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Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Dec. 31, 2017	Feb. 20, 2018	Jun. 30, 2017
Document and Entity Information
Entity Registrant Name	Pacira Pharmaceuticals, Inc.
Entity Central Index Key	0001396814
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1.9
Entity Common Stock, Shares Outstanding		40,711,707
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 54,126	$ 35,944
Short-term investments	257,221	136,653
Accounts receivable, net	31,658	29,937
Inventories, net	41,411	31,278
Prepaid expenses and other current assets	6,694	9,277
Total current assets	391,110	243,089
Long-term investments	60,047	0
Fixed assets, net	107,046	101,016
Goodwill	55,197	46,737
Equity investments	14,146	0
Other assets	825	624
Total assets	628,371	391,466
Current liabilities:
Accounts payable	14,658	7,511
Accrued expenses	41,057	36,666
Convertible senior notes	324	0
Current portion of deferred revenue	102	595
Income taxes payable	76	66
Total current liabilities	56,217	44,838
Convertible senior notes	276,173	108,738
Other liabilities	16,498	18,914
Total liabilities	348,888	172,490
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001; 5,000,000 shares authorized, none issued and outstanding at December 31, 2017 and 2016	0	0
Common stock, par value $0.001 and 250,000,000 shares authorized; 40,668,877 shares issued and outstanding at December 31, 2017; 37,480,952 shares issued and outstanding at December 31, 2016	41	37
Additional paid-in capital	669,032	565,207
Accumulated deficit	(389,136)	(346,238)
Accumulated other comprehensive loss	(454)	(30)
Total stockholders’ equity	279,483	218,976
Total liabilities and stockholders’ equity	$ 628,371	$ 391,466

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	40,668,877	37,480,952
Common stock, shares outstanding	40,668,877	37,480,952
Treasury stock at cost, shares	0	0

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues:
Net product sales	$ 284,342	$ 270,073	$ 244,487
Collaborative licensing and milestone revenue	387	3,426	1,426
Royalty revenue	1,901	2,872	3,084
Total revenues	286,630	276,371	248,997
Operating expenses:
Cost of goods sold	87,915	110,104	71,837
Research and development	57,290	45,678	28,662
Selling, general and administrative	161,494	152,613	139,043
Product discontinuation	4,868	0	0
Total operating expenses	311,567	308,395	239,542
Income (loss) from operations	(24,937)	(32,024)	9,455
Other (expense) income:
Interest income	4,078	1,323	678
Interest expense	(18,047)	(7,061)	(7,725)
Loss on early extinguishment of debt	(3,732)		(52)
Royalty interest obligation	0	0	(71)
Other, net	167	(82)	(165)
Total other expense, net	(17,534)	(5,820)	(7,335)
Income (loss) before income taxes	(42,471)	(37,844)	2,120
Income tax expense	(140)	(105)	(264)
Net income (loss)	$ (42,611)	$ (37,949)	$ 1,856
Net income (loss) per share:
Basic net income (loss) per common share (in dollars per share)	$ (1.07)	$ (1.02)	$ 0.05
Diluted net income (loss) per common share (in dollars per share)	$ (1.07)	$ (1.02)	$ 0.04
Weighted average common shares outstanding:
Basic (in shares)	39,806	37,236	36,540
Diluted (in shares)	39,806	37,236	41,301

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (42,611)	$ (37,949)	$ 1,856
Other comprehensive income (loss):
Net unrealized gain (loss) on investments	(424)	22	28
Total other comprehensive income (loss)	(424)	22	28
Comprehensive income (loss)	$ (43,035)	$ (37,927)	$ 1,884

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Two Thousand Nineteen Senior Convertible Notes [Member]	Convertible Senior Notes Due 2022 [Member]	Common Stock	Additional Paid-In Capital	Additional Paid-In Capital Two Thousand Nineteen Senior Convertible Notes [Member]	Additional Paid-In Capital Convertible Senior Notes Due 2022 [Member]	Accumulated Deficit	Accumulated Other Comprehensive Income
Balances at Dec. 31, 2014	$ 171,145			$ 36	$ 481,334			$ (310,145)	$ (80)
Balances (in shares) at Dec. 31, 2014				36,151,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	10,073			$ 1	10,072
Exercise of stock options (in shares)				618,000
Shares issued under employee stock purchase plan	2,093				2,093
Shares issued under employee stock purchase plan (in shares)				35,000
Stock-based compensation	33,368				33,368
Issuance of common stock upon conversion of 2019 convertible senior notes	3,929				3,929
Issuance of common stock upon conversion of 2019 convertible senior notes (in shares)				44,000
Equity component of convertible senior notes, net of issuance costs	(4,100)				(4,100)
Net unrealized gain (loss) on investments	28								28
Net income (loss)	1,856							1,856
Balances at Dec. 31, 2015	218,392			$ 37	526,696			(308,289)	(52)
Balances (in shares) at Dec. 31, 2015				36,848,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	5,770				5,770
Exercise of stock options (in shares)				518,000
Vested restricted stock units	0
Vested restricted stock units (in shares)				62,000
Shares issued under employee stock purchase plan	1,495				1,495
Shares issued under employee stock purchase plan (in shares)				53,000
Stock-based compensation	31,248				31,248
Equity component of convertible senior notes, net of issuance costs	(2)				(2)
Net unrealized gain (loss) on investments	22								22
Net income (loss)	(37,949)							(37,949)
Balances at Dec. 31, 2016	218,976			$ 37	565,207			(346,238)	(30)
Balances (in shares) at Dec. 31, 2016				37,481,000
Increase (Decrease) in Stockholders' Equity
Cumulative effect adjustment of the adoption of Accounting Standards Update 2016-09 (Note 3)					287			(287)
Exercise of stock options	6,778			$ 1	6,777
Exercise of stock options (in shares)				540,000
Vested restricted stock units	0
Vested restricted stock units (in shares)				101,000
Shares issued under employee stock purchase plan	$ 1,862				1,862
Shares issued under employee stock purchase plan (in shares)	160,147			57,000
Stock-based compensation	$ 31,601				31,601
Issuance of common stock upon conversion of 2019 convertible senior notes	120,960			$ 3	120,957
Issuance of common stock upon conversion of 2019 convertible senior notes (in shares)				2,490,000
Equity component of convertible senior notes, net of issuance costs		$ (126,328)	$ 68,669			$ (126,328)	$ 68,669
Net unrealized gain (loss) on investments	(424)								(424)
Net income (loss)	(42,611)							(42,611)
Balances at Dec. 31, 2017	$ 279,483			$ 41	$ 669,032			$ (389,136)	$ (454)
Balances (in shares) at Dec. 31, 2017				40,669,000

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Operating activities:
Net income (loss)	$ (42,611)	$ (37,949)	$ 1,856
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of fixed assets and amortization of intangibles	13,833	12,919	11,475
Amortization of unfavorable lease obligation and debt issuance costs	1,248	479	481
Amortization of debt discount	10,423	4,088	4,102
Loss on disposal of fixed assets	2,133	389	6
Loss on early extinguishment of debt	3,732		52
Stock-based compensation	31,601	31,248	33,368
Changes in operating assets and liabilities:
Restricted cash	0	0	1,509
Accounts receivable, net	(1,721)	(4,082)	(3,489)
Inventories, net	(10,133)	30,367	(32,382)
Prepaid expenses and other assets	3,476	(3,377)	(2,007)
Accounts payable, accrued expenses and income taxes payable	9,359	710	8,966
Royalty interest obligation	0	0	(276)
Other liabilities	(3,555)	(1,339)	4,360
Net cash provided by operating activities	17,785	33,453	28,021
Investing activities:
Purchases of fixed assets	(19,266)	(24,709)	(40,295)
Purchases of investments	(502,752)	(192,815)	(189,082)
Sales of investments	321,713	171,627	217,240
Payment of contingent consideration	(8,460)	(15,857)	(7,119)
Equity investments	(15,000)	0	0
Net cash used in investing activities	(223,765)	(61,754)	(19,256)
Financing activities:
Proceeds from exercise of stock options	6,778	5,770	10,073
Proceeds from shares issued under employee stock purchase plan	1,862	1,495	2,093
Proceeds from 2022 convertible senior notes	345,000	0	0
Repayment of 2019 convertible senior notes	(118,193)	(4)	(1,467)
Payment of debt issuance and financing costs	(11,000)	0	0
Costs for conversion of convertible senior notes	(285)	0	0
Net cash provided by financing activities	224,162	7,261	10,699
Net increase (decrease) in cash and cash equivalents	18,182	(21,040)	19,464
Cash and cash equivalents, beginning of year	35,944	56,984	37,520
Cash and cash equivalents, end of year	54,126	35,944	56,984
Supplemental cash flow information:
Cash paid for interest, including royalty interest obligation	6,896	3,852	4,224
Cash paid for income taxes, net of refunds	129	247	195
Non-cash investing and financing activities:
Issuance of common stock from conversion of 2019 convertible senior notes	120,960	0	3,929
Issuance of common stock from conversion of 2019 convertible senior notes	(126,328)	0	0
Net increase (decrease) in accrued fixed assets	$ 2,189	$ (789)	$ 1,393

DESCRIPTION OF BUSINESS	12 Months Ended
DESCRIPTION OF BUSINESS	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	DESCRIPTION OF BUSINESS Pacira Pharmaceuticals, Inc. and its subsidiaries (collectively, the “Company” or “Pacira”) is a specialty pharmaceutical company focused on the development, manufacture and commercialization of pharmaceutical products, based on its proprietary DepoFoam^® extended release drug delivery technology, for use primarily in hospitals and ambulatory surgery centers. Pacira is committed to driving innovation in postsurgical pain management with opioid-sparing strategies. The Company’s lead product, EXPAREL^®(bupivacaine liposome injectable suspension), which consists of bupivacaine encapsulated in DepoFoam, was approved by the United States Food and Drug Administration, or FDA, on October 28, 2011 and launched commercially in April 2012. DepoFoam is also the basis for the Company’s other FDA-approved product, DepoCyt(e), which the Company had manufactured for its commercial partners before discontinuing production in June 2017. The Company also sells its bupivacaine liposome injectable suspension product to a commercial partner to serve animal health indications. Pacira is subject to risks common to companies in similar industries and stages of development, including, but not limited to, competition from larger companies, reliance on revenue from one product, reliance on a single manufacturing site, new technological innovations, dependence on key personnel, reliance on third-party service providers and sole source suppliers, protection of proprietary technology and compliance with government regulations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. The accounts of wholly owned subsidiaries are included in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications were made to conform to the current presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and contingent liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, among other things, revenue recognition, inventory costs, impairments of goodwill and long-lived assets, liabilities and accruals and the valuation of deferred tax assets. The Company’s critical accounting policies are those that are both most important to the Company’s consolidated financial condition and results of operations and require the most difficult, subjective or complex judgments on the part of management in their application, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Because of the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results could differ from these estimates.

Liquidity

Management believes that the Company’s existing cash and cash equivalents, short-term and long-term investments and cash flows generated from product sales will be sufficient to enable the Company to meet its planned operating expenses, capital expenditure requirements, payment of the principal on any conversions of the Company’s convertible senior notes and to service its indebtedness at least through February 28, 2019. However, changing circumstances may cause the Company to expend cash significantly faster than currently anticipated, and the Company may need to spend more cash than currently expected because of circumstances beyond its control. See Note 8, Debt, for further discussion of the Company’s convertible senior notes and conversion elections. The Company expects to continue to incur substantial additional expenditures as it continues to commercialize EXPAREL, develops and seeks regulatory approval for its product candidates and expands its manufacturing facilities for EXPAREL and its other product candidates, including costs associated with certain technical transfer activities and the construction of two dedicated manufacturing suites in England.

Revenue Recognition

The Company’s sources of revenue include (i) sales of EXPAREL in the United States, or U.S.; (ii) sales of DepoCyt(e) to its commercial partners within the U.S. and the European Union, or E.U.; (iii) sales of its bupivacaine liposome injectable suspension product for use in animal health indications in the U.S.; (iv) royalties based on sales by commercial partners of DepoCyt(e) and sales of its bupivacaine liposome injectable suspension product for use in animal health indications and (v) license fees and milestone payments. The Company recognizes revenue when there is persuasive evidence that an arrangement exists, title has passed, collection is reasonably assured and the price is fixed or determinable.

Net Product Sales

The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by end-users which include hospitals, ambulatory surgery centers and doctors. EXPAREL is delivered directly to the end-user without the wholesaler ever taking physical possession of the product. The Company records revenue at the time the product is delivered to the end-user. The Company also recognizes revenue from products manufactured and supplied to commercial partners upon shipment, such as DepoCyt(e) and its bupivacaine liposome injectable suspension product for use in animal health indications. Prior to the shipment of manufactured products, the Company conducts initial product release and stability testing in accordance with the FDA’s current Good Manufacturing Practices.

Revenues from sales of products are recorded net of returns allowances, prompt payment discounts, wholesaler service fees and volume rebates and chargebacks. The calculation of some of these items requires management to make estimates based on sales data, contract terms, inventory data and other related information which may become known in the future. The Company reviews the adequacy of its provisions on a quarterly basis.

Returns Allowances

The Company allows customers to return product that is damaged or received in error. In addition, the Company allows EXPAREL to be returned beginning six months prior to, and twelve months following product expiration. The Company estimates its sales return reserve based on its historical return rates and related product return data. The returns reserve is recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses.

Prompt Payment Discounts

The prompt payment reserve is based upon discounts offered to wholesalers as an incentive to meet certain payment

terms. The Company accrues discounts to wholesalers based on contractual terms of agreements and historical experience. The Company accounts for these discounts at the time of sale as a reduction to gross product sales and a reduction to accounts receivable.

Wholesaler Service Fees

The Company’s customers include major and regional wholesalers with whom the Company has contracted a fee for service based on a percentage of gross product sales. This fee for service is recorded as a reduction to gross product sales and an increase to accrued expenses at the time of sale, and is recorded based on the contracted percentage.

Volume Rebates and Chargebacks

Volume rebates and chargeback reserves are based upon contracted discounts and promotional offers the Company provides to certain end-users. Volume rebates are recorded at the time of sale as a reduction to gross product sales and an increase in accrued expenses. Chargeback reserves are recorded at the time of sale as a reduction to gross product sales and a reduction to accounts receivable.

The following table provides a summary of activity with respect to the Company’s sales related allowances and accruals for the years ended December 31, 2017, 2016 and 2015 (in thousands):



	Returns Allowances			Prompt Payment Discounts			Wholesaler Service Fees			Volume Rebates and Chargebacks			Total
Balance at December 31, 2014	$	1,559		$	575		$	588		$	321		$	3,043
Provision	339			4,905			3,482			2,020			10,746
Payments/credits	(165		)	(4,855		)	(3,325		)	(1,544		)	(9,889		)
Balance at December 31, 2015	1,733			625			745			797			3,900
Provision	694			5,448			4,118			2,611			12,871
Payments/credits	(1,081		)	(5,478		)	(4,128		)	(2,284		)	(12,971		)
Balance at December 31, 2016	1,346			595			735			1,124			3,800
Provision	716			5,806			4,403			4,656			15,581
Payments/credits	(1,241		)	(5,744		)	(4,299		)	(5,084		)	(16,368		)
Balance at December 31, 2017	$	821		$	657		$	839		$	696		$	3,013

Royalty Revenue

The Company recognizes revenue from royalties based on sales of its commercial partners’ net sales of DepoCyt(e) and sales of its bupivacaine liposome injectable suspension product to serve animal health indications.

Royalties are recognized as earned in accordance with contract terms when they can be reasonably estimated and collection is reasonably assured. Based on historical product sales, royalty receipts and other relevant information, the Company accrues royalty revenue each quarter.

Collaborative Licensing and Milestone Revenue

The Company recognizes revenues from non-refundable up-front license fees received under collaboration agreements ratably over the performance period as determined under the agreement (estimated development period in the case of development agreements, and contract period or longest patent life in the case of supply and distribution agreements). If the estimated performance period is subsequently modified, the Company will modify the period over which the up-front license fee is recognized accordingly on a prospective basis. Upon notification of a termination of a collaboration agreement, any remaining non-refundable license fees received by the Company, which had been deferred, are recognized over the remaining contractual term. If the termination is immediate and no additional services are to be performed, the deferred revenue is generally recognized in full. All such recognized revenues are included in collaborative licensing and milestone revenue in the Company’s consolidated statements of operations.

The Company recognizes revenue from milestone payments received under collaboration agreements when earned, provided that the milestone event is substantive, its achievability was not reasonably assured at the inception of the agreement, the Company has no further performance obligations relating to the event and collection is reasonably assured. If these criteria are not met, the Company recognizes milestone payments ratably over the remaining period of the Company’s performance obligations under the applicable agreements.

