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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2018	Jan. 31, 2019	Jun. 30, 2018
Document and Entity Information
Entity Registrant Name	COLLEGIUM PHARMACEUTICAL, INC
Entity Central Index Key	0001267565
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Entity Shell Company	false
Current Fiscal Year End Date	--12-31
Entity Emerging Growth Company	false
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Small Business	false
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 725
Entity Common Stock, Shares Outstanding		33,305,011
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 146,633	$ 118,697
Accounts receivable	77,946	9,969
Inventory	7,817	1,813
Prepaid expenses and other current assets	5,116	3,005
Total current assets	237,512	133,484
Property and equipment, net	9,274	1,826
Intangible assets, net	44,255
Restricted cash		97
Other long-term assets	204	161
Total assets	291,245	135,568
Current liabilities
Accounts payable	12,150	5,684
Accrued expenses	30,551	8,541
Accrued rebates, returns and discounts	144,783	15,784
Current portion of term loan payable	1,642	1,479
Total current liabilities	189,126	31,488
Other long-term liabilities	676
Term loan payable, long-term	9,858
Total liabilities	199,660	31,488
Commitments and contingencies (see Note 11)
Shareholders' equity:
Preferred stock, $0.001 par value; authorized shares - 5,000,000 at December 31, 2018 and December 31, 2017; issued and outstanding shares - none at December 31, 2018 and December 31, 2017
Common stock, $0.001 par value; authorized shares - 100,000,000 at December 31, 2018 and December 31, 2017; issued and outstanding shares - 33,265,629 at December 31, 2018 and 32,770,678 at December 31, 2017	33	33
Additional paid-in capital	428,729	402,096
Accumulated deficit	(337,177)	(298,049)
Total shareholders' equity	91,585	104,080
Total liabilities and shareholders' equity	$ 291,245	$ 135,568

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, authorized shares	5,000,000
Preferred stock, issued shares	0
Preferred stock, outstanding shares	0
Common stock, par value (in dollars per share)	$ 0.001
Common stock, authorized shares	100,000,000
Common stock, issued shares	33,265,629	32,770,678
Common stock, outstanding shares	33,265,629	32,770,678

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenues
Product revenues, net	$ 73,427	$ 70,176	$ 73,061	$ 63,749	$ 10,794	$ 11,950	$ 3,560	$ 2,172	$ 280,413	$ 28,476	$ 1,711
Costs and expenses
Cost of product revenues	29,726	46,007	46,838	43,106	1,094	553	577	371	165,677	2,595	213
Research and development	2,249	1,907	2,237	2,268	2,194	2,069	2,179	2,130	8,661	8,572	14,948
Selling, general and administrative	30,451	33,448	31,279	31,582	25,089	22,758	22,062	22,847	126,760	92,756	80,632
Total costs and expenses	62,426	81,362	80,354	76,956	28,377	25,380	24,818	25,348	301,098	103,923	95,793
Loss from operations	11,001	(11,186)	(7,293)	(13,207)	(17,583)	(13,430)	(21,258)	(23,176)	(20,685)	(75,447)	(94,082)
Interest expense	(2,404)	(5,868)	(6,158)	(5,700)					(20,130)		(94)
Interest income	489	552	391	255	180	167	137	98	1,687	582
Net loss	$ 9,086	$ (16,502)	$ (13,060)	$ (18,652)	$ (17,403)	$ (13,263)	$ (21,121)	$ (23,078)	$ (39,128)	$ (74,865)	$ (94,176)
Loss per share - basic and diluted					$ (0.54)	$ (0.45)	$ (0.72)	$ (0.79)	$ (1.19)	$ (2.47)	$ (3.88)
Weighted-average shares - basic and diluted					32,485,572	29,753,043	29,441,514	29,350,268	32,953,808	30,265,262	24,262,945

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Treasury Stock, at cost	Accumulated Deficit	Total
Balance at beginning of year at Dec. 31, 2015	$ 21	$ 214,062	$ (3)	$ (129,008)	$ 85,072
Balance at beginning of year, shares at Dec. 31, 2015	20,739,351
Increase (decrease) in convertible redeemable preferred stock
Exercise of common stock options		443			443
Exercise of common stock options, shares	81,831
Issuance for employee stock purchase plan		442			442
Issuance for employee stock purchase plan, shares	42,918
Public offerings of common stock, net of issuance costs	$ 8	137,332			137,340
Public offerings of common stock, net of issuance costs, shares	8,500,000
Retirement of treasury stock		(3)	$ 3
Stock-based compensation expense		5,787			5,787
Net loss				(94,176)	(94,176)
Balance at end of year at Dec. 31, 2016	$ 29	358,063		(223,184)	134,908
Balance at end of year, shares at Dec. 31, 2016	29,364,100
Increase (decrease) in convertible redeemable preferred stock
Exercise of common stock options	$ 1	735			$ 736
Exercise of common stock options, shares	158,801				349,777
Issuance for employee stock purchase plan		1,141			$ 1,141
Issuance for employee stock purchase plan, shares	110,841
Vesting of restricted stock units ("RSUs"), shares	14,757
Shares withheld for employee taxes upon vesting of restricted stock units		(68)			(68)
Shares withheld for employee taxes upon vesting of restricted stock units, shares	(4,819)
Public offerings of common stock, net of issuance costs	$ 3	34,280			$ 34,283
Public offerings of common stock, net of issuance costs, shares	3,126,998				3,126,998
Stock-based compensation expense		7,945			$ 7,945
Net loss				(74,865)	(74,865)
Balance at end of year at Dec. 31, 2017	$ 33	402,096		(298,049)	$ 104,080
Balance at end of year, shares at Dec. 31, 2017	32,770,678				32,770,678
Increase (decrease) in convertible redeemable preferred stock
Exercise of common stock options		4,255			$ 4,255
Exercise of common stock options, shares	349,777
Issuance for employee stock purchase plan		1,117			1,117
Issuance for employee stock purchase plan, shares	86,929
Vesting of restricted stock units ("RSUs"), shares	85,119
Shares withheld for employee taxes upon vesting of restricted stock units		(560)			(560)
Shares withheld for employee taxes upon vesting of restricted stock units, shares	(26,874)
Stock-based compensation expense		13,778			13,778
Issuance of warrant		8,043			8,043
Net loss				(39,128)	(39,128)
Balance at end of year at Dec. 31, 2018	$ 33	$ 428,729		$ (337,177)	$ 91,585
Balance at end of year, shares at Dec. 31, 2018	33,265,629				33,265,629

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Common Stock
Sale of stock
Stock issuance costs	$ 1,253	$ 845

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating activities
Net loss	$ (39,128)	$ (74,865)	$ (94,176)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization expense for Nucynta asset acquisition	109,834	258	397
Depreciation and amortization, excluding Nucynta intangible asset	1,074	594	655
Non-cash impairment charges		1,845
Lease incentive obligation		(34)	(34)
Stock-based compensation expense	13,778	7,945	5,787
Non-cash interest expense	19,281
Changes in operating assets and liabilities:
Accounts receivable	(68,231)	(7,840)	(2,129)
Inventories	219	(497)	(1,316)
Prepaid expenses and other assets	(166)	(1,057)	(923)
Accounts payable	6,465	(3,422)	5,569
Accrued expenses	18,995	(527)	6,570
Accrued rebates, returns and discounts	106,593	15,784
Deferred revenue		(4,944)	4,944
Other long-term liabilities	676
Net cash provided by (used in) operating activities	169,390	(67,018)	(75,053)
Investing activities
Purchase of intangible assets	(18,877)		(2,500)
Purchases of property and equipment	(5,477)	(990)	(477)
Net cash used in investing activities	(24,354)	(990)	(2,977)
Financing activities
Proceeds from issuances of common stock from public offerings, net of issuance costs of none, $1,198 and $845, respectively	(30)	34,338	137,340
Issuance costs from issuance of common stock	30	1,198	845
Proceeds from issuances of common stock from employee stock purchase plans	1,117	1,141	442
Repayment of asset acquisition obligations	(132,000)
Proceeds from term loan amendment	10,021
Repayment of term loan		(2,667)	(2,667)
Proceeds from the exercise of stock options	4,255	736	443
Payments made for employee restricted stock tax withholdings	(560)	(68)
Net cash (used in) provided by financing activities	(117,197)	33,480	135,558
Net increase (decrease) in cash, cash equivalents and restricted cash	27,839	(34,528)	57,528
Cash, cash equivalents and restricted cash at beginning of period	118,794	153,322	95,794
Cash, and cash equivalents and restricted cash at end of period	146,633	118,794	153,322
Supplemental disclosure of cash flow information
Cash paid for offering costs	30	1,228
Cash paid for interest	582	139	284
Supplemental disclosure of non-cash activities
Acquisition of property and equipment in accrued expenses	3,261	$ 216	$ 81
Liabilities assumed from Nucynta asset acquisition included in accrued rebates, returns and discounts	22,406
Liabilities assumed from Nucynta asset acquisition included as a reduction to accounts receivable	254
Warrant issued in connection with Nucynta asset acquisition	$ 8,043

NATURE OF BUSINESS	12 Months Ended
NATURE OF BUSINESS	Dec. 31, 2018
NATURE OF BUSINESS
NATURE OF BUSINESS	COLLEGIUM PHARMACEUTICAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data) 1. NATURE OF BUSINESS Organization 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 Stoughton, Massachusetts. The Company is a specialty pharmaceutical company committed to being the leader in responsible pain management. The Company’s first product, Xtampza ER® is an abuse-deterrent, extended-release, oral formulation of oxycodone. In April 2016, the U.S. Food and Drug Administration (“FDA”) approved the Company’s new drug application (“NDA”) filing for Xtampza ER 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 ER. The Company’s product portfolio also includes Nucynta ER and Nucynta IR,(the “Nucynta Products”). In December 2017, the Company entered into a Commercialization Agreement with Assertio Therapeutics, Inc. (formerly known as Depomed) (“Assertio”), pursuant to which the Company acquired the right to commercialize the Nucynta Products in the United States and began marketing the Nucynta Products in February 2018. 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 acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate in adults. 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 development of competing products, changing regulatory environment and reimbursement landscape, litigation related to opioid marketing and distribution practices, manufacture of adequate commercial inventory, inability to secure adequate supplies of active pharmaceutical ingredients for each of our products, key personnel retention and protection of intellectual property, patent infringement litigation and the availability of additional capital financing on terms acceptable to the Company. Public Offerings of Common Stock In January 2016, the Company issued and sold in a public offering an aggregate of 2,750,000 shares of its common stock at $20.00 per share. The Company received net proceeds from this public offering of approximately $51,174, after deduction of underwriting discounts and commissions and expenses payable by the Company. In October 2016, the Company issued and sold in a public offering an aggregate of 5,750,000 shares of its common stock at $16.00 per share. The Company received net proceeds from this public offering of approximately $86,166, after deduction of underwriting discounts and commissions and expenses payable by the Company. 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. No shares were sold pursuant to the ATM Sales during the year ended December 31, 2018. During the year ended December 31, 2017, the Company sold an aggregate of 3,126,998 ATM Shares under the ATM Sales Agreement 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. Basis of Accounting The consolidated financial statements include the accounts of Collegium Pharmaceutical, Inc. as well as the accounts of its subsidiaries Collegium Securities Corp. (a Massachusetts corporation), incorporated in December 2015, and Collegium NF LLC (a Delaware limited liability company), incorporated in December 2017, both wholly owned subsidiaries requiring consolidation. The consolidated financial statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. Liquidity The Company has experienced net losses since its inception, and as of December 31, 2018, had an accumulated deficit of $337,177. 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 December 31, 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

12 Months Ended

Dec. 31, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. The most significant estimates in the Company’s consolidated financial statements relate to revenue recognition, including the estimates of product returns, units prescribed, discounts and allowances related to commercial sales of products, estimates of useful lives with respect to intangible assets, accounting for stock based compensation, contingencies, impairment of intangible assets and tax valuation 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.

