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Level 1 Inputs

Quoted prices for identical instruments in active markets.

Level 2 Inputs

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

Level 3 Inputs

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

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2013	Feb. 21, 2014	Jun. 28, 2013
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Trading Symbol	CADX
Entity Registrant Name	CADENCE PHARMACEUTICALS INC
Entity Central Index Key	0001333248
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		89,183,960
Entity Public Float			$ 423,000,000

BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 55,075	$ 58,327
Investments in marketable securities	2,326	3,745
Restricted cash	548	640
Accounts receivable, net	9,300	6,152
Inventory	8,646	6,498
Prepaid expenses	1,902	1,064
Other current assets	91	90
Total current assets	77,888	76,516
Property and equipment, net	2,060	1,967
Intangible assets, net	10,747	12,090
Restricted cash	92
Other assets	16	7,106
Total assets	90,803	97,679
Current liabilities:
Accounts payable	7,724	5,796
Accrued liabilities	18,042	12,969
Deferred revenue		2,234
Current portion of long-term debt, less discount of $252 and $-, respectively	10,777
Total current liabilities	36,543	20,999
Long-term debt, less discount of $433 and $1,182, respectively	18,538	28,818
Other long-term liabilities	844	51
Total liabilities	55,925	49,868
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2013 and 2012, respectively
Common stock, $0.0001 par value; 200,000,000 shares authorized, 86,719,716 shares and 85,668,668 shares issued and outstanding at December 31, 2013 and 2012, respectively	9	9
Additional paid-in capital	506,819	495,458
Accumulated other comprehensive income
Accumulated deficit	(471,950)	(447,656)
Total stockholders' equity	34,878	47,811
Total liabilities and stockholders' equity	$ 90,803	$ 97,679

BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2013	Dec. 31, 2012
Discount on debt	$ 685
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	86,719,716	85,668,668
Common stock, shares outstanding	86,719,716	85,668,668
Long-term debt, Current
Discount on debt	$ 252
Long-term debt, Noncurrent
Discount on debt	$ 433	$ 1,182

STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands

12 Months Ended

Dec. 31, 2013

Dec. 31, 2012

Dec. 31, 2011

Revenues:

Product revenue, net

$ 110,529

$ 50,066

$ 11,486

License revenue

2,027

118

5,210

Total net revenues

112,556

50,184

16,696

Costs and expenses:

Cost of product sales

37,973

23,256

12,406

Amortization of patent license

1,343

1,567

Research and development

6,743

6,519

8,885

Selling, general and administrative

94,482

86,843

81,504

Impairment of long-lived assets

7,723

Other

(441)

1,174

1,076

Total costs and expenses

140,100

126,858

105,438

Loss from operations

(27,544)

(76,674)

(88,742)

Other (expense) income:

Interest income

123

136

Interest expense

(4,467)

(4,449)

(4,424)

Other income

7,648

Total other income (expense), net

3,250

(4,299)

(4,279)

Loss before income tax

(24,294)

(80,973)

(93,021)

Net loss

$ (24,294)

$ (80,973)

$ (93,021)

Basic and diluted net loss per share

^[1]

$ (0.28)

^[2]

$ (0.95)

^[2]

$ (1.41)

Shares used to compute basic and diluted net loss per share

^[1]

85,969

85,556

66,075

[1]	As a result of the issuance of common stock pursuant to public offerings in the fourth quarter of 2011, there is a lack of comparability in the per share amounts between the periods presented. Please see Note 2 of the Notes to Financial Statements for further discussion.
[2]	Loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net loss per share may not necessarily equal the total for the year.

STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net loss	$ (24,294)	$ (80,973)	$ (93,021)
Other comprehensive income (loss) gain:
Net unrealized (loss) gain on securities available for sale		(2)	2
Other comprehensive income (loss) gain		(2)	2
Comprehensive loss	$ (24,294)	$ (80,975)	$ (93,019)

- 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

STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Balance at Dec. 31, 2010	$ 123,960	$ 6	$ 397,616		$ (273,662)
Balance, shares at Dec. 31, 2010		63,107,000
Public offering of common stock, net of offering costs (in shares)		21,800,000
Public offering of common stock, net of offering costs	77,302	$ 2	77,300
Issuance of warrants to purchase common stock	390		390
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans (in shares)		605,000
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans	1,444	$ 1	1,443
Stock-based compensation	9,233		9,233
Unrealized gain (loss) on marketable securities, net	2			$ 2
Net loss	(93,021)				(93,021)
Balance at Dec. 31, 2011	119,310	$ 9	485,982	2	(366,683)
Balance, shares at Dec. 31, 2011		85,512,000
Issuance of warrants to purchase common stock	416		416
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans (in shares)		157,000
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans	451		451
Stock-based compensation	8,609		8,609
Unrealized gain (loss) on marketable securities, net	(2)			$ (2)
Net loss	(80,973)				(80,973)
Balance at Dec. 31, 2012	$ 47,811	$ 9	495,458		(447,656)
Balance, shares at Dec. 31, 2012	85,668,668	85,669,000
Cashless warrant exercise in December at $7.84 per share		128
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans (in shares)		923,000
Issuance of common stock from option exercises and lapse of restricted stock units under equity compensation plans	$ 4,292		4,292
Stock-based compensation	7,069		7,069
Net loss	(24,294)				(24,294)
Balance at Dec. 31, 2013	$ 34,878	$ 9	$ 506,819		$ (471,950)
Balance, shares at Dec. 31, 2013	86,719,716	86,720,000

STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Public offering of common stock, offering costs			$ 4,448
Warrants to purchase common stock		155	158
Warrant exercise price	$ 7.84	$ 3.88	$ 3.79
Issuance of Stock in November and December
Common stock, price per share			$ 3.75

STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
STATEMENTS OF CASH FLOWS - USD ($)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating activities
Net loss	$ (24,294,000)	$ (80,973,000)	$ (93,021,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	213,000	1,560,000	1,670,000
Loss (gain) on disposal of assets		873,000	(66,000)
Gain on sale of investment	(7,654,000)
Impairment of long-lived assets		7,723,000
Inventory write-down	0	163,000	5,574,000
Stock-based compensation	7,069,000	8,609,000	9,233,000
Non-cash interest expense	17,000	27,000	49,000
Amortization of intangible assets	1,343,000	1,343,000	1,567,000
Amortization of discount on note payable	497,000	122,000	409,000
Accretion of discounts on available-for-sale securities, net of accretion of premiums	(1,000)	(16,000)	5,000
Changes in operating assets and liabilities:
Accounts receivable	(3,148,000)	(3,944,000)	(2,208,000)
Prepaid expenses and other assets	(830,000)	(78,000)	104,000
Inventory	(2,148,000)	(5,273,000)	(6,477,000)
Accounts payable	1,928,000	2,140,000	360,000
Deferred revenue	(2,234,000)	943,000	1,291,000
Accrued liabilities and other liabilities	6,049,000	2,482,000	3,358,000
Net cash used in operating activities	(23,193,000)	(64,299,000)	(78,152,000)
Investing activities
Purchases of marketable securities		(1,397,000)	(82,681,000)
Maturities and sales of marketable securities	1,420,000	42,275,000	60,006,000
Payment for option purchase right			(3,500,000)
Proceeds from the sale of Incline options and preferred shares	14,654,000
Restricted cash			(300,000)
Purchases of property and equipment	(505,000)	(1,705,000)	(2,733,000)
Proceeds from the sale of property and equipment	80,000	393,000	66,000
Net cash provided by (used in) investing activities	15,649,000	39,566,000	(29,142,000)
Financing activities
Proceeds from issuance of common stock	4,292,000	451,000	78,746,000
Borrowings under debt agreements, net of fees			3,434,000
Principal payments under debt agreements			(4,452,000)
Net cash provided by financing activities	4,292,000	451,000	77,728,000
Net decrease in cash and cash equivalents	(3,252,000)	(24,282,000)	(29,566,000)
Cash and cash equivalents at beginning of period	58,327,000	82,609,000	112,175,000
Cash and cash equivalents at end of period	55,075,000	58,327,000	82,609,000
Supplemental disclosures
Issuance of warrants in connection with loan and security agreement		416,000	390,000
Property and equipment purchases in accounts payable and accrued expenses	232,000	338,000	891,000
Cash paid for interest and fees	$ 3,250,000	$ 3,865,000	$ 4,311,000

The Company

12 Months Ended

Dec. 31, 2013

The Company

The Company

Cadence Pharmaceuticals, Inc. (the “Company”) was incorporated in the state of Delaware in May 2004. The Company is a biopharmaceutical company focused on acquiring, in-licensing, developing and commercializing proprietary 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

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Management Estimates

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

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 year ended December 31, 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 year ended December 31, 2013, and the per share net impact of the adjustment was a reduction in net loss of $0.02 per share for the year. There was no similar impact on the reported revenue, cost of sales or loss per share for the years ended December 31, 2012 and 2011.

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.

Revenue from the Company’s data license agreement with Terumo Corporation (“Terumo”) is recognized separately for each element of the arrangement. Revenue from the data and services element that was provided to Terumo by the Company in 2011 and 2012 has been recognized upon delivery of the goods and services provided, based upon the consideration allocated to each deliverable, or the termination of the service period. The Company allocated the consideration from the data and services element to each deliverable based upon its review of the agreement pursuant to multiple-element arrangement guidance. Revenue from the first commercial sales milestone payment was recognized in November 2013 as the Company was able to confirm that the initial sale of Terumo’s IV acetaminophen product had occurred in Japan. Royalties on subsequent sales will be recorded at the time the royalties can be reliably measured and collectability is reasonably assured. See Note 9 for further discussion.

Accounts Receivable

The Company extends credit to its customers in the normal course of business based upon an evaluation of the customer’s credit history, financial condition and other factors. Trade accounts receivable are recorded on gross sales to wholesalers, net of allowances for prompt payment and other discounts, 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 December 31, 2013 and 2012, the Company’s allowance for uncollectible receivables was $19,000 and $56,000, respectively. During the years ended December 31, 2013, 2012 and 2011 charges of $3,000, $56,000 and $0, respectively, were taken to reserve for past due accounts. During the year ended December 31, 2013, past due accounts totaling $40,000 that were previously reserved were written off. No past due accounts were written off during the years ended December 31, 2012 and 2011.

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 upon 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:

The following tables present further detail of the financial instruments carried at fair value on the Company’s balance sheet as of December 31, 2013 and 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 December 31, 2013		Fair Value Measurements as of December 31, 2013
Description	Balance at December 31, 2013		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	48,975	$	48,975	$	—	$	—
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	$	51,301	$	48,975	$	2,326	$	—


Description	Balance at December 31, 2012		Fair Value Measurements as of December 31, 2012
Description	Balance at 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.

Cash Equivalents

The Company considers all highly liquid investments purchased with maturities of three months or less from the date of purchase to be cash equivalents. These investments may include money market funds, U.S. Government agencies, corporate debt securities and commercial paper. As of December 31, 2013 and 2012, the Company’s cash equivalents were $48,975,000 and $55,736,000, respectively.

