Liquidity Risks and Management's Plans	6 Months Ended
Jun. 30, 2015
Liquidity Risks and Management's Plans [Abstract]
Liquidity Risks and Management's Plans	Note 2 – Liquidity Risks and Management’s Plans We have incurred substantial losses since inception, due to investments in research and development, manufacturing, and, more recently, commercialization and medical affairs activities, and we expect to continue to incur substantial losses over the next several years. Historically, we have funded our business operations through various sources, including public and private securities offerings, debt facilities, strategic alliances, committed equity financing facilities, at-the-market equity programs, and capital equipment financings. We expect to fund our business operations in the future primarily through all or a combination of strategic alliances, public equity offerings, including under our ATM Program (see, Note 10, “Stockholders’ Equity – At-the-Market Program (ATM Program),” in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2014 that we filed with the Securities and Exchange Commission (SEC) on March 16, 2015 (2014 Form 10-K)), the potential exercise of outstanding warrants, and secured debt facilities. As of June 30, 2015, we had cash and cash equivalents of $26.1 million and long-term debt of $30 million under our loan (Deerfield Loan) with affiliates of Deerfield Management Company, L.P. (Deerfield) (see, Note 6, “Deerfield Loan.”). On July 22, 2015, we completed a public offering of common stock, warrants and pre-funded warrants, resulting in gross proceeds to us of approximately $40.25 million ($37.6 million net after deducting underwriting fees and estimated expenses, and including $5.0 million in non-cash consideration from Deerfield in satisfaction of future interest payments under the Deerfield Loan). See, Note 8, “Subsequent Events – July 2015 Registered Public Offering.” Under our ATM Program, subject to market conditions, we may sell up to approximately $23 million of common stock at such times and in such amounts we deem appropriate, subject to a 3% commission. To secure additional capital when needed, we also will consider public and private equity offerings or other financing transactions, including potentially secured equipment financing facilities or other similar transactions. There can be no assurance, however, that we will be successful in securing additional capital when needed, if at all. Before any additional financings and taking into account the impact of certain July 2015 amendments to the Deerfield Loan and the collaboration agreement with Battelle Memorial Institute (Battelle), discussed below, we anticipate that we will have sufficient cash available to support our AEROSURF phase 2 clinical program, pay our debt service obligations and fund our operations through the first quarter of 2017. In July 2015, we entered into two amendments to the Deerfield Loan agreement and related notes (Deerfield Notes), pursuant to which (i) we prepaid in cash $5.0 million of the outstanding principal amounts under the Deerfield Notes; (ii) the payment dates for the remaining principal installments due under the Deerfield Loan were amended to (x) eliminate the installment due in February 2017, and (y) adjust the amounts due on each of February 13, 2018 and February 13, 2019 to $12.5 million and $12.5 million, respectively; (iii) in our July 2015 public offering, in lieu of providing cash consideration, Deerfield accepted $5 million securities issued thereunder in prepayment of $5 million future interest obligations under the Deerfield Notes allocated in the manner provided in the amendment; and (iv) following application of the full $5 million interest prepayments described in clause (iii), the interest rate on any remaining interest due under the Deerfield Notes was adjusted from 8.75% to 8.25%. Under our collaboration agreement with Battelle, we have completed Stage 1 (design requirements) of the three-stage project plan to develop our CAG device for potential use in our AEROSURF phase 3 clinical program and, if approved, initial commercial supply. In July 2015, we agreed on a planned cost of up to approximately $11.85 million to complete Stage 2 (development) and Stage 3 (design verification and testing) of the project plan, which under the collaboration agreement will be shared equally. Accordingly, we expect our 50% share of the planned cost for Stage 2 and Stage 3 to be up to approximately $6 million and that, following the completion of Stage 3 in mid-2016, we will be in a position to manufacture the CAG device and related componentry for use in the AEROSURF phase 3 clinical program. There can be no assurance that our collaboration will be successful or that we will timely complete the development work within the anticipated time, if ever, and for the anticipated cost contemplated under the collaboration project plan. Under the collaboration agreement, we also may defer payments due to Battelle for up to 12 months, provided that (i) any amounts deferred will bear interest from and after 90 days at a rate of 12% per annum, and (ii) the aggregate amounts deferred more than 30 days may not exceed at any time our available cash and cash equivalents. We currently have deferred $1.5 million and expect to defer aggregate payments of up to approximately $4.0 million at certain times throughout the term of the project. For at least the next several years, we do not expect to generate any revenue from the sale of approved products. Thus, to secure the significant additional infusions of capital that we will need to execute our business strategy, advance our development programs, pay debt obligations and fund our operations, we will have to rely on non-sales sources of capital, including potentially: (i) strategic alliances and collaboration arrangements, which could provide development and commercial expertise to support the development and, if approved, commercial introduction of, our KL4 surfactant pipeline product candidates, beginning with AEROSURF, in markets outside the U.S. Such alliances typically also would provide financial resources, in the form of upfront payments, milestone payments, commercialization royalties and a sharing of research and development expenses. We believe that we will be better positioned to identify and enter into a significant strategic alliance for AEROSURF if we obtain encouraging results from the AEROSURF phase 2 clinical program; (ii) public and private equity offerings, including potentially pursuant to our ATM Program; (iii) secured debt arrangements to provide working capital and fund investment in capital assets; and (iv) the potential exercise of outstanding warrants (discussed below). In addition, we have in the past collaborated with research organizations and universities to assess potential application of our KL4 surfactant in studies funded in part through