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Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Dec. 31, 2019	Feb. 19, 2020	Jun. 28, 2019
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Annual Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Trading Symbol	HZNP
Entity Registrant Name	HORIZON THERAPEUTICS PUBLIC LIMITED COMPANY
Entity Central Index Key	0001492426
Entity Tax Identification Number	00-0000000
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity File Number	001-35238
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Incorporation, State or Country Code	L2
Entity Address, Address Line One	Connaught House, 1st Floor
Entity Address, Address Line Two	1 Burlington Road
Entity Address, City or Town	Dublin 4
Entity Address, Postal Zip Code	D04 C5Y6
Entity Address, Country	IE
City Area Code	011
Local Phone Number	353 1 772 2100
Title of 12(b) Security	Ordinary shares, nominal value $0.0001 per share
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		189,941,651
Entity Public Float			$ 4.5
Documents Incorporated by Reference	Portions of the registrant’s definitive Proxy Statement for the registrant’s 2020 Annual General Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 1,076,287	$ 958,712
Restricted cash	3,752	3,405
Accounts receivable, net	408,685	464,730
Inventories, net	53,802	50,751
Prepaid expenses and other current assets	143,577	68,218
Total current assets	1,686,103	1,545,816
Property and equipment, net	30,159	20,101
Intangible assets, net	1,702,628	1,950,269
Goodwill	413,669	413,669
Deferred tax assets, net	555,165	3,148
Other assets	48,310	8,959
Total assets	4,436,034	3,941,962
CURRENT LIABILITIES:
Accounts payable	21,514	30,284
Accrued expenses	235,234	215,739
Accrued trade discounts and rebates	466,421	457,763
Deferred revenues, current portion		4,901
Total current liabilities	723,169	708,687
LONG-TERM LIABILITIES:
Exchangeable notes, net	351,533	332,199
Long-term debt, net of current	1,001,308	1,564,485
Deferred tax liabilities, net	94,247	107,768
Other long-term liabilities	80,328	38,717
Total long-term liabilities	1,527,416	2,043,169
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 and 300,000,000 shares authorized at December 31, 2019 and December 31, 2018, respectively; 188,402,040 and 169,244,520 shares issued at December 31, 2019 and December 31, 2018, respectively, and 188,017,674 and 168,860,154 shares outstanding at December 31, 2019 and December 31, 2018, respectively	19	17
Treasury stock, 384,366 ordinary shares at December 31, 2019 and December 31, 2018	(4,585)	(4,585)
Additional paid-in capital	2,797,602	2,374,966
Accumulated other comprehensive loss	(1,905)	(1,523)
Accumulated deficit	(605,682)	(1,178,769)
Total shareholders’ equity	2,185,449	1,190,106
Total liabilities and shareholders' equity	4,436,034	3,941,962
Developed Technology [Member]
CURRENT ASSETS:
Intangible assets, net	1,698,808	1,945,639
Customer Relationships [Member]
CURRENT ASSETS:
Intangible assets, net	$ 3,820	$ 4,630

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Ordinary shares, nominal value	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	600,000,000	300,000,000
Ordinary shares, shares issued	188,402,040	169,244,520
Ordinary shares, shares outstanding	188,017,674	168,860,154
Treasury stock, ordinary shares	384,366	384,366

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Net sales	$ 1,300,029	$ 1,207,570	$ 1,056,231
Cost of goods sold	362,175	391,301	493,368
Gross profit	937,854	816,269	562,863
OPERATING EXPENSES:
Research and development	103,169	82,762	224,962
Selling, general and administrative	697,111	692,485	655,093
Loss (gain) on sale of assets	10,963	(42,985)
Impairment of long-lived assets		46,096	22,270
Total operating expenses	811,243	778,358	902,325
Operating income (loss)	126,611	37,911	(339,462)
OTHER EXPENSE, NET:
Interest expense, net	(87,089)	(121,692)	(126,523)
Loss on debt extinguishment	(58,835)		(978)
Gain on divestiture			7,965
Foreign exchange gain (loss)	33	(192)	(260)
Other (expense) income, net	(944)	841	447
Total other expense, net	(146,835)	(121,043)	(119,349)
Loss before benefit for income taxes	(20,224)	(83,132)	(458,811)
Benefit for income taxes	(593,244)	(44,752)	(108,686)
Net income (loss)	$ 573,020	$ (38,380)	$ (350,125)
Net income (loss) per ordinary share—basic	$ 3.13	$ (0.23)	$ (2.15)
Weighted average ordinary shares outstanding—basic	182,930,109	166,155,405	163,122,663
Net income (loss) per ordinary share—diluted	$ 2.90	$ (0.23)	$ (2.15)
Weighted average ordinary shares outstanding—diluted	205,224,221	166,155,405	163,122,663
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX
Foreign currency translation adjustments	$ (382)	$ (826)	$ 2,067
Pension remeasurements		286	36
Other comprehensive (loss) income	(382)	(540)	2,103
Comprehensive income (loss)	$ 572,638	$ (38,920)	$ (348,022)