Fair Value Measurements

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


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

Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2018 and 2017.

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


						Significant
				Quoted Prices		other		Significant
				in active		observable		unobservable
				markets		inputs		inputs
December 31, 2018		Total		(Level 1)		(Level 2)		(Level 3)
Money market funds, included in cash equivalents	$	92,914	$	92,914	$	—	$	—

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

During the year ended December 31, 2018, the Company issued a warrant to purchase 1,041,667 shares of common stock of the Company to Assertio. The Company used a Black-Scholes option pricing model to determine the fair value of the warrant as of the date of issuance. This model requires Level 1 and Level 2 inputs on the valuation date, including the risk-free interest rate, the expected volatility of the Company’s common stock, the remaining contractual term of the warrant and the expected dividend yield. The minimum royalty liability associated with the guaranteed future minimum royalty payments and the fair value of the warrant instrument were included as a component of the intangible asset acquired in connection with the Commercialization Agreement, which is further described in Note 9.

As of December 31, 2018, and December 31, 2017, the carrying amounts of the Company’s other assets and liabilities approximated their estimated fair values.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash deposits primarily with one reputable and nationally recognized financial institution. In addition, as of December 31, 2018, the Company’s cash equivalents were invested in money market funds. The Company has not experienced any material losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the financial institutions in which those deposits are held.

Three customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2018. These customers comprised 54%, 26% and 16% of the accounts receivable balance, respectively. The same three customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2018. These customers comprised 36%, 31% and 27% of revenue, respectively. To date, the Company has not experienced any losses with respect to the collection of its accounts receivable and believes that its entire accounts receivable balances is collectible as of December 31, 2018. The Company has no financial instruments with off‑balance sheet risk of loss.

Cash and Cash Equivalents

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

The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis. As of December 31, 2018 and 2017, the carrying amount of cash equivalents was $92,914 and $81,225, respectively, which approximates fair value and was determined based upon Level 1 inputs. Money market funds are valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1.

Inventory

Inventories are stated at the lower of cost or net realizable value. Inventory costs consist of costs related to the manufacturing of the Company’s products, which are primarily the costs of contract manufacturing. The Company determines the cost of its inventories on a specific identification basis, and removes amounts from inventories on a first-in, first-out basis. If the Company identifies excess, obsolete or unsalable items, inventories are written down to their realizable value in the period in which the impairment is identified. These adjustments are recorded based upon various factors, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected demand and the expected shelf-life of the inventory components. As of December 31, 2018, cumulative estimates of excess inventory recorded as a component of cost of product revenues were immaterial.

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

Prior to the approval of Xtampza ER by the FDA in April 2016, the Company recorded all costs incurred related to the manufacturing of Xtampza ER as research and development expense. Subsequent to approval, the Company began capitalizing these costs as inventory as they are incurred.

The Company has capitalized $7,817 of inventory as of December 31, 2018. The Company expects sales of the capitalized units to occur during the next twelve months.

Property and Equipment

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


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

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

Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in the statements of operations. The Company disposed of fully depreciated assets of $905 during the year ended December 31, 2018. During the years ended December 31, 2017 and 2016 disposals were immaterial. The Company did not have any material gains or losses from the retirement, sale or disposal of property and equipment during the years ended December 31, 2018, 2017, or 2016.

Intangible Assets

The Company records the fair value of finite-lived intangible assets as of the transaction date. Intangible assets are then amortized over their estimated useful lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. The Company tests intangible assets for potential impairment whenever triggering events or circumstances present an indication of impairment. If the sum of expected undiscounted future cash flows of the intangible assets is less than the carrying amount of such assets, the intangible assets would be written down to the estimated fair value, calculated based on the present value of expected future cash flows.

Restricted Cash

Restricted cash is reported as non‑current unless the restrictions are expected to be released in the next twelve months. The Company had no restricted cash as of December 31, 2018. As of December 31, 2017, the Company had restricted cash of $97, which represents cash held in a depository account at a financial institution to collateralize a conditional stand by letter of credit for the Company’s former headquarters.

Revenue Recognition

See Note 3 for further detail.

Research and Development Costs

Research and development costs are charged to expense as incurred and consist of costs incurred to further the Company’s research and development activities, including salaries and employee related costs, costs associated with conducting preclinical and clinical activities, including fees paid to third‑party professional consultants and service providers, costs incurred under preclinical and clinical trial agreements, costs for laboratory supplies, costs to acquire, develop and manufacture preclinical study and clinical trial materials, facilities, depreciation and other expenses including allocated expenses for rent and maintenance of facilities.

Patent Costs

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

Advertising and Product Promotion Costs

Advertising and product promotion costs are included in selling, general and administrative expenses and were $17,497, $11,019, and $16,328 in the years ended December 31, 2018, 2017, and 2016 respectively. Advertising and product promotion costs are expensed as incurred.

Stock‑Based Compensation

The Company accounts for grants of stock options, restricted stock awards and restricted stock units to employees, including members of the board of directors, based on their grant date fair value and recognizes compensation expense over their vesting period. The Company estimates the fair value of stock options as of the date of grant using the Black‑Scholes option pricing model and restricted stock awards and restricted stock units based on the fair value of the underlying common stock as determined by management.

Income Taxes

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

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planning strategies and the absence of carryback available from results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future, in excess of its net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company will recognize interest and penalties related to uncertain tax positions within income tax expense. Any accrued interest and penalties will be included within the related tax liability. As of December 31, 2018 and December 31, 2017, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss attributable to common shareholders by the weighted‑average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted‑average number of shares of common stock and potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock accounting method. For purposes of the diluted net loss per share calculation, stock options, warrants and unvested restricted stock units are considered potentially dilutive securities. Because the Company has reported a net loss for the years ended December 31, 2018, 2017 and 2016, diluted net loss per common share is the same as basic net loss per common share for those periods.

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 (“ASC 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 ASC Topic 606, Revenue from Contracts with Customers. In 2015, 2016 and 2017, the FASB issued additional ASUs related to ASC 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, on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. The adoption of ASC Topic 606 did not have an impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of the adoption date for the year ended December 31, 2018. Refer to Note 3 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, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, and in November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): 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), which supersedes the lease accounting requirements in ASC Topic 840 with ASC Topic 842 and 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 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 ASC Topic 840 for operating leases. This guidance is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. In July 2018, the FASB issued ASU 2018-10, Leases (Topic 842), Codification Improvements and ASU 2018-11, Leases (Topic 842), Targeted Improvements, to correct unintended application of guidance and provide additional transition guidance.

The Company adopted ASU 2016-02 on January 1, 2019 under the modified retrospective method by initially applying the new standard at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings. This adoption method did not impact comparative prior periods presented. The Company utilized of the transition package of practical expedients permitted within the new standard, which, among other things, allowed the Company to carryforward the historical lease classification. The Company anticipates the adoption of ASU 2016-02 will result in a right-to-use asset and corresponding lease liability of $9,500 to $11,500 on its balance sheet primarily related to the operating lease agreements for its corporate headquarters. In addition, the Company has implemented new accounting policies, processes and controls that will be used to identify and account for leases going forward.

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2018

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

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

Revenue Recognition

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

Adoption of ASC Topic 606, Revenue from Contracts with Customers

The Company adopted ASC Topic 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 Topic 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 ASC Topic 606 as of the adoption date. Therefore, the adoption of ASC 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. In the third quarter of 2017, the Company transitioned to the sell-in method of revenue recognition and the Company recorded a cumulative one-time $4,377 increase to revenues during the three months ended September 30, 2017. Therefore, the adoption of Topic 606 would not have had a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of December 31, 2018.

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 90 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 year ended December 31, 2018:


					Trade
	Rebates and		Product		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		243,158		17,326		68,189
Liabilities assumed from asset acquisition (4)		22,406		—		254
Changes in estimate related to prior period sales		(32)		—		—
Credits/payments made		(148,861)		(4,998)		(55,858)
Balance at December 31, 2018	$	129,318	$	15,465	$	14,841


	(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.
	(4)		The Company recorded a liability of $22,660 related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018, for which the Company is liable under the terms of the Nucynta 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 December 31, 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:


	Year ended December 31,
	2018		2017		2016
Xtampza ER	$	69,383	$	28,476	$	1,711
Nucynta Products		211,030		—		—
Total product revenues, net	$	280,413	$	28,476	$	1,711

LICENSE AGREEMENTS	12 Months Ended
LICENSE AGREEMENTS	Dec. 31, 2018
LICENSE AGREEMENTS
LICENSE AGREEMENTS	4. LICENSE AGREEMENTS The Company periodically enters into license and development agreements to develop and commercialize its products. The Company’s license and development agreements are as follows: Nucynta Commercialization Agreement On January 9, 2018 (the “Closing Date”), the Company consummated the transactions contemplated by the Nucynta Commercialization Agreement, pursuant to which Assertio agreed to grant a sublicense of certain of its intellectual property related to the Nucynta Products for commercialization in the United States. The Company began selling the Nucynta Products on January 9, 2018 and began commercial promotion of the Nucynta Products in February 2018. Pursuant to the Nucynta Commercialization Agreement, the Company paid a one-time, non-refundable license fee of $10,000 to Assertio at the closing of the Nucynta Commercialization Agreement, 6,223 for transferred inventory and $1,987 as reimbursement for prepaid expenses. The Company also assumed the existing liabilities of the Nucynta Products, including $22,660 related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018. The Nucynta Commercialization Agreement initially required the Company to pay guaranteed minimum royalty of $135,000 per year through December 2021, payable in quarterly payments of $33,750, prorated in 2018 for the Closing Date, as well as a variable royalty based on annual net sales over $233,000. Beginning January 2022 and for each year of the Nucynta Commercialization Agreement term thereafter, the Company was required to pay a variable royalty on annual net sales of the Nucynta Products, but without a guaranteed minimum. Effective August 2018, the Company entered into a Second Amendment to the Nucynta Commercialization Agreement to clarify the mechanism for transferring title of products to be sold by the Company pursuant to the agreement and various related matters. The Second Amendment did not have an impact on the Company’s financial statements. Effective November 2018, the Company entered into the Third Amendment to the Nucynta Commercialization Agreement to adjust the royalty structure and termination clauses. Pursuant to the amended Nucynta Commercialization Agreement, the $135,000 guaranteed minimum annual royalties are eliminated, and the Company is no longer required to secure its royalty payment obligations with a standby letter of credit. Beginning on January 1, 2019 and thereafter, the Company will be conditionally obligated to make royalty payments to Assertio conditional upon net sales and based on the following royalty structure for the period between January 1, 2019 and December 31, 2021: (i)65% of annual net sales of the Nucynta Products up to $180,000, plus (ii)14% of annual net sales of the Nucynta Products between $180,000 and $200,000, plus (iii)58% of annual net sales of the Nucynta Products between $210,000 and $233,000, plus (iv)20% of annual net sales of the Nucynta Products between $233,000 and $258,000, plus (v)15% of annual net sales of the Nucynta Products in excess of $258,000. The Amendment does not modify the royalties payable on sales of the Nucynta Products on and after January 1, 2022, which will remain as contemplated by the Nucynta Commercialization Agreement as in effect on January 9, 2018, based on the following royalty structure: (i)58% of annual net sales of the Nucynta Products up to $233,000, plus (ii)25% of annual net sales of the Nucynta Products between $233,000 and $258,000, plus (iii)17.5% of annual net sales of the Nucynta Products in excess of $258,000. In addition, prior to January 1, 2022, if the annual net sales of the Nucynta Products are in the range of $180,000 to $243,000, the Company will be required to pay a supplemental royalty to Assertio, for ultimate payment to Grünenthal GmbH, not to exceed a maximum of 4.9% of net sales of the Nucynta Products. If annual net sales of Products are less than $180,000 in any 12-month period through January 1, 2022, or if they are less than $170,000 in any 12-month period commencing on January 1, 2022, then Assertio will have the right to terminate the Nucynta Commercialization Agreement without penalty. The Amendment further provides that the Company does not have a right to terminate the Nucynta Commercialization Agreement prior to December 31, 2021. The Company will be required to pay a $5,000 termination fee to Assertio in connection with any termination by the Company with an effective date between December 31, 2021 and December 31, 2022. In connection with execution of the Third Amendment, the Company issued a warrant to purchase 1,041,667 shares of common stock of the Company (the “Warrant”) at an exercise price of $19.20 per share. The Warrant will expire in November 2022 and includes customary adjustments for changes in the Company’s capitalization. The assets acquired, liabilities assumed, and equity interests issued by the Company in connection with the Nucynta Commercialization Agreement are further described in Note 9. Commercialization Agreement for Onsolis 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), or 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 term of the License Agreement, milestone payments in the aggregate amount of $21,000 could become payable by the Company subject to the satisfaction of certain commercialization, intellectual property, and net sales milestones, including $4,000 upon the first commercial sale of the product in the United States. Finally, the Company was required to pay royalties in the upper teens based on annual net sales of the product in the United States. 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”). No milestones were achieved, nor did any royalties become payable, under the License Agreement. 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 recognized an impairment loss of $1,845 during the year ended December 31, 2017. As of the years ended December 31, 2018 and 2017, the Onsolis net intangible asset is zero.

