Research Agreements	12 Months Ended
Dec. 31, 2012
Research Agreements
Research Agreements	13. Research Agreements BA058-SC Phase 3 Clinical Study—On March 29, 2011, the Company and Nordic entered into a Clinical Trial Services Agreement, a Work Statement NB-1 (the "Work Statement NB-1") under such Clinical Trial Services Agreement and a related Stock Issuance Agreement. Pursuant to the Work Statement NB-1, Nordic is managing the Phase 3 clinical study (the "Phase 3 Clinical Study") of BA058-SC and Nordic will be compensated for such services in a combination of cash and shares of stock. In December 2011, the Company entered into an amendment to the Work Statement NB-1(the "First Amendment"). Pursuant to the original terms of the Work Statement NB-1, the study was to be conducted in 10 countries at a specified number of sites within each country. The terms of the First Amendment (1) provided for two additional countries (the United States and India) in which the study will be conducted, (2) specified a certain number of sites within each such additional country for the conduct of the study, and (3) amended various terms and provisions of the Work Statement NB-1 to reflect the addition of such countries and sites within the study's parameters. Payments to be made by the Company to Nordic under the First Amendment in connection with the conduct of the study in such additional countries are denominated in both euros and U.S. dollars and total up to both €717,700 ($946,359) and $289,663, respectively, for the 15 additional study sites in India contemplated by the First Amendment and up to both €1.2 million ($1.6 million) and $143,369, respectively, for the five additional study sites in the United States contemplated by the First Amendment. In June 2012, the Company entered into a second amendment to the Work Statement NB-1(the "Second Amendment"). Pursuant to the original terms of the Work Statement NB-1, as amended by the First Amendment, the study was to be conducted in 12 countries at a specified number of sites within each country. The terms of the Second Amendment (1) increased the overall number of sites by adding sites in Europe, Brazil and Argentina and removing other sites, (2) specified a certain number of sites within each country for the conduct of the study, and (3) amended various terms and provisions of the Work Statement NB-1 to reflect additional services provided at existing sites and the addition of the new study sites within the study's parameters. The Second Amendment also provided that cash payments to Nordic under the Clinical Trial Services Agreement as well as the payment of shares of stock under the related Stock Issuance Agreement will each be reduced by an amount of €11,941 ($15,745) per subject for any subjects enrolled in India or the United States. Such reductions shall be applied in pro rata monthly installments. Payments to be made by the Company to Nordic under the Second Amendment in connection with the additional services provided at existing sites and the conduct of the study at the new study sites are denominated in both euros and U.S. dollars and total €3.7 million ($4.9 million) and $205,540, respectively. Pursuant to the Work Statement NB-1, the Company is required to make certain per patient payments denominated in both euros and U.S. dollars for each patient enrolled in the Phase 3 Clinical Study followed by monthly payments for the duration of the study and final payments in two equal euro-denominated installments and two equal U.S. dollar-denominated installments. Changes to the Clinical Study schedule may alter the timing, but not the aggregate amounts, of the payments. The Work Statement NB-1, as amended on December 9, 2011 and June 18, 2012, provides for a total of up to approximately €41.2 million ($54.3 million) of euro-denominated payments and a total of up to approximately $3.2 million of U.S. dollar-denominated payments over the course of the Phase 3 Clinical Study. Pursuant to the Stock Issuance Agreement, as amended, Nordic agreed to purchase the equivalent of €371,864 of Series A-5 at $8.142 per share, and the Company sold 64,430 shares of Series A-5 to Nordic on May 17, 2011 for proceeds of $525,154 to the Former Operating Company. These shares were exchanged in the Merger for an aggregate of 6,443 shares of Series A-5. The Stock Issuance Agreement provides that Nordic is entitled to receive quarterly stock dividends, payable in shares of Series A-6 prior to the conversion of the Company's preferred stock into common stock, and shares of common stock if the Company's preferred stock has been converted in accordance with its amended certificate of incorporation, having an aggregate value of up to €36.8 million ($48.5 million), or the Nordic Accruing Dividend. In the event Nordic sells the shares of series A-5 preferred stock or in the event the shares of series A-5 preferred stock are converted into common stock in accordance with our amended certificate of incorporation, this right to receive the Nordic Accruing Dividend will terminate, but a right to receive an equivalent number of shares of series A-6 preferred stock or common stock, as applicable, will remain with Nordic as a contractual right under the Stock Issuance Agreement. The Nordic Accruing Dividend is determined based upon the estimated period that will be required to complete the Phase 3 Clinical Study. On the last business day of each calendar quarter (each, an "Accrual Date"), beginning with the quarter ended June 30, 2011, the Company has a liability to issue shares of Series A-6 (or common stock, after the conversion of the Company's preferred stock into common stock) to Nordic that is referred to as the Applicable Quarterly Amount and is equal to (1) €36.8 million ($48.5 million) minus the aggregate value of any prior Nordic Accruing Dividend accrued divided by (2) the number of calendar quarters it will take to complete the Phase 3 Clinical Study. To calculate the aggregate number of shares due to Nordic in each calendar quarter, the Company converts the portion of €36.8 million ($48.5 million) to accrue in such calendar quarter into