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Note 6. Notes, Loans and Financing (Detail) - Loan Agreements (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Balance $ 4,071 $ 8,385
Less: Debt discount (139) (363)
Total notes and loans payable 3,932 8,022
Notes and loans payable, current portion 3,932 8,022
Notes Payable, Other Payables [Member]
   
Balance    [1] 62 [1]
Senior Secured Term Loan [Member]
   
Balance $ 4,071 [2] $ 8,323 [2]
[1] In July 2006, the Company entered into a six-year non-interest bearing promissory note in the amount of $0.8 million with Pharmaceutical Research Associates, Inc., ("PRA") as compensation for PRA assuming liability on a lease of premises in San Diego, CA. The fair value of the note (assuming an imputed 11.6% interest rate) was $0.6 million and broker fees amounted to $0.2 million at issuance. The note was payable in seventy-two equal installments of $11,000 per month and was fully repaid in June 2012.
[2] In May 2011, the Company entered into a senior secured term loan in the amount of $8.6 million with Midcap Financial, LLC., ("Midcap"). The Company had the option to borrow an additional $2.0 million from Midcap on or before December 31, 2011 upon meeting certain conditions, including the commencement of a Phase III clinical trial, which it did not exercise. The interest rate on the loan is 11.5% per year. The Company incurred approximately $0.1 million in issuance costs in connection with the loan and is required to pay a $0.3 million fee on the maturity date of the loan. In addition, the Company issued five year common stock purchase warrants to Midcap granting them the right to purchase 1.1 million shares of the Company's common stock at an exercise price of $0.63 per share. The basic terms of the loan required monthly payments of interest only through November 1, 2011, with 30 monthly payments of principal and interest that commenced on December 1, 2011. Any outstanding balance of the loan and accrued interest was to be repaid on May 27, 2014. In connection with the terms of the loan agreement, the Company granted Midcap a security interest in substantially all of the Company's personal property including its intellectual property.The Company allocated the $8.6 million in proceeds between the term loan and the warrants based on their relative fair values. The Company calculated the fair value of the warrants at the date of the transaction at approximately $0.5 million with a corresponding amount recorded as a debt discount. The debt discount is being accreted over the life of the outstanding term loan using the effective interest method. At the date of the transaction, the fair value of the warrants of $0.5 million was determined utilizing the Black-Scholes option pricing model utilizing the following assumptions: dividend yield of 0%, risk free interest rate of 1.71%, volatility of 110% and an expected life of five years. The Company recognized approximately $0.2 million and $27,000, respectively, of non-cash interest expense related to the accretion of the debt discount during the six months ended June 30, 2012 and 2011.The Company entered into a consent agreement with Midcap in June 2012 with respect to the sale of its Ceplene asset to Meda. As a result of entering into this consent agreement, the Company paid Midcap $0.8 million as a partial payment of principal on the loan in return for Midcap's release of security interest in certain assets sold to Meda.The Company entered into an amendment to the loan agreement with Midcap in August 2012. Under the amendment, the Company agreed to make a principal prepayment of $1.2 million, which approximates the scheduled principal payments due under the loan agreement from September 1, 2012 through December 31, 2012. As a result of the prepayment, the current principal balance of the loan was reduced to $4.1 million. The next principal payment is due on January 15, 2013, and regularly scheduled monthly principal payments will re-commence February 1, 2013 until the scheduled maturity of the loan in March 2014. The Company will continue to make monthly payments of interest to Midcap as per the loan agreement.The Company also agreed, pursuant to the amendment, to maintain a cash balance of $1.1 million in a bank account that is subject to the security interest maintained by MidCap under the loan agreement. Further, the Company has committed to signing a definitive agreement, acceptable to MidCap, by November 15, 2012 with respect to a sale or partnering transaction and to consummate such a transaction as soon as is practical but in any event no later than January 15, 2013.The Company's term loan with Midcap contains a subjective acceleration clause, which allows the lender to accelerate the loan's due date in the event of a material adverse change in the Company's ability to pay its obligations when due. The Company believes that its losses from operations, its stockholders' deficit and a cash balance that is lower than its loan payable increase the likelihood of the due date being accelerated in this manner, and therefore the Company has classified loan repayments due more than twelve months from the date of these financial statements as a short term liability. The original deferred financing fees and debt discount continue to be amortized over the life of the debt that was assumed when the obligation was originally recorded.