum applicable performance metric is not achieved. The Company recognizes compensation expense ratably over the required service period based on its estimate of the number of shares that will

vest based upon the probability of achieving the performance metrics. If there is a change in the estimate of the number of shares that are likely to vest, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made.

In February 2020, the Company granted PSUs with performance criteria related to the relative ranking of the total stockholder return (“TSR”) of the Company’s common stock in 2020, 2021, 2022 and the cumulative three-year performance period return relative to the TSR of certain peer companies within the S&P Pharmaceutical Select Industry Index. TSR will be measured based on the 30-day average stock price on the first day of each period compared to the 30-day average stock price on the last day of each period. The PSUs subject to the annual performance criteria will vest annually, subject to the satisfaction of the performance criteria and the executive’s continued employment through the performance period. The cumulative PSUs will vest following the three-year performance period, subject to the satisfaction of the performance criteria and the executive’s continued employment through the performance period. PSUs may vest in a range between 0% and 200%, based on the satisfaction of performance, and no shares will be issued if the minimum applicable performance metric is not achieved. As these PSUs vest based on the achievement of market conditions, the grant date fair values were determined using a Monte-Carlo valuation model. The Monte-Carlo valuation model considered a variety of potential future share prices for the Company as well as its peer companies in the selected market index. The weighted-average grant date fair value of 2020 PSUs granted with market-based vesting conditions was $28.81 based on the valuation model.

In December 2020, the Company’s board of directors approved a modification of PSUs that were originally granted to the Company’s senior management team in January 2019. The modification replaced the original performance criteria for the 2020, 2021 and cumulative performance periods from being based on Xtampza 2020, 2021 and three-year cumulative revenue goals to being based on total shareholder return (“TSR”) for 2020, 2021 and the corresponding two-year cumulative period. The PSUs achieved based on 2019 Xtampza revenues goals were not changed as part of the modification. The Company accounted for this modification under ASC 718, and, per guidance, determined the modification created incremental value as the fair value of these awards was increased upon modification. The increase in fair value resulted in an accelerated recognition of stock-based compensation expense on the modification date of $906. The total expense for these PSUs in years ended December 31, 2020 and 2019 was $950 and $136, respectively.

A summary of the Company’s performance share units activity for the year ended December 31, 2020 and related information is as follows:


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2019	99,400	$	15.90
Granted	187,978		28.49
Vested	—		—
Forfeited	—		—
Performance adjustment	(4,155)		15.90
Outstanding at December 31, 2020	283,223	$	24.26

The number of PSUs awarded represents the target number of shares of common stock that may be earned; however, the actual number of shares earned may vary based on the satisfaction of performance criteria. The weighted-average grant date fair value of PSUs granted for the years ended December 31, 2020 and 2019 was $28.49 and $15.90, respectively. There were no PSUs granted in the year ended December 31, 2018.

For the years ended December 31, 2020 and 2019, the stock-based compensation expense for PSUs was $3,551 and $136, respectively. There was no expense for PSUs in the year ended December 31, 2018.

As of December 31, 2020, the unrecognized compensation cost related to performance share units was $3,555 and is expected to be recognized as expense over approximately 1.6 years.

Restricted Stock Units

A summary of the Company’s restricted stock units activity for the year ended December 31, 2020 and related information is as follows:


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2019	849,679	$	17.10
Granted	767,634		21.35
Vested	(335,524)		17.85
Forfeited	(39,402)		20.20
Outstanding at December 31, 2020	1,242,387	$	19.42

The weighted-average grant date fair value of RSUs granted for the years ended December 31, 2020, 2019 and 2018 was $21.35, $15.48 and $23.41. The total fair value of RSUs vested (measured on the date of vesting) for the years ended December 31, 2020, 2019 and 2018 was $6,992, $2,683 and $1,782 respectively.

As of December 31, 2020, the unrecognized compensation cost related to restricted stock units was $16,816 and is expected to be recognized as expense over approximately 2.6 years. The fair value of restricted stock units vested during the year ended December 31, 2020 was $5,989.

Stock Options

The Company granted stock options to employees for the years ended December 31, 2020, 2019 and 2018. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option pricing model and restricted stock awards and restricted stock units based on the fair value of the award.

A summary of the Company’s stock option activity for the year ended December 31, 2020 and related information is as follows:


				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise Price	Contractual		Intrinsic
	Shares		per Share	Term (in years)		Value
Outstanding at December 31, 2019	3,955,887	$	16.00	7.5	$	21,257
Granted	717,304		21.30
Exercised	(637,924)		10.44
Cancelled	(174,786)		18.82
Outstanding at December 31, 2020	3,860,481	$	17.78	7.2	$	13,011
Exercisable at December 31, 2020	2,373,097	$	17.00	6.4	$	9,770

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows:


	Year ended December 31,
	2020		2019		2018
Risk-free interest rate	1.3	%	2.4	%	2.6	%
Volatility	66.2	%	63.3	%	64.8	%
Expected term (years)	6.0		6.1		6.1
Expected dividend yield	—	%	—	%	—	%

Risk-free Interest Rate. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of the stock option grants.

Expected Volatility. Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption is based on the Company’s volatility as well as the historical volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology and pharmaceutical industries. In evaluating similarity, the Company considers factors such as industry, stage of life cycle and size.

Expected Term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior through December 31, 2020 it determined the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period.

Expected Dividend Yield. The expected dividend yield assumption is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends.

The weighted-average grant date fair value of stock options granted for the years ended December 31, 2020, 2019, and 2018 was $12.78, $9.07 and $14.51 respectively. The total intrinsic value of stock options exercised for the years ended December 31, 2020, 2019, and 2018 was $7,516, $1,506 and $3,970, respectively.

As of December 31, 2020, the unrecognized compensation cost related to outstanding options was $14,170 and is expected to be recognized as expense over approximately 2.4 years.

In June 2018, the Company’s board of directors approved a modification of equity-based awards granted to the former President and Chief Executive Officer to provide that all of those awards, to the extent unvested as of the Company’s 2020 annual meeting of shareholders, will vest on such date, subject to his continued service on the Company’s board of directors through such date. This modification was effective on June 4, 2018 and affected 116,250 shares of non-vested restricted stock units and 225,625 unvested stock options to purchase the Company’s common stock. The Company accounted for this modification under ASC 718, and, per guidance, determined the modification did not create incremental value as the fair value of these awards was unchanged. The shorter requisite service period resulted in the accelerated recognition of stock-based compensation expense from the modification date through the date of the annual meeting of shareholders in May 2020.

Employee Stock Purchase Plan

The Company’s 2015 Employee Stock Purchase Plan allows employees as designated by the Company’s Board of Directors to purchase shares of the Company’s common stock. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on (1) the first day of the purchase period or (2) the last day of the purchase period. During the year ended December 31, 2020, 67,512 shares of common stock were purchased for total proceeds of $758. As of December 31, 2020, there were 1,315,844 shares of common stock authorized for issuance pursuant to the employee stock purchase plan. The expense for the years ended December 31, 2020, 2019 and 2018 was $342, $358 and $493 respectively.

Stock-Based Compensation Expense

Stock-based compensation for all stock options, restricted stock awards, restricted stock units, performance share units and for the employee stock purchase plan are reported within the following:


	Year Ended December 31,
	2020		2019		2018
Research and development expenses	$	3,909	$	2,126	$	1,468
Selling, general and administrative expenses		18,001		14,402		12,310
Total stock-based compensation expense	$	21,910	$	16,528	$	13,778

INCOME TAXES

12 Months Ended

Dec. 31, 2020

INCOME TAXES

INCOME TAXES

16. INCOME TAXES

For the year ended December 31, 2020, the Company recorded a current state tax expense of $830. For the years ended December 2019, and 2018 the Company did not record a current or deferred income tax expense or (benefit) due to current and historical losses incurred by the Company. The Company's losses before income taxes consist solely of losses from domestic operations.

