FIXED ASSETS

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Fixed assets, net, summarized by major category, consist of the following (in thousands):


	September 30,		December 31,
	2024		2023
Machinery and equipment (1) (2)	$	154,652	$	121,773
Leasehold improvements (2)	80,956		61,826
Computer equipment and software (2)	23,797		17,186
Office furniture and equipment	2,645		2,543
Construction in progress (2)	34,529		105,905
Total	296,579		309,233
Less: accumulated depreciation (1)	(129,727)		(135,306)
Fixed assets, net	$	166,852	$	173,927

(1) During the nine months ended September 30, 2024, the Company disposed $19.0 million of fully depreciated machinery and equipment associated with its 45-liter EXPAREL manufacturing process at its contract manufacturing facility located in Swindon, England. The Company continues to operate its 200-liter EXPAREL manufacturing process at the same facility.

(2) During the nine months ended September 30, 2024, a 200-liter EXPAREL manufacturing suite at the Company’s Science Center Campus in San Diego, California was placed into service, for which approximately $76.1 million was reclassified from construction in progress to machinery and equipment, leasehold improvements and computer equipment and software.

For the three months ended September 30, 2024 and 2023, depreciation expense was $6.0 million and $4.1 million, respectively. For the three months ended September 30, 2024 and 2023, there was $0.5 million and $0.7 million of capitalized interest on the construction of manufacturing sites, respectively.

For the nine months ended September 30, 2024 and 2023, depreciation expense was $14.6 million and $14.1 million, respectively. For the nine months ended September 30, 2024 and 2023, there was $1.9 million and $2.8 million of capitalized interest on the construction of manufacturing sites, respectively.

At September 30, 2024 and December 31, 2023, total fixed assets, net, includes manufacturing process equipment and leasehold improvements located in Europe in the amount of $30.4 million and $36.8 million, respectively.

As of September 30, 2024 and December 31, 2023, the Company had asset retirement obligations of $4.1 million and $4.3 million, respectively, included in accrued expenses and other liabilities on its condensed consolidated balance sheets, for costs associated with returning leased spaces to their original condition upon the termination of certain of its lease agreements.

During the three months ended September 30, 2024, the United States Food and Drug Administration, or FDA, approved a generic competitor to EXPAREL and a U.S. District Court ruled that one of the Company’s patents was not valid (for more information, see Note 15, Commitments and Contingencies). The Company determined that these events and a subsequent decrease in the Company’s common stock price constituted impairment indicators under ASC 360 Property, Plant and Equipment. As of September 30, 2024, the Company performed a quantitative recoverability test of the carrying values of its asset group. The Company estimated the undiscounted future cash flows expected to result from the use of these asset groups and found that no impairment charge to long-lived assets was necessary.