Nature of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Summary of Company's Customers Accounts Receivable

The following table lists the Company’s customers that individually comprise greater than 10% of total accounts receivable:


	December 31,
Customers	2019		2018
Customer A	42	%	47	%
Customer B	35	%	22	%
Customer C	18	%	25	%
Total	95	%	94	%

Summary of Inventories

Inventory is composed of the following at December 31:


	2019		2018
Raw Materials & Supplies	$	624	$	645
Work-in-process	6,198		2,093
Finished Goods	4,874		2,855
Finished Goods Reserve	(384)		(187)
Total Inventories	$	11,312	$	5,406

Intangible Assets with Finite Useful Lives, Amortized Over Estimated Useful Lives

Intangible assets with finite useful lives are amortized over the estimated useful lives as follows:


			Estimated Useful Lives
Licenses			15 years
BELBUCA license and distribution rights			10 years
Symproic license and distribution rights			12 years
U.S. product rights			8-12 years
EU product rights			7-11 years

Black Scholes Options-Pricing Model, Assumptions

In applying the Black-Scholes options-pricing model, assumptions are as follows:


	2019	2018	2017
Expected price volatility	61.66%-64.10%	60.34%-68.77%	68.76%-78.79%
Risk-free interest rate	1.36%-2.66%	2.05%-3.00%	1.77%-2.05%
Weighted average expected life in years	6 years	6 years	6 years
Dividend yield	—	—	—

Fair Value, Assets Measured on Recurring and Nonrecurring Basis

The following table summarizes the cash and cash equivalents measured at fair value on a recurring basis as of December 31, 2019:


	Level 1		Level 2	Level 3	Balance
Cash and cash equivalents	$	63,888	—	—	$63,888

Accounting Pronouncements adopted in 2019

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The authoritative guidance significantly amends the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842 (Leases), which amends narrow aspects of the guidance issued in the amendments in ASU 2016-02, and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows entities to recognize a cumulative-effect adjustment from the application of ASU 2016-02 to the opening balance of retained earnings in the period of adoption. Effective January 1, 2019, the Company adopted Topic 842 using the modified retrospective method as of January 1, 2019 and will not restate comparative periods. The Company elected the optional package of practical expedients, which allowed the Company to not reassess: (i) whether any expired or existing contracts are considered or contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. The new standard also allows entities to make certain policy elections, including a policy to not separate lease and non-lease components, which the Company did not elect for its facility and office equipment lease. Refer to footnote three “Leases” for further information.

Accounting Pronouncements not yet adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments; in November 2018 the FASB issued a subsequent amendment ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses; in April 2019 the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. In May 2019 the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief; and in November 2019 the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The new guidance changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. In November 2019 the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326). This guidance is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company is currently evaluating the timing and effect the new guidance will have on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value

measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating but does not expect the new guidance to have a material impact on its consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which amends ASC 808 to clarify ASC 606 should apply in entirety to certain transactions between collaborative arrangement participants. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating but does not expect the new guidance to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes, which is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. The Company is currently evaluating but does not expect the new guidance to have a material impact on its consolidated financial statements.