NET LOSS PER COMMON SHARE

12 Months Ended

Dec. 31, 2018

NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE

5. NET LOSS PER COMMON SHARE

For the years ended December 31, 2018, 2017 and 2016, the securities discussed below were anti‑dilutive due to the net losses in those periods and, therefore, the number of shares used to compute basic and diluted earnings per share are the same for of those periods.

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


	Years ended December 31,
		2018		2017		2016
Loss attributable to common shareholders — basic and diluted	$	(39,128)	$	(74,865)	$	(94,176)
Weighted-average number of common shares used in net loss per share - basic and diluted		32,953,808		30,265,262		24,262,945
Loss per share - basic and diluted	$	(1.19)	$	(2.47)	$	(3.88)

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted‑average shares outstanding because such securities have an antidilutive impact due to losses reported (in common stock equivalent shares):


	Years ended December 31,
	2018	2017	2016
Outstanding stock options	3,585,856	3,037,690	2,326,801
Warrants	1,041,667	2,445	2,445
Unvested restricted stock (1)	3,018	31,943	82,512
Restricted stock units	514,603	218,872	41,741

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

INVENTORY

12 Months Ended

Dec. 31, 2018

INVENTORY

INVENTORY

6. INVENTORY

Inventory consisted of the following:


	As of December 31,		As of December 31,
	2018		2017
Raw materials	$	496	$	616
Work in process		671		322
Finished goods		6,650		875
Total inventory	$	7,817	$	1,813

During the years ended December 31, 2018 and 2017, the aggregate charges to date related to excess inventory were immaterial. These expenses were recorded as a component of cost of product revenues.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

12 Months Ended

Dec. 31, 2018

PREPAID EXPENSES AND OTHER CURRENT ASSETS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

7. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:


	As of December 31,
	2018		2017
Prepaid regulatory fees	$	3,035	$	1,434
Other prepaid expenses		655		279
Prepaid insurance		340		310
Prepaid development costs		78		526
Other current assets		1,008		456
Prepaid expenses and other current assets	$	5,116	$	3,005

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2018

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

8. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:


	As of December 31,
	2018		2017
Machinery and equipment	$	1,613	$	1,447
Computers and office equipment		1,277		702
Leasehold improvements		567		700
Furniture and fixtures		1,111		117
Construction-in-process		6,543		528
Total property and equipment		11,111		3,494
Less: accumulated deprecation		(1,837)		(1,668)
Property and equipment, net	$	9,274	$	1,826

Depreciation expense related to property and equipment amounted to $1,074, $336 and $258 for the years ended December 31, 2018, 2017 and 2016, respectively. The Company disposed of fully depreciated assets of $905 during the year ended December 31, 2018. During the years ended December 31, 2017 and 2016 disposals were immaterial.

INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2018

INTANGIBLE ASSETS

INTANGIBLE ASSETS

9. INTANGIBLE ASSETS

As of December 31, 2018, the Company’s only intangible asset is related to the Nucynta Commercialization Agreement.

Nucynta Intangible Asset

The Company determined the Nucynta Commercialization Agreement should be accounted for as an asset acquisition in accordance with ASC 805-50 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. The Company concluded that the fair value estimates of the assets surrendered, liabilities incurred, and equity interests issued were more clearly evident than the fair value of the assets received, and therefore followed a cost accumulation model to determine the consideration transferred in the asset acquisition.

The table below represents the costs accumulated as of December 31, 2018, to acquire the sublicense of the Nucynta Products based on the terms of the Nucynta Commercialization Agreement, as amended:


Acquisition consideration:
Upfront cash paid	$	18,877
Minimum royalty payment obligation (1)		112,719
Rebates, incentives, trade allowances and chargebacks assumed		22,660
Warrant issued		8,043
Total acquisition consideration:	$	162,299

(1)

Represents $132,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $19,281.

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


Assets acquired:
Nucynta Intangible Asset	$	154,089
Inventory		6,223
Prepaid expenses		1,987
Total consideration allocated to assets acquired:	$	162,299

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

A summary of the costs included in the Nucynta Intangible Asset as of the acquisition date of January 9, 2018, is as follows:


Costs included in Nucynta Intangible Asset:
Upfront cash paid	$	10,000
Transaction costs		667
Minimum royalty payment obligation (2)		482,300
Rebates, incentives, trade allowances and chargebacks assumed (3)		22,660
Total cost:	$	515,627

(2)

Represents $537,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $54,700.

(3)

Represents $22,660 of liabilities assumed related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018, for which the Company is liable under the terms of the Nucynta 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 part of the Nucynta Commercialization Agreement.

Effective November 8, 2018 (the “Amendment Date”), the Company entered into the Third Amendment to the Nucynta Commercialization Agreement, which eliminated the guaranteed minimum royalty payment obligations for years 2019, 2020 and 2021. As a result, the Company remeasured the remaining contractual obligation as of the Amendment Date and recorded a reduction of the acquired intangible asset and obligation. As of December 31, 2018, the Company had paid all of the $132,000 of minimum royalty payment obligation owed under the Nucynta Commercialization Agreement for 2018.

A summary of the gross carrying amount, accumulated amortization, and net book value of the Nucynta Intangible Asset from the acquisition date through December 31, 2018 is as follows:


		Gross Carrying Value		Accumulated Amortization		Net Book Value
Cost basis as of acquisition date:	$	515,627	$	-	$	515,627
Amortization from acquisition date through Amendment Date		-		(107,662)		(107,662)
Adjustment due to the remeasurement of liability as of Amendment Date		(369,581)		-		(369,581)
Additional costs incurred as of Amendment Date(4)		8,043		-		8,043
Amortization from Amendment Date through period end		-		(2,172)		(2,172)
Total, as amended:	$	154,089	$	(109,834)	$	44,255

(4)

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

Warrant

In November 2018, in connection with the Third Amendment to the Nucynta Commercialization Agreement, the Company issued a warrant to purchase 1,041,667 shares of common stock of the Company at an exercise price of $19.20 per share. The terms of the warrant are fixed, with the exception of customary adjustments for changes in the Company’s capitalization. The warrant may only be settled with the issuance of shares of common stock upon exercise and will expire in November 2022. The Company has recorded the relative fair value of the warrant as a component of equity interest issued by the Company as consideration transferred in the cost accumulation model for the asset acquisition. The Company estimated the fair value of the warrant on the date of issuance to be approximately $8,043 using the Black-Scholes option-pricing model. The Company concluded that the warrant met the definition of an equity instrument and was recorded as a component of additional paid-in capital in the Company’s Consolidated Balance Sheet as of the issuance date.

Amortization

The Company has been amortizing the Nucynta Intangible Asset over its useful life, which is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The Company determined that the useful life for the intangible asset was approximately 4.0 years from the closing date of January 9, 2018. The Company will recognize amortization expense as a component of cost of product revenues in the Statement of Operations on a straight-line basis over its useful life as it approximates the period of economic benefits expected to be realized from future cash inflows from sales of the Nucynta Products. Prior to the Third Amendment to the Nucynta Commercialization Agreement, the Company had recognized $107,662 of amortization expense. As the accumulated cost basis of the intangible asset was reduced with the Third Amendment to the Nucynta Commercialization agreement on November 8, 2018, the Company will continue to prospectively amortize the residual net intangible asset on a straight-line basis over the remaining useful life. For the year ended December 31, 2018, the Company recognized amortization expense of $109,834. As of December 31, 2018, the remaining amortization period is approximately 3.0 years and estimated amortization for 2019, 2020 and 2021 is expected to be $14,752, $14,752, and $14,751.

Onsolis Intangible Asset

In May 2016, the Company entered into an agreement with BDSI to license the rights to develop, manufacture, and commercialize Onsolis, in the United States. 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, and 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 the years ended December 31, 2018.

Amortization Expense

Amortization expense relating to the Company’s intangible assets for the years ended December 31, 2018, 2017 and 2016 were as follows:


	Years ended December 31,
		2018		2017		2016
Nucynta amortization expense included in cost of product revenues	$	109,834	$	—	$	—
Onsolis amortization expense included in selling, general and administrative expense		—		258		397
Total amortization expense	$	109,834	$	258	$	397

ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2018

ACCRUED EXPENSES

ACCRUED EXPENSES

10. ACCRUED EXPENSES

Accrued expenses consisted of the following:


	As of December 31,		As of December 31,
	2018		2017
Accrued cost of product revenues	$	15,138	$	—
Accrued bonuses		4,286		2,940
Accrued inventory		3,745		—
Accrued sales and marketing		2,193		624
Accrued incentive compensation		1,806		1,790
Accrued payroll and related benefits		1,544		1,382
Accrued audit and legal		480		405
Accrued interest		274		6
Accrued development costs		—		517
Accrued other operating costs		1,085		877
Total accrued expenses	$	30,551	$	8,541

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2018

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

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

Xtampza ER Litigation

The Company filed the NDA for Xtampza ER as a 505(b)(2) application, which allows the Company to reference data from an approved drug listed in the FDA’s 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 ER 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 entered an order to institute post-grant review of all claims of the ’961 patent on October 4, 2018, upon a finding that it is more likely than not that the claims of the ʼ961 patent are unpatentable. Purdue filed its Patent Owner Response on January 30, 2019. The PTAB has scheduled oral argument on the proceedings for July 10, 2019 and, absent special circumstances, will issue a decision on the patentability of the ʼ961 patent by no later than October 4, 2019.

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

The current suits have been consolidated by the District of Massachusetts, where Purdue asserted infringement of five patents: the ʼ497 patent, the ʼ933 patent, the ʼ717 patent, the ʼ919 patent, and the ʼ961 patent. The Court issued an order on September 28, 2018 in which it granted in part a motion for summary judgment filed by the Company, and in which the Court ruled that the ʼ497 and ʼ717 patents are not infringed by the Company. As a result, only the ʼ933, the ʼ919, and the ʼ961 patents remain in dispute. On October 16, 2018, the Company filed a motion to stay proceedings in the district court on the ‘961 patent pending the PGR. None of these suits are associated with any stay of FDA approval for Xtampza ER. Purdue has made a demand for monetary relief but has not quantified its alleged damages. Purdue has also requested a judgment of infringement, an adjustment of the effective date of FDA approval, and an injunction on the sale of the Company’s products accused of infringement. The Company has denied all claims and 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 first half of 2019. A claim construction hearing was held on June 1, 2017. On November 21, 2017, the Court issued its claim construction ruling, construing certain claims of the ʼ933, ʼ497, and ʼ717 patents. No trial date has been scheduled.

