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Level 1 Inputs

Quoted prices for identical instruments in active markets.

Level 2 Inputs

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 in which all significant inputs and significant value drivers are observable.

Level 3 Inputs

Valuation derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Document And Entity Information - USD ($)	12 Months Ended
Document And Entity Information - USD ($)	Dec. 31, 2011	Feb. 29, 2012	Jun. 30, 2011
Document And Entity Information [Abstract]
Entity Registrant Name	CADENCE PHARMACEUTICALS INC
Entity Central Index Key	0001333248
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		85,516,607
Entity Well-known Seasoned Issuer	No
Entity Public Float			$ 125,600,000
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010
Assets
Cash and cash equivalents	$ 82,609	$ 112,175
Investments in marketable securities	44,618	21,966
Restricted cash	450	150
Accounts receivable, net	2,703
Inventory	1,388	485
Prepaid expenses	1,071	1,232
Other current assets	90	36
Total current assets	132,929	136,044
Property and equipment, net	10,569	8,986
Intangible assets, net	13,433	15,000
Restricted cash	190	190
Other assets	7,039	3,566
Total assets	164,160	163,786
Liabilities and Stockholders' Equity
Accounts payable	3,801	3,416
Accrued liabilities	10,945	7,286
Deferred revenue	1,291
Current portion of long-term debt, less discount of $- and $429, respectively		4,023
Total current liabilities	16,037	14,725
Long-term debt, less current portion and discount of $1,304 and $894, respectively	28,696	24,654
Other long-term liabilities	117	447
Total liabilities	44,850	39,826
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2011 and 2010, respectively
Common stock, $0.0001 par value; 100,000,000 shares authorized, 85,511,607 shares and 63,107,361 shares issued and outstanding at December 31, 2011 and 2010, respectively	9	6
Additional paid-in capital	485,982	397,616
Accumulated other comprehensive income	2
Accumulated deficit	(366,683)	(273,662)
Total stockholders' equity	119,310	123,960
Total liabilities and stockholders' equity	$ 164,160	$ 163,786

Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	85,511,607	63,107,361
Common stock, shares outstanding	85,511,607	63,107,361
Long - Term Debt, Current [Member]
Discount on debt		$ 429
Long - Term Debt, Noncurrent [Member]
Discount on debt	$ 1,304	$ 894

Statements Of Operations - USD ($)
shares in Thousands, $ in Thousands

12 Months Ended

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2009

Revenues:

Product revenue, net

$ 11,486

License revenue

5,210

Total net revenues

16,696

Costs and expenses:

Cost of product sales

12,406

Amortization of patent license

1,567

Research and development

8,885

$ 13,757

$ 19,464

Selling, general and administrative

81,504

39,347

24,620

Other

1,076

1,813

413

Total costs and expenses

105,438

54,917

44,497

Loss from operations

(88,742)

(54,917)

(44,497)

Other (expense) income:

Interest income

136

106

182

Interest expense

(4,424)

(2,144)

(1,137)

Other income (expense)

312

(39)

Total other expense, net

(4,279)

(1,726)

(994)

Loss before income tax

(93,021)

(56,643)

(45,491)

Net loss

$ (93,021)

$ (56,643)

$ (45,491)

Basic and diluted net loss per share

^[1]

$ (1.41)

$ (1.09)

$ (0.93)

Shares used to compute basic and diluted net loss per share

^[1]

66,075

52,042

48,754

[1]	As a result of the issuance of common stock pursuant to public offerings in the fourth quarter of 2011 and 2010, there is a lack of comparability in the per share amounts between the periods presented. Please see Note 2 of the Notes to Financial Statements for further discussion.

Statements Of Stockholders' Equity - USD ($) $ in Thousands	Private Placement [Member] Common Stock [Member]	Private Placement [Member] Additional Paid-In Capital [Member]	Private Placement [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income [Member]	Accumulated Deficit [Member]	Comprehensive Loss [Member]	Total
Balance at Dec. 31, 2008				$ 4	$ 197,965		$ (171,528)		$ 26,441
Balance, shares at Dec. 31, 2008				38,364,000
Issuance of common stock, net of offering costs	$ 1	$ 86,242	$ 86,243
Issuance of common stock, net of offering costs, shares	12,040,000
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans					115				115
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans, shares				81,000
Stock-based compensation					7,755				7,755
Net Loss							(45,491)	$ (45,491)	(45,491)
Balance at Dec. 31, 2009				$ 5	292,077		(217,019)	(45,491)	75,063
Balance, shares at Dec. 31, 2009				50,485,000
Issuance of warrants to purchase common stock					1,237				1,237
Issuance of common stock, net of offering costs				$ 1	93,554				93,555
Issuance of common stock, net of offering costs, shares				12,500,000
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans					235				235
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans, shares				122,000
Stock-based compensation					10,513				10,513
Net Loss							(56,643)	(56,643)	(56,643)
Balance at Dec. 31, 2010				$ 6	397,616		(273,662)	(56,643)	$ 123,960
Balance, shares at Dec. 31, 2010				63,107,000					63,107,361
Issuance of warrants to purchase common stock					390				$ 390
Issuance of common stock, net of offering costs				$ 2	77,300				77,302
Issuance of common stock, net of offering costs, shares				21,800,000
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans				$ 1	1,443				1,444
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans, shares				605,000
Stock-based compensation					9,233				9,233
Unrealized gain on marketable securities, net						$ 2		2	2
Net Loss							(93,021)	(93,021)	(93,021)
Balance at Dec. 31, 2011				$ 9	$ 485,982	$ 2	$ (366,683)	$ (93,019)	$ 119,310
Balance, shares at Dec. 31, 2011				85,512,000					85,511,607

Statements Of Stockholders' Equity (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Issuance of common stock, offering costs	$ 4,448	$ 6,445	$ 353
Warrants to purchase common stock	158	255	6,020
Price per warrant to purchase common stock			$ 0.125
Common stock, price per share	$ 3.79	$ 7.0645	7.84
Issuance Of Stock In February [Member]
Common stock, price per share			$ 7.13
Issuance Of Stock In November And December [Member]
Common stock, price per share		$ 8
Issuance Of Stock In November [Member]
Common stock, price per share	$ 3.75

Statements Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
Statements Of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Operating activities
Net loss	$ (93,021)	$ (56,643)	$ (45,491)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,670	758	537
(Gain) loss on disposal of assets	(66)	55	7
Impairment of long-lived assets		1,522
Inventory write-down	5,574
Adjustment to estimate of impairment of long-lived assets			(181)
Impairment of available-for-sale securities			45
Stock-based compensation	9,233	10,513	7,755
Non-cash interest expense	49	32	26
Amortization of intangible assets	1,567
Amortization of discount on note payable	409	373	219
Accretion of premiums on available-for-sale securities, net of accretion of discounts	5	29	130
Changes in operating assets and liabilities:
Accounts receivable	(2,703)
Prepaid expenses and other current assets	104	(585)	(444)
Intangible assets		(15,000)
Inventory	(6,477)	(485)
Accounts payable	360	653	(1,930)
Deferred revenue	1,291
Accrued liabilities and other liabilities	3,853	(82)	(2,721)
Net cash used in operating activities	(78,152)	(58,860)	(42,048)
Investing activities
Purchases of marketable securities	(82,681)	(24,201)	(10,738)
Maturities of marketable securities	60,006	8,250	4,575
Payment for option purchase right	(3,500)	(3,500)
Restricted cash	(300)	1,348	1,046
Purchases of property and equipment	(2,733)	(3,754)	(3,267)
Proceeds from the sale of property and equipment	66	3
Net cash used in investing activities	(29,142)	(21,854)	(8,384)
Financing activities
Proceeds from issuance of common stock	78,746	93,790	86,358
Borrowings under debt agreements, net of fees	3,434	29,591
Principal payments under debt agreements	(4,452)	(6,351)	(7,694)
Net cash provided by financing activities	77,728	117,030	78,664
Net (decrease) increase in cash and cash equivalents	(29,566)	36,316	28,232
Cash and cash equivalents at beginning of period	112,175	75,859	47,627
Cash and cash equivalents at end of period	82,609	112,175	75,859
Supplemental disclosures
Issuance of warrants in connection with loan and security agreement	390	1,237
Shares in unconsolidated entity acquired in option purchase agreement		500
Property and equipment purchases in accounts payable and accrued expenses	891	371	1,101
Cash paid for interest and fees	$ 4,311	$ 1,986	$ 814

The Company

12 Months Ended

Dec. 31, 2011

The Company [Abstract]

The Company

The Company

Cadence Pharmaceuticals, Inc. (the "Company") was incorporated in the state of Delaware in May 2004. The Company is a biopharmaceutical company focused on acquiring, in-licensing, developing and commercializing proprietary product candidates principally for use in the hospital setting. In March 2006, the Company in-licensed the exclusive U.S. and Canadian rights to OFIRMEV^®, an intravenous formulation of acetaminophen, from Bristol-Myers Squibb Company ("BMS"). In November 2010, the Food and Drug Administration ("FDA") approved the Company's New Drug Application ("NDA") for OFIRMEV for the management of mild to moderate pain, moderate to severe pain with adjunctive opioid analgesics, and the reduction of fever in adults and children two years of age and older. In January 2011, the Company commenced commercial sales of the product in the U.S., and therefore it is no longer considered a development stage company.

Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

Summary of Significant Accounting Policies

Management Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Examples of such estimates include, but are not limited to, inventory obsolescence and valuation, restructuring liabilities, stock-based compensation, and commitments and contingencies. On a regular basis, the Company reviews its estimates to ensure the estimates appropriately reflect changes in its business or as new information becomes available. Management believes that these estimates are reasonable, however, actual results could materially differ from these estimates.

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current period presentation. Specifically, it has consolidated its sales and marketing expense and its general and administrative expense into a single selling, general and administrative expense category. This reclassification had no impact on the net loss from operations or stockholders' equity as previously reported.

Revenue Recognition

The Company recognizes revenue when there is persuasive evidence that an arrangement exists, title has passed, collection is reasonably assured and the price is fixed or determinable. It sells OFIRMEV mostly to wholesalers who in-turn sell the product to hospitals and other end-user customers. Sales to wholesalers provide for selling prices that are fixed on the date of sale, although the Company offers certain discounts to group purchasing organizations and governmental programs. The wholesalers take title to the product, bear the risk of loss of ownership, and have economic substance to the inventory. Further, the Company has no significant obligations for future performance to generate pull-through sales, however it does allow wholesalers to return product that is damaged or received in error. In addition, the Company allows for product to be returned beginning six months prior to, and ending twelve months following, product expiration. As OFIRMEV is the Company's first and only commercially available product and there is a limited amount of product return data, the Company does not believe it has sufficient sales and returns history at this time to accurately predict product returns from its wholesaler distribution channel. Therefore, the Company is deferring the recognition of revenue until the wholesalers sell OFIRMEV to hospitals or other end-user customers. It will continue to defer revenue recognition until the point at which it has obtained sufficient sales history to accurately estimate returns from the wholesalers. Shipments of product that are not recognized as revenue are treated as deferred revenue until evidence exists to confirm that pull-through sales to hospitals or other end-user customers have occurred.

The Company records certain sales reserves and allowances as a reduction to gross revenue and deferred revenue, as applicable. These reserves and allowances include distribution service fees, a prompt payment reserve, a group purchasing discount and chargeback reserve, and discounts to governmental programs, as applicable. Distribution service fees arise from contractual agreements the Company has with certain wholesalers for distribution services they provide with respect to OFIRMEV. These fees are generally a fixed percentage of the price of the product purchased by these wholesalers. The prompt payment reserve is based upon cash discounts the Company offers certain wholesalers as an incentive to meet certain payment terms. It accounts for these cash discounts at the time the sale is made to the wholesalers and reduces its accounts receivable accordingly. The group purchasing discount and chargeback reserve is based upon contracted discounts the Company provides to members of certain purchasing groups. The Company estimates the sales through its wholesalers to these group purchasing organizations and accrues for the chargebacks it anticipates from its wholesalers for the difference between the current retail price and the reduced price paid by the members of the group purchasing organizations. A group purchasing organization fee the Company incurs for these transactions is also recorded at the time of sale. The Company also provides governmental programs a predetermined discount that is recorded at the time of sale.

Revenue from the Company's data license agreement is recognized upon delivery of the goods and services provided, based upon the consideration allocated to each deliverable. The Company allocates the consideration to each deliverable based upon its review of the agreement pursuant to multiple-element arrangement guidance. See Note 9 for further discussion.

Accounts Receivable

The Company extends credit to its customers in the normal course of business based upon an evaluation of the customer's credit history, financial condition and other factors. Trade accounts receivable are recorded on gross sales to wholesalers, net of allowances for prompt payment and other discounts, chargebacks and doubtful accounts. Wholesaler distribution fees are recorded as accounts payable and accrued liabilities. Estimates of allowances for doubtful accounts are determined by evaluating individual customer circumstances, historical payment patterns, length of time past due and economic and other factors. As of December 31, 2011 and December 31, 2010, the Company had no reserves for doubtful accounts on its balance sheets. Further, during the years ended December 31, 2011, 2010 and 2009, no charges were incurred to reserve or write-off past due accounts.

Fair Value Reporting

The Company's financial instruments consist of cash and cash equivalents, marketable securities, restricted cash, trade receivables and payables, an option purchase right, equity securities of an unconsolidated privately-held entity, accrued liabilities and long-term debt. Fair value estimates of these instruments are made at a specific point in time, based on relevant market information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The carrying amount of cash and cash equivalents, restricted cash, trade receivables and payables, accrued liabilities and long term debt are generally considered to be representative of their respective fair values because of the short-term nature of those instruments. The Company's option purchase right and equity securities of an unconsolidated privately-held entity have been initially valued based upon the transaction price under the cost method of accounting. These assets are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The fair value of marketable securities is based upon market prices quoted on the last day of the fiscal period.

Current accounting guidance defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and requires certain disclosures about fair value measurements. The valuation techniques included in the guidance are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions and are classified into the following fair value hierarchy:

The following tables present further detail of the financial instruments carried at fair value on the Company's balance sheet as of December 31, 2011 and 2010. The tables do not include assets and liabilities which are measured at historical cost or on any basis other than fair value (in thousands):


Description	Balance at December 31, 2011		Fair Value Measurements as of December 31, 2011
Description	Balance at December 31, 2011		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	74,389	$	74,389	$	—	$	—
Debt instruments—Corporate debt obligations		6,346		—		6,346		—
Investments in marketable securities—short-term:
Debt instruments—Corporate debt obligations		37,394		—		37,394		—
Debt instruments— Municipal debt obligations		6,224		—		6,224		—
Certificates of deposit		1,000		—		1,000		—

Assets at fair value	$	125,353	$	74,389	$	50,964	$	—


Description	Balance at December 31, 2010		Fair Value Measurements as of December 31, 2010
Description	Balance at December 31, 2010		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	107,611	$	107,611	$	—	$	—
Debt instruments—Corporate debt obligations		4,500		—		4,500		—
Investments in marketable securities—short-term:
Debt instruments—Municipal debt obligations		15,466		—		15,466		—
Debt instruments—Corporate debt obligations		5,500		—		5,500		—
Certificates of deposit		1,000		—		1,000		—

Assets at fair value	$	134,077	$	107,611	$	26,466	$	—

The Company's level 2 financial instruments are valued using market prices on less active markets and model-derived valuations with observable valuation inputs such as interest rates and yield curves. The Company obtains the fair value of Level 2 financial instruments from a third-party pricing service, which the Company validates through independent valuation testing and review of portfolio valuations provided by the Company's investment managers.

Cash Equivalents

The Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. These investments may include money market funds, U.S. Government agencies, corporate debt securities and commercial paper. As of December 31, 2011 and 2010, the Company's cash equivalents were $80,735,000 and $112,111,000, respectively.

Marketable Securities

The Company determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. The Company's investment policy set minimum credit quality criteria and maximum maturity limits on its investments to provide for safety of principle, liquidity and a reasonable rate of return. Available-for-sale securities are recorded at fair value, based on current market valuations. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and are reported as a separate component of other comprehensive income until realized. Realized gains and losses are included in non-operating other income (expense) on the statement of operations and are derived using the specific identification method for determining the cost of the securities sold.

The Company has classified its investment holdings as available-for-sale, as the sale of such securities may be required prior to maturity to implement management strategies. During the year ended December 31, 2009 the Company recorded an impairment charge to reduce the value of an available-for-sale equity security by $45,000 as the market value was significantly below the security's carrying value. No such charges were incurred for the years ended December 31, 2011 and 2010. See Note 3 for further discussion.

Concentration Risk

Credit Risk. Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash, cash equivalents, restricted cash and marketable securities. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain safety and liquidity. To date, the Company has not experienced any material realized losses on its cash, cash equivalents, restricted cash and marketable securities.

Manufacturing. The Company depends on an outsourced manufacturing strategy for its products. Currently, it has a primary third-party manufacturer and a supplemental manufacturer approved for the production of OFIRMEV. Further, the Company relies upon a single source for the active pharmaceutical ingredient for OFIRMEV at both third-party manufacturers.

Customers. The Company has entered into distribution agreements with three major pharmaceutical wholesalers to supply OFIRMEV across the U.S. through their distribution centers and a majority of the Company's sales are to these customers. These customers represented approximately 93% of the Company's product revenue for 2011 and approximately 92% of the Company's accounts receivable balance at December 31, 2011. However, these wholesalers sell OFIRMEV to hospitals and other end-user customers and as of December 31, 2011, approximately 2,200 accounts had ordered OFIRMEV. See Note 12 for further detail of our significant customers.

Inventories

The Company states its inventories at the lower of cost or market. The Company uses a combination of standard and actual costing methodologies to determine its cost basis for its inventories. These methodologies approximate actual costs on a first-in, first-out basis. In addition to stating inventory at the lower of cost or market, the Company also evaluates inventory each period for excess quantities and obsolescence. This evaluation includes identifying those items specifically identified as obsolete and reserving them, analyzing forecasted demand versus quantities on hand and reserving for the excess, and identifying other specific reserves. For 2011, the Company recorded a charge for inventory losses of $5,574,000 in cost of sales to write-down certain inventory manufactured to its estimated net realizable value. The product in question was placed on indefinite hold pending the outcome of an investigation into unidentified particulate matter observed during routine product stability testing. The charge is based upon the Company's best estimate of the value it will realize from the sale, if any, of the product and is being recorded due to uncertainty as to the amount of time that may be required to complete the investigation and whether the product will have sufficient remaining shelf life or otherwise be saleable after the investigation is completed.

