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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2013	Oct. 31, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	CADX
Entity Registrant Name	CADENCE PHARMACEUTICALS INC
Entity Central Index Key	0001333248
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		86,087,199

CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 51,980	$ 58,327
Investments in marketable securities	2,326	3,745
Restricted cash	548	640
Accounts receivable, net	8,711	6,152
Inventory	6,094	6,498
Prepaid expenses	1,183	1,064
Other current assets	124	90
Total current assets	70,966	76,516
Property and equipment, net	1,801	1,967
Intangible assets, net	11,082	12,090
Restricted cash	92
Other assets	83	7,106
Total assets	84,024	97,679
Current liabilities:
Accounts payable	4,473	5,796
Accrued liabilities	15,379	12,969
Deferred revenue		2,234
Current portion of long-term debt, less discount of $221 and $-, respectively	7,937
Total current liabilities	27,789	20,999
Long-term debt, less current portion and discount of $591 and $1,182, respectively	21,251	28,818
Other liabilities	604	51
Total liabilities	49,644	49,868
Commitments and contingencies (Note 11)
Stockholders' equity :
Common stock, $0.0001 par value; 200,000,000 shares authorized, 86,085,324 shares and 85,668,668 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively	9	9
Additional paid-in capital	502,203	495,458
Accumulated other comprehensive income
Accumulated deficit	(467,832)	(447,656)
Total stockholders' equity	34,380	47,811
Total liabilities and stockholders' equity	$ 84,024	$ 97,679

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2013	Dec. 31, 2012
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	86,085,324	85,668,668
Common stock, shares outstanding	86,085,324	85,668,668
Long-term debt, Current
Discount on debt	$ 221
Long-term debt, Noncurrent
Discount on debt	$ 591	$ 1,182

CONDENSED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues:
Product revenue, net	$ 28,957	$ 13,898	$ 77,243	$ 32,977
License revenue				33
Total revenues	28,957	13,898	77,243	33,010
Costs and expenses:
Cost of product sales	9,964	6,076	26,425	16,078
Amortization of patent license	336	336	1,008	1,008
Research and development	1,655	2,235	4,698	5,446
Selling, general and administrative	22,928	20,039	70,261	66,811
Other	(107)	13	(602)	14
Total costs and expenses	34,776	28,699	101,790	89,357
Loss from operations	(5,819)	(14,801)	(24,547)	(56,347)
Other (expense) income:
Interest income	15	34	55	97
Interest expense	(1,122)	(1,122)	(3,333)	(3,331)
Other (expense) income	(12)	(1)	7,649	29
Total other (expense) income, net	(1,119)	(1,089)	4,371	(3,205)
Net loss	$ (6,938)	$ (15,890)	$ (20,176)	$ (59,552)
Basic and diluted net loss per share	$ (0.08)	$ (0.19)	$ (0.24)	$ (0.70)
Shares used to compute basic and diluted net loss per share	86,044	85,560	85,841	85,544

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net loss	$ (6,938)	$ (15,890)	$ (20,176)	$ (59,552)
Other comprehensive income (loss):
Net unrealized loss on securities available for sale				(2)
Other comprehensive loss				(2)
Comprehensive loss	$ (6,938)	$ (15,890)	$ (20,176)	$ (59,554)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Net Income
-URI http://asc.fasb.org/extlink&oid=6518256

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=31042434&loc=d3e3602-108585

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.19)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 225
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.18)
-URI http://asc.fasb.org/extlink&oid=26872669&loc=d3e20235-122688

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.22)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Other Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6519514

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=28358780&loc=d3e565-108580

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 19
-Article 5

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 20
-Article 9

+ Details

CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	Sep. 30, 2013	Sep. 30, 2012
Operating activities
Net loss	$ (20,176,000)	$ (59,552,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	169,000	1,226,000
(Gain) Loss on disposal of assets	(16,000)	14,000
Gain on sale of investment	(7,654,000)
Inventory write-down		163,000
Stock-based compensation	5,326,000	6,925,000
Non-cash interest expense	13,000	21,000
Amortization of intangible assets	1,008,000	1,008,000
Amortization of discount on note payable	371,000	409,000
Accretion of discounts on available-for-sale securities	(2,000)	(14,000)
Changes in operating assets and liabilities:
Accounts receivable	(2,559,000)	(4,145,000)
Inventory	404,000	(3,649,000)
Prepaid expenses and other assets	(143,000)	425,000
Accounts payable	(1,323,000)	2,658,000
Deferred revenue	(2,234,000)	710,000
Accrued liabilities and other liabilities	2,976,000	2,459,000
Net cash used in operating activities	(23,840,000)	(51,342,000)
Investing activities
Maturities and sales of marketable securities	1,420,000	40,860,000
Purchases of marketable securities		(1,396,000)
Proceeds from the sale of Incline option and preferred shares	14,654,000
Purchases of property and equipment	(80,000)	(1,460,000)
Proceeds from the sale of property and equipment	80,000	2,000
Net cash provided by investing activities	16,074,000	38,006,000
Financing activities
Proceeds from issuance of common stock, net	1,419,000	97,000
Net cash provided by financing activities	1,419,000	97,000
Net increase in cash and cash equivalents	(6,347,000)	(13,239,000)
Cash and cash equivalents at beginning of period	58,327,000	82,609,000
Cash and cash equivalents at end of period	51,980,000	69,370,000
Supplemental disclosures
Property and equipment purchases in accounts payable and accrued expenses at period end	202,000	109,000
Unrealized loss on investment securities		(2,000)
Cash paid for interest and fees	$ 2,428,000	$ 2,290,000

The Company

9 Months Ended

Sep. 30, 2013

The Company

1.	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 products principally for use in the hospital setting. In March 2006, the Company in-licensed the exclusive U.S. and Canadian rights to OFIRMEV^® (acetaminophen) injection, an intravenous (“IV”) 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, the management of 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.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Summary of Significant Accounting Policies

2.	Summary of Significant Accounting Policies

Basis of Presentation

The Company has prepared the accompanying unaudited condensed financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). However, certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, or omitted, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In addition, the preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. In the opinion of the Company’s management, all adjustments, consisting of normal, recurring adjustments considered necessary for a fair presentation of the results of the interim periods presented have been included.

These condensed financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2012, as included in the Company’s 2012 Annual Report on Form 10-K filed with the SEC on March 8, 2013.

During the three months ended September 30, 2013, the Company identified selling, general and administrative expenses of $574,000 that should have been recorded in previously reported quarters of 2013. Of this amount, $252,000 related to the three months ended March 31, 2013, and $322,000 related to the three months ended June 30, 2013. The Company determined that the adjustments were immaterial to each of the previously reported interim periods based on a quantitative and qualitative analysis. As a result, the Company recorded the correction of these errors during the three months ended September 30, 2013. There is no impact on the Company’s interim financial statements for the nine months ended September 30, 2013.

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 discounts to certain group purchasing organizations, end-user hospitals, and government 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.

OFIRMEV, which was launched in January 2011, is the Company’s first and only commercially available product. Because the Company initially had limited product return data, it deferred the recognition of revenue on sales to wholesalers and, instead, recognized revenue at the time that product was sold by a wholesaler to an end-user customer. Shipments of product that were not recognized as revenue were treated as deferred revenue. However, as of January 1, 2013, the Company determined that it had obtained sufficient product return history to reasonably estimate future wholesaler returns. Since that time, the Company has recognized revenue at the time product is sold to a wholesaler. As a result of this change, the Company recorded a one-time adjustment to recognize revenue that had previously been deferred, resulting in additional net revenue of $2,616,000 and cost of sales of $919,000 for the nine months ended September 30, 2013. The corresponding impact of this one-time adjustment was a reduction of $1,697,000 in both the Company’s loss from continuing operations and net loss for the nine months ended September 30, 2013, and the per share net impact of the adjustment was a reduction in net loss of $0.02 per share for the period. There was no similar impact on the reported revenue, cost of sales or loss per share for the three months ended September 30, 2013, or the three or nine months ended September 30, 2012.

The Company records certain sales reserves and allowances as a reduction to gross revenue. These reserves and allowances include distribution service fees, a prompt payment discount, a group purchasing discount and administrative service fee, discounts to certain end-user customers and governmental programs and a reserve for estimated product returns based on historical return rates, 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 Company offers a prompt payment discount to 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 from 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. Administrative service fees for these transactions are also recorded at the time of sale. The Company also provides predetermined discounts under certain government programs, which are recorded at the time of sale.

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, wholesaler fees, chargebacks and doubtful accounts. 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. At September 30, 2013 and December 31, 2012, the Company’s allowance for uncollectible receivables was $16,000 and $56,000, respectively. During the three months ended September 30, 2013, charges of $2,000 were taken to reserve for past due accounts and no previously reserved accounts were written off. During the nine months ended September 30, 2013, past due accounts totaling $40,000 that were previously reserved were written off. No charges were incurred to reserve or write-off past due accounts during the three and nine months ended September 30, 2012.