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Ordinary Shares [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]
Beginning balance at Dec. 31, 2016	$ 1,313,732	$ 16	$ (4,585)	$ 2,119,455	$ (3,086)	$ (798,068)
Beginning balance, shares at Dec. 31, 2016		162,004,956	384,366
Cumulative effect adjustments - New accounting pronouncements and adoption	7,210					7,210
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises	2,167			2,167
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises, shares		1,117,876
Ordinary shares withheld for payment of employees’ withholding tax liability	(6,533)			(6,533)
Issuance of ordinary shares in conjunction with ESPP program	7,082			7,082
Issuance of ordinary shares in conjunction with ESPP programs, shares		822,231
Issuance of ordinary shares in conjunction with PSU vesting, shares		25,000
Share-based compensation	125,019			125,019
Issuance of ordinary shares in conjunction with warrant exercises	1,789			1,789
Issuance of ordinary shares in conjunction with warrant exercises, shares		915,020
Shares repurchased	(992)					(992)
Shares repurchased, shares		(100,000)
Currency translation adjustment	2,067				2,067
Pension remeasurements	36				36
Net (loss) income	(350,125)					(350,125)
Ending balance at Dec. 31, 2017	1,101,452	$ 16	$ (4,585)	2,248,979	(983)	(1,141,975)
Ending balance, shares at Dec. 31, 2017		164,785,083	384,366
Cumulative effect adjustments - New accounting pronouncements and adoption	1,586					1,586
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises	16,973	$ 1		16,972
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises, shares		3,541,933
Ordinary shares withheld for payment of employees’ withholding tax liability	(14,455)			(14,455)
Issuance of ordinary shares in conjunction with ESPP program	8,610			8,610
Issuance of ordinary shares in conjunction with ESPP programs, shares		917,504
Share-based compensation	114,860			114,860
Currency translation adjustment	(826)				(826)
Pension remeasurements	286				286
Net (loss) income	(38,380)					(38,380)
Ending balance at Dec. 31, 2018	1,190,106	$ 17	$ (4,585)	2,374,966	(1,523)	(1,178,769)
Ending balance, shares at Dec. 31, 2018		169,244,520	384,366
Cumulative effect adjustments - New accounting pronouncements and adoption	67					67
Issuance of ordinary shares - public offering	326,794	$ 2		326,792
Issuance of ordinary shares - public offering, shares		14,081,632
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises	24,881			24,881
Issuance of ordinary shares in conjunction with vesting of restricted stock units and stock option exercises, shares		4,227,998
Ordinary shares withheld for payment of employees’ withholding tax liability	(31,569)			(31,569)
Issuance of ordinary shares in conjunction with ESPP program	11,317			11,317
Issuance of ordinary shares in conjunction with ESPP programs, shares		847,890
Share-based compensation	91,215			91,215
Currency translation adjustment	(382)				(382)
Net (loss) income	573,020					573,020
Ending balance at Dec. 31, 2019	$ 2,185,449	$ 19	$ (4,585)	$ 2,797,602	$ (1,905)	$ (605,682)
Ending balance, shares at Dec. 31, 2019		188,402,040	384,366

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 573,020	$ (38,380)	$ (350,125)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense	237,157	249,759	256,087
Equity-settled share-based compensation	91,215	114,860	125,019
Loss on debt extinguishment	58,835		978
Amortization of debt discount and deferred financing costs	22,602	22,751	21,619
Loss (gain) on sale of assets	10,963	(42,985)
Deferred income taxes	(565,537)	(64,491)	(132,231)
Impairment of long-lived assets		46,096	22,270
Gain on divestiture			(1,236)
Acquired in-process research and development expense			159,171
Foreign exchange and other adjustments	574	332	(1,466)
Changes in operating assets and liabilities:
Accounts receivable	56,166	(59,697)	(84,444)
Inventories	(3,268)	10,280	108,371
Prepaid expenses and other current assets	(72,763)	(25,313)	5,110
Accounts payable	(8,723)	(4,593)	(16,521)
Accrued trade discounts and rebates	8,591	(44,028)	205,487
Accrued expenses	19,788	40,787	(43,937)
Deferred revenues	(4,901)	(395)	4,468
Other non-current assets and liabilities	2,613	(10,440)	5,720
Net cash provided by operating activities	426,332	194,543	284,340
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets	6,000	44,424
Purchases of property and equipment	(17,857)	(4,771)	(4,336)
Change in escrow deposit for property purchase	(6,000)
Payment related to license agreement		(12,000)
Payments for acquisitions, net of cash acquired			(167,220)
Proceeds from divestiture, net of cash divested			69,371
Net cash (used in) provided by investing activities	(17,857)	27,653	(102,185)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of senior notes	590,057
Net proceeds from the issuance of ordinary shares	326,793
Repayment of senior notes	(814,420)
Net proceeds from term loans	935,404	818,026	1,693,512
Repayment of term loans	(1,336,207)	(845,749)	(1,622,749)
Contingent consideration proceeds from divestiture	3,297
Payment of contingent consideration			(20,000)
Repurchase of ordinary shares			(992)
Proceeds from the issuance of ordinary shares in connection with warrant exercises			1,789
Proceeds from the issuance of ordinary shares in conjunction with ESPP program	11,317	8,610	7,082
Proceeds from the issuance of ordinary shares in connection with stock option exercises	24,882	16,972	2,167
Payment of employee withholding taxes relating to share-based awards	(31,569)	(14,455)	(6,533)
Net cash (used in) provided by financing activities	(290,446)	(16,596)	54,276
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	(107)	(1,380)	5,316
Net increase in cash, cash equivalents and restricted cash	117,922	204,220	241,747
Cash, cash equivalents and restricted cash, beginning of the year	962,117	757,897	516,150
Cash, cash equivalents and restricted cash, end of the year	1,080,039	962,117	757,897
Supplemental cash flow information:
Cash paid for interest	78,044	112,468	113,790
Cash paid for income taxes	9,925	53,058	2,548
Cash paid for amounts included in the measurement of lease liabilities, net of lease incentive payments	6,484
Supplemental non-cash flow information:
Purchases of property and equipment included in accounts payable and accrued expenses	117	$ 1,101
Lease liabilities arising from obtaining right-of-use assets	$ 11,444
Purchases of acquired in-process research and development included in accounts payable and accrued expenses			$ 12,000

Basis of Presentation and Business Overview

12 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation and Business Overview

NOTE 1 – BASIS OF PRESENTATION AND BUSINESS OVERVIEW

Unless otherwise indicated or the context otherwise requires, references to “Horizon”, the “Company”, “we”, “us” and “our” refer to Horizon Therapeutics plc (formerly known as Horizon Pharma plc) and its consolidated subsidiaries.

On May 2, 2019, the shareholders of the Company approved changing the name of the Company from “Horizon Pharma Public Limited Company” to “Horizon Therapeutics Public Limited Company” to better reflect the Company’s long-term strategy to develop and commercialize innovative new medicines to address rare diseases with very few effective options.

Business Overview

Horizon is focused on researching, developing and commercializing medicines that address critical needs for people impacted by rare and rheumatic diseases. The Company’s pipeline is purposeful: it applies scientific expertise and courage to bring clinically meaningful therapies to patients. Horizon believes science and compassion must work together to transform lives. The Company has two reportable segments, the orphan and rheumatology segment and the inflammation segment (previously named the primary care segment), and currently markets eleven medicines in the areas of orphan diseases, rheumatology and inflammation.

On January 21, 2020, the U.S. Food and Drug Administration (“FDA”) approved TEPEZZA™ (teprotumumab-trbw) for the treatment of thyroid eye disease.

