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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2016	Nov. 01, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	MNKD
Entity Registrant Name	MANNKIND CORP
Entity Central Index Key	0000899460
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		478,376,869

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 35,530	$ 59,074
Accounts receivable	3,137	23
Inventory	5,124
Deferred costs from collaboration		13,539
Deferred costs from commercial product sales	279
Prepaid expenses and other current assets	4,534	4,018
Total current assets	48,604	76,654
Property and equipment - net	46,825	48,749
Other assets	702	1,009
Total assets	96,131	126,412
Current liabilities:
Accounts payable	5,093	15,599
Accrued expenses and other current liabilities	14,164	7,929
Facility financing obligation	70,888	74,582
Deferred sales from collaboration		17,503
Deferred payments from collaboration	462	140,231
Deferred revenue	2,014
Recognized loss on purchase commitments - current	8,340	12,475
Warrant liability	4,871
Total current liabilities	105,832	268,319
Note payable to our principal stockholder	49,521	49,521
Sanofi loan facility and loss share obligation	71,210	62,371
Senior convertible notes - long term	27,629	27,613
Recognized loss on purchase commitments - long term	63,229	53,692
Other liabilities	17,397	15,225
Total liabilities	334,818	476,741
Commitments and contingencies
Stockholders' deficit:
Undesignated preferred stock, $0.01 par value - 10,000,000 shares authorized; no shares issued or outstanding at September 30, 2016 and December 31, 2015
Common stock, $0.01 par value - 700,000,000 and 550,000,000 shares authorized at September 30, 2016 and December 31, 2015, respectively; 478,362,548 and 428,670,943 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	4,784	4,287
Additional paid-in capital	2,548,090	2,508,633
Accumulated other comprehensive loss	(21)	(20)
Accumulated deficit	(2,791,540)	(2,863,229)
Total stockholders' deficit	(238,687)	(350,329)
Total liabilities and stockholders' deficit	$ 96,131	$ 126,412

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Undesignated preferred stock, par value	$ 0.01	$ 0.01
Undesignated preferred stock, shares authorized	10,000,000	10,000,000
Undesignated preferred stock, shares issued	0	0
Undesignated preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	700,000,000	550,000,000
Common stock, shares issued	478,362,548	428,670,943
Common stock, shares outstanding	478,362,548	428,670,943

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Net revenue - collaboration	$ 161,781		$ 161,781
Net revenue - commercial product sales	573		573
Total net revenue	162,354		162,354
Expense:
Product costs - collaboration	22,742		22,742
Cost of goods sold	4,331	$ 8,115	15,567	$ 15,688
Research and development	3,917	6,341	13,357	23,455
Selling, general and administrative	13,135	11,547	31,595	32,649
Total expenses	44,125	26,003	83,261	71,792
Income (loss) from operations	118,229	(26,003)	79,093	(71,792)
Change in fair value of warrant liability	13,185		7,879
Interest income	28	2	70	8
Interest expense on notes	(4,166)	(4,145)	(12,567)	(17,899)
Interest expense on note payable to our principal stockholder	(729)	(729)	(2,172)	(2,164)
Loss on extinguishment of debt		(1,049)		(1,049)
Other (expense) income	(27)	67	(613)	1,470
Income (loss) before income tax benefit (expense)	126,520	(31,857)	71,690	(91,426)
Income tax benefit (expense)	0	0	0	0
Net income (loss)	$ 126,520	$ (31,857)	$ 71,690	$ (91,426)
Net income (loss) per share - basic	$ 0.26	$ (0.08)	$ 0.16	$ (0.23)
Net income (loss) per share - diluted	$ 0.26	$ (0.08)	$ 0.16	$ (0.23)
Shares used to compute basic net income (loss) per share	478,137	405,199	454,188	401,734
Shares used to compute diluted net income (loss) per share	482,744	405,199	454,366	401,734

Condensed Consolidated Statements of Comprehensive (Income) Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income (loss)	$ 126,520	$ (31,857)	$ 71,690	$ (91,426)
Other comprehensive (loss) income:
Other comprehensive (loss) income - cumulative translation (loss) gain		1	(1)	(5)
Comprehensive income (loss)	$ 126,520	$ (31,856)	$ 71,689	$ (91,431)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 71,690	$ (91,426)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and accretion	3,097	10,094
Stock-based compensation expense	4,130	6,378
Loss on disposal of property and equipment		27
Interest on note payable to our principal stockholder	2,172	2,193
Loss on foreign currency exchange	3,035
Warrant fair value adjustment	(7,879)
Series A Warrant issuance costs included in financing	653
Loss on extinguishment of debt		1,049
Interest incurred through borrowings under Sanofi Loan Facility	4,125	798
Other, net	717	(5)
Changes in operating assets and liabilities:
Accounts receivable	(3,114)	48,757
Inventory	(5,124)	(13,732)
Deferred costs from collaboration	13,539	(13,539)
Deferred costs from commercial product sales	(279)
Prepaid expenses and other current assets	(516)	6,979
Other assets	307	(672)
Accounts payable	(10,288)	(2,698)
Accrued expenses and other current liabilities	6,575	(5,922)
Deferred sales from collaboration	(17,503)	17,038
Deferred payment from collaboration	(135,056)
Deferred revenue	2,014
Recognized loss on purchase commitments	2,367
Net cash used in operating activities	(65,338)	(34,681)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,144)	(9,969)
Proceeds from sale of property and equipment	17	78
Net cash used in investing activities	(1,127)	(9,891)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	772	13,524
Proceeds from direct placement	50,000
Issuance costs associated with direct placement	(2,690)
Payment of 2015 notes		(64,287)
Principal payments on notes payable to Deerfield	(5,000)
Payment of debt issuance costs on 2018 notes		(831)
Milestone payment		(4,219)
Other		40
Proceeds from issuance of common stock pursuant to at-the-market issuance		14,536
Issuance costs of at-the-market issuance		(271)
Payment of employment taxes related to vested restricted stock units	(161)	(1,833)
Net cash provided by (used in) financing activities	42,921	(43,341)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(23,544)	(87,913)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	59,074	120,841
CASH AND CASH EQUIVALENTS, END OF PERIOD	35,530	32,928
SUPPLEMENTAL CASH FLOWS DISCLOSURES:
Interest paid in cash, net of amounts capitalized	7,198	11,439
Payment of 2015 Notes and interest through issuance of common stock		8,253
Reclassification of deferred payments from collaboration to Sanofi loan facility and loss share obligation	$ 4,713	28,150
Cost incurred for construction in progress included in accounts payable and accrued liabilities		$ 192

Description of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2016

Description of Business and Basis of Presentation

1. Description of Business and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of MannKind Corporation and its subsidiaries (“MannKind,” the “Company,” “we” or “us”), have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on March 15, 2016 (the “Annual Report”).

In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the three and nine months ended September 30, 2016 may not be indicative of the results that may be expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates or assumptions. The more significant estimates reflected in these accompanying financial statements involve assessing inventory, long-lived assets and deferred costs for impairment, accrued expenses, deferred sales and payments from collaboration, purchase commitments, valuation of stock-based compensation and warrants and the determination of the provision for income taxes and corresponding deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets as well as revenue sold through to the end customer. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements.

Business

MannKind is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutic products for diseases such as diabetes. The Company’s only marketed product, Afrezza (insulin human) inhalation powder, is a rapid-acting inhaled insulin that was approved by the U.S. Food and Drug Administration (the “FDA”) on June 27, 2014 to improve glycemic control in adult patients with diabetes.

Basis of Presentation

The Company’s primary activities since incorporation have been establishing its facilities, recruiting personnel, conducting research and development, business development, business and financial planning, raising capital, and commercial manufacturing. In 2016, the Company commenced commercial sales and marketing activities related to Afrezza. It is costly to develop and conduct clinical studies for therapeutic products, as well as to establish and maintain commercial sales and marketing capabilities. As of September 30, 2016, the Company had an accumulated deficit of $2.8 billion and has reported negative cash flow from operations since inception, other than for the nine months ended September 30, 2014, the year ended December 31, 2014, and for the three months ended March 31, 2015, as a result of receipt of the upfront payment and milestone payments from Sanofi-Aventis U.S. LLC (“Sanofi”) related to a license and collaboration agreement previously in effect.

In May 2016, pursuant to a previously filed Form S-3 Registration Statement, which was declared effective by the SEC on April 27, 2016, the Company sold in a registered public offering 48,543,692 shares of its common stock, together with warrants to purchase up to 48,543,692 shares of the Company’s common stock. Net proceeds from this offering were approximately $47.4 million after deducting placement agent fees and expenses and paying for offering expenses, excluding any future proceeds from the exercise of the warrants. (See Note 14 — Warrants).

At September 30, 2016, the Company’s capital resources consisted of cash and cash equivalents of $35.5 million. The Company expects to continue to incur significant expenditures to support commercial manufacturing and sales and marketing of Afrezza and the development of its product candidates. The facility agreement (the “Facility Agreement”) with Deerfield Private Design Fund II, L.P. (“Deerfield Private Design Fund”) and Deerfield Private Design International II, L.P. (collectively, “Deerfield”) and the First Amendment to Facility Agreement and Registration Rights Agreement (the “First Amendment”) that resulted in the issuance of an additional tranche of notes (see Note 13 — Facility Agreement) requires the Company to maintain at least $25.0 million in cash and cash equivalents or available borrowings under the loan arrangement, dated as of October 2, 2007, between the Company and The Mann Group LLC (as amended, restated, or otherwise modified as of the date hereof, “The Mann Group Loan Arrangement”), as of the last day of each fiscal quarter.

On August 11, 2014, the Company executed a license and collaboration agreement (the “Sanofi License Agreement”) with Sanofi-Aventis Deutschland GmbH (which subsequently assigned its rights and obligations under the agreement to Sanofi), pursuant to which Sanofi was responsible for global commercial, regulatory and development activities for Afrezza. The Sanofi License Agreement became effective on September 23, 2014. The Company manufactured Afrezza at its manufacturing facility in Danbury, Connecticut to supply Sanofi’s demand for the product pursuant to a supply agreement dated August 11, 2014 (the “Sanofi Supply Agreement”).

Under the Sanofi License Agreement, worldwide profits and losses, which were determined based on the difference between the net sales of Afrezza and the costs and expenses incurred by the Company and Sanofi that were specifically attributable or related to the development, regulatory filings, manufacturing, or commercialization of Afrezza, were shared 65% by Sanofi and 35% by the Company until Sanofi ceased distributing Afrezza. In connection with the Sanofi License Agreement, an affiliate of Sanofi provided the Company with a secured loan facility (the “Sanofi Loan Facility”) of up to $175.0 million to fund the Company’s share of net losses under the Sanofi License Agreement.

The Sanofi License Agreement and Sanofi Supply Agreement terminated, effective April 4, 2016, following which the Company assumed responsibility for the worldwide development and commercialization of Afrezza from Sanofi. Under the terms of the transition agreement, Sanofi continued to fulfill orders for Afrezza in the United States until the Company began distributing MannKind-branded Afrezza product to major wholesalers during the week of July 25, 2016.

Additional funding sources that are, or in certain circumstances may be, available to the Company, include approximately $30.1 million principal amount of available borrowings under The Mann Group Loan Arrangement. A portion of these available borrowings may be used to capitalize accrued interest into principal, upon mutual agreement of the parties, as it becomes due and payable under The Mann Group Loan Arrangement (see Note 5 — Related-Party Arrangements). The Company cannot provide assurances that its plans will not change or that changed circumstances will not result in the depletion of its capital resources more rapidly than it currently anticipates. The Company is seeking and will need to raise additional capital, whether through a sale of equity or debt securities, a strategic business collaboration with a pharmaceutical company, the establishment of other funding facilities, licensing arrangements, asset sales or other means, in order to continue the development and commercialization of Afrezza and its product candidates and to support its other ongoing activities. However, the Company cannot provide assurances that such additional capital will be available on acceptable terms or at all.

Reclassifications

Certain amounts from previous periods in the condensed consolidated statement of cash flows have been reclassified to conform to the 2016 presentation. Specifically interest on note payable to our principal stockholder has been reclassified from other liabilities. Additionally, on the condensed consolidated statement of operations, product manufacturing has been renamed to cost of goods sold.

Revenue Recognition – Net Revenue – Collaboration

On April 5, 2016 the Company assumed responsibility for the worldwide development and commercialization of Afrezza from Sanofi. Under terms of the transition agreement, Sanofi continued to fulfill orders for Afrezza in the United States until the Company began distributing MannKind-branded Afrezza product to major wholesalers during the week of July 25, 2016. As previously disclosed, profits and losses incurred by the Company and Sanofi that were specifically attributable or related to the development, regulatory filings, manufacturing, or commercialization of Afrezza, were shared 65% by Sanofi and 35% by the Company until Sanofi ceased selling Afrezza.

The Company analyzed the agreements entered into with Sanofi at their inception to determine whether the consideration, paid or payable to the Company, or a portion thereof, could be recognized as revenue. Revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether the delivered element has stand-alone value to the customer. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price of each deliverable and the appropriate revenue recognition principles are applied to each unit.

The assessment of multiple element arrangements requires judgment in order to determine the appropriate units of accounting and the points in time that, or periods over which, revenue should be recognized. Under the terms of the Sanofi License Agreement, Sanofi Supply Agreement and the Sanofi Loan Facility, the Company determined that the arrangement contained significant deliverables including (i) licenses to develop and commercialize Afrezza and to use the Company’s trademarks, (ii) development activities, and (iii) manufacture and supply services for Afrezza. Due to the proprietary nature of the manufacturing services to be provided by the Company, the Company determined that all of the significant deliverables should be combined into a single unit of accounting. The Company believes that the manufacturing services are proprietary due to the fact that since the late 1990’s, the Company has developed proprietary knowledge and patented equipment and tools that are used in the manufacturing process of Afrezza. Due to the complexities of particle formulation and the specialized knowledge and equipment needed to handle the Afrezza powder, neither Sanofi nor, to the Company’s knowledge, any third-party contract manufacturing organization currently possesses the capability of manufacturing Afrezza.