Stock-Based Compensation

Stock option awards. Stock options are valued using the Black-Scholes option pricing model. The Company values option awards on the date of grant or, if the awards are classified as liability awards, it revalues the awards each reporting period using this model until the awards are subsequently classified as equity awards, or otherwise vest. The Black-Scholes 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 weighted average estimates the Company used in the Black-Scholes option-pricing model during the periods presented, to determine the fair value of employee and non-employee director stock options granted during each period:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Risk free interest rates		1.8	%		0.8	%		1.2	%		0.9	%
Expected life in years		6.0 years			6.1 years			6.0 years			5.7 years
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Expected volatility		68.5	%		69.6	%		65.3	%		72.0	%

Compensation expense for 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, as applicable. If awards are forfeited prior to vesting, all previous expense recognized for unvested awards 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):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of product sales	$	68	$	77	$	207	$	264
Research and development		190		597		552		1,483
Selling, general and administrative		1,569		1,500		4,567		5,178

Total stock-based compensation expense included in loss from operations	$	1,827	$	2,174	$	5,326	$	6,925

Fair Value Reporting

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, restricted cash, trade receivables and payables, 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 and accrued liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments. Further, based on the borrowing rates currently available to the Company for loans with similar terms, the Company believes the fair value of long-term debt approximates its carrying value. 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:


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.

The following tables present further detail of the financial instruments carried at fair value on the Company’s balance sheets as of September 30, 2013 and December 31, 2012. The tables do not include assets and liabilities that are measured at historical cost or on any basis other than fair value (in thousands):


	Balance at		Fair Value Measurements as of September 30, 2013
Description	September 30, 2013		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	46,672	$	46,672	$	-	$	-
Investments in marketable securities – short-term:
Debt instruments – Municipal debt obligations		1,326		-		1,326		-
Certificates of deposit		1,000		-		1,000		-

Assets at fair value	$	48,998	$	46,672	$	2,326	$	-


	Balance at		Fair Value Measurements as of December 31, 2012
Description	December 31, 2012		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	55,736	$	55,736	$	-	$	-
Investments in marketable securities – short-term:
Debt instruments – Corporate debt obligations		1,398		-		1,398		-
Debt instruments – Municipal debt obligations		1,347		-		1,347		-
Certificates of deposit		1,000		-		1,000		-

Assets at fair value	$	59,481	$	55,736	$	3,745	$	-

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.

Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2013

Recent Accounting Pronouncements

3.	Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013, with an option for early adoption. The Company intends to adopt this guidance at the beginning of its first quarter of fiscal year 2014, and is currently evaluating the impact on its financial statements and disclosures.

Net Loss Per Share

9 Months Ended

Sep. 30, 2013

Net Loss Per Share

4.	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, however, are not included in the calculations of diluted net loss per share for the periods presented as their effect would be anti-dilutive. Additionally, the unvested restricted stock units outstanding during 2012 and 2013 have been 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 three and nine months ended September 30, 2013 and 2012, were computed based on the weighted average shares of common stock outstanding during the respective periods. The Company incurred net losses for all periods presented and there were no reconciling items for potentially dilutive securities. More specifically, at September 30, 2013 and 2012, stock options, restricted stock units, and warrants totaling 17,950,000 and 16,790,000 shares, respectively, were excluded from the calculations as their effect would have been antidilutive.

Inventory

9 Months Ended

Sep. 30, 2013

Inventory

5.	Inventory

Inventories, stated at the lower of cost or market, consisted of the following (in thousands):


	September 30, 2013		December 31, 2012
Inventory:
Raw material	$	83	$	83
Finished goods		6,011		6,415

Total	$	6,094	$	6,498

Property and Equipment

9 Months Ended

Sep. 30, 2013

Property and Equipment

6.	Property and Equipment

Property and equipment for operations were as follows (in thousands):


	September 30, 2013			December 31, 2012
Property and equipment:
Manufacturing equipment	$	2,801		$	2,999
Leasehold improvements		1,639			1,639
Computer equipment and software		1,570			1,489
Furniture and fixtures		478			478
Construction-in-process		709			724

		7,197			7,329
Less accumulated depreciation		(5,396	)		(5,362	)

Total	$	1,801		$	1,967

As of December 31, 2012, the Company impaired the value of its manufacturing equipment and construction-in-process to their estimated fair market value due to the termination of the Company’s supply agreement with Baxter Healthcare Corporation (“Baxter”). See “Supply Agreements” in Note 11 below for further information.

For the three months ended September 30, 2013 and 2012, the Company incurred depreciation expense of $42,000 and $401,000, respectively. For the nine months ended September 30, 2013 and 2012, the Company incurred depreciation expense of $169,000 and $1,226,000, respectively.

Investments in Marketable Securities

9 Months Ended

Sep. 30, 2013

Investments in Marketable Securities

7.	Investments in Marketable Securities

In accordance with the Company’s investment policy, it has invested funds in marketable 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 September 30, 2013 and December 31, 2012 consisted of the following (in thousands):


At September 30, 2013	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	$	1,326	$	-	$	-	$	-	$	1,326
Certificates of deposit		1,000		-		-		-		1,000

	$	2,326	$	-	$	-	$	-	$	2,326


At December 31, 2012	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	$	1,398	$	-	$	-	$	-	$	1,398
Debt instruments – Municipal debt obligations		1,347		-		-		-		1,347
Certificates of deposit		1,000		-		-		-		1,000

	$	3,745	$	-	$	-	$	-	$	3,745

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


	September 30, 2013				December 31, 2012
	Cost		Fair Value		Cost		Fair Value
Due or callable in one year or less	$	2,326	$	2,326	$	3,745	$	3,745
Due after one year	$	-	$	-	$	-	$	-

No gains or losses were realized on the sale of marketable securities using the specific identification method during the three and nine months ended September 30, 2013 and 2012. Further, as of September 30, 2013 and December 31, 2012, there were no investments in unrealized loss positions.

Investment in Incline

9 Months Ended

Sep. 30, 2013

Investment in Incline

8.	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 (the “Option”) to acquire Incline, which was 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. Additionally, in consideration of the Company’s expenditure of funds in connection with conducting its initial 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.

In December 2012, the Company and Incline entered into a Waiver, Consent and Option Termination Agreement (the “Waiver Agreement”) pursuant to which the Company agreed to the buy-out and termination of its Option, contingent upon the closing of a separate agreement and plan of merger between Incline and The Medicines Company whereby The Medicines Company agreed to acquire Incline (the “Incline Acquisition”). In January 2013, The Medicines Company completed its acquisition of Incline. As consideration for entering into the Waiver Agreement and relinquishing its Option, the Company received a payment of $13,125,000 upon the closing of the Incline Acquisition. The Company also received an additional payment of $1,529,000 as consideration for the 500,000 shares of Incline Series A preferred stock held by the Company, and it could receive future milestone payments related to potential future licensing, regulatory approval and sales of the product candidate. Such milestones, if any, will be recorded as they are earned.

At the time the Option Agreement was entered into, the Company determined that Incline was a variable interest entity (“VIE”). However, because it would not absorb a disproportionate amount of Incline’s expected losses or receive a disproportionate amount of Incline’s expected residual returns, the Company was not the primary beneficiary of this entity. Further, the Company did not have oversight of the day-to-day operations of Incline, nor did it have sufficient rights or voting representation to influence the operating or financial decisions of Incline, and the Company was not a founder of Incline and had no additional equity or funding requirements in future financings or otherwise. As such, the Company did not consolidate Incline into its financial statements. Alternatively, it valued its 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 with a carrying value of $7,000,000. No adjustments were made to the carrying value of these assets prior to the closing of the Incline Acquisition in January 2013, and, as a result, the Company recorded a gain of $7,654,000 in other income during the nine months ended September 30, 2013. No similar gains were recorded during the three months ended September 30, 2013, or during the three or nine months ended September 30, 2012.

Restructuring and Impairment Charges

9 Months Ended

Sep. 30, 2013

Restructuring and Impairment Charges

9.	Restructuring and Impairment Charges

In February 2012, the Company observed particulate matter during routine product stability testing of OFIRMEV that was manufactured at one of its third-party manufacturers, Baxter. As a result, the Company decided to suspend further production by Baxter. In March 2013, the Company and Baxter mutually agreed to terminate the supply agreement for OFIRMEV. As a result, the Company reduced the carrying value of its manufacturing assets and its manufacturing equipment and facility construction assets in process to their current estimated fair value as of December 31, 2012, resulting in an impairment charge of $6,973,000 during the year. The fair value of these assets was determined through a third-party valuation assessment based upon research of market prices for similar equipment and the Company’s prior experience with asset disposals. The determination of the fair value of the manufacturing assets was considered a Level 3 measurement. The Company also fully impaired the retirement obligation asset related to the removal of the equipment as of December 31, 2012, resulting in a charge of $750,000 during the year. See “Supply Agreements” in Note 11 below for further information.

