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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2018	Jul. 31, 2018
Document and Entity Information
Entity Registrant Name	COLLEGIUM PHARMACEUTICAL, INC
Entity Central Index Key	0001267565
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,221,704
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 133,747	$ 118,697
Accounts receivable	68,380	9,969
Inventory	8,544	1,813
Prepaid expenses and other current assets	5,622	3,005
Total current assets	216,293	133,484
Property and equipment, net	3,203	1,826
Intangible assets, net	453,694
Restricted cash		97
Other long-term assets	139	161
Total assets	673,329	135,568
Current liabilities
Accounts payable	18,692	5,684
Accrued expenses	23,395	8,541
Accrued rebates, returns and discounts	107,790	15,784
Current portion of asset acquisition obligations	114,825
Current portion of term loan payable		1,479
Total current liabilities	264,702	31,488
Asset acquisition obligations, long-term	314,446
Term loan payable, long-term	11,500
Total liabilities	590,648	31,488
Commitments and contingencies (see Note 12)
Shareholders' equity:
Preferred stock, $0.001 par value; authorized shares - 5,000,000 at June 30, 2018 and December 31, 2017; issued and outstanding shares - none at June 30, 2018 and December 31, 2017
Common stock, $0.001 par value; authorized shares - 100,000,000 at June 30, 2018 and December 31, 2017; issued and outstanding shares - 33,179,860 at June 30, 2018 and 32,770,678 at December 31, 2017	33	33
Additional paid-in capital	412,409	402,096
Accumulated deficit	(329,761)	(298,049)
Total shareholders' equity	82,681	104,080
Total liabilities and shareholders' equity	$ 673,329	$ 135,568

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
CONDENSED 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	33,179,860	32,770,678
Common stock, outstanding shares	33,179,860	32,770,678

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues
Product revenues, net	$ 73,061	$ 3,560	$ 136,810	$ 5,732
Costs and expenses
Cost of product revenues	46,838	577	89,944	948
Research and development	2,237	2,179	4,505	4,309
Selling, general and administrative	31,279	22,062	62,861	44,909
Total costs and expenses	80,354	24,818	157,310	50,166
Loss from operations	(7,293)	(21,258)	(20,500)	(44,434)
Interest expense	(6,158)		(11,858)
Interest income	391	137	646	235
Net loss	$ (13,060)	$ (21,121)	$ (31,712)	$ (44,199)
Loss per share - basic and diluted	$ (0.40)	$ (0.72)	$ (0.96)	$ (1.50)
Weighted-average shares - basic and diluted	32,967,718	29,441,514	32,935,873	29,396,143

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (31,712)	$ (44,199)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and other amortization expense	578	332
Nucynta amortization expense	61,933	177
Lease incentive obligation		(17)
Stock-based compensation expense	6,254	3,767
Non-cash interest expense	11,471
Changes in operating assets and liabilities:
Accounts receivable	(58,411)	(2,748)
Inventories	(508)	(204)
Prepaid expenses and other assets	(608)	(1,083)
Accounts payable	13,008	(3,494)
Accrued expenses	13,917	1,074
Accrued rebates, returns and discounts	69,346
Deferred revenue		5,417
Net cash provided by (used in) operating activities	85,268	(41,155)
Investing activities
Cash paid for asset acquisition	(18,877)
Purchases of property and equipment	(987)	(478)
Net cash used in investing activities	(19,864)	(478)
Financing activities
Cash paid for common stock offerings costs	(30)	(87)
Proceeds from issuances of common stock from employee stock purchase plans	510	673
Proceeds from term loan amendment, net of repayment of amended term loan	10,020
Repayment of asset acquisition obligations	(64,500)
Repayment of term note		(1,333)
Proceeds from the exercise of stock options	3,905	415
Payments made for employee restricted stock tax withholdings	(356)	(51)
Net cash used in financing activities	(50,451)	(383)
Net increase (decrease) in cash, cash equivalents and restricted cash	14,953	(42,016)
Cash, cash equivalents and restricted cash at beginning of period	118,794	153,322
Cash, and cash equivalents and restricted cash at end of period	133,747	111,306
Supplemental disclosure of cash flow information
Cash paid for offering costs	30	87
Cash paid for interest	242	88
Supplemental disclosure of non-cash activities
Offering costs in accrued expenses	25	25
Acquisition of property and equipment in accrued expenses	1,184	$ 304
Liabilities assumed from asset acquisition in accrued rebates, returns and discounts	$ 22,660

Nature of Business	6 Months Ended
Nature of Business	Jun. 30, 2018
Nature of Business
Nature of Business	1. Nature of Business Collegium Pharmaceutical, Inc. (the “Company”) was incorporated in Delaware in April 2002 and then reincorporated in Virginia in July 2014. The Company has its principal operations in Canton, Massachusetts. The Company is a specialty pharmaceutical company focused on becoming the leader in responsible pain management by developing and commercializing innovative, differentiated products for people suffering from pain and our communities. The Company’s first product, Xtampza ER®, or Xtampza, is an abuse-deterrent, extended-release, oral formulation of oxycodone, a widely prescribed opioid medication. In April 2016, the U.S. Food and Drug Administration (“FDA”) approved the Company’s new drug application (“NDA”) filing for Xtampza for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. In June 2016, the Company announced the commercial launch of Xtampza. In December 2017, the Company and its wholly owned subsidiary, Collegium NF, LLC (“Collegium NF”) entered into a Commercialization Agreement with Depomed, Inc. (“Depomed”), pursuant to which Depomed agreed to grant a sublicense of certain of its intellectual property related to Nucynta ER and IR products (the “Nucynta Products”) to the Company for commercialization of the Nucynta Products in the United States. On January 9, 2018, the parties amended the Commercialization Agreement (as amended, the “Commercialization Agreement”) and consummated the transactions contemplated thereby. Nucynta ER is an extended release formulation of tapentadol that is indicated for the management of pain severe enough to require daily, around the clock, long term opioid treatment, including neuropathic pain associated with diabetic peripheral neuropathy in adults, and for which alternate treatment options are inadequate. Nucynta IR is an immediate release formulation of tapentadol that is indicated for the management of moderate to severe acute pain in adults. The Company began shipping and recognizing product sales on the Nucynta Products on January 9, 2018 and began commercial promotion of the Nucynta Products in February 2018. The assets and liabilities assumed by the Company in connection with the Commercialization Agreement are further described in Note 7. The Company’s operations are subject to certain risks and uncertainties. The principal risks include inability to successfully commercialize products, changing market conditions for products and product candidates (including development of competing products), changing regulatory environment and reimbursement landscape, litigation related to opioid marketing and distribution practices, inability or delay in completing clinical trials or obtaining regulatory approvals, inability to secure adequate supplies of active pharmaceutical ingredients for each of our products and product candidates, key personnel retention and protection of intellectual property, patent infringement litigation and the availability of additional capital financing on terms acceptable to the Company. The Company has experienced net losses and negative cash flows from operating activities since its inception, and, as of June 30, 2018 had an accumulated deficit of $329,761. The Company expects to continue to incur net losses in the near future. A successful transition to profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. The Company believes that its cash and cash equivalents at June 30, 2018 together with expected cash inflows from the commercialization of its products, will enable the Company to fund its operating expenses, debt service and capital expenditure requirements under its current business plan for the foreseeable future.