U.S. dollars using the simple average of the exchange rate for buying U.S. dollars with euros for all Mondays in such calendar quarter. The Company then calculates the aggregate number of shares to accrue in such calendar quarter by dividing the U.S. dollar equivalent of the Applicable Quarterly Amount, by the greater of (1) the fair market value as of the applicable Accrual Date and (2) $8.142 and rounding down the resulting quotient to the nearest whole number. Such shares due to Nordic will be issued when declared or paid by the Company's board of directors, who are required to do so upon Nordic's request, or upon an event of sale. During the year ended December 31, 2012, additional information became available that required the Company to update the estimated period it will take to complete the Phase 3 Clinical Study, which is part of the calculation of the Applicable Quarterly Amount, as described above. The estimated period that it will take to complete the Clinical Study was updated from a total of 11 calendar quarters as of December 31, 2011 to a total of 15 calendar quarters as of December 31, 2012. Such change in the number of calendar quarters it will take to complete the Clinical Study resulted in a lower number of shares due to Nordic as of December 31, 2012 and will result in a lower number of shares due to Nordic through the end of the Phase 3 Clinical Study. The reduction in the number of shares due to Nordic has no impact on the total amount of expense to be recognized in the statement of operations. As of December 31, 2012, 309,264 shares of Series A-6 were due to Nordic, or, after the automatic conversion into common stock of the Company's convertible preferred stock, 3,092,640 shares of common stock. Prior to the issuance of shares of stock to Nordic in satisfaction of the Nordic Accruing Dividend, the liability to issue shares of stock is being accounted for as a liability in the Company's balance sheet. As of December 31, 2012, the fair value of the liability is $23.4 million based upon the fair value of the Series A-6 as determined using PWERM (see note 11). Changes in the fair value from the date of accrual to the date of issuance of the shares are recorded as a gain or loss in other (expense) income in the statement of operations. The Company recognizes research and development expense for the amounts due to Nordic under the Work Statement NB-1 ratably over the estimated per patient treatment period beginning upon enrollment in the Phase 3 Clinical Study, or a twenty-month period. The Company recorded $30.8 million and $5.1 million of research and development expense during the years ended December 31, 2012 and 2011, respectively, for per patient costs incurred for patients that had enrolled in the Phase 3 Clinical Study. During the year ended December 31, 2011, the Company also recorded approximately $11.0 million of research and development expense associated with the costs incurred for preparatory and other start-up costs to initiate the Phase 3 Clinical Study. As of December 31, 2012, in addition to the $23.4 million liability that is reflected in other liabilities on the balance sheet for the Nordic Accruing Dividend, as noted above, the Company has (1) a liability of $0.2 million reflected in accrued expenses and other current liabilities on the balance sheet resulting from services provided by Nordic which are payable in the form of a stock dividend, the fair value of which is less than the services provided by Nordic as of December 31, 2012, and (2) a liability of $5.2 million that is reflected in accrued expenses and other current liabilities on the balance sheet resulting from services provided by Nordic which are payable in cash. BA058-SC Phase 3 Clinical Extension Study—On October 22, 2012, the Company entered into a Letter of Intent, or the October Letter of Intent, with Nordic, which provides that we and Nordic will, subject to compliance by the Company with certain requirements of its Certificate of Incorporation and applicable securities laws, negotiate in good faith to enter into a Work Statement NB-3 (the "Work Statement NB-3"). The October Letter of Intent further provides that Nordic will perform an extension study to evaluate six months of standard-of-care osteoporosis management following the completion of the 18-month BA058-SC Phase 3 Clinical Study. Upon acceptance of the October Letter of Intent, the Company was required to make an initial payment of €806,468 ($1.1 million). In February 2013, the Company entered into Work Statement NB-3, under the Clinical Trial Services Agreement and a related Stock Issuance Agreement. As noted above, pursuant to the Work Statement NB-3, Nordic will perform an extension study to evaluate six months of standard-of-care osteoporosis management following the completion of BA058-SC Phase 3 Clinical Study and will be compensated for such services in a combination of cash and shares of stock. Payments in cash to be made to Nordic under Work Statement NB-3 are denominated in both euros and U.S. dollars and total up to €4.5 million ($6.0 million based on the exchange rate as of February 21, 2013) and $579,495, respectively. In addition, we will issue to Nordic, subject to the Stock Issuance Agreement Amendment, shares of our series A-6 preferred stock having a value of up to €4.5 million ($6.0 million based on the exchange rate as of February 21, 2013) and $0.3 million, as additional payment for services to be provided under the Work Statement NB-3 and the Services Agreement. The Stock Issuance Agreement provides that, beginning with the quarter ended March 31, 2013, Nordic is entitled to receive quarterly stock dividends in connection with services performed under Work Statement NB-3, payable in shares of series A-6 preferred stock, or shares of common stock if our preferred stock has been automatically converted into common stock in accordance with our certificate of incorporation, having an aggregate value of up to €4.5 million ($6.0 million based on the exchange rate as of February 21, 2013) and $0.3 million. In the event Nordic sells the shares of series A-5 preferred