Marketable Securities

The Company determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. The Company has classified its investment holdings as available-for-sale, as the sale of such securities may be required prior to maturity to implement management strategies. The Company’s investment policy set minimum credit quality criteria and maximum maturity limits on its investments to provide for safety of principle, liquidity and a reasonable rate of return. Available-for-sale securities are recorded at fair value, based on current market valuations. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and are reported as a separate component of other comprehensive income (loss) until realized. Realized gains and losses are included in non-operating other income (expense) on the statement of operations and are derived using the specific identification method for determining the cost of the securities sold. During the years ended December 31, 2013, 2012 and 2011, no realized gains or losses were recorded on the sale or maturity of the Company’s marketable securities. Further, no impairments to reduce the value of an available-for-sale equity security were taken during the years ended December 31, 2013, 2012 and 2011. See Note 3 for further discussion.

Concentration Risk

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

Manufacturing. The Company depends on an outsourced manufacturing strategy for its products. It has contracts in place with one third-party manufacturer that is approved for the production of OFIRMEV and one third-party manufacturer which is pending FDA approval.

Customers. The Company has entered into distribution agreements with major pharmaceutical wholesalers to supply OFIRMEV across the U.S. through their distribution centers, and a majority of the Company’s sales are to these customers. The Company’s three primary wholesaler customers represented approximately 94% of the Company’s product revenue for the year ended December 31, 2013, and 95% of the Company’s accounts receivable balance at December 31, 2013. See Note 12 for further detail of the Company’s significant customers.

Inventories

The Company states its inventories at the lower of cost or market. The Company uses a combination of standard and actual costing methodologies to determine its cost basis for its inventories. These methodologies approximate actual costs on a first-in, first-out basis. In addition to stating inventory at the lower of cost or market, the Company also evaluates inventory each period for excess quantities and obsolescence. This evaluation includes identifying those items specifically identified as obsolete and reserving them, analyzing forecasted demand versus quantities on hand and reserving for the excess, and identifying other specific reserves. During the years ended December 31, 2012 and 2011, the Company recorded charges for inventory losses of $163,000 and $5,574,000, respectively, in cost of sales to write-down certain inventory manufactured to its estimated net realizable value. No charges for inventory losses were incurred for the year ended December 31, 2013. See “Supply Agreements” in Note 8 below for further information.

Royalty and License Payments

Pursuant to the terms of its license agreement with BMS, the Company is required to make royalty payments based upon net sales of OFIRMEV, subject to annual minimums, that range from the mid-teens to the mid-twenties, depending on the aggregate amount of net sales. The Company accrues for these payments as the product is sold, or otherwise deemed obligated. Additionally, the Company paid $15,000,000 under the license agreement upon the NDA approval of OFIRMEV in November 2010 and may be required to make future milestone payments of up to $25,000,000 based on the achievement of certain levels of annual net sales. The Company has capitalized the $15,000,000 payment as an intangible asset on its balance sheet and is amortizing this balance over the estimated useful life of the licensed patents. As of December 31, 2013, the Company had amortized an aggregate $4,253,000 of the payment and the estimated aggregate amortization expense of the payment for each of the five succeeding fiscal years is approximately $1,343,000. With respect to future milestone payments, at December 31, 2013, the Company had not yet achieved the levels of annual net sales necessary to require it to make payments under these milestone obligations, and therefore had not accrued for such potential payments in its financial statements. The Company will accrue for future milestone payments as they are anticipated and recognize the related expense in the period in which the milestone is achieved. See Note 9 for further discussion.

Advertising Expense

The Company records the cost of its advertising efforts when services are performed or goods are delivered. The Company incurred advertising costs of approximately $1,290,000, $1,594,000 and $2,181,000, respectively, for the years ended December 31, 2013, 2012 and 2011.

Shipping and Handling Costs

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

Property and Equipment

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

For the years ended December 31, 2013, 2012 and 2011, the Company recorded depreciation expense of $213,000, $1,560,000 and $1,670,000, respectively.

Impairment of Long-Lived Assets

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

During the year ended December 31, 2012, the Company recorded a charge of $6,973,000 to impair the value of its manufacturing assets and certain construction-in-process to their estimated fair value. The charge was due to the termination of a supply agreement with one of its third-party manufacturers. Additionally, the Company fully impaired its estimated asset retirement obligation related to the removal of the equipment located at that manufacturer’s facility, resulting in an additional charge of $750,000. During 2013, the Company removed its assets from the facility and fulfilled its asset retirement obligation for less than the estimated cost. As a result, the Company recorded a credit of $136,000 during the year ended December 31, 2013, to relieve the accrued balance. No similar charges or credits were recorded during the year ended December 31, 2011. See Note 6 and Note 8 for further discussion.

Research and Development

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

Income Taxes

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

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

Stock-Based Compensation

The Company has stock-based compensation plans, which are described in Note 11. As of December 31, 2013, the Company had issued both stock option awards and restricted stock units under its stock-based compensation plans. As of December 31, 2013 and 2012, all stock-based compensation awards were classified as equity awards.

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 average estimates the Company used in the Black-Scholes option pricing model for the years ended December 31, 2013, 2012 and 2011, to determine the fair value of stock options granted during each period:


	Year Ended December 31,
	2013	2012	2011
Risk free interest rates	1.2%	0.9%	2.2%
Expected life in years	6.0 years	5.7 years	6.2 years
Expected dividend yield	0.0%	0.0%	0.0%
Expected volatility	65.4%	72.0%	73.9%

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

Based upon these assumptions, the Company has estimated the per share weighted-average grant date fair value of its options granted for the years ended December 31, 2013, 2012 and 2011 at $3.45, $1.86 and $5.67, respectively.

Restricted stock unit awards. Restricted stock units (“RSUs”) are valued based on the fair market value of the Company’s stock on the date of grant. The weighted-average grant date fair value of the RSUs granted in 2013 was $8.31. There were no RSUs granted in 2012 or 2011.

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

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


	Year Ended December 31,
	2013		2012		2011
Cost of product sales	$	277	$	343	$	297
Research and development		742		1,651		2,308
Selling, general and administrative		6,050		6,615		6,628

Total stock-based compensation expense included in loss from operations	$	7,069	$	8,609	$	9,233

The compensation expense related to unvested stock options and RSUs not yet recognized was approximately $11,308,000 at December 31, 2013. This expense is expected to be recognized over a weighted-average period of approximately 32 months. The total fair value of shares vested during the years ended December 31, 2013, 2012 and 2011 was $6,647,000, $9,212,000 and $9,852,000, respectively.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Components of comprehensive income (loss) includes, among other items, unrealized gains and losses on the changes in fair value of investments. These components are added, net of their related tax effect, to the reported net income (loss) to arrive at comprehensive income (loss). The balance of accumulated other comprehensive income at December 31, 2011 was comprised of the net unrealized net holding gains on the Company’s investments in marketable securities. There was no similar accumulated other comprehensive income or loss at December 31, 2013 and 2012. See Note 3 for further detail of the unrealized holdings gains and losses on the Company’s investments in marketable securities.

Net Loss Per Share

Net loss per share is presented as basic and diluted net loss per share. Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, stock options, restricted stock units and warrants are considered to be common stock equivalents and are not included in the calculations of diluted net loss per share as their effect is anti-dilutive. Additionally, the restricted stock units outstanding during 2013, 2012 and 2011 were excluded from the basic net loss calculation as these units do not include dividend rights and therefore are not considered to be participating securities.

The actual net loss per share amounts for the years ended December 31, 2013, 2012 and 2011 were computed based on the weighted average shares of common stock outstanding during the respective periods. The net loss per share for the years presented include the effect of the 21,800,000 common shares issued pursuant to a public offering in the fourth quarter of 2011. As a result of the issuance of these common shares, there is a lack of comparability in the basic and diluted net loss per share amounts for the periods presented.

The Company incurred net losses for all periods presented and there were no reconciling items for potentially dilutive securities. More specifically, at December 31, 2013, 2012 and 2011, options, restricted stock units and warrants totaling approximately 16,734,000 shares, 16,677,000 shares and 14,457,000 shares, respectively, were excluded from the calculation as their effect would have been anti-dilutive.

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’s adoption of this guidance during the fourth quarter of 2013 did not have an impact on the Company’s financial statements for the period ended December 31, 2013.

Investments in Marketable Securities

12 Months Ended

Dec. 31, 2013

Investments in Marketable Securities

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 these investments by types and classes of security at December 31, 2013 and December 31, 2012 consisted of the following (in thousands):


At December 31, 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):


	December 31, 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	$	—	$	—	$	—	$	—

As of December 31, 2013 and 2012, there were no investments in unrealized loss positions.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References + Details

Selected Financial Statement Data

12 Months Ended

Dec. 31, 2013

Selected Financial Statement Data

Selected Financial Statement Data


	As of December 31,
	2013			2012
Accounts receivable (in thousands):
Trade accounts receivable	$	9,319		$	6,208
Allowance for doubtful accounts		(19	)		(56	)

	$	9,300		$	6,152

Inventory (in thousands):
Raw materials	$	83		$	83
Finished goods		8,563			6,415

	$	8,646		$	6,498

Property and equipment (in thousands):
Manufacturing equipment	$	2,801		$	2,999
Leasehold improvements		1,639			1,639
Computer equipment and software		1,613			1,489
Furniture and fixtures		478			478
Construction-in-process		961			724

		7,492			7,329
Less accumulated depreciation		(5,432	)		(5,362	)

Total	$	2,060		$	1,967

Accrued liabilities (in thousands):
Accrued personnel costs	$	9,510		$	6,560
Accrued royalties payable		4,992			2,652
Accrued clinical trial costs		703			20
Accrued sales returns		369			—
Accrued asset retirement obligation		—			750
Other accrued liabilities		2,468			2,987

Total	$	18,042		$	12,969

Investment in Incline

12 Months Ended

Dec. 31, 2013

Investment in Incline

Investment in Incline

On June 21, 2010, the Company entered into an option agreement (the “Option Agreement”) with Incline Therapeutics, Inc. (“Incline”), a privately held specialty pharmaceutical company, pursuant to which the Company obtained an exclusive, irrevocable option (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. The Company could also 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, 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 year ended December 31, 2013. No similar gains were recorded during the years ended December 31, 2012 and 2011.

The $7,000,000 carrying value of the Company’s Incline investment was recorded as other long-term assets on the Company’s balance sheet at December 31, 2012.

Restructuring and Impairment Charges

12 Months Ended

Dec. 31, 2013

Restructuring and Impairment Charges

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. No such obligation had been recorded as of December 31, 2011. See further discussion of the Baxter agreement in Note 8.

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. During 2012, the Company disbursed the remaining severance benefits and as of December 31, 2012, no restructuring liability remained on the balance sheet.

Loan and Security Agreement

12 Months Ended

Dec. 31, 2013

Loan and Security Agreement

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 made interest-only payments through December 2013, and in January 2014, began 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 December 31, 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 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%. Similarly, in connection with the 2011 Amendment, the Company determined that the terms were not substantially different than the 2010 Amendment and therefore accounted for the transaction as a loan modification of the 2010 Amendment. The 2011 Amendment provided the Company with $3,434,000 of additional net capital after deducting a $954,000 term loan final payment paid under the 2010 Amendment and customary closing fees and expenses of $63,000 paid in connection with the closing of the 2011 Amendment. As part of the 2011 Amendment, the Company issued warrants to purchase an aggregate of 158,311 shares of the Company’s common stock to the Lenders, as detailed below, and classified the warrants as equity, recognizing the fair value as a discount on the loan issuance. The fair value of the warrants was aggregated with the carrying value of the issuance costs and discount related to the 2010 Amendment, and was being amortized over the term of the 2011 Amendment using an effective interest rate of 15.31% prior to the 2012 Amendment.