A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the consolidated financial statements is as follows:


	As of December 31,
	2020		2019		2018
Federal income tax expense at statutory rate	21.00	%	21.00	%	21.00	%
(Increase) decrease income tax (benefit) resulting from:
State income tax, net of federal benefit	5.06		5.59		5.89
Permanent differences	(1.85)		(3.24)		(2.51)
Research and development credit	(1.08)		1.83		0.52
Change in valuation allowance	(20.12)		(25.18)		(24.90)
Effective income tax rate	3.01	%	0.00	%	0.00	%

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are comprised of the following:


	As of December 31,
	2020		2019
Deferred tax assets:
U.S. and state net operating loss carryforwards	$	57,457	$	66,553
Research and development credits		5,004		3,768
Operating lease liabilities		2,508		2,630
Accruals and other ₍₁₎		15,306		14,286
Intangible assets		1,297		—
Depreciation		—		92
Gross deferred tax assets:		81,572		87,329
Valuation allowance		(65,661)		(77,285)
Total deferred tax assets:		15,911		10,044
Deferred tax liabilities:
Debt discount		(10,809)		—
Operating lease assets		(2,217)		(2,357)
Intangible assets		—		(7,687)
Depreciation		(2,885)		—
Net deferred tax assets	$	—	$	—

(1) Balance includes $7,133 and $5,796 of stock-based compensation expense related to accruals as of December 31, 2020 and 2019, respectively. Balance also includes $6,281 and $7,204 of accrued rebates, returns, and discounts as of December 31, 2020 and 2019, respectively.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. As of December 31, 2020, and December 31, 2019, based on the Company's history of operating losses, the Company has concluded that it is not more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2020 and

December 31, 2019. The valuation allowance decreased $11,624 during the year ended December 31, 2020 due primarily to the expected utilization of its net operating losses in 2020.

The Company recorded a valuation allowance against all of its deferred tax assets as of December 31, 2020 and 2019. The Company intends to continue to maintain a full valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Given the Company’s current earnings and anticipated future earnings, however, the Company believes that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion or all of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to the provision for income taxes for the period the release is recorded. The exact timing and amount of the valuation allowance release, however, are subject to change on the basis of the level of profitability that the Company is able to actually achieve.

As of December 31, 2020, 2019, and 2018, the Company had gross U.S. federal net operating loss carryforwards of $226,824, $292,342, and $324,533, respectively, which may be available to offset future income tax liabilities. The Tax Cuts and Jobs Act of 2017 (“TCJA”) will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the NOL deduction to the lesser of the NOL carryover or 80% of a corporation’s taxable income (subject to Internal Revenue Code Sections 382 and 383). Also, there will be no carryback for losses incurred after 2017. Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s NOL carryover or 100% of a corporation’s taxable income (subject to Internal Revenue Code Section 382 and 383) and be available for twenty years from the period the loss was generated.

As of December 31, 2020, 2019, and 2018, the Company also had gross U.S. state net operating loss carryforwards of $170,280, $222,629, and $285,181, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2038.

As of December 31, 2020, 2019 and 2018, the Company had federal research and development tax credit carryforwards of approximately $4,623, $4,044, and $3,628, respectively, available to reduce future tax liabilities which expire at various dates through 2038. As of December 31, 2020, 2019 and 2018 the Company had state research and development tax credit carryforwards of approximately $1,150, $1,112, and $885, respectively, available to reduce future tax liabilities which expire at various dates through 2035.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions.

During 2020, the Company completed an updated study to assess the impact of ownership changes, if any, on the Company’s ability to use its NOL and tax credit carryovers as defined under Section 382 of the Internal Revenue Code (“IRC 382”). As a result of the study, the Company concluded that there were ownership changes that occurred during the years 2006, 2012 and 2015 that could be subject to IRC 382 limitations. These IRC 382 annual limitations may limit the Company’s ability to use pre-ownership change federal NOL carryovers and pre-ownership change federal tax credit carryovers, which may potentially increase the Company’s future federal income tax liability.

The Company files income tax returns in the United States and in several states. The federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2017 through December 31, 2020. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. The Company originally recorded an unrecognized tax benefit of $902 (net rate effected unrecognized tax benefit of $235) during 2017 associated with its IRS examination of its 2015 federal income tax return, and accordingly reduced its NOL deferred tax asset during 2017. The Company settled its IRS audit during 2018, which resulted in a total decrease to its NOL carryover of $36. As a result of the IRS settlement, the Company reversed this unrecognized tax benefit and trued-up its NOL carryover during 2018 to reflect the reduction of the $36 to its NOL as required by the IRS

settlement. This is included in the tabular rollforward below of gross unrecognized tax benefits. Since a full valuation allowance has been provided against the Company’s net operating loss carryover, the true up of the NOL carryover and associated deferred tax asset during 2018 does not result in any financial statement impact.

For all years through December 31, 2020, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s research and development credit carryforwards. The Company has reduced its deferred tax asset for its estimate of credits that could be reduced, and that is included in the tabular rollforward of uncertain tax positions. Since a full valuation allowance has been provided against the Company’s research and development credits the reduction in the gross deferred tax asset established for the research and development credit carryforwards does not result in any financial statement impact.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows:


	As of December 31,
	2020		2019		2018
Gross UTB Balance at January 1	$	578	$	502	$	1,364
Additions based on tax positions related to the current year		36		76		64
Additions for tax positions of prior years		—		—		—
Reductions for tax positions of prior years		(28)		—		(24)
Settlements		—		—		(902)
Reductions due to lapse of applicable statute of limitations		—		—		—
Gross UTB Balance at December 31	$	586	$	578	$	502

Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation)	$	560	$	549	$	481

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

UNAUDITED QUARTERLY OPERATING RESULTS

12 Months Ended

Dec. 31, 2020

UNAUDITED QUARTERLY OPERATING RESULTS

UNAUDITED QUARTERLY OPERATING RESULTS

18. UNAUDITED QUARTERLY OPERATING RESULTS

The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2020 and 2019:


		First		Second		Third		Fourth
Year ended December 31, 2020		Quarter		Quarter		Quarter		Quarter
Product revenues, net	$	76,511	$	78,058	$	79,176	$	76,271
Cost of product revenues
Cost of product revenues (excluding intangible asset amortization)		27,229		12,899		14,188		15,184
Intangible asset amortization		10,295		16,795		16,795		16,795
Total cost of products revenues		37,524		29,694		30,983		31,979
Gross profit		38,987		48,364		48,193		44,292
Operating expenses
Research and development		2,666		2,493		2,141		2,472
Selling, general and administrative		31,260		29,322		26,426		26,824
Total operating expenses		33,926		31,815		28,567		29,296
Income from operations		5,061		16,549		19,626		14,996
Interest expense		(4,823)		(8,259)		(8,063)		(7,737)
Interest income		212		14		3		3
Income before income taxes		450		8,304		11,566		7,262
Provision for income taxes		—		246		280		304
Net income	$	450	$	8,058	$	11,286	$	6,958

Earnings per share — basic	$	0.01	$	0.23	$	0.33	$	0.20
Weighted-average shares — basic		34,100,688		34,395,266		34,540,126		34,592,277

Earnings (loss) per share — diluted	$	0.01	$	0.23	$	0.32	$	0.20
Weighted-average shares — diluted		35,069,693		35,091,906		35,069,188		35,417,623


		First		Second		Third		Fourth
Year ended December 31, 2019		Quarter		Quarter		Quarter		Quarter
Product revenues, net	$	74,516	$	75,040	$	72,942	$	74,203
Cost of product revenues
Cost of product revenues (excluding intangible asset amortization)		45,476		44,966		43,066		45,400
Intangible asset amortization		3,688		3,688		3,688		3,688
Total cost of products revenues		49,164		48,654		46,754		49,088
Gross profit		25,352		26,386		26,188		25,115
Operating expenses
Research and development		2,992		2,459		2,491		2,398
Selling, general and administrative		32,352		28,935		30,072		25,090
Total operating expenses		35,344		31,394		32,563		27,488
Loss from operations		(9,992)		(5,008)		(6,375)		(2,373)
Interest expense		(234)		(236)		(228)		(211)
Interest income		526		532		494		383
Net loss	$	(9,700)	$	(4,712)	$	(6,109)	$	(2,201)

Weighted-average shares - basic and diluted		33,331,917		33,397,709		33,481,923		33,600,566
Loss per share - basic and diluted	$	(0.29)	$	(0.14)	$	(0.18)	$	(0.07)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

Basis of Accounting

Use of Estimates

Use of Estimates

Fair Value Measurements

Fair Value Measurements


Level 1 inputs:	Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 inputs:	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 inputs:	Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability

Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2020 and 2019.

