Quarterly report pursuant to Section 13 or 15(d)

Condensed Consolidated Financial Statement Detail

 v2.3.0.11
Condensed Consolidated Financial Statement Detail
6 Months Ended
Jun. 30, 2011
Condensed Consolidated Financial Statement Detail [Abstract]  
Condensed Consolidated Financial Statement Detail
3.  Condensed Consolidated Financial Statement Detail

Comprehensive Loss

Unrealized gain on the Company's available-for-sale securities is included in accumulated comprehensive income. Comprehensive loss and its components for the three and six months ended June 30, 2011 and 2010 was as follows (in thousands):

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Net loss
  $ (8,130 )   $ (15,580 )   $ (14,466 )   $ (37,365 )
Unrealized gain on available-for-sale securities
    1       -       1       -  
Comprehensive loss
  $ (8,129 )   $ (15,580 )   $ (14,465 )   $ (37,365 )

Net Loss Per Common Share

Basic and diluted net loss per common share is based on the weighted average number of common shares outstanding during the period.

Potentially dilutive securities are excluded from the calculation of earnings per share if their inclusion is anti-dilutive. The following table shows the total outstanding securities considered anti-dilutive and therefore excluded from the computation of diluted net loss per share (in thousands):

   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
Options for common shares
    3,833       1,478       3,711       1,223  
Convertible preference shares
    17       254       135       254  
Warrants for common shares
    1,607       1,607       1,607       1,607  
Total
    5,457       3,339       5,453       3,084  
 
For the three and six months ended June 30, 2011 and 2010, all outstanding securities were considered anti-dilutive, and therefore the calculations of basic and diluted net losses per share were the same.

Cash and Cash Equivalents

At June 30, 2011, cash equivalents consisted of demand deposits, money market funds and treasury bonds with maturities of less than 90 days at the date of purchase. At December 31, 2010, cash equivalents consisted of demand deposits, money market funds and repurchase agreements with maturities of less than 90 days at the date of purchase.
 
The treasury bond held in cash and cash equivalents is classified as an available-for-sale security and is stated at fair value, with unrealized gains and losses, net of tax, if any, reported in other comprehensive income. The estimate of fair value is based on publicly-available market information. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment and interest income. The cost of investments sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are also included in investment and interest income.

Cash and cash equivalent balances were recorded at fair value as follows as of June 30, 2011 and December 31, 2010 (in thousands):
 
   
June 30, 2011
 
   
Cost
Basis
   
Unrealized
Gains
   
Unrealized
Losses
   
Estimated Fair
Value
 
                         
Cash
  $ 15,548     $ -     $ -     $ 15,548  
Cash equivalents
    35,608       1       -       35,609  
 Total cash and cash equivalents
  $ 51,156     $ 1     $ -     $ 51,157  

   
December 31, 2010
 
   
Cost
Basis
   
Unrealized
Gains
   
Unrealized
Losses
   
Estimated Fair
Value
 
                         
Cash
  $ 29,536     $ -     $ -     $ 29,536  
Cash equivalents
    7,768       -       -       7,768  
Total cash and cash equivalents
  $ 37,304     $ -     $ -     $ 37,304  
 
Foreign Exchange Options
 
The Company holds debt and may incur expenses denominated in foreign currencies, which exposes it to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and the Euro. The Company is required to make principal and accrued interest payments in Euros on its €15.0 million loan from Les Laboratoires Servier (“Servier”) (refer to Note 6 below). In order to manage its foreign currency exposure related to these payments, in May of 2011, the Company entered into two foreign exchange option contracts to buy €15.0 million and €1.5 million on January 2016 and January 2014, respectively. By having these option contracts in place, the Company's foreign exchange rate risk is reduced if the U.S. dollar weakens against the Euro. However, if the U.S. dollar strengthens against the Euro, the Company is not required to exercise these options, but will not receive any refund on premiums paid.

Upfront premiums paid on these foreign exchange option contracts totaled $1.5 million. The fair values of these option contracts are re-valued at each reporting period and are estimated based on pricing models using readily observable inputs from actively quoted markets. The fair values of these option contracts are included in other assets on the condensed consolidated balance sheet and changes in fair value on these contracts are included in other income (expense) on the condensed consolidated statements of operations. The foreign exchange options were revalued at June 30, 2011 and had an aggregate fair value of $1.7 million, and the Company recognized a gain of $0.2 million related to the revaluation for the three and six months ended June 30, 2011.

Receivables

Receivables consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):

   
June 30,
2011
   
December 31,
2010
 
Trade receivables, net
  $ 8,257     $ 20,309  
Other receivables
    2,802       555  
Total
  $ 11,059     $ 20,864  
 
Property and Equipment

Property and equipment consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):
 
   
June 30,
2011
   
December 31,
2010
 
Furniture and equipment
  $ 32,827     $ 31,700  
Buildings, leasehold and building improvements
    21,481       21,463  
Construction-in-progress
    943       203  
Land
    310       310  
      55,561       53,676  
Less:  Accumulated depreciation and amortization
    (41,151 )     (38,807 )
Property and equipment, net
  $ 14,410     $ 14,869  
 
Depreciation expense was $1.4 million and $2.7 million for the three and six months ended June 30, 2011, respectively, compared with $1.4 million and $3.0 million, respectively, for the same periods in 2010.

Accrued Liabilities

Accrued liabilities consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):

   
June 30,
2011
   
December 31,
2010
 
Accrued payroll and other benefits
  $ 2,709     $ 2,752  
Accrued management incentive compensation
    2,253       4,982  
Accrued professional fees
    709       1,020  
Accrued clinical trial costs
    224       1,020  
Other
    1,192       884  
Total
  $ 7,087     $ 10,658