Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2018	Apr. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Trading Symbol	SPPI
Entity Registrant Name	SPECTRUM PHARMACEUTICALS INC
Entity Central Index Key	0000831547
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		104,055,102

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 183,513	$ 227,323
Marketable securities	48,403	248
Accounts receivable, net of allowance for doubtful accounts of $71 and $71, respectively	33,375	32,260
Other receivables	2,906	2,133
Inventories	5,028	5,715
Prepaid expenses and other assets	3,803	10,067
Total current assets	277,028	277,746
Property and equipment, net of accumulated depreciation	593	589
Intangible assets, net of accumulated amortization	130,319	137,159
Goodwill	18,227	18,162
Other assets	18,106	53,783
Total assets	444,273	487,439
Current liabilities:
Accounts payable and other accrued liabilities	50,927	58,117
Accrued payroll and benefits	3,401	9,261
Deferred revenue	0	3,872
FOLOTYN development liability	275	275
Convertible senior notes	38,819	38,224
Total current liabilities	93,422	109,749
FOLOTYN development liability, less current portion	12,008	12,111
Deferred revenue, less current portion	0	315
Acquisition-related contingent obligations	6,563	6,272
Deferred tax liabilities	1,447	1,438
Other long-term liabilities	6,539	6,215
Total liabilities	119,979	136,100
Commitments and contingencies
Stockholders’ equity:
Preferred stock	0	0
Common stock, $0.001 par value; 175,000,000 shares authorized; 103,935,398 and 100,742,735 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	103	100
Additional paid-in capital	820,701	837,347
Accumulated other comprehensive (loss) income	(819)	15,999
Accumulated deficit	(495,691)	(502,107)
Total stockholders’ equity	324,294	351,339
Total liabilities and stockholders’ equity	444,273	487,439
Series B junior participating preferred stock [Member]
Stockholders’ equity:
Preferred stock	0	0
Series E Convertible Voting Preferred Stock [Member]
Stockholders’ equity:
Preferred stock	$ 0	$ 0

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Allowance for doubtful accounts receivable	$ 71	$ 71
Preferred stock, par value ($ per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (shares)	5,000,000	5,000,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Common stock, par value ($ per share)	$ 0.001	$ 0.001
Common stock, shares authorized (shares)	175,000,000	175,000,000
Common stock, shares issued (shares)	103,935,398	100,742,735
Common stock, shares outstanding (shares)	103,935,398	100,742,735
Series B junior participating preferred stock [Member]
Preferred stock, par value ($ per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (shares)	1,500,000	1,500,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Series E Convertible Voting Preferred Stock [Member]
Preferred stock, par value ($ per share)	$ 0.001	$ 0.001
Preferred stock, stated value ($ per share)	$ 10,000	$ 10,000
Preferred stock, shares authorized (shares)	2,000	2,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues:
Product sales, net	$ 28,111	$ 25,845
License fees and service revenue	2,384	3,256
Total revenues	30,495	29,101
Operating costs and expenses:
Cost of sales (excludes amortization of intangible assets)	6,813	8,135
Cost of service revenue	0	2,103
Selling, general and administrative	24,104	19,104
Research and development	17,895	14,779
Amortization of intangible assets	6,947	6,889
Total operating costs and expenses	55,759	51,010
Loss from operations	(25,264)	(21,909)
Other income (expense):
Interest expense, net	(230)	(2,052)
Change in fair value of contingent consideration related to acquisitions	(291)	(197)
Other income, net	9,972	410
Total other income (expense)	9,451	(1,839)
Loss before income taxes	(15,813)	(23,748)
(Provision) benefit for income taxes	(3)	201
Net loss	$ (15,816)	$ (23,547)
Net loss per share:
Basic and diluted ($ per share)	$ (0.16)	$ (0.30)
Weighted average shares outstanding:
Basic and diluted (shares)	100,809,853	78,523,023

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (15,816)	$ (23,547)
Other comprehensive (loss) income:
Unrealized gain on available-for-sale securities, net of income tax of $960 for the three months ended March 31, 2017	0	1,807
Cumulative effect of ASU 2016-01 adoption on January 1, 2018 for unrealized gains on equity securities, net of income tax; recorded as a reclassification to accumulated deficit (see Note 3(a))	(17,211)	0
Foreign currency translation adjustments	393	152
Other comprehensive (loss) income	(16,818)	1,959
Total comprehensive loss	$ (32,634)	$ (21,588)

Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Statement of Comprehensive Income [Abstract]
Tax on available-for-sale securities	$ 960

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash Flows From Operating Activities:
Net loss	$ (15,816)	$ (23,547)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6,995	6,982
Stock-based compensation	4,478	3,720
Accretion of debt discount on 2018 Convertible Notes, recorded to interest expense (Note 13)	533	1,381
Amortization of deferred financing costs on 2018 Convertible Notes, recorded to interest expense (Note 13)	61	166
Unrealized gains from transactions denominated in foreign currency	(8)	(11)
Change in cash surrender value of corporate-owned life insurance policy	0	(104)
Deferred tax liabilities	9	74
Income tax recognition on unrealized gain for available-for-sale securities	0	(960)
Unrealized gains on marketable securities (Note 3(a))	(10,196)	0
Change in fair value of contingent consideration related to the Talon and EVOMELA acquisitions (Note 9)	291	197
Changes in operating assets and liabilities:
Accounts receivable, net	(583)	310
Other receivables	(762)	(190)
Inventories	657	(1,204)
Prepaid expenses	2,134	204
Other assets	(1,693)	1,316
Accounts payable and other accrued obligations	(7,207)	(4,269)
Accrued payroll and benefits	(5,860)	(3,807)
FOLOTYN development liability	(103)	(359)
Deferred revenue	0	(296)
Other long-term liabilities	325	270
Net cash used in operating activities	(26,745)	(20,127)
Cash Flows From Investing Activities:
Proceeds from redemption of corporate-owned life insurance policy	4,130	0
Redemption of mutual funds	(1)	(1)
Purchases of property and equipment	(52)	(136)
Net cash provided by (used in) investing activities	4,077	(137)
Cash Flows From Financing Activities:
Proceeds from employees for exercises of stock options	1,920	85
Proceeds from employees, for our remittance to tax authorities, related to employee vesting of restricted stock and stock option exercises	4,645	0
Payments to tax authorities related to employee surrender of vested restricted stock and stock option exercises	(27,686)	(873)
Net cash used in financing activities	(21,121)	(788)
Effect of exchange rates on cash and equivalents	(21)	26
Net decrease in cash and cash equivalents	(43,810)	(21,026)
Cash and cash equivalents—beginning of period	227,323	158,222
Cash and cash equivalents—end of period	183,513	137,196
Supplemental disclosure of cash flow information:
Cash paid for income taxes	0	0
Cash paid for interest	$ 0	$ 0