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2018
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Collegium Pharmaceutical, Inc. (a Virginia corporation) as well as the accounts of Collegium Securities Corp. (a Massachusetts corporation), incorporated in December 2015, and Collegium NF, LLC (a Delaware limited liability company), organized in December 2017, both wholly owned subsidiaries requiring consolidation. The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to fairly present the financial position of the Company as of June 30, 2018, the results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to revenue recognition, including the estimates of product returns, units prescribed, discounts and allowances related to commercial sales of its products, estimates utilized in the valuation of inventory, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, intangible assets, and tax valuation reserves. 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. The consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Annual Report”). Significant Accounting Policies The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report. There have been no material changes in the Company’s significant accounting policies, other than the adoption of accounting pronouncements below, as compared to the significant accounting policies described in the Annual Report. Controlled Equity Offering Sales Agreement In March 2017, the Company entered into a Controlled Equity Offering Sales Agreement (the “ATM Sales Agreement”), with Cantor Fitzgerald & Co., as sales agent (“Cantor Fitzgerald”), pursuant to which the Company may issue and sell, from time to time, through Cantor Fitzgerald, shares of the Company’s common stock, up to an aggregate offering price of $60,000 (the “ATM Shares”). Under the ATM Sales Agreement, Cantor Fitzgerald may sell the ATM Shares by methods deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on The NASDAQ Global Select Market, on any other existing trading market for the ATM Shares or to or through a market maker. In addition, under the ATM Sales Agreement, Cantor Fitzgerald may sell the ATM Shares by any other method permitted by law, including in privately negotiated transactions. The Company is not obligated to make any sales of the ATM Shares under the ATM Sales Agreement. The Company or Cantor Fitzgerald may suspend or terminate the offering of ATM Shares upon notice to the other party and subject to other conditions. The Company will pay Cantor Fitzgerald a commission of up to 3.0% of the gross proceeds from the sale of the ATM Shares pursuant to the ATM Sales Agreement and has agreed to provide Cantor Fitzgerald with customary indemnification and contribution rights. As of June 30, 2018, the Company had sold an aggregate of 3,126,998 shares at an average gross sales price of $11.36 per share generating net proceeds of $34,283, after deduction of underwriting discounts and commissions and expenses payable by the Company. All shares sold pursuant to the ATM Sales agreement were sold during the year ended December 31, 2017. The Company did not sell any shares pursuant to the ATM sales agreement during the six months ended June 30, 2018. Advertising and Product Promotion Costs Advertising and product promotion costs are included in selling, general and administrative expenses and were $5,720 and $2,567 in the three months ended June 30, 2018 and 2017, respectively. Advertising and product promotion costs were $8,282 and $6,427 in the six months ended June 30, 2018 and 2017, respectively. Advertising and product promotion costs are expensed as incurred. Restricted Cash Restricted cash represents cash held in a depository account at a financial institution to collateralize a conditional stand‑by letter of credit related to the Company’s facility lease agreements. The Company no longer has restricted cash as of June 30, 2018. Leases In March 2018, the Company entered into a lease for its new corporate headquarters (the “Lease”) pursuant to which the Company will lease approximately 50,678 of rentable square feet of space, in Stoughton, Massachusetts. The Lease will commence when the tenant improvements in the space are substantially complete and will continue thereafter for a term of ten years. The Company has the right to extend the term of the Lease for two additional five-year terms, provided that written notice is provided to the Landlord no later than twelve months prior to the expiration of the current Lease term. The initial 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 Lease years. The Lease term will commence upon possession of the new space. The Company expects to take possession of the new space in the third quarter of 2018. Income Taxes For the three and six months ended June 30, 2018 and 2017, 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. As of June 30, 2018, the Company has recorded a full valuation allowance for deferred tax assets including net operating loss (“NOL”) and tax credit carryovers. The Tax Cuts and Jobs Act of 2017 (“TCJA” or “2017 Tax Act”), which was signed into law in December 2017, resulted in significant changes to the U.S. corporate income tax system. The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which allows companies the ability to record provisional amounts during a measurement period not to extend more than one year beyond the Tax Act enactment date. The Company reasonably estimated the effects of the 2017 Tax Act by remeasuring its federal net deferred tax asset as of December 31, 2017. For additional information related to the TCJA and its impact on the Company, please read Note 13, Income Taxes, in the Company’s Annual Report. Since the Company has recorded a full valuation allowance, this provisional estimate resulted in no impact to the financial statements. As the Company completes its analysis of the 2017 Tax Act, collects and prepares necessary data, and interprets any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, it may be required to make adjustments to the original provisional estimate, however the Company has not made any material changes to its provisional estimates during the three and six months ended June 30, 2018. The Company plans to finalize its review and conclusion of the impact of TCJA before year end in accordance with SAB 118 and adjust its provisional estimates as may be required by the TCJA. 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. In May 2014, the FASB issued Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and creates a new Topic 606, Revenue from Contracts with Customers. In 2015, 2016 and 2017, the FASB issued additional ASUs related to Topic 606, including ASUs 2015-14, 2016-08, 2016-10, 2016-12, 2016-20, 2017-13, 2017-14, that delayed the effective date of and clarified various aspects of the new guidance, including principal versus agent considerations, identifying performance obligations, and licensing. The Company adopted ASC Topic 606, Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. The adoption of ASU 2014-09 did not have an impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the three or six months ended June 30, 2018. Refer to Note 3 "Revenue from Contracts with Customers" for the required disclosures and a discussion of the Company's policies related to revenue recognition. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, and in November 2016, the FASB issued ASU 2016-18, Restricted Cash. The purpose of ASU 2016-15 is to reduce the diversity in presentation and classification of the following items within the Statement of Cash Flows: debt prepayments, settlement of zero coupon debt instruments, contingent consideration payments, insurance proceeds, securitization transactions and distributions from equity method investees. The update also addresses classification of transactions that have characteristics of more than one class of cash flows. ASU 2016-18 requires the Statement of Cash Flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. The Company adopted these new standards on January 1, 2018 using the retrospective transition method as required with respect to each period presented. The adoption of these standards did not have an impact on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 most significantly impacts lessee accounting and disclosures. First, this guidance requires lessees to identify arrangements that should be accounted for as leases. Under ASU 2016-02, for lease arrangements exceeding a 12-month term, a right-of-use asset and lease obligation is recorded by the lessee for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. Leases with a term of 12 months or less will be accounted for in a manner similar to existing guidance for operating leases. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities. The Company has not chosen early adoption for this ASU and is currently evaluating its effect on the Company’s consolidated financial statements. Based on its preliminary assessment, the Company expects to recognize a right-to-use asset and corresponding lease liability on its balance sheet related to the lease agreement for its corporate headquarters upon adoption of this ASU.

Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2018

Revenue from Contracts with Customers

Revenue from Contract with Customer

3. Revenue from Contracts with Customers

The Company’s only source of revenue to date has been generated by sales of the Company’s products, which are primarily sold to distributors and retailers (“customers”), which in turn sell the product to pharmacies for the treatment of patients (“end users”).

Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 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 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 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.

Adoption of ASC Topic 606, Revenue from Contracts with Customers

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. Under this method, prior periods were not retrospectively adjusted and, as a result, the reported results for 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of ASC Topic 605, Revenue Recognition (“legacy GAAP”).

Immediately prior to the adoption date of January 1, 2018, the Company recognized revenue in accordance with legacy GAAP, or when there was persuasive evidence of an arrangement; when title and risk of loss had passed to the customer; when estimated provisions for chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns were reasonably determinable; and when collectability was reasonably assured. The satisfaction of these criteria generally occurred upon delivery of products to customers, or the sell-in method of revenue recognition under legacy GAAP. The Company began recognizing revenue on the sell-in method in the third quarter of 2017. Prior to the third quarter of 2017, the Company recognized revenue when products were dispensed to end users, or the sell-through method of revenue recognition under legacy GAAP, as the Company did not have sufficient experience with product sales to estimate returns at the time product was sold to customers.

As a result of the considerations discussed above, the Company concluded that, as of the adoption date, it would record revenue net of a provision for estimated chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns upon delivery of products to customers under either the sell-in method of revenue recognition under legacy GAAP or under Topic 606 as of the adoption date. Therefore, the adoption of Topic 606 did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of January 1, 2018, however, periods presented prior to the third quarter of 2017, when the Company recognized revenue on the sell-through method under legacy GAAP, would be impacted. For the three and six months ended June 30, 2017, the Company determined that, under Topic 606, the only significant changes to the reported results for the three and six months ended June 30, 2017 under Topic 606 would be higher product sales of $1,229 and $2,449, respectively, due to the acceleration of revenue recognition for product sales in which recognition was previously deferred due to the fees not being fixed or determinable under the sell-through method under legacy GAAP.

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, which represents the Company’s only contract asset. Payment is typically received 30 to 60 days after satisfaction of the Company’s performance obligations and generally does not have an effect on contract asset and contract liability balances. Under the practical expedients permitted by the rules of the adoption, the Company will expense 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 chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns. The Company will estimate the amount of variable consideration that should be included in the transaction price under the expected value method. These estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. These provisions reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. 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 table summarizes activity in each of the Company’s product revenue provision and allowance categories for the six months ended June 30, 2018:


	Rebates and		Product		Trade Allowances and
	Incentives (1)		Returns (2)		Chargebacks (3)
Balance at December 31, 2017	$	12,647	$	3,137	$	2,256
Provision related to current period sales		117,462		8,374		33,682
Changes in estimate related to prior period sales		(32)		—		—
Credits/payments made		(53,165)		(3,039)		(13,054)
Balance at June 30, 2018	$	76,912	$	8,472	$	22,884


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


	(3)		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 Condensed Consolidated Balance Sheets.

In addition to the above, the Company also recorded a liability of $22,660 related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018 which the Company is liable for under the terms of the Commercialization Agreement. This assumed liability, representing $22,406 of assumed rebates and incentives and $254 of assumed trade allowances and chargebacks, was recorded as a component of the intangible asset acquired as of the closing date of January 9, 2018.