Concentration of Major Customers

The Company’s customers are national and regional wholesalers of pharmaceutical products as well as commercial, collaborative and licensing partners. The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers (including AmerisourceBergen Health Corporation, Cardinal Health, Inc. and McKesson Drug Company), but shipments of the product are sent directly to individual accounts, such as hospitals, ambulatory surgery centers and individual doctors. The table below includes the percentage of revenue comprised by the Company’s three largest wholesalers in each year presented:



	Year Ended December 31,
	2017		2016		2015
Largest wholesaler	35	%	32	%	33	%
Second largest wholesaler	30	%	28	%	29	%
Third largest wholesaler	26	%	26	%	28	%
	91	%	86	%	90	%

Revenue from customers outside the U.S. accounted for less than 1%, 1% and 2% of the Company’s total revenue for the years ended December 31, 2017, 2016 and 2015, respectively.

Research and Development Expenses

Research and development expenses consist of costs associated with products and processes being developed, and include related personnel expenses, laboratory supplies, active pharmaceutical ingredients, manufacturing supplies, facilities costs, preclinical and clinical trial costs, development costs related to significant scale-ups of manufacturing capacity and other outside service fees. The Company expenses research and development costs as incurred. A significant portion of the development activities are outsourced to third parties, including contract research organizations. In such cases, the Company may be required to estimate related service fees to be accrued.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to basis differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2017 and 2016, all deferred tax assets were fully offset by a valuation allowance because there is significant doubt regarding the Company’s ability to utilize such net deferred tax assets.

The Company accrues interest and penalties, if any, on underpayment of income taxes related to unrecognized tax benefits as a component of income tax expense in its consolidated statements of operations.

Stock-Based Compensation

The Company’s stock-based compensation program includes grants of stock options and restricted stock units, or RSUs, to employees, consultants and non-employee directors in addition to the opportunity for employees to participate in an employee stock purchase plan. The expense associated with these programs is recognized in the Company’s consolidated statements of operations based on their fair values as they are earned under the applicable vesting terms or the length of an offering period.

The valuation of stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable stock options. Accordingly, the Company uses an option pricing model to derive an estimated fair value. In calculating the estimated fair value of stock options granted, the Company uses the Black-Scholes option valuation model, or Black-Scholes model, which requires the consideration of the following variables for purposes of estimating fair value:


•	Expected term of the option


•	Expected volatility


•	Expected dividends


•	Risk-free interest rate

The Company utilizes its available historic volatility data to determine expected volatility over the expected option term. The Company uses an expected term based on its historical data from stock option exercises. The risk-free interest rate is based on the implied yield on U.S. Department of the Treasury zero coupon bonds for periods commensurate with the expected term of the options. The dividend yield on the Company’s common stock is estimated to be zero as the Company has not paid any dividends since inception, nor does it have any intention to do so in the foreseeable future. The Company records forfeitures as they occur rather than estimating forfeitures during each period.

Cash and Cash Equivalents

All highly-liquid investments with maturities of 90 days or less when purchased are considered cash equivalents.

Short-Term and Long-Term Investments

Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate bonds with initial maturities of greater than three months at the date of purchase, but less than one year. Long-term investments consist of asset-backed securities collateralized by credit card receivables and corporate bonds with initial maturities greater than one year at the date of purchase. The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such determination at each balance sheet date. The Company’s investment policy sets minimum credit quality criteria and maximum maturity limits on its investments to provide for preservation of capital, liquidity and a reasonable rate of return. Available-for-sale securities are recorded at fair value, based on current market valuations. Unrealized holding gains and losses on available-for-sale securities are excluded from net loss and are reported as a separate component of accumulated other comprehensive loss until realized. Realized gains and losses are included in interest income in the consolidated statements of operations and are derived using the specific identification method for determining the cost of the securities sold.

Inventories

Inventories consist of finished goods held for sale and distribution, raw materials and work in process. Inventories are stated at the lower of cost, which includes amounts related to material, labor and overhead, or net realizable value and is determined using the first-in, first-out (“FIFO”) method. The Company periodically reviews its inventory to identify obsolete, slow-moving, or otherwise unsalable inventories, and establishes allowances for situations in which the cost of the inventory is not expected to be recovered.

Fixed Assets

Fixed assets are recorded at cost, net of accumulated depreciation and amortization. The Company reviews its property, plant and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Depreciation of fixed assets is provided over their estimated useful lives on a straight-line basis. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the related remaining lease terms. Useful lives by asset category are as follows:



Asset Category		Useful Life
Computer equipment and software		1 to 3 years
Office furniture and equipment		5 years
Manufacturing and laboratory equipment		5 to 10 years

Asset Retirement Obligations

The Company has contractual obligations stemming from certain of its lease agreements to return leased space to its original condition upon termination of the lease agreement. The Company records an asset retirement obligation, or ARO, along with a corresponding capital asset in an amount equal to the estimated fair value of the ARO, based on the present value of expected future cash flows. In subsequent periods, the Company records interest expense to accrete the ARO to full value. Each ARO capital asset is depreciated over the depreciable term of the associated asset.

Goodwill

Goodwill represents the excess of purchase price over fair value acquired in a business combination and is not amortized, but subject to impairment at least annually or when a triggering event occurs that could indicate a potential impairment.

Equity Investments

The Company accounts for its equity investment in a minority interest of a company over which it does not exercise significant influence using the cost method. Under the cost method, an investment is carried at cost until it is sold or there is evidence that changes in the business environment or other facts and circumstances suggest it may be other than temporarily impaired.

Equity investments are reviewed on a regular basis for possible impairment. If an investment’s fair value is determined to be less than its net carrying value, the investment is written down to its fair value. Such an evaluation is judgmental and dependent on specific facts and circumstances. Factors considered in determining whether a decline in value has occurred include, but are not limited to: (i) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee; (ii) a significant adverse change in the regulatory, economic or technological environment of the investee; (iii) a sale of the same or similar investment for an amount less than the carrying amount of that investment; (iv) factors that raise significant concerns about the investee’s ability to continue as a going concern and (v) any other information that the Company may be aware of related to the investment.

Impairment of Long-Lived Assets

Management reviews long-lived assets, including fixed assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Convertible Debt Transactions

The Company separately accounts for the liability and equity components of convertible debt instruments by allocating the proceeds from the issuance between the liability component and the embedded conversion option, or equity component. This is done in accordance with accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The value of the equity component is calculated by first measuring the fair value of the liability component, using the interest rate of a similar liability that does not have a conversion feature, as of the issuance date. The difference between the initial proceeds from the convertible debt issuance and the fair value of the liability component is recorded as the carrying amount of the equity component. The Company recognizes the amortization of the resulting discount as part of interest expense in its consolidated statements of operations.

Upon settlement of the convertible senior notes, the liability component is measured at fair value. The Company allocates a portion of the fair value of the total settlement consideration transferred to the extinguishment of the liability component equal to the fair value of that component immediately prior to the settlement. Any difference between the consideration attributed to the liability component and the net carrying amount of the liability component, including any unamortized debt issuance costs and debt discount, is recognized as a gain or loss in the consolidated statements of operations. Any remaining consideration is allocated to the reacquisition of the equity component and is recognized as a reduction of additional paid-in capital.

Per Share Data

Basic net income (loss) per common share is computed by dividing net income (loss) available (attributable) to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Diluted net income (loss) per common share is calculated by dividing net income (loss) available (attributable) to common stockholders as adjusted for the effect of dilutive securities, if any, by the weighted average number of shares of common stock and dilutive common stock outstanding during the period. Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options and warrants, the vesting of RSUs and the purchase of shares from the Company’s employee stock purchase plan (using the treasury stock method), as well as the conversion of the excess conversion value on the Company’s convertible senior notes.

Segment Reporting

The Company operates in one reportable segment and, accordingly, no segment disclosures have been presented.

RECENT ACCOUNTING PRONOUNCEMENTS	12 Months Ended
RECENT ACCOUNTING PRONOUNCEMENTS	Dec. 31, 2017
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted In March 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update includes multiple provisions intended to simplify various aspects of accounting for share-based payment transactions including accounting for excess tax benefits and tax deficiencies, classification of excess tax benefits and tax deficiencies in the statement of cash flows and accounting for award forfeitures. The update also removes the requirement to delay recognition of an excess tax benefit until it reduces current taxes payable, instead, it is required to be recognized at the time of settlement, subject to normal valuation allowance considerations. This update became effective for the Company beginning January 1, 2017. The Company elected an accounting policy change to record forfeitures as they occur rather than estimating forfeitures during each period and recorded a charge of $0.3 million to retained earnings as of January 1, 2017 related to the reversal of cumulative forfeiture estimates. The adoption of this standard also resulted in the recognition of $29.3 million of previously unrecognized excess tax benefits in deferred tax assets, fully offset by a valuation allowance. The changes have been applied prospectively in accordance with the update, and prior periods have not been adjusted. All tax-related cash flows resulting from stock-based compensation, including the excess tax benefits related to the settlement of stock-based awards, will be classified as cash flows from operating activities in the Company’s consolidated statements of cash flows. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The standard requires entities to measure most inventory “at the lower of cost and net realizable value”, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market (market in this context is defined as one of three different measures, one of which is net realizable value). Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The standard became effective for the Company prospectively beginning January 1, 2017. The adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements. Not Adopted as of December 31, 2017 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and has subsequently issued a number of amendments to this update. The new standard, as amended, provides a single comprehensive model to be used in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASU 2014-09 provides a five-step model that includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations and (5) recognizing revenue when, or as, an entity satisfies a performance obligation. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will become effective for the Company beginning January 1, 2018 and permits two methods of adoption: the full retrospective method, which requires the standard to be applied to each prior period presented, or the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. The Company will adopt this standard using the modified retrospective method. The Company has completed an analysis of existing contracts with its customers and assessed the differences in accounting for such contracts under ASU 2014-09 compared with the current revenue accounting standards. Based on its review of its current customer contracts, the implementation of ASU 2014-09 will not have a material quantitative impact on the Company’s consolidated financial statements, as the timing of revenue recognition for EXPAREL product sales is not expected to significantly change. The Company will recognize existing collaborative licensing, milestone and royalty revenue earlier, subject to the variable consideration constraints, than it would have under the current standard, however, such changes are not expected to be material to the Company’s consolidated financial statements. Adoption of the new standard will result in additional revenue-related disclosures in the footnotes to the Company’s consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 changes accounting for equity investments and presentation and disclosure requirements for financial instruments. ASU 2016-01 does not apply to equity investments in consolidated subsidiaries or those accounted for under the equity method of accounting. Equity investments with readily determinable fair values will be measured at fair value with changes in fair value recognized in net income (loss). Entities have the option to measure equity investments without readily determinable fair values either at fair value or at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The standard also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. ASU 2016-01 will become effective for the Company beginning January 1, 2018. The Company has elected to measure equity investments without readily determinable fair values at cost adjusted for changes in observable prices. The guidance related to equity investments without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption. The adoption of ASU 2016-01 may increase volatility in the Company’s net income as changes in observable prices of equity investments without readily determinable fair values will be recorded in net income (loss). The Company does not expect the implementation of this standard to have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment for items such as initial direct costs. For income statement purposes, the new standard retains a dual model similar to Accounting Standards Codification, or ASC, 840, requiring leases to be classified as either operating or financing. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while financing leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). This update also introduces new disclosure requirements for leasing arrangements. The standard will become effective for the Company beginning January 1, 2019. Early adoption is permitted, although the Company does not expect to do so. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements. For operating leases it will result in the recognition of lease liabilities and corresponding right-of-use assets upon adoption, which will have a material impact on the Company’s consolidated balance sheet. The Company does not believe the adoption of this ASU will have a significant impact on its consolidated statements of operations, stockholders’ equity or cash flows. At adoption, this update will be applied using a modified retrospective approach. Refer to Note 17, Commitments and Contingencies, for further discussion on the Company’s leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which 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. Entities will now use forward-looking information to better form their credit loss estimates. This update also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. This ASU will become effective for the Company beginning January 1, 2020, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies existing guidance on how companies present and classify certain cash receipts and cash payments in the statement of cash flows by addressing specific cash flow issues in an effort to reduce diversity in practice, including guidance on debt prepayment or extinguishment costs and contingent consideration payments made after a business combination. ASU 2016-15 will become effective for the Company in the first quarter of fiscal year 2018. The Company does not expect any changes to its consolidated statement of cash flows upon the adoption of this standard. Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company.

INVENTORIES

12 Months Ended

Dec. 31, 2017

Inventory Disclosure [Abstract]

INVENTORIES

The components of inventories are as follows (in thousands):



	December 31,
	2017		2016
Raw materials	$	16,500	$	11,742
Work-in-process	8,371		11,621
Finished goods	16,540		7,915
Total	$	41,411	$	31,278

The Company is required to perform ongoing stability testing on select lots of EXPAREL at various time intervals. In October 2016, as part of its ongoing stability testing, the Company identified that a single batch of EXPAREL, which was manufactured in early 2016, did not meet the required specification. An internal investigation tied this unexpected result to a modification in the manufacturing process that existed when this product was made, which has subsequently been corrected. The Company reserved all impacted inventory on hand and recorded a $20.7 million charge to cost of goods sold in 2016 related to this matter.

FIXED ASSETS

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

FIXED ASSETS

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



	December 31,
	2017			2016
Machinery and laboratory equipment	$	39,002		$	34,309
Leasehold improvements	34,933			33,787
Computer equipment and software	7,086			5,623
Office furniture and equipment	1,603			1,606
Construction in progress	73,632			63,201
Total	156,256			138,526
Less: accumulated depreciation	(49,210		)	(37,510		)
Fixed assets, net	$	107,046		$	101,016

Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was $13.8 million, $12.8 million and $11.2 million, respectively. During the years ended December 31, 2017, 2016 and 2015, the Company capitalized interest of $1.1 million, $1.5 million and $0.8 million, respectively.

As of December 31, 2017 and 2016, total fixed assets, net, includes leasehold improvements and manufacturing process equipment located in England in the amount of $59.8 million and $33.7 million, respectively.

As of December 31, 2017 and 2016, the Company had an ARO of $1.5 million and $0.5 million, respectively, included in other liabilities on its consolidated balance sheet, for costs associated with returning leased space to its original condition upon the termination of certain lease agreements. The increase in 2017 relates to a $0.5 million revision in estimated future cash flows related to the AROs, $0.4 million of liabilities incurred in the current period and $0.1 million of accretion expense.

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

In March 2007, the Company acquired from SkyePharma Holding, Inc., or Skyepharma, its California operating subsidiary (Pacira California), referred to herein as the Acquisition. The Company’s goodwill arose in April 2012 from a contingent milestone payment to Skyepharma in connection with the Acquisition. The Acquisition was accounted for under Statement of Financial Accounting Standards 141, Accounting for Business Combinations, which was the effective GAAP standard at the Acquisition date. In connection with the Acquisition, the Company agreed to certain earn-out payments based on a percentage of net sales of DepoBupivacaine products collected, including EXPAREL and certain other yet-to-be-developed products, as well as milestone payments for DepoBupivacaine products, including EXPAREL, as follows:


(i)	$10.0 million upon the first commercial sale in the U.S. (met April 2012);


(ii)	$4.0 million upon the first commercial sale in a major E.U. country (United Kingdom, France, Germany, Italy and Spain);


(iii)	$8.0 million when annual net sales collected reach $100.0 million (met September 2014);


(iv)	$8.0 million when annual net sales collected reach $250.0 million (met June 2016); and


(v)	$32.0 million when annual net sales collected reach $500.0 million.

The first milestone was met in April 2012 resulting in a $10.0 million payment to Skyepharma. The Company recorded this payment net of a $2.0 million contingent consideration liability recognized at the time of the Acquisition, resulting in $8.0 million recorded as goodwill. In September 2014, the Company recorded an $8.0 million milestone in connection with achieving $100.0 million of annual EXPAREL net sales collected, and in June 2016, the Company recorded another $8.0 million milestone for achieving $250.0 million of annual EXPAREL net sales collected. For purposes of meeting future potential milestone payments, with certain exceptions, annual net sales are measured on a rolling quarterly basis. Cumulatively through December 31, 2017, the Company has recorded an additional $31.2 million as goodwill for earn-out payments which are based on a percentage of net sales of DepoBupivacaine products collected, including EXPAREL. Any remaining earn-out payments will also be treated as additional costs of the Acquisition and, therefore, recorded as goodwill if and when each contingency is resolved.

The Acquisition was treated as a stock acquisition for tax purposes and, therefore, the acquired intangibles for book purposes are not deductible for income tax purposes. The Company also recorded goodwill related to contingent payments due under the Acquisition during the years ended December 31, 2017 and 2016, which are not deductible for income tax purposes.

The change in the carrying value of goodwill is summarized as follows (in thousands):



	Carrying Value
Balance at December 31, 2015	$	30,880
Percentage payments on collections of net sales of DepoBupivacaine products	7,857
Milestone payment triggered by collections of net sales of DepoBupivacaine products	8,000
Balance at December 31, 2016	46,737
Percentage payments on collections of net sales of DepoBupivacaine products	8,460
Balance at December 31, 2017	$	55,197

Intangible assets acquired in the Acquisition consisted of core technology, developed technology, trademarks and trade names. There was no amortization expense for intangibles for the year ended December 31, 2017. For the years ended December 31, 2016 and 2015, amortization expense for intangibles was $0.1 million and $0.3 million, respectively.

ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2017

Payables and Accruals [Abstract]

ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):



	December 31,
	2017		2016
Compensation and benefits	$	12,295	$	11,228
Accrued operating expenses	20,646		16,538
Accrued royalties	4,091		3,822
Accrued interest	2,053		1,605
Product returns, rebates and other fees	1,972		3,473
Total	$	41,057	$	36,666

DEBT

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

DEBT

Convertible Senior Notes Due 2022

On March 13, 2017, the Company completed a private placement of $345.0 million in aggregate principal amount of 2.375% convertible senior notes due 2022, or 2022 Notes, and entered into an indenture agreement, or 2022 Indenture, with respect to the 2022 Notes. The 2022 Notes accrue interest at a fixed rate of 2.375% per year, payable semiannually in arrears on April 1 and October 1 of each year. The 2022 Notes mature on April 1, 2022.

The total debt composition of the 2022 Notes is as follows (in thousands):



	December 31,
	2017			2016
2.375% convertible senior notes due 2022	$	345,000		$	—
Deferred financing costs	(7,482		)	—
Discount on debt	(61,345		)	—
Total debt, net of debt discount and deferred financing costs	$	276,173		$	—

The net proceeds from the issuance of the 2022 Notes were $334.0 million, after deducting commissions and the offering expenses paid by the Company. A portion of the net proceeds from the 2022 Notes were used by the Company to repurchase the majority of its then-outstanding convertible senior notes due 2019 in privately-negotiated transactions.

Holders may convert the 2022 Notes at any time prior to the close of business on the business day immediately preceding October 1, 2021, only under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ended June 30, 2017 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day;

(ii) during the five business-day period immediately after any five consecutive trading-day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2022 Indenture) per $1,000 principal amount of the 2022 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

(iii) upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company’s assets; or

(iv) if the Company calls the 2022 Notes for redemption, until the close of business on the business day immediately preceding the redemption date.

On or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding April 1, 2022, holders may convert their 2022 Notes at any time.

Upon conversion, holders will receive the principal amount of their 2022 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 2022 Indenture). For both the principal and excess conversion value, holders may receive cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option. The initial conversion rate for the 2022 Notes is 14.9491 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $66.89 per share of the Company’s common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the 2022 Notes represents a premium of approximately 37.5% to the closing sale price of $48.65 per share of the Company’s common stock on the NASDAQ Global Select Market on March 7, 2017, the date that the Company priced the private offering of the 2022 Notes.

As of December 31, 2017, the 2022 Notes had a market price of $1,048 per $1,000 principal amount. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of stock price appreciation. Upon the receipt of conversion requests, the settlement of the 2022 Notes will be paid pursuant to the terms of the 2022 Indenture. In the event that all of the 2022 Notes are converted, the Company would be required to repay the $345.0 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option).

Prior to April 1, 2020, the Company may not redeem the 2022 Notes. On or after April 1, 2020, the Company may redeem for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option, all or part of the 2022 Notes if the last reported sale price (as defined in the 2022 Indenture) of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending within five trading days prior to the date on which the Company provides notice of redemption. The redemption price will equal the sum of (i) 100% of the principal amount of the 2022 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date. In addition, calling the 2022 Notes for redemption will constitute a “make whole fundamental change” (as defined in the 2022 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption. No sinking fund is provided for the 2022 Notes.

If the Company undergoes a fundamental change, as defined in the 2022 Indenture, subject to certain conditions, holders of the 2022 Notes may require the Company to repurchase for cash all or part of their 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a ‘‘make-whole fundamental change’’ (as defined in the 2022 Indenture) occurs prior to April 1, 2022, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change.

The 2022 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2022 Notes, and equal in right of payment to the Company’s unsecured indebtedness. The 2022 Notes are also effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to any debt or other liabilities (including trade payables) of the Company’s subsidiaries.

While the 2022 Notes are currently classified on the Company’s consolidated balance sheet at December 31, 2017 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the 2022 Notes have the election to convert the 2022 Notes at any time during the prescribed measurement period, the 2022 Notes would then be considered a current obligation and classified as such.

Under ASC 470-20, Debt with Conversion and Other Options, an entity must separately account for the liability and equity components of convertible debt instruments (such as the 2022 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance. The initial carrying value of the liability component of $274.1 million was calculated using a 7.45% assumed borrowing rate. The equity component of $70.9 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2022 Notes and is recorded in additional paid-in capital on the consolidated balance sheet at the issuance date. That equity component is treated as a discount on the liability component of the 2022 Notes, which is amortized over the five year term of the 2022 Notes using the effective interest rate method. The equity component is not re-measured as long as it continues to meet the conditions for equity classification.

The Company allocated the total transaction costs of $11.0 million related to the issuance of the 2022 Notes to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the five-year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity.

The 2022 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. The 2022 Indenture contains customary events of default with respect to the 2022 Notes, including that upon certain events of default, 100% of the principal and accrued and unpaid interest on the 2022 Notes will automatically become due and payable.

Convertible Senior Notes Due 2019

On January 23, 2013, the Company completed a private placement of $120.0 million in aggregate principal amount of

3.25% convertible senior notes due 2019, or 2019 Notes. The 2019 Notes accrue interest at a fixed rate of 3.25% per year, payable semiannually in arrears on February 1 and August 1 of each year. The 2019 Notes mature on February 1, 2019.

The total debt composition of the 2019 Notes is as follows (in thousands):



	December 31,
	2017			2016
3.25% convertible senior notes due 2019	$	338		$	118,531
Deferred financing costs	(2		)	(1,276		)
Discount on debt	(12		)	(8,517		)
Total debt, net of debt discount and deferred financing costs	$	324		$	108,738

In March 2017, the Company used part of the net proceeds from the issuance of the 2022 Notes discussed above to repurchase $117.7 million aggregate principal of the 2019 Notes in privately-negotiated transactions for an aggregate of approximately $118.2 million in cash and the issuance of approximately 2.5 million shares of common stock. The partial repurchase of the 2019 Notes resulted in a $3.7 million loss on early debt extinguishment. In May 2017, the Company repurchased $0.5 million aggregate principal of the 2019 Notes in a privately-negotiated transaction for an aggregate of approximately $0.5 million in cash and the issuance of approximately 10 thousand shares of common stock. At December 31, 2017, approximately $0.3 million of principal remains outstanding on the 2019 Notes.

Holders may convert their 2019 Notes prior to August 1, 2018 only if certain circumstances are met, including if during the previous calendar quarter, the sales price of the Company’s common stock was greater than 130% of the conversion price then applicable for at least 20 out of the last 30 consecutive trading days of the quarter. During the quarter ended December 31, 2017, this condition for conversion was met. As a result, the 2019 Notes are classified as a current obligation and will be convertible until March 31, 2018. As of December 31, 2017, the 2019 Notes had a market price of $1,905 per $1,000 principal amount, compared to an estimated conversion value of $1,839 per $1,000 principal amount. In the event that the remaining 2019 Notes are converted, the Company would be required to repay the $0.3 million of principal value in cash and settle approximately $0.3 million of the conversion premium in cash, common stock or a combination of cash and shares of its common stock at the Company’s option as of December 31, 2017.

The following table sets forth the total interest expense recognized in the periods presented (in thousands):



	Year Ended December 31,
	2017			2016			2015
Contractual interest expense	$	7,344		$	3,852		$	3,856
Amortization of debt issuance costs	1,381			612			615
Amortization of debt discount	10,423			4,088			4,102
Capitalized interest and other (Note 5)	(1,101		)	(1,491		)	(848		)
Total	$	18,047		$	7,061		$	7,725

Effective interest rate on convertible senior notes	7.77		%	7.22		%	7.21		%

FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

FINANCIAL INSTRUMENTS

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in the principal or most advantageous market in an orderly transaction. To increase consistency and comparability in fair value measurements, the FASB established a three-level hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of fair value measurements are:


•	Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.


•	Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.


•	Level 3: Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these items. The fair value of the Company’s convertible senior notes at December 31, 2017 are calculated utilizing market quotations from an over-the-counter trading market for these notes (Level 2). The carrying amount and fair value of the Company’s convertible senior notes are as follows (in thousands):



Financial Liabilities Carried at Historical Cost	Carrying Value		Fair Value Measurements Using
December 31, 2017	Carrying Value		Level 1		Level 2		Level 3
2.375% convertible senior notes due 2022 ⁽¹⁾	$	276,173	$	—	$	361,526	$	—
3.25% convertible senior notes due 2019 ⁽²⁾	$	324	$	—	$	644	$	—

(1) The closing price of the Company’s common stock was $45.65 per share at December 31, 2017 compared to a conversion price of $66.89 per share. Currently, the conversion price is above the stock price. The maximum conversion premium that can be due on the 2022 Notes is approximately 5.2 million shares of the Company’s common stock, which assumes no increases in the conversion rate for certain corporate events.

(2) The closing price of the Company’s common stock was $45.65 per share at December 31, 2017 compared to a conversion price of $24.82 per share which, if converted, would result in a conversion premium of less than ten thousand shares of the Company’s common stock or $0.3 million of cash. The maximum conversion premium that can be due on the 2019 Notes is approximately ten thousand shares of the Company’s common stock, which assumes no increases in the conversion rate for certain corporate events.

Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate bonds with maturities greater than three months, but less than one year. Long-term investments consist of asset-backed securities collateralized by credit card receivables and corporate bonds with maturities greater than one year. Net unrealized gains or losses from the Company’s short-term and long-term investments are reported in other comprehensive income (loss). At December 31, 2017, all of the Company’s short-term investments are classified as available for sale investments and are determined to be Level 2 instruments, which are measured at fair value using standard industry models with observable inputs. The fair value of the commercial paper is measured based on a standard industry model that uses the three-month U.S. Treasury bill rate as an observable input. The fair value of the asset-backed securities and corporate bonds is principally measured or corroborated by trade data for identical issues in which related trading activity is not sufficiently frequent to be considered a Level 1 input or that of comparable securities. At December 31, 2017, all short-term and long-term investments were rated A or better by Standard & Poor’s.

The following summarizes the Company’s investments at December 31, 2017 and 2016 (in thousands):



December 31, 2017 Debt Securities:	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value (Level 2)
Short-term:
Asset-backed securities	$	28,338	$	—	$	(37	)	$	28,301
Commercial paper	48,999		—		(23		)	48,976
Corporate bonds	180,119		—		(175		)	179,944
Subtotal	257,456		—		(235		)	257,221
Long-term:
Asset-backed securities	23,836		—		(79		)	23,757
Corporate bonds	36,430		—		(140		)	36,290
Subtotal	60,266		—		(219		)	60,047
Total	$	317,722	$	—	$	(454	)	$	317,268



December 31, 2016 Debt Securities:	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value (Level 2)
Short-term:
Asset-backed securities	$	9,012	$	—	$	(2	)	$	9,010
Commercial paper	39,530		8		(15		)	39,523
Corporate bonds	88,141		11		(32		)	88,120
Total	$	136,683	$	19	$	(49	)	$	136,653

Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets and liabilities acquired in a business combination, and long-lived assets, which would be recognized at fair value if deemed to be impaired or if reclassified as assets held for sale. The fair value in these instances would be determined using Level 3 inputs.

TELA Bio, Inc.

In October 2017, the Company made a cash investment of $15.0 million in convertible preferred B shares of TELA Bio Inc., or TELA Bio, a privately-held surgical reconstruction company that markets its proprietary OviTex^TM portfolio of products for ventral hernia repair and abdominal wall reconstruction. In conjunction with the investment in TELA Bio, the Company acquired an option to purchase an additional $10.0 million of convertible preferred B shares of TELA Bio under the same terms and conditions as existed on the initial purchase date. The purchase option expires on September 15, 2018. If the Company does not exercise its purchase option, the Company may be required to invest up to $10.0 million in TELA Bio convertible preferred B shares under certain conditions. This contingent purchase obligation expires on October 31, 2018.

The investment in TELA Bio, the purchase option and the contingent purchase obligation were recorded at fair value based on integrated valuation pricing models. These models included both unobservable and observable market inputs including projected revenues, option purchase price, volatility and projected liquidity date. The equity investment in the TELA Bio preferred B shares was recorded at $14.1 million and the purchase option was recorded in prepaid expenses and other current assets at $0.9 million. The fair value of the contingent purchase obligation was determined to be de minimis.

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, long-term investments and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At times, such amounts may exceed federally-insured limits. The Company performs ongoing credit evaluations of its customers as warranted and generally does not require collateral.

As of December 31, 2017, three wholesalers accounted for over 10% of the Company’s accounts receivable: 35%, 30% and 27%, respectively. At December 31, 2016, three wholesalers accounted for over 10% of the Company’s accounts receivable: 36%, 29% and 25%, respectively. Revenues are primarily derived from major wholesalers and pharmaceutical companies which generally have significant cash resources. Allowances for doubtful accounts receivable are maintained based on historical payment patterns, aging of accounts receivable and actual write-off history. As of December 31, 2017 and 2016, no allowances for doubtful accounts were deemed necessary by the Company on its accounts receivable.

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2017

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Common Stock

The Company is authorized to issue up to 250,000,000 shares of common stock, of which 40,668,877 and 37,480,952 were outstanding at December 31, 2017 and 2016, respectively.

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of preferred stock. No preferred stock was outstanding at December 31, 2017 or 2016.

Accumulated Other Comprehensive Income (Loss)

The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands):



	Net Unrealized Gains (Losses) From Available For Sale Investments
Balance at December 31, 2015	$	(52	)
Other comprehensive income before reclassifications	22
Amounts reclassified from accumulated other comprehensive income (loss)	—
Balance at December 31, 2016	(30		)
Other comprehensive loss before reclassifications	(424		)
Amounts reclassified from accumulated other comprehensive income (loss)	—
Balance at December 31, 2017	$	(454	)

STOCK PLANS

12 Months Ended

Dec. 31, 2017

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

STOCK PLANS

Stock Incentive Plans

The Company’s amended and restated 2011 stock incentive plan, or 2011 Plan, was adopted by its board of directors and approved by its stockholders in June 2014. The 2011 Plan allows the granting of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. Since the adoption of the 2011 Plan, any remaining shares available for issuance under a 2007 stock incentive plan, or 2007 Plan, are reallocated to the 2011 Plan. In April 2014, the Company’s board of directors adopted the 2014 Inducement Plan which authorized 175,000 shares of common stock to be granted as equity awards to new employees.

In June 2016, the Company’s board of directors adopted an amendment to the 2011 Plan. Under the amendment, an additional 4,000,000 shares of common stock were authorized for issuance as equity awards under the 2011 Plan. The amendment to the 2011 Plan was subsequently approved by the Company’s stockholders and became effective in June 2016.

All of the Company’s stock option grants have an exercise price equal to the closing price of the Company’s common stock on the date of grant, generally have a 10-year contractual term and vest in increments (generally over four years from the date of grant although the Company may occasionally grant options with different vesting terms). Since 2015, the Company has granted RSUs to employees and its board of directors. The Company uses authorized and unissued shares to satisfy its obligations under these plans.

2014 Employee Stock Purchase Plan

In April 2014, the Company’s board of directors adopted the 2014 Employee Stock Purchase Plan, or ESPP, which was subsequently approved by the Company’s stockholders in June 2014. The purpose of the ESPP is to provide a vehicle for eligible employees to purchase shares of the Company’s common stock at a discounted price and to help retain and motivate current employees as well as attract new talent. Under the ESPP, up to 500,000 shares of common stock may be sold. The plan expires in June 2024. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. The maximum fair market value of stock which can be purchased by a participant in a calendar year is $25,000. Six-month offering periods begin on January 1 and July 1 of each year. During an offering period, eligible employees have the opportunity to elect to purchase shares of the Company’s common stock on the purchase dates of June 30 and December 31 or the last trading day of an offering period. The per share purchase price will be equal to the lesser of 85% of the fair market value of the Company’s common stock on either the offering date or the purchase date.

The following table contains information about the Company’s plans at December 31, 2017:



Stock Incentive Plans	Awards Reserved for Issuance	Awards Issued	Awards Available for Grant
2007 Plan	2,022,837	2,022,837	—
2011 Plan	9,931,700	7,037,947	2,893,753
2014 Inducement plan	175,000	52,276	122,724
	12,129,537	9,113,060	3,016,477

Employee Stock Purchase Plan	Shares Reserved for Purchase	Shares Purchased	Shares Available for Purchase
2014 ESPP	500,000	160,147	339,853

Stock-Based Compensation

Compensation expense for stock options and RSUs granted to employees and directors is based on the estimated grant date fair value of options recognized over the requisite service period on a straight-line expense attribution method. Compensation expense for options and RSUs granted to non-employees is based on the fair value of options, which are revalued each reporting period until vested and are recognized as expense over the requisite service period. Compensation expense for ESPP options is based on the grant date fair value of the ESPP shares and the grant date number of shares that can be purchased, which is recognized as expense over the length of an offering period.