stock or in the event the shares of series A-5 preferred stock are converted into common stock in accordance with our amended certificate of incorporation, this right to receive the Nordic Accruing Dividend will terminate, but a right to receive an equivalent number of shares of series A-6 preferred stock or common stock, as applicable, will remain with Nordic as a contractual right under the Stock Issuance Agreement. BA058-TD Phase 2 Clinical Study—On July 26, 2012, the Company entered into a Letter of Intent (the "Letter of Intent") with Nordic, which provides that the Company and Nordic will, subject to compliance by the Company with certain requirements of its Certificate of Incorporation and applicable securities laws, negotiate in good faith to enter into (1) a Work Statement NB-2 (the "Work Statement NB-2"), a draft of which is attached to the Letter of Intent, and (2) an amendment to the Amended and Restated Stock Issuance Agreement. The Work Statement NB-2 is contemplated by the terms of the Clinical Trial Services Agreement. The Letter of Intent further provided that Nordic would begin providing clinical trial services relating to the Phase 2 clinical study of the Company's BA058-TD product (the "Phase 2 Clinical Study"), as contemplated by the Services Agreement and the draft Work Statement NB-2. In February 2013, we executed the final Work Statement NB-2, under the Clinical Trial Services Agreement and a related Stock Issuance Agreement. As noted above, pursuant to the Work Statement NB-2, Nordic will provide clinical trial services relating to the Phase 2 Clinical Study and will be compensated for such services in a combination of cash and shares of stock. Payments in cash to be made by us to Nordic under Work Statement NB-2 are denominated in both euros and U.S. dollars and total up to €3.6 million ($4.8 million based on the exchange rate as of February 21, 2013) and $257,853, respectively. In addition, we will issue to Nordic shares of our series A-6 preferred stock having a value of up to $2.9 million, as additional payment for services to be provided under the Work Statement NB-2 and the Services Agreement. The Stock Issuance Agreement provides that Nordic is entitled to receive quarterly stock dividends in connection with services performed under Work Statement NB-2, payable in shares of Series A-6, or shares of common stock if the Company's preferred stock has been automatically converted in accordance with its amended certificate of incorporation. The Nordic Accruing Dividend related to the Phase 2 Clinical Study is determined based upon the estimated period that will be required to complete the Phase 2 Clinical Study. On each Accrual Date, beginning with the quarter ended December 31, 2012, the Company will recognize a liability to issue shares of Series A-6 to Nordic that is referred to as the Applicable Quarterly Amount and is equal to (1) $2.9 million minus the aggregate value of any prior Nordic Accruing Dividend related to the Phase 2 Clinical Study divided by (2) the number of calendar quarters it will take to complete the Phase 2 Clinical Study. The Company calculates the aggregate number of shares of Series A-6 to accrue in such calendar quarter by dividing the Applicable Quarterly Amount, by the greater of (1) the fair market value as of the applicable Accrual Date and (2) $8.142 and rounding down the resulting quotient to the nearest whole number. Such shares due to Nordic will be issued when declared or paid by the Company's board of directors, who are required to do so upon Nordic's request, or upon an event of sale. As of December 31, 2012, 12,886 shares of Series A-6 are due to Nordic in connection with the Phase 2 Clinical Study, or after the automatic conversion into common stock of the Company's convertible preferred stock, 128,860 shares of common stock. Prior to the issuance of shares of stock to Nordic in satisfaction of the Nordic Accruing Dividend, the liability to issue shares of stock is being accounted for as a liability in the Company's balance sheet. As of December 31, 2012, the fair value of the liability is $1.0 million based upon the fair value of the Series A-6 as determined using PWERM (see note 11). Changes in the fair value from the date of accrual to the date of issuance of the shares are recorded as a gain or loss in other income (expense) in the statement of operations. The Company recognizes research and development expense for the amounts due to Nordic under the Work Statement NB-2 ratably over the estimated per patient treatment period beginning upon enrollment in the Phase 2 Clinical Study, or a nine-month period. The Company recorded $1.4 million of research and development expense during the year ended December 31, 2012 for per patient costs incurred for patients that had enrolled in the Phase 2 Clinical Study. Additionally, the Company recorded approximately $0.9 million of research and development expense associated with the costs incurred for preparatory and other start-up costs to initiate the Phase 2 Clinical Study during the year ended December 31, 2012. As of December 31, 2012, in addition to the $1.0 million liability that is reflected in other liabilities on the balance sheet that will be settled in shares of stock, as noted above, the Company has (1) an asset of $0.4 million reflected in prepaid expenses and other current assets on the balance sheet resulting from services provided by Nordic which are payable in the form of a stock dividend, the fair value of which exceeds the services provided by Nordic as of December 31, 2012, and (2) an asset of $0.4 million that is reflected in prepaid expenses and other current assets on the balance sheet resulting from services provided by Nordic which are payable in cash. The Company is also responsible for certain pass through costs in connection with the Phase 3 Clinical Study and Phase 2 Clinical Study. Pass through costs are expensed as incurred or upon delivery. The Company recognized research and development expense of $6.0 million and $5.0 million for pass through costs during the years ended December 31, 2012 and 2011, respectively.