In November 2011, the Company restructured its workforce to focus its resources on the commercialization of OFIRMEV and reduce program costs not directly associated with such efforts. 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 following table details the restructuring charges for severance-related costs and termination of contractual obligations for the periods presented (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013		2012
Beginning restructuring liability	$	-	$	13		$	-	$	931
Severance and termination disbursements		-		(6	)		-		(924	)

Ending restructuring liability	$	-	$	7		$	-	$	7

Loan and Security Agreement

9 Months Ended

Sep. 30, 2013

Loan and Security Agreement

10.

Loan and Security Agreement

In December 2012, the Company entered into a First Amendment to Second Amended and Restated Loan and Security Agreement (the “2012 Amendment”) with Oxford Finance LLC, Silicon Valley Bank and General Electric Capital Corporation (collectively, the “Lenders”), which amended and restated the Company’s previous Second Amended and Restated Loan and Security Agreement entered into in December 2011 (the “2011 Amendment”). Pursuant to the terms of the 2012 Amendment, the Company will make interest-only payments through December 2013, and in January 2014, will begin to make equal monthly principal and interest payments to fully amortize the balance over the remaining 30-month term. The stated interest rate under the 2012 Amendment is 10.9545% and the Company will be required to make a final payment of 6% of the total advance at the termination of the loan.

At the time of closing the 2012 Amendment, the Company made a term loan final payment of $752,000 in accordance with the terms of the 2011 Amendment, which had been amortized over the term of the 2011 Amendment, and paid customary closing fees and expenses of $18,000 in connection with the closing of the 2012 Amendment. Additionally, the Company issued warrants to purchase 154,638 shares of the Company’s common stock, as detailed below, to the Lenders in connection with the 2012 Amendment at an exercise price $3.88 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. Further, 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 2012 Amendment, 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 prepayment penalties and certain financial and non-financial covenants, including the maintenance of minimum quarterly product revenue of at least $12,500,000. Upon the occurrence of an event of default, including a Material Adverse Change (as defined in the 2011 Amendment), the lenders may declare all outstanding amounts due and payable under the 2012 Amendment. As of September 30, 2013, the Company was in compliance with all covenants under the 2012 Amendment.

The Company determined that the terms of the 2012 Amendment were not substantially different than the 2011 Amendment and has accounted for the transaction as a loan modification. As such, the fair value of the warrants issued in connection with the 2012 Amendment and the carrying value of the issuance costs and discount related to the 2011 Amendment were aggregated and are being amortized to interest expense throughout the life of the 2012 Amendment using an effective interest rate of 15.30%. Prior to the 2012 Amendment, the Company had been amortizing the 2011 Amendment using an effective interest rate of 15.31%.

Warrants

In connection with the establishment of the Company’s credit facilities and related amendments, including the 2012 Amendment, the Company has issued warrants to the Lenders to purchase shares of the Company’s common stock. The table below summarizes the issuances of such warrants currently outstanding, including the Black-Scholes valuation model assumptions used to determine the fair value of the warrants:


	Date of Issuance
	December 2012			December 2011			June 2010			November 2007
Aggregate shares pursuant to warrants issued		154,638			158,311			254,793			50,331
Per share exercise price of warrants issued	$	3.88		$	3.79		$	7.0645		$	12.67
Fair value of warrants issued	$	416,000		$	390,000		$	1,237,000		$	474,000
Expiration date of warrants		December 9, 2019			December 22, 2018			June 18, 2017			November 30, 2014
Black-Scholes valuation inputs:
Expected volatility		70.17	%		72.40	%		76.50	%		70.00	%
Risk-free interest rate		1.02	%		1.40	%		2.70	%		3.64	%
Dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Expected term		7 years			7 years			7 years			7 years

As of September 30, 2013, all of the aforementioned warrants to purchase 618,073 shares of the Company’s common stock were outstanding.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies

11.

Commitments and Contingencies

Leases

In May 2006, the Company entered into an operating lease for corporate 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 was reduced commencing in April 2012 and the Company returned a portion of the leased space in September 2012. In September 2013, the Company further amended the lease to extend the lease term until May 31, 2019, and to expand the rented space. The Company has the right to renew the lease for one additional five year term. The terms of the lease include a one-time tenant improvement allowance of up to $475,000, which the Company will record as the improvements are completed, and which will be amortized ratably over the shorter of the useful life or the remaining life of the lease. As of September 30, 2013, no such improvements had been completed.

As of September 30, 2013, the future minimum payments related to the operating lease for the Company’s corporate office space were as follows (in thousands):


Remainder 2013	$	192
2014		557
2015		983
2016		1,013
2017		1,043
Thereafter		1,535

Total	$	5,323

As security for the initial lease, the landlord required a letter of credit, which is collateralized by a certificate of deposit in the same amount, and which the Company has classified as restricted cash on its balance sheet. As of September 30, 2013 and December 31, 2012, the amount of each of the letter of credit and the corresponding certificate of deposit was $190,000. The security deposit required by the landlord will be reduced to $92,000, effective January 1, 2014.

The Company also leases certain office equipment under capital and operating leases. Its current capital lease has an initial term of four years and expires in 2016. As of September 30, 2013 and December 31, 2012, the assets under this capital lease had a gross value of $56,000 and during the three and nine months ended September 30, 2013, the Company recorded amortization expense of $3,000 and $10,000, respectively. No similar expense was recorded during the three and nine months ended September 30, 2012. The remaining obligation under its capital lease at September 30, 2013 is recorded on the Company’s balance sheet in accrued expenses and other long-term liabilities at $12,000 and $34,000, respectively.

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 under the Company’s lease agreements for the three months ended September 30, 2013 and 2012 was $168,000 and $236,000, respectively. Rent expense under the Company’s lease agreements for the nine months ended September 30, 2013 and 2012 was $504,000 and $709,000, 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 to $450,000 related to an increase in its credit limit. At September 30, 2013, the Company maintained the pledge agreement and the funds under the agreement are classified as restricted cash on the Company’s balance sheet at September 30, 2013 and December 31, 2012.

Supply Agreements

Lawrence Laboratories

In February 2013, the Company entered into an Amended and Restated Supply Agreement (the “Supply Agreement”) with Lawrence Laboratories, an operating division of Swords Laboratories, and a member of the BMS group of companies, which amended and restated the original agreement entered into between the parties in December 2010, for the manufacture of commercial supplies of the finished drug product for OFIRMEV packaged in vials (the “Product”), for sale and distribution by the Company in the United States and Canada. Bristol-Myers Squibb Srl (“BMS Anagni”), an indirect subsidiary of BMS located in Anagni, Italy, manufactures the Product on behalf of Lawrence Laboratories. BMS Anagni is currently the Company’s sole supplier of OFIRMEV.

Pursuant to the terms of the Supply Agreement, the Company pays Lawrence Laboratories a set price for each unit of Product purchased, based upon the aggregate quantity of Product the Company has specified that it intends to order during a calendar year, and whether Lawrence Laboratories has implemented certain agreed-upon manufacturing capacity increase improvements. The Company is obligated to purchase a minimum number of units each year, or pay Lawrence Laboratories an amount equal to the shortfall between the minimum purchase requirement and the number of units of Product actually ordered during such year, multiplied by a pre-set amount that also varies depending upon whether Lawrence Laboratories has implemented certain agreed-upon manufacturing capacity increase improvements. The Company is obligated to purchase at least 75% of its annual Product requirements from Lawrence Laboratories each contract year. The Supply Agreement also requires the Company to pay Lawrence Laboratories for additional services requested by the Company at a specified hourly rate and for any validation batches that may be required by the Company, not to exceed a specified rate. All amounts payable under the Supply Agreement are paid in U.S. dollars.

The term of the Supply Agreement extends through December 31, 2018, unless extended by mutual agreement of the Company and Lawrence Laboratories, or unless the Supply Agreement is terminated sooner: (1) by the mutual agreement of the parties, (2) by either party for convenience following 24 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 Supply Agreement. In addition, either party may terminate the Supply Agreement: (a) within 60 days, after written notice in the event of a material uncured breach of the Supply 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 Supply Agreement is terminated by the Company for its convenience or by Lawrence Laboratories due to the Company’s material breach of the Supply Agreement, the Company will reimburse Lawrence Laboratories for: (1) any Product ordered under a firm order and received by the Company, and (2) any inventory of materials used to manufacture the Product that are specific to the Product and that Lawrence Laboratories 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 Supply Agreement is terminated for any reason other than by the Company for its convenience or by Lawrence Laboratories due to the Company’s material breach of the Supply Agreement, the Company will not be required to reimburse Lawrence Laboratories for any inventory of materials used to manufacture the Product, 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.