As of June 30, 2018, 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

Product revenues, net consisted of the following:


	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Xtampza	$	18,116	$	3,560	$	33,911	$	5,732
Nucynta		54,945		—		102,899		—
Total product revenues, net	$	73,061	$	3,560	$	136,810	$	5,732

Loss per Common Share

6 Months Ended

Jun. 30, 2018

Loss per Common Share

Loss per Common Share

4. Loss per Common Share

The following table presents the computations of basic and dilutive net loss per share:


	Three months ended June 30,				Six months ended June 30,
	June 30,				June 30,
		2018		2017		2018		2017
Loss attributable to common shareholders — basic and diluted	$	(13,060)	$	(21,121)	$	(31,712)	$	(44,199)
Weighted-average number of common shares used in net loss per share - basic and diluted		32,967,718		29,441,514		32,935,873		29,396,143
Loss per share - basic and diluted	$	(0.40)	$	(0.72)	$	(0.96)	$	(1.50)

The following potentially dilutive securities, which represent all outstanding potentially dilutive securities, were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect (in common stock equivalent shares):


	Three months ended June 30,		Six months ended June 30,
	2018	2017	2018	2017
Outstanding stock options	3,665,459	3,124,039	3,665,459	3,124,039
Warrants	—	2,445	—	2,445
Unvested restricted stock (1)	12,072	57,228	12,072	57,228
Restricted stock units	522,190	223,194	522,190	223,194

(1) - Includes shares of unvested restricted stock remaining from the early exercise of stock options.

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2018

Fair Value of Financial Instruments

Fair Value of Financial Instruments

5. Fair Value of Financial Instruments

Disclosures of fair value information about financial instruments are required, whether recognized in the Balance Sheet or not, 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

The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at June 30, 2018 and December 31, 2017.


						Significant
				Quoted Prices		other		Significant
				in active		observable		unobservable
				markets		inputs		inputs
June 30, 2018		Total		(Level 1)		(Level 2)		(Level 3)
Money market funds, included in cash equivalents	$	121,877	$	121,877	$	—	$	—

December 31, 2017
Money market funds, included in cash equivalents	$	81,225	$	81,225	$	—	$	—

The Company’s cash equivalents are comprised of money market funds that are measured on a recurring basis based on quoted market prices. As of June 30, 2018 and December 31, 2017, the carrying amounts of cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, intangible assets, accounts payable, accrued expenses, accrued rebates, returns and discounts, asset acquisition obligations and term loan payable approximated their estimated fair values.

In connection with the Commercialization Agreement for the Nucynta Products, the Company recorded a liability of $482,300 representing the fair value of the future minimum royalty payments owed under the terms of the Commercialization Agreement. The fair value of the minimum royalty payments was measured by calculating the present value of the minimum royalty payments using a discount rate of 5.7%. The discount rate is a Level 2 input which was based on a review of observable market data of similar liabilities. The liability associated with the future minimum royalty payments is included as a component of the intangible asset acquired and as a component of the obligations assumed in connection with the Commercialization Agreement, which is further described in Note 7.

- Definition

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

+ References + Details

Inventory

6 Months Ended

Jun. 30, 2018

Inventory

Inventory

6. Inventory

Inventory consisted of the following:


	As of June 30,		As of December 31,
	2018		2017
Raw materials	$	350	$	616
Work in process		709		322
Finished goods		7,485		875
Total inventory	$	8,544	$	1,813

The aggregate charges related to excess inventory for the three and six months ended June 30, 2018 were immaterial. During the three and six months ended June 30, 2017, the aggregate charges related to excess inventory were $257 and $350, respectively. These expenses were recorded as a component of cost of product revenues.

Intangible Assets and Asset Acquisition Obligations

6 Months Ended

Jun. 30, 2018

Intangible Assets and Asset Acquisition Obligations

Intangible Assets and Asset Acquisition Obligations

7. Intangible Assets and Asset Acquisition Obligations

As of June 30, 2018, the Company’s only intangible asset related to the Company’s Commercialization Agreement with Depomed, pursuant to which Depomed agreed to grant a sublicense of certain of its intellectual property related to the Nucynta Products to the Company for commercialization of the Nucynta Products in the United States (the “Nucynta Intangible Asset”). The Company closed the transactions contemplated by the Commercialization Agreement, as amended, on January 9, 2018, and began marketing the Nucynta Products in February 2018.

Nucynta Intangible Asset

The Company determined that the Commercialization Agreement represented an asset acquisition, as substantially all of the fair value of the gross assets acquired is concentrated in the sublicense of the Nucynta Products, which is a single identifiable asset or group. The consideration transferred in the asset acquisition was measured at cost, including transaction costs, assets transferred by the acquirer, and liabilities assumed by the acquirer.

The transaction resulted in the Company receiving the assets and assuming the liabilities noted below, which were recognized at cost as a component of intangible assets in the Condensed Consolidated Balance Sheets upon acquisition:


Cash paid for asset acquisition	$	18,877

Identifiable assets acquired and liabilities assumed:
Intangible assets	$	515,627
Inventory		6,223
Prepaid expenses		1,987
Minimum royalty payments		(482,300)
Other liabilities		(22,660)
Total	$	18,877

The Company will amortize 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 determined that the useful life for the intangible asset is approximately 4.0 years from the closing date of January 9, 2018. The Company will recognize amortization expense as cost of product revenues in the Statement of Operations on a straight-line basis over its useful life as it approximates cash flows. For the three and six months ended June 30, 2018, the Company recognized amortization expense of $32,407 and $61,933, respectively. As of June 30, 2018, the remaining amortization period is approximately 3.5 years and estimated amortization for the remainder of 2018, 2019, 2020, and 2021 is expected to be $64,813, $129,627, $129,627, and $129,627, respectively.

As of June 30, 2018, the gross carrying amount and accumulated amortization of the Nucynta Intangible Asset were as follows:


	As of June 30,
	2018
Gross carrying amount	$	515,627
Accumulated amortization		(61,933)
Intangible assets, net	$	453,694

Nucynta Asset Acquisition Obligations

From January 9, 2018 through December 2021, under the terms of the Commercialization Agreement, the Company will be required to pay a minimum royalty of $135,000 per year, payable in quarterly payments of $33,750, prorated in 2018 for the closing date of January 9, 2018. The total required minimum royalty payment from the closing date of January 9, 2018 through December 2021 is $537,000. Payments are swept to Depomed daily based on proceeds received for Nucynta Product sales, and minimum payments are paid in full within 45 days of the quarter end.

Due to the nature of the obligation and fact that it will be settled in cash, the Company determined that the minimum royalty payments represented a liability incurred at the closing of the transaction and that the liability should be recorded at its fair value as of the closing date on the Condensed Consolidated Balance Sheet. The Company calculated the fair value of the minimum royalty payments to be $482,300, which was the calculated present value of the minimum royalty payments using a discount rate of 5.7%. The discount rate was determined based on a review of observable market data of similar liabilities. The Company will recognize the $54,700 discount as interest expense in the Statement of Operations using the effective interest method and will recognize the interest over the repayment period from January 9, 2018 through December 2021.

For the three and six months ended June 30, 2018, the Company recognized interest expense of $5,943 and $11,471, respectively, relating to the minimum royalty payments. As of June 30, 2018, the remaining interest expense relating to the minimum royalty payments for the remainder of 2018, 2019, 2020, and 2021 is expected to be $10,912, $17,138, $10,907, and $4,272, respectively.

For the three and six months ended June 30, 2018, the Company paid Depomed minimum royalty payments of $51,455 and $64,500, respectively.

As of June 30, 2018, the remaining minimum royalty payments due under the Commercialization Agreement are as follows:


2018	$	67,500
2019		135,000
2020		135,000
2021		135,000
Total remaining minimum royalty payments due	$	472,500
Less: Unamortized discount		(43,229)
Carrying value of minimum royalty payments	$	429,271

Onsolis Intangible Asset

In May 2016, the Company entered into an agreement with BioDelivery Sciences International, Inc. (“BDSI”) to license the rights to develop, manufacture, and commercialize Onsolis® (fentanyl buccal soluble film), (“Onsolis”), in the United States. Onsolis is a Transmucosal Immediate-Release Fentanyl (“TIRF”) film indicated for the management of breakthrough pain in certain cancer patients.

During the year ended December 31, 2016, the Company made an upfront payment of $2,500 and recorded the payment as a component of intangible assets (the “Onsolis Intangible Asset”). On December 8, 2017, the Company, after a review of its product portfolio, provided written notice to BDSI of termination of the License and Development Agreement. The termination was effective pursuant to the terms of such agreement on March 8, 2018. Upon such termination of the License Agreement, the Company’s rights to develop and commercialize Onsolis reverted to BDSI. As a result of this notice of termination, the Company determined that the carrying amount of the intangible asset was not recoverable and that the carrying amount exceeded its fair value. As such, an impairment loss of $1,845 was recognized and included as a component of sales, general and administrative expense during the year ended December 31, 2017 and the net intangible asset is zero as of June 30, 2018 and December 31, 2017.