various U.S. Government-sponsored drug development programs, including grants in support of initiatives related to our AEROSURF clinical program and biodefense-related initiatives under programs that encourage private sector development of medical countermeasures against chemical, biological, radiological, and nuclear terrorism threat agents, and pandemic influenza, and provide a mechanism for federal acquisition of such countermeasures. Although there can be no assurance, we expect that we may have opportunities in the future to participate in similar programs. As of June 30, 2015, we had outstanding warrants to purchase approximately 13.2 million shares of our common stock at various prices, exercisable on different dates into 2024. This includes warrants to purchase up to 7.0 million shares that were issued to Deerfield in connection with the Deerfield Loan at an exercise price of $2.81 per share (Deerfield Warrants). The Deerfield Warrants may be exercised for cash or through a net cashless exercise. In lieu of paying cash upon exercise, the holders also may elect to reduce the principal amount of the Deerfield Loan in an amount sufficient to satisfy the exercise price of the Deerfield Warrants. In addition to the Deerfield Warrants, we have outstanding warrants issued in February 2011 to purchase approximately 4.6 million shares of common stock that expire in February 2016 and contain anti-dilution provisions that adjust the exercise price if we issue any common stock, securities convertible into common stock, or other securities (subject to certain exceptions) at a value below the then-current exercise price of the warrants. The exercise price of these warrants was recently adjusted as a result of our July 2015 public offering and currently have an exercise price of $0.19 per share. If the holders determine in their discretion to exercise the February 2011 warrants prior to their expiration date in February 2016 (and we have an effective registration statement covering the warrant shares to be issued upon exercise of the warrants), we potentially could receive up to approximately $0.9 million. In addition, in connection with the July 2015 public offering, we issued warrants to purchase up to approximately 67.1 million shares of common stock at an initial exercise price of $0.70 per share, and 42.0 million fully paid pre-funded warrants to purchase one share of common stock at an exercise price of $0.60 per share. The July 2015 warrants may be exercised at the election of the holder for cash or through a net cashless exercise. There can be no assurance that the price of our common stock will achieve a level greater than the exercise price of the Deerfield Warrants or the July 2015 warrants, that the holders would choose to exercise their warrants for cash, or that holders of any of our outstanding warrants would choose to exercise any or all of their warrants prior to the applicable warrant expiration dates. If any of our outstanding warrants are exercised, such exercises likely will be at a discount to the then-market value of our common stock and have a dilutive effect on the value of our shares of common stock at the time of exercise. Moreover, if the holders of the February 2011 warrants choose to exercise their warrants at any time prior to the expiration date in February 2016, such exercises could be accompanied by increased selling activity in the Nasdaq market and the market value of our common stock could decline. As of June 30, 2015, there were 250 million shares of common stock authorized under our Amended and Restated Certificate of Incorporation, as amended, and approximately 136.0 million shares of common stock were available for issuance and not otherwise reserved. Of the 250 million shares of common stock that are presently authorized under our Amended and Restated Certificate of Incorporation, as amended, as of July 22, 2015, approximately 246.9 million shares of common stock are either issued and outstanding or reserved for issuance under our 2011 Equity Incentive Plans (2011 Plan), our 401(k) benefit plan, and upon exercise of outstanding warrants. If in the future we are unable to fund our capital requirements, we will not have sufficient cash flows and liquidity to fund our business operations and pay our debt service. In that event, we may be forced to further limit our development programs and consider other means of creating value for our stockholders, such as licensing the development and/or commercialization of products that we consider valuable and might otherwise plan to develop ourselves. If we are unable to raise the necessary capital, we may be forced to curtail all of our activities and, ultimately, cease operations. Even if we are able to secure additional capital, such transactions may only be available on unattractive terms, or could result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline. Moreover, if we fail in the future to make any required payment under our Deerfield Loan or fail to comply with any commitments contained in the loan documents, Deerfield would be able to declare us in default regarding that indebtedness, which could result in the acceleration of the payment obligations under all or a portion of our indebtedness. Since we have pledged substantially all of our assets to secure our obligations under the Deerfield Loan, a debt default would enable the lenders to foreclose on our assets securing the debt and could significantly diminish the market value and marketability of our common stock. Our financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue in existence. On June 29, 2015, we received a letter from The Nasdaq Stock Market indicating that for 30 consecutive business days our common stock had not maintained a minimum closing per share bid price of $1.00 (“Minimum Bid Price Requirement”) as required by Nasdaq Listing Rule 5550(a)(2). This notification had no immediate impact on the continued trading or listing of our common stock on Nasdaq. Under Nasdaq’s Listing Rules, we have 180 calendar days from the date of the notification (the “Compliance Period”), or until December 28, 2015, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our common stock must close above $1.00 for a minimum of 10 consecutive business days; thereafter, our common stock would continue to be eligible for listing on the Nasdaq Capital Market. If we are unable to achieve compliance with the Minimum Bid Price Requirement within 180 days, we may be eligible for a 180‑day extension of the Compliance Period if we meet certain criteria set forth in the Nasdaq Listing Rules. If we fail to achieve compliance with the Minimum Bid Price Requirement within the applicable Compliance Period, the Nasdaq staff would issue a delisting notification and we would be subject to potential delisting, which if it occurred likely would further impair the liquidity and value of our common stock.