As of December 31, 2019, the Company’s marketed medicines consisted of the following:

Orphan and Rheumatology

KRYSTEXXA^® (pegloticase injection), for intravenous infusion

RAVICTI^® (glycerol phenylbutyrate) oral liquid

PROCYSBI^® (cysteamine bitartrate) delayed-release capsules, for oral use

ACTIMMUNE^® (interferon gamma-1b) injection, for subcutaneous use

RAYOS^® (prednisone) delayed-release tablets

BUPHENYL^® (sodium phenylbutyrate) tablets and powder

QUINSAIR™ (levofloxacin) solution for inhalation

Inflammation

PENNSAID® (diclofenac sodium topical solution) 2% w/w (“PENNSAID 2%”), for topical use

DUEXIS^® (ibuprofen/famotidine) tablets, for oral use

VIMOVO^® (naproxen/esomeprazole magnesium) delayed-release tablets, for oral use

Change in Accounting Method

When accounting for business combinations under ASC Topic 805, Business Combinations, the Company previously separately identified and recorded at fair value intangible assets acquired and their related third-party contingent royalties at the date of acquisition. Third-party contingent royalties are royalties payable to parties other than sellers of the businesses. Effective January 1, 2019, the Company retrospectively changed its accounting for business combinations and now records acquired intangible assets and their related third-party contingent royalties on a net basis (“New Method”). The Company changed its accounting principle on the basis that the use of the New Method is preferable primarily due to improved comparability with the Company’s peers. The Company has adjusted the accompanying consolidated balance sheet as at December 31, 2018, consolidated statement of comprehensive income (loss) for the years ended December 31, 2018 and 2017 and the consolidated statements of cash flows for the years ended December 31, 2018 and 2017 to reflect this change in accounting. Total shareholders’ equity at December 31, 2018 was adjusted by $135.9 million to reflect the cumulative impact of the change to the earliest year presented. The impact on the consolidated statement of cash flows consisted of adjustments to reconcile net income (loss) to net cash provided by operating activities and changes in operating assets and liabilities for all periods presented. There was no impact on total operating, investing or financing cash flows for any prior period. The following are selected line items from the Company’s consolidated financial statements illustrating the effect of the change in accounting method (in thousands, except per share data):

	Consolidated Balance Sheet as of
	December 31, 2018
	As Previously Reported			Impact of Accounting Change (1)			As Adjusted
Prepaid expenses and other current assets	$	70,828		$	(2,610	)	$	68,218
Total current assets		1,548,426			(2,610	)		1,545,816
Developed technology, net		2,120,596			(174,957	)		1,945,639
Goodwill		426,441			(12,772	)		413,669
Other assets		23,029			(14,070	)		8,959
Total assets		4,146,371			(204,409	)		3,941,962
Accrued expenses		205,593			10,146			215,739
Accrued royalties - current portion		63,363			(63,363	)		—
Total current liabilities		761,904			(53,217	)		708,687
Accrued royalties - net of current		285,374			(285,374	)		—
Deferred tax liabilities, net		93,630			14,138			107,768
Other long-term liabilities		54,622			(15,905	)		38,717
Total long-term liabilities		2,330,310			(287,141	)		2,043,169
Accumulated deficit		(1,314,718	)		135,949			(1,178,769	)
Total shareholders' equity		1,054,157			135,949			1,190,106
Total liabilities and shareholders' equity		4,146,371			(204,409	)		3,941,962

(1)

The change in accounting principle resulted in the Company re-performing its purchase price allocations as of the respective acquisition dates for prior business combinations. The adjustments to the purchase price allocations primarily resulted in a decrease in developed technology intangible assets and the elimination of liabilities for accrued contingent royalties due to recording these items on a net basis. The re-performance of purchase price allocations also impacted goodwill and deferred tax liabilities. In addition, the change in accounting principle resulted in the elimination of royalty reimbursement assets and accrued contingent royalty liabilities that were recorded in connection with divestitures, impacting prepaid expenses and other current assets, other assets, accrued expenses and other long-term liabilities captions as shown in the table above. In addition, under the New Method of accounting, the Company is presenting accrued royalties based on each periods’ net sales as part of the accrued expenses line item on its consolidated balance sheets.

	Consolidated Statement of Comprehensive Loss
	For the Year Ended December 31, 2018
	As Previously Reported			Impact of Accounting Change (1)			As Adjusted
Cost of goods sold	$	422,317		$	(31,016	)	$	391,301
Gross profit		785,253			31,016			816,269
Impairment of long-lived assets		50,302			(4,206	)		46,096
Gain on sale of assets		(42,688	)		(297	)		(42,985	)
Total operating expenses		782,861			(4,503	)		778,358
Operating income		2,392			35,519			37,911
Other income, net		346			495			841
Total other expenses, net		(121,538	)		495			(121,043	)
Loss before benefit for income taxes		(119,146	)		36,014			(83,132	)
Benefit for income taxes		(44,959	)		207			(44,752	)
Net loss		(74,187	)		35,807			(38,380	)
Net loss per ordinary share - basic and diluted		(0.45	)		0.22			(0.23	)
Comprehensive loss		(74,727	)		35,807			(38,920	)

	Consolidated Statement of Comprehensive Loss
	For the Year Ended December 31, 2017
	As Previously Reported			Impact of Accounting Change (1)			As Adjusted
Cost of goods sold	$	537,334		$	(43,966	)	$	493,368
Gross profit		518,897			43,966			562,863
Operating loss		(383,428	)		43,966			(339,462	)
Gain on divestiture		6,267			1,698			7,965
Other income, net		588			(141	)		447
Total other expenses, net		(120,906	)		1,557			(119,349	)
Loss before benefit for income taxes		(504,334	)		45,523			(458,811	)
Benefit for income taxes		(102,749	)		(5,937	)		(108,686	)
Net loss		(401,585	)		51,460			(350,125	)
Net loss per ordinary share - basic and diluted		(2.46	)		0.31			(2.15	)
Comprehensive loss		(399,482	)		51,460			(348,022	)

(1)

The change in accounting principle resulted in the Company re-performing its purchase price allocations as of the respective acquisition dates for prior business combinations. The adjustments to the purchase price allocations primarily resulted in a net decrease in cost of goods sold reflecting lower intangible asset amortization and the elimination of royalty accretion and remeasurement expenses, partially offset by the royalty expense based on the periods’ net sales. The re-performance of purchase price allocations also directly impacted impairments of long-lived assets and benefit/expense for income taxes, as shown in the tables above. In addition, the elimination of royalty reimbursement assets and accrued contingent royalty liabilities that were recorded in connection with divestitures resulted in adjustments to other income, net.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The consolidated financial statements include the Company’s accounts and those of its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Segment Information

The Company’s reportable segments, which are the orphan and rheumatology segment and the inflammation segment, are reported in a manner consistent with the internal reporting provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM has been identified as its chief executive officer. The Company has no transactions between reportable segments.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation and Transactions

The reporting currency of the Company and its subsidiaries is the U.S. dollar.

