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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2013	Mar. 19, 2014	Jun. 30, 2013
Document And Entity Information
Entity Registrant Name	Retrophin, Inc.
Entity Central Index Key	0001438533
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 41,994,436
Entity Common Stock, Shares Outstanding		24,262,716
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2013

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash	$ 5,997,307	$ 11,388
Marketable securities	132,994
Prepaid expenses and other current assets	1,370,943	21,830
Total current assets	7,501,244	33,218
Property and equipment, net	127,427	23,790
Due from affiliate		137,547
Security deposit	244,058
Restricted cash	40,000
Indefinite lived intangible assets	10,560,355
Other amortizable intangible assets, net	2,025,795	2,196,710
Total Assets	20,498,879	2,391,265
Current liabilities:
Technology license liability		1,300,000
Deferred technology purchase liability, current portion	1,634,630
Accounts payable	3,553,567	1,023,320
Accrued expenses	2,779,695	2,467,796
Offering expense liability	746,739
Securities sold, not yet purchased	1,457,901
Notes payable - related parties		884,764
Investors deposit		100,000
Due to related parties		23,200
Derivative financial instruments, warrants	25,037,346
Total current liabilities	35,209,878	5,799,080
Deferred technology purchase liability	1,000,000
Deferred income tax liability, net	2,600,899
Total liabilities	38,810,777	5,799,080
Commitments and contingencies
Stockholders' Deficit:
Preferred stock Series A $0.001 par value; 20,000,000 shares authorized; 0 issued and outstanding
Common stock $0.0001 par value; 100,000,000 shares authorized; 18,546,363 and 8,952,905 issued and 18,415,573 and 8,952,905 outstanding, respectively	1,855	895
Additional paid-in capital	50,189,127	30,203,402
Treasury stock, at cost, 130,790	(957,272)
Deficit accumulated during the development stage	(67,435,621)	(33,612,112)
Accumulated other comprehensive loss	(109,987)
Total stockholders' deficit	(18,311,898)	(3,407,815)
Total liabilities and stockholders' deficit	$ 20,498,879	$ 2,391,265

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2013	Dec. 31, 2012
STOCKHOLDERS' EQUITY ( DEFICIT )
Preferred Series A, Par Value	$ 0.001	$ 0.001
Preferred Series A, Authorized	20,000,000	20,000,000
Preferred Stock Shares A, Issued	0	0
Preferred Stock Shares A, Outstanding	0	0
Common Stock Par Value	$ 0.0001	$ 0.0001
Common Stock Shares Authorized	100,000,000	100,000,000
Common Stock Shares Issued	18,546,363	8,952,905
Common Stock Shares Outstanding	18,415,573	8,952,905

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)	12 Months Ended		34 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Operating expenses
Selling, general and administrative - inclusive of share base compensation $4,384,220, $22,410,222, and $28,773,741	$ 16,888,064	$ 29,594,515	$ 49,514,264
Research and development - inclusive of share based compensation $259,076, $0, and $259,076	7,084,009	662,502	7,978,522
Total operating expenses	23,972,073	30,257,017	57,492,786
Operating loss	(23,972,073)	(30,257,017)	(57,492,786)
Other income (expense)
Interest expense, net	(46,344)	(84,087)	(130,356)
Registration payment obligation income	360,000		360,000
Registration payment obligation expense	(360,000)		(360,000)
Realized gain on sale of marketable securities, net	374,482		374,482
Change in fair value of derivative financial instruments - warrants	(10,099,926)		(10,099,926)
Loss on transactions denominated in foreign currencies	(3,873)	(2,752)	(11,260)
Total other expense, net	(9,775,661)	(86,839)	(9,867,060)
Loss before provision for income taxes	(33,747,734)	(30,343,856)	(67,359,846)
Provision for income taxes	(75,775)		(75,775)
Net loss	$ (33,823,509)	$ (30,343,856)	(67,435,621)
Net loss per common share - basic and diluted	$ (2.38)	$ (8.29)
Weighted average common shares outstanding, basic and diluted	14,205,264	3,662,114
Comprehensive Loss:
Net loss	$ (33,823,509)	$ (30,343,856)	(67,435,621)
Unrealized loss on marketable securities	(109,987)		(109,987)
Comprehensive Loss	$ (33,933,496)	$ (30,343,856)	$ (67,545,608)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($)	12 Months Ended		34 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Income Statement [Abstract]
Compensation and related costs - Share based compensation	$ 4,384,220	$ 22,410,222	$ 28,773,741
Research and development - share based compensation	$ 259,076	$ 0	$ 259,076

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($)	Common Stock	Common stock in treasury	Additional Paid-In Capital	Receivables Due From Stockholder	Accumulated other comprehensive loss	Accumulated Deficit	Total
Beginning Balance, Shares at Mar. 10, 2011
Beginning Balance, Amount at Mar. 10, 2011
Issuance of common shares, Shares	1,608,300
Issuance of common shares, Amount	$ 161		24,839	(25,000)
Issuance of common shares to founders in connection with the initial capital contribution, Shares	50,000
Issuance of common shares to founders in connection with the initial capital contribution, Amount	$ 5		95				100
Incentive shares granted - employees, Shares	1,758,300
Incentive shares granted - employees, Amount	$ 176		(176)
Incentive shares granted- non employees, Shares	381,000
Incentive shares granted- non employees, Amount	$ 38		(38)
Incentive shares forfeited - employees, Shares	(45,835)
Incentive shares forfeited - employees, Amount	$ (5)		5
Share based compensation - employees			1,724,967				1,724,967
Share based compensation - non employees			254,332				254,332
Issuance of shares in connection with March 2011 private placement, net of fees of $66,061, Shares	253,750
Issuance of shares in connection with March 2011 private placement, net of fees of $66,061, Amount	$ 25		658,914				658,939
Prior issuance of Series A preferred in connection with March 2011 private placement, net of fees of $1,367, exchanged to common stock, Shares	36,750
Prior issuance of Series A preferred in connection with March 2011 private placement, net of fees of $1,367, exchanged to common stock, Amount	$ 4		103,629				103,633
Loan made to stockholder				(10,000)			(10,000)
Net loss						(3,268,256)	(3,268,256)
Ending Balance, Shares at Dec. 31, 2011	4,042,265
Ending Balance, Amount at Dec. 31, 2011	$ 404		2,766,567	(35,000)		(3,268,256)	(536,285)
Beginning Balance, Shares at Mar. 10, 2011
Beginning Balance, Amount at Mar. 10, 2011
Unrealized loss on marketable securities							(109,987)
Loan made to stockholder							382,900
Net loss							(67,435,621)
Ending Balance, Shares at Dec. 31, 2013	18,546,363	(130,790)
Ending Balance, Amount at Dec. 31, 2013	$ 1,855	$ (957,272)	50,189,127		(109,987)	(67,435,621)	(18,311,898)
Beginning Balance, Shares at Dec. 31, 2011	4,042,265
Beginning Balance, Amount at Dec. 31, 2011	$ 404		2,766,567	(35,000)		(3,268,256)	(536,285)
Issuance of Series A preferred in connection with January 2012 private placement, net of fees of $61,677 recapitalized into common stock, Shares	326,963
Issuance of Series A preferred in connection with January 2012 private placement, net of fees of $61,677 recapitalized into common stock, Amount	$ 33		1,806,644				1,806,677
Issuance of Series A preferred in connection with May 2012 private placement, net of fees of $12,275, Shares	470,764
Issuance of Series A preferred in connection with May 2012 private placement, net of fees of $12,275, Amount	$ 47		1,668,979				1,669,026
Shares transferred to consultants by founder for services rendered to the Company			4,400,000				4,400,000
Shares transferred to employees by founders for services rendered to the Company			1,375,000				1,375,000
Shares issued in accordance with technology license agreement, Shares	620,000
Shares issued in accordance with technology license agreement, Amount	$ 62		1,549,938				1,550,000
Shares outstanding at time of reverse merger completed on December 12, 2012, Shares	2,585,583
Shares outstanding at time of reverse merger completed on December 12, 2012, Amount	$ 259		1,142				1,401
Incentive shares granted - employees, Shares	866,180
Incentive shares granted - employees, Amount	$ 86		(86)				0
Incentive shares granted- non employees, Shares	87,503
Incentive shares granted- non employees, Amount	$ 9		(9)				0
Incentive shares forfeited - employees, Shares	(46,353)
Incentive shares forfeited - employees, Amount	$ (5)		5				0
Share based compensation - employees			14,638,850				14,638,850
Share based compensation - non employees			1,997,372				1,997,372
Receivable due from stockholder charged to compensation				407,900			407,900
Loan made to stockholder				(372,900)			372,900
Net loss						(30,343,856)	(30,343,856)
Ending Balance, Shares at Dec. 31, 2012	8,952,905
Ending Balance, Amount at Dec. 31, 2012	$ 895		30,203,402			(33,612,112)	(3,407,815)
Beginning Balance, Shares at Dec. 31, 2012	8,952,905
Beginning Balance, Amount at Dec. 31, 2012	$ 895		30,203,402			(33,612,112)	(3,407,815)
Beginning Balance, Shares at Dec. 31, 2012	8,952,905
Beginning Balance, Amount at Dec. 31, 2012	$ 895		30,203,402			(33,612,112)	(3,407,815)
Beginning Balance, Shares at Dec. 31, 2012	8,952,905
Beginning Balance, Amount at Dec. 31, 2012	$ 895		30,203,402			(33,612,112)	(3,407,815)
Incentive shares granted - employees, Shares	135,000
Incentive shares granted - employees, Amount	$ 14		(14)
Incentive shares forfeited - employees, Shares	(20,833)
Incentive shares forfeited - employees, Amount	$ (2)		2
Share based compensation - employees			1,424,528				1,424,528
Share based compensation - non employees			3,218,768				3,218,768
Incentive shares forfeited - non employees, Shares	(37,500)
Incentive shares forfeited - non employees, Amount	$ (4)		4
Issuance of common stock in connection with January 2013 private placement at $3.00 per share, net of fees of $0	272,221
Issuance of common stock in connection with January 2013 private placement at $3.00 per share, net of fees of $0	$ 27		816,637				816,664
Issuance of common stock in connection with February 2013 private placement at $3.00 per share, net of fees of $928,986 and registration payment obligation of $360,000	3,045,929
Issuance of common stock in connection with February 2013 private placement at $3.00 per share, net of fees of $928,986 and registration payment obligation of $360,000	$ 305		2,441,124				2,441,429
Issuance of common stock in connection with August 2013 private placement at $4.50 per share, net of fees of $2,780,563 and payment made to February investors for inducement to participate in August financing of $2,238,681 (unaudited)	5,531,401
Issuance of common stock in connection with August 2013 private placement at $4.50 per share, net of fees of $2,780,563 and payment made to February investors for inducement to participate in August financing of $2,238,681 (unaudited)	$ 553		10,670,020				10,670,573
Issuance of common stock in connection with payment made to February investors for inducement to participate in August financing, 271,222 shares at $4.50 per share and 20,685 shares at $5.00 per share (unaudited), shares	291,907
Issuance of common stock in connection with payment made to February investors for inducement to participate in August financing, 271,222 shares at $4.50 per share and 20,685 shares at $5.00 per share (unaudited), value	$ 29		1,323,894				1,323,923
Treasury stock, shares		(130,790)
Treasury stock, amount		$ (957,272)					(957,272)
Shares issued on behalf of related party, Shares	11,000
Shares issued on behalf of related party, Amount	$ 1		80,799				80,800
Adjustment to existing shareholder, shares	5,333
Adjustment to existing shareholder (unaudited)	$ 1		9,999
Unrealized loss on marketable securities					(109,987)		(109,987)
Loan made to stockholder
Net loss						(33,823,509)	(33,823,509)
Ending Balance, Shares at Dec. 31, 2013	18,546,363	(130,790)
Ending Balance, Amount at Dec. 31, 2013	$ 1,855	$ (957,272)	$ 50,189,127		$ (109,987)	$ (67,435,621)	$ (18,311,898)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended		34 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Cash Flows From Operating Activities
Net loss	$ (33,823,509)	$ (30,343,856)	$ (67,435,621)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	215,993	124,885	341,233
Realized gain on marketable securities	(374,482)		(374,482)
Compensation in lieu of stockholder receivable		407,900	407,900
Deferred provision for income taxes	75,775		75,775
Share based compensation - employees	1,424,528	16,012,850	19,162,345
Share based compensation - non-employees	3,218,768	6,397,372	9,870,472
Shares issued on behalf of related party	80,800		80,800
Registration payment obligation expense	360,000		360,000
Reversal of registration payment obligation liability	(360,000)		(360,000)
Share based payment - Technology license contingent fee		1,550,000	1,550,000
Change in estimated fair value of liability classified warrants	10,099,926		10,099,926
Changes in operating assets and liabilities
Prepaid expenses and other current assets	(1,349,113)	(14,830)	(1,370,943)
Technology license fees		150,000	150,000
Accounts payable and accrued expenses	2,842,146	2,978,940	6,330,941
Net cash (used) in operating activities	(17,589,168)	(2,736,739)	(21,111,654)
Cash Flows From Investing Activities
Purchase of fixed assets	(117,033)	(24,774)	(144,679)
Purchase of indefinite lived intangible assets	(5,400,601)		(5,400,601)
Purchase of amortizable intangible asset	(31,682)	(1,168,093)	(1,199,775)
Security deposit	(106,511)		(106,511)
Repayment of technology license liability	(1,300,000)		(1,300,000)
Proceeds from the sale of marketable securities	4,385,425		4,385,425
Purchase of marketable securities	(4,124,482)		(4,124,482)
Proceeds from securities sold, not yet purchased	4,193,719		4,193,719
Cover securities sold, not yet purchased	(2,865,260)		(2,865,260)
Increase in restricted cash	(40,000)		(40,000)
Cash received in merger transaction		3,721	3,721
Payments made on behalf of affiliate		(137,547)	(137,547)
Loans made to stockholder		(372,900)	(382,900)
Net cash used in investing activities	(5,406,425)	(1,699,593)	(7,118,890)
Cash Flows From Financing Activities
Proceeds from related parties		10,500	56,500
Repayment of net amounts due to related parties	(13,200)	(33,300)	(46,500)
Proceeds from note payable - related party		930,000	930,000
Repayment of note payable - related party	(884,764)	(45,236)	(930,000)
Investors' deposit	(100,000)	100,000
Proceeds received from issuance of common stock, net	30,936,748	3,475,703	35,175,123
Purchase of treasury stock, at cost	(957,272)		(957,272)
Net cash provided in financing activities	28,981,512	4,437,667	34,227,851
Net increase in cash	5,985,919	1,335	5,997,307
Cash, beginning of period	11,388	10,053
Cash, end of period	5,997,307	11,388	5,997,307
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	28,263	14,764	43,027
Non-cash investing and financing activities:
Unrealized gain on marketable securities	3,292		3,292
Unrealized loss on securities sold, not yet purchased	(113,279)		(113,279)
Forfeiture of subscription receivable			25,000
Reclassification of due from related parties		500
Technology license liability		1,300,000
Adjustment to existing shareholders	10,000		10,000
Purchase of Kyalin in exchange for future consideration	2,634,630		2,634,630
Affiliate receivable applied to security deposit	137,547		137,547
Share based payment made to February investors for inducement to participate in August financing	1,323,923		1,323,923
Offering expense liability	746,739		746,739
Increase in basis of indefinite lived intangible assets acquired from Kyalin due to accrual of deferred tax liability	$ 2,525,124		$ 2,525,124

1. DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

1. DESCRIPTION OF BUSINESS

Organization and Description of Business

Retrophin, Inc. (the “Company”) was incorporated as Desert Gateway, Inc. (“Desert Gateway”) in the State of Oklahoma on February 8, 2008. Desert Gateway was originally a wholly-owned subsidiary of American Merchant Data Services, Inc. (“American Merchant”). In a 2008 reorganization of American Merchant, each share of outstanding common stock of American Merchant was converted into one share of Desert Gateway, while all of American Merchant’s operating assets, liabilities and tax attributes (including accumulated losses and net operating losses) carried forward to another subsidiary of American Merchant in a downstream merger with such other subsidiary. Accordingly, American Merchant was not considered a predecessor company of the Desert Gateway for accounting or legal purposes. Following the 2008 reorganization, Desert Gateway re-domiciled to Delaware. Since inception and until Desert Gateway’s merger with Retrophin, Inc., a private company (“Former Retrophin”) in December 2012 (as described below), Desert Gateway had no existing operations, and its sole purpose was to locate and consummate a merger or acquisition with a private entity.

