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Document And Entity Information - USD ($)	12 Months Ended
Document And Entity Information - USD ($)	Dec. 31, 2011	Feb. 29, 2012	Jun. 30, 2011
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Entity Registrant Name	TARGACEPT INC
Entity Central Index Key	0001124105
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,396,259
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Public Float			$ 606,111,272

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 107,283	$ 165,854
Investments in marketable securities-short term	87,721	48,168
Receivables from collaborations	218	838
Prepaid expenses	3,471	3,219
Total current assets	198,693	218,079
Investments in marketable securities-long term	54,266	38,487
Property and equipment, net	5,035	6,072
Intangible assets	132	149
Total assets	258,126	262,787
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	3,489	4,721
Accrued expenses	16,167	10,516
Current portion of long-term debt	1,241	1,710
Current portion of deferred revenue	57,714	81,710
Total current liabilities	78,611	98,657
Long-term debt, net of current portion	1,986	1,349
Deferred revenue, net of current portion	3,241	70,934
Total liabilities	83,838	170,940
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, 100,000,000 shares authorized; 33,383,403 and 28,870,691 shares issued and outstanding at December 31, 2011 and December 31 2010, respectively	33	29
Preferred stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2011 and 2010
Capital in excess of par value	401,149	309,994
Accumulated other comprehensive income	36	225
Accumulated deficit	(226,930)	(218,401)
Total stockholders' equity	174,288	91,847
Total liabilities and stockholders' equity	$ 258,126	$ 262,787

Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2011	Dec. 31, 2010
Balance Sheets [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	33,383,403	28,870,691
Common stock, shares outstanding	33,383,403	28,870,691
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

Statements Of Operations - USD ($) $ in Thousands	12 Months Ended
Statements Of Operations - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Operating revenues:
License fees and milestones from collaborations	$ 96,979	$ 83,380	$ 18,934
Collaboration research and development			5,246
Product sales, net			473
Grant revenue	658	2,333	409
Net operating revenues	97,637	85,713	25,062
Operating expenses:
Research and development (including stock-based compensation of $4,885, $2,768 and $1,353 in 2011, 2010 and 2009, respectively)	95,215	64,546	40,179
General and administrative (including stock-based compensation of $3,628, $2,169 and $1,101 in 2011, 2010 and 2009, respectively)	12,167	8,052	8,167
License fees			16,350
Cost of product sales			691
Total operating expenses	107,382	72,598	65,387
(Loss) income from operations	(9,745)	13,115	(40,325)
Other income (expense):
Interest income	1,348	1,463	1,050
Interest expense	(132)	(153)	(217)
Total other income (expense)	1,216	1,310	833
(Loss) income before income taxes	(8,529)	14,425	(39,492)
Income tax (expense) benefit		(3,526)	88
Net (loss) income	$ (8,529)	$ 10,899	$ (39,404)
Basic net (loss) income per share	$ (0.27)	$ 0.38	$ (1.54)
Diluted net (loss) income per share	$ (0.27)	$ 0.36	$ (1.54)
Weighted average common shares outstanding-basic	31,637,283	28,543,408	25,636,419
Weighted average common shares outstanding-diluted	31,637,283	30,150,324	25,636,419

Statements Of Operations (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Research And Development [Member]
Stock-based compensation	$ 4,885	$ 2,768	$ 1,353
General And Administrative [Member]
Stock-based compensation	$ 3,628	$ 2,169	$ 1,101

- Definition

Represents the expense recognized during the period arising from equity-based compensation arrangements (for example, shares of stock, unit, stock options or other equity instruments) with employees, directors and certain consultants qualifying for treatment as employees.

+ References + Details

Statements Of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Capital In Excess Of Par Value [Member]	Other Comprehensive Income [Member]	Accumulated Deficit [Member]	Total
Balances at Dec. 31, 2008	$ 25	$ 247,244		$ (189,896)	$ 57,373
Balances, shares at Dec. 31, 2008	24,964,373
Issuance of common stock related to exercise of stock options	$ 1	3,353			3,354
Issuance of common stock related to exercise of stock options, shares	1,062,456
Stock-based compensation		2,454			2,454
Net proceeds from public stock offering	$ 2	44,447			44,449
Net proceeds from public stock offering, shares	2,200,000
Stockholder short swing profit payment		724			724
Excess tax deductions from stock-based compensation		41			41
Net loss and comprehensive loss				(39,404)	(39,404)
Net income (loss)					(39,404)
Balances at Dec. 31, 2009	$ 28	298,263		(229,300)	68,991
Balances, shares at Dec. 31, 2009	28,226,829
Issuance of common stock related to exercise of stock options	$ 1	3,291			3,292
Issuance of common stock related to exercise of stock options, shares	643,862
Stock-based compensation		4,937			4,937
Excess tax deductions from stock-based compensation		3,503			3,503
Net change in unrealized holding gain on available for sale marketable securities			$ 225		225
Net income (loss)				10,899	10,899
Comprehensive income (loss)					11,124
Balances at Dec. 31, 2010	$ 29	309,994	225	(218,401)	91,847
Balances, shares at Dec. 31, 2010	28,870,691
Issuance of common stock related to exercise of stock options		1,802			1,802
Issuance of common stock related to exercise of stock options, shares	305,395
Stock-based compensation		8,513			8,513
Net proceeds from public stock offering	$ 4	80,840			80,844
Net proceeds from public stock offering, shares	4,207,317
Net change in unrealized holding gain on available for sale marketable securities			(189)		(189)
Net income (loss)				(8,529)	(8,529)
Comprehensive income (loss)					(8,718)
Balances at Dec. 31, 2011	$ 33	$ 401,149	$ 36	$ (226,930)	$ 174,288
Balances, shares at Dec. 31, 2011	33,383,403

Statements Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
Statements Of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Operating activities
Net (loss) income	$ (8,529)	$ 10,899	$ (39,404)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Recognition of deferred revenue	(97,439)	(83,767)	(6,383)
Amortization of premium on marketable securities, net	911	416
Depreciation and amortization	2,480	1,997	1,835
Stock-based compensation expense	8,513	4,937	2,454
Excess tax benefits from stock-based compensation		(3,503)	(41)
Changes in operating assets and liabilities:
Receivables from collaborations	620	200,963	272
Other current assets	(443)	(1,815)	(28)
Accounts payable, license fees payable and accrued expenses	4,419	(3,802)	16,551
Deferred license fee revenue	5,750	11,973	473
Net cash (used in) provided by operating activities	(83,718)	138,298	(24,271)
Investing activities
Purchase of investments in marketable securities	(156,253)	(144,012)	(31,000)
Proceeds from sale of investments in marketable securities	100,012	84,481	41,000
Purchase of property and equipment	(1,431)	(3,311)	(200)
Proceeds from sale of property and equipment	5	43
Net cash (used in) provided by investing activities	(57,667)	(62,799)	9,800
Financing activities
Proceeds from issuance of long-term debt	2,132	1,228
Principal payments on long-term debt	(1,964)	(1,577)	(1,390)
Proceeds from issuance of common stock, net	82,646	3,292	48,527
Excess tax benefits from stock-based compensation		3,503	41
Net cash provided by financing activities	82,814	6,446	47,178
Net (decrease) increase in cash and cash equivalents	(58,571)	81,945	32,707
Cash and cash equivalents at beginning of year	165,854	83,909	51,202
Cash and cash equivalents at end of year	$ 107,283	$ 165,854	$ 83,909

The Company And Nature Of Operations	12 Months Ended
The Company And Nature Of Operations	Dec. 31, 2011
The Company And Nature Of Operations [Abstract]
The Company And Nature Of Operations	1. The Company and Nature of Operations Targacept, Inc., or the Company, is a Delaware corporation formed on March 7, 1997. The Company is a biopharmaceutical company engaged in the design, discovery and development of novel NNR Therapeutics™ for the treatment of diseases and disorders of the nervous system. The Company's NNR Therapeutics selectively target neuronal nicotinic receptors, which it refers to as NNRs. Its facilities are located in Winston-Salem, North Carolina.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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+ Details

Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates, Reclassifications and Revisions

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

Certain reclassifications have been made to the financial statements for the years ended December 31, 2010 and 2009 to conform to the presentation in the financial statements for the year ended December 31, 2011. These reclassifications had no impact on previously reported net loss or stockholders' equity. Also, certain revisions have been made to the notes to the financial statements. In particular, the fair value hierarchy inputs used to determine the fair value of corporate debt securities were reflected as Level 1 inputs in the 2010 audited financial statements. The Company has revised the applicable footnote as of December 31, 2010 to reflect the inputs as Level 2 inputs. This revision had no impact on the recorded value of the securities.