Note 2 – Liquidity Risks and Management’s Plans

We have incurred substantial losses since inception, due to investments in research and development, manufacturing, and, more recently, commercialization and medical affairs activities, and we expect to continue to incur substantial losses over the next several years. Historically, we have funded our business operations through various sources, including public and private securities offerings, debt facilities, strategic alliances, committed equity financing facilities, at-the-market equity programs, and capital equipment financings. We expect to fund our business operations in the future primarily through all or a combination of strategic alliances, public equity offerings, including under our ATM Program (see, Note 10, “Stockholders’ Equity – At-the-Market Program (ATM Program),” in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2014 that we filed with the Securities and Exchange Commission (SEC) on March 16, 2015 (2014 Form 10-K)), the potential exercise of outstanding warrants, and secured debt facilities.

As of June 30, 2015, we had cash and cash equivalents of $26.1 million and long-term debt of $30 million under our loan (Deerfield Loan) with affiliates of Deerfield Management Company, L.P. (Deerfield) (see, Note 6, “Deerfield Loan.”). On July 22, 2015, we completed a public offering of common stock, warrants and pre-funded warrants, resulting in gross proceeds to us of approximately $40.25 million ($37.6 million net after deducting underwriting fees and estimated expenses, and including $5.0 million in non-cash consideration from Deerfield in satisfaction of future interest payments under the Deerfield Loan). See, Note 8, “Subsequent Events – July 2015 Registered Public Offering.” Under our ATM Program, subject to market conditions, we may sell up to approximately $23 million of common stock at such times and in such amounts we deem appropriate, subject to a 3% commission. To secure additional capital when needed, we also will consider public and private equity offerings or other financing transactions, including potentially secured equipment financing facilities or other similar transactions. There can be no assurance, however, that we will be successful in securing additional capital when needed, if at all. Before any additional financings and taking into account the impact of certain July 2015 amendments to the Deerfield Loan and the collaboration agreement with Battelle Memorial Institute (Battelle), discussed below, we anticipate that we will have sufficient cash available to support our AEROSURF phase 2 clinical program, pay our debt service obligations and fund our operations through the first quarter of 2017.

