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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2013	May 07, 2013
Document And Entity Information
Entity Registrant Name	Imprimis Pharmaceuticals, Inc.
Entity Central Index Key	0001360214
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		8,888,250
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Current assets
Cash and cash equivalents	$ 18,979,031	$ 10,035,615
Restricted short-term investment	50,000	0
Prepaid expenses and other current assets	204,450	61,552
Deferred offering costs	0	596,281
Total current assets	19,233,481	10,693,448
Furniture and equipment, net	13,098	12,548
TOTAL ASSETS	19,246,579	10,705,996
Current liabilities
Accounts payable and accrued expenses	700,795	635,384
Accrued Phase 3 expenses	55,784	55,784
Accrued payroll and related liabilities	91,137	18,391
Deferred revenue	833	0
Total current liabilities	848,549	709,559
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 395,000,000 shares authorized, 8,888,250 and 6,772,066 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively	8,888	6,772
Additional paid-in capital	43,958,891	34,093,933
Deficit accumulated during the development stage	(25,569,749)	(24,104,268)
TOTAL STOCKHOLDERS' EQUITY	18,398,030	9,996,437
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 19,246,579	$ 10,705,996

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2013	Dec. 31, 2012
STOCKHOLDERS' EQUITY
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	395,000,000	395,000,000
Common stock, issued shares	8,888,250	6,772,066
Common stock, outstanding shares	8,888,250	6,772,066

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		176 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
Revenues:
License revenues	$ 2,500	$ 100,000	$ 102,500
Operating Expenses:
Selling, general and administrative	1,019,949	308,956	13,573,650
Research and development	455,100	142,963	9,573,861
Loss from operations	(1,472,549)	(351,919)	(23,045,011)
Other income (expense):
Interest expense	0	(21,082)	(1,730,892)
Interest income	7,068	0	150,059
Loss from extinguishment of debt	0	(1,006,087)	(1,195,410)
Gain on settlement	0	0	375,000
Gain on forgiveness of liabilities	0	0	176,505
Total other income (expense), net	7,068	(1,027,169)	(2,224,738)
Net loss	(1,465,481)	(1,379,088)	(25,269,749)
Deemed dividend to preferred stockholders	0	0	(300,000)
Net loss attributable to common stockholders	$ (1,465,481)	$ (1,379,088)	$ (25,569,749)
Net loss per share of common stock, basic and diluted:	$ (0.19)	$ (1.30)
Weighted average number of shares of common stockoutstanding, basic and diluted	7,788,236	1,063,278

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended		176 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,465,481)	$ (1,379,088)	$ (25,269,749)
Adjustments to reconcile net loss to net cash used in operating activities:
Estimated fair value of contributed services	0	0	2,475,000
Gain on forgiveness of liabilities	0	0	(176,505)
Amortization of prepaid consulting fees	0	0	807,608
Depreciation	899	404	6,997
Loss on extinguishment of debt	0	1,006,087	1,195,410
Non-cash interest on notes payable	0	21,083	1,730,892
Stock-based compensation	410,715	118,504	4,696,143
Payments made on behalf of Company by related party	0	0	254,142
Changes in assets and liabilities:
Prepaid consulting costs	0	0	(140,000)
Prepaid expenses and other current assets	(142,898)	(48,976)	(204,450)
Accounts payable and accrued expenses	65,411	38,096	605,373
Accrued Phase 3 expenses	0	0	111,871
Accrued payroll	72,746	9,048	177,728
Deferred revenue	833	(100,000)	833
NET CASH USED IN OPERATING ACTIVITIES	(1,057,775)	(334,842)	(13,728,707)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of restricted short-term investment	(50,000)	0	(50,000)
Purchases of fixed assets	(1,449)	(14,607)	(20,096)
NET CASH USED IN INVESTING ACTIVITIES	(51,449)	(14,607)	(70,096)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for settlement of shares in connection with reverse stock split	(192)	0	(192)
Proceeds from issuance of notes payable to a related party	0	300,000	976,300
Proceeds received in connection with debt modification	0	50,000	50,000
Proceeds from issuance of preferred stock	0	0	100,000
Proceeds from notes payable	0	0	2,500,000
Preferred stock deemed dividend paid at conversion	0	0	(200,000)
Cash advances from related party	0	0	27,537
Repayment of advances from related party	0	0	(281,679)
Capital contributions	0	0	168,707
Net proceeds from purchase of common stock and exercise of warrants and stock options	0	0	100,250
Proceeds from issuance of common stock and warrants for cash, net of offering costs	10,052,832	0	29,336,911
NET CASH PROVIDED BY FINANCING ACTIVITIES	10,052,640	350,000	32,777,834
NET CHANGE IN CASH AND CASH EQUIVALENTS	8,943,416	551	18,979,031
CASH AND CASH EQUIVALENTS, beginning of period	10,035,615	146,160	0
CASH AND CASH EQUIVALENTS, end of period	18,979,031	146,711	18,979,031
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	1,600	1,600	13,600
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of and adjustment to common stock and warrants to consulting firms for prepaid consulting fees	0	0	432,007
Conversion of related party accounts payable into common stock	0	56,087	56,087
Conversion of notes payable and accrued interest into common stock	0	1,142,603	3,435,314
Forgiveness of notes payable and accrued interest to shareholders	0	0	241,701
Conversion of advances to notes payable to shareholders	0	0	196,300
Accretion of preferred stock discount	0	100,000	100,000
Related party acquisition of Phase 3 liabilities	0	56,087	56,087
Conversion of preferred stock into common stock	0	0	1,500
Reclassification of deferred offering costs in connection with equity offering	$ 596,281	$ 0	$ 596,281

OVERVIEW AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

NOTE 1. OVERVIEW AND BASIS OF PRESENTATION

Company and Background

Imprimis Pharmaceuticals, Inc. (“Imprimis”, the “Company”, “we”, “us”, or “our”) is a specialty pharmaceutical company focused on the commercial development of compounded drug formulations. Imprimis expects to use its proprietary Accudel™ drug delivery technologies, proprietary drug formulations, and its exclusive relationship with Professional Compounding Centers of America, Inc. (“PCCA”), to identify pharmaceutical development opportunities where there are significant unmet medical needs.

The Company’s most near term drug candidate, Impracor™, utilizes its patented Accudel topical cream formulation to enable highly targeted site-specific treatment. Impracor, which is a Phase 3 clinical trial pain product candidate, delivers the active drug (API), ketoprofen, a non-steroidal anti-inflammatory drug (NSAID), through the skin directly into the underlying tissues where the drug exerts its localized anti-inflammatory and analgesic effects.

Basis of Presentation

On February 28, 2012, the Company changed its name from Transdel Pharmaceuticals, Inc. to Imprimis Pharmaceuticals, Inc. All prior references to Transdel Pharmaceuticals, Inc. have been changed to Imprimis Pharmaceuticals, Inc. to reflect the change. On February 28, 2012, the Company effected a one-for-eight reverse stock split and on February 7, 2013, the Company effected a one-for-five reverse stock split. All share and per share amounts and calculations in this report reflect the effects of these reverse stock splits.