Cash and Cash Equivalents

The Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and mature within three months from the date of purchase.

Investments in Marketable Securities

Consistent with its investment policy, the Company invests its cash allocated to fund its short-term liquidity requirements with prominent financial institutions in bank depository accounts and institutional money market funds and the Company invests the remainder of its cash in U.S. Treasury notes and bonds, U.S. and state government agency-backed certificates, corporate debt securities that are rated at least A quality or equivalent and certificates of deposit.

The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates its classification as of each balance sheet date. All marketable securities owned during 2011 and 2010 were classified as available for sale. The cost of securities sold is based on the specific identification method. Investments in marketable securities are recorded as of each balance sheet date at fair value, with unrealized gains and, to the extent deemed temporary, unrealized losses included in stockholders' equity. Interest and dividend income on investments in marketable securities, accretion of discounts and amortization of premiums and realized gains and losses are included in interest income in the statement of operations.

An investment in marketable securities is considered to be impaired when a decline in fair value below its cost basis is determined to be other than temporary. The Company evaluates whether a decline in fair value of an investment in marketable securities below its cost basis is other than temporary using available evidence. In the event that the cost basis of the investment exceeds its fair value, the Company evaluates, among other factors, the amount and duration of the period that the fair value is less than the cost basis, the financial health of and business outlook for the issuer, including industry and sector performance and operational and financing cash flow factors, overall market conditions and trends, the Company's intent to sell the investment and whether it is more likely than not the Company would be required to sell the investment before its anticipated recovery. If a decline in fair value is determined to be other than temporary, the Company records an impairment charge in the statement of operations and establishes a new cost basis in the investment.

Receivables from Collaborations

Substantially all of the Company's collaboration revenue is related to the collaboration and alliance agreements discussed in Note 12. A substantial majority of the Company's receivables from collaborations at December 31, 2011 and 2010 are related to the Company's collaboration agreements with AstraZeneca AB.

During 2011, 2010, and 2009, the Company recognized revenue of $96,979,000, $83,380,000, and $24,180,000, respectively, or 99%, 97% and 96% of net operating revenues, respectively, from the collaboration and alliance agreements discussed in Note 12.

Product Sales

Effective as of September 30, 2009, the Company discontinued commercialization of its only marketed product, Inversine. Cost of product sales for the year ended December 31, 2009 includes materials and manufacturing costs, applied by the weighted average method, FDA fees and other fees associated with the manufacture and sale of Inversine. As a result of the discontinuation of the commercialization of Inversine, the Company recorded aggregate charges of $77,000 related to the impairment of its remaining raw materials and finished goods inventory to cost of product sales for the year ended December 31, 2009. The discontinuation of the commercialization of Inversine did not have a material impact on the Company's cash flows or results of operations for any of the periods presented.

During 2009, cost of product sales included shipping and handling costs of $183,000.

Long-lived Assets

Property and equipment consists primarily of laboratory equipment, office furniture and fixtures and leasehold improvements and is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from 3 to 10 years. Laboratory equipment is typically depreciated over 3 to 5 years, office furniture and fixtures are typically depreciated over 5 to 10 years, and leasehold improvements are typically amortized over the lesser of the asset life or the lease term.

The Company capitalizes the costs of intellectual property acquired or licensed from external sources as intangible assets if, at the time of acquisition, the intellectual property has reached technological feasibility. Intellectual property acquired or licensed from external sources that has not reached technological feasibility at the time of acquisition or that has no expected future use is charged to research and development expense as incurred. The Company records all other charges related to the filing, prosecution and maintenance of patents to expense as incurred.

The Company assesses the net realizable value of its long-lived assets and evaluates these assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment charge would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. An impairment charge, if recognized, would be based on the excess of the carrying value of the impaired asset over its estimated fair value.

Research and Development Expense

Research and development costs are expensed as incurred and include direct costs incurred to third parties related to the Company's clinical and preclinical product candidates, salaries of, and stock-based compensation for, personnel involved in research and development activities, contractor fees, administrative expenses and allocations of research-related overhead costs. Administrative expenses and research-related overhead costs included in research and development expense consist of allocations of facility and equipment lease charges, depreciation and amortization of assets, and insurance, legal and supply costs that are directly related to research and development activities. The Company directly reduces research and development expenses for amounts reimbursed pursuant to the cost-sharing agreements described in Note 12.

Accrued Expenses

The Company records accruals based on estimates of the services received, efforts expended and amounts owed pursuant to contracts with clinical trial sites, contract research organizations and other service providers. In the normal course of business, the Company contracts with third parties to perform various clinical trial and other research and development activities in the ongoing development of potential products. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under these agreements depend on the performance of services or the achievement of specified events, such as the production of drug substance or drug product, the recruitment of clinical trial subjects, the completion of portions of a non-clinical study or clinical trial or similar conditions. The objective of the Company's accrual policy is to match the recording of expenses in its financial statements to the actual services received and efforts expended. As such, expense accruals are recognized based on the Company's estimate of the degree of completion of the event or events specified in a particular contract as giving rise to a payment.

Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash, investments in marketable securities and receivables from collaborations. The Company has established guidelines for investment of its cash that are designed to emphasize safety, liquidity and preservation of capital. The Company places its cash and cash equivalents with prominent financial institutions. At December 31, 2011 and 2010, the Company had deposits in excess of federally insured limits of $102,412,000 and $160,932,000, respectively.

Revenue Recognition

The Company uses the revenue recognition guidance established by Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 605, Revenue Recognition, or ASC 605. In determining the accounting for collaboration and alliance agreements, the Company follows the provisions of ASC 605, Subtopic 25, Multiple Element Arrangements, or ASC 605-25. ASC 605-25 provides guidance on whether an arrangement that involves multiple revenue-generating activities or deliverables should be divided into separate units of accounting for revenue recognition purposes and, if division is required, how the arrangement consideration should be allocated among the separate units of accounting. If the arrangement constitutes separate units of accounting according to the separation criteria of ASC 605-25, the consideration received is allocated among the separate units of accounting and the applicable revenue recognition criteria must be applied to each unit. If the arrangement constitutes a single unit of accounting, the revenue recognition policy must be determined for the entire arrangement and the consideration received is recognized over the period of inception through the date the last deliverable within the single unit of accounting is expected to be delivered. Revisions to the estimated period of recognition are reflected in revenue prospectively.

Collaboration research and development revenue is earned and recognized as research is performed and related expenses are incurred. Non-refundable upfront fees, which may include, for example, an initial payment upon effectiveness of the contractual relationship, payment representing a common stock purchase premium or payment to secure a right for a future license, are recorded as deferred revenue and recognized into revenue as license fees and milestones from collaborations on a straight-line basis over the estimated period of the Company's substantive performance obligations. If the Company does not have substantive performance obligations, it recognizes non-refundable upfront fees into revenue through the date the deliverable is satisfied.

Revenue for non-refundable payments based on the achievement of milestone events under collaboration agreements is recognized in accordance with ASC 605, Subtopic 28, Milestone Method, or ASC 605-28, which the Company adopted as of January 1, 2011. Milestone events under the Company's collaboration agreements may include research, development, regulatory, commercialization or sales events. Under ASC 605-28, a milestone payment is recognized as revenue when the applicable event is achieved if the event meets the definition of a milestone and the milestone is determined to be substantive. ASC 605-28 defines a milestone event as an event having all of the following characteristics: (1) there is substantive uncertainty regarding achievement of the milestone event at the inception of the arrangement; (2) the event can only be achieved based, in whole or in part, on either the company's performance or a specific outcome resulting from the company's performance; and (3) if achieved, the event would result in additional payment due to the company. The Company also treats events that can only be achieved based, in whole or in part, on either a third party's performance or a specific outcome resulting from a third party's performance as milestone events if the criteria of ASC 605-28 are otherwise satisfied.