In order for revenue to be recognized, the seller’s price to the buyer must be fixed or determinable. Prior to the third quarter of 2016, because the Company did not have the ability to estimate the amount of costs that would potentially be incurred under the loss share provision related to the Sanofi License Agreement and the Sanofi Supply Agreement, the Company believed this requirement for revenue recognition had not been met.

Therefore, the Company had recorded the $150.0 million up-front payment and the two milestone payments of $25.0 million each as deferred payments from collaboration. In addition, as of December 31, 2015 the Company had recorded $17.5 million in Afrezza product shipments to Sanofi as deferred sales from collaboration and recorded $13.5 million as deferred costs from collaboration. Deferred costs from collaboration represented the costs of product manufactured and shipped to Sanofi, as well as certain direct costs associated with a firm purchase commitment entered into in connection with the collaboration with Sanofi.

During the three months ended September 30, 2016, the Company determined that the remaining costs under the Sanofi License Agreement and the Sanofi Supply Agreement were reasonably estimable. Accordingly, the fixed or determinable fee requirement for revenue recognition was met and there are no future obligations to Sanofi. Therefore, the Company recognized $161.8 million of net revenue – collaboration for the three and nine months ended September 30, 2016. The revenue recognized includes the upfront payment of $150.0 million and the two milestone payments of $25.0 million each, net of $64.8 million of net loss share with Sanofi, as well as $17.4 million in sales of Afrezza and $9.2 million from sales of raw insulin, both to Sanofi. These payments and sales were made pursuant to the contractual terms of the agreements with Sanofi.

Revenue Recognition – Net Revenue – Commercial Product Sales

Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. When the accounting requirements for revenue recognition are not met, the Company defers the recognition of revenue by recording deferred revenue on the balance sheet until such time that all criteria are met.

The Company sells Afrezza in the United States to Integrated Commercialization Solutions (“ICS”) Direct and wholesale pharmaceutical distributors and, through them, to retail pharmacies, which are collectively referred to as “customers”. These sales are subject to rights of return within a period beginning six months prior to, and ending 12 months following, product expiration. For the three and nine months ended September 30, 2016, net revenue – commercial product sales consisted of $0.6 million of net sales of Afrezza dispensed to patients. The net sales took place in the third quarter as a result of the Company’s re-launch in July 2016.

With respect to sales to customers, the Company has entered into a Commercial Outsourcing Services Agreement with ICS, a third party logistics provider, under which ICS will distribute MannKind product to wholesalers on its behalf. To enable the Company to distribute product in all necessary jurisdictions, on July 1, 2016 the Company entered into a first amendment to its contract with ICS for an interim period. Under this amendment, ICS, through ICS Direct, will purchase product from the Company and title and risk of loss transfers to ICS Direct. However, because (1) the Company indemnifies and holds harmless ICS for all accounts receivable arising out of commercial product sales under the first amendment that are not collected from the customers according to payment terms, and (2) ICS Direct may return product to the Company under the right of return described below, the Company has concluded that it cannot recognize revenue upon transfer of product to ICS or further, to ICS Direct.

The Company provides the right of return to ICS Direct and its wholesale distributors and, through them, to its retail pharmacy customers for unopened product for a limited time before and after its expiration date. Once the product has been prescribed and dispensed to the patient, any right of return ceases to exist.

Given the Company’s limited sales history for Afrezza, the Company cannot reliably estimate expected returns of the product at the time of shipment into the distribution channel. Accordingly, the Company defers recognition of revenue on Afrezza product shipments until the right of return no longer exists, which occurs at the earlier of the time Afrezza is dispensed from pharmacies to patients or expiration of the right of return. The Company recognizes revenue based on Afrezza patient prescriptions dispensed as estimated by syndicated data provided by a third party. The Company also analyzes additional data points to ensure that such third-party data is reasonable including data related to inventory movements within the channel and ongoing prescription demand.

On September 26, 2016, the Company provided notice to ICS of its election to terminate the interim period agreement effective December 15, 2016. We expect this termination election will not impact our recognition of revenue. After that date, ICS will no longer take title to inventory. However, the Commercial Outsourcing Services Agreement will continue to apply and ICS will continue to distribute MannKind product to wholesalers on its behalf.

The Company recorded $2.0 million in deferred revenue on its condensed consolidated balance sheet, of which $1.6 million (net of estimated gross-to-net adjustments) represents product shipped to our third-party logistics provider and wholesale distributors, but not dispensed to patients as of September 30, 2016. Deferred revenue also includes $0.4 million that we have received for the sale of surplus raw materials to a third party, where delivery was made after September 30, 2016. In addition, the costs of Afrezza associated with the deferred revenue are recorded as deferred costs until such time the related deferred revenue is recognized.

Gross-to-net Adjustments

Estimated gross-to-net adjustments for Afrezza include wholesaler distribution fees, prompt pay discounts, estimated rebates and patient discount programs, and are based on estimated amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of the Company’s agreements with its customers and the levels of inventory within the distribution and retail channels that may result in future rebates or discounts taken. In certain cases, such as patient support programs, the Company recognizes the cost of patient discounts as a reduction of revenue based on estimated utilization. If actual future results vary, the Company may need to adjust these estimates, which could have an effect on product revenue in the period of adjustment. The Company records product sales deductions in the statement of operations at the time product revenue is recognized.

Product Returns

The Company does not provide a reserve for product refunds for sales of Afrezza due to its revenue recognition policy of deferring recognition of revenue on product shipments of Afrezza until the right of return no longer exists.

Wholesaler Distribution Fees

The Company pays distribution fees to certain wholesale distributors based on contractually determined rates. The Company accrues the distribution fees on shipment to the respective wholesale distributors and recognizes the distribution fees as a reduction of revenue in the same period the related revenue is recognized.

Prompt Pay Discounts

The Company offers cash discounts to its customers, generally 2% of the sales price, as an incentive for prompt payment. The Company accounts for cash discounts by reducing accounts receivable by the prompt pay discount amount and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.

Rebates

The Company participates in federal and state government-managed Medicare and Medicaid rebate programs and intends to pursue participation in certain other qualifying federal and state government programs whereby discounts and rebates are provided to participating federal and state government entities. Rebates provided through these other qualifying programs will be included in the Medicaid/Medicare rebate accrual and are considered Medicaid/Medicare rebates for the purposes of this discussion. The Company accounts for these rebates by establishing an accrual equal to the estimate of rebate claims attributable to a sale and determines its estimate of the rebates accrual based on historical payor data provided by a third-party vendor along with additional data including a forecasted participation rate for Medicare and Medicaid. From that data, as well as input received from the commercial team, an estimated participation rate for Medicare and Medicaid is determined and applied at the mandated rate for those sales. Any new information regarding changes in the programs’ regulations and guidelines or any changes in the Company’s government price reporting calculations that would impact the amount of the rebates will also be taken into account in determining or modifying the appropriate reserve. The time period between the date the product is sold into the channel and the date such rebates are paid ranges from approximately six to nine months. As such, continuous monitoring of these estimates will be performed on a periodic basis and if necessary, adjusted to reflect new facts and circumstances. Rebates are recognized as a reduction of revenue in the period the related revenue is recognized.

Patient Discount and Co-Pay Assistance Programs

The Company offers discount card programs to patients for Afrezza in which patients receive discounts on their prescriptions or a reduction in their co-pay amounts that are reimbursed by the Company. The Company estimates the total amount that will be redeemed based on levels of inventory in the distribution and retail channels and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.

Deferred costs from collaboration

Deferred costs from collaboration represents the costs of product manufactured and sold to Sanofi, as well as certain direct costs associated with a firm purchase commitment entered into in connection with the collaboration with Sanofi. During the third quarter of 2016, the costs related to the Sanofi product sales were recognized as product costs – collaboration in the condensed consolidated statement of operations.

Deferred costs from commercial product sales

Deferred costs from commercial product sales represents the cost of product (including labor, overhead and costs to ship to third party logistics) shipped to ICS and wholesale distributors, but not dispensed by pharmacies to patients.

Cost of goods sold

Cost of goods sold includes the costs related to Afrezza product dispensed by pharmacies to patients as well as under-absorbed labor and overhead, foreign currency exchange impact and inventory write-offs, which are recorded as expenses in the period in which they are incurred rather than as a portion of the inventory cost.

Recognized loss on purchase commitments

The Company assesses whether losses on long term purchase commitments should be accrued. Losses that are expected to arise from firm, non-cancellable, commitments for the future purchases of inventory items are recognized unless recoverable. When making the assessment, the Company also considers whether it is able to renegotiate with its vendors. The recognized loss on purchase commitments is reduced as inventory items are purchased.

Fair Value of Financial Instruments

The carrying amounts reported in the accompanying financial statements for cash, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair value due to their relatively short maturities. The fair value of the cash equivalents, note payable to our principal stockholder, senior convertible notes, the Facility Agreement, the Sanofi Loan Facility and warrant liability are discussed in Note 8 — Fair Value of Financial Instruments.

Stock-based compensation

Share-based payments to employees, including grants of stock options, restricted stock units, performance-based awards and the compensatory elements of employee stock purchase plans, are recognized in the condensed consolidated statements of operations based upon the fair value of the awards at the grant date. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options and the compensatory elements of employee stock purchase plans. Restricted stock units are valued based on the market price on the grant date. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and estimates the date at which the performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period. At the point that it becomes probable that the performance conditions will be met, the Company will record a cumulative catchup of the expense from the grant date to the current date, and the Company will then amortize the remainder of the expense over the remaining service period.

Warrants

The Company accounts for its warrants as either equity or liabilities based upon the characteristics and provisions of each instrument and evaluation of sufficient authorized shares available to satisfy the obligations. Warrants classified as derivative liabilities are recorded on the Company’s condensed consolidated balance sheets at their fair value on the date of issuance and are revalued at each subsequent balance sheet date, with fair value changes recognized in the condensed consolidated statements of operations. The Company estimates the fair value of its derivative liabilities using a third party valuation analysis that utilizes a Monte Carlo pricing valuation model and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as expected volatility, expected life, yield, and risk-free interest rate. Warrants classified as equity are recorded within additional paid in capital at the issuance date and are not re-measured in subsequent periods, unless the underlying assumptions change to trigger liability accounting.

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date.

In May 2014, the FASB issued ASU No. 2014-09 related to revenue recognition, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration it expects to be entitled to receive in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. The Company is assessing the potential impact of the new standards on its consolidated financial statements and has not yet selected a method of adoption.

In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter; early adoption is permitted. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Topic 330, inventory, currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments indicate that after adoption an entity should measure inventory within the scope of the ASU at the lower of cost and net realizable value. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of ASU No. 2015-11 will have no impact on the Company’s consolidated financial statements because the Company currently measures inventory at the lower of cost and net realizable value.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The update is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU No. 2016-01 will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019. The Company is evaluating the impact the adoption of ASU No. 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. For public business entities, the amendments in this standard are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the impact the adoption of ASU No. 2016-09 will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard seeks to reduce diversity in practice related to the classification of certain transactions in the Statement of Cash Flows. For public business entities, the amendments in this standard are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company is evaluating the impact the adoption of ASU No. 2016-15 will have on its consolidated financial statements.

Inventories

9 Months Ended

Sep. 30, 2016

Inventories

2. Inventories

Inventories consist of the following (in thousands):


	September 30, 2016		December 31, 2015
Raw materials	$	2,666	$	—
Work-in-process		1,774		—
Finished goods		684		—

Total Inventory	$	5,124	$	—

As of December 31, 2015, the Company recorded a write-off of all of its inventory. As of September 30, 2016, raw materials consists only of insulin which the Company intends to sell to Sanofi under the Insulin Put Option as described in Note 11. Work-in-process and finished goods as of September 30, 2016 includes conversion costs but not materials cost because the materials used in its production were previously written-off.

Property and Equipment

9 Months Ended

Sep. 30, 2016

Property and Equipment

3. Property and Equipment

Property and equipment — net consist of the following (dollar amounts in thousands):


	Estimated Useful Life (Years)		September 30, 2016			December 31, 2015
Land		—	$	3,435		$	3,435
Buildings		39-40		21,590			21,590
Building improvements		5-40		60,584			60,584
Machinery and equipment		3-15		67,996			68,434
Furniture, fixtures and office equipment		5-10		4,114			4,114
Computer equipment and software		3		9,519			9,519
Construction in progress		—		203			586

				167,441			168,262
Less accumulated depreciation				(120,616	)		(119,513	)

Total property and equipment — net			$	46,825		$	48,749

The December 31, 2015 balances have been reclassified to the current year presentation by allocating an impairment of $140.4 million to the individual asset groups. An additional impairment of $0.7 million was charged to the individual asset groups for the nine months ended September 30, 2016.

Depreciation expense related to property and equipment for the three and nine months ended September 30, 2016 and 2015 was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Depreciation expense	$	597	$	3,165	$	1,775	$	8,282

Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2016

Accrued Expenses and Other Current Liabilities

4. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2016		December 31, 2015
Salary and related expenses	$	7,533	$	5,662
Sales and marketing services		4,036		—
Professional fees		1,300		931
Discounts and allowances for commercial product sales		623		—
Other services		260		309
Accrued interest		212		615
Other		200		174
Construction in progress		—		238

Accrued expenses and other current liabilities	$	14,164	$	7,929

Related-Party Arrangements

9 Months Ended

Sep. 30, 2016

Related-Party Arrangements

5. Related-Party Arrangements

In October 2007, the Company entered into a $350.0 million loan arrangement with its principal stockholder. The Mann Group Loan Arrangement has been amended from time to time. On October 31, 2013, the promissory note underlying The Mann Group Loan Arrangement was amended to, among other things, extend the maturity date of the loan to January 5, 2020, extend the date through which the Company can borrow under The Mann Group Loan Arrangement to December 31, 2019, increase the aggregate borrowing amount under The Mann Group Loan Arrangement from $350.0 million to $370.0 million and provide that repayments or cancellations of principal under The Mann Group Loan Arrangement will not be available for reborrowing.