13. Research Agreements

BA058-SC Phase 3 Clinical Study—On March 29, 2011, the Company and Nordic entered into a Clinical Trial Services Agreement, a Work Statement NB-1 (the "Work Statement NB-1") under such Clinical Trial Services Agreement and a related Stock Issuance Agreement. Pursuant to the Work Statement NB-1, Nordic is managing the Phase 3 clinical study (the "Phase 3 Clinical Study") of BA058-SC and Nordic will be compensated for such services in a combination of cash and shares of stock.

In December 2011, the Company entered into an amendment to the Work Statement NB-1(the "First Amendment"). Pursuant to the original terms of the Work Statement NB-1, the study was to be conducted in 10 countries at a specified number of sites within each country. The terms of the First Amendment (1) provided for two additional countries (the United States and India) in which the study will be conducted, (2) specified a certain number of sites within each such additional country for the conduct of the study, and (3) amended various terms and provisions of the Work Statement NB-1 to reflect the addition of such countries and sites within the study's parameters. Payments to be made by the Company to Nordic under the First Amendment in connection with the conduct of the study in such additional countries are denominated in both euros and U.S. dollars and total up to both €717,700 ($946,359) and $289,663, respectively, for the 15 additional study sites in India contemplated by the First Amendment and up to both €1.2 million ($1.6 million) and $143,369, respectively, for the five additional study sites in the United States contemplated by the First Amendment.

In June 2012, the Company entered into a second amendment to the Work Statement NB-1(the "Second Amendment"). Pursuant to the original terms of the Work Statement NB-1, as amended by the First Amendment, the study was to be conducted in 12 countries at a specified number of sites within each country. The terms of the Second Amendment (1) increased the overall number of sites by adding sites in Europe, Brazil and Argentina and removing other sites, (2) specified a certain number of sites within each country for the conduct of the study, and (3) amended various terms and provisions of the Work Statement NB-1 to reflect additional services provided at existing sites and the addition of the new study sites within the study's parameters. The Second Amendment also provided that cash payments to Nordic under the Clinical Trial Services Agreement as well as the payment of shares of stock under the related Stock Issuance Agreement will each be reduced by an amount of €11,941 ($15,745) per subject for any subjects enrolled in India or the United States. Such reductions shall be applied in pro rata monthly installments. Payments to be made by the Company to Nordic under the Second Amendment in connection with the additional services provided at existing sites and the conduct of the study at the new study sites are denominated in both euros and U.S. dollars and total €3.7 million ($4.9 million) and $205,540, respectively.