A milestone is considered substantive if it meets all of the following criteria: (A) the payment is commensurate with either the Company's performance to achieve the milestone or with the enhancement of the value of the delivered item; (B) the payment relates solely to past performance; and (C) the payment is reasonable relative to all of the deliverables and payment terms within the arrangement. If any of these conditions is not met, the milestone payment is deferred and recognized on a straight-line basis over a period determined as discussed above.

Research and development costs that are reimbursable under collaboration agreements are recorded in accordance with ASC 605, Subtopic 45, Principal Agent Considerations. Amounts reimbursed under a cost sharing arrangement are reflected as a reduction of research and development expense.

Product sales revenue, net of allowances for returns and discounts, is recognized when goods are shipped, at which point title has passed. Grant payments received prior to the Company's performance of work required by the terms of the award are recorded as deferred revenue and recognized as grant revenue as the Company performs the work and incurs qualifying costs.

Income Taxes

The Company uses the liability method in accounting for income taxes as required by ASC Topic 740, Income Taxes, or ASC 740. Under ASC 740, deferred tax assets and liabilities are recorded for operating loss and tax credit carryforwards and for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the assets will be realized. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. The Company's policy is to classify any interest recognized in accordance with ASC 740 as interest expense and to classify any penalties recognized in accordance with ASC 740 as an expense other than income tax expense.

Net Income or Loss Per Share

The Company computes net income or loss per share in accordance with ASC Topic 260, Earnings Per Share, or ASC 260. Under the provisions of ASC 260, basic net income or loss per share, or Basic EPS, is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per share, or Diluted EPS, is computed by dividing net income or loss by the weighted average number of common shares outstanding plus, in the case of diluted net income per share, dilutive common share equivalents outstanding. The calculations of Basic EPS and Diluted EPS are set forth in the table below (in thousands, except share and per share amounts):


	Year Ended December 31,
	2011			2010		2009
Basic:
Net (loss) income	$	(8,529	)	$	10,899	$	(39,404	)

Weighted average common shares—basic		31,637,283			28,543,408		25,636,419

Basic EPS	$	(0.27	)	$	0.38	$	(1.54	)

Diluted:
Net (loss) income	$	(8,529	)	$	10,899	$	(39,404	)

Weighted average common shares—basic		31,637,283			28,543,408		25,636,419
Common share equivalents		—			1,606,916		—

Weighted average common shares—diluted		31,637,283			30,150,324		25,636,419

Diluted EPS	$	(0.27	)	$	0.36	$	(1.54	)

Common share equivalents consist of the incremental common shares that would be outstanding upon the exercise of stock options, calculated using the treasury stock method. For each of the years ended December 31, 2011 and 2009, the Company excluded all common share equivalents from the calculation of Diluted EPS because the Company had a net loss. As a result, Diluted EPS is identical to Basic EPS for those years. If the Company had been in a net income position for the years ended December 31, 2011 and 2009, 3,597,530 and 3,648,268 shares, respectively, subject to outstanding stock options may have been included in the calculation of common share equivalents using the treasury stock method. For the year ended December 31, 2010, a period in which the Company had net income, shares subject to outstanding stock options that were antidilutive and consequently not included in the calculation of common share equivalents totaled 850,683, calculated on a weighted-average basis.

Public Offerings of Common Stock

In May 2011, the Company completed an underwritten public offering of 3,658,537 shares of its common stock. In June 2011, the Company sold an additional 548,780 shares of its common stock upon the exercise of the over-allotment option granted to the underwriters. The Company's net proceeds from the offering, after deducting underwriters' discounts and commissions and offering expenses paid by the Company, were $80,840,000.

On October 13, 2009, the Company completed a public offering of 2,200,000 shares of its common stock. The Company's net proceeds from the offering, after deducting underwriters' discounts and commissions and offering expenses paid by the Company, were $44,449,000.

In October 2009, the Company was notified by one of its stockholders that the stockholder had generated short swing profits under the provisions of Section 16(b) of the Exchange Act on its purchases and sales of shares of the Company's common stock. The amount of realized profit under Section 16(b) was calculated to be $724,000, and the stockholder made a payment to the Company in that amount later in October 2009.

Stock-Based Compensation

The Company has two stock-based incentive plans, the 2000 Equity Incentive Plan of Targacept, Inc., as amended and restated through March 15, 2006, or the 2000 Plan, and the Targacept, Inc. 2006 Stock Incentive Plan, as amended and restated through March 9, 2011, or the 2006 Plan. The 2000 Plan and the 2006 Plan, or the Plans, are described more fully in Note 9.

The Company records stock-based compensation under the fair value recognition provisions of ASC Topic 718, Compensation—Stock Compensation, or ASC 718. Under ASC 718, the Company calculates the fair value of each option grant using the Black-Scholes-Merton valuation formula. The fair value of each grant is recorded as expense on a straight-line basis over the option's vesting period.

ASC 718 also requires the benefits of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow. This requirement reduces net operating cash flows and increases net financing cash flows for periods after adoption. The Company cannot estimate the future effect of excess tax deductions or shortfalls on cash flows because they depend on, among other things, when employees exercise stock options and the tax deductions available to the Company at those times. No financing or operating cash flows have been recognized in periods prior to 2009 for excess tax deductions because of cumulative net operating losses generated since inception and because the related deferred tax assets are offset by a valuation allowance.

Prepaid Expenses

The Company defers and capitalizes non-refundable advance payments for goods or services to be received in the future. The Company then charges the advance payments to expense ratably as the goods are delivered or the services are rendered. The Company may make adjustments to the amount charged to expense each period if expectations change regarding the timing of delivery of goods or rendering of services.

Fair Value

The carrying amounts of cash and cash equivalents, investments in marketable securities, receivables from collaborations, accounts payable and accrued expenses are considered to be representative of their respective fair values due to their short-term natures and, in the case of investments in marketable securities, their market interest rates. Likewise, the carrying amounts of the Company's long-term debts are considered to be representative of their fair value due to their respective market interest rates.

The Company follows ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, for application to financial assets. ASC 820 defines fair value, provides a consistent framework for measuring fair value under GAAP and requires fair value financial statement disclosures. ASC 820 applies only to the measurement and disclosure of financial assets that are required or permitted to be measured and reported at fair value under other ASC topics (except for standards that relate to share-based payments such as ASC Topic 718, Compensation—Stock Compensation).

The valuation techniques required by ASC 820 may be based on either observable or unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, and unobservable inputs reflect the Company's market assumptions. These inputs are classified into the following hierarchy:

Level 1 Inputs—quoted prices (unadjusted) in active markets for identical assets that the reporting entity has the ability to access at the measurement date;

Level 2 Inputs—inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly; and

Level 3 Inputs—unobservable inputs for the assets.

The following tables present the Company's investments in marketable securities (including those classified on the Company's balance sheet as cash equivalents) that are measured at fair value on a recurring basis as of December 31, 2011 and 2010, respectively:


December 31, 2011	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury and U.S. or state government agency-backed securities	$	69,474	$	—	$	—
Corporate debt securities		—		75,007		—
Certificates of deposit		13,000		—		—
Accrued interest		506		—		—

Total cash equivalents and marketable securities	$	82,980	$	75,007	$	—


December 31, 2010	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury and U.S. or state government agency-backed securities	$	47,463	$	—	$	—
Corporate debt securities		—		41,874		—
Certificates of deposit		13,000		—		—
Accrued interest		314		—		—

Total cash equivalents and marketable securities	$	60,777	$	41,874	$	—

Corporate debt securities are valued based on various observable inputs such as benchmark yields, reported trades, broker/dealer quotes, benchmark securities and bids.

Comprehensive Loss or Income

Comprehensive loss or income is comprised of net loss or income and net other comprehensive loss or income. Net other comprehensive loss or income includes unrealized gains and losses on the Company's available-for-sale securities, which are excluded from net loss or income. The following is a reconciliation of net loss or income to comprehensive loss or income for the years presented.