As of September 30, 2016, the total principal amount outstanding under The Mann Group Loan Arrangement was $49.5 million, and the amount available for future borrowings was $30.1 million. Interest, at a fixed rate of 5.84%, is due and payable quarterly in arrears on the first day of each calendar quarter for the preceding quarter, or at such other time as the Company and The Mann Group mutually agree. All or any portion of accrued and unpaid interest that becomes due and payable may be paid-in-kind and capitalized as additional borrowings at any time and would be classified as non-current upon mutual agreement of both parties. As of September 30, 2016, the Company had accrued $8.6 million of interest in other long term liabilities. The Mann Group can require the Company to prepay up to $200.0 million in advances that have been outstanding for at least 12 months (less approximately $105.0 million aggregate principal amount that has been cancelled in connection with two common stock purchase agreements). If The Mann Group exercises this right, the Company will have 90 days after The Mann Group provides written notice (or the number of days to maturity of the note if less than 90 days) to prepay such advances. However, pursuant to a letter agreement entered into in August 2010, The Mann Group has agreed to not require the Company to prepay amounts outstanding under the amended and restated promissory note if the prepayment would require the Company to use its working capital resources. The Mann Group entered into a subordination agreement with Deerfield pursuant to which The Mann Group agreed with Deerfield not to demand or accept any payment under The Mann Group Loan Arrangement until the Company’s payment obligations to Deerfield under the Facility Agreement have been satisfied in full. Subject to the foregoing, in the event of a default under The Mann Group Loan Arrangement, all unpaid principal and interest either becomes immediately due and payable or may be accelerated at The Mann Group’s option, and the interest rate will increase to the one-year LIBOR calculated on the date of the initial advance or in effect on the date of default, whichever is greater, plus 5% per annum. All borrowings under The Mann Group Loan Arrangement are unsecured. The Mann Group Loan Arrangement contains no financial covenants.

During the nine months ended September 30, 2016, there were no additional borrowings under or amendments to The Mann Group Loan Arrangement.

In May 2015, the Company entered into a sublease agreement with the Alfred Mann Foundation for Scientific Research (the “Mann Foundation”), a California not-for-profit corporation. The lease is for approximately 12,500 square feet of office space in Valencia, California and expires in April 2017. The office space contains the Company’s principal executive offices.

Lease payments to the Mann Foundation for the three and nine months ended September 30, 2016 and 2015 were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Lease Payments	$	67	$	65	$	200	$	109

The Company has entered into indemnification agreements with each of its directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate of incorporation and amended and restated bylaws (see Note 11 — Commitments and Contingencies).

Senior Convertible Notes

9 Months Ended

Sep. 30, 2016

Senior Convertible Notes

6. Senior Convertible Notes

Senior convertible notes consist of the following (in thousands):


	September 30, 2016			December 31, 2015
Principal amount	$	27,690		$	27,690
Unamortized premium		486			660
Unaccreted debt issuance costs		(547	)		(737	)

Net carrying amount	$	27,629		$	27,613

The 5.75% senior convertible notes due 2018 (the “2018 notes”) are the Company’s general, unsecured, senior obligations, except that the 2018 notes are subordinated in right of payment to the outstanding notes issued pursuant to the Facility Agreement and the Company’s borrowings under the Sanofi Loan Facility with an affiliate of Sanofi. The 2018 notes rank equally in right of payment with the Company’s other unsecured senior debt. The 2018 notes bear interest at the rate of 5.75% per year on the principal amount, payable semiannually in arrears in cash on February 15 and August 15 of each year, beginning February 15, 2016, with interest accruing from August 15, 2015. The 2018 notes mature on August 15, 2018.

The 2018 notes are convertible, at the option of the holder, at any time on or prior to the close of business on the business day immediately preceding the stated maturity date, into shares of the Company’s common stock at an initial conversion rate of 147.0859 shares per $1,000 principal amount of 2018 notes, which is equal to a conversion price of approximately $6.80 per share, the same conversion price as that of the 2015 notes on the date of exchange. The conversion rate is subject to adjustment under certain circumstances described in an indenture governing the 2018 notes dated August 10, 2015 with US Bank (as successor trustee to Wells Fargo, National Association), including in connection with a make-whole fundamental change. If certain fundamental changes occur, such as share price being over $4.82 on date of conversion, the Company will be obligated to pay a make-whole premium on any 2018 notes converted in connection with such fundamental change by increasing the conversion rate on such 2018 notes. In such instances, the amount of the fundamental change make-whole premium will be based on the Company’s common stock price and the effective date of the applicable fundamental change. The Company can force conversion at $6.80 or 747.1 thousand shares.

If the Company undergoes certain fundamental changes, except in certain circumstances, each holder of 2018 notes will have the option to require the Company to repurchase all or any portion of that holder’s 2018 notes. The fundamental change repurchase price will be 100% of the principal amount of the 2018 notes to be repurchased plus accrued and unpaid interest, if any.

On or after the date that is one year following the original issue date of the 2018 notes, the Company will have the right to redeem for cash all or part of the 2018 notes if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for 20 or more trading days during the 30 consecutive trading day period ending on the trading day immediately prior to the date of the redemption notice. The redemption price will equal the sum of 100% of the principal amount of the 2018 notes to be redeemed, plus accrued and unpaid interest. Under the terms of the indenture, the conversion option can be net-share settled and the maximum number of shares that could be required to be delivered under the indenture, including the make-whole shares, is fixed and less than the number of authorized and unissued shares less the maximum number of shares that could be required to be delivered during the term of the 2018 notes under existing commitments. Applying the Company’s sequencing policy, the Company performed an analysis at the time of the offering of the 2018 notes and each reporting date since and has concluded that the number of available authorized shares at the time of the offering and each subsequent reporting date was sufficient to deliver the number of shares that could be required to be delivered during the term of the 2018 notes under existing commitments.

The 2018 notes provide that upon an acceleration of certain indebtedness, including the 9.75% Senior Convertible Notes due 2019 (the “2019 notes”) and the 8.75% Senior Convertible Notes due 2019 (the “Tranche B notes”) issued to Deerfield pursuant to the Facility Agreement (see Note 13 — Facility Agreement), the holders may elect to accelerate the Company’s repayment obligations under the notes if such acceleration is not cured, waived, rescinded or annulled. There can be no assurance that the holders would not choose to exercise these rights in the event such events were to occur.

The Company incurred approximately $0.8 million in issuance costs, which are recorded as an offset to the 2018 notes, in the accompanying condensed consolidated balance sheets. These costs are being accreted to interest expense using the effective interest method over the term of the 2018 notes.

Amortization of the premium related to the 2018 notes was $59,000 and $174,000 during the three and nine months ended September 30, 2016, respectively. Amortization of the premium related to the 2018 notes was $29,000 during the three and nine months ended September 30, 2015. Accretion of debt issuance expense related to the 2018 notes during the three and nine months ended September 30, 2016 was $65,000 and $190,000, respectively. There was no accretion of debt issuance expense related to the 2018 notes during the three and nine months ended September 30, 2015.

Collaboration Arrangement

9 Months Ended

Sep. 30, 2016

Collaboration Arrangement

7. Collaboration Arrangement

Sanofi License Agreement and Sanofi Supply Agreement

See Note 1 under Basis of Presentation, for accounting considerations related to the Company’s license and collaboration agreement with Sanofi which was terminated effective April 4, 2016.

Sanofi Loan Facility

On September 23, 2014, the Company entered into the Sanofi Loan Facility, consisting of a senior secured revolving promissory note and a guaranty and security agreement (the “Security Agreement”) with an affiliate of Sanofi which provides the Company with a secured loan facility of up to $175.0 million to fund the Company’s share of net losses under the Sanofi License Agreement. In the event of certain future defaults under the Sanofi Loan Facility for which the Company is not able to obtain waivers, the lender under the Sanofi Loan Facility may accelerate all of the Company’s repayment obligations, and take control of the Company’s pledged assets, potentially requiring the Company to renegotiate the terms of its indebtedness on terms less favorable to the Company, or to immediately cease operations.

The obligations of the Company under the Sanofi Loan Facility are guaranteed by the Company’s wholly-owned subsidiary, MannKind LLC, and are secured by a first priority security interest in certain insulin inventory located in the United States and any contractual rights and obligations pursuant to which the Company purchases or has purchased such insulin, and a second priority security interest in the Company’s assets that secure the Company’s obligations under the Facility Agreement, as amended. In addition, the Company granted to Sanofi, as additional security for the obligations under the Sanofi Loan Facility, a first priority mortgage on the Company’s facility in Valencia, California, which has a carrying value of $17.4 million as of September 30, 2016.

Advances under the Sanofi Loan Facility bear interest at a rate of 8.5% per annum and are payable in-kind and compounded quarterly and added to the outstanding principal balance under the Sanofi Loan Facility. The Company is required to make mandatory prepayments on the outstanding loans under the Sanofi Loan Facility from its share of any profits (as defined in the Sanofi License Agreement) under the Sanofi License Agreement within 30 days of receipt of its share of any such profits. No advances may be made under the Sanofi Loan Facility if Deerfield has commenced enforcement proceedings in connection with an event of default under the Facility Agreement.

The outstanding principal of all loans under the Sanofi Loan Facility, if not prepaid, will become due and payable on September 23, 2024 unless accelerated pursuant to the terms of the Sanofi Loan Facility. Additionally, if the Company sells its Valencia facility, the Company is required to prepay the loans under the Sanofi Loan Facility from the net cash proceeds of the sale within five business days of receipt. The maturity date of September 23, 2024 for repayment of the outstanding principal amount of the loans under the Sanofi Loan Facility is not affected by the termination of the Sanofi License Agreement.

The Company’s total cumulative portion of the loss sharing, including interest, was $71.2 million, of which $71.5 million was borrowed under the Sanofi Loan Facility as of September 30, 2016. For the three months ended September 30, 2016, the Company’s portion of the profit sharing was $0.3 million under the Sanofi License Agreement, which is required to be applied as a prepayment against the balance owed under the Sanofi Loan Facility. The total amount owed to Sanofi is $71.2 million, which includes $5.8 million in paid-in-kind interest capitalized as principal.

The Sanofi Loan Facility includes customary representations, warranties and covenants by the Company, including restrictions on its ability to incur additional indebtedness, grant certain liens and make certain changes to its organizational documents. Events of default under the Sanofi Loan Facility include: the Company’s failure to timely make payments due under the Sanofi Loan Facility; inaccuracies in the Company’s representations and warranties to the noteholder; the Company’s failure to comply with any of its covenants under any of the Sanofi Loan Facility or certain other related security agreements and documents entered into in connection with the Sanofi Loan Facility, subject to a cure period with respect to most covenants; the Company’s insolvency or the occurrence of certain bankruptcy-related events; and the failure of any material provision under any of the Sanofi Loan Facility or certain other related security agreements and documents entered into in connection with the Sanofi Loan Facility to remain in full force and effect. If one or more events of default occurs and is continuing, Sanofi may terminate its obligation to make advances under the Sanofi Loan Facility, and, if certain specified events of default (including the Company’s failure to timely make payments due under the Sanofi Loan Facility; the Company’s failure to comply with the negative covenants under the Sanofi Loan Facility limiting the Company’s ability to incur additional indebtedness or grant certain liens; the Company’s insolvency or the occurrence of certain bankruptcy-related events; or the failure of any material provision under any of the Sanofi Loan Facility or certain other related security agreements and documents entered into in connection with the Sanofi Loan Facility to remain in full force and effect) occur and are continuing, the noteholder may accelerate all of the Company’s repayment obligations under the Sanofi Loan Facility and otherwise exercise any of its remedies as a secured creditor. There can be no assurance that the noteholder would not choose to exercise these rights in the event such events were to occur.

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value of Financial Instruments

8. Fair Value of Financial Instruments

The Company applies various valuation approaches in determining the fair value of its financial assets and liabilities within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1— Quoted prices for identical instruments in active markets.

Level 2— Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3— Significant inputs to the valuation model are unobservable.

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

Cash Equivalents

Cash equivalents consist of highly liquid investments with original or remaining maturities of 90 days or less at the time of purchase, that are readily convertible into cash. As of September 30, 2016 and December 31, 2015, the Company held cash equivalents of $33.7 million and $55.8 million, respectively, comprised of money market funds. The fair value of these money market funds was determined by using quoted prices for identical investments in an active market (Level 1 in the fair value hierarchy).

Note Payable to Principal Stockholder

The fair value of the note payable to our principal stockholder cannot be reasonably estimated as the Company would not be able to obtain a similar credit arrangement in the current economic environment. Therefore the fair value is based upon carrying value.

Financial Liabilities

The following tables set forth the fair value of our financial instruments (in millions):


	As of September 30, 2016
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	—	$	—	$	21.7	$	21.7
Facility financing obligation		—		—		74.9		74.9
Milestone rights		—		—		15.3		15.3
Sanofi Loan Facility		—		—		61.8		61.8
Warrant liability		—		—		4.9		4.9

Total financial liabilities	$	—	$	—	$	178.6	$	178.6


	As of December 31, 2015
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	—	$	—	$	21.3	$	21.3
Facility financing obligation		—		—		78.4		78.4
Milestone rights		—		—		14.4		14.4
Sanofi Loan Facility		—		—		36.5		36.5

Total financial liabilities	$	—	$	—	$	150.6	$	150.6

Senior Convertible Notes

The estimated fair value of the 2018 notes was calculated based on model-derived valuations whose inputs were observable, such as the Company’s stock price and yields on U.S. Treasury notes and actively traded bonds, and non-observable, such as the Company’s longer-term historical volatility, and estimated yields implied from any available market trades of the Company’s issued debt instruments. As there is no current active and observable market for the 2018 notes, the Company determined the estimated fair value using a convertible bond valuation model within a lattice framework. The convertible bond valuation model combined expected cash flows based on terms of the notes with market-based assumptions regarding risk-free rate, risk-adjusted yields (20%), stock price volatility (90.0%) and recent price quotes and trading information regarding Company issued debt instruments and shares of common stock into which the notes are convertible (Level 3 in the fair value hierarchy).