Royalty and License Payments

Pursuant to the terms of its license agreement with BMS, the Company is required to make royalty payments based upon net sales of OFIRMEV, subject to annual minimums. The Company will accrue for these payments as the product is sold, or otherwise deemed obligated. Additionally, the Company paid $15,000,000 under the license agreement upon the NDA approval of OFIRMEV in November 2010 and may be required to make future milestone payments of up to $25,000,000 based the achievement of certain levels of net sales. The Company has capitalized the $15,000,000 payment as an intangible asset on its balance sheet and is amortizing this balance over the estimated useful life of the licensed patents. As of December 31, 2011, the Company had amortized an aggregate $1,567,000 of the payment and the estimated aggregate amortization expense of the payment for each of the five succeeding fiscal years is approximately $1,343,000. The Company will accrue for future milestone payments as they are anticipated and amortize the payments over the period in which the milestone is achieved.

Advertising Expense

The Company records the cost of its advertising efforts when services are performed or goods are delivered. The Company incurred advertising costs of approximately $2,181,000 and $828,000, respectively, for the years ended December 31, 2011 and 2010. No advertising expense was incurred during the year ended December 31, 2009. As of December 31, 2011 and 2010, the Company capitalized $24,000 and $30,000, respectively, of advertising costs in prepaid expenses.

Shipping and Handling Costs

The costs incurred by the Company for shipping and handling are classified as cost of product sales. The Company does not charge its customers shipping and handling costs.

Property and Equipment

Property and equipment, including leasehold improvements, are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which are generally as follows: seven years for manufacturing equipment; five years for furniture and equipment; and three years for computer equipment and software. Leasehold improvements are amortized over the shorter of their useful lives or the terms of the related leases. Asset lives are reviewed periodically to determine if appropriate and adjustments are made as necessary. Depreciation begins at the time the asset is placed in service. Maintenance and repairs are expensed as incurred.

For the years ended December 31, 2011, 2010 and 2009, the Company recorded depreciation expense of $1,670,000, $758,000 and $537,000, respectively.

Impairment of Long-Lived Assets

Long-lived assets such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or the fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

During 2010, the Company recorded a charge of $1,522,000 due to the modification of the design of the planned second production line for OFIRMEV, resulting in the partial cancellation of a capital equipment order for which the Company had identified an alternative supplier. During 2009, the Company recorded an adjustment to a previously incurred impairment charge related to the discontinuation of its omiganan pentahydrochloride development program, reducing the charge by $181,000, as actual costs incurred in disposing of the assets were less than anticipated. The impairment charge and adjustment are included in "Other" operating expenses on the Company's statement of operations for the years ended December 31, 2010 and 2009, respectively. No similar charges were incurred during the year ended December 31, 2011.

Research and Development

The Company's research and development expenses consist primarily of license fees, salaries and related employee benefits, costs associated with clinical trials managed by the Company's contract research organizations ("CROs"), and costs associated with non-clinical activities, such as regulatory and pre-commercialization manufacturing expenses. The Company uses external service providers and vendors to conduct clinical trials, to manufacture product candidates to be used in clinical trials and to provide various other research and development related products and services. The Company accounts for research and development expenditures as incurred and accrues expenses based upon estimates of work performed, patient enrollment and experience with similar contracts.

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made.

The Company assesses its income tax positions and record tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.

Stock-Based Compensation

The Company has stock-based compensation plans, which are described in Note 11. As of December 31, 2011, the Company had issued both stock option awards and restricted stock units under its stock-based compensation plans.

Stock option awards. Stock options are valued using the Black-Scholes option pricing model on the date of grant. This option pricing model involves a number of estimates, including the expected lives of stock options, the Company's anticipated stock volatility and interest rates. The following table summarizes the average estimates the Company used in the Black-Scholes option pricing model for the years ended December 31, 2011, 2010 and 2009, to determine the fair value of stock options granted during each period:


	Year Ended December 31,
	2011	2010	2009
Risk free interest rates	2.2%	2.7%	2.2%
Expected life in years	6.2 years	5.9 years	6.0 years
Expected dividend yield	0.0%	0.0%	0.0%
Expected volatility	73.9%	76.3%	71.6%

The Company determines its risk-free interest rate assumption based on the U.S. Treasury yield for obligations with contractual lives similar to the expected lives of the Company's share-based payment awards being valued. The weighted-average expected life of options has historically been calculated using the simplified method, as prescribed by the Securities and Exchange Commission ("SEC"), due to the lack of relevant historical exercise data. In addition, due to the Company's limited historical stock price volatility data, the estimated volatility has historically been calculated by incorporating the historical volatility of comparable companies. In 2011, the Company began to incorporate the historical stock price volatility and the implied volatility of its exchanged traded options in determining the expected volatility. The assumed dividend yield was based on the Company's expectation of not paying dividends in the foreseeable future. Forfeitures are estimated based upon the historical and anticipated future experience.

Based upon these assumptions, the Company has estimated the per share weighted-average grant date fair value of its options granted for the years ended December 31, 2011, 2010 and 2009 at $5.67, $5.99 and $5.99, respectively.

Restricted stock unit awards. Restricted stock units ("RSUs") are valued based on the fair market value of the Company's stock on the date of grant and the Company recognizes expense for RSUs if vesting is considered probable. The weighted-average grant date fair value of the RSUs granted in 2010 and 2009 was $10.38 and $10.91 respectively. There were no RSUs granted in 2011.

Compensation expense for all stock-based payment awards is recognized using the straight-line method. Stock-based compensation expense recognized during the period is based on the value of the portion of awards that is ultimately expected to vest. Hence, the gross expense is reduced for estimated forfeitures and adjusted for the probability of achieving performance criteria. If awards are forfeited prior to vesting, all previous expense recognized is recovered during the period in which the forfeiture occurs.

The table below summarizes the total stock-based compensation expense included in the Company's statements of operations for the periods presented (in thousands):


	Year Ended December 31,
	2011		2010		2009
Cost of product sales	$	297	$	—	$	—
Research and development		2,308		3,058		2,577
Selling, general and administrative		6,628		7,455		5,178

Total stock-based compensation expense included in loss from operations	$	9,233	$	10,513	$	7,755

The compensation expense related to unvested stock options and RSUs not yet recognized was approximately $15,580,000 at December 31, 2011. This expense is expected to be recognized over a weighted-average period of approximately 35 months. The total fair value of shares vested during the years ended December 31, 2011, 2010 and 2009 was $9,852,000, $9,273,000 and $6,546,000, respectively.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Components of comprehensive income (loss) include foreign currency translation adjustments and unrealized gains and losses on the changes in fair value of investments. These components are added, net of their related tax effect, to the reported net income (loss) to arrive at comprehensive income (loss). The balance of accumulated other comprehensive income at December 31, 2011 was comprised of the net unrealized net holding gains on the Company's investments in marketable securities. There was no similar accumulated other comprehensive income or loss at December 31, 2010. See Note 3 for further detail of the unrealized holdings gains and losses on the Company's investments in marketable securities.

Net Loss Per Share

Net loss per share is presented as basic and diluted net loss per share. Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, stock options, restricted stock units and warrants are considered to be common stock equivalents and are not included in the calculations of diluted net loss per share as their effect is anti-dilutive. Additionally, the restricted stock units outstanding during 2011, 2010 and 2009 were excluded from the basic net loss calculation as these units do not include dividend rights and therefore are not considered to be participating securities.

The actual net loss per share amounts for the years ended December 31, 2011, 2010 and 2009 were computed based on the weighted average shares of common stock outstanding during the respective periods. The net loss per share for the years presented include the effect of the (1) 21,800,000 common shares issued pursuant to a public offering in the fourth quarter of 2011; (2) 12,500,000 common shares issued pursuant to a public offering in the fourth quarter of 2010; and (3) 12,039,794 common shares issued pursuant to a private placement in the first quarter of 2009. As a result of the issuance of these common shares, there is a lack of comparability in the basic and diluted net loss per share amounts for the periods presented.

The following is a reconciliation of the basic and diluted shares for the periods presented (in thousands):


	Year Ended December 31,
	2011		2010			2009
Shares for basic and dilutive net loss per share:
Weighted average common shares outstanding		66,075		52,043			48,841
Weighted average unvested common shares subject to repurchase		—		(1	)		(87	)

Denominator for basic and diluted earnings per share		66,075		52,042			48,754

At December 31, 2011, 2010 and 2009, options, restricted stock units and warrants totaling approximately 14,457,000 shares, 13,460,000 shares and 11,446,000 shares, respectively, were excluded from the calculation as their effect would have been anti-dilutive.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income. ASU 2011-05 amends the presentation of comprehensive income to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both options, the entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. In December 2011, the FASB issued ASU 2011-12 which defers certain provisions of ASU 2011-05. Under ASU 2011-12, the provision to require entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement of operations and the statement of equity was deferred indefinitely. During the deferral period, entities will be required to comply with all existing requirements for reclassification adjustments. The Company adopted these standards on January 1, 2012, which did not have an impact on the Company's financial results or disclosures, but will have an impact on the presentation of comprehensive income.