Former Retrophin, Inc. was originally organized as a Delaware limited liability company, named Retrophin, LLC, on March 11, 2011 (“Inception”). On September 20, 2012, Retrophin filed a Certificate of Conversion to change its legal form of organization from a limited liability company to a corporation in the State of Delaware. This conversion (as more fully described in Note 14) into a corporation, which preceded the Merger on December 12, 2012, resulted in no change of ownership and was therefore considered a recapitalization of the LLC’s equity.

On September 13, 2012, Former Retrophin formed a new entity, Retrophin Pharmaceutical, Inc., a Delaware corporation and wholly-owned subsidiary of Retrophin, Inc.

On December 12, 2012, Desert Gateway completed the transactions contemplated under the Agreement and Plan of Merger, dated as of December 12, 2012 (the “Merger Agreement”), by and among Desert Gateway, Desert Gateway Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Desert Gateway, and Former Retrophin, our predecessor, in which Former Retrophin became a wholly-owned subsidiary and the principal operating subsidiary of the Company. The transactions contemplated by the Merger Agreement are collectively referred to herein as the “2012 Merger”. The Merger became effective on December 12, 2012, upon the filing of a certificate of merger with the Secretary of State of the State of Delaware. Accordingly, the Merger resulted in a change in control of Desert Gateway. Desert Gateway’s net assets amounted to $1,401 at the time of the merger, including $3,721 of cash and $2,320 of trade liabilities. The merger was accounted for as a reverse merger and recapitalization of Former Retrophin into Desert Gateway, whereby Desert Gateway is the legal acquirer and Former Retrophin is the legal acquiree and the accounting acquirer in this transaction.

Upon the consummation of the Merger all of the issued and outstanding Class A Preferred shares of Former Retrophin were exchanged into the Company’s common shares at the rate of 1 to 7 (each Class A Preferred stockholder received 7 shares of the Company’s common stock) and all of the issued and outstanding share of common stock of Former Retrophin were exchanged for shares of the Company’s common stock on exchange ratio of 1 to 5 (each Common stockholder of Former Retrophin received 5 shares of the Company’s common stock).

The consolidated financial statements give retroactive effect to these changes as if the merger occurred at the inception of the Company.

On February 14, 2013, the Company changed its name to “Retrophin, Inc.” through a short-form merger pursuant to Section 253 of the Delaware General Corporation Law, with its then wholly owned subsidiary, and our predecessor, Retrophin, with the Company continuing as the surviving corporation following the merger.

On April 1, 2013, the Company changed its fiscal year end from the last day of February to December 31 in order to conform its reporting cycle to that of Former Retrophin.

Retrophin, is an emerging biotechnology company dedicated to developing drugs for rare and life-threatening diseases. Retrophin’s primary business objective is to develop and commercialize therapies for orphan diseases. The Company is considered to be a development stage company and, as such, the Company’s financial statements are prepared in accordance with Accounting Standards Codification (“ASC”) 915, “Development Stage Entities” (“ASC 915”). The Company is subject to all of the risks and uncertainties associated with development stage companies.

2. LIQUIDITY AND FINANCIAL CONDITION AND MANAGEMENT'S PLANS

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

3. LIQUIDITY AND FINANCIAL CONDITION AND MANAGEMENT'S PLANS

The Company incurred a net loss of approximately $67.4 million, including stock-based compensation of $29.0 million for the period from March 11, 2011 (inception) to December 31, 2013. At December 31, 2013, the Company had a cash balance of approximately $6.0 million and a working capital deficiency of approximately $27.7 million; however, the working capital deficit includes a derivative liability of approximately $25.04 million for warrants issued in financing transactions. The Company’s accumulated deficit amounted to approximately $67.4 million at December 31, 2013.

The Company has principally financed its operations from inception using proceeds from sales of its equity securities in a series of private placement transactions (see Note 14). On January 9, 2014, the Company raised gross proceeds of approximately $40 million.

The Company to date has no revenues, significantly limited capital resources and is subject to all of the risks and uncertainties that are typical of a development stage enterprise. Significant uncertainties include, among others, whether it will be able to raise the capital it needs to finance its planned operations and whether such operations, if launched, will enable the Company to become a profitable enterprise.

On August 14, 2013, the Company and the investors who participated in the private placement transaction that the Company completed on February 14, 2013, entered into the first amendment to the registration rights agreement (the “Amended Registration Rights Agreement”) associated with that transaction. The Amended Registration Rights Agreement provides, among other things, for (i) a waiver of any and all liquidated damages that the Company incurred for its inability to cause the a registration statement to be declared effective within certain contractually defined time-frames stipulated in the original agreement; (ii) a commitment on the part of the investors in the February private placement to participate in a private placement transaction that the Company completed on August 15, 2013, and (iii) a covenant on the part of the Company to proceed with the sale of shares that were issued under the August 15, 2013 private placement transaction. In exchange, the Company paid an aggregate fee to these investors of $2,495,256 consisting of (i) 73,710 shares of the Company’s common stock with an aggregate fair value of $331,695 (based on the selling price of $4.50 per share in the August financing transaction); (ii) cash in the amount of $1,835,000; and (iii) warrants to purchase 98,756 shares of common stock with a fair value of $328,561. The investors were also given the option to purchase shares of the Company’s common stock at $4.50 as a use of the cash portion of the payment arrangement. Accordingly, $946,196 of the cash portion of the fee was settled in cash and the remainder was settled by the issuance of 197,512, shares. Additionally, the Company paid $103,425 to an investor to whom the Company sold shares in a private placement transaction in January 2013 and who participated in the August 2013 private placement transaction. This payment was settled entirely by the issuance of 20,685 shares of the Company’s common stock at a value of $5.00 per share (see Note 14).

In the second quarter of 2013, the Company, its Chief Executive Officer and a related party became parties to a series of agreements to settle up to $2,284,511 of liabilities, which Company management believes are the primary obligation of the related party. The Company paid $593,111 of these settlements in the second quarter on behalf of the related party and had outstanding liabilities of $1,691,400 as of September 30, 2013, which the Company paid as of the date of this filing. Concurrent with the execution and payment of such settlement agreements, the Company entered into indemnification agreements and received promissory notes from the related party whereby the related party agreed to pay the Company the principal amount of $2,284,511 plus interest at an annualized rate of 5% as reimbursement of payments that the Company made to settle a portion of the agreements. The Chief Executive Officer also agreed to deliver or cause to be delivered 47,128 shares of common stock to one of the counter parties as a separate component of one of these agreements. Accordingly, the Company does not believe it is required to record a liability for the shared-based component of this specific agreement during the third quarter ended September 30, 2013. There is uncertainty as to whether the related party will have sufficient liquidity to repay the Company or fund the indemnification agreements should it become necessary (see Note 12).

In addition, on August 29, 2013, the Company entered into and paid an additional settlement agreement for $300,000.

Effective October 1, 2013, the Company signed a Sponsored Research Agreement (“SRA”) with St. Jude Children’s Research Hospital (“St. Jude”). Unless otherwise terminated by operation of law or by acts of the parties in accordance with the terms of the agreement, the SRA shall be in full force and effect for a period of two (2) years and shall expire on October 1, 2015. The term may be extended by written agreement between the parties. The Company and St. Jude will collaborate on research focused on the study of PKAN disease and other infectious diseases (see Note 13).

On December 12, 2013, the Company entered into an agreement with Novartis Pharma AG and Novartis AG pursuant to which Novartis and Novartis AG agreed to grant the Company an exclusive, perpetual, and royalty-bearing license for the manufacture, development and commercialization of Syntocinon and related intranasal products in the United States. Under the license, Novartis and Novartis AG are obligated to transfer to the Company certain information that is necessary for or related to the development or commercialization of Syntocinon. The Company is responsible for conducting research and preclinical, clinical and other development of Syntocinon at its expense, and must use commercially reasonably efforts to develop Syntocinon in the United States.

As consideration for the license, the Company paid to Novartis and Novartis AG a $5 million upfront fee and is required to pay annual maintenance fees of $3 million after each anniversary until there has been regulatory approval, up to $34 million in developmental milestones for the first indication and up to $32 million in developmental milestones for the second indication. Should the Company commercialize the Product, it will be obligated to pay Novartis and Novartis AG a 10%-20% royalty on net sales of such products (see Note 7).

On December 12, 2013, the Company entered into an agreement “Weg License Agreement,” with Stuart Weg, MD, pursuant to which Dr. Weg agreed to grant the Company an exclusive worldwide license for the manufacture, development and distribution of products to be developed for the treatment of central nervous system disorders. As consideration for the license, the Company paid Dr. Weg $1,000,000, as well as certain maintenance and sublicensing fees. The Company is also obligated to pay Dr. Weg certain royalties on sales of Food and Drug Administration (the “FDA”) approved products.

On December 12, 2013, the Company entered into an agreement with The Regents of the University of California, on behalf of its San Diego Campus (“UCSD”), pursuant to which UCSD will undertake research projects related to a study on oxytocin. As consideration for the research program, the Company is obligated to pay an aggregate of approximately $1.54 million in fees to UCSD on a specified timeline, of which $0 has been paid as of the date hereof. As of December 31, 2013, the Company has accrued $40,082 in relation to the agreement. The Company is obligated to pay $192,500 per quarter through 2015. This agreement will continue until completion of the projects, unless earlier terminated by either party (i) due to a material uncured breach of such agreement by the other party or (ii) for any reason by giving written notice to the other party within 60 days.

On December 16, 2013 (the “Effective Date”), the Company announced that it had withdrawn its proposal to acquire all of the issued and outstanding shares of common stock of Transcept Pharmaceuticals, Inc. (“Transcept”). The Company no longer owns any shares of Transcept’s common stock. The Company realized a gain of $235,839 on the sale of Transcept shares for the year ended December 31, 2013.

On December 16, 2013, the Company entered into an employment agreement (the “Shkreli Employment Agreement”) with Martin Shkreli, pursuant to which Mr. Shkreli will continue to serve as the Company’s Chief Executive Officer (“CEO”).

On December 23, 2013, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Kyalin Biosciences, Inc., a Delaware corporation (“Kyalin”), pursuant to which the Company acquired all of the issued and outstanding shares of capital stock (the “Shares”) from the Kyalin Sellers (“Sellers”). In consideration for the Shares, the Company agreed to pay to the Sellers (i) $1 million of cash consideration at specified dates; and (ii) up to $4 million of the Company’s common stock, par value $0.0001 per share at certain dates and subject to the achievement of certain milestones. Under certain limited circumstances, the Company would be required to pay to the Sellers, in the place of such shares of common stock, an amount of cash equal to one-half (1/2) of the value of the shares of common stock issuable in accordance with the Stock Purchase Agreement (see Note 8.)

On March 26, 2014, the Company acquired 100% of the outstanding membership interests of Manchester Pharmaceuticals, LLC (“Manchester” or “acquiree”), a privately-held specialty pharmaceutical company that focuses on treatments for rare diseases. The acquisition of Manchester expands the Company’s ability to address the special needs of patients with ultra-rare diseases.

Under the terms of the agreement, the Company paid $29.5 million upon closing, of which $3.2 million was paid by Retrophin Therapeutics International LLC, a newly formed indirect wholly owned subsidiary, for rights of product sales outside of the United States. The Company entered into a promissory note with Manchester principals for $33 million to be paid in three equal installments of $11 million within three, six, and nine months after closing. Additional contingent payments will be made based on product sales. The Company expects to raise additional funds through a public equity offering, a private equity offering, and/or debt financing to satisfy its short term obligations.

The financial statements of the acquiree are not practicable to prepare at the time of filing due to the acquiree being privately held and not maintaining financial statements in accordance with U.S. GAAP. The initial accounting for the business combination is not yet complete and the Company is still performing procedures to determine the appropriate accounting. As such, the Company is unable to make the following disclosures, (i) pro forma data, (ii) purchase price allocation, (iii) expenses of the acquisition, and (iv) revenue and earnings of the acquiree since the acquisition date.

Management believes the Company’s ability to continue its operations depends on its ability to raise capital. The Company’s future depends on the costs, timing, and outcome of regulatory reviews of its product candidates and the costs of commercialization activities, including product marketing, sales and distribution. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recovery of assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

During the year ended December 31, 2013, the Company raised approximately $30.9 million in certain private placement transactions and raised an additional $40 million in gross proceeds through a public offering in January 2014. The Company expects to continue to finance its cash needs through additional public offerings, private equity offerings and debt financings, corporate collaboration and licensing arrangements and grants from patient advocacy groups, foundations and government agencies. Although management believes that the Company has access to capital resources, there are no commitments for financing in place at this time, nor can management provide any assurance that such financing will be available on commercially acceptable terms, if at all.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiary in conformity with United States of America generally accepted accounting principles (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.

Restatement of Prior Quarters

In the fourth quarter of 2013, the Company discovered that certain warrants issued to a placement agent in connection with the Company’s February Private Placement were not recorded (see Note 14) and certain expenses were overstated in the Company’s condensed consolidated financial statements for the first, second, and third quarters of 2013. The overstated expenses include costs related to the February 14, 2013 Private Placement Offering (see Note 14) and costs associated with the Company’s consultants. The adjustments necessary to reflect such issuance were recorded in the fourth quarter of 2013.

The following table (in thousands) sets forth the effects of the restatement on affected items within the Company’s previously reported Consolidated Balance Sheets for the periods ended March 31, 2013, June 30, 2013 and September 30, 2013 had the adjustments been made in the corresponding quarters.

	March 31, 2013				June 30, 2013				September 30, 2013
	As Reported		As Restated		As Reported		As Restated		As Reported		As Restated
Non-derivative liabilities	$	1,575	$	1,460	$	4,229	$	4,114	$	4,935	$	4,935
Derivative financial instruments, warrants		7,000		8,392		6,901		8,283		22,234		23,853
Total Liabilities		8,575		9,852		11,130		12,397		27,169		28,788
Additional paid in capital		34,773		33,621		34,946		33,794		48,652		47,500
Deficit accumulated during the development stage		(38,355)		(38,480)		(43,404)		(43,519)		(54,301)		(54,768)
Stockholder’s deficit	$	(3,582)	$	(4,859)	$	(8,458)	$	(9,725)	$	(5,804)	$	(7,423)

The following table (in thousands) sets forth the effects of the restatement on affected items within the Company’s previously reported Consolidated Statement of Operations for the three months ended March 31, 2013, June 30, 2013 and September 30, 2013 had the adjustments been made in the corresponding quarters.

	March 31, 2013				June 30, 2013				September 30, 2013
	As Reported		As Restated		As Reported		As Restated		As Reported		As Restated
Operating loss	$	(2,251)	$	(1,886)	$	(5,100)	$	(4,985)	$	(5,155)	$	(5,155)
Non-operating loss		(2,492)		(2,982)		51		61		(5,743)		(5,980)
Net loss		(4,743)		(4,868)		(5,049)		(4,924)		(10,898)		(11,135)
Net loss per common share, basic and diluted	$	(0.44)	$	(0.46)	$	(0.41)	$	(0.40)	$	(0.71)	$	(0.72)

The following table (in thousands) sets forth the effects of the restatement on affected items within the Company’s previously reported Consolidated Statement of Operations for the six and nine months ended June 30, 2013 and September 30, 2013, respectively had the adjustments been made in the corresponding quarters.

	June 30, 2013						September 30, 2013
	As Reported			As Restated			As Reported			As Restated
Operating loss	$	(7,351	)	$	(6,986	)	$	(12,505	)	$	(12,255	)
Non-operating loss		(2,441	)		(2,921	)		(8,184	)		(8,901	)
Net Loss	$	(9,792	)	$	(9,907	)	$	(20,689	)	$	(21,156	)
Net loss per common share, basic and diluted	$	(0.85	)	$	(0.86	)	$	(1.62	)	$	(1.65	)

Restatement of Previously Issued Financial Statements for Additional Disclosures

The Company, while undergoing a review of its condensed consolidated financial statements for the three and six months periods ended June 30, 2013, commenced an evaluation of its accounting for a series of settlement agreements that the Company, along with certain of its related parties, entered into between April 2013 and June 2013. These agreements, which Company management originally deemed to be the primary obligation of a related party, are more fully described in Notes 2 and 12. On September 13, 2013, Company management, under the authority of the board of directors, determined that these agreements should have been disclosed in the footnotes to its consolidated financial statements for the year ended December 31, 2012. Accordingly, the Company has restated the consolidated financial statements to include these disclosures.

