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Other Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Other Liabilities Disclosure [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Various other assets and liabilities are summarized as follows:



Prepaid Expenses and Other Current Assets:	March 31, 2020		December 31, 2019

Valued-added tax recoverable	$	257	$	1,051
Prepaid and other expenses	1,933		2,116
Guarantee from Armistice	456		454
Income tax receivable	536		536
Other	155		107
Total	$	3,337	$	4,264

Schedule of Other Assets, Noncurrent



Other Non-Current Assets:	March 31, 2020		December 31, 2019

Deferred tax assets, net	$	37,860	$	29,427
Long-term deposits	1,477		1,477
Guarantee from Armistice	1,252		1,367
Right of use assets at contract manufacturing organizations	6,362		6,428
Other	573		575
Total	$	47,524	$	39,274

Schedule of Accrued Liabilities



Accrued Expenses	March 31, 2020		December 31, 2019

Accrued compensation	$	1,724	$	3,944
Accrued social charges	192		592
Accrued restructuring (see Note 14)	1,705		2,949
Customer allowances	6,200		6,470
Accrued contract research organization charges	1,802		2,098
Accrued contract manufacturing organization costs	426		735
Other	2,809		3,022
Total	$	14,858	$	19,810

Schedule Of Long Term Liabilities



Other Non-Current Liabilities:	March 31, 2020		December 31, 2019

Customer allowances	$	1,210	$	981
Unrecognized tax benefits	3,143		6,465
Guarantee to Deerfield	1,256		1,372
Other	55		55
Total	$	5,664	$	8,873

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues:
Total revenues	$ 12,243	$ 16,437
Operating expenses:
Cost of products	2,457	3,266
Research and development expenses	5,530	7,329
Selling, general and administrative expenses	7,913	10,446
Intangible asset amortization	203	201
Changes in fair value of contingent consideration	2,478	2,134
Restructuring costs	159	1,228
Total operating expenses	18,740	24,604
Operating loss	(6,497)	(8,167)
Investment and other income, net	(378)	817
Interest expense	(3,190)	(3,062)
Loss on deconsolidation of subsidiary	0	(2,673)
Other expense - changes in fair value of contingent consideration payable	(310)	(307)
Loss before income taxes	(10,375)	(13,392)
Income tax benefit	(9,510)	(374)
Net loss	$ (865)	$ (13,018)
Net income (loss) per share - basic (in dollars per share)	$ (0.02)	$ (0.35)
Net income (loss) per share - diluted (in dollars per share)	$ (0.02)	$ (0.35)
Weighted average number of shares outstanding - basic (in shares)	41,057	37,354
Weighted average number of shares outstanding - diluted (in shares)	41,057	37,354

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 73,506	$ 9,774
Marketable securities	39,977	54,384
Accounts receivable	8,797	8,281
Inventories	3,523	3,570
Research and development tax credit receivable	1,835	2,107
Prepaid expenses and other current assets	3,337	4,264
Total current assets	130,975	82,380
Property and equipment, net	472	544
Operating lease right-of-use assets	3,365	3,612
Goodwill	18,491	18,491
Intangible assets, net	610	813
Research and development tax credit receivable	6,288	6,322
Other non-current assets	47,524	39,274
Total assets	207,725	151,436
Current liabilities:
Current portion of long-term contingent consideration payable	5,855	5,554
Current portion of operating lease liability	604	645
Accounts payable	6,790	6,100
Accrued expenses	14,858	19,810
Income taxes	2,297	43
Other current liabilities	1,932	3,832
Total current liabilities	32,336	35,984
Long-term debt	123,258	121,686
Long-term contingent consideration payable, less current portion	12,195	11,773
Long-term operating lease liability	2,205	2,319
Other non-current liabilities	5,664	8,873
Total liabilities	175,658	180,635
Shareholders’ equity (deficit):
Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; 488 issued and outstanding at March 31, 2020 and none issued and outstanding at December 31, 2019, respectively	5	0
Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 51,812 issued and 46,404 outstanding at March 31, 2020 and 42,927 issued and 37,520 outstanding at December 31, 2019	518	429
Treasury shares, at cost, 5,407 shares held at March 31, 2020 and December 31, 2019, respectively	(49,998)	(49,998)
Additional paid-in capital	497,249	434,391
Accumulated deficit	(392,080)	(391,215)
Accumulated other comprehensive loss	(23,627)	(22,806)
Total shareholders’ equity (deficit)	32,067	(29,199)
Total liabilities and shareholders’ equity (deficit)	$ 207,725	$ 151,436

Contingent Consideration Payable - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended
	Dec. 31, 2013	Feb. 28, 2013	Mar. 31, 2012	Mar. 31, 2020
Line of Credit Facility [Line Items]
Percentage of royalty payable on net sales				15.00%
Minimum
Line of Credit Facility [Line Items]
Discounted cash flow risk adjusted discount rate				14.00%
Broadfin Debt Financing
Line of Credit Facility [Line Items]
Cash consideration received on royalty agreement	$ 2,200
Percentage of royalty payable on net sales	0.834%
Affiliated Entity \| Deerfield FSC LLC
Line of Credit Facility [Line Items]
Cash consideration received on royalty agreement		$ 2,600
Percentage of royalty payable on net sales		1.75%
Eclat Pharmaceuticals
Line of Credit Facility [Line Items]
Percentage of earn-out payments			20.00%

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss	$ (865)	$ (13,018)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	456	369
Remeasurement of acquisition-related contingent consideration	2,478	2,134
Remeasurement of financing-related contingent consideration	310	307
Amortization of debt discount and debt issuance costs	1,573	1,445
Change in deferred tax and income tax deferred charge	(8,440)	(222)
Stock-based compensation expense	742	351
Loss on deconsolidation of subsidiary	0	1,750
Other adjustments	573	(541)
Net changes in assets and liabilities
Accounts receivable	(517)	(1,021)
Inventories	47	467
Prepaid expenses and other current assets	899	(3,228)
Research and development tax credit receivable	160	(449)
Accounts payable & other current liabilities	(1,187)	752
Accrued expenses	(4,905)	(4,750)
Accrued income taxes	2,253	(46)
Earn-out payments for contingent consideration in excess of acquisition-date fair value	(1,774)	(3,181)
Royalty payments for contingent consideration payable in excess of original fair value	(291)	(507)
Other assets and liabilities	(3,148)	(1,818)
Net cash used in operating activities	(11,636)	(21,206)
Cash flows from investing activities:
Purchases of property and equipment	0	(30)
Proceeds from sales of marketable securities	14,788	34,864
Purchases of marketable securities	(1,562)	(13,444)
Net cash provided by investing activities	13,226	21,390
Cash flows from financing activities:
Proceeds from the February 2020 private placement	60,733	0
Proceeds from stock option exercises and ESPP	1,477	92
Net cash provided by financing activities	62,210	92
Effect of foreign currency exchange rate changes on cash and cash equivalents	(68)	29
Net change in cash and cash equivalents	63,732	305
Cash and cash equivalents at January 1,	9,774	9,325
Cash and cash equivalents at March 31,	73,506	9,630
Supplemental disclosures of cash flow information:
Interest paid	3,234	3,234
Income taxes paid	$ 0	$ 72

Comprehensive Loss - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stockholders' Equity Note [Abstract]
Other comprehensive income (loss), tax	$ (49)	$ (18)

Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Inventory reserves	$ 348	$ 914
Inventory:
Finished goods	2,845	3,020
Raw materials	678	550
Total	$ 3,523	$ 3,570

Inventories

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Inventories

The principal categories of inventories, net reserves of $348 and $914 at March 31, 2020 and December 31, 2019, respectively, are comprised of the following:



Inventory:	March 31, 2020		December 31, 2019

Finished goods	$	2,845	$	3,020
Raw materials	678		550
Total	$	3,523	$	3,570

Net Loss Per Share - Narrative (Details) - shares	3 Months Ended
Net Loss Per Share - Narrative (Details) - shares	Mar. 31, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	15,858	19,762

Contingent Consideration Payable - Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Acquisition-related contingent consideration:
Related party payable, beginning balance	$ 17,327	$ 28,840
Payments	(2,065)	(3,688)
Operating Expense	2,478	2,134
Other Expense	310
Related party payable, ending balance	18,050	$ 27,593
Less: Current portion	(5,855)		$ (5,554)
Long-term contingent consideration payable	12,195		$ 11,773
Acquisition-related contingent consideration \| Earn-out payments
Acquisition-related contingent consideration:
Related party payable, beginning balance	15,472
Payments	(1,774)
Operating Expense	2,478
Other Expense	0
Related party payable, ending balance	16,176
Financing-related \| Royalty agreement - Deerfield
Acquisition-related contingent consideration:
Related party payable, beginning balance	1,251
Payments	(197)
Operating Expense	0
Other Expense	188
Related party payable, ending balance	1,242
Financing-related \| Royalty agreement - Broadfin
Acquisition-related contingent consideration:
Related party payable, beginning balance	604
Payments	(94)
Operating Expense	0
Other Expense	122
Related party payable, ending balance	$ 632

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended
	Jan. 27, 2019	Mar. 31, 2020
Loss Contingencies [Line Items]
Percentage of royalty payable on net sales		15.00%
Guarantee, liability		$ 1,713
Guarantee from Armistice		1,708
Specialty Pharma
Loss Contingencies [Line Items]
Loss contingency, damages sought, value	$ 1,700
Maximum
Loss Contingencies [Line Items]
Guarantee, liability		$ 10,300

Comprehensive Loss

3 Months Ended

Mar. 31, 2020

Stockholders' Equity Note [Abstract]

Comprehensive Loss

The following table shows the components of accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019, respectively, net of tax effects:



	Three Months Ended March 31,
Accumulated Other Comprehensive Loss:	2020			2019

Foreign currency translation adjustment:
Beginning balance	$	(23,738	)	$	(23,621	)
Net other comprehensive loss	(177		)	(161		)
Balance at March 31,	$	(23,915	)	$	(23,782	)

Unrealized gain (loss) on marketable debt securities, net
Beginning balance	$	932		$	205
Net other comprehensive (loss) income, net of ($49) and ($18) tax, respectively	(644		)	374
Balance at March 31,	$	288		$	579
Accumulated other comprehensive loss at March 31,	$	(23,627	)	$	(23,203	)

The effect on the Company’s unaudited condensed consolidated financial statements of amounts reclassified out of accumulated other comprehensive loss was immaterial for all periods presented.