	Year Ended December 31,
	2011			2010		2009
	(in thousands)
Net (loss) income		$(8,529	)		$10,899		$(39,404)
Unrealized (loss) gain on marketable securities, net		(189	)		225		—

Comprehensive (loss) income		$(8,718	)		$11,124		$(39,404)

Recent Accounting Pronouncements

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Presentation of Comprehensive Income, or ASU 2011-05. ASU 2011-05 amends the current guidance on the presentation of comprehensive income to give an entity the option to present comprehensive income in either one continuous statement or two consecutive financial statements. The option under current guidance that permits the presentation of components of other comprehensive income as part of the statement of changes in stockholders' equity has been eliminated. ASU 2011-05 does not change the items that must be reported in other comprehensive income. ASU 2011-05 is effective for fiscal years beginning on or after December 15, 2011, and for interim periods within those years, applied retrospectively for all periods presented. Early adoption is permitted. The Company does not expect ASU 2011-05 to have a material impact on its financial position, results of operations or cash flows.

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, or ASU 2011-04. ASU 2011-04 amends the current guidance to expand existing disclosure requirements and to change the description of many of the GAAP requirements for measuring fair value. ASU 2011-04 is effective for fiscal years beginning after December 15, 2011, and for interim periods within those years. The Company does not expect ASU 2011-04 to have a material impact on its financial position, results of operations or cash flows.

Investments In Marketable Securities

12 Months Ended

Dec. 31, 2011

Investments In Marketable Securities [Abstract]

Investments In Marketable Securities

3. Investments in Marketable Securities

The following is a reconciliation of amortized cost to fair value of available-for-sale marketable securities (including those classified on the Company's balance sheet as cash equivalents) held at December 31, 2011 and 2010:


December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Security type
Cash Equivalents
Corporate debt securities	$	16,000	$	—	$	—		$	16,000
Marketable Securities—Short term
U.S. Treasury and U.S. or state government agency-backed securities		35,908		32		—			35,940
Corporate debt securities		38,531		37		(34	)		38,534
Certificates of deposit		13,000		—		—			13,000
Accrued interest		247		—		—			247
Marketable Securities—Long term
U.S. Treasury and U.S. or state government agency-backed securities		33,466		75		(7	)		33,534
Corporate debt securities—long term		20,540		39		(106	)		20,473
Accrued interest		259		—		—			259

Total available-for-sale marketable securities		157,951	$	183	$	(147	)		157,987


December 31, 2010	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Security type
Cash Equivalents
U.S. Treasury and U.S. or state government agency-backed securities	$	11,998	$	1	$	—		$	11,999
Corporate debt securities		3,999		—		(2	)		3,997
Marketable Securities—Short term
U.S. Treasury and U.S. or state government agency-backed securities		14,698		2		—			14,700
Corporate debt securities		20,391		18		—			20,409
Certificates of deposit		13,000		—		—			13,000
Accrued interest		59		—		—			59
Marketable Securities—Long term
U.S. Treasury and U.S. or state government agency-backed securities		20,689		84		(9	)		20,764
Corporate debt securities—long term		17,337		149		(18	)		17,468
Accrued interest		255		—		—			255

Total available-for-sale marketable securities	$	102,426	$	254	$	(29	)	$	102,651

As of December 31, 2011, the Company held investments in marketable securities with unrealized gains of $183,000 and unrealized losses of $147,000. For investments in an unrealized loss position, the duration of the loss was less than 12 months. None of these investments is considered to be other-than-temporarily impaired.

As of December 31, 2011, the Company's investments in marketable securities including those classified on its balance sheet as cash equivalents, reach maturity between January 6, 2012 and November 25, 2014, with a weighted average maturity date of approximately November 24, 2012.

Property And Equipment

12 Months Ended

Dec. 31, 2011

Property And Equipment [Abstract]

Property And Equipment

4. Property and Equipment

As of the respective dates shown, property and equipment consisted of the following:


	December 31,
	2011			2010
	(in thousands)
Laboratory equipment	$	12,218		$	12,133
Office furniture and fixtures		4,254			4,640
Leasehold improvements		1,395			1,175

		17,867			17,948
Less: accumulated depreciation		(12,832	)		(11,876	)

Property and equipment, net	$	5,035		$	6,072

The Company recorded $2,463,000, $1,979,000, and $1,818,000 of depreciation expense for the years ended December 31, 2011, 2010 and 2009, 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.

+ References + Details

Intangible Assets

12 Months Ended

Dec. 31, 2011

Intangible Assets [Abstract]

Intangible Assets

5. Intangible Assets

As of the respective dates shown, intangible assets consisted of the following:


	December 31,
	2011			2010
	(in thousands)
Patents	$	296		$	296
Less: accumulated amortization		(164	)		(147	)

Total	$	132		$	149

Intangible assets consist of licensed patent rights assigned to the Company by Layton Bioscience, Inc. in 2002, which had an original value to the Company of $296,000.

The Company's prospective amortization of its intangible assets is $17,000 per year to research and development expense on a straight-line basis over the remaining useful life of the patents, a period of 17 years from the date of acquisition.

Accrued Expenses

12 Months Ended

Dec. 31, 2011

Accrued Expenses [Abstract]

Accrued Expenses

6. Accrued Expenses

As of the respective dates shown, accrued expenses consisted of the following:


	December 31,
	2011		2010
	(in thousands)
Clinical trial and preclinical study costs	$	14,859	$	8,326
Employee compensation		1,178		2,032
Other		130		158

Total	$	16,167	$	10,516

Long-Term Debt

12 Months Ended

Dec. 31, 2011

Long-Term Debt [Abstract]

Long-Term Debt

7. Long-term Debt

In July 2010, the Company entered into a loan agreement with a bank that provides aggregate borrowing capacity of $4,000,000 to be provided in up to three individual term loans on or prior to June 30, 2011 to fund the purchase of equipment, furnishings, software and other fixed assets. The Company borrowed $1,228,000 under the loan agreement in September 2010 and borrowed an additional $2,132,000 in June 2011. The Company's September 2010 borrowing bears interest at a fixed rate of 3.40% per annum and is repayable in equal monthly installments of $28,000 beginning January 1, 2011 through the maturity date of December 1, 2014. The Company's June 2011 borrowing bears interest at a fixed rate of 3.471% per annum and is repayable in equal monthly installments of $48,000 beginning July 1, 2011 through the maturity date of June 1, 2015. Pursuant to the loan agreement, the Company granted a first priority security interest in favor of the bank in the assets acquired with the proceeds of the loan.

In March 2008, the Company entered into a loan agreement with a bank that provided borrowing capacity of $5,300,000 to fund the purchase of equipment, furnishings, software and other fixed assets and enable the refinancing of an existing loan facility with another lender. The Company borrowed $4,811,000 upon entering into the loan agreement and borrowed the remaining $489,000 in September 2008. The Company's March 2008 borrowing bore interest at a fixed rate of 5.231% per annum and was repayable in equal monthly installments of $112,000 beginning April 1, 2008 through the maturity date of March 1, 2012. The March 2008 borrowing was paid and satisfied in full on March 1, 2012. The Company used $1,679,000 of the proceeds from the March 2008 borrowing to pay and satisfy in full the principal and interest outstanding on two tranches of the existing loan facility with another lender and granted a first priority security interest in favor of the bank in assets previously acquired with the proceeds of those tranches. The Company's September 2008 borrowing bears interest at a fixed rate of 6.131% per annum and is repayable in equal monthly installments of $11,000 beginning October 1, 2008 through the maturity date of September 1, 2012.

During 2002, the Company borrowed $500,000 from the City of Winston-Salem. No payments were due on the City of Winston-Salem note until April 2007, when the Company began making monthly payments of $9,000 on the loan based on an interest rate of 5%. The note payable to the City of Winston-Salem was scheduled to mature on April 19, 2012. In December 2010, the Company repaid the remaining $135,000 balance of the note payable.

