Significant Accounting Policies	12 Months Ended
Dec. 31, 2016
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies. Basis of Presentation and Principles of Consolidation The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). All amounts herein are expressed in U.S. dollars (USD) unless otherwise noted. The accompanying Consolidated Financial Statements include operations of Novelion Therapeutics Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. In management’s opinion, the Consolidated Financial Statements reflect all adjustments (including reclassifications of normal recurring adjustments) necessary to present fairly the financial position of Novelion as of December 31, 2016 and 2015 and the result of operations and cash flows for all periods presented. Use of Estimates The preparation of Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of expenses during the reporting periods presented. Significant estimates and assumptions are required when determining the fair value of contingent assets and liabilities, the valuation of the convertible notes, and the valuation of the assets and liabilities acquired in a business combination including inventory and intangible assets. Significant estimates and assumptions are also required in determination of stock-based compensation and income tax. Our estimates often are based on complex judgments, probabilities and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by us, there may also be other estimates or assumptions that are reasonable. Actual results may differ from estimates made by management. Changes in estimates are reflected in reported results in the period in which they become known. Reporting and Functional Currency Novelion’s reporting currency is the USD and the Company's operations utilize the USD or local currency as the functional currency, where applicable. Transactions in other currencies are recorded in the functional currency at the rate of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are re-measured into the functional currency at rate of exchange in effect at the balance sheet date. Exchange gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur. For foreign entities where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resultant translation adjustments are reported, net of their related tax effects, as a component of accumulated other comprehensive items in equity. Discontinued Operations The results of operations, including the gain on disposal for businesses that have been sold or are classified as held for sale, are excluded from continuing operations and reported as discontinued operations for all periods presented. The Company sold its Visudyne business in 2012 and sold its punctal plug drug delivery system technology (PPDS Technology) in 2013. The Company has not had any continued involvement with the Visudyne business or the PPDS Technology following their sale. Amounts billed in connection with the provision of these transition services are included within discontinued operations. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid instruments purchased with an original maturity of three months or less at the date of purchase. As of December 31, 2016 and December 31, 2015, the Company held $108.9 million and $141.8 million in cash and cash equivalents, respectively, consisting of cash and money market funds. Restricted Cash Restricted cash represents amounts deposited with Silicon Valley Bank (SVB) to collateralize the Company’s corporate credit card program and a letter of credit for the Company’s facility lease in Cambridge, Massachusetts. As of December 31, 2016, $0.4 million was held at SVB as security and hence is presented as restricted cash on the Consolidated Balance Sheet. Accounts Receivable The majority of the Company's accounts receivable arise from product sales and primarily represent amounts due from distributors, named patients, and other entities. The Company monitors the financial performance and creditworthiness of large customers to properly assess and respond to changes in their credit profile. The Company provides reserves against account receivables for estimated losses that may result from a customer’s inability to pay. Amounts determined to be uncollectible are charged or written-off against the reserve. To date, the Company's historical reserves and write-offs of accounts receivable have not been significant. Inventories and Cost of Product Sales Inventories are stated at the lower of cost or market price with cost determined on a first-in, first-out basis. Inventories acquired in a business combination are required to be fair valued at initial recognition. See "Business Combinations" section below for details. Inventory is maintained on the Company’s Consolidated Balance Sheets until the inventory is sold, donated as part of the Company’s compassionate use program, or used for clinical development. Inventory that is sold is recognized as cost of product sales in the Consolidated Statements of Operations, inventory that is donated as part of the Company’s compassionate use program is recognized as a selling, general and administrative expense in the Consolidated Statements of Operations, expired inventory is disposed of and the related costs are recognized as cost of product sales in the Consolidated Statements of Operations, and inventory used for clinical development is recognized as research and development expense in the Consolidated Statements of Operations. Inventories are reviewed periodically to identify slow-moving inventory based on sales activity, both projected and historical, as well as product shelf-life. The portion of the slow-moving inventory not expected to be sold within one year is classified as long-term inventory in the Company's accompanying Consolidated Balance Sheets. If the asset becomes impaired or is abandoned, the carrying value is written down to its fair value, and an impairment charge is recorded in the period in which the impairment occurs. In evaluating the recoverability of inventories produced, the Company considers the probability that revenue will be obtained from the future sale of the related inventory. Cost of product sales includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and handling costs, charges for excess and obsolete inventory, amortization of acquired intangibles, as well as royalties payable to The Trustees of the University of Pennsylvania (UPenn) related to the sale of lomitapide and royalties payable to Amgen Inc. (Amgen), Rockefeller University and Bristol-Myers Squibb (BMS) related to the sale of metreleptin. Contingent Consideration The contingent consideration is initially recognized and measured at fair value, and are subsequently revalued at the end of each reporting period. Resulting changes in fair value are reported in continuing operations on the Consolidated Statements of Operations and comprehensive loss. See Note 16 - Contingencies, Commitments and Guarantees and Note 14 - Fair Value of Financial Instruments for more information on the Company’s historic contingent consideration asset balance. Prepaid Manufacturing Costs Cash advances paid by the Company prior to receipt of the inventory are recorded as prepaid manufacturing costs and included in prepaid expenses and other current assets. The cash advances are subject to forfeiture if the Company terminates the scheduled production. The Company expects the carrying value of the prepaid manufacturing costs to be fully realized. As of December 31, 2016, $1.4 million was recorded as prepaid manufacturing costs and hence was reported under prepaid expenses and other current assets on the Consolidated Balance Sheet. As of December 31, 2015, the Company did not record any prepaid manufacturing costs. Property and Equipment Property and equipment are stated at cost and depreciated using the straight-line method based on estimated economic lives of 3 to 5 years for computer software and hardware, and 5 years for office furniture, fixtures, research equipment and other equipment. Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements or the remaining lease term, which include lease extensions when reasonably assured. Repair and maintenance costs are expensed as incurred. Intangible Assets Intangible assets with definite useful lives are amortized to their estimated residual values over their estimated useful lives and reviewed for impairment if certain events occur. Impairment of Long-lived Assets Impairment testing and assessments of remaining useful lives are performed when a triggering event occurs that could indicate a potential impairment. Such test first entails comparison of the carrying value of the long-lived asset to the undiscounted cash flows expected from that asset. If impairment is indicated by this test, the long-lived assets are written down by the amount, if any, by which the discounted cash flows expected from the long-lived asset exceeds its carrying value. Business Combinations The Company evaluates acquisitions of assets and other similar transactions to assess whether or not each such transaction should be accounted for as a business combination by assessing whether or not the Company has acquired inputs and processes that have the ability to create outputs. If the Company determines that an acquisition qualifies as a business, the Company applies the acquisition method of accounting which requires that the purchase price be allocated to the net assets acquired at their respective fair values. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill is not amortized and is not deductible for tax purposes. The Company reports provisional amounts when measurements are incomplete as of the end of the reporting period. We complete our purchase price allocation within a measurement period and which does not extend beyond one year after the acquisition date. Contingent consideration in a business combination is included as part of the acquisition cost and is recognized at fair value as of the acquisition date. Fair value is generally estimated by using a probability-weighted discounted cash flow approach. Any liability resulting from contingent consideration is re-measured to fair value at each reporting date until the contingency is resolved. These changes in fair value are recognized in earnings in other income (expense), net. The present-value models used to estimate the fair values of acquired inventory and intangibles incorporate significant assumptions, including, but not limited to: assumptions regarding the probability of obtaining marketing approval; estimated selling price, estimates of the timing and amount of future cash flows from potential product sales and related expenses; and the appropriate discount rate selected to measure the risks inherent in the future cash flows, the assessment of the asset’s life cycle and the competitive trends impacting the assets, including consideration of any technical, legal, regulatory or economic barrier. Transaction costs associated with business combinations are expensed as incurred. The Company's Consolidated Financial Statements include the results from operations of an acquired business after transaction date. Contingencies The Company records a liability in the Consolidated Financial Statements for litigation related matters when a loss is considered probable and the amount can be reasonably estimated. If the loss is not probable or a range cannot reasonably be estimated, no liability is recorded in the Consolidated Financial Statements. Convertible Notes The accounting guidance for convertible notes requires the Company to separately account for the liability and equity components of the Convertible Notes by allocating the proceeds between the liability component and the embedded conversion option. The carrying amount of the liability component is initially valued at the fair value of a similar liability that does not have an associated convertible feature. The equity component of the Convertible Notes was determined by deducting the fair value of the liability component from the fair value of the Convertible Notes as a whole on the date of acquisition. The excess of the principal amount of the liability component over its carrying amount, or debt discount, is amortized to interest expense using the effective interest method over the life of the Convertible Notes. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. Contingent Warrants The Company accounted for the Contingent Warrants in accordance with the guidance regarding the accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock. The Contingent Warrants met the requirements to be accounted for as derivative instruments as the Contingent Warrants are variable and indexed to an event other than the fair value of the Company’s shares. See Note 11 (e) - Share Capital - Cash, Share and Warrant Distributions and Note 11 (d) - Share Capital - Private Placement for more information. Paid-Up Warrants The Company accounted for the Paid-Up Warrants issued in the Private Placement in accordance with the guidance regarding the accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock. The Paid-Up Warrants met the requirements to be accounted for as equity instruments. The proceeds related to the sale of the Paid-Up Warrants are included in additional paid-in capital in the Consolidated Balance Sheets. See Note 11(d) - Share Capital - Private Placement for more information. Revenue Recognition The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Subtopic No. 605-15, Revenue Recognition—Products. The Company recognizes revenue from product sales when there is persuasive evidence that an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collectability is reasonably assured and the Company has no further performance obligations. Lomitapide In the U.S., JUXTAPID® is only available for distribution through a specialty pharmacy, and is shipped directly to the patient. JUXTAPID is not available in retail pharmacies. Prior authorization and confirmation of coverage level by a patient’s private insurance plan or government payer are currently prerequisites to the shipment of product to the patient in the U.S. Revenue from sales in the U.S. covered by the patient’s private insurance plan or government payer is recognized once the product has been received by the patient. For uninsured amounts billed directly to the patient, revenue is recognized at the time of cash receipt as collectability is not reasonably assured at the time the product is received by the patient. To the extent amounts are billed in advance of delivery to the patient, the Company defers revenue until the product has been received by the patient. The Company also records revenue on sales in countries where lomitapide is available on a named patient basis, and typically paid for by a government authority or institution. In many cases, these sales are facilitated through a third-party distributor that takes title to the product upon acceptance. Because of factors such as the pricing of lomitapide, the limited number of patients, the short period from product sale to delivery to the end-customer and the limited contractual return rights, these distributors typically only hold inventory to supply specific orders for the product. The Company recognizes revenue for sales under these named patient programs upon product acceptance by either the named patient or the third-party distributor. In the event the payer’s creditworthiness has not been established, the Company recognizes revenue on a cash basis if all other revenue recognition criteria have been met. The Company records distribution and other fees paid to its distributors as a reduction of revenue, unless the Company receives an identifiable and separate benefit for the consideration and the Company can reasonably estimate the fair value of the benefit received. If both conditions are met, the Company records the consideration paid to the distributor as an operating expense. At this time, neither condition has been met and therefore, the fees paid to the Company’s distributors are recorded as a reduction of revenue. The Company records revenue net of estimated discounts and rebates, including those provided to Medicare, Medicaid, Tricare and other government programs in the U.S. and other countries. Allowances are recorded as a reduction of revenue at the time revenues from product sales are recognized. Allowances for government rebates and discounts are established based on the actual payer information, which is reasonably estimated at the time of delivery. These allowances are adjusted to reflect known changes in the factors that may impact such allowances in the quarter those changes are known. From time to time, the Company provides financial support to patient assistance programs operated by independent charitable 501(c)(3) organizations