Description of Business, Basis of Presentation, and Operating Segment

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Description of Business, Basis of Presentation, and Operating Segment

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND OPERATING SEGMENT

(a) Description of Business

Spectrum Pharmaceuticals, Inc. (“Spectrum”, the “Company”, “we”, “our”, or “us”) is a biopharma company, with a primary strategy comprised of acquiring, developing, and commercializing a broad and diverse pipeline of late-stage clinical and commercial products. We have an in-house clinical development organization with regulatory and data management capabilities, and a commercial infrastructure and a field sales force for our marketed products. Currently, we have six approved oncology/hematology products (FUSILEV, FOLOTYN, ZEVALIN, MARQIBO, BELEODAQ, and EVOMELA) that target different types of cancer including: non-Hodgkin’s lymphoma (“NHL”), advanced metastatic colorectal cancer, acute lymphoblastic leukemia, and multiple myeloma (“MM”).

We also have three drugs in mid-to-late stage development (in Phase 2 or Phase 3 clinical trials):


•	Poziotinib, a novel pan-HER inhibitor used in the treatment of patients with a variety of solid tumors, including breast and lung cancer.


•	ROLONTIS (formerly referred to as SPI-2012 or LAPS-G-CSF) for chemotherapy-induced neutropenia; and


•	QAPZOLA (formerly referred to as APAZIQUONE) for immediate intravesical instillation in post-transurethral resection of bladder tumors in patients with non-muscle invasive bladder cancer (“NMIBC”).

(b) Basis of Presentation

Interim Financial Statements

The interim financial data for the three months ended March 31, 2018 and 2017, respectively, is unaudited, and is not necessarily indicative of our operating results for a full year. In the opinion of our management, the interim data includes normal and recurring adjustments necessary for a fair presentation of our financial results for the three months ended March 31, 2018 and 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the United States Securities and Exchange Commission (“SEC”) rules and regulations relating to interim financial statements. The December 31, 2017 balances reported herein are derived from the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 7, 2018.

Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and with the rules and regulations of the SEC. These financial statements include the financial position, results of operations, and cash flows of Spectrum and its subsidiaries, all of which are wholly-owned (except for Spectrum Pharma Canada (“SPC”), as discussed below). All inter-company accounts and transactions among these legal entities have been eliminated in consolidation.

Variable Interest Entity

We own fifty-percent of SPC, a legal entity organized in Quebec, Canada in January 2008. Some of our clinical studies are conducted through this “variable interest entity” (as defined under applicable GAAP). We fund all of SPC’s operating costs, and since we assume all risks and rewards for this entity, we meet the criteria as being its “primary beneficiary.” Accordingly, SPC’s balance sheets and statements of operations are included in our Condensed Consolidated Financial Statements as if it were a wholly-owned subsidiary for all periods presented.

We operate in one reportable operating segment that is focused exclusively on developing and commercializing oncology and hematology drug products. For the three months ended March 31, 2018 and 2017, all of our revenue and related expenses were solely attributable to these activities. Substantially all of our assets (excluding our cash held in certain foreign bank accounts and our ZEVALIN distribution rights for the ex-U.S. territory) are held in the United States.

Summary of Significant Accounting Policies and Use of Estimates

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Use of Estimates

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires our management to make informed estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. However, actual values may materially differ, since estimates are inherently uncertain. On an on-going basis, our management evaluates its estimates and assumptions, including those related to (i) gross-to-net revenue adjustments; (ii) the timing of revenue recognition; (iii) the collectability of customer accounts; (iv) whether the cost of our inventories can be recovered; (v) the recoverability of our reported goodwill and intangible assets; (vi) the realization of our tax assets and estimates of our tax liabilities; (vii) the likelihood of payment and value of contingent liabilities; (viii) the fair value of our investments; (ix) the valuation of our stock options and the periodic expense recognition of stock-based compensation; and (x) the potential outcome of our ongoing or threatened litigation.

Our accounting policies and estimates that most significantly impact the presented amounts within our Condensed Consolidated Financial Statements are further described below:

(i) Revenue Recognition

Impact of the New Revenue Recognition Standard: ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for us on January 1, 2018. Our disclosure within the below sections to this footnote reflects our updated accounting policies that are affected by this new standard. We applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606; this resulted in the recognition of an aggregate $4.7 million, net of tax, decrease to our January 1, 2018 “accumulated deficit” on our accompanying Condensed Consolidated Balance Sheets for the cumulative impact of applying this new standard. We made no adjustments to our previously-reported total revenues, as those periods continue to be presented in accordance with our historical accounting practices under Topic 605, Revenue Recognition. See Notes 4, 5, and 19 for additional quantitative and qualitative revenue disclosures in accordance with Topic 606.