Pursuant to the Work Statement NB-1, the Company is required to make certain per patient payments denominated in both euros and U.S. dollars for each patient enrolled in the Phase 3 Clinical Study followed by monthly payments for the duration of the study and final payments in two equal euro-denominated installments and two equal U.S. dollar-denominated installments. Changes to the Clinical Study schedule may alter the timing, but not the aggregate amounts, of the payments. The Work Statement NB-1, as amended on December 9, 2011 and June 18, 2012, provides for a total of up to approximately €41.2 million ($54.3 million) of euro-denominated payments and a total of up to approximately $3.2 million of U.S. dollar-denominated payments over the course of the Phase 3 Clinical Study.

Pursuant to the Stock Issuance Agreement, as amended, Nordic agreed to purchase the equivalent of €371,864 of Series A-5 at $8.142 per share, and the Company sold 64,430 shares of Series A-5 to Nordic on May 17, 2011 for proceeds of $525,154 to the Former Operating Company. These shares were exchanged in the Merger for an aggregate of 6,443 shares of Series A-5.

The Stock Issuance Agreement provides that Nordic is entitled to receive quarterly stock dividends, payable in shares of Series A-6 prior to the conversion of the Company's preferred stock into common stock, and shares of common stock if the Company's preferred stock has been converted in accordance with its amended certificate of incorporation, having an aggregate value of up to €36.8 million ($48.5 million), or the Nordic Accruing Dividend. In the event Nordic sells the shares of series A-5 preferred stock or in the event the shares of series A-5 preferred stock are converted into common stock in accordance with our amended certificate of incorporation, this right to receive the Nordic Accruing Dividend will terminate, but a right to receive an equivalent number of shares of series A-6 preferred stock or common stock, as applicable, will remain with Nordic as a contractual right under the Stock Issuance Agreement.

The Nordic Accruing Dividend is determined based upon the estimated period that will be required to complete the Phase 3 Clinical Study. On the last business day of each calendar quarter (each, an "Accrual Date"), beginning with the quarter ended June 30, 2011, the Company has a liability to issue shares of Series A-6 (or common stock, after the conversion of the Company's preferred stock into common stock) to Nordic that is referred to as the Applicable Quarterly Amount and is equal to (1) €36.8 million ($48.5 million) minus the aggregate value of any prior Nordic Accruing Dividend accrued divided by (2) the number of calendar quarters it will take to complete the Phase 3 Clinical Study. To calculate the aggregate number of shares due to Nordic in each calendar quarter, the Company converts the portion of €36.8 million ($48.5 million) to accrue in such calendar quarter into U.S. dollars using the simple average of the exchange rate for buying U.S. dollars with euros for all Mondays in such calendar quarter. The Company then calculates the aggregate number of shares to accrue in such calendar quarter by dividing the U.S. dollar equivalent of the Applicable Quarterly Amount, by the greater of (1) the fair market value as of the applicable Accrual Date and (2) $8.142 and rounding down the resulting quotient to the nearest whole number. Such shares due to Nordic will be issued when declared or paid by the Company's board of directors, who are required to do so upon Nordic's request, or upon an event of sale. During the year ended December 31, 2012, additional information became available that required the Company to update the estimated period it will take to complete the Phase 3 Clinical Study, which is part of the calculation of the Applicable Quarterly Amount, as described above. The estimated period that it will take to complete the Clinical Study was updated from a total of 11 calendar quarters as of December 31, 2011 to a total of 15 calendar quarters as of December 31, 2012. Such change in the number of calendar quarters it will take to complete the Clinical Study resulted in a lower number of shares due to Nordic as of December 31, 2012 and will result in a lower number of shares due to Nordic through the end of the Phase 3 Clinical Study. The reduction in the number of shares due to Nordic has no impact on the total amount of expense to be recognized in the statement of operations. As of December 31, 2012, 309,264 shares of Series A-6 were due to Nordic, or, after the automatic conversion into common stock of the Company's convertible preferred stock, 3,092,640 shares of common stock.