which assist patients in the U.S. in accessing treatment for HoFH. These patient assistance programs assist HoFH patients according to eligibility criteria defined independently by the charitable organization. The Company records donations made to these patient assistance programs as selling, general and administrative expense. Any payments received from these patient assistance programs on behalf of a patient who is taking lomitapide for the treatment of HoFH are recorded as a reduction of selling, general and administrative expense rather than as revenue. Beginning in 2015, the Company also offers a branded co-pay assistance program for eligible patients with commercial insurance in the U.S. who are on JUXTAPID therapy. The branded co-pay assistance program assists commercially insured patients who have coverage for JUXTAPID, and is intended to reduce each participating patient’s portion of the financial responsibility for JUXTAPID’s purchase price up to a specified dollar amount of assistance. The Company records revenue net of amounts paid under the branded specific co-pay assistance program for each patient. Metreleptin In the U.S., MYALEPT is only available through an exclusive third-party distributor that takes title to the product upon shipment. MYALEPT is not available in retail pharmacies. The distributor may contractually hold inventory for no more than 21 business days. The Company recognizes revenue for these sales once the product is received by the patient as it is currently unable to reasonably estimate the rebates owed to certain government payers at the time of receipt by the distributor. Prior authorization and confirmation of coverage level by a patient’s private insurance plan or government payer are currently prerequisites to the shipment of product to a patient in the U.S. Revenue from sales in the U.S. covered by the patient’s private insurance plan or government payer is recognized once the product has been received by the patient. The Company records distribution and other fees paid to its distributor as a reduction of revenue, unless the Company receives an identifiable and separate benefit for the consideration and the Company can reasonably estimate the fair value of the benefit received. If both conditions are met, the Company records the consideration paid to the distributor as an operating expense. At this time, neither condition has been met and therefore, these fees paid to the distributor are recorded as a reduction of revenue. The Company records revenue from sales of MYALEPT net of estimated discounts and rebates, including those provided to Medicare and Medicaid in the U.S. Allowances for government rebates and discounts are established based on the actual payer information, which is reasonably estimable at the time of delivery, and the government-mandated discounts applicable to government-funded programs. These allowances are adjusted to reflect known changes in the factors that may impact such allowances in the quarter those changes are known. To date, such adjustments have not been significant. From time to time, the Company provides financial support to patient assistance programs operated by independent charitable 501(c)(3) organizations which assist eligible patients in the U.S. in accessing treatment for GL. These patient assistance programs assists GL patients according to eligibility criteria defined independently by the organization. The Company records donations made to these patient assistance programs as selling, general and administrative expense. Beginning in 2015, the Company also offers a branded co-pay assistance program for eligible patients with commercial insurance in the U.S. who are on MYALEPT therapy. The branded co-pay assistance program assists commercially insured patients who have coverage for MYALEPT, and is intended to reduce each participating patient’s portion of the financial responsibility for MYALEPT’s purchase price up to a specified dollar amount of assistance. The Company records revenue net of amounts paid under the branded specific co-pay assistance program for each patient. Research and Development Expenses Research and development expenses are charged to expense as incurred. Research and development expenses comprise costs incurred in performing research and development activities, including personnel-related costs, stock-based compensation, facilities-related overhead, clinical trial costs, costs to support certain medical affairs activities, manufacturing costs for clinical and pre-clinical materials as well as other contracted services, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made in accordance with the provisions of ASC No. 730 - Research and Development. Income Taxes Income taxes are reported using the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to: (i) differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and (ii) operating loss and tax credit carryforwards using applicable enacted tax rates. An increase or decrease in these tax rates will increase or decrease the carrying value of future net tax assets resulting in an increase or decrease to net income. Income tax credits, such as investment tax credits, are included as part of the provision for income taxes. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. Significant estimates are required in determining the Company’s provision for income taxes and uncertain tax positions. Some of these estimates are based on interpretations of existing tax laws or regulations. Various internal and external factors may have favorable or unfavorable effects on the Company’s future effective tax rate. These factors include, but are not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, changes in estimates of prior years’ items, results of tax audits by tax authorities, future levels of research and development spending, changes in estimates related to repatriation of undistributed earnings of foreign subsidiaries, and changes in overall levels of pre-tax earnings. The realization of the Company’s deferred tax assets is primarily dependent on whether the Company is able to generate sufficient capital gains and taxable income prior to expiration of any loss carry forward balance. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. The assessment of whether or not a valuation allowance is required often requires significant judgment including the long-range forecast of future taxable income and the evaluation of tax planning initiatives. Adjustments to the deferred tax valuation allowances are made to earnings in the period when such assessments are made. The Company records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. There is inherent uncertainty in quantifying income tax positions. The Company has recorded tax benefits for those tax positions where it is more likely than not that a tax benefit will result upon ultimate settlement with a tax authority that has all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will result, no tax benefit has been recognized in the Consolidated Financial Statements. See Note 13 - Income Taxes for additional information. Stock-Based Compensation The Company accounts for its stock-based compensation to employees in accordance with ASC No. 718 - Compensation - Stock Compensation and to non-employees in accordance with ASC No. 505-50 - Equity-Based Payments to Non-Employees. For service-based awards, compensation expense is recognized using the ratable method over the requisite service period, which is typically the vesting period. For awards that vest or begin vesting upon achievement of a performance condition, the Company recognizes compensation expense when achievement of the performance condition is deemed probable using a straight-line model over the implicit service period. Certain of the Company’s awards that contain performance conditions also require the Company to estimate the number of awards that will vest, which the Company estimates when the performance condition is deemed probable of achievement. For awards that vest upon the achievement of a market condition, the Company recognizes compensation expense over the derived service period. For equity awards that have previously been modified, any incremental increase in the fair value over the original award has been recorded as compensation expense on the date of the modification for vested awards or over the remaining service period for