Required Elements of Our Revenue Recognition: Revenue from our (a) product sales, (b) out-license arrangements, and (c) service arrangements is recognized under Topic 606 in a manner that reasonably reflects the delivery of our goods and/or services to customers in return for expected consideration and includes the following elements:


(1)	we ensure that we have an executed contract(s) with our customer that we believe is legally enforceable;


(2)	we identify the “performance obligations” in the the respective contract;


(3)	we determine the “transaction price” for each performance obligation in the the respective contract;


(4)	we allocate the transaction price to each performance obligation; and


(5)	we recognize revenue only when we satisfy each performance obligation.

These five elements, as applied to each of our three revenue categories, are summarized below:

(a) Product Sales: We sell our products to pharmaceutical wholesalers/distributors (i.e., our customers), except for our U.S. sales of ZEVALIN in which case the end-user (i.e., clinic or hospital) is our customer. Our wholesalers/distributors in turn sell our products directly to clinics, hospitals, and private oncology-based practices. Revenue from our product sales is recognized as physical delivery of product occurs (when our customer obtains control of the product), in return for agreed-upon consideration.

Our gross product sales (i.e., delivered units multiplied by the contractual price per unit) are reduced by our corresponding gross-to-net (“GTN”) estimates using the “expected value” method, resulting in our reported “product sales, net” in the accompanying Condensed Consolidated Statements of Operations, reflecting the amount we ultimately expect to realize in net cash proceeds, taking into account our current period gross sales and related cash receipts, and the subsequent cash disbursements on these sales that we estimate for the various GTN categories discussed below. These estimates are based upon information received from external sources (such as written or oral information obtained from our customers with respect to their period-end inventory levels and sales to end-users during the period), in combination with management’s informed judgments. Due to the inherent uncertainty of these estimates, the actual amount incurred (of some, or all) of product returns, government chargebacks, prompt pay discounts, commercial rebates, Medicaid rebates, and distribution, data, and GPO administrative fees may be materially above or below the amount estimated, then requiring prospective adjustments to our reported net product sales.

These GTN estimate categories are each discussed below:

Product Returns Allowances: Our FUSILEV, MARQIBO, and BELEODAQ customers are contractually permitted to return purchased products beginning at its expiration date and within six months thereafter. Our EVOMELA customers are permitted to return purchased product beginning at six months prior to its expiration date, and within 12 months thereafter (as well as for overstock inventory, as determined by end-users). ZEVALIN and FOLOTYN returns for expiry are not contractually permitted. Returns outside of this aforementioned criteria are not customarily allowed. We estimate expected product returns for our allowance based on our historical return rates. Returned product is typically destroyed, since substantially all returns are due to expiry and cannot be resold.

Government Chargebacks: Our products are subject to pricing limits under certain federal government programs (e.g., Medicare and 340B Drug Pricing Program). Qualifying entities (i.e., end-users) purchase products from our customers at their qualifying discounted price. The chargeback amount we incur represents the difference between our contractual sales price to our customer, and the end-user’s applicable discounted purchase price under the government program. There may be significant lag time between our reported net product sales and our receipt of the corresponding government chargeback claims from our customers.

Prompt Pay Discounts: Discounts for prompt payment are estimated at the time of sale, based on our eligible customers’ prompt payment history and the contractual discount percentage.

Commercial Rebates: Commercial rebates are based on (i) our estimates of end-user purchases through a group purchasing organization (“GPO”), (ii) the corresponding contractual rebate percentage tier we expect each GPO to achieve, and (iii) our estimates of the impact of any prospective rebate program changes made by us.

Medicaid Rebates: Our products are subject to state government-managed Medicaid programs, whereby rebates are issued to participating state governments. These rebates arise when a patient treated with our product is covered under Medicaid, resulting in a discounted price for our product under the applicable Medicaid program. Our Medicaid rebate accrual calculations require us to project the magnitude of our sales, by state, that will be subject to these rebates. There is a significant time lag in us receiving rebate notices from each state (generally several months or longer after our sale is recognized). Our estimates are based on our historical claim levels by state, as supplemented by management’s judgment.

Distribution, Data, and GPO Administrative Fees: Distribution, data, and GPO administrative fees are paid to authorized wholesalers/distributors of our products (except for U.S. sales of ZEVALIN) for various commercial services including: contract administration, inventory management, delivery of end-user sales data, and product returns processing. These fees are based on a contractually-determined percentage of our applicable sales.

(b) License Fees: Our out-license arrangements allow licensees to market our product(s) in certain territories for a specific term (representing the out-license of “functional intellectual property”). These arrangements may include one or more of the following forms of consideration: (a) upfront license fees, (b) sales royalties, (c) sales milestone-achievement fees, and (d) regulatory milestone-achievement fees. We recognize revenue for each based on the contractual terms that establish our right to collect payment once the performance obligation is achieved, as follows:

(a)

Upfront license fees: We determine whether upfront license fees are earned at the time of contract execution (i.e., when rights transfer to the customer) or over the actual (or implied) contractual period of the out-license. As part of this determination, we evaluate whether we have any other requirements to provide substantive services that are inseparable from the performance obligation of the license transfer. Our customers’ “distinct” rights to licensed “functional intellectual property” at the time of contract execution results in concurrent revenue recognition of all upfront license fees (assuming that there are no other performance obligations at contract execution that are inseparable from this license transfer).


(b)	Royalties: Under the “sales-or-usage-based royalty exception” we recognize revenue in the same period that our licensees complete product sales in their territory for which we are contractually entitled to a percentage-based royalty receipt.


(c)	Sales milestones: Under the “sales-or-usage-based royalty exception” we recognize revenue in full within the period that our licensees achieve annual or aggregate product sales levels in their territories for which we are contractually entitled to a specified lump-sum receipt.