As of December 31, 2013 and 2012, the aggregate outstanding principal balance of the loans included on the Company’s balance sheets for each period was $30,000,000. Future maturities and interest payments under the Company’s 2012 Amendment as of December 31, 2013 were as follows (in thousands):


2014	$	13,772
2015		13,772
2016		8,686

Total future payments		36,230
Less amount representing interest and fees		(6,230	)

Gross balance of long-term debt		30,000
Less unamortized discount		(685	)

Total carrying value of long-term debt		29,315
Less current portion		(10,777	)

Long-term portion	$	18,538

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 December 31, 2013, the aforementioned warrants to purchase 618,073 shares of the Company’s common stock were outstanding.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies

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 entered into a third amendment to the lease agreement (the “Third Amendment”), pursuant to which the Company expanded its rented space for a term from January 1, 2014, through May 31, 2019. The Company also 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 December 31, 2013, no such improvements had been completed.

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 December 31, 2013 and 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 pursuant to the Third Amendment to $92,000, effective January 1, 2014.

The Company also leases certain office equipment under capital and operating leases. Its current capital lease has a term of four years and expires in 2016. As of December 31, 2013 and 2012, the assets under its current capital lease had a gross value of $56,000. During the years ended December 31, 2013 and 2012, the Company recorded amortization expense of $14,000 and $1,000, respectively, related to these assets. The remaining obligation under its capital lease at December 31, 2013 is recorded on the Company’s balance sheet in accrued expenses and other long-term liabilities at $12,000 and $29,000, respectively. No assets were recorded under capital leases as of December 31, 2011.

As of December 31, 2013, the total future minimum payments under its operating and capital leases, including rent and office equipment, were as follows (in thousands):


2014	$	600
2015		1,006
2016		1,030
2017		1,043
2018		1,074
Thereafter		461

Total	$	5,214

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 facility and equipment leases for the years ended December 31, 2013, 2012 and 2011 was $709,000, $927,000 and $928,000, respectively.

Corporate Credit Card

In 2009, the Company entered into a pledge agreement pursuant to the establishment of a corporate credit card program whereby the Company pledged $150,000 in a certificate of deposit as collateral. During 2011, the Company increased its pledged amount by $300,000 related to an increase in its credit limit. At December 31, 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 December 31, 2013 and 2012, respectively.

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.

Purchases under the current agreement were $17,600,000 during the year ended December 31, 2013, which was sufficient to meet the minimum purchase commitment. Future minimum purchase requirements under this agreement at December 31, 2013 are as follows (in thousands):


2014	$	16,050
2015		15,750
2016		15,750
2017		15,750
2018		15,750
Thereafter		—

Total	$	79,050

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 submitted 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. The Company subsequently completed the removal of the equipment and released the remaining balance of the accrued obligation, resulting in a gain of $136,000 during the third quarter of 2013, which was recorded in other operating expenses. No similar gains were recorded during the years ended December 31, 2012 and 2011. Also pursuant to the settlement, a previously accrued liability of $317,000 related to an outstanding product order 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 and $50,000 in other operating expenses for the years ended December 31, 2012 and 2013, respectively. In addition, the Company incurred costs associated with these recalls, including administration costs, of approximately $300,000 through December 31, 2013. As of December 31, 2013, the recall had been substantially completed and further 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 December 31, 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. 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 December 31, 2013.

License Agreements and Acquired Development and Commercialization Rights

12 Months Ended

Dec. 31, 2013

License Agreements and Acquired Development and Commercialization Rights

License Agreements and Acquired Development and Commercialization Rights

In March 2006, the Company in-licensed the technology and the exclusive development and commercialization rights to OFIRMEV in the U.S. and Canada from BMS. BMS sublicensed these rights to the Company under a license agreement with 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 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. During 2012, the Company recognized the remaining balance of $118,000 as license revenue.

In June 2013, the Company was notified that Terumo received regulatory approval for its IV acetaminophen product from the Japanese Ministry of Health, Labour & Welfare. In November 2013, Terumo commenced commercial sales of its product and pursuant to the terms of the data license agreement, the Company received from Terumo a non-refundable payment of $2,027,000 which was recorded as licensing revenue during the year ended December 31, 2013. In addition, the Company is entitled to royalty payments on the product’s commercial sales in Japan, which will be recognized as royalty revenue in the quarter in which Terumo provides the necessary sales information. No royalty revenue was recognized for the years ended December 31, 2013, 2012 and 2011.

Legal Matters

12 Months Ended

Dec. 31, 2013

Legal Matters

10.

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. In November 2013, the court ruled in favor of us and found that Exela’s ANDA for a generic version of OFIRMEV infringed the ‘222 and ‘218 patents. An appeal of the decision in favor of us was filed by Exela on December 20, 2013. It is not possible to predict the outcome of this appeal, 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, Sandoz, Inc. and Wockhardt USA LLC

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. (together with Sandoz, the Sandoz Parties) 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 the Sandoz Parties, which were coordinated for purposes of discovery and other pretrial proceedings in the Southern District of California, the Company alleged that Fresenius and the Sandoz Parties 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 the Sandoz Parties, seeking approval from the FDA to market a generic version of OFIRMEV prior to the expiration of these patents. Both Fresenius and the Sandoz Parties 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 the Sandoz Parties, or such shorter or longer period as the court may order.

In January 2014, the Company entered into a settlement agreement and a binding term sheet for a license agreement with the Sandoz Parties. The settlement agreement includes a stipulation by the parties requesting dismissal with prejudice of the lawsuit filed by the Company relating to the ANDA filed by Sandoz. Under the terms of the license, the Company granted to the holder of the Sandoz ANDA and its affiliates the non-exclusive right to market a generic intravenous acetaminophen product in the United States under the Sandoz ANDA beginning December 6, 2020, or earlier under certain circumstances. The Company also agreed that in the event that it determines to launch an authorized generic version of OFIRMEV (i.e., a generic version marketed under its NDA) in the U.S. and Perrigo elects not to exercise its right of first refusal to become the distributor of the authorized generic version of the product, the Company will grant a similar right of first refusal to the holder of the Sandoz ANDA on substantially the same terms as those previously granted to Perrigo. In addition, the license agreement will contain provisions regarding indemnification, confidentiality and other customary provisions for agreements of these kinds. The settlement documents are subject to submission to the Federal Trade Commission and the U.S. Department of Justice. Litigation remains ongoing against Fresenius, and the bench trial for such lawsuit is tentatively scheduled to commence on July 14, 2014.

In December 2013, the Company received a notice from Wockhardt USA LLC, or Wockhardt, stating that Wockhardt filed an ANDA containing a Paragraph IV patent certification with the FDA for a generic version OFIRMEV. This notice stated that the Paragraph IV patent certification was made with respect to both the ‘222 patent and the ‘218 patent. The Company filed suit against Wockhardt Limited, Wockhardt BIO AG and Wockhardt on January 22, 2014 in the U.S. District Court of Delaware, and on January 23, 2014, in the U.S. District Court of New Jersey.

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.

‘222 and ‘218 Patents: 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 first office action was filed in November 2013.

In addition, in January 2014, an unidentified third party filed with the USPTO a Request for Ex Parte Reexamination of the ‘218 patent. All of the claims of the ‘222 and ‘218 patents 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 these patents are appropriate and that the USPTO’s prior issuances of the patents were correct, the Company, in conjunction with Pharmatop, will vigorously defend these patents. The Company cannot predict whether it and Pharmatop ultimately will succeed in maintaining the scope and validity of the claims of these patents during reexamination. If any of the patent claims in these patents 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. The Court of Appeals heard oral argument on the appeal in February 2014. A decision by the Court of Appeals in favor of Exela could result in the invalidation of the ‘218 patent.

Stockholder Class-Action Litigation Regarding the Company’s Pending Acquisition by Mallinckrodt plc

Following the February 11, 2014, announcement that the Company had entered into an agreement and plan of merger with Mallinckrodt plc and a subsidiary of Mallinckrodt, six putative class-action lawsuits were filed in the Court of Chancery of the State of Delaware: Wolfson v. Cadence Pharmaceuticals, Inc., et al., No. 9341-VCP (filed February 12, 2014); Goode v. Garner, et al., No. 9361-VCP (filed February 18, 2014); Bushansky v. Cadence Pharmaceuticals Inc., et al., No. 9365-VCP (filed February 19, 2014); Bokol v. Cadence Pharmaceuticals Inc., et al., No. 9367 (filed February 19, 2014); Elvir v. Cadence Pharmaceuticals Inc., et al., No. 9370-VCP (filed February 19, 2014); and Nguyen v. Cadence Pharmaceuticals, Inc., et al., No. 9376-VCP (filed February 21, 2014). Two substantially identical putative class-action lawsuits were filed in the Superior Court of California, County of San Diego: Denny v. Cadence Pharmaceuticals, Inc., et al., No. 37-2014-00002579-CU-BT-CTL (filed February 13, 2014) and Militello v. Cadence Pharmaceuticals, Inc., et al., No. 37-00003634-CU-BT-CTL (filed February 20, 2014). The complaints allege that members of the Company’s board of directors breached their fiduciary duties to the Company’s stockholders in connection with the proposed transaction and that the merger agreement involves an unfair price, an inadequate sales process, and unreasonable deal protection devices that purportedly preclude competing offers. The complaints other than Bushansky further allege that the Company, Mallinckrodt, and/or its subsidiary aided and abetted the alleged breaches of fiduciary duties. The lawsuits seek an injunction against the consummation of the merger and rescission of the merger agreement to the extent the merger may already be consummated prior to the entry of the court’s final judgment, and an award of costs and expenses, including attorneys’ and experts’ fees.

The Company intends to vigorously defend against these claims. The outcome of this litigation cannot be predicted at this time and any outcome in favor of the plaintiffs could have an adverse effect on the proposed transaction, the Company’s financial condition, and the Company’s results of operations.

At this time, the Company is unable to estimate possible losses or ranges of losses for any of its current litigation, and it has not accrued any amounts for current litigation other than ongoing attorney’s fees.

Stockholders' Equity

12 Months Ended

Dec. 31, 2013

Stockholders' Equity

11.

Stockholders’ Equity

Authorized Shares

In June 2012, following approval by the Company’s stockholders, the Company filed a Certificate of Amendment of Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which increased the number of authorized shares of common stock of the Company from 100,000,000 to 200,000,000.

Public Offerings

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

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. During December 2013, warrants to purchase an aggregate of 590,893 shares of the Company’s common stock were exercised at a price of $10.01, resulting in a total of 128,095 shares issued on a net exercise basis. As of December 31, 2013, warrants related to the private placement to purchase up to 5,429,004 additional shares of the Company’s common stock remained outstanding.