Imprimis has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Principles of Consolidation

On September 17, 2007, Imprimis entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) by and among Imprimis, Transdel Pharmaceuticals Holdings, Inc., a privately held Nevada corporation (“Transdel Holdings”), and Trans-Pharma Acquisition Corp., a newly formed, wholly-owned Delaware subsidiary of Imprimis (“Acquisition Sub”). Upon closing of the merger transaction contemplated under the Merger Agreement (the “Merger”), Acquisition Sub merged with and into Transdel Holdings, and Transdel Holdings, as the surviving corporation, became a wholly-owned subsidiary of Imprimis. As a result of the Merger, the former owners of Transdel Holdings became the controlling stockholders of Imprimis. Accordingly, the merger of Transdel Holdings and Imprimis is a reverse merger that has been accounted for as a recapitalization of Transdel Holdings.

Effective on September 17, 2007, and for all reporting periods thereafter, Imprimis’ operating activities, including any prior comparative period, include only those of Transdel Holdings. All references to share and per share amounts in the accompanying consolidated financial statements and footnotes have been restated to reflect the aforementioned share exchange. All significant intercompany accounts and transactions have been eliminated in consolidation.

On June 20, 2011, Transdel Holdings was merged with Imprimis Pharmaceuticals, Inc., at which time Transdel Holdings ceased as a corporation, and Imprimis Pharmaceuticals, Inc. remains as the sole surviving corporation.

Development Stage Enterprise

The Company is a development stage company as defined under Financial Accounting Standards Board (“FASB”) guidance. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

These condensed consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage enterprise and has incurred recurring operating losses, has had negative operating cash flows and has not recognized any significant revenues since July 24, 1998 (Inception). In addition, the Company has a deficit accumulated during the development stage of approximately $25.6 million at March 31, 2013, and anticipates incurring further losses through the remainder of the fiscal year 2013 and beyond. The Company has not yet generated significant sales revenue and has funded its operating losses to date through debt and equity offerings and borrowings under its line of credit. The Company believes that its existing cash and cash equivalents will be sufficient to cover its cash flow requirements for at least the next twelve months.

Research and Development

The Company expenses all costs related to research and development as they are incurred. Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, and other overhead expenses, clinical trials, contract services and outsourced contracts.

Revenue Recognition and Deferred Revenue

The Company will recognize revenues when all of the following criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. The Company believes it will not generate significant revenues until one or more of its drug candidates are approved by the U.S. Food and Drug Administration (“FDA”) and the Company is able to commercialize one or more of its product candidates. Also, effective sales and marketing support must be in place for either the drug candidates or any other products the Company may develop in order to generate any revenues. The FDA approval process is highly uncertain and the Company cannot estimate when it will generate revenues at this time from sales of its products.

Product Revenues

Determination of criteria (3) and (4) will be based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or for which services have not been rendered or are subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required.

License Revenues

License arrangements may consist of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive licensed rights to patented or patent pending compounds, technology access fees, and various performance or sales milestones. These arrangements can be multiple element arrangements.

Non-refundable, up-front fees that are not contingent on any future performance by us, and require no consequential continuing involvement on our part, are recognized as revenue when the license term commences and the licensed data, technology and/or compound is delivered. Such deliverables may include physical quantities of compounds, design of the compounds and structure-activity relationships, the conceptual framework and mechanism of action, and rights to the patents or patents pending for such compounds. We defer recognition of non-refundable upfront fees if we have continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement. In addition, if we have required continuing involvement through research and development services that are related to our proprietary know-how and expertise of the delivered technology, or can only be performed by us, then such up-front fees are deferred and recognized over the period of continuing involvement. Guaranteed minimum annual royalties are recognized on a straight-line basis over the applicable term.

During three months ended March 31, 2013, and 2012, the Company recorded $2,500 and $100,000 in revenues, respectively, for non-refundable royalty advances. In January 2013, we entered into a license agreement with resolutionMD, LLC granting resolutionMD, LLC rights to our Accudel delivery technology to be used for anti-cellulite formulations. Under the license agreement, the Company will receive $10,000 as a guaranteed minimum royalty amount for fiscal 2013 and, if applicable, additional royalty payments based on a percent (generally, 5%-7%) of net sales of any products covered under the license agreement. The license agreement with resolutionMD, LLC, unless terminated earlier, will be valid for ten years following the first commercial sale of a product that is covered under the license agreement. The Company does not anticipate that the license agreement with resolutionMD, LLC will generate significant revenues for the fiscal 2013 year.

Income Taxes

The Company accounts for income taxes under the provisions of Accounting Standards Codification (“ASC”) 740, “Income Taxes”, or ASC 740. As of March 31, 2013, there were no unrecognized tax benefits included in the condensed consolidated balance sheets that would, if recognized, affect the effective tax rate. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties in its condensed consolidated balance sheets at March 31, 2013 and December 31, 2012, and has not recognized interest and/or penalties in the consolidated statements of operations for the periods ended March 31, 2013 and 2012. The Company is subject to taxation in the United States and California. The Company’s tax years for 2000 and forward are subject to examination by the federal and state tax authorities due to the carry forward of unutilized net operating losses.

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.

Concentrations of Credit Risk

The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits to $250,000 per owner. At March 31, 2013, the Company had approximately $18.4 million in cash deposits in excess of FDIC limits.

Deferred Offering Costs

On July 25, 2012, the Company filed with the Securities and Exchange Commission a registration statement on Form S-1 (as amended, the “Registration Statement”) in connection with an underwritten public offering of its common stock (the “Public Offering”). At December 31, 2012, the Company had deferred offering costs of $596,281 for legal, accounting and other expenses directly related to the Public Offering. The Public Offering closed on February 13, 2013 (see Note 4), and these deferred offering costs and any other costs directly associated with the Public Offering subsequent to December 31, 2012 were netted against the cash proceeds to the Company arising from the Public Offering. As a result, there were no deferred offering costs at March 31, 2013.

Furniture and Equipment

Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of three to five years.

Deferred Rent

The Company accounts for rent expense related to its operating leases by determining total minimum rent payments on the leases over their respective periods and recognizing the rent expense on a straight-line basis. The difference between the actual amount paid and the amount recorded as rent expense in each fiscal year is recorded as an adjustment to deferred rent.

Fair Value Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The established fair value hierarchy prioritizes the use of inputs used in valuation methodologies into the following three levels:

·	Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
·	Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
·	Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.

As of March 31, 2013 and December 31, 2012, the Company did not have any financial assets or liabilities which are measured on a recurring basis. At March 31, 2013 and December 31, 2012, the Company’s financial instruments include cash and cash equivalents, a restricted short-term investment, accounts payable and accrued expenses, accrued Phase 3 expenses and accrued payroll and related liabilities. The carrying amount of these financial instruments, except for the restricted short-term investment, approximates fair value due to the short-term maturities of these instruments. The Company’s restricted short-term investment is carried at amortized cost which approximates fair value.