Amortization Expense

Amortization expense relating to the Company’s intangible assets for the three and six months ended June 30, 2018 and 2017 was as follows:


	Three months ended June 30,				Six months ended June 30,
		2018		2017		2018		2017
Nucynta amortization expense included in cost of product revenues	$	32,407	$	—	$	61,933	$	—
Onsolis amortization expense included in selling, general and administrative expense		—		47		—		177
Total amortization expense	$	32,407		47	$	61,933		177

Accrued Expenses

6 Months Ended

Jun. 30, 2018

Accrued Expenses

Accrued Expenses

8. Accrued Expenses

Accrued expenses consisted of the following:


	As of June 30,		As of December 31,
	2018		2017
Accrued cost of product revenues	$	14,540	$	—
Accrued bonuses		1,828		2,940
Accrued incentive compensation		1,643		1,790
Accrued other operating costs		1,433		877
Accrued payroll and related benefits		1,401		1,382
Accrued inventory		1,385		—
Accrued audit and legal		551		405
Accrued sales and marketing		259		624
Accrued development costs		202		517
Accrued interest		153		6
Total accrued expenses	$	23,395	$	8,541

Term Loan Payable

6 Months Ended

Jun. 30, 2018

Term Loan Payable

Term Loan Payable

9. Term Loan Payable

On August 28, 2012, the Company entered into a loan agreement (“Original Term Loan”) with Silicon Valley Bank (“SVB”) to borrow up to a maximum amount of $1,000. The Original Term Loan bore interest at a rate per annum of 2.25% above the prime rate fixed at the time of advance of the Original Term Loan (5.50%). The Original Term Loan was subsequently amended in 2014 and 2015 to provide for additional borrowings of up to $8,000, adjust the interest rate, extend the loan draw period, and modify loan covenants (as amended, the “Existing Term Loan”). As of December 31, 2017, the future payments under the Existing Term Loan were $1,479.

In connection with, and as a condition to, consummation of the transactions contemplated by the Commercialization Agreement with Depomed, the Company entered into a Consent and Amendment to Loan and Security Agreement (the “Consent and Amendment”) with SVB to amend the Existing Term Loan. The Consent and Amendment provided the Company with a new term loan facility in an original principal amount of $11,500 (the “New Term Loan”), which replaced the Existing Term Loan and the proceeds of which were used by the Company to finance certain payment obligations under the Commercialization Agreement and to repay the balance of the Existing Term Loan. The Consent and Amendment also provided SVB’s consent with respect to transactions contemplated by the Commercialization Agreement, including the delivery by SVB of a standby letter of credit in an aggregate amount of $33,750.

The New Term Loan bears interest at a rate per annum of 0.75% above the prime rate (as defined in the Consent and Amendment). The Company will repay the New Term Loan in equal consecutive monthly installments of principal plus monthly payments of accrued interest, commencing in July 2019, provided that, if the Company achieves EBITDA (as defined in the Consent and Amendment) in excess of $2,500 for two (2) consecutive calendar quarters prior to June 2019, such payments will commence in January 2020. All outstanding principal and accrued and unpaid interest under the New Term Loan, and all other outstanding obligations with respect to the New Term Loan, are due and payable in full in December 2022. The Company may prepay the New Term Loan, in full but not in part, with a prepayment fee of (i) 3.0% of the outstanding principal balance prior to the first anniversary of the Consent and Amendment, (ii) 2.0% of the outstanding principal balance following the first anniversary of the Consent and Amendment and prior to the second anniversary of the Consent and Amendment and (iii) 1.0% of the outstanding principal balance following the second anniversary of the Consent and Amendment, plus, in each case, a final payment fee of $719. The Company is required to refinance the New Term Loan on August 31, 2018.

Under the New Term Loan, the Company will be required to maintain a liquidity ratio of at least 2.0 to 1.0. Any amounts outstanding during the continuance of any event of default under the New Term Loan will bear additional interest at the per annum rate of 5.0%.

As of June 30, 2018, scheduled principle repayments under the Company’s term loan are as follows:


2018	$	—
2019		1,642
2020		3,286
2021		3,286
2022		3,286
Balance	$	11,500

Equity

6 Months Ended

Jun. 30, 2018

Equity

Equity

10. Equity

The changes in shareholders’ equity for the six months ended June 30, 2018 were as follows:


				Additional				Total
	Common Stock			Paid- In		Accumulated		Shareholders’
	Shares		Amount	Capital		Deficit		Equity (Deficit)
Balance, December 31, 2017	32,770,678	$	33	$	402,096	$	(298,049)	$	104,080
Exercise of common stock options	321,406		—		3,905		—		3,905
Issuance for employee stock purchase plan	50,151		—		510		—		510
Vesting of restricted stock units	53,640		—		—		—		—
Shares withheld for employee taxes upon vesting of restricted stock units	(16,015)		—		(356)		—		(356)
Stock-based compensation	—		—		6,254		—		6,254
Net loss	—		—		—		(31,712)		(31,712)
Balance, June 30, 2018	33,179,860	$	33	$	412,409	$	(329,761)	$	82,681

Stock-based Compensation

6 Months Ended

Jun. 30, 2018

Stock-based Compensation

Stock-based Compensation

11. Stock-based Compensation

A summary of the Company’s stock-based compensation expense included in the Condensed Consolidated Statements of Operations are as follows:


	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Research and development expenses	$	380	$	242	$	703	$	451
Selling, general and administrative expenses		3,146		1,704		5,551		3,316
Total stock-based compensation expense	$	3,526	$	1,946	$	6,254	$	3,767

At June 30, 2018, there was approximately $34,073 of unrecognized compensation expense related to unvested options, restricted stock units and restricted stock awards, which is expected to be recognized as expense over a weighted average period of approximately 2.6 years.

Restricted Stock Awards, Restricted Stock Units and Stock Options

In May 2015, the Company adopted the Amended and Restated 2014 Stock Incentive Plan (the “Plan”), under which an aggregate of 2,700,000 shares of common stock were authorized for issuance to employees, officers, directors, consultants and advisors of the Company, plus an annual increase on the first day of each fiscal year until the expiration of the Plan equal to 4% of the total number of outstanding shares of common stock on December 31st of the immediately preceding calendar year (or a lower amount as otherwise determined by the board of directors prior to January 1st). As of June 30, 2018, there were 1,139,189 shares of common stock available for issuance pursuant to the Plan. The Plan provides for granting of both Internal Revenue Service qualified incentive stock options and non-qualified options, restricted stock awards and restricted stock units. The Company’s equity awards generally vest ratably over a four year period of service. The stock options generally have a ten year contractual life and, upon termination, vested options are generally exercisable between one and three months following the termination date, while unvested options are forfeited immediately.

In June 2018, the Company’s board of directors approved a modification to the former President and Chief Executive Officer’s equity-based awards 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. This modification did not create incremental value as the fair value of these awards was unchanged. The shorter requisite service period will result in the accelerated recognition of stock-based compensation expense through 2020.

A summary of the Company’s restricted stock award activity for the six months ended June 30, 2018 and related information is as follows:


		Weighted-Average
		Purchase Price
	Shares (1)	per Share
Unvested at December 31, 2017	10,816	$	5.73
Granted	—		—
Vested	(10,816)		5.73
Unvested at June 30, 2018	—	$	—

(1)Excludes activity from the early exercise of stock options. As of June 30, 2018, 12,072 shares of unvested restricted stock remain outstanding from the early exercise of stock options.

A summary of the Company’s restricted stock units activity for the six months ended June 30, 2018 and related information is as follows:


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2017	218,872	$	12.64
Granted	360,858		23.62
Vested	(53,640)		12.57
Forfeited	(3,900)		21.00
Outstanding at June 30, 2018	522,190	$	20.17

A summary of the Company’s stock option activity and related information follows:


				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise Price	Contractual		Intrinsic
	Shares		per Share	Term (in years)		Value
Outstanding at December 31, 2017	3,037,690	$	13.00	8.4	$	16,829
Granted	1,045,662		24.17
Exercised	(321,406)		12.15
Cancelled	(96,487)		16.22
Outstanding at June 30, 2018	3,665,459	$	16.17	8.4	$	29,126
Exercisable at June 30, 2018	1,312,351	$	12.73	7.5	$	14,588
Vested and expected to vest at June 30, 2018	3,408,606	$	15.83	8.3	$	28,146

The fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model using the following assumptions:


	Six months ended June 30,
	2018		2017
Risk-free interest rate	2.6	%	2.0	%
Volatility	65	%	71	%
Expected term (years)	6.11		6.02
Expected dividend yield	—	%	—	%

