Related Party Transactions

9 Months Ended

Sep. 30, 2011

RELATED PARTY TRANSACTIONS

The table below presents the transactions between the Company and Watson.



	Nine Months Ended September 30,				Three Months Ended September 30,
	2011		2010		2011		2010
REVENUES
Net product revenues	$	1,513,296	$	581,104	$	574,956	$	581,104
Royalties	1,845,154		450,000		702,336		450,000
Amortization of deferred revenue	16,974,383		8,487,192		—		8,487,192
Milestone payment	5,000,000		—		—		—
Other revenue	21,974,383		8,487,192		—		8,487,192

Total net revenues	$	25,332,833	$	9,518,296	$	1,277,292	$	9,518,296
COST OF PRODUCT REVENUES
Cost of product revenues	1,453,720		528,473		636,232		528,473
Gross profit	$	23,879,113	$	8,989,823	$	641,060	$	8,989,823


Accounts receivable	$	932,052	$	533,445

The Company has exceeded the cap of $7.0 million by $2.7 million for research and development spending on the PREGNANT study and related Preterm Birth NDA pursuant to the Watson Transactions and has recorded this amount as a reduction of research and development expenses. Watson has paid the Company for $2.4 million of these excess amounts and has been invoiced for the remaining $0.3 million.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

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-Number 210

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

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-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

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Reference 8: http://www.xbrl.org/2003/role/presentationRef

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Reference 9: http://www.xbrl.org/2003/role/presentationRef

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+ Details