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

Equity Awards

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

The 2006 Plan initially reserved 2,100,000 shares of common stock for future issuance and allowed for the initial number of reserved shares to be increased by (1) the 90,772 shares of common stock that remained available for issuance under the 2004 Plan as of the effective date of the 2006 Plan and (2) the number of shares under the 2004 Plan that are repurchased, forfeited, expired or cancelled on or after the effective date of the 2006 Plan. As of December 31, 2013, options to purchase 75,816 shares issued under the 2004 Plan have been repurchased, forfeited and/or cancelled since the effective date of the 2006 Plan, increasing the number of shares reserved for issuance under the 2006 Plan accordingly.

Beginning on January 1, 2008, the 2006 Plan allows for an annual increase in the number of shares available for issuance under the 2006 Plan by the lesser of (1) 4% of the outstanding common stock on January 1 and (2) a lesser amount determined by the board of directors, subject to an aggregate of 20,000,000 shares of common stock that may be issued through January 1, 2016. Through December 31, 2013, the board of directors approved the amount of shares authorized for future issuance under the 2006 Plan to be increased by an aggregate 11,853,707 shares under this provision.

As of December 31, 2013, the Company had issued both stock options and restricted stock units (“RSUs”) under the 2006 Plan and only stock options under the 2004 Plan. The following table presents shares authorized, available for future grant and outstanding under each of the Company’s plans at December 31, 2013:


	Authorized		Available		Outstanding
2004 Equity Incentive Plan		2,708,412		—		742,685
2006 Equity Incentive Plan		14,120,295		3,125,966		9,944,220

		16,828,707		3,125,966		10,686,905

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

Stock Options

Stock options granted under the 2006 Plan expire no later than 10 years from the date of grant and generally vest over a four-year period. Vesting generally occurs at the rate of 25% at the end of the first year, and thereafter in 36 equal monthly installments, however certain grants to the Company’s executive officers have been made in lieu of their annual bonus awards and vest over a term of generally less than one-year. In addition, annual grants to the Company’s board members vest over a period of one-year. The exercise price of the Company’s stock options shall not be less than 100% of the fair value of the Company’s common stock on the date of grant. Further, the exercise price of any option granted to a 10% stockholder may not be less than 110% of the fair value of the Company’s common stock on the date of grant.

The following table summarizes the Company’s stock option activity as of December 31, 2013, and changes for the year then ended:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life - Years		Aggregate Intrinsic Value
Options outstanding at beginning of period		10,037,984		$	6.81
Granted		2,208,750		$	5.84
Exercised		(922,141	)	$	4.65
Cancelled		(640,688	)	$	8.13

Options outstanding at end of period		10,683,905		$	6.72		6.83	$	28,675,000

Options exercisable at end of period		6,729,953		$	7.39		5.81	$	14,926,000

The aggregate intrinsic value of options exercised during 2013, 2012 and 2011 was $2,921,000, $175,000 and $2,774,000, respectively. During 2013, the Company received $4,292,000 upon the exercise of stock options in satisfaction of the exercise price.

Restricted Stock Units

The Company has granted a limited number of RSUs with vesting schedules based upon performance criteria, service conditions or a combination of both performance criteria and service conditions. During 2013, the Company granted 3,000 RSUs, all of which remained outstanding as of December 31, 2013.

The following table summarizes the Company’s RSU activity as of December 31, 2013, and changes for the year then ended:


	Shares			Weighted-Average Grant Date Fair Value per Share		Aggregate Intrinsic Value
Restricted stock units outstanding at beginning of period		938		$	10.38
Granted		3,000		$	8.31
Vested		(938	)	$	10.38
Cancelled		—			—

Restricted stock units outstanding at end of period		3,000		$	8.31	$	27,000

The aggregate intrinsic value of RSUs vested during 2013, 2012 and 2011 was $5,000, $6,000 and $716,000, respectively. During 2013, a total of 126 vested shares were withheld from distribution in satisfaction of statutory minimum tax obligations and the Company used less than $1,000 to satisfy such tax obligations.

- 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

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 1
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-Paragraph d
-Article 4

Reference 15: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Segment Information

12 Months Ended

Dec. 31, 2013

Segment Information

12.

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:


	Year Ended December 31,
	2013			2012			2011
AmerisourceBergen Corporation.		35	%		33	%		33	%
Cardinal Health, Inc.		32	%		33	%		37	%
McKesson Corporation		27	%		27	%		23	%

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


	As of December 31,
	2013			2012
AmerisourceBergen Corporation		36	%		32	%
Cardinal Health, Inc.		32	%		31	%
McKesson Corporation		27	%		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

12 Months Ended

Dec. 31, 2013

Income Taxes

13.

Income Taxes

The Company is subject to taxation in the U.S. and various state jurisdictions. The Company’s tax years for 2004 and forward are subject to examination by the federal and state tax authorities due to the carryforward of unutilized net operating losses and research and development credits. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrued interest and/or penalties related to income tax matters in the Company’s balance sheets at December 31, 2013 and 2012, and has recognized no interest and/or penalties in the Company’s statement of operations for the years ended December 31, 2013, 2012 and 2011.

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 analysis did not have any impact on the Company’s unrecognized tax benefits. There is risk that additional changes in ownership have occurred since the completion of the Company’s analysis, which was through December 31, 2012. If a change in ownership were to have occurred, additional net operating loss and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.

A valuation allowance has been established as realization of such deferred tax assets has not met the more likely than not threshold requirement. Other significant components of the Company’s net deferred tax assets for federal and state income taxes at December 31, 2013 and 2012 are shown below (in thousands):


	As of December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	157,484		$	—
Tax credit carryforwards		5,781			—
Stock-based compensation		13,983			12,876
Capitalized research and development		4,535			5,348
Other, net		4,208			5,954

		185,991			24,178
Valuation allowance for deferred tax assets		(185,987	)		(23,272	)

Net deferred tax assets	$	4		$	906

Deferred tax liabilities:
Deferred tax liabilities		(4	)		(906	)

Net deferred tax liabilities	$	(4	)	$	(906	)

Net deferred tax assets	$	—		$	—

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


	As of December 31,
	2013			2012			2011
Federal income taxes		35.0	%		35.0	%		35.0	%
State income taxes		3.3	%		4.7	%		4.3	%
Research and development credits		(4.3	)%		0.3	%		0.9	%
Stock-based compensation		(1.8	)%		(1.0	)%		(0.7	)%
Change in valuation allowance		(28.1	)%		(5.6	)%		0.0	%
State rate change		(2.1	)%		0.6	%		(0.0	)%
Removal of net operating loss and research and development tax credits		0.0	%		(32.4	)%		(37.8	)%
Other, net		(2.0	)%		(1.6	)%		(1.7	)%

		0.0	%		0.0	%		0.0	%

At December 31, 2013, the Company had federal and state net operating loss carryforwards of approximately $392,129,000 and $387,589,000, respectively. The federal and state tax loss carryforwards will begin to expire in 2024 and 2014, respectively, unless previously utilized. The Company also had federal research and development tax credit carryforwards of approximately $4,140,000 which will begin expiring in 2025 unless previously utilized, and state research and development tax credit carryforwards of approximately $2,524,000 which carryforward indefinitely.

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

We recognize the impact of an uncertain income tax position on our income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

Following is a tabular reconciliation of the unrecognized tax benefit activity for the two years ended December 31, 2013 (excluding interest and penalties, in thousands):


Beginning balance, January 1, 2012	$	—
Additions based on tax positions related to the current year		—
Reductions due to tax positions that reversed in the current year and completion of research and development study	$	—

Ending balance December 31, 2012		—
Additions based on tax positions related to the current year		3,756
Reductions due to tax positions that reversed in the current year and completion of research and development study		—

Ending balance December 31, 2013	$	3,756

Employee Benefit Plan

12 Months Ended

Dec. 31, 2013

Employee Benefit Plan

14.

Employee Benefit Plan

The Company has a qualified retirement plan under the provisions of Section 401(k) of the Internal Revenue Code covering substantially all employees. Employees may contribute up to 100% of their annual compensation up to the maximum annual amount prescribed by the Internal Revenue Service. The Company may elect to make a discretionary contribution or match a discretionary percentage of employee contributions. During 2013, 2012 and 2011, the Company elected not to make any contributions to the plan.

Summarized Quarterly Data

12 Months Ended

Dec. 31, 2013

Summarized Quarterly Data

15.

Summarized Quarterly Data (Unaudited)

The following financial information reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods. Summarized quarterly data for the years ended December 31, 2013 and 2012 are as follows (in thousands, except per share data):


	Fiscal Year 2013 Quarters
	1st⁽³⁾			2nd			3rd			4th⁽⁴⁾			Total
Revenues	$	23,612		$	24,674		$	28,957		$	35,313		$	112,556
Gross profit⁽¹⁾	$	15,445		$	16,380		$	18,993		$	23,765		$	74,583
Net loss	$	(1,363	)	$	(11,875	)	$	(6,938	)	$	(4,118	)	$	(24,294	)
Basic and diluted net loss per share⁽²⁾	$	(0.02	)	$	(0.14	)	$	(0.08	)	$	(0.05	)	$	(0.28	)


	Fiscal Year 2012 Quarters
	1st⁽⁵⁾			2nd			3rd			4th⁽⁶⁾			Total
Revenues	$	8,004		$	11,108		$	13,898		$	17,174		$	50,184
Gross profit⁽¹⁾	$	3,758		$	5,352		$	7,822		$	9,996		$	26,928
Net loss	$	(22,673	)	$	(20,989	)	$	(15,890	)	$	(21,421	)	$	(80,973	)
Basic and diluted net loss per share⁽²⁾	$	(0.27	)	$	(0.25	)	$	(0.19	)	$	(0.25	)	$	(0.95	)

⁽¹⁾	Determined by subtracting cost of sales from net revenue.

⁽²⁾	Loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net loss per share may not necessarily equal the total for the year.

⁽³⁾	During the first quarter of 2013, the Company recognized $2,616 of previously deferred revenue and related cost of sales of $919. Further, it recorded a gain of $7,654 on the sale of its Incline option and preferred shares.

⁽⁴⁾	During the fourth quarter of 2013, the Company recognized $2,027 of license revenue under its data license agreement with Terumo Corporation, related to their first commercial sale of its IV acetaminophen product in Japan.

⁽⁵⁾	During the first quarter of 2012, the Company recorded a charge of $163 to write-down the value of certain inventory.

⁽⁶⁾

During the fourth quarter of 2012, the Company recorded charges of $6,973 to impair certain manufacturing equipment and construction-in-process to their fair values and, a related asset retirement obligation impairment charge of $750 for the removal of the equipment. Additionally, the Company recorded a loss on the sale of one of its construction-in-process assets of $858 and a charge of $290 to accrue for inventory destruction costs.

Subsequent Events

12 Months Ended

Dec. 31, 2013

Subsequent Events

16.

Subsequent Events

Agreement and Plan of Merger with Mallinckrodt plc

On February 10, 2014, the Company entered into an agreement and plan of merger (“Merger Agreement”) with Mallinckrodt plc (“Parent”) and Madison Merger Sub, Inc., a wholly owned indirect subsidiary of Parent (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions thereof, among other things, Merger Sub commenced a tender offer (“Offer”) on February 19, 2014 to acquire all of the outstanding shares of common stock of the Company at a purchase price of $14.00 per share in cash, without interest (the “Offer Price”). The Merger Agreement includes a remedy of specific performance and is not subject to a financing condition.