Investments In Marketable Securities

12 Months Ended

Dec. 31, 2011

Investments In Marketable Securities [Abstract]

Investments In Marketable Securities

Investments in Marketable Securities

In accordance with the Company's investment policy, it has invested funds in marketable debt securities. The cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for-sale investments by types and classes of security at December 31, 2011 and December 31, 2010 consisted of the following (in thousands):


At December 31, 2011	Amortized Cost Basis		Other-than- temporary Impairments		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
Available-for-sale:
Debt instruments—Corporate debt obligations	$	37,392	$	—	$	3	$	(1	)	$	37,394
Debt instruments—Municipal debt obligations		6,224		—		—		—			6,224
Certificates of deposit		1,000		—		—		—			1,000

	$	44,616	$	—	$	3	$	(1	)	$	44,618


At December 31, 2010	Amortized Cost Basis		Other-than- temporary Impairments		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
Available-for-sale:
Debt instruments—Municipal debt obligations	$	15,466	$	—	$	—	$	—	$	15,466
Debt instruments—Corporate debt obligations		5,500		—		—		—		5,500
Certificates of deposit		1,000		—		—		—		1,000

	$	21,966	$	—	$	—	$	—	$	21,966

Investments by contractual maturity are as follows (in thousands):


	December 31, 2011				December 31, 2010
	Cost		Fair Value		Cost		Fair Value
Due or callable in one year or less	$	44,616	$	44,618	$	21,966	$	21,966
Due after one year	$	—	$	—	$	—	$	—

As of December 31, 2011, the Company held two investments in an unrealized loss position, all of which have been in such a position for less than 12 months. There were no investments in unrealized loss positions as of December 31, 2010.

Selected Financial Statement Data

12 Months Ended

Dec. 31, 2011

Selected Financial Statement Data [Abstract]

Selected Financial Statement Data

Selected Financial Statement Data


	As of December 31,
	2011			2010
Inventory (in thousands):
Raw materials	$	96		$	68
Finished goods		1,292			417

	$	1,388		$	485

Property and equipment (in thousands):
Manufacturing equipment	$	6,925		$	4,016
Leasehold improvements		1,610			1,610
Computer equipment and software		1,629			1,505
Furniture and fixtures		458			455
Construction-in-process		3,965			3,813

		14,587			11,399
Less accumulated depreciation		(4,018	)		(2,413	)

Total	$	10,569		$	8,986

Accrued liabilities (in thousands):
Accrued personnel costs	$	6,896		$	3,987
Accrued manufacturing costs and equipment purchases		1,613			562
Other accrued liabilities		2,436			2,737

Total	$	10,945		$	7,286

Investment In Incline

12 Months Ended

Dec. 31, 2011

Investment In Incline [Abstract]

Investment In Incline

Investment in Incline

On June 21, 2010, the Company entered into an option agreement (the "Option Agreement") with Incline Therapeutics, Inc. ("Incline"), a privately held specialty pharmaceutical company, pursuant to which the Company obtained an exclusive, irrevocable option to acquire Incline during two option periods, and has additional rights after the expiration of the second period. Incline is developing IONSYS™ (fentanyl iontophoretic transdermal system), an investigational product candidate intended to provide patient-controlled analgesia for adult inpatients requiring opioids following surgery. As consideration for the option, the Company paid Incline a $3,500,000 upfront option fee in June 2010 and made a second payment of $3,500,000 in September 2011 upon Incline's receipt of the second tranche of its Series A financing. The Company is currently in the second of two option periods, which extends until the earliest to occur of (1) 30 days after the date on which Incline submits a supplemental NDA for IONSYS to the FDA, (2) 30 days after the filing of an initial public offering by Incline, or (3) 42 months after the effective date of the option (December 21, 2013). During this second option period, the Company may acquire Incline for an amount not to exceed $228,000,000, plus payment of an additional amount not to exceed $57,000,000 upon FDA approval of IONSYS. The Company has an exclusive right of first negotiation to acquire Incline for the six-month period following the expiration of the second option period. In addition, the Company may elect to extend the second option period for two additional three-month periods upon the payment of $2,500,000 to Incline for each period. Incline will remain primarily responsible for the development of IONSYS. However, the Company and Incline have formed a joint development committee to oversee the global development and regulatory approval for the IONSYS product candidate.

The Company has determined that Incline is a variable interest entity ("VIE"). However, because it will not absorb a disproportionate amount of Incline's expected losses or receive a disproportionate amount of Incline's expected residual returns, the Company is not the primary beneficiary of this entity at this time. Further, Cadence will have no oversight of the day-to-day operations of Incline, nor does it have sufficient rights or voting representation to influence the operating or financial decisions of Incline. Additionally, the Company was not a founder of Incline and has no additional equity or funding requirements in future financings or otherwise. Therefore, the Company is not required to consolidate Incline into its financial statements. This consolidation status could change in the future if the option agreement is exercised, or if other changes occur in the relationship between the Company and Incline. Frazier Healthcare VI, L.P. owns approximately 22.4% of Incline's Series A Preferred Stock. Alan D. Frazier, one of the Company's directors, has an ownership interest in Frazier Healthcare VI, L.P., and is a member of the general partner of the entity that serves as general partner of Frazier Healthcare VI, L.P.

In consideration of the Company's expenditure of funds in connection with conducting due diligence on IONSYS, the Company received $500,000 of Incline Series A preferred stock, or 500,000 shares, on terms generally consistent with Incline's other Series A preferred stock investors. The Company has valued the investment in the option, and the shares received from the due diligence, using the cost method and classified these investments as Level 3 in the fair value hierarchy. At the time of the first option payment in June 2010, the Company assigned $500,000 to the preferred stock and $3,000,000 to the option. The value of the second option payment in September 2011 was fully applied to the option, resulting in an aggregate option value of $6,500,000. Under the cost method, the fair value of the investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. The Company has reviewed the value allocated from the June 2010 and September 2011 payments and is not aware of any such adverse events which would be expected to negatively influence these values at December 31, 2011. As a result, no fair value estimate has been prepared with respect to this investment as the costs associated with an independent evaluation would be excessive and the available information on which to base such an assessment is both limited and highly subjective. Therefore, there have been no reductions to the aggregate $7,000,000 carrying value of the investments, which represents the Company's maximum loss exposure to Incline at December 31, 2011. Both assets are recorded as other long-term assets on the Company's balance sheets at December 31, 2011 and December 31, 2010, respectively.

Restructuring And Impairment Charges

12 Months Ended

Dec. 31, 2011

Restructuring And Impairment Charges [Abstract]

Restructuring And Impairment Charges

Restructuring and Impairment Charges

In November 2011, the Company commenced a restructuring of its workforce to focus its resources on the commercialization of OFIRMEV and reduce program costs not directly associated with such efforts. Additionally, in March 2009, the Company announced its decision to discontinue the development of its omiganan pentahydrochloride product candidate and implemented a corporate restructuring in order to reduce, and eventually eliminate, costs associated with the program.

As a result of the 2011 restructuring, the Company recorded one-time employee termination charges of $1,142,000 in connection with the termination of 17 employees. The discontinuation of the omiganan pentahydrochloride program in 2009 resulted in charges of $651,000 in connection with the termination of 11 employees. The Company also recorded impairment charges in the fourth quarter of 2008 of $2,353,000 with respect to certain omiganan pentahydrochloride manufacturing equipment, based upon management estimates of the salvage value of the equipment at the time the impairment charge was taken. The Company recorded adjustments to this impairment charge in 2009, reducing the charge by an aggregate $181,000 as actual costs incurred in disposing of the assets were less than anticipated. All such charges and credits were recorded in "Other" operating expense for the periods indicated.

The following table details the restructuring charges for severance-related costs and termination of contractual obligations for periods presented (in thousands):


	Year Ended December 31,
	2011			2010		2009
Beginning restructuring liability	$	—		$	—	$	—
Severance and termination charges incurred		1,142			—		651
Adjustments to severance and termination charges		—			—		(64	)
Severance and termination disbursements		(211	)		—		(587	)

Ending restructuring liability	$	931		$	—	$	—

The balance of the restructuring liability at December 31, 2011 is anticipated to be fully distributed in 2012.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References + Details

Loan And Security Agreement

12 Months Ended

Dec. 31, 2011

Loan And Security Agreement [Abstract]

Loan And Security Agreement

Loan and Security Agreement

In December 2011, the Company entered into a Second Amended and Restated Loan and Security Agreement (the "Second Amended Agreement") with Oxford Finance LLC ("Oxford"), Silicon Valley Bank ("SVB") and General Electric Capital Corporation ("GECC") (collectively, the "Lenders"). The Second Amended Agreement amends and restates the Company's previous Amended and Restated Loan and Security Agreement (the "Restated Agreement") entered in June 2010 with the Lenders, and provided the Company with $3,434,000 of additional net capital after deducting a $954,000 term loan final payment paid under the Restated Agreement and customary closing fees and expenses of $63,000 paid in connection with the closing of the Second Amended Agreement. The interest rate under the Second Amended Agreement is 10.99% and the Company will be required to make a final payment of 6% of the total advance at the termination of the loan.