The Company also determined that its obligation to pay liquidated damages under a registration payment that it entered into in connection with a financing transaction completed on February 14, 2013, which required the Company to cause a registration statement to be declared effective by the Securities and Exchange Commission by May 15, 2013, should have also been disclosed. Accordingly, the Company restated the condensed consolidated financial statements for the quarter ended March 31, 2013 to disclose that it allocated approximately $360.000 of the proceeds received in this financing transaction to a registration payment obligation that was deemed probable at the date that the financing transaction was completed.

Cash

For purposes of the statement of cash flows, the Company considers cash instruments with maturities of less than three months when purchased to be cash equivalents. There are no cash equivalents as of the balance sheet date. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

Marketable Securities

The Company accounts for marketable securities held as “available-for-sale” in accordance with ASC 320, “Investments Debt and Equity Securities” (“ASC 320”). The Company classifies these investments as current assets and carry them at fair value. Unrealized gains and losses are recorded as a separate component of stockholders’ equity as accumulated other comprehensive income. Realized gains or losses on marketable security transactions are reported in earnings and computed using the specific identification of cost basis. Marketable securities are maintained at one financial institution and are governed by the Company’s investment policy as approved by our Board of Directors. Fair values of marketable securities are based on quoted market prices. Valuation of marketable securities are further describe in Note 4.

Securities Sold, Not Yet Purchased

Securities sold, not yet purchased consist of marketable securities that the Company has sold short. In order to facilitate a short sale, the Company borrows the securities from another party and delivers the securities to the buyer. The Company will be required to "cover" its short sale in the future through the purchase of the security in the market at the prevailing market price and deliver it to the counterparty from which it borrowed. The Company is exposed to a loss to the extent that the security price increases during the time from when the Company borrowed the security to when the Company purchases it in the market to cover the short sale.

The Company accounts for securities sold, not yet purchased in accordance with ASC 815 – Derivative and Hedging (“ASC 815”), which states such transactions have two of the three characteristics of a derivative instrument and do not generally involve derivative instruments. Securities sold, not yet purchased are presented on the consolidated balance sheets with gains and losses reported in realized and unrealized gains on marketable securities on the consolidated statement of operations and comprehensive loss.

Restricted Cash

The Company holds restricted cash as a rent guarantee on an operating lease through September 2016.

Employee Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, “Stock Compensation” (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

Non-Employee Stock-Based Compensation

The Company accounts for equity instruments issued to non-employees in accordance with ASC 505, “Share Based Payments to Non-Employees” (“ASC 505”), and ASC 718 which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. Non-employee stock-based compensation charges are being amortized over their respective contractual vesting periods.

Use of Estimates

In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payments, estimating fair value of equity instruments recorded as derivative liabilities, estimating the useful lives of depreciable and amortizable assets and estimating the fair value of long-lived assets to assets whether impairment charges may apply.

Research and Development Costs

The Company develops new products through research and development and the licensing and acquisition of third-party businesses and technologies. Research and development costs are charged to operations as incurred and consist primarily of internal and external expenses related to conducting clinical trials, pre-clinical studies, regulatory activities, consulting, contract research and development, and compensation. For the years ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized $7,084,009, $662,502 $7,978,522, respectively, of research and development costs.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on March 11, 2011, all of its years of operations will be subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its consolidated financial position.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the period from March 11, 2011 (inception) through December 31, 2013. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Prior to conversion into a corporation on September 20, 2012, as a limited liability company, the Company was treated as a partnership for federal and state income tax purposes. Accordingly, no provision has been made for federal and state income taxes in the accompanying financial statements for any periods preceding September 20, 2012, since all items of income or loss are required to be reported on the income tax returns of the members, who are responsible for any taxes thereon. Profits and losses are allocated based upon capital in accordance with the permissible methods under Internal Revenue Code Section 704. Further, the Company incurred losses since inception through September 20, 2012, that would have resulted in the recognition of deferred tax assets that would have been fully reserved had the Company been subject to income taxes.

The Company is subject to the New York City Unincorporated Business Tax through September 19, 2012. Subsequent to the Company’s conversion to a corporation from a limited liability company on September 20, 2012, the Company reports and pays taxes based on its income or loss.

Foreign Currency Translation and Remeasurement

The Company accounts for foreign currency translation and remeasurement in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”). Under ASC 830, currency assets and liabilities are translated into the reporting currency, US Dollars, using period end rates of exchange and the related translation adjustments are recorded as a separate component of accumulated other comprehensive income. Functional statements of operations amounts expressed in functional currencies are translated using average exchange rates for the respective periods. Remeasurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the consolidated statements of operations.

Patents

The Company capitalized external cost, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent applications pending. The Company expense cost associated with maintaining and defending patents subsequent to their issuance in the period incurred. The Company amortizes patent cost once issued on a straight-line basis over the estimate useful lives of the patents. The Company assesses the carrying amounts of its patents for potential impairment when events or changes in circumstances indicate that the carrying amounts of our patents may not be recoverable. As of December 31, 2013 and 2012, patents costs of $49,775 and $18,093, respectively, are included in the accompanying consolidated balance sheets.

Long-Lived Assets

The Company accounts for long-lived assets in accordance with ASC 360, “Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Application of alternative assumptions, such as changes in estimate of future cash flows, could produce significantly different results. Because of the significance of the judgments and estimation processes, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change.

For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and estimated fair value.

Basic and diluted Net Loss Per Share

Basic and diluted net loss per share has been computed by dividing net loss by the weighted average number of common shares outstanding during the period. All potentially dilutive common shares have been excluded since their inclusion would be anti-dilutive.

An aggregate of 4,462,426 and 0 warrants were excluded from the computation of diluted net loss per common share for the years ended December 31, 2013 and 2012, respectively, because their inclusion would have an anti-dilutive effect for the periods presented.

An aggregate of 172,667 and 0 stock options were excluded from the computation of diluted net loss per common share for the years ended December 31, 2013 and 2012, respectively, because they would have an anti-dilutive effect for the periods presented.

An aggregate of 168,643 and 267,768 incentive shares were excluded from the computation of diluted net loss per common share for the years ended December 31, 2013 and 2012, respectively, because they were contingent shares subject to recall.

On January 9, 2014, the Company completed a public offering of 4.7 million shares of common stock at a price of $8.50 per share (see Note 17).

Subsequent to year end, an aggregate of 798,391 warrants were exercised for a total of $3,830,316 in cash received by the Company (see Note 17).

Derivative Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company calculates the fair value of the financial instruments using the Binomial Lattice options pricing model at inception and on each subsequent valuation date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period (see Note 5 and Note 6).

Joint and Several Liability Arrangements

The Company measures obligations resulting from joint and several liability arrangements as the sum of the amount that the Company has a) contractually agreed to pay, and b) any additional amounts that the Company expects to pay on behalf of its co-obligors.

Financial Instruments and Fair Value

The Company accounts for financial instruments in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC Topic 820 are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In estimating the fair value of the Company’s marketable securities available-for-sale and securities sold, not yet purchased, the Company used quoted prices in active markets (see Note 4 and Note 6).

In estimating the fair value of the Company’s derivative liabilities, the Company used the Binomial Lattice pricing model (see Note 5 and Note 6).

Financial assets with carrying values approximating fair value include cash as well as marketable securities, deposits on license agreements, prepaid expenses and other current assets. Financial liabilities with carrying values approximating fair value include accounts payable and accrued expenses.

Treasury Stock

Treasury stock is recorded at cost. Issuance of treasury stock is accounted for on a first-in, first-out basis. Differences between the cost of treasury stock and the re-issuance proceeds are charged to additional paid-in capital.

Registration Payment Arrangements

The Company accounts for registration payment arrangements in accordance with ASC 825-20, “Registration Payment Arrangements” (“ASC 825-20”) ASC 825-20 addresses an issuer’s accounting for registration payment arrangements. This pronouncement specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument, should be separately recognized and accounted for as a contingency in accordance with ASC 450-20, “Loss Contingencies” (“ASC 450”).

Reclassifications

Certain prior year financial statement balances have been reclassified to conform to the current year presentation. These reclassifications had no effect on the recorded net loss. The Company reclassified research and development expenses and selling, general, and administrative expenses.

Subsequent Events

The Company follows the provisions of ASC Topic 855-10, “Subsequent Events” (“ASC 855-10”) relating to subsequent events. This guidance establishes principles and requirements for subsequent events. This guidance defines the period after the balance sheet date during which events or transactions that may occur would be required to be disclosed in a company’s financial statements. The Company has evaluated subsequent events up to the date of issuance of this report.

Recently Issued Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-04 “Obligations Resulting from Joint and Several Liability Arrangements for Which the Amount at the Reporting Date is Fixed” (“ASU 2013-04”). The guidance in this update is effective for fiscal years beginning after December 15, 2013 with early adoption permitted. The guidance in this update requires companies to measure obligations resulting from joint and several liability arrangements as the sum of the amount the entity has a) contractually agreed to pay, and b) any additional amounts that the entity expects to pay on behalf of its co-obligors. The Company early adopted this guidance in the second quarter of 2013 (Note 2 and Note 12).

The FASB has issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company has not yet determined the effect of the adoption of this standard and it is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a significant effect on the accompanying consolidated financial statements.

4. MARKETABLE SECURITIES AND SECURITIES SOLD, NOT YET PURCHASED

12 Months Ended

Dec. 31, 2013

Marketable Securities [Abstract]

4. MARKETABLE SECURITIES AND SECURITIES SOLD, NOT YET PURCHASED

The Company measures marketable securities and securities sold, not yet purchased on a recurring basis. Generally, the types of securities the Company invests in are traded on a market such as the NASDAQ Global Market, which the Company considers to be Level 1 inputs.

Marketable securities and securities sold, not yet purchased at December 31, 2013 consisted of the following:


	Cost	Unrealized Gains	Unrealized Losses	Estimated Fair Value

Marketable securities available-for-sale:	$ 129,702	$ 3,292	$ -	$ 132,994
Securities sold, not yet purchased	$ 1,344,622	$ 13,256	$ 126,535	$ 1,457,901

For the year ended December 31, 2012, marketable securities and securities sold, not yet purchased were $0.

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
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-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41620-113959

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959

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-Publisher FASB
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
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-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4H
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624258-113959

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80748-113994

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4J
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708773-113959

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5618551-113959

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5580258-113959

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4E
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 25
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959

Reference 20: 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.(n))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

+ Details

5. DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2013

Investments, All Other Investments [Abstract]

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Company accounts for derivative financial instruments in accordance with ASC Topic 815-40, “Derivative and Hedging – Contracts in Entity’s Own Equity” (“ASC Topic 815-40”), instruments which do not have fixed settlement provisions are deemed to be derivative instruments. Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, the warrants issued in connection with the sale of the common stock during the year ended December 31, 2013 that do not have fixed settlement provisions, are not indexed to the Company’s own stock. The fair value of the warrants are classified as liability instruments due to a non-standard anti-dilution provision that provides for a reduction to the exercise price of the warrants if the Company issues additional equity or equity linked instruments in the future at an effective price per share less than the exercise price then in effect.

The warrants are re-measured at each balance sheet date based on estimated fair value. Changes in estimated fair value are recorded as non-cash valuation adjustments within other income (expense) in the Company’s accompanying consolidated statements of operations. The Company recorded a loss on a change in the estimated fair value of warrants of $10,099,926 during the year ended December 31, 2013

The Company calculated the fair value of the warrants using the Binomial Lattice pricing model. The assumptions used at the date of issuance and at December 31, 2013 are noted in the following table:

		As of
	Date of issuance February 14, 2013		Date of issuance August 14, 2013	Date of issuance August 15, 2013	December 31, 2013
Fair market price of common stock	$3.75		$4.50	$4.50	$7.00
Contractual term	5 years		5 years	5 years	4.12 – 4.62 years
Risk-free interest rate	0.86%		1.48%	1.48%	1.39%
Expected volatility	101%		106%	106%	93%-97%

Expected volatility is based on historical stock volatilities of several comparable publicly-traded companies over a period equal to the expected terms of the warrants, as the Company does not have a long trading history to estimate the volatility of its own common stock. The warrants have a transferability provision. Based on guidance provided in SEC Staff Accounting Bulletin No. 107 (“SAB 107”) for options issued with such a provision, the Company used the full contractual term as the initial expected term of the warrants. The risk free interest rate is based on the U.S. Treasury security rates for the remaining term of the warrants at the measurement date.

The following tables illustrates the Company’s derivative warrant issuances and balances outstanding as of, and during the years ended December 31, 2013 and 2012:

	Warrants	Weighted Average
	Warrants	Exercise Price		Fair Value
Outstanding at December 31, 2011	-	$	-	$	-
Issued	-		-		-
Canceled	-		-		-
Exercised	-		-		-
Outstanding at December 31, 2012	-	$	-	$	-
Issued	4,782,249		5.04		3.13
Canceled	-		-		-
Exercised	-		-		-
Outstanding at December 31, 2013	4,782,249	$	5.04	$	5.23

The following information applies to derivative warrants outstanding at December 31, 2013:

Exercise Price		Number of Warrants	Weighted Average Remaining Contractual Life (years)	Number Exercisable
$	3.60	1,917,792	4.12	1,917,792
$	6.00	2,864,457	4.62	2,864,457

The total intrinsic value of derivative warrants outstanding and exercisable as of December 31, 2013 is $9,384,950. The Company’s closing stock price was $7 on December 31, 2013.

6. FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

6. FAIR VALUE MEASUREMENTS

The following table presents the Company’s asset and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2013:

	As of December 31, 2013	Fair Value Hierarchy at December 31, 2013
	Total carrying and estimated fair value	Quoted prices in active markets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Asset:	$ 132,994	$ 132,994	$ -	$ -
Marketable securities, available-for-sale	$ 132,994	$ 132,994	$ -	$ -
	$ 25,037,346
Liabilities:
Derivative liability related to warrants		$ -	$ -	$ 25,037,346
Securities sold, not yet purchased	$ 1,457,901	$ 1,457,901	$ -	$ -

The following table sets forth a summary of changes in the estimated fair value of the Company’s Level 3 liability for the year ended December 31, 2013:

	Fair Value Measurements of Common Stock Warrants Using Significant Unobservable Inputs (Level 3)
Balance at January 1, 2013	$ -
Issuance of common stock warrants:
February 14, 2013	5,407,372
August 14, 2013	328,561
August 15, 2013	9,201,487
Total value upon issuance	14,937,420
Change in fair value of common stock warrant liability	10,099,926
Balance at December 31, 2013	$ 25,037,346

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, the Company performs a detailed analysis of the assets and liabilities that are subject to ASC Topic 820. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

7. INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

7. INTANGIBLE ASSETS

Indefinite lived intangible assets

The Company purchased, and currently owns (i) an exclusive, perpetual, and royalty-bearing license exclusive for the manufacture, development and commercialization of a product in the United States (ii) technology related to an intranasal formulation compound. The intellectual property underlying the license and formula is held in perpetuity. These intangible assets are measured initially at cost not subject to amortization and are tested for impairment annually or in interim reporting periods if events or changes in circumstances indicate that the carrying amounts of these intangible asset might not be recoverable. FASB ASC 740-10-55 (“ASC 740”) addresses the accounting treatment when an asset is acquired outside of a business combination, and the tax basis of that asset differs from the amount paid. As a result of this guidance, the Company has stepped-up the basis of its intangible assets and has recorded a deferred tax liability in the same amount, to account for the basis difference resulting from the Kyalin acquisition.

Indefinite lived intangible assets as of December 31, 2013 consist of the following:

Syntocinon License	$	5,000,000
Carbetocin Assets		5,560,355
Total	$	10,560,355

2013 Activity

Syntocinon License Agreement

On December 12, 2013 (the “Effective Date”), the Company entered into an agreement with Novartis Pharma AG and Novartis AG pursuant to which Novartis and Novartis AG agreed to grant the Company an exclusive, perpetual, and royalty-bearing license for the manufacture, development and commercialization of Syntocinon (the “Product”) and related intranasal products in the United States. Under the license, Novartis and Novartis AG are obligated to transfer to the Company certain information that is necessary for or related to the development or commercialization of Syntocinon. The Company is responsible for conducting research and preclinical, clinical trials and other development of Syntocinon at its expense, and must use commercially reasonably efforts to develop Syntocinon in the United States.