The Company recognized stock-based compensation expense (net of forfeitures) in its consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015 as follows (in thousands):



	Year Ended December 31,
	2017		2016		2015
Cost of goods sold	$	5,467	$	6,438	$	6,012
Research and development	3,341		3,297		5,134
Selling, general and administrative	22,793		21,513		22,222
Total	$	31,601	$	31,248	$	33,368

Stock-based compensation from:
Stock options (employee awards)	$	24,056	$	24,505	$	27,262
Stock options (consultant awards)	167		841		2,367
RSUs	6,698		5,117		2,887
ESPP	680		785		852
Total	$	31,601	$	31,248	$	33,368

The following table summarizes the Company’s stock option activity and related information for the period from January 1, 2015 to December 31, 2017:



	Number of Options		Weighted Average Exercise Price (Per Share)		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in Thousands)
Outstanding at December 31, 2014	4,677,856		$	35.78	7.86	$	248,276
Granted	906,706		75.35
Exercised	(618,434	)	16.29			$	39,401
Forfeited	(294,880	)	64.29
Expired	(25,526	)	81.94
Outstanding at December 31, 2015	4,645,722		44.03		7.31	$	162,340
Granted	1,656,598		38.20
Exercised	(518,226	)	11.13			$	21,750
Forfeited	(401,048	)	70.27
Expired	(175,303	)	80.91
Outstanding at December 31, 2016	5,207,743		42.16		7.39	$	37,581
Granted	1,072,625		43.93
Exercised	(539,989	)	12.55			$	15,865
Forfeited	(555,897	)	48.66
Expired	(232,989	)	74.65
Outstanding at December 31, 2017	4,951,493		$	43.51	6.91	$	57,021
Exercisable at December 31, 2017	2,882,384		$	42.20	5.51	$	47,082
Vested and expected to vest at December 31, 2017	4,951,493		$	43.51	6.91	$	57,021

As of December 31, 2017, $41.6 million of total unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted average period of 2.7 years. The Company’s stock options have a maximum expiration date of ten years from the date of grant.

The weighted average fair value of stock options granted for the years ended December 31, 2017, 2016 and 2015 was $20.78, $19.13 and $37.82 per share, respectively. The fair values of stock options granted were estimated using the Black-Scholes model with the following weighted average assumptions:



	Year Ended December 31,
	2017	2016	2015
Expected dividend yield	None	None	None
Risk-free interest rate	1.68% - 2.42%	1.03% - 2.48%	1.40% - 2.28%
Expected volatility	51.4%	53.5%	52.9%
Expected term of options	5.31 years	5.77 years	5.76 years

The following table summarizes the Company’s RSU activity and related information for the period from January 1, 2015 to December 31, 2017:



	Number of Units		Weighted Average Grant Date Fair Value (Per Share)		Aggregate Intrinsic Value (in Thousands)
Unvested at December 31, 2014	—		$	—	$	—
Granted	232,046		78.65
Vested	—		—
Forfeited	(15,848	)	79.43
Unvested at December 31, 2015	216,198		78.59		$	16,602
Granted	256,631		40.21
Vested	(61,487	)	78.33
Forfeited	(46,939	)	68.84
Unvested at December 31, 2016	364,403		52.85		$	11,824
Granted	343,583		44.23
Vested	(101,379	)	53.76
Forfeited	(107,061	)	49.98
Unvested and expected to vest at December 31, 2017	499,546		$	47.32	$	22,804

As of December 31, 2017, $19.1 million of total unrecognized compensation cost related to non-vested RSUs is expected to be recognized over a weighted average period of 2.9 years. The Company’s RSUs have a maximum vest date of four years from the date of grant. The fair values of RSUs awarded are equal to the closing price of the Company’s common stock on the date of grant.

The fair values of the ESPP share options granted are estimated using the Black-Scholes model with the following weighted average assumptions:



	Year Ended December 31,
	2017	2016	2015
ESPP option fair value	$10.80 - $13.85	$10.57 - $25.28	$21.93 - $25.24
Expected dividend yield	None	None	None
Risk-free interest rate	0.62% - 1.14%	0.37% - 0.49%	0.11% - 0.13%
Expected volatility	53.8%	63.4%	50.7%
Expected term of ESPP share options	6 months	6 months	6 months

NET INCOME (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NET INCOME (LOSS) PER SHARE

Potential common shares are excluded from the diluted net income (loss) per share computation to the extent that they would be antidilutive. Because the Company reported a net loss for the years ended December 31, 2017 and 2016, no potentially dilutive securities have been included in the computation of diluted net loss per share for those periods. As discussed in Note 8, Debt, the Company has either the obligation or the option to pay cash for the aggregate principal amount due upon the conversion of its convertible senior notes. Since it is the Company’s intent to settle the principal amount of its convertible senior notes in cash, the potentially dilutive effect of such notes on net income (loss) per share is computed under the treasury stock method.

The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2017, 2016 and 2015 (in thousands, except per share amounts):



	Year Ended December 31,
	2017			2016			2015
Numerator:
Net income (loss)	$	(42,611	)	$	(37,949	)	$	1,856
Denominator:
Weighted average common shares outstanding—basic	39,806			37,236			36,540
Computation of diluted securities:
Dilutive effect of stock options	—			—			1,638
Dilutive effect of RSUs	—			—			3
Dilutive effect of conversion premium on the 2019 Notes	—			—			3,113
Dilutive effect of warrants	—			—			6
Dilutive effect of ESPP purchase options	—			—			1
Weighted average common shares outstanding—diluted	39,806			37,236			41,301
Net income (loss) per share:
Basic net income (loss) per common share	$	(1.07	)	$	(1.02	)	$	0.05
Diluted net income (loss) per common share	$	(1.07	)	$	(1.02	)	$	0.04

The following outstanding stock options, RSUs, conversion premiums on the Company’s convertible senior notes, warrants and ESPP purchase options are antidilutive in the periods presented (in thousands):



	Year Ended December 31,
	2017	2016	2015
Weighted average number of stock options	5,171	4,482	1,891
Weighted average number of RSUs	449	290	99
Conversion premium on the 2019 Notes	411	2,022	—
Weighted average number of warrants	—	1	—
Weighted average ESPP purchase options	29	21	8
Total	6,060	6,816	1,998

INCOME TAXES

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

Income (loss) before income taxes and the related tax expense is as follows (in thousands):



	Year Ended December 31,
	2017			2016			2015
Income (loss) before income taxes:
Domestic	$	(39,898	)	$	(36,339	)	$	3,760
Foreign	(2,573		)	(1,505		)	(1,640		)
Total income (loss) before income taxes	$	(42,471	)	$	(37,844	)	$	2,120

Current taxes:
Federal	$	—		$	11		$	92
State	140			94			172
Total income tax expense	$	140		$	105		$	264

The tax provision of $0.1 million for each of the years ended December 31, 2017 and 2016 is principally the result of minimum state taxes. The tax provision of $0.3 million for the year ended December 31, 2015 is the result of the federal alternative minimum tax and state taxes.

A reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes is as follows:



	Year Ended December 31,
	2017		2016		2015
U.S. federal statutory rate	35.00	%	35.00	%	35.00	%
State taxes	2.26	%	2.20	%	0.71	%
Foreign taxes	(1.28	)%	(0.81	)%	12.03	%
Change in valuation allowance	4.58	%	(43.96	)%	10.32	%
Stock-based compensation	(1.21	)%	(0.54	)%	7.26	%
Tax credits	4.96	%	8.77	%	(30.63	)%
Interest expense	2.90	%	5.75	%	(37.57	)%
Effect of rate changes	(130.88	)%	(4.65	)%	—	%
Convertible senior notes refinancing	6.55	%	—	%	—	%
Effect of the adoption of ASU 2016-09	68.89	%	—	%	—	%
Other	7.90	%	(2.04	)%	15.33	%
Effective tax rate	(0.33	)%	(0.28	)%	12.45	%

The Company’s effective tax rates of (0.33)% and (0.28)% for the years ended December 31, 2017 and 2016, respectively, differed from the expected U.S. statutory tax rate of 35.0%. This difference was primarily driven by pretax losses for which the Company concluded that a majority of its tax benefits are not more-likely-than-not to be realized, resulting in the recording of a full valuation allowance. The Company’s effective tax rate of 12.45% for the year ended December 31, 2015 was favorably impacted by the utilization of domestic net operating loss, or NOL, carryforwards for which there was a full valuation allowance.

Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2017 and 2016 are as follows (in thousands):



	December 31,
	2017			2016
Deferred tax assets:
Net operating loss carry-forwards	$	95,067		$	96,163
Federal and state credits	15,048			13,724
Depreciation and amortization	2,593			2,604
Accruals and reserves	2,743			4,672
Deferred revenue	1,841			3,023
Stock based compensation	16,925			21,890
Inventory	552			9,811
Other	139			52
Total deferred tax assets	134,908			151,939
Deferred tax liabilities:
Discount on convertible senior notes	(14,678		)	(3,186		)
	120,230			148,753
Less: valuation allowance	(120,230		)	(148,753		)
Net deferred tax assets	$	—		$	—

As of December 31, 2017, the Company’s federal NOLs and federal tax credit carryforwards totaled $380.5 million and $10.3 million, respectively. The Company also had state NOLs and state tax credit carryforwards of $232.3 million and $6.0 million, respectively, which are subject to change on an annual basis due to variations in the Company’s annual state apportionment factors. The Company had non-U.S. tax NOLs of $5.9 million at December 31, 2017. The existing federal NOLs will begin expiring in 2025 while the existing state NOLs begin expiring in 2024, if the Company has not used them prior to that time. The non-U.S. NOLs do not expire.

Since the Company had cumulative changes in ownership of more than 50% within a three-year period, under Internal Revenue Code sections 382 and 383, the Company’s ability to use certain net operating loss and credit carryforwards to offset taxable income or tax will be limited. Such ownership changes were triggered by the initial acquisition of the Company’s stock in 2007 as well as cumulative ownership changes arising as a result of the completion of the Company’s initial public offering and other financing transactions. As a result of these ownership changes, the Company estimates that approximately $192.4 million of federal net operating losses are subject to annual limitations. At December 31, 2017, $134.8 million of these federal net operating losses were available. The Company estimates that an additional $10.3 million will become available from 2018 through 2022, and the remaining $6.0 million through 2025. In addition, California and certain states have previously suspended or limited the use of net operating loss carryforwards for certain taxable years, and certain states are considering similar future measures. As a result, the Company may incur higher state income tax expense in the future.

In accordance with ASC Topic 740, the Company establishes a valuation allowance for deferred tax assets that, in its judgment, are not more-likely-than-not realizable. These judgments are based on projections of future income, including tax-planning strategies, by individual tax jurisdictions. In each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowance is appropriate. The Company had a net reduction in its valuation allowance of $28.5 million in the year ended December 31, 2017 and a net increase in its valuation allowance of $16.6 million and $0.8 million during the years ended December 31, 2016 and 2015, respectively. There is significant doubt regarding the Company’s ability to utilize its net deferred tax assets and, therefore, the Company has recorded a full valuation allowance reducing its net deferred tax assets to zero at both December 31, 2017 and 2016.

In December 2017, new legislation was signed into law reducing the corporate U.S. tax rate from 35% to 21% for tax years beginning after December 31, 2017, fully repealing the corporate alternative minimum tax and making the NOL carryforward period indefinite for NOLs generated after 2017. In accordance with ASC Topic 740, deferred tax assets and liabilities are required to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. As of December 31, 2017, the Company re-measured its deferred tax balances based upon the new 21% tax rate. This resulted in a reduction of $55.7 million in the Company’s deferred tax assets, which was offset by a change in its year-end valuation allowance.

In March 2017, the Company established a deferred tax liability with an offset to additional paid-in capital resulting from the conversion feature of the 2022 Notes. The initial difference between the book value of the convertible debt, issued with a beneficial conversion feature, and its tax basis was $70.9 million, a temporary difference. The net effect of the deferred tax liability recorded to additional paid-in capital was zero because the Company has a full valuation allowance against its net deferred tax assets.

In 2017, the Company recorded a reserve of $2.5 million related to unrecognized tax benefits, or UTBs, of which $1.4 million relates to tax positions taken in 2017 and $1.1 million relates to tax positions taken in 2016. The Company did not have any such liability at December 31, 2016. The Company regularly assesses the likelihood of additional tax assessments by jurisdiction and, if necessary, adjusts its reserve for UTBs based on new information or developments. Due to the Company’s tax credit carryforwards, the reserve was recorded as a reduction of the Company’s deferred tax assets, and any potential deficiency would not result in a tax liability. Therefore, no interest or penalties were recognized in income tax expense for the year ended December 31, 2017. Due to the Company’s full valuation allowance against deferred tax assets, none of the UTBs, if recognized, would affect the effective income tax rate.

The Company estimates that it is not reasonably possible that within the next twelve months, any of the unrecognized tax benefits will significantly increase or decrease. The Company is currently subject to audit by the U.S. Internal Revenue Service, or IRS, for the years 2014 through 2017, and state tax jurisdictions for the years 2013 through 2017. However, the IRS or states may still examine and adjust a net operating loss arising from a closed year to the extent it is utilized in a year that remains subject to audit. The Company’s previously filed income tax returns are not presently under audit by the IRS or state tax authorities.

OTHER EMPLOYEE BENEFITS	12 Months Ended
OTHER EMPLOYEE BENEFITS	Dec. 31, 2017
Retirement Benefits [Abstract]
OTHER EMPLOYEE BENEFITS	OTHER EMPLOYEE BENEFITS The Company sponsors a 401(k) savings plan. Under the plan, employees may make contributions which are eligible for a discretionary percentage match as defined in the plan and determined by the board of directors. The Company recognized $1.3 million, $1.5 million and $1.7 million of related compensation expense for the years ended December 31, 2017, 2016 and 2015, respectively.

COMMERCIAL PARTNERS AND OTHER AGREEMENTS

12 Months Ended

Dec. 31, 2017

COMMERCIAL PARTNERS AND OTHER AGREEMENTS

COMMERCIAL PARTNERS AND OTHER AGREEMENTS

DepoCyt(e) Discontinuation

In June 2017, the Company’s board of directors approved a decision to discontinue production of DepoCyt^® (U.S. and Canada) and DepoCyte^® (E.U.) due to persistent technical issues specific to the DepoCyt(e) manufacturing process. DepoCyt(e) accounted for 2.6% of the Company’s 2016 total full-year revenues of $276.4 million. As of June 30, 2017, the Company had ceased all production of DepoCyt(e).

Prior to the discontinuation, the Company received a fixed payment for the supply of DepoCyt(e) and double-digit royalties, net of supply price, on the sales of DepoCyt by Leadiant Bioscience, Ltd. in the U.S. and Canada, and on the sales of DepoCyte by Mundipharma International Corporation Limited, or Mundipharma, in the E.U. and other European countries. In addition, the Company also received a non-refundable upfront payment of $8.0 million in connection with a 15 year extension and concurrent expansion of the territories where Mundipharma can market and distribute DepoCyte.

In 2017, the Company recorded a non-recurring charge of $5.4 million related to the discontinuation of its DepoCyt(e) manufacturing activities, including $0.5 million for DepoCyt(e) related inventory, which is recorded in cost of goods sold, and $4.9 million for the remaining lease costs less an estimate of potential sublease income for the facility where DepoCyt(e) was manufactured, the write-off of property, plant and equipment, employee severance, asset retirement obligations and other estimated exit costs. Cash payments related to the lease on the DepoCyt(e) manufacturing facility are expected to continue through the end of the lease term in August 2020.

As of December 31, 2017, a summary of the Company’s costs and reserves related to the DepoCyt(e) discontinuation are as follows (in thousands):



	Severance and Related Costs			Lease Costs			Write-Off of Property, Plant & Equipment and Inventory			Asset Retirement Obligations and Other Discontinuation Costs			Total
Balance at December 31, 2016	$	—		$	—		$	—		$	—		$	—
Charges incurred	303			2,018			2,470			656			5,447
Cash payments made	(303		)	(744		)	—			(420		)	(1,467		)
Disposal of property, plant & equipment and inventory	—			—			(2,470		)	—			(2,470		)
Balance at December 31, 2017	$	—		$	1,274		$	—		$	236		$	1,510

The Company may be required to make additional payments or incur additional costs relating to the DepoCyt(e) discontinuation which could be material to the Company’s results of operations and/or cash flows in a given period.

Commercial Partners

Patheon UK Limited

In April 2014, the Company and Patheon UK Limited, or Patheon, entered into a Strategic Co-Production Agreement, a Technical Transfer and Service Agreement and a Manufacturing and Supply Agreement to collaborate in the manufacture of EXPAREL. Under the terms of the Technical Transfer and Service Agreement, Patheon has agreed to undertake certain technical transfer activities and construction services needed to prepare its Swindon, England facility for the manufacture of EXPAREL in two dedicated manufacturing suites. Under these agreements, the Company will make monthly base fee payments for services rendered. The agreements will remain in full effect unless and until they expire or are terminated. Upon termination of the Technical Transfer and Services Agreement (other than termination by the Company in the event that Patheon does not meet the construction and manufacturing milestones or for a breach by Patheon), the Company will pay for the make good costs occasioned by the removal of its manufacturing equipment and for Patheon’s termination costs up to a maximum amount of $2.7 million.