The U.S. dollar is the functional currency for the Company’s Ireland and United States-based businesses and the majority of its subsidiaries. The Company has foreign subsidiaries that have the Euro and the Canadian Dollar as their functional currency. Foreign currency-denominated assets and liabilities of these subsidiaries are translated into U.S. dollars based on exchange rates prevailing at the end of the period, revenues and expenses are translated at average exchange rates prevailing during the corresponding period, and shareholders’ equity accounts are translated at historical exchange rates as of the date of any equity transaction. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of those entities where the functional currency is not the U.S. dollar are included as a component of accumulated other comprehensive (loss) income.

Gains and losses resulting from foreign currency transactions are reflected within the Company’s results of operations.

Revenue Recognition

On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, and subsequent amendments (ASC 606 or new guidance), using the modified retrospective method. The Company applied the new guidance to all contracts with customers within the scope of the standard that were in effect on January 1, 2018 and recognized the cumulative effect of initially applying the new guidance as an adjustment to the opening balance of retained earnings. Comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. In the United States, the Company sells its medicines primarily to wholesale distributors and specialty pharmacy providers. In other countries, the Company sells its medicines primarily to wholesale distributors and other third-party distribution partners. These customers subsequently resell the Company’s medicines to health care providers and patients. In addition, the Company enters into arrangements with health care providers and payers that provide for government-mandated or privately negotiated discounts and allowances related to the Company’s medicines. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company's contracts have a single performance obligation to transfer medicines. Accordingly, revenues from medicine sales are recognized when the customer obtains control of the Company’s medicines, which occurs at a point in time, typically upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring medicines and is generally based upon a list or fixed price less allowances for medicine returns, rebates and discounts. The Company sells its medicines to wholesale pharmaceutical distributors and pharmacies under agreements with payment terms typically less than 90 days. The Company’s process for estimating reserves established for these variable consideration components does not differ materially from the Company’s historical practices.

Medicine Sales Discounts and Allowances

The nature of the Company’s contracts gives rise to variable consideration because of allowances for medicine returns, rebates and discounts. Allowances for medicine returns, rebates and discounts are recorded at the time of sale to wholesale pharmaceutical distributors and pharmacies. The Company applies significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company will be required to make adjustments to these allowances in the future. The Company’s adjustments to gross sales are discussed further below.

Commercial Rebates

The Company participates in certain commercial rebate programs. Under these rebate programs, the Company pays a rebate to the commercial entity or third-party administrator of the program. The Company calculates accrued commercial rebate estimates using the expected value method. The Company accrues estimated rebates based on contract prices, estimated percentages of medicine that will be prescribed to qualified patients and estimated levels of inventory in the distribution channel and records the rebate as a reduction of revenue. Accrued commercial rebates are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Distribution Service Fees

The Company includes distribution service fees paid to its wholesalers for distribution and inventory management services as a reduction to revenue. The Company calculates accrued distribution service fee estimates using the most likely amount method. The Company accrues estimated distribution fees based on contractually determined amounts, typically as a percentage of revenue. Accrued distribution service fees are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Co-pay and Other Patient Assistance Programs

The Company offers discount card and other programs such as its HorizonCares program to patients under which the patient receives a discount on his or her prescription. In certain circumstances when a patient’s prescription is rejected by a managed care vendor, the Company will pay for the full cost of the prescription. The Company reimburses pharmacies for this discount through third-party vendors. The Company reduces gross sales by the amount of actual co-pay and other patient assistance in the period based on invoices received. The Company also records an accrual to reduce gross sales for estimated co-pay and other patient assistance on units sold to distributors that have not yet been prescribed/dispensed to a patient. The Company calculates accrued co-pay and other patient assistance costs using the expected value method. The estimate is based on contract prices, estimated percentages of medicine that will be prescribed to qualified patients, average assistance paid based on reporting from the third-party vendors and estimated levels of inventory in the distribution channel. Accrued co-pay and other patient assistance costs are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Sales Returns

Consistent with industry practice, the Company maintains a return policy that allows customers to return certain medicines within a specified period prior to and subsequent to the medicine expiration date. Generally, medicines may be returned for a period beginning six months prior to its expiration date and up to one year after its expiration date. The right of return expires on the earlier of one year after the medicine expiration date or the time that the medicine is dispensed to the patient. The majority of medicine returns result from medicine dating, which falls within the range set by the Company’s policy, and are settled through the issuance of a credit to the customer. The Company calculates sales returns using the expected value method. The estimate of the provision for returns is based upon the Company’s historical experience with actual returns. The return period is known to the Company based on the shelf life of medicines at the time of shipment. The Company records sales returns in “accrued expenses” and as a reduction of revenue.

Prompt Pay Discounts

As an incentive for prompt payment, the Company offers a 2% cash discount to most customers. The Company calculates accrued prompt pay discounts using the most likely amount method. The Company expects that all eligible customers will comply with the contractual terms to earn the discount. The Company records the discount as an allowance against “accounts receivable, net” and a reduction of revenue.

Government Rebates

The Company participates in certain government rebate programs such as Medicare Coverage Gap and Medicaid. The Company calculates accrued government rebate estimates using the expected value method. The Company accrues estimated rebates based on percentages of medicine prescribed to qualified patients, estimated rebate percentages and estimated levels of inventory in the distribution channel that will be prescribed to qualified patients and records the rebates as a reduction of revenue. Accrued government rebates are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Chargebacks

The Company provides discounts to government qualified entities with whom the Company has contracted. These entities purchase medicines from the wholesale pharmaceutical distributors at a discounted price and the wholesale pharmaceutical distributors then charge back to the Company the difference between the current retail price and the contracted price that the entities paid for the medicines. The Company calculates accrued chargeback estimates using the expected value method. The Company accrues estimated chargebacks based on contract prices, sell-through sales data obtained from third-party information and estimated levels of inventory in the distribution channel and records the chargeback as a reduction of revenue. Accrued chargebacks are included in “accrued trade discounts and rebates” on the consolidated balance sheet.