Employee Stock Purchase Plan

The Company’s 2015 Employee Stock Purchase Plan allows employees to purchase shares of the Company’s common stock. The purchase price is equal to 85% of the lower of the closing price of our common stock on (1) the first day of the purchase period or (2) the last day of the purchase period. During the six months ended June 30, 2018, 50,151 shares of common stock were purchased for total proceeds of $510. The expense for the three months ended June 30, 2018 and 2017 was $120 and $108, respectively. The expense for the six months ended June 30, 2018 and 2017 was $242 and $214, respectively.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2018
Commitments and Contingencies
Commitments and Contingencies	12. Commitments and Contingencies 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 Litigation The Company filed the NDA for Xtampza as a 505(b)(2) application, which allows the Company to reference data from an approved drug listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the Orange Book), in this case OxyContin OP. The 505(b)(2) process requires that the Company certifies to the FDA and notify Purdue Pharma, L.P (“Purdue”), as the holder of the NDA and any other Orange Book-listed patent owners, that the Company does not infringe any of the patents listed for OxyContin OP in the Orange Book, or that the patents are invalid. The Company made such certification and provided such notice on February 11, 2015 and such certification documented why Xtampza does not infringe any of the 11 Orange Book listed patents for OxyContin OP, five of which have been invalidated in court proceedings. Under the Hatch-Waxman 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. Purdue exercised its option and elected to sue 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. In November 2015, Purdue filed a follow-on suit asserting infringement of another patent, Patent No. 9,073,933. In June 2016, Purdue filed another follow-on suit asserting infringement of another non-Orange Book listed patent, Patent No. 9,155,717. In April 2017, Purdue filed another follow-on suit asserting infringement of another patent, Patent No. 9,522,919, which was late-listed in the Orange Book and therefore could not trigger any stay of FDA approval. Then, in September 2017, Purdue filed another follow-on suit asserting infringement of another non-Orange Book listed patent, 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. Purdue filed its Patent Owner Preliminary Response on July 10, 2018. The PTAB will make its institution decision on or before October 10, 2018. 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 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 current suits have been consolidated by the District of Massachusetts, where Purdue continues to assert infringement of five patents: the ʼ497 patent, the ʼ933 patent, the ʼ717 patent, the ʼ919 patent, and the ʼ961 patent. None of these suits are associated with any stay of FDA approval for Xtampza. Purdue has made a demand for monetary relief but has not quantified their 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 seeks a judgment that the patents are invalid and/or not infringed by the Company; the Company is also seeking a judgment that the case is exceptional, with an award to the Company of its fees for defending the case. The parties are in the early stages of fact discovery. Written discovery has commenced with depositions expected to commence during the second half of 2018. A claim construction and summary judgment 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. At this time, the Motion for Summary Judgment, which asserted that claims of the ’933, ’497, and ’717 patents are invalid and not infringed, remains pending. The Company is not able to predict with certainty when the Court will decide the Company’s motion. The Scheduling Order has been amended to stay the close of fact discovery until after the Court decides our Motion for Summary Judgment. No trial date has been scheduled. The Company is, and plans to continue, defending 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 Collegium NF and 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. The Company filed its answer to the Complaint on April 9, 2018. Purdue filed its answer to the Company’s counterclaims on April 30, 2018. The Court adopted the parties’ proposed scheduling order on June 6, 2018. Fact and expert discovery will close on October 9, 2019 and March 18, 2020, respectively. The Court scheduled trial for September 28, 2020. 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 The Company has fourteen 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 (the “Orange Book Patents”). Teva Pharmaceuticals USA, Inc. (“Teva”) filed a Notice Letter of Patent Certification against twelve of the fourteen listed Orange Book Patents (the ’598 and ’729 patents were listed among the Orange Book Patents after receipt of Teva’s Notice Letter), alleging that they were invalid and/or not infringed by the proposed oxycodone products that are the subject of Teva’s Abbreviated New Drug Application (“ANDA”). On February 22, 2018—within the 45-day period that gives the Company a 30-month stay on 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 Orange Book Patents. Teva responded to the Company’s complaint on May 14, 2018, alleging that the Orange Book Patents are invalid and are not infringed by Teva’s proposed ANDA products and asserting counterclaims of non-infringement and invalidity of the Orange Book Patents. The Company answered Teva’s counterclaims on June 4, 2018. The parties have proposed a schedule and the court will hold a case management conference on July 23, 2018. According to the proposed schedule, fact discovery will close on July 30, 2019 and expert discovery will close on January 31, 2020. Opioid Litigation On March 19, 2018, a lawsuit was filed by multiple local governments in the Circuit Court of Crittenden County, Arkansas, against the Company and other pharmaceutical manufacturers and distributors. The action alleges a variety of claims related to opioid marketing and distribution practices, including false advertising, deceptive trade practices, public nuisance, unjust enrichment, violations of state narcotics statutes and civil conspiracy. The suit seeks monetary penalties. The Company was served with the lawsuit on April 30, 2018. On March 21, 2018, the Company and other pharmaceutical manufacturers and distributors were named in a class-action lawsuit filed in the Eastern District of Kentucky by a family practice clinic, on behalf of other similarly-situated healthcare providers. The action alleges violations of the Racketeer Influenced and Corrupt Organizations Act relating to opioid marketing and distribution practices. On April 2, 2018, the lawsuit was conditionally transferred by the Judicial Panel on Multi-District Litigation to the federal Prescription Opiate Multi District Litigation (the “MDL”) in the Southern District of Ohio. On April 10, 2018, the conditional transfer was finalized and the lawsuit was docketed in the MDL on April 11, 2018. On May 4, 2018, the Company and other pharmaceutical manufacturers and distributors were named in two lawsuits filed in the MDL by the Fiscal Court of Bourbon County, Kentucky and the Fiscal Court of Owen County, Kentucky, relating to opioid marketing and distribution practices. On June 11 and 12, 2018, the Company was named in four lawsuits filed in the MDL by a health system and various member hospitals. The lawsuits allege violations of the RICO Act, fraud, public nuisance, negligence, and violations of state consumer protections laws. The lawsuits all seek, generally, penalties and/or injunctive relief. The MDL lawsuits in which the Company has been named are not designated representative cases in the MDL and, therefore, are effectively currently stayed. On May 29, 2018, a lawsuit was filed by Bucks County, Pennsylvania against the Company and other pharmaceutical manufacturers. On June 12, 2018, a lawsuit was filed by Clinton County, Pennsylvania, against the Company and other pharmaceutical manufacturers and distributors. Both lawsuits allege claims related to opioid marketing and distribution, including negligence, fraud, unjust enrichment, public nuisance, and violations of state consumer protections laws. The Company has not been served with either lawsuit. 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, and Massachusetts. The Company is currently cooperating with the each of the foregoing states in their respective investigations