As consideration for the license, the Company paid to Novartis Pharma AG and Novartis AG a $5 million upfront fee and is required to make substantial payments at certain dates and upon the achievement of certain milestones as follows: (i) annual payments of $3,000,000 after each anniversary of the Effective Date until there has been Regulatory Approval of the Product for use in an autism or schizophrenia indication from the U.S. Food and Drug Administration, (ii) a milestone payment of $2,000,000 after the first patient is enrolled in a clinical trial for any indication not set forth in the New Drug Application (“NDA”) filed by Novartis on January 19, 1960 for the following indications: initial milk let-down, milk retention, incipient mastitis, impaired milk let-down, (the “Initial NDAregistration”), (iii) a milestone payment of $2,000,000 after the first patient is enrolled in a registration study in the first indication for the Product for any indication not set forth in the Initial NDA, (iv) a milestone payment of $2,000,000 after the first patient is enrolled in a registration study in the second indication for the Product for any indication not set forth in the Initial NDA, (v) a milestone payment of $5,000,000 after the receipt of positive results from a registration study in the first indication for the Product for any indication not set forth in the Initial NDA (vi) a milestone payment of $5,000,000 after receipt of positive results from a registration study in the second indication for the Product for any indication not set forth in the Initial NDA, (vii) a milestone payment of $10,000,000 after filing an NDA for the first indication for any indication not set for the in the Initial NDA, (viii) a milestone payment of $10,000,000 after filing an NDA for the second indication for any indication not set for the in the Initial NDA, (ix) a milestone payment of $15,000,000 after Regulatory Approval of the Product in the first indication from FDA for any indication not set forth in the Initial NDA, (x) a milestone payment of $15,000,000 after Regulatory Approval of the Product in the second indication from FDA for any indication not set forth in the Initial NDA. Should the Company commercialize the Product, it will be obligated to pay Novartis and Novartis AG a 10%-20% royalty on net sales of such products.

The Company capitalized the $5,000,000 upfront fee as an indefinite lived intangible asset. The Company will test for impairment when events and circumstances indicate that the assets might be impaired. As of December 31, 2013, the Company has accrued the annual maintenance fee in the amount of $150,000.

Kyalin - Carbetocin Technology Purchase

On December 23, 2013 (the “Closing Date”), the Company entered into a Stock Purchase Agreement with Kyalin to acquire substantially all of Kyalin’s assets which include patents, patent applications, contracts and data related to the intranasal formulation of the compound Carbetocin (collectively, the “Carbetocin Assets”) Carbetocin, similar to Oxytocin, has potential utility for the treatment of milk let-down in post pregnant women, inducing contractions during labor, postpartum hemorrhage, as well as for autism and schizophrenia.

The Company determined to treat the Stock Purchase Agreement as an asset acquisition in accordance with ASC 805, “Business Combinations” (“ASC 805”). In accordance with ASC 805, the Company is required to determine whether the transaction meets the definition of a business combination, which requires that the assets acquired and liabilities assumed constitute a business. The form in which the transaction takes place typically will not affect the determination of whether the acquisition is a business. A business is identified by evaluating whether there is sufficient continuity of operations so that disclosure of prior financial information is material to an understanding of future operations. Kyalin has had significantly limited activity since its formation on October 4, 2011.

The Company agreed to pay to the Sellers $3,000,000 of fixed minimum payments consisting of: (i) $500,000 of cash at closing, (ii) $500,000 of cash on the first anniversary of the Closing Date, (iii) $1,000,000 of the Company’s common stock, par value $0.0001 per share common stock on the first anniversary of the Closing Date, (iv) $1,000,000 of the Company’s common stock, par value $0.0001 per share common stock on the second anniversary of the Closing Date, and up to $2,000,000 of additional consideration thereafter, subject to the attainment of following milestones, (v) $800,000 of the Company’s common stock, par value $0.0001 per share common stock after completion of the first Phase II study of a compound that meets its primary endpoint and would enable the Company to subsequently move the respective compound into a Phase III Study, (vi) $800,000 of the Company’s common stock, par value $0.0001 per share common stock after completion of the first Phase III Study of a compound that meets its primary endpoint such that the safety and efficacy data from such Phase III Study may be included in an NDA for a drug with the FDA, (vii) $400,000 of the Company’s common stock, par value $0.0001 per share common stock after receipt of FDA approval of an NDA for a drug. On the closing date of the acquisition, the Company paid $365,370 and recorded a liability of $2,634,630. As of December 31, 2013, the Company has recorded a liability of $634,630 for the cash and $2,000,000 for value of shares payable at certain future dates in accordance with the stock purchase agreement. Share payments shall be issued based on the greater of (a) the average price per share quoted 30 trading days immediately preceding the date such shares first become issuable or (b) $7.0938 per share. The Company has recorded a deferred purchase asset liability of $2,634,630.

In accordance with ASC 740, the Company has stepped-up the basis of its intangible assets in the amount of $2,525,124 and has recorded a deferred tax liability in the same amount, to account for the basis difference resulting from the Kyalin acquisition (see Note 16).

Amortizable intangible assets

2012 Activity

Ligand License Agreement

On February 16, 2012 the Company entered into an agreement pursuant to which a biotechnology company (‘the Sublicensor’) with license rights to certain drug technologies agreed to grant the Company a worldwide sublicense for the development, manufacture and commercialization of Sparsentan (DARA). The license agreement also enables the Company to sell the licensed technology as a research product or sublicense the technology to other third parties as potential sources of revenue. Under the license agreement, Sublicensor is obligated to transfer to the Company certain information, records, regulatory filings, materials and inventory controlled by Sublicensor and relating to or useful for developing Sparsentan. The Company must use commercially reasonable efforts to develop and commercialize Sparsentan in specified major market countries and other countries in which the Company believes it is commercially reasonable to develop and commercialize such products. The agreement shall continue until neither party has any obligations under the agreement to make payments to the other party.

In accordance with the agreement as amended most recently as of January 7, 2013, the Company was obligated to make two non-refundable payments totaling $2,550,000, the first payment of $1,150,000 was made upon execution and the second payment of $1,400,000 was made in February 2013, and includes a $250,000 fee payable to the sublicensee in exchange for extending the due date of this payment from October 1, 2012 to February 2013. As of December 31, 2013, the Company has recognized $2,300,000 for the cost of the License Agreement which is presented in the accompanying consolidated balance sheet as an intangible asset that is being amortized on a straight-line basis over the term of the License Agreement which expires on September 30, 2023. The $250,000 extension fee was expensed in February 2013. In addition, the Company issued 620,000 common shares to Ligand valued at $1,550,000 following the completion of the Merger transaction as required under the terms of the agreement. The fair value of these shares was expensed to operations in December 2012. Amortization expense on intangibles was $202,597, $121,383, and $323,890 for the year ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, respectively, and was recorded in the statement of operations as Research and Development expense.

In addition, the Company is obligated to make series of milestone payments upon the achievement of each development milestone event set forth in the sublicense agreement which could amount to an aggregate of up to $106.9 million. Per the sublicense agreement, starting from the first commercial sale of any licensed product (as defined in the agreement), the Company is obligated to pay the Sublicensor royalty payments equal to 15% of annual worldwide net sales of licensed product up to $300,000. For worldwide net sales of licensed product exceeding $300,000, a royalty percentage of 17% is applied. Royalties are payable on a quarterly basis, and are payable on a product-by-product and country-by country basis on the net sales of licensed products. Royalties terms will be in effect until the later of (i) ten years after the first commercial sale of any licensed product in such country or (ii) the expiration of any patent rights licensed under the license agreement (iii) the expiration of all periods of market exclusivity. Currently, the last to expire issued patent covered by such arrangement expires in September 2023; however, the Company expects such date may be extended by patent-term extensions. The sublicense agreement contains other customary clauses and terms as are common in similar agreements in the industry.

Amortizable intangible assets as of December 31, 2013 and 2012 consist of the following:

			December 31, 2013
		Gross Carrying Amount			Accumulated Amortization		Net Book Value
Ligand License		2,300,000			(323,980)		1,976,020
Patent Costs*		49,775			-		49,775
Total	$	2,349,775		$	(323,980)	$	2,025,795

			December 31, 2012
		Gross Carrying Amount			Accumulated Amortization		Net Book Value
Ligand License	$	2,300,000		$	(121,383)	$	2,178,617
Patent Costs*		18,093			-		18,093
Total	$	2,318,093		$	(121,383)	$	2,196,710

*Patent costs will be amortized when a patent is procured and a life is assigned to the asset

As of December 31, 2013, amortization expense for the next five years is expected to be as follows:


2014	$	202,597
2015		202,597
2016		202,597
2017		202,597
2018		202,597
thereafter		1,012,810
Total	$	2,025,795

As of December 31, 2013 the remaining weighed average period of amortization is 9.54 years.

8. ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2013

Payables and Accruals [Abstract]

8. ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2013 and 2012:

		December 31, 2013		December 31, 2012
Compensation related costs		1,144,983		1,022,716
Research and development		1,035,875		679,800
Business development 300,000 -		300,000		-
License fee		150,000		-
Accounting and legal fees		75,000		563,380
Finder’s fee		-		100,000
Other		73,837		11,250
Interest		-		90,650
	$	2,779,695	$	2,467,796

9. SELLING GENERAL AND ADMINISTRATIVE

12 Months Ended

Dec. 31, 2013

Selling General And Administrative

9. SELLING, GENERAL, AND ADMINISTRATIVE

Selling, general, and administrative expenses consist of the following at December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013:

		December 31, 2013		December 31, 2012		For the period from March 11, 2011 (inception) through December 31, 2013
Professional fees (inclusive of share base compensation $3,218,768, $6,397,372, and $9,870,472)	$	7,333,830	$	9,035,702	$	16,982,798
Other		5,029,491		725,263		5,852,152
Compensation and related costs (inclusive of share base compensation $1,165,452, $16,012,850, and $18,903,269)		4,274,743		18,133,550		24,729,314
Technology license contingent fees		250,000		1,700,000		1,950,000
Total selling, general, and administrative expenses	$	16,888,064	$	29,594,515	$	49,514,264

10. RESEARCH AND DEVELOPMENT

12 Months Ended

Dec. 31, 2013

Research and Development [Abstract]

10. RESEARCH AND DEVELOPMENT

Research and development expenses consist of the following at December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013:

		December 31, 2013		December 31, 2012		For the period from March 11, 2011 through December 31, 2013
External service provider costs:
Sparsentan	$	2,443,273	$	297,833	$	2,619,723
RE-024		1,548,957		124,635		1,673,592
Weg license in process R&D (Note 13)		1,000,000		-		1,000,000
Syntocinon		250,540		-		250,540
RE-034		230,279		-		230,279
General		159,080		240,034		493,569
Other product candidates		117,771		-		376,710
Total external service provider costs:		5,749,900		662,502		6,644,413
Internal personnel costs (inclusive of share base compensation $259,076, $0, and $259,076):		1,334,109		-		1,334,109
Total research and development	$	7,084,009	$	662,502	$	7,978,522

- Definition

The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.

+ References + Details

11. NOTES PAYABLE

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

11. NOTES PAYABLE

Note Payable - related party

On February 1, 2012, the Company entered into a secured promissory note with a related party in the amount of $900,000, with an interest rate of 12% per annum, compounded monthly. The note plus accrued unpaid interest was originally due i) on or prior to December 31, 2012 or ii) upon consummation of a Sale of the Company to acquire (a) a majority of the outstanding equity securities, or (b) all or substantially all of the Company's assets on a consolidated basis. On March 5, 2012, an aggregate payment of $25,000 was made by the Company, of which $9,764 was applied to accrued interest and the remaining balance of $15,236 was applied to the principal balance. The remaining principal balance of this note amounts to $884,764 as of December 31, 2012, was repaid during the quarter ended March 31, 2013.

Note Payable - employee

On September 30 2012, the Company received an advance of $30,000 from a related party in the form of a promissory note, with an interest rate of 15% per annum, compounded monthly. On December 3, 2012, the Company repaid $30,000 plus any unpaid interest.

Total interest expense recognized for the years ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013 were aggregated to $41,563, $105,917, and $147,480, respectively.

12. RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2013

12. RELATED PARTY TRANSACTIONS

In August 2012, the Company paid a security deposit on behalf of an affiliate of $137,547 in connection with a building lease entered into by such affiliate. The Company assumed the lease from its affiliate in April 2013, whereby the security deposit was assigned to the Company.

During the year 2012, the Company paid an aggregate amount of $563,380 in legal fees on behalf of the same affiliate. The affiliate is currently in the process of dissolving and the Company does not expect to collect the amount outstanding. As a result, the Company has written-off $563,380 to bad debt expense in 2012. Such charge is included in selling general and administrative expense in the statement of operations.

In the second quarter of 2013, the Company, its Chief Executive Officer and a related party, which is a former investor in the Company that was previously managed by the Company’s Chief Executive Officer, became party to a series of agreements to settle up to $2,284,511 of liabilities, which Company management believes are the primary obligation of the related party. The Company and the related party have entered into indemnification agreements whereby the related party has agreed to defend and hold the Company harmless against all such obligations and amounts, whether paid or unpaid, arising from these agreements. Notwithstanding the indemnification, the Company recorded a $2,284,511 charge to operations for the year ended December 31, 2013 for the (a) $2,203,711 of cash consideration, and (b) 11,000 shares of common stock valued at $80,800 of non-cash consideration. The $2,284,511 is entirely paid as of the date of this filing. In addition, the Chief Executive Officer also agreed to provide one of the counter parties with 47,128 shares of his common stock in the Company as a separate component of one of these settlement agreements. Accordingly, the Company does not believe it is required to record a liability for the shared-based component of this specific agreement. There is uncertainty as to whether the related party will have sufficient liquidity to repay the Company or fund the indemnification agreements should it become necessary.

Concurrent with the execution of such settlement agreements, the Company and the related party entered into promissory notes whereby the related party agreed to pay the Company the principal amount of $2,284,511 plus interest at an annualized rate of 5% as reimbursement of payments that the Company made to settle a portion of the agreements.

The Company applied the accounting guidance provided in ASU 2013-04. The guidance in this update is effective for fiscal years beginning after December 15, 2013 with early adoption permitted. The guidance in this update requires companies to measure obligations resulting from joint and several liability arrangements as the sum of the amount that the entity has a) contractually agreed to pay, and b) any additional amounts that the entity expects to pay on behalf of its co-obligors. The Company has recorded the full amount of the settlements as a charge to its operations due to uncertainty as to whether the related party will have sufficient liquidity to repay the Company or fund the indemnification agreements should it become necessary. Any amounts that the Company may recover under the note due from the related party or under the terms of the indemnification agreement, if in fact any amounts are recovered at all, would be characterized as a capital contribution at the date such payments are received.

On August 15, 2013, the Company closed a private placement and sold 5,531,401 shares of the Company’s common stock, at a purchase price of $4.50 per share, or $24,891,303 in the aggregate, and warrants to purchase up to an aggregate of 2,765,701 shares of common stock with an exercise price of $6.00 per share underlying each warrant. Members of the Company’s management purchased an aggregate of 10,522 shares of common stock and warrants to purchase up to an aggregate of 5,261 shares of common stock in such private placement. The Warrants are deemed to be derivative instruments due to a ratchet provision that adjusts the exercise price if the Company issues additional equity instruments in the future at an effective price per share less than the exercise price then in effect. The issuance of the shares of common stock in such private placement was not registered under the Securities Act as such issuance was exempt from registration under Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References + Details

13. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

13. COMMITMENTS AND CONTINGENCIES

Leases and Sublease

In October 2012, the Company entered into a sublease with a company (“Sublessor”) affiliated by common ownership for 4,216 square foot of office space and its principal offices. The sublease agreement required the Company to pay 50% of the rent and related escalations and for the Company to pay for 50% of the utilities incurred by the Sublessor. The Company assumed the building lease from such affiliate in April 2013 for office space at its principal offices in New York, New York and is responsible for rent of approximately $275,000 annually plus rent escalations through August 2016 (see Note 12).