Facility Agreement

As discussed in Note 13 — Facility Agreement, the Company issued 2019 notes and subsequently issued Tranche B notes (the “Facility Financing Obligation”) in connection with the Facility Agreement. As there is no current observable market for the 2019 notes or Tranche B notes, the Company determined the estimated fair value using a bond valuation model based on a discounted cash flow methodology. The bond valuation model combined expected cash flows associated with principal repayment and interest based on the contractual terms of the debt agreement discounted to present value using a selected market discount rate. On September 30, 2016 the market discount rate was recalculated at 12% for the principal amount of $20.0 million of 2019 notes, and 11% for the remaining principal amount of $40.0 million on the 2019 notes and 11% for the Tranche B notes, which reflected an increase in the market price of benchmark U.S. Treasury securities as compared to prior measurement date (Level 3 in the fair value hierarchy).

In addition to the 2019 notes and Tranche B notes, the Company also issued certain rights to receive payments of up to $90.0 million upon occurrence of specified strategic and sales milestones (the “Milestone Rights”). These rights are not reflected in the Facility Financing Obligation. The estimated fair value of the Milestone Rights was calculated using the income approach in which the cash flows associated with the specified contractual payments were adjusted for both the expected timing and the probability of achieving the milestones discounted to present value using a selected market discount rate (Level 3 in the fair value hierarchy). The expected timing and probability of achieving the milestones, starting in 2014, was developed with consideration given to both internal data, such as progress made to date and assessment of criteria required for achievement, and external data, such as market research studies. The discount rate (13.5%) was selected based on an estimation of required rate of returns for similar investment opportunities using available market data. As of September 30, 2016, the carrying value of the Milestone Rights is $8.9 million, classified as a long-term liability in other liabilities and the fair value is estimated at $15.3 million.

Sanofi Loan Facility

As discussed in Note 7 — Collaboration Arrangement, the Sanofi Loan Facility consists of a senior secured revolving promissory note and a guaranty and security agreement with an affiliate of Sanofi which provides the Company with a secured loan facility of up to $175.0 million to fund the Company’s share of net losses under the Sanofi License Agreement. The estimated fair value was determined using a discounted cash flow model in which time outstanding and discount rate were primary variables. This method considered the key elements of the contractual terms of the Sanofi Loan Facility, market-based estimated cost of capital, and time value of money, namely the amount of time to settlement and the estimated discount rate (10%) appropriate for the liability (Level 3 in the fair value hierarchy). As of September 30, 2016, the carrying value of the Sanofi Loan Facility is $71.5 million and the fair value is estimated at $61.8 million.

Warrant Liability

Warrant liabilities are measured at fair value using a Monte Carlo pricing valuation model. The assumptions used in the valuation model for the common stock warrant liabilities were: (a) a risk-free interest rate based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the remaining contractual term of the warrants; (b) an assumed dividend yield of zero percent based on the Company’s expectation that it will pay no dividends in the foreseeable future; (c) an expected term based on the remaining contractual term of the warrants; and (d) an expected volatility based upon the Company’s historical volatility over the remaining contractual term of the warrants and probability of a dilutive financing that may trigger a price protection clause. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities is the expected volatility. Significant increases in volatility would result in a higher fair value measurement (Level 3 in the fair value hierarchy). See Note 14 – Warrants for further discussion.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Accounting for Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Accounting for Stock-Based Compensation

9. Accounting for Stock-Based Compensation

Total stock-based compensation expense recognized in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2016 and 2015 was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock-based compensation	$	1,502	$	2,600	$	4,130	$	6,378

During the three months ended March 31, 2016, the Company issued stock awards to employees with a four-year vesting schedule. The grant date fair value of the 2,364,200 restricted stock units and 4,920,267 stock options issued was $2.2 million and $3.0 million, respectively, with a grant date fair value per share of $0.92 and $0.61, respectively.

During the three months ended June 30, 2016, the Company issued stock awards to employees with a four-year vesting schedule. The grant date fair value of the 1,088,050 restricted stock units and 1,140,200 stock options issued was $1.0 million and $0.7 million respectively, with a grant date fair value per share of $0.91 and $0.62, respectively.

During the three months ended September 30, 2016, the Company issued stock awards to employees with a four-year vesting schedule. The grant date fair value of the 374,900 restricted stock units and 272,900 stock options issued was $0.3 million and $0.1 million, respectively, with a grant date fair value per share of $0.84 and $0.55, respectively.

As of September 30, 2016, there was $5.0 million and $5.8 million of unrecognized compensation cost related to options and restricted stock units, respectively, which are expected to be recognized over the remaining weighted average vesting period of 3 years.

During the three months ended June 30, 2016, the Company granted certain employees stock options to purchase an aggregate of 4,015,000 shares of common stock at a weighted average exercise price of $0.91 per share. These awards vest in four equal tranches upon the achievement of certain product sales targets. The grant date fair value of these awards is $2.5 million with a grant date fair value of $0.63 per share, as determined using a Black-Scholes option pricing model. As of June 30, 2016, no compensation cost was recognized related to these awards as, at that time, it was not considered probable of achievement within the next twelve months.

During the three months ended September 30, 2016, the Company granted certain employees stock options to purchase an aggregate of 470,000 shares of common stock at a weighted average exercise price of $0.84 per share. These awards vest in four equal tranches upon the achievement of certain product sales targets. The grant date fair value of these awards is $0.3 million with a grant date fair value of $0.55 per share, as determined using a Black-Scholes option pricing model.

As of September 30, 2016, the Company reviewed the probability of achieving the performance conditions for each of the four vesting tranches and determined that it was probable that the Company would achieve the first vesting tranche in September 2017. Therefore, the Company recorded a non-material cumulative catchup of the expense from the grant date through September 30, 2016 and will record the unrecognized compensation cost related to the first tranche in the amount of $0.4 million through September 30, 2017. The Company further determined that no compensation costs would be recognized for the second, third and fourth vesting tranches as it had not been determined that it was probable.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Net Income (Loss) Per Common Share

9 Months Ended

Sep. 30, 2016

Net Income (Loss) Per Common Share

10. Net Income (Loss) Per Common Share

Generally, basic net income (loss) per share excludes dilution for potentially dilutive securities and is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution under the treasury method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For periods where the Company has presented a net loss, potentially dilutive securities are excluded from the computation of diluted net loss per share as they would be antidilutive. During 2015, 9,000,000 shares of the Company’s common stock, which were loaned to Bank of America pursuant to the terms of a share lending agreement, were issued and outstanding, with the holder of the borrowed shares having all the rights of a holder of the Company’s common stock. As the share borrower was required to return all borrowed shares to the Company, the borrowed shares were not considered outstanding for the purpose of computing and reporting basic or diluted loss per share during the periods presented for 2015. These shares were returned to the Company in the third quarter of 2015.

The following tables summarize the components of the basic and diluted net income (loss) per common share computations:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016		2015
Basic EPS:
Net income (loss) (numerator)	$	126,520	$	(31,857	)	$	71,690	$	(91,426	)

Weighted average common shares (denominator)		478,137		405,199			454,188		401,734

Net income (loss) per share	$	0.26	$	(0.08	)	$	0.16	$	(0.23	)

Diluted EPS:
Net income (loss) (numerator)	$	126,520	$	(31,857	)	$	71,690	$	(91,426	)

Weighted average common shares		478,137		405,199			454,188		401,734
Effect of dilutive securities - common shares issuable		4,607		—			178		—

Adjusted weighted average common shares (denominator)		482,744		405,199			454,366		401,734

Net income (loss) per share	$	0.26	$	(0.08	)	$	0.16	$	(0.23	)

Common shares issuable represents incremental shares of common stock which consist of stock options, restricted stock units, warrants, and shares that could be issued upon conversion of the senior convertible notes. For the three and nine months ended September 30, 2016, 78,085,579 and 82,158,388 incremental shares of common stock, respectively, were not included in the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive. For the three and nine months ended September 30, 2015, 30,416,127 incremental shares of common stock were not included in the calculation of diluted loss per share for both periods because the inclusion of these shares would have been antidilutive.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies

11. Commitments and Contingencies

Guarantees and Indemnifications

In the ordinary course of its business, the Company makes certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. The Company, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. The Company has not recorded any liability for these indemnities in the accompanying condensed consolidated balance sheets. However, the Company accrues for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and the amount can be reasonably estimated. No such losses have been recorded to date.

Litigation

The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. As of September 30, 2016, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company and no accrual has been recorded. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company’s policy is to accrue for legal expenses in connection with legal proceedings and claims as they are incurred.

Following the public announcement of Sanofi’s election to terminate the Sanofi License Agreement and the subsequent decline in the Company’s stock price, several complaints were filed in the U.S. District Court for the Central District of California (the “District Court”) against the Company and certain of its officers and directors on behalf of certain purchasers of its common stock, which were consolidated into a single action. The amended complaint alleged that the Company and certain of its officers and directors violated federal securities laws by making materially false and misleading statements regarding the prospects for Afrezza, thereby artificially inflating the price of its common stock. The Company and the named defendants brought a motion to dismiss the class action that was pending against them, which the District Court granted in August 2016 without leave to amend the complaint. The lead plaintiff has appealed the decision to the Ninth Circuit Court of Appeals. The Company will vigorously oppose the appeal.

Following the public announcement of Sanofi’s election to terminate the Sanofi License Agreement and the subsequent decline in the Company’s stock price, two motions were submitted to the district court at Tel Aviv (Economic Department) for the certification of a class action against the Company and certain of its officers and directors. In general, the complaints allege that the Company and certain of its officers and directors violated Israeli and U.S. securities laws by making materially false and misleading statements regarding the prospects for Afrezza, thereby artificially inflating the price of its common stock. The plaintiffs are seeking monetary damages. The Company will vigorously defend against the claims advanced.

Subsequent to the filing of the federal securities class action against the Company, two shareholder derivative complaints were filed in the Superior Court for the State of California, County of Los Angeles against certain of the Company’s directors and officers. The complaints allege breaches of fiduciary duties by the defendants and other violations of law. Among other allegations, the complaints allege that the defendants caused the Company to make false and misleading statements or omissions of material fact regarding the Company’s business and the prospects for sales of Afrezza, thereby artificially inflating the price of the Company’s common stock. Following the dismissal of the federal securities class action, each derivative complaint was voluntarily dismissed by its plaintiff.

Contingencies

In connection with the Facility Agreement, on July 1, 2013 the Company also entered into a Milestone Rights Purchase Agreement (the “Milestone Agreement”) with Deerfield Private Design Fund and Horizon Santé FLML SÁRL (collectively, the “Milestone Purchasers”), pursuant to which the Company sold the Milestone Purchasers the Milestone Rights to receive payments up to $90.0 million upon the occurrence of specified strategic and sales milestones, including the first commercial sale of an Afrezza product in the United States and the achievement of specified net sales figures (see Note 13 – Facility Agreement).

Commitments

On July 31, 2014, the Company entered into a supply agreement (the “Insulin Supply Agreement”) with Amphastar France Pharmaceuticals S.A.S., a French corporation (“Amphastar”), pursuant to which Amphastar manufactures for and supplies to the Company certain quantities of recombinant human insulin for use in Afrezza. Under the terms of the Insulin Supply Agreement, Amphastar is responsible for manufacturing the insulin in accordance with the Company’s specifications and agreed-upon quality standards. The Company has agreed to purchase annual minimum quantities of insulin under the Insulin Supply Agreement of an aggregate total of approximately €120.1 million, of which €92.4 million is remaining at September 30, 2016. The annual minimum quantity for 2016 is €6.1 million, of which €6.1 million has been purchased as of September 30, 2016. The Company may request to purchase additional quantities of insulin over annual minimum quantities and will incur aggregate cancellation fees of approximately $5.3 million if not purchased. The Company also has other firm commitments with other suppliers for an aggregate of $0.9 million. Based on the Company’s firm purchase commitments outstanding, the Company has recorded a recognized loss on purchase commitments of $71.6 million and $66.2 million as of September 30, 2016 and December 31, 2015, respectively. The $5.4 million increase for the nine months ended September 30, 2016 related to the recognized loss on purchase commitments was primarily due to an increase of $9.2 million for a change in estimate as a result of the sale of raw insulin for Sanofi, offset by a decrease of $1.1 million for a reduction in the recognized loss on purchase commitments for other materials related to a change in estimate associated with the renegotiation of certain agreements and a foreign currency translation loss of $3.0 million.

Unless earlier terminated, the term of the Insulin Supply Agreement with Amphastar expires on December 31, 2019 and can be renewed for additional, successive two year terms upon 12 months’ written notice given prior to the end of the initial term or any additional two year term. The Company and Amphastar each have normal and customary termination rights, including termination for material breach that is not cured within a specific time frame or in the event of liquidation, bankruptcy or insolvency of the other party. In addition, the Company may terminate the Insulin Supply Agreement upon two years’ prior written notice to Amphastar without cause or upon 30 days’ prior written notice to Amphastar if a controlling regulatory authority withdraws approval for Afrezza, provided, however, in the event of a termination pursuant to either of the latter two scenarios, the provisions of the Insulin Supply Agreement require the Company to pay the full amount of all unpaid purchase commitments due over the initial term within 60 calendar days of the effective date of such termination.

Under the terms of the Sanofi Supply Agreement, in the event that Sanofi terminates the Sanofi License Agreement for various reasons (including the reasons cited in its notice of termination to the Company), then upon written notice from the Company within 30 days following the termination date, Sanofi is obligated to purchase up to $50 million of the Company’s insulin inventory as a percentage of each lot received or receivable by the Company (the “Insulin Put Option”). On April 14, 2016, the Company provided Sanofi with written notice that it was exercising the Insulin Put Option. In the second quarter of 2016, $9.2 million was received for the sale of insulin inventory in connection with the Insulin Put Option, which was initially recorded as deferred sales from collaboration. This amount was recognized as net revenue – collaboration in the condensed consolidated statements of operations for the three and nine months ended September 30, 2016.