(d)	Regulatory milestones: Under the terms of the respective out-license, regulatory achievements may either be our responsibility, or that of our licensee.

•

When our licensee is responsible for the achievement of the regulatory milestone, we recognize revenue in full (for the contractual amount due from our licensee) in the period that the approval occurs (i.e., when the “performance obligation” is satisfied by our customer) under the “most likely amount” method. This revenue recognition remains “constrained” until regulatory approval occurs, given its inherent uncertainty and the requirement of a significant revenue reversal not being probable if achievement does not occur. At each reporting period, we re-evaluate the probability of milestone achievement and the associated revenue constraint; any resulting adjustments would be recorded on a cumulative catch-up basis, thus reflected in our financial statements in the period of adjustment.

•

When we are responsible for the achievement of a regulatory milestone, the “relative selling price method” is applied for purposes of allocating the transaction price to our performance obligations. In such case, we consider (i) the extent of our effort to achieve the milestone and/or the enhancement of the value of the delivered item(s) as a result of milestone achievement and (ii) if the milestone payment is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement. We have historically assessed the contractual value of these milestones upon their achievement to be identical to the allocation of value of our performance obligations and thus representing the “transaction price” for each milestone at contract inception. We recognize this revenue in the period that the regulatory approval occurs (i.e., when we complete the “performance obligation”) under the “most likely amount” method, and revenue recognition is otherwise “constrained” until regulatory approval occurs, given its inherent uncertainty and the requirement of a significant revenue reversal not being probable if achievement does not occur. At each reporting period, we re-evaluate the probability of milestone achievement and the associated revenue constraint; any resulting adjustments would be recorded on a cumulative catch-up basis, thus reflected in our financial statements in the period of adjustment.

(c) Service Revenue: We receive fees under certain arrangements for (a) sales and marketing services, (b) supply chain services (c) research and development services, and (d) clinical trial management services. Our rights to receive payment for these services may be established by (i) a fixed-fee schedule that covers the term of the arrangement, so long as we meet ongoing performance obligations, (ii) our completion of product delivery in our capacity as a procurement agent, (iii) the successful completion of a phase of drug development, (iv) favorable results from a clinical trial, and/or (v) regulatory approval events. We consider whether revenue associated with these service arrangements is reportable each period, based on our completed services or deliverables (i.e., satisfied “performance obligations”) during the reporting period, and the terms of the arrangement that contractually result in fixed payments due to us. The promised service(s) within these arrangements are distinct and explicitly stated within each contract, and our customer benefits from the separable service(s) delivery/completion. Further, the nature of the promise to our customer as stated within the respective contract is to deliver each named service individually (not a transfer of combined items to which the promised goods or services are inputs), and thus are separable for revenue recognition.

(ii) Cash and Cash Equivalents

Cash and cash equivalents consist of bank deposits and highly liquid investments with maturities of three months or less from the purchase date.

(iii) Marketable Securities

Our marketable securities consist of our holdings in equity securities (beginning January 1, 2018 - see Note 3(a)), mutual funds, and bank certificates of deposit (“Bank CDs”). Beginning January 1, 2018, our realized and unrealized gains (losses) on marketable securities are included in “Other income, net” on the accompanying Condensed Consolidated Statements of Operations. Prior to January 1, 2018, our unrealized gains (losses) were included in “other comprehensive (loss) income” on our accompanying Condensed Consolidated Statements of Comprehensive Loss.

(iv) Accounts Receivable

Our accounts receivables are derived from our product sales and license fees (our service revenue is recorded in “other receivables”), and do not bear interest. The allowance for doubtful accounts is management’s best estimate of the amount of probable credit losses in our existing accounts receivable. Account balances are charged off against the allowance after appropriate collection efforts are exhausted.

(v) Inventories

We value our inventory at the lower of (i) the actual cost of its purchase or manufacture, or (ii) its net realizable value. Inventory cost is determined on the first-in, first-out method. We regularly review our inventory quantities in process of manufacture and on hand. When appropriate, we record a provision for obsolete and excess inventory to derive its new cost basis, which takes into account our sales forecast by product and corresponding expiry dates of each product lot.

Manufacturing costs of drug products that are pending U.S. Food and Drug Administration (“FDA”) approval are expensed through “research and development,” on the accompanying Condensed Consolidated Statements of Operations (rather than being capitalized to “inventories”).

(vi) Property and Equipment

Our property and equipment is stated at historical cost, and is depreciated on a straight-line basis over an estimated useful life that corresponds with its designated asset category. We evaluate the recoverability of “long-lived assets” (which includes property and equipment) whenever events or changes in circumstances in our business indicate that the asset’s carrying amount may not be recoverable through our on-going operations.

(vii) Goodwill and Intangible Assets

Our goodwill represents the excess of our business acquisition cost over the estimated fair value of the net assets acquired in the corresponding transaction. Goodwill has an indefinite accounting life and is therefore not amortized. Instead, goodwill is evaluated for impairment on an annual basis (as of each October 1st), unless we identify impairment indicators that would require earlier testing.

We evaluate the recoverability of indefinite-lived intangible assets at least annually, or whenever events or changes in our business indicate that an intangible asset’s (whether indefinite or definite-lived) carrying amount may not be recoverable. Such circumstances could include, but are not limited to the following:


(a)	a significant decrease in the market value of an asset;


(b)	a significant adverse change in the extent or manner in which an asset is used; or


(c)	an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset.

Intangible assets with finite useful lives are amortized over their estimated useful lives on a straight-line basis. We review these assets for potential impairment if/when facts or circumstances suggest that the carrying value of these assets may not be recoverable.