The Company paid $134,000, $156,000 and $223,000 in interest under notes payable during the years ended December 31, 2011, 2010 and 2009, respectively. Maturities of long-term debt were as follows at December 31, 2011 (in thousands):


2012	$	1,240
2013		851
2014		853
2015		283

	$	3,227

Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

8. Income Taxes

For the year ended December 31, 2011, the Company did not recognize any income tax expense. For the year ended December 31, 2010, the Company recognized $3,526,000 of income tax expense primarily as a result of the application of ASC 740 to stock-based compensation. Exercises of stock options during year ended December 31, 2010 resulted in tax deductions for stock-based compensation in excess of expense recorded for the stock options under GAAP, resulting in an income tax benefit of $3,503,000. The Company recognized the income tax benefit related to the excess tax deductions as an increase to capital in excess of par value, which based on ASC 740 resulted in an offsetting charge in the same amount to income tax expense.

For the year ended December 31, 2009, the Company recognized an $88,000 income tax benefit primarily as a result of elections to forgo certain "bonus depreciation" deductions for federal income tax purposes in exchange for $131,000 of refundable research and development tax credits under the Housing Assistance Tax Act of 2008, as extended by the American Recovery and Reinvestment Act of 2009. These tax credits were partially offset by income tax expense of $41,000 related to tax deductions for stock-based compensation in excess of expense recorded for the stock options under GAAP. The Company has incurred cumulative net operating losses since inception. For the years shown, components of the Company's income tax expense (benefit) were as follows:


	Year Ended December 31,
	2011			2010			2009
	(in thousands)
Current:
Federal	$	—		$	3,086		$	(96	)
State		—			440			8

Net current income tax expense (benefit)		—			3,526			(88	)
Deferred:
Federal		(6,147	)		1,519			(13,230	)
State		(1,095	)		(1,321	)		(2,951	)
Valuation allowance		7,242			(198	)		16,181

Net deferred income tax expense (benefit)		—			—			—

Net income tax expense (benefit)	$	—		$	3,526		$	(88	)

The following is a reconciliation from the federal income tax rate to the Company's effective tax rate:


	Year Ended December 31,
	2011			2010			2009
Expected federal income tax benefit/expense at statutory rate		35	%		35	%		35	%
Increase (decrease) resulting from:
Research and development credits		19			(12	)		5
Stock-based compensation		(13	)		4			(1	)
State income tax expense, net of federal benefit		3			3			4
Qualifying Therapeutic Drug Project grant		—			(3	)		—
Change in unrecognized tax benefit reserves		—			(3	)		—
Change in valuation allowance		(85	)		(1	)		(41	)
Other		41			1			(2	)

		—	%		24	%		—	%

At December 31, 2011, 2010 and 2009, the Company had net operating loss carryforwards for federal income tax purposes of $135,860,000, $39,011,000, and $152,839,000, respectively, and for state income tax purposes of $134,470,000, $76,178,000 and $135,789,000, respectively. At December 31, 2011, 2010 and 2009, the Company had research and development income tax credit carryforwards for federal income tax purposes of $10,778,000, $9,556,000 and $7,340,000, respectively. The Company had research and development income tax credit carryforwards for state income tax purposes of $587,000 at December 31, 2011, 2010 and 2009. The federal net operating loss carryforwards begin to expire in 2024. The state net operating loss carryforwards begin to expire in 2019. The federal and state research and development tax credits begin to expire in 2021.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. A series of stock issuances occurring prior to the Company's initial public offering gave rise to such an ownership change. As a result, an annual limitation is imposed on the Company's use of net operating loss and credit carryforwards attributable to periods before the change.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company's net deferred tax assets relate principally to its recognition of deferred license fees from collaborations, research and development tax credits and net operating loss carryforwards. A valuation allowance has been recognized to offset the deferred tax assets. If and when recognized, the tax benefit for those items will be reflected in the period in which the benefit is recorded as a reduction of income tax expense. However, in the event the Company has excess tax deductions related to the exercise of stock options, the tax benefit will be reflected as an increase to capital in excess of par value. The utilization of the loss carryforwards to reduce future income taxes will depend on the Company's ability to generate sufficient taxable income prior to the expiration of the net operating loss carryforwards. For the year ended December 31, 2011, the valuation allowance increased by $7,242,000. For the year ended December 31, 2010, the valuation allowance decreased by $198,000. For the year ended December 31, 2009, the valuation allowance increased by $16,181,000.

As of the respective dates shown, significant components of the Company's deferred tax assets (liabilities) were as follows:


	December 31,
	2011			2010
	(in thousands)
Deferred tax assets:
Collaboration revenue	$	21,193		$	55,857
Research and development tax credit		10,049			8,443
Net operating loss carryforward		45,901			7,463
Patents		1,968			2,125
Stock-based compensation		3,509			1,903
Accrued royalties		—			—
Other		48			35

Total gross deferred tax assets		82,668			75,826
Valuation allowance		(82,356	)		(75,114	)

Net deferred tax asset		312			712
Deferred tax liabilities
Equipment and other		(312	)		(712	)

Net deferred tax asset	$	—		$	—

As of December 31, 2011, the Company had cumulative tax deductions from exercises of stock options in excess of expense recorded for the stock options under GAAP. The $7,534,000 benefit of these excess tax deductions had not begun to be realized as of December 31, 2011 because the Company incurred operating losses in the years the respective stock options were exercised and has incurred cumulative net operating losses since inception. Accordingly, the tax benefit will not be recognized as an increase to capital in excess of par value unless and until the excess deductions reduce income taxes payable.

The Company follows the provisions of ASC 740, which prescribes a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosures. There was no cumulative effect adjustment upon adoption.

A reconciliation of beginning and ending unrecognized tax benefits is as follows (in thousands):


Balance at January 1, 2009	$	1,220
Additions based on tax positions related to the current year		532
Additions based on tax positions related to prior years		134

Balance at December 31, 2009		1,886
Decreases based on tax positions related to prior years		(412	)

Balance at December 31, 2010		1,474
Additions (decreases) based on tax positions related to current and prior years		—

Balance at December 31, 2011	$	1,474

None of the unrecognized tax benefits would, if recognized, affect the effective tax rate because the Company has recorded a valuation allowance to fully offset federal and state deferred tax assets. The Company has no tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease during 2012. No interest or penalties with respect to unrecognized tax positions are recognized in the statement of operations for any of the years ended December 31, 2011, 2010 or 2009.

Because the Company has incurred cumulative net operating losses since inception, all tax years remain open to examination by U.S. federal, North Carolina and Massachusetts tax authorities. An examination of the Company's 2006 federal income tax return was completed in 2009 with no adjustments. An examination of the Company's 2009, 2008, 2007, and 2006 North Carolina income tax returns was recently completed with no material adjustments.

In November 2010, the Internal Revenue Service notified the Company that it had approved cumulative grants of $1,467,000 to the Company under the Qualifying Therapeutic Discovery Project tax credit program enacted as part of the Patient Protection and Affordable Care Act of 2010. In the fourth quarter of 2010, the Company recorded the cumulative grants as grant revenue in its financial statements.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-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 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-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
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

Stock-Based Incentive Plans

12 Months Ended

Dec. 31, 2011

Stock-Based Incentive Plans [Abstract]

Stock-Based Incentive Plans

9. Stock-Based Incentive Plans

The 2000 Plan became effective in August 2000. The 2006 Plan became effective in April 2006 and is the successor equity incentive program to the 2000 Plan. All shares previously reserved under the 2000 Plan and not subject to outstanding awards under the 2000 Plan are now reserved for grant under the 2006 Plan. As of December 31, 2011, the number of shares authorized for issuance under the Plans was 7,282,078, of which 1,276,173 shares remained available for grant.

Awards may be made with respect to the 2006 Plan, or may have been made with respect to both Plans, to participants under the Plans in the form of incentive and nonqualified stock options, restricted stock, stock appreciation rights, stock awards, and performance awards. Eligible participants under the Plans include employees, directors and certain independent contractors, consultants or advisors of the Company or a related corporation. Awards made under the Plans have vesting periods that are determined at the discretion of the administrator and range from 0 to 5 years and most commonly have 10-year contractual terms or, in some cases, shorter terms designed to comply with Section 409A of the Internal Revenue Code. The exercise price of incentive options granted under the Plans may not be less than 100% of the fair market value of the common stock on the date of grant, as determined by the administrator.