Income Taxes

9 Months Ended

Sep. 30, 2016

Income Taxes

12. Income Taxes

Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and concluded, in accordance with the applicable accounting standards, that net deferred tax assets should be fully reserved.

The Company has assessed their position with regards to uncertainty in tax positions and believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to this guidance. Tax years since 2011 remain subject to examination by the major tax jurisdictions in which the Company is subject to tax.

Facility Agreement

9 Months Ended

Sep. 30, 2016

Facility Agreement

13. Facility Agreement

As of September 30, 2016, there was $55.0 million principal amount of 2019 notes and $20.0 million principal amount of Tranche B notes outstanding. The 2019 notes accrue interest at an annual rate of 9.75% and the Tranche B notes accrue interest at an annual rate of 8.75%. The Facility Agreement principal repayment schedule is comprised of annual payments beginning on July 1, 2016 and ending December 9, 2019. The repayment dates correspond to the dates on which the 2019 notes or Tranche B notes, as applicable, were issued. Principal payments of $20.0 million are due during the year ending December 31, 2017.

In conjunction with the Facility Agreement, the Company entered into a Milestone Rights Agreement with Deerfield which requires the Company to make contingent payments to Deerfield, totaling up to $90.0 million, upon the Company achieving specified commercialization milestones. The Milestone Rights were initially recorded as a short-term liability equal to $3.2 million included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet and a long-term liability equal to $13.1 million included in other liabilities. As of September 30, 2016, the remaining liability balance of $8.9 million is classified as a long-term liability in other liabilities.

Accretion of debt issuance cost and debt discount in connection with the Facility Agreement during the three and nine months ended September 30, 2016 and 2015 are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Accretion expense - debt issuance cost	$	9	$	9	$	26	$	26

Accretion expense - debt discount	$	428	$	397	$	1,280	$	1,142

The Facility Agreement contains a financial covenant that requires the Company’s cash and cash equivalents, which include available borrowings under The Mann Group Loan Arrangement, on the last day of each fiscal quarter to not be less than $25.0 million. The Company will need to raise additional capital to support its current operating plans. Due to the uncertainties related to maintaining sufficient resources to comply with the aforementioned covenant, the 2019 notes and Tranche B notes have been classified as current liabilities in the accompanying condensed consolidated balance sheet as of September 30, 2016. In the event of non-compliance, Deerfield may declare all or any portion of the 2019 notes and/or Tranche B notes to be immediately due and payable.

Warrants

9 Months Ended

Sep. 30, 2016

Warrants

14. Warrants

In May 2016, the Company sold in a registered offering an aggregate of 48,543,687 shares of common stock together with A Warrants exercisable for up to an aggregate of 36,407,765 shares of common stock and B Warrants exercisable for up to an aggregate of 12,135,921 shares of common stock with a total fair value of $44.7 million. Each of the warrants has an exercise price of $1.50 per share. The A Warrants became exercisable upon issuance and will expire two years thereafter. The B Warrants will become exercisable beginning in May 2017 and will expire 30 months after the date of issuance. The shares of common stock and the warrants are immediately separable and issued separately. There have been no warrants exercised as of September 30, 2016.

The Company determined that the A Warrants require liability classification primarily due to a price-protection clause that applies in the event of certain dilutive financings. The fair value of the A Warrants was recorded as warrant liability in the condensed consolidated balance sheet at issuance and is adjusted to fair value at each reporting period until exercise or expiration. The Company determined that the B Warrants met the criteria for equity classification and has accounted for such warrants in additional paid-in capital.

As of September 30, 2016 and May 12, 2016, the fair value of the A Warrants liability was $4.9 million and $12.8 million, respectively. As of May 12, 2016, the fair value of the B Warrants at issuance was $5.0 million. The fair value of the A Warrants liability as of September 30, 2016 was estimated using a Monte Carlo valuation pricing model with the following underlying assumptions: (a) a risk-free interest rate of 0.66%; (b) an assumed dividend yield of zero percent; (c) an expected term of 1.6 years; and (d) an expected volatility of 90%. The fair value of the A Warrants liability as of May 12, 2016 was estimated using a Monte Carlo valuation pricing model with the following underlying assumptions: (a) a risk-free interest rate of 0.76%; (b) an assumed dividend yield of zero percent; (c) an expected term of 2.0 years; and (d) an expected volatility of 95%. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities is the expected volatility. Significant increases in volatility would result in a higher fair value measurement (Level 3 in the fair value hierarchy).

For the three and nine months ended September 30, 2016, the Company recognized a change in fair value of warrant liability of $13.2 million and $7.9 million, respectively, in the condensed consolidated statements of operations to reflect the fair value adjustments of the A Warrant liability from the date of issuance.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

Selling, General and Administrative Expenses

9 Months Ended

Sep. 30, 2016

Selling, General and Administrative Expenses

15. Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Sales and marketing	$	7,005	$	507	$	11,022	$	1,616
General and administrative		6,130		11,040		20,573		31,033

Total selling, general and administrative	$	13,135	$	11,547	$	31,595	$	32,649

Restructuring Charges

9 Months Ended

Sep. 30, 2016

Restructuring Charges

16. Restructuring Charges

In September 2016, the Company initiated a restructuring of its organization in order to conserve resources for commercial sales and marketing of Afrezza and to align product manufacturing in support of these commercial efforts (“2016 Restructuring”). In connection with the 2016 Restructuring, the Company reduced its total workforce by approximately 18% to 155 employees. The Company recorded charges of approximately $1.5 million, primarily for employee severance as well as other related termination benefits and recognized a liability of $1.5 million as of September 30, 2016, which approximates fair value. The Company expects to substantially pay out the obligation for the 2016 Restructuring in the fourth quarter of 2016. The $1.5 million of costs associated with the 2016 Restructuring are included in cost of goods sold, research and development and selling, general and administrative in the condensed consolidated statements of operations as $0.4 million, $0.7 million and $0.4 million, respectively, for the three and nine months ended September 30, 2016.

In September 2015, the Company initiated a restructuring of the organization as a result of its shift to commercial production of Afrezza (“2015 Restructuring”). In connection with the 2015 Restructuring, the Company reduced its total workforce by approximately 26% to 198 employees. The Company recorded charges of approximately $3.2 million, primarily for employee severance as well as other related termination benefits and recognized a liability of $3.2 million as of September 30, 2015, which approximates fair value. The $3.2 million of costs associated with the 2015 Restructuring are included in operating expenses for research and development and selling, general and administrative in the condensed consolidated statements of operations as $2.0 million and $1.2 million, respectively, for the three and nine months ended September 30, 2015. During the quarter ended December 31, 2015, the Company recorded additional charges related to employee severance and other related termination benefits in the amount of $2.8 million, meaning it had recorded restructuring charges of $6.0 million for the year ended December 31, 2015. This additional $2.8 million of costs are included in research and development and selling, general and administrative in the condensed consolidated statements of operations as $0.7 million and $2.1 million, respectively. As of September 30, 2016 and December 31, 2015, the Company had a remaining accrual balance for the 2015 Restructuring of $1.7 million and $3.0 million, respectively. The Company expects to substantially pay out the remainder of this obligation by the third quarter of 2017.

A reconciliation of beginning and ending liability balances for the restructuring charges is as follows (in thousands):


Description	2016 Restructuring		2015 Restructuring			Total
Accrual - September 30, 2015	$	—	$	3,149		$	3,149
Costs incurred and charged to expense		—		2,891			2,891
Costs paid or settled		—		(3,012	)		(3,012	)

Accrual - December 31, 2015		—		3,028			3,028
Costs incurred and charged to expense		1,475		547			2,022
Costs paid or settled		—		(1,865	)		(1,865	)