The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at December 31, 2020 and 2019.


						Significant
				Quoted Prices		other		Significant
				in active		observable		unobservable
				markets		inputs		inputs
		Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2020
Money market funds, included in cash equivalents	$	45,069	$	45,069	$	—	$	—

December 31, 2019
Money market funds, included in cash equivalents	$	94,841	$	94,841	$	—	$	—

Concentration of Credit Risk

Concentration of Credit Risk

Cash and Cash Equivalents

Cash and Cash Equivalents

Restricted Cash

Restricted Cash

Inventory

Inventory

The Company has capitalized $15,614 of inventory as of December 31, 2020. The Company expects sales of the capitalized units to occur during the next twelve months.

Property and Equipment

Property and Equipment


Asset Category		Estimated Useful Life
Computers and office equipment		3-5 years
Laboratory equipment		5 years
Furniture and fixtures		7 years
Manufacturing equipment		5-13 years
Leasehold improvements		Lesser of remaining lease term and estimated useful life

Costs for capital assets not yet placed into service have been capitalized as construction-in-progress, and will be depreciated in accordance with the above guidelines once placed into service.

Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in the statements of operations.

Intangible Assets

Intangible Assets

Revenue Recognition

Revenue Recognition

Research and Development Costs

Research and Development Costs

Patent Costs

Patent Costs

Costs related to filing and pursuing patent applications are recorded as selling, general and administrative expense as incurred since the recoverability of such expenditures is uncertain.

Advertising and Product Promotion Costs

Advertising and Product Promotion Costs

Stock-Based Compensation

Stock-Based Compensation

Income Taxes

Income Taxes

Earnings per Share

Earnings per Share

Embedded Derivatives

Embedded Derivatives

Reclassifications

Reclassifications

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective dates.

Recently Issued Accounting Pronouncements Not Yet Adopted

NET LOSS PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 2020

EARNINGS PER SHARE

Schedule of computations of basic and diluted net (loss) per share


	Years ended December 31,
		2020		2019		2018
Numerator:
Net income (loss)	$	26,752	$	(22,722)	$	(39,128)
Denominator:
Weighted-average shares outstanding — basic		34,407,959		33,453,844		32,953,808
Effect of dilutive securities:
Stock options		431,524		—		—
Restricted stock units		271,542		—		—
Performance share units		27,002		—		—
Employee stock purchase plan		567		—		—
Warrants		12,759		—		—

Weighted average shares outstanding — diluted		35,151,353		33,453,844		32,953,808

Earnings (loss) per share — basic	$	0.78	$	(0.68)	$	(1.19)
Earnings (loss) per share — diluted	$	0.76	$	(0.68)	$	(1.19)

Schedule of dilutive securities excluded from the calculation of diluted earnings per share


	Years ended December 31,
	2020	2019	2018
Stock options	2,294,961	3,955,887	3,585,856
Restricted stock units	4,809	849,679	514,603
Performance share units	211,618	99,400	—
Warrants	—	1,041,667	1,041,667
Convertible senior notes	4,925,134	—	—
Unvested restricted stock	—	—	3,018

INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2020

INTANGIBLE ASSETS

Carrying amount of Nucynta intangible


	As of December 31,
	2020		2019
Gross carrying amount	$	521,170	$	154,089
Accumulated amortization		(185,266)		(124,586)
Intangible asset, net	$	335,904	$	29,503

Summary of costs included in acquired asset


Acquisition consideration:
Base purchase price	$	375,000
Cash paid for inventory		6,030
Transaction costs		6,297
Reduction for 2020 cash transferred to Assertio under the prior Nucynta Commercialization Agreement₍₁₎		(13,071)
Reduction for accrued royalty obligation discharged upon closing₍₁₎		(1,145)
Total acquisition consideration:	$	373,111

(1)


Assets acquired:
Nucynta Intangible Asset	$	367,081
Inventory		6,030
Total consideration allocated to assets acquired:	$	373,111

Summary of the gross carrying amount, accumulated amortization, and net book value


		Gross Carrying Value		Accumulated Amortization		Net Book Value
Intangible Asset, net
Cost basis as of acquisition date	$	515,627	$	—	$	515,627
Amortization expense from acquisition date through Third Amendment Date		—		(107,662)		(107,662)
Adjustment due to the remeasurement of liability as of Third Amendment Date		(369,581)		—		(369,581)
Additional costs incurred as of Third Amendment Date₍₁₎		8,043		—		8,043
Amortization expense from Amendment Date through fiscal year end		—		(2,172)		(2,172)
Balance as of December 31, 2018	$	154,089	$	(109,834)	$	44,255
Amortization expense		—		(14,752)		(14,752)
Balance as of December 31, 2019	$	154,089	$	(124,586)	$	29,503
Amortization expense through Nucynta Acquisition		—		(1,754)		(1,754)
Additional cost incurred from Nucynta Acquisition		367,081		—		367,081
Amortization expense from Nucynta Acquisition through period end		—		(58,926)		(58,926)
Balance as of December 31, 2020	$	521,170	$	(185,266)	$	335,904

(1)

Represents fair value of warrant issued in connection with the Amendment to the Nucynta Commercialization Agreement.

Summary of amortization expense


	Years ended December 31,
		2020		2019		2018
Nucynta amortization expense included in cost of product revenues	$	60,680	$	14,752	$	109,834

Schedule of remaining amortization period


Years ended December 31,	Amortization Expense
2021		67,181
2022		67,181
2023		67,181
2024		67,181
2025		67,180
Remaining amortization expense:	$	335,904

STOCK BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2020

STOCK BASED COMPENSATION

Summary of performance share units activity


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2019	99,400	$	15.90
Granted	187,978		28.49
Vested	—		—
Forfeited	—		—
Performance adjustment	(4,155)		15.90
Outstanding at December 31, 2020	283,223	$	24.26

Summary of restricted stock units activity


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2019	849,679	$	17.10
Granted	767,634		21.35
Vested	(335,524)		17.85
Forfeited	(39,402)		20.20
Outstanding at December 31, 2020	1,242,387	$	19.42

Summary of stock option activity


				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise Price	Contractual		Intrinsic
	Shares		per Share	Term (in years)		Value
Outstanding at December 31, 2019	3,955,887	$	16.00	7.5	$	21,257
Granted	717,304		21.30
Exercised	(637,924)		10.44
Cancelled	(174,786)		18.82
Outstanding at December 31, 2020	3,860,481	$	17.78	7.2	$	13,011
Exercisable at December 31, 2020	2,373,097	$	17.00	6.4	$	9,770

Schedule of fair value assumption using Black-Scholes option-pricing model


	Year ended December 31,
	2020		2019		2018
Risk-free interest rate	1.3	%	2.4	%	2.6	%
Volatility	66.2	%	63.3	%	64.8	%
Expected term (years)	6.0		6.1		6.1
Expected dividend yield	—	%	—	%	—	%

Summary of stock-based compensation


	Year Ended December 31,
	2020		2019		2018
Research and development expenses	$	3,909	$	2,126	$	1,468
Selling, general and administrative expenses		18,001		14,402		12,310
Total stock-based compensation expense	$	21,910	$	16,528	$	13,778