The obligation of Merger Sub to purchase the shares of common stock of the Company validly tendered pursuant to the Offer is subject to the satisfaction or waiver of a number of conditions set forth in the Merger Agreement, including (1) that there shall have been validly tendered and not validly withdrawn a number of shares of common stock of the Company that, when added to the shares then owned by Parent and its subsidiaries, represents one more than 50% of the total number of shares of common stock of the Company outstanding at the time of the expiration of the Offer, (2) the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (3) the accuracy of the representations and warranties and compliance with covenants contained in the Merger Agreement, (4) the absence of any law, order, injunction or decree by any government, court or governmental entity that would make illegal or otherwise prohibit the Offer or the Merger, (5) there not having been a material adverse effect with respect to the Company, (6) the delivery of certain audited and unaudited financial statements, and (7) other customary conditions.

The Merger Agreement contains certain termination rights in favor of each the Company and Parent, including under certain circumstances, the requirement for the Company to pay to Parent a termination fee of approximately $20,200,000, or approximately 1.5% of the Offer Price. The Company has also agreed (1) to cease any existing, and agreed not to solicit or initiate any additional, discussions with third parties regarding other proposals to acquire the Company and (2) to certain restrictions on its ability to respond to such proposals, subject to fulfillment of certain fiduciary requirements of the board of directors of the Company.

Following the completion of the Offer and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving as an indirect wholly owned subsidiary of Parent, pursuant to the procedure provided for under Section 251(h) of the Delaware General Corporation Law without any stockholder approvals (the “Merger”). At the effective time of the Merger (the “Effective Time”), by virtue of the Merger and without any action on the part of the holders of any shares of common stock of the Company, each outstanding share of common stock of the Company, other than any shares owned by Parent, Merger Sub or any wholly owned subsidiary of Parent or held in the treasury of the Company, or any stockholders who are entitled to and who properly exercise appraisal rights under Delaware law, will be canceled and converted into the right to receive an amount in cash equal to the Offer Price. In addition, (1) effective as of immediately prior to the Effective Time, each outstanding Company stock option will fully vest and automatically be canceled and terminated as of the Effective Time and the holder thereof will be entitled to receive an amount in cash, without interest and less the amount of any tax withholding, equal to the product of (a) the number of shares of common stock of the Company underlying such option multiplied by (b) the excess, if any, of the Offer Price over the exercise price per share of such option, (2) effective as of immediately prior to the Effective Time, each outstanding Company restricted stock unit, other than any Company restricted stock unit issued or awarded on or after January 1, 2014 (collectively, the “Specified Restricted Stock Units”), will fully vest and the restrictions thereon will lapse, and each such restricted stock unit will be canceled and converted into the right to receive an amount in cash, without interest and less the amount of any tax withholding, equal to the product of (a) the Offer Price multiplied by (b) the number of shares of common stock of the Company underlying such restricted stock unit, and (3) at the Effective Time, each outstanding Specified Restricted Stock Unit will be canceled and converted into an award (a “Converted Award”) representing the right to receive an amount in cash equal to the product of (a) the Offer Price multiplied by (b) the number of shares of Common Stock of the Company underlying such Specified Restricted Stock Unit. Each Converted Award shall continue to vest and be settled in cash in accordance with the terms of the applicable Specified Restricted Stock Unit award agreement, subject to accelerated vesting under certain circumstances, including in the event of the holder’s death or disability or an involuntary termination of employment that would otherwise qualify the holder to severance under any employment or severance plan or agreement to which the holder is a party or in which the holder is eligible to participate as of the date of grant. The foregoing treatment of the Specified Restricted Stock Unit Awards will supersede any more favorable vesting provisions in the Company’s equity plan or any employment or severance plan or agreement to which the holder is a party or in which the holder is eligible to participate (including the executive employment agreements).

The Merger Agreement contains customary representations, warranties and covenants, including covenants obligating the Company to continue to conduct its business in the ordinary course and to cooperate in seeking regulatory approvals.

The board of directors of the Company has unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, the Company’s stockholders, (2) approved and declared advisable the Merger Agreement and the transactions contemplated thereby and (3) resolved to recommend acceptance of the Offer by the Company’s stockholders. The board of directors of Parent has also unanimously approved the transaction. The Company expects to complete the Merger in mid to late March 2014, subject to the satisfaction of the closing conditions.

Exercise of Warrants

In January and February 2014, warrants to purchase an aggregate of 5,909,457 shares of the Company’s common stock were exercised on a net exercise basis, which resulted in the issuance of a total of 2,454,472 shares of the Company’s common stock. As of February 28, 2014, warrants to purchase an aggregate of 137,620 shares of the Company’s common stock remained outstanding with an average exercise price of $7.08 per share.

Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2013

Valuation and Qualifying Accounts

Schedule II

CADENCE PHARMACEUTICALS, INC.

Valuation and Qualifying Accounts

For the Years ended December 31, 2013, 2012 and 2011

(in thousands)


	Allowance for doubtful accounts			Allowance for cash discounts, chargebacks, and wholesaler fees
Balance at December 31, 2010	$	—		$	—
Additions		—			451
Deductions		—			(372	)

Balance at December 31, 2011		—			79
Additions		56			1,912
Deductions		—			(1,766	)

Balance at December 31, 2012		56			225
Additions		3			4,489
Deductions		(40	)		(4,279	)

Balance at December 31, 2013	$	19		$	435

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Management Estimates

Management Estimates

Revenue Recognition

Revenue Recognition

Accounts Receivable

Accounts Receivable

Fair Value Reporting

Fair Value Reporting


	Balance at December 31, 2013		Fair Value Measurements as of December 31, 2013
Description	Balance at December 31, 2013		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	48,975	$	48,975	$	—	$	—
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	$	51,301	$	48,975	$	2,326	$	—


Description	Balance at December 31, 2012		Fair Value Measurements as of December 31, 2012
Description	Balance at 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	$	—

Cash Equivalents

Cash Equivalents

Marketable Securities

Marketable Securities

Concentration Risk

Concentration Risk

Inventories

Inventories

Royalty and License Payments

Royalty and License Payments

Advertising Expense

Advertising Expense

Shipping and Handling Costs

Shipping and Handling Costs

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

Property and Equipment

Property and Equipment

For the years ended December 31, 2013, 2012 and 2011, the Company recorded depreciation expense of $213,000, $1,560,000 and $1,670,000, respectively.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Research and Development

Research and Development

Income Taxes

Income Taxes

Stock-Based Compensation

Stock-Based Compensation


	Year Ended December 31,
	2013	2012	2011
Risk free interest rates	1.2%	0.9%	2.2%
Expected life in years	6.0 years	5.7 years	6.2 years
Expected dividend yield	0.0%	0.0%	0.0%
Expected volatility	65.4%	72.0%	73.9%

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


	Year Ended December 31,
	2013		2012		2011
Cost of product sales	$	277	$	343	$	297
Research and development		742		1,651		2,308
Selling, general and administrative		6,050		6,615		6,628

Total stock-based compensation expense included in loss from operations	$	7,069	$	8,609	$	9,233

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Net Loss Per Share

Net Loss Per Share

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Details of Financial Instruments Carried at Fair Value


	Balance at December 31, 2013		Fair Value Measurements as of December 31, 2013
Description	Balance at December 31, 2013		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	48,975	$	48,975	$	—	$	—
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	$	51,301	$	48,975	$	2,326	$	—


Description	Balance at December 31, 2012		Fair Value Measurements as of December 31, 2012
Description	Balance at 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	$	—

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

The following table summarizes the average estimates the Company used in the Black-Scholes option pricing model for the years ended December 31, 2013, 2012 and 2011, to determine the fair value of stock options granted during each period:


	Year Ended December 31,
	2013	2012	2011
Risk free interest rates	1.2%	0.9%	2.2%
Expected life in years	6.0 years	5.7 years	6.2 years
Expected dividend yield	0.0%	0.0%	0.0%
Expected volatility	65.4%	72.0%	73.9%

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):


	Year Ended December 31,
	2013		2012		2011
Cost of product sales	$	277	$	343	$	297
Research and development		742		1,651		2,308
Selling, general and administrative		6,050		6,615		6,628

Total stock-based compensation expense included in loss from operations	$	7,069	$	8,609	$	9,233

Investments in Marketable Securities (Tables)

12 Months Ended

Dec. 31, 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 these investments by types and classes of security at December 31, 2013 and December 31, 2012 consisted of the following (in thousands):


At December 31, 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):


	December 31, 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

Selected Financial Statement Data (Tables)

12 Months Ended

Dec. 31, 2013

Accounts receivable


	As of December 31,
	2013			2012
Accounts receivable (in thousands):
Trade accounts receivable	$	9,319		$	6,208
Allowance for doubtful accounts		(19	)		(56	)

	$	9,300		$	6,152

Inventory

Inventory (in thousands):
Raw materials	$	83	$	83
Finished goods		8,563		6,415

	$	8,646	$	6,498

Property and equipment

Property and equipment (in thousands):
Manufacturing equipment	$	2,801		$	2,999
Leasehold improvements		1,639			1,639
Computer equipment and software		1,613			1,489
Furniture and fixtures		478			478
Construction-in-process		961			724

		7,492			7,329
Less accumulated depreciation		(5,432	)		(5,362	)

Total	$	2,060		$	1,967

Accrued liabilities

Accrued liabilities (in thousands):
Accrued personnel costs	$	9,510	$	6,560
Accrued royalties payable		4,992		2,652
Accrued clinical trial costs		703		20
Accrued manufacturing costs and equipment purchases		0		564
Accrued sales returns		369		—
Accrued asset retirement obligation		0		750
Other accrued liabilities		2,468		2,423

Total	$	18,042	$	12,969

Loan and Security Agreement (Tables)

12 Months Ended

Dec. 31, 2013

Future Maturities and Interest Payments Under First Amendment

Future maturities and interest payments under the Company’s 2012 Amendment as of December 31, 2013 were as follows (in thousands):


2014	$	13,772
2015		13,772
2016		8,686

Total future payments		36,230
Less amount representing interest and fees		(6,230	)

Gross balance of long-term debt		30,000
Less unamortized discount		(685	)

Total carrying value of long-term debt		29,315
Less current portion		(10,777	)

Long-term portion	$	18,538

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)

12 Months Ended

Dec. 31, 2013

Future Minimum Payments under Operating Leases, Including Rent and Office Equipment

As of December 31, 2013, the total future minimum payments under its operating and capital leases, including rent and office equipment, were as follows (in thousands):


2014	$	600
2015		1,006
2016		1,030
2017		1,043
2018		1,074
Thereafter		461

Total	$	5,214

Minimum Purchase Requirements under Supply Agreements with Lawrence Laboratories

Future minimum purchase requirements under this agreement at December 31, 2013 are as follows (in thousands):


2014	$	16,050
2015		15,750
2016		15,750
2017		15,750
2018		15,750
Thereafter		—

Total	$	79,050

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2013

Shares Authorized, Available for Future Grant and Outstanding

The following table presents shares authorized, available for future grant and outstanding under each of the Company’s plans at December 31, 2013:


	Authorized		Available		Outstanding
2004 Equity Incentive Plan		2,708,412		—		742,685
2006 Equity Incentive Plan		14,120,295		3,125,966		9,944,220

		16,828,707		3,125,966		10,686,905

Stock Options Activity

The following table summarizes the Company’s stock option activity as of December 31, 2013, and changes for the year then ended:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life - Years		Aggregate Intrinsic Value
Options outstanding at beginning of period		10,037,984		$	6.81
Granted		2,208,750		$	5.84
Exercised		(922,141	)	$	4.65
Cancelled		(640,688	)	$	8.13

Options outstanding at end of period		10,683,905		$	6.72		6.83	$	28,675,000

Options exercisable at end of period		6,729,953		$	7.39		5.81	$	14,926,000

Restricted Stock Units Activity

The following table summarizes the Company’s RSU activity as of December 31, 2013, and changes for the year then ended:


	Shares			Weighted-Average Grant Date Fair Value per Share		Aggregate Intrinsic Value
Restricted stock units outstanding at beginning of period		938		$	10.38
Granted		3,000		$	8.31
Vested		(938	)	$	10.38
Cancelled		—			—

Restricted stock units outstanding at end of period		3,000		$	8.31	$	27,000

Segment Information (Tables)

12 Months Ended

Dec. 31, 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:


	Year Ended December 31,
	2013			2012			2011
AmerisourceBergen Corporation.		35	%		33	%		33	%
Cardinal Health, Inc.		32	%		33	%		37	%
McKesson Corporation		27	%		27	%		23	%

Percentage of Total Gross Trade Receivables

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


	As of December 31,
	2013			2012
AmerisourceBergen Corporation		36	%		32	%
Cardinal Health, Inc.		32	%		31	%
McKesson Corporation		27	%		31	%

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Significant Components of Deferred Tax Assets

Other significant components of the Company’s net deferred tax assets for federal and state income taxes at December 31, 2013 and 2012 are shown below (in thousands):


	As of December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	157,484		$	—
Tax credit carryforwards		5,781			—
Stock-based compensation		13,983			12,876
Capitalized research and development		4,535			5,348
Other, net		4,208			5,954

		185,991			24,178
Valuation allowance for deferred tax assets		(185,987	)		(23,272	)

Net deferred tax assets	$	4		$	906

Deferred tax liabilities:
Deferred tax liabilities		(4	)		(906	)

Net deferred tax liabilities	$	(4	)	$	(906	)

Net deferred tax assets	$	—		$	—

Reconciliation of Effective Tax Rate and Federal Statutory Tax Rate

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


	As of December 31,
	2013			2012			2011
Federal income taxes		35.0	%		35.0	%		35.0	%
State income taxes		3.3	%		4.7	%		4.3	%
Research and development credits		(4.3	)%		0.3	%		0.9	%
Stock-based compensation		(1.8	)%		(1.0	)%		(0.7	)%
Change in valuation allowance		(28.1	)%		(5.6	)%		0.0	%
State rate change		(2.1	)%		0.6	%		(0.0	)%
Removal of net operating loss and research and development tax credits		0.0	%		(32.4	)%		(37.8	)%
Other, net		(2.0	)%		(1.6	)%		(1.7	)%

		0.0	%		0.0	%		0.0	%

Reconciliation of Unrecognized Tax Benefit

Following is a tabular reconciliation of the unrecognized tax benefit activity for the two years ended December 31, 2013 (excluding interest and penalties, in thousands):


Beginning balance, January 1, 2012	$	—
Additions based on tax positions related to the current year		—
Reductions due to tax positions that reversed in the current year and completion of research and development study	$	—

Ending balance December 31, 2012		—
Additions based on tax positions related to the current year		3,756
Reductions due to tax positions that reversed in the current year and completion of research and development study		—

Ending balance December 31, 2013	$	3,756

Summarized Quarterly Data (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Quarterly Data

Summarized quarterly data for the years ended December 31, 2013 and 2012 are as follows (in thousands, except per share data):


	Fiscal Year 2013 Quarters
	1st⁽³⁾			2nd			3rd			4th⁽⁴⁾			Total
Revenues	$	23,612		$	24,674		$	28,957		$	35,313		$	112,556
Gross profit⁽¹⁾	$	15,445		$	16,380		$	18,993		$	23,765		$	74,583
Net loss	$	(1,363	)	$	(11,875	)	$	(6,938	)	$	(4,118	)	$	(24,294	)
Basic and diluted net loss per share⁽²⁾	$	(0.02	)	$	(0.14	)	$	(0.08	)	$	(0.05	)	$	(0.28	)


	Fiscal Year 2012 Quarters
	1st⁽⁵⁾			2nd			3rd			4th⁽⁶⁾			Total
Revenues	$	8,004		$	11,108		$	13,898		$	17,174		$	50,184
Gross profit⁽¹⁾	$	3,758		$	5,352		$	7,822		$	9,996		$	26,928
Net loss	$	(22,673	)	$	(20,989	)	$	(15,890	)	$	(21,421	)	$	(80,973	)
Basic and diluted net loss per share⁽²⁾	$	(0.27	)	$	(0.25	)	$	(0.19	)	$	(0.25	)	$	(0.95	)

⁽¹⁾	Determined by subtracting cost of sales from net revenue.

⁽²⁾	Loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net loss per share may not necessarily equal the total for the year.

⁽³⁾	During the first quarter of 2013, the Company recognized $2,616 of previously deferred revenue and related cost of sales of $919. Further, it recorded a gain of $7,654 on the sale of its Incline option and preferred shares.

⁽⁴⁾	During the fourth quarter of 2013, the Company recognized $2,027 of license revenue under its data license agreement with Terumo Corporation, related to their first commercial sale of its IV acetaminophen product in Japan.

⁽⁵⁾	During the first quarter of 2012, the Company recorded a charge of $163 to write-down the value of certain inventory.

⁽⁶⁾

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)	1 Months Ended		3 Months Ended				12 Months Ended
	Nov. 30, 2011 shares	Nov. 30, 2010 USD ($)	Mar. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2013 USD ($) Customer $ / shares shares	Dec. 31, 2012 USD ($) $ / shares shares	Dec. 31, 2011 USD ($) $ / shares shares	Mar. 31, 2006 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Number of months before product expiration during which a customer can return product							6 months	6 months
Number of months after product expiration during which a customer can return product							12 months	12 months
Net revenue, previously deferred			$ 2,616,000
Reserves for doubtful accounts				$ 56,000			$ 19,000	$ 56,000
Written-off past due accounts							40,000	0	$ 0
Charges incurred to reserve past due accounts							3,000	56,000	0
Cash equivalent				55,736,000			48,975,000	55,736,000
Realized gains or losses on the sale or maturity of marketable securities							0	0	0
Impairments on available-for-sale equity securities							0	0	0
Inventory losses					$ 163,000	$ 5,574,000	0	163,000	5,574,000
Aggregate amortized amount of intangible assets							4,253,000
Estimated aggregate amortization expense, 2014							1,343,000
Estimated aggregate amortization expense, 2015							1,343,000
Estimated aggregate amortization expense, 2016							1,343,000
Estimated aggregate amortization expense, 2017							1,343,000
Estimated aggregate amortization expense, 2018							1,343,000
Advertising costs							1,290,000	1,594,000	2,181,000
Depreciation expenses							213,000	1,560,000	1,670,000
Impairment of long-lived assets				6,973,000				6,973,000
Asset retirement obligation				$ 750,000			0	$ 750,000	$ 0
Reversal of overaccrual of asset retirement obligation							$ 136,000
Weighted-average grant date fair value of options granted \| $ / shares							$ 3.45	$ 1.86	$ 5.67
Compensation expense related to unvested stock options and restricted stock unit not yet recognized							$ 11,308,000
Compensation expense related to unvested stock options and restricted stock unit, expected recognition period							32 months
Total fair value of shares vested							$ 6,647,000	$ 9,212,000	$ 9,852,000
Shares excluded from the calculations as their effect anti-dilutive \| shares							16,734,000	16,677,000	14,457,000
Customer Concentration Risk
Summary Of Significant Accounting Policies [Line Items]
Number of wholesalers \| Customer							3
Restricted Stock Units (RSUs)
Summary Of Significant Accounting Policies [Line Items]
Weighted-average grant date fair value of restricted stock unit awards \| $ / shares							$ 8.31	$ 0.00	$ 0.00
Manufacturing Equipment
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment useful life							7 years
Furniture and Fixtures
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment useful life							5 years
Computer Equipment and Software
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment useful life							3 years
Public Offering
Summary Of Significant Accounting Policies [Line Items]
Shares issued in prior period affecting current period comparability \| shares	21,800,000
OFIRMEV Patent
Summary Of Significant Accounting Policies [Line Items]
Capitalized milestone payment		$ 15,000,000
Maximum future milestone payment										$ 25,000,000
Sales Revenue, Goods, Net \| Customer Concentration Risk
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage							94.00%
Accounts Receivable \| Customer Concentration Risk
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage							95.00%
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 \| $ / shares							$ 0.02

Details of Financial Instruments Carried at Fair Value (Detail) - USD ($) $ in Thousands	Dec. 31, 2013	Dec. 31, 2012
Investments in marketable securities-short-term:
Investments in marketable securities - short-term	$ 2,326	$ 3,745
Assets at fair value	51,301	59,481
Money market funds
Cash equivalents:
Cash equivalents	48,975	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	48,975	55,736
Level 1 \| Money market funds
Cash equivalents:
Cash equivalents	48,975	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

Average Estimates Used in Black-Scholes Option-Pricing Model (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rates	1.20%	0.90%	2.20%
Expected life in years	6 years	5 years 8 months 12 days	6 years 2 months 12 days
Expected dividend yield	0.00%	0.00%	0.00%
Expected volatility	65.40%	72.00%	73.90%

Summary of Stock Based Compensation Expense Included in Statements of Operations (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense included in loss from operations	$ 7,069	$ 8,609	$ 9,233
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	277	343	297
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	742	1,651	2,308
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	$ 6,050	$ 6,615	$ 6,628

Cost, Gross Unrealized Holding Gains, Gross Unrealized Holding Losses and Fair Value of Investments by Types and Classes of Security (Detail) - USD ($) $ in Thousands	Dec. 31, 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	Dec. 31, 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 Marketable Securities - Additional Information (Detail) - Investment	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Number of investments in an unrealized loss position	0	0

Selected Financial Statement Data (Detail) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Accounts receivable
Trade accounts receivable	$ 9,319,000	$ 6,208,000
Allowance for doubtful accounts	(19,000)	(56,000)
Accounts receivable, net	9,300,000	6,152,000
Inventory
Raw materials	83,000	83,000
Finished goods	8,563,000	6,415,000
Inventory	8,646,000	6,498,000
Property and equipment
Manufacturing equipment	2,801,000	2,999,000
Leasehold improvements	1,639,000	1,639,000
Computer equipment and software	1,613,000	1,489,000
Furniture and fixtures	478,000	478,000
Construction-in-process	961,000	724,000
Property, Plant and Equipment, Gross, Total	7,492,000	7,329,000
Less accumulated depreciation	(5,432,000)	(5,362,000)
Total	2,060,000	1,967,000
Accrued liabilities
Accrued personnel costs	9,510,000	6,560,000
Accrued royalties payable	4,992,000	2,652,000
Accrued clinical trial costs	703,000	20,000
Accrued sales returns	369,000
Accrued asset retirement obligation		750,000
Other accrued liabilities	2,468,000	2,987,000
Total	$ 18,042,000	$ 12,969,000