On October 1, 2013, the Company entered into building lease for approximately 4,232 square foot of office space located in Cambridge, Massachusetts under which we are responsible for rent of approximately $216,000 annually plus rent escalations, common area maintenance, insurance, and real estate taxes through September 2016.

On October 8, 2013, the Company entered into an amended lease agreement for an approximately 4,000 square foot of additional office space at its principal offices in New York, New York and is responsible for additional rent of approximately $225,000 annually plus rent escalations through August 2016.

On December 1, 2013, the Company entered into a lease for approximately 2,500 square feet of office space located in Carlsbad, CA that expires in February, 2017. The Company is responsible for approximately $70,500 of annual base rent plus rent escalations, common area maintenance, insurance, and real estate taxes.

Consulting Agreements

On August 15, 2011, the Company entered into an agreement with a consultant to serve as a senior advisor of strategy. The agreement’s initial term is for one year and automatically renews on an annual basis. Pursuant to this agreement the compensation to the consultant is comprised of (a) a fee of $37,500 per calendar quarter, payable commencing September 30, 2011, and (b) 25,000 shares of the Company common stock with an estimated fair value of $100,000, which vests over twelve (12) quarters so long as the agreement remains in effect. For the years ended December 31, 2013 and 2012, for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized professional fees related to this agreement in the amounts of approximately $153,000, $150,000, and $378,500, respectively, of which amounts comprised of fee payable of $0, $155,000 and $0 at December 31, 2013 and 2012 and for the period from March 11 ,2011 (inception) through December 31, 2013, respectively.

On November 1, 2011, the Company granted to the same above consultant an additional 120,000 shares of common stock with an estimate fair value of $480,000, which vest in over twelve (12) calendar quarters commencing December 31, 2011. For the years ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized professional fees related to this share based compensation of $195,000, $210,000, and $445,000, respectively.

On October 26, 2013 and December 1, 2013, the Company amended the above consulting agreements to issue the consultant 200,000 additional shares of the Company common stock to the consultant that payable as follows: (i) 100,000 shares on December 31, 2013, (ii) 50,000 shares on March 30, 2014, (iii) 50,000 shares on June 30, 2014. In addition, the consultant amended the fee and shall receive $26,666 per month. The agreement expires on October 25, 2013, and shall automatically extend for one year unless notice of non-extension is given. For the year ended December 31, 2013 and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized professional expense related to this agreement in the amount of approximately $780,000.

On August 25, 2011 and November 1, 2011, the Company entered into two agreements with a consultant to serve as chief scientific officer of the Company. The agreements’ initial terms were for one year and automatically renewed on an annual basis. Pursuant to the agreements the compensation to the consultant was comprised of (a) a fee of $50,000 per calendar quarter, and (b) 145,000 incentive shares with an estimated fair value of $580,000, which vested over twelve (12) quarters so long as the agreements remained in effect. For the years ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized professional expense related to these agreements in amounts of $225,000, $200,000, and 525,000, respectively. These agreements terminated on December 31, 2012. The Company recorded professional expense for the year ended December 31, 2013 for 34,575 vested shares in 2013 that were issued upon execution of the agreements.

On February 15, 2013, the Company entered into an agreement with a consultant to provide certain advisory services. The Company granted 12,500 shares of common stock with an estimated value of $52,500. For the years ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized professional expense related to these agreements in amounts of $52,500, $0, and $52,500, respectively

On September 20, 2013, the Company entered into an agreement with a consultant to serve as an advisor to the Company. The Company granted 331,500 shares of common stock issued and payable as follows (i) 131,500 shares of common stock issued upon execution of the agreement, (ii) 50,000 shares of common stock issued on September 30, 2013, (iii) 50,000 shares of common stock issued on December 31, 2013, (iv) 50,000 shares of common stock issued on March 31, 2014, and (v) 50,000 shares issued on June 30, 2014. The agreement expires on June 30, 2014. For the years ended December 31 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized professional expense related to this agreement in the amount of $1,628,375, $0, and $1,628,375.

On November 8, 2013, the Company entered into an agreement with a consultant to serve as an advisor to the Company. The Company shall pay the consultant $15,000 per quarter and expires in six months from the date entered into.

On December 31, 2013, the Company entered into an agreement with a consultant to serve as an advisor to the Company. The Company granted 15,000 shares of common stock issued and paid upon the date of execution. During the term of the agreement, the Company shall pay the consultant $50,000 per month. The agreement expires on April 30, 2014. For the years ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized professional expense related to these agreements in amounts of $105,000, $0, and $105,000, respectively.

Sponsored Research Agreements

St. Jude

On July 1, 2012, the Company entered into a Sponsored Research Agreement with St. Jude Children’s Research Hospital (“St. Jude”) that expired on July 1, 2013. The Company paid sponsor fees totaling $203,169 to the organization to perform the research program stated in the Sponsored Research Agreement.

Sponsor fees totaling $203,169 was recognized as professional expense, pro-rata over the one year term of the Sponsored Research Agreement. Total professional expense recorded related to the Sponsored Research Agreement totaled $101,314, $101,855, $203,169 for the years ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, respectively.

Effective October 1, 2013, the Company signed a new Sponsored Research Agreement with St. Jude. The Company is responsible for a total of $780,674 payable in four equal installments on October 19, 2013, March 19, 2014, September 19, 2014, and March 19, 2015. Unless otherwise terminated by operation of law or by acts of the parties in accordance with the terms of the agreement, the SRA shall be in full force and effect for a period of two (2) years and shall expire on October 1, 2015. The term may be extended by written agreement between the parties. On October 22, 2013, the Company paid $195,169 in accordance with this agreement. For the year ended December 31, 2013, the Company recognized professional expense related to this agreement in the amount of $97,584.

SickKids

On July 12, 2013, the Company agreed to sponsor a study with The Hospital for Sick Children (“SickKids”). The Company agreed to fund the study by providing a CAD $750,000 (USD $721,470) amount matching Brain Canada’s contribution over a three-year term. The Company paid CAD $250,000 (USD $234,490) on December 3, 2013. The Company is obligated to pay a total of CAD $500,000 (USD $467,425) in CAD $250,000 (USD $233,713) yearly installments through 2015. For the year ended December 31, 2013, the Company recognized professional expense related to this agreement in the amount of $113,327.

University of Michigan

On October 2, 2013, the Company agreed to provide a charitable contribution to the University of Michigan up to $2,000,000 to be funded in equal quarterly installments over a two-year period commending in October, 2013. On October 2, 2013, the Company paid and expensed $250,000 to the University of Michigan as part of this agreement. The Company reserves the right to cancel this arrangement with no further funding obligation.

UCSD

On December 11, 2013, the Company entered into an agreement with UC San Diego to provide an unrestricted charitable gift in support of translation psychiatric research at UC San Diego. The total charitable contribution in the amount of $530,000 will be paid in three contribution over a one year period in beginning on January 31, 2014. As of December 31, 2013, the Company has accrued and expensed $530,000 as part of this agreement.

On December 12, 2013, the Company entered into an agreement with The Regents of the University of California, on behalf of its San Diego Campus (“UCSD”), pursuant to which UCSD will undertake research projects related to a study on oxytocin over a period of two years. As consideration for the research program, the Company is obligated to pay an aggregate of approximately $1.54 million in fees to UCSD on a specified timeline, of which $0 has been paid as of the date hereof. As of December 31, 2013, the Company has expense and accrued $40,082 in relation to the agreement. The Company is obligation to pay $192,500 per quarter through 2015. This agreement will continue until completion of the projects, unless earlier terminated by either party (i) due to a material uncured breach of such agreement by the other party or (ii) for any reason by giving written notice to the other party within 60 days.

License Agreements

Weg License Agreement

On December 12, 2013, the Company entered into an agreement “Weg License Agreement,” with Stuart Weg, MD, pursuant to which Dr. Weg agreed to grant the Company an exclusive worldwide license for the manufacture, development and distribution of products to be developed for the treatment of central nervous system disorders. As consideration for the license, the Company paid Dr. Weg $1,000,000 upon execution of the agreement. The Company is also obligated to pay Dr. Weg certain royalties on sales of FDA-approved products.

Prior to receipt from the FDA of approval for a product for depression indications, the Company agrees to pay Weg an annual license maintenance fee of $1 million. Upon the receipt of FDA approval for any product for depression indication, no further annual maintenance fees are due. The Company agrees to pay a royalty for FDA approved products at a rate of 3% to 8%.

The following one-time milestones are due in accordance with the Weg agreement:

$1 million after a patent covering products under the agreement is granted by the U.S. Patent and Trademark Office;

$2.5 million for the first NDA acceptance for depression indication;

$2.5 million after the first FDA approval for products for depression indication;

$2.5 million for the first NDA acceptance of product for an indication not included in the Company’s previously accepted NDA;

$2.5 million for the first FDA approval for products not included in the Company’s previous FDA approval.

Other License Agreements

During the years ended December 31, 2013 and 2013, the Company entered into license agreements with Novartis and Ligand. The Company is required to pay annual maintenance fees and milestone payments in accordance with these agreements (see Note 2 and 7.)

Kyalin Technology Acquisition

On December 23, 2013, the Company entered into a Stock Purchase Agreement with Kyalin to acquire substantially all of Kyalin’s assets. The Company is required to pay annual maintenance fees and milestone payments in accordance with the agreement (see Note 2 and 7.)

Shkreli Employment agreement

On December 16, 2013, the Company entered into a new employment agreement (the “Shkreli Employment Agreement”) with Martin Shkreli, pursuant to which Mr. Shkreli will continue to serve as the Company’s Chief Executive Officer.

In accordance with the terms of the Shkreli Employment Agreement, Mr. Shkreli will be paid (i) a base salary in the amount of $300,000 (subject to adjustments at the discretion of the Company’s board of directors after each anniversary of the Effective Date), and (ii) at the sole discretion of the board, an annual bonus award based upon specific goals and performance metrics. Mr. Shkreli will also be awarded options to purchase One Million Eighty Thousand (1,080,000) shares of restricted common stock of the Company, a pro rata portion of which will vest quarterly during the 3 years following the Effective Date. In the event of a change of control of the Company, all of Mr. Shkreli’s unvested options shall immediately vest.

The Shkreli Employment Agreement contemplates that Mr. Shkreli’s employment will be for a three-year term and may be automatically extended for successive three-year periods unless (i) Mr. Shkreli gives notice of non-extension to the Company no later than one hundred eighty (180) days prior to the expiration of the Agreement or (ii) Mr. Shkreli is terminated.

In the event Mr. Shkreli’s employment is terminated by Mr. Shkreli for good reason (as such term is defined in the Shkreli Employment Agreement), then Mr. Shkreli will be entitled to continue to receive his annual base salary, any unpaid bonus and health insurance coverage on the same terms as made available to the Company’s employees for a period of twelve (12) months following such termination. If Mr. Shkreli’s employment is terminated other than for good reason, Mr. Shkreli will forfeit any unvested stock options that he received and will not be entitled to severance or any additional payments.

If Mr. Shkreli’s employment is terminated for cause (as such term is defined in the Shkreli employment Agreement) then Mr. Shkreli will not be entitled to any further payments of any kind, except for payment of base salary plus reimbursement of certain expenses.

In the event that Mr. Shkreli is no longer employed by the Company, any options that have not vested prior to the date of termination will be immediately cancelled and not subject to further vesting.

Director Compensation

On December 6, 2013, the Company’s board of directors established a compensation policy for the Company’s non-employee directors pursuant to which each non-employee director shall receive $100,000 annually, which amount shall be comprised of not more than $25,000 in cash, with the remainder paid in the form of options to purchase shares of the Company’s common stock. Each non-employee director may, at his discretion, determine to receive less than $25,000 annually in the form of cash, in which case such amount will be paid to such director in the form of options to purchase additional shares of the Company’s common stock. In accordance with such policy, in December 2013, the Company issued options to purchase 51,000 shares of common stock to four non-employee directors. Such options vest immediately and are exercisable over a ten year period at an exercise price of $8.70 per share.

Withdrawal of Transcept Proposal

On September 18, 2013, the Company made a proposal to the board of directors of Transcept Pharmaceuticals, Inc. (“Transcept”) to acquire all of the outstanding shares of Transcept’s common stock for $4.00 per share in cash. The proposal has been rejected by Transcept’s board of directors. The Company invested approximately $3 million and acquired approximately 4.96% of the outstanding common stock of Transcept as part of the proposal process.

On December 16, 2013, the Company announced that it had withdrawn its proposal to acquire all of the issued and outstanding shares of common stock of Transcept Pharmaceuticals, Inc. (“Transcept”). The Company no longer owns any shares of Transcept’s common stock. The Company realized a gain of $235,839 on the sale of Transcept shares for the year ended December 31, 2013.

Contract Commitments

The following table summarizes our principal contractual commitments, excluding open orders that support normal operations, as of December 31, 2013:

Year Ending December 31,		Research and Development and other Charitable Donations	Consultants			Operating Leases
2014	$	4,560,092	$	831,660	$	777,538
2015		2,950,294		-		811,149
2016		-		-		724,292
2017		-		-		12,850
2018		-		-		-
2019 and thereafter		-		-		-
Total	$	7,510,386	$	831,660	$	2,325,829

14. STOCKHOLDERS DEFICIT

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

14. STOCKHOLDERS DEFICIT

Post Merger Capitalization with Desert Gateway

Common Stock

The Company is currently authorized to issue up to 100,000,000 shares of $0.0001 par value common stock. All issued shares of common stock are entitled to vote on a 1 share/1 vote basis.

Preferred Stock

The Company is currently authorized to issue up to 20,000,000 shares of $0.001 preferred stock, of which 1,000 shares are designated Class "A" Preferred shares, $0.001 par value. Class A Preferred Shares are not entitled to interest, have certain liquidation preferences, special voting rights and other provisions. No Preferred Shares have been issued to date.

Issuances

Common Stock

On March 30, 2011, the Company issued to its founder 1,608,300 shares of Common Stock for a $25,000 capital contribution.

On March 31, 2011, the Company issued to a member 50,000 shares of Common Stock for a $100 capital contribution.

Private Placement Offering - March 2011

On March 31, 2011, the Company offered for sale, pursuant to a Private Placement Memorandum ("PPM"), up to 500,000 of the Company's Common Stock at $4 per share, for an aggregate offering price of $2,000,000. The Common Stock was entitled to one (1) vote per each unit outstanding. The termination date of this offer was originally May 3, 2011. On June 15, 2011, the Company extended the termination date of the PPM to August 31, 2011.

In April, May and June 2011, the Company sold shares of Common Stock in a private placement for $4 per share, yielding aggregate proceeds of $725,000. In addition, the Company incurred aggregate fees of $66,061 in connection with the private placement. These common shares were subsequently exchanged for Series A Preferred shares (subsequently recapitalized into 253,750 shares of common stock).

Private Placement Offerings - 2013

In January 2013, the Company sold an aggregate of 272,221 shares of common stock, at a purchase price of $3.00 per share in certain private placement transactions, for an aggregate purchase price of $816,664 in cash. The issuance of such shares of common stock was not registered under the Securities Act as such issuance was exempt from registration under Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

On January 4, 2013, the Company entered into an agreement with Roth Capital Partners to act as its exclusive placement agent in connection with the February Private Placement. In connection with the agreement, the Company paid cash fees in the amount of $624,033 and issued warrants to purchase up to an aggregate of 319,823 shares of common stock with an exercise price of $3.60 per such share underlying any warrant. The warrants are deemed to be derivative instruments due to a ratchet provision that adjusts the exercise price if the Company issues additional equity instruments in the future at an effective price per share less than the exercise price then in effect. Upon issuance of the warrants, the Company recorded a liability of $901,767 to derivative financial instruments in its balance sheet. The issuance of such shares of common stock was not registered under the Securities Act as such issuance was exempt from registration under Section 4(2) of the Securities Act and Regulation D promulgated thereunder (see Note 2).