Prior to the issuance of shares of stock to Nordic in satisfaction of the Nordic Accruing Dividend, the liability to issue shares of stock is being accounted for as a liability in the Company's balance sheet. As of December 31, 2012, the fair value of the liability is $23.4 million based upon the fair value of the Series A-6 as determined using PWERM (see note 11). Changes in the fair value from the date of accrual to the date of issuance of the shares are recorded as a gain or loss in other (expense) income in the statement of operations.

The Company recognizes research and development expense for the amounts due to Nordic under the Work Statement NB-1 ratably over the estimated per patient treatment period beginning upon enrollment in the Phase 3 Clinical Study, or a twenty-month period. The Company recorded $30.8 million and $5.1 million of research and development expense during the years ended December 31, 2012 and 2011, respectively, for per patient costs incurred for patients that had enrolled in the Phase 3 Clinical Study. During the year ended December 31, 2011, the Company also recorded approximately $11.0 million of research and development expense associated with the costs incurred for preparatory and other start-up costs to initiate the Phase 3 Clinical Study.

As of December 31, 2012, in addition to the $23.4 million liability that is reflected in other liabilities on the balance sheet for the Nordic Accruing Dividend, as noted above, the Company has (1) a liability of $0.2 million reflected in accrued expenses and other current liabilities on the balance sheet resulting from services provided by Nordic which are payable in the form of a stock dividend, the fair value of which is less than the services provided by Nordic as of December 31, 2012, and (2) a liability of $5.2 million that is reflected in accrued expenses and other current liabilities on the balance sheet resulting from services provided by Nordic which are payable in cash.

BA058-SC Phase 3 Clinical Extension Study—On October 22, 2012, the Company entered into a Letter of Intent, or the October Letter of Intent, with Nordic, which provides that we and Nordic will, subject to compliance by the Company with certain requirements of its Certificate of Incorporation and applicable securities laws, negotiate in good faith to enter into a Work Statement NB-3 (the "Work Statement NB-3").

The October Letter of Intent further provides that Nordic will perform an extension study to evaluate six months of standard-of-care osteoporosis management following the completion of the 18-month BA058-SC Phase 3 Clinical Study. Upon acceptance of the October Letter of Intent, the Company was required to make an initial payment of €806,468 ($1.1 million).

In February 2013, the Company entered into Work Statement NB-3, under the Clinical Trial Services Agreement and a related Stock Issuance Agreement. As noted above, pursuant to the Work Statement NB-3, Nordic will perform an extension study to evaluate six months of standard-of-care osteoporosis management following the completion of BA058-SC Phase 3 Clinical Study and will be compensated for such services in a combination of cash and shares of stock.

Payments in cash to be made to Nordic under Work Statement NB-3 are denominated in both euros and U.S. dollars and total up to €4.5 million ($6.0 million based on the exchange rate as of February 21, 2013) and $579,495, respectively. In addition, we will issue to Nordic, subject to the Stock Issuance Agreement Amendment, shares of our series A-6 preferred stock having a value of up to €4.5 million ($6.0 million based on the exchange rate as of February 21, 2013) and $0.3 million, as additional payment for services to be provided under the Work Statement NB-3 and the Services Agreement.

The Stock Issuance Agreement provides that, beginning with the quarter ended March 31, 2013, Nordic is entitled to receive quarterly stock dividends in connection with services performed under Work Statement NB-3, payable in shares of series A-6 preferred stock, or shares of common stock if our preferred stock has been automatically converted into common stock in accordance with our certificate of incorporation, having an aggregate value of up to €4.5 million ($6.0 million based on the exchange rate as of February 21, 2013) and $0.3 million. In the event Nordic sells the shares of series A-5 preferred stock or in the event the shares of series A-5 preferred stock are converted into common stock in accordance with our amended certificate of incorporation, this right to receive the Nordic Accruing Dividend will terminate, but a right to receive an equivalent number of shares of series A-6 preferred stock or common stock, as applicable, will remain with Nordic as a contractual right under the Stock Issuance Agreement.

BA058-TD Phase 2 Clinical Study—On July 26, 2012, the Company entered into a Letter of Intent (the "Letter of Intent") with Nordic, which provides that the Company and Nordic will, subject to compliance by the Company with certain requirements of its Certificate of Incorporation and applicable securities laws, negotiate in good faith to enter into (1) a Work Statement NB-2 (the "Work Statement NB-2"), a draft of which is attached to the Letter of Intent, and (2) an amendment to the Amended and Restated Stock Issuance Agreement. The Work Statement NB-2 is contemplated by the terms of the Clinical Trial Services Agreement.