Bad Debt Expense

The Company’s medicines are sold to wholesale pharmaceutical distributors and pharmacies. The Company monitors its accounts receivable balances to determine the impact, if any, of such factors as changes in customer concentration, credit risk and the realizability of its accounts receivable, and records a bad debt reserve when applicable.

Inventories

Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out convention. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs. The Company reviews its inventory balance and purchase obligations to assess if it has obsolete or excess inventory and records a charge to “cost of goods sold” when applicable.

Inventories acquired in business combinations are recorded at their estimated fair values. “Step-up” represents the write-up of inventory from the lower of cost or net realizable value (the historical book value as previously recorded on the acquired company’s balance sheet) to fair market value at the acquisition date. Inventory step-up expense is recorded in the consolidated statement of comprehensive income (loss) based on actual sales, or usage, using the first-in, first-out convention.

Inventories exclude medicine sample inventory, which is included in other current assets and is expensed as a component of “selling, general and administrative” expense when shipped to sales representatives.

Pre-launch Inventories

The Company capitalizes inventory costs associated with its medicine candidates prior to regulatory approval when, based on management judgment, future commercialization is considered probable and future economic benefit is expected to be realized. A number of factors are taken into consideration by management, including the current status of the regulatory approval process and any potential impediments to the approval process such as safety or efficacy. If future commercialization and future economic benefit is no longer considered probable, the capitalized pre-launch inventory would be expensed.

Cost of Goods Sold

The Company recognizes cost of goods sold in connection with its sales of each of its distributed medicines. Cost of goods sold includes all costs directly related to the acquisition of the Company’s medicines from its third-party manufacturers, including freight charges and other direct expenses such as insurance and supply chain costs. Cost of goods sold also includes amortization of intellectual property as described in the intangible assets accounting policy below, inventory step-up expense, drug substance harmonization costs, share-based compensation, charges relating to discontinuation of clinical trials, royalty payments to third parties and loss on inventory purchase commitments.

Pre-clinical Studies and Clinical Trial Accruals

The Company’s pre-clinical studies and clinical trials have historically been conducted by third-party contract research organizations and other vendors. Pre-clinical study and clinical trial expenses are based on the services received from these contract research organizations and vendors. Payments depend on factors such as the milestones accomplished, successful enrollment of certain numbers of patients and site initiation. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual accordingly.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share (“EPS”) reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue ordinary shares were exercised, converted into ordinary shares, or resulted in the issuance of ordinary shares that would have shared in the Company’s earnings.

Cash and Cash Equivalents

The Company considers all highly liquid investments, readily convertible to cash, that mature within three months or less from date of purchase to be cash equivalents. Cash and cash equivalents primarily consist of cash balances and money market funds. The Company generally invests excess cash in money market funds and other financial instruments with short-term durations, based upon operating requirements.

Restricted Cash

Restricted cash consists primarily of balances in interest-bearing money market accounts required by a vendor for the Company’s sponsored employee business credit card program and collateral for a letter of credit.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their short maturities.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and investments. The Company’s investment policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper, money market instruments, certain qualifying money market mutual funds, certain repurchase agreements, and tax-exempt obligations of municipalities and places restrictions on credit ratings, maturities, and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding the Company’s cash, cash equivalents and investments to the extent recorded on the balance sheet.

The purchase cost of TEPEZZA drug substance and ACTIMMUNE inventory are principally denominated in Euros and are subject to foreign currency risk. The Company has contracts relating to RAVICTI, QUINSAIR and PROCYSBI for sales in Canada which are subject to foreign currency risk. The Company also incurs certain operating expenses in currencies other than the U.S. dollar in relation to its Irish operations and foreign subsidiaries. Therefore, the Company is subject to volatility in cash flows due to fluctuations in foreign currency exchange rates, particularly changes in the Euro and the Canadian dollar.

Historically, the Company’s accounts receivable balances have been highly concentrated with a select number of customers consisting primarily of large wholesale pharmaceutical distributors who, in turn, sell the medicines to pharmacies, hospitals and other customers. As of December 31, 2019 and 2018, the Company’s top four customers accounted for approximately 84% and 85%, respectively, of the Company’s total outstanding accounts receivable balances.

The Company depends on single-source suppliers and manufacturers for certain of its medicines, medicine candidates and their active pharmaceutical ingredients.

Business Combinations

The Company accounts for business combinations in accordance with the guidance in Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”) under which acquired assets and liabilities are measured at their respective estimated fair values as of the acquisition date. The Company may be required, as in the case of intangible assets, to determine the fair value associated with these amounts by estimating the fair value using an income approach under the discounted cash flow method, which may include revenue projections and other assumptions made by the Company to determine the fair value.

Provision for Income Taxes

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Significant judgment is required in determining whether it is probable that sufficient future taxable income will be available against which a deferred tax asset can be utilized. In determining future taxable income, the Company is required to make assumptions including the amount of taxable income in the various jurisdictions in which the Company operates. These assumptions require significant judgment about forecasts of future taxable income. Actual operating results in future years could render our current assumption of recoverability of deferred tax assets inaccurate. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the period that the change is enacted. From time to time, the Company executes intra-company transactions in response to changes in operations, regulations, tax laws, funding needs and other circumstances. These transactions require the interpretation and application of tax laws in the applicable jurisdiction to support the tax treatment taken. The valuations which support the tax treatment of the transactions require significant estimates and assumptions within discounted cash flow models. The Company also accounts for the uncertainty in income taxes by utilizing a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or are expected to be taken on an income tax return. Deferred tax assets and deferred tax liabilities are netted by each tax-paying entity within each jurisdiction on the Company’s consolidated balance sheets.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes and an accelerated method for income tax reporting purposes. Upon retirement or sale of an asset, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operations. Repair and maintenance costs are charged to expenses as incurred and improvements are capitalized.

Leasehold improvements are amortized on a straight-line basis over the term of the applicable lease, or the useful life of the assets, whichever is shorter.

Depreciation and amortization periods for the Company’s property and equipment are as follows:

Machinery and equipment		5 to 7 years
Furniture and fixtures		3 to 5 years
Computer equipment		3 years
Software		3 years
Trade show equipment		3 years

The Company capitalizes software development costs associated with internal use software, including external direct costs of materials and services and payroll costs for employees devoting time to a software project. Costs incurred during the preliminary project stage, as well as costs for maintenance and training, are expensed as incurred.

Software includes internal-use software acquired and modified to meet the Company’s internal requirements. Amortization commences when the software is ready for its intended use.