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

On December 6, 2018, the Company filed an Amended Answer asserting an affirmative defense for patent exhaustion. On December 10, 2018, the Court granted the parties’ stipulation for resolution of the Company’s defense of patent exhaustion and stayed the action, with the exception of briefing on and resolution of the Company’s Motion for Judgment on the Pleadings and any discovery related to that Motion. On December 12, 2018, the Company filed a Rule 12(c) Motion for Judgment on the Pleadings, arguing that the Purdue’s claims were barred by the doctrine of patent exhaustion. Purdue filed its response on January 11, 2019 and the Company filed a reply on January 25, 2019. That Motion is currently under advisement, and, if successful, would result in a dismissal of this suit.

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. According to the Scheduling Order, 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 alleging a variety of claims related to opioid marketing and distribution practices. On January 29, 2019, the Company was dismissed form this litigation without predjudice.

On March 21, 2018, the Company, along with 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 14, 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, along with 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. On September 26, 2018, the Company was named in two lawsuits filed in the MDL by the Fiscal Court of Lee County, Kentucky and the Fiscal Court of Wolfe County, Kentucky. 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 and on June 14, 2018, a lawsuit was filed by Clinton County, Pennsylvania, against the Company and other pharmaceutical manufacturers and distributors. On June 6, 2018, a lawsuit was filed by Mercer County, Pennsylvania, against the Company and other pharmaceutical manufacturers and distributors. These lawsuits allege claims related to opioid marketing and distribution, including negligence, fraud, unjust enrichment, public nuisance, and violations of state consumer protections laws. These cases have been consolidated for discovery purposes in the Delaware County Court of Common Pleas as part of a consolidated proceeding of similar lawsuits brought by numerous Pennsylvania counties against other pharmaceutical manufacturers and distributors.

On July 30, 2018, a lawsuit was filed by the City of Worcester, Massachusetts against the Company and other pharmaceutical manufacturers and distributors. The action alleges a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, violations of Mass Gen. Laws ch. 93A, Section 11, unjust enrichment and civil conspiracy. In February 2019, the City of Worcester case was transferred to the Business Litigation Session of the Superior Court. Additional lawsuits brought by cities and towns in Massachusetts were filed in December 2018 and February 2019; City of Salem, City of Framingham, Town of Lynnfield, City of Springfield, City of Haverhill, City of Gloucester, Town of Canton, Town of Wakefield; and City of Chicopee. The plaintiffs in these lawsuits are seeking to transfer and consolidate each of the additional lawsuits for possible coordination before the Business Litigation Session. The same plaintiffs’ law firm has indicated it intends to file more complaints against us and other pharmaceutical manufacturers and distributors on behalf of additional Massachusetts municipalities.

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.

Operating Leases

In March 2018, the Company entered into an operating lease for its new corporate headquarters (the “Stoughton Lease”) pursuant to which the Company leases approximately 50,678 of rentable square feet of space, in Stoughton, Massachusetts. The Stoughton Lease commenced in August 2018 when the Company took possession of the space after tenant improvements were substantially complete. After the initial four-month free rent period following possession of the space, the operating lease will continue for a term of 10 years. The Company has the right to extend the term of the Stoughton Lease for two additional five-year terms, provided that written notice is provided to the landlord no later than 12 months prior to the expiration of the then current Stoughton Lease term. The annual base rent is $1,214, or $23.95 per rentable square foot, and will increase annually by 2.5% to 3.1% over the subsequent years. The Company recognizes rent expense on a straight-line basis over the lease term and records rent expense in excess of contractual lease payments as deferred rent liability.

The Company continues to lease 9,660 square feet of office and research space at its former corporate headquarters located in Canton, Massachusetts (the “Canton Lease”). The Canton Lease terminates in August 2020 and may be extended for an additional five years at the Company’s election.

Aggregate minimum lease commitments of the Company under its non‑cancelable operating leases as of December 31, 2018 are as follows:



2019	$	1,032
2020		1,305
2021		1,261
2022		1,299
2023		1,337
After 2023		8,423
Total minimum lease payments	$	14,657

Rent expense under the operating lease agreements amounted to approximately $817, $194 and $182 for the years ended December 31, 2018, 2017 and 2016, respectively. Deferred rent was approximately $734 as of December 31, 2018. Deferred rent as of December 31, 2017 was immaterial. In addition, as of December 31, 2017, the Company maintained a stand by letter of credit in connection with the Canton Lease of $97, which was classified as restricted cash in the Consolidated Balance Sheets. As of December 31, 2018, the Company was no longer required to maintain a standby letter of credit for the Canton lease and therefore no longer has a restricted cash balance relating to the Canton Lease.

Amounts provided by the lessor related to tenant improvements are considered inducements to enter into the lease. The Company has recorded these costs in the Consolidated Balance Sheets as leasehold improvements, with the corresponding liabilities as deferred lease incentive and lease note payable. These liabilities are amortized on a straight‑line basis over the term of the lease.

TERM LOAN PAYABLE

12 Months Ended

Dec. 31, 2018

TERM LOAN PAYABLE

TERM LOAN PAYABLE

12. 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 Nucynta Commercialization Agreement, 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, which replaced the Existing Term Loan and the proceeds of which were used by the Company to finance certain payment obligations under the Nucynta 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 Nucynta Commercialization Agreement.

The Consent and Amendment 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 Consent and Amendment 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 Consent and Amendment, 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. Under the Consent and Amendment, 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%.

In November 2018, the Company entered into an amended and restated Loan and Security Agreement (“New Term Loan”) with SVB, that supersedes the Company’s original loan agreement and subsequent amendments with SVB. The New Term Loan amended and restated the loan documentation between the Company and SVB and modified the minimum liquidity ratio to be at least 1.5 to 1.0, along with other non-material changes. The New Term Loan did not modify the Company’s borrowings, interest rates, or repayment terms.

As of December 31, 2018, scheduled principle repayments under the Company’s term loan are as follows:


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

EQUITY

12 Months Ended

Dec. 31, 2018

Equity

EQUITY

13. EQUITY

Common Stock

As of December 31, 2018 and 2017, the Company had reserved the following shares of common stock for the issuance of shares upon the exercise of stock options and warrants and the issuance of shares under the 2015 Employee Stock Purchase Plan:


	As of December 31,
	2018	2017
Options to purchase common stock	4,710,771	4,153,055
Employee stock purchase plan	788,053	547,276
Warrants	1,041,667	2,445
Total	6,540,491	4,702,776

Warrants

As of December 31, 2018, the warrant issued to Assertio in November 2018 was the Company’s only outstanding warrant, which is described in greater detail in Note 9.

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2018

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

14. STOCK‑BASED COMPENSATION

Stock Options, Restricted Stock Awards and Restricted Stock Units

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 to be added 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 December 31, 2018, 1,166,529 shares of common stock were available for issuance pursuant to the Plan. The Plan provides for granting of both Internal Revenue Service qualified incentive stock options (“ISOs”) and non‑qualified options (“NQs”), restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). Stock options generally vest over a four year period of service. The 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.

Stock option activity under the Plan is summarized as 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	1,159,280		23.76
Exercised	(349,777)		12.17
Cancelled	(261,337)		17.83
Outstanding at December 31, 2018	3,585,856	$	16.20	8.0	$	11,170
Exercisable at December 31, 2018	1,608,346	$	12.63	7.2	$	7,690
Vested and expected to vest at December 31, 2018	3,389,023	$	15.97	7.9	$	10,882

The total intrinsic value of stock options exercised for the year ended December 31, 2018 was $3,970. As of December 31, 2018, the unrecognized compensation cost related to outstanding options was $19,285, and is expected to be recognized as expense over approximately 2.4 years.

As of December 31, 2018, the weighted-average grant date fair value of vested options was $8.38. The weighted-average grant date fair value of options granted during the year ended December 31, 2018 was $14.51. The weighted-average grant date fair value of options that vested during the year ended December 31, 2018 was $8.11.

Restricted stock awards under the Plan are summarized 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 December 31, 2018	—	$	—

(1) Excludes 3,018 shares of unvested restricted stock remaining from the early exercise of stock options as of December 31, 2018.

The total fair value of restricted stock awards vested during the year ended December 31, 2018, was $62. As of December 31, 2018, there is no unrecognized compensation cost related to restricted stock awards.

Restricted stock units under the Plan are summarized as follows:


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2017	218,872	$	12.64
Granted	403,334		23.41
Vested	(85,119)		13.00
Forfeited	(22,484)		20.84
Outstanding at December 31, 2018	514,603	$	20.67

As of December 31, 2018, the unrecognized compensation cost related to restricted stock units was $7,987 and is expected to be recognized as expense over approximately 2.4 years.

Employee Stock Purchase Plan

The Company’s 2015 Employee Stock Purchase Plan allows employees as designated by the Company’s Board of Directors to purchase shares of the Company’s common stock. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on (1) the first day of the purchase period or (2) the last day of the purchase period. The first purchase period commenced in the year ended December 31, 2016. The expense for the years ended December 31, 2018, 2017 and 2016 was $493, $380 and $457, respectively.

Stock‑Based Compensation Expense

The Company granted stock options to employees for the years ended December 31, 2018, 2017 and 2016. The Company estimates the fair value of stock options as of the date of grant using the Black‑Scholes option pricing model and restricted stock awards and restricted stock units based on the fair value of the award.

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


	Years ended December 31,
		2018		2017		2016
Research and development	$	1,468	$	888	$	638
Selling, general and administrative		12,310		7,057		5,149
Total stock-based compensation expense	$	13,778	$	7,945	$	5,787

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


	Year ended December 31,
	2018		2017		2016
Risk-free interest rate	2.6	%	2.0	%	1.5	%
Volatility	64.8	%	71.0	%	76.3	%
Expected term (years)	6.11		6.01		6.02
Expected dividend yield	—	%	—	%	—	%

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

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

Expected Term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior through December 31, 2018 it determined the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period.

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

INCOME TAXES

12 Months Ended

Dec. 31, 2018

INCOME TAXES

INCOME TAXES

15. INCOME TAXES

For the years ended December 31, 2018, 2017 and 2016, 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.

The enactment of the Tax Cuts and Jobs Act (TCJA) in December 2017, as further described below, resulted in a remeasurement of the Company’s net deferred tax asset due to the reduction in corporate rates from 35% to a 21% flat tax, which is included in the Company’s 2017 rate reconciliation. A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the consolidated financial statements is as follows:


	As of December 31,
	2018		2017		2016
Federal income tax expense at statutory rate	21.00	%	34.00	%	34.00	%
(Increase) decrease income tax (benefit) resulting from:
State income tax, net of federal benefit	5.89		3.93		3.43
Permanent differences	(2.51)		(2.49)		(1.45)
U.S. - TCJA	—		(43.32)		—
Research and development credit	0.52		0.53		0.27
Change in valuation allowance	(24.90)		7.35		(36.25)
Effective income tax rate	0.00	%	0.00	%	0.00	%

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


	As of December 31,
	2018		2017		2016
Deferred tax assets:
U.S. and state net operating loss carryforwards	$	82,501	$	62,715	$	71,049
Research and development credits		4,364		3,892		3,712
Accruals and other		4,676		3,615		1,541
Depreciation and amortization		269		145		261
Total deferred tax assets		91,810		70,367		76,563
Valuation allowance		(80,290)		(70,367)		(76,563)
Deferred tax assets after valuation allowance		11,520		—		—
Deferred tax liabilities – intangible assets		(11,520)		—		—
Net deferred tax assets	$	—	$	—	$	—

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. As of December 31, 2018, and December 31, 2017, based on the Company's history of operating losses, the Company has concluded that it is not more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2018 and December 31, 2017. The valuation allowance increased $9,923 during the year ended December 31, 2018 due primarily to net operating losses generated during the year. The valuation allowance decreased $6,196 during 2017 primarily due to the enacted change in the corporate income tax rate from the enactment of TCJA signed into law in December 2017.