Stock-Based Compensation

All share-based payments to employees, including grants of stock options to employees, directors and consultants, warrants and restricted stock grants, are recognized in the condensed consolidated financial statements based upon their fair values.

The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows FASB guidance. As such, the value of the applicable stock-based compensation is periodically remeasured and income or expense is recognized during their vesting terms. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is primarily recognized over the term of the consulting agreement. In accordance with FASB guidance, an asset acquired in exchange for the issuance of fully vested, nonforfeitable equity instruments should not be presented or classified as an offset to equity on the grantor's balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of nonforfeitable equity instruments issued for future consulting services as prepaid consulting fees in its condensed consolidated balance sheets.

The Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:

	For The Three Months Ended March 31, 2013			For The Three Months Ended March 31, 2012
Employees - selling, general and administrative	$	86,003		$	2,590
Employees - research and development		67,131			41,546
Directors - selling, general and administrative		202,792			74,368
Consultants - selling, general and administrative		117,389			-
Consultants - research and development		(62,600	)		-
Total	$	410,715		$	118,504

Basic and Diluted Loss per Common Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants outstanding during the period.

Basic and diluted net loss applicable to common stock per share is computed using the weighted average number of shares of common stock outstanding during the period. Common stock equivalents (using the treasury stock or, “if converted” method) from convertible notes, preferred stock, stock options, unvested restricted stock units (“RSUs”) and warrants were 1,854,354 and 2,113,830 at March 31, 2013 and 2012, respectively, and are excluded from the calculation of diluted net loss per share for all periods presented because the effect is anti-dilutive.

The following table shows the computation of basic and diluted loss per share of common stock for the three months ended March 31, 2013 and 2012:

	For the three months ended			For the three months ended
	March 31, 2013			March 31, 2012

Numerator – Net loss	$	(1,465,481	)	$	(1,379,088	)
Denominator – weighted average number of shares
of common stock outstanding, basic and diluted		7,788,236			1,063,278
Loss per share, basic and diluted	$	(0.19	)	$	(1.30	)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management are, among others, the valuation of contributed services, deferred taxes and stock-based compensation issued to employees and non-employees. Actual results could differ from those estimates.

Reclassifications

Certain prior period items and amounts have been reclassified to conform to the classifications used to prepare the 2013 condensed consolidated financial statements. These reclassifications had no material impact on the Company’s financial position, results of operations, or cash flows as previously reported.

Recently Adopted Accounting Pronouncements

In December 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-11, “Disclosures about Offsetting Assets and Liabilities.” This pronouncement was issued to enhance disclosure requirements surrounding the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. This new guidance requires companies to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to master netting arrangements. This pronouncement is effective for reporting periods beginning on or after January 1, 2013. The adoption of ASU 2011-11 did not have a material impact on our condensed consolidated financial statements.

In January 2013, the FASB issued ASU 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.” This pronouncement was issued to address implementation issues about the scope of ASU 2011-11 and to clarify the scope of the offsetting disclosures and address any unintended consequences. This pronouncement is effective for reporting periods beginning on or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on our condensed consolidated financial statements.

2. SHORT-TERM RESTICTED INVESTMENT

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

NOTE 2. SHORT-TERM RESTICTED INVESTMENT

Short-term restricted investment at March 31, 2013 consists of a certificate of deposit, which is classified as held-to-maturity. At March 31, 2013, the fair value of this investment approximated its cost basis.

At March 31, 2013, the certificate of deposit of $50,000 was classified as a current asset. The certificate of deposit is required as collateral under the Company’s corporate credit card agreement and automatically renews every twelve months.

3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

NOTE 3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

	March 31,		December 31,
	2013		2012
Accounts payable	$	503,147	$	286,686
Accrued offering costs		-		185,337
Deferred rent		1,734		2,477
Other accrued expenses		-		21,440
Stock-based compensation accrual		195,914		139,444
Total accounts payable and accrued expenses	$	700,795	$	635,384

There are 26,667 and 20,000 shares of our common stock and 11,429 and 0 shares of common stock from unissued stock options underlying the stock-based compensation accrual at March 31, 2013 and December 31, 2012, respectively.

4. STOCKHOLDERS' EQUITY AND STOCK- BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

NOTE 4. STOCKHOLDERS' EQUITY AND STOCK- BASED COMPENSATION

Common Stock

In connection with the Public Offering, after the effectiveness of the Registration Statement on February 7, 2013, the Company effected a one-for-five reverse stock split of its common stock and on February 8, 2013, the Company's common stock began trading on The NASDAQ Capital Market on a split-adjusted basis. All information included in this Quarterly Report has been adjusted to reflect the effect of the one-for-five reverse stock split.

In February 2013, the Company issued 219 shares of common stock at a price of $4.00 per share. The shares of common stock were issued to net settle total common stock options to purchase 1,030 shares of common stock pursuant to a cashless exercise provision.

During February and March 2013, the Company made payments totaling $192 in connection with cancelled, fractional share amounts of common stock (35 common stock share equivalents) in connection with the reverse stock split effected February 7, 2013.

On February 13, 2013, the Company closed the underwritten Public Offering of 1,840,000 shares of its common stock at a per share price to the public of $5.25, and received net proceeds of $8,140,435 after deducting underwriter fees and commissions and other offering expenses. The underwriters also exercised their option to purchase an additional 276,000 shares of common stock from the Company at $5.25 per share to cover over-allotments on March 14, 2013. Net cash proceeds from the exercise of the over-allotment option were $1,316,116. On February 7, 2013, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with MDB Capital Group, LLC. As contemplated by the Underwriting Agreement, at the closing of the Public Offering and the over-allotment exercise, the underwriters received warrants (the “Warrants”) to purchase an aggregate of 179,860 shares, or 8.5% of the number of shares sold in the offering (including 8.5% of shares sold pursuant to their over-allotment option). The Warrants are exercisable at $5.25 per share (100% of the price of the common stock sold in the offering), commencing on the effective date of the offering and expiring five years from the effective date of the offering.

Preferred Stock

At March 31, 2013, the Company had 5,000,000 shares of preferred stock, $0.001 par value, authorized and no shares of preferred stock issued and outstanding.

Restricted Stock Units (“RSUs”)

RSU awards are granted subject to certain restrictions, including performance based conditions. The grant-date fair value of the RSUs, which has been determined based upon the market value of the Company’s shares on the grant date, is expensed over the vesting period. Unvested portions of RSUs issued to consultants are remeasured on an interim basis until vesting criteria is met. On July 18, 2012, a consultant was issued RSUs (40,000 shares) valued at $130,000, and as of March 31, 2013, the remeasured fair value of those RSUs was $236,000.