Under the terms of the Manufacturing and Supply Agreement, following the FDA approval date of the suites, the Company has agreed to purchase EXPAREL product from Patheon. Unless earlier terminated by giving notice of up to three years (other than termination by the Company in the event of a material breach by Patheon), this agreement will expire on the 10th anniversary of the FDA approval date for the initial manufacturing suite.

DePuy Synthes Sales, Inc.

In January 2017, the Company announced the initiation of a Co-Promotion Agreement, or the Agreement, with DePuy

Synthes Sales, Inc., or DePuy Synthes, part of the Johnson & Johnson family of companies, to market and promote the use of

EXPAREL for orthopedic procedures in the U.S.. DePuy Synthes field representatives, specializing in joint reconstruction, spine, sports medicine and trauma, collaborates with and supplements the Company’s field teams by expanding the reach and frequency of EXPAREL education in the hospital surgical suite and ambulatory surgery center settings.

Under the five-year arrangement, DePuy Synthes is the exclusive third-party distributor during the term of the Agreement to promote and sell EXPAREL for operating room use for orthopedic and spine surgeries (including knee, hip, shoulder, sports and trauma surgeries) in the U.S.. DePuy Synthes receives a tiered commission ranging from low single-digits to double-digits on sales of EXPAREL under the Agreement, subject to conditions, limitations and adjustments. The initial term of the Agreement commenced on January 24, 2017 and ends on December 31, 2021, with the option to extend the Agreement in additional 12-month increments upon mutual agreement of the parties, subject to certain conditions.

The Company and DePuy Synthes have mutual termination rights under the Agreement, subject to certain terms, conditions and advance notice requirements, provided that the Company or DePuy Synthes generally may not terminate the Agreement, without cause, within three years of the effective date of the Agreement. The Company also has additional unilateral termination rights under certain circumstances. The Agreement contains customary representations, warranties, covenants and confidentiality provisions, as well as mutual indemnification obligations. DePuy Synthes is also subject to certain obligations and restrictions, including required compliance with certain laws and regulations and the Company’s policies, in connection with fulfilling their obligations under the Agreement.

Aratana Therapeutics, Inc.

On December 5, 2012, the Company entered into a worldwide license, development and commercialization agreement with Aratana Therapeutics, Inc., or Aratana. Under the agreement, the Company granted Aratana an exclusive royalty-bearing license, including the limited right to grant sublicenses, for the development and commercialization of the Company’s bupivacaine liposome injectable suspension product for animal health indications. Under the agreement, Aratana developed and obtained FDA approval for the use of the product in veterinary surgery to manage postsurgical pain. In connection with its entry into the license agreement, the Company received a one-time payment of $1.0 million. In December 2013, the Company received a $0.5 million milestone payment under the agreement. In June 2016, the Company recorded $1.0 million in milestone revenue for Aratana’s filing of an FDA Administrative New Animal Drug Application, or ANADA, and in August 2016 recorded $1.0 million related to the FDA’s approval of the ANADA. The Company is eligible to receive up to an additional aggregate $40.0 million upon the achievement of commercial milestones. Aratana is required to pay the Company a tiered double digit royalty on net sales made in the U.S.. If the product is approved by foreign regulatory agencies for sale outside of the U.S., Aratana will be required to pay the Company a tiered double digit royalty on such net sales. Royalty rates will be reduced by a certain percentage upon the entry of a generic competitor for animal health indications into a jurisdiction or if Aratana must pay royalties to third parties under certain circumstances. Unless terminated earlier pursuant to its terms, the license agreement is effective until December 2027, after which Aratana has the option to extend the agreement for an additional five-year term, subject to certain requirements.

Aratana began purchasing bupivacaine liposome injectable suspension product in 2016, which they market under the trade name NOCITA^® to serve animal health indications.

NOCITA^® is a registered trademark of Aratana Therapeutics, Inc.

CrossLink BioScience, LLC

In October 2013, the Company and CrossLink BioScience, LLC, or CrossLink, commenced a five-year arrangement for the promotion and sale of EXPAREL, pursuant to the terms of a Master Distributor Agreement (as amended, the “CrossLink Agreement”). On June 30, 2016, the Company provided notice to CrossLink electing to terminate the CrossLink Agreement effective as of September 30, 2016. In connection with the termination of the CrossLink Agreement, a termination fee based on a percentage of earned performance-based fees is due to CrossLink. This fee of $7.1 million is payable to CrossLink quarterly over two years beginning in the fourth quarter of 2016, and was recorded in selling, general and administrative expense in the consolidated statements of operations. At December 31, 2017, $2.4 million is classified in accrued expenses.

RELATED PARTY TRANSACTIONS	12 Months Ended
RELATED PARTY TRANSACTIONS	Dec. 31, 2017
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS The Company’s former Chief Medical Officer, Dr. Gary Patou, is a partner of MPM Asset Management LLC, or MPM, an investor in the Company. The Company incurred no consulting expenses with MPM or Dr. Patou in the year ended December 31, 2017 and expenses of $0.1 million and $0.3 million for the years ended December 31, 2016 and 2015, respectively. At December 31, 2017 and 2016 there was nothing payable to MPM. The Company’s agreement with MPM expired on December 31, 2015. The Company contracted with Dr. Patou directly for his services for the first six months of 2016. In December 2012, the Company entered into a worldwide license, development and commercialization agreement with Aratana as discussed in Note 15, Commercial Partners and Other Agreements. MPM and its affiliates are holders of capital stock of Aratana. David Stack, the Company’s Chief Executive Officer and Chairman, was a managing director at MPM from 2005 through March 2017. In April 2012, the Company entered into a consulting agreement with Dr. Gary Pace, a director of the Company. The Company recorded no expenses under the consulting arrangement in the year ended December 31, 2017 and expenses of less than $0.1 million for each of the years ended December 31, 2016 and 2015. In connection with the consulting arrangement, Dr. Pace received an option to purchase 20,000 shares of common stock at an exercise price of $11.02 per share and an option to purchase 70,000 shares of common stock at an exercise price of $16.67 per share. At December 31, 2017 and 2016, there was nothing payable to Dr. Pace for consulting services.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Leases

The Company’s leases for its research and development, warehouse and DepoCyt(e) manufacturing facility in San Diego, California all expire in August 2020, and its lease for its EXPAREL manufacturing facility in San Diego, California expires in December 2025. The Company’s lease for its corporate headquarters in Parsippany, New Jersey expires in March 2028.

As of December 31, 2017, aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands):



Year	Aggregate Minimum Payments
2018	$	7,886
2019	8,089
2020	7,570
2021	5,245
2022	5,366
2023 through 2028	19,577
Total	$	53,733

Total rent expense, net of amortization of unfavorable lease obligations and tenant improvements, under all operating leases for the years ended December 31, 2017, 2016 and 2015 was $7.5 million, $6.0 million and $5.7 million, respectively. Deferred rent at December 31, 2017 and 2016 was $6.8 million and $8.6 million, respectively. The Company’s research and development facility in San Diego, California included a lease incentive allowance of $5.6 million for the payment of leasehold improvements, which the Company utilized completely in 2015 and 2016. The leasehold improvements were capitalized into fixed assets, net on the consolidated balance sheets and are depreciated over the lease term.

Litigation

From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of its business, including those related to patents, product liability and government investigations. Except as described below, the Company is not presently a party to any litigation which it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material adverse effect on its business, operating results, financial condition or cash flows.

In April 2015, the Company received a subpoena from the U.S. Department of Justice, U.S. Attorney’s Office for the District of New Jersey, requiring the production of a broad range of documents pertaining to marketing and promotional practices related to EXPAREL. The Company is cooperating with the government’s inquiry. The Company can make no assurances as to the time or resources that will need to be devoted to this inquiry or the impact, if any, of this inquiry or any proceedings on its business, financial condition, results of operations and cash flows.

Purchase Obligations

The Company has $0.3 million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2017.

Other Commitments and Contingencies

The FDA, as a condition of EXPAREL approval, has required the Company to study EXPAREL in pediatric patients. The Company was granted a deferral for the required pediatric trials in all age groups for EXPAREL in the setting of wound infiltration and plans to conduct these pediatric trials as a post-marketing requirement, which was stated in the New Drug Application approval letter for EXPAREL. The Company recently secured feedback from the FDA on a pediatric trial design in all age groups and is in the process of finalizing its clinical strategy.

In addition to the initial $19.6 million purchase price for the Acquisition, the Company entered into an earn-out agreement with Skyepharma which was based on the Company reaching certain revenue milestones following the Acquisition. Pursuant to this agreement, the Company is required to pay Skyepharma milestone payments up to an aggregate of $62.0 million, of which $36.0 million are for milestones not yet met. Additionally, the Company agreed to pay to Skyepharma a low single-digit percentage payment on collections of EXPAREL sales in the U.S., Japan, United Kingdom, France, Germany, Italy and Spain. Such obligations to make percentage payments will continue for the term in which such sales related to EXPAREL are covered by a valid claim in certain patent rights related to EXPAREL and other biologics products. The Company has the right to cease paying the low single-digit percentage payments in the event that Skyepharma breaches certain covenants not to compete contained in the stock purchase agreement or the last valid patent claim expires. Refer to Note 6, Goodwill, for further discussion.

Pursuant to an agreement with Research Development Foundation, or RDF, the Company is required to pay RDF a low single-digit royalty on the collection of revenues from its DepoFoam-based products, for as long as certain patents assigned to the Company under the agreement remain valid. RDF has the right to terminate the agreement for an uncured material breach by the Company, in connection with its bankruptcy or insolvency or if it directly or indirectly opposes or disputes the validity of the assigned patent rights.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected quarterly financial data for the years ended December 31, 2017 and 2016 (in thousands, except per share data):



	Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
Total revenues	$	69,283		$	70,934		$	67,335		$	79,078
Cost of goods sold	24,581			23,811			18,228			21,295
Total operating expenses	83,333			86,714			70,907			70,613
Net income (loss)	(19,866		)	(19,743		)	(7,597		)	4,595
Basic and diluted net income (loss) per common share	$	(0.52	)	$	(0.49	)	$	(0.19	)	$	0.11



	Three Months Ended
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Total revenues	$	65,474		$	69,640		$	68,355		$	72,902
Cost of goods sold	20,278			23,053			43,152			23,621
Total operating expenses	67,728			76,084			89,220			75,363
Net loss	(3,854		)	(7,958		)	(22,164		)	(3,973		)
Basic and diluted net loss per common share	$	(0.10	)	$	(0.21	)	$	(0.59	)	$	(0.11	)

For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Use of Estimates

Liquidity

Revenue Recognition

Net Product Sales

Returns Allowances

Prompt Payment Discounts

The prompt payment reserve is based upon discounts offered to wholesalers as an incentive to meet certain payment

Wholesaler Service Fees

Volume Rebates and Chargebacks

The following table provides a summary of activity with respect to the Company’s sales related allowances and accruals for the years ended December 31, 2017, 2016 and 2015 (in thousands):



	Returns Allowances			Prompt Payment Discounts			Wholesaler Service Fees			Volume Rebates and Chargebacks			Total
Balance at December 31, 2014	$	1,559		$	575		$	588		$	321		$	3,043
Provision	339			4,905			3,482			2,020			10,746
Payments/credits	(165		)	(4,855		)	(3,325		)	(1,544		)	(9,889		)
Balance at December 31, 2015	1,733			625			745			797			3,900
Provision	694			5,448			4,118			2,611			12,871
Payments/credits	(1,081		)	(5,478		)	(4,128		)	(2,284		)	(12,971		)
Balance at December 31, 2016	1,346			595			735			1,124			3,800
Provision	716			5,806			4,403			4,656			15,581
Payments/credits	(1,241		)	(5,744		)	(4,299		)	(5,084		)	(16,368		)
Balance at December 31, 2017	$	821		$	657		$	839		$	696		$	3,013

Royalty Revenue

Collaborative Licensing and Milestone Revenue

Concentration of Major Customers



	Year Ended December 31,
	2017		2016		2015
Largest wholesaler	35	%	32	%	33	%
Second largest wholesaler	30	%	28	%	29	%
Third largest wholesaler	26	%	26	%	28	%
	91	%	86	%	90	%

Revenue from customers outside the U.S. accounted for less than 1%, 1% and 2% of the Company’s total revenue for the years ended December 31, 2017, 2016 and 2015, respectively.

Research and Development Expenses

Income Taxes

Stock-Based Compensation


•	Expected term of the option


•	Expected volatility


•	Expected dividends


•	Risk-free interest rate

Cash and Cash Equivalents

All highly-liquid investments with maturities of 90 days or less when purchased are considered cash equivalents.

Short-Term Investments

Short-Term and Long-Term Investments

Inventories

Fixed Assets



Asset Category		Useful Life
Computer equipment and software		1 to 3 years
Office furniture and equipment		5 years
Manufacturing and laboratory equipment		5 to 10 years

Asset Retirement Obligations

Goodwill

Equity Investments

Impairment of Long-Lived Assets

Convertible Debt Transactions

Per Share Data

Segment Reporting

The Company operates in one reportable segment and, accordingly, no segment disclosures have been presented.

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted

In March 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update includes multiple provisions intended to simplify various aspects of accounting for share-based payment transactions including accounting for excess tax benefits and tax deficiencies, classification of excess tax benefits and tax deficiencies in the statement of cash flows and accounting for award forfeitures. The update also removes the requirement to delay recognition of an excess tax benefit until it reduces current taxes payable, instead, it is required to be recognized at the time of settlement, subject to normal valuation allowance considerations. This update became effective for the Company beginning January 1, 2017. The Company elected an accounting policy change to record forfeitures as they occur rather than estimating forfeitures during each period and recorded a charge of $0.3 million to retained earnings as of January 1, 2017 related to the reversal of cumulative forfeiture estimates. The adoption of this standard also resulted in the recognition of $29.3 million of previously unrecognized excess tax benefits in deferred tax assets, fully offset by a valuation allowance. The changes have been applied prospectively in accordance with the update, and prior periods have not been adjusted. All tax-related cash flows resulting from stock-based compensation, including the excess tax benefits related to the settlement of stock-based awards, will be classified as cash flows from operating activities in the Company’s consolidated statements of cash flows.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The standard requires entities to measure most inventory “at the lower of cost and net realizable value”, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market (market in this context is defined as one of three different measures, one of which is net realizable value). Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The standard became effective for the Company prospectively beginning January 1, 2017. The adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements.

Not Adopted as of December 31, 2017

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and has subsequently issued a number of amendments to this update. The new standard, as amended, provides a single comprehensive model to be used in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASU 2014-09 provides a five-step model that includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations and (5) recognizing revenue when, or as, an entity satisfies a performance obligation. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

The new standard will become effective for the Company beginning January 1, 2018 and permits two methods of adoption: the full retrospective method, which requires the standard to be applied to each prior period presented, or the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. The Company will adopt this standard using the modified retrospective method.

The Company has completed an analysis of existing contracts with its customers and assessed the differences in accounting for such contracts under ASU 2014-09 compared with the current revenue accounting standards. Based on its review of its current customer contracts, the implementation of ASU 2014-09 will not have a material quantitative impact on the Company’s consolidated financial statements, as the timing of revenue recognition for EXPAREL product sales is not expected to significantly change. The Company will recognize existing collaborative licensing, milestone and royalty revenue earlier, subject to the variable consideration constraints, than it would have under the current standard, however, such changes are not expected to be material to the Company’s consolidated financial statements. Adoption of the new standard will result in additional revenue-related disclosures in the footnotes to the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 changes accounting for equity investments and presentation and disclosure requirements for financial instruments. ASU 2016-01 does not apply to equity investments in consolidated subsidiaries or those accounted for under the equity method of accounting. Equity investments with readily determinable fair values will be measured at fair value with changes in fair value recognized in net income (loss). Entities have the option to measure equity investments without readily determinable fair values either at fair value or at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The standard also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. ASU 2016-01 will become effective for the Company beginning January 1, 2018. The Company has elected to measure equity investments without readily determinable fair values at cost adjusted for changes in observable prices. The guidance related to equity investments without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption. The adoption of ASU 2016-01 may increase volatility in the Company’s net income as changes in observable prices of equity investments without readily determinable fair values will be recorded in net income (loss). The Company does not expect the implementation of this standard to have a material impact on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment for items such as initial direct costs. For income statement purposes, the new standard retains a dual model similar to Accounting Standards Codification, or ASC, 840, requiring leases to be classified as either operating or financing. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while financing leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). This update also introduces new disclosure requirements for leasing arrangements. The standard will become effective for the Company beginning January 1, 2019. Early adoption is permitted, although the Company does not expect to do so. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements. For operating leases it will result in the recognition of lease liabilities and corresponding right-of-use assets upon adoption, which will have a material impact on the Company’s consolidated balance sheet. The Company does not believe the adoption of this ASU will have a significant impact on its consolidated statements of operations, stockholders’ equity or cash flows. At adoption, this update will be applied using a modified retrospective approach. Refer to Note 17, Commitments and Contingencies, for further discussion on the Company’s leases.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which 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. Entities will now use forward-looking information to better form their credit loss estimates. This update also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. This ASU will become effective for the Company beginning January 1, 2020, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies existing guidance on how companies present and classify certain cash receipts and cash payments in the statement of cash flows by addressing specific cash flow issues in an effort to reduce diversity in practice, including guidance on debt prepayment or extinguishment costs and contingent consideration payments made after a business combination. ASU 2016-15 will become effective for the Company in the first quarter of fiscal year 2018. The Company does not expect any changes to its consolidated statement of cash flows upon the adoption of this standard.