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

INCOME TAXES

Schedule of reconciliation of income tax expense (benefit) at statutory federal income tax rate to income taxes


	As of December 31,
	2020		2019		2018
Federal income tax expense at statutory rate	21.00	%	21.00	%	21.00	%
(Increase) decrease income tax (benefit) resulting from:
State income tax, net of federal benefit	5.06		5.59		5.89
Permanent differences	(1.85)		(3.24)		(2.51)
Research and development credit	(1.08)		1.83		0.52
Change in valuation allowance	(20.12)		(25.18)		(24.90)
Effective income tax rate	3.01	%	0.00	%	0.00	%

Schedule of significant components of deferred tax assets and liabilities


	As of December 31,
	2020		2019
Deferred tax assets:
U.S. and state net operating loss carryforwards	$	57,457	$	66,553
Research and development credits		5,004		3,768
Operating lease liabilities		2,508		2,630
Accruals and other ₍₁₎		15,306		14,286
Intangible assets		1,297		—
Depreciation		—		92
Gross deferred tax assets:		81,572		87,329
Valuation allowance		(65,661)		(77,285)
Total deferred tax assets:		15,911		10,044
Deferred tax liabilities:
Debt discount		(10,809)		—
Operating lease assets		(2,217)		(2,357)
Intangible assets		—		(7,687)
Depreciation		(2,885)		—
Net deferred tax assets	$	—	$	—

Schedule of reconciliation of gross unrecognized tax benefits


	As of December 31,
	2020		2019		2018
Gross UTB Balance at January 1	$	578	$	502	$	1,364
Additions based on tax positions related to the current year		36		76		64
Additions for tax positions of prior years		—		—		—
Reductions for tax positions of prior years		(28)		—		(24)
Settlements		—		—		(902)
Reductions due to lapse of applicable statute of limitations		—		—		—
Gross UTB Balance at December 31	$	586	$	578	$	502

Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation)	$	560	$	549	$	481

UNAUDITED QUARTERLY OPERATING RESULTS (Tables)

12 Months Ended

Dec. 31, 2020

UNAUDITED QUARTERLY OPERATING RESULTS

Summary of unaudited quarterly results of operations


		First		Second		Third		Fourth
Year ended December 31, 2020		Quarter		Quarter		Quarter		Quarter
Product revenues, net	$	76,511	$	78,058	$	79,176	$	76,271
Cost of product revenues
Cost of product revenues (excluding intangible asset amortization)		27,229		12,899		14,188		15,184
Intangible asset amortization		10,295		16,795		16,795		16,795
Total cost of products revenues		37,524		29,694		30,983		31,979
Gross profit		38,987		48,364		48,193		44,292
Operating expenses
Research and development		2,666		2,493		2,141		2,472
Selling, general and administrative		31,260		29,322		26,426		26,824
Total operating expenses		33,926		31,815		28,567		29,296
Income from operations		5,061		16,549		19,626		14,996
Interest expense		(4,823)		(8,259)		(8,063)		(7,737)
Interest income		212		14		3		3
Income before income taxes		450		8,304		11,566		7,262
Provision for income taxes		—		246		280		304
Net income	$	450	$	8,058	$	11,286	$	6,958

Earnings per share — basic	$	0.01	$	0.23	$	0.33	$	0.20
Weighted-average shares — basic		34,100,688		34,395,266		34,540,126		34,592,277

Earnings (loss) per share — diluted	$	0.01	$	0.23	$	0.32	$	0.20
Weighted-average shares — diluted		35,069,693		35,091,906		35,069,188		35,417,623


		First		Second		Third		Fourth
Year ended December 31, 2019		Quarter		Quarter		Quarter		Quarter
Product revenues, net	$	74,516	$	75,040	$	72,942	$	74,203
Cost of product revenues
Cost of product revenues (excluding intangible asset amortization)		45,476		44,966		43,066		45,400
Intangible asset amortization		3,688		3,688		3,688		3,688
Total cost of products revenues		49,164		48,654		46,754		49,088
Gross profit		25,352		26,386		26,188		25,115
Operating expenses
Research and development		2,992		2,459		2,491		2,398
Selling, general and administrative		32,352		28,935		30,072		25,090
Total operating expenses		35,344		31,394		32,563		27,488
Loss from operations		(9,992)		(5,008)		(6,375)		(2,373)
Interest expense		(234)		(236)		(228)		(211)
Interest income		526		532		494		383
Net loss	$	(9,700)	$	(4,712)	$	(6,109)	$	(2,201)

Weighted-average shares - basic and diluted		33,331,917		33,397,709		33,481,923		33,600,566
Loss per share - basic and diluted	$	(0.29)	$	(0.14)	$	(0.18)	$	(0.07)

LICENSE AGREEMENTS (Details) - USD ($) $ / shares in Units, $ in Thousands				1 Months Ended	3 Months Ended								12 Months Ended
	Feb. 13, 2020	Feb. 06, 2020	Jan. 09, 2018	Nov. 30, 2018	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Nov. 08, 2018
License Agreements [Line Items]
License fee					$ 31,979	$ 30,983	$ 29,694	$ 37,524	$ 49,088	$ 46,754	$ 48,654	$ 49,164	$ 130,180	$ 193,660	$ 165,677
Annual net sales					$ 76,271	$ 79,176	$ 78,058	$ 76,511	$ 74,203	$ 72,942	$ 75,040	$ 74,516	310,016	296,701	280,413
Nucynta Products
License Agreements [Line Items]
Annual net sales													$ 182,032	$ 191,689	$ 211,030
Nucynta Products \| Grnenthal
License Agreements [Line Items]
Royalty payment as percentage of annual net sales	14.00%
Nucynta Commercialization Agreement \| Assertio
License Agreements [Line Items]
License fee			$ 10,000
Nucynta Commercialization Agreement \| Nucynta Products \| Assertio
License Agreements [Line Items]
Payment for inventory			6,223
Reimbursement for prepaid expenses			1,987
Liability relating to sales			22,660
Annual royalty payable			135,000
Quarterly royalty payable			33,750
Base annual net sales for variable royalty			$ 233,000
Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 1
License Agreements [Line Items]
Royalty payment as percentage of annual net sales on and after January 1, 2022				58.00%
Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 2
License Agreements [Line Items]
Royalty payment as percentage of annual net sales on and after January 1, 2022				25.00%
Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 3
License Agreements [Line Items]
Royalty payment as percentage of annual net sales on and after January 1, 2022				17.50%
Royalty payment limit on and after January 1, 2022				$ 258,000
Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Minimum \| Sales Royalty Structure 2
License Agreements [Line Items]
Royalty payment limit on and after January 1, 2022				233,000
Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Maximum \| Sales Royalty Structure 1
License Agreements [Line Items]
Royalty payment limit on and after January 1, 2022				233,000
Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Maximum \| Sales Royalty Structure 2
License Agreements [Line Items]
Royalty payment limit on and after January 1, 2022				$ 258,000
Third Amendment to the Nucynta Commercialization Agreement \| Assertio
License Agreements [Line Items]
Number of shares that can be purchased				1,041,667
Exercise price of warrant				$ 19.20
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products
License Agreements [Line Items]
Minimum royalty payment eliminated				$ 135
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Maximum \| Any 12-month period through January 1, 2022
License Agreements [Line Items]
Net sales limit upon which Counterparty can terminate without penalty				180,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Maximum \| Any 12-month period commencing on January 1, 2022
License Agreements [Line Items]
Net sales limit upon which Counterparty can terminate without penalty				170,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio
License Agreements [Line Items]
Termination fee owed if Company terminates				$ 5,000
Number of shares that can be purchased																1,041,667
Exercise price of warrant																$ 19.20
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 1
License Agreements [Line Items]
Royalty payment as percentage of annual net sales				65.00%
Royalty payment limit between January 1, 2019 and December 31, 2021				$ 180,000
Collaborative Arrangement, Royalty Payment Limit				$ 180,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 2
License Agreements [Line Items]
Royalty payment as percentage of annual net sales				14.00%
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 3
License Agreements [Line Items]
Royalty payment as percentage of annual net sales				58.00%
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 4
License Agreements [Line Items]
Royalty payment as percentage of annual net sales				20.00%
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Sales Royalty Structure 5
License Agreements [Line Items]
Royalty payment as percentage of annual net sales				15.00%
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Minimum \| Sales Royalty Structure 2
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021				$ 180,000
Collaborative Arrangement, Royalty Payment Limit				180,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Minimum \| Sales Royalty Structure 3
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021				210,000
Collaborative Arrangement, Royalty Payment Limit				210,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Minimum \| Sales Royalty Structure 4
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021				233,000
Collaborative Arrangement, Royalty Payment Limit				233,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Minimum \| Sales Royalty Structure 5
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021				258,000
Collaborative Arrangement, Royalty Payment Limit				258,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Minimum \| prior to January 1, 2022
License Agreements [Line Items]
Sales threshold where supplemental royalty payment is due				180,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Maximum \| Sales Royalty Structure 2
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021				210,000
Collaborative Arrangement, Royalty Payment Limit				210,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Maximum \| Sales Royalty Structure 3
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021				233,000
Collaborative Arrangement, Royalty Payment Limit				233,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Maximum \| Sales Royalty Structure 4
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021				258,000
Collaborative Arrangement, Royalty Payment Limit				258,000
Third Amendment to the Nucynta Commercialization Agreement \| Nucynta Products \| Assertio \| Maximum \| prior to January 1, 2022
License Agreements [Line Items]
Sales threshold where supplemental royalty payment is due				$ 243,000
Percentage of supplemental royalty based on net sales				4.90%
Nucynta Purchase Agreement \| Nucynta Products \| Assertio
License Agreements [Line Items]
Aggregate purchase price		$ 375,000