A summary of the Company’s RSU activity and related information for the three months ended March 31, 2013 is as follows:

	Number of RSUs	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
RSUs outstanding - January 1, 2013	200,000	$	3.25
RSUs granted	-
RSUs vested	(40,000)		3.25	$ 210,000
RSUs cancelled	-		-
Balance at March 31, 2013	160,000	$	3.25	$ 944,000

As of March 31, 2013, the total unrecognized compensation expense related to unvested RSUs was approximately $397,000 (including recognized and unrecognized expenses of the remeasured fair value of the consultant RSUs) which are expected to be recognized over a weighted-average period of 1.65 years, based on estimated vesting schedules. During February 2013, 40,000 RSUs vested, and the common stock underlying these RSUs will be issued in May 2013. The stock-based compensation for RSU’s was $(5,075) during the three months ended March 31, 2013.

Stock Option Plan

On September 17, 2007, the Company’s Board of Directors and stockholders adopted the Company’s 2007 Incentive Stock and Awards Plan, which was subsequently amended on November 5, 2008, February 26, 2012 and July 18, 2012 (as amended, the “Plan”). As of March 31, 2013, the Plan provides for the issuance of a maximum of an aggregate of 2,400,000 shares of the Company’s common stock. The purpose of the Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in the Company’s development and financial success. Under the Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, non-qualified stock options and restricted stock. The Plan is administered by the Compensation Committee of the Company’s Board of Directors.

A summary of the Plan activity for the three months ended March 31, 2013 is as follows:

	Number of shares	Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (In Years)	Aggregate Intrinsic Value
Options outstanding - January 1, 2013	905,806	$	5.26
Options granted	-		-
Options exercised	(1,030)		4.00
Options expired	(15,250)		74.75
Options outstanding - March 31, 2013	889,526	$	4.07	4.60	$	1,916,935
Options exercisable	606,099	$	4.12	5.24	$	1,332,648
Options vested and expected to vest	861,183	$	4.07	4.64	$	1,858,506

The aggregate intrinsic value in the table above represents the total pre-tax amount of the proceeds, net of exercise price, which would have been received by option holders if all option holders had exercised and immediately sold all options with an exercise price lower than the market price on March 28, 2013, based on the closing price of the Company’s common stock of $5.90 on that date.

The Company did not grant any options during the three months ended March 31, 2013.

As of March 31, 2013, there was approximately $940,000 of total unrecognized compensation expense related to unvested stock options under the Plan. That expense is expected to be recognized over the weighted-average remaining vesting period of 0.84 years.

Effective April 1, 2012, the Company entered into an advisory agreement with director Dr. Robert J. Kammer (the “Advisory Agreement”) pursuant to which Dr. Kammer provides certain services to the Company in addition to his services as a director, including, but not limited to, providing management and advice regarding the operations of the Company’s clinical trials and assistance in the identification of new drug delivery technologies. As part of Dr. Kammer’s compensation under the Advisory Agreement, the Company granted to Dr. Kammer on April 1, 2012 an option to purchase up to 60,000 shares of the Company’s common stock at an exercise price of $4.50 per share under the Plan. The option terminates on March 31, 2017 and vests over a two year period, with 15,000 options vested immediately upon issuance and an additional 1,875 options vesting monthly for the next twenty four months thereafter. In accordance with accounting guidance for stock-based compensation to consultants, the unvested portion of the option will be remeasured on an interim basis until the termination of the Advisory Agreement. The Advisory Agreement will terminate on the earlier of the completion of the services or the second anniversary of the date of the agreement. As of March 31, 2013, the remeasured fair value of the unvested portion of the stock option, based on the Black-Scholes-Merton pricing model, was $143,409.

On January 13, 2013, the Company entered into a statement of work agreement with a clinical development consultant (the “SOW Agreement”) and as part of the compensation in the SOW Agreement, the Company agreed to issue an option to purchase up to 11,429 shares of the Company’s common stock at an exercise price of $8.75 per share. The option will terminate on January 13, 2017 and vest over an eighteen month period beginning on March 15, 2014, with approximately 635 options vesting monthly for the eighteen months. As of March 31, 2013, this stock option had not yet been issued. However, the Company has accounted for an expense based on the fair value of the proposed option value and the applicable vesting schedule according to the option grant criteria defined in the SOW Agreement. In accordance with accounting guidance for share-based compensation to consultants, the unvested portion of options issued to consultants will be revalued on an interim basis until the termination of the consulting agreement and all of the options have been fully vested. The remeasured fair value of the unvested portion of the proposed stock option, based on the Black-Scholes-Merton option pricing model, was $56,012.

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. Expected volatilities are based on historical volatility of the Company’s common stock and other factors. The expected term of options granted was determined in accordance with the “simplified approach” as the Company has limited historical data on employee exercises and post-vesting employment termination behavior. The expected risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual effect differs from those estimates. For option grants to employees and directors, the Company assigns a forfeiture factor of 10%. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. Utilizing these assumptions, the fair value is determined at the date of grant.

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing the grant issued to the consultant:

	Three Months Ended March 31, 2013
Weighted-average fair value of options granted	$	6.14
Expected terms (in years)		4
Expected volatility		304% - 372%
Risk-free interest rate		0.35%-0.65%
Dividend yield		-

The following table summarizes information about stock options outstanding and exercisable at March 31, 2013:

	Options Outstanding				Options Exercisable
		Weighted
		Average		Weighted			Weighted
		Remaining		Average			Average
	Number	Contractual		Exercise	Number		Exercise
Range of Exercise Prices	Outstanding	Life in Years		Price	Exercisable		Price
$2.40-3.20	250,000	6.32	$	2.80	225,000	$	2.76
$3.60 - $4.50	624,643	3.88	$	4.07	372,218	$	4.25
$10.75	7,603	4.71	$	10.75	1,901	$	10.75
$28.00	2,000	5.65	$	28.00	1,700	$	28.00
$42.80	5,030	7.49	$	42.80	5,030	$	42.80
$80.00	250	4.47	$	80.00	250	$	44.56
	889,526	4.60	$	4.07	606,099	$	4.12

The stock-based compensation for stock options was $340,230 during the three months ended March 31, 2013.

Warrants

From time to time, the Company issues warrants to purchase shares of the Company’s common stock to investors, note holders, underwriters and to non-employees for services rendered or to be rendered in the future.

In February 2013, the Company issued 30,000 common stock purchase warrants to a consultant with an exercise price of $5.25 per share. The warrants expire three years following the issuance date, and vest as follows: 10,000 shares vested immediately upon execution of the consulting agreement, and the remaining shares will vest evenly (4,000 shares) on each of the five monthly periods following the date of the consulting agreement provided the consultant continues to provide services to the Company as of the applicable vesting date.