Investment in Incline - Additional Information (Detail) - Incline Therapeutics Inc. - USD ($)	1 Months Ended			12 Months Ended
	Jan. 31, 2013	Sep. 30, 2011	Jun. 30, 2010	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
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	$ 0	$ 0
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)	3 Months Ended	12 Months Ended
	Dec. 31, 2012 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($) Employee
Restructuring Cost and Reserve [Line Items]
Impairment of long-lived assets	$ 6,973,000		$ 6,973,000
Asset retirement obligation	750,000	$ 0	750,000	$ 0
One-time employee termination charges				$ 1,142,000
Number of employees terminated \| Employee				17
Restructuring liability	$ 0		$ 0

Loan and Security Agreement - Additional Information (Detail)	1 Months Ended
	Dec. 31, 2012 USD ($) $ / Warrants shares	Dec. 31, 2011 USD ($) $ / Warrants shares	Jun. 30, 2010 $ / Warrants shares	Nov. 30, 2007 $ / Warrants shares	Dec. 31, 2013 USD ($) 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
Aggregate outstanding principal balance of the loans					$ 30,000,000
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]
Fees and expenses paid in connection with closing of the credit facility		$ 63,000
Loan using an effective interest rate		15.31%
Net capital loan		$ 3,434,000
Payment for termination of loan		$ 954,000
Second Amended Agreement \| Warrant
Line of Credit Facility [Line Items]
Number of aggregate shares underlying warrants \| shares	158,311

Future Maturities and Interest Payments Under First Amendment (Detail) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
2014	$ 13,772,000
2015	13,772,000
2016	8,686,000
Total future payments	36,230,000
Less amount representing interest and fees	(6,230,000)
Gross balance of long-term debt	30,000,000
Less unamortized discount	(685,000)
Total carrying value of long-term debt	29,315,000
Less current portion	(10,777,000)
Long-term portion	$ 18,538,000	$ 28,818,000

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					12 Months Ended
	Sep. 30, 2013 USD ($) RenewalOptions	Jul. 31, 2012 Lot	Jul. 31, 2007	Sep. 30, 2013 USD ($)	Mar. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2009 USD ($)
Commitments and Contingencies [Line Items]
Lease CD in restricted cash						$ 190,000			$ 190,000	$ 190,000
Effective deposit reduction date									Jan. 01, 2014
Rent expense									$ 709,000	927,000	$ 928,000
Purchase under current agreement									17,600,000
Asset retirement obligation						750,000			0	750,000	0
Reversal of overaccrual of asset retirement obligation									136,000
Inventory write-down							$ 163,000	$ 5,574,000	0	163,000	5,574,000
Recall administration costs									300,000
Impairment of long-lived assets						6,973,000				6,973,000
Gain/(Loss) on disposal of asset										(873,000)	66,000
Carrying value of manufacturing assets						2,999,000			2,801,000	2,999,000
Carrying value of manufacturing equipment and facility construction in process assets						724,000			961,000	724,000
Destruction of Inventory
Commitments and Contingencies [Line Items]
Other operating expense						290,000			50,000	290,000
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
Office Space \| Third Amendment
Commitments and Contingencies [Line Items]
Certificate of deposit balance reduction									$ 92,000
Construction in Progress
Commitments and Contingencies [Line Items]
Gain/(Loss) on disposal of asset						(858,000)				(858,000)
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		0	$ 56,000	56,000	0
Amortization of capital lease assets									14,000	1,000
Obligation under capital lease, current									12,000
Obligation under capital lease, non current									$ 29,000
Initial Pledged Amount
Commitments and Contingencies [Line Items]
Certificate of deposit pledged as collateral												$ 150,000
Pledged Amount Increase
Commitments and Contingencies [Line Items]
Certificate of deposit pledged as collateral								$ 300,000			300,000
Maximum \| Office Space
Commitments and Contingencies [Line Items]
Tenant improvement allowance included in terms of lease	$ 475,000			$ 475,000
Baxter Healthcare
Commitments and Contingencies [Line Items]
Initial term of development and supply agreement			5 years
Initiation of development and supply agreement			July 2007
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						0	$ 0
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%
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
Initial term of development and supply agreement									6 years
Period for termination notice in the case of payment default									30 days

Future Minimum Payments Related to Operating Lease (Detail) $ in Thousands	Dec. 31, 2013 USD ($)
Other Commitments [Line Items]
2014	$ 600
2015	1,006
2016	1,030
2017	1,043
2018	1,074
Thereafter	461
Total	$ 5,214

Minimum Purchase Requirements under Supply Agreements with Lawrence Laboratories (Detail) $ in Thousands	Dec. 31, 2013 USD ($)
Long-term Purchase Commitment [Line Items]
2014	$ 16,050
2015	15,750
2016	15,750
2017	15,750
2018	15,750
Thereafter
Total	$ 79,050

License Agreements and Acquired Development and Commercialization Rights - Additional Information (Detail) - USD ($)	1 Months Ended			3 Months Ended	12 Months Ended
	Apr. 30, 2011	Nov. 30, 2010	Mar. 31, 2006	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
License Agreements [Line Items]
Upfront license fee paid					$ 6,743,000	$ 6,519,000	$ 8,885,000
Up front Payment	$ 5,329,000
Licensing revenue				$ 2,027,000	2,027,000	118,000	5,210,000
Royalty Revenue					$ 0	$ 0	$ 0
OFIRMEV Patent
License Agreements [Line Items]
Upfront license fee paid			$ 25,000,000
Capitalized milestone payment		$ 15,000,000
Maximum future milestone payment			$ 25,000,000

Legal Matters - Additional Information (Detail)	1 Months Ended		12 Months Ended
Legal Matters - Additional Information (Detail)	Jan. 31, 2014	Aug. 31, 2011	Dec. 31, 2013
Legal Proceedings [Line Items]
Date for bench trial			2013-07
Required patent response date			2013-11
Fresenius
Legal Proceedings [Line Items]
Patent infringement			45 days
Number of months/ years for expiration of patent			30 months
Sandoz
Legal Proceedings [Line Items]
Patent infringement			45 days
Number of months/ years for expiration of patent			30 months
OFIRMEV Patent
Legal Proceedings [Line Items]
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
Subsequent Event \| Fresenius
Legal Proceedings [Line Items]
Bench trial tentative schedule date	Jul. 14, 2014
Subsequent Event \| Sandoz
Legal Proceedings [Line Items]
License agreement granting to market a product, beginning date	Dec. 06, 2020

Stockholders' Equity - Additional Information (Detail)	1 Months Ended							12 Months Ended
Stockholders' Equity - Additional Information (Detail)	Dec. 31, 2012 $ / Warrants shares	Dec. 31, 2011 $ / Warrants shares	Nov. 30, 2011 USD ($) $ / shares shares	Jun. 30, 2010 $ / Warrants shares	Feb. 28, 2009 USD ($) Director Investment $ / shares $ / Warrants shares	Nov. 30, 2007 $ / Warrants shares	Oct. 31, 2006 shares	Dec. 31, 2013 USD ($) $ / shares shares	Dec. 31, 2012 USD ($) $ / shares $ / Warrants shares	Dec. 31, 2011 USD ($) $ / shares $ / Warrants shares	Jun. 30, 2012 shares
Stockholders Equity Note [Line Items]
Authorized number of shares of common stock	200,000,000							200,000,000	200,000,000
Proceeds net of offering costs \| $								$ 4,292,000	$ 451,000	$ 78,746,000
Number of aggregate shares underlying warrants	154,638	158,311		254,793		50,331			154,638	158,311
Warrants exercise price \| $ / Warrants	3.8800	3.7900		7.0645		12.6700			3.8800	3.7900
Period for warrant term	7 years	7 years		7 years		7 years
Private placement warrants outstanding								618,073
Shares authorized for future issuance								16,828,707
Aggregate intrinsic value of options \| $								$ 2,921,000	$ 175,000	$ 2,774,000
Proceeds from stock options exercised \| $								$ 4,292,000
Minimum
Stockholders Equity Note [Line Items]
Authorized number of shares of common stock											100,000,000
Exercise price of stock option as percentage of fair market value of common stock								100.00%
Maximum
Stockholders Equity Note [Line Items]
Authorized number of shares of common stock											200,000,000
10% Stockholder \| Minimum
Stockholders Equity Note [Line Items]
Exercise price of stock option as percentage of fair market value of common stock								110.00%
Equity Option \| Executive Officer \| Maximum
Stockholders Equity Note [Line Items]
Vesting period of executive officer awards received in lieu of annual bonus award								1 year
Equity Option \| Board Members
Stockholders Equity Note [Line Items]
Stock option vesting period								1 year
Restricted Stock Units (RSUs)
Stockholders Equity Note [Line Items]
Restricted stock units granted during period								3,000
Restricted stock units outstanding	938							3,000	938
Aggregate intrinsic value of restricted stock unit \| $ / shares								$ 5,000	$ 6,000	$ 716,000
Number of shares withheld to fund minimum tax obligation								126
Restricted Stock Units (RSUs) \| Maximum
Stockholders Equity Note [Line Items]
Value of shares withheld to fund minimum tax obligation \| $								$ 1,000
2006 Equity Incentive Plan
Stockholders Equity Note [Line Items]
Shares authorized for future issuance							2,100,000	14,120,295
Annual increase in number of shares available for issuance								4.00%
Aggregate number of shares that may be issued								20,000,000
Aggregate number of shares that may be issued through date								Jan. 01, 2016
Additional shares authorized for future issuance								11,853,707
Stock option expiration period								10 years
2006 Equity Incentive Plan \| Equity Option
Stockholders Equity Note [Line Items]
Stock option vesting period								4 years
Stock option vested after one year								25.00%
Remaining vesting period								36 months
2004 Equity Incentive Plan
Stockholders Equity Note [Line Items]
Shares authorized for future issuance								2,708,412
Shares of common stock that remained available for issuance							90,772
2004 Plan shares repurchased, cancelled and/or forfeited since inception of 2006 Plan								75,816
Public Offering
Stockholders Equity Note [Line Items]
Common stock issued			21,800,000
Share price \| $ / shares			$ 3.75
Proceeds net of offering costs \| $			$ 77,302,000
Private Placement
Stockholders Equity Note [Line Items]
Common stock issued					12,039,794
Share price \| $ / shares					$ 7.13
Proceeds net of offering costs \| $					$ 86,243,000
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
Warrants exercised in period								590,893
Share price \| $ / shares								$ 10.01
Common stock issued on a net exercise basis								128,095
Private placement warrants outstanding								5,429,004
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%

Shares Authorized, Available for Future Grant and Outstanding (Detail) - shares	Dec. 31, 2013	Oct. 31, 2006
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share authorized	16,828,707
Shares available	3,125,966
Shares outstanding	10,686,905
2004 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share authorized	2,708,412
Shares outstanding	742,685
2006 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share authorized	14,120,295	2,100,000
Shares available	3,125,966
Shares outstanding	9,944,220