EARNINGS PER SHARE - Computation of Net Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
EARNINGS PER SHARE
Net income (loss)	$ 6,958	$ 11,286	$ 8,058	$ 450	$ (2,201)	$ (6,109)	$ (4,712)	$ (9,700)	$ 26,752	$ (22,722)	$ (39,128)
Weighted-average shares - basic (in shares)	34,592,277	34,540,126	34,395,266	34,100,688					34,407,959	33,453,844	32,953,808
Effect of dilutive securities, warrants (in shares)									12,759
Weighted-average shares - diluted (in shares)	35,417,623	35,069,188	35,091,906	35,069,693					35,151,353	33,453,844	32,953,808
Earnings (loss) per share - basic (in dollars per share)	$ 0.20	$ 0.33	$ 0.23	$ 0.01					$ 0.78	$ (0.68)	$ (1.19)
Earnings (loss) per share - diluted (in dollars per share)	$ 0.20	$ 0.32	$ 0.23	$ 0.01					$ 0.76	$ (0.68)	$ (1.19)
Stock options
EARNINGS PER SHARE
Effect of dilutive securities (in shares)									431,524
Restricted stock units
EARNINGS PER SHARE
Effect of dilutive securities (in shares)									271,542
Performance share units
EARNINGS PER SHARE
Effect of dilutive securities (in shares)									27,002
Employee stock purchase plan
EARNINGS PER SHARE
Effect of dilutive securities (in shares)									567

COMMITMENTS AND CONTINGENCIES (Details)								1 Months Ended	6 Months Ended	12 Months Ended		16 Months Ended	18 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Sep. 11, 2020	Oct. 02, 2019	Sep. 11, 2019 item	Nov. 30, 2018 patent	Feb. 22, 2018 patent	Mar. 24, 2015 patent	Feb. 11, 2015 patent	Oct. 31, 2019 case	Jun. 30, 2020 patent	Dec. 31, 2020 state patent case lawsuit	Dec. 31, 2018 patent	Sep. 30, 2017 patent	Apr. 30, 2017 patent lawsuit
Commitments and Contingencies
Period that gives the Company a 30-month stay of FDA approval while the parties have an opportunity to litigate					45 days
Additional patent listed									4
Xtampza ER
Commitments and Contingencies
Number of total patent										19
Xtampza ER Litigation
Commitments and Contingencies
Number of patents listed in FDA Orange Book							11
Stay period before FDA can issue a final approval unless it is terminated							30 months
Number of patents allegedly infringed							5					2	2
Number of lawsuits filed \| lawsuit													2
PTAB duration for issuing decision		1 year
Statutory Period of Proceedings	18 months
Xtampza ER Litigation \| Maximum
Commitments and Contingencies
PTAB extended duration for issuing decision		6 months
Xtampza ER Litigation, District of Delaware
Commitments and Contingencies
Stay period before FDA can issue a final approval unless it is terminated						30 months
Number of patents allegedly infringed						3
Xtampza ER Litigation, District of Massachusetts
Commitments and Contingencies
Stay period before FDA can issue a final approval unless it is terminated						30 months
Number of patents found not infringed						3
Teva Litigation
Commitments and Contingencies
Number of patents listed in FDA Orange Book					12					19
Number of Orange Book patents asserted to have been infringed				2
Stay period before FDA can issue a final approval unless it is terminated					30 months
Number of patents found not infringed					11
Number of terms or sets of terms addressed \| item			2
Number of terms or sets of terms in dispute \| item			6
Additional patent listed											2
Opioid Litigation
Commitments and Contingencies
Number of lawsuits filed \| lawsuit										6
Number of lawsuits designated as representative cases \| lawsuit										0
Number of lawsuits designated as Track One case \| lawsuit										0
Multi-District Litigation (MDL)
Commitments and Contingencies
Number of states filed cases \| state										3
Total number of cases brought primarily by states, cities, counties, and other local entities \| case										2,000
Number of lawsuits filed								2		21
Number of lawsuits currently stayed \| case										8
Number of lawsuits settled \| lawsuit										13
Number of lawsuits dismissed \| lawsuit										3

DEBT - Pharmakon (Details) - Pharmakon Term Notes - USD ($) $ in Thousands		12 Months Ended
	Feb. 06, 2020	Dec. 31, 2020
Debt
Aggregate principal amount	$ 200,000
Margin rate	7.50%
Debt maturity	48 months
Facility fee (as a percent)	2.50%
Facility fee amount	$ 5,000
Debt issuance costs	427
Net proceeds	194,573
Issuance cost capitalized	2,456
Threshold amount of single voluntary prepayment from equity proceeds	50,000
Threshold annual net sales to be maintained	$ 200,000
Interest expense		$ 19,034
Principal repayments
2021		50,000
2022		50,000
2023		50,000
2024		12,500
Total before unamortized discount and issuance costs		162,500
Less: unamortized discount and issuance costs		(4,986)
Total term notes		$ 157,514
Prepayment prior to the second-year anniversary
Debt
Prepayment premium percentage	3.00%
Prepayment on or after the second-year anniversary, but on or prior to the third-year anniversary
Debt
Prepayment premium percentage	2.00%
Prepayment on or after the third-year anniversary
Debt
Prepayment premium percentage	1.00%
Single voluntary prepayment of threshold amount prior to the second-year anniversary
Debt
Prepayment premium percentage	5.00%
LIBOR
Debt
Floor rate	2.00%