Marketable Securities - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Investments, Debt and Equity Securities [Abstract]
Marketable securities, realized gain	$ 276	$ 94
Marketable securities, realized loss	$ 872	$ 147

Comprehensive Income (Loss) - Components (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accumulated Other Comprehensive Loss:
Beginning balance	$ (29,199)	$ 2,780
Net other comprehensive loss	(1,686)	(12,805)
Ending balance	32,067	(9,582)
Foreign currency translation adjustment
Accumulated Other Comprehensive Loss:
Beginning balance	(23,738)	(23,621)
Net other comprehensive loss	(177)	(161)
Ending balance	(23,915)	(23,782)
Unrealized gain (loss) on marketable debt securities, net
Accumulated Other Comprehensive Loss:
Beginning balance	932	205
Net other comprehensive loss	(644)	374
Ending balance	288	579
Accumulated other comprehensive (loss) income
Accumulated Other Comprehensive Loss:
Beginning balance	(22,806)	(23,416)
Ending balance	$ (23,627)	$ (23,203)

Net Loss Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding during each period. Diluted net (loss) income per share is calculated by dividing net (loss) income by the diluted number of shares outstanding during each period. Except where the result would be anti-dilutive to net loss, diluted net loss per share would be calculated assuming the impact of the conversion of the 2023 Notes, the conversion of our preferred shares, the exercise of outstanding equity compensation awards, and ordinary shares expected to be issued under our employee stock purchase plan (“ESPP”).

We have a choice to settle the conversion obligation under the 2023 Notes in cash, shares or any combination of the two. We utilize the if-converted method to reflect the impact of the conversion of the 2023 Notes, unless the result is anti-dilutive. This method assumes the conversion of the 2023 Notes into shares of our ordinary shares and reflects the elimination of the interest expense related to the 2023 Notes.

The dilutive effect of the warrants, stock options, restricted stock units, preferred shares and ordinary shares expected to be issued under or ESPP has been calculated using the treasury stock method.

A reconciliation of basic and diluted net loss per share, together with the related shares outstanding in thousands is as follows:



	Three Months Ended March 31,
Net Loss Per Share:	2020			2019

Net loss	$	(865	)	$	(13,018	)

Weighted average shares:
Basic shares	41,057			37,354
Effect of dilutive securities—employee and director equity awards outstanding, preferred shares and 2023 Notes	—			—
Diluted shares	41,057			37,354

Net loss per share - basic	$	(0.02	)	$	(0.35	)
Net loss per share - diluted	$	(0.02	)	$	(0.35	)

Potential common shares of 15,858 and 19,762 were excluded from the calculation of weighted average shares for the three months ended March 31, 2020 and 2019, respectively, because their effect was considered to be anti-dilutive. For the three months ended March 31, 2020 and 2019, the effects of dilutive securities were entirely excluded from the calculation of net loss per share as a net loss was reported in this period.

Goodwill and Intangible Assets - Gross Value and Net Carrying Amount (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Unamortizable intangible assets:
Gross Value	$ 18,491	$ 18,491
Accumulated Amortization	0	0
Net Carrying Amount	18,491	18,491
Developed technology \| Vazculep
Amortizable intangible assets:
Gross Value	12,061	12,061
Accumulated Amortization	(11,451)	(11,248)
Net Carrying Amount	$ 610	$ 813

Long-Term Debt Schedule of Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Net carrying amount of liability component	$ 123,258	$ 121,686
Other debt	55	55
Less: current maturities	0	0
Long-term debt	123,258	121,686
Senior Notes
Debt Instrument [Line Items]
Long-term debt	143,750	143,750
Less: debt discount and issuance costs, net	(20,492)	(22,064)
Net carrying amount of liability component	123,258	121,686
Equity component of exchangeable notes, net of issuance costs	$ (26,699)	$ (26,699)
Debt instrument, interest rate, stated percentage	4.50%	4.50%
Loans Payable
Debt Instrument [Line Items]
Other debt	$ 0	$ 0

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019	Oct. 02, 2019	Jul. 02, 2019
Tax Credit Carryforward [Line Items]
CARES Act, discrete tax benefit	$ 9,124
Income tax benefit	$ (9,510)	$ (374)
Effective income tax rate	91.70%	2.70%
Internal Revenue Service (IRS)
Tax Credit Carryforward [Line Items]
Penalties and interest accrued	$ 300
Speciality Pharama \| Internal Revenue Service (IRS)
Tax Credit Carryforward [Line Items]
Bankruptcy claims, amount of filed claims likely to be denied	$ 1,937		$ 9,302	$ 50,695

Marketable Securities Marketable Securities - Schedule of Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Total	$ 39,977	$ 54,384
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Less than 1 Year	592
1-5 Years	3,030
5-10 Years	391
Greater than 10 Years	0
Total	4,013	4,098
Government securities - U.S.
Debt Securities, Available-for-sale [Line Items]
Less than 1 Year	0
1-5 Years	5,269
5-10 Years	329
Greater than 10 Years	487
Total	6,085	5,446
Other fixed-income securities
Debt Securities, Available-for-sale [Line Items]
Less than 1 Year	50
1-5 Years	1,357
5-10 Years	0
Greater than 10 Years	0
Total	1,407	$ 1,637
Total
Debt Securities, Available-for-sale [Line Items]
Less than 1 Year	642
1-5 Years	9,656
5-10 Years	720
Greater than 10 Years	487
Total	$ 11,505

Restructuring Costs - Narrative (Details) - USD ($) $ in Thousands	17 Months Ended
	May 31, 2020	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
2019 French Restructuring Obligation
Restructuring Cost and Reserve [Line Items]
Restructuring reserve		$ 765	$ 1,922
2019 French Restructuring Obligation \| Accrued Liabilities
Restructuring Cost and Reserve [Line Items]
Restructuring reserve		765
2019 Corporate Restructuring Obligations
Restructuring Cost and Reserve [Line Items]
Restructuring reserve		$ 940	$ 1,080	$ 644	$ 0
2019 Corporate Restructuring Obligations \| Scenario, Forecast
Restructuring Cost and Reserve [Line Items]
Severance costs	$ 3,000
Employee Severance \| Corporate Workforce Reduction
Restructuring Cost and Reserve [Line Items]
Expected number of positions eliminated (as a percent)				50.00%

Long-Term Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Long-Term Debt

Long-term debt is summarized as follows:



	March 31, 2020			December 31, 2019
Principal amount of 4.50% exchangeable senior notes due 2023	$	143,750		$	143,750
Less: debt discount and issuance costs, net	(20,492		)	(22,064		)
Net carrying amount of liability component	123,258			121,686
Other debt	—			—
Subtotal	123,258			121,686
Less: current maturities	—			—
Long-term debt	$	123,258		$	121,686

Equity component:
Equity component of exchangeable notes, net of issuance costs	$	(26,699	)	$	(26,699	)

Marketable Securities - Gross Unrealized Losses and Fair Value of Available-For-Sale Debt Securities (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value	$ 3,136
Unrealized Losses	112
Corporate bonds
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value	2,442
Unrealized Losses	94
Other fixed-income securities
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items]
Fair Value	694
Unrealized Losses	$ 18

Fair Value Measurement

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurement

The Company is required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. For example, we use fair value extensively when accounting for and reporting certain financial instruments, when measuring certain contingent consideration liabilities and in the initial recognition of net assets acquired in a business combination. Fair value is estimated by applying the hierarchy described below, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.

ASC 820, “Fair Value Measurements and Disclosures,” defines fair value as a market-based measurement that should be determined based on the assumptions that marketplace participants would use in pricing an asset or liability. When estimating fair value, depending on the nature and complexity of the asset or liability, we may generally use one or each of the following techniques:


•	Income approach, which is based on the present value of a future stream of net cash flows.


•	Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

As a basis for considering the assumptions used in these techniques, the standard establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:


•	Level 1 - Quoted prices for identical assets or liabilities in active markets.


•	Level 2 - Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.


•	Level 3 - Unobservable inputs that reflect estimates and assumptions.

The following table summarizes the financial instruments measured at fair value on a recurring basis classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the accompanying unaudited condensed consolidated balance sheets:



	As of March 31, 2020						As of December 31, 2019
Fair Value Measurements:	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3

Marketable securities (see Note 6)
Equity securities	$	—	$	—	$	—	$	4,404	$	—	$	—
Money market and mutual funds	28,472		—		—		38,799		—		—
Corporate bonds	—		4,013		—		—		4,098		—
Government securities - U.S.	—		6,085		—		—		5,446		—
Other fixed-income securities	—		1,407		—		—		1,637		—
Total assets	$	28,472	$	11,505	$	—	$	43,203	$	11,181	$	—

Contingent consideration payable (see Note 9)	$	—	$	—	$	18,050	$	—	$	—	$	17,327
Total liabilities	$	—	$	—	$	18,050	$	—	$	—	$	17,327

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. During the periods ended March 31, 2020 and December 31, 2019, respectively, there were no transfers in and out of Level 1, 2, or 3. During the three month periods ended March 31, 2020 and 2019, respectively, we did not recognize any other-than-temporary impairment loss.

Some of the Company’s financial instruments, such as cash and cash equivalents, accounts receivable and accounts payable, are reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.

Debt

We estimate the fair value of our $143,750 aggregate principal amount of 4.50% exchangeable senior notes due 2023 (the “2023 Notes”), a Level 2 input, based on interest rates that would be currently available to the Company for issuance of similar types of debt instruments with similar terms and remaining maturities or recent trading prices obtained from brokers. The estimated fair value of the 2023 Notes at March 31, 2020 of $123,258, which is the same as book value.

See Note 10: Long-Term Debt for additional information regarding our debt obligations.

- Definition

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

+ References + Details

Equity Transactions

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Equity Transactions

Shelf Registration Statement on Form S-3

In February 2020, we filed with the SEC a new shelf registration statement on Form S-3 (the 2020 Shelf Registration Statement) (File No. 333-236258) that allows issuance and sale by us, from time to time, of:

(a)

up to $250,000 in aggregate of ordinary shares, nominal value US$0.01 per share (the “Ordinary Shares”), each of which may be represented by American Depositary Shares (“ADSs”), preferred shares, nominal value US$0.01 per share (the “Preferred Shares”), debt securities (the “Debt Securities”), warrants to purchase Ordinary Shares, ADSs, Preferred Shares and/or Debt Securities (the “Warrants”), and/or units consisting of Ordinary Shares, ADSs, Preferred Shares, one or more Debt Securities or Warrants in one or more series, in any combination, pursuant to the terms of the 2020 Shelf Registration Statement, the base prospectus contained in the 2020 Shelf Registration Statement (the “Base Prospectus”), and any amendments or supplements thereto (together, the “Securities”); including


(b)	up to $50,000 of ADSs that may be issued and sold from time to time pursuant to the terms of an Open Market Sale Agreement^SM (“the Sales Agreement”), entered into with Jefferies LLC on February 4, 2020 (the “Sales Agreement”), the 2020 Shelf Registration Statement, the Base Prospectus and the terms of the sales agreement prospectus contained in the 2020 Shelf Registration Statement.