Pursuant to the terms of the Second Amended Agreement, the Company will make interest only payments through December 2012, and in January 2013, will begin to make equal monthly principal and interest payments to fully amortize the balance over the remaining 30-month term. The Company issued warrants to purchase 158,311 shares of the Company's common stock to the Lenders in connection with the Second Amended Agreement at an exercise price $3.79 per share. The warrants are immediately exercisable, and excluding certain mergers or acquisitions, will expire on the seven-year anniversary of the date of issuance. The Company determined the relative fair value of these warrants, as detailed below, and has classified the warrants as equity, recognizing the cost as a discount on the loan issuance. The credit facility contains customary default and acceleration provisions and is secured by the Company's assets, excluding intellectual property. The Company was required to make a negative pledge of its intellectual property, which generally prohibits the Company from granting liens on its intellectual property. Under the terms of the Second Amended Agreement, the Company may be precluded from entering into certain financing and other transactions, including disposing of certain assets and paying dividends, and is subject to certain non-financial covenants and prepayment penalties. Upon the occurrence of an event of default, including a Material Adverse Change (as defined in the Second Amended Agreement), the lenders may declare all outstanding amounts due and payable under the Second Amended Agreement. As of December 31, 2011, the Company believed it was in compliance will all covenants under the Second Amended Agreement.

The Company determined that the terms of Second Amended Agreement were not substantially different than the Restated Agreement and hence has accounted for the transaction as a loan modification. As such, the fair value the warrants issued in connection with the Second Amended Agreement and the carrying value of the issuance costs and discount related to the Restated Agreement were aggregated and are being amortized to interest expense throughout the life of the Second Amended Agreement using an effective interest rate of 15.31%.

In connection with the establishment of the $30,000,000 credit facility in June 2010 under the Restated Agreement, the outstanding balance of the Company's previous $15,000,000 credit facility established in 2007 was paid in full, including accrued interest, and a $375,000 term loan final payment. The transaction was accounted for as a loan extinguishment and upon the repayment of the $15,000,000 facility, the Company recorded a charge of approximately $145,000 in the second quarter of 2010 to (1) fully amortize the balance of the loan discount and related issuance costs and (2) fully accrue the term loan final payment. The warrants issued and the upfront fees paid in connection with the Restated Agreement were recognized as a discount on the loan issuance and the legal and related expenses were recognized as debt issuance costs on the Company's balance sheets. The carrying value of these costs at the time of the loan modification in December 2011 were aggregated with the relative fair value of the warrants issued in connection with the Second Amended Agreement and are being amortized throughout the life of the Second Amended Agreement as noted above.

As of December 31, 2011 and 2010, the aggregate outstanding principal balance of the loans included on the Company's balance sheets for each period was $30,000,000. Future maturities and interest payments under the Company's Second Amended Agreement as of December 31, 2011 were as follows (in thousands):


2012	$	3,114
2013		13,778
2014		13,778
2015		8,689
2016		—

Total future payments		39,359
Less amount representing interest and fees		(9,359	)

Gross balance of long-term debt		30,000
Less unamortized discount		(1,304	)

Total present value of long-term debt	$	28,696

Warrants

In connection with the establishment of the Company's $15,000,000 credit facility with the Lenders in 2007, the Company issued six fully exercisable warrants to the Lenders to purchase an aggregate of 50,331 shares of the Company's common stock at an exercise price of $12.67 per share, expiring November 30, 2014. The Company determined the fair value of these warrants to be $474,000 under the Black-Scholes valuation model using the following assumptions: risk-free interest rate of 3.64%; dividend yield of 0.0%; expected volatility of 70.0%; and a contractual term of seven years. As of December 31, 2011, all of these warrants were outstanding.

In connection with the Restated Agreement, the Company issued three fully exercisable warrants to the Lenders in June 2010 to purchase an aggregate of 254,793 shares of the Company's common stock at an exercise price of $7.0645 per share, expiring June 18, 2017. The Company classified the warrants as equity and determined their relative fair value to be $1,237,000, using the Black-Scholes valuation model. The value of the warrants was recorded as a discount to the loan and is currently being amortized to interest expense over the term of the Second Amended Agreement pursuant to the loan modification. The warrants were valued using the following assumptions: risk-free interest rate of 2.7%; dividend yield of 0.0%; expected volatility of 76.5%; and a contractual term of seven years. As of December 31, 2011, all warrants related to the Restated Agreement were outstanding.

In connection with the Second Amended Agreement, the Company issued four exercisable warrants to the lenders in December 2011 to purchase an aggregate of 158,311 shares of the Company's common stock at an exercise price of $3.79 per share, expiring December 22, 2018. The Company classified the warrants as equity and determined their relative fair value to be $390,000, using the Black-Scholes valuation model. The value of the warrants was recorded as a discount to the note payable, and will be amortized to interest expense over the expected term of the loan agreement. The warrants were valued using the following assumptions: risk-free interest rate of 1.4%; dividend yield of 0.0%; expected volatility of 72.4%; and a contractual term of seven years. As of December 31, 2011, all warrants related to the Second Amended Agreement were outstanding.

Commitments And Contingencies

12 Months Ended

Dec. 31, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Commitments and Contingencies

Leases

In May 2006, the Company entered into a six-year operating lease for office space. In December 2011, the Company amended the lease to reduce the monthly rent charge, extend the lease term and terminate a portion of the lease, returning space to the lessor. Pursuant to the terms of the amended agreement, the basic monthly per square foot fee will be reduced commencing in April 2012 and the Company will return a portion of the leased space in September 2012. The lease will expire in December 2013 with no option to extend the term.

As security for the initial lease, a letter of credit in the initial amount of $1,581,000 was required by the landlord. The letter of credit is collateralized by a certificate of deposit in the same amount that is classified as restricted cash in the Company's balance sheet. The required amount subject to the letter of credit and corresponding certificate of deposit was eligible to be reduced by 22% on each of the first four anniversaries of the commencement of the lease and as of December 31, 2011, the letter of credit had been reduced by $1,391,000 in accordance with the agreement and the related restricted cash had been adjusted by a like amount. The value of the letter of credit and corresponding certificate of deposit, classified as restricted cash on the Company's balance sheet at December 31, 2011 and 2010, was $190,000.

The Company also leases certain office equipment under operating leases with original terms that range from one to four years and expire in 2015. As of December 31, 2011, the total future minimum payments under operating leases, including rent and office equipment, were as follows (in thousands):


2012	$	1,065
2013		792
2014		25
2015		4
2016		—
Thereafter		—

	$	1,886

Rent expense for operating leases is recorded on a straight-line basis over the life of the lease term. If a lease has a fixed and determinable escalation clause, the difference between the rent expense and rent paid is recorded as deferred rent. Rent expense, net of sublease rent income, for the years ended December 31, 2011, 2010 and 2009 was $864,000, $859,000 and $653,000, respectively.

Corporate Credit Card

In 2009, the Company entered into a pledge agreement pursuant to the establishment of a corporate credit card program whereby the Company pledged $150,000 in a certificate of deposit as collateral. During 2011, the Company increased its pledged amount by $300,000 related to an increase in its credit limit. These funds are therefore classified as restricted cash on the Company's balance sheet at December 31, 2011 and 2010, respectively.

Supply Agreements

Baxter Healthcare Corporation

In July 2007, the Company entered into a development and supply agreement (the "Supply Agreement") with Baxter Healthcare Corporation ("Baxter") for the completion of pre-commercialization manufacturing development activities and the manufacture of commercial supplies of the finished drug product for OFIRMEV with an initial term of five years. Pursuant to the terms of the Supply Agreement, Baxter received development fees from the Company upon the completion of specified development activities, which the Company expensed as these activities had no alternative future uses at the time they were incurred. The Supply Agreement also required the Company to fund specified improvements at Baxter's manufacturing facility and purchase certain equipment for use by Baxter in manufacturing OFIRMEV. Certain equipment purchased for the manufacture of OFIRMEV to which the Company retains title, has been capitalized on the Company's balance sheets as property and equipment. During the years ended December 30, 2010 and 2009, the Company reimbursed Baxter approximately $1,813,000 and $952,000, respectively, for the facility improvements under this agreement, which were expensed as these costs were incurred. No reimbursements for facility improvements were made under this agreement during the year ended December 31, 2011. During the year ended December 31, 2010, the Company reimbursed Baxter $754,000 for development fees under the Supply Agreement. No development fees were paid by the Company under the Supply Agreement during the years ended December 31, 2011 and 2009.