Under ASC 718, the Company recognizes the grant date fair value of stock options issued to employees and non-employee directors over the requisite service periods, which are typically the vesting periods. The Company uses the Black-Scholes-Merton formula to estimate the fair value of its stock-based payments. The volatility assumption used in the Black-Scholes-Merton formula is primarily based on the Company's implied volatility, the calculated historical volatility of twelve to sixteen benchmark companies in the Company's industry that have been identified as comparable public entities, the Company's historical volatility and the implied volatility of the same benchmark companies. The expected term for stock options granted during 2011, 2010 and 2009 is based on historical analysis. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The following table illustrates the weighted average assumptions for the Black-Scholes-Merton model used in determining the fair value of stock options granted as of the respective dates shown:


	Year ended December 31,
	2011			2010			2009
Dividend yield		—			—			—
Risk-free interest rate		2.5	%		2.9	%		2.0	%
Volatility		0.7			0.7			0.7
Expected term		6.00 years			6.27 years			6.72 years

A summary of option activity and changes during each of the years ended December 31, 2011, 2010 and 2009 appears below:


	Shares Subject to Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
								(in thousands)
Outstanding at December 31, 2008		3,119,097		$	5.21
Granted		779,400			3.06
Forfeited		(12,229	)		4.30
Exercised		(1,062,456	)		3.16

Outstanding at December 31, 2009		2,823,812			5.40
Granted		941,532			20.88
Forfeited		(21,867	)		17.63
Exercised		(643,862	)		5.12

Outstanding at December 31, 2010		3,099,615			10.07
Granted		1,014,561			25.63
Forfeited		(28,915	)		20.03
Exercised		(305,395	)		5.89

Outstanding at December 31, 2011		3,779,866		$	14.51		7.01 years	$	1,921

Vested and exercisable at December 31, 2011		2,403,785		$	10.71		6.09 years	$	1,468

The weighted average grant date fair value of options granted during the years ended December 31, 2011, 2010, and 2009 was $15.87, $13.46 and $2.03, respectively. The total intrinsic value of options exercised during the years ended December 31, 2011, 2010, and 2009 was $6,082,000, $11,527,000, and $16,833,000, respectively.

A summary of the status of non-vested stock options granted under the 2006 Plan as of December 31, 2011 and changes during the year ended December 31, 2011 appears below:


	Shares Subject to Options			Weighted Average Grant-Date Fair Value Per Share
Non-vested at January 1, 2010		1,166,371		$	9.41
Granted		1,014,561			15.87
Vested		(780,114	)		10.87
Forfeited		(24,737	)		12.90

Non-vested at December 31, 2011		1,376,081		$	13.28

As of December 31, 2011, there was $18,275,000 of total unrecognized compensation expense related to non-vested stock-based compensation arrangements granted under the Plans, before considering forfeitures. That cost is expected to be recorded over a weighted average period of 2.61 years. The total fair value of shares subject to stock-based compensation arrangements granted under the Plans that vested during the years ended December 31, 2011, 2010, and 2009 was $8,481,000, $4,396,000 and $2,338,000, respectively.

The Company had 3,779,866 and 3,099,615 shares of common stock reserved for future issuance upon the exercise of outstanding stock options at December 31, 2011 and 2010, respectively.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-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 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-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 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Commitments And Contingencies

12 Months Ended

Dec. 31, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

10. Commitments and Contingencies

Leases

On March 1, 2002, the Company entered into an agreement with Wake Forest University Health Sciences to lease an office and research facility in Winston-Salem, North Carolina with an initial term that extended through July 31, 2007. The lease contained a renewal option for up to one additional five-year term, with a rental rate for the renewal term similar to the initial term. From 2005 to 2010, the terms of the lease were amended to, among other things, increase the rental space and include a second renewal term, exercisable at the Company's option, at the then-existing market rate for similar space in the Piedmont Triad in North Carolina. The Company exercised its first renewal option in January 2007 and, as a result, the lease extends until July 31, 2012.

The Company has entered into various other lease agreements, primarily for equipment. Rent expense incurred by the Company under the office lease and other operating leases was $2,575,000, $2,003,000 and $2,148,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

The following table illustrates expected future lease payments under all operating leases (in thousands):


2012	$	1,695
2013		234
2014		176
2015		1
2016 and thereafter		—

	$	2,106

Employment Arrangements

The Company has entered into employment agreements with some of its executive officers. Under the agreements, if the Company terminates the employment of the executive officer other than for just cause or if the executive officer terminates his employment for good reason, in each case as that term is defined in the agreement, the executive officer is entitled, among other things, to receive severance equal to his current base salary for nine to twelve months following termination or, if shorter, until he secures other employment. The executive officer would also be entitled to continuation of the health and life insurance benefits coverage provided to him as of the date of termination for the period during which he receives severance.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-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 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 5
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 460
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
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-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

Retirement Savings Plan	12 Months Ended
Retirement Savings Plan	Dec. 31, 2011
Retirement Savings Plan [Abstract]
Retirement Savings Plan	11. Retirement Savings Plan The Company has a 401(k) retirement plan in which all of its employees are eligible to participate. The Company contributed $535,000, $487,000, and $666,000 to the plan for the years ended December 31, 2011, 2010 and 2009, respectively. The Company matched employee contributions to the plan, on a per employee basis, up to 4% of each employee's wages for the years ended December 31, 2011 and 2010. During 2009 the Company matched employee contributions to the plan, on a per employee basis, up to 6% of each employee's wages.

- Definition

The entire disclosure for pension and other postretirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph a
-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 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
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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 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-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 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 87
-Paragraph 264
-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 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 03-2
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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 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 30
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 158
-Paragraph 7, 21, 22
-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 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5, 6, 7, 8
-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 13: http://www.xbrl.org/2003/role/presentationRef
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-Number FAS88
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-URI http://asc.fasb.org/topic&trid=2235017