DEBT - Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Feb. 13, 2020 USD ($) D $ / shares	Dec. 31, 2020 USD ($) D
Debt
Equity component of transaction costs for 2020 Convertible Notes		$ 1,773
Conversion of convertible debt after the calendar quarter ending on march 31, 2020
Debt
Amortization period of debt discount	6 years
Convertible senior notes
Debt
Interest rate (as a percent)	2.625%
Aggregate principal amount	$ 143,750
Total debt issuance cost	5,473
Equity component of transaction costs for 2020 Convertible Notes		$ 1,773
Debt discount	$ 3,700
Amortization period of debt discount	6 years
Initial conversion rate	34.2618
Conversion, threshold percentage of stock price trigger \| $ / shares	$ 29.19
Consecutive business days \| D	5
Measurement period \| D	10
Threshold percentage to product of sale price of common stock and conversion rate	98.00%
Redemption, threshold percentage of stock price trigger	130.00%
Redemption, threshold trading days \| D	20
Redemption, threshold consecutive trading days \| D	30
Default period	30 days
Threshold amount of money borrowed	$ 20,000
Initial carrying amount of the liability component	97,200
Carrying amount of the equity component	$ 46,550
Convertible senior notes \| Conversion of convertible debt after the calendar quarter ending on march 31, 2020
Debt
Conversion, threshold percentage of stock price trigger		130.00%
Conversion, threshold trading days \| D		20
Conversion, threshold consecutive trading days \| D		30

STOCK BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended			12 Months Ended
	Jun. 04, 2018	Dec. 31, 2020	Feb. 29, 2020	Jan. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Stock-based compensation
Proceeds from issuances of common stock from employee stock purchase plans					$ 758	$ 817	$ 1,117
Share-based Compensation					$ 21,910	$ 16,528	$ 13,778
Weighted-average grant date fair value per share of grants (in dollars per share)					$ 12.78	$ 9.07	$ 14.51
Total intrinsic value of stock options exercised					$ 7,516	$ 1,506	$ 3,970
Performance share units
Stock-based compensation
Unrecognized compensation cost related to outstanding options		$ 3,555			$ 3,555
Period over which unrecognized compensation cost is expected to be recognized as expense					1 year 7 months 6 days
Vesting period (in years)				3 years
Period of cumulative revenue goals		3 years		3 years
Period of average stock price			30 days
Cumulative performance period		2 years	3 years
Weighted-average grant date fair value of shares granted			$ 28.81
Share-based Compensation		$ 906					$ 0
Total expense					$ 950	$ 136
Performance share units \| Minimum
Stock-based compensation
Vesting percentage			0.00%	0.00%
Performance share units \| Maximum
Stock-based compensation
Vesting percentage			200.00%	200.00%
Restricted stock units
Stock-based compensation
Period over which unrecognized compensation cost is expected to be recognized as expense					2 years 7 months 6 days
Weighted-average grant date fair value of shares granted					$ 21.35	$ 15.48	$ 23.41
Total fair value of shares vested					$ 6,992	$ 2,683	$ 1,782
Number of shares affected by modification	116,250
Unrecognized stock-based compensation expense		16,816			16,816
Fair value of restricted stock units vested					5,989
Stock options
Stock-based compensation
Unrecognized compensation cost related to outstanding options		$ 14,170			$ 14,170
Period over which unrecognized compensation cost is expected to be recognized as expense					2 years 4 months 24 days
Number of shares affected by modification	225,625
Employee stock purchase plan
Stock-based compensation
Employee Stock Purchase Plan, Purchase Price Percentage					85.00%
Issuance for employee stock purchase plan, shares					67,512
Proceeds from issuances of common stock from employee stock purchase plans					$ 758
Shares of common stock authorized for issuance (in shares)		1,315,844			1,315,844
Total purchased proceeds					$ 342	$ 358	$ 493

STOCK BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Stock option activity
Outstanding	3,955,887
Granted	717,304
Exercised	(637,924)
Cancelled	(174,786)
Outstanding	3,860,481	3,955,887
Exercisable at end of period	2,373,097
Weighted average exercise price per share
Outstanding	$ 16.00
Granted	21.30
Exercised	10.44
Cancelled	18.82
Outstanding	17.78	$ 16.00
Exercisable at end of period	$ 17.00
Stock option activity, additional information
Outstanding Weighted-Average Remaining Contractual Term	7 years 2 months 12 days	7 years 6 months
Outstanding Aggregate Intrinsic Value	$ 13,011	$ 21,257
Exercisable at end of period, Weighted-Average Remaining Contractual Term	6 years 4 months 24 days
Exercisable at end of period, Aggregate Intrinsic Value	$ 9,770

INCOME TAXES - Other (Details) - USD ($) $ in Thousands	12 Months Ended
INCOME TAXES - Other (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
U.S. and state net operating loss carryforwards	$ 57,457	$ 66,553
Research and development credits	5,004	3,768
Operating lease liabilities	2,508	2,630
Accruals and other	15,306	14,286
Intangible assets	1,297
Depreciation		92
Total deferred tax assets	81,572	87,329
Valuation allowance	(65,661)	(77,285)
Deferred tax assets after valuation allowance	15,911	10,044
Deferred tax liabilities:
Debt discount	(10,809)
Operating lease assets	(2,217)	(2,357)
Intangible assets		(7,687)
Depreciation	(2,885)
Stock-based compensation expense	7,133	5,796
Accrual rebates, returns, and discounts	6,281	$ 7,204
Valuation allowance
Deferred tax asset valuation allowance decrease	$ 11,624
Net operating loss carryforwards
Federal corporate tax rate (as a percent)	21.00%	21.00%	21.00%
Unrecognized tax benefit associated with IRS examination				$ 902
Net rate effected unrecognized tax benefit				235
Decrease to net operating loss carryforward			$ 36
Reconciliation of gross unrecognized tax benefits - Federal, State and Foreign Tax
Gross UTB Balance at beginning of period	$ 578	$ 502	1,364
Additions based on tax positions related to the current year	36	76	64
Reductions for tax positions of prior years	(28)		(24)
Settlements			(902)
Gross UTB Balance at end of period	586	578	502	$ 1,364
Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation)	560	549	481
U.S. federal
Net operating loss carryforwards
Operating loss carryforwards	226,824	292,342	324,533
Research and development tax credit carryforwards	4,623	4,044	3,628
State
Net operating loss carryforwards
Operating loss carryforwards	170,280	222,629	285,181
Research and development tax credit carryforwards	$ 1,150	$ 1,112	$ 885

UNAUDITED QUARTERLY OPERATING RESULTS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
UNAUDITED QUARTERLY OPERATING RESULTS
Product revenues, net	$ 76,271	$ 79,176	$ 78,058	$ 76,511	$ 74,203	$ 72,942	$ 75,040	$ 74,516	$ 310,016	$ 296,701	$ 280,413
Cost of product revenues (excluding intangible asset amortization)	15,184	14,188	12,899	27,229	45,400	43,066	44,966	45,476	69,500	178,908	55,843
Amortization expense	16,795	16,795	16,795	10,295	3,688	3,688	3,688	3,688	60,680	14,752	109,834
Total cost of products revenues	31,979	30,983	29,694	37,524	49,088	46,754	48,654	49,164	130,180	193,660	165,677
Gross profit	44,292	48,193	48,364	38,987	25,115	26,188	26,386	25,352	179,836	103,041	114,736
Research and development	2,472	2,141	2,493	2,666	2,398	2,491	2,459	2,992	9,772	10,340	8,661
Selling, general and administrative	26,824	26,426	29,322	31,260	25,090	30,072	28,935	32,352	113,832	116,449	126,760
Total operating expenses	29,296	28,567	31,815	33,926	27,488	32,563	31,394	35,344	123,604	126,789	135,421
Income (loss) from operations	14,996	19,626	16,549	5,061	(2,373)	(6,375)	(5,008)	(9,992)	56,232	(23,748)	(20,685)
Interest expense	(7,737)	(8,063)	(8,259)	(4,823)	(211)	(228)	(236)	(234)	(28,882)	(909)	(20,130)
Interest income	3	3	14	212	383	494	532	526	232	1,935	1,687
Income (loss) before income taxes	7,262	11,566	8,304	450					27,582	(22,722)	(39,128)
Provision for income taxes	304	280	246						830
Net income (loss)	$ 6,958	$ 11,286	$ 8,058	$ 450	$ (2,201)	$ (6,109)	$ (4,712)	$ (9,700)	$ 26,752	$ (22,722)	$ (39,128)
Earnings (loss) per share - basic (in dollars per share)	$ 0.20	$ 0.33	$ 0.23	$ 0.01					$ 0.78	$ (0.68)	$ (1.19)
Weighted-average shares - basic (in shares)	34,592,277	34,540,126	34,395,266	34,100,688					34,407,959	33,453,844	32,953,808
Earnings (loss) per share - diluted (in dollars per share)	$ 0.20	$ 0.32	$ 0.23	$ 0.01					$ 0.76	$ (0.68)	$ (1.19)
Weighted-average shares - diluted (in shares)	35,417,623	35,069,188	35,091,906	35,069,693					35,151,353	33,453,844	32,953,808
Weighted-average shares - basic and diluted (in shares)					33,600,566	33,481,923	33,397,709	33,331,917
Loss per share - basic and diluted					$ (0.07)	$ (0.18)	$ (0.14)	$ (0.29)