Grifols

In March 2013, the Company entered into an agreement with Laboratorios Grifols, S.A. (“Grifols”), a division of Grifols, S.A., a global healthcare company headquartered in Barcelona, Spain, for the development, manufacture and supply of commercial quantities of OFIRMEV in flexible IV bags. Grifols has supplied IV acetaminophen in flexible plastic bags to BMS for distribution in certain markets outside of the U.S. and Canada since 2010. The Company plans to submit a supplemental NDA to the FDA in the fourth quarter of 2013 seeking approval of the product to be manufactured by Grifols.

Pursuant to the terms of the agreement, the Company will pay Grifols a set price for the OFIRMEV it purchases, which may be adjusted annually by Grifols, subject to specified limitations. In addition, the Company will be obligated to pay Grifols a reservation fee, in lieu of any minimum purchase commitment, calculated by multiplying the shortfall between the annual production capacity it has reserved with Grifols and the amount of product actually ordered during that year by a fixed amount. Pending review and subsequent approval of the submission by the FDA, the agreement will terminate on the sixth anniversary of the approval by the FDA of the product manufactured by Grifols, unless it is terminated sooner by the Company upon the termination of its license agreement for the product with BMS, or after 60 days’ written notice following the discontinuation of the distribution of the product by the Company. In addition, either party may terminate the agreement after 60 days’ written notice in the event of a material uncured breach of the agreement by the other party (or 30 days in the case of a payment default), or immediately upon an insolvency event.

Baxter Healthcare Corporation

In July 2007, the Company entered into a development and supply agreement (the “Baxter Supply Agreement”) with 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. In January 2011, the Company amended and restated the Baxter Supply Agreement (the “Amended Supply Agreement”) in connection with a plan to expand the manufacturing capacity for OFIRMEV at Baxter.

In February 2012, the Company announced a voluntary recall of a single lot of OFIRMEV that was manufactured at Baxter’s facility due to the presence of an unidentified, visible particle in that lot during routine stability testing. The Company also placed certain finished product inventory of OFIRMEV manufactured by Baxter on indefinite hold and decided to suspend further production by Baxter. In July 2012, the Company announced a second voluntary recall of the remaining 41 unexpired lots of OFIRMEV manufactured at Baxter’s facility due to the presence of unidentified, visible particles in a limited number of vials from one lot of the product, which were detected during routine stability testing. Although the Company received no adverse event reports associated with the particulate matter, and no product complaints involving similar particulate matter have been received, the Company decided to recall the remaining lots of OFIRMEV manufactured by Baxter as a precautionary measure. All of the 41 recalled lots, which were manufactured between January and March 2011, had expired by December 31, 2012. In March 2013, the Company and Baxter mutually agreed to terminate the Amended Supply Agreement for OFIRMEV. As part of the settlement and termination with Baxter, the Company agreed that it would be responsible for the removal of the equipment, which the Company estimated would cost approximately $750,000. Accordingly, it recorded this retirement obligation on its balance sheet at December 31, 2012 as the conditions existed under the terms of the Amended Supply Agreement at that time. Further, as of December 31, 2012, the Company fully impaired this retirement obligation asset and recognized a charge of $750,000 in its statement of operations for the year ended December 31, 2012. During the three months ended September 30, 2013, the Company completed the removal of the equipment and released the remaining balance of the accrued obligation, resulting in a gain of $136,000 during the three and nine months ended September 30, 2013, which was recorded in other operating expenses. No similar gain was recorded during the three and nine months ended September 30, 2012. Also pursuant to the settlement, a previously accrued liability of $317,000 was canceled, which was recorded in cost of sales during the first quarter of 2013.

As a result of the initial recall, the Company recorded charges of $5,574,000 for the fourth quarter of 2011 and $163,000 for the first quarter of 2012 to fully write-down the value of the inventory placed on hold. As a result of the second recall, the Company decided to destroy the product that was previously placed on hold and accrued for estimated destruction charges, recording $290,000 during the fourth quarter of 2012 and $50,000 during the first quarter of 2013 in other operating expenses for the respective periods. In addition, the Company incurred costs associated with these recalls, including administration costs, of approximately $300,000 through September 30, 2013. As of September 30, 2013, the recall had been substantially completed and future returns are expected to be minimal, if any. The costs related to the recalls are being recognized as selling, general and administrative expenses on the Company’s statement of operations as they are incurred. The charge to reduce the value of the inventory was recorded as a cost of product sales on the Company’s statement of operations during the period in which the impairment was taken. As of September 30, 2013, no accrued destruction charges remained on the Company’s balance sheet.

Due to the termination of the Amended Supply Agreement with Baxter, the Company reduced the carrying value of its manufacturing assets and its manufacturing equipment and facility construction assets in process to their current estimated fair value, resulting in an impairment charge of $6,973,000 for the year ended December 31, 2012. The fair value of these assets was determined through a third-party valuation assessment and market prices for similar assets. Further, in December 2012, the Company sold a construction-in-process asset resulting in a loss on the disposal of $858,000. As a result, the carrying value of the manufacturing assets on the Company’s balance sheet at December 31, 2012, was $975,000, and the value of manufacturing equipment and facility construction assets in process was $357,000. These assets were classified as held and used at December 31, 2012, as a formal plan to sell the assets, or otherwise dispose of them, had not been implemented at that time. The Company continues to assess the classification of these assets and has determined that, based upon relevant guidance, the assets continue to be considered held and used at September 30, 2013.

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 SCR Pharmatop S.A. (“Pharmatop”) and the Company has the right to grant sublicenses to third parties. As consideration for the license, the Company paid a $25,000,000 up-front fee in March 2006 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 which range 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 June 2013, Health Canada issued a Notice of Compliance that granted marketing approval for OFIRMEV in Canada. The Company has not determined the commercial feasibility of launching the product in Canada, either independently or in collaboration with a company with an existing Canadian commercial presence, because it has not yet received a pricing review from the Canadian Patented Medicine Prices Review Board (“PMPRB”). The Company submitted a pricing review application for OFIRMEV to the PMPRB in October 2013.

In November 2010, the Company entered into a data license agreement among Terumo Corporation (“Terumo”), the Company and 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 commercialization of, the same IV formulation of acetaminophen in Japan. Further, the Company provided technical assistance and consulting services to Terumo at no charge regarding the licensed technical information, data and know-how, 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. In June 2013, the Company was notified that Terumo received regulatory approval for its IV acetaminophen from the Japanese Ministry of Health, Labour & Welfare. The Company will be entitled to receive a lump-sum payment upon the first commercial sale of the product by Terumo, and royalty payments on commercial sales of the product in Japan, however, Terumo has not yet initiated 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 recognized the consideration allocated to the data license upon delivery and recognized the consideration allocated to the consulting services as such services were 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 and in April 2011, the Company recognized $5,210,000 of license revenue pursuant to the agreement for the data transfer and consulting hours provided. As of December 31, 2012, the remaining balance of $119,000 had been recognized as license revenue. No license revenue was recognized for the three and nine months ended September 30, 2013. License revenue of $33,000 was recognized for the three and nine months ended September 30, 2012. Any milestones or royalties received from potential sales of the product will be recognized as revenue in the period earned.

Legal Matters

‘222 and ‘218 Patent Litigation: Exela Pharma Sciences, LLC and Paddock Laboratories, Inc. (Perrigo Company)

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 referred to herein as Perrigo, and against Exela Pharma Sciences, LLC, Exela PharmaSci, Inc. and Exela Holdings, Inc., collectively referred to herein as Exela. The lawsuit followed the notices that the Company received in July 2011 from each of Perrigo 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 alleged that Perrigo and Exela each infringed the ‘222 patent and 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, commonly known as 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 Perrigo 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 Perrigo or Exela, or such shorter or longer period as the Court may order. Each of Perrigo and Exela filed an answer in the case asserting, among other things, non-infringement and invalidity of the asserted patents, as well as certain counterclaims.

The Company settled with Perrigo and the case against Perrigo was dismissed on November 30, 2012. In connection with the settlement and license agreements entered into in November 2012, Perrigo was granted the exclusive right of first refusal to negotiate an agreement with the Company to market an authorized generic version of OFIRMEV in the U.S. in the event that the Company elects to launch an authorized generic version of the product. The license agreement also provides that, if the Company enters into an agreement for Perrigo to market an authorized generic version of OFIRMEV during the license period, Perrigo would purchase the product exclusively from the Company. The Company would receive product costs plus an administrative fee, as well as a royalty payment based on the net profits achieved by Perrigo from the sale of the authorized generic product. Additionally, the Company granted Perrigo the non-exclusive right to market a generic IV acetaminophen product in the U.S. under Perrigo’s ANDA after December 6, 2020, or earlier under certain circumstances. The Federal Trade Commission, or FTC, or the Department of Justice, or DOJ, could seek to challenge the Company’s settlement with Perrigo, or a competitor, customer or other third-party could initiate a private action under antitrust or other laws challenging the Company’s settlement with Perrigo.

