Property and Equipment

12 Months Ended

Dec. 31, 2012

Note 6 – Property and Equipment

Property and equipment is comprised of the following:

	December 31,
(in thousands)	2012			2011

Equipment	$	7,775		$	7,428
Furniture		816			815
Leasehold improvements		2,711			2,875
Subtotal		11,302			11,118
Accumulated depreciation and amortization		(9,565	)		(8,825	)
Property and equipment, net	$	1,737		$	2,293

Equipment primarily consists of: (i) manufacturing equipment to produce our KL4 surfactant products, including SURFAXIN and our lyophilized KL4 surfactant for AEROSURF and SURFAXIN LS, for use in our preclinical studies, clinical trials and potential commercial needs; (ii) laboratory equipment for manufacturing, analytical, research and development activities; and (iii) computers and office equipment to support our overall business activities.

Leasehold improvements primarily consist of construction of an analytical and development laboratory in our Warrington, Pennsylvania headquarters, which was completed in 2007. The activities conducted in our laboratory include release and stability testing of raw materials as well as preclinical, clinical and commercial drug product supply. We also perform development work with respect to our aerosolized and lyophilized dosage forms of our KL4 surfactant. In addition, in 2007, we built a microbiology laboratory at our manufacturing facility in Totowa, New Jersey, to support production of our drug product candidates. The microbiology laboratory will be amortized through the end of the lease term for our Totowa, New Jersey facility in December 2014.

Depreciation expense on property and equipment for the years ended December 31, 2012, 2011 and 2010 was $0.9 million, $1.3 million and $1.4 million, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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