The transactions costs associated with the 2020 Shelf Registration Statement of approximately $340 were capitalized as a prepaid asset.

February 2020 Private Placement

On February 21, 2020, we announced that we entered into a definitive agreement for the sale of our ADSs and Series A Non-Voting Convertible Preferred Shares (“Series A Preferred”) in a private placement to a group of institutional accredited investors. The private placement resulted in gross proceeds of approximately $65,000 before deducting placement agent and other offering expenses, which resulted in net proceeds of $60,733.

Pursuant to the terms of the private placement, we issued 8,680 ADSs and 488 shares of Series A Preferred at a price of $7.09 per share, priced at-the-market under Nasdaq rules. Each share of non-voting Series A Preferred is convertible into one ADS, provided that conversion will be prohibited if, as a result, the holder and its affiliates would own more than 9.99% of the total number of Avadel ADSs outstanding. The closing of the private placement occurred on February 25, 2020.

Issuance costs of $4,267 were recorded as a reduction of additional paid-in capital.

May 2020 Public Offering

In connection with the shelf registration statement described above, on April 28, 2020 we announced the pricing of an underwritten public offering of 11,630 ordinary shares, in the form of American Depositary Shares (“ADSs”) at a price to the public of $10.75 per ADS. Each ADS represents the right to receive one Ordinary Share. All of the ADSs are being offered by Avadel. The gross proceeds to us from the offering were approximately $125,000, before deducting underwriting discounts and commissions and estimated offering expenses.

In connection with the public offering, we granted the underwriters a 30-day option to purchase up to an additional 1,745 ADSs at the public offering price less the underwriting discounts and commissions. The offering closed on May 1, 2020. See Note 19: Subsequent Events.

Marketable Securities

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

The Company has investments in equity and available-for-sale debt securities which are recorded at fair market value. The change in the fair value of equity investments is recognized in our unaudited condensed consolidated statements of loss and the change in the fair value of available-for-sale debt investments is recorded as other comprehensive loss in shareholders’ equity (deficit), net of income tax effects. As of March 31, 2020, we considered any decreases in fair value on our marketable securities to be driven by factors other than credit risk, including market risk.

The following tables show the Company’s available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category as of March 31, 2020 and December 31, 2019, respectively:



	March 31, 2020
Marketable Securities:	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value

Money market and mutual funds	$	28,370	$	410	$	(308	)	$	28,472
Corporate bonds	4,074		33		(94		)	4,013
Government securities - U.S.	5,777		308		—			6,085
Other fixed-income securities	1,418		7		(18		)	1,407
Total	$	39,639	$	758	$	(420	)	$	39,977



	December 31, 2019
Marketable Securities:	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value

Equity securities	$	4,234	$	170	$	—		$	4,404
Money market and mutual funds	38,028		771		—			38,799
Corporate bonds	4,021		77		—			4,098
Government securities - U.S.	5,341		110		(5		)	5,446
Other fixed-income securities	1,614		23		—			1,637
Total	$	53,238	$	1,151	$	(5	)	$	54,384

We determine realized gains or losses on the sale of marketable securities on a specific identification method. We reflect these gains and losses as a component of investment and other income in the accompanying unaudited condensed consolidated statements of loss.

We recognized gross realized gains of $276 and $94 for the three months ended March 31, 2020, and 2019, respectively. These realized gains were offset by realized losses of $872 and $147 for the three months ended March 31, 2020, and 2019, respectively.

The following table summarizes the estimated fair value of our investments in marketable debt securities, accounted for as available-for-sale debt securities and classified by the contractual maturity date of the securities as of March 31, 2020:



	Maturities
Marketable Debt Securities:	Less than 1 Year		1-5 Years		5-10 Years		Greater than 10 Years		Total

Corporate bonds	$	592	$	3,030	$	391	$	—	$	4,013
Government securities - U.S.	—		5,269		329		487		6,085
Other fixed-income securities	50		1,357		—		—		1,407
Total	$	642	$	9,656	$	720	$	487	$	11,505

The Company has classified our investment in available-for-sale marketable debt securities as current assets in the unaudited condensed consolidated balance sheets as the securities need to be available for use, if required, to fund current operations. There are no restrictions on the sale of any securities in our investment portfolio.

The following table shows the gross unrealized losses and fair value of our available-for-sale debt securities at March 31, 2020. The unrealized losses in the table below are driven by factors other than credit risk and have been in a unrealized loss position for less than one year. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases.



Marketable Debt Securities:	Fair Value		Unrealized Losses

Corporate bonds	$	2,442	$	94
Other fixed-income securities	694		18
Total	$	3,136	$	112

Contingent Consideration Payable - Payable Balance (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Contingent Consideration Payable Rollforward:
Related party payable, beginning balance	$ 17,327	$ 28,840
Payment of related party payable	(2,065)	(3,688)
Fair value adjustments	2,788	2,441
Related party payable, ending balance	$ 18,050	$ 27,593

Revenue by Product (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, Revenue by Product

The following table presents a summary of total revenues by these products:



	Three Months Ended March 31,
Revenues by Product:	2020			2019

Bloxiverz	$	1,401		$	2,568
Vazculep	5,514			9,473
Akovaz	5,349			3,792
Other	(21		)	604
Total product sales	$	12,243		$	16,437

Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Debt

Long-term debt is summarized as follows:



	March 31, 2020			December 31, 2019
Principal amount of 4.50% exchangeable senior notes due 2023	$	143,750		$	143,750
Less: debt discount and issuance costs, net	(20,492		)	(22,064		)
Net carrying amount of liability component	123,258			121,686
Other debt	—			—
Subtotal	123,258			121,686
Less: current maturities	—			—
Long-term debt	$	123,258		$	121,686

Equity component:
Equity component of exchangeable notes, net of issuance costs	$	(26,699	)	$	(26,699	)

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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+ Details

Subsidiary Bankruptcy and Deconsolidation (Details) - USD ($)		3 Months Ended
	Apr. 26, 2019	Mar. 31, 2020	Mar. 31, 2019	Oct. 02, 2019	Jul. 02, 2019	Feb. 08, 2019	Feb. 05, 2019
Business Acquisition, Contingent Consideration [Line Items]
Gain (loss) on deconsolidation of subsidiary		$ 0	$ (2,673,000)
DIP Credit Agreement \| Debtor in Possession Credit and Security Facility
Business Acquisition, Contingent Consideration [Line Items]
Gain (loss) on deconsolidation of subsidiary		407,000
Payments for debtor in possession financing		407,000
Speciality Pharama
Business Acquisition, Contingent Consideration [Line Items]
Aggregate cash proceeds of intangible assets and remaining inventory	$ 250,000
Speciality Pharama \| Internal Revenue Service (IRS)
Business Acquisition, Contingent Consideration [Line Items]
Bankruptcy claims, amount of filed claims likely to be denied		$ 1,937,000		$ 9,302,000	$ 50,695,000
Speciality Pharama \| DIP Credit Agreement \| Debtor in Possession Credit and Security Facility
Business Acquisition, Contingent Consideration [Line Items]
DIP financing, amount arranged						$ 2,700,000
Specialty Pharma
Business Acquisition, Contingent Consideration [Line Items]
Equity method investments, fair value							$ 0

Document And Entity Information - shares	3 Months Ended
Document And Entity Information - shares	Mar. 31, 2020	May 07, 2020
Document And Entity Information [Abstract]
Entity Registrant Name	AVADEL PHARMACEUTICALS PLC
Entity Central Index Key	0001012477
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Smaller Reporting Company	false
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding		58,129,037

Inventories (Tables)

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Schedule of Inventory

The principal categories of inventories, net reserves of $348 and $914 at March 31, 2020 and December 31, 2019, respectively, are comprised of the following:



Inventory:	March 31, 2020		December 31, 2019

Finished goods	$	2,845	$	3,020
Raw materials	678		550
Total	$	3,523	$	3,570

Other Assets and Liabilities

3 Months Ended

Mar. 31, 2020

Other Liabilities Disclosure [Abstract]

Other Assets and Liabilities

Various other assets and liabilities are summarized as follows:



Prepaid Expenses and Other Current Assets:	March 31, 2020		December 31, 2019

Valued-added tax recoverable	$	257	$	1,051
Prepaid and other expenses	1,933		2,116
Guarantee from Armistice	456		454
Income tax receivable	536		536
Other	155		107
Total	$	3,337	$	4,264



Other Non-Current Assets:	March 31, 2020		December 31, 2019

Deferred tax assets, net	$	37,860	$	29,427
Long-term deposits	1,477		1,477
Guarantee from Armistice	1,252		1,367
Right of use assets at contract manufacturing organizations	6,362		6,428
Other	573		575
Total	$	47,524	$	39,274



Accrued Expenses	March 31, 2020		December 31, 2019

Accrued compensation	$	1,724	$	3,944
Accrued social charges	192		592
Accrued restructuring (see Note 14)	1,705		2,949
Customer allowances	6,200		6,470
Accrued contract research organization charges	1,802		2,098
Accrued contract manufacturing organization costs	426		735
Other	2,809		3,022
Total	$	14,858	$	19,810



Other Non-Current Liabilities:	March 31, 2020		December 31, 2019

Customer allowances	$	1,210	$	981
Unrecognized tax benefits	3,143		6,465
Guarantee to Deerfield	1,256		1,372
Other	55		55
Total	$	5,664	$	8,873

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (865)	$ (13,018)
Other comprehensive (loss) income, net of tax:
Foreign currency translation loss	(177)	(161)
Net other comprehensive (loss) income, net of ($49) and ($18) tax, respectively	(644)	374
Total other comprehensive (loss) income, net of tax	(821)	213
Total comprehensive loss	$ (1,686)	$ (12,805)

- Definition

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

+ References + Details

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY Statement - USD ($) shares in Thousands, $ in Thousands	Total	Ordinary shares	Preferred Stock [Member]	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive (loss) income	Treasury shares
Beginning balance (in shares) at Dec. 31, 2018		42,720					5,407
Beginning balance at Dec. 31, 2018	$ 2,780	$ 427		$ 433,756	$ (357,989)	$ (23,416)	$ (49,998)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(13,018)				(13,018)
Other comprehensive income (loss)	213					213
Vesting of restricted shares	0
Employee share purchase plan share issuance	92
Stock-based compensation expense	351			351
Ending balance (in shares) at Mar. 31, 2019		42,763					5,407
Ending balance at Mar. 31, 2019	(9,582)	$ 427		434,199	(371,007)	(23,203)	$ (49,998)
Beginning balance (in shares) at Dec. 31, 2019		42,927					5,407
Beginning balance at Dec. 31, 2019	(29,199)	$ 429		434,391	(391,215)	(22,806)	$ (49,998)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(865)				(865)
Other comprehensive income (loss)	(821)					(821)
Exercise of stock options (in shares)		146
Exercise of stock options	1,389	$ 2		1,387
February 2020 private placement (in shares)		8,680	488
February 2020 private placement	60,733	$ 87	$ 5	60,641
Vesting of restricted shares (in shares)		19
Vesting of restricted shares	0
Employee share purchase plan share issuance (in shares)		40
Employee share purchase plan share issuance	88			88
Stock-based compensation expense	742			742
Ending balance (in shares) at Mar. 31, 2020		51,812	488				5,407
Ending balance at Mar. 31, 2020	$ 32,067	$ 518	$ 5	$ 497,249	$ (392,080)	$ (23,627)	$ (49,998)

Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2020

Stockholders' Equity Note [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table shows the components of accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019, respectively, net of tax effects:



	Three Months Ended March 31,
Accumulated Other Comprehensive Loss:	2020			2019

Foreign currency translation adjustment:
Beginning balance	$	(23,738	)	$	(23,621	)
Net other comprehensive loss	(177		)	(161		)
Balance at March 31,	$	(23,915	)	$	(23,782	)

Unrealized gain (loss) on marketable debt securities, net
Beginning balance	$	932		$	205
Net other comprehensive (loss) income, net of ($49) and ($18) tax, respectively	(644		)	374
Balance at March 31,	$	288		$	579
Accumulated other comprehensive loss at March 31,	$	(23,627	)	$	(23,203	)

Revenue by Product

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Revenue by Product

The Company has determined that it operates in one segment, the development and commercialization of pharmaceutical products, including controlled-release therapeutic products based on its proprietary polymer based technology. The Company’s Chief Operating Decision Maker is the CEO. The CEO reviews profit and loss information on a consolidated basis to assess performance and make overall operating decisions as well as resource allocations. All products are included in one segment because the Company’s products have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment.

The following table presents a summary of total revenues by these products:



	Three Months Ended March 31,
Revenues by Product:	2020			2019

Bloxiverz	$	1,401		$	2,568
Vazculep	5,514			9,473
Akovaz	5,349			3,792
Other	(21		)	604
Total product sales	$	12,243		$	16,437

Contingent Consideration Payable (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Related Party Transactions

Contingent consideration payable and related activity are reported at fair value and consist of the following at March 31, 2020 and December 31, 2019:



				Activity during the three months ended March 31, 2020
							Changes in Fair Value of Contingent Consideration Payable
Contingent Consideration Payable:	Balance, December 31, 2019			Payments			Operating Expense		Other Expense		Balance, March 31, 2020

Acquisition-related contingent consideration:
Earn-out payments - Éclat Pharmaceuticals (a) (d)	$	15,472		$	(1,774	)	$	2,478	$	—	$	16,176
Financing-related:
Royalty agreement - Deerfield (b) (d)	1,251			(197		)	—		188		1,242
Royalty agreement - Broadfin (c) (d)	604			(94		)	—		122		632
Total contingent consideration payable	17,327			$	(2,065	)	$	2,478	$	310	18,050
Less: current portion	(5,554		)								(5,855		)
Long-term contingent consideration payable	$	11,773									$	12,195

(a) In March 2012, the Company acquired all of the membership interests of Éclat from Breaking Stick Holdings, L.L.C. (“Breaking Stick”, formerly Éclat Holdings), an affiliate of Deerfield. Breaking Stick is majority owned by Deerfield, with a minority interest owned by the Company’s former CEO, and certain other current and former employees. As part of the consideration, the Company committed to provide quarterly earn-out payments equal to 20% of any gross profit generated by certain Éclat products. These payments will continue in perpetuity, to the extent gross profit of the related products also continue in perpetuity.

(b)

As part of a February 2013 debt financing transaction conducted with Deerfield, the Company received cash of $2,600 in exchange for entering into a royalty agreement whereby the Company is obligated to pay quarterly a 1.75% royalty on the net sales of certain Éclat products until December 31, 2024. In connection with such debt financing transaction, the Company granted Deerfield a security interest in the product registration rights of the Éclat products.


(c)	As part of a December 2013 debt financing transaction conducted with Broadfin Healthcare Master Fund, a former related party and shareholder, the Company received cash of $2,200 in exchange for entering into a royalty agreement whereby the Company is obligated to pay quarterly a 0.834% royalty on the net sales of certain Éclat products until December 31, 2024.


(d)	Deerfield and Broadfin Healthcare Master Trust disposed of their 2023 Notes and ordinary shares in the Company during the three months ended March 31, 2020 and are no longer considered related parties.

The following table summarizes changes to the contingent consideration payables, a recurring Level 3 measurement, for the three-month periods ended March 31, 2020 and 2019, respectively:



Contingent Consideration Payable Rollforward:	Balance

Balance, December 31, 2018	$	28,840
Payments of contingent consideration	(3,688		)
Fair value adjustments ⁽¹⁾	2,441
Balance, March 31, 2019	$	27,593

Balance, December 31, 2019	$	17,327
Payments of contingent consideration	(2,065		)
Fair value adjustments ⁽¹⁾	2,788
Balance, March 31, 2020	$	18,050

⁽¹⁾Fair value adjustments are reported as changes in fair value of contingent consideration and other expense - changes in fair value of contingent consideration payable in the unaudited condensed consolidated statements of loss.

Contingent Consideration Payable

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Contingent Consideration Payable

Payable

Contingent consideration payable and related activity are reported at fair value and consist of the following at March 31, 2020 and December 31, 2019:



				Activity during the three months ended March 31, 2020
							Changes in Fair Value of Contingent Consideration Payable
Contingent Consideration Payable:	Balance, December 31, 2019			Payments			Operating Expense		Other Expense		Balance, March 31, 2020

Acquisition-related contingent consideration:
Earn-out payments - Éclat Pharmaceuticals (a) (d)	$	15,472		$	(1,774	)	$	2,478	$	—	$	16,176
Financing-related:
Royalty agreement - Deerfield (b) (d)	1,251			(197		)	—		188		1,242
Royalty agreement - Broadfin (c) (d)	604			(94		)	—		122		632
Total contingent consideration payable	17,327			$	(2,065	)	$	2,478	$	310	18,050
Less: current portion	(5,554		)								(5,855		)
Long-term contingent consideration payable	$	11,773									$	12,195

(b)


(c)	As part of a December 2013 debt financing transaction conducted with Broadfin Healthcare Master Fund, a former related party and shareholder, the Company received cash of $2,200 in exchange for entering into a royalty agreement whereby the Company is obligated to pay quarterly a 0.834% royalty on the net sales of certain Éclat products until December 31, 2024.


(d)	Deerfield and Broadfin Healthcare Master Trust disposed of their 2023 Notes and ordinary shares in the Company during the three months ended March 31, 2020 and are no longer considered related parties.

At March 31, 2020, the fair value of each contingent consideration payable listed in (a), (b) and (c) above was estimated using a discounted cash flow model based on estimated and projected annual net revenues or gross profit, as appropriate, of each of the specified Éclat products using an appropriate risk-adjusted discount rate of 14%. These fair value measurements are based on significant inputs not observable in the market and thus represent a level 3 measurement as defined in ASC 820. Subsequent changes in the fair value of the acquisition-related contingent consideration payables, resulting primarily from management’s revision of key assumptions, will be recorded in the unaudited condensed consolidated statements of loss in the line items entitled “Changes in fair value of contingent consideration” for items noted in (b) above and in “Other expense - changes in fair value of contingent consideration payable” for items (b) and (c) above. See Note 1: Summary of Significant Accounting Policies under the caption Acquisition-related Contingent Consideration and Financing-related Royalty Agreements in Part II, Item 8 of the Company’s 2019 Annual Report on Form 10-K for more information on key assumptions used to determine the fair value of these liabilities.

The Company has chosen to make a fair value election pursuant to ASC 825, “Financial Instruments” for its royalty agreements detailed in items (b) and (c) above. These financing-related liabilities are recorded at fair market value on the unaudited condensed consolidated balance sheets and the periodic change in fair market value is recorded as a component of “Other expense – change in fair value of contingent consideration payable” on the unaudited condensed consolidated statements of loss.

The following table summarizes changes to the contingent consideration payables, a recurring Level 3 measurement, for the three-month periods ended March 31, 2020 and 2019, respectively:



Contingent Consideration Payable Rollforward:	Balance

Balance, December 31, 2018	$	28,840
Payments of contingent consideration	(3,688		)
Fair value adjustments ⁽¹⁾	2,441
Balance, March 31, 2019	$	27,593

Balance, December 31, 2019	$	17,327
Payments of contingent consideration	(2,065		)
Fair value adjustments ⁽¹⁾	2,788
Balance, March 31, 2020	$	18,050

