Note 3 - Upsher-Smith (USL) Agreement	3 Months Ended
Mar. 31, 2013
Upsher- Smith Agreement [Text Block]	3. Upsher-Smith (USL) Agreement In November 2002, the Company signed an exclusive U.S. licensing agreement with USL for a value before royalties of $10,000,000 to market its patented nasal formulation of calcitonin for the treatment of osteoporosis. There are no potential milestone payments remaining under this agreement. The Company is responsible for manufacturing the product and USL packages the product and distributes it nationwide. Fortical was approved by the FDA and launched by USL in August 2005. Revenue for the three months ended March 31, 2013 consisted of zero sales to USL and $84,000 in royalties from USL. Revenue for the three months ended March 31, 2012 consisted of $646,000 in sales to USL and $349,000 in royalties from USL. At March 31, 2013, accounts receivable from USL were approximately $10,000. From August 2005 through March 2013, the Company has recognized an aggregate of $49,269,000 in Fortical sales and $27,499,000 in Fortical royalties. The Company recognizes USL royalty revenue based on a quarterly royalty report received from USL. This provides for a reliable measure as well as reasonable assurances of collectability. Royalty revenue, computed in a range from the transfer price of product to USL to a royalty rate in the mid-thirties depending on the circumstances, is earned on net sales of Fortical by USL and is recognized in the period Fortical is sold by USL. Future sales and royalties are contingent upon many factors including a recent recommendation by an FDA advisory committee in regards to the use of calcitonin products (see below), competition, pricing, marketing and acceptance in the market place. However, as set forth in Note 1, the Company has concluded that the Fortical assets are impaired and the amount of future sales of Fortical, if any, remains uncertain. Pursuant to an amendment effected in 2009, there are no net sales minimums in the agreement. In December 2008, Apotex and Sandoz launched nasal calcitonin products which are generic to Novartis’ nasal calcitonin product, but not to Fortical. In June 2009, Par also launched a product generic to Novartis’ nasal calcitonin product. Certain providers have substituted these products for Fortical, causing Fortical sales and royalties to steadily decline. This agreement may be terminated by either party by mutual agreement or due to breach of any material provision of the agreement not cured within 60 days. In addition, USL may terminate the agreement under certain circumstances where USL assigns the agreement and the Company does not approve the assignment. The term of the USL agreement shall continue through the expiration of USL’s obligation to pay royalties and continue thereafter, unless terminated earlier. On March 5, 2013, the FDA held an advisory committee meeting to discuss whether the overall benefit-risk assessment of calcitonin salmon products supports their continued marketing for the treatment of post-menopausal osteoporosis. The advisory committee concluded that the benefits of salmon calcitonin products, including Fortical, do not outweigh the potential risks associated with their use and as a result, should not continue to be broadly marketed. The FDA will assess the recommendation and may or may not concur with the advisory committee. The FDA has not yet issued a response to the advisory committee recommendation. Due largely in part to the FDA advisory committee recommendation, the Company has not received and does not anticipate receiving additional orders for Fortical in the near term and has ceased production of Fortical and written off all related assets. Additionally, the Company received a deposit of $400,000 from USL in the fourth quarter of 2012 as an advance for future Fortical purchase orders, which in the absence of any such purchase orders, will be applied against future royalties due from USL.

Note 3 - Upsher-Smith (USL) Agreement

3 Months Ended

Mar. 31, 2013

3. Upsher-Smith (USL) Agreement

In November 2002, the Company signed an exclusive U.S. licensing agreement with USL for a value before royalties of $10,000,000 to market its patented nasal formulation of calcitonin for the treatment of osteoporosis. There are no potential milestone payments remaining under this agreement. The Company is responsible for manufacturing the product and USL packages the product and distributes it nationwide. Fortical was approved by the FDA and launched by USL in August 2005. Revenue for the three months ended March 31, 2013 consisted of zero sales to USL and $84,000 in royalties from USL. Revenue for the three months ended March 31, 2012 consisted of $646,000 in sales to USL and $349,000 in royalties from USL. At March 31, 2013, accounts receivable from USL were approximately $10,000. From August 2005 through March 2013, the Company has recognized an aggregate of $49,269,000 in Fortical sales and $27,499,000 in Fortical royalties. The Company recognizes USL royalty revenue based on a quarterly royalty report received from USL. This provides for a reliable measure as well as reasonable assurances of collectability. Royalty revenue, computed in a range from the transfer price of product to USL to a royalty rate in the mid-thirties depending on the circumstances, is earned on net sales of Fortical by USL and is recognized in the period Fortical is sold by USL. Future sales and royalties are contingent upon many factors including a recent recommendation by an FDA advisory committee in regards to the use of calcitonin products (see below), competition, pricing, marketing and acceptance in the market place. However, as set forth in Note 1, the Company has concluded that the Fortical assets are impaired and the amount of future sales of Fortical, if any, remains uncertain. Pursuant to an amendment effected in 2009, there are no net sales minimums in the agreement. In December 2008, Apotex and Sandoz launched nasal calcitonin products which are generic to Novartis’ nasal calcitonin product, but not to Fortical. In June 2009, Par also launched a product generic to Novartis’ nasal calcitonin product. Certain providers have substituted these products for Fortical, causing Fortical sales and royalties to steadily decline. This agreement may be terminated by either party by mutual agreement or due to breach of any material provision of the agreement not cured within 60 days. In addition, USL may terminate the agreement under certain circumstances where USL assigns the agreement and the Company does not approve the assignment. The term of the USL agreement shall continue through the expiration of USL’s obligation to pay royalties and continue thereafter, unless terminated earlier.

On March 5, 2013, the FDA held an advisory committee meeting to discuss whether the overall benefit-risk assessment of calcitonin salmon products supports their continued marketing for the treatment of post-menopausal osteoporosis. The advisory committee concluded that the benefits of salmon calcitonin products, including Fortical, do not outweigh the potential risks associated with their use and as a result, should not continue to be broadly marketed. The FDA will assess the recommendation and may or may not concur with the advisory committee. The FDA has not yet issued a response to the advisory committee recommendation. Due largely in part to the FDA advisory committee recommendation, the Company has not received and does not anticipate receiving additional orders for Fortical in the near term and has ceased production of Fortical and written off all related assets. Additionally, the Company received a deposit of $400,000 from USL in the fourth quarter of 2012 as an advance for future Fortical purchase orders, which in the absence of any such purchase orders, will be applied against future royalties due from USL.