(viii) Stock-Based Compensation

Stock-based compensation expense for equity awards granted to our employees and members of our Board of Directors is recognized on a straight-line basis over each award’s vesting period. Recognized compensation expense is net of an estimated forfeiture rate, representing the percentage of awards that are expected to be forfeited prior to vesting, though is ultimately adjusted for actual forfeitures. We use the Black-Scholes option pricing model to determine the fair value of stock options (as of the date of grant) which carry service conditions for vesting, though recognized expense is ultimately adjusted for actual forfeitures. We use the Monte Carlo valuation model to value equity awards (as of the date of grant) which carry combined market conditions and service conditions for vesting.

The calculation of the fair value of stock options and the recognition of stock-based compensation expense requires uncertain assumptions, including (a) the pre-vesting forfeiture rate of the award, (b) the expected term of our stock options, (c) our stock price volatility over its expected term (and that of our designated peer group with respect to certain market-based awards), and (d) the risk-free interest rate over the expected term.

We estimate forfeiture rates based on our employees’ overall forfeiture history, which we believe will be representative of future results. We estimate the expected term of stock options granted based on our employees’ historical exercise patterns, which we believe will be representative of their future behavior. We estimate the volatility of our common stock on the date of grant based on historical volatility of our common stock for a look-back period that corresponds with the expected term. We estimate the risk-free interest rate based upon the U.S. Department of the Treasury yields in effect at award grant, for a period equaling the expected term of the stock option.

(ix) Foreign Currency Translation

We translate the assets and liabilities of our foreign subsidiaries that are stated in their functional currencies (i.e., local operating currencies), to U.S. dollars at the rates of exchange in effect at the reported balance sheet date. Revenues and expenses are translated using the monthly average exchange rates during the reported period. Unrealized gains and losses from the translation of our subsidiaries’ financial statements (that are initially denominated in the corresponding functional currency) are included as a separate component of “accumulated other comprehensive (loss) income” in the Condensed Consolidated Balance Sheets.

We record foreign currency transactions, when initially denominated in a currency other than the respective functional currency of our subsidiary, at the prevailing exchange rate on the date of the transaction. Resulting unrealized foreign exchange gains and losses from transactions with third parties are included in “accumulated other comprehensive (loss) income” in the Condensed Consolidated Balance Sheets.

All unrealized foreign exchange gains and losses associated with our intercompany loans are included in “accumulated other comprehensive (loss) income” in the Condensed Consolidated Balance Sheets, as these loans with our foreign subsidiaries are not expected to be settled in the “foreseeable future.”

(x) Basic and Diluted Net Loss per Share

We calculate basic and diluted net loss per share using the weighted average number of common shares outstanding during the periods presented. In periods of a net loss, basic and diluted loss per share are the same. For the diluted earnings per share calculation, we adjust the weighted average number of common shares outstanding to include only dilutive stock options, warrants, and other common stock equivalents outstanding during the period.

(xi) Income Taxes

Deferred tax assets and liabilities are recorded based on the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the financial statements, as well as operating losses and tax credit carry forwards using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.

We have recorded a valuation allowance to reduce our deferred tax assets, because we believe that, based upon a weighting of positive and negative factors, it is more likely than not that these deferred tax assets will not be realized. If/when we were to determine that our deferred tax assets are realizable, an adjustment to the corresponding valuation allowance would increase our net income in the period that such determination was made.

In the event that we are assessed interest and/or penalties from taxing authorities that have not been previously accrued, such amounts would be included in “(provision) benefit for income taxes” within the Condensed Consolidated Statements of Operations for the period in which we received the notice.

(xii) Research and Development Costs

Our research and development costs are expensed as incurred, or as certain milestone payments become due, which are generally triggered by contractual clinical or regulatory events.

(xiii) Fair Value Measurements

We determine measurement-date fair value based on the proceeds that would be received through the sale of the asset, or that we would pay to settle or transfer the liability, in an orderly transaction between market participants. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include the following:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are publicly accessible at the measurement date.

Level 2: Observable prices that are based on inputs not quoted on active markets, but that are corroborated by market data. These inputs may include quoted prices for similar assets or liabilities or quoted market prices in markets that are not active to the general public.

Level 3: Unobservable inputs are used when little or no market data is available.

Balance Sheet Account Detail

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Account Detail

BALANCE SHEET ACCOUNT DETAIL

The composition of selected financial statement captions that comprise the accompanying Condensed Consolidated Balance Sheets are summarized below:

(a) Cash and Cash Equivalents and Marketable Securities

As of March 31, 2018 and December 31, 2017, our “cash and cash equivalents” were held with major financial institutions. Our “marketable securities” solely relate to our equity holdings in CASI - see Note 10.

We maintain cash balances in excess of federally insured limits with reputable financial institutions. To a limited degree, the Federal Deposit Insurance Corporation (“FDIC”) and other third parties insure these investments. However, these investments are not insured against the possibility of a complete loss of earnings or principal and are inherently subject to the credit risk related to the continued credit worthiness of the underlying issuer and general credit market risks. We manage such risks in our portfolio by investing in highly liquid, highly-rated instruments, and limit investing in long-term maturity instruments.

Our investment policy requires that purchased investments in marketable securities may only be in highly-rated instruments, which are primarily United States treasury bills or United States treasury-backed securities, and also limits our investments in securities of any single issuer (excluding any debt or equity securities received from our strategic partners in connection with a license arrangement, as discussed in Note 10).

The carrying amount of our equity securities, money market funds, and Bank CDs approximates their fair value (utilizing “Level 1” or “Level 2” inputs – see Note 2(xiii)) because of our ability to immediately convert these instruments into cash with minimal expected change in value.