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized shares	5,000,000	5,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	100,000,000
Common stock, issued shares	34,612,054	33,678,840
Common stock, outstanding shares	34,612,054	33,678,840

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2018
Debt Instrument [Line Items]
Issuance costs of common stock from public offerings		$ 30
Term Loan
Debt Instrument [Line Items]
Issuance costs	$ 2,456
Convertible senior notes
Debt Instrument [Line Items]
Issuance costs	$ 5,473

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) Institution customer	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Number of reputable and nationally recognized financial institution \| Institution	1
Financial instruments with off balance sheet risk of loss, liabilities	$ 0
Carrying amount of cash equivalents	45,069,000	$ 94,841,000
Restricted cash	2,547,000	0
Inventory	15,614,000	9,643,000
Accrued interest or penalties related to uncertain tax positions	0	0
Accrued interest or penalties recognized related to uncertain tax positions	0	0
Selling, general and administrative expenses
Advertising and product promotion costs	$ 5,368,000	$ 9,527,000	$ 17,497,000
Accounts Receivable \| Customer Concentration Risk
Number of customers	3
Accounts Receivable \| Customer Concentration Risk \| Customer One
Concentration Risk, Percentage	46.00%
Accounts Receivable \| Customer Concentration Risk \| Customer Two
Concentration Risk, Percentage	34.00%
Accounts Receivable \| Customer Concentration Risk \| Customer Three
Concentration Risk, Percentage	17.00%
Revenue \| Customer Concentration Risk
Number of customers \| customer	3
Revenue \| Customer Concentration Risk \| Customer One
Concentration Risk, Percentage	34.00%
Revenue \| Customer Concentration Risk \| Customer Two
Concentration Risk, Percentage	31.00%
Revenue \| Customer Concentration Risk \| Customer Three
Concentration Risk, Percentage	31.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Measurements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Transfer of Assets From Level 1 to Level 2	$ 0	$ 0
Transfer of Assets From Level 2 to Level 1	0	0
Transfer of Liabilities From Level 1 to Level 2	0	0
Transfer of Liabilities From Level 2 to Level 1	0	0
Transfer of Assets Into Level 3	0	0
Transfer of Assets Out of Level 3	0	0
Transfer of Liabilities Into Level 3	0	0
Transfer of Liabilities Out of Level 3	0	0
Convertible senior notes, fair value	139,643
Convertible senior notes, net carrying value	99,575
Money market funds \| Recurring
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash equivalents	45,069	94,841
Money market funds \| Quoted Prices in active markets (Level 1) \| Recurring
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash equivalents	$ 45,069	$ 94,841

INVENTORY (Details) - USD ($) $ in Thousands	12 Months Ended
INVENTORY (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
INVENTORY
Raw materials	$ 3,514	$ 795
Work in process	1,096	1,427
Finished goods	11,004	7,421
Total inventory	15,614	$ 9,643
Inventory used in the construction and installation of property and equipment	$ 2,299

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Equity component of 2020 Convertible Notes, issuance costs	$ 1,773

NATURE OF BUSINESS (Details) - USD ($) $ in Thousands	Feb. 13, 2020	Feb. 06, 2020	Dec. 31, 2020	Dec. 31, 2019
Accumulated deficit			$ 333,147	$ 359,899
Assertio \| Nucynta Purchase Agreement \| Nucynta Products
Aggregate purchase price		$ 375,000
Grnenthal \| Nucynta Products
Royalty payment as percentage of annual net sales	14.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment Useful Lives (Details)	12 Months Ended
	Dec. 31, 2020
Computers and office equipment \| Minimum
Property and Equipment
Estimated Useful Life	3 years
Computers and office equipment \| Maximum
Property and Equipment
Estimated Useful Life	5 years
Laboratory equipment
Property and Equipment
Estimated Useful Life	5 years
Furniture and fixtures
Property and Equipment
Estimated Useful Life	7 years
Manufacturing Equipment \| Minimum
Property and Equipment
Estimated Useful Life	5 years
Manufacturing Equipment \| Maximum
Property and Equipment
Estimated Useful Life	13 years

REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details)	12 Months Ended
	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Practical expedient incremental cost	true
Minimum
Disaggregation of Revenue [Line Items]
Term of payment received	30 days
Maximum
Disaggregation of Revenue [Line Items]
Term of payment received	90 days

REVENUE FROM CONTRACTS WITH CUSTOMERS - Transaction Price and Variable Consideration (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Rebates and Incentives
Allowance categories
Balance at beginning of the period	$ 129,901	$ 129,318
Provision related to current period sales	326,280	263,315
Changes in estimate related to prior period sales	(539)	(2,865)
Credits/payments made	(322,867)	(259,867)
Balance at end of the period	132,775	129,901
Product Returns
Allowance categories
Balance at beginning of the period	27,648	15,465
Provision related to current period sales	10,900	14,991
Credits/payments made	(14,769)	(2,808)
Balance at end of the period	23,779	27,648
Trade Allowances and Chargebacks
Allowance categories
Balance at beginning of the period	14,020	14,841
Provision related to current period sales	75,554	65,155
Changes in estimate related to prior period sales	(403)
Credits/payments made	(70,116)	(65,679)
Balance at end of the period	$ 19,055	$ 14,020

PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid regulatory fees	$ 3,280	$ 1,222
Prepaid insurance	656	414
Prepaid development costs	392	474
Other prepaid expenses	450	854
Other current assets	60	141
Prepaid expenses and other current assets	$ 4,838	$ 3,105

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	12 Months Ended
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Property and Equipment
Total property and equipment	$ 22,044	$ 14,142
Less: accumulated deprecation	(3,056)	(2,288)
Property and equipment, net	18,988	11,854
Depreciation expense	870	731	$ 1,074
Disposal of fully depreciated assets	102	280	$ 905
Computers and office equipment
Property and Equipment
Total property and equipment	1,429	1,453
Laboratory equipment
Property and Equipment
Total property and equipment	1,299	1,220
Furniture and fixtures
Property and Equipment
Total property and equipment	1,073	1,066
Manufacturing Equipment
Property and Equipment
Total property and equipment	14,119	987
Leasehold improvements
Property and Equipment
Total property and equipment	541	541
Construction-in-process
Property and Equipment
Total property and equipment	$ 3,583	$ 8,875

INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Jan. 31, 2020	Dec. 31, 2019
INTANGIBLE ASSETS
Gross carrying amount	$ 521,170		$ 154,089
Accumulated amortization	(185,266)	$ (126,340)	(124,586)
Intangible assets, net	$ 335,904		$ 29,503