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Litigation The Company is subject to potential liabilities generally incidental to our business arising out of present and future lawsuits and claims related to product liability, personal injury, contract, commercial, intellectual property, tax, employment, compliance and other matters that arise in the ordinary course of business. The Company accrues for potential liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and such costs can be reasonably estimated. At March 31, 2020 and December 31, 2019, there were no contingent liabilities with respect to any litigation, arbitration or administrative or other proceeding that are reasonably likely to have a material adverse effect on the Company’s unaudited condensed consolidated financial position, results of operations, cash flows or liquidity. Litigation Related to Noctiva Note 3: Subsidiary Bankruptcy and Deconsolidation briefly describes the Chapter 11 bankruptcy case which our subsidiary Specialty Pharma commenced on February 6, 2019, and which on April 26, 2019 resulted in the bankruptcy court-approved sale of all of Specialty Pharma’s intangible assets and inventory to an unaffiliated third party. As a result of such sale, Specialty Pharma has completed its divestment of the assets of the Noctiva business. During the pendency of the bankruptcy case, all pending litigation against Specialty Pharma is automatically stayed and any new litigation against Specialty Pharma is precluded unless the bankruptcy court orders otherwise. Below are descriptions of a litigation to which Specialty Pharma is a party and a contract dispute involving Specialty Pharma, both of which matters are subject to the automatic stay during the bankruptcy case. Ferring Litigation. Some of the patents covering the Noctiva product (the “Noctiva Patents”) are the subject of litigation initiated by Ferring Pharmaceuticals Inc. and two of its foreign affiliates, Ferring B.V. and Ferring International Center S.A., who manufacture a competing product known as Nocdurna. Nocdurna was approved by the FDA in June 2018 and commercially launched in the U.S. in November 2018. Ferring initiated this litigation initially against Serenity Pharmaceuticals, LLC (“Serenity”) (the licensor of the Noctiva Patents) and Reprise Biopharmaceutics, LLC (“Reprise”) on April 28, 2017. Avadel subsequently joined the litigation on June 28, 2018, shortly after Ferring received FDA approval for Nocdurna. In this litigation, filed in the United States District Court for the Southern District of New York, Ferring seeks to invalidate and disputes the inventorship of the Noctiva Patents, seeks damages for various alleged breaches of contractual and common law duties, and seeks damages for alleged infringement by Noctiva of Ferring’s “Nocdurna” trademark. Specialty Pharma, Serenity, and Reprise have defended this litigation, and have made counterclaims against Ferring, including for infringement of the Noctiva Patents and a declaratory judgment of noninfringement with respect to Ferring’s “Nocdurna” trademark. The court dismissed Ferring’s inventorship claim and its claims for alleged breaches of contractual and common law duties, although these dismissals may be appealed by Ferring. On February 15, 2019, Specialty Pharma and its co-defendants moved to stay the litigation pending completion of the bankruptcy proceeding of Specialty Pharma. On May 15, 2019, that motion was denied due to a pending settlement of the litigation with respect to just Ferring and Specialty Pharma. On February 25, 2020, Ferring and Specialty Pharma jointly moved for bankruptcy court approval of a settlement agreement with respect to the claims alleged in the litigation. In accordance with the terms of the settlement agreement, promptly following bankruptcy court approval of the settlement agreement, the parties would dismiss with prejudice their respective claims against each other in the litigation. On March 13, 2020, the Bankruptcy Court entered an order approving the settlement with Ferring. Pursuant to the terms of the settlement, the parties are to dismiss their respective claims against each other in the District Court litigation in the Southern District of New York, with such dismissals to be effective concurrently. The joint dismissal has not yet been filed with District Court for the Southern District of New York. Contract Dispute. On January 21, 2019, Serenity gave notice to Specialty Pharma of an alleged breach of the parties’ Noctiva license agreement. Serenity alleges that Specialty Pharma breached its contractual obligation to devote commercially reasonable efforts to the commercialization of Noctiva and seeks unspecified damages. On January 27, 2019, Specialty Pharma notified Serenity of a claim for $1.7 million in damages as a result of Serenity’s breach of its contractual obligation to pay the costs of the Ferring Litigation. Serenity’s notice to Specialty Pharma invoked the dispute resolution provisions of the Noctiva license agreement, which culminate in arbitration, but neither party has yet initiated an arbitration proceeding or filed suit. Exela Litigation. On January 7, 2020, Exela filed a complaint against us and our subsidiary, Avadel Legacy, in the United States District for the District of Delaware. The complaint alleges infringement of a certain Exela patent related to its cysteine hydrochloride product. Exela is most notably seeking i) a declaratory judgment that the Nouress product infringes its patent, ii) an injunction (both preliminary and permanent) precluding the launch of Nouress, and iii) monetary damages (including enhanced damages, prejudgment interest and attorneys’ fees) in the event Nouress is commercially launched and found to infringe Exela’s patent. The current deadline for Avadel to respond to Exela’s complaint is May 29, 2020. Material Commitments Other than commitments disclosed in Note 16: Contingent Liabilities and Commitments to the Company’s audited consolidated financial statements included in Part II, Item 8 of the Company’s 2019 Annual Report on Form 10-K, there were no other material commitments outside of the normal course of business. Material commitments in the normal course of business include long-term debt obligations which are disclosed in Note 10: Long-Term Debt and long-term contingent consideration payable as disclosed in Note 9: Contingent Consideration Payable, to the Company’s unaudited condensed consolidated financial statements included in Part I, Item 1 of this report. Guarantees Deerfield Guarantee The fair values of our guarantee to Deerfield and the guarantee received by us from Armistice largely offset and when combined are not material. In connection with our February 2018 divestiture of our pediatric assets, we have guaranteed to Deerfield the quarterly royalty payment of 15% on net sales of the FSC products through February 6, 2026 (“FSC Product Royalties”), in an aggregate amount of up to approximately $10,300. Given our explicit guarantee to Deerfield, the Company recorded the guarantee in accordance with ASC 460. The balance of this guarantee liability was $1,713 at March 31, 2020. This liability is being amortized proportionately based on undiscounted cash outflows through the remainder of the contract with Deerfield. Armistice Guarantee In connection with our February 2018 divestiture of the pediatric assets, Armistice Capital Master Fund, Ltd., the majority shareholder of Cerecor, guaranteed to us the FSC Product Royalties. The Company recorded the guarantee in accordance with ASC 460. The balance of this guarantee asset was $1,708 at March 31, 2020. This liability is being amortized proportionately based on undiscounted cash outflows through the remainder of the contract with Deerfield. Off-Balance Sheet Arrangements As of March 31, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

The Company’s amortizable and unamortizable intangible assets at March 31, 2020 and December 31, 2019 are as follows:



	March 31, 2020							December 31, 2019
Goodwill and Intangible Assets:	Gross Value		Accumulated Amortization			Net Carrying Amount		Gross Value		Accumulated Amortization			Net Carrying Amount

Amortizable intangible assets - Acquired developed technology - Vazculep	$	12,061	$	(11,451	)	$	610	$	12,061	$	(11,248	)	$	813

Unamortizable intangible assets - Goodwill	$	18,491	$	—		$	18,491	$	18,491	$	—		$	18,491

The Company recorded amortization expense related to amortizable intangible assets of $203 and $201 for the three months ended March 31, 2020 and 2019, respectively.

Our amortizable intangible asset is amortized over its estimated useful life, which is seven years, using the straight-line method. At March 31, 2020, total amortization of intangible assets for the year ended December 31, 2020 will be $813. There is no estimated amortization during the years ended December 31, 2021-2024 as the acquired developed technology, Vazculep, will be fully amortized at December 31, 2020.

Restructuring Costs

3 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring Costs

2019 French Restructuring

During the second quarter of 2019, the Company initiated a plan to substantially reduce all of its workforce at its Vénissieux, France site (“2019 French Restructuring”). This reduction was part of an effort to align the Company’s cost structure with our ongoing and future planned projects. The reduction in workforce has been substantially completed as of March 31, 2020. Restructuring charges associated with this plan recognized during the three months ended March 31, 2020 were immaterial.

The following table sets forth activities for the Company’s cost reduction plan obligations for the three months ended March 31, 2020:



2019 French Restructuring Obligation:	2020

Balance of restructuring accrual at January 1,	$	1,922
Charges for employee severance, benefits and other costs	171
Payments	(1,294		)
Foreign currency impact	(34		)
Balance of restructuring accrual at March 31,	$	765

The 2019 French Restructuring liabilities of $765 are included in the unaudited condensed consolidated balance sheet in accrued expenses at March 31, 2020, respectively.

2019 Corporate Restructuring

During the first quarter of 2019, the Company announced a plan to reduce its Corporate workforce by more than 50% (“2019 Corporate Restructuring”). The reduction in workforce is primarily a result of the exit of Noctiva during the first quarter of 2019 (see Note 3: Subsidiary Bankruptcy and Deconsolidation), as well as an effort to better align the Company’s remaining cost structure at our U.S. and Ireland locations with our ongoing and future planned projects. The reduction in workforce was substantially complete at the end of March 31, 2020, and has resulted in employee severance, benefits and other costs of up to approximately $3,000, which are likely to be recognized through May 31, 2020. The restructuring charges associated with this plan recognized during the three months ended March 31, 2020 were immaterial, compared to $1,398 of restructuring charges recognized during the three months ended March 31, 2019.

The following table sets forth activities for the Company’s cost reduction plan obligations for the three months ended March 31, 2020 and 2019:



2019 Corporate Restructuring Obligation:	2020			2019

Balance of restructuring accrual at January 1,	$	1,080		$	—
Charges for employee severance, benefits and other costs	62			1,398
Payments	(202		)	(754		)
Balance of restructuring accrual at March 31,	$	940		$	644

The 2019 Corporate Restructuring liabilities of $940 are included in the unaudited condensed consolidated balance sheet in accrued expenses at March 31, 2020.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Other comprehensive income (loss), tax	$ (49)	$ (18)

Other Assets and Liabilities - Other Non-Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Other Non-Current Assets:
Deferred tax assets, net	$ 37,860	$ 29,427
Long-term deposits	1,477	1,477
Guarantee from Armistice	1,252	1,367
Right of use assets at contract manufacturing organizations	6,362	6,428
Other	573	575
Total	$ 47,524	$ 39,274

Subsequent Events - Narrative (Details) - Subsequent Event $ / shares in Units, $ in Thousands	Apr. 28, 2020 USD ($) $ / shares shares
Over-Allotment Option
Subsequent Event [Line Items]
Shares sold in offering	1,745
American Depositary Shares \| Public Offering
Subsequent Event [Line Items]
Shares sold in offering	11,630
Offering price per share (in dollars per share) \| $ / shares	$ 10.75
Aggregate net proceeds from stock offering \| $	$ 125,000

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), enacted on March 27, 2020, includes significant business tax provisions. In particular, the CARES Act modified the rules associated with net operating losses (“NOLs”). Under the temporary provisions of CARES Act, NOL carryforwards and carrybacks may offset 100% of taxable income for taxable years beginning before 2021. In addition, NOLs arising in 2018, 2019 and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. During the three months ended March 31, 2020, the income tax benefit includes a discrete tax benefit of $9,124 as a result of our ability under the CARES Act to carry back NOLs incurred to periods when the statutory U.S. Federal tax rate was 35% versus our current U.S. Federal tax rate of 21%. The income tax benefit was $9,510 for the three months ended March 31, 2020 resulting in an effective tax rate of 91.7%. The income tax benefit was $374 for the three months ended March 31, 2019 resulting in an effective tax rate of 2.7%. The net increase in the effective income tax rate for the three months ended March 31, 2020, as compared to the same period in 2019, is primarily due to the discrete tax benefits recognized under the CARES Act as described above, favorable income tax benefits from the U.S. Orphan Drug and Research & Development Tax Credit and agreement with the IRS in the first quarter of 2020 on audit adjustments resulting from the U.S. Federal Income Tax audit of the tax years 2015, 2016 and 2017, all of which was recorded during the three months ended March 31, 2020. During the three months ended March 31, 2020, the Company substantially completed the 2015 through 2017 U.S. Federal Tax Audit. Completion of the audit resulted in an assessment of $1,937 for the 2015 through 2017 U.S. Federal Tax Returns compared to the IRS Claims of $50,695 made on July 2, 2019 and the updated IRS Claims of $9,302 on October 2, 2019 made as part of the Specialty Pharma bankruptcy proceedings, which at this time does not include interest and penalties. The Company expects interest and penalties to be approximately $300. While there are still additional approval and administrative procedures to complete, the Company expects the completion of the 2015 through 2017 U.S. Federal Tax Audit to be completed by the quarter ended September 30, 2020. The audit of the 2017 French tax return was also completed during the three months ended March 31, 2020 with no material changes.