unvested awards. See Note 12 - Stock-Based Payments for further information about the Company’s equity incentive plans. The Company has a Directors’ Deferred Share Unit Plan ("DDSU Plan") for the Company’s directors. Given that vested Deferred Share Units ("DSUs") are convertible to cash only, the Company recognizes compensation expense for DSUs based on the market price of the Company’s shares. The Company also records an accrued liability to recognize the expected financial obligation related to the future settlement of these DSUs as they vest. Each reporting period, the expected obligation is revalued for changes in the market value of Novelion’s common shares. The Company issues restricted stock units ("RSUs") to its employees and directors as consideration for their provision of future services. Restricted stock-based compensation expense is measured based on the fair value market price of Novelion’s common shares on the grant date and is recognized over the requisite service period, which coincides with the vesting period. RSUs can only be exchanged and settled for Novelion’s common shares, on a one-to-one basis, upon vesting. Comprehensive Loss Comprehensive loss combines net loss and other comprehensive items. Other comprehensive items represent certain amounts that are reported as components of shareholders’ equity in the accompanying Consolidated Balance Sheets, including currency translation adjustments. Net Loss Per Common Share Basic net loss per common share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed in accordance with the treasury-shares and if-converted methods, which uses the weighted average number of common shares outstanding during the period and also includes the dilutive effect of common shares potentially issuable from outstanding stock-based awards. Recent Accounting Pronouncements- Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards update (ASU) No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. This ASU sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed. In August 2015, the FASB issued ASU No. 2015-14, “ Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e. the original effective date). As such, ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2017. In March and April 2016, the FASB issued ASU No. 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Consideration (Reporting Revenue Gross versus Net)” and ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” respectively, which clarify the guidance on reporting revenue as a principal versus agent, identifying performance obligations and accounting for intellectual property licenses. In addition, in May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which amends certain narrow aspects of Topic 606, and in December 2016, the FASB issued ASU No. 2016-20 “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” which amends certain narrow aspects of Topic 606. The new standard may be adopted using either the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. In the fourth quarter of 2016, the Company engaged an external accounting firm to assist with the new standard adoption and has made significant progress in the assessment. Based on the progress, the Company expects to complete its assessment by the second quarter of 2017. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (ASU 2015-11). ASU 2015-11 states that an entity should measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For public entities, ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in this update should be applied prospectively and early application is permitted. The Company does not expect the adoption of ASU 2015-11 to impact the Company’s consolidated results of operations and financial position. On February 25, 2016, the FASB issued ASU No. 2016-02 - Leases, its new standard on accounting for leases. The new guidance will require organizations that lease assets (referred to as lessees) for terms of more than 12 months, to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases. Consistent with current guidance, the recognition, measurement, and presentation of the expenses and cash flows associated with a particular lease will depend on its classification as a capital or operating lease. However, unlike current GAAP, which only requires capital leases to be reflected on the balance sheet, ASU No. 2016- 02 will require both types of leases to be recognized on the balance sheet. ASU No. 2016-02 also aligns many of the underlying principles of the new lessor model with those in ASC No. 606 - Revenue from Contracts with Customers, and will require lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage the associated exposure. ASU No. 2016-02 will be effective for annual periods beginning after December 15, 2018, and interim periods within those annual reporting periods. Management is currently assessing the impact ASU No. 2016-02 will have on the Company’s Consolidated Financial Statements. On March 30, 2016, the FASB issued ASU No. 2016-09 - Improvements to Employee Stock-Based Payment Accounting, ASU 2016-09 changes how companies account for certain aspects of share-based payments to employees including: (a) requiring all income tax effects of awards to be recognized in the income statement, rather than in additional paid in capital, when the awards vest or are settled, (b) eliminating the requirement that excess tax benefits be realized before companies can recognize them, (c) requiring companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity, (d) increasing the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation, (e) requiring an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows and (f) electing whether to account for forfeitures of share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company has adopted the new guidance on January 1, 2017. Upon adoption the Company will account for forfeitures when they occur, instead of estimating the number of awards that are expected to vest under current GAAP. The Company will retrospectively adopt the provision of this guidance related to forfeitures by utilizing the modified retrospective transition method. The adoption of ASU No. 2016-09 will not materially impact the Company’s Consolidated Financial Statements. On August 26, 2016, the FASB issued ASU No. 2016-15 - Classification of Certain Cash Receipts and Cash Payments, which amends the guidance in ASC No. 230 on the classification of certain items in the statement of cash flows. The primary purpose of ASU No. 2016-15 is to reduce the diversity in practice by making amendments that add or clarify the guidance on eight specific cash flow issues. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. ASU No. 2016-15 must be applied retrospectively to all periods presented, but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable. Management is currently assessing the impact ASU No. 2016-15 will have on the Company’s Consolidated Financial Statements. On October 24, 2016, the FASB issued ASU No. 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory and eliminates the exception for an intra-entity transfer of an asset other than inventory. ASU No. 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. ASU No. 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Upon adoption, prior periods will be retrospectively adjusted. Management does not expect the adoption of ASU No. 2016-16 will materially impact the Company’s Consolidated Financial Statements. On November 17, 2016, the FASB issued ASU No. 2016-18 “Statement of Cash Flows (Topic 230) - Restricted Cash” (ASU 2016-18). ASU 2016-18 states that a statement of cash flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period, and all updates should be applied using a retrospective transition method. The Company is currently evaluating the impact ASU 2016-18 will have on the Company’s Consolidated Statement of Cash Flows. On January 5, 2017, the FASB issued ASU No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides a more robust framework to use in determining when a set of assets and activities is a business. It also provides more consistency in applying the guidance, reduces the costs of application and makes the definition of a business more operable. ASU No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Management is currently assessing the impact ASU No. 2017-01 will have on the Company’s Consolidated Financial Statements.