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Summary of Activity in Accrued Rebates and Chargebacks, Returns, Wholsesaler Service Fees and Prompt Pay Discounts

The following table provides a summary of activity with respect to the Company’s sales related allowances and accruals for the years ended December 31, 2017, 2016 and 2015 (in thousands):



	Returns Allowances			Prompt Payment Discounts			Wholesaler Service Fees			Volume Rebates and Chargebacks			Total
Balance at December 31, 2014	$	1,559		$	575		$	588		$	321		$	3,043
Provision	339			4,905			3,482			2,020			10,746
Payments/credits	(165		)	(4,855		)	(3,325		)	(1,544		)	(9,889		)
Balance at December 31, 2015	1,733			625			745			797			3,900
Provision	694			5,448			4,118			2,611			12,871
Payments/credits	(1,081		)	(5,478		)	(4,128		)	(2,284		)	(12,971		)
Balance at December 31, 2016	1,346			595			735			1,124			3,800
Provision	716			5,806			4,403			4,656			15,581
Payments/credits	(1,241		)	(5,744		)	(4,299		)	(5,084		)	(16,368		)
Balance at December 31, 2017	$	821		$	657		$	839		$	696		$	3,013

Schedule of percentage of revenue comprised by the three largest customers

The table below includes the percentage of revenue comprised by the Company’s three largest wholesalers in each year presented:



	Year Ended December 31,
	2017		2016		2015
Largest wholesaler	35	%	32	%	33	%
Second largest wholesaler	30	%	28	%	29	%
Third largest wholesaler	26	%	26	%	28	%
	91	%	86	%	90	%

Schedule of useful lives by asset category

Useful lives by asset category are as follows:



Asset Category		Useful Life
Computer equipment and software		1 to 3 years
Office furniture and equipment		5 years
Manufacturing and laboratory equipment		5 to 10 years

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2017

Inventory Disclosure [Abstract]

Schedule of components of inventories

The components of inventories are as follows (in thousands):



	December 31,
	2017		2016
Raw materials	$	16,500	$	11,742
Work-in-process	8,371		11,621
Finished goods	16,540		7,915
Total	$	41,411	$	31,278

FIXED ASSETS (Tables)

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Schedule of fixed assets summarized by major category

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



	December 31,
	2017			2016
Machinery and laboratory equipment	$	39,002		$	34,309
Leasehold improvements	34,933			33,787
Computer equipment and software	7,086			5,623
Office furniture and equipment	1,603			1,606
Construction in progress	73,632			63,201
Total	156,256			138,526
Less: accumulated depreciation	(49,210		)	(37,510		)
Fixed assets, net	$	107,046		$	101,016

GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of change in carrying value of goodwill

The change in the carrying value of goodwill is summarized as follows (in thousands):



	Carrying Value
Balance at December 31, 2015	$	30,880
Percentage payments on collections of net sales of DepoBupivacaine products	7,857
Milestone payment triggered by collections of net sales of DepoBupivacaine products	8,000
Balance at December 31, 2016	46,737
Percentage payments on collections of net sales of DepoBupivacaine products	8,460
Balance at December 31, 2017	$	55,197

ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2017

Payables and Accruals [Abstract]

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):



	December 31,
	2017		2016
Compensation and benefits	$	12,295	$	11,228
Accrued operating expenses	20,646		16,538
Accrued royalties	4,091		3,822
Accrued interest	2,053		1,605
Product returns, rebates and other fees	1,972		3,473
Total	$	41,057	$	36,666

DEBT (Tables)

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Schedule of composition of the Company's debt and financing obligations

The total debt composition of the 2019 Notes is as follows (in thousands):



	December 31,
	2017			2016
3.25% convertible senior notes due 2019	$	338		$	118,531
Deferred financing costs	(2		)	(1,276		)
Discount on debt	(12		)	(8,517		)
Total debt, net of debt discount and deferred financing costs	$	324		$	108,738

The total debt composition of the 2022 Notes is as follows (in thousands):



	December 31,
	2017			2016
2.375% convertible senior notes due 2022	$	345,000		$	—
Deferred financing costs	(7,482		)	—
Discount on debt	(61,345		)	—
Total debt, net of debt discount and deferred financing costs	$	276,173		$	—

Schedule of total interest expense recognized related to the Notes

The following table sets forth the total interest expense recognized in the periods presented (in thousands):



	Year Ended December 31,
	2017			2016			2015
Contractual interest expense	$	7,344		$	3,852		$	3,856
Amortization of debt issuance costs	1,381			612			615
Amortization of debt discount	10,423			4,088			4,102
Capitalized interest and other (Note 5)	(1,101		)	(1,491		)	(848		)
Total	$	18,047		$	7,061		$	7,725

Effective interest rate on convertible senior notes	7.77		%	7.22		%	7.21		%

FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Schedule of carrying amount and fair value of the long-term debt

The carrying amount and fair value of the Company’s convertible senior notes are as follows (in thousands):



Financial Liabilities Carried at Historical Cost	Carrying Value		Fair Value Measurements Using
December 31, 2017	Carrying Value		Level 1		Level 2		Level 3
2.375% convertible senior notes due 2022 ⁽¹⁾	$	276,173	$	—	$	361,526	$	—
3.25% convertible senior notes due 2019 ⁽²⁾	$	324	$	—	$	644	$	—

Schedule of short-term investments

The following summarizes the Company’s investments at December 31, 2017 and 2016 (in thousands):



December 31, 2017 Debt Securities:	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value (Level 2)
Short-term:
Asset-backed securities	$	28,338	$	—	$	(37	)	$	28,301
Commercial paper	48,999		—		(23		)	48,976
Corporate bonds	180,119		—		(175		)	179,944
Subtotal	257,456		—		(235		)	257,221
Long-term:
Asset-backed securities	23,836		—		(79		)	23,757
Corporate bonds	36,430		—		(140		)	36,290
Subtotal	60,266		—		(219		)	60,047
Total	$	317,722	$	—	$	(454	)	$	317,268



December 31, 2016 Debt Securities:	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value (Level 2)
Short-term:
Asset-backed securities	$	9,012	$	—	$	(2	)	$	9,010
Commercial paper	39,530		8		(15		)	39,523
Corporate bonds	88,141		11		(32		)	88,120
Total	$	136,683	$	19	$	(49	)	$	136,653

STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2017

Stockholders' Equity Note [Abstract]

Schedule of accumulated other comprehensive income

The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands):



	Net Unrealized Gains (Losses) From Available For Sale Investments
Balance at December 31, 2015	$	(52	)
Other comprehensive income before reclassifications	22
Amounts reclassified from accumulated other comprehensive income (loss)	—
Balance at December 31, 2016	(30		)
Other comprehensive loss before reclassifications	(424		)
Amounts reclassified from accumulated other comprehensive income (loss)	—
Balance at December 31, 2017	$	(454	)

STOCK PLANS (Tables)

12 Months Ended

Dec. 31, 2017

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

Schedule of information about the plans

The following table contains information about the Company’s plans at December 31, 2017:



Stock Incentive Plans	Awards Reserved for Issuance	Awards Issued	Awards Available for Grant
2007 Plan	2,022,837	2,022,837	—
2011 Plan	9,931,700	7,037,947	2,893,753
2014 Inducement plan	175,000	52,276	122,724
	12,129,537	9,113,060	3,016,477

Employee Stock Purchase Plan	Shares Reserved for Purchase	Shares Purchased	Shares Available for Purchase
2014 ESPP	500,000	160,147	339,853

Schedule of recognized stock-based compensation in consolidated statements of operations



	Year Ended December 31,
	2017		2016		2015
Cost of goods sold	$	5,467	$	6,438	$	6,012
Research and development	3,341		3,297		5,134
Selling, general and administrative	22,793		21,513		22,222
Total	$	31,601	$	31,248	$	33,368

Stock-based compensation from:
Stock options (employee awards)	$	24,056	$	24,505	$	27,262
Stock options (consultant awards)	167		841		2,367
RSUs	6,698		5,117		2,887
ESPP	680		785		852
Total	$	31,601	$	31,248	$	33,368

Schedule of the Company's stock option activity and related information

The following table summarizes the Company’s stock option activity and related information for the period from January 1, 2015 to December 31, 2017:



	Number of Options		Weighted Average Exercise Price (Per Share)		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in Thousands)
Outstanding at December 31, 2014	4,677,856		$	35.78	7.86	$	248,276
Granted	906,706		75.35
Exercised	(618,434	)	16.29			$	39,401
Forfeited	(294,880	)	64.29
Expired	(25,526	)	81.94
Outstanding at December 31, 2015	4,645,722		44.03		7.31	$	162,340
Granted	1,656,598		38.20
Exercised	(518,226	)	11.13			$	21,750
Forfeited	(401,048	)	70.27
Expired	(175,303	)	80.91
Outstanding at December 31, 2016	5,207,743		42.16		7.39	$	37,581
Granted	1,072,625		43.93
Exercised	(539,989	)	12.55			$	15,865
Forfeited	(555,897	)	48.66
Expired	(232,989	)	74.65
Outstanding at December 31, 2017	4,951,493		$	43.51	6.91	$	57,021
Exercisable at December 31, 2017	2,882,384		$	42.20	5.51	$	47,082
Vested and expected to vest at December 31, 2017	4,951,493		$	43.51	6.91	$	57,021

Schedule of weighted average assumptions used to estimate the fair values of each option grant using the Black-Scholes option pricing model

The fair values of stock options granted were estimated using the Black-Scholes model with the following weighted average assumptions:



	Year Ended December 31,
	2017	2016	2015
Expected dividend yield	None	None	None
Risk-free interest rate	1.68% - 2.42%	1.03% - 2.48%	1.40% - 2.28%
Expected volatility	51.4%	53.5%	52.9%
Expected term of options	5.31 years	5.77 years	5.76 years

NET INCOME (LOSS) PER SHARE (Tables)

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted loss per share

The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2017, 2016 and 2015 (in thousands, except per share amounts):



	Year Ended December 31,
	2017			2016			2015
Numerator:
Net income (loss)	$	(42,611	)	$	(37,949	)	$	1,856
Denominator:
Weighted average common shares outstanding—basic	39,806			37,236			36,540
Computation of diluted securities:
Dilutive effect of stock options	—			—			1,638
Dilutive effect of RSUs	—			—			3
Dilutive effect of conversion premium on the 2019 Notes	—			—			3,113
Dilutive effect of warrants	—			—			6
Dilutive effect of ESPP purchase options	—			—			1
Weighted average common shares outstanding—diluted	39,806			37,236			41,301
Net income (loss) per share:
Basic net income (loss) per common share	$	(1.07	)	$	(1.02	)	$	0.05
Diluted net income (loss) per common share	$	(1.07	)	$	(1.02	)	$	0.04

Schedule of potential dilutive effect of the securities excluded from the calculation of diluted loss per share



	Year Ended December 31,
	2017	2016	2015
Weighted average number of stock options	5,171	4,482	1,891
Weighted average number of RSUs	449	290	99
Conversion premium on the 2019 Notes	411	2,022	—
Weighted average number of warrants	—	1	—
Weighted average ESPP purchase options	29	21	8
Total	6,060	6,816	1,998

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Schedule of reconciliation of income taxes at the U.S. Federal statutory rate to the provision for income taxes

A reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes is as follows:



	Year Ended December 31,
	2017		2016		2015
U.S. federal statutory rate	35.00	%	35.00	%	35.00	%
State taxes	2.26	%	2.20	%	0.71	%
Foreign taxes	(1.28	)%	(0.81	)%	12.03	%
Change in valuation allowance	4.58	%	(43.96	)%	10.32	%
Stock-based compensation	(1.21	)%	(0.54	)%	7.26	%
Tax credits	4.96	%	8.77	%	(30.63	)%
Interest expense	2.90	%	5.75	%	(37.57	)%
Effect of rate changes	(130.88	)%	(4.65	)%	—	%
Convertible senior notes refinancing	6.55	%	—	%	—	%
Effect of the adoption of ASU 2016-09	68.89	%	—	%	—	%
Other	7.90	%	(2.04	)%	15.33	%
Effective tax rate	(0.33	)%	(0.28	)%	12.45	%

Schedule of significant components of the Company's deferred tax assets



	December 31,
	2017			2016
Deferred tax assets:
Net operating loss carry-forwards	$	95,067		$	96,163
Federal and state credits	15,048			13,724
Depreciation and amortization	2,593			2,604
Accruals and reserves	2,743			4,672
Deferred revenue	1,841			3,023
Stock based compensation	16,925			21,890
Inventory	552			9,811
Other	139			52
Total deferred tax assets	134,908			151,939
Deferred tax liabilities:
Discount on convertible senior notes	(14,678		)	(3,186		)
	120,230			148,753
Less: valuation allowance	(120,230		)	(148,753		)
Net deferred tax assets	$	—		$	—

COMMERCIAL PARTNERS AND OTHER AGREEMENTS COMMERICAL PARTNERS AND OTHER AGREEMENTS (Tables)

12 Months Ended

Dec. 31, 2017

COMMERCIAL PARTNERS AND OTHER AGREEMENTS

COMMERCIAL PARTNERS AND OTHER AGREEMENTS [Table Text Block]

As of December 31, 2017, a summary of the Company’s costs and reserves related to the DepoCyt(e) discontinuation are as follows (in thousands):



	Severance and Related Costs			Lease Costs			Write-Off of Property, Plant & Equipment and Inventory			Asset Retirement Obligations and Other Discontinuation Costs			Total
Balance at December 31, 2016	$	—		$	—		$	—		$	—		$	—
Charges incurred	303			2,018			2,470			656			5,447
Cash payments made	(303		)	(744		)	—			(420		)	(1,467		)
Disposal of property, plant & equipment and inventory	—			—			(2,470		)	—			(2,470		)
Balance at December 31, 2017	$	—		$	1,274		$	—		$	236		$	1,510

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of annual minimum payments due under the Company's lease obligations

As of December 31, 2017, aggregate annual minimum payments due under the Company’s lease obligations are as follows (in thousands):



Year	Aggregate Minimum Payments
2018	$	7,886
2019	8,089
2020	7,570
2021	5,245
2022	5,366
2023 through 2028	19,577
Total	$	53,733

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Data

The following tables present selected quarterly financial data for the years ended December 31, 2017 and 2016 (in thousands, except per share data):



	Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
Total revenues	$	69,283		$	70,934		$	67,335		$	79,078
Cost of goods sold	24,581			23,811			18,228			21,295
Total operating expenses	83,333			86,714			70,907			70,613
Net income (loss)	(19,866		)	(19,743		)	(7,597		)	4,595
Basic and diluted net income (loss) per common share	$	(0.52	)	$	(0.49	)	$	(0.19	)	$	0.11



	Three Months Ended
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Total revenues	$	65,474		$	69,640		$	68,355		$	72,902
Cost of goods sold	20,278			23,053			43,152			23,621
Total operating expenses	67,728			76,084			89,220			75,363
Net loss	(3,854		)	(7,958		)	(22,164		)	(3,973		)
Basic and diluted net loss per common share	$	(0.10	)	$	(0.21	)	$	(0.59	)	$	(0.11	)

For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Dec. 31, 2017
Revenue Recognition
Beginning period prior to product expiration allowed for the product to be returned	6 months
Period following product expiration upto which the product is allowed to be returned	12 months

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning of Period	$ 3,800	$ 3,900	$ 3,043
Accruals	15,581	12,871	10,746
Payments (Credits)	(16,368)	(12,971)	(9,889)
End of Period	3,013	3,800	3,900
Accrued returns
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning of Period	1,346	1,733	1,559
Accruals	716	694	339
Payments (Credits)	(1,241)	(1,081)	(165)
End of Period	821	1,346	1,733
Reserves for prompt pay discounts
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning of Period	595	625	575
Accruals	5,806	5,448	4,905
Payments (Credits)	(5,744)	(5,478)	(4,855)
End of Period	657	595	625
Accrued wholesaler service fees
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning of Period	735	745	588
Accruals	4,403	4,118	3,482
Payments (Credits)	(4,299)	(4,128)	(3,325)
End of Period	839	735	745
Accrued rebates and chargebacks
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning of Period	1,124	797	321
Accruals	4,656	2,611	2,020
Payments (Credits)	(5,084)	(2,284)	(1,544)
End of Period	$ 696	$ 1,124	$ 797