A bench trial for the lawsuit with Exela was held in May 2013, with one additional trial date held in early July 2013. Post-trial briefs have been submitted, but the court has not yet issued a decision in this case. The court may render its decision at any time before or after the expiration of the applicable 30-month stay. It is not possible to predict the outcome of this litigation, and an adverse outcome could result in the launch of one or more generic versions of OFIRMEV before the expiration of the last of the listed patents on June 6, 2021 (or December 6, 2021 if pediatric exclusivity is granted), which could adversely affect the Company’s ability to successfully maximize the value of OFIRMEV, and would negatively impact the Company’s financial condition and results of operations, including causing a significant decrease in the Company’s revenues and cash flows.

‘222 and ‘218 Patent Litigation: Fresenius Kabi USA, LLC and Sandoz, Inc.

In January 2013, the Company filed suit in the United States District Court for the Southern District of California against Fresenius Kabi USA, LLC, or Fresenius, following receipt of a December 2012 notice from Fresenius concerning its submission of an NDA containing a Paragraph IV patent certification with the FDA for a generic version of OFIRMEV. In February 2013, the Company filed suit in the United States District Court for the Southern District of California against Sandoz, Inc., or Sandoz, following receipt of a December 2012 notice from Sandoz concerning its submission of an ANDA containing a Paragraph IV patent certification with the FDA for a generic version of OFIRMEV. In October 2013, the Company filed a motion to amend the complaint against Sandoz to join Sandoz AG, Neogen International N.V., APC Pharmaceuticals, LLC, and DIACO, S.p.A. to the lawsuit against Sandoz due to the involvement of each of these companies in the preparation of the Sandoz ANDA and related matters.

In the lawsuits against Fresenius and Sandoz, which have been coordinated for purposes of discovery and other pretrial proceedings in the Southern District of California, the Company alleges that Fresenius and Sandoz have each infringed the ‘222 patent and the ‘218 patent by filing an NDA, in the case of Fresenius, or an ANDA, in the case of Sandoz, seeking approval from the FDA to market a generic version of OFIRMEV prior to the expiration of these patents. Both Fresenius and Sandoz have filed answers in the Southern District of California asserting, among other things, non-infringement and invalidity of the asserted patents, as well as certain counterclaims. Both the Fresenius and Sandoz lawsuits were filed within 45 days of receipt of the respective notice letters, thereby triggering a stay of FDA approval of the Fresenius NDA and the Sandoz 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 Fresenius and/or Sandoz, or such shorter or longer period as the court may order. A claims construction hearing in the lawsuits against Fresenius and Sandoz was held on November 4, 2013, and the bench trial for each of these lawsuits is tentatively scheduled to commence on July 14, 2014.

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 6, 2021 if pediatric exclusivity is granted). However, given the unpredictability inherent in litigation, the Company cannot predict the outcome of these matters or any other litigation. At this time, the Company is unable to estimate possible losses or ranges of losses for current litigation, and it has not accrued any amounts for current litigation other than ongoing attorney’s fees.

‘222 Patent: Ex Parte Reexamination

In September 2012, an unidentified third party (subsequently identified as Exela) filed with the United States Patent and Trademark Office, or USPTO, a Request for Ex Parte Reexamination of the ‘222 patent. In December 2012, the Company received notice that the USPTO had granted the Request for Reexamination. The reexamination process is provided for by law and requires the USPTO to consider the scope and validity of the patent based on substantial new questions of patentability raised by a third party or the USPTO. In February 2013, Cadence and Pharmatop filed with the USPTO a patent owner’s statement commenting on the reexamination request, and in April 2013, Exela filed comments in response to the patent owner’s statement. In a non-final, initial office action issued by the USPTO on August 13, 2013, the USPTO rejected certain claims of the ‘222 patent. A response to the office action is due in November 2013. All of the claims of the ‘222 patent remain valid and in force during the reexamination proceedings. Because the Company and Pharmatop believe that the scope and validity of the patent claims in this patent are appropriate and that the USPTO’s prior issuance of the patent was correct, the Company, in conjunction with Pharmatop, will vigorously defend this patent. The Company cannot predict whether it and Pharmatop ultimately will succeed in maintaining the scope and validity of the claims of this patent during reexamination. If any of the patent claims in this patent ultimately are narrowed during prosecution before the USPTO, the extent of the patent coverage afforded to OFIRMEV could be impaired, which could potentially harm the Company’s business and operating results.

‘218 Patent Litigation: Exela Pharma Sciences, LLC

In April 2012, Exela filed suit against David J. Kappos and the USPTO in the United States District Court for the Eastern District of Virginia for declaratory judgment seeking a reversal of the USPTO’s decision not to act on a petition by Exela to vacate the USPTO’s April 2003 order reviving the international application for the ‘218 patent. The lawsuit followed the USPTO’s rejection of Exela’s petition to the USPTO filed in November 2011, which sought to vacate the April 23, 2003 order granting Pharmatop’s petition to revive the ‘218 patent. The USPTO determined that Exela lacked standing to seek such relief. Exela also seeks declaratory judgment that the USPTO’s rules and regulations that allow for revival of abandoned, international patent applications under the “unintentional” standard are invalid, and similar relief in connection with one or more counterclaims it has filed in the Delaware litigation. The Company’s motion to intervene in this lawsuit was granted in October 2012. In December 2012, the district court dismissed the case with prejudice as barred by the applicable statute of limitations. In February 2013, Exela appealed the district court’s decision to the Court of Appeals for the Federal Circuit. In response to an opening brief in the appeal filed by Exela, the Company and Phamatop filed an opening brief on September 27, 2013. A decision by the Court of Appeals in favor of Exela could result in the invalidation of the ‘218 patent.

Stockholders' Equity

9 Months Ended

Sep. 30, 2013

Stockholders' Equity

12.

Stockholders’ Equity

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 September 30, 2013, 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.

- Definition

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

+ References

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+ Details

Segment Information

9 Months Ended

Sep. 30, 2013

Segment Information

13.

Segment Information

Operating segments are identified as components of an enterprise for 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. The Company operates and manages its business as 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.

The Company had three major customers, each representing 10% or more of total gross product revenue for the periods presented as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
AmerisourceBergen Corporation		35	%		34	%		35	%		33	%
Cardinal Health, Inc.		32	%		33	%		32	%		34	%
McKesson Corporation		27	%		26	%		27	%		26	%

Receivables from these customers at September 30, 2013 and December 31, 2012, amounted to the following percentages of total gross accounts receivable:


	September 30, 2013			December 31, 2012
AmerisourceBergen Corporation		34	%		32	%
Cardinal Health, Inc.		31	%		31	%
McKesson Corporation		28	%		31	%

- 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

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+ Details

Income Taxes

9 Months Ended

Sep. 30, 2013

Income Taxes

14.

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 September 30, 2013 and December 31, 2012, and has recognized no interest and/or penalties in the Company’s statement of operations for the three and nine months ended September 30, 2013 and 2012. Further, as of September 30, 2013, 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. During the second quarter of 2013, the Company completed an analysis under IRC Sections 382 and 383 through December 31, 2012, and determined that it experienced an ownership change in March 2006. However, this ownership change did not result in the forfeiture of any net operating losses or research and development credits. Therefore, the Company has reinstated the (1) deferred tax assets for net operating losses of approximately $149,071,000 and (2) research and development credits of approximately $6,809,000 generated through 2012 to its deferred tax asset schedule. Further, the Company has recorded a corresponding increase to its valuation allowance. The amount of the Company’s deferred tax assets will be disclosed in the Company’s Annual Report on Form 10-K for fiscal year ending December 31, 2013. The analysis did not have any impact on the Company’s unrecognized tax benefits.

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Basis of Presentation

Basis of Presentation

During the three months ended September 30, 2013, the Company identified selling, general and administrative expenses of $600,000 that should have been recorded in previously reported quarters of 2013. Of this amount, $252,000 related to the three months ended March 31, 2013, and $348,000 related to the three months ended June 30, 2013. The Company determined that the adjustments were immaterial to each of the previously reported interim periods based on a quantitative and qualitative analysis. As a result, the Company recorded the correction of these errors during the three months ended September 30, 2013. There is no impact on the Company’s interim financial statements for the nine months ended September 30, 2013.

