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Note 5 - Revenue Recognition | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Revenue from Contract with Customer [Text Block] | 5 . Revenue Recognition Product Sales SUSTOL is distributed in the U.S. through a limited number of Customers that resell SUSTOL to healthcare providers, the end users of SUSTOL. CINVANTI is distributed in the U.S. through a limited number of Customers that resell CINVANTI to healthcare providers and hospitals, the end users of CINVANTI. Adoption of Topic 606 On January 1, 2018, we adopted Topic 606 using the modified retrospective approach applied to those contracts that were not completed as of January 1, 2018. Results from reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under the FASB ASC Topic 605, Revenue Recognition (“Topic 605” ). Prior to the adoption of Topic 606, we recognized product sales as revenue to the extent that our Customers had resold our products to end users (sell-through approach). With the adoption of Topic 606, we recognize product sales as revenue when our products are sold to our Customers (sell-in approach). Product sales under both Topic 605 and 606 are reported net of product sales allowances, which include product returns. Revenue is recognized in an amount that reflects the consideration we expect to receive in exchange for our products. To determine revenue recognition for contracts with customers within the scope of Topic 606, we performed the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations of the contract(s); (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract(s); and (v) recognize revenue when (or as) we satisfy the performance obligations. The following table shows the reconciliation of assets and liabilities disclosed in our Annual Report on Form 10 -K for the year ended December 31, 2017, as adjusted, due to the modified retrospective adoption of Topic 606 on January 1, 2018 ( in thousands):
|  | As Reported Under Topic 605 |  |  | Effect of Change |  |  | As Adjusted Under Topic 606 |
Inventory |  | $ | 10,108 |  |  | $ | (198 | ) |  | $ | 9,910 |
Other accrued liabilities |  |  | 17,175 |  |  |  | 991 |  |  |  | 18,166 |
Deferred revenue |  |  | 2,763 |  |  |  | (2,763 | ) |  |  | — |
Accumulated deficit |  |  | (783,455 | ) |  |  | 1,574 |  |  |  | (781,881 | )
The following table shows the unaudited condensed consolidated financial statement line items as if revenue from contracts with customers had been accounted for under Topic 605 (in thousands, except per share data):
|  | As Reported Under Topic 606 |  |  | Effect of Change |  |  | As Calculated Under Topic 605 |
Consolidated Balance Sheet as of December 31, 2018: |  |  |  |  |  |  |  |  |  |  |  |
Inventory |  | $ | 39,032 |  |  | $ | 2,181 |  |  | $ | 41,213 |
Other accrued liabilities |  |  | 32,715 |  |  |  | (7,195 | ) |  |  | 25,520 |
Deferred revenue |  |  | — |  |  |  | 14,010 |  |  |  | 14,010 |
Accumulated deficit |  |  | (960,721 | ) |  |  | (4,634 | ) |  |  | (965,355 | )
Consolidated Statement of Operations for the Year Ended December 31 , 2018 : |  |  |  |  |  |  |  |  |  |  |  |
Net product sales |  | $ | 77,474 |  |  | $ | (5,043 | ) |  | $ | 72,431 |
Cost of product sales |  |  | 27,512 |  |  |  | (1,983 | ) |  |  | 25,529 |
Loss from operations |  |  | (183,937 | ) |  |  | (3,060 | ) |  |  | (186,997 | )
Net loss |  |  | (178,840 | ) |  |  | (3,060 | ) |  |  | (181,900 | )
Basic and diluted net loss per share |  |  | (2.44 | ) |  |  | (0.05 | ) |  |  | (2.49 | )
Consolidated Statement of Cash Flows for the Year Ended December 31 , 2018 : |  |  |  |  |  |  |  |  |  |  |  |
Net loss |  | $ | (178,840 | ) |  | $ | (3,060 | ) |  | $ | (181,900 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Inventory |  |  | (29,122 | ) |  |  | (1,983 | ) |  |  | (31,105 | )
Other accrued liabilities |  |  | 14,941 |  |  |  | (6,204 | ) |  |  | 8,737 |
Deferred revenue |  |  | — |  |  |  | 11,247 |  |  |  | 11,247 |
Product Sales Allowances We recognize product sales allowances as a reduction of product sales in the same period the related revenue is recognized. Product sales allowances are based on amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of our agreements with Customers, historical product returns, rebates or discounts taken, the shelf life of the product and specific known market events, such as competitive pricing and new product introductions. If actual future results vary from our estimates, we may need to adjust these estimates, which could have an effect on product sales and earnings in the period of adjustment. Our product sales allowances include:
| ● | Product Returns — We allow our Customers to return product for credit 12 months after its product expiration date. As such, there may be a significant period of time between the time the product is shipped and the time the credit is issued on returned product.
| ● | Distributor Fees — We offer contractually determined discounts to our Customers. These discounts are paid no later than two months after the quarter in which product was shipped.
| ● | Group Purchasing Organization (“GPO”) Discounts and Rebates — We offer cash discounts to GPO members. These discounts are taken when the GPO members purchase SUSTOL or CINVANTI from our Customers, who then charge back to us the discount amount. Additionally, we offer volume and contract-tier rebates to GPO members. Rebates are based on actual purchase levels during the quarterly rebate purchase period.
| ● | GPO Administrative Fees — We pay administrative fees to GPOs for services and access to data. These fees are based on contracted terms and are paid after the quarter in which the product was purchased by the GPOs’ members.
| ● | Medicaid Rebates — We participate in Medicaid rebate programs, which provide assistance to certain low-income patients based on each individual state’s guidelines regarding eligibility and services. Under the Medicaid rebate programs, we pay a rebate to each participating state, generally within three months after the quarter in which SUSTOL or CINVANTI was sold.
We believe our estimated allowance for product returns requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors. We believe our estimated allowances for distributor fees, GPO discounts, rebates and administrative fees and Medicaid rebates do not require a high degree of judgment because the amounts are settled within a relatively short period of time. Our product sales allowances and related accruals are evaluated each reporting period and adjusted when trends or significant events indicate that a change in estimate is appropriate. Changes in sales allowance estimates could materially affect our results of operations and financial position. The following table provides a summary of activity with respect to our product returns, distributor fees and discounts, rebates and administrative fees, which are included in other accrued liabilities on the condensed consolidated balance sheets (in thousands):
|  | Product Returns |  |  | Distributor Fees |  |  | Discounts, Rebates and Administrative Fees |  |  | Total |
Balance at December 31, 2017 |  | $ | 521 |  |  | $ | 580 |  |  | $ | 8,218 |  |  | $ | 9,319 |
Provision |  |  | 464 |  |  |  | 7,555 |  |  |  | 58,504 |  |  |  | 66,523 |
Payments/credits |  |  | (38 | ) |  |  | (5,322 | ) |  |  | (44,979 | ) |  |  | (50,339 | )
Balance at December 31, 2018 |  | $ | 947 |  |  | $ | 2,813 |  |  | $ | 21,743 |  |  | $ | 25,503 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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