Intangible Assets

Definite-lived intangible assets are amortized over their estimated useful lives. The Company reviews its intangible assets when events or circumstances may indicate that the carrying value of these assets is not recoverable and exceeds their fair value. The Company measures fair value based on the estimated future discounted cash flows associated with these assets in addition to other assumptions and projections that the Company deems to be reasonable and supportable. The estimated useful lives, from the date of acquisition, for all identified intangible assets that are subject to amortization are between five and thirteen years.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. Impairment loss, if any, is recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability. The Company tests goodwill for impairment annually during the fourth quarter and whenever indicators of impairment exist by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is performed. If the Company concludes that goodwill is impaired, it will record an impairment charge in its consolidated statement of comprehensive income (loss).

Research and Development Expenses

Research and development expenses include, but are not limited to, payroll and other personnel expenses, consultant expenses, expenses incurred under agreements with contract research organizations to conduct clinical trials, expenses incurred to manufacture clinical trial materials and acquired in-process research and development (“IPR&D”) assets. Research and development expenses were $103.2 million, $82.8 million and $225.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Advertising Expenses

We expense the costs of advertising as incurred. Advertising expenses were $35.8 million, $21.6 million and $19.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Deferred Financing Costs

Costs incurred in connection with debt financings have been capitalized to “Long-term debt, net of current” and “Exchangeable notes, net” in the Company’s consolidated balance sheets as deferred financing costs, and are charged to interest expense using the effective interest method over the terms of the related debt agreements. These costs include document preparation costs, commissions, fees and expenses of investment bankers and underwriters, and accounting and legal fees.

Comprehensive Income (Loss)

Comprehensive income (loss) is composed of net income (loss) and other comprehensive income (loss) (“OCI”). OCI includes certain changes in shareholders’ equity that are excluded from net income (loss), which consist of foreign currency translation adjustments and pension remeasurements. The Company reports the effect of significant reclassifications out of accumulated OCI on the respective line items in net income (loss) if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income (loss). For other amounts that are not required under GAAP to be reclassified in their entirety to net income (loss) in the same reporting period, the Company cross-references other disclosures required under GAAP that provide additional detail about those amounts.

Share-Based Compensation

The Company accounts for employee share-based compensation by measuring and recognizing compensation expense for all share-based payments based on estimated grant date fair values. The Company uses the straight-line method to allocate compensation cost to reporting periods over each awardee’s requisite service period, which is generally the vesting period. The Company adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU No. 2016-09”) on January 1, 2017 and has elected to retain a forfeiture rate after adoption.

Royalties

The Company records royalty expense based on each periods’ net sales as part of cost of goods sold.

Leases

The Company’s leases primarily relate to operating leases of rented office properties. For contracts entered into on or after January 1, 2019, at the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether the Company has the right to direct the use of the asset. At inception of a lease, the Company allocates the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. The right-of-use lease asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease.

The right-of-use lease asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred. All right-of-use lease assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s secured incremental borrowing rate for the same term as the underlying lease.

The Company identified and assessed the following significant assumptions in recognizing the right-of-use lease assets and corresponding liabilities.

Expected lease term – The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Incremental borrowing rate – As the Company’s leases do not provide an implicit rate, the Company obtained the incremental borrowing rate (“IBR”) based on the remaining term of each lease. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company has elected not to recognize right-of-use lease assets and lease liabilities for short-term leases that have a term of 12 months or less.

The Company reports right-of-use lease assets within non-current “Other assets” in its consolidated balance sheet. The Company reports the current portion of lease liabilities within “Accrued expenses” and long-term lease liabilities within “Other long-term liabilities” in its consolidated balance sheet.

Contingencies

From time to time, the Company may become involved in claims and other legal matters arising in the ordinary course of business. The Company records accruals for loss contingencies to the extent that it concludes that it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. Legal fees and other expenses related to litigation are expensed as incurred and included in “selling, general and administrative” expenses.

Recent Accounting Pronouncements

From time to time, the Company adopts new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies.

Effective January 1, 2019, the Company adopted Accounting Standards Updated (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). Under ASU No. 2016-02, an entity is required to recognize right-of-use lease assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. The Company adopted this standard on January 1, 2019, using a modified retrospective approach at the adoption date through a cumulative-effect adjustment to retained earnings. The Company elected the package of transition provisions available for expired or existing contracts, which allowed the Company to carry forward its historical assessments of (i) whether contracts are or contain leases, (ii) lease classification and (iii) initial direct costs. In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The Company applied the new guidance to all operating leases within the scope of the standard that were in effect on January 1, 2019, or entered into after, the adoption date. Comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption did not have a material impact on the Company’s consolidated statement of comprehensive income (loss). However, the new standard established $38.0 million of liabilities and corresponding right-of-use assets of $36.0 million on the Company’s consolidated balance sheet for leases, primarily related to operating leases on rented office properties, that existed as of the January 1, 2019, adoption date.

Effective January 1, 2019, the Company adopted ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU No. 2018-07”). ASU No. 2018-07 largely aligns the accounting for share-based payment awards issued to employees and non-employees. The adoption of ASU No. 2018-07 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Effective January 1, 2019, the Company adopted ASU No. 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (“ASU No. 2018-08”), using prospective application to any new agreements entered into after the effective date. The new guidance applies to all entities that receive or make contributions, including business entities. The adoption of ASU No. 2018-08 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which modifies the measurement of expected credit losses on certain financial instruments and is effective for the Company as of January 1, 2020. The Company does not expect the adoption of ASU 2016-13 to have a material impact to the Company’s consolidated financial statements and related disclosures.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplification and reduce the cost of accounting for income taxes (“ASU 2019-12”) and is effective for the Company January 1, 2021. The Company is currently evaluating the impact of ASU 2019-12.

Other recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards Codification), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not, or are not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.