Revenue Recognition

Revenue Recognition

Accounts Receivable

Accounts Receivable

Stock-Based Compensation

Stock-Based Compensation


	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Risk free interest rates		1.8	%		0.8	%		1.2	%		0.9	%
Expected life in years		6.0 years			6.1 years			6.0 years			5.7 years
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Expected volatility		68.5	%		69.6	%		65.3	%		72.0	%

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of product sales	$	68	$	77	$	207	$	264
Research and development		190		597		552		1,483
Selling, general and administrative		1,569		1,500		4,567		5,178

Total stock-based compensation expense included in loss from operations	$	1,827	$	2,174	$	5,326	$	6,925

Fair Value Reporting

Fair Value Reporting


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.


	Balance at		Fair Value Measurements as of September 30, 2013
Description	September 30, 2013		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	46,672	$	46,672	$	-	$	-
Investments in marketable securities – short-term:
Debt instruments – Municipal debt obligations		1,326		-		1,326		-
Certificates of deposit		1,000		-		1,000		-

Assets at fair value	$	48,998	$	46,672	$	2,326	$	-


	Balance at		Fair Value Measurements as of December 31, 2012
Description	December 31, 2012		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	55,736	$	55,736	$	-	$	-
Investments in marketable securities – short-term:
Debt instruments – Corporate debt obligations		1,398		-		1,398		-
Debt instruments – Municipal debt obligations		1,347		-		1,347		-
Certificates of deposit		1,000		-		1,000		-

Assets at fair value	$	59,481	$	55,736	$	3,745	$	-

- Definition

Disclosure of accounting policy for revenue recognition. If the entity has different policies for different types of revenue transactions, the policy for each material type of transaction is generally disclosed. If a sales transaction has multiple element arrangements (for example, delivery of multiple products, services or the rights to use assets) the disclosure may indicate the accounting policy for each unit of accounting as well as how units of accounting are determined and valued. The disclosure may encompass important judgment as to appropriateness of principles related to recognition of revenue. The disclosure also may indicate the entity's treatment of any unearned or deferred revenue that arises from the transaction.

+ References + Details

- Definition

Disclosure of accounting policy for trade and other accounts receivables. This disclosure may include the basis at which such receivables are carried in the entity's statements of financial position (for example, net realizable value), how the entity determines the level of its allowance for doubtful accounts, when impairments, charge-offs or recoveries are recognized, and the entity's income recognition policies for such receivables, including its treatment of related fees and costs, its treatment of premiums, discounts or unearned income, when accrual of interest is discontinued, how the entity records payments received on nonaccrual receivables and its policy for resuming accrual of interest on such receivables. If the enterprise holds a large number of similar loans, disclosure may include the accounting policy for the anticipation of prepayments and significant assumptions underlying prepayment estimates for amortization of premiums, discounts, and nonrefundable fees and costs.

+ References + Details

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Weighted Average Estimates Used in Black-Scholes Option-Pricing Model


	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Risk free interest rates		1.8	%		0.8	%		1.2	%		0.9	%
Expected life in years		6.0 years			6.1 years			6.0 years			5.7 years
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Expected volatility		68.5	%		69.6	%		65.3	%		72.0	%

Summary of Stock Based Compensation Expense Included in Statements of Operations

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of product sales	$	68	$	77	$	207	$	264
Research and development		190		597		552		1,483
Selling, general and administrative		1,569		1,500		4,567		5,178

Total stock-based compensation expense included in loss from operations	$	1,827	$	2,174	$	5,326	$	6,925

Details of Financial Instruments Carried at Fair Value


	Balance at		Fair Value Measurements as of September 30, 2013
Description	September 30, 2013		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	46,672	$	46,672	$	-	$	-
Investments in marketable securities – short-term:
Debt instruments – Municipal debt obligations		1,326		-		1,326		-
Certificates of deposit		1,000		-		1,000		-

Assets at fair value	$	48,998	$	46,672	$	2,326	$	-


	Balance at		Fair Value Measurements as of December 31, 2012
Description	December 31, 2012		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	55,736	$	55,736	$	-	$	-
Investments in marketable securities – short-term:
Debt instruments – Corporate debt obligations		1,398		-		1,398		-
Debt instruments – Municipal debt obligations		1,347		-		1,347		-
Certificates of deposit		1,000		-		1,000		-

Assets at fair value	$	59,481	$	55,736	$	3,745	$	-

Inventory (Tables)

9 Months Ended

Sep. 30, 2013

Inventories, Stated at the Lower of Cost or Market

Inventories, stated at the lower of cost or market, consisted of the following (in thousands):


	September 30, 2013		December 31, 2012
Inventory:
Raw material	$	83	$	83
Finished goods		6,011		6,415

Total	$	6,094	$	6,498

Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2013

Property and Equipment for Operations

Property and equipment for operations were as follows (in thousands):


	September 30, 2013			December 31, 2012
Property and equipment:
Manufacturing equipment	$	2,801		$	2,999
Leasehold improvements		1,639			1,639
Computer equipment and software		1,570			1,489
Furniture and fixtures		478			478
Construction-in-process		709			724

		7,197			7,329
Less accumulated depreciation		(5,396	)		(5,362	)

Total	$	1,801		$	1,967

Investments in Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2013

Cost, Gross Unrealized Holding Gains, Gross Unrealized Holding Losses and Fair Value of Available-For-Sale Investments by Types and Classes of Security

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 September 30, 2013 and December 31, 2012 consisted of the following (in thousands):


At September 30, 2013	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	$	1,326	$	-	$	-	$	-	$	1,326
Certificates of deposit		1,000		-		-		-		1,000

	$	2,326	$	-	$	-	$	-	$	2,326


At December 31, 2012	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	$	1,398	$	-	$	-	$	-	$	1,398
Debt instruments – Municipal debt obligations		1,347		-		-		-		1,347
Certificates of deposit		1,000		-		-		-		1,000

	$	3,745	$	-	$	-	$	-	$	3,745

Investments by Contractual Maturity

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


	September 30, 2013				December 31, 2012
	Cost		Fair Value		Cost		Fair Value
Due or callable in one year or less	$	2,326	$	2,326	$	3,745	$	3,745
Due after one year	$	-	$	-	$	-	$	-

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References + Details

Restructuring and Impairment Charges (Tables)

9 Months Ended

Sep. 30, 2013

Restructuring Charges for Severance-Related Costs and Termination of Contractual Obligations

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


	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013		2012
Beginning restructuring liability	$	-	$	13		$	-	$	931
Severance and termination disbursements		-		(6	)		-		(924	)

Ending restructuring liability	$	-	$	7		$	-	$	7

Loan and Security Agreement (Tables)

9 Months Ended

Sep. 30, 2013

Issuances of Warrants Currently Outstanding

The table below summarizes the issuances of such warrants currently outstanding, including the Black-Scholes valuation model assumptions used to determine the fair value of the warrants:


	Date of Issuance
	December 2012			December 2011			June 2010			November 2007
Aggregate shares pursuant to warrants issued		154,638			158,311			254,793			50,331
Per share exercise price of warrants issued	$	3.88		$	3.79		$	7.0645		$	12.67
Fair value of warrants issued	$	416,000		$	390,000		$	1,237,000		$	474,000
Expiration date of warrants		December 9, 2019			December 22, 2018			June 18, 2017			November 30, 2014
Black-Scholes valuation inputs:
Expected volatility		70.17	%		72.40	%		76.50	%		70.00	%
Risk-free interest rate		1.02	%		1.40	%		2.70	%		3.64	%
Dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Expected term		7 years			7 years			7 years			7 years

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2013

Future Minimum Payments Related to Operating Lease

As of September 30, 2013, the future minimum payments related to the operating lease for the Company’s corporate office space were as follows (in thousands):


Remainder 2013	$	192
2014		557
2015		983
2016		1,013
2017		1,043
Thereafter		1,535

Total	$	5,323

Segment Information (Tables)

9 Months Ended

Sep. 30, 2013

Percentage of Total Gross Product Revenue

The Company had three major customers, each representing 10% or more of total gross product revenue for the periods presented as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
AmerisourceBergen Corporation		35	%		34	%		35	%		33	%
Cardinal Health, Inc.		32	%		33	%		32	%		34	%
McKesson Corporation		27	%		26	%		27	%		26	%

Percentage of Total Gross Trade Receivables

Receivables from these customers at September 30, 2013 and December 31, 2012, amounted to the following percentages of total gross accounts receivable:


	September 30, 2013			December 31, 2012
AmerisourceBergen Corporation		34	%		32	%
Cardinal Health, Inc.		31	%		31	%
McKesson Corporation		28	%		31	%

The Company - Additional Information (Detail)	1 Months Ended
The Company - Additional Information (Detail)	Nov. 30, 2010
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Minimum age of adults & children for treatment	2 years