INTANGIBLE ASSETS - Nucynta Acquisitions (Details) - Nucynta Purchase Agreement - Nucynta Products - USD ($) $ in Thousands		1 Months Ended
	Feb. 06, 2020	Feb. 29, 2020
Acquisition consideration:
Base purchase price		$ 375,000
Cash paid for inventory		6,030
Transaction costs		6,297
Reduction for 2020 cash transferred to Assertio under the prior Nucynta Commercialization Agreement(1)		(13,071)
Reduction for accrued royalty obligation discharged upon closing(1)		(1,145)
Total acquisition consideration		373,111
Assertio
Finite-Lived Intangible Assets [Line Items]
Aggregate purchase price	$ 375,000
Acquisition consideration:
Base purchase price		375,000
Reduction for 2020 cash transferred to Assertio under the prior Nucynta Commercialization Agreement(1)		(13,071)
Reduction for accrued royalty obligation discharged upon closing(1)		(1,145)
Reduction to base purchase price		14,216
Consideration transferred to assets acquired:
Nucynta Intangible Asset		367,081
Inventory		6,030
Total consideration allocated to assets acquired		$ 373,111

INTANGIBLE ASSETS - Nucynta Commercialization Agreement - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	10 Months Ended	12 Months Ended	48 Months Ended
	Feb. 13, 2020	Jan. 31, 2018	Nov. 07, 2018	Dec. 31, 2018	Dec. 31, 2021	Dec. 31, 2020	Nov. 30, 2018	Nov. 08, 2018
Grnenthal \| Nucynta Products
Finite-Lived Intangible Assets [Line Items]
Royalty payment as percentage of annual net sales	14.00%
Nucynta Commercialization Agreement \| Assertio \| Nucynta Products
Finite-Lived Intangible Assets [Line Items]
Annual minimum royalty payments		$ 537,000
2018		132,000
2019		135,000
2020		135,000
2021		135,000
Fair Value of future minimum royalty payments		$ 482,300
Discounted rate		0.057%
Interest expense			$ 19,281		$ 54,700
Amortization expense			$ 107,662
Minimum royalty paid				$ 132,000
Third Amendment to the Nucynta Commercialization Agreement \| Assertio
Finite-Lived Intangible Assets [Line Items]
Number of shares that can be purchased							1,041,667
Exercise price of warrant (in dollars per share)							$ 19.20
Third Amendment to the Nucynta Commercialization Agreement \| Assertio \| Nucynta Products
Finite-Lived Intangible Assets [Line Items]
Number of shares that can be purchased								1,041,667
Exercise price of warrant (in dollars per share)								$ 19.20
Fair value of warrant						$ 8,043

INTANGIBLE ASSETS - Nucynta Commercialization Agreement - Table (Details) - USD ($) $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended								9 Months Ended	11 Months Ended	12 Months Ended
	Feb. 05, 2020	Jan. 31, 2020	Dec. 31, 2018	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Nov. 07, 2018	Dec. 31, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Feb. 29, 2020	Nov. 08, 2018	Jan. 31, 2018
Gross carrying amount				$ 521,170				$ 154,089					$ 521,170	$ 521,170	$ 154,089
Amortization expense				(16,795)	$ (16,795)	$ (16,795)	$ (10,295)	(3,688)	$ (3,688)	$ (3,688)	$ (3,688)			(60,680)	(14,752)	$ (109,834)
Accumulated amortization		$ (126,340)		(185,266)				(124,586)					(185,266)	(185,266)	(124,586)
Intangible assets, net				335,904				29,503					335,904	335,904	29,503
Nucynta Commercialization Agreement \| Nucynta Products
Gross carrying amount			$ 154,089	521,170				154,089					521,170	521,170	154,089	154,089			$ 515,627
Amortization expense	$ (1,754)	$ (1,754)	(2,172)									$ (107,662)	(58,926)		(14,752)
Accumulated amortization			(109,834)	(185,266)				(124,586)					(185,266)	(185,266)	(124,586)	(109,834)
Adjustment due to remeasurement of liability																		$ (369,581)
Additional costs incurred																	$ 367,081	$ 8,043
Intangible assets, net			$ 44,255	$ 335,904				$ 29,503					$ 335,904	$ 335,904	$ 29,503	$ 44,255

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
ACCRUED EXPENSES
Accrued royalties	$ 12,954	$ 21,893
Accrued bonuses	4,571	4,047
Accrued product taxes and fees	1,817
Accrued incentive compensation	1,417	1,650
Accrued interest	1,415	473
Accrued payroll and related benefits	892	1,154
Accrued audit and legal	445	308
Accrued sales and marketing	261	775
Accrued other operating costs	884	3,180
Total accrued expenses	$ 24,656	$ 33,480

DEBT - Silicon Valley (Details) - Silicon Valley Bank Term Loan Facility $ in Thousands	1 Months Ended
	Jan. 31, 2020 USD ($)
Loan and Security Agreements
Line of credit	$ 11,500
Prime
Loan and Security Agreements
Margin rate	0.75%

DEBT - Outstanding (Details) $ in Thousands	12 Months Ended
DEBT - Outstanding (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Debt
Net carrying amount	$ 99,575
Equity component of transaction costs for 2020 Convertible Notes	1,773
Convertible senior notes
Debt
Principal	143,750
Less: unamortized debt discount and issuance costs	(44,175)
Net carrying amount	99,575
Equity component, net of issuance costs of $1,773	44,777
Equity component of transaction costs for 2020 Convertible Notes	$ 1,773
Debt term	6 years
Effective interest rate	10.27%

LEASES (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
LEASES
Operating lease assets	$ 8,391	$ 9,047
Operating lease liabilities	$ 9,495

LEASES - Operating Lease Arrangements (Details) $ in Thousands	1 Months Ended
	Mar. 31, 2018 USD ($) ft² item $ / ft²	Jan. 31, 2016 ft²	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019 ft²	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease liabilities \| $			$ 9,495
CMO
Lessee, Lease, Description [Line Items]
Square of feet of space \| ft²		3,267
Term of lease extension option		2 years
Advance written notice termination period		2 years
Vehicle leases
Lessee, Lease, Description [Line Items]
Lease term						12 months
Stoughton, Massachusetts
Lessee, Lease, Description [Line Items]
Square of feet of space \| ft²	50,678
Rent-free term	4 months
Lease term	10 years
Number of renewal periods \| item	2
Term of lease extension option	5 years
Base rent \| $	$ 1,214
Annual base rent per rentable square foot \| $ / ft²	23.95
Canton, Massachusetts
Lessee, Lease, Description [Line Items]
Square of feet of space \| ft²					9,660
Operating lease liabilities \| $				$ 0
Maximum \| Stoughton, Massachusetts
Lessee, Lease, Description [Line Items]
Increase in annual base rent	3.10%
Minimum \| Stoughton, Massachusetts
Lessee, Lease, Description [Line Items]
Increase in annual base rent	2.50%

LEASES - Components of Lease Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Lease Cost
Operating lease cost	$ 1,305	$ 1,446
Short-term lease cost	1,312	752
Variable lease cost	331	283
Total lease cost	$ 2,948	$ 2,481

LEASES - Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Future minimum lease payments
2021	$ 1,287
2022	1,325
2023	1,363
2024	1,401
2025	1,439
After 2025	5,537
Total minimum lease payments	12,352
Less: Present value discount	2,857
Present value of lease liabilities	$ 9,495

EQUITY (Details) - 2014 Stock Incentive Plan - shares	12 Months Ended
EQUITY (Details) - 2014 Stock Incentive Plan - shares	Dec. 31, 2020	May 31, 2015
Equity
Shares of common stock authorized for issuance (in shares)		2,700,000
Increase in number of authorized shares on the first day of each fiscal year, as a percentage of outstanding common stock (as a percent)	4.00%
Shares of common stock remaining available for future grant (in shares)	928,261
Vesting period (in years)	4 years
Contractual life (in years)	10 years
Minimum
Equity
Period following termination date vested options are exercisable (in months)	1 month
Maximum
Equity
Period following termination date vested options are exercisable (in months)	3 months

EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands	12 Months Ended
EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
EMPLOYEE BENEFITS
Total expense for contributions made	$ 1,260	$ 1,170	$ 1,208