LICENSING AND OTHER REVENUE

9 Months Ended

Sep. 30, 2011

LICENSING AND OTHER REVENUE [Abstract]

LICENSING AND OTHER REVENUE

(12) LICENSING AND OTHER REVENUE

         Ferndale License of Prelude® SkinPrep System – On May 27, 2009, the Company entered into a License Agreement with Ferndale Pharma Group, Inc. (“Ferndale”) pursuant to which the Company granted Ferndale a license in North America and the United Kingdom to develop, assemble, use, market, sell and export Prelude for skin preparation prior to the application of a topical analgesic or anesthetic cream for local dermal anesthesia or analgesia prior to a  needle insertion or IV procedure (the “Ferndale License”). The Ferndale License has a minimum term of 10 years from the date of the first commercial sale of Prelude product components in North America or the United Kingdom.

         The Company received a licensing fee of $750,000 upon execution of the Ferndale License. The Company recognizes the upfront, nonrefundable payments as revenue on a straight-line basis over the contractual or estimated performance period. During the nine months ended September 30, 2011 and 2010, approximately $168,000 and $76,000, respectively, of the nonrefundable license revenue was recognized. As of September 30, 2011, approximately $73,000 of remaining deferred revenue is recognizable over the next 12 months and is shown in Deferred Revenue amongst current liabilities on the Consolidated Balance Sheet.

         Other Revenue - The Company has retained contract engineering services in connection with product development pursuant to the Ferndale License and the Company is reimbursed by Ferndale for the cost of product development engineering services. Other Revenue of approximately $145,000 and $127,000 related to product development costs incurred was earned during the nine months ended September 30, 2011 and 2010, respectively. The expenses billed to the Company are included in Research and Development expenses in the Consolidated Statement of Operations. There was no markup on expenses from third party vendors.

         Handok License of Symphony® tCGM System – On June 15, 2009, the Company entered into a License Agreement with Handok Pharmaceuticals Co., Ltd. (“Handok”) pursuant to which the Company granted Handok a license to develop, use, market, sell and import Symphony for continuous glucose monitoring for use by medical facilities and/or individual consumers in South Korea (the “Handok License”). The Handok License has a minimum term of 10 years from the date of the first commercial sale of Symphony in South Korea.

         The Company received a licensing fee of approximately $500,000 upon execution of the Handok License. The Company recognizes the upfront, nonrefundable payments as revenue on a straight-line basis over the contractual or estimated performance period. During the nine months ended September 30, 2011, as a result of a change in the amortization period, the Company recorded a charge of approximately $30,000 to nonrefundable license revenue. During the nine months ended September 30, 2010, the Company recognized nonrefundable license revenue of $121,000. As of September 30, 2011, approximately $124,000 of remaining deferred revenue is recognizable over the next 12 months and is shown as Deferred Revenue amongst current liabilities on the Consolidated Balance Sheet.  Approximately $93,000 of the remaining deferred revenue will be earned after 12 months and is shown as non-current Deferred Revenue.