As of December 31, 2018, 2017, and 2016, the Company had U.S. federal net operating loss carryforwards of $324,533, $249,511, and $190,926, respectively, which may be available to offset future income tax liabilities. TCJA will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the NOL deduction to the lesser of the NOL carryover or 80% of a corporation’s taxable income (subject to Code Section 382/383). Also, there will be no carryback for losses incurred after 2017. Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s NOL carryover or 100% of a corporation’s taxable income (subject to Code Section 382/383) and be available for twenty years from the period the loss was generated.

As of December 31, 2018, 2017, and 2016, the Company also had U.S. state net operating loss carryforwards of $285,181, $205,074, and $145,902, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2038.

As of December 31, 2018, 2017 and 2016, the Company had federal research and development tax credit carryforwards of approximately $3,628, $3,426, and $3,367, respectively, available to reduce future tax liabilities which expire at various dates through 2038. As of December 31, 2018, 2017 and 2016 the Company had state research and development tax credit carryforwards of approximately $885, $589, and $522, respectively, available to reduce future tax liabilities which expire at various dates through 2033.

The TCJA was enacted in December 2017. Among other things, the TCJA reduces the U.S. federal corporate tax rate from 35 percent to 21 percent beginning in 2018. During 2018 the Company finalized its review of the impact of TCJA on the NOL rules and determined its impact on its NOL carryovers. The impact of TCJA to the Company was primarily attributable to the limitation on the deductions associated with executive compensation under Internal Revenue Code Section 162(m). The Company made adjustments during 2018 to its carryovers associated with its analysis of TCJA so that as of December 31, 2018, the Company’s NOL carryovers have been adjusted to comply with the impact of TCJA’s changes to the tax treatment of executive compensation under Internal Revenue Code Section 162(m). Since a full valuation allowance has been provided against the Company’s net deferred tax asset, the impact of adjustments during 2018 to the net deferred tax asset associated with the impact of TCJA does not result in any financial statement impact.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed numerous financings as well as its IPO since its inception. The Company has not completed a current study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since its formation. As a result, if the Company earns net taxable income, its ability to use its pre-change NOL carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

The Company files income tax returns in the United States and in several states. The federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2015 through December 31, 2018. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. The Company originally recorded an unrecognized tax benefit of $902 (net rate effected unrecognized tax benefit of $235) during 2017 associated with its IRS examination of its 2015 federal income tax return, and accordingly reduced its NOL deferred tax asset during 2017. The Company settled its IRS audit during 2018, which resulted in a total decrease to its NOL carryover of $36. As a result of the IRS settlement, the Company reversed this unrecognized tax benefit and trued-up its NOL carryover during 2018 to reflect the reduction of the $36 to its NOL as required by the IRS settlement. This is included in the tabular rollforward below of gross unrecognized tax benefits. Since a full valuation allowance has been provided against the Company’s net operating loss carryover, the true up of the NOL carryover and associated deferred tax asset during 2018 does not result in any financial statement impact.

For all years through December 31, 2018, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s research and development credit carryforwards. The Company has reduced its deferred tax asset for its estimate of credits that could be reduced, and that is included in the tabular rollforward of uncertain tax positions. Since a full valuation allowance has been provided against the Company’s research and development credits the reduction in the gross deferred tax asset established for the research and development credit carryforwards does not result in any financial statement impact.

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


	As of December 31,
	2018		2017
Gross UTB Balance at January 1	$	1,364	$	—
Additions based on tax positions related to the current year		64		57
Additions for tax positions of prior years		—		1,307
Reductions for tax positions of prior years		(24)		—
Settlements		(902)		—
Reductions due to lapse of applicable statute of limitations		—		—

Gross UTB Balance at December 31		502		1,364

Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation)	$	481	$	680

EMPLOYEE BENEFITS	12 Months Ended
EMPLOYEE BENEFITS	Dec. 31, 2018
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS	16. EMPLOYEE BENEFITS The Company has a retirement savings plan, which is qualified under section 401(k) of the Code, for its employees. The plan allows eligible employees to defer, at the employee’s discretion, pretax compensation up to the Internal Revenue Service annual limits. Employees become eligible to participate starting on the first day of employment. The Company is not required to contribute to this plan. Total expense for contributions made by the Company for the years ended December 31, 2018, 2017 and 2016 was $1,208, $969 and $613 respectively.

UNAUDITED QUARTERLY OPERATING RESULTS

12 Months Ended

Dec. 31, 2018

UNAUDITED QUARTERLY OPERATING RESULTS

UNAUDITED QUARTERLY OPERATING RESULTS

17. UNAUDITED QUARTERLY OPERATING RESULTS

The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2018 and 2017:


		First		Second		Third		Fourth
Year ended December 31, 2018		Quarter		Quarter		Quarter		Quarter (2)
Product revenues, net	$	63,749	$	73,061	$	70,176	$	73,427

Costs and expenses
Cost of product revenues		43,106		46,838		46,007		29,726
Research and development		2,268		2,237		1,907		2,249
Selling, general and administrative		31,582		31,279		33,448		30,451
Total costs and expenses		76,956		80,354		81,362		62,426
Loss from operations	$	(13,207)	$	(7,293)	$	(11,186)	$	11,001

Interest expense		(5,700)		(6,158)		(5,868)		(2,404)
Interest income		255		391		552		489
Net loss	$	(18,652)	$	(13,060)	$	(16,502)	$	9,086

Weighted-average shares - basic		32,903,674		32,967,718		33,012,174		33,250,180
(Loss) earnings per share - basic	$	(0.57)	$	(0.40)	$	(0.50)	$	0.27

Weighted-average shares - diluted		32,903,674		32,967,718		33,012,174		33,769,765
(Loss) earnings per share - diluted	$	(0.57)	$	(0.40)	$	(0.50)	$	0.27

		First		Second		Third		Fourth
Year ended December 31, 2017		Quarter		Quarter		Quarter (1)		Quarter
Product revenues, net	$	2,172	$	3,560	$	11,950	$	10,794

Costs and expenses
Cost of product revenues		371		577		553		1,094
Research and development		2,130		2,179		2,069		2,194
Selling, general and administrative		22,847		22,062		22,758		25,089
Total costs and expenses		25,348		24,818		25,380		28,377
Loss from operations	$	(23,176)	$	(21,258)	$	(13,430)	$	(17,583)

Interest income		98		137		167		180
Net loss	$	(23,078)	$	(21,121)	$	(13,263)	$	(17,403)

Weighted-average shares - basic and diluted		29,350,268		29,441,514		29,753,043		32,485,572
Loss per share - basic and diluted	$	(0.79)	$	(0.72)	$	(0.45)	$	(0.54)

(1) - In the third quarter of 2017, the Company recorded a one-time $4,377 increase to revenues as a result of the Company’s change to the sell-in method in the third quarter of 2017. (2) - In the fourth quarter of 2018, the Company executed the Third Amendment to the Nucynta Commercialization Agreement, which eliminated the guaranteed minimum royalty payment obligations after 2018. As a result, the Company remeasured the remaining contractual obligation as of the Amendment Date and reduced the intangible asset. Consequently, amortization expense included within cost of product revenues was $15,494 in the fourth quarter compared to $32,407, $32,407 and $29,526 in the third, second and first quarters, respectively. Similarly, interest expense associated with the minimum royalty payments was $2,169 in the fourth quarter compared to $5,641, $5,943 and $5,528 in the third, second and first quarters, respectively. See Note 9 for further detail.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Fair Value Measurements


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

Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2018 and 2017.

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


						Significant
				Quoted Prices		other		Significant
				in active		observable		unobservable
				markets		inputs		inputs
December 31, 2018		Total		(Level 1)		(Level 2)		(Level 3)
Money market funds, included in cash equivalents	$	92,914	$	92,914	$	—	$	—

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

As of December 31, 2018, and December 31, 2017, the carrying amounts of the Company’s other assets and liabilities approximated their estimated fair values.

Concentration of Credit Risk

Cash and Cash Equivalents

Inventory

The Company has capitalized $7,817 of inventory as of December 31, 2018. The Company expects sales of the capitalized units to occur during the next twelve months.

Property and Equipment


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

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

Intangible Assets

Restricted Cash

Revenue Recognition

Adoption of ASC Topic 606, Revenue from Contracts with Customers

Performance Obligations

Transaction Price and Variable Consideration

Research and Development Costs

Patent Costs

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

Advertising and Product Promotion Costs

Stock-Based Compensation

Stock‑Based Compensation

Income Taxes

Net Loss per Common Share

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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

Recently Issued Accounting Pronouncements Not Yet Adopted

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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
December 31, 2018		Total		(Level 1)		(Level 2)		(Level 3)
Money market funds, included in cash equivalents	$	92,914	$	92,914	$	—	$	—

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

Schedule of estimated useful lives of property and equipment


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

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

12 Months Ended

Dec. 31, 2018

REVENUE FROM CONTRACTS WITH CUSTOMERS

Summary of product revenue provision and allowance


					Trade
	Rebates and		Product		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		243,158		17,326		68,189
Liabilities assumed from asset acquisition (4)		22,406		—		254
Changes in estimate related to prior period sales		(32)		—		—
Credits/payments made		(148,861)		(4,998)		(55,858)
Balance at December 31, 2018	$	129,318	$	15,465	$	14,841


	(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.
	(4)		The Company recorded a liability of $22,660 related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018, for which the Company is liable under the terms of the Nucynta 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.

Schedule of disaggregation of revenue


	Year ended December 31,
	2018		2017		2016
Xtampza ER	$	69,383	$	28,476	$	1,711
Nucynta Products		211,030		—		—
Total product revenues, net	$	280,413	$	28,476	$	1,711

NET LOSS PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 2018

NET LOSS PER COMMON SHARE

Schedule of computations of basic and diluted net loss per share


	Years ended December 31,
		2018		2017		2016
Loss attributable to common shareholders — basic and diluted	$	(39,128)	$	(74,865)	$	(94,176)
Weighted-average number of common shares used in net loss per share - basic and diluted		32,953,808		30,265,262		24,262,945
Loss per share - basic and diluted	$	(1.19)	$	(2.47)	$	(3.88)

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


	Years ended December 31,
	2018	2017	2016
Outstanding stock options	3,585,856	3,037,690	2,326,801
Warrants	1,041,667	2,445	2,445
Unvested restricted stock (1)	3,018	31,943	82,512
Restricted stock units	514,603	218,872	41,741

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

INVENTORY (Tables)

12 Months Ended

Dec. 31, 2018

INVENTORY

Schedule of Inventory


	As of December 31,		As of December 31,
	2018		2017
Raw materials	$	496	$	616
Work in process		671		322
Finished goods		6,650		875
Total inventory	$	7,817	$	1,813

PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables)

12 Months Ended

Dec. 31, 2018

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Schedule of components of prepaid expenses and other current assets


	As of December 31,
	2018		2017
Prepaid regulatory fees	$	3,035	$	1,434
Other prepaid expenses		655		279
Prepaid insurance		340		310
Prepaid development costs		78		526
Other current assets		1,008		456
Prepaid expenses and other current assets	$	5,116	$	3,005

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2018

PROPERTY AND EQUIPMENT

Schedule of components of property and equipment


	As of December 31,
	2018		2017
Machinery and equipment	$	1,613	$	1,447
Computers and office equipment		1,277		702
Leasehold improvements		567		700
Furniture and fixtures		1,111		117
Construction-in-process		6,543		528
Total property and equipment		11,111		3,494
Less: accumulated deprecation		(1,837)		(1,668)
Property and equipment, net	$	9,274	$	1,826

INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2018

INTANGIBLE ASSETS

Costs accumulated to acquire assets and consideration allocated to assets

The table below represents the costs accumulated as of December 31, 2018, to acquire the sublicense of the Nucynta Products based on the terms of the Nucynta Commercialization Agreement, as amended:


Acquisition consideration:
Upfront cash paid	$	18,877
Minimum royalty payment obligation (1)		112,719
Rebates, incentives, trade allowances and chargebacks assumed		22,660
Warrant issued		8,043
Total acquisition consideration:	$	162,299

(1)

Represents $132,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $19,281.