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2018
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Collegium Pharmaceutical, Inc. (a Virginia corporation) as well as the accounts of Collegium Securities Corp. (a Massachusetts corporation), incorporated in December 2015, and Collegium NF, LLC (a Delaware limited liability company), organized in December 2017, both wholly owned subsidiaries requiring consolidation. The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to fairly present the financial position of the Company as of June 30, 2018, the results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to revenue recognition, including the estimates of product returns, units prescribed, discounts and allowances related to commercial sales of its products, estimates utilized in the valuation of inventory, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, intangible assets, and tax valuation reserves. 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. The consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Annual Report”).
Advertising and Product Promotion Costs	Advertising and Product Promotion Costs Advertising and product promotion costs are included in selling, general and administrative expenses and were $5,720 and $2,567 in the three months ended June 30, 2018 and 2017, respectively. Advertising and product promotion costs were $8,282 and $6,427 in the six months ended June 30, 2018 and 2017, respectively. Advertising and product promotion costs are expensed as incurred.
Restricted Cash	Restricted Cash Restricted cash represents cash held in a depository account at a financial institution to collateralize a conditional stand‑by letter of credit related to the Company’s facility lease agreements. The Company no longer has restricted cash as of June 30, 2018.
Leases	Leases In March 2018, the Company entered into a lease for its new corporate headquarters (the “Lease”) pursuant to which the Company will lease approximately 50,678 of rentable square feet of space, in Stoughton, Massachusetts. The Lease will commence when the tenant improvements in the space are substantially complete and will continue thereafter for a term of ten years. The Company has the right to extend the term of the Lease for two additional five-year terms, provided that written notice is provided to the Landlord no later than twelve months prior to the expiration of the current Lease term. The initial 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 Lease years. The Lease term will commence upon possession of the new space. The Company expects to take possession of the new space in the third quarter of 2018.
Income Taxes	Income Taxes For the three and six months ended June 30, 2018 and 2017, 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. As of June 30, 2018, the Company has recorded a full valuation allowance for deferred tax assets including net operating loss (“NOL”) and tax credit carryovers. The Tax Cuts and Jobs Act of 2017 (“TCJA” or “2017 Tax Act”), which was signed into law in December 2017, resulted in significant changes to the U.S. corporate income tax system. The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which allows companies the ability to record provisional amounts during a measurement period not to extend more than one year beyond the Tax Act enactment date. The Company reasonably estimated the effects of the 2017 Tax Act by remeasuring its federal net deferred tax asset as of December 31, 2017. For additional information related to the TCJA and its impact on the Company, please read Note 13, Income Taxes, in the Company’s Annual Report. Since the Company has recorded a full valuation allowance, this provisional estimate resulted in no impact to the financial statements. As the Company completes its analysis of the 2017 Tax Act, collects and prepares necessary data, and interprets any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, it may be required to make adjustments to the original provisional estimate, however the Company has not made any material changes to its provisional estimates during the three and six months ended June 30, 2018. The Company plans to finalize its review and conclusion of the impact of TCJA before year end in accordance with SAB 118 and adjust its provisional estimates as may be required by the TCJA.
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. In May 2014, the FASB issued Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and creates a new Topic 606, Revenue from Contracts with Customers. In 2015, 2016 and 2017, the FASB issued additional ASUs related to Topic 606, including ASUs 2015-14, 2016-08, 2016-10, 2016-12, 2016-20, 2017-13, 2017-14, that delayed the effective date of and clarified various aspects of the new guidance, including principal versus agent considerations, identifying performance obligations, and licensing. The Company adopted ASC Topic 606, Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. The adoption of ASU 2014-09 did not have an impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the three or six months ended June 30, 2018. Refer to Note 3 "Revenue from Contracts with Customers" for the required disclosures and a discussion of the Company's policies related to revenue recognition. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, and in November 2016, the FASB issued ASU 2016-18, Restricted Cash. The purpose of ASU 2016-15 is to reduce the diversity in presentation and classification of the following items within the Statement of Cash Flows: debt prepayments, settlement of zero coupon debt instruments, contingent consideration payments, insurance proceeds, securitization transactions and distributions from equity method investees. The update also addresses classification of transactions that have characteristics of more than one class of cash flows. ASU 2016-18 requires the Statement of Cash Flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. The Company adopted these new standards on January 1, 2018 using the retrospective transition method as required with respect to each period presented. The adoption of these standards did not have an impact on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 most significantly impacts lessee accounting and disclosures. First, this guidance requires lessees to identify arrangements that should be accounted for as leases. Under ASU 2016-02, for lease arrangements exceeding a 12-month term, a right-of-use asset and lease obligation is recorded by the lessee for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. Leases with a term of 12 months or less will be accounted for in a manner similar to existing guidance for operating leases. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities. The Company has not chosen early adoption for this ASU and is currently evaluating its effect on the Company’s consolidated financial statements. Based on its preliminary assessment, the Company expects to recognize a right-to-use asset and corresponding lease liability on its balance sheet related to the lease agreement for its corporate headquarters upon adoption of this ASU.

- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

+ References + Details

Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contracts with Customers

Summary of product revenue provision and allowance


	Rebates and		Product		Trade Allowances and
	Incentives (1)		Returns (2)		Chargebacks (3)
Balance at December 31, 2017	$	12,647	$	3,137	$	2,256
Provision related to current period sales		117,462		8,374		33,682
Changes in estimate related to prior period sales		(32)		—		—
Credits/payments made		(53,165)		(3,039)		(13,054)
Balance at June 30, 2018	$	76,912	$	8,472	$	22,884


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


	(3)		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 Condensed Consolidated Balance Sheets.

Schedule of disaggregation of revenue


	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Xtampza	$	18,116	$	3,560	$	33,911	$	5,732
Nucynta		54,945		—		102,899		—
Total product revenues, net	$	73,061	$	3,560	$	136,810	$	5,732

Loss per Common Share (Tables)

6 Months Ended

Jun. 30, 2018

Loss per Common Share

Schedule of computations of basic and diluted net loss per share


	Three months ended June 30,				Six months ended June 30,
	June 30,				June 30,
		2018		2017		2018		2017
Loss attributable to common shareholders — basic and diluted	$	(13,060)	$	(21,121)	$	(31,712)	$	(44,199)
Weighted-average number of common shares used in net loss per share - basic and diluted		32,967,718		29,441,514		32,935,873		29,396,143
Loss per share - basic and diluted	$	(0.40)	$	(0.72)	$	(0.96)	$	(1.50)

Schedule of potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding


	Three months ended June 30,		Six months ended June 30,
	2018	2017	2018	2017
Outstanding stock options	3,665,459	3,124,039	3,665,459	3,124,039
Warrants	—	2,445	—	2,445
Unvested restricted stock (1)	12,072	57,228	12,072	57,228
Restricted stock units	522,190	223,194	522,190	223,194

(1) - Includes shares of unvested restricted stock remaining from the early exercise of stock options.

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value of Financial Instruments

Schedule of financial instruments measured at fair value by level within fair value hierarchy


						Significant
				Quoted Prices		other		Significant
				in active		observable		unobservable
				markets		inputs		inputs
June 30, 2018		Total		(Level 1)		(Level 2)		(Level 3)
Money market funds, included in cash equivalents	$	121,877	$	121,877	$	—	$	—

December 31, 2017
Money market funds, included in cash equivalents	$	81,225	$	81,225	$	—	$	—

Inventory (Tables)

6 Months Ended

Jun. 30, 2018

Inventory

Schedule of Inventory


	As of June 30,		As of December 31,
	2018		2017
Raw materials	$	350	$	616
Work in process		709		322
Finished goods		7,485		875
Total inventory	$	8,544	$	1,813

Intangible Assets and Asset Acquisition Obligations (Tables)

6 Months Ended

Jun. 30, 2018

Intangible Assets and Asset Acquisition Obligations

Schedule of recognized assets and assuming liabilities


Cash paid for asset acquisition	$	18,877

Identifiable assets acquired and liabilities assumed:
Intangible assets	$	515,627
Inventory		6,223
Prepaid expenses		1,987
Minimum royalty payments		(482,300)
Other liabilities		(22,660)
Total	$	18,877

Carrying amount of Nucynta intangible


	As of June 30,
	2018
Gross carrying amount	$	515,627
Accumulated amortization		(61,933)
Intangible assets, net	$	453,694

Schedule of remaining minimum royalty payments


2018	$	67,500
2019		135,000
2020		135,000
2021		135,000
Total remaining minimum royalty payments due	$	472,500
Less: Unamortized discount		(43,229)
Carrying value of minimum royalty payments	$	429,271

Summary of amortization expense


	Three months ended June 30,				Six months ended June 30,
		2018		2017		2018		2017
Nucynta amortization expense included in cost of product revenues	$	32,407	$	—	$	61,933	$	—
Onsolis amortization expense included in selling, general and administrative expense		—		47		—		177
Total amortization expense	$	32,407		47	$	61,933		177

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2018

Accrued Expenses

Schedule of components of accrued expenses


	As of June 30,		As of December 31,
	2018		2017
Accrued cost of product revenues	$	14,540	$	—
Accrued bonuses		1,828		2,940
Accrued incentive compensation		1,643		1,790
Accrued other operating costs		1,433		877
Accrued payroll and related benefits		1,401		1,382
Accrued inventory		1,385		—
Accrued audit and legal		551		405
Accrued sales and marketing		259		624
Accrued development costs		202		517
Accrued interest		153		6
Total accrued expenses	$	23,395	$	8,541

Term Loan Payable (Tables)

6 Months Ended

Jun. 30, 2018

Term Loan Payable

Schedule of future payments under debt agreements


2018	$	—
2019		1,642
2020		3,286
2021		3,286
2022		3,286
Balance	$	11,500

Equity (Tables)

6 Months Ended

Jun. 30, 2018

Equity

Summary of Changes in Shareholders' Equity


				Additional				Total
	Common Stock			Paid- In		Accumulated		Shareholders’
	Shares		Amount	Capital		Deficit		Equity (Deficit)
Balance, December 31, 2017	32,770,678	$	33	$	402,096	$	(298,049)	$	104,080
Exercise of common stock options	321,406		—		3,905		—		3,905
Issuance for employee stock purchase plan	50,151		—		510		—		510
Vesting of restricted stock units	53,640		—		—		—		—
Shares withheld for employee taxes upon vesting of restricted stock units	(16,015)		—		(356)		—		(356)
Stock-based compensation	—		—		6,254		—		6,254
Net loss	—		—		—		(31,712)		(31,712)
Balance, June 30, 2018	33,179,860	$	33	$	412,409	$	(329,761)	$	82,681

Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Stock-based Compensation

Summary of stock-based compensation included in statement of operations


	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Research and development expenses	$	380	$	242	$	703	$	451
Selling, general and administrative expenses		3,146		1,704		5,551		3,316
Total stock-based compensation expense	$	3,526	$	1,946	$	6,254	$	3,767

Summary of restricted stock awards activity

		Weighted-Average
		Purchase Price
	Shares (1)	per Share
Unvested at December 31, 2017	10,816	$	5.73
Granted	—		—
Vested	(10,816)		5.73
Unvested at June 30, 2018	—	$	—

(1)Excludes activity from the early exercise of stock options. As of June 30, 2018, 12,072 shares of unvested restricted stock remain outstanding from the early exercise of stock options.