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Summary Of Significant Accounting Policies [Line Items]
Selling, general and administrative expenses	$ 22,928,000			$ 20,039,000	$ 70,261,000	$ 66,811,000
Number of months before product expiration during which a customer can return product	6 months			6 months	6 months	6 months	6 months
Number of months after product expiration during which a customer can return product	12 months			12 months	12 months	12 months	12 months
Reserves for doubtful accounts	$ 16,000				$ 16,000		$ 56,000
Written-off past due accounts	0			$ 0	40,000	$ 0
Charges incurred to reserve past due accounts	2,000			$ 0		$ 0
Error Correction
Summary Of Significant Accounting Policies [Line Items]
Selling, general and administrative expenses	$ 574,000
First Quarter
Summary Of Significant Accounting Policies [Line Items]
Selling, general and administrative expenses			$ 252,000
Second Quarter
Summary Of Significant Accounting Policies [Line Items]
Selling, general and administrative expenses		$ 322,000
Change in Accounting Method Accounted for as Change in Estimate
Summary Of Significant Accounting Policies [Line Items]
Net revenue, previously deferred					2,616,000
Cost of sales, previously deferred					919,000
Reduction in net loss					$ 1,697,000
Reduction in net loss per share					$ 0.02

Weighted Average Estimates Used in Black-Scholes Option-Pricing Model (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rates	1.80%	0.80%	1.20%	0.90%
Expected life in years	6 years	6 years 1 month 6 days	6 years	5 years 8 months 12 days
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Expected volatility	68.50%	69.60%	65.30%	72.00%

Summary of Stock Based Compensation Expense Included in Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense included in loss from operations	$ 1,827	$ 2,174	$ 5,326	$ 6,925
Cost of product sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense included in loss from operations	68	77	207	264
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense included in loss from operations	190	597	552	1,483
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense included in loss from operations	$ 1,569	$ 1,500	$ 4,567	$ 5,178

Details of Financial Instruments Carried at Fair Value (Detail) - USD ($) $ in Thousands	Sep. 30, 2013	Dec. 31, 2012
Investments in marketable securities - short-term:
Investments in marketable securities - short-term	$ 2,326	$ 3,745
Assets at fair value	48,998	59,481
Money market funds
Cash equivalents:
Cash equivalents	46,672	55,736
Debt instruments - Corporate debt obligations
Investments in marketable securities - short-term:
Investments in marketable securities - short-term		1,398
Debt instruments - Municipal debt obligations
Investments in marketable securities - short-term:
Investments in marketable securities - short-term	1,326	1,347
Certificates of deposit
Investments in marketable securities - short-term:
Investments in marketable securities - short-term	1,000	1,000
Level 1
Investments in marketable securities - short-term:
Assets at fair value	46,672	55,736
Level 1 \| Money market funds
Cash equivalents:
Cash equivalents	46,672	55,736
Level 2
Investments in marketable securities - short-term:
Assets at fair value	2,326	3,745
Level 2 \| Debt instruments - Corporate debt obligations
Investments in marketable securities - short-term:
Investments in marketable securities - short-term		1,398
Level 2 \| Debt instruments - Municipal debt obligations
Investments in marketable securities - short-term:
Investments in marketable securities - short-term	1,326	1,347
Level 2 \| Certificates of deposit
Investments in marketable securities - short-term:
Investments in marketable securities - short-term	$ 1,000	$ 1,000

Net Loss Per Share - Additional Information (Detail) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the calculations as their effect anti-dilutive	17,950,000	16,790,000

Inventories, Stated at lower of Cost or Market (Detail) - USD ($) $ in Thousands	Sep. 30, 2013	Dec. 31, 2012
Inventory:
Raw material	$ 83	$ 83
Finished goods	6,011	6,415
Total	$ 6,094	$ 6,498

Property and Equipment for Operations (Detail) - USD ($) $ in Thousands	Sep. 30, 2013	Dec. 31, 2012
Property and equipment:
Manufacturing equipment	$ 2,801	$ 2,999
Leasehold improvements	1,639	1,639
Computer equipment and software	1,570	1,489
Furniture and fixtures	478	478
Construction-in-process	709	724
Gross property and equipment	7,197	7,329
Less accumulated depreciation	(5,396)	(5,362)
Total	$ 1,801	$ 1,967

Property and Equipment - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 42,000	$ 401,000	$ 169,000	$ 1,226,000

Cost, Gross Unrealized Holding Gains, Gross Unrealized Holding Losses and Fair Value of Investments by Types and Classes of Security (Detail) - USD ($) $ in Thousands	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	$ 2,326	$ 3,745
Other-than-temporary Impairments
Gross Unrealized Holding Gains
Gross Unrealized Holding Losses
Fair Value	2,326	3,745
Debt instruments - Corporate debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis		1,398
Other-than-temporary Impairments
Gross Unrealized Holding Gains
Gross Unrealized Holding Losses
Fair Value		1,398
Debt instruments - Municipal debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	1,326	1,347
Other-than-temporary Impairments
Gross Unrealized Holding Gains
Gross Unrealized Holding Losses
Fair Value	1,326	1,347
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	1,000	1,000
Other-than-temporary Impairments
Gross Unrealized Holding Gains
Gross Unrealized Holding Losses
Fair Value	$ 1,000	$ 1,000

Investments by Contractual Maturity (Detail) - USD ($) $ in Thousands	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Due or callable in one year or less, Cost	$ 2,326	$ 3,745
Due after one year, Cost
Due or callable in one year or less, Fair Value	2,326	3,745
Due after one year, Fair Value

Investment in Incline - Additional Information (Detail) - Incline Therapeutics Inc. - USD ($)	1 Months Ended			9 Months Ended
	Jan. 31, 2013	Sep. 30, 2011	Jun. 30, 2010	Sep. 30, 2013	Dec. 31, 2012
Schedule of Cost-method Investments [Line Items]
Upfront option fee		$ 3,500,000	$ 3,500,000
Amount of preferred stock received			$ 500,000
Number of preferred stock received			500,000
Number of preferred shares sold	500,000
Carrying value of the investments					$ 7,000,000
Gain on investment				$ 7,654,000
Call Option
Schedule of Cost-method Investments [Line Items]
Payment received for options upon closing of Incline Acquisition	$ 13,125,000
Preferred Stock
Schedule of Cost-method Investments [Line Items]
Payment received for options upon closing of Incline Acquisition	$ 1,529,000

Restructuring and Impairment Charges - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($) Employee
Restructuring Cost and Reserve [Line Items]
Impairment of long-lived assets	$ 6,973,000
Asset retirement obligation	$ 750,000
One-time employee termination charges		$ 1,142,000
Number of employees terminated \| Employee		17

Restructuring Charges for Severance-Related Costs and Termination of Contractual Obligations (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Restructuring Cost and Reserve [Line Items]
Beginning restructuring liability	$ 13	$ 931
Severance and termination disbursements	(6)	(924)
Ending restructuring liability	$ 7	$ 7

Loan and Security Agreement - Additional Information (Detail)	1 Months Ended
	Dec. 31, 2012 USD ($) $ / Warrants shares	Dec. 31, 2011 $ / Warrants shares	Jun. 30, 2010 $ / Warrants shares	Nov. 30, 2007 $ / Warrants shares	Sep. 30, 2013 shares
Line of Credit Facility [Line Items]
Number of aggregate shares underlying warrants \| shares	154,638	158,311	254,793	50,331
Exercise price of warrants \| $ / Warrants	3.8800	3.7900	7.0645	12.6700
Expected term of warrants	7 years	7 years	7 years	7 years
Warrants outstanding \| shares					618,073
2012 Amendment
Line of Credit Facility [Line Items]
Amortization period for monthly principal and interest payment	30 months
Fixed interest rate	10.9545%
Payment at termination of loan, percentage of total advance	6.00%
Payment for termination of loan \| $	$ 752,000
Fees and expenses paid in connection with closing of the credit facility \| $	$ 18,000
Number of aggregate shares underlying warrants \| shares	154,638
Exercise price of warrants \| $ / Warrants	3.88
Expected term of warrants	7 years
Minimum quarterly revenue requirement \| $	$ 12,500,000
Loan using an effective interest rate	15.30%
Second Amended Agreement
Line of Credit Facility [Line Items]
Loan using an effective interest rate		15.31%

Issuances of Warrants Currently Outstanding (Detail)	1 Months Ended
Issuances of Warrants Currently Outstanding (Detail)	Dec. 31, 2012 USD ($) $ / Warrants shares	Dec. 31, 2011 USD ($) $ / Warrants shares	Jun. 30, 2010 USD ($) $ / Warrants shares	Nov. 30, 2007 USD ($) $ / Warrants shares
Class of Warrant or Right [Line Items]
Aggregate shares pursuant to warrants issued \| shares	154,638	158,311	254,793	50,331
Per share exercise price of warrants issued \| $ / Warrants	3.8800	3.7900	7.0645	12.6700
Fair value of warrants issued \| $	$ 416,000	$ 390,000	$ 1,237,000	$ 474,000
Expiration date of warrants	Dec. 09, 2019	Dec. 22, 2018	Jun. 18, 2017	Nov. 30, 2014
Black-Scholes valuation inputs:
Expected volatility	70.17%	72.40%	76.50%	70.00%
Risk-free interest rate	1.02%	1.40%	2.70%	3.64%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Expected term	7 years	7 years	7 years	7 years