A summary of the activity of the warrants for the three months ended March 31, 2013 is as follows:

	Number of Shares Subject to Warrants Outstanding	Weighted Avg. Exercise Price

Warrants outstanding - January 1, 2013	556,872	$	7.66
Granted	209,860		5.25
Exercised	-
Expired	-		-
Warrants outstanding and exercisable - March 31, 2013	766,732	$	7.00
Weighted average remaining contractual life of the outstanding warrants in years - March 31, 2013	2.75

The fair value of each warrant is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing the warrants issued:

	2013
Weighted-average fair value of warrants granted	$	4.77
Expected terms (in years)		3-5
Expected volatility		282%-346%
Risk-free interest rate		0.36%-0.92%
Dividend yield		-

A list of the warrants outstanding as of March 31, 2013 is included in the table below:

	Warrants Outstanding				Warrants Exercisable
		Warrants		Exercise	Warrants	Expiration
Warrant Series	Issue Date	Outstanding		Price	Exercisable	Date
Pipe Investors	5/12/2008	5,682	$	176.00	5,682	5/12/2013
DermaStar	4/25/2012	48,262	$	5.93	48,262	4/25/2015
April PPM	4/25/2012	502,928	$	5.93	502,928	4/25/2015
Underwriter Warrants	2/7/2013	179,860	$	5.25	179,860	2/7/2018
IR Consultant	2/28/2013	30,000	$	5.25	14,000	2/28/2016
		766,732	$	7.00	750,732

The stock-based compensation for warrants was $75,560 during the three months ended March 31, 2013.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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+ Details

5. COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

NOTE 5. COMMITMENTS AND CONTINGENCIES

Commitments

The Company leases its office facilities under a noncancelable operating lease, which expires on February 28, 2014, with a monthly amount due of $2,972 for the first 12 months beginning March 1, 2012, and $3,715 due monthly for the next 12 months. For the remaining fiscal year 2013, the Company’s lease commitment is approximately $33,435.

Indemnities and Guarantees

In addition to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into separate indemnification agreements with the Company’s directors and officers. These agreements require the Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessor in connection with its facility lease for certain claims arising from the use of the facility. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying condensed consolidated balance sheets.

PCCA License Agreement

PCCA has granted to the Company and its affiliates certain exclusive rights under PCCA’s proprietary formulations, other technologies and data, and the Company has agreed to pay to PCCA certain royalties on net sales relating to the sale of certain future products, which royalties range from 4.5% to 9% for each product, subject to certain minimum royalty payments. PCCA may terminate the PCCA License Agreement if the Company fails to commence efforts to research and develop future products within certain time periods, as set forth in the PCCA License Agreement.

PCCA Strategic Alliance Agreement

On February 18, 2013, we entered into a Strategic Alliance Agreement (the “Agreement) with PCCA. Under the Agreement, PCCA has agreed that during the term of the Agreement, it will not introduce any of PCCA’s members or customers meeting certain criteria (the “Member/Customers”) to any third party whereby such third party licenses or otherwise acquires the intellectual property rights of such Member/Customer, without first presenting such an opportunity to the Company. PCCA may, but is not required to, present such opportunities to the Company, use reasonable efforts to facilitate an introductory meeting between the Member/Customer and the Company, and to further provide certain key technical assistance to a potential development project associated with the Member/Customer’s intellectual property rights. In the event the Company and a Member/Customer introduced to the Company by PCCA enter into a commercial agreement for the license or acquisition of the intellectual property rights owned by the Member/Customer, PCCA will be entitled to receive certain cash fees up to an aggregate of $100,000, as well as a commission based on net sales, if any, generated by the Company as a result of the acquired intellectual property rights. The Agreement has a term of one year and is automatically extended for successive one year periods unless either party gives the other written notice of non-renewal.

- Definition

The entire disclosure for commitments and contingencies.

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Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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+ Details

6. SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

NOTE 6. SUBSEQUENT EVENTS

The Company has performed an evaluation of events occurring subsequent to March 31, 2013 through the filing date of this Quarterly Report. Based on our evaluation, nothing other than the events described below need to be disclosed.

In April 2013, the Board approved grants of options to purchase 120,000 shares of common stock to employees of the Company under the Plan, effective May 1, 2013. The exercise price of the options is $6.00 per share and the options vest on a quarterly basis over three years following the date of the grants provided the employees continue to be employed by the Company as of the applicable vesting date.

In April 2013 the Company entered into a lease agreement for 3,874 square feet of office space from May 1, 2013 to September 30, 2016, effective May 1, 2013. Monthly rent begins on May 1, 2013 in the amount of $10,406, with a 3% increase in the base rent amount on an annual basis. The lease agreement allows for the monthly rent amount to be abated for five months at various times during the lease agreement. The total lease obligation is approximately $387,900.

In April 2013, the Board approved a grant of options to purchase 51,675 shares of common stock under the Plan to a new employee of the Company, effective on April 22, 2013, the date of commencement of employment. The exercise price of the options is $9.00 per share. One-third of the options vest on April 22, 2014 and the remaining options vest on a quarterly basis over the following two years, provided the employee continues to be employed by the Company as of the applicable vesting date.

On May 2, 2013, the Board of Directors approved the amendment and restatement of the Company’s 2007 Stock Incentive and Awards Plan (the “Amended and Restated Plan”). The Amended and Restated Plan provides for (i) the issuance of restricted stock units (in addition to the previously authorized options and restricted stock) and (ii) incorporates the prior three stockholder-approved amendments to the Plan. Furthermore, on May 2, 2013 the Board of Directors approved an amendment of the Amendment and Restated Plan (the “Proposed Amendment”) to increase the number of shares issuable under the Amended and Restated Plan from 2,400,000 shares to 5,000,000 shares and the maximum number of restricted stock units and shares of restricted stock that may be granted to an individual in a calendar year from 600,000 shares to 1,750,000 shares. The Proposed Amendment must be approved by the Company’s stockholders. The Company expects to present the Proposed Amendment as a proposal at the Company’s 2013 Annual Meeting of Stockholders.

Effective upon approval of the Proposed Amendment by the Company’s stockholders, Mr. Baum has agreed to cancel 120,000 unvested restricted stock units granted to him in July 2012.

On May 2, 2013, the Company entered into an amended and restated employment agreement (the “Agreement”) with Mr. Baum with respect to his employment as Chief Executive Officer. The Agreement has an initial term of three years and will automatically renew thereafter for consecutive one year terms unless earlier terminated by either party. The Agreement provides for an initial annual base salary of $329,000 and a target annual bonus incentive under the Company’s Management Incentive Plan (“MIP”) of 45% of his annual base salary. In connection with the Agreement, Mr. Baum was granted a performance-based restricted stock unit award (the “Performance Equity Award”) comprised of up to 1,050,000 performance stock units. These performance stock units will only vest if the Company achieves and maintains certain stock price targets during the three year period following the grant date and are subject to Mr. Baum’s employment with the Company on the third anniversary of the grant date (other than as described further below). The earning and issuance of any shares under the Performance Equity Award that would exceed the number of shares available for grant and/or the applicable annual per person grant limit under the Amended and Restated Plan are subject to approval by the Company’s stockholders of the Plan Amendment. The Agreement contains restrictions on Mr. Baum’s ability to sell shares received pursuant to any grant made to him under the Agreement during the term of the Agreement.