Summary of restricted stock units activity


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2017	218,872	$	12.64
Granted	360,858		23.62
Vested	(53,640)		12.57
Forfeited	(3,900)		21.00
Outstanding at June 30, 2018	522,190	$	20.17

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, 2017	3,037,690	$	13.00	8.4	$	16,829
Granted	1,045,662		24.17
Exercised	(321,406)		12.15
Cancelled	(96,487)		16.22
Outstanding at June 30, 2018	3,665,459	$	16.17	8.4	$	29,126
Exercisable at June 30, 2018	1,312,351	$	12.73	7.5	$	14,588
Vested and expected to vest at June 30, 2018	3,408,606	$	15.83	8.3	$	28,146

Schedule of weighted-average assumptions used in Black-Scholes option-pricing model


	Six months ended June 30,
	2018		2017
Risk-free interest rate	2.6	%	2.0	%
Volatility	65	%	71	%
Expected term (years)	6.11		6.02
Expected dividend yield	—	%	—	%

Nature of Business (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	6 Months Ended
	Mar. 31, 2017	Jun. 30, 2018	Dec. 31, 2017
Nature of Business
Accumulated deficit		$ 329,761	$ 298,049
Public offering of common stock, net of issuance costs (in shares)		3,126,998
Offering price (in dollars per share)		$ 11.36
Sale of Stock, Consideration Received if Additional Shares are Issued	$ 60,000
Commission fee percentage on gross proceeds from sale of ATM shares	3.00%
Proceeds from the offering, after deducting underwriting discounts and commissions		$ 34,283

Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) ft² $ / shares	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) ft² item $ / shares shares	Jun. 30, 2017 USD ($)
Stock Issued During Period, Shares, New Issues \| shares			3,126,998
Shares Issued, Price Per Share \| $ / shares	$ 11.36		$ 11.36
Marketing and Advertising Expense	$ 5,720,000	$ 2,567,000	$ 8,282,000	$ 6,427,000
Net cash used in investing activities			$ (19,864,000)	$ (478,000)
Square of feet of space \| ft²	50,678		50,678
Lease term			10 years
Number of renewal periods \| item			2
Term of lease extension option			5 years
Initial annual base rent	$ 1,214,000		$ 1,214,000
Annual increase in base rent (per square foot)	$ 23.95		$ 23.95
Minimum
Increase in annual base rent			2.50%
Maximum
Increase in annual base rent			3.10%

Revenue from Contracts with Customers - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 09, 2017
Revenue from Contracts with Customers
Revenue recognition for product sales	$ 1,229		$ 2,449
Practical expedient incremental cost		true
Assumed liability related to product sales				$ 22,660
Assumed rebates and incentives				22,406
Assumed trade allowances and chargebacks				$ 254

Revenue from Contracts with Customers - Contract Liabilities (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Rebates and Incentives
Allowance categories
Balance at beginning of the period	$ 12,647
Provision related to current period sales	117,462
Changes in estimate related to prior period sales	(32)
Credits/payments made	(53,165)
Balance at end of the period	76,912
Product Returns
Allowance categories
Balance at beginning of the period	3,137
Provision related to current period sales	8,374
Credits/payments made	(3,039)
Balance at end of the period	8,472
Trade Allowances and Chargebacks
Allowance categories
Balance at beginning of the period	2,256
Provision related to current period sales	33,682
Credits/payments made	(13,054)
Balance at end of the period	$ 22,884

Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue
Revenue	$ 73,061	$ 3,560	$ 136,810	$ 5,732
Xtampza
Disaggregation of Revenue
Revenue	18,116	$ 3,560	33,911	$ 5,732
Nucynta
Disaggregation of Revenue
Revenue	$ 54,945		$ 102,899

Loss per Common Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Loss per Common Share
Net loss	$ (13,060)	$ (21,121)	$ (31,712)	$ (44,199)
Loss attributable to common shareholders — basic and diluted	$ (13,060)	$ (21,121)	$ (31,712)	$ (44,199)
Weighted-average number of common shares used in net loss per share - basic and diluted	32,967,718	29,441,514	32,935,873	29,396,143
Loss per share - basic and diluted	$ (0.40)	$ (0.72)	$ (0.96)	$ (1.50)

Loss per Common Share - Summary of Potentially Dilutive Securities (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Stock options
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding	3,665,459	3,124,039	3,665,459	3,124,039
Warrants
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding		2,445		2,445
Unvested restricted stock
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding	12,072	57,228	12,072	57,228
Restricted stock units
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding	522,190	223,194	522,190	223,194

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Royalty liability	$ 482,300
Discount rate used to calculate present value of royalty payments	5.70%
Money market funds
Cash equivalents	$ 121,877	$ 81,225
Quoted Prices in active markets (Level 1) \| Money market funds
Cash equivalents	$ 121,877	$ 81,225

Inventory (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2017	Jun. 30, 2018	Dec. 31, 2017
Inventory
Raw materials			$ 350	$ 616
Work in process			709	322
Finished goods			7,485	875
Total inventory			$ 8,544	$ 1,813
Excess inventory charges	$ 257	$ 350

Intangible Assets and Asset Acquisition Obligations - Recognized at cost component of intangible assets (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Intangible Assets and Asset Acquisition Obligations
Cash paid for asset acquisition	$ 18,877
Identifiable assets acquired and liabilities assumed:
Intangible assets	515,627
Inventory	6,223
Prepaid expenses	1,987
Minimum royalty payments	(482,300)
Other liabilities	(22,660)
Total	$ 18,877

Intangible Assets and Asset Acquisition Obligations - Amortization expense for Nucynta Intangible Asset (Details) - USD ($) $ in Thousands		6 Months Ended
	Jan. 09, 2018	Jun. 30, 2018
Intangible Assets and Asset Acquisition Obligations
Useful life	4 years
Accumulated amortization		$ 32,407
Remaining amortization period		3 years 6 months
Reminder of 2018		$ 64,813
2019		129,627
2020		129,627
2021		$ 129,627

Intangible Assets and Asset Acquisition Obligations - Gross carrying amount and accumulated amortization (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Accumulated amortization	$ (32,407)
Commercialization Agreement - Nucynta [Member]
Gross carrying amount	515,627
Accumulated amortization	(61,933)
Intangible assets, net	$ 453,694

Intangible Assets and Asset Acquisition Obligations - Nucynta Asset Acquisition Obligations (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jan. 09, 2018
Intangible Assets and Asset Acquisition Obligations
Annual royalty payable	$ 135,000	$ 135,000
Quarterly royalty payable			$ 33,750
Minimum royalty payable	537,000	$ 537,000
Royalty payment period		45 days
Fair Value of royalty payments	482,300	$ 482,300
Discounted cash flow rate		5.70%
Discount	54,700	$ 54,700
Interest expense	5,943	11,471
Remainder of 2018	10,912	10,912
2019	17,138	17,138
2020	10,907	10,907
2021	4,272	4,272
Minimum royalty payments	$ 51,455	$ 64,500

Intangible Assets and Asset Acquisition Obligations - Remaining minimum royalty payments (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Intangible Assets and Asset Acquisition Obligations
2018	$ 67,500
2019	135,000
2020	135,000
2021	135,000
Total remaining minimum royalty payments due	472,500
Less: Unamortized discount	(43,229)
Carrying value of minimum royalty payments	$ 429,271

Intangible Assets and Asset Acquisition Obligations - Onsolis Intangible Asset (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 32,407	$ 47	$ 61,933	$ 177
Onsolis
Finite-Lived Intangible Assets [Line Items]
Upfront cash payment						$ 2,500
Intangible assets, net	$ 0		$ 0		$ 0
Selling, general and administrative expenses \| Onsolis
Finite-Lived Intangible Assets [Line Items]
Impairment loss					$ 1,845
Amortization expense		$ 47		$ 177

Intangible Assets and Asset Acquisition Obligations - Amortization Expense for Onsolis Intangible Asset (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 32,407	$ 47	$ 61,933	$ 177
Nucynta \| Cost of product revenues
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 32,407		$ 61,933
Onsolis \| Selling, general and administrative expenses
Finite-Lived Intangible Assets [Line Items]
Amortization expense		$ 47		$ 177

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accrued Expenses
Accrued cost of product revenues	$ 14,540
Accrued bonuses	1,828	$ 2,940
Accrued incentive compensation	1,643	1,790
Accrued other operating costs	1,433	877
Accrued payroll and related benefits	1,401	1,382
Accrued inventory	1,385
Accrued audit and legal	551	405
Accrued sales and marketing	259	624
Accrued development costs	202	517
Accrued interest	153	6
Total accrued expenses	$ 23,395	$ 8,541

