EQUITY METHOD INVESTMENT

12 Months Ended

Dec. 31, 2012

EQUITY METHOD INVESTMENT

EQUITY METHOD INVESTMENT

3. EQUITY METHOD INVESTMENT

        In November 2010, we purchased an additional $23,000 in equity of ViaGen, Inc., or ViaGen, a company with in-house breeding services and expertise in advanced reproductive technologies for animal cloning, from another ViaGen shareholder, Moral Compass Corporation, or MCC, which increased our ownership of ViaGen from 28% to 40%. In addition, we provided a loan of $1,500,000 to ViaGen to fund its operations. The loan represented additional financial support to ViaGen and funded approximately $900,000 in prior losses of the company, which has been included in losses recognized under equity method investment in our consolidated statements of operations for the year ended December 31, 2010. In addition, since the loan represented additional financial support to ViaGen, we applied the equity method of accounting to the remaining balance of the loan and recognized $503,000 and $1,447,000 for our proportionate share of ViaGen's operating losses for the years ended December 31, 2011 and 2010, respectively, which has also been included in losses recognized under equity method investment in our consolidated statements of operations. No comparable amount was recognized for the year ended December 31, 2012 because we suspended the equity method of accounting in June 2011 since our proportionate share of net losses exceeded the value of our investment and we did not have any commitments to provide financial support or obligations to perform services or other activities for ViaGen. Since MCC continued to hold the majority of the equity and debt of ViaGen and maintained controlling financial interest over the company, including the power to direct the activities that most significantly impacted ViaGen's economic performance, we concluded that we were not the primary beneficiary of ViaGen and did not include ViaGen's financial information with our consolidated results.

        In September 2012, we cancelled our outstanding loan to ViaGen and sold our entire equity interest to Trans Ova Genetics, L.C., or Trans Ova, in exchange for potential payments aggregating up to $2,400,000 upon reaching certain commercial milestones. We are also eligible to receive 40% of potential proceeds upon the sale by Trans Ova of a non-marketable equity investment held by ViaGen. These potential payments are subject to substantive contingencies and as such, we will recognize a gain only upon achievement of the milestones or sale, as applicable. Since we had no carrying value for our investment in ViaGen at the time of sale to Trans Ova and future payments from Trans Ova are subject to substantive contingencies, we have not recognized any loss or gain in connection with the sale of our equity interest in ViaGen.