Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and notes. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. Actual results may differ materially from those estimates.

Intangible assets

Intangible assets

Effective January 1, 2012, the Company launched LAVIV™ and as a result, the research and development intangible assets related to the Company’s primary study are considered finite-lived intangible assets and are being amortized over 12 years. For the three months ended September 30, 2013 and 2012, the Company amortized $138, respectively, for the intangible assets. For the nine months ended September 30, 2013 and 2012, the Company amortized $414, respectively, for the intangible assets.

Finite-lived intangible assets are recorded at cost, net of accumulated amortization and, if applicable, impairment charges. Amortization of finite-lived intangible assets is provided over their estimated useful lives on a straight-line basis. We review our finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There was no impairment expense recognized during the three and nine months ended September 30, 2013 and 2012.

Loss per share data

Loss per share data

Basic income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during a period. The diluted earnings per share calculation gives effect to dilutive options, warrants, convertible notes, convertible preferred stock, and other potential dilutive common stock including selected restricted shares of common stock outstanding during the period. Diluted income (loss) per share is based on the treasury stock method and includes the effect from potential issuance of common stock, such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options. Common share equivalents have been excluded where their inclusion would be anti-dilutive. The warrants related to the stock warrant liability were first evaluated on an “as if converted” basis; the change in the fair value of the stock warrants recognized in the first quarter was subtracted from earnings to calculate net income (loss) applicable to dilutive common stock. Then, the incremental shares for dilution were determined utilizing the treasury method. Since the average stock price for the quarter was below the exercise price of the warrants, the calculation under the treasury method resulted in repurchasing more shares than would have been exercised and therefore, the inclusion of these shares were deemed to be anti-dilutive and excluded from the dilutive share calculation.

The following table presents computations of net income (loss) per share.

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012
Net income (loss) per share-Basic:
Numerator for basic net (loss) income per share	$	(12,937	)	$	11,433		$	(24,981	)	$	(1,663	)
Denominator for basic net (loss) income per share		27,158,394			3,957,231			26,543,099			3,887,530
Basic net (loss) income per common share	$	(0.48	)	$	2.89		$	(0.94	)	$	(0.43	)
Net income (loss) per share-Diluted:
Numerator for diluted net income (loss) per share	$	(12,937	)	$	11,433		$	(24,981	)	$	(1,663	)
Less: Fair value of stock warrants		—			(14,545	)		—			—
Less: Fair value of derivatives		—			(1,894	)		—			—
Net loss attributable to common share	$	(12,937	)	$	(5,006	)	$	(24,981	)	$	(1,663	)
Denominator for diluted net loss per share		27,158,394			3,957,231			26,543,099			3,887,530
Diluted net loss per common share	$	(0.48	)	$	(1.27	)	$	(0.94	)	$	(0.43	)

The following potentially dilutive securities have been excluded from the calculations of diluted net loss per share as their effect would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Shares of convertible preferred stock		—		1,917,120		—		1,917,120
Shares underlying options outstanding		1,269,320		546,490		1,269,320		546,490
Shares underlying warrants outstanding		6,033,050		5,466,470		6,033,050		5,466,470

Stock Warrants

The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Stock warrants are accounted for as a derivative in accordance with Financial Accounting Standards Board Accounting Standard Codification (ASC) 815, Derivatives and Hedging (ASC 815) if the stock warrants contain “down-round protection” and therefore, do not meet the scope exception for treatment as a derivative. Since “down-round protection” is not an input into the calculation of the fair value of the warrants, the warrants cannot be considered indexed to the Company’s own stock which is a requirement for the scope exception as outlined under ASC 815. The Company will continue to classify the fair value of the warrants that contain “down-round protection” as a liability until the warrants are exercised, expire or are amended in a way that would no longer require these warrants to be classified as a liability. From January 1, 2012 through September 30, 2012, the Company utilized the Monte Carlo simulation valuation method to value the liability classified warrants. Beginning October 1, 2012, the Company concluded that the Black-Scholes option pricing model was an appropriate valuation method due to the assumption that no future financing would be expected at a price lower than the current exercise price and the majority of the warrants were converted to equity-classified warrants on October 9, 2012.