In the event the Company terminates Mr. Baum’s employment without Cause (as defined in the Agreement) or Mr. Baum terminates his employment for Good Reason (as defined in the Agreement) (a termination without Cause or for Good Reason a “Qualifying Termination”), Mr. Baum will be entitled to (i) accrued and unpaid base salary through the termination date; (ii) a prorated MIP bonus payment for the year in which the termination occurs, (iii) a severance payment equal to the sum of (A) his annual base salary plus (B) one times his actual MIP bonus payment in the two prior years; and (iv) continued group health plan coverage through COBRA for 18 months. In the event of a Qualifying Termination, the Performance Equity Award for which the relevant stock price vesting targets have been satisfied at the time of such Qualifying Termination shall vest immediately. In addition, any Performance Equity Awards for which the relevant stock price vesting targets are satisfied within 12 months following the Qualifying Termination will vest on the date of the satisfaction of such vesting criteria. With respect to the Performance Equity Award, in the event of a Qualifying Termination after the first anniversary and prior to the third anniversary of the grant date and within one year of a change of control, all performance stock units subject to the Performance Equity Award that would have vested prior to such date based on the achievement of the associated Company stock price targets will vest and all performance stock units subject to the Performance Equity Award with an associated stock price target at or below the per share consideration in the Change of Control transaction shall vest in full.

Furthermore, the Agreement provides for the issuance of 180,000 stock options and 200,000 restricted stock units. The stock options vest on a quarterly basis over three years and have an exercise price of $8.99 per share and the restricted stock units vest on the third anniversary of the agreement, in each case provided that Mr. Baum is employed with the Company on the applicable vesting date. Mr. Baum will also be eligible for an annual long-term incentive grants at the time grants are generally made to other senior executives.

OVERVIEW AND BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Company and Background

Basis of Presentation

Principles of Consolidation

Development Stage Enterprise

Research and Development

Revenue Recognition and Deferred Revenue

Product Revenues

License Revenues

Income Taxes

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.

Concentrations of Credit Risk

Deferred Offering Costs

Furniture and Equipment

Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of three to five years.

Deferred Rent

Fair Value Measurements

·	Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
·	Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
·	Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.

Stock-Based Compensation

The Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:

	For The Three Months Ended March 31, 2013			For The Three Months Ended March 31, 2012
Employees - selling, general and administrative	$	86,003		$	2,590
Employees - research and development		67,131			41,546
Directors - selling, general and administrative		202,792			74,368
Consultants - selling, general and administrative		117,389			-
Consultants - research and development		(62,600	)		-
Total	$	410,715		$	118,504

Basic and Diluted Loss per Common Share

stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options and warrants outstanding during the period.

The following table shows the computation of basic and diluted loss per share of common stock for the three months ended March 31, 2013 and 2012:

	For the three months ended			For the three months ended
	March 31, 2013			March 31, 2012

Numerator – Net loss	$	(1,465,481	)	$	(1,379,088	)
Denominator – weighted average number of shares
of common stock outstanding, basic and diluted		7,788,236			1,063,278
Loss per share, basic and diluted	$	(0.19	)	$	(1.30	)

Use of Estimates

Reclassifications

Recently Adopted Accounting Pronouncements

OVERVIEW AND BASIS OF PRESENTATION (Tables)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Stock-Based Compensation

The Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:

	For The Three Months Ended March 31, 2013			For The Three Months Ended March 31, 2012
Employees - selling, general and administrative	$	86,003		$	2,590
Employees - research and development		67,131			41,546
Directors - selling, general and administrative		202,792			74,368
Consultants - selling, general and administrative		117,389			-
Consultants - research and development		(62,600	)		-
Total	$	410,715		$	118,504

Earnings per share

The following table shows the computation of basic and diluted loss per share of common stock for the three months ended March 31, 2013 and 2012:

	For the three months ended			For the three months ended
	March 31, 2013			March 31, 2012

Numerator – Net loss	$	(1,465,481	)	$	(1,379,088	)
Denominator – weighted average number of shares
of common stock outstanding, basic and diluted		7,788,236			1,063,278
Loss per share, basic and diluted	$	(0.19	)	$	(1.30	)

3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Schedule of accounts payable and accrued expenses

Accounts payable and accrued expenses consisted of the following:

	March 31,		December 31,
	2013		2012
Accounts payable	$	503,147	$	286,686
Accrued offering costs		-		185,337
Deferred rent		1,734		2,477
Other accrued expenses		-		21,440
Stock-based compensation accrual		195,914		139,444
Total accounts payable and accrued expenses	$	700,795	$	635,384

STOCKHOLDERS EQUITY AND STOCK BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2013

Restricted Stock Units [Member]

Schedule of Plan Activity

A summary of the Company’s RSU activity and related information for the three months ended March 31, 2013 is as follows:

	Number of RSUs			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
RSUs outstanding - January 1, 2013		200,000		$	3.25
RSUs granted		-
RSUs vested		(40,000	)		3.25	$	210,000
RSUs cancelled		-			-
Balance at March 31, 2013		160,000		$	3.25	$	944,000

Stock Option Plan [Member]

Schedule of Plan Activity

A summary of the Plan activity for the three months ended March 31, 2013 is as follows:

	Number of shares			Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Options outstanding - January 1, 2013		905,806		$	5.26
Options granted		-			-
Options exercised		(1,030	)		4.00
Options expired		(15,250	)		74.75
Options outstanding - March 31, 2013		889,526		$	4.07		4.60	$	1,916,935
Options exercisable		606,099		$	4.12		5.24	$	1,332,648
Options vested and expected to vest		861,183		$	4.07		4.64	$	1,858,506

Schedule of fair value assumption

The table below illustrates the fair value per share determined by the Black-Scholes-Merton option pricing model with the following assumptions used for valuing the grant issued to the consultant:

	Three Months Ended March 31, 2013
Weighted-average fair value of options granted	$	6.14
Expected terms (in years)		4
Expected volatility		304% - 372%
Risk-free interest rate		0.35%-0.65%
Dividend yield		-

Schedule of shares outstanding and exercisable

The following table summarizes information about stock options outstanding and exercisable at March 31, 2013:

		Options Outstanding						Options Exercisable
				Weighted
				Average		Weighted				Weighted
				Remaining		Average				Average
		Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices		Outstanding		Life in Years		Price		Exercisable		Price
$	2.40-3.20		250,000		6.32	$	2.80		225,000	$	2.76
$	3.60 - $4.50		624,643		3.88	$	4.07		372,218	$	4.25
$	10.75		7,603		4.71	$	10.75		1,901	$	10.75
$	28.00		2,000		5.65	$	28.00		1,700	$	28.00
$	42.80		5,030		7.49	$	42.80		5,030	$	42.80
$	80.00		250		4.47	$	80.00		250	$	44.56
			889,526		4.60	$	4.07		606,099	$	4.12

Warrant

Schedule of Plan Activity

A summary of the activity of the warrants for the three months ended March 31, 2013 is as follows:

	Number of Shares Subject to Warrants Outstanding		Weighted Avg. Exercise Price

Warrants outstanding - January 1, 2013		556,872	$	7.66
Granted		209,860		5.25
Exercised		-
Expired		-		-
Warrants outstanding and exercisable - March 31, 2013		766,732	$	7.00
Weighted average remaining contractual life of the outstanding warrants in years - March 31, 2013		2.75

Schedule of fair value assumption

	2013
Weighted-average fair value of warrants granted	$	4.77
Expected terms (in years)		3-5
Expected volatility		282%-346%
Risk-free interest rate		0.36%-0.92%
Dividend yield		-

Schedule of shares outstanding and exercisable

A list of the warrants outstanding as of March 31, 2013 is included in the table below:

	Warrants Outstanding					Warrants Exercisable
		Warrants		Exercise		Warrants		Expiration
Warrant Series	Issue Date	Outstanding		Price		Exercisable		Date
Pipe Investors	5/12/2008		5,682	$	176.00		5,682	5/12/2013
DermaStar	4/25/2012		48,262	$	5.93		48,262	4/25/2015
April PPM	4/25/2012		502,928	$	5.93		502,928	4/25/2015
Underwriter Warrants	2/7/2013		179,860	$	5.25		179,860	2/7/2018
IR Consultant	2/28/2013		30,000	$	5.25		14,000	2/28/2016
			766,732	$	7.00		750,732

OVERVIEW AND BASIS OF PRESENTATION (Details) - USD ($)	3 Months Ended
OVERVIEW AND BASIS OF PRESENTATION (Details) - USD ($)	Mar. 31, 2013	Mar. 31, 2012
Compensation Expenses	$ 410,715	$ 118,504
EmployeesSellingAndAdminstrativeMember
Compensation Expenses	86,003	2,590
EmployeesResearchAndDevelopmentMember
Compensation Expenses	67,131	41,546
DirectorSellingAndAdminstrativeMember
Compensation Expenses	202,792	74,368
ConsultantsSellingAndAdminstrativeMember
Compensation Expenses	117,389
ConsultantsResearchAndDevelopment [Member]
Compensation Expenses	$ (62,600)

- 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

OVERVIEW AND BASIS OF PRESENTATION (Details 1) - USD ($)	3 Months Ended		176 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
Overview And Basis Of Presentation Details 1
Numerator - loss attributable to common stockholders	$ (1,465,481)	$ (1,379,088)	$ (25,569,749)
Denominator - weighted average number of shares outstanding, basic and diluted	7,788,236	1,063,278
Loss per share, basic and diluted	$ (0.19)	$ (1.30)

OVERVIEW AND BASIS OF PRESENTATION (Details Narrative) - USD ($)	3 Months Ended		176 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Dec. 31, 2012
Overview And Basis Of Presentation Details Narrative
Accumulated deficit	$ 25,600,000		$ 25,600,000
Revenue	2,500	$ 100,000	102,500
Cash deposits	$ 18,400,000		$ 18,400,000
Unvested restricted stock units ("RSUs") and warrants	1,854,354	2,113,830	1,854,354
Deferred offering costs	$ 0		$ 0	$ 596,281

2. SHORT-TERM RESTICTED INVESTMENT (Details Narrative)	Mar. 31, 2013 USD ($)
Short-Term Resticted Investment Details Narrative
Certificate of deposit	$ 50,000

3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Accounts Payable And Accrued Expenses Details
Accounts payable	$ 503,147	$ 286,686
Accrued offering costs		185,337
Deferred rent	1,734	2,477
Other accrued expenses		21,440
Stock-based compensation accrual	195,914	139,444
Total accounts payable and accrued expenses	$ 700,795	$ 635,384

3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details Narrative) - shares	Mar. 31, 2013	Dec. 31, 2012
Accounts Payable And Accrued Expenses Details Narrative
Common stock	26,667	20,000
Common stock from unissued stock options	11,429	0

4. STOCKHOLDERS EQUITY AND STOCK - BASED COMPENSATION (Details)	3 Months Ended
	Mar. 31, 2013 USD ($) $ / shares shares
Number of Shares
Granted
Cancelled/Forfeited	(15,250)
Weighted Average Grant Date Fair Value
Granted \| $ / shares	$ 6.14
Ending Balance \| $	$ 1,916,935
Restricted Stock Units [Member]
Number of Shares
Beginning Balance	200,000
Granted
Vested	(40,000)
Cancelled/Forfeited
Ending, Unvested	160,000
Weighted Average Grant Date Fair Value
Beginning, Unvested \| $ / shares	$ 3.25
Vested \| $ / shares	3.25
Cancelled \| $ / shares
Ending, Unvested \| $ / shares	$ 3.25
Beginning Balance \| $
Granted \| $
Vested \| $	210,000
Cancelled \| $
Ending Balance \| $	$ 944,000

4. STOCKHOLDERS EQUITY AND STOCK - BASED COMPENSATION (Details 1)	3 Months Ended
	Mar. 31, 2013 USD ($) $ / shares shares
Number of shares
Beginning Balance \| shares	905,806
Granted \| shares
Exercised \| shares	(1,030)
Cancelled/Forfeited \| shares	(15,250)
Ending Balance \| shares	889,526
Exercisable Ending Balance \| shares	606,099
Vested and expected to vest - September 30, 2012 \| shares	861,183
Weighted Avg. Exercise Price
Beginning Balance \| $ / shares	$ 5.26
Granted \| $ / shares
Exercised \| $ / shares	4
Cancelled/Forfeited \| $ / shares	74.75
Ending Balance \| $ / shares	4.07
Exercisable Ending Balance \| $ / shares	4.12
Vested and expected to vest - September 30, 2012 \| $ / shares	$ 4.07
Weighted Avg. Remaining Contractual Life
Ending Balance	4 years 7 months 6 days
Exercisable Ending Balance	5 years 2 months 27 days
Vested and expected to vest - September 30, 2012	4 years 7 months 21 days
Ending Balance \| $	$ 1,916,935
Exercisable Ending Balance \| $	1,332,648
Vested and expected to vest - September 30, 2012 \| $	$ 1,858,506

4. STOCKHOLDERS EQUITY AND STOCK - BASED COMPENSATION (Details 2)	3 Months Ended
	Mar. 31, 2013 $ / shares
Stockholders Equity And Stock - Based Compensation Details 2
Weighted-average fair value of options granted	$ 6.14
Expected terms	4 years
Expected volatility minimum	304.00%
Expected volatility maximum	372.00%
Risk-free interest rate Minimum	0.35%
Risk-free interest rate Maximum	0.65%
Expected Dividend Yield	0.00%