Stock Option Activity (Detail)	12 Months Ended
Stock Option Activity (Detail)	Dec. 31, 2013 USD ($) $ / shares shares
Shares
Options outstanding at beginning of period \| shares	10,037,984
Granted \| shares	2,208,750
Exercised \| shares	(922,141)
Cancelled \| shares	(640,688)
Options outstanding at end of period \| shares	10,683,905
Options exercisable at end of period \| shares	6,729,953
Weighted- average exercise price
Options outstanding at beginning of period \| $ / shares	$ 6.81
Granted \| $ / shares	5.84
Exercised \| $ / shares	4.65
Cancelled \| $ / shares	8.13
Options outstanding at end of period \| $ / shares	6.72
Options exercisable at end of period \| $ / shares	$ 7.39
Weighted-Average Remaining Contractual Life-Years
Options outstanding at end of period	6 years 9 months 29 days
Options exercisable at end of period	5 years 9 months 22 days
Aggregate Intrinsic Value
Options outstanding at end of period \| $	$ 28,675,000
Options exercisable at end of period \| $	$ 14,926,000

Restricted Stock Units Activity (Detail) - Restricted Stock Units (RSUs) - $ / shares	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Shares
Restricted stock units outstanding at beginning of period	938
Granted	3,000
Vested	(938)
Cancelled
Restricted stock units outstanding at end of period	3,000	938
Weighted-Average grant date fair value per share
Restricted stock units outstanding at beginning of period	$ 10.38
Granted	8.31	$ 0.00	$ 0.00
Vested	10.38
Cancelled
Restricted stock units outstanding at end of period	8.31	$ 10.38
Aggregate Intrinsic Value
Restricted stock units outstanding at end of period	$ 27,000

Segment Information - Additional Information (Detail)	12 Months Ended
Segment Information - Additional Information (Detail)	Dec. 31, 2013 Segment Distributor
Segment Reporting Information [Line Items]
Number of segments \| Segment	1
Number of leading wholesale pharmaceutical distributors \| Distributor	3

Percentage of Total Gross Product Revenue (Detail)	12 Months Ended
Percentage of Total Gross Product Revenue (Detail)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Amerisource Bergen Corporation
Revenue, Major Customer [Line Items]
Percentage of total product revenue	35.00%	33.00%	33.00%
Cardinal Health, Inc
Revenue, Major Customer [Line Items]
Percentage of total product revenue	32.00%	33.00%	37.00%
McKesson Corporation
Revenue, Major Customer [Line Items]
Percentage of total product revenue	27.00%	27.00%	23.00%

Percentage of Total Gross Trade Receivables (Detail)	Dec. 31, 2013	Dec. 31, 2012
Amerisource Bergen Corporation
Concentration Risk [Line Items]
Percentage of total trade receivables	36.00%	32.00%
Cardinal Health, Inc
Concentration Risk [Line Items]
Percentage of total trade receivables	32.00%	31.00%
McKesson Corporation
Concentration Risk [Line Items]
Percentage of total trade receivables	27.00%	31.00%

Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
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	$ 0
Deferred tax assets for net operating losses	157,484,000
Losses attributable to excess stock option deductions	975,000
Reinstated Net Operating Losses Generated Through 2012
Schedule Of Income Tax [Line Items]
Deferred tax assets for net operating losses	149,071,000
Research and development credits	6,809,000
Internal Revenue Service (IRS)
Schedule Of Income Tax [Line Items]
Operating loss carryforwards	$ 392,129,000
Operating loss carryforwards, expiration year	2024
Internal Revenue Service (IRS) \| Research and development
Schedule Of Income Tax [Line Items]
Research and development tax credit carryforwards	$ 4,140,000
Research and development tax credit carryforwards, expiration year	2025
State and Local Jurisdiction
Schedule Of Income Tax [Line Items]
Operating loss carryforwards	$ 387,589,000
Operating loss carryforwards, expiration year	2014
State and Local Jurisdiction \| Research and development
Schedule Of Income Tax [Line Items]
Research and development tax credit carryforwards	$ 2,524,000

Significant Components of Deferred Tax Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Net operating loss carryforwards	$ 157,484
Tax credit carryforwards	5,781
Stock-based compensation	13,983	$ 12,876
Capitalized research and development	4,535	5,348
Other, net	4,208	5,954
Deferred Tax Assets, Gross, Total	185,991	24,178
Valuation allowance for deferred tax assets	(185,987)	(23,272)
Net deferred tax assets	4	906
Deferred tax liabilities:
Deferred tax liabilities	(4)	(906)
Net deferred tax liabilities	(4)	(906)
Net deferred tax assets

Reconciliation of Effective Tax Rate and Federal Statutory Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Rate Reconciliation [Line Items]
Federal income taxes	35.00%	35.00%	35.00%
State income taxes	3.30%	4.70%	4.30%
Research and development credits	(4.30%)	0.30%	0.90%
Stock-based compensation	(1.80%)	(1.00%)	(0.70%)
Change in valuation allowance	(28.10%)	(5.60%)	0.00%
State rate change	(2.10%)	0.60%	0.00%
Removal of net operating loss and research and development tax credits	0.00%	(32.40%)	(37.80%)
Other, net	(2.00%)	(1.60%)	(1.70%)
Effective Income Tax Rate, Continuing Operations, Total	0.00%	0.00%	0.00%

Reconciliation of Unrecognized Tax Benefit (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Reconciliation of Unrecognized Tax Benefits [Line Items]
Additions based on tax positions related to the current year	$ 3,756
Reductions due to tax positions that reversed in the current year and completion of research and development study
Ending balance	$ 3,756

Employee Benefit Plan - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Percentage of employee contribution to compensation plan	100.00%
Company discretionary contribution	$ 0	$ 0	$ 0

Summary of Quarterly Data (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2013

^[1]

Sep. 30, 2013

Jun. 30, 2013

Mar. 31, 2013

^[2]

Dec. 31, 2012

^[3]

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

^[4]

Dec. 31, 2013

Dec. 31, 2012

Dec. 31, 2011

Quarterly Financial Information [Line Items]

Revenues

$ 35,313

$ 28,957

$ 24,674

$ 23,612

$ 17,174

$ 13,898

$ 11,108

$ 8,004

$ 112,556

$ 50,184

$ 16,696

Gross profit

^[5]

23,765

18,993

16,380

15,445

9,996

7,822

5,352

3,758

74,583

26,928

Net loss

$ (4,118)

$ (6,938)

$ (11,875)

$ (1,363)

$ (21,421)

$ (15,890)

$ (20,989)

$ (22,673)

$ (24,294)

$ (80,973)

$ (93,021)

Basic and diluted net loss per share

$ (0.05)

^[6]

$ (0.08)

^[6]

$ (0.14)

^[6]

$ (0.02)

^[6]

$ (0.25)

^[6]

$ (0.19)

^[6]

$ (0.25)

^[6]

$ (0.27)

^[6]

$ (0.28)

^[6],[7]

$ (0.95)

^[6],[7]

$ (1.41)

^[7]

[1]	During the fourth quarter of 2013, the Company recognized $2,027 of license revenue under its data license agreement with Terumo Corporation, related to their first commercial sale of its IV acetaminophen product in Japan.
[2]	During the first quarter of 2013, the Company recognized $2,616 of previously deferred revenue and related cost of sales of $919. Further, it recorded a gain of $7,654 on the sale of its Incline option and preferred shares.
[3]	During the fourth quarter of 2012, the Company recorded charges of $6,973 to impair certain manufacturing equipment and construction-in-process to their fair values and, a related asset retirement obligation impairment charge of $750 for the removal of the equipment. Additionally, the Company recorded a loss on the sale of one of its construction-in-process assets of $858 and a charge of $290 to accrue for inventory destruction costs.
[4]	During the first quarter of 2012, the Company recorded a charge of $163 to write-down the value of certain inventory.
[5]	Determined by subtracting cost of sales from net revenue.
[6]	Loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net loss per share may not necessarily equal the total for the year.
[7]	As a result of the issuance of common stock pursuant to public offerings in the fourth quarter of 2011, there is a lack of comparability in the per share amounts between the periods presented. Please see Note 2 of the Notes to Financial Statements for further discussion.

- Definition

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

+ References

+ Details

Summary of Quarterly Data (Parenthetical) (Detail) - USD ($)	3 Months Ended					12 Months Ended
	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Quarterly Financial Information [Line Items]
Net revenue, previously deferred		$ 2,616,000
Gain on sale of investment		7,654,000				$ 7,654,000
License revenue	$ 2,027,000					2,027,000	$ 118,000	$ 5,210,000
Write down of inventory				$ 163,000	$ 5,574,000	0	163,000	5,574,000
Impairment charge of manufacturing equipment			$ 6,973,000				6,973,000
Loss on disposal of asset							(873,000)	66,000
Asset impairment charge			750,000			0	750,000	$ 0
Destruction of Inventory
Quarterly Financial Information [Line Items]
Other operating expense			290,000			$ 50,000	290,000
Construction in Progress
Quarterly Financial Information [Line Items]
Loss on disposal of asset			$ (858,000)				$ (858,000)
Deferred revenue related
Quarterly Financial Information [Line Items]
Cost of sales		$ 919,000

Subsequent Events - Additional Information (Detail)			2 Months Ended
Subsequent Events - Additional Information (Detail)	Feb. 19, 2014 $ / shares	Feb. 10, 2014 USD ($)	Feb. 28, 2014 $ / Warrants shares	Dec. 31, 2013 shares	Dec. 31, 2012 $ / Warrants shares	Dec. 31, 2011 $ / Warrants shares	Jun. 30, 2010 $ / Warrants shares	Nov. 30, 2007 $ / Warrants shares
Subsequent Event [Line Items]
Number of aggregate shares underlying warrants					154,638	158,311	254,793	50,331
Warrants outstanding				618,073
Warrants outstanding, average exercise price \| $ / Warrants					3.8800	3.7900	7.0645	12.6700
Subsequent Event
Subsequent Event [Line Items]
Merger, agreement date	Feb. 10, 2014
Commencement of tender offer	Feb. 19, 2014
Acquisition, outstanding shares of common stock, purchase price \| $ / shares	$ 14.00
Termination fee \| $		$ 20,200,000
Termination fee, percentage		1.50%
Number of aggregate shares underlying warrants			5,909,457
Common stock issued due to exercise of warrants			2,454,472
Warrants outstanding			137,620
Warrants outstanding, average exercise price \| $ / Warrants			7.08
Subsequent Event \| Minimum
Subsequent Event [Line Items]
Shares owned by Parent and its subsidiaries, at time of expiration of offer		50.00%

Valuation and Qualifying Accounts (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Allowance for Doubtful Accounts
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning Balance	$ 56
Additions	3	$ 56
Deductions	(40)
Ending Balance	19	56
Allowance for cash discounts, chargebacks, and wholesaler fees
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning Balance	225	79
Additions	4,489	1,912	$ 451
Deductions	(4,279)	(1,766)	(372)
Ending Balance	$ 435	$ 225	$ 79