Significant Accounting Policies.

Basis of Presentation and Principles of Consolidation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). All amounts herein are expressed in U.S. dollars (USD) unless otherwise noted.

The accompanying Consolidated Financial Statements include operations of Novelion Therapeutics Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

In management’s opinion, the Consolidated Financial Statements reflect all adjustments (including reclassifications of normal recurring adjustments) necessary to present fairly the financial position of Novelion as of December 31, 2016 and 2015 and the result of operations and cash flows for all periods presented.

Use of Estimates

The preparation of Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of expenses during the reporting periods presented. Significant estimates and assumptions are required when determining the fair value of contingent assets and liabilities, the valuation of the convertible notes, and the valuation of the assets and liabilities acquired in a business combination including inventory and intangible assets. Significant estimates and assumptions are also required in determination of stock-based compensation and income tax. Our estimates often are based on complex judgments, probabilities and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by us, there may also be other estimates or assumptions that are reasonable. Actual results may differ from estimates made by management. Changes in estimates are reflected in reported results in the period in which they become known.

Reporting and Functional Currency

Novelion’s reporting currency is the USD and the Company's operations utilize the USD or local currency as the functional currency, where applicable.

Transactions in other currencies are recorded in the functional currency at the rate of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are re-measured into the functional currency at rate of exchange in effect at the balance sheet date. Exchange gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur.

For foreign entities where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resultant translation adjustments are reported, net of their related tax effects, as a component of accumulated other comprehensive items in equity.

Discontinued Operations

The results of operations, including the gain on disposal for businesses that have been sold or are classified as held for sale, are excluded from continuing operations and reported as discontinued operations for all periods presented. The Company sold its Visudyne business in 2012 and sold its punctal plug drug delivery system technology (PPDS Technology) in 2013. The Company has not had any continued involvement with the Visudyne business or the PPDS Technology following their sale. Amounts billed in connection with the provision of these transition services are included within discontinued operations.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid instruments purchased with an original maturity of three months or less at the date of purchase. As of December 31, 2016 and December 31, 2015, the Company held $108.9 million and $141.8 million in cash and cash equivalents, respectively, consisting of cash and money market funds.

Restricted Cash

Restricted cash represents amounts deposited with Silicon Valley Bank (SVB) to collateralize the Company’s corporate credit card program and a letter of credit for the Company’s facility lease in Cambridge, Massachusetts. As of December 31, 2016, $0.4 million was held at SVB as security and hence is presented as restricted cash on the Consolidated Balance Sheet.

Accounts Receivable

The majority of the Company's accounts receivable arise from product sales and primarily represent amounts due from distributors, named patients, and other entities. The Company monitors the financial performance and creditworthiness of large customers to properly assess and respond to changes in their credit profile. The Company provides reserves against account receivables for estimated losses that may result from a customer’s inability to pay. Amounts determined to be uncollectible are charged or written-off against the reserve. To date, the Company's historical reserves and write-offs of accounts receivable have not been significant.

Inventories and Cost of Product Sales

Inventories are stated at the lower of cost or market price with cost determined on a first-in, first-out basis. Inventories acquired in a business combination are required to be fair valued at initial recognition. See "Business Combinations" section below for details.

Inventory is maintained on the Company’s Consolidated Balance Sheets until the inventory is sold, donated as part of the Company’s compassionate use program, or used for clinical development. Inventory that is sold is recognized as cost of product sales in the Consolidated Statements of Operations, inventory that is donated as part of the Company’s compassionate use program is recognized as a selling, general and administrative expense in the Consolidated Statements of Operations, expired inventory is disposed of and the related costs are recognized as cost of product sales in the Consolidated Statements of Operations, and inventory used for clinical development is recognized as research and development expense in the Consolidated Statements of Operations.

Inventories are reviewed periodically to identify slow-moving inventory based on sales activity, both projected and historical, as well as product shelf-life. The portion of the slow-moving inventory not expected to be sold within one year is classified as long-term inventory in the Company's accompanying Consolidated Balance Sheets.

If the asset becomes impaired or is abandoned, the carrying value is written down to its fair value, and an impairment charge is recorded in the period in which the impairment occurs. In evaluating the recoverability of inventories produced, the Company considers the probability that revenue will be obtained from the future sale of the related inventory.

Cost of product sales includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and handling costs, charges for excess and obsolete inventory, amortization of acquired intangibles, as well as royalties payable to The Trustees of the University of Pennsylvania (UPenn) related to the sale of lomitapide and royalties payable to Amgen Inc. (Amgen), Rockefeller University and Bristol-Myers Squibb (BMS) related to the sale of metreleptin.

Contingent Consideration

The contingent consideration is initially recognized and measured at fair value, and are subsequently revalued at the end of each reporting period. Resulting changes in fair value are reported in continuing operations on the Consolidated Statements of Operations and comprehensive loss. See Note 16 - Contingencies, Commitments and Guarantees and Note 14 - Fair Value of Financial Instruments for more information on the Company’s historic contingent consideration asset balance.

Prepaid Manufacturing Costs

Cash advances paid by the Company prior to receipt of the inventory are recorded as prepaid manufacturing costs and included in prepaid expenses and other current assets. The cash advances are subject to forfeiture if the Company terminates the scheduled production. The Company expects the carrying value of the prepaid manufacturing costs to be fully realized. As of December 31, 2016, $1.4 million was recorded as prepaid manufacturing costs and hence was reported under prepaid expenses and other current assets on the Consolidated Balance Sheet. As of December 31, 2015, the Company did not record any prepaid manufacturing costs.

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method based on estimated economic lives of 3 to 5 years for computer software and hardware, and 5 years for office furniture, fixtures, research equipment and other equipment. Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements or the remaining lease term, which include lease extensions when reasonably assured. Repair and maintenance costs are expensed as incurred.

Intangible Assets

Intangible assets with definite useful lives are amortized to their estimated residual values over their estimated useful lives and reviewed for impairment if certain events occur.