4. STOCKHOLDERS EQUITY AND STOCK - BASED COMPENSATION (Details 3)	3 Months Ended
	Mar. 31, 2013 $ / shares shares
Weighted Average Remaining Contractual Life in Years	4 years 7 months 6 days
Stock Option [Member]
Range of Exercise Prices Minimum	$ 2.4
Range of Exercise Prices Maximum	$ 3.2
Number Outstanding \| shares	250,000
Weighted Average Remaining Contractual Life in Years	6 years 3 months 26 days
Weighted Average Outstanding Exercise Price	$ 2.8
Number Exercisable \| shares	225,000
Weighted Average Exercisable Exercise Price	$ 2.76
StockOption1Member
Range of Exercise Prices Minimum	3.6
Range of Exercise Prices Maximum	$ 4.5
Number Outstanding \| shares	624,643
Weighted Average Remaining Contractual Life in Years	3 years 10 months 17 days
Weighted Average Outstanding Exercise Price	$ 4.07
Number Exercisable \| shares	372,218
Weighted Average Exercisable Exercise Price	$ 4.25
StockOption2Member
Range of Exercise Prices Maximum	$ 10.75
Number Outstanding \| shares	7,603
Weighted Average Remaining Contractual Life in Years	4 years 8 months 16 days
Weighted Average Outstanding Exercise Price	$ 10.75
Number Exercisable \| shares	1,901
Weighted Average Exercisable Exercise Price	$ 10.75
StockOption3Member
Range of Exercise Prices Maximum	$ 28
Number Outstanding \| shares	2,000
Weighted Average Remaining Contractual Life in Years	5 years 7 months 24 days
Weighted Average Outstanding Exercise Price	$ 28
Number Exercisable \| shares	1,700
Weighted Average Exercisable Exercise Price	$ 28
StockOption4Member
Range of Exercise Prices Maximum	$ 42.8
Number Outstanding \| shares	5,030
Weighted Average Remaining Contractual Life in Years	7 years 5 months 27 days
Weighted Average Outstanding Exercise Price	$ 42.8
Number Exercisable \| shares	5,030
Weighted Average Exercisable Exercise Price	$ 42.8
StockOption5Member
Range of Exercise Prices Maximum	$ 80
Number Outstanding \| shares	250
Weighted Average Remaining Contractual Life in Years	4 years 5 months 19 days
Weighted Average Outstanding Exercise Price	$ 80
Number Exercisable \| shares	250
Weighted Average Exercisable Exercise Price	$ 44.56
StockOption6Member
Number Outstanding \| shares	889,526
Weighted Average Remaining Contractual Life in Years	4 years 7 months 6 days
Weighted Average Outstanding Exercise Price	$ 4.07
Number Exercisable \| shares	606,099
Weighted Average Exercisable Exercise Price	$ 4.12

4. STOCKHOLDERS' EQUITY AND STOCK- BASED COMPENSATION (Details 4)	3 Months Ended
	Mar. 31, 2013 $ / shares shares
Number of shares
Beginning Balance	905,806
Granted
Exercised	(1,030)
Expired	(15,250)
Ending Balance	889,526
Weighted average remaining contractual life of the outstanding warrants in years - March 31, 2013	5 years 2 months 27 days
Weighted Avg. Exercise Price
Beginning Balance \| $ / shares	$ 5.26
Granted \| $ / shares
Exercised \| $ / shares	4
Expired \| $ / shares	74.75
Ending Balance \| $ / shares	$ 4.07
Warrant [Member]
Number of shares
Beginning Balance	556,872
Granted	209,860
Exercised
Expired
Ending Balance	766,732
Weighted average remaining contractual life of the outstanding warrants in years - March 31, 2013	2 years 9 months
Weighted Avg. Exercise Price
Beginning Balance \| $ / shares	$ 7.66
Granted \| $ / shares	5.25
Expired \| $ / shares
Ending Balance \| $ / shares	$ 7

4. STOCKHOLDERS' EQUITY AND STOCK- BASED COMPENSATION (Details 5)	3 Months Ended
	Mar. 31, 2013 $ / shares
Weighted-average fair value of options granted	$ 6.14
Expected terms Minimum	4 years
Expected volatility minimum	304.00%
Expected volatility maximum	372.00%
Risk-free interest rate Minimum	0.35%
Risk-free interest rate Maximum	0.65%
Warrant [Member]
Weighted-average fair value of options granted	$ 4.77
Expected terms Minimum	3 years
Expected terms Maximum	5 years
Expected volatility minimum	282.00%
Expected volatility maximum	346.00%
Risk-free interest rate Minimum	0.36%
Risk-free interest rate Maximum	0.92%
Dividend yield

4. STOCKHOLDERS' EQUITY AND STOCK- BASED COMPENSATION (Details 6)	Mar. 31, 2013 $ / shares shares
Warrant [Member]
Warrants Outstanding	766,732
Exercise Price \| $ / shares	$ 7
Warrants Exercisable	750,732
Pipe Investors
Issue Date	Dec. 05, 2008
Warrants Outstanding	5,682
Exercise Price \| $ / shares	$ 176
Warrants Exercisable	5,682
Expiration Date	May 12, 2013
DermaStar
Issue Date	Apr. 25, 2012
Warrants Outstanding	48,262
Exercise Price \| $ / shares	$ 5.93
Warrants Exercisable	48,262
Expiration Date	Apr. 25, 2015
April PPM
Issue Date	Apr. 25, 2012
Warrants Outstanding	502,928
Exercise Price \| $ / shares	$ 5.93
Warrants Exercisable	502,928
Expiration Date	Apr. 25, 2015
Underwriter Warrants
Issue Date	Feb. 07, 2013
Warrants Outstanding	179,860
Exercise Price \| $ / shares	$ 5.25
Warrants Exercisable	179,860
Expiration Date	Feb. 07, 2018
IR Consultant
Issue Date	Feb. 28, 2013
Warrants Outstanding	30,000
Exercise Price \| $ / shares	$ 5.25
Warrants Exercisable	14,000
Expiration Date	Feb. 28, 2016

STOCKHOLDERS EQUITY AND STOCK BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended		176 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
Preferred authorized, shares held	5,000,000		5,000,000
Preferred stock, par value	$ 0.001		$ 0.001
Stock based compensation	$ 236,000		$ 236,000
stock-based compensation for stock options	410,715	$ 118,504	4,696,143
Warrant [Member]
stock-based compensation for stock options	75,560
Restricted Stock Units [Member]
Unrecognized compensation expense related to Restricted Stock Units	$ 397,000
Weighted-average period of Restricted Stock Units	1 year 7 months 24 days
Stock-based compensation of Restricted Stock Units	$ (5,075)		(5,075)
StockOptionPlanMember
Unrecognized compensation expense related to unvested stock options	$ 940,000		940,000
Weighted-average remaining vesting period	10 months 2 days
Remeasured fair value of the unvested portion of the stock option	$ 143,409		$ 143,409
stock-based compensation for stock options	$ 340,230

5. COMMITMENTS AND CONTINGENCIES (Details Narrative)	3 Months Ended
5. COMMITMENTS AND CONTINGENCIES (Details Narrative)	Mar. 31, 2013 USD ($)
Commitments And Contingencies Details Narrative
Operating lease Expiry	Feb. 28, 2014
Operating lease due current	$ 2,972
Operating lease due next year	3,715
Operating lease due thereafter	$ 33,435