In January 2011, the Company amended and restated the Supply Agreement (the "Amended Supply Agreement") in connection with a plan to expand the manufacturing capacity for OFIRMEV at Baxter. Similar to the original Supply Agreement, all capital equipment and facility improvements included in the plan will be funded by the Company. The Company intends to capitalize these costs, as OFIRMEV has been approved by the FDA, however the Company is not able to reasonably estimate the cost of expansion until the capacity increase development plan is completed. Further, the Company will pay Baxter a per unit purchase price based on the amount of finished OFIRMEV drug product produced, which price will be increased annually, and may be adjusted to reflect an increase or decrease, as the case may be, in the cost of material required to manufacture OFIRMEV, subject to specified limitations. The Company is obligated to purchase a minimum number of units of OFIRMEV each year or pay Baxter an amount equal to the purchase price multiplied by the shortfall in units. In addition, Baxter will be the Company's primary supplier of OFIRMEV up to a specified number of units in each year, subject to Baxter's ability to timely supply the specified volumes required by the Company. However, if Baxter fails or declines to supply a sufficient quantity of OFIRMEV in accordance with the Company's purchase orders during a specified period of time, then the Company may purchase that quantity of OFIRMEV from third party suppliers and such quantity will be deducted from the quantity of OFIRMEV that the Company otherwise would have been required to purchase from Baxter. The Company is also obligated to reimburse Baxter for all reasonable costs directly related to work performed by Baxter in support of any change in the active pharmaceutical ingredient ("API") source or API manufacturing process. The Company recorded a charge for the fourth quarter of 2011 and it placed certain finished product inventory of OFIRMEV on indefinite hold pending the outcome of an investigation into unidentified particulate matter observed during routine product stability testing. The Company decided to temporarily suspend further production by its primary supplier until the investigation has been completed and any necessary corrective and preventative actions have been implemented. For the year ended December 30, 2011, the Company had reimbursed Baxter approximately $262,000 for facility improvements pursuant to the Amended Supply Agreement. No reimbursements under this agreement were made during the years ended December 31, 2010 and 2009.

The initial term of the Amended Supply Agreement will terminate on November 1, 2015, and will automatically renew for successive one-year periods thereafter, unless either party provides at least two years prior written notice of termination to the other party. In addition, either party may terminate the Agreement (1) within 90 days, after written notice in the event of a material uncured breach of the Agreement by the other party or (2) immediately, upon the filing of a petition of bankruptcy by the other party. The Company may also terminate the Agreement, effective 30 days after providing written notice, in the event that Baxter does not agree to the assignment of the Agreement by the Company to a competitor of Baxter. Baxter has agreed that, for the initial term and any renewals or extensions of the Agreement, neither it nor any of its affiliates will develop or commercially produce, for itself or for any third party, any intravenous formulation of a product containing acetaminophen for distribution or sale in the United States.

If the Amended Supply Agreement with Baxter is terminated, except as a result of a material uncured breach or bankruptcy by Baxter, the Company will reimburse Baxter for all materials ordered prior to the termination of the Amended Supply Agreement that are not cancelable at no cost to Baxter. Upon termination of the agreement and subject to certain exceptions, the Company will purchase from Baxter all undelivered products manufactured or packaged under a purchase order from the Company, at the price in effect at the time the purchase order was placed. The Company is also obligated to reimburse Baxter for reasonable costs incurred in returning all Company-owned equipment and for restoring Baxter's manufacturing facility to its condition prior to the installation of OFIRMEV-related improvements, other than restoration costs for changes that Baxter reasonably agrees are usable by Baxter at the time of removal of the Company-owned equipment. The Company is not able to reasonably estimate the cost and the timing of these expenses at this time and therefore cannot reasonably estimate the fair value of the retirement obligation.

Lawrence Laboratories

In December 2010, the Company entered into a supplemental Supply Agreement (the "Supplemental Agreement") with Lawrence Laboratories ("Lawrence"), an indirectly wholly-owned subsidiary of BMS, for the manufacture of commercial supplies of the finished drug product for OFIRMEV. Bristol-Myers Squibb Srl ("BMS Anagni"), an indirect subsidiary of BMS, manufactures the product on behalf of Lawrence. BMS Anagni also currently manufactures intravenous acetaminophen for sale and distribution by BMS and its affiliates in a number of countries outside of the U.S. and Canada. At the time the Supplemental Agreement was executed, the Company submitted a supplemental NDA ("sNDA") to the FDA, seeking the approval of the BMS Anagni facility as an additional manufacturing site for OFIRMEV. The FDA approved the BMS Anagni facility as an additional manufacturing site for OFIRMEV in March 2011.

Pursuant to the terms of the Supplemental Agreement, Lawrence will receive from the Company a set price for the OFIRMEV purchased, which prices may be adjusted by Lawrence, subject to specified limitations. In addition, the Company is obligated to purchase a minimum number of units each year following regulatory approval of OFIRMEV manufactured on behalf of Lawrence, or pay Lawrence an amount equal to the per-unit purchase price less Lawrence's average material and direct labor costs for OFIRMEV, multiplied by the amount of the shortfall.

The Supplemental Agreement has an initial term that ends upon the 36-month anniversary of the date the sNDA is approved by the FDA, unless the Supplemental Agreement is terminated sooner: (1) by mutual agreement of the parties, (2) by either party for convenience following eighteen months' prior written notice of termination to the other party, (3) upon the termination of the Company's license agreement for the product with BMS, or (4) upon the dissolution or termination of the Company, other than in connection with or following the assignment of the Supplemental Agreement. In addition, either party may terminate the Supplemental Agreement: (a) within 60 days after written notice in the event of a material uncured breach of the Supplemental Agreement by the other party, or (b) immediately, if the other party becomes insolvent or admits in writing its inability to pay its debts as they become due, files a petition for bankruptcy, makes an assignment for the benefit of its creditors or has a receiver or other court officer appointed for its properties or assets.

If the Supplemental Agreement is terminated by the Company for its convenience or by Lawrence due to the Company's material breach of the agreement, the Company will reimburse Lawrence for: (1) any product ordered under a firm order and received by the Company, and (2) any inventory of materials used to manufacture OFIRMEV that are specific to OFIRMEV and that Lawrence is unable to reasonably utilize. Additionally, the Company's minimum purchase requirement for the year in which the termination takes effect will be reduced proportionally, and the Company will not be required to fulfill the minimum purchase requirement for any subsequent contract year. If the Supplemental Agreement is terminated for any reason other than by the Company for its convenience or by Lawrence due to the Company's material breach of the agreement, the Company will not be required to reimburse Lawrence for any inventory of materials used to manufacture OFIRMEV, and will have no obligation to purchase the minimum purchase requirement for the year in which the termination takes effect, or for any subsequent contract year.

The combined minimum purchase requirements under the Company's two supply agreements as of December 31, 2011 were as follows (in thousands):


2012	$	14,397
2013		15,440
2014		6,613
2015		3,083
2016		—
Thereafter		—

Total	$	39,533

The ultimate liability for these obligations may be reduced if one or more of the Company's suppliers fails or declines to supply a sufficient quantity of OFIRMEV in accordance with the Company's purchase orders.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Topic 450
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

License Agreements And Acquired Development And Commercialization Rights

12 Months Ended

Dec. 31, 2011

License Agreements And Acquired Development And Commercialization Rights [Abstract]

License Agreements And Acquired Development And Commercialization Rights

License Agreements and Acquired Development and Commercialization Rights

In March 2006, the Company in-licensed the technology and the exclusive development and commercialization rights to OFIRMEV in the U.S. and Canada from BMS. BMS sublicensed these rights to the Company under a license agreement with Pharmatop. As consideration for the license, the Company paid a $25,000,000 up-front fee and, as a result of the approval of the Company's NDA for OFIRMEV in the fourth quarter of 2010, the Company paid an additional milestone payment of $15,000,000 in the fourth quarter of 2010. The Company may be required to make future milestone payments totaling up to $25,000,000 upon the achievement of certain levels of net sales. In addition, the Company is obligated to pay a royalty on net sales of the licensed products and has the right to grant sublicenses to third parties. The amount of such royalty ranges from the mid-teens to the mid-twenties, depending on the aggregate amount of net sales, and is subject to annual minimum royalty obligations. The $25,000,000 up-front fee was recognized as research and development expense at the time the payment was made. The $15,000,000 milestone payment was recorded as an intangible asset on the Company's balance sheets and is being amortized over the estimated useful life of the licensed patents. Royalty liabilities are recognized at the time the product is sold or, for minimum royalty obligations that are not anticipated to be met, over the period in which the minimum liability is incurred.

In November 2010, the Company has entered into a data license agreement among Terumo Corporation ("Terumo"), the Company and SCR Pharmatop S.A. ("Pharmatop"). Under the data license agreement, the Company provided to Terumo certain data and information resulting from the Company's clinical development program for OFIRMEV for Terumo's use in obtaining regulatory approval for and commercializing the same intravenous formulation of acetaminophen in Japan. Further, the Company will provide to Terumo, without charge, up to 500 hours of technical assistance and consulting services regarding the licensed technical information, data and know-how, as reasonably necessary to assist Terumo in obtaining regulatory approval and manufacturing capacity for the product candidate. In April 2011, the Company received an upfront payment of $5,329,000 under the terms of the data license agreement. If Terumo is successful in obtaining regulatory approval for and commercializing the product in Japan, the Company may also be entitled to an additional lump-sum payment upon the first commercial sale of the product candidate and royalty payments on any commercial sales of the product in Japan.