Impairment of Long-lived Assets

Impairment testing and assessments of remaining useful lives are performed when a triggering event occurs that could indicate a potential impairment. Such test first entails comparison of the carrying value of the long-lived asset to the undiscounted cash flows expected from that asset. If impairment is indicated by this test, the long-lived assets are written down by the amount, if any, by which the discounted cash flows expected from the long-lived asset exceeds its carrying value.

Business Combinations

The Company evaluates acquisitions of assets and other similar transactions to assess whether or not each such transaction should be accounted for as a business combination by assessing whether or not the Company has acquired inputs and processes that have the ability to create outputs. If the Company determines that an acquisition qualifies as a business, the Company applies the acquisition method of accounting which requires that the purchase price be allocated to the net assets acquired at their respective fair values. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill is not amortized and is not deductible for tax purposes. The Company reports provisional amounts when measurements are incomplete as of the end of the reporting period. We complete our purchase price allocation within a measurement period and which does not extend beyond one year after the acquisition date.

Contingent consideration in a business combination is included as part of the acquisition cost and is recognized at fair value as of the acquisition date. Fair value is generally estimated by using a probability-weighted discounted cash flow approach. Any liability resulting from contingent consideration is re-measured to fair value at each reporting date until the contingency is resolved. These changes in fair value are recognized in earnings in other income (expense), net.

The present-value models used to estimate the fair values of acquired inventory and intangibles incorporate significant assumptions, including, but not limited to: assumptions regarding the probability of obtaining marketing approval; estimated selling price, estimates of the timing and amount of future cash flows from potential product sales and related expenses; and the appropriate discount rate selected to measure the risks inherent in the future cash flows, the assessment of the asset’s life cycle and the competitive trends impacting the assets, including consideration of any technical, legal, regulatory or economic barrier.

Transaction costs associated with business combinations are expensed as incurred. The Company's Consolidated Financial Statements include the results from operations of an acquired business after transaction date.

Contingencies

The Company records a liability in the Consolidated Financial Statements for litigation related matters when a loss is considered probable and the amount can be reasonably estimated. If the loss is not probable or a range cannot reasonably be estimated, no liability is recorded in the Consolidated Financial Statements.

Convertible Notes

The accounting guidance for convertible notes requires the Company to separately account for the liability and equity components of the Convertible Notes by allocating the proceeds between the liability component and the embedded conversion option. The carrying amount of the liability component is initially valued at the fair value of a similar liability that does not have an associated convertible feature. The equity component of the Convertible Notes was determined by deducting the fair value of the liability component from the fair value of the Convertible Notes as a whole on the date of acquisition. The excess of the principal amount of the liability component over its carrying amount, or debt discount, is amortized to interest expense using the effective interest method over the life of the Convertible Notes. The equity component is not re-measured as long as it continues to meet the conditions for equity classification.

Contingent Warrants

The Company accounted for the Contingent Warrants in accordance with the guidance regarding the accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock. The Contingent Warrants met the requirements to be accounted for as derivative instruments as the Contingent Warrants are variable and indexed to an event other than the fair value of the Company’s shares. See Note 11 (e) - Share Capital - Cash, Share and Warrant Distributions and Note 11 (d) - Share Capital - Private Placement for more information.

Paid-Up Warrants

The Company accounted for the Paid-Up Warrants issued in the Private Placement in accordance with the guidance regarding the accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock. The Paid-Up Warrants met the requirements to be accounted for as equity instruments. The proceeds related to the sale of the Paid-Up Warrants are included in additional paid-in capital in the Consolidated Balance Sheets. See Note 11(d) - Share Capital - Private Placement for more information.

Revenue Recognition

The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Subtopic No. 605-15, Revenue Recognition—Products. The Company recognizes revenue from product sales when there is persuasive evidence that an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collectability is reasonably assured and the Company has no further performance obligations.

Lomitapide

In the U.S., JUXTAPID® is only available for distribution through a specialty pharmacy, and is shipped directly to the patient. JUXTAPID is not available in retail pharmacies. Prior authorization and confirmation of coverage level by a patient’s private insurance plan or government payer are currently prerequisites to the shipment of product to the patient in the U.S. Revenue from sales in the U.S. covered by the patient’s private insurance plan or government payer is recognized once the product has been received by the patient. For uninsured amounts billed directly to the patient, revenue is recognized at the time of cash receipt as collectability is not reasonably assured at the time the product is received by the patient. To the extent amounts are billed in advance of delivery to the patient, the Company defers revenue until the product has been received by the patient.

The Company also records revenue on sales in countries where lomitapide is available on a named patient basis, and typically paid for by a government authority or institution. In many cases, these sales are facilitated through a third-party distributor that takes title to the product upon acceptance. Because of factors such as the pricing of lomitapide, the limited number of patients, the short period from product sale to delivery to the end-customer and the limited contractual return rights, these distributors typically only hold inventory to supply specific orders for the product. The Company recognizes revenue for sales under these named patient programs upon product acceptance by either the named patient or the third-party distributor. In the event the payer’s creditworthiness has not been established, the Company recognizes revenue on a cash basis if all other revenue recognition criteria have been met.

The Company records distribution and other fees paid to its distributors as a reduction of revenue, unless the Company receives an identifiable and separate benefit for the consideration and the Company can reasonably estimate the fair value of the benefit received. If both conditions are met, the Company records the consideration paid to the distributor as an operating expense. At this time, neither condition has been met and therefore, the fees paid to the Company’s distributors are recorded as a reduction of revenue. The Company records revenue net of estimated discounts and rebates, including those provided to Medicare, Medicaid, Tricare and other government programs in the U.S. and other countries. Allowances are recorded as a reduction of revenue at the time revenues from product sales are recognized. Allowances for government rebates and discounts are established based on the actual payer information, which is reasonably estimated at the time of delivery. These allowances are adjusted to reflect known changes in the factors that may impact such allowances in the quarter those changes are known.