Net Income (Loss) per Share

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Net Income (Loss) per Share

NOTE 3 – NET INCOME (LOSS) PER SHARE

The following table presents basic and diluted net income (loss) per share for the years ended December 31, 2019, 2018 and 2017 (in thousands, except share and per share data):

	For the Years Ended December 31,
	2019		2018			2017
Basic net income (loss) per share calculation:
Numerator - net income (loss)	$	573,020	$	(38,380	)	$	(350,125	)
Denominator - weighted average of ordinary shares outstanding		182,930,109		166,155,405			163,122,663
Basic net income (loss) per share	$	3.13	$	(0.23	)	$	(2.15	)
	For the Years Ended December 31,
	2019		2018			2017
Diluted net income (loss) per share calculation:
Net income (loss)	$	573,020	$	(38,380	)	$	(350,125	)
Effect of assumed conversion of Exchangeable Senior Notes, net of tax		22,440		—			—
Numerator - net income (loss)	$	595,460	$	(38,380	)	$	(350,125	)
Denominator - weighted average of ordinary shares outstanding		205,224,221		166,155,405			163,122,663
Diluted net income (loss) per share	$	2.90	$	(0.23	)	$	(2.15	)

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised, converted into ordinary shares, or resulted in the issuance of ordinary shares that would have shared in the Company’s earnings.

Beginning in the fourth quarter of 2019, with the ordinary share price significantly above the $28.66 exchange price, the Company decided that it no longer had the intent to settle the notes for cash. Accordingly, during the year ended December 31, 2019, the Company prospectively applied the if-converted method to its 2.50% Exchangeable Senior Notes due 2022 (the “Exchangeable Senior Notes”) when determining the diluted net income (loss) per share.

The outstanding securities listed in the table below were excluded from the computation of diluted net income (loss) per ordinary share for the years ended December 31, 2019, 2018 and 2017 due to being anti-dilutive:

	For the Years Ended December 31,
	2019		2018		2017
Stock options		233,260		6,406,914		12,887,595
Restricted stock units		1,840		2,299,254		1,095,768
Performance stock units		586,868		1,248,632		2,742,301
Employee stock purchase plan shares		2,207		265,886		63,445
Warrants		—		—		388,841
		824,175		10,220,686		17,177,950

During the years ended December 31, 2018 and 2017, the potentially dilutive impact of the Exchangeable Senior Notes was determined using a method similar to the treasury stock method. Under this method, no numerator or denominator adjustments arose from the principal and interest components of the Exchangeable Senior Notes because the Company had the intent and ability to settle the Exchangeable Senior Notes’ principal and interest in cash. Instead, the Company was required to increase the diluted net income (loss) per share denominator by the variable number of shares that would be issued upon conversion if it settled the conversion spread obligation with shares. For diluted net income (loss) per share purposes, the conversion spread obligation was calculated based on whether the average market price of the Company’s ordinary shares over the reporting period was in excess of the exchange price of the Exchangeable Senior Notes. There was no calculated spread added to the denominator for the years ended December 31, 2018 and 2017.

Acquisitions, Divestitures and Other Arrangements

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisitions, Divestitures and Other Arrangements

NOTE 4 –ACQUISITIONS, DIVESTITURES AND OTHER ARRANGEMENTS

Sale of MIGERGOT rights

On June 28, 2019, the Company sold its rights to MIGERGOT to Cosette Pharmaceuticals, Inc., for $6.0 million and total potential contingent consideration payments of $4.0 million (the “MIGERGOT transaction”).

Pursuant to ASC 805 (as amended by ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU No. 2017-01”)), the Company accounted for the MIGERGOT transaction as a sale of assets, specifically a sale of intellectual property rights, and a sale of inventory.

The loss on sale of assets recorded to the consolidated statement of comprehensive income (loss) during the year ended December 31, 2019, was determined as follows (in thousands):

Cash proceeds	$	6,000
Less net assets sold:
Developed technology		(16,999	)
Inventory		(236	)
Release of contingent consideration liability		272
Loss on sale of assets	$	(10,963	)

Sale of RAVICTI and AMMONAPS Rights outside of North America and Japan

On December 28, 2018, the Company sold its rights to RAVICTI and AMMONAPS (known as BUPHENYL in the United States) outside of North America and Japan to Medical Need Europe AB, part of the Immedica Group, for $35.0 million (the “Immedica transaction”). The Company previously distributed RAVICTI and AMMONAPS through a commercial partner in Europe and other non-U.S. markets. The Company has retained the rights to RAVICTI and BUPHENYL in North America and Japan.

Pursuant to ASU No. 2017-01, the Company accounted for the Immedica transaction as a sale of assets, specifically a sale of intellectual property rights.

The gain on sale of assets recorded to the consolidated statement of comprehensive income (loss) during the year ended December 31, 2018, was determined as follows (in thousands):

Cash proceeds	$	35,000
Less net assets sold:
Developed technology		(4,146	)
Transaction costs		(197	)
Gain on sale of assets	$	30,657

Acquisition and Subsequent Sale of Additional Rights to Interferon Gamma-1b

On June 30, 2017, the Company completed its acquisition of certain rights to interferon gamma-1b from Boehringer Ingelheim International GmbH (“Boehringer Ingelheim International”) in all territories outside of the United States, Canada and Japan and in connection therewith, paid Boehringer Ingelheim International €19.5 million ($22.3 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1406). Boehringer Ingelheim International commercialized interferon gamma-1b as IMUKIN in an estimated thirty countries, primarily in Europe and the Middle East. Upon closing, during the year ended December 31, 2017, the Company accounted for the payment as the acquisition of an asset which was immediately impaired as projections for future net sales of IMUKIN in these territories did not exceed the related costs, and included the payment in the “impairment of long-lived assets” line item in its consolidated statement of comprehensive income (loss).

On July 24, 2018, the Company sold its rights to interferon gamma-1b in all territories outside the United States, Canada and Japan to Clinigen Group plc (“Clinigen”) for an upfront payment of €7.5 million ($8.8 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1683) and a potential additional contingent consideration payment of €3.0 million ($3.5 million when converted using a Euro-to-Dollar exchange rate of 1.1673) (the “IMUKIN sale”). The contingent consideration payment of €3.0 million ($3.3 million when converted using a Euro-to-Dollar exchange rate at the date of receipt of 1.0991) was received in September 2019. The Company continues to market interferon gamma-1b as ACTIMMUNE in the United States.

Pursuant to ASU No. 2017-01, the Company accounted for the IMUKIN sale as a sale of assets, specifically a sale of intellectual property rights and a sale of inventory.