Accrual - September 30, 2016	$	1,475	$	1,710		$	3,185

Description of Business and Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2016
Business	Business MannKind is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutic products for diseases such as diabetes. The Company’s only marketed product, Afrezza (insulin human) inhalation powder, is a rapid-acting inhaled insulin that was approved by the U.S. Food and Drug Administration (the “FDA”) on June 27, 2014 to improve glycemic control in adult patients with diabetes.
Basis of Presentation	Basis of Presentation The Company’s primary activities since incorporation have been establishing its facilities, recruiting personnel, conducting research and development, business development, business and financial planning, raising capital, and commercial manufacturing. In 2016, the Company commenced commercial sales and marketing activities related to Afrezza. It is costly to develop and conduct clinical studies for therapeutic products, as well as to establish and maintain commercial sales and marketing capabilities. As of September 30, 2016, the Company had an accumulated deficit of $2.8 billion and has reported negative cash flow from operations since inception, other than for the nine months ended September 30, 2014, the year ended December 31, 2014, and for the three months ended March 31, 2015, as a result of receipt of the upfront payment and milestone payments from Sanofi-Aventis U.S. LLC (“Sanofi”) related to a license and collaboration agreement previously in effect. In May 2016, pursuant to a previously filed Form S-3 Registration Statement, which was declared effective by the SEC on April 27, 2016, the Company sold in a registered public offering 48,543,692 shares of its common stock, together with warrants to purchase up to 48,543,692 shares of the Company’s common stock. Net proceeds from this offering were approximately $47.4 million after deducting placement agent fees and expenses and paying for offering expenses, excluding any future proceeds from the exercise of the warrants. (See Note 14 — Warrants). At September 30, 2016, the Company’s capital resources consisted of cash and cash equivalents of $35.5 million. The Company expects to continue to incur significant expenditures to support commercial manufacturing and sales and marketing of Afrezza and the development of its product candidates. The facility agreement (the “Facility Agreement”) with Deerfield Private Design Fund II, L.P. (“Deerfield Private Design Fund”) and Deerfield Private Design International II, L.P. (collectively, “Deerfield”) and the First Amendment to Facility Agreement and Registration Rights Agreement (the “First Amendment”) that resulted in the issuance of an additional tranche of notes (see Note 13 — Facility Agreement) requires the Company to maintain at least $25.0 million in cash and cash equivalents or available borrowings under the loan arrangement, dated as of October 2, 2007, between the Company and The Mann Group LLC (as amended, restated, or otherwise modified as of the date hereof, “The Mann Group Loan Arrangement”), as of the last day of each fiscal quarter. On August 11, 2014, the Company executed a license and collaboration agreement (the “Sanofi License Agreement”) with Sanofi-Aventis Deutschland GmbH (which subsequently assigned its rights and obligations under the agreement to Sanofi), pursuant to which Sanofi was responsible for global commercial, regulatory and development activities for Afrezza. The Sanofi License Agreement became effective on September 23, 2014. The Company manufactured Afrezza at its manufacturing facility in Danbury, Connecticut to supply Sanofi’s demand for the product pursuant to a supply agreement dated August 11, 2014 (the “Sanofi Supply Agreement”). Under the Sanofi License Agreement, worldwide profits and losses, which were determined based on the difference between the net sales of Afrezza and the costs and expenses incurred by the Company and Sanofi that were specifically attributable or related to the development, regulatory filings, manufacturing, or commercialization of Afrezza, were shared 65% by Sanofi and 35% by the Company until Sanofi ceased distributing Afrezza. In connection with the Sanofi License Agreement, an affiliate of Sanofi provided the Company with a secured loan facility (the “Sanofi Loan Facility”) of up to $175.0 million to fund the Company’s share of net losses under the Sanofi License Agreement. The Sanofi License Agreement and Sanofi Supply Agreement terminated, effective April 4, 2016, following which the Company assumed responsibility for the worldwide development and commercialization of Afrezza from Sanofi. Under the terms of the transition agreement, Sanofi continued to fulfill orders for Afrezza in the United States until the Company began distributing MannKind-branded Afrezza product to major wholesalers during the week of July 25, 2016. Additional funding sources that are, or in certain circumstances may be, available to the Company, include approximately $30.1 million principal amount of available borrowings under The Mann Group Loan Arrangement. A portion of these available borrowings may be used to capitalize accrued interest into principal, upon mutual agreement of the parties, as it becomes due and payable under The Mann Group Loan Arrangement (see Note 5 — Related-Party Arrangements). The Company cannot provide assurances that its plans will not change or that changed circumstances will not result in the depletion of its capital resources more rapidly than it currently anticipates. The Company is seeking and will need to raise additional capital, whether through a sale of equity or debt securities, a strategic business collaboration with a pharmaceutical company, the establishment of other funding facilities, licensing arrangements, asset sales or other means, in order to continue the development and commercialization of Afrezza and its product candidates and to support its other ongoing activities. However, the Company cannot provide assurances that such additional capital will be available on acceptable terms or at all.
Reclassifications	Reclassifications Certain amounts from previous periods in the condensed consolidated statement of cash flows have been reclassified to conform to the 2016 presentation. Specifically interest on note payable to our principal stockholder has been reclassified from other liabilities. Additionally, on the condensed consolidated statement of operations, product manufacturing has been renamed to cost of goods sold.
Revenue Recognition - Net Revenue - Collaboration	Revenue Recognition – Net Revenue – Collaboration On April 5, 2016 the Company assumed responsibility for the worldwide development and commercialization of Afrezza from Sanofi. Under terms of the transition agreement, Sanofi continued to fulfill orders for Afrezza in the United States until the Company began distributing MannKind-branded Afrezza product to major wholesalers during the week of July 25, 2016. As previously disclosed, profits and losses incurred by the Company and Sanofi that were specifically attributable or related to the development, regulatory filings, manufacturing, or commercialization of Afrezza, were shared 65% by Sanofi and 35% by the Company until Sanofi ceased selling Afrezza. The Company analyzed the agreements entered into with Sanofi at their inception to determine whether the consideration, paid or payable to the Company, or a portion thereof, could be recognized as revenue. Revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether the delivered element has stand-alone value to the customer. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price of each deliverable and the appropriate revenue recognition principles are applied to each unit. The assessment of multiple element arrangements requires judgment in order to determine the appropriate units of accounting and the points in time that, or periods over which, revenue should be recognized. Under the terms of the Sanofi License Agreement, Sanofi Supply Agreement and the Sanofi Loan Facility, the Company determined that the arrangement contained significant deliverables including (i) licenses to develop and commercialize Afrezza and to use the Company’s trademarks, (ii) development activities, and (iii) manufacture and supply services for Afrezza. Due to the proprietary nature of the manufacturing services to be provided by the Company, the Company determined that all of the significant deliverables should be combined into a single unit of accounting. The Company believes that the manufacturing services are proprietary due to the fact that since the late 1990’s, the Company has developed proprietary knowledge and patented equipment and tools that are used in the manufacturing process of Afrezza. Due to the complexities of particle formulation and the specialized knowledge and equipment needed to handle the Afrezza powder, neither Sanofi nor, to the Company’s knowledge, any third-party contract manufacturing organization currently possesses the capability of manufacturing Afrezza. In order for revenue to be recognized, the seller’s price to the buyer must be fixed or determinable. Prior to the third quarter of 2016, because the Company did not have the ability to estimate the amount of costs that would potentially be incurred under the loss share provision related to the Sanofi License Agreement and the Sanofi Supply Agreement, the Company believed this requirement for revenue recognition had not been met. Therefore, the Company had recorded the $150.0 million up-front payment and the two milestone payments of $25.0 million each as deferred payments from collaboration. In addition, as of December 31, 2015 the Company had recorded $17.5 million in Afrezza product shipments to Sanofi as deferred sales from collaboration and recorded $13.5 million as deferred costs from collaboration. Deferred costs from collaboration represented the costs of product manufactured and shipped to Sanofi, as well as certain direct costs associated with a firm purchase commitment entered into in connection with the collaboration with Sanofi. During the three months ended September 30, 2016, the Company determined that the remaining costs under the Sanofi License Agreement and the Sanofi Supply Agreement were reasonably estimable. Accordingly, the fixed or determinable fee requirement for revenue recognition was met and there are no future obligations to Sanofi. Therefore, the Company recognized $161.8 million of net revenue – collaboration for the three and nine months ended September 30, 2016. The revenue recognized includes the upfront payment of $150.0 million and the two milestone payments of $25.0 million each, net of $64.8 million of net loss share with Sanofi, as well as $17.4 million in sales of Afrezza and $9.2 million from sales of raw insulin, both to Sanofi. These payments and sales were made pursuant to the contractual terms of the agreements with Sanofi.
Revenue Recognition - Net Revenue - Commercial Product Sales	Revenue Recognition – Net Revenue – Commercial Product Sales Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. When the accounting requirements for revenue recognition are not met, the Company defers the recognition of revenue by recording deferred revenue on the balance sheet until such time that all criteria are met. The Company sells Afrezza in the United States to Integrated Commercialization Solutions (“ICS”) Direct and wholesale pharmaceutical distributors and, through them, to retail pharmacies, which are collectively referred to as “customers”. These sales are subject to rights of return within a period beginning six months prior to, and ending 12 months following, product expiration. For the three and nine months ended September 30, 2016, net revenue – commercial product sales consisted of $0.6 million of net sales of Afrezza dispensed to patients. The net sales took place in the third quarter as a result of the Company’s re-launch in July 2016. With respect to sales to customers, the Company has entered into a Commercial Outsourcing Services Agreement with ICS, a third party logistics provider, under which ICS will distribute MannKind product to wholesalers on its behalf. To enable the Company to distribute product in all necessary jurisdictions, on July 1, 2016 the Company entered into a first amendment to its contract with ICS for an interim period. Under this amendment, ICS, through ICS Direct, will purchase product from the Company and title and risk of loss transfers to ICS Direct. However, because (1) the Company indemnifies and holds harmless ICS for all accounts receivable arising out of commercial product sales under the first amendment that are not collected from the customers according to payment terms, and (2) ICS Direct may return product to the Company under the right of return described below, the Company has concluded that it cannot recognize revenue upon transfer of product to ICS or further, to ICS Direct. The Company provides the right of return to ICS Direct and its wholesale distributors and, through them, to its retail pharmacy customers for unopened product for a limited time before and after its expiration date. Once the product has been prescribed and dispensed to the patient, any right of return ceases to exist. Given the Company’s limited sales history for Afrezza, the Company cannot reliably estimate expected returns of the product at the time of shipment into the distribution channel. Accordingly, the Company defers recognition of revenue on Afrezza product shipments until the right of return no longer exists, which occurs at the earlier of the time Afrezza is dispensed from pharmacies to patients or expiration of the right of return. The Company recognizes revenue based on Afrezza patient prescriptions dispensed as estimated by syndicated data provided by a third party. The Company also analyzes additional data points to ensure that such third-party data is reasonable including data related to inventory movements within the channel and ongoing prescription demand. On September 26, 2016, the Company provided notice to ICS of its election to terminate the interim period agreement effective December 15, 2016. We expect this termination election will not impact our recognition of revenue. After that date, ICS will no longer take title to inventory. However, the Commercial Outsourcing Services Agreement will continue to apply and ICS will continue to distribute MannKind product to wholesalers on its behalf. The Company recorded $2.0 million in deferred revenue on its condensed consolidated balance sheet, of which $1.6 million (net of estimated gross-to-net adjustments) represents product shipped to our third-party logistics provider and wholesale distributors, but not dispensed to patients as of September 30, 2016. Deferred revenue also includes $0.4 million that we have received for the sale of surplus raw materials to a third party, where delivery was made after September 30, 2016. In addition, the costs of Afrezza associated with the deferred revenue are recorded as deferred costs until such time the related deferred revenue is recognized.
Gross-to-net Adjustments	Gross-to-net Adjustments Estimated gross-to-net adjustments for Afrezza include wholesaler distribution fees, prompt pay discounts, estimated rebates and patient discount programs, and are based on estimated amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of the Company’s agreements with its customers and the levels of inventory within the distribution and retail channels that may result in future rebates or discounts taken. In certain cases, such as patient support programs, the Company recognizes the cost of patient discounts as a reduction of revenue based on estimated utilization. If actual future results vary, the Company may need to adjust these estimates, which could have an effect on product revenue in the period of adjustment. The Company records product sales deductions in the statement of operations at the time product revenue is recognized.
Product Returns	Product Returns The Company does not provide a reserve for product refunds for sales of Afrezza due to its revenue recognition policy of deferring recognition of revenue on product shipments of Afrezza until the right of return no longer exists.
Wholesaler Distribution Fees	Wholesaler Distribution Fees The Company pays distribution fees to certain wholesale distributors based on contractually determined rates. The Company accrues the distribution fees on shipment to the respective wholesale distributors and recognizes the distribution fees as a reduction of revenue in the same period the related revenue is recognized.
Prompt Pay Discounts	Prompt Pay Discounts The Company offers cash discounts to its customers, generally 2% of the sales price, as an incentive for prompt payment. The Company accounts for cash discounts by reducing accounts receivable by the prompt pay discount amount and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized. Rebates The Company participates in federal and state government-managed Medicare and Medicaid rebate programs and intends to pursue participation in certain other qualifying federal and state government programs whereby discounts and rebates are provided to participating federal and state government entities. Rebates provided through these other qualifying programs will be included in the Medicaid/Medicare rebate accrual and are considered Medicaid/Medicare rebates for the purposes of this discussion. The Company accounts for these rebates by establishing an accrual equal to the estimate of rebate claims attributable to a sale and determines its estimate of the rebates accrual based on historical payor data provided by a third-party vendor along with additional data including a forecasted participation rate for Medicare and Medicaid. From that data, as well as input received from the commercial team, an estimated participation rate for Medicare and Medicaid is determined and applied at the mandated rate for those sales. Any new information regarding changes in the programs’ regulations and guidelines or any changes in the Company’s government price reporting calculations that would impact the amount of the rebates will also be taken into account in determining or modifying the appropriate reserve. The time period between the date the product is sold into the channel and the date such rebates are paid ranges from approximately six to nine months. As such, continuous monitoring of these estimates will be performed on a periodic basis and if necessary, adjusted to reflect new facts and circumstances. Rebates are recognized as a reduction of revenue in the period the related revenue is recognized.
Patient Discount and Co-Pay Assistance Programs	Patient Discount and Co-Pay Assistance Programs The Company offers discount card programs to patients for Afrezza in which patients receive discounts on their prescriptions or a reduction in their co-pay amounts that are reimbursed by the Company. The Company estimates the total amount that will be redeemed based on levels of inventory in the distribution and retail channels and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.
Deferred costs	Deferred costs from collaboration Deferred costs from collaboration represents the costs of product manufactured and sold to Sanofi, as well as certain direct costs associated with a firm purchase commitment entered into in connection with the collaboration with Sanofi. During the third quarter of 2016, the costs related to the Sanofi product sales were recognized as product costs – collaboration in the condensed consolidated statement of operations. Deferred costs from commercial product sales Deferred costs from commercial product sales represents the cost of product (including labor, overhead and costs to ship to third party logistics) shipped to ICS and wholesale distributors, but not dispensed by pharmacies to patients.
Cost of Goods Sold	Cost of goods sold Cost of goods sold includes the costs related to Afrezza product dispensed by pharmacies to patients as well as under-absorbed labor and overhead, foreign currency exchange impact and inventory write-offs, which are recorded as expenses in the period in which they are incurred rather than as a portion of the inventory cost.
Recognized loss on purchase commitments	Recognized loss on purchase commitments The Company assesses whether losses on long term purchase commitments should be accrued. Losses that are expected to arise from firm, non-cancellable, commitments for the future purchases of inventory items are recognized unless recoverable. When making the assessment, the Company also considers whether it is able to renegotiate with its vendors. The recognized loss on purchase commitments is reduced as inventory items are purchased.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The carrying amounts reported in the accompanying financial statements for cash, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair value due to their relatively short maturities. The fair value of the cash equivalents, note payable to our principal stockholder, senior convertible notes, the Facility Agreement, the Sanofi Loan Facility and warrant liability are discussed in Note 8 — Fair Value of Financial Instruments.
Stock-based compensation	Stock-based compensation Share-based payments to employees, including grants of stock options, restricted stock units, performance-based awards and the compensatory elements of employee stock purchase plans, are recognized in the condensed consolidated statements of operations based upon the fair value of the awards at the grant date. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options and the compensatory elements of employee stock purchase plans. Restricted stock units are valued based on the market price on the grant date. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and estimates the date at which the performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period. At the point that it becomes probable that the performance conditions will be met, the Company will record a cumulative catchup of the expense from the grant date to the current date, and the Company will then amortize the remainder of the expense over the remaining service period.
Warrants	Warrants The Company accounts for its warrants as either equity or liabilities based upon the characteristics and provisions of each instrument and evaluation of sufficient authorized shares available to satisfy the obligations. Warrants classified as derivative liabilities are recorded on the Company’s condensed consolidated balance sheets at their fair value on the date of issuance and are revalued at each subsequent balance sheet date, with fair value changes recognized in the condensed consolidated statements of operations. The Company estimates the fair value of its derivative liabilities using a third party valuation analysis that utilizes a Monte Carlo pricing valuation model and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as expected volatility, expected life, yield, and risk-free interest rate. Warrants classified as equity are recorded within additional paid in capital at the issuance date and are not re-measured in subsequent periods, unless the underlying assumptions change to trigger liability accounting.
Recently Issued Accounting Standards	Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. In May 2014, the FASB issued ASU No. 2014-09 related to revenue recognition, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration it expects to be entitled to receive in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. The Company is assessing the potential impact of the new standards on its consolidated financial statements and has not yet selected a method of adoption. In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter; early adoption is permitted. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Topic 330, inventory, currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments indicate that after adoption an entity should measure inventory within the scope of the ASU at the lower of cost and net realizable value. The amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of ASU No. 2015-11 will have no impact on the Company’s consolidated financial statements because the Company currently measures inventory at the lower of cost and net realizable value. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The update is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU No. 2016-01 will have on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019. The Company is evaluating the impact the adoption of ASU No. 2016-02 will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. For public business entities, the amendments in this standard are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the impact the adoption of ASU No. 2016-09 will have on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard seeks to reduce diversity in practice related to the classification of certain transactions in the Statement of Cash Flows. For public business entities, the amendments in this standard are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company is evaluating the impact the adoption of ASU No. 2016-15 will have on its consolidated financial statements.