On February 14, 2013, the Company closed a private placement (the “February Private Placement”) of 3,045,929 shares of common stock, at a purchase price of $3.00 per share, or $9,137,787 in the aggregate, and warrants (the “Warrants”) to purchase up to an aggregate of 1,597,969 shares of common stock with an exercise price of $3.60 per such share underlying any Warrant. The Warrants are deemed to be derivative instruments due to a ratchet provision that adjusts the exercise price if the Company issues additional equity instruments in the future at an effective price per share less than the exercise price then in effect. Upon issuance of the warrants, the Company recorded a liability of $4,505,605 to derivative financial instruments in its balance sheet. The issuance of such shares of common stock was not registered under the Securities Act as such issuance was exempt from registration under Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

On August 15, 2013, the Company closed a private placement and sold 5,531,401 shares of the Company’s common stock, at a purchase price of $4.50 per share, or $24,891,303 in the aggregate, and warrants to purchase up to an aggregate of 2,765,701 shares of common stock with an exercise price of $6.00 per share underlying each warrant. The Warrants are deemed to be derivative instruments due to a ratchet provision that adjusts the exercise price if the Company issues additional equity instruments in the future at an effective price per share less than the exercise price then in effect. Upon issuance of the warrants, the Company recorded a liability of $9,201,487 to derivative financial instruments in its balance sheet. The issuance of the shares of common stock in such private placement was not registered under the Securities Act as such issuance was exempt from registration under Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

February Registration Rights Agreement

On February 14, 2013, in connection with the closing of the February Private Placement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the purchasers in the February Private Placement (the “Purchasers”), which sets forth the rights of the Purchasers to have their shares of common stock purchased in the February Private Placement and shares of common stock issuable upon exercise of the Warrants registered with the SEC for public resale.

Pursuant to the Registration Rights Agreement, the Company was required to file a Registration Statement on Form S-1 (the “Registration Statement”) with the SEC within 30 days of the date of the Registration Rights Agreement registering the total number of shares of common stock purchased in the February Private Placement and shares of common stock issuable upon exercise of the Warrants. The Company further agreed to use its reasonable efforts to have the Registration Statement declared effective within 60 days after the date of the Registration Rights Agreement (or, in the event of a “full review” by the SEC, within 90 days after the date of the Registration Rights Agreement). The Company has also agreed to use reasonable efforts to maintain the effectiveness of the Registration Statement until all of the securities covered by the Registration Statement have or may be sold by investors under Rule 144 of the Securities Act, without volume or manner-of-sale restrictions.

The Registration Rights Agreement provided that in the event the Registration Statement was not filed or declared effective within the prescribed time period or if the Company failed to maintain the effectiveness of the Registration Statement as required for specified time periods, the Company shall pay to the holders of registrable securities, on the date of each such event and on each monthly anniversary thereof until the applicable event is cured, partial liquidated damages equal to 2.0% of the aggregate purchase price paid by such Purchaser in the February Private Placement, up to a maximum of 10.0% of such aggregate purchase price. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Purchaser, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.

The Company determined, as of the date of the financing transaction, that it was probable that it would not be in a position to cause the registration statement to be declared effective within the contractually defined time period. Accordingly, the Company allocated approximately $360,000 of the proceeds to a registration payment arrangement liability on the date that the financing transaction closed, in accordance with the guidelines of ASC 825-20. As described in Note 2, the Company and the investors who are parties to the registration payment arrangement entered into an the Amended Registration Rights Agreement which provides, among other things, for a waiver of the liquidated damages that the Company incurred under the original terms of the registration payment arrangement described herein. The Company recognized $360,000 as income upon the waiver of the liquidated damages.

First Amendment to the February Registration Rights Agreement

As described in Note 2, the Company and the investors who participated in the private placement transaction that the Company completed on February 14, 2013 entered into the Amended Registration Rights Agreement which provides, among other things, for (i) a waiver of any and all liquidated damages that the Company incurred for its inability to cause the registration statement to be declared effective within certain contractually defined time-frames stipulated in the original agreement; (ii) a commitment on the part of the investors in the February private placement to participate in the private placement transaction that the Company completed on August 15, 2013; and (iii) a covenant on the part of the Company to proceed with the sale of shares that were issued in the August 15, 2013 private placement transaction. In exchange, the Company paid an aggregate fee of $2,495,256 to these investors consisting of (i) 73,710 shares of the Company’s common stock with an aggregate fair value of $331,695 (based on the selling price of $4.50 per share in the August financing transaction); (ii) cash in the amount of $1,835,000; and (iii) warrants to purchase 98,756 shares of common stock with a fair value of $328,561 that were classified as derivative liability instruments. The investors were also given the option to purchase shares of the Company’s common stock at $4.50 per share as a use of the cash portion of the payment arrangement. Accordingly, $946,196 of the cash portion of the fee was settled in cash and the remainder was settled by the issuance of 197,512, shares. Additionally, the Company paid $103,425 to an investor to whom the Company sold shares in a private placement transaction in January 2013 and who participated in the August 2013 private placement transaction. This payment was settled entirely by the issuance of 20,685 shares of the Company’s common stock at a value of $5.00 per share.

The Company recorded the aggregate amount of the payments made to the investors by to allocating approximately $360,000 to the waiver of the original registration payment obligation taken as a charge to operations and the remaining amount of $2,238,681 is treated as reduction of the proceeds received in the August financing transaction.

August Registration Rights Agreement

On August 15, 2013, in connection with the closing of the August 15, 2013 private placement (the “August Private Placement”), the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the purchasers in the August Private Placement (the “Purchasers”), which sets forth the rights of the Purchasers to have their shares of common stock purchased in the Private Placement and shares of common stock issuable upon exercise of the Warrants registered with the SEC for public resale.

Pursuant to the Registration Rights Agreement, the Company was required to file a Registration Statement on Form S-1 (the “Registration Statement”) with the SEC within 30 days of the date of the Registration Rights Agreement registering the total number of shares of common stock purchased in the August Private Placement and shares of common stock issuable upon exercise of the Warrants. The Company further agreed to use its reasonable efforts to have the Registration Statement declared effective within 60 days after the date of the Registration Rights Agreement (or, in the event of a “full review” by the SEC, within 120 days after the date of the Registration Rights Agreement). The Company has also agreed to use reasonable efforts to maintain the effectiveness of the Registration Statement until all of the securities covered by the Registration Statement have or may be sold by investors under Rule 144 of the Securities Act, without volume or manner-of-sale restrictions.

The Registration Rights Agreement provided that in the event the Registration Statement was not filed or declared effective within the prescribed time period or if the Company failed to maintain the effectiveness of the Registration Statement as required for specified time periods, the Company shall pay to the holders of registrable securities, on the date of each such event and on each monthly anniversary thereof until the applicable event is cured, partial liquidated damages equal to 2.0% of the aggregate purchase price paid by such Purchaser in the August Private Placement, up to a maximum of 10.0% of such aggregate purchase price. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Purchaser, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.

On September 13, 2013, the Company submitted the Registration Statement to the SEC on a confidential basis. The Company determined, as of the date of the financing transaction, that it was probable that it would be in a position to cause the registration statement to be declared effective within the contractually defined time period. The Registration Statement was declared effective by the SEC on December 6, 2013.

Incentive Stock Awards

Since Inception, the Company entered into various incentive unit agreements for issuances of Incentive Common Shares with certain individuals for future services (see note 15).

Preferred Stock

On January 25, 2012, the Company, in connection with a January 2012 private placement offered for sale up to 875,000 shares of the Company’s Series A Preferred Shares at approximately $5.71 per share with similar terms and conditions as the amended PPM.

From January 1, 2012 through May 14, 2012, the Company sold shares of Series A Preferred Stock (subsequently recapitalized into 326,963 shares of common stock) related to the January 2012 private placement at approximately $5.71 per share, yielding aggregate proceeds of $1,868,354 of which 128,163 shares sold and $732,353 proceeds were from a related party through common ownership. In addition, the Company incurred aggregate fees of $61,677 in connection with the private placement.

On May 18, 2012, the Company, in connection with the May 2012 private placement, offered for sale up to 875,000 shares of the Company’s Series A Preferred Stock at approximately $11.43 per share with similar terms and conditions as the amended PPM.

On September 20, 2012, the Company amended its May 2012 private placement selling price of the Preferred Shares from approximately $11.43 per share to approximately $3.57 per share as a result of a resolution of the Company's board. This resolution was determined as a result of market conditions.

From May 31, 2012 through September 25, 2012, the Company sold shares of the Series A Preferred Stock (subsequently recapitalized into 271,824 shares of common stock) related to May 2012 private placement at approximately $3.57 per share, yielding aggregate proceeds of $970,800 of which 185,024 shares sold and $660,800 proceeds were from a related party through common ownership. In addition, the Company incurred aggregate fees of $12,275 in connection with the private placement.

From October 1, 2012 through December 11, 2012, the Company sold shares of the Series A Preferred Stock (subsequently recapitalized into 198,940 shares of common stock) related to May 2012 private placement at approximately $3.57 per Unit, yielding aggregate proceeds of $710,501.

Capital Contributions of Common Shares by Founder

In April 2012, the Company’s founding stockholder personally transferred 300,000 shares of his common stock to third party consultant for advisory services provided to the company. In September 2012, the Company's founder personally transferred 250,000 shares of his common stock to the former Chief Executive Officer and current member of the Board of Directors. The shares in both of these transactions, which have an aggregate fair value of $4,400,000, are fully vested and non-forfeitable and were recorded as a charge to operations in the accompanying statement of operations.

In November 2012 and December 2012, the Company’s founding shareholder personally transferred 275,000 shares of his common stock to several employees. The shares, which had an aggregate fair value of $1,375,000, are fully vested and non-forfeitable and were recorded as a charge to operations in the accompanying statement of operations.

Receivables from Shareholders

On February 3, 2012, the Company entered into a note receivable with a related party in the amount of $200,000. The note receivable was unsecured, bearing an interest rate of 12% per annum and due to mature on February 3, 2013. The note was originally classified as a reduction of stockholders' equity in the accompanying consolidated balance sheet and later treated as compensation in the amount of $372,900 for the year ended December 31, 2012

Stock Options

On May 13, 2013, the Company issued options (the “Options”) to purchase 120,000 shares of common stock with an estimated fair value of $804,732 in connection with an employment agreement with Horacio Plotkin, M.D. (the “Plotkin Employment Agreement”) pursuant to which Dr. Plotkin was appointed as Chief Medical Officer of the Company. The Options vest quarterly in pro rata portions during the 3 years following the effective date of July 1, 2013. The Company valued these Options using the Black-Scholes options pricing model with the following assumptions: risk-free interest rate of .83% (based on the U.S. Treasury note yield), expected term (in years) of 5.81 (based on guidance provided in SAB 107 that allows the Company to use the simplified method for “plain vanilla” options for this calculation), expected volatility of 98.56% (based on historical stock volatilities of several comparable publicly-traded companies over a period equal to the expected term of the Options, as the Company does not have a long trading history to estimate the volatility of its own common stock), and an exercise price equal to the fair value of the stock on the date of issuance of $8.70 per share. For the year ended December 31, 2013, the Company recognized $170,500 as compensation expense related to the Options.

On August 13, 2013, the Company issued options to purchase 50,000 shares of common stock with an estimated fair value of $193,765 to an employee. These options vest quarterly in pro rata portions during the 3 years following the effective date of October 1, 2013. The Company valued these options using the Black-Scholes options pricing model and the following assumption terms: risk-free interest rate of 1.49% (based on the U.S. Treasury note yield), expected term (in years) of 5.81 (based on guidance provided in SAB 107 that allows the Company to use the simplified method for “plain vanilla” options for this calculation), expected volatility of 98.56% (based on historical stock volatilities of several comparable publicly-traded companies over a period equal to the expected term of the options, as the Company does not have a long trading history to estimate the volatility of its own common stock), and an exercise price equal to the fair value of the stock on the date of issuance of $5.00 per share. For the year ended December 31, 2013, the Company recognized $24,774 as compensation expense related to the Options.

On September 9, 2013, the Company issued options to purchase 90,000 shares of common stock with an estimated fair value of $448,354 to two employees. The options vest quarterly in pro rata portions during the 3 years following the effective date of October 1, 2013. The Company valued these options using the Black-Scholes options pricing model and the following assumption terms: risk-free interest rate of 1.71% (based on the U.S. Treasury note yield), expected term (in years) of 5.81 (based on guidance provided in SAB 107 that allows the Company to use the simplified method for “plain vanilla” options for this calculation), expected volatility of 104.78% (based on historical stock volatilities of several comparable publicly-traded companies over a period equal to the expected term of the options, as the Company does not have a long trading history to estimate the volatility of its own common stock), and an exercise price equal to the fair value of the stock on the date of issuance of $6.20 per share. For the year ended December 31, 2013, the Company recognized $46,268 as compensation expense related to the Options.

On December 6, 2013 and December 9, 2013, the Company issued options to purchase 330,000 shares of common stock with an estimated fair value of $2,236,848 to six employees. The options vest quarterly in pro rata portions during the 3 years following the effective date of January 1, 2014. The Company valued these options using the Black-Scholes options pricing model and the following assumption terms: risk-free interest rate of 1.51% (based on the U.S. Treasury note yield), expected term (in years) of 5.81 (based on guidance provided in SAB 107 that allows the Company to use the simplified method for “plain vanilla” options for this calculation), expected volatility of 101.66% (based on historical stock volatilities of several comparable publicly-traded companies over a period equal to the expected term of the options, as the Company does not have a long trading history to estimate the volatility of its own common stock), and an exercise price equal to the fair value of the stock on the date of issuance of $8.70 and $8.10, respectively, per share. For the year ended December 31, 2013, the Company recognized $50,019 as compensation expense related to the Options.

On December 6, 2013, the Company issued options to purchase 51,000 shares of common stock with an estimated fair value of $350,085 to four Board of Directors. The options vest immediately. The Company valued these options using the Black-Scholes options pricing model and the following assumption terms: risk-free interest rate of 1.51% (based on the U.S. Treasury note yield), expected term (in years) of 5.81 (based on guidance provided in SAB 107 that allows the Company to use the simplified method for “plain vanilla” options for this calculation), expected volatility of 101.66% (based on historical stock volatilities of several comparable publicly-traded companies over a period equal to the expected term of the options, as the Company does not have a long trading history to estimate the volatility of its own common stock), and an exercise price equal to the fair value of the stock on the date of issuance of $8.70 per share. For the year ended December 31, 2013, the Company recognized $350,085 as compensation expense related to the Options.

On December 16, 2013, the Company issued options (the “Options”) to purchase 1,080,000 shares of common stock with an estimated fair value of $6,350,400 in connection with an employment agreement with Martin Shkreli (the “Shkreli Employment Agreement”). The options vest quarterly in pro rata portions during the 3 years following the effective date of December 31, 2013. The Company valued these Options using the Black-Scholes options pricing model and the following assumption terms: risk-free interest rate of 1.55% (based on the U.S. Treasury note yield), expected term (in years) of 5.81 (based on guidance provided in SAB 107 that allows the Company to use the simplified method for “plain vanilla” options for this calculation), expected volatility of 101.66% (based on historical stock volatilities of several comparable publicly-traded companies over a period equal to the expected term of the options, as the Company does not have a long trading history to estimate the volatility of its own common stock), and an exercise price equal to the fair value of the stock on the date of issuance of $7.45 per share. For the year ended December 31, 2013, the Company recognized $529,200 as compensation expense related to the Options.

The following tables illustrates the Company’s stock option issuances and balances outstanding as of, and during the years ended December 31, 2013 and 2012, respectively:

	Shares Underlying Options	Weighted Average
	Shares Underlying Options	Exercise Price		Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2013	-	-		-		-
Granted	1,721,000	$	7.66		-	$	-
Canceled	-		-		-
Exercised	-		-		-
Outstanding at December 31, 2013	1,721,000	$	7.66	$	9.89	$	172,000
Exercisable at December 31, 2013	172,667	$	7.85	$	9.86	$	14,333

The weighted average grant date fair value of option granted during the year ended December 31, 2013 is $6.03 The aggregate intrinsic value of stock options outstanding and exercisable was calculated based on a closing stock price of $7 on December 31, 2013. Unrecognized compensation cost associated with unvested options amounts to $9, 213,338, as of December 31, 2013, which will be expensed over a weighted average remaining vesting period of 2.7 years.

Share based compensation

For the year ended December 31, 2013, the Company issued 359,000 shares to consultants. The weighted average fair value of the shares issued is $6.92. The Compensation expense for these shares was determined based on the closing market price of the Company’s stock at the date of grant. Compensation expense for the year ended December 31, 2013 amounted to $2,485,875.