The gain on sale of assets recorded to the consolidated statement of comprehensive income (loss) during the year ended December 31, 2018, was determined as follows (in thousands):

Cash proceeds including $715 for inventory	$	9,477
Contingent consideration receivable		3,502
Less net assets sold:
Inventory		(623	)
Transaction costs		(28	)
Gain on sale of assets	$	12,328

Acquisition of River Vision

On May 8, 2017, the Company acquired 100% of the equity interests in River Vision Development Corp. (“River Vision”) for upfront cash payments totaling approximately $150.3 million, including cash acquired of $6.3 million, with additional potential future milestone and royalty payments contingent on the satisfaction of certain regulatory milestones and sales thresholds. Pursuant to ASU No. 2017-01, the Company accounted for the River Vision acquisition as the purchase of an IPR&D asset and, pursuant to ASC Topic 730, Research and Development, recorded the purchase price as research and development expense during the year ended December 31, 2017. Further, the Company recognized approximately $32.4 million of federal net operating losses, $2.2 million of state net operating losses and $9.5 million of federal tax credits. The acquired tax attributes were set up as deferred tax assets which were further netted within the net deferred tax liabilities of the U.S. group, offset by a deferred credit recorded in long-term liabilities.

Under the agreement for the acquisition of River Vision, the Company is required to pay up to $325.0 million upon the attainment of various milestones, composed of $100.0 million related to FDA approval and $225.0 million related to net sales thresholds for TEPEZZA. The agreement also includes a royalty payment of 3 percent of the portion of annual worldwide net sales exceeding $300.0 million (if any). The Company will make a milestone payment of $100.0 million related to FDA approval during the first quarter of 2020 and is expected to be capitalized as a finite-lived intangible asset representing the developed technology for TEPEZZA. Refer to Note 15 for further detail on TEPEZZA milestone payments.

Divestiture of PROCYSBI and QUINSAIR rights in EMEA Regions

On June 23, 2017, the Company completed the sale of its European subsidiary that owned the marketing rights to PROCYSBI and QUINSAIR in Europe, the Middle East and Africa (“EMEA”) regions (the “Chiesi divestiture”) to Chiesi Farmaceutici S.p.A. (“Chiesi”) for an upfront payment of $72.5 million, which reflects $3.1 million of cash divested, with additional potential milestone payments based on sales thresholds.

Pursuant to ASU No. 2017-01, the Company accounted for the Chiesi divestiture as a sale of a business. The Company determined that the sale of the business and its assets in connection with the Chiesi divestiture did not constitute a strategic shift and that it did not and will not have a major effect on its operations and financial results. Accordingly, the operations associated with the Chiesi divestiture are not reported in discontinued operations.

The gain on divestiture recorded during the year ended December 31, 2017 was determined as follows (in thousands):

Cash proceeds	$	72,462
Add reimbursement of royalties		5,074
Less net assets sold:
Developed technology		(42,627	)
Goodwill		(15,692	)
Other		(5,984	)
Transaction and other costs		(5,268	)
Gain on divestiture	$	7,965

Under the terms of its agreement with Chiesi, the Company will continue to pay third parties for the royalties on sales of PROCYSBI and QUINSAIR in the EMEA regions, and Chiesi will reimburse the Company for those royalties. At the date of divestiture, the Company recorded an asset of $5.1 million to “other assets”, which represented the estimated amounts that are expected to be reimbursed from Chiesi for the PROCYSBI and QUINSAIR royalties. These estimated royalties are accrued in “accrued expenses” and “other long-term liabilities”.

Transaction and other costs primarily relate to professional and license fees attributable to the divestiture.

Licensing Agreement

On December 12, 2017, the Company entered into an agreement to license HZN-003 (formerly MEDI4945), a potential next-generation biologic for uncontrolled gout, from MedImmune LLC (“MedImmune”), the global biologics research and development arm of the AstraZeneca Group. HZN-003 is a pre-clinical, genetically engineered uricase derivative with optimized uricase and optimized PEGylation technology that has the potential to improve the response rate to the biologic as well as the potential for subcutaneous dosing. Under the terms of the agreement, the Company agreed to pay MedImmune an upfront cash payment of $12.0 million with additional potential future milestone payments of up to $153.5 million contingent on the satisfaction of certain development and sales thresholds. The $12.0 million upfront payment was accounted for as the acquisition of an asset and was recorded as “research and development” expenses in the consolidated statement of comprehensive income (loss) during the year ended December 31, 2017 and included in “accrued expenses” as of December 31, 2017. The upfront payment was subsequently paid in January 2018.

Other Arrangements

On January 3, 2019, the Company entered into a collaboration agreement with HemoShear Therapeutics, LLC (“HemoShear”), a biotechnology company, to discover novel therapeutic targets for gout. The collaboration provides the Company with an opportunity to address unmet treatment needs for people with gout by evaluating new targets for the control of serum uric acid levels as well as new targets to address the inflammation associated with acute flares of gout. Under the terms of the agreement, the Company paid HemoShear an upfront cash payment of $2.0 million with additional potential future milestone payments upon commencement of new stages of development, contingent on the Company’s approval at each stage. In June 2019, the Company incurred a $4.0 million progress payment, which was subsequently paid in July 2019.

Inventories

12 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

Inventories

NOTE 5 – INVENTORIES

The components of inventories as of December 31, 2019 and 2018 consisted of the following (in thousands):

	As of December 31,
	2019		2018
Raw materials	$	6,750	$	5,092
Work-in-process		22,465		27,068
Finished goods		24,587		18,591
Inventories, net	$	53,802	$	50,751

At December 31, 2019, the Company had approximately $3.2 million of raw materials and $3.9 million of work-in-process inventory related to TEPEZZA.

Prepaid Expenses and Other Current Assets

12 Months Ended

Dec. 31, 2019

Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of December 31, 2019 and 2018 consisted of the following (in thousands):

	As of December 31,
	2019		2018
Deferred charge for taxes on intra-company profit	$	46,388	$	21,734
Advance payments for inventory		31,203		1,449
Rabbi trust assets		12,704		8,203
Prepaid income taxes		12,583		5,899
Other prepaid expenses and other current assets		40,699		30,933
Prepaid expenses and other current assets	$	143,577	$	68,218

Advance payments for inventory as of December 31, 2019, represents payments made to the manufacturer of TEPEZZA drug substance.

Property and Equipment

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Property and Equipment

NOTE 7 – PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2019 and 2018 consisted of the following (in thousands):

	As of December 31,
	2019			2018
Leasehold improvements	$	25,985		$	9,982
Software		14,890			14,843
Machinery and equipment		5,217			4,800
Computer equipment		3,316			2,485
Other		6,334			2,501
		55,742			34,611
Less accumulated depreciation		(25,848	)		(19,197	)
Construction in process		265			4,687
Property and equipment, net