Other Assets and Liabilities - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Other Non-Current Liabilities:
Customer allowances	$ 1,210	$ 981
Unrecognized tax benefits	3,143	6,465
Guarantee to Deerfield	1,256	1,372
Other	55	55
Total	$ 5,664	$ 8,873

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Nature of Operations

Nature of Operations. Avadel Pharmaceuticals plc (Nasdaq: AVDL) (“Avadel,” the “Company,” “we,” “our,” or “us”) is an emerging biopharmaceutical company. Our lead product candidate, FT218, is an investigational once-nightly formulation of sodium oxybate for the treatment of excessive daytime sleepiness (“EDS”) and cataplexy in narcolepsy patients. FT218 uses our Micropump drug-delivery technology. In addition, we have three approved commercial products developed under our unapproved marketed drug (“UMD”) program, Akovaz, Bloxiverz and Vazculep, and a fourth approved product, Nouress, which are sterile injectable drugs used in the hospital setting.

We are primarily focused on the development and potential United States (“U.S.”) Food and Drug Administration (“FDA”) approval of FT218. In addition, we continue to market and distribute our current approved hospital products portfolio and, pending resolution of the existing patent infringement claim (as described below), we plan to commercialize Nouress. Outside of our product candidate and our existing commercial products, we continue to evaluate opportunities to expand our product portfolio.

FT218 (Micropump sodium oxybate)

FT218 is a once-nightly formulation of sodium oxybate that uses our Micropump controlled release drug- delivery technology for the treatment of EDS and cataplexy in patients suffering from narcolepsy. Sodium oxybate is the sodium salt of gamma hydroxybutyrate, an endogenous compound and metabolite of the neurotransmitter gamma-aminobutyric acid. Sodium oxybate is approved in Europe and the United States as a twice-nightly formulation indicated for the treatment of EDS and cataplexy in patients with narcolepsy. In December 2019, we completed patient enrollment of our Phase 3 REST-ON clinical trial of FT218 to assess the safety and efficacy of a once-nightly formulation of FT218 for the treatment of EDS and cataplexy in patients suffering from narcolepsy and on April 27, 2020, we announced topline results from our Phase 3 REST-ON clinical trial of FT218.

Existing Commercial Products

To date, we have received FDA approvals for three previously unapproved prescription drugs:

•

Bloxiverz (neostigmine methylsulfate injection) - Bloxiverz was approved by the FDA in May 2013 and was launched in July 2013. Bloxiverz is a drug used intravenously in the operating room to reverse the effects of non-depolarizing neuromuscular blocking agents after surgery. Bloxiverz was the first FDA-approved version of neostigmine methylsulfate. Today, neostigmine is one of the two most frequently used products for the reversal of the effects of other agents used for neuromuscular blocks.


•	Vazculep (phenylephrine hydrochloride injection) - Vazculep was approved by the FDA in June 2014 and was launched in October 2014. Vazculep is indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.


•	Akovaz (ephedrine sulfate injection) - Akovaz, was approved by the FDA in April 2016 and was launched in August 2016. Akovaz was the first FDA approved formulation of ephedrine sulfate, an alpha- and beta- adrenergic agonist and a norepinephrine-releasing agent that is indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.

Nouress

In December 2019, we received FDA approval for Nouress (cysteine hydrochloride injection), a sterile injectable product for use in the hospital setting, and currently have two patents covering that product. Several additional patent applications for Nouress are pending with the U.S. Patent and Trademark Office (“USPTO”). In light of the recently filed patent suit by Exela Pharma Sciences, LLC, we are currently evaluating the timing and process for a commercial launch of Nouress in the U.S. See Note 18: Commitments and Contingencies.

We were incorporated in Ireland on December 1, 2015 as a private limited company, and re-registered as an Irish public limited company on November 21, 2016. Our headquarters are in Dublin, Ireland and we have operations in St. Louis, Missouri, U.S.

Basis of Presentation. The unaudite

Basis of Presentation

Basis of Presentation. The unaudited condensed consolidated balance sheet as of March 31, 2020, which is derived from the prior year 2019 audited consolidated financial statements, and the interim unaudited condensed consolidated financial statements presented herein, have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), the requirements of Form 10-Q and Article 10 of Regulation S-X and, consequently, do not include all information or footnotes required by U.S. GAAP for complete financial statements or all the disclosures normally made in an Annual Report on Form 10-K. Accordingly, the unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s 2019 Annual Report on Form 10-K filed with the SEC on March 16, 2020.

The unaudited condensed consolidated financial statements include the accounts of the Company and subsidiaries, and reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. All intercompany accounts and transactions have been eliminated. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

On February 6, 2019, our indirect wholly-owned subsidiary, Avadel Specialty Pharmaceuticals, LLC (“Specialty Pharma”), filed a voluntary petition for reorganization under Chapter 11 of the United States (“U.S.”) Code (the “Bankruptcy Code”). in the U.S. District Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), Case No. 19-10248. Specialty Pharma is operating and managing its business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and order of the Bankruptcy Court. As a result of Specialty Pharma’s voluntary bankruptcy filing on February 6, 2019, we no longer controlled the operations of Specialty Pharma; therefore, we deconsolidated Specialty Pharma effective with the bankruptcy filing and the Company recorded its investment in Specialty Pharma under the cost method. See Note 3: Subsidiary Bankruptcy and Deconsolidation. Our results of operations for the period January 1, 2019 through February 6, 2019 include the results of Specialty Pharma prior to its February 6, 2019 voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Revenue

Revenue. Revenue includes sales of pharmaceutical products.

Product Sales

We sell products primarily through wholesalers and considers these wholesalers to be our customers. Revenue from product sales is recognized when the customer obtains control of our product and our performance obligations are met, which occurs typically upon receipt of delivery to the customer. As is customary in the pharmaceutical industry, our gross product sales are subject to a variety of price adjustments in arriving at reported net product sales. These adjustments include estimates for product returns, chargebacks, payment discounts, rebates, and other sales allowances and are estimated when the product is delivered based on analysis of historical data for the product or comparable products, as well as future expectations for such products.

For a complete discussion of the accounting for net product revenue, see Note 4: Revenue Recognition.

Revenue Recognition

The Company generates revenue primarily from the sale of pharmaceutical products to customers.

Product Sales

Reserves to Reduce Gross Revenues to Net Revenues

Revenues from product sales are recorded at the net selling price, which includes estimated reserves to reduce gross product sales to net product sales resulting from product returns, chargebacks, payment discounts, rebates, and other sales allowances that are offered within contracts between the Company and its customers and end users. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable if the amount is payable to the customer, except in the case of the estimated reserve for future expired product returns, which are classified as a liability. The reserves are classified as a liability if the amount is payable to a party other than a customer. Where appropriate, these estimated reserves take into consideration 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. Overall, these reserves reflect the Company’s best estimates to reduce gross selling price to net selling price to which it expects to be entitled based on the terms of its contracts. The actual selling price ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known.

Product Returns

Consistent with industry practice, the Company maintains a returns policy that generally offers customers a right of return for product that has been purchased from the Company. The Company estimates the amount of product returns and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities based on analysis of historical data for the product or comparable products, as well as future expectations for such products and other judgments and analysis.

Chargebacks, Discounts and Rebates

Chargebacks, discounts and rebates represent the estimated obligations resulting from contractual commitments to sell products to its customers or end users at prices lower than the list prices charged to our wholesale customers. Customers charge the Company for the difference between the gross selling price they pay for the product and the ultimate contractual price agreed to between the Company and these end users. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargebacks, discounts and rebates are estimated at the time of sale to the customer.

Revenue from licensing arrangements

The terms of the Company’s licensing agreements may contain multiple performance obligations, including certain R&D activities. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees, development, regulatory and commercial milestone payments. Each of these payments results in license revenues.

Disaggregation of revenue

The Company’s source of revenue is from the sale of pharmaceutical products, which are equally affected by the same economic factors as it relates to the nature, amount, timing, and uncertainty of revenue and cash flows. For further detail about the Company’s revenues by product, see Note 17: Revenue by Product.

Contract Balances

The Company does not recognize revenue in advance of invoicing its customers and therefore has no related contract assets.

A receivable is recognized in the period the Company sells its products and when the Company’s right to consideration is unconditional.

There were no material deferred contract costs at March 31, 2020.

Transaction Price Allocated to the Remaining Performance Obligation

For product sales, the Company generally satisfies its performance obligations within the same period the product is delivered. Product sales recognized in the first quarter of 2020 from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

For certain licenses of intellectual property, specifically those with performance obligations satisfied over time, the Company allocates a portion of the transaction price to that performance obligation and recognizes revenue using an appropriate measure of progress towards development of the product.

The Company has elected certain of the practical expedients from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. Accordingly, the Company applies the practical expedient in ASC 606 to its stand-alone contracts and does not disclose information about variable consideration from remaining performance obligations for which the Company recognizes revenue.

Newly Issued Accounting Pronouncements

Newly Issued Accounting Standards

Recent Accounting Guidance Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. The FASB’s amendments primarily impact ASC 740, Income Taxes, and may impact both interim and annual reporting periods. ASU 2019-12 will be effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years and early adoption is permitted. We are currently evaluating the impact of adopting ASU 2019-12.

Recently Adopted Accounting Guidance

In August 2018, FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirement for Fair Value Measurement” which amends certain disclosure requirements over Level 1, Level 2 and Level 3 fair value measurements. The amendments in ASU 2018-13 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We adopted ASU 2018-13 in the first quarter of 2020.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).” This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. The standard limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. ASU 2016-13 is effective for the Company for fiscal years beginning on or after January 1, 2020, including interim periods within those annual reporting periods and early adoption is permitted. We adopted the provisions of ASU 2016-13 in the first quarter of 2020. Adoption of the new standard did not have any impact on our unaudited condensed consolidated financial statements.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

FT218 (Micropump sodium oxybate)

Existing Commercial Products

To date, we have received FDA approvals for three previously unapproved prescription drugs:

•


•	Vazculep (phenylephrine hydrochloride injection) - Vazculep was approved by the FDA in June 2014 and was launched in October 2014. Vazculep is indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.


•	Akovaz (ephedrine sulfate injection) - Akovaz, was approved by the FDA in April 2016 and was launched in August 2016. Akovaz was the first FDA approved formulation of ephedrine sulfate, an alpha- and beta- adrenergic agonist and a norepinephrine-releasing agent that is indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.

Nouress

Revenue. Revenue includes sales of pharmaceutical products.

Product Sales

For a complete discussion of the accounting for net product revenue, see Note 4: Revenue Recognition.

Accounts Receivable. Accounts receivable are stated at amounts invoiced and certain other gross to net variable consideration deductions. An allowance for credit losses is established based on expected losses. Expected losses are estimated by reviewing individual accounts, considering aging, financial condition of the debtor, payment history, current and forecast economic conditions and other relevant factors. A majority of our accounts receivable are due from four significant customers.