The Letter of Intent further provided that Nordic would begin providing clinical trial services relating to the Phase 2 clinical study of the Company's BA058-TD product (the "Phase 2 Clinical Study"), as contemplated by the Services Agreement and the draft Work Statement NB-2.

In February 2013, we executed the final Work Statement NB-2, under the Clinical Trial Services Agreement and a related Stock Issuance Agreement. As noted above, pursuant to the Work Statement NB-2, Nordic will provide clinical trial services relating to the Phase 2 Clinical Study and will be compensated for such services in a combination of cash and shares of stock. Payments in cash to be made by us to Nordic under Work Statement NB-2 are denominated in both euros and U.S. dollars and total up to €3.6 million ($4.8 million based on the exchange rate as of February 21, 2013) and $257,853, respectively. In addition, we will issue to Nordic shares of our series A-6 preferred stock having a value of up to $2.9 million, as additional payment for services to be provided under the Work Statement NB-2 and the Services Agreement.

The Stock Issuance Agreement provides that Nordic is entitled to receive quarterly stock dividends in connection with services performed under Work Statement NB-2, payable in shares of Series A-6, or shares of common stock if the Company's preferred stock has been automatically converted in accordance with its amended certificate of incorporation. The Nordic Accruing Dividend related to the Phase 2 Clinical Study is determined based upon the estimated period that will be required to complete the Phase 2 Clinical Study. On each Accrual Date, beginning with the quarter ended December 31, 2012, the Company will recognize a liability to issue shares of Series A-6 to Nordic that is referred to as the Applicable Quarterly Amount and is equal to (1) $2.9 million minus the aggregate value of any prior Nordic Accruing Dividend related to the Phase 2 Clinical Study divided by (2) the number of calendar quarters it will take to complete the Phase 2 Clinical Study. The Company calculates the aggregate number of shares of Series A-6 to accrue in such calendar quarter by dividing the Applicable Quarterly Amount, by the greater of (1) the fair market value as of the applicable Accrual Date and (2) $8.142 and rounding down the resulting quotient to the nearest whole number. Such shares due to Nordic will be issued when declared or paid by the Company's board of directors, who are required to do so upon Nordic's request, or upon an event of sale. As of December 31, 2012, 12,886 shares of Series A-6 are due to Nordic in connection with the Phase 2 Clinical Study, or after the automatic conversion into common stock of the Company's convertible preferred stock, 128,860 shares of common stock.

Prior to the issuance of shares of stock to Nordic in satisfaction of the Nordic Accruing Dividend, the liability to issue shares of stock is being accounted for as a liability in the Company's balance sheet. As of December 31, 2012, the fair value of the liability is $1.0 million based upon the fair value of the Series A-6 as determined using PWERM (see note 11). Changes in the fair value from the date of accrual to the date of issuance of the shares are recorded as a gain or loss in other income (expense) in the statement of operations.

The Company recognizes research and development expense for the amounts due to Nordic under the Work Statement NB-2 ratably over the estimated per patient treatment period beginning upon enrollment in the Phase 2 Clinical Study, or a nine-month period. The Company recorded $1.4 million of research and development expense during the year ended December 31, 2012 for per patient costs incurred for patients that had enrolled in the Phase 2 Clinical Study. Additionally, the Company recorded approximately $0.9 million of research and development expense associated with the costs incurred for preparatory and other start-up costs to initiate the Phase 2 Clinical Study during the year ended December 31, 2012.

As of December 31, 2012, in addition to the $1.0 million liability that is reflected in other liabilities on the balance sheet that will be settled in shares of stock, as noted above, the Company has (1) an asset of $0.4 million reflected in prepaid expenses and other current assets on the balance sheet resulting from services provided by Nordic which are payable in the form of a stock dividend, the fair value of which exceeds the services provided by Nordic as of December 31, 2012, and (2) an asset of $0.4 million that is reflected in prepaid expenses and other current assets on the balance sheet resulting from services provided by Nordic which are payable in cash.

The Company is also responsible for certain pass through costs in connection with the Phase 3 Clinical Study and Phase 2 Clinical Study. Pass through costs are expensed as incurred or upon delivery. The Company recognized research and development expense of $6.0 million and $5.0 million for pass through costs during the years ended December 31, 2012 and 2011, respectively.