Commitments and Contingencies - Additional Information (Detail)	1 Months Ended					3 Months Ended							9 Months Ended		12 Months Ended
	Jul. 31, 2012 Lot	Aug. 31, 2011	Apr. 30, 2011 USD ($)	Jul. 31, 2007	Mar. 31, 2006 USD ($)	Sep. 30, 2013 USD ($)	Mar. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Sep. 30, 2012 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)	Sep. 30, 2013 USD ($) RenewalOptions	Sep. 30, 2012 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2009 USD ($)
Commitments and Contingencies [Line Items]
Lease CD in restricted cash						$ 190,000		$ 190,000					$ 190,000		$ 190,000
Effective deposit reduction date													Jan. 01, 2014
Rent expense						168,000			$ 236,000				$ 504,000	$ 709,000
Asset retirement obligation															750,000
Inventory write-down										$ 163,000	$ 5,574,000			163,000
Recall administration costs													300,000
Impairment of long-lived assets															6,973,000
Gain/(Loss) on disposal of asset													16,000	(14,000)
Carrying value of manufacturing assets						2,801,000		2,999,000					2,801,000		2,999,000
Carrying value of manufacturing equipment and facility construction in process assets						709,000		724,000					709,000		724,000
Up front Payment			$ 5,329,000
Licensing revenue recognized			$ 5,210,000			0			$ 33,000				$ 0	$ 33,000	119,000
Date for bench trial													2013-07
Required patent response date													2013-11
Destruction of Inventory
Commitments and Contingencies [Line Items]
Other operating expense							$ 50,000	290,000
Fresenius
Commitments and Contingencies [Line Items]
Patent infringement													45 days
Number of months/ years for expiration of patent													30 months
Sandoz
Commitments and Contingencies [Line Items]
Patent infringement													45 days
Number of months/ years for expiration of patent													30 months
Fresenius and Sandoz
Commitments and Contingencies [Line Items]
Date of claims construction hearing													Nov. 04, 2013
Bench trial tentative schedule date													Jul. 14, 2014
Office Equipment
Commitments and Contingencies [Line Items]
Capital lease period													4 years
Office equipment under capital leases, expiration year													2016
Capital lease assets, gross value						56,000		56,000					$ 56,000		56,000
Amortization of capital lease assets						3,000							10,000
Obligation under capital lease, current						12,000							12,000
Obligation under capital lease, non current						34,000							$ 34,000
Office Space
Commitments and Contingencies [Line Items]
Expiration of lease													May 31, 2019
Number of renewal options \| RenewalOptions													1
Right to renew the lease term in years													5 years
Certificate of deposit balance reduction						92,000							$ 92,000
Construction in Progress
Commitments and Contingencies [Line Items]
Gain/(Loss) on disposal of asset															(858,000)
Initial Pledged Amount
Commitments and Contingencies [Line Items]
Certificate of deposit pledged as collateral																$ 150,000
Current Pledged Amount
Commitments and Contingencies [Line Items]
Certificate of deposit pledged as collateral											$ 450,000
Maximum \| Office Space
Commitments and Contingencies [Line Items]
Tenant improvement allowance included in terms of lease						475,000							$ 475,000
OFIRMEV Patent
Commitments and Contingencies [Line Items]
Up-front fee paid					$ 25,000,000							$ 15,000,000
Future milestone payment					$ 25,000,000
Patent infringement		45 days
Number of months/ years for expiration of patent		30 months
222 patent expiration date					Aug. 05, 2017
218 patent expiration date					Jun. 06, 2021
Baxter Healthcare
Commitments and Contingencies [Line Items]
Initiation of development and supply agreement				July 2007
Initial term of development and supply agreement				5 years
Number of recalled lots of unexpired OFIRMEV \| Lot	41
Agreement termination date													2013-03
Asset retirement obligation															750,000
Cancellation of previously accrued liability							$ 317,000
Reversal of overaccrual of asset retirement obligation						$ 136,000
Baxter Healthcare \| Manufacturing Assets
Commitments and Contingencies [Line Items]
Carrying value of manufacturing assets								975,000							975,000
Baxter Healthcare \| Facility Construction in Process Assets
Commitments and Contingencies [Line Items]
Carrying value of manufacturing equipment and facility construction in process assets								$ 357,000							$ 357,000
Lawrence Laboratories
Commitments and Contingencies [Line Items]
Annual purchase requirement percentage						75.00%							75.00%
Written notice of termination to the other party													24 months
Period for termination notice relating to a material uncured breach of the Agreement													60 days
Lawrence Laboratories \| Minimum
Commitments and Contingencies [Line Items]
Period of supply agreement													Feb. 01, 2013
Lawrence Laboratories \| Maximum
Commitments and Contingencies [Line Items]
Period of supply agreement													Dec. 31, 2018
Grifols Sa
Commitments and Contingencies [Line Items]
Period for termination notice relating to a material uncured breach of the Agreement													60 days

Future Minimum Payments Related to Operating Lease (Detail) $ in Thousands	Sep. 30, 2013 USD ($)
Commitments and Contingencies Disclosure [Line Items]
Remainder 2013	$ 192
2014	557
2015	983
2016	1,013
2017	1,043
Thereafter	1,535
Total	$ 5,323

Stockholders' Equity - Additional Information (Detail)	1 Months Ended					9 Months Ended
Stockholders' Equity - Additional Information (Detail)	Dec. 31, 2012 $ / Warrants shares	Dec. 31, 2011 $ / Warrants shares	Jun. 30, 2010 $ / Warrants shares	Feb. 28, 2009 USD ($) Director Investment $ / shares $ / Warrants shares	Nov. 30, 2007 $ / Warrants shares	Sep. 30, 2013 USD ($) shares	Sep. 30, 2012 USD ($)
Stockholders Equity Note [Line Items]
Number of aggregate shares underlying warrants	154,638	158,311	254,793		50,331
Warrants exercise price \| $ / Warrants	3.8800	3.7900	7.0645		12.6700
Period for warrant term	7 years	7 years	7 years		7 years
Private placement warrants outstanding						618,073
Proceeds net of offering costs \| $						$ 1,419,000	$ 97,000
Private Placement
Stockholders Equity Note [Line Items]
Common stock issued				12,039,794
Share price \| $ / shares				$ 7.13
Number of aggregate shares underlying warrants				6,019,897
Warrants price \| $ / Warrants				0.125
Warrants exercise price \| $ / Warrants				7.84
Period for warrant term				5 years
Private placement warrants outstanding						6,019,897
Proceeds net of offering costs \| $				$ 86,243,000
Number of affiliated funds participating in private placement \| Investment				6
Number of Directors participating in private placement \| Director				3
Liquidated damages				1.00%
Liquidated damages cap				8.00%

Segment Information - Additional Information (Detail)	9 Months Ended
Segment Information - Additional Information (Detail)	Sep. 30, 2013 Segment Distributor
Segment Reporting Information [Line Items]
Number of segments \| Segment	1
Number of leading wholesale pharmaceutical distributors \| Distributor	3
Major customers as percentage of total gross product revenue	10% or more

Percentage of Total Gross Product Revenue (Detail)	3 Months Ended		9 Months Ended
Percentage of Total Gross Product Revenue (Detail)	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Amerisource Bergen Corporation
Revenue, Major Customer [Line Items]
Percentage of total product revenue	35.00%	34.00%	35.00%	33.00%
Cardinal Health, Inc
Revenue, Major Customer [Line Items]
Percentage of total product revenue	32.00%	33.00%	32.00%	34.00%
McKesson Corporation
Revenue, Major Customer [Line Items]
Percentage of total product revenue	27.00%	26.00%	27.00%	26.00%

Percentage of Total Gross Trade Receivables (Detail)	Sep. 30, 2013	Dec. 31, 2012
Amerisource Bergen Corporation
Concentration Risk [Line Items]
Percentage of total trade receivables	34.00%	32.00%
Cardinal Health, Inc
Concentration Risk [Line Items]
Percentage of total trade receivables	31.00%	31.00%
McKesson Corporation
Concentration Risk [Line Items]
Percentage of total trade receivables	28.00%	31.00%

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Schedule Of Income Tax [Line Items]
Accrued interest and/or penalties on balance sheet	$ 0		$ 0
Interest and/or penalties in income statement	0	$ 0
Unrecognized tax benefits	0
Deferred tax assets for net operating losses	149,071,000
Research and development credits	$ 6,809,000