Segment Reporting

9 Months Ended

Sep. 30, 2011

Segment Reporting

Segment Reporting

4.              Segment Reporting

In 2010, we began to manage our business in two reportable operating segments: the Therapeutics segment and the Biosurgery segment. Our Therapeutics segment focuses on developing and marketing products to treat medical conditions in the inflammatory and cardiovascular disease areas. Its operations have focused on clinical trials and discovery efforts to identify additional medical indications. Our Therapeutics segment does not presently have any products approved for sale and its revenues consist primarily of collaborative research agreements and royalties as described in our Annual Report in the “Revenue Recognition” section of Note 2, Significant Accounting Policies.

Our Biosurgery segment is focused on the development, manufacture and sale of biologic products for wound healing and use in surgical procedures by harnessing the ability of cells and novel constructs to promote the body’s natural healing.  We commenced the manufacturing of our first Biosurgery product, a regenerative wound care product, during the first quarter of 2010.  During the first and second quarters of 2010, we distributed the product only for initial clinical evaluation. Accordingly, we incurred research, development, manufacturing, general, and administrative costs related to the Biosurgery segment throughout 2010, but did not recognize revenue from sales until beginning in the third quarter of 2010.  As a result of these start up costs, any measure of segment profitability from our Biosurgery segment for 2010 is not indicative of the segment’s expected future results.

Substantially all of our revenues and assets are attributed to and are received from entities located in the United States.

The costs specifically attributable to each of our segments for the three and nine months ended September 30, 2011 and September 30, 2010 are as follows:

	Three Months Ended							Three Months Ended
	September 30, 2011							September 30, 2010
	($000s)							($000s)
	Therapeutics		Biosurgery			Total		Therapeutics		Biosurgery			Total
Product sales	$	—	$	331		$	331	$	—	$	99		$	99
Cost of goods sold	—		139			139		—		34			34
Gross profit	—		192			192		—		65			65
Revenue from collaborative research agreements, government contract and royalties	10,242		—			10,242		10,659		—			10,659
Operating expenses:
Research and development	4,411		607			5,018		4,639		821			5,460
General and administrative	1,230		199			1,429		1,084		184			1,268
	5,641		806			6,447		5,723		1,005			6,728
Income (loss) from operations	$	4,601	$	(614	)	$	3,987	$	4,936	$	(940	)	$	3,996

	Nine Months Ended							Nine Months Ended
	September 30, 2011							September 30, 2010
	($000s)							($000s)
	Therapeutics		Biosurgery			Total		Therapeutics		Biosurgery			Total
Product sales	$	—	$	498		$	498	$	—	$	99		$	99
Cost of goods sold	—		209			209		—		34			34
Gross profit	—		289			289		—		65			65
Revenue from collaborative research agreements, government contract and royalties	30,861		—			30,861		32,340		—			32,340
Operating expenses:
Research and development	12,520		2,418			14,938		15,231		3,245			18,476
General and administrative	5,767		638			6,405		4,185		492			4,677
	18,287		3,056			21,343		19,416		3,737			23,153
Income (loss) from operations	$	12,574	$	(2,767	)	$	9,807	$	12,924	$	(3,672	)	$	9,252

In general, our total assets, including long-lived assets such as property and equipment, and our capital expenditures are not specifically allocated to any particular operating segment. Accordingly, capital expenditures and total asset information by reportable segment is not presented. The only assets that are allocated to the individual segments are the inventory and accounts receivable specifically related to each segment.

The assets specifically attributable to each of our segments as of September 30, 2011 and December 31, 2010 are as follows:

	September 30, 2011						December 31, 2010
	($000s)						($000s)
	Therapeutics		Biosurgery		Total		Therapeutics		Biosurgery		Total
Segment assets:
Accounts receivable	$	1,215	$	245	$	1,460	$	1,757	$	171	$	1,928
Inventory	—		729		729		—		510		510
Total segment assets	$	1,215	$	974	$	2,189	$	1,757	$	681	$	2,438