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


Assets acquired:
Nucynta Intangible Asset	$	154,089
Inventory		6,223
Prepaid expenses		1,987
Total consideration allocated to assets acquired:	$	162,299

Summary of costs included in acquired asset

Costs included in Nucynta Intangible Asset:
Upfront cash paid	$	10,000
Transaction costs		667
Minimum royalty payment obligation (2)		482,300
Rebates, incentives, trade allowances and chargebacks assumed (3)		22,660
Total cost:	$	515,627

(1)

Represents $537,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $54,700.

(2)

Gross carrying amount, accumulated amortization, and net book value of asset

		Gross Carrying Value		Accumulated Amortization		Net Book Value
Cost basis as of acquisition date:	$	515,627	$	-	$	515,627
Amortization from acquisition date through Amendment Date		-		(107,662)		(107,662)
Adjustment due to the remeasurement of liability as of Amendment Date		(369,581)		-		(369,581)
Additional costs incurred as of Amendment Date(4)		8,043		-		8,043
Amortization from Amendment Date through period end		-		(2,172)		(2,172)
Total, as amended:	$	154,089	$	(109,834)	$	44,255

(1)

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

Summary of amortization expense


	Years ended December 31,
		2018		2017		2016
Nucynta amortization expense included in cost of product revenues	$	109,834	$	—	$	—
Onsolis amortization expense included in selling, general and administrative expense		—		258		397
Total amortization expense	$	109,834	$	258	$	397

ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2018

ACCRUED EXPENSES

Schedule of components of accrued expenses


	As of December 31,		As of December 31,
	2018		2017
Accrued cost of product revenues	$	15,138	$	—
Accrued bonuses		4,286		2,940
Accrued inventory		3,745		—
Accrued sales and marketing		2,193		624
Accrued incentive compensation		1,806		1,790
Accrued payroll and related benefits		1,544		1,382
Accrued audit and legal		480		405
Accrued interest		274		6
Accrued development costs		—		517
Accrued other operating costs		1,085		877
Total accrued expenses	$	30,551	$	8,541

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2018

COMMITMENTS AND CONTINGENCIES

Schedule of aggregate minimum annual lease commitments under non-cancellable operating lease



2019	$	1,032
2020		1,305
2021		1,261
2022		1,299
2023		1,337
After 2023		8,423
Total minimum lease payments	$	14,657

TERM LOAN PAYABLE (Tables)

12 Months Ended

Dec. 31, 2018

TERM LOAN PAYABLE

Schedule of future payments under debt agreements


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

EQUITY (Tables)

12 Months Ended

Dec. 31, 2018

Equity

Schedule of shares of common stock reserved for future issuance


	As of December 31,
	2018	2017
Options to purchase common stock	4,710,771	4,153,055
Employee stock purchase plan	788,053	547,276
Warrants	1,041,667	2,445
Total	6,540,491	4,702,776

STOCK BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2018

STOCK-BASED COMPENSATION

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 December 31, 2018	—	$	—

(1) Excludes 3,018 shares of unvested restricted stock remaining from the early exercise of stock options as of December 31, 2018.

Summary of restricted stock units activity


		Weighted-Average
	Shares	Grant Date Fair Value
Outstanding at December 31, 2017	218,872	$	12.64
Granted	403,334		23.41
Vested	(85,119)		13.00
Forfeited	(22,484)		20.84
Outstanding at December 31, 2018	514,603	$	20.67

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	1,159,280		23.76
Exercised	(349,777)		12.17
Cancelled	(261,337)		17.83
Outstanding at December 31, 2018	3,585,856	$	16.20	8.0	$	11,170
Exercisable at December 31, 2018	1,608,346	$	12.63	7.2	$	7,690
Vested and expected to vest at December 31, 2018	3,389,023	$	15.97	7.9	$	10,882

Summary of stock-based compensation


	Years ended December 31,
		2018		2017		2016
Research and development	$	1,468	$	888	$	638
Selling, general and administrative		12,310		7,057		5,149
Total stock-based compensation expense	$	13,778	$	7,945	$	5,787

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


	Year ended December 31,
	2018		2017		2016
Risk-free interest rate	2.6	%	2.0	%	1.5	%
Volatility	64.8	%	71.0	%	76.3	%
Expected term (years)	6.11		6.01		6.02
Expected dividend yield	—	%	—	%	—	%

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

INCOME TAXES

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


	As of December 31,
	2018		2017		2016
Federal income tax expense at statutory rate	21.00	%	34.00	%	34.00	%
(Increase) decrease income tax (benefit) resulting from:
State income tax, net of federal benefit	5.89		3.93		3.43
Permanent differences	(2.51)		(2.49)		(1.45)
U.S. - TCJA	—		(43.32)		—
Research and development credit	0.52		0.53		0.27
Change in valuation allowance	(24.90)		7.35		(36.25)
Effective income tax rate	0.00	%	0.00	%	0.00	%

Schedule of significant components of deferred tax assets and liabilities


	As of December 31,
	2018		2017		2016
Deferred tax assets:
U.S. and state net operating loss carryforwards	$	82,501	$	62,715	$	71,049
Research and development credits		4,364		3,892		3,712
Accruals and other		4,676		3,615		1,541
Depreciation and amortization		269		145		261
Total deferred tax assets		91,810		70,367		76,563
Valuation allowance		(80,290)		(70,367)		(76,563)
Deferred tax assets after valuation allowance		11,520		—		—
Deferred tax liabilities – intangible assets		(11,520)		—		—
Net deferred tax assets	$	—	$	—	$	—

Schedule of reconciliation of gross unrecognized tax benefits


	As of December 31,
	2018		2017
Gross UTB Balance at January 1	$	1,364	$	—
Additions based on tax positions related to the current year		64		57
Additions for tax positions of prior years		—		1,307
Reductions for tax positions of prior years		(24)		—
Settlements		(902)		—
Reductions due to lapse of applicable statute of limitations		—		—

Gross UTB Balance at December 31		502		1,364

Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation)	$	481	$	680

UNAUDITED QUARTERLY OPERATING RESULTS (Tables)

12 Months Ended

Dec. 31, 2018

UNAUDITED QUARTERLY OPERATING RESULTS

Summary of unaudited quarterly results of operations


		First		Second		Third		Fourth
Year ended December 31, 2018		Quarter		Quarter		Quarter		Quarter (2)
Product revenues, net	$	63,749	$	73,061	$	70,176	$	73,427

Costs and expenses
Cost of product revenues		43,106		46,838		46,007		29,726
Research and development		2,268		2,237		1,907		2,249
Selling, general and administrative		31,582		31,279		33,448		30,451
Total costs and expenses		76,956		80,354		81,362		62,426
Loss from operations	$	(13,207)	$	(7,293)	$	(11,186)	$	11,001

Interest expense		(5,700)		(6,158)		(5,868)		(2,404)
Interest income		255		391		552		489
Net loss	$	(18,652)	$	(13,060)	$	(16,502)	$	9,086

Weighted-average shares - basic		32,903,674		32,967,718		33,012,174		33,250,180
(Loss) earnings per share - basic	$	(0.57)	$	(0.40)	$	(0.50)	$	0.27

Weighted-average shares - diluted		32,903,674		32,967,718		33,012,174		33,769,765
(Loss) earnings per share - diluted	$	(0.57)	$	(0.40)	$	(0.50)	$	0.27

		First		Second		Third		Fourth
Year ended December 31, 2017		Quarter		Quarter		Quarter (1)		Quarter
Product revenues, net	$	2,172	$	3,560	$	11,950	$	10,794

Costs and expenses
Cost of product revenues		371		577		553		1,094
Research and development		2,130		2,179		2,069		2,194
Selling, general and administrative		22,847		22,062		22,758		25,089
Total costs and expenses		25,348		24,818		25,380		28,377
Loss from operations	$	(23,176)	$	(21,258)	$	(13,430)	$	(17,583)

Interest income		98		137		167		180
Net loss	$	(23,078)	$	(21,121)	$	(13,263)	$	(17,403)

Weighted-average shares - basic and diluted		29,350,268		29,441,514		29,753,043		32,485,572
Loss per share - basic and diluted	$	(0.79)	$	(0.72)	$	(0.45)	$	(0.54)

(1) - In the third quarter of 2017, the Company recorded a one-time $4,377 increase to revenues as a result of the Company’s change to the sell-in method in the third quarter of 2017. (2) - In the fourth quarter of 2018, the Company executed the Third Amendment to the Nucynta Commercialization Agreement, which eliminated the guaranteed minimum royalty payment obligations after 2018. As a result, the Company remeasured the remaining contractual obligation as of the Amendment Date and reduced the intangible asset. Consequently, amortization expense included within cost of product revenues was $15,494 in the fourth quarter compared to $32,407, $32,407 and $29,526 in the third, second and first quarters, respectively. Similarly, interest expense associated with the minimum royalty payments was $2,169 in the fourth quarter compared to $5,641, $5,943 and $5,528 in the third, second and first quarters, respectively. See Note 9 for further detail.

NATURE OF BUSINESS (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended			12 Months Ended
	Mar. 31, 2017	Oct. 31, 2016	Jan. 31, 2016	Dec. 31, 2017	Dec. 31, 2018
Subsidiary or Equity Method Investee [Line Items]
Common stock sold (in shares)				3,126,998
Issue 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
Accumulated deficit				$ (298,049)	$ (337,177)
Initial public offering
Subsidiary or Equity Method Investee [Line Items]
Common stock sold (in shares)		5,750,000	2,750,000
Proceeds from Issuance Initial Public Offering		$ 86,166	$ 51,174
Issue price (in dollars per share)		$ 16.00	$ 20.00

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($)	Dec. 31, 2018 USD ($) customer shares	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Nov. 30, 2018 shares
Marketing and Advertising Expense		$ 17,497	$ 11,019	$ 16,328
Common stock that may be purchased upon exercise of warrant (in shares) \| shares		1,041,667			1,041,667
Inventory		$ 7,817	1,813
Restricted cash			97
Accrued interest or penalties related to uncertain tax positions		0	0
Accrued interest or penalties paid related to uncertain tax positions		0	0
Increase in revenue due to change in selling method	$ 4,377
Financial instruments with off balance sheet risk of loss, assets		0
Financial instruments with off balance sheet risk of loss, liabilities		0
Stand-by letter of credit
Restricted cash		$ 97	$ 0
Accounts Receivable \| Customer Concentration Risk
Number of customers		3
Accounts Receivable \| Customer Concentration Risk \| Customer One
Concentration Risk, Percentage		54.00%
Accounts Receivable \| Customer Concentration Risk \| Customer Two
Concentration Risk, Percentage		26.00%
Accounts Receivable \| Customer Concentration Risk \| Customer Three
Concentration Risk, Percentage		16.00%
Revenue \| Customer Concentration Risk
Number of customers \| customer		3
Revenue \| Customer Concentration Risk \| Customer One
Concentration Risk, Percentage		36.00%
Revenue \| Customer Concentration Risk \| Customer Two
Concentration Risk, Percentage		31.00%
Revenue \| Customer Concentration Risk \| Customer Three
Concentration Risk, Percentage		27.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial Instruments Carried at Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Money market funds
Fair value measurements
Cash and cash equivalents	$ 92,914	$ 81,225
Quoted Prices in active markets (Level 1)
Fair value measurements
Cash and cash equivalents	$ 92,914	$ 81,225

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment Useful Lives (Details)	12 Months Ended
	Dec. 31, 2018
Machinery and equipment
Property and Equipment
Estimated Useful Life	5 years
Computers and office equipment \| Minimum
Property and Equipment
Estimated Useful Life	3 years
Computers and office equipment \| Maximum
Property and Equipment
Estimated Useful Life	5 years
Furniture and fixtures
Property and Equipment
Estimated Useful Life	7 years

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Adopted and not yet Adopted Accounting Pronouncements (Details) - Adjustment - ASU 2016-02 $ in Thousands	Jan. 01, 2019 USD ($)
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
ROU assets	$ 11,500
Lease liability	11,500
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
ROU assets	9,500
Lease liability	$ 9,500

REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2017 USD ($)
REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue recognition for product sales	$ 4,377
Practical expedient incremental cost	true

REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Liabilities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Allowance categories
Assumed liability related to product sales	$ 22,660
Rebates and Incentives
Allowance categories
Balance at beginning of the period	12,647
Provision related to current period sales	243,158
Liabilities assumed from asset acquisition	22,406
Changes in estimate related to prior period sales	(32)
Credits/payments made	(148,861)
Balance at end of the period	129,318
Product Returns
Allowance categories
Balance at beginning of the period	3,137
Provision related to current period sales	17,326
Credits/payments made	(4,998)
Balance at end of the period	15,465
Trade Allowances and Chargebacks
Allowance categories
Balance at beginning of the period	2,256
Provision related to current period sales	68,189
Liabilities assumed from asset acquisition	254
Credits/payments made	(55,858)
Balance at end of the period	$ 14,841

REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disaggregation of Revenue
Revenue	$ 280,413	$ 28,476	$ 1,711
Xtampza
Disaggregation of Revenue
Revenue	69,383	$ 28,476	$ 1,711
Nucynta
Disaggregation of Revenue
Revenue	$ 211,030

LICENSE AGREEMENTS (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended		3 Months Ended								12 Months Ended
	Jan. 09, 2018	Nov. 30, 2018	May 31, 2016	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
License Agreements [Line Items]
Cost of product revenues				$ 29,726	$ 46,007	$ 46,838	$ 43,106	$ 1,094	$ 553	$ 577	$ 371	$ 165,677	$ 2,595	$ 213
Annual net sales				73,427	70,176	73,061	63,749	10,794	$ 11,950	$ 3,560	$ 2,172	280,413	28,476	1,711
Exercise price of warrant		$ 19.20
Onsolis
License Agreements [Line Items]
Upfront cash payment			$ 2,500
Nucynta Commercialization Agreement \| Assertio
License Agreements [Line Items]
Annual royalty payable	$ 135,000
Nucynta Commercialization Agreement \| Nucynta \| Assertio
License Agreements [Line Items]
Payment for inventory	6,223
Reimbursement for prepaid expenses	1,987
Liability relating to sales	22,660
Variable royalty payment based on net sales	233,000
Quarterly royalty payable	33,750
Nucynta Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 1 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales on and after January 1, 2022		58.00%
Nucynta Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 2 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales on and after January 1, 2022		25.00%
Nucynta Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 3 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales on and after January 1, 2022		17.50%
Royalty payment limit on and after January 1, 2022		$ 258,000
Nucynta Commercialization Agreement \| Nucynta \| Assertio \| Minimum \| Sales Royalty Structure 2 [member]
License Agreements [Line Items]
Royalty payment limit on and after January 1, 2022		233,000
Nucynta Commercialization Agreement \| Nucynta \| Assertio \| Maximum \| Sales Royalty Structure 1 [member]
License Agreements [Line Items]
Royalty payment limit on and after January 1, 2022		233
Nucynta Commercialization Agreement \| Nucynta \| Assertio \| Maximum \| Sales Royalty Structure 2 [member]
License Agreements [Line Items]
Royalty payment limit on and after January 1, 2022		$ 258,000
Nucynta Commercialization Agreement \| License \| Assertio
License Agreements [Line Items]
Cost of product revenues	$ 10,000
Third Amendment to the Commercialization Agreement
License Agreements [Line Items]
Cost of product revenues				15,494	$ 32,407	$ 32,407	$ 29,526
Number of shares that can be purchased		1,041,667
Exercise price of warrant		$ 19.20
Third Amendment to the Commercialization Agreement \| Nucynta
License Agreements [Line Items]
Minimum royalty payment eliminated		$ 135,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Maximum \| Any 12-month period through January 1, 2022
License Agreements [Line Items]
Net sales limit upon which Counterparty can terminate without penalty		180,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Maximum \| Any 12-month period commencing on January 1, 2022
License Agreements [Line Items]
Net sales limit upon which Counterparty can terminate without penalty		170,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio
License Agreements [Line Items]
Termination fee owed if Company terminates		$ 5,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 1 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021		65.00%
Royalty payment limit between January 1, 2019 and December 31, 2021		$ 180,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 2 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021		14.00%
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 3 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021		58.00%
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 4 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021		20.00%
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Sales Royalty Structure 5 [member]
License Agreements [Line Items]
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021		15.00%
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Minimum \| Sales Royalty Structure 2 [member]
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021		$ 180,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Minimum \| Sales Royalty Structure 3 [member]
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021		210,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Minimum \| Sales Royalty Structure 4 [member]
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021		233,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Minimum \| Sales Royalty Structure 5 [member]
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021		258,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Minimum \| Sales Royalty Structure 6 [member]
License Agreements [Line Items]
Annual net sales		$ 180,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Maximum
License Agreements [Line Items]
Percentage of supplemental royalty based on net sales		4.90%
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Maximum \| Sales Royalty Structure 2 [member]
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021		$ 200,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Maximum \| Sales Royalty Structure 3 [member]
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021		233,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Maximum \| Sales Royalty Structure 4 [member]
License Agreements [Line Items]
Royalty payment limit between January 1, 2019 and December 31, 2021		258,000
Third Amendment to the Commercialization Agreement \| Nucynta \| Assertio \| Maximum \| Sales Royalty Structure 6 [member]
License Agreements [Line Items]
Annual net sales		$ 243,000
License Agreement \| Onsolis Intangible Asset
License Agreements [Line Items]
Impairment loss													1,845
Net intangible asset				$ 0				$ 0				$ 0	$ 0
License Agreement \| BDSI
License Agreements [Line Items]
Annual net sales			4,000
milestone payments becomes payable			$ 21,000
License Agreement \| BDSI \| Onsolis Intangible Asset
License Agreements [Line Items]
Upfront cash payment														$ 2,500

NET LOSS PER COMMON SHARE - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
NET LOSS PER COMMON SHARE
Loss attributable to common shareholders — basic and diluted					$ (39,128)	$ (74,865)	$ (94,176)
Weighted-average number of common shares used in net loss per share - basic and diluted	32,485,572	29,753,043	29,441,514	29,350,268	32,953,808	30,265,262	24,262,945
Loss per share - basic and diluted	$ (0.54)	$ (0.45)	$ (0.72)	$ (0.79)	$ (1.19)	$ (2.47)	$ (3.88)

NET LOSS PER COMMON SHARE - Summary of Potentially Dilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Outstanding stock option
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding	3,585,856	3,037,690	2,326,801
Warrants
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding	1,041,667	2,445	2,445
Unvested restricted stock
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding	3,018	31,943	82,512
Restricted stock units
Anti-dilutive securities
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding	514,603	218,872	41,741

INVENTORY (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
INVENTORY
Raw materials	$ 496	$ 616
Work in process	671	322
Finished goods	6,650	875
Total inventory	$ 7,817	$ 1,813

PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid regulatory fees	$ 3,035	$ 1,434
Other current assets	1,008	456
Other prepaid expenses	655	279
Prepaid insurance	340	310
Prepaid development costs	78	526
Prepaid expenses and other current assets	$ 5,116	$ 3,005

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	12 Months Ended
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property and Equipment
Total property and equipment	$ 11,111	$ 3,494
Less: accumulated deprecation	(1,837)	(1,668)
Property and equipment, net	9,274	1,826
Depreciation expense	1,074	336	$ 258
Disposal of fully depreciated assets	905
Machinery and equipment
Property and Equipment
Total property and equipment	1,613	1,447
Computers and office equipment
Property and Equipment
Total property and equipment	1,277	702
Leasehold improvements
Property and Equipment
Total property and equipment	567	700
Furniture and fixtures
Property and Equipment
Total property and equipment	1,111	117
Construction-in-process
Property and Equipment
Total property and equipment	$ 6,543	$ 528

INTANGIBLE ASSETS - Costs Accumulated to Acquire Intangible Asset; and Consideration Transferred (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 09, 2018	Dec. 31, 2018
Acquisition consideration:
Upfront cash paid	$ 10,000	$ 18,877
Minimum royalty payment obligation	482,300	112,719
Rebates, incentives, trade allowances and chargebacks assumed	22,660	22,660
Warrant issued		8,043
Total cost	$ 515,627	162,299
Consideration transferred to assets acquired:
Intangible assets		154,089
Inventory		6,223
Prepaid expenses		1,987
Total consideration allocated to assets acquired		$ 162,299

INTANGIBLE ASSETS - Minimum Royalty Payments - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
INTANGIBLE ASSETS
Total remaining minimum royalty payments due	$ 537,000
2018	132,000
2019	135,000
2020	135,000
2021	135,000
Fair Value of royalty payments	$ 482,300
Discounted cash flow rate	5.70%
Interest expense recognized	$ 54,700
Interest expense recognized, relating to royalty payments, prior to third amendment	$ 19,281

INTANGIBLE ASSETS - Summary of Costs Included in Intangible Asset (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 09, 2018	Dec. 31, 2018
Acquisition consideration:
Upfront cash paid	$ 10,000	$ 18,877
Transaction costs	667
Minimum royalty payment obligation	482,300	112,719
Rebates, incentives, trade allowances and chargebacks assumed	22,660	22,660
Total cost	515,627	$ 162,299
Rebates and incentives assumed	22,406
Trade allowances and chargebacks assumed	$ 254

INTANGIBLE ASSETS - Gross carrying amount, accumulated amortization, and net book value (Details) - USD ($) $ in Thousands	2 Months Ended	10 Months Ended	12 Months Ended
	Dec. 31, 2018	Nov. 07, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Nov. 08, 2018	Jan. 09, 2018
Amortization expense			$ 109,834	$ 258	$ 397
Nucynta
Gross carrying value	$ 154,089		154,089				$ 515,627
Amortization expense	2,172	$ 107,662
Adjustment due to remeasurement of liability						$ (369,581)
Additional costs incurred						$ 8,043
Accumulated amortization, total, as amended	(109,834)		(109,834)
Net book value, total, as amended	$ 44,255		$ 44,255

INTANGIBLE ASSETS - Warrant and Amortization for Nucynta Intangible Asset - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Jan. 09, 2018	Dec. 31, 2018	Nov. 30, 2018
INTANGIBLE ASSETS
Common stock that may be purchased upon exercise of warrant (in shares)		1,041,667	1,041,667
Exercise price of warrant (in dollars per share)			$ 19.20
Useful life	4 years	3 years
Amortization expense recognized prior to third amendment		$ 107,662
2019		14,752
2020		14,752
2021		$ 14,751

INTANGIBLE ASSETS - Onsolis Intangible Asset - Narrative (Details) - Onsolis - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	May 31, 2016	Dec. 31, 2017	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Upfront cash payment	$ 2,500
Intangible asset balance post-impairment			$ 0
Selling, general and administrative expenses
Finite-Lived Intangible Assets [Line Items]
Impairment loss		$ 1,845

INTANGIBLE ASSETS - Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 109,834	$ 258	$ 397
Nucynta \| Cost of product revenues
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 109,834
Onsolis \| Selling, general and administrative expenses
Finite-Lived Intangible Assets [Line Items]
Amortization expense		$ 258	$ 397

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
ACCRUED EXPENSES
Accrued cost of product revenues	$ 15,138
Accrued bonuses	4,286	$ 2,940
Accrued inventory	3,745
Accrued sales and marketing	2,193	624
Accrued incentive compensation	1,806	1,790
Accrued payroll and related benefits	1,544	1,382
Accrued other operating costs	1,085	877
Accrued audit and legal	480	405
Accrued interest	274	6
Accrued development costs		517
Total accrued expenses	$ 30,551	$ 8,541