+ Details

Strategic Alliance And Collaboration Agreements	12 Months Ended
Strategic Alliance And Collaboration Agreements	Dec. 31, 2011
Strategic Alliance And Collaboration Agreements [Abstract]
Strategic Alliance And Collaboration Agreements	12. Strategic Alliance and Collaboration Agreements *AstraZeneca AB* Cognitive Disorders In December 2005, the Company entered into a collaborative research and license agreement with AstraZeneca AB under which the Company granted AstraZeneca exclusive development and worldwide commercialization rights to the Company's product candidate AZD3480 (TC-1734) as a treatment for specified conditions characterized by cognitive impairment, including Alzheimer's disease and attention deficit/hyperactivity disorder, or ADHD. The Company is eligible to receive license fees and milestone payments under the agreement. The amount of license fees and milestone payments depends on the timing and achievement of specified milestone events. AstraZeneca paid the Company an initial fee of $10,000,000 in February 2006. Based on the agreement terms, the Company allocated $5,000,000 of the initial fee to the research collaboration, which the Company recognized as revenue on a straight-line basis over the four-year term of the research collaboration. The Company deferred recognition of the remaining $5,000,000 of the initial fee, which was allocated to the AZD3480 license grants, until December 2006, when AstraZeneca made a determination to proceed with further development of AZD3480. As a result, in the first quarter of 2007, the Company began recognizing the $5,000,000 of the initial fee that it had previously deferred as revenue on a straight-line basis over the estimated development period for AZD3480. In July 2009, based on feedback received from AstraZeneca regarding its development plans for AZD3480 as a treatment for ADHD, the Company extended its estimate of the development period for AZD3480 to continue through 2013 and began recognizing the part of the $5,000,000 portion of the initial fee not yet recognized as of April 1, 2009 into revenue on a straight-line basis over the remaining estimated development period. In September 2010, the Company and AstraZeneca amended the agreement to enable the Company to conduct a clinical trial of AZD3480 in mild to moderate Alzheimer's disease and to provide for respective roles and responsibilities and associated financial terms for such a study. Under the amendment, the Company received from AstraZeneca $500,000 in October 2010, $2,000,000 in September 2011 and $3,500,000 in December 2011. The Company is recognizing both the portion of the $5,000,000 of the initial fee attributable to AZD3480 license grants not yet recognized and the payments received under the amendment into revenue on a straight-line basis through 2013, which is the estimated period of the Company's performance obligations under the agreement as amended. The Company recognized $579,000, $683,000, and $1,934,000 of the initial fee as revenue for the years ended December 31, 2011, 2010, and 2009, respectively. The Company recognized $613,000 of the payments received under the amendment for the year ended December 31, 2011. Under the agreement, the Company is also eligible to receive additional payments from AstraZeneca if specified milestone events for AZD3480 are achieved for Alzheimer's disease, including up to an additional $35,000,000 if development milestone events are achieved, an additional $20,000,000 if a regulatory milestone event is achieved, and up to an additional $90,000,000 if first commercial sale milestone events are achieved, plus, if regulatory approval is achieved for AZD3480 for any indication, stepped double-digit royalties on any sales of AZD3480 for that indication or any other indication. The Company is also eligible to receive other payments under the agreement if development, regulatory, first commercial sale and first detail milestone events for AZD3480 are achieved for any other target indication under the agreement. AZD3480 is not currently in development for any indication other than Alzheimer's disease. Under the terms of a sponsored research agreement and a subsequent license agreement between the Company and University of Kentucky Research Foundation, or UKRF, if the Company receives any of these payments from AstraZeneca related to AZD3480, including royalties, the Company is required to pay a low-single digit percentage of each such payment to UKRF. Based solely on projected activities and timelines, the Company does not expect it to be possible for it to achieve any contingent milestone event for AZD3480 during 2012. The likelihood that the Company will achieve any particular milestone event with respect to AZD3480 in any future period is uncertain, and the Company may not ever achieve any of the milestone events with respect to AZD3480. With respect to AZD1446, the most advanced product candidate that arose out of the parties' preclinical research collaboration described below, the Company is eligible to receive additional payments from AstraZeneca if specified milestone events for AZD1446 under the agreement are achieved for Alzheimer's disease, including up to an additional $14,000,000 if development milestone events are achieved, an additional $10,000,000 if a regulatory milestone event is achieved and up to an additional $49,000,000 if first commercial sale milestone events are achieved, plus, if regulatory approval is achieved for AZD1446 for any indication, stepped royalties on any sales of AZD1446 for that indication or any other indication. The Company is also eligible to receive other payments under the agreement if development, regulatory, first commercial sale and first detail milestone events for AZD1446 are achieved for any other target indication under the agreement. AZD1446 is not currently in development for any indication other than Alzheimer's disease. Based solely on projected activities and timelines, the Company does not expect it to be possible for it to achieve any contingent milestone event for AZD1446 during 2012. The likelihood that the Company will achieve any particular milestone event with respect to AZD1446 in any future period is uncertain, and the Company may not ever achieve any of the milestone events with respect to AZD1446. The Company considers that each of the potential milestone events under the agreement with respect to AZD3480 or AZD1446 would be substantive because the applicable criteria of its revenue recognition policy (see Note 2) would be satisfied. The Company and AstraZeneca conducted a multi-year preclinical research collaboration under the agreement. The term of the research collaboration expired in January 2010 and, as a result, the Company did not recognize any collaboration research and development revenue for the years ended December 31, 2011 and 2010. While the research collaboration was ongoing, the Company was eligible to receive payments from AstraZeneca for research services performed. The Company recognized collaboration research and development revenue as the research was performed and related expenses were incurred. The Company recognized collaboration research and development revenue of $5,246,000 for the year ended December 31, 2009. In October 2007, the Company provided notice under the agreement offering AstraZeneca the right to license its product candidate TC-5619 for specified conditions characterized by cognitive impairment. Based on a subsequent election by AstraZeneca made under the terms of the agreement, AstraZeneca paid the Company $2,000,000 and the Company agreed to develop TC-5619 independently through completion of Phase 1 clinical development and a Phase 2 clinical proof of concept clinical trial in accordance with a mutually acceptable development plan, following which AstraZeneca would have the right to license TC-5619 on terms specified in the agreement (as it was amended in April 2010 as described below). The Company recognized the $2,000,000 payment as revenue on a straight-line basis over the period estimated from time to time for the Company's research and development obligations for TC-5619. The Company completed its research and development obligations for TC-5619 under the agreement in the second quarter of 2011. Accordingly, as of June 30, 2011, all of the $2,000,000 payment related to TC-5619 received from AstraZeneca was recognized into revenue. The Company recognized $87,000, $278,000 and $596,000 of the payment as revenue for the years ended December 31, 2011, 2010 and 2009, respectively. In April 2010, the Company and AstraZeneca amended the agreement to modify the terms applicable to TC-5619. In conjunction with the amendment, the Company and AstraZeneca agreed to an expanded development program for TC-5619 and the Company received a payment of $11,000,000 to maintain AstraZeneca's option to license TC-5619. The Company recorded the $11,000,000 payment as deferred revenue and recognized it as revenue on a straight-line basis over the period estimated from time to time for the Company's research and development obligations for TC-5619 under the agreement, which, as noted above, were completed in the second quarter of 2011. Accordingly, as of June 30, 2011, all of the $11,000,000 payment related to TC-5619 received from AstraZeneca was recognized into revenue. The Company recognized $4,714,000 and $6,286,000 of the payment as revenue for the years ended December 31, 2011 and 2010, respectively. In late April 2011, the Company received notice from AstraZeneca that it had determined not to exercise its license option. The Company has received payments upon achievement of milestone events under the agreement that it recognized in full as revenue upon achievement because the event met each of the conditions required for immediate recognition under its revenue recognition policy (see Note 2). In particular, the Company received a $10,000,000 payment from AstraZeneca in July 2009 based on achievement of the objective in a completed Phase 2 clinical trial of AZD3480 in adults with ADHD, a milestone event under an amendment to the agreement. The Company made a payment of $350,000 to UKRF in January 2010 as a result of the $10,000,000 payment received from AstraZeneca. The Company has also received cumulative payments from AstraZeneca of $2,600,000 based on the achievement of milestone events related to the development of product candidates arising under the parties' completed preclinical research collaboration, including AZD1446. AstraZeneca has paid the Company an aggregate of $88,120,000 under the agreement since its inception. TC-5214 In December 2009, the Company entered into a collaboration and license agreement with AstraZeneca AB for the global development and commercialization of TC-5214. Under the agreement, AstraZeneca made an upfront payment to the Company of $200,000,000 and the Company is eligible to receive additional payments if specified milestone events for TC-5214 are achieved, plus significant stepped double-digit royalties on net sales of TC-5214 worldwide. The Company recorded the upfront payment made by AstraZeneca as deferred revenue and is recognizing the payment as revenue on a straight-line basis over the estimated period of the Company's substantive performance obligations under the agreement, or approximately 33 months. The Company recognized $72,565,000 of the upfront payment as revenue for each of the years ended December 31, 2011 and 2010 and $398,000 of the upfront payment as revenue for the year ended December 31, 2009. The Company is eligible to receive additional payments from AstraZeneca if specified milestone events for TC-5214 are achieved, including up to an additional $10,000,000 if a development milestone event is achieved, up to an additional $275,000,000 if regulatory milestone events are achieved, up to an additional $105,000,000 if first commercial sale milestone events for TC-5214 are achieved, up to an additional $150,000,000 if development, labeling and marketing criteria are achieved and up to an additional $500,000,000 if sales milestone events for TC-5214 are achieved. Based solely on projected activities and timelines, the Company expects that the only milestone payment for which it is eligible and that could possibly be earned during 2012 would be $50,000,000 upon acceptance by the FDA of an NDA for TC-5214 as adjunct therapy for major depressive disorder. If an NDA for TC-5214 is submitted and then accepted for filing by the FDA, the next regulatory milestone for which the Company is eligible would be $150,000,000 upon approval of the NDA. The likelihood that the Company will achieve any particular milestone event with respect to TC-5214 in 2012 or in any future period is uncertain, and the Company may not ever achieve any of the milestone events with respect to TC-5214. The Company considers that each of the potential milestone events under the agreement would be substantive because the applicable criteria of its revenue recognition policy (see Note 2) would be satisfied. The Company and AstraZeneca jointly designed a program for the global development of TC-5214 as an adjunct therapy and as a "switch" monotherapy, in each case in patients with major depressive disorder who do not respond adequately to initial antidepressant treatment. AstraZeneca is responsible for 80% and the Company is responsible for 20% of the costs of this program, except that AstraZeneca is responsible for 100% of development costs that are required only to obtain or maintain regulatory approval in countries outside the United States and the European Union. The Company has the right to terminate its obligation to fund its share of the costs of the program once it has funded a specified amount. In addition, for each of the Company and AstraZeneca, costs that were not contemplated at execution to be part of the program may in some cases be excluded from the cost-sharing arrangement. If the Company funds the specified amount and terminates its obligation to fund its share of further costs of the program, any future milestones and royalties payable to the Company under this agreement would be reduced by the amount of the Company's unfunded share plus interest at a specified rate, subject to a maximum reduction that may be applied to any one payment. In addition, if the Company and AstraZeneca mutually agree to develop TC-5214 for any indication other than major depressive disorder or in any formulation other than those contemplated by the current program, the same cost-sharing arrangement would apply, except that the Company would have the immediate right to terminate its obligation to fund its share of development costs for the other indication or formulation. If the Company terminates its obligation to fund its share of these other development costs, any future milestones and royalties payable to the Company under this agreement would be reduced by the amount of the Company's unfunded share plus interest at a specified rate, subject to a maximum reduction that may be applied to any one payment, but only from and after the occurrence of a specified event to be agreed upon by the parties. The Company's portion of the costs of the TC-5214 development program was $32,046,000 and $10,771,000 for the years ended December 31, 2011 and 2010, respectively. AstraZeneca's allocable portion of the program costs paid by the Company was $336,000 and $2,023,000 for the years ended December 31, 2011 and 2010, respectively. AstraZeneca's allocable portion of the program costs paid by the Company is reflected in the Company's financial statements as a reduction to research and development expense. AstraZeneca is responsible under the agreement for executing and funding the costs of any commercialization of TC-5214 worldwide. The Company has retained an option to co-promote TC-5214 to a specified target physician audience in the United States. If the Company exercises its co-promotion option, AstraZeneca would compensate the Company on a per detail basis. AstraZeneca is also responsible under the agreement for the manufacture and supply of TC-5214. Under the terms of an existing license agreement, the Company paid $16,000,000 to University of South Florida Research Foundation, or USFRF, in February 2010 based on the Company's receipt of the upfront payment from AstraZeneca and would be required to pay to USFRF a percentage of each milestone payment that may be received from AstraZeneca, after deducting from the milestone payment the unexhausted portion of the Company's projected share of the costs of the initial development program for TC-5214, as well as royalties on any future TC-5214 product sales. The percentage of each milestone payment, net of any deduction, that the Company would be required to pay would be at least 10% and could be greater in specified circumstances. Based on the terms of the license agreement with USFRF and the terms of another existing license agreement with Yale University, the Company expects to pay royalties at an effective worldwide rate in the low single digits and that the effective royalty rate could in some circumstances reach the mid single digits. *GlaxoSmithKline* On July 27, 2007, the Company entered into a product development and commercialization agreement with SmithKline Beecham Corporation, doing business as GlaxoSmithKline, and Glaxo Group Limited, which are referred to together as GlaxoSmithKline, that set forth the terms of an alliance designed to discover, develop and market product candidates that selectively target specified NNR subtypes for specified therapeutic focus areas. In February 2011, the Company received notice of termination of the agreement. By the terms of the agreement, the termination became effective in May 2011. Under the agreement and a related stock purchase agreement, GlaxoSmithKline made an initial payment to the Company of $20,000,000 and purchased 1,275,502 shares of the Company's common stock for an aggregate purchase price of $15,000,000 on July 27, 2007. The purchase price paid by GlaxoSmithKline reflected an aggregate deemed premium of $3,521,000, based on the closing price of the Company's common stock on the trading day immediately preceding the date that the agreements were signed and announced. The Company deferred recognition of both the initial payment made by GlaxoSmithKline and the deemed premium paid for the shares of the Company's common stock purchased by GlaxoSmithKline and was recognizing both amounts into revenue on a straight-line basis over the nine-year period of the Company's research and early development obligations estimated at inception of the agreement. The Company recognized $2,613,000 of the initial payment and deemed premium as revenue for each of the years ended December 31, 2010 and 2009. In December 2007, the Company received a $6,000,000 payment from GlaxoSmithKline upon the achievement of a specified milestone event under the agreement. The Company determined the payment did not meet each of the conditions of its revenue recognition policy (see Note 2) required for recognition of the full amount into revenue upon achievement of the milestone. Specifically, based on the progress of this product candidate as of inception of the agreement, there was not substantive uncertainty regarding achievement of the milestone event within the meaning of the Company's revenue recognition policy. Accordingly, the Company recorded the payment as deferred revenue and was recognizing it into revenue on a straight-line basis over the remaining portion of the nine-year period of the Company's research and early development obligations estimated at inception of the agreement. The Company recognized $692,000 of the payment as revenue for each of the years ended December 31, 2010 and 2009. The Company received an aggregate of $2,500,000 in payments from GlaxoSmithKline for achievement of specified milestone events under the agreement for the year ended December 31, 2009. The Company immediately recognized the full amount of each payment as revenue upon achievement of the corresponding milestone event because each event met each of the conditions required for immediate recognition under its revenue recognition policy (see Note 2). As a result of its receipt in February 2011 of notice of termination of the agreement, the Company recognized the remaining $18,421,000 of the payments discussed above not previously recognized into revenue for the first quarter of 2011 in accordance with its revenue recognition policy (see Note 2).