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - Net revenue - Customer concentration	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Concentration of Major Customers
Percentage of revenue from customers to total revenue	91.00%	86.00%	90.00%
Largest customer
Concentration of Major Customers
Percentage of revenue from customers to total revenue	35.00%	32.00%	33.00%
Second largest customer
Concentration of Major Customers
Percentage of revenue from customers to total revenue	30.00%	28.00%	29.00%
Third largest customer
Concentration of Major Customers
Percentage of revenue from customers to total revenue	26.00%	26.00%	28.00%
Customers outside U.S.
Concentration of Major Customers
Percentage of revenue from customers to total revenue	1.00%	1.00%	2.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4)	12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4)	Dec. 31, 2017 segment
Segment Reporting
Number of reportable segments	1
Computer equipment and software \| Minimum
Fixed Assets
Useful life	1 year
Computer equipment and software \| Maximum
Fixed Assets
Useful life	3 years
Office furniture and equipment
Fixed Assets
Useful life	5 years
Manufacturing and laboratory equipment \| Minimum
Fixed Assets
Useful life	5 years
Manufacturing and laboratory equipment \| Maximum
Fixed Assets
Useful life	10 years

RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements (Details) $ in Millions	Jan. 01, 2017 USD ($)
Accounting Changes and Error Corrections [Abstract]
Cumulative Effect on Retained Earnings, Net of Tax	$ 0.3
Effective Income Tax Rate Reconciliation, Share-based Compensation, Excess Tax	$ 29.3

INVENTORIES (Details) - USD ($) $ in Thousands	12 Months Ended
INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 11,742	$ 16,500
Work-in-process	11,621	8,371
Finished goods	7,915	16,540
Total	31,278	$ 41,411
Inventory Write-down	$ 20,700

FIXED ASSETS (Details) - USD ($) $ in Thousands	12 Months Ended
FIXED ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
FIXED ASSETS
Total	$ 156,256	$ 138,526
Less accumulated depreciation	(49,210)	(37,510)
Fixed assets, net	107,046	101,016
Depreciation expense	13,800	12,800	$ 11,200
Capitalized interest	1,100	1,500	$ 800
Foreign Property, Plant and Equipment, Net	59,800	33,700
Asset Retirement Obligation	1,500	500
Increase (Decrease) in Asset Retirement Obligations	500
Asset Retirement Obligation, Liabilities Incurred	400
Asset Retirement Obligation, Accretion Expense	100
Manufacturing and laboratory equipment
FIXED ASSETS
Total	39,002	34,309
Leasehold improvements
FIXED ASSETS
Total	34,933	33,787
Computer equipment and software
FIXED ASSETS
Total	7,086	5,623
Office furniture and equipment
FIXED ASSETS
Total	1,603	1,606
Construction in progress
FIXED ASSETS
Total	$ 73,632	$ 63,201

GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($)	1 Months Ended	12 Months Ended
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($)	Apr. 30, 2012	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Sep. 30, 2014
Goodwill
Payment obligation arising in connection with the acquisition	$ 10,000,000
Contingent consideration liability recognized at the time of the acquisition	2,000,000
Goodwill recorded in connection with the acquisition	$ 8,000,000
Total Goodwill Recorded for Earn Out Payments		$ 31,200,000
Goodwill [Roll Forward]
Beginning balance		46,737,000	$ 30,880,000
Percentage payments on collections of net sales of DepoBupivacaine products		8,460,000	7,857,000
Milestone payment triggered by collections of net sales of DepoBupivacaine products			8,000,000
Ending balance		55,197,000	$ 46,737,000
Upon first commercial sale in the United States
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition		10,000,000
Upon first commercial sale in a major EU country (United Kingdom, France, Germany, Italy and Spain)
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition		4,000,000
When annual net sales collected reach $100.0 million
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition		8,000,000
Annual net sales threshold		100,000,000
Payment Obligation Arising Due to Net Sales Collected Threshold of $100 Million				$ 8,000,000	$ 8,000,000
Net Sales Collected Threshold Which Triggers a Payment Obligation					$ 100,000,000
When annual net sales collected reach $250.0 million
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition		8,000,000
Annual net sales threshold		250,000,000
Net Sales Collected Threshold Which Triggers a Payment Obligation				$ 250,000,000
When annual net sales collected reach $500.0 million
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition		32,000,000
Annual net sales threshold		$ 500,000,000

GOODWILL AND INTANGIBLE ASSETS Schedule of Intangible Assets (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 0.0	$ 0.1	$ 0.3

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Compensation and benefits	$ 12,295	$ 11,228
Accrued operating expenses	20,646	16,538
Accrued royalties	4,091	3,822
Accrued interest	2,053	1,605
Product returns, rebates and other fees	1,972	3,473
Total	$ 41,057	$ 36,666

DEBT (Details)			1 Months Ended		9 Months Ended	12 Months Ended
DEBT (Details)	Mar. 13, 2017 USD ($) $ / shares	Jan. 23, 2013 USD ($)	May 31, 2017 shares	Mar. 31, 2017 USD ($) shares	Sep. 30, 2017 USD ($) d	Dec. 31, 2017 USD ($) $ / shares	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2017 USD ($)	Mar. 07, 2017 $ / shares	May 02, 2012 shares
Debt:
Settlement Period - Convertible Debt Conversion Request					40 days
Share Price \| $ / shares						$ 45.65
Debt Instrument Conversion Obligation Number of Trading Days Prior to Date on which Entity Provides Notice of Redemption					30 days
Debt Conversion, Converted Instrument, Shares Issued \| shares			10,000	2,500,000
Debt Instrument, Convertible, Conversion Value						$ 300,000
Loss on early extinguishment of debt				$ 3,700,000		3,732,000		$ 52,000
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger					130.00%
Debt Instrument, Convertible, Threshold Trading Days \| d					20
Class of Warrant or Right, Number of Securities Called by Warrants or Rights \| shares											162,885
Convertible Senior Notes Due 2022 [Member]
Debt:
Debt Instrument, Convertible, Conversion Ratio	14.9491
Debt Instrument, Convertible, Conversion Price \| $ / shares	$ 66.89
Debt Instrument, Conversion Obligation Premium on Common Stock	37.50%
Share Price \| $ / shares										$ 48.65
Debt Redemption Price Due to Fundamental Change as Percentage of Principal Amount	100.00%
Convertible Debt	$ 274,100,000
Debt Instrument, Convertible, Assumed Borrowing Rate	7.45%
Debt Instrument, Convertible, Carrying Amount of Equity Component	$ 70,900,000
Debt Related Commitment Fees and Debt Issuance Costs	$ 11,000,000
Debt Issuance Costs, Amortization period	5 years
Debt Instrument, Customary Events of Default, Percentage of Principal and Accrued and Unpaid Interest Due and Payable Upon Default	100.00%
Convertible Senior Notes Due 2022 [Member] \| Debt Conversion Terms Business Day Immediately Preceding October 1, 2021 [Member]
Debt:
Debt Instrument, Conversion Obligation Common Stock Closing Sales Price Minimum, Number of Trading Days	20 days
Debt Instrument, Conversion Obligation Number of Consecutive Trading Days	30 days
Debt Instrument, Conversion Obligation Common Stock Closing Sales Price Minimum as Percentage of Conversion Price	130.00%
Debt Instrument Conversion Obligation Number of Consecutive Business Days after Consecutive Trading Day Period	5 days
Debt Instrument, Conversion Obligation Period of Consecutive Trading Days	5 days
Debt Instrument, Principal Amount Denominator for Conversion into Common Stock	$ 1,000					1,000
Debt Instrument, Conversion Obligation Trading Price as Percentage of Product of Last Reported Common Stock Sale Price and Conversion Rate Maximum	98.00%
Debt Instrument, Market Price						$ 1,048
Convertible Senior Notes Due 2022 [Member] \| Debt Redemption Terms on or after April 1, 2020 [Member]
Debt:
Debt Instrument, Conversion Obligation Common Stock Closing Sales Price Minimum, Number of Trading Days	20 days
Debt Instrument, Conversion Obligation Number of Consecutive Trading Days	30 days
Debt Instrument, Conversion Obligation Common Stock Closing Sales Price Minimum as Percentage of Conversion Price	130.00%
Debt Instrument Conversion Obligation Number of Trading Days Prior to Date on which Entity Provides Notice of Redemption	5 days
Debt Instrument, Percentage of Principal Amount for Computation of Redemption Price	100.00%
Two Thousand Nineteen Senior Convertible Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		3.25%				3.25%
Debt:
Amortization of Debt Issuance Costs						$ 1,381,000	$ 612,000	$ 615,000
Total debt, net of debt discount									$ 300,000
Debt Instrument, Principal Amount Denominator for Conversion into Common Stock					$ 1,000
Debt Instrument, Convertible, Conversion Price \| $ / shares						$ 24.82
Gross Proceeds From Issuance of Debt		$ 120,000,000
Debt Instrument, Repurchased Face Amount				117,700,000					500,000
Debt Instrument, Repurchase Amount				$ 118,200,000					$ 500,000
Repayments of Debt					$ 300,000
Two Thousand Nineteen Senior Convertible Notes [Member] \| Debt Conversion Terms Business Day Immediately Preceding August 12018 [Member]
Debt:
Debt Instrument, Principal Amount Denominator for Conversion into Common Stock						$ 1,000
Debt Instrument, Market Price						1,905
Debt Instrument, Convertible, Conversion Value						1,839
Unsecured Debt [Member] \| Convertible Senior Notes Due 2022 [Member]
Debt Instrument [Line Items]
Proceeds from Issuance of Debt	$ 345,000,000
Debt Instrument, Interest Rate, Stated Percentage	2.375%
Debt:
Long-term Debt, Gross						345,000,000	0
Debt Issuance Costs, Net						(7,482,000)	0
Discount on debt						(61,345,000)	0
Total debt, net of debt discount						276,173,000	0
Proceeds from Convertible Debt, Net	$ 334,000,000
Unsecured Debt [Member] \| Two Thousand Nineteen Senior Convertible Notes [Member]
Debt:
Long-term Debt, Gross						338,000	118,531,000
Debt Issuance Costs, Net						(2,000)	(1,276,000)
Discount on debt						(12,000)	(8,517,000)
Total debt, net of debt discount						$ 324,000	$ 108,738,000

DEBT (Details 2) - USD ($) $ in Thousands	12 Months Ended
DEBT (Details 2) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest Expense, Debt [Abstract]
Amortization of debt discount	$ 10,423	$ 4,088	$ 4,102
Interest Costs Capitalized	1,100	1,500	800
Notes
Interest Expense, Debt [Abstract]
Contractual interest expense	7,344	3,852	3,856
Amortization of debt issuance costs	1,381	612	615
Amortization of debt discount	10,423	4,088	4,102
Interest Costs Capitalized	(1,101)	(1,491)	(848)
Total interest expense recognized	$ 18,047	$ 7,061	$ 7,725
Effective interest rate (as a percent)	7.77%	7.22%	7.21%

FINANCIAL INSTRUMENTS (Details) - USD ($)
$ / shares in Units, $ in Thousands

1 Months Ended

12 Months Ended

Mar. 13, 2017

Oct. 31, 2017

Dec. 31, 2017

Sep. 30, 2017

Mar. 07, 2017

Dec. 31, 2016

Fair Value Measurements

Price per share (in dollars per share)

$ 45.65

Debt Instrument, Convertible, Conversion Premium, Shares

10,000

Estimated conversion value

$ 300

Payments to Acquire Businesses, Net of Cash Acquired

$ 15,000

Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High

$ 10,000

Equity investments

14,146

$ 0

Investments, Contingent Purchase Obligation

$ 900

Convertible Senior Notes Due 2022 [Member]

Fair Value Measurements

Price per share (in dollars per share)

$ 48.65

Initial conversion price of notes into common stock (in dollars per share)

$ 66.89

Notes

Fair Value Measurements

Initial conversion price of notes into common stock (in dollars per share)

$ 24.82

Maximum

Fair Value Measurements

Debt Instrument, Convertible, Conversion Premium, Shares

10,000

Maximum | Convertible Senior Notes Due 2022 [Member]

Fair Value Measurements

Debt Instrument, Convertible, Conversion Premium, Shares

5,200,000

Unsecured Debt [Member] | Convertible Senior Notes Due 2022 [Member] | Level 1

Fair Value Measurements

Long-term debt-current and long-term

^[1]

$ 0

Unsecured Debt [Member] | Convertible Senior Notes Due 2022 [Member] | Level 2

Fair Value Measurements

Long-term debt-current and long-term

^[1]

361,526

Unsecured Debt [Member] | Convertible Senior Notes Due 2022 [Member] | Level 3

Fair Value Measurements

Long-term debt-current and long-term

^[1]

Unsecured Debt [Member] | Notes | Level 1

Fair Value Measurements

Long-term debt-current and long-term

^[2]

Unsecured Debt [Member] | Notes | Level 2

Fair Value Measurements

Long-term debt-current and long-term

^[2]

644

Unsecured Debt [Member] | Notes | Level 3

Fair Value Measurements

Long-term debt-current and long-term

^[2]

Unsecured Debt [Member] | Carrying Value | Convertible Senior Notes Due 2022 [Member]

Fair Value Measurements

Long-term debt-current and long-term

^[1]

276,173

Unsecured Debt [Member] | Carrying Value | Notes

Fair Value Measurements

Long-term debt-current and long-term

^[2]

$ 324

[1]

The closing price of the Company’s common stock was $45.65 per share at December 31, 2017 compared to a conversion price of $66.89 per share. Currently, the conversion price is above the stock price. The maximum conversion premium that can be due on the 2022 Notes is approximately 5.2 million shares of the Company’s common stock, which assumes no increases in the conversion rate for certain corporate events.

[2]

The closing price of the Company’s common stock was $45.65 per share at December 31, 2017 compared to a conversion price of $24.82 per share which, if converted, would result in a conversion premium of less than ten thousand shares of the Company’s common stock or $0.3 million of cash. The maximum conversion premium that can be due on the 2019 Notes is approximately ten thousand shares of the Company’s common stock, which assumes no increases in the conversion rate for certain corporate events.

FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Fair Value Measurements
Cost	$ 317,722	$ 136,683
Gross Unrealized Gains	0	19
Gross Unrealized Losses	(454)	(49)
Level 2
Fair Value Measurements
Fair Value	317,268	136,653
Short-term:
Fair Value Measurements
Cost	257,456
Gross Unrealized Gains	0
Gross Unrealized Losses	(235)
Short-term: \| Level 2
Fair Value Measurements
Fair Value	257,221
Short-term: \| Asset-backed Securities
Fair Value Measurements
Cost	28,338	9,012
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(37)	(2)
Short-term: \| Asset-backed Securities \| Level 2
Fair Value Measurements
Fair Value	28,301	9,010
Short-term: \| Commercial Paper
Fair Value Measurements
Cost	48,999	39,530
Gross Unrealized Gains	0	8
Gross Unrealized Losses	(23)	(15)
Short-term: \| Commercial Paper \| Level 2
Fair Value Measurements
Fair Value	48,976	39,523
Short-term: \| Corporate bonds
Fair Value Measurements
Cost	180,119	88,141
Gross Unrealized Gains	0	11
Gross Unrealized Losses	(175)	(32)
Short-term: \| Corporate bonds \| Level 2
Fair Value Measurements
Fair Value	179,944	$ 88,120
Long-term:
Fair Value Measurements
Cost	60,266
Gross Unrealized Gains	0
Gross Unrealized Losses	(219)
Long-term: \| Level 2
Fair Value Measurements
Fair Value	60,047
Long-term: \| Asset-backed Securities
Fair Value Measurements
Cost	23,836
Gross Unrealized Gains	0
Gross Unrealized Losses	(79)
Long-term: \| Asset-backed Securities \| Level 2
Fair Value Measurements
Fair Value	23,757
Long-term: \| Corporate bonds
Fair Value Measurements
Cost	36,430
Gross Unrealized Gains	0
Gross Unrealized Losses	(140)
Long-term: \| Corporate bonds \| Level 2
Fair Value Measurements
Fair Value	$ 36,290

FINANCIAL INSTRUMENTS (Details 3) - customer	12 Months Ended
FINANCIAL INSTRUMENTS (Details 3) - customer	Dec. 31, 2017	Dec. 31, 2016
Credit Risk
Number of major customers	3	3
Accounts receivable \| Credit risk \| Major customer one
Credit Risk
Concentration risk (as a percent)	35.00%	36.00%
Accounts receivable \| Credit risk \| Major customer two
Credit Risk
Concentration risk (as a percent)	30.00%	29.00%
Accounts receivable \| Credit risk \| Major customer three
Credit Risk
Concentration risk (as a percent)	27.00%	25.00%

STOCKHOLDERS' EQUITY (Details) - shares	Dec. 31, 2017	Dec. 31, 2016
Stockholders' Equity Note [Abstract]
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares outstanding	40,668,877	37,480,952
Preferred stock, shares authorized	5,000,000	5,000,000