From time to time, the Company provides financial support to patient assistance programs operated by independent charitable 501(c)(3) organizations which assist patients in the U.S. in accessing treatment for HoFH. These patient assistance programs assist HoFH patients according to eligibility criteria defined independently by the charitable organization. The Company records donations made to these patient assistance programs as selling, general and administrative expense. Any payments received from these patient assistance programs on behalf of a patient who is taking lomitapide for the treatment of HoFH are recorded as a reduction of selling, general and administrative expense rather than as revenue.

Beginning in 2015, the Company also offers a branded co-pay assistance program for eligible patients with commercial insurance in the U.S. who are on JUXTAPID therapy. The branded co-pay assistance program assists commercially insured patients who have coverage for JUXTAPID, and is intended to reduce each participating patient’s portion of the financial responsibility for JUXTAPID’s purchase price up to a specified dollar amount of assistance. The Company records revenue net of amounts paid under the branded specific co-pay assistance program for each patient.

Metreleptin

In the U.S., MYALEPT is only available through an exclusive third-party distributor that takes title to the product upon shipment. MYALEPT is not available in retail pharmacies. The distributor may contractually hold inventory for no more than 21 business days. The Company recognizes revenue for these sales once the product is received by the patient as it is currently unable to reasonably estimate the rebates owed to certain government payers at the time of receipt by the distributor. Prior authorization and confirmation of coverage level by a patient’s private insurance plan or government payer are currently prerequisites to the shipment of product to a patient in the U.S. Revenue from sales in the U.S. covered by the patient’s private insurance plan or government payer is recognized once the product has been received by the patient.

The Company records distribution and other fees paid to its distributor as a reduction of revenue, unless the Company receives an identifiable and separate benefit for the consideration and the Company can reasonably estimate the fair value of the benefit received. If both conditions are met, the Company records the consideration paid to the distributor as an operating expense. At this time, neither condition has been met and therefore, these fees paid to the distributor are recorded as a reduction of revenue. The Company records revenue from sales of MYALEPT net of estimated discounts and rebates, including those provided to Medicare and Medicaid in the U.S. Allowances for government rebates and discounts are established based on the actual payer information, which is reasonably estimable at the time of delivery, and the government-mandated discounts applicable to government-funded programs. These allowances are adjusted to reflect known changes in the factors that may impact such allowances in the quarter those changes are known. To date, such adjustments have not been significant.

From time to time, the Company provides financial support to patient assistance programs operated by independent charitable 501(c)(3) organizations which assist eligible patients in the U.S. in accessing treatment for GL. These patient assistance programs assists GL patients according to eligibility criteria defined independently by the organization. The Company records donations made to these patient assistance programs as selling, general and administrative expense.

Beginning in 2015, the Company also offers a branded co-pay assistance program for eligible patients with commercial insurance in the U.S. who are on MYALEPT therapy. The branded co-pay assistance program assists commercially insured patients who have coverage for MYALEPT, and is intended to reduce each participating patient’s portion of the financial responsibility for MYALEPT’s purchase price up to a specified dollar amount of assistance. The Company records revenue net of amounts paid under the branded specific co-pay assistance program for each patient.

Research and Development Expenses

Research and development expenses are charged to expense as incurred. Research and development expenses comprise costs incurred in performing research and development activities, including personnel-related costs, stock-based compensation, facilities-related overhead, clinical trial costs, costs to support certain medical affairs activities, manufacturing costs for clinical and pre-clinical materials as well as other contracted services, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made in accordance with the provisions of ASC No. 730 - Research and Development.

Income Taxes

Income taxes are reported using the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to: (i) differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and (ii) operating loss and tax credit carryforwards using applicable enacted tax rates. An increase or decrease in these tax rates will increase or decrease the carrying value of future net tax assets resulting in an increase or decrease to net income. Income tax credits, such as investment tax credits, are included as part of the provision for income taxes. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. Significant estimates are required in determining the Company’s provision for income taxes and uncertain tax positions. Some of these estimates are based on interpretations of existing tax laws or regulations. Various internal and external factors may have favorable or unfavorable effects on the Company’s future effective tax rate. These factors include, but are not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, changes in estimates of prior years’ items, results of tax audits by tax authorities, future levels of research and development spending, changes in estimates related to repatriation of undistributed earnings of foreign subsidiaries, and changes in overall levels of pre-tax earnings. The realization of the Company’s deferred tax assets is primarily dependent on whether the Company is able to generate sufficient capital gains and taxable income prior to expiration of any loss carry forward balance. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. The assessment of whether or not a valuation allowance is required often requires significant judgment including the long-range forecast of future taxable income and the evaluation of tax planning initiatives. Adjustments to the deferred tax valuation allowances are made to earnings in the period when such assessments are made.

The Company records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. There is inherent uncertainty in quantifying income tax positions. The Company has recorded tax benefits for those tax positions where it is more likely than not that a tax benefit will result upon ultimate settlement with a tax authority that has all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will result, no tax benefit has been recognized in the Consolidated Financial Statements. See Note 13 - Income Taxes for additional information.

Stock-Based Compensation

The Company accounts for its stock-based compensation to employees in accordance with ASC No. 718 - Compensation - Stock Compensation and to non-employees in accordance with ASC No. 505-50 - Equity-Based Payments to Non-Employees. For service-based awards, compensation expense is recognized using the ratable method over the requisite service period, which is typically the vesting period. For awards that vest or begin vesting upon achievement of a performance condition, the Company recognizes compensation expense when achievement of the performance condition is deemed probable using a straight-line model over the implicit service period. Certain of the Company’s awards that contain performance conditions also require the Company to estimate the number of awards that will vest, which the Company estimates when the performance condition is deemed probable of achievement. For awards that vest upon the achievement of a market condition, the Company recognizes compensation expense over the derived service period. For equity awards that have previously been modified, any incremental increase in the fair value over the original award has been recorded as compensation expense on the date of the modification for vested awards or over the remaining service period for unvested awards. See Note 12 - Stock-Based Payments for further information about the Company’s equity incentive plans.