Subsidiary Bankruptcy and Deconsolidation	3 Months Ended
Subsidiary Bankruptcy and Deconsolidation	Mar. 31, 2020
Reorganizations [Abstract]
Subsidiary Bankruptcy and Deconsolidation	Subsidiary Bankruptcy and Deconsolidation Bankruptcy Filing and Deconsolidation As a result of Specialty Pharma’s bankruptcy filing on February 6, 2019, Avadel has ceded authority for managing the business to the Bankruptcy Court, and Avadel management cannot carry on Specialty Pharma’s activities in the ordinary course of business without Bankruptcy Court approval. Avadel manages the day-to-day operations of Specialty Pharma but does not have discretion to make significant capital or operating budgetary changes or decisions and purchase or sell significant assets, as Specialty Pharma’s material decisions are subject to review by the Bankruptcy Court. For these reasons, we concluded that Avadel has lost control of Specialty Pharma, and no longer has significant influence over Specialty Pharma during the pendency of the bankruptcy. Therefore, we deconsolidated Specialty Pharma effective with the filing of the Chapter 11 bankruptcy in February 2019. In order to deconsolidate Specialty Pharma, the carrying values of the assets and certain liabilities of Specialty Pharma were removed from our unaudited condensed consolidated balance sheet as of February 5, 2019, and we recorded our investment in Specialty Pharma at its estimated fair value of $0. As the estimated fair value of our investment in Specialty Pharma was lower than its net book value immediately prior to the deconsolidation, we recorded a non-cash charge of approximately $2,673 for the three months ended March 31, 2019 associated with the deconsolidation of Specialty Pharma. Subsequent to the deconsolidation of Specialty Pharma, we are accounting for our investment in Specialty Pharma using the cost method of accounting because Avadel does not exercise significant influence over the operations of Specialty Pharma due to the Chapter 11 filing. On April 26, 2019, Specialty Pharma sold its intangible assets and remaining inventory to an unaffiliated third party in exchange for aggregate cash proceeds of approximately $250, pursuant to an order approving such sale which was issued by the Bankruptcy Court on April 15, 2019. As a result of such sale, Specialty Pharma has completed its divestment of the assets of the Noctiva business. On July 2, 2019, Specialty Pharma was made aware of a $50,695 claim made by the Internal Revenue Service (IRS) as part of the bankruptcy claims process against Specialty Pharma. On October 2, 2019 the IRS amended the original claim filed in July, reducing the claim to $9,302. Specialty Pharma files its U.S. federal tax return as a member of the Company’s consolidated U.S. tax group. As such, the IRS claim was filed against Specialty Pharma in the bankruptcy proceedings due to IRS tax law requirements for joint and several liability of all members in a consolidated U.S. tax group. Both Specialty Pharma and the Company disagreed with the merits of the amended IRS claim, and Specialty Pharma entered into negotiations regarding the treatment of the claim in the bankruptcy case. On November 19, 2019, Specialty Pharma and the IRS resolved their dispute, subject to Bankruptcy Court approval in Specialty Pharma's Chapter 11 plan, and without prejudice to the claims, rights and defenses of the IRS and other Avadel entities outside of the bankruptcy case. The resolution provided for allowance of the IRS claim as a priority claim but for the IRS to receive a distribution of not less than $125 from Specialty Pharma following confirmation of its chapter 11 plan, leaving a substantial amount of the bankruptcy estate for general unsecured creditors. Debtor in Possession (“DIP”) Financing – Related Party Relationship In connection with the bankruptcy filing, Specialty Pharma entered into a Debtor in Possession Credit and Security Agreement with Avadel US Holdings (“DIP Credit Agreement”) dated as of February 8, 2019, in an aggregate amount of up to $2,700, of which the funds are to be used by Specialty Pharma solely to fund operations through February 6, 2020. As of March 31, 2020, the Company had funded $407 under the DIP Credit Agreement. As the Company has assessed that it is unlikely that Specialty Pharma will pay back the loan to Avadel and the $407 has been recorded as part of the loss on deconsolidation of subsidiary within the unaudited condensed consolidated statements of loss for the three months ended March 31, 2019.

Other Assets and Liabilities - Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accrued Expenses
Accrued compensation	$ 1,724	$ 3,944
Accrued social charges	192	592
Accrued restructuring (see Note 14)	1,705	2,949
Customer allowances	6,200	6,470
Accrued contract research organization charges	1,802	2,098
Accrued contract manufacturing organization costs	426	735
Other	2,809	3,022
Total	$ 14,858	$ 19,810

Marketable Securities - Summary of Marketable Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Mar. 31, 2020
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Adjusted Cost	$ 53,238	$ 39,639
Unrealized Gains	1,151	758
Unrealized Losses	(5)	(420)
Fair Value	54,384	39,977
Equity securities
Debt Securities, Trading, and Equity Securities, FV-NI [Abstract]
Adjusted Cost	4,234
Unrealized Gains	170
Unrealized Losses	0
Fair Value	4,404
Money market and mutual funds
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Adjusted Cost	38,028	28,370
Unrealized Gains	771	410
Unrealized Losses	0	(308)
Fair Value	38,799	28,472
Corporate bonds
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Adjusted Cost	4,021	4,074
Unrealized Gains	77	33
Unrealized Losses	0	(94)
Fair Value	4,098	4,013
Government securities - U.S.
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Adjusted Cost	5,341	5,777
Unrealized Gains	110	308
Unrealized Losses	(5)	0
Fair Value	5,446	6,085
Other fixed-income securities
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Adjusted Cost	1,614	1,418
Unrealized Gains	23	7
Unrealized Losses	0	(18)
Fair Value	$ 1,637	$ 1,407

Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis



	As of March 31, 2020						As of December 31, 2019
Fair Value Measurements:	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3

Marketable securities (see Note 6)
Equity securities	$	—	$	—	$	—	$	4,404	$	—	$	—
Money market and mutual funds	28,472		—		—		38,799		—		—
Corporate bonds	—		4,013		—		—		4,098		—
Government securities - U.S.	—		6,085		—		—		5,446		—
Other fixed-income securities	—		1,407		—		—		1,637		—
Total assets	$	28,472	$	11,505	$	—	$	43,203	$	11,181	$	—

Contingent consideration payable (see Note 9)	$	—	$	—	$	18,050	$	—	$	—	$	17,327
Total liabilities	$	—	$	—	$	18,050	$	—	$	—	$	17,327

Other Assets and Liabilities - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Prepaid Expenses and Other Current Assets:
Valued-added tax recoverable	$ 257	$ 1,051
Prepaid and other expenses	1,933	2,116
Guarantee from Armistice	456	454
Income tax receivable	536	536
Research and development tax credit receivable	1,835	2,107
Other	155	107
Total	$ 3,337	$ 4,264

Subsequent Events	3 Months Ended
Subsequent Events	Mar. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events May 2020 Public Offering On April 28, 2020, we announced the pricing of an underwritten public offering of 11,630 ordinary shares, in the form of ADSs at a price to the public of $10.75 per ADS. Each ADS represents the right to receive one ordinary share. The gross proceeds to us from the offering were approximately $125,000, before deducting underwriting discounts and commissions and estimated offering expenses. In connection with the public offering, we granted the underwriters a 30-day option to purchase up to an additional 1,745 ADSs at the public offering price less the underwriting discounts and commissions. The offering closed on May 1, 2020.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Preferred shares, nominal value (in usd per share)	$ 0.01	$ 0.01
Preferred shares, shares authorized (in shares)	50,000,000	50,000,000
Preferred shares, shares issued (in shares)	0	0
Preferred shares, shares outstanding (in shares)	0	0
Ordinary shares, nominal value (in usd per share)	$ 0.01	$ 0.01
Ordinary shares, shares authorized (in shares)	500,000,000	500,000,000
Ordinary shares, shares issued (in shares)	42,857,000	42,720,000
Ordinary shares, shares outstanding (in shares)	37,450,000	37,313,000
Treasury stock, shares held (in shares)	5,407,000	5,407,000

Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended
	Mar. 31, 2020 FDA_drug
Accounting Policies [Abstract]
Number of products with FDA approval	3

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The Company’s amortizable and unamortizable intangible assets at March 31, 2020 and December 31, 2019 are as follows:



	March 31, 2020							December 31, 2019
Goodwill and Intangible Assets:	Gross Value		Accumulated Amortization			Net Carrying Amount		Gross Value		Accumulated Amortization			Net Carrying Amount

Amortizable intangible assets - Acquired developed technology - Vazculep	$	12,061	$	(11,451	)	$	610	$	12,061	$	(11,248	)	$	813

Unamortizable intangible assets - Goodwill	$	18,491	$	—		$	18,491	$	18,491	$	—		$	18,491

Revenue Recognition - Narrative (Details)	Mar. 31, 2020 USD ($)
Revenue from Contract with Customer [Abstract]
Deferred contract costs	$ 0

Net Loss Per Share - Reconciliation of Basic and Diluted Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Net loss	$ (865)	$ (13,018)
Weighted average shares:
Basic shares (in shares)	41,057	37,354
Effect of dilutive securities—options and warrants outstanding (in shares)	0	0
Diluted shares (in shares)	41,057	37,354
Net income (loss) per share - basic (in dollars per share)	$ (0.02)	$ (0.35)
Net income (loss) per share - diluted (in dollars per share)	$ (0.02)	$ (0.35)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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+ Details

- Definition

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

+ References + Details

Restructuring Costs (Tables)

3 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

The following table sets forth activities for the Company’s cost reduction plan obligations for the three months ended March 31, 2020:



2019 French Restructuring Obligation:	2020

Balance of restructuring accrual at January 1,	$	1,922
Charges for employee severance, benefits and other costs	171
Payments	(1,294		)
Foreign currency impact	(34		)
Balance of restructuring accrual at March 31,	$	765

The following table sets forth activities for the Company’s cost reduction plan obligations for the three months ended March 31, 2020 and 2019:



2019 Corporate Restructuring Obligation:	2020			2019

Balance of restructuring accrual at January 1,	$	1,080		$	—
Charges for employee severance, benefits and other costs	62			1,398
Payments	(202		)	(754		)
Balance of restructuring accrual at March 31,	$	940		$	644

Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization	$ 203	$ 201
Finite-lived intangible assets, amortization expense, next 12 months	$ 813
Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated useful life (in years)	7 years