STOCKHOLDERS' EQUITY (Details 2) - USD ($) $ in Thousands	12 Months Ended
STOCKHOLDERS' EQUITY (Details 2) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balances at the beginning of the period	$ (30)
Balances at the end of the period	(454)	$ (30)
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balances at the beginning of the period	(30)	(52)
Other comprehensive income before reclassifications	(424)	22
Amounts reclassified from accumulated other comprehensive income (loss)	0	0
Balances at the end of the period	$ (454)	$ (30)

STOCK PLANS (Details) - USD ($)	12 Months Ended
STOCK PLANS (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Apr. 30, 2014
Stock Incentive Plans
Awards Reserved for Issuance (in shares)	12,129,537
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	4,000,000
Employee Stock Purchase Plan (ESPP), Shares in ESPP	500,000
Maximum Fair Market Value Purchase of ESPP Shares	$ 25,000
Employee Stock Purchase Plan fair value	85.00%
Awards Issued (in shares)	9,113,060
Awards Available for Grant (in shares)	3,016,477
Employee Stock Purchase Plan, Number of Shares Authorized	500,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans	160,147
Employee Stock Purchase Plan, Number of Shares Available For Purchase	339,853
Stock options
Stock Incentive Plans
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 41,600,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 7 months 25 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 20.78	$ 19.13	$ 37.82
Restricted Stock Units (RSUs) [Member]
Stock Incentive Plans
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 10 months 7 days
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 19,100,000
Inducement Plan 2014 [Member]
Stock Incentive Plans
Awards Reserved for Issuance (in shares)	175,000			175,000
Awards Issued (in shares)	52,276
Awards Available for Grant (in shares)	122,724
Two Thousand Seven Stock Incentive Plan [Member]
Stock Incentive Plans
Awards Reserved for Issuance (in shares)	2,022,837
Awards Issued (in shares)	2,022,837
Awards Available for Grant (in shares)	0
Stock Incentive Plan 2011 [Member]
Stock Incentive Plans
Awards Reserved for Issuance (in shares)	9,931,700
Awards Issued (in shares)	7,037,947
Awards Available for Grant (in shares)	2,893,753

STOCK PLANS (Details 2) - USD ($) $ in Thousands	12 Months Ended
STOCK PLANS (Details 2) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-Based Compensation
Stock-based compensation expense	$ 31,601	$ 31,248	$ 33,368
Compensation expense from stock options, employees	24,056	24,505	27,262
Compensation expense from stock options, non-employee awards	167	841	2,367
Restricted Stock or Unit Expense	6,698	5,117	2,887
Compensation expense from employee stock purchase plan	680	785	852
Stock-based compensation	31,601	31,248	33,368
Cost of revenues
Share-Based Compensation
Stock-based compensation expense	5,467	6,438	6,012
Research and development
Share-Based Compensation
Stock-based compensation expense	3,341	3,297	5,134
Selling, general and administrative
Share-Based Compensation
Stock-based compensation expense	$ 22,793	$ 21,513	$ 22,222

STOCK PLANS (Details 3) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Share-based Compensation arrangement by Share-based payment award, equity instruments others than options, vested and expected to vest, weighted average grant date fair value	$ 47.32
share-based compensation arrangement by share-based payment award, equity instruments other than options, vested and expected to vest, aggregate intrinsic value	$ 22,804
Stock options
Number of Shares
Balance at the beginning of the period (in shares)	5,207,743	4,645,722	4,677,856
Granted (in shares)	1,072,625	1,656,598	906,706
Exercised (in shares)	(539,989)	(518,226)	(618,434)
Forfeited (in shares)	(555,897)	(401,048)	(294,880)
Expired (in shares)	(232,989)	(175,303)	(25,526)
Balance at the end of the period (in shares)	4,951,493	5,207,743	4,645,722	4,677,856
Exercisable at the end of the period (in shares)	2,882,384
Vested and expected to vest at the end of the period (in shares)	4,951,493
Weighted Average Exercise Price
Balance at the beginning of the period (in dollars per share)	$ 42.16	$ 44.03	$ 35.78
Granted (in dollars per share)	43.93	38.20	75.35
Exercised (in dollars per share)	12.55	11.13	16.29
Forfeited (in dollars per share)	48.66	70.27	64.29
Expired (in dollars per share)	74.65	80.91	81.94
Balance at the end of the period (in dollars per share)	43.51	$ 42.16	$ 44.03	$ 35.78
Exercisable at the end of the period (in dollars per share)	42.20
Vested and expected to vest at the end of the period (in dollars per share)	$ 43.51
Weighted Average remaining contractual term
Balance at the end of the period	6 years 10 months 27 days	7 years 4 months 22 days	7 years 3 months 22 days	7 years 10 months 11 days
Exercisable at the end of the period	5 years 6 months 2 days
Vested and expected to vest at the end of the period	6 years 10 months 27 days
Aggregate intrinsic value
Balance at the beginning of the period (in dollars)	$ 37,581	$ 162,340	$ 248,276
Exercised (in dollars)	15,865	21,750	39,401
Balance at the end of the period (in dollars)	57,021	$ 37,581	$ 162,340	$ 248,276
Exercisable at the end of the period (in dollars)	47,082
Vested and expected to vest at the end of the period (in dollars)	$ 57,021
Weighted average assumptions used to estimate the fair values of each option grant
Risk free interest rate, minimum (as a percent)	1.68%	1.03%	1.40%
Risk free interest rate, maximum (as a percent)	2.42%	2.48%	2.28%
Expected volatility (as a percent)	51.40%	53.50%	52.90%
Expected life of options	5 years 3 months 21 days	5 years 9 months 6 days	5 years 9 months 3 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 20.78	$ 19.13	$ 37.82
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	364,403	216,198	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	343,583	256,631	232,046
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	(101,379)	(61,487)	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	(107,061)	(46,939)	(15,848)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	499,546	364,403	216,198	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 52.85	$ 78.59	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	44.23	40.21	78.65
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	53.76	78.33	0.00
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value	49.98	68.84	79.43
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 47.32	$ 52.85	$ 78.59	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Outstanding	$ 22,804	$ 11,824	$ 16,602	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest	499,546,000
Stock options
Weighted average assumptions used to estimate the fair values of each option grant
Expected volatility (as a percent)	53.80%	63.40%	50.70%
Expected life of options	6 months	6 months	6 months
Stock options \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 10.80	$ 10.57	$ 21.93
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	0.62%	0.37%	0.13%
Stock options \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 13.85	$ 25.28	$ 25.24
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	1.14%	0.49%	0.11%

NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Numerator:
Net income (loss)	$ 4,595	$ (7,597)	$ (19,743)	$ (19,866)	$ (3,973)	$ (22,164)	$ (7,958)	$ (3,854)	$ (42,611)	$ (37,949)	$ 1,856
Weighted average common shares outstanding—basic (in shares)									39,806	37,236	36,540
Dilutive effect of stock options (in shares)									0	0	1,638
Dilutive effect of RSUs (in shares)									0	0	3
Dilutive effect of conversion premium on the 2019 Notes (in shares)									0	0	3,113
Dilutive effect of warrants (in shares)									0	0	6
Dilutive effect of ESPP purchase options (in shares)									0	0	1
Weighted average common shares outstanding—diluted (in shares)									39,806	37,236	41,301
Basic net income (loss) per common share (in dollars per share)									$ (1.07)	$ (1.02)	$ 0.05
Diluted net income (loss) per common share (in dollars per share)									$ (1.07)	$ (1.02)	$ 0.04

NET INCOME (LOSS) PER SHARE (Details 2) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive effect of securities (in shares)	6,060	6,816	1,998
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive effect of securities (in shares)	5,171	4,482	1,891
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive effect of securities (in shares)	449	290	99
Convertible debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive effect of securities (in shares)	411	2,022	0
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive effect of securities (in shares)	0	1	0
ESPP purchase options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive effect of securities (in shares)	29	21	8

INCOME TAXES (Details) - USD ($) $ in Thousands	12 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Mar. 13, 2017
Income Tax Provision [Line Items]
Domestic	$ (39,898)	$ (36,339)	$ 3,760
Foreign	(2,573)	(1,505)	(1,640)
Total income (loss) before income taxes	(42,471)	(37,844)	2,120
Federal	0	11	92
State	140	94	172
Total income tax expense	140	105	264
Income Tax Provision	$ 100	$ 100	$ 300
Reconciliation of income taxes at U.S. Federal statutory rate to the provision for income taxes
U.S. federal statutory rate	35.00%	35.00%	35.00%
State taxes	2.26%	2.20%	0.71%
Foreign taxes	(1.28%)	(0.81%)	12.03%
Change in valuation allowance	4.58%	(43.96%)	10.32%
Stock-based compensation	(1.21%)	(0.54%)	7.26%
Tax credits	4.96%	8.77%	(30.63%)
Interest expense	2.90%	5.75%	(37.57%)
Effect of rate changes	(130.88%)	(4.65%)	0.00%
Convertible senior notes refinancing	6.55%	0.00%	0.00%
Effect of the adoption of ASU 2016-09	68.89%	0.00%	0.00%
Other	7.90%	(2.04%)	15.33%
Effective tax rate	(0.33%)	(0.28%)	12.45%
Deferred tax assets:
Net operating loss carry-forwards	$ 95,067	$ 96,163
Federal and state credits	15,048	13,724
Depreciation and amortization	2,593	2,604
Accruals and reserves	2,743	4,672
Deferred revenue	1,841	3,023
Stock based compensation	16,925	21,890
Inventory	552	9,811
Other	139	52
Total deferred tax assets	134,908	151,939
Discount on convertible senior notes	(14,678)	(3,186)
Net deferred tax assets, before valuation allowance	120,230	148,753
Less: valuation allowance	(120,230)	(148,753)
Net deferred tax assets	0	0
Non-US Net Operating Loss	$ 5,900
Minimum Cumulative Percentage of Change in Ownership as Condition to Offset Taxable Income or Tax	50.00%
Increase in valuation allowance for deferred tax assets	$ (28,500)	16,600	$ 800
Tax Cuts and Jobs Act of 2017, Change in Tax Rate, Income Tax Expense (Benefit)	55,700
Unrecognized Tax Benefits	$ 2,500	$ 0	$ 0
United States Statutory Tax Rate	35.00%	35.00%	35.00%
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions	$ 1,400
Unrecognized Tax Benefits, Increase Resulting from Prior Period Tax Positions		$ 1,100
Convertible Senior Notes Due 2022 [Member]
Deferred tax assets:
Debt Instrument, Convertible, Carrying Amount of Equity Component				$ 70,900
Federal
Deferred tax assets:
Net operating losses	380,500
Net Operating Loss, Subject to Limitation	192,400
Available Net Operating Loss, Subject to Limitation	134,800
Future NOL's Which Will Become Available (2018-2022)	10,300
Future NOL's Which Will Become Available (2015-Onward)	6,000
State
Deferred tax assets:
Net operating losses	232,300
Research Tax Credit Carryforward [Member] \| Federal
Deferred tax assets:
Tax Credit Carryforward, Amount	10,300
Research Tax Credit Carryforward [Member] \| State
Deferred tax assets:
Tax Credit Carryforward, Amount	$ 6,000

OTHER EMPLOYEE BENEFITS (Details) - USD ($) $ in Millions	12 Months Ended
OTHER EMPLOYEE BENEFITS (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Savings Plan
Compensation expense recognized	$ 1.3	$ 1.5	$ 1.7

COMMERCIAL PARTNERS AND OTHER AGREEMENTS (Details) - USD ($)		1 Months Ended				3 Months Ended								12 Months Ended
	Dec. 05, 2012	Aug. 31, 2016	Jun. 30, 2016	Apr. 30, 2014	Dec. 31, 2013	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
COMMERCIAL PARTNERS AND OTHER AGREEMENTS
Revenues						$ 79,078,000	$ 67,335,000	$ 70,934,000	$ 69,283,000	$ 72,902,000	$ 68,355,000	$ 69,640,000	$ 65,474,000	$ 286,630,000	$ 276,371,000	$ 248,997,000
Discontinued Operation, Tax Effect of Gain (Loss) from Disposal of Discontinued Operation														5,400,000
Inventory Write-down															20,700,000
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax														(4,868,000)	0	$ 0
Supplemental Unemployment Benefits, Severance Benefits						0				0				0	0
Discontinued Operations - Residual Lease Costs						1,274,000				0				1,274,000	0
Asset Retirement Obligation, Current						236,000				0				236,000	0
Discontinued Operation, Amounts of Material Contingent Liabilities Remaining						1,510,000				$ 0				1,510,000	$ 0
Severance Costs														303,000
Discontinued Operations - Remaining Lease Costs														2,018,000
Discontinued Operations - Fixed Asset and Inventory Writedown														2,470,000
Costs Incurred, Asset Retirement Obligation Incurred														656,000
Payments for Postemployment Benefits														(303,000)
Discontinued Operations, Payments For Lease Costs														(744,000)
Asset Retirement Obligation, Liabilities Settled														(420,000)
Disposal Group, Including Discontinued Operation, Operating Expense														(1,467,000)
Discontinued Operations Assets removed from Service														(2,470,000)
Total Change in Discontinued Operations Balance														(2,470,000)
Contract Termination Fee						7,100,000								7,100,000
Contract Termination Fee, Current Portion						2,400,000								2,400,000
Aratana
COMMERCIAL PARTNERS AND OTHER AGREEMENTS
Up-front payment received	$ 1,000,000
Milestone payment received		$ 1,000,000	$ 1,000,000		$ 500,000
Aratana \| Maximum \| Achievement of development and commercial milestones
COMMERCIAL PARTNERS AND OTHER AGREEMENTS
Milestone payments Company is entitled to receive based on terms of agreement	$ 40,000,000
Patheon [Member]
COMMERCIAL PARTNERS AND OTHER AGREEMENTS
Contract Termination Fee						$ 2,700,000.0								2,700,000.0
Initial Term of Manufacturing Supply Agreement				10th
Mundipharma Ltd [Member]
COMMERCIAL PARTNERS AND OTHER AGREEMENTS
European Rights Expansion & New Distribution Payment				$ 8,000,000
Term Extension of 2003 Agreements				15
DepoCyte [Member]
COMMERCIAL PARTNERS AND OTHER AGREEMENTS
Percentage of total revenue															2.60%
Revenues															$ 276,400,000
Inventory Write-down								500,000
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax								$ (4,900,000)						$ 5,447,000

RELATED PARTY TRANSACTIONS (Details) - USD ($)	1 Months Ended		12 Months Ended
RELATED PARTY TRANSACTIONS (Details) - USD ($)	Aug. 31, 2012	Apr. 30, 2012	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
MPM
RELATED PARTY TRANSACTIONS
Due to Related Parties			$ 0
MPM \| Consulting agreement
RELATED PARTY TRANSACTIONS
Expenses incurred by the entity			0	$ 100,000	$ 300,000
Member of board of directors
RELATED PARTY TRANSACTIONS
Due to Related Parties			0	100,000
Member of board of directors \| Consulting agreement
RELATED PARTY TRANSACTIONS
Number of shares that can be purchased under option (in shares)	70,000	20,000
Exercise price of shares that can be purchased under option (in dollars per share)	$ 16.67	$ 11.02
Member of board of directors \| Consulting agreement \| Maximum
RELATED PARTY TRANSACTIONS
Expenses incurred by the entity			$ 0	$ 100,000	$ 100,000

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Annual minimum payments due
2018	$ 7,886
2019	8,089
2020	7,570
2021	5,245
2022	5,366
2023 through 2028	19,577
Total	53,733
Rent expense	7,500	$ 6,000	$ 5,700
Deferred rent	6,800	$ 8,600
Leasehold Improvements, Gross	5,600
Purchase Obligation	$ 300

COMMITMENTS AND CONTINGENCIES (Details 2) - USD ($) $ in Millions	Mar. 21, 2007	Dec. 31, 2017
SkyePharma Holding, Inc.
Commitments
Total milestone payments paid		$ 36.0
SkyePharma Holding, Inc. \| Maximum
Commitments
Milestone payments for EXPAREL agreed in connection with acquisition		$ 62.0
PPI-California
Commitments
Initial purchase price for acquisition	$ 19.6

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Total revenues	$ 79,078	$ 67,335	$ 70,934	$ 69,283	$ 72,902	$ 68,355	$ 69,640	$ 65,474	$ 286,630	$ 276,371	$ 248,997
Cost of goods sold	21,295	18,228	23,811	24,581	23,621	43,152	23,053	20,278	87,915	110,104	71,837
Total operating expenses	70,613	70,907	86,714	83,333	75,363	89,220	76,084	67,728	311,567	308,395	239,542
Net income (loss)	$ 4,595	$ (7,597)	$ (19,743)	$ (19,866)	$ (3,973)	$ (22,164)	$ (7,958)	$ (3,854)	$ (42,611)	$ (37,949)	$ 1,856
Basic and diluted net income (loss) per common share (in dollars per share)	$ 0.11	$ (0.19)	$ (0.49)	$ (0.52)	$ (0.11)	$ (0.59)	$ (0.21)	$ (0.10)