The Company has a Directors’ Deferred Share Unit Plan ("DDSU Plan") for the Company’s directors. Given that vested Deferred Share Units ("DSUs") are convertible to cash only, the Company recognizes compensation expense for DSUs based on the market price of the Company’s shares. The Company also records an accrued liability to recognize the expected financial obligation related to the future settlement of these DSUs as they vest. Each reporting period, the expected obligation is revalued for changes in the market value of Novelion’s common shares.

The Company issues restricted stock units ("RSUs") to its employees and directors as consideration for their provision of future services. Restricted stock-based compensation expense is measured based on the fair value market price of Novelion’s common shares on the grant date and is recognized over the requisite service period, which coincides with the vesting period. RSUs can only be exchanged and settled for Novelion’s common shares, on a one-to-one basis, upon vesting.

Comprehensive Loss

Comprehensive loss combines net loss and other comprehensive items. Other comprehensive items represent certain amounts that are reported as components of shareholders’ equity in the accompanying Consolidated Balance Sheets, including currency translation adjustments.

Net Loss Per Common Share

Basic net loss per common share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed in accordance with the treasury-shares and if-converted methods, which uses the weighted average number of common shares outstanding during the period and also includes the dilutive effect of common shares potentially issuable from outstanding stock-based awards.

Recent Accounting Pronouncements- Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards update (ASU) No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. This ASU sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed. In August 2015, the FASB issued ASU No. 2015-14, “ Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e. the original effective date). As such, ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2017. In March and April 2016, the FASB issued ASU No. 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Consideration (Reporting Revenue Gross versus Net)” and ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” respectively, which clarify the guidance on reporting revenue as a principal versus agent, identifying performance obligations and accounting for intellectual property licenses. In addition, in May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which amends certain narrow aspects of Topic 606, and in December 2016, the FASB issued ASU No. 2016-20 “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” which amends certain narrow aspects of Topic 606. The new standard may be adopted using either the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. In the fourth quarter of 2016, the Company engaged an external accounting firm to assist with the new standard adoption and has made significant progress in the assessment. Based on the progress, the Company expects to complete its assessment by the second quarter of 2017.

In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (ASU 2015-11). ASU 2015-11 states that an entity should measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For public entities, ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in this update should be applied prospectively and early application is permitted. The Company does not expect the adoption of ASU 2015-11 to impact the Company’s consolidated results of operations and financial position.

On February 25, 2016, the FASB issued ASU No. 2016-02 - Leases, its new standard on accounting for leases. The new guidance will require organizations that lease assets (referred to as lessees) for terms of more than 12 months, to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases. Consistent with current guidance, the recognition, measurement, and presentation of the expenses and cash flows associated with a particular lease will depend on its classification as a capital or operating lease. However, unlike current GAAP, which only requires capital leases to be reflected on the balance sheet, ASU No. 2016- 02 will require both types of leases to be recognized on the balance sheet. ASU No. 2016-02 also aligns many of the underlying principles of the new lessor model with those in ASC No. 606 - Revenue from Contracts with Customers, and will require lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage the associated exposure. ASU No. 2016-02 will be effective for annual periods beginning after December 15, 2018, and interim periods within those annual reporting periods. Management is currently assessing the impact ASU No. 2016-02 will have on the Company’s Consolidated Financial Statements.

On March 30, 2016, the FASB issued ASU No. 2016-09 - Improvements to Employee Stock-Based Payment Accounting, ASU 2016-09 changes how companies account for certain aspects of share-based payments to employees including: (a) requiring all income tax effects of awards to be recognized in the income statement, rather than in additional paid in capital, when the awards vest or are settled, (b) eliminating the requirement that excess tax benefits be realized before companies can recognize them, (c) requiring companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity, (d) increasing the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation, (e) requiring an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows and (f) electing whether to account for forfeitures of share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company has adopted the new guidance on January 1, 2017. Upon adoption the Company will account for forfeitures when they occur, instead of estimating the number of awards that are expected to vest under current GAAP. The Company will retrospectively adopt the provision of this guidance related to forfeitures by utilizing the modified retrospective transition method. The adoption of ASU No. 2016-09 will not materially impact the Company’s Consolidated Financial Statements.

On August 26, 2016, the FASB issued ASU No. 2016-15 - Classification of Certain Cash Receipts and Cash Payments, which amends the guidance in ASC No. 230 on the classification of certain items in the statement of cash flows. The primary purpose of ASU No. 2016-15 is to reduce the diversity in practice by making amendments that add or clarify the guidance on eight specific cash flow issues. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. ASU No. 2016-15 must be applied retrospectively to all periods presented, but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable. Management is currently assessing the impact ASU No. 2016-15 will have on the Company’s Consolidated Financial Statements.

On October 24, 2016, the FASB issued ASU No. 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory and eliminates the exception for an intra-entity transfer of an asset other than inventory. ASU No. 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. ASU No. 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Upon adoption, prior periods will be retrospectively adjusted. Management does not expect the adoption of ASU No. 2016-16 will materially impact the Company’s Consolidated Financial Statements.

On November 17, 2016, the FASB issued ASU No. 2016-18 “Statement of Cash Flows (Topic 230) - Restricted Cash” (ASU 2016-18). ASU 2016-18 states that a statement of cash flows should explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period, and all updates should be applied using a retrospective transition method. The Company is currently evaluating the impact ASU 2016-18 will have on the Company’s Consolidated Statement of Cash Flows.

On January 5, 2017, the FASB issued ASU No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides a more robust framework to use in determining when a set of assets and activities is a business. It also provides more consistency in applying the guidance, reduces the costs of application and makes the definition of a business more operable. ASU No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Management is currently assessing the impact ASU No. 2017-01 will have on the Company’s Consolidated Financial Statements.