COMMITMENTS AND CONTINGENCIES (Details)					12 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Sep. 26, 2018 lawsuit	Jun. 12, 2018 lawsuit	May 04, 2018 lawsuit	Mar. 24, 2015 patent	Dec. 31, 2018 patent
Contingencies
Stay period before FDA can issue a final approval unless it is terminated					30 months
Number of lawsuits filed \| lawsuit	2	4	2
Number of patents listed in FDA Orange Book					14
Purdue Pharma, L. P. patent infringement suit, District of Delaware
Contingencies
Number of patents found not infringed					3
Purdue Pharma, L. P. patent infringement suit, District of Massachusetts
Contingencies
Number of patents allegedly infringed				3	5
Teva Litigation [member]
Contingencies
Number of patents allegedly infringed					11
Number of Orange Book patents asserted to have been infringed					12

COMMITMENTS AND CONTINGENCIES - Minimum Annual Lease Commitments (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($) ft² item $ / ft²	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2018 USD ($)
Aggregate minimum annual lease commitments under non cancellable operating lease
2019		$ 1,032
2020		1,305
2021		1,261
2022		1,299
2023		1,337
After 2023		8,423
Total minimum lease payments		14,657
Rent expense under operating lease agreement
Rent expense		194	$ 817	$ 182
Deferred rent					$ 734
Guarantees
Restricted cash		97
Stoughton, Massachusetts
Lease
Rent-free term	4 months
Square of feet of space \| ft²	50,678
Lease term	10 years
Number of renewal periods \| item	2
Term of lease extension option	5 years
Base rent	$ 1,214
Annual base rent per rentable square foot \| $ / ft²	23.95
Stoughton, Massachusetts \| Maximum
Lease
Increase in annual base rent	3.10%
Stoughton, Massachusetts \| Minimum
Lease
Increase in annual base rent	2.50%
Canton, Massachusetts
Lease
Square of feet of space \| ft²	9,660
Term of lease extension option	5 years
Stand-by letter of credit
Guarantees
Restricted cash		$ 97

TERM LOAN PAYABLE (Details) $ in Thousands		1 Months Ended	12 Months Ended
TERM LOAN PAYABLE (Details) $ in Thousands	Dec. 31, 2017 USD ($)	Nov. 30, 2018 shares	Dec. 31, 2018 USD ($) shares	Aug. 28, 2012 USD ($)
Loan and Security Agreements
Maximum borrowing capacity				$ 1,000
Future payments under the Existing Term Loan	$ 1,479
Common stock that may be purchased upon exercise of warrant (in shares) \| shares		1,041,667	1,041,667
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
Final payment fee			$ 719
Minimum liquidity ratio		1.5	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%
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) $ in Thousands	Dec. 31, 2018 USD ($)
Future payments under term loan
2019	$ 1,642
2020	3,286
2021	3,286
2022	3,286
Balance	$ 11,500

EQUITY (Details) - shares	Dec. 31, 2017	Dec. 31, 2016
Equity
Common stock reserved for future issuance (in shares)	6,540,491	4,702,776
Employee stock purchase plan
Equity
Common stock reserved for future issuance (in shares)	788,053	547,276
Employee stock options
Equity
Common stock reserved for future issuance (in shares)	4,710,771	4,153,055
Warrants
Equity
Common stock reserved for future issuance (in shares)	1,041,667	2,445

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($)	1 Months Ended	12 Months Ended
	May 31, 2015	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock-based compensation
Total fair value of shares vested		$ 8.11
Shares of common stock authorized for issuance outstanding (in shares)		3,585,856	3,037,690
Employee Stock Purchase Plan, Purchase Price Percentage		85.00%
Proceeds from issuances of common stock from employee stock purchase plans		$ 1,117,000	$ 1,141,000	$ 442,000
Employee Stock Purchase Plan, Compensation Expense		493,000	$ 380,000	$ 457,000
Outstanding stock option
Stock-based compensation
Unrecognized compensation cost related to outstanding options		$ 19,285,000
Period over which unrecognized compensation cost is expected to be recognized as expense		2 years 4 months 24 days
Weighted average fair value of vested options (in dollars per share)		$ 8.38
Weighted-average grant date fair value per share of employee option grants (in dollars per share)		$ 14.51
Vesting period		4 years
Contractual life		10 years
Compensation Arrangement by Share-based Payment		$ 3,970,000
Outstanding stock option \| Minimum
Stock-based compensation
Period following termination date vested options are exercisable		1 month
Outstanding stock option \| Maximum
Stock-based compensation
Period following termination date vested options are exercisable		3 months
Restricted Stock Awards
Stock-based compensation
Total fair value of shares vested		$ 62,000
Unrecognized stock-based compensation expense		$ 0
Restricted stock units
Stock-based compensation
Period over which unrecognized compensation cost is expected to be recognized as expense		2 years 4 months 24 days
Unrecognized stock-based compensation expense		$ 7,987,000
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		1,166,529
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%

STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Included in Statement of Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock-based compensation
Total stock-based compensation expense	$ 13,778	$ 7,945	$ 5,787
Research and development expenses
Stock-based compensation
Total stock-based compensation expense	1,468	888	638
Selling, general and administrative expenses
Stock-based compensation
Total stock-based compensation expense	$ 12,310	$ 7,057	$ 5,149

STOCK-BASED COMPENSATION - Summary of Restricted Stock Award Activity (Details) - Restricted Stock Awards	12 Months Ended
	Dec. 31, 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	3,018

STOCK-BASED COMPENSATION - Summary of Restricted Stock Units Activity (Details) - Restricted stock units	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Restricted stock awards
Balance \| shares	218,872
Granted \| shares	403,334
Vested \| shares	(85,119)
Forfeited \| shares	(22,484)
Balance \| shares	514,603
Weighted-average purchase price per share
Balance \| $ / shares	$ 12.64
Granted \| $ / shares	23.41
Vested \| $ / shares	13.00
Forfeited \| $ / shares	20.84
Balance \| $ / shares	$ 20.67

STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Stock option activity
Outstanding	3,037,690
Granted		1,159,280
Exercised		(349,777)
Cancelled		(261,337)
Outstanding	3,585,856	3,037,690
Exercisable at end of period	1,608,346
Vested and expected to vest at end of period	3,389,023
Weighted average exercise price per share
Outstanding	$ 13.00
Granted		$ 23.76
Exercised		12.17
Cancelled		17.83
Outstanding	16.20	$ 13.00
Exercisable at end of period	12.63
Vested and expected to vest at end of period	$ 15.97
Stock option activity, additional information
Outstanding Weighted-Average Remaining Contractual Term	8 years	8 years 4 months 24 days
Outstanding Aggregate Intrinsic Value	$ 11,170	$ 16,829
Exercisable at end of period, Weighted-Average Remaining Contractual Term	7 years 2 months 12 days
Exercisable at end of period, Aggregate Intrinsic Value	$ 7,690
Vested and expected to vest at end of period, Weighted-Average Remaining Contractual Term	7 years 10 months 24 days
Vested and expected to vest at end of period, Aggregate Intrinsic Value	$ 10,882

STOCK-BASED COMPENSATION - Summary of Valuation Assumptions Used (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
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%	1.50%
Volatility	64.80%	71.00%	76.30%
Expected term (in years)	6 years 1 month 10 days	6 years 4 days	6 years 7 days

INCOME TAXES - Reconciliation of Income Tax Expense (Benefit) Computed at Statutory Federal Rate) (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
INCOME TAXES
Federal income tax expense at statutory rate	21.00%	34.00%	34.00%
(Increase) decrease income tax (benefit) resulting from:
State income tax, net of federal benefit	5.89%	3.93%	3.43%
Permanent differences (as a percent)	(2.51%)	(2.49%)	(1.45%)
U.S. - TCJA		(43.32%)
Research and development credits	0.52%	0.53%	0.27%
Change in valuation allowance (as a percent)	(24.90%)	7.35%	(36.25%)
Income tax expense (benefit) (as a percent)	0.00%	0.00%	0.00%

INCOME TAXES - Other (Details) - USD ($) $ in Thousands	12 Months Ended
INCOME TAXES - Other (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets:
U.S. and state net operating loss carryforwards	$ 82,501	$ 62,715	$ 71,049
Research and development credits	4,364	3,892	3,712
Accruals and other	4,676	3,615	1,541
Depreciation and amortization	269	145	261
Total deferred tax assets	91,810	70,367	76,563
Valuation allowance	(80,290)	(70,367)	(76,563)
Deferred tax assets after valuation allowance	11,520
Deferred tax liabilities – intangible assets	(11,520)
Valuation allowance
Deferred tax asset valuation allowance increase (decrease)	9,923	(6,196)
Net operating loss carryforwards
Unrecognized tax benefit associated with IRS examination		902
Unrecognized tax benefit associated with IRS examination		235
Decrease in net operating loss carryforward	36
Reconciliation of gross unrecognized tax benefits - Federal, State and Foreign Tax
Gross UTB Balance at beginning of period	1,364
Additions based on tax positions related to the current year	64	57
Additions for tax positions of prior years		1,307
Reductions for tax positions of prior years	(24)
Settlements	(902)
Gross UTB Balance at end of period	502	1,364
Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation)	481	680
U.S. federal
Deferred tax assets:
Research and development credits	3,628	3,426	3,367
Net operating loss carryforwards
Available net operating loss carryforwards as of the end of the year	324,533	249,511	190,926
State
Deferred tax assets:
Research and development credits	885	589	522
Net operating loss carryforwards
Available net operating loss carryforwards as of the end of the year	$ 285,181	$ 205,074	$ 145,902

EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands	12 Months Ended
EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
EMPLOYEE BENEFITS
Total expense for contributions made to 401(k) plan	$ 1,208	$ 969	$ 613

UNAUDITED QUARTERLY OPERATING RESULTS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Product revenues, net	$ 73,427	$ 70,176	$ 73,061	$ 63,749	$ 10,794	$ 11,950	$ 3,560	$ 2,172	$ 280,413	$ 28,476	$ 1,711
Cost of product revenues	29,726	46,007	46,838	43,106	1,094	553	577	371	165,677	2,595	213
Research and development	2,249	1,907	2,237	2,268	2,194	2,069	2,179	2,130	8,661	8,572	14,948
Selling, general and administrative	30,451	33,448	31,279	31,582	25,089	22,758	22,062	22,847	126,760	92,756	80,632
Total costs and expenses	62,426	81,362	80,354	76,956	28,377	25,380	24,818	25,348	301,098	103,923	95,793
Loss from operations	11,001	(11,186)	(7,293)	(13,207)	(17,583)	(13,430)	(21,258)	(23,176)	(20,685)	(75,447)	(94,082)
Interest expense	(2,404)	(5,868)	(6,158)	(5,700)					(20,130)		(94)
Interest income	489	552	391	255	180	167	137	98	1,687	582
Net loss	$ 9,086	$ (16,502)	$ (13,060)	$ (18,652)	$ (17,403)	$ (13,263)	$ (21,121)	$ (23,078)	$ (39,128)	$ (74,865)	$ (94,176)
Weighted-average shares - basic (in shares)	33,250,180	33,012,174	32,967,718	32,903,674
(Loss) earnings per share - basic	$ 0.27	$ (0.50)	$ (0.40)	$ (0.57)
Weighted-average shares - diluted (in shares)	33,769,765	33,012,174	32,967,718	32,903,674
(Loss) earnings per share - diluted	$ 0.27	$ (0.50)	$ (0.40)	$ (0.57)
Weighted-average shares - basic and diluted					32,485,572	29,753,043	29,441,514	29,350,268	32,953,808	30,265,262	24,262,945
Loss per share - basic and diluted					$ (0.54)	$ (0.45)	$ (0.72)	$ (0.79)	$ (1.19)	$ (2.47)	$ (3.88)
Increase in revenue due to change in selling method						$ 4,377
Third Amendment to the Commercialization Agreement
Cost of product revenues	$ 15,494	$ 32,407	$ 32,407	$ 29,526
Interest expense associated with minimum royalty payments	$ 2,169	$ 5,641	$ 5,943	$ 5,528