Stock Repurchases

In the fourth quarter of 2013, the Company repurchased 130,790 shares of its common stock for an aggregate purchase price of $957,272. The Company currently recognizes such repurchased common stock as treasury stock.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: 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.(d),(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
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Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

+ Details

15. INCENTIVE SHARES

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

15. INCENTIVE SHARES

On March 31, 2011, the Company granted 1,849,300 incentive shares to several executive and non-executive employees, and certain consultants, with an aggregate fair value of $7,397,200 or $4 per share. The incentive shares vested on the final day of each calendar quarter over three years, commencing on June 30, 2011. On September 11, 2012, the Company accelerated the vesting of 938,175 shares issued to its founder and Chief Executive Officer, which resulted in a charge of $3,216,600 included in compensation and related costs in the accompanying statement of operations.

In August and November 2011, the Company granted an aggregate of 290,000 incentive shares to two consultants, with an aggregate fair value of $1,160,000 or $4 per share, for consulting services. The incentive shares vested on the final day of each calendar quarter over three years, commencing on June 30, 2011 and December 31, 2011.

In January 2012, the Company granted 826,600 incentive shares to the Chief Executive Officer, an employee and a consultant, with an aggregate fair value of $9,919,200 or $12 per share. The incentive shares vested on the final day of each calendar quarter over three years, commencing on March 31, 2012. On September 11, 2012, the Company immediately vested the Chief Executive Officer’s unvested incentive shares totaling 28,185 for continuing services. On December 11, 2012, the Chief Executive Officer’s remaining unvested incentive shares totaling 573,015 were vested immediately due to the merger, which resulted in an aggregate charge of $7,214,400 included in compensation and related costs in the accompanying statement of operations.

On March 7, 2012, the Company granted 83,333 incentive shares to a third party consultant, with an aggregate fair value of $2,000,000 or approximately $24 per share, for consulting services. The incentive shares vested (i) 50% immediately and (ii) on the final day of each calendar quarter over two years, commencing on March 31, 2012.

On July 7, 2012, the Company granted 43,750 incentive shares to an employee, with an aggregate fair value of $375,000 or approximately $8.6 per share. The incentive shares vested on the final day of each calendar quarter over three years, commencing on September 30, 2012. In December 2012, the employee was terminated and the shares were accordingly forfeited.

Effective May 20, 2013, the Company entered into an employment agreement with Marc L. Panoff (the “Panoff Employment Agreement”) pursuant to which Mr. Panoff was appointed as Chief Financial Officer and Chief Accounting Officer of the Company. In accordance with the terms of the Panoff Employment Agreement, Mr. Panoff was granted 120,000 shares with an estimated fair value of $768,000 on May 20, 2013 of restricted common stock of the Company, a pro rata portion of which vest quarterly beginning on December 31, 2013 during the 3 years following the effective date.

On July 1, 2013, the Company granted 15,000 units of restricted common stock of the Company to an employee with an estimated fair value of $75,000. The stock will vest quarterly in pro rata portions beginning September 30, 2013 during the 3 years following the grant date.

For the year ended December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013, the Company recognized $986,575 ($253,682 to employees and $732,893 to non-employees), $22,410,222, and $25,295,054 as compensation expense related to incentive shares granted in the consolidated statements of operations, respectively. Share compensation for non-employee awards subject to vesting is being accrued at current fair value. As of December 31, 2013, there was approximately $1,105,967 of unrecognized compensation cost related to incentive shares issued. This amount is expected to be recognized over a weighted average of 2.19 years. The Company issued these shares with an initial vesting period of 2 to 3 years.

	Employee – number of shares		Non Employee – number of shares		Total number of shares		Weighted Average Fair Value
Unvested March 11, 2011 (“inception”)					-		$	-
Granted	1,758,300		381,000		2,139,300			4.00
Vested	(431,240	)	(59,835	)	(491,075	)		4.00
Forfeited	(45,835	)	-		(45,835	)		-

Unvested December 31, 2011	1,281,225		321,165		1,602,390			4.00
Granted	866,180		87,503		953,683			12.89
Vested	(2,048,280	)	(193,672	)	(2,241,952	)		7.34
Forfeited	(46,353	)	-		(46,353	)		-

Unvested December 31, 2012	52,772		214,996		267,768			3.20
Granted	135,000		-		135,000			6.24
Vested	(36,724)		(139,069)		(175,793)			5.44
Forfeited	(20,833)		(37,500)		(58,333)			4.00
Unvested December 31, 2013	130,215		38,427		168,642		$	6.44

From inception through September 2012, the Company’s share base payments were originally issued as Retrophin LLC Class B incentive units that represent a profits interest up through the date of the Retrophin’s conversation to a C Corporation, which was structured as a tax free exchange transaction.

Shares granted as incentive shares were originally subject to certain conditions at the time of grant. Such conditions specified that the occurrence of a Termination Event, as defined in the amended operating agreement the Company shall have the right, but not the obligation, to repurchase, all, of the vested incentive shares owned by such incentive shareholder, at a purchase price based on the fair market value of the incentive shares determined in good faith by the Board of Directors. The aforementioned repurchase option was rescinded upon the Company’s conversion to a corporation.

16. INCOME TAXES

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

16. INCOME TAXES

The components of the provision (benefit) for income taxes, in the consolidated statement of operations are as follows (in thousands):


	2013			2012
Current
Federal	$-			$-
State	-			-
	-			-
Deferred
Federal		(6,293	)		(1,173	)
State		(3,435	)		(733	)
		(9,728	)		(1,906	)
Total		(9,728	)		(1,906	)
Change in valuation allowance		9,804			1,906
Income tax (benefit)		76			—
Total	$	—		$	—

A reconciliation of the statutory federal income tax expense (benefit) to the effective tax rate is as follows:

	2013	2012
Statutory rate - federal	-35.00%	-35.00%
State taxes, net of federal benefit	-6.70%	-1.81%
Change in FV of derivative liability (warrants)	10.46%	0.00%
Stock Based Compensation related to profits interest	2.30%	9.52%
Other	0.17%	1.62%
Partnership losses preceding conversion	0.00%	19.39%
Change in valuation allowance	29.00%	6.28%
Income tax provision (benefit)	0.23%	0.00%

The tax effects of "temporary differences" giving rise to deferred tax assets and liabilities as of December 31, 2013 and 2012 are as follows (in thousands):

	2013		2012
Net operating loss and capital loss carryforward	$	11,498	$	2,748
Intangible assets		(2,999)		(466)
Other		610		(376)
Valuation allowance		(11,710)		(1,906)

Total Deferred tax liability	$	(2,601)	$	-

From the Company’s inception in March 11, 2011 to September 20, 2012, the Company was not subject to federal and state income taxes since it was operating as a Limited Liability Company (LLC). On September 20, 2012, the Company converted from an LLC to a C corporation and, as a result, became subject to corporate federal and state income taxes. This conversion is considered a recapitalization of the equity structure of the Company and was treated as a nontaxable transaction. As a result of the conversion to a taxable entity, the Company recorded a deferred tax liability on the balance sheet and in income tax expense as of the date of the change in tax status in the amount of $1,079,000 related to the technology license.

For the periods ended December 31, 2012 and 2013, the Company incurred net operating losses and, accordingly, no federal current provision for income taxes has been recorded. As a result of indefinite-lived intangibles that are not subject to amortization for tax purposes, the Company recorded a deferred provision for the period ended December 31, 2013. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets including NOL carryovers. At December 31, 2013, the Company had approximately $25.3million of federal, state and local net operating losses. The Company's utilization of the net operating loss carryforwards may be subject to annual limitations due to the ownership change limitations provided by Internal Revenue Code (IRC) Section 382 and similar state provisions. Pursuant to IRC Section 382, the annual use of the Company’s net operating loss credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The annual limitations may result in the expiration of net operating losses and credits prior to utilization. The annual limitation is determined based upon the fair market value of the Company as of the date of such ownership change. Based on the value of the Company at all relevant dates, the computed annual limitation that would result from an ownership change of the Company is not expected to prevent us from utilizing our net operating losses prior to their expiration if we can generate sufficient taxable income to do so in the future. The net operating loss carry forwards, if not utilized, will begin to expire in 2032 for federal purposes. The Company recorded a deferred income tax provision of approximately $76,000 million in the year ended December 31, 2013 related to the different book and tax treatment for other intangible assets. For tax purposes, intangible assets are subject to different amortization allowances than for book purposes. Further, pursuant to the guidance in FASB ASC 740-10-55, the Company has stepped-up the basis of its intangible assets by $2,525,124 and has recorded a deferred tax liability in the same amount, to account for the book/tax basis difference resulting from the Kyalin acquisition.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company’s income tax returns are open to examination by federal, state and foreign tax authorities, generally for the years ended December 31, 2011 and later. The Company has no amount recorded for any unrecognized tax benefits as of December 31, 2013 and 2012, nor did the Company record any amount for the implementation of ASC 740. The Company’s policy is to record estimated interest and penalty related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. During the years ended 2013 and 2012, the Company did not recognize any interest or penalties in its statements of operations and there are no accruals for interest or penalties at December 31, 2013 or 2012.

17. SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

17. SUBSEQUENT EVENTS

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report.

On February 28, 2014, the Company amended its lease agreement for its offices located in Carlsbad, CA. The Company increased its Carlsbad offices by approximately 3,800 square feet of office space for approximately $110,000 of additional annual base rent plus rent escalations, common area maintenance, insurance, and real estate taxes under a lease agreement expiring in June 2017.

Public Offering

On January 9, 2014, the Company completed a public offering of 4,705,882 shares of common stock at a price of $8.50 per share. The Company received net proceeds from the offering of $37,399,997, after deducting the underwriting discount and other estimated offering expenses.

Acquisition of Manchester Pharmaceuticals, LLC

Exercise of Warrants

Subsequent to year end, an aggregate of 798,391 warrants were exercised for a total of $3,830,316 in cash received by the Company.

Covered Short Sales

Subsequent to December 31, 2013, the Company purchased $1,019,456 in marketable securities of thirteen publicly traded companies to “cover” securities sold, not yet purchased held as of December 31, 2013. As of the date of this filing, the Company has realized a gain on securities sold, not yet purchased in the amount of $45,885.

Stock Repurchases

Subsequent to December 31, 2013, the Company repurchased 248,801 shares of its common stock for an aggregate purchase price of $2,257,336. The Company currently recognizes such repurchased common stock as treasury stock.

Consulting Agreements

On January 14, 2014, the Company entered into an agreement with a consultant to serve as an advisor to the Company. The Company granted 14,000 shares of common stock payable as follows (i) 3,500 shares of common stock issued on April 1, 2014, (ii) 3,500 shares of common stock issued on July 1, 2014, (iii) 3,500 shares of common stock issued on October 1, 2014, (iv) 3,500 shares of common stock issued on January 1, 2015. In addition, the Consultant shall receive $12,500 per month. The agreement expires on January 13, 2015.

On February 14, 2014, the Company entered into an agreement with a consultant to serve as an advisor to the Company. The Company granted 66,000 shares of common stock payable as follows (i) 16,500 shares of common stock issued on March 31, 2014, (ii) 16,500 shares of common stock issued on June 30, 2014, (iii) 16,500 shares of common stock issued on September 30, 2014, (iv) 16,500 shares of common stock issued on December 31, 2014. In addition, the Consultant shall receive $200,000 upon the execution of the agreement. The agreement expires on December 31, 2014.

In March 2014, the Company entered into an agreement with a consultant to serve as an advisor to the Company. In exchange for the services, the Company issued 200,000 shares of common stock.

Bonus

On February 24, 2014, the Company’ Board of Directors approved an aggregate cash bonus pool of $1,100,000 to officers and employees of record as of December 31, 2013.

Employee Equity Issuance

Subsequent to year end, the Company issued 400,000 shares of restricted common stock to three officers and 1,210,000 options to purchase shares of the Company’s common stock to four officers and other employees of the Company.

Securities sold, not yet purchased

As of the date of this filing, the Company has $1,218,800 and $498,146 of securities sold not yet purchased and unrealized loss related to securities sold, not yet purchased, respectively.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Principles of Consolidation

Restatement of Prior Quarters

	March 31, 2013				June 30, 2013				September 30, 2013
	As Reported		As Restated		As Reported		As Restated		As Reported		As Restated
Non-derivative liabilities	$	1,575	$	1,460	$	4,229	$	4,114	$	4,935	$	4,935
Derivative financial instruments, warrants		7,000		8,392		6,901		8,283		22,234		23,853
Total Liabilities		8,575		9,852		11,130		12,397		27,169		28,788
Additional paid in capital		34,773		33,621		34,946		33,794		48,652		47,500
Deficit accumulated during the development stage		(38,355)		(38,480)		(43,404)		(43,519)		(54,301)		(54,768)
Stockholder’s deficit	$	(3,582)	$	(4,859)	$	(8,458)	$	(9,725)	$	(5,804)	$	(7,423)

	March 31, 2013				June 30, 2013				September 30, 2013
	As Reported		As Restated		As Reported		As Restated		As Reported		As Restated
Operating loss	$	(2,251)	$	(1,886)	$	(5,100)	$	(4,985)	$	(5,155)	$	(5,155)
Non-operating loss		(2,492)		(2,982)		51		61		(5,743)		(5,980)
Net loss		(4,743)		(4,868)		(5,049)		(4,924)		(10,898)		(11,135)
Net loss per common share, basic and diluted	$	(0.44)	$	(0.46)	$	(0.41)	$	(0.40)	$	(0.71)	$	(0.72)

The following table (in thousands) sets forth the effects of the restatement on affected items within the Company’s previously reported Consolidated Statement of Operations for the six and nine months ended June 30, 2013 and September 30, 2013, respectively had the adjustments been made in the corresponding quarters.

	June 30, 2013						September 30, 2013
	As Reported			As Restated			As Reported			As Restated
Operating loss	$	(7,351	)	$	(6,986	)	$	(12,505	)	$	(12,255	)
Non-operating loss		(2,441	)		(2,921	)		(8,184	)		(8,901	)
Net Loss	$	(9,792	)	$	(9,907	)	$	(20,689	)	$	(21,156	)
Net loss per common share, basic and diluted	$	(0.85	)	$	(0.86	)	$	(1.62	)	$	(1.65	)

Restatement of Previously Issued Financial Statements for Additional Disclosures

Cash

Marketable Securities

Securities Sold, Not Yet Purchased

Restricted Cash

The Company holds restricted cash as a rent guarantee on an operating lease through September 2016.

Employee Stock-Based Compensation

Non-Employee Stock-Based Compensation

Use of Estimates

Research and Development Costs

Income Taxes

Foreign Currency Translation and Remeasurement

Patents

Long-Lived Assets

Basic and diluted Net Loss Per Share

On January 9, 2014, the Company completed a public offering of 4.7 million shares of common stock at a price of $8.50 per share (see Note 17).

Subsequent to year end, an aggregate of 798,391 warrants were exercised for a total of $3,830,316 in cash received by the Company (see Note 17).

Derivative Instruments

Joint and Several Liability Assessment

Financial Instruments and Fair Value

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In estimating the fair value of the Company’s derivative liabilities, the Company used the Binomial Lattice pricing model (see Note 5 and Note 6).

Treasury Stock

Registration Payment Arrangement

Reclassifications

Subsequent Events

Recently Issued Accounting Pronouncements

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Schedule of effects of the restatement on affected items within the Company’s previously reported financial statements

	March 31, 2013				June 30, 2013				September 30, 2013
	As Reported		As Restated		As Reported		As Restated		As Reported		As Restated
Non-derivative liabilities	$	1,575	$	1,460	$	4,229	$	4,114	$	4,935	$	4,935
Derivative financial instruments, warrants		7,000		8,392		6,901		8,283		22,234		23,853
Total Liabilities		8,575		9,852		11,130		12,397		27,169		28,788
Additional paid in capital		34,773		33,621		34,946		33,794		48,652		47,500
Deficit accumulated during the development stage		(38,355)		(38,480)		(43,404)		(43,519)		(54,301)		(54,768)
Stockholder’s deficit	$	(3,582)	$	(4,859)	$	(8,458)	$	(9,725)	$	(5,804)	$	(7,423)

	March 31, 2013				June 30, 2013				September 30, 2013
	As Reported		As Restated		As Reported		As Restated		As Reported		As Restated
Operating loss	$	(2,251)	$	(1,886)	$	(5,100)	$	(4,985)	$	(5,155)	$	(5,155)
Non-operating loss		(2,492)		(2,982)		51		61		(5,743)		(5,980)
Net loss		(4,743)		(4,868)		(5,049)		(4,924)		(10,898)		(11,135)
Net loss per common share, basic and diluted	$	(0.44)	$	(0.46)	$	(0.41)	$	(0.40)	$	(0.71)	$	(0.72)

The following table (in thousands) sets forth the effects of the restatement on affected items within the Company’s previously reported Consolidated Statement of Operations for the six and nine months ended June 30, 2013 and September 30, 2013, respectively had the adjustments been made in the corresponding quarters.