Term Loan Payable (Details) $ in Thousands	6 Months Ended
Term Loan Payable (Details) $ in Thousands	Jun. 30, 2018 USD ($) item shares	Dec. 31, 2017 USD ($)	Aug. 31, 2012 USD ($)	Aug. 28, 2012 USD ($)
Loan and Security Agreements
Maximum borrowing capacity				$ 1,000
Proceeds from term loan amendment, net of repayment of amended term loan	$ 10,020
Public offering of common stock, net of issuance costs (in shares) \| shares	3,126,998
2019	$ 1,642	$ 1,479
Term loan \| Silicon Valley Bank loan agreement \| Prime
Loan and Security Agreements
Variable interest rate margin (as a percent)	2.25%
Interest rate (as a percent)				5.50%
Term loan \| Silicon Valley Bank loan agreement Amendment No. 2
Loan and Security Agreements
Maximum borrowing capacity			$ 8,000
New Term Loan \| Silicon Valley Bank Loan Agreement Consent and Sixth Amendment
Loan and Security Agreements
Original principal amount	$ 11,500
Threshold limit of EDITDA to repay principal and interest prior to specific date	$ 2,500
Number of consecutive calendar quarters to maintain threshold limit of EDITDA to repay principal and interest prior to specific date \| item	2
Final payment fee	$ 719
Minimum liquidity ratio	2.0
Additional interest rate in event of default	5.0
New Term Loan \| Silicon Valley Bank Loan Agreement Consent and Sixth Amendment \| Prime
Loan and Security Agreements
Variable interest rate margin (as a percent)	0.75%
Variable rate basis	prime rate
Standby letter of credit \| New Term Loan
Loan and Security Agreements
Maximum borrowing capacity	$ 33,750
Prior to first anniversary \| New Term Loan \| Silicon Valley Bank Loan Agreement Consent and Sixth Amendment
Loan and Security Agreements
Prepayment fee (as a percent)	3.0
Between first anniversary and second anniversary \| New Term Loan \| Silicon Valley Bank Loan Agreement Consent and Sixth Amendment
Loan and Security Agreements
Prepayment fee (as a percent)	2.0
Following second anniversary \| New Term Loan \| Silicon Valley Bank Loan Agreement Consent and Sixth Amendment
Loan and Security Agreements
Prepayment fee (as a percent)	1.0

Term Loan Payable - Future Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Future payments under term loan
2019	$ 1,642	$ 1,479
2020	3,286
2021	3,286
2022	3,286
Balance	$ 11,500

Equity - Changes in Shareholders' Equity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Balance at beginning of period			$ 104,080
Exercise of common stock options			$ 3,905
Exercise of common stock options, shares			321,406
Issuance for employee stock purchase plan			$ 510
Issuance for employee stock purchase plan, shares			50,151
Shares withheld for employee taxes upon vesting of restricted stock units			$ (356)
Public offering of common stock, net of issuance costs (in shares)			3,126,998
Stock-based compensation expense			$ 6,254
Net loss	$ (13,060)	$ (21,121)	(31,712)	$ (44,199)
Balance at end of period	82,681		82,681
Cash paid for common stock offerings costs			30	$ 87
Common Stock
Balance at beginning of period			$ 33
Balance at beginning of year, shares			32,770,678
Exercise of common stock options, shares			321,406
Issuance for employee stock purchase plan, shares			50,151
Vesting of restricted stock units, shares			53,640
Shares withheld for employee taxes upon vesting of restricted stock units, shares			(16,015)
Balance at end of period	$ 33		$ 33
Balance at end of year, shares	33,179,860		33,179,860
Additional Paid-In Capital
Balance at beginning of period			$ 402,096
Exercise of common stock options			3,905
Issuance for employee stock purchase plan			510
Shares withheld for employee taxes upon vesting of restricted stock units			(356)
Stock-based compensation expense			6,254
Balance at end of period	$ 412,409		412,409
Accumulated Deficit
Balance at beginning of period			(298,049)
Net loss			(31,712)
Balance at end of period	$ (329,761)		$ (329,761)

Stock-based Compensation - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	May 31, 2015
Stock-based compensation
Shares of common stock authorized for issuance outstanding (in shares)	3,665,459	3,665,459		3,665,459		3,037,690
Employee Stock Purchase Plan, Purchase Price Percentage				85.00%
Issuance for employee stock purchase plan, shares				50,151
Proceeds from issuances of common stock from employee stock purchase plans				$ 510,000	$ 673,000
Employee Stock Purchase Plan, Compensation Expense		$ 120,000	$ 108,000	242,000	$ 214,000
Stock options
Stock-based compensation
Number of shares affected by modification	225,625
Restricted stock units
Stock-based compensation
Number of shares affected by modification	116,250
Restricted Stock Awards And Restricted Stock Units
Stock-based compensation
Unrecognized compensation cost related to outstanding options	$ 34,073	$ 34,073		$ 34,073
Period over which unrecognized compensation cost is expected to be recognized as expense				2 years 7 months 6 days
2014 Stock Incentive Plan
Stock-based compensation
Shares of common stock authorized for issuance (in shares)							2,700,000
Shares of common stock remaining available for future grant	1,139,189	1,139,189		1,139,189
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%
Vesting period				4 years
Contractual life				10 years
2014 Stock Incentive Plan \| Minimum
Stock-based compensation
Period following termination date vested options are exercisable				1 month
2014 Stock Incentive Plan \| Maximum
Stock-based compensation
Period following termination date vested options are exercisable				3 months

Stock-based Compensation - Summary of Stock-Based Compensation Included in Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Stock-based compensation
Total stock-based compensation expense	$ 3,526	$ 1,946	$ 6,254	$ 3,767
Research and development expenses
Stock-based compensation
Total stock-based compensation expense	380	242	703	451
Selling, general and administrative expenses
Stock-based compensation
Total stock-based compensation expense	$ 3,146	$ 1,704	$ 5,551	$ 3,316

Stock-based Compensation - Summary of Restricted Stock Award Activity (Details) - Restricted Stock Awards	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Restricted stock awards
Balance	10,816
Vested	(10,816)
Weighted-average purchase price per share
Balance \| $ / shares	$ 5.73
Vested \| $ / shares	$ 5.73
Unvested restricted stock remaining from the early exercise of stock options	12,072

Stock-based Compensation - Summary of Restricted Stock Units Activity (Details) - Restricted stock units	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Restricted stock awards
Balance \| shares	218,872
Granted \| shares	360,858
Vested \| shares	(53,640)
Forfeited \| shares	(3,900)
Balance \| shares	522,190
Weighted-average purchase price per share
Balance \| $ / shares	$ 12.64
Granted \| $ / shares	23.62
Vested \| $ / shares	12.57
Forfeited \| $ / shares	21.00
Balance \| $ / shares	$ 20.17

Stock-based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Stock option activity
Outstanding	3,037,690
Granted	1,045,662
Exercised	(321,406)
Cancelled	(96,487)
Outstanding	3,665,459	3,037,690
Exercisable at end of period	1,312,351
Vested and expected to vest at end of period	3,408,606
Weighted average exercise price per share
Outstanding	$ 13.00
Granted	24.17
Exercised	12.15
Cancelled	16.22
Outstanding	16.17	$ 13.00
Exercisable at end of period	12.73
Vested and expected to vest at end of period	$ 15.83
Stock option activity, additional information
Outstanding Weighted-Average Remaining Contractual Term	8 years 4 months 24 days	8 years 4 months 24 days
Outstanding Aggregate Intrinsic Value	$ 29,126	$ 16,829
Exercisable at end of period, Weighted-Average Remaining Contractual Term	7 years 6 months
Exercisable at end of period, Aggregate Intrinsic Value	$ 14,588
Vested and expected to vest at end of period, Weighted-Average Remaining Contractual Term	8 years 3 months 18 days
Vested and expected to vest at end of period, Aggregate Intrinsic Value	$ 28,146

Stock-based Compensation - Summary of Valuation Assumptions Used (Details)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants
Risk-free interest rate	2.60%	2.00%
Volatility	65.00%	71.00%
Expected term (in years)	6 years 1 month 10 days	6 years 7 days

Commitments and Contingencies (Details) - patent			6 Months Ended
Commitments and Contingencies (Details) - patent	Mar. 24, 2015	Feb. 11, 2015	Jun. 30, 2018
Purdue Pharma, L. P. patent infringement suit, District of Delaware
Contingencies
Stay period before FDA can issue a final approval unless it is terminated	30 months
Number of patents asserted infringed	3
Teva Litigation [member]
Contingencies
Total number of Orange Book patents asserted to have been infringed			12
Number of patents listed in FDA Orange Book			14
Xtampza Litigation
Contingencies
Stay period before FDA can issue a final approval unless it is terminated		30 months
Total number of Orange Book patents asserted to have been infringed		11
Total number of non-Orange Book patents asserted to have been infringed		5