Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Corporate Structure

Corporate Structure

The Company was incorporated in 1989 as a Delaware corporation. On June7, 2012, the Company reincorporated in the State of California. All common and preferred shares of the Delaware company were exchanged for common and preferred shares of the Company.

Use of Estimates

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed financial statements and disclosures made in the accompanying notes to the unaudited condensed financial statements. Actual results could differ materially from those estimates.

Net Income (Loss) Per Share

Net Income (Loss) Per Share

Basic and diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding during the periods. Basic earnings per share (“EPS”) is calculated by dividing the net income or loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income or loss by the weighted-average number of common shares and common stock equivalents outstanding for the period issuable upon the conversion of preferred stock and exercise of stock options and warrants. These common stock equivalents are included in the calculation of diluted EPS only if their effect is dilutive (see Note 5). There is no difference between basic and diluted net loss per share for the three months ended March31, 2013, as potentially dilutive securities have been excluded from the calculation of diluted net loss per common share because the inclusion of such securities would be antidilutive.

Restricted Cash

Restricted Cash

Restricted cash consists of certificates of deposit on hand with the Company’s financial institutions as collateral for its San Diego office space.

Derivative Liabilities

Derivative Liabilities

In the Company’s private placement of common stock, redeemable convertible preferred stock and warrants to purchase convertible preferred stock that occurred in May of 2010 (the “May2010 Financing”), the Company issued redeemable convertible preferred stock that contained certain embedded derivative features, as well as warrants that were accounted for as derivative liabilities.

The SeriesC-12 Convertible PreferredStock (the “Series C-12 Preferred”), Series D-12 Convertible Preferred Stock (the “SeriesD-12 Preferred”) and the  securities underlying the warrants to purchase shares of SeriesC-22Convertible Preferred Stock (the “Series C-22Warrants”) issued in the May 2010 Financing contain conversion features. In addition, the SeriesC-12 Preferred, SeriesD-12 Preferred and the  securitiesunderlying the SeriesC-22 Warrants were subject to redemption provisions and certain conversion features. As of December31, 2012, pursuant to a Consent, Waiver and Amendment Agreement (the “Second Waiver Agreement”) that the Company entered into with its preferred stockholders,the redemption features, certain conversion features and the  warrants to purchase shares of the Company’s Series D-22 Convertible Preferred Stock (the “SeriesD-22Warrants”) were eliminated, removing the derivative liabilities.

The Company’s derivative liabilities were initially recorded at their estimated fair value on the date of issuance and were subsequently adjusted to reflect the estimated fair value at each period end, with any decrease or increase in the estimated fair value being recorded as other income or expense, accordingly.