In July 2015, we entered into two amendments to the Deerfield Loan agreement and related notes (Deerfield Notes), pursuant to which (i) we prepaid in cash $5.0 million of the outstanding principal amounts under the Deerfield Notes; (ii) the payment dates for the remaining principal installments due under the Deerfield Loan were amended to (x) eliminate the installment due in February 2017, and (y) adjust the amounts due on each of February 13, 2018 and February 13, 2019 to $12.5 million and $12.5 million, respectively; (iii) in our July 2015 public offering, in lieu of providing cash consideration, Deerfield accepted $5 million securities issued thereunder in prepayment of $5 million future interest obligations under the Deerfield Notes allocated in the manner provided in the amendment; and (iv) following application of the full $5 million interest prepayments described in clause (iii), the interest rate on any remaining interest due under the Deerfield Notes was adjusted from 8.75% to 8.25%.

Under our collaboration agreement with Battelle, we have completed Stage 1 (design requirements) of the three-stage project plan to develop our CAG device for potential use in our AEROSURF phase 3 clinical program and, if approved, initial commercial supply. In July 2015, we agreed on a planned cost of up to approximately $11.85 million to complete Stage 2 (development) and Stage 3 (design verification and testing) of the project plan, which under the collaboration agreement will be shared equally. Accordingly, we expect our 50% share of the planned cost for Stage 2 and Stage 3 to be up to approximately $6 million and that, following the completion of Stage 3 in mid-2016, we will be in a position to manufacture the CAG device and related componentry for use in the AEROSURF phase 3 clinical program. There can be no assurance that our collaboration will be successful or that we will timely complete the development work within the anticipated time, if ever, and for the anticipated cost contemplated under the collaboration project plan. Under the collaboration agreement, we also may defer payments due to Battelle for up to 12 months, provided that (i) any amounts deferred will bear interest from and after 90 days at a rate of 12% per annum, and (ii) the aggregate amounts deferred more than 30 days may not exceed at any time our available cash and cash equivalents. We currently have deferred $1.5 million and expect to defer aggregate payments of up to approximately $4.0 million at certain times throughout the term of the project.

For at least the next several years, we do not expect to generate any revenue from the sale of approved products. Thus, to secure the significant additional infusions of capital that we will need to execute our business strategy, advance our development programs, pay debt obligations and fund our operations, we will have to rely on non-sales sources of capital, including potentially: (i) strategic alliances and collaboration arrangements, which could provide development and commercial expertise to support the development and, if approved, commercial introduction of, our KL4 surfactant pipeline product candidates, beginning with AEROSURF, in markets outside the U.S. Such alliances typically also would provide financial resources, in the form of upfront payments, milestone payments, commercialization royalties and a sharing of research and development expenses. We believe that we will be better positioned to identify and enter into a significant strategic alliance for AEROSURF if we obtain encouraging results from the AEROSURF phase 2 clinical program; (ii) public and private equity offerings, including potentially pursuant to our ATM Program; (iii) secured debt arrangements to provide working capital and fund investment in capital assets; and (iv) the potential exercise of outstanding warrants (discussed below). In addition, we have in the past collaborated with research organizations and universities to assess potential application of our KL4 surfactant in studies funded in part through various U.S. Government-sponsored drug development programs, including grants in support of initiatives related to our AEROSURF clinical program and biodefense-related initiatives under programs that encourage private sector development of medical countermeasures against chemical, biological, radiological, and nuclear terrorism threat agents, and pandemic influenza, and provide a mechanism for federal acquisition of such countermeasures. Although there can be no assurance, we expect that we may have opportunities in the future to participate in similar programs.