The following is a summary of our presented “cash and cash equivalents” and “marketable securities”:




	Cost		Foreign Currency Translation			Gross Unrealized Gains*		Gross Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalents		Marketable Securities
March 31, 2018
Equity securities* (see Note 3(g) and Note 10)	$	8,710	$	(174	)	$	39,618	$	—	$	48,154	$	—	$	48,154
Bank deposits	20,546		—			—		—		20,546		20,546		—
Money market funds	162,967		—			—		—		162,967		162,967		—
Bank certificates of deposits	249		—			—		—		249		—		249
Total cash and cash equivalents and marketable securities	$	192,472	$	(174	)	$	39,618	$	—	$	231,916	$	183,513	$	48,403
December 31, 2017
Bank deposits	$	10,965	$	—		$	—	$	—	$	10,965	$	10,965	$	—
Money market funds	216,358		—			—		—		216,358		216,358		—
Bank certificates of deposits	248		—			—		—		248		—		248
Total cash and cash equivalents and marketable securities	$	227,571	$	—		$	—	$	—	$	227,571	$	227,323	$	248

* Beginning January 1, 2018, under the new requirements of ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities, the unrealized gains on our equity securities in CASI Pharmaceuticals, Inc. (NASDAQ: CASI) (“CASI”) are recognized as an increase to “other income, net” on the Consolidated Statements of Operations (rather than through “other comprehensive (loss) income” on the Consolidated Statements of Comprehensive Loss). Our adoption of ASU 2016-01 on January 1, 2018, resulted in a $17.2 million cumulative-effect adjustment, net of income tax, recorded as a decrease to “accumulated other comprehensive (loss) income” and a decrease to “accumulated deficit” on the accompanying Condensed Consolidated Balance Sheets. Our recognized unrealized gain on these equity securities was $10.2 million for the three months ended March 31, 2018, as reported in “other income, net” on the accompanying Condensed Consolidated Statements of Operations.

As of March 31, 2018, none of our securities had been in a continuous unrealized loss position longer than one year.

(b) Property and Equipment, net of Accumulated Depreciation

“Property and equipment, net of accumulated depreciation” consists of the following:



	March 31, 2018			December 31, 2017
Computer hardware and software	$	3,067		$	2,994
Laboratory equipment	630			630
Office furniture	218			218
Leasehold improvements	2,938			2,938
Property and equipment, at cost	6,853			6,780
(Less): Accumulated depreciation	(6,260		)	(6,191		)
Property and equipment, net of accumulated depreciation	$	593		$	589

Depreciation expense (included within “total operating costs and expenses” in the accompanying Condensed Consolidated Statements of Operations) for the three months ended March 31, 2018 and 2017, was $49 thousand and $0.1 million, respectively.

In February 2016, the FASB issued ASU 2016-02, which amends the FASB Accounting Standards Codification and creates Topic 842, Leases. The new topic supersedes Topic 840, Leases, and requires lease assets and lease liabilities (including those for operating leases) to be presented on the balance sheet at their “gross amounts” and requires additional disclosures regarding lease arrangements. Topic 842 is effective for us beginning January 1, 2019, and mandates a “modified retrospective” transition method. We are currently assessing the impact this guidance will have on our consolidated financial statements. We presently do not have any capital lease arrangements, or have any active contracts that would contain an “embedded lease”. Our current lease arrangements impacted for this gross-up” presentation on our balance sheets, beginning January 1, 2019, are limited to our principal executive office in Henderson, Nevada, and our administrative and research and development facility in Irvine, California, in addition to several other administrative office leases.

“Inventories” consists of the following:



	March 31, 2018			December 31, 2017
Raw materials	$	1,251		$	1,077
Work-in-process	2,576			2,551
Finished goods	4,332			5,187
(Less:) Non-current portion of inventories included within "other assets" *	(3,131		)	(3,100		)
Inventories	$	5,028		$	5,715

* The “non-current” portion of inventories is presented within “other assets” in the accompanying Condensed Consolidated Balance Sheets at March 31, 2018 and December 31, 2017, respectively. This value of $3.1 million at March 31, 2018 represents product that we expect to sell beyond March 31, 2019 and the value at December 31, 2017 represents product that we expect to sell beyond December 31, 2018.

(d) Prepaid Expenses and Other Assets

“Prepaid expenses and other assets” consists of the following:



	March 31, 2018		December 31, 2017
Other miscellaneous prepaid operating expenses	$	3,148	$	3,389
Prepaid insurance	603		645
Research and development supplies	52		1,883
Key employee life insurance - cash surrender value	—		4,150
Prepaid expenses and other assets	$	3,803	$	10,067

(e) Other Receivables

“Other receivables” consists of the following:



	March 31, 2018		December 31, 2017
Other miscellaneous receivables*	$	992	$	1,152
Income tax receivable	637		665
Insurance receivable	1,095		53
Reimbursements due from development partners for incurred research and development expenses	182		263
Other receivables	$	2,906	$	2,133

* As of March 31, 2018 and December 31, 2017, the balance is inclusive of $0.4 million and $0.4 million, respectively, of Medicaid rebate credits to be applied against future invoices for each respective state program, and $0.2 million and $0.4 million, respectively, of royalty receivables from Mundipharma International Corporation Limited (“Mundipharma”) for sales of ZEVALIN in Japan.

