Joint Development and License agreement with Johnson and Johnson Consumer Companies, Inc

12 Months Ended

Dec. 31, 2011

Joint Development and License agreement [Abstract]

Joint Development and License agreement with Johnson and Johnson Consumer Companies, Inc

Note 10 – Joint Development and License agreement with Johnson & Johnson Consumer Companies, Inc.

Effective as of September 1, 2004, we entered into a Joint Development and License Agreement with Johnson & Johnson to develop and commercialize home-use, light-based devices in the fields of (i) reducing or reshaping body fat including cellulite; (ii) reducing appearance of skin aging; and (iii) reducing or preventing acne. Under the agreement, Johnson & Johnson funds our research and clinical studies during an initial proof-of-principle phase. At the end of the proof-of-principle phase, Johnson & Johnson will decide whether or not to continue with one or more of the devices in one or more of the fields into a development phase. If Johnson & Johnson decides to continue, Johnson & Johnson will be obligated to fund the development of the selected devices.  If Johnson & Johnson decides not to continue, we may proceed in fields not selected by Johnson & Johnson to develop and commercialize these and other devices on our own or with a different party.

At the end of the development phase, Johnson & Johnson will decide whether or not to commercialize one or more of the devices in one or more fields. If Johnson & Johnson decides to commercialize one or more of the devices, Johnson & Johnson will make payments to us for each selected field. Upon commercial launch of the first device in each selected field, Johnson & Johnson will make a payment to us, and for all devices sold for use in each selected field, Johnson & Johnson shall pay us a percentage of sales of such devices and certain topical compounds. If Johnson & Johnson decides not to commercialize or fails to launch a device, we may proceed in fields not selected by Johnson & Johnson to develop and commercialize these and other devices on our own or with a different party.

On August 22, 2007 and June 29, 2009, we signed amendments to our agreement with Johnson & Johnson to provide for additional development funding for certain development activities. Johnson & Johnson will provide us with quarterly payments for these development activities. We will recognize this revenue as costs are incurred and services are provided.

On October 16, 2009, we announced the termination of our Joint Development and License Agreement with Johnson & Johnson. Despite having met all of our deliverables under the agreement, Johnson & Johnson terminated the agreement referencing the current unfavorable economic conditions as the reason for its decision. As a result, Johnson & Johnson will not be obligated to make a large commercialization payment to us or to commit to the significant level of funding required to successfully launch a new product into the consumer market.

For the years ended December 31, 2011, 2010, and 2009, we recognized approximately $0, $0, and $1.8 million, respectively, of funded product development revenues from Johnson & Johnson. As of December 31, 2011 and 2010, no advance payments had been received from Johnson & Johnson for which services were not yet provided.