In accordance with multiple-element arrangement guidance, the Company determined both the data license and consulting service deliverables were separate units of accounting, each having value on a standalone basis. The Company estimated the fair value of the data license based upon similar proposals from third parties and internal costs incurred in developing the data and obtaining similar rights. The value of the consulting services was based on contracts the Company had engaged with third parties for similar services. The Company allocated the value of the payment received on a relative fair value basis and will recognize the consideration allocated to the data license upon delivery and the consideration allocated to the consulting services as such services are rendered. There is no right of return or similar refund provisions in the data license agreement. During 2011, the Company transferred the data and related information to Terumo and provided a portion of the consulting hours. For the year ended December 31, 2011, the Company recognized $5,210,000 of licensing revenue pursuant to the agreement for the data transfer and consulting hours provided. The remaining balance of $119,000 reflects the value of the outstanding consulting hours the Company is obligated to provide under the terms of the contract through November 2012. This balance is recorded as deferred revenue on the Company's balance sheet at December 31, 2011 and will be recognized as revenue as the consulting services are rendered. Any milestones or royalties received from potential sales of the product candidate will be recognized as revenue in the period earned. No similar revenue was recognized during the years ended December 31, 2010 and 2009.

Legal Matters

12 Months Ended

Dec. 31, 2011

Legal Matters [Abstract]

Legal Matters

10.

Legal Matters

In August 2011, the Company and Pharmatop filed suit in the United States District Court for the District of Delaware against Paddock Laboratories, Inc., Perrigo Company and Paddock Laboratories, LLC (collectively, "Paddock") and against Exela Pharma Sciences, LLC, Exela PharmaSci, Inc. and Exela Holdings, Inc. (collectively, "Exela"). The lawsuit follows the notices that the Company received in July 2011 from each of Paddock and Exela concerning their filings of Abbreviated New Drug Applications, or ANDAs, containing a "Paragraph IV" patent certification with the FDA for a generic version of OFIRMEV. In the lawsuit the Company alleges that Paddock and Exela have each infringed U.S. Patent Nos. 6,028,222 (the "'222 patent"), and 6,992,218 (the "'218 patent"), by filing their respective ANDAs seeking approval from the FDA to market a generic version of OFIRMEV prior to the expiration of these patents. The '222 and the '218 patents are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book"). The patent infringement lawsuit was filed within 45 days of receipt of the pertinent notice letters, thereby triggering a stay of FDA approval of the Paddock ANDA and the Exela ANDA until the earlier of the expiration of a 30-month period, the expiration of the '222 and '218 patents, the entry of a settlement order or consent decree stating that the '222 and '218 patents are invalid or not infringed, a decision in the case concerning infringement or validity that is favorable to Paddock or Exela, or such shorter or longer period as the Court may order. Each of Paddock and Exela has filed an answer in the case that asserts, among other things, non-infringement and invalidity of the asserted patents, and has also filed counterclaims. A date for the bench trial in this case has been tentatively scheduled for May 2013. Regardless of the outcome of any litigation, no ANDA can receive final approval from the FDA before expiration of the regulatory exclusivity period for OFIRMEV. Specifically, the FDA has granted OFIRMEV three years of regulatory exclusivity, which expires November 2, 2013. The Company intends to vigorously enforce its intellectual property rights relating to OFIRMEV to prevent the marketing of infringing generic products prior to the expiration of its patents. The '222 patent expires August 5, 2017 (or February 5, 2018 if pediatric exclusivity is granted) and the '218 patent expires June 6, 2021 (or December 21, 2021 if pediatric exclusivity is granted). However, given the unpredictability inherent in litigation, the Company cannot predict the outcome of this matter or any other litigation.

Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

11.

Stockholders' Equity

Public Offerings

In November 2011, the Company issued an aggregate of 21,800,000 shares of its common stock at a purchase price of $3.75 per share pursuant to a public offering. In November and December 2010, the Company issued an aggregate of 12,500,000 shares of its common stock at a purchase price of $8.00 per share pursuant to a public offering. The 2011 and 2010 offerings raised proceeds, net of offering costs and underwriting discounts and commissions, of $77,302,000 and $93,555,000, respectively.

Private Placement

In February 2009, the Company issued 12,039,794 shares of its common stock at a purchase price of $7.13 per share pursuant to a private placement. In addition to the shares of the Company's common stock, warrants to purchase up to 6,019,897 additional shares of the Company's common stock were also issued as part of the transaction at a price of $0.125 per warrant. Each warrant is immediately exercisable and has a five-year term. The warrants may be exercised through either cash or net exercise for one share of common stock at a price of $7.84 and have been accounted for as permanent equity. As of December 31, 2011, all warrants related to the private placement were outstanding.

The private placement raised proceeds, net of offering costs, of $86,243,000. The purchasers in the offering consisted of new investors and existing stockholders of the Company, including six funds affiliated with three directors of the Company. In March 2009, the Company filed a registration statement covering the resale of the shares of common stock acquired by the investors in this offering, which was declared effective by the SEC in May 2009. The Company is required to maintain the effectiveness of the registration statement and may be subject to liquidated damages of one percent per month of the aggregate purchase price of the common shares then held by the investor that are registrable securities, subject to an aggregate cap of eight percent per calendar year. The Company has not recorded a liability for the potential damages associated with these liquidated damages provisions as it does not currently believe that the transfer of consideration is probable under the agreement.

Equity Awards

In 2006, the Company adopted the 2006 Equity Incentive Award Plan (the "2006 Plan") in connection with the Company's initial public offering which became effective on October 24, 2006. Upon adoption of the 2006 Plan, the Company restricted future grants from its 2004 Equity Incentive Award Plan (the "2004 Plan"). The 2006 Plan was amended and restated in 2010 to preserve the ability to deduct compensation associated with future performance-based awards made under the plan to certain executives. The term of the 2006 Plan was also extended under the 2010 amendment to 2020.

The 2006 Plan initially reserved 2,100,000 shares of common stock for future issuance and allowed for the initial number of reserved shares to be increased by (1) the 90,772 shares of common stock that remained available for issuance under the 2004 Plan as of the effective date of the 2006 Plan and (2) the number of shares under the 2004 Plan that are repurchased, forfeited, expired or cancelled on or after the effective date of the 2006 Plan. As of December 31, 2011, options to purchase 74,753 shares issued under the 2004 Plan have been repurchased, forfeited and/or cancelled since the effective date of the 2006 Plan, increasing the number of shares reserved for issuance under the 2006 Plan accordingly.

Beginning on January 1, 2008, the 2006 Plan allows for an annual increase in the number of shares available for issuance under the 2006 Plan by the lesser of (1) 4% of the outstanding common stock on January 1 and (2) a lesser amount determined by the board of directors, subject to an aggregate of 20,000,000 shares of common stock that may be issued through January 1, 2016. Through December 31, 2011, the board of directors approved the amount of shares authorized for future issuance under the 2006 Plan to be increased by an aggregate 5,948,695 shares under this provision.

As of December 31, 2011, the Company had issued both stock options and restricted stock units under the 2006 Plan and only stock options under the 2004 Plan. The following table presents shares authorized, available for future grant and outstanding under each of the Company's plans at December 31, 2011:


	Authorized		Available		Outstanding
2004 Equity Incentive Plan		2,709,475		—		1,031,478
2006 Equity Incentive Plan		8,214,220		1,014,264		6,942,131

		10,923,695		1,014,264		7,973,609

The Company issues new shares of common stock upon the exercise of stock options and vesting of RSU awards. Shares that are tendered or withheld to satisfy the exercise price or tax withholding obligation pursuant to the award are returned to the pool of available shares for future grant.

Stock Options

Stock options granted under the 2006 Plan expire no later than 10 years from the date of grant and generally vest over a four-year period. Vesting generally occurs at the rate of 25% at the end of the first year, and thereafter in 36 equal monthly installments. The exercise price of incentive stock options shall not be less than 100% of the fair value of the Company's common stock on the date of grant. The exercise price of any option granted to a 10% stockholder may not be less than 110% of the fair value of the Company's common stock on the date of grant.

The following table summarizes the Company's stock option activity as of December 31, 2011, and changes for the year then ended:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life - Years		Aggregate Intrinsic Value
Options outstanding at beginning of period		6,999,657		$	7.84
Granted		1,844,525		$	8.50
Exercised		(507,515	)	$	3.16
Cancelled		(367,434	)	$	9.69

Options outstanding at end of period		7,969,233		$	8.21		7.03	$	1,844,000

Options exercisable at end of period		4,907,056		$	7.89		6.02	$	1,842,000

The aggregate intrinsic value of options exercised during 2011, 2010 and 2009 was $2,774,000, $792,000 and $700,000, respectively. During 2011, the Company received $1,603,000 upon the exercise of stock options.

Restricted Stock Units

In August 2009, the Company granted a total of 300,500 RSUs to certain officers and employees. One-half of the RSUs were to vest upon the approval by the FDA of the NDA for OFIRMEV, if such approval occurred prior to December 31, 2009. At December 31, 2009, the Company had not received approval of its OFIRMEV NDA and therefore the performance criteria for these grants were not achieved. As such, the awards were forfeited and all previously recorded expense associated with these RSUs was recovered. The remaining half of the RSUs, adjusted for cancellations from terminations, vested upon the first anniversary of the approval by the FDA of the NDA for OFIRMEV, or November 2, 2011. An additional 13,500 RSUs were granted in 2010, of which a portion had vested as of December 31, 2011.