Equity Transactions (Details) - USD ($)			1 Months Ended	3 Months Ended
Equity Transactions (Details) - USD ($)	Apr. 28, 2020	Feb. 21, 2020	Feb. 29, 2020	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Class of Stock [Line Items]
Maximum aggregate offering price of securities under shelf registration			$ 250,000
Ordinary shares, nominal value (in usd per share)			$ 0.01	$ 0.01		$ 0.01
Preferred shares, nominal value (in usd per share)			$ 0.01	$ 0.01		$ 0.01
Maximum aggregate offering price of ADSs under shelf registration			$ 50,000
Stock transaction issuance costs			$ 340,000
February 2020 private placement				$ 60,733,000
Proceeds from the February 2020 private placement				60,733,000	$ 0
Maximum threshold percentage for trigger of convertible preferred stock		9.99%
Additional paid-in capital
Class of Stock [Line Items]
Stock transaction issuance costs		$ 4,267,000
February 2020 private placement				$ 60,641,000
Securities Purchase Agreement
Class of Stock [Line Items]
February 2020 private placement		65,000,000
Proceeds from the February 2020 private placement		$ 60,733,000
Over-Allotment Option \| Subsequent Event
Class of Stock [Line Items]
Shares sold in offering	1,745
American Depositary Receipts \| Securities Purchase Agreement
Class of Stock [Line Items]
February 2020 private placement (in shares)		8,680,000
Series A Preferred Stock \| Securities Purchase Agreement
Class of Stock [Line Items]
February 2020 private placement (in shares)		488
Shares issued, price per share (in dollars per share)		$ 7.09
American Depositary Shares \| Public Offering \| Subsequent Event
Class of Stock [Line Items]
Shares sold in offering	11,630
Offering price per share (in dollars per share)	$ 10.75
Aggregate net proceeds from stock offering	$ 125,000,000

Newly Issued Accounting Pronouncements	3 Months Ended
Newly Issued Accounting Pronouncements	Mar. 31, 2020
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Newly Issued Accounting Pronouncements	Newly Issued Accounting Standards Recent Accounting Guidance Not Yet Adopted In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. The FASB’s amendments primarily impact ASC 740, Income Taxes, and may impact both interim and annual reporting periods. ASU 2019-12 will be effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years and early adoption is permitted. We are currently evaluating the impact of adopting ASU 2019-12. Recently Adopted Accounting Guidance In August 2018, FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirement for Fair Value Measurement” which amends certain disclosure requirements over Level 1, Level 2 and Level 3 fair value measurements. The amendments in ASU 2018-13 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We adopted ASU 2018-13 in the first quarter of 2020. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).” This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. The standard limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. ASU 2016-13 is effective for the Company for fiscal years beginning on or after January 1, 2020, including interim periods within those annual reporting periods and early adoption is permitted. We adopted the provisions of ASU 2016-13 in the first quarter of 2020. Adoption of the new standard did not have any impact on our unaudited condensed consolidated financial statements.

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share Reconciliation

A reconciliation of basic and diluted net loss per share, together with the related shares outstanding in thousands is as follows:



	Three Months Ended March 31,
Net Loss Per Share:	2020			2019

Net loss	$	(865	)	$	(13,018	)

Weighted average shares:
Basic shares	41,057			37,354
Effect of dilutive securities—employee and director equity awards outstanding, preferred shares and 2023 Notes	—			—
Diluted shares	41,057			37,354

Net loss per share - basic	$	(0.02	)	$	(0.35	)
Net loss per share - diluted	$	(0.02	)	$	(0.35	)

Revenue by Product - Summary of Revenue (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) segment	Mar. 31, 2019 USD ($)
Segment Reporting [Abstract]
Number of operating segments (in segments) \| segment	1
Segment Reporting Information [Line Items]
Total revenues	$ 12,243	$ 16,437
Bloxiverz
Segment Reporting Information [Line Items]
Total revenues	1,401	2,568
Vazculep
Segment Reporting Information [Line Items]
Total revenues	5,514	9,473
Akovaz
Segment Reporting Information [Line Items]
Total revenues	5,349	3,792
Other
Segment Reporting Information [Line Items]
Total revenues	$ (21)	$ 604

Restructuring Costs - Severance Obligation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Restructuring Reserve [Roll Forward]
Restructuring costs	$ 159	$ 1,228
2019 Corporate Restructuring Obligations
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	1,080	0
Payments	(202)	(754)
Restructuring reserve, ending balance	940	644
2019 French Restructuring Obligation
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	1,922
Payments	(1,294)
Foreign currency impact	(34)
Restructuring reserve, ending balance	765
Employee Severance \| 2019 Corporate Restructuring Obligations
Restructuring Reserve [Roll Forward]
Restructuring costs	62	$ 1,398
Employee Severance \| 2019 French Restructuring Obligation
Restructuring Reserve [Roll Forward]
Restructuring costs	$ 171

Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale and Equity Securities



	March 31, 2020
Marketable Securities:	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value

Money market and mutual funds	$	28,370	$	410	$	(308	)	$	28,472
Corporate bonds	4,074		33		(94		)	4,013
Government securities - U.S.	5,777		308		—			6,085
Other fixed-income securities	1,418		7		(18		)	1,407
Total	$	39,639	$	758	$	(420	)	$	39,977



	December 31, 2019
Marketable Securities:	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value

Equity securities	$	4,234	$	170	$	—		$	4,404
Money market and mutual funds	38,028		771		—			38,799
Corporate bonds	4,021		77		—			4,098
Government securities - U.S.	5,341		110		(5		)	5,446
Other fixed-income securities	1,614		23		—			1,637
Total	$	53,238	$	1,151	$	(5	)	$	54,384

Schedule of Contractual Maturity Dates



	Maturities
Marketable Debt Securities:	Less than 1 Year		1-5 Years		5-10 Years		Greater than 10 Years		Total

Corporate bonds	$	592	$	3,030	$	391	$	—	$	4,013
Government securities - U.S.	—		5,269		329		487		6,085
Other fixed-income securities	50		1,357		—		—		1,407
Total	$	642	$	9,656	$	720	$	487	$	11,505

Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value [Table Text Block]



Marketable Debt Securities:	Fair Value		Unrealized Losses

Corporate bonds	$	2,442	$	94
Other fixed-income securities	694		18
Total	$	3,136	$	112

Revenue Recognition	3 Months Ended
Revenue Recognition	Mar. 31, 2020
Revenue from Contract with Customer [Abstract]
Revenue Recognition	Revenue Recognition The Company generates revenue primarily from the sale of pharmaceutical products to customers. Product Sales We sell products primarily through wholesalers and considers these wholesalers to be our customers. Revenue from product sales is recognized when the customer obtains control of our product and our performance obligations are met, which occurs typically upon receipt of delivery to the customer. As is customary in the pharmaceutical industry, our gross product sales are subject to a variety of price adjustments in arriving at reported net product sales. These adjustments include estimates for product returns, chargebacks, payment discounts, rebates, and other sales allowances and are estimated when the product is delivered based on analysis of historical data for the product or comparable products, as well as future expectations for such products. Reserves to Reduce Gross Revenues to Net Revenues Revenues from product sales are recorded at the net selling price, which includes estimated reserves to reduce gross product sales to net product sales resulting from product returns, chargebacks, payment discounts, rebates, and other sales allowances that are offered within contracts between the Company and its customers and end users. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable if the amount is payable to the customer, except in the case of the estimated reserve for future expired product returns, which are classified as a liability. The reserves are classified as a liability if the amount is payable to a party other than a customer. Where appropriate, these estimated reserves take into consideration 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. Overall, these reserves reflect the Company’s best estimates to reduce gross selling price to net selling price to which it expects to be entitled based on the terms of its contracts. The actual selling price ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known. Product Returns Consistent with industry practice, the Company maintains a returns policy that generally offers customers a right of return for product that has been purchased from the Company. The Company estimates the amount of product returns and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities based on analysis of historical data for the product or comparable products, as well as future expectations for such products and other judgments and analysis. Chargebacks, Discounts and Rebates Chargebacks, discounts and rebates represent the estimated obligations resulting from contractual commitments to sell products to its customers or end users at prices lower than the list prices charged to our wholesale customers. Customers charge the Company for the difference between the gross selling price they pay for the product and the ultimate contractual price agreed to between the Company and these end users. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargebacks, discounts and rebates are estimated at the time of sale to the customer. Revenue from licensing arrangements The terms of the Company’s licensing agreements may contain multiple performance obligations, including certain R&D activities. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees, development, regulatory and commercial milestone payments. Each of these payments results in license revenues. Disaggregation of revenue The Company’s source of revenue is from the sale of pharmaceutical products, which are equally affected by the same economic factors as it relates to the nature, amount, timing, and uncertainty of revenue and cash flows. For further detail about the Company’s revenues by product, see Note 17: Revenue by Product. Contract Balances The Company does not recognize revenue in advance of invoicing its customers and therefore has no related contract assets. A receivable is recognized in the period the Company sells its products and when the Company’s right to consideration is unconditional. There were no material deferred contract costs at March 31, 2020. Transaction Price Allocated to the Remaining Performance Obligation For product sales, the Company generally satisfies its performance obligations within the same period the product is delivered. Product sales recognized in the first quarter of 2020 from performance obligations satisfied (or partially satisfied) in previous periods were immaterial. For certain licenses of intellectual property, specifically those with performance obligations satisfied over time, the Company allocates a portion of the transaction price to that performance obligation and recognizes revenue using an appropriate measure of progress towards development of the product. The Company has elected certain of the practical expedients from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. Accordingly, the Company applies the practical expedient in ASC 606 to its stand-alone contracts and does not disclose information about variable consideration from remaining performance obligations for which the Company recognizes revenue.

Fair Value Measurement Fair Value Measurement - Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	$ 39,977	$ 54,384
Book value of long-term debt	123,258	121,686
Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	$ 143,750	$ 143,750
Debt instrument, interest rate, stated percentage	4.50%	4.50%
Book value of long-term debt	$ 123,258	$ 121,686
4.50% Exchangeable Senior Notes Due 2023 \| Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, interest rate, stated percentage	4.50%
Book value of long-term debt	$ 123,258
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities		4,404
Money market and mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	28,472	38,799
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	4,013	4,098
Government securities - U.S.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	6,085	5,446
Other fixed-income securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	1,407	1,637
Fair Value Measurements, Recurring \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	28,472	43,203
Fair Value Measurements, Recurring \| Level 1 \| Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	0	4,404
Fair Value Measurements, Recurring \| Level 1 \| Money market and mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	28,472	38,799
Fair Value Measurements, Recurring \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,505	11,181
Fair Value Measurements, Recurring \| Level 2 \| Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	4,013	4,098
Fair Value Measurements, Recurring \| Level 2 \| Government securities - U.S.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	6,085	5,446
Fair Value Measurements, Recurring \| Level 2 \| Other fixed-income securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market and mutual funds	1,407	1,637
Fair Value Measurements, Recurring \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Related party payable	18,050	17,327
Total liabilities	$ 18,050	$ 17,327