Selected Quarterly Financial Data

12 Months Ended

Dec. 31, 2011

Selected Quarterly Financial Data [Abstract]

Selected Quarterly Financial Data

13. Selected Quarterly Financial Data (unaudited)


	2011 Quarter
	First		Second			Third			Fourth
	(in thousands, except share and per share amounts)
Net operating revenues	$	38,994	$	20,743		$	18,955		$	18,945
Income (loss) from operations		12,302		(2,571	)		(9,331	)		(10,145	)
Net income (loss)		12,587		(2,257	)		(9,054	)		(9,805	)
Basic net income (loss) per share(1)	$	0.43	$	(0.07	)	$	(0.27	)	$	(0.29	)
Diluted net income (loss) per share(1)	$	0.41	$	(0.07	)	$	(0.27	)	$	(0.29	)
Weighted average common shares outstanding—basic		28,996,060		30,725,227			33,377,874			33,382,640
Weighted average common shares outstanding—diluted		30,399,750		30,725,227			33,377,874			33,382,640


	2010 Quarter
	First			Second			Third			Fourth
	(in thousands, except share and per share amounts)
Net operating revenues	$	19,518		$	20,902		$	21,798		$	23,495
Income (loss) from operations		7,089			4,966			2,417			(1,357	)
Income tax expense		(626	)		(1,512	)		(257	)		(1,131	)
Net income (loss)		6,795			3,782			2,486			(2,164	)
Basic net income (loss) per share(1)	$	0.24		$	0.13		$	0.09		$	(0.08	)
Diluted net income (loss) per share(1)	$	0.23		$	0.13		$	0.08		$	(0.08	)
Weighted average common shares outstanding—basic		28,311,452			28,509,619			28,622,187			28,724,965
Weighted average common shares outstanding—diluted		29,172,218			30,152,309			30,173,406			28,724,965

(1)

Per common share amounts for the quarters and full years have been calculated separately. Accordingly, the sum of quarterly amounts may not equal the annual amount because of differences in the weighted average common shares outstanding during each period, principally due to the effect of share issuances by the Company during the year.

(2)

Diluted weighted average common shares outstanding are identical to basic weighted average common shares outstanding and Diluted EPS is identical to Basic EPS for the second, third and fourth quarters of 2011 and for the fourth quarter of 2010 because common share equivalents are excluded from the calculations of diluted weighted average common shares outstanding for those quarters, as their effect is antidilutive.

- Definition

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

+ References + Details