(f) Intangible Assets and Goodwill

Intangible assets, net of accumulated amortization and impairment charges consists of the following:



			March 31, 2018
	Historical Cost		Accumulated Amortization			Foreign Currency Translation			Impairment			Net Amount		Full Amortization Period (months)	Remaining Amortization Period (months)
MARQIBO IPR&D (NHL and other novel indications)	$	17,600	$	—		$	—		$	—		$	17,600	n/a	n/a
EVOMELA distribution rights (1)	7,700		(1,185		)	—			—			6,515		156	132
BELEODAQ distribution rights	25,000		(7,031		)	—			—			17,969		160	115
MARQIBO distribution rights	26,900		(18,262		)	—			—			8,638		81	24
FOLOTYN distribution rights (2)	118,400		(57,380		)	—			—			61,020		152	56
ZEVALIN distribution rights – U.S.	41,900		(38,426		)	—			—			3,474		123	12
ZEVALIN distribution rights – ex-U.S.	23,490		(18,157		)	(1,871		)	—			3,462		96	24
FUSILEV distribution rights (3)	16,778		(9,618		)	—			(7,160		)	—		56	0
FOLOTYN out-license (4)	27,900		(15,236		)	—			(1,023		)	11,641		110	52
Total intangible assets	$	305,668	$	(165,295	)	$	(1,871	)	$	(8,183	)	$	130,319

(1)

The FDA approval of EVOMELA in March 2016 triggered a $6 million payment due to CyDex Pharmaceuticals, Inc. (a wholly-owned subsidiary of Ligand Pharmaceuticals Incorporated (“Ligand”) (“Cydex”)). This event also resulted in a reclassification of our $7.7 million “EVOMELA IPR&D” to “EVOMELA distribution rights” due to our ability to begin commercialization of EVOMELA upon FDA approval. Amortization commenced on April 1, 2016, in accordance with our capitalization policy for intangible assets.


(2)	Beginning June 2016, we adjusted the amortization period of our FOLOTYN distribution rights to November 2022 from March 2025, representing the period through which we expect to have patent protection from generic competition (see Note 16(g)).

(3)

On February 20, 2015, the United States District Court for the District of Nevada found the patent covering FUSILEV to be invalid, which was upheld on appeal. On April 24, 2015, Sandoz began to commercialize a generic version of FUSILEV. This represented a “triggering event” under applicable GAAP in evaluating the value of our FUSILEV distribution rights as of March 31, 2015, resulting in a $7.2 million impairment charge (non-cash) in the first quarter of 2015. We accelerated amortization expense recognition in 2015 for the then remaining net book value of FUSILEV distribution rights.

(4)

On May 29, 2013, we amended our FOLOTYN collaboration agreement with Mundipharma. As a result of the amendment, Europe and Turkey were excluded from Mundipharma’s commercialization territory, and their royalty rates and milestone payments to us were modified. This constituted a change under which we originally valued the FOLOTYN out-license as part of business combination accounting, resulting in an impairment charge (non-cash) of $1.0 million in the second quarter of 2013.



			December 31, 2017
	Historical Cost		Accumulated Amortization			Foreign Currency Translation			Impairment			Net Amount
MARQIBO IPR&D (NHL and other novel indications)	$	17,600	$	—		$	—		$	—		$	17,600
EVOMELA distribution rights	7,700		(1,037		)	—			—			6,663
BELEODAQ distribution rights	25,000		(6,563		)	—			—			18,437
MARQIBO distribution rights	26,900		(17,182		)	—			—			9,718
FOLOTYN distribution rights	118,400		(54,111		)	—			—			64,289
ZEVALIN distribution rights – U.S.	41,900		(37,557		)	—			—			4,343
ZEVALIN distribution rights – Ex-U.S.	23,490		(17,232		)	(2,471		)	—			3,787
FUSILEV distribution rights	16,778		(9,618		)	—			(7,160		)	—
FOLOTYN out-license	27,900		(14,555		)	—			(1,023		)	12,322
Total intangible assets	$	305,668	$	(157,855	)	$	(2,471	)	$	(8,183	)	$	137,159

Intangible asset amortization expense recognized during the three months ended March 31, 2018 and 2017, was $6.9 million and $6.9 million, respectively.

Estimated intangible asset amortization expense for the remainder of 2018 and the five succeeding fiscal years and thereafter is as follows:



Years Ending December 31,
Remainder of 2018	$	20,843
2019	25,185
2020	19,779
2021	18,266
2022	15,882
2023	2,467
2024 and thereafter	10,297
	$	112,719

“Goodwill” consists of the following:



	March 31, 2018			December 31, 2017
Acquisition of Talon (MARQIBO rights)	$	10,526		$	10,526
Acquisition of ZEVALIN Ex-U.S. distribution rights	2,525			2,525
Acquisition of Allos (FOLOTYN rights)	5,346			5,346
Foreign currency exchange translation effects	(170		)	(235		)
Goodwill	$	18,227		$	18,162

(g) Other Assets

“Other assets” consists of the following:



	March 31, 2018		December 31, 2017
Equity securities (see Note 10)*	$	—	$	37,530
Key employee life insurance – cash surrender value	11,463		10,737
Inventories - non-current portion	3,131		3,100
Promissory note receivable - long term (see Note 10)	1,519		1,517
Income tax receivable**	668		668
Research & development supplies and other	1,325		231
Other assets	$	18,106	$	53,783

* As of March 31, 2018, we reclassified our presentation of these equity securities from this account caption to “marketable securities” on the face of our accompanying Condensed Consolidated Balance Sheets - see Note 3(a).

** This value represents the non-current portion of the refundable alternative minimum tax credit that is expected to be received over the next few years (see Note 16).