Inventories (Tables)

9 Months Ended

Sep. 30, 2016

Components of Inventories

Inventories consist of the following (in thousands):


	September 30, 2016		December 31, 2015
Raw materials	$	2,666	$	—
Work-in-process		1,774		—
Finished goods		684		—

Total Inventory	$	5,124	$	—

Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2016

Property and Equipment, Net and Depreciation Expense Related to Property and Equipment

Property and equipment — net consist of the following (dollar amounts in thousands):


	Estimated Useful Life (Years)		September 30, 2016			December 31, 2015
Land		—	$	3,435		$	3,435
Buildings		39-40		21,590			21,590
Building improvements		5-40		60,584			60,584
Machinery and equipment		3-15		67,996			68,434
Furniture, fixtures and office equipment		5-10		4,114			4,114
Computer equipment and software		3		9,519			9,519
Construction in progress		—		203			586

				167,441			168,262
Less accumulated depreciation				(120,616	)		(119,513	)

Total property and equipment — net			$	46,825		$	48,749

Depreciation expense related to property and equipment for the three and nine months ended September 30, 2016 and 2015 was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Depreciation expense	$	597	$	3,165	$	1,775	$	8,282

Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2016

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2016		December 31, 2015
Salary and related expenses	$	7,533	$	5,662
Sales and marketing services		4,036		—
Professional fees		1,300		931
Discounts and allowances for commercial product sales		623		—
Other services		260		309
Accrued interest		212		615
Other		200		174
Construction in progress		—		238

Accrued expenses and other current liabilities	$	14,164	$	7,929

Related-Party Arrangements (Tables)

9 Months Ended

Sep. 30, 2016

Schedule of Lease Payments to the Mann Foundation

Lease payments to the Mann Foundation for the three and nine months ended September 30, 2016 and 2015 were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Lease Payments	$	67	$	65	$	200	$	109

Senior Convertible Notes (Tables)

9 Months Ended

Sep. 30, 2016

Summary of Senior Convertible Notes

Senior convertible notes consist of the following (in thousands):


	September 30, 2016			December 31, 2015
Principal amount	$	27,690		$	27,690
Unamortized premium		486			660
Unaccreted debt issuance costs		(547	)		(737	)

Net carrying amount	$	27,629		$	27,613

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6479336&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21521-112644

+ Details

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value of Financial Instruments

The following tables set forth the fair value of our financial instruments (in millions):


	As of September 30, 2016
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	—	$	—	$	21.7	$	21.7
Facility financing obligation		—		—		74.9		74.9
Milestone rights		—		—		15.3		15.3
Sanofi Loan Facility		—		—		61.8		61.8
Warrant liability		—		—		4.9		4.9

Total financial liabilities	$	—	$	—	$	178.6	$	178.6


	As of December 31, 2015
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	—	$	—	$	21.3	$	21.3
Facility financing obligation		—		—		78.4		78.4
Milestone rights		—		—		14.4		14.4
Sanofi Loan Facility		—		—		36.5		36.5

Total financial liabilities	$	—	$	—	$	150.6	$	150.6

Accounting for Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Stock-Based Compensation Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock-based compensation	$	1,502	$	2,600	$	4,130	$	6,378

Net Income (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2016

Components of Basic and Diluted Net Income (Loss) Per Common Share Computations

The following tables summarize the components of the basic and diluted net income (loss) per common share computations:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016		2015
Basic EPS:
Net income (loss) (numerator)	$	126,520	$	(31,857	)	$	71,690	$	(91,426	)

Weighted average common shares (denominator)		478,137		405,199			454,188		401,734

Net income (loss) per share	$	0.26	$	(0.08	)	$	0.16	$	(0.23	)

Diluted EPS:
Net income (loss) (numerator)	$	126,520	$	(31,857	)	$	71,690	$	(91,426	)

Weighted average common shares		478,137		405,199			454,188		401,734
Effect of dilutive securities - common shares issuable		4,607		—			178		—

Adjusted weighted average common shares (denominator)		482,744		405,199			454,366		401,734

Net income (loss) per share	$	0.26	$	(0.08	)	$	0.16	$	(0.23	)

Facility Agreement (Tables)

9 Months Ended

Sep. 30, 2016

Accretion of Debt Issuance Cost and Debt Discount

Accretion of debt issuance cost and debt discount in connection with the Facility Agreement during the three and nine months ended September 30, 2016 and 2015 are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Accretion expense - debt issuance cost	$	9	$	9	$	26	$	26

Accretion expense - debt discount	$	428	$	397	$	1,280	$	1,142

Selling, General and Administrative Expenses (Tables)

9 Months Ended

Sep. 30, 2016

Schedule of Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Sales and marketing	$	7,005	$	507	$	11,022	$	1,616
General and administrative		6,130		11,040		20,573		31,033

Total selling, general and administrative	$	13,135	$	11,547	$	31,595	$	32,649

Restructuring Charges (Tables)

9 Months Ended

Sep. 30, 2016

Reconciliation of Beginning and Ending Liability Balances for Restructuring Charges

A reconciliation of beginning and ending liability balances for the restructuring charges is as follows (in thousands):


Description	2016 Restructuring		2015 Restructuring			Total
Accrual - September 30, 2015	$	—	$	3,149		$	3,149
Costs incurred and charged to expense		—		2,891			2,891
Costs paid or settled		—		(3,012	)		(3,012	)

Accrual - December 31, 2015		—		3,028			3,028
Costs incurred and charged to expense		1,475		547			2,022
Costs paid or settled		—		(1,865	)		(1,865	)

Accrual - September 30, 2016	$	1,475	$	1,710		$	3,185

Description of Business and Basis of Presentation - Additional Information (Detail)	1 Months Ended	3 Months Ended	9 Months Ended
	May 31, 2016 USD ($) shares	Sep. 30, 2016 USD ($) Payment	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Sep. 23, 2014 USD ($)
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Accumulated deficit		$ (2,791,540,000)	$ (2,791,540,000)		$ (2,863,229,000)
Number of shares sold in a registered public offering \| shares	48,543,692
Proceeds from offering of common stocks and warrants, net	$ 47,400,000		772,000	$ 13,524,000
Cash and cash equivalents		35,530,000	35,530,000	$ 32,928,000	59,074,000	$ 120,841,000
Amount available for future borrowings		30,100,000	30,100,000
Net revenue from collaboration		161,781,000	161,781,000
Net revenue - commercial product sales		573,000	573,000
Deferred revenue		$ 2,014,000	$ 2,014,000
Cash discount as incentive for prompt payment		2.00%	2.00%
Third party logistics
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Deferred revenue		$ 1,600,000	$ 1,600,000
Third Party
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Deferred revenue		400,000	$ 400,000
License and Collaboration Agreement with Sanofi
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Profits and losses sharing percentage			35.00%
Maximum secured loan facility							$ 175,000,000
Net revenue from collaboration		161,800,000	$ 161,800,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Profits and losses sharing percentage			65.00%
Maximum secured loan facility		175,000,000	$ 175,000,000
Deferred sales from collaboration product shipments		150,000,000	150,000,000
Milestone receivable		25,000,000	25,000,000
Deferred cost					13,500,000
Net revenue from collaboration		17,400,000
Up-front fee		$ 150,000,000
Number of milestone payment \| Payment		2
Milestone payments earned		$ 25,000,000	$ 25,000,000
Net loss share payments		(64,800,000)
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| Insulin Put
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Net revenue from collaboration		9,200,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| AFREZZA product sales
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Deferred sales from collaboration product shipments					$ 17,500,000
Maximum
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of warrants available for purchase common shares \| shares	48,543,692
Maximum \| AFREZZA product sales
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Sales return right following product expiration in months			12 months
Minimum \| AFREZZA product sales
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Sales return right following product expiration in months			6 months
Senior convertible notes due December 31, 2019 \| Deerfield \| Minimum \| Less portion of commitment asset
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Available amount of credit facility under covenant restrictions		$ 25,000,000	$ 25,000,000

Components of Inventories (Detail) $ in Thousands	Sep. 30, 2016 USD ($)
Inventory [Line Items]
Raw materials	$ 2,666
Work-in-process	1,774
Finished goods	684
Total Inventory	$ 5,124

Property and Equipment, Net (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 167,441	$ 168,262
Less accumulated depreciation	(120,616)	(119,513)
Total property and equipment - net	46,825	48,749
Land
Property, Plant and Equipment [Line Items]
Property and equipment - gross	3,435	3,435
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 21,590	21,590
Buildings \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	39 years
Buildings \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	40 years
Building Improvements
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 60,584	60,584
Building Improvements \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	5 years
Building Improvements \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	40 years
Machinery and Equipment
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 67,996	68,434
Machinery and Equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	3 years
Machinery and Equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	15 years
Furniture, fixtures and office equipment
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 4,114	4,114
Furniture, fixtures and office equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	5 years
Furniture, fixtures and office equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	10 years
Computer Equipment and Software
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	3 years
Property and equipment - gross	$ 9,519	9,519
Construction in Progress
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 203	$ 586

Property and Equipment - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Impairment charges allocated to individual asset groups		$ 140.4
Property and equipment impairment	$ 0.7

Depreciation Expense Related to Property and Equipment (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 597	$ 3,165	$ 1,775	$ 8,282

Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accrued Expenses and Other Current Liabilities [Line Items]
Salary and related expenses	$ 7,533	$ 5,662
Sales and marketing services	4,036
Professional fees	1,300	931
Discounts and allowances for commercial product sales	623
Other services	260	309
Accrued interest	212	615
Other	200	174
Construction in progress		238
Accrued expenses and other current liabilities	$ 14,164	$ 7,929

Related-Party Arrangements - Additional Information (Detail)	1 Months Ended		9 Months Ended
	Oct. 31, 2013 USD ($)	Oct. 31, 2007 USD ($)	Sep. 30, 2016 USD ($)	May 31, 2015 ft²
Related Party Transaction [Line Items]
Amount available for future borrowings			$ 30,100,000
Additional borrowings			$ 0
Principal stockholder
Related Party Transaction [Line Items]
Loan agreement with related party	$ 370,000,000	$ 350,000,000
Principal stockholder \| Amended Agreement
Related Party Transaction [Line Items]
Maturity date			Jan. 05, 2020
Principal stockholder \| Loan Arrangement
Related Party Transaction [Line Items]
Principal amount outstanding under credit facility			$ 49,500,000
Amount available for future borrowings			$ 30,100,000
Fixed borrowing rate			5.84%
Accrued interest payable			$ 8,600,000
Related party transaction prepayment period			90 days
Aggregate principal amount cancelled			$ 105,000,000
Principal stockholder \| Loan Arrangement \| Maximum
Related Party Transaction [Line Items]
Amount prepaid for cancellation of indebtedness			$ 200,000,000
Principal stockholder \| Loan Arrangement \| Minimum
Related Party Transaction [Line Items]
Number of months advances outstanding			12 months
Related Party Debt \| Letter Agreement
Related Party Transaction [Line Items]
Description of variable rate interest			The interest rate will increase to the one-year LIBOR calculated on the date of the initial advance or in effect on the date of default, whichever is greater, plus 5% per annum.
Related Party Debt \| Letter Agreement \| LIBOR
Related Party Transaction [Line Items]
Interest rate (LIBOR)			5.00%
Mann Foundation \| Sublease Agreement
Related Party Transaction [Line Items]
Area of office space leased \| ft²				12,500
Lease expiration period			2017-04

Schedule of Lease Payments to the Mann Foundation (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Mann Foundation \| Sublease Agreement
Lease and Rental Expense [Line Items]
Lease Payments	$ 67	$ 65	$ 200	$ 109

Summary of Senior Convertible Notes (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Principal amount	$ 27,690	$ 27,690
Unamortized premium	486	660
Unaccreted debt issuance costs	(547)	(737)
Net carrying amount	$ 27,629	$ 27,613

Senior Convertible Notes - Additional Information (Detail)		3 Months Ended		9 Months Ended
	Aug. 10, 2015 d $ / shares shares	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Jul. 28, 2015 USD ($)
Deerfield
Debt Instrument [Line Items]
Amortization of notes premium \| $		$ 428,000	$ 397,000	$ 1,280,000	$ 1,142,000
5.75% Senior convertible notes due August 15, 2018
Debt Instrument [Line Items]
Maturity date	Aug. 15, 2018
Senior notes, effective interest rate	5.75%
No of convertible shares	147.0859
Principal amount per share \| $ / shares	$ 1,000
Conversion price of shares \| $ / shares	$ 6.80
Percentage of repurchase price	100.00%
Debt Instrument, redemption description				On or after the date that is one year following the original issue date of the 2018 notes, the Company will have the right to redeem for cash all or part of the 2018 notes if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for 20 or more trading days during the 30 consecutive trading day period ending on the trading day immediately prior to the date of the redemption notice. The redemption price will equal the sum of 100% of the principal amount of the 2018 notes to be redeemed, plus accrued and unpaid interest.
Percentage of conversion price equaling stock price	130.00%
Number of trading days \| d	20
Consecutive trading days	30 days
Debt Issuance Cost \| $						$ 800,000
Amortization of notes premium \| $		59,000,000	29,000,000	$ 174,000,000	29,000,000
Accretion of debt issuance costs \| $		$ 65,000,000	$ 0	$ 190,000,000	$ 0
5.75% Senior convertible notes due August 15, 2018 \| If certain fundamental changes occur
Debt Instrument [Line Items]
Conversion price of shares \| $ / shares	$ 6.80
Number of shares to be converted \| shares	747,100
5.75% Senior convertible notes due August 15, 2018 \| Minimum \| If certain fundamental changes occur
Debt Instrument [Line Items]
Share price on date of conversion \| $ / shares	$ 4.82
Senior convertible notes due December 31, 2019 \| Deerfield
Debt Instrument [Line Items]
Senior notes, effective interest rate		9.75%		9.75%
Senior convertible notes due December 31, 2019 \| Deerfield \| Less portion of commitment asset
Debt Instrument [Line Items]
Senior notes, effective interest rate		8.75%		8.75%

Collaborative Arrangement - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Sep. 23, 2014
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Carrying value	$ 27,629,000	$ 27,629,000		$ 27,613,000
Paid-in-kind interest		4,125,000	$ 798,000
Sanofi-Aventis Deutschland GmbH \| Mortgage Loan
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Carrying value	17,400,000	17,400,000
License and Collaboration Agreement with Sanofi
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Maximum secured loan facility					$ 175,000,000
Senior notes, effective interest rate					8.50%
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Maximum secured loan facility	175,000,000	175,000,000
Carrying value	71,500,000	71,500,000
Secured loan facility, amount borrowed		71,500,000
Secured loan facility, amount earned	300,000
Secured loan facility, amount owed	$ 71,200,000	71,200,000
Paid-in-kind interest		5,800,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| Operating loss Sharing
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Company's total portion of loss sharing		$ 71,200,000