As of June 30, 2015, we had outstanding warrants to purchase approximately 13.2 million shares of our common stock at various prices, exercisable on different dates into 2024. This includes warrants to purchase up to 7.0 million shares that were issued to Deerfield in connection with the Deerfield Loan at an exercise price of $2.81 per share (Deerfield Warrants). The Deerfield Warrants may be exercised for cash or through a net cashless exercise. In lieu of paying cash upon exercise, the holders also may elect to reduce the principal amount of the Deerfield Loan in an amount sufficient to satisfy the exercise price of the Deerfield Warrants. In addition to the Deerfield Warrants, we have outstanding warrants issued in February 2011 to purchase approximately 4.6 million shares of common stock that expire in February 2016 and contain anti-dilution provisions that adjust the exercise price if we issue any common stock, securities convertible into common stock, or other securities (subject to certain exceptions) at a value below the then-current exercise price of the warrants. The exercise price of these warrants was recently adjusted as a result of our July 2015 public offering and currently have an exercise price of $0.19 per share. If the holders determine in their discretion to exercise the February 2011 warrants prior to their expiration date in February 2016 (and we have an effective registration statement covering the warrant shares to be issued upon exercise of the warrants), we potentially could receive up to approximately $0.9 million. In addition, in connection with the July 2015 public offering, we issued warrants to purchase up to approximately 67.1 million shares of common stock at an initial exercise price of $0.70 per share, and 42.0 million fully paid pre-funded warrants to purchase one share of common stock at an exercise price of $0.60 per share. The July 2015 warrants may be exercised at the election of the holder for cash or through a net cashless exercise. There can be no assurance that the price of our common stock will achieve a level greater than the exercise price of the Deerfield Warrants or the July 2015 warrants, that the holders would choose to exercise their warrants for cash, or that holders of any of our outstanding warrants would choose to exercise any or all of their warrants prior to the applicable warrant expiration dates. If any of our outstanding warrants are exercised, such exercises likely will be at a discount to the then-market value of our common stock and have a dilutive effect on the value of our shares of common stock at the time of exercise. Moreover, if the holders of the February 2011 warrants choose to exercise their warrants at any time prior to the expiration date in February 2016, such exercises could be accompanied by increased selling activity in the Nasdaq market and the market value of our common stock could decline.

As of June 30, 2015, there were 250 million shares of common stock authorized under our Amended and Restated Certificate of Incorporation, as amended, and approximately 136.0 million shares of common stock were available for issuance and not otherwise reserved. Of the 250 million shares of common stock that are presently authorized under our Amended and Restated Certificate of Incorporation, as amended, as of July 22, 2015, approximately 246.9 million shares of common stock are either issued and outstanding or reserved for issuance under our 2011 Equity Incentive Plans (2011 Plan), our 401(k) benefit plan, and upon exercise of outstanding warrants. If in the future we are unable to fund our capital requirements, we will not have sufficient cash flows and liquidity to fund our business operations and pay our debt service. In that event, we may be forced to further limit our development programs and consider other means of creating value for our stockholders, such as licensing the development and/or commercialization of products that we consider valuable and might otherwise plan to develop ourselves. If we are unable to raise the necessary capital, we may be forced to curtail all of our activities and, ultimately, cease operations. Even if we are able to secure additional capital, such transactions may only be available on unattractive terms, or could result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline. Moreover, if we fail in the future to make any required payment under our Deerfield Loan or fail to comply with any commitments contained in the loan documents, Deerfield would be able to declare us in default regarding that indebtedness, which could result in the acceleration of the payment obligations under all or a portion of our indebtedness. Since we have pledged substantially all of our assets to secure our obligations under the Deerfield Loan, a debt default would enable the lenders to foreclose on our assets securing the debt and could significantly diminish the market value and marketability of our common stock. Our financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue in existence.

On June 29, 2015, we received a letter from The Nasdaq Stock Market indicating that for 30 consecutive business days our common stock had not maintained a minimum closing per share bid price of $1.00 (“Minimum Bid Price Requirement”) as required by Nasdaq Listing Rule 5550(a)(2). This notification had no immediate impact on the continued trading or listing of our common stock on Nasdaq. Under Nasdaq’s Listing Rules, we have 180 calendar days from the date of the notification (the “Compliance Period”), or until December 28, 2015, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our common stock must close above $1.00 for a minimum of 10 consecutive business days; thereafter, our common stock would continue to be eligible for listing on the Nasdaq Capital Market. If we are unable to achieve compliance with the Minimum Bid Price Requirement within 180 days, we may be eligible for a 180‑day extension of the Compliance Period if we meet certain criteria set forth in the Nasdaq Listing Rules. If we fail to achieve compliance with the Minimum Bid Price Requirement within the applicable Compliance Period, the Nasdaq staff would issue a delisting notification and we would be subject to potential delisting, which if it occurred likely would further impair the liquidity and value of our common stock.