	June 30, 2013						September 30, 2013
	As Reported			As Restated			As Reported			As Restated
Operating loss	$	(7,351	)	$	(6,986	)	$	(12,505	)	$	(12,255	)
Non-operating loss		(2,441	)		(2,921	)		(8,184	)		(8,901	)
Net Loss	$	(9,792	)	$	(9,907	)	$	(20,689	)	$	(21,156	)
Net loss per common share, basic and diluted	$	(0.85	)	$	(0.86	)	$	(1.62	)	$	(1.65	)

4. MARKETABLE SECURITIES AND SECURITIES SOLD, NOT YET PURCHASED (Tables)

12 Months Ended

Dec. 31, 2013

Marketable Securities [Abstract]

Marketable securities

Marketable securities and securities sold, not yet purchased at December 31, 2013 consisted of the following:


	Cost	Unrealized Gains	Unrealized Losses	Estimated Fair Value

Marketable securities available-for-sale:	$ 129,702	$ 3,292	$ -	$ 132,994
Securities sold, not yet purchased	$ 1,344,622	$ 13,256	$ 126,535	$ 1,457,901

5. DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2013

Investments, All Other Investments [Abstract]

Assumptions for valuation of warrants

The Company calculated the fair value of the warrants using the Binomial Lattice pricing model. The assumptions used at the date of issuance and at December 31, 2013 are noted in the following table:

		As of
	Date of issuance February 14, 2013		Date of issuance August 14, 2013	Date of issuance August 15, 2013	December 31, 2013
Fair market price of common stock	$3.75		$4.50	$4.50	$7.00
Contractual term	5 years		5 years	5 years	4.12 – 4.62 years
Risk-free interest rate	0.86%		1.48%	1.48%	1.39%
Expected volatility	101%		106%	106%	93%-97%

Schedule of derivative warrant issuances and balances outstanding

The following tables illustrates the Company’s derivative warrant issuances and balances outstanding as of, and during the years ended December 31, 2013 and 2012:

	Warrants	Weighted Average
	Warrants	Exercise Price		Fair Value
Outstanding at December 31, 2011	-	$	-	$	-
Issued	-		-		-
Canceled	-		-		-
Exercised	-		-		-
Outstanding at December 31, 2012	-	$	-	$	-
Issued	4,782,249		5.04		3.13
Canceled	-		-		-
Exercised	-		-		-
Outstanding at December 31, 2013	4,782,249	$	5.04	$	5.23

Schedule of derivative warrants outstanding

The following information applies to derivative warrants outstanding at December 31, 2013:

Exercise Price		Number of Warrants	Weighted Average Remaining Contractual Life (years)	Number Exercisable
$	3.60	1,917,792	4.12	1,917,792
$	6.00	2,864,457	4.62	2,864,457

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
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-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5580258-113959

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
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

+ Details

6. FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair value on a recurring basis

	As of December 31, 2013	Fair Value Hierarchy at December 31, 2013
	Total carrying and estimated fair value	Quoted prices in active markets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Asset:	$ 132,994	$ 132,994	$ -	$ -
Marketable securities, available-for-sale	$ 132,994	$ 132,994	$ -	$ -
	$ 25,037,346
Liabilities:
Derivative liability related to warrants		$ -	$ -	$ 25,037,346
Securities sold, not yet purchased	$ 1,457,901	$ 1,457,901	$ -	$ -

Summary of changes in the estimated fair value of the Company's Level 3 liability

The following table sets forth a summary of changes in the estimated fair value of the Company’s Level 3 liability for the year ended December 31, 2013:

	Fair Value Measurements of Common Stock Warrants Using Significant Unobservable Inputs (Level 3)
Balance at January 1, 2013	$ -
Issuance of common stock warrants:
February 14, 2013	5,407,372
August 14, 2013	328,561
August 15, 2013	9,201,487
Total value upon issuance	14,937,420
Change in fair value of common stock warrant liability	10,099,926
Balance at December 31, 2013	$ 25,037,346

7. INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Indefinite lived intangible assets

Indefinite lived intangible assets as of December 31, 2013 consist of the following:

Syntocinon License	$	5,000,000
Carbetocin Assets		5,560,355
Total	$	10,560,355

Schedule of amortizable intangible assets

Amortizable intangible assets as of December 31, 2013 and 2012 consist of the following:

			December 31, 2013
		Gross Carrying Amount			Accumulated Amortization		Net Book Value
Ligand License		2,300,000			(323,980)		1,976,020
Patent Costs*		49,775			-		49,775
Total	$	2,349,775		$	(323,980)	$	2,025,795

			December 31, 2012
		Gross Carrying Amount			Accumulated Amortization		Net Book Value
Ligand License	$	2,300,000		$	(121,383)	$	2,178,617
Patent Costs*		18,093			-		18,093
Total	$	2,318,093		$	(121,383)	$	2,196,710

8. ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2013

Payables and Accruals [Abstract]

Schedule of accrued expenses

Accrued expenses consist of the following at December 31, 2013 and 2012:

		December 31, 2013		December 31, 2012
Compensation related costs		1,144,983		1,022,716
Research and development		1,035,875		679,800
Business development 300,000 -		300,000		-
License fee		150,000		-
Accounting and legal fees		75,000		563,380
Finder’s fee		-		100,000
Other		73,837		11,250
Interest		-		90,650
	$	2,779,695	$	2,467,796

9. SELLING GENERAL AND ADMINISTRATIVE (Tables)

12 Months Ended

Dec. 31, 2013

Selling General And Administrative

Selling, general, and administrative expenses

Selling, general, and administrative expenses consist of the following at December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013:

		December 31, 2013		December 31, 2012		For the period from March 11, 2011 (inception) through December 31, 2013
Professional fees (inclusive of share base compensation $3,218,768, $6,397,372, and $9,870,472)	$	7,333,830	$	9,035,702	$	16,982,798
Other		5,029,491		725,263		5,852,152
Compensation and related costs (inclusive of share base compensation $1,165,452, $16,012,850, and $18,903,269)		4,274,743		18,133,550		24,729,314
Technology license contingent fees		250,000		1,700,000		1,950,000
Total selling, general, and administrative expenses	$	16,888,064	$	29,594,515	$	49,514,264

10. RESEARCH AND DEVELOPMENT (Tables)

12 Months Ended

Dec. 31, 2013

Research and Development [Abstract]

Research and development expenses

Research and development expenses consist of the following at December 31, 2013 and 2012, and for the period from March 11, 2011 (inception) through December 31, 2013:

		December 31, 2013		December 31, 2012		For the period from March 11, 2011 through December 31, 2013
External service provider costs:
Sparsentan	$	2,443,273	$	297,833	$	2,619,723
RE-024		1,548,957		124,635		1,673,592
Weg license in process R&D (Note 13)		1,000,000		-		1,000,000
Syntocinon		250,540		-		250,540
RE-034		230,279		-		230,279
General		159,080		240,034		493,569
Other product candidates		117,771		-		376,710
Total external service provider costs:		5,749,900		662,502		6,644,413
Internal personnel costs (inclusive of share base compensation $259,076, $0, and $259,076):		1,334,109		-		1,334,109
Total research and development	$	7,084,009	$	662,502	$	7,978,522

13. COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Contract Commitments

The following table summarizes our principal contractual commitments, excluding open orders that support normal operations, as of December 31, 2013:

Year Ending December 31,		Research and Development and other Charitable Donations	Consultants			Operating Leases
2014	$	4,560,092	$	831,660	$	777,538
2015		2,950,294		-		811,149
2016		-		-		724,292
2017		-		-		12,850
2018		-		-		-
2019 and thereafter		-		-		-
Total	$	7,510,386	$	831,660	$	2,325,829

14. STOCKHOLDERS DEFICIT (Tables)

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Schedule of stock option issuances and balances outstanding

The following tables illustrates the Company’s stock option issuances and balances outstanding as of, and during the years ended December 31, 2013 and 2012, respectively:

	Shares Underlying Options	Weighted Average
	Shares Underlying Options	Exercise Price		Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2013	-	-		-		-
Granted	1,721,000	$	7.66		-	$	-
Canceled	-		-		-
Exercised	-		-		-
Outstanding at December 31, 2013	1,721,000	$	7.66	$	9.89	$	172,000
Exercisable at December 31, 2013	172,667	$	7.85	$	9.86	$	14,333

15. INCENTIVE SHARES (Tables)

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of incentive shares

	Employee – number of shares		Non Employee – number of shares		Total number of shares		Weighted Average Fair Value
Unvested March 11, 2011 (“inception”)					-		$	-
Granted	1,758,300		381,000		2,139,300			4.00
Vested	(431,240	)	(59,835	)	(491,075	)		4.00
Forfeited	(45,835	)	-		(45,835	)		-

Unvested December 31, 2011	1,281,225		321,165		1,602,390			4.00
Granted	866,180		87,503		953,683			12.89
Vested	(2,048,280	)	(193,672	)	(2,241,952	)		7.34
Forfeited	(46,353	)	-		(46,353	)		-

Unvested December 31, 2012	52,772		214,996		267,768			3.20
Granted	135,000		-		135,000			6.24
Vested	(36,724)		(139,069)		(175,793)			5.44
Forfeited	(20,833)		(37,500)		(58,333)			4.00
Unvested December 31, 2013	130,215		38,427		168,642		$	6.44

16. INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of income tax provision

The components of the provision (benefit) for income taxes, in the consolidated statement of operations are as follows (in thousands):


	2013			2012
Current
Federal	$-			$-
State	-			-
	-			-
Deferred
Federal		(6,293	)		(1,173	)
State		(3,435	)		(733	)
		(9,728	)		(1,906	)
Total		(9,728	)		(1,906	)
Change in valuation allowance		9,804			1,906
Income tax (benefit)		76			—
Total	$	—		$	—

Reconciliation of the statutory federal income tax expense (benefit)

A reconciliation of the statutory federal income tax expense (benefit) to the effective tax rate is as follows:

	2013	2012
Statutory rate - federal	-35.00%	-35.00%
State taxes, net of federal benefit	-6.70%	-1.81%
Change in FV of derivative liability (warrants)	10.46%	0.00%
Stock Based Compensation related to profits interest	2.30%	9.52%
Other	0.17%	1.62%
Partnership losses preceding conversion	0.00%	19.39%
Change in valuation allowance	29.00%	6.28%
Income tax provision (benefit)	0.23%	0.00%

Schedule of deferred tax assets and liabilities

The tax effects of "temporary differences" giving rise to deferred tax assets and liabilities as of December 31, 2013 and 2012 are as follows (in thousands):

	2013		2012
Net operating loss and capital loss carryforward	$	11,498	$	2,748
Intangible assets		(2,999)		(466)
Other		610		(376)
Valuation allowance		(11,710)		(1,906)

Total Deferred tax liability	$	(2,601)	$	-

2. LIQUIDITY AND FINANCIAL CONDITION AND MANAGEMENT'S PLANS (Details Narrative) - USD ($)	10 Months Ended	12 Months Ended		34 Months Ended
	Dec. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ (3,268,256)	$ (33,823,509)	$ (30,343,856)	$ (67,435,621)
Stock-based compensation (Approximately)				2,900,000
Cash		5,997,307	11,388	5,997,307
Working Capital (Approximately)		2,504,000		2,504,000
Accumulated deficit		$ 67,435,621	$ 33,612,112	$ 67,435,621

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Net Income
-URI http://asc.fasb.org/extlink&oid=6518256

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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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+ Details

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended			6 Months Ended	9 Months Ended	10 Months Ended	12 Months Ended		34 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2013	Sep. 30, 2013	Dec. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Mar. 10, 2011
Derivative financial instruments, warrants							$ 25,037,346		$ 25,037,346
Total liabilities							38,810,777	5,799,080	38,810,777
Additional paid-in capital							50,189,127	30,203,402	50,189,127
Deficit accumulated during the development stage							(67,435,621)	(33,612,112)	(67,435,621)
Total stockholders' deficit						$ (536,285)	(18,311,898)	(3,407,815)	(18,311,898)
Operating loss							(23,972,073)	(30,257,017)	(57,492,786)
Net loss						$ (3,268,256)	$ (33,823,509)	$ (30,343,856)	$ (67,435,621)
Net loss per common share - basic and diluted							$ (2.38)	$ (8.29)
As Restated
Operating loss			$ (1,886)
Non-operating loss			(2,982)
Net loss			$ (4,868)
Net loss per common share - basic and diluted			$ (0.46)
As Reported
Non-derivative liabilities	$ 4,935	$ 4,229	$ 1,575	$ 4,229	$ 4,935
Derivative financial instruments, warrants	22,234	6,901	7,000	6,901	22,234
Total liabilities	27,169	11,130	8,575	11,130	27,169
Additional paid-in capital	48,652	34,946	34,773	34,946	48,652
Deficit accumulated during the development stage	(54,301)	(43,404)	(38,355)	(43,404)	(54,301)
Total stockholders' deficit	(5,804)	(8,458)	(3,582)	(8,458)	(5,804)
Operating loss	(5,155)	(5,100)	(2,251)	(7,351)	(12,505)
Non-operating loss	(5,743)	51	(2,492)	(2,441)	(8,184)
Net loss	$ (10,898)	$ (5,049)	$ (4,743)	$ (9,792)	$ (20,689)
Net loss per common share - basic and diluted	$ (0.71)	$ (0.41)	$ (0.44)	$ (0.85)	$ (1.62)
As Restated
Non-derivative liabilities	$ 4,935	$ 4,114	$ 1,460	$ 4,114	$ 4,935
Derivative financial instruments, warrants	23,853	8,283	8,392	8,283	23,853
Total liabilities	28,788	12,397	9,852	12,397	28,788
Additional paid-in capital	47,500	33,794	33,621	33,794	47,500
Deficit accumulated during the development stage	(54,768)	(43,519)	(38,480)	(43,519)	(54,768)
Total stockholders' deficit	(7,423)	(9,725)	$ (4,859)	(9,725)	(7,423)
Operating loss	(5,155)	(4,985)		(6,986)	(12,255)
Non-operating loss	(5,980)	61		(2,921)	(8,901)
Net loss	$ (11,135)	$ (4,924)		$ (9,907)	$ (21,156)
Net loss per common share - basic and diluted	$ (0.72)	$ (0.4)		$ (0.86)	$ (1.65)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended		34 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Accounting Policies [Abstract]
Research and development costs	$ 7,084,009	$ 662,502	$ 7,978,522

4. MARKETABLE SECURITIES AND SECURITIES SOLD, NOT YET PURCHASED (Details)	Dec. 31, 2013 USD ($)
Available-for-sale
Cost	$ 129,702
Unrealized Gains	3,292
Unrealized Losses
Estimated Fair Value	132,994
Securities Sold, Not yet Purchased [Member]
Cost	1,344,622
Unrealized Gains	13,256
Unrealized Losses	126,535
Estimated Fair Value	$ 1,457,901

5. DERIVATIVE FINANCIAL INSTRUMENTS (Details)	12 Months Ended
5. DERIVATIVE FINANCIAL INSTRUMENTS (Details)	Dec. 31, 2013 $ / shares
Fair market price of common stock	$ 7.00
Risk-free interest rate	1.39%
Minimum [Member]
Contractual term	4 years 1 month 13 days
Expected volatility	93.00%
Maximum [Member]
Contractual term	4 years 7 months 13 days
Expected volatility	97.00%
Date of issuance February 14, 2013
Fair market price of common stock	$ 3.75
Contractual term	5 years
Risk-free interest rate	0.86%
Expected volatility	101.00%
Date of issuance August 14, 2013
Fair market price of common stock	$ 4.50
Contractual term	5 years
Risk-free interest rate	1.48%
Expected volatility	106.00%