The following table summarizes the Company's RSU activity as of December 31, 2011, and changes for the year then ended:


	Shares			Weighted-Average Grant Date Fair Value per Share		Aggregate Intrinsic Value
Restricted stock units outstanding at beginning of period		135,658		$	10.87
Granted		—			—
Vested		(124,500	)	$	10.90
Cancelled		(6,782	)	$	10.79

Restricted stock units outstanding at end of period		4,376		$	10.38	$	17,000

The aggregate intrinsic value of RSUs vested during 2011 and 2010 was $716,000 and $33,000, respectively. There was no vesting of RSUs in 2009. During 2011, a total of 27,769 vested shares were withheld from distribution in satisfaction of statutory minimum tax obligations and the Company used $159,000 to satisfy such tax obligations.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Segment Information

12.

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions regarding resource allocation and assessing performance and the Company operates and manages its business as principally one segment. It sells its only product, OFIRMEV, primarily to established wholesale distributors in the pharmaceutical industry, including the nation's three leading wholesale pharmaceutical distributors: Cardinal Health, Inc., AmerisourceBergen Corporation and McKesson Corporation.

Shipments to wholesalers representing approximately 10% or more of total product revenue for the periods presented were as follows (as a percentage of total gross product revenue):


	Year Ended December 31,
	2011			2010		2009
Cardinal Health, Inc.		37	%		—		—
AmerisourceBergen Corporation		33	%		—		—
McKesson Corporation		23	%		—		—

Related receivables from customers representing approximately 10% or more of total product revenue for each period are as follows (as a percentage of total gross trade receivables):


	Year Ended December 31,
	2011			2010		2009
Cardinal Health, Inc.		35	%		—		—
AmerisourceBergen Corporation		36	%		—		—
McKesson Corporation		21	%		—		—

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

13.

Income Taxes

The Company is subject to taxation in the U.S. and various state jurisdictions. The Company's tax years for 2004 and forward are subject to examination by the Federal and state tax authorities due to the carryforward of unutilized net operating losses and research and development credits. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrued interest and/or penalties related to income tax matters in the Company's balance sheets at December 31, 2011 and 2010, and has recognized no interest and/or penalties in the Company's statement of operations for the years ended December 31, 2011, 2010 and 2009. Further, as of December 31, 2011, the Company had not recorded any unrecognized tax benefits.

Pursuant to Internal Revenue Code ("IRC") Sections 382 and 383, annual use of the Company's net operating loss and research and development credit carryforwards may be limited in the event of a cumulative change in ownership of more than 50% within a three-year period. The Company has not completed this analysis regarding the limitation and therefore has removed the (1) deferred tax assets for net operating losses of approximately $123,436,000 and (2) research and development credits of approximately $6,562,000 generated through 2011 from its deferred tax asset schedule. Further, the Company has recorded a corresponding decrease to its valuation allowance. When this analysis is finalized, the Company plans to update its deferred tax asset and valuation allowance accordingly. The Company expects to complete this analysis within the next 12 months and, as a result, the Company may have a change in the unrecognized tax benefits that are recorded. Due to the existence of the valuation allowance, future changes in the Company's unrecognized tax benefits will not impact the Company's effective tax rate.

A valuation allowance has been established as realization of such deferred tax assets has not met the more likely than not threshold requirement. Other significant components of the Company's deferred tax assets for federal and state income taxes at December 31, 2011 and 2010 are shown below (in thousands):


	As of December 31,
	2011			2010
Deferred tax assets:
Net operating loss carryforwards	$	—		$	—
Tax credit carryforwards		—			—
Stock-based compensation		10,394			9,007
Capitalized research and development		6,360			7,115
Other, net		1,651			2,302

		18,405			18,424
Valuation allowance for deferred tax assets		(18,405	)		(18,424	)

Net deferred tax assets	$	—		$	—

A reconciliation of the Company's effective tax rate and federal statutory tax rate is as follows:


	As of December 31,
	2011			2010			2009
Federal income taxes		35.0	%		35.0	%		35.0	%
State income taxes		4.3	%		5.8	%		5.8	%
Research and development credits		0.9	%		1.0	%		2.4	%
Stock-based compensation		(0.7	)%		(1.7	)%		(1.7	)%
Change in federal valuation allowance		0.0	%		(4.3	)%		(5.9	)%
Prior year true-up		(0.0	)%		0.3	%		2.3	%
Removal of net operating loss and research and development tax credits		(37.8	)%		(35.7	)%		(37.4	)%
Other, net		(1.7	)%		(0.4	)%		(0.5	)%

		0.0	%		0.0	%		0.0	%

At December 31, 2011, the Company had federal and state net operating loss carryforwards of approximately $306,480,000 and $309,950,000, respectively. The federal and state tax loss carryforwards will begin to expire in 2024 and 2014, respectively, unless previously utilized. The Company also had federal research and development tax credit carryforwards of approximately $4,753,000 which will begin expiring in 2024 unless previously utilized, and state research and development tax credit carryforwards of approximately $2,785,000 which carryforward indefinitely.

Included in the net operating loss carryforwards is approximately $975,000 of losses attributable to excess stock option deductions. Under current accounting guidance concerning when tax benefits related to excess stock option deductions can be credited to paid in capital, the related valuation allowance cannot be reversed, even if the facts and circumstances indicate that it is more likely than not that the deferred tax asset can be realized. The valuation allowance will only be reversed as the related deferred tax asset is applied to reduce taxes payable.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

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Reference 6: 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.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

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+ Details

Employee Benefit Plan

12 Months Ended

Dec. 31, 2011

Employee Benefit Plan [Abstract]

Employee Benefit Plan

14.

Employee Benefit Plan

The Company has a qualified retirement plan under the provisions of Section 401(k) of the Internal Revenue Code covering substantially all employees. Employees may contribute up to 100% of their annual compensation up to the maximum annual amount prescribed by the Internal Revenue Service. The Company may elect to make a discretionary contribution or match a discretionary percentage of employee contributions. During 2011, 2010 and 2009, the Company elected not to make any contributions to the plan.

Summarized Quarterly Data

12 Months Ended

Dec. 31, 2011

Summarized Quarterly Data [Abstract]

Summarized Quarterly Data

15.

Summarized Quarterly Data (Unaudited)

The following financial information reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods. Summarized quarterly data for the years ended December 31, 2011 and 2010 are as follows (in thousands, except share and per share data):


	Fiscal Year 2011 Quarters
	1st			2nd⁽⁴⁾			3rd			4th⁽⁵⁾			Total
Revenues⁽¹⁾	$	350		$	6,916		$	3,541		$	5,889		$	16,696
Gross profit (loss)⁽¹⁾	$	61		$	5,935		$	1,223		$	(2,929	)	$	4,290
Net loss	$	(24,372	)	$	(19,214	)	$	(21,829	)	$	(27,606	)	$	(93,021	)
Basic and diluted net loss per share⁽²⁾⁽³⁾	$	(0.39	)	$	(0.30	)	$	(0.34	)	$	(0.37	)	$	(1.41	)


	Fiscal Year 2010 Quarters
	1st			2nd⁽⁶⁾			3rd⁽⁶⁾			4th			Total
Revenues⁽¹⁾	$	—		$	—		$	—		$	—		$	—
Gross profit⁽¹⁾	$	—		$	—		$	—		$	—		$	—
Net loss	$	(13,919	)	$	(12,219	)	$	(11,712	)	$	(18,793	)	$	(56,643	)
Basic and diluted net loss per share⁽ ² ⁾⁽ ³ ⁾	$	(0.28	)	$	(0.24	)	$	(0.23	)	$	(0.33	)	$	(1.09	)

⁽¹⁾	The Company commenced commercial sales of OFIRMEV in January 2011. As such, there were no similar revenues or related gross profit during the 2010 periods.

⁽ ² ⁾

Loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net loss per share may not necessarily equal the total for the year.

⁽ ³ ⁾

In the fourth quarter of 2011 and 2010, the Company issued 21,800,000 shares and 12,500,000 shares, respectively, of common stock. As a result, there is a lack of comparability in the basic and diluted net loss per share amounts for the periods presented.

⁽ ⁴ ⁾

During the second quarter of 2011, the Company recognized $5,210 in license revenue under a data license agreement with Terumo Corporation, primarily related to the one-time transfer of data and related information.

⁽ ⁵ ⁾

During the fourth quarter of 2011, the Company recorded a charge of $5,574 to write-down the value of certain inventory. Further, the Company recorded one-time employee charges of $1,142 related to a reduction in force of 17 employees. Relatedly, $251 of previously accrued labor-related costs for these individuals of was reversed at the time of the termination.

⁽ ⁶ ⁾

During the second and third quarters of 2010, the Company recorded charges of $1,186 and $336, respectively, related to the partial cancellation of an equipment order.

- Definition

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

+ References + Details