(h) Accounts Payable and Other Accrued Liabilities

“Accounts payable and other accrued liabilities” consists of the following:



	March 31, 2018		December 31, 2017
Trade accounts payable and other accrued liabilities	$	29,549	$	33,648
Accrued rebates	7,713		7,990
Accrued product royalty	3,868		4,339
Allowance for returns	4,549		4,045
Accrued data and distribution fees	2,530		4,305
Accrued GPO administrative fees	312		296
Accrued inventory management fee	560		1,126
Allowance for chargebacks	1,846		2,368
Accounts payable and other accrued liabilities	$	50,927	$	58,117

Amounts presented within “accounts payable and other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets for our categories of GTN estimates (see Note 2(i)) were as follows:



	Commercial/Medicaid Rebates and Government Chargebacks			Distribution, Data, and GPO Administrative Fees			Product Return Allowances
Balance as of December 31, 2016	$	9,817		$	5,146		$	2,309
Add: provisions	106,647			20,104			2,807
(Less): credits or actual allowances	(106,106		)	(19,523		)	(1,071		)
Balance as of December 31, 2017	10,358			5,727			4,045
Add: provisions	13,805			3,425			468
(Less): credits or actual allowances	(14,604		)	(5,750		)	36
Balance as of March 31, 2018	$	9,559		$	3,402		$	4,549

(i) Deferred Revenue

Deferred revenue (current and non-current) consists of the following:



	March 31, 2018		December 31, 2017
EVOMELA deferred revenue	$	—	$	3,819
ZEVALIN out-license in India territory (see Note 15(b)(iii))	—		368
Deferred revenue*	$	—	$	4,187

* On January 1, 2018, we reclassified the deferred revenue related to our EVOMELA product sales and our ZEVALIN out-license in the India territory of $3.8 million and $0.4 million, respectively. These amounts were included in the $4.7 million aggregate decrease to “accumulated deficit” on January 1, 2018, in accordance with the adoption of Topic 606 (see Note 2(i)).

(j) Other Long-Term Liabilities

“Other long-term liabilities” consists of the following:



	March 31, 2018		December 31, 2017
Accrued executive deferred compensation	$	5,981	$	5,928
Deferred rent (non-current portion)	20		52
Clinical study holdback fees, non-current	62		59
Other tax liabilities	176		176
Royalty liability	300		—
Other long-term liabilities	$	6,539	$	6,215

Composition of Total Revenue

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Composition of Total Revenue

COMPOSITION OF TOTAL REVENUE

The below table presents our net product sales by geography for the three months ended March 31, 2018 and 2017:



	Three Months Ended March 31,
	2018				2017
United States	$	23,198	82.5	%	$	23,801	92.1	%
International:
Europe	3,489		12.4	%	2,044		7.9	%
Asia Pacific	1,424		5.1	%	—		—	%
Total international	4,913		17.5	%	2,044		7.9	%
Product sales, net	$	28,111	100.0	%	$	25,845	100.0	%

The below table presents our net sales by product for the three months ended March 31, 2018 and 2017:



	Three Months Ended March 31,
	2018				2017
FOLOTYN	$	12,721	45.3	%	$	9,274	35.9	%
EVOMELA	8,134		28.9	%	6,301		24.4	%
BELEODAQ	2,713		9.7	%	2,871		11.1	%
ZEVALIN	3,025		10.8	%	2,845		11.0	%
MARQIBO	894		3.2	%	1,980		7.7	%
FUSILEV	624		2.2	%	2,574		10.0	%
Product sales, net	$	28,111	100.0	%	$	25,845	100.0	%

The below table presents our license fees and service revenue by source for the three months ended March 31, 2018 and 2017:



	Three Months Ended March 31,
	2018				2017
Out-license of FOLOTYN in all countries except the United States, Canada, Europe, and Turkey: royalties (Note 14)	$	377	15.8	%	$	263	8.1	%
Out-license of ZEVALIN: recognition of milestone achievement, upfront cash receipt and subsequent royalties for Asia and certain other territories, excluding China (Note 11)	2,001		83.9	%	615		18.9	%
Out-license of ZEVALIN: amortization of upfront cash receipt related to India territory (Note 15(b)(iii)) and other	—		—	%	12		0.4	%
Out-license of ZEVALIN, FOLOTYN, BELEODAQ, MARQIBO: upfront cash receipt and subsequent royalties for the Canada territory (Note 15(b)(xiv))	6		0.3	%	—		—	%
Sales and marketing contracted services (Note 12)	—		—	%	2,366		72.7	%
License fees and service revenues	$	2,384	100.0	%	$	3,256	100.0	%

Stock-Based Compensation

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

We report our stock-based compensation expense (inclusive of our incentive stock plan, employee stock purchase plan, and 401(k) contribution matching program) in the accompanying Condensed Consolidated Statements of Operations, based on the department to which the recipient belongs. Stock-based compensation expense included within “total operating costs and expenses” for the three months ended March 31, 2018 and 2017, was as follows (see Note 18 for a discussion of certain immaterial corrections affecting the presented 2017 amounts below):



	Three Months Ended March 31,
	2018		2017
Cost of sales	$	66	$	30
Selling, general and administrative	3,691		3,238
Research and development	721		452
Total stock-based compensation	$	4,478	$	3,720

Net Loss Per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Net Loss Per Share

NET LOSS PER SHARE

Net loss per share was computed by dividing net loss by the weighted average number of common shares outstanding for the three months ended March 31, 2018 and 2017:



	Three Months Ended March 31,
	2018			2017
Net loss	$	(15,816	)	$	(23,547	)
Weighted average shares – basic and diluted	100,809,853			78,523,023
Net loss per share – basic and diluted	$	(0.16	)	$	(0.30	)

The below outstanding securities were excluded from the above calculation of net loss per share because their impact under the “treasury stock method” and “if-converted method” would have been anti-dilutive due to our net loss per share in the three months ended March 31, 2018 and 2017, as summarized below:



	Three Months Ended March 31,
	2018	2017
2018 Convertible Notes	3,854,959	10,454,799
Common stock options	5,589,852	1,557,920
Restricted stock awards	1,875,569	1,769,530
Restricted stock units	210,214	217,206
Common stock warrants	261,622	—
Employee stock purchase plan shares	24,064	53,927
Total	11,816,280	14,053,382