Fair Value of Financial Instruments - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	May 31, 2016	Dec. 31, 2015	Sep. 23, 2014	Jul. 01, 2013
Fair Value of Financial Instruments [Line Items]
Cash equivalents, money market funds	$ 33,700,000		$ 55,800,000
Debt facility principal amount	27,690,000		27,690,000
Fair value of Milestone Rights		$ 44,700,000
Carrying value	27,629,000		$ 27,613,000
License and Collaboration Agreement with Sanofi
Fair Value of Financial Instruments [Line Items]
Maximum secured loan facility				$ 175,000,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH
Fair Value of Financial Instruments [Line Items]
Maximum secured loan facility	175,000,000
Carrying value	71,500,000
Estimated fair value	61,800,000
Senior convertible notes due December 31, 2019 \| Deerfield
Fair Value of Financial Instruments [Line Items]
Debt facility principal amount	55,000,000
Less portion of commitment asset \| Senior convertible notes due December 31, 2019 \| Deerfield
Fair Value of Financial Instruments [Line Items]
Debt facility principal amount	20,000,000
Milestone Rights Liability \| Deerfield \| Maximum
Fair Value of Financial Instruments [Line Items]
Contingent liability for milestone payments					$ 90,000,000
Milestone Rights Liability \| Senior convertible notes due December 31, 2019 \| Deerfield
Fair Value of Financial Instruments [Line Items]
Long term liability	8,900,000				$ 13,100,000
Fair Value, Inputs, Level 3 \| Milestone Rights Liability
Fair Value of Financial Instruments [Line Items]
Fair value of Milestone Rights	$ 15,300,000
Fair Value, Inputs, Level 3 \| Market Approach Valuation Technique \| 5.75% Senior convertible notes due August 15, 2018 \| Convertible Debt Securities
Fair Value of Financial Instruments [Line Items]
Fair value assumption, risk-free rate	20.00%
Fair value assumption, stock price volatility	90.00%
Fair Value, Inputs, Level 3 \| Income Approach Valuation Technique \| Sanofi-Aventis Deutschland GmbH
Fair Value of Financial Instruments [Line Items]
Market discount rate	10.00%
Fair Value, Inputs, Level 3 \| Income Approach Valuation Technique \| Senior convertible notes due December 31, 2019
Fair Value of Financial Instruments [Line Items]
Debt facility principal amount	$ 20,000,000
Market discount rate	12.00%
Fair Value, Inputs, Level 3 \| Income Approach Valuation Technique \| Less portion of commitment asset \| Senior convertible notes due December 31, 2019
Fair Value of Financial Instruments [Line Items]
Debt facility principal amount	$ 40,000,000
Market discount rate	11.00%
Fair Value, Inputs, Level 3 \| Income Approach Valuation Technique \| Milestone Rights Liability
Fair Value of Financial Instruments [Line Items]
Market discount rate	13.50%

Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Financial liabilities:
Financial liabilities fair value	$ 178.6	$ 150.6
Sanofi-Aventis Deutschland GmbH
Financial liabilities:
Financial liabilities fair value	61.8	36.5
Warrant Liability
Financial liabilities:
Financial liabilities fair value	4.9
Milestone Rights Liability
Financial liabilities:
Financial liabilities fair value	15.3	14.4
Senior Convertible Notes \| Convertible Debt Securities
Financial liabilities:
Financial liabilities fair value	21.7	21.3
Facility financing obligation
Financial liabilities:
Financial liabilities fair value	74.9	78.4
Fair Value, Inputs, Level 3
Financial liabilities:
Financial liabilities fair value	178.6	150.6
Fair Value, Inputs, Level 3 \| Sanofi-Aventis Deutschland GmbH
Financial liabilities:
Financial liabilities fair value	61.8	36.5
Fair Value, Inputs, Level 3 \| Warrant Liability
Financial liabilities:
Financial liabilities fair value	4.9
Fair Value, Inputs, Level 3 \| Milestone Rights Liability
Financial liabilities:
Financial liabilities fair value	15.3	14.4
Fair Value, Inputs, Level 3 \| Senior Convertible Notes \| Convertible Debt Securities
Financial liabilities:
Financial liabilities fair value	21.7	21.3
Fair Value, Inputs, Level 3 \| Facility financing obligation
Financial liabilities:
Financial liabilities fair value	$ 74.9	$ 78.4

Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 1,502	$ 2,600	$ 4,130	$ 6,378

Accounting for Stock-Based Compensation - Additional Information (Detail)	3 Months Ended			9 Months Ended
	Sep. 30, 2016 USD ($) Tranche $ / shares shares	Jun. 30, 2016 USD ($) Tranche $ / shares shares	Mar. 31, 2016 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock units issued \| shares	374,900	1,088,050	2,364,200
Number of stock options issued \| shares	272,900	1,140,200	4,920,267
Share-based Compensation Arrangement by Share-based Payment Award, Options,grant date fair value \| $ / shares	$ 0.55	$ 0.63
Weighted average vesting period for unrecognized compensation cost				3 years
Unrecognized compensation cost, share-based compensation arrangements		$ 0
Number of equal tranches \| Tranche	4	4
Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to options	$ 400,000			$ 400,000
Tranche achievement date				2017-09
Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, share-based compensation arrangements	0			$ 0
Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, share-based compensation arrangements	0			0
Tranche Four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, share-based compensation arrangements	$ 0			0
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options,grant date fair value \| $ / shares	$ 0.84	$ 0.91
Aggregate number of shares granted to awards, share-based compensation arrangements \| shares	470,000	4,015,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award , vesting period	4 years	4 years	4 years
Fair value of the stock options granted , value	$ 100,000	$ 700,000	$ 3,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options,grant date fair value \| $ / shares	$ 0.55	$ 0.62	$ 0.61
Unrecognized compensation cost related to options	$ 5,000,000			5,000,000
Stock Options \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock granted, share-based compensation arrangements	300,000	$ 2,500,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of Restricted stock options granted , value	$ 300,000	$ 1,000,000	$ 2,200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options,grant date fair value \| $ / shares	$ 0.84	$ 0.91	$ 0.92
Unrecognized compensation cost related to non-option	$ 5,800,000			$ 5,800,000

Net Income (Loss) per Common Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Net Income Loss Per Common Share [Line Items]
Common shares loaned under the share lending arrangement, issued and outstanding					9,000,000
Antidilutive securities not included in calculation of diluted earnings per share amount	78,085,579	30,416,127	82,158,388	30,416,127

Components of Basic and Diluted Net Income (Loss) Per Common Share Computations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Basic EPS:
Net income (loss) (numerator)	$ 126,520	$ (31,857)	$ 71,690	$ (91,426)
Weighted average common shares (denominator)	478,137	405,199	454,188	401,734
Net income (loss) per share	$ 0.26	$ (0.08)	$ 0.16	$ (0.23)
Diluted EPS:
Net income (loss) (numerator)	$ 126,520	$ (31,857)	$ 71,690	$ (91,426)
Weighted average common shares	478,137	405,199	454,188	401,734
Effect of dilutive securities - common shares issuable	4,607		178
Adjusted weighted average common shares (denominator)	482,744	405,199	454,366	401,734
Net income (loss) per share	$ 0.26	$ (0.08)	$ 0.16	$ (0.23)

Commitments and Contingencies - Additional Information (Detail) € in Millions		3 Months Ended	9 Months Ended		12 Months Ended
	Jul. 31, 2014 EUR (€)	Jun. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 EUR (€)	Dec. 31, 2015 USD ($)	Sep. 30, 2016 EUR (€)	Jul. 01, 2013 USD ($)
Commitments and Contingencies [Line Items]
Purchase commitment amount under Insulin Supply Agreement \| €	€ 120.1
Purchase obligation \| €						€ 92.4
Purchase obligation, due in 2016 \| €						€ 6.1
Purchase commitment cancellation fees			$ 5,300,000
Other commitments with other suppliers			900,000
Foreign currency transaction loss			3,035,000
Purchase obligation, purchased amount \| €				€ 6.1
Loss on purchase commitments			71,600,000		$ 66,200,000
Increase (decrease) in loss on purchase commitments			$ 5,400,000
Supply Agreement expiration period			Dec. 31, 2019	Dec. 31, 2019
Supply Agreement renewal period			2 years	2 years
Insulin Put
Commitments and Contingencies [Line Items]
Purchase obligation			$ 50,000,000
Increase (decrease) in loss on purchase commitments			9,200,000
Proceeds from the exercise of the Insulin Put Option		$ 9,200,000
Other Materials
Commitments and Contingencies [Line Items]
Increase (decrease) in loss on purchase commitments			$ (1,100,000)
Deerfield \| Milestone Rights Liability \| Maximum
Commitments and Contingencies [Line Items]
Contingent liability for milestone payments							$ 90,000,000

Facility Agreement - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Jul. 01, 2013
Debt Instrument [Line Items]
Debt facility principal amount	$ 27,690,000	$ 27,690,000
Short term liability	$ 70,888,000	$ 74,582,000
Deerfield
Debt Instrument [Line Items]
Principal repayment schedule, start date	Jul. 01, 2016
Principal repayment schedule, end date	Dec. 09, 2019
Deerfield \| Senior convertible notes due December 31, 2019
Debt Instrument [Line Items]
Debt facility principal amount	$ 55,000,000
Senior notes, effective interest rate	9.75%
Principal payments due during next twelve months	$ 20,000,000
Deerfield \| Less portion of commitment asset \| Senior convertible notes due December 31, 2019
Debt Instrument [Line Items]
Debt facility principal amount	$ 20,000,000
Senior notes, effective interest rate	8.75%
Deerfield \| Less portion of commitment asset \| Minimum \| Senior convertible notes due December 31, 2019
Debt Instrument [Line Items]
Available amount of credit facility under covenant restrictions	$ 25,000,000
Deerfield \| Milestone Rights Liability \| Senior convertible notes due December 31, 2019
Debt Instrument [Line Items]
Short term liability			$ 3,200,000
Long term liability	$ 8,900,000		13,100,000
Deerfield \| Milestone Rights Liability \| Maximum
Debt Instrument [Line Items]
Contingent liability for milestone payments			$ 90,000,000

Accretion of Debt Issuance Cost and Debt Discount in Connection with Facility Financing Agreement (Detail) - Deerfield - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Debt Instrument [Line Items]
Accretion expense - debt issuance cost	$ 9	$ 9	$ 26	$ 26
Accretion expense - debt discount	$ 428	$ 397	$ 1,280	$ 1,142

Warrants - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
	May 12, 2016	May 31, 2016	Sep. 30, 2016	Sep. 30, 2016
Class of Warrant or Right [Line Items]
Number of shares sold in underwritten public offering		48,543,692
Fair value of warrants liability		$ 44,700
Exercise price of warrants		$ 1.50
Class of warrants exercised				0
Warrant fair value adjustments				$ (7,879)
A Warrants
Class of Warrant or Right [Line Items]
Fair value of warrants liability	$ 12,800		$ 4,900	$ 4,900
Class of warrants expiration period upon issuance		2 years
Valuation technique				Monte Carlo valuation pricing model
Warrant liability fair value assumptions, risk-free rate	0.76%			0.66%
Warrant liability fair value assumptions, dividend yield	0.00%			0.00%
Warrant liability fair value assumptions, remaining term	2 years			1 year 7 months 6 days
Warrant liability fair value assumptions, volatility rate	95.00%			90.00%
Warrant fair value adjustments			$ 13,200	$ 7,900
B Warrants
Class of Warrant or Right [Line Items]
Fair value of warrants liability	$ 5,000
Class of warrants expiration period upon issuance		30 months
Warrants exercisable date		2017-05
Maximum \| A Warrants
Class of Warrant or Right [Line Items]
Warrants to purchase of common stock		36,407,765
Maximum \| B Warrants
Class of Warrant or Right [Line Items]
Warrants to purchase of common stock		12,135,921
Registered Offering
Class of Warrant or Right [Line Items]
Number of shares sold in underwritten public offering		48,543,687

Schedule of Selling, General and Administrative Expenses (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Selling General And Administrative Expenses [Line Items]
Sales and marketing	$ 7,005	$ 507	$ 11,022	$ 1,616
General and administrative	6,130	11,040	20,573	31,033
Selling, general and administrative expenses	$ 13,135	$ 11,547	$ 31,595	$ 32,649

Restructuring Charges - Additional information (Detail) $ in Thousands	1 Months Ended	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2015 USD ($) Employee	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Employee	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring charges			$ 2,891		$ 2,022
Remaining accrual balance	$ 3,149	$ 3,185	3,028	$ 3,149	$ 3,185	$ 3,149	$ 3,028
Twenty Sixteen Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Percentage of workforce reduction					18.00%
Number of employees eliminated \| Employee					155
Restructuring charges					$ 1,475
Restructuring liability		1,500			1,500
Remaining accrual balance		1,475			1,475
Twenty Sixteen Restructuring Plan \| Cost of Sales
Restructuring Cost and Reserve [Line Items]
Restructuring charges		400			400
Twenty Sixteen Restructuring Plan \| Research and development
Restructuring Cost and Reserve [Line Items]
Restructuring charges		700			700
Twenty Sixteen Restructuring Plan \| Selling, General and Administrative Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges		400			400
Twenty Fifteen Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Percentage of workforce reduction	26.00%
Number of employees eliminated \| Employee	198
Restructuring charges	$ 3,200		2,891		547		6,000
Restructuring liability	3,200			3,200		3,200
Remaining accrual balance	$ 3,149	$ 1,710	3,028	3,149	$ 1,710	3,149	$ 3,028
Twenty Fifteen Restructuring Plan \| Research and development
Restructuring Cost and Reserve [Line Items]
Restructuring charges			700	2,000		2,000
Twenty Fifteen Restructuring Plan \| Selling, General and Administrative Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges			$ 2,100	$ 1,200		$ 1,200

Reconciliation of Beginning and Ending Liability Balances for Restructuring Charges (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2015	Sep. 30, 2016	Dec. 31, 2015
Restructuring Cost and Reserve [Line Items]
Accrual - Beginning balance		$ 3,149	$ 3,028
Costs incurred and charged to expense		2,891	2,022
Costs paid or settled		(3,012)	(1,865)
Accrual - Ending balance	$ 3,149	3,028	3,185	$ 3,028
Twenty Sixteen Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Costs incurred and charged to expense			1,475
Accrual - Ending balance			1,475
Twenty Fifteen Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Accrual - Beginning balance		3,149	3,028
Costs incurred and charged to expense	3,200	2,891	547	6,000
Costs paid or settled		(3,012)	(1,865)
Accrual - Ending balance	$ 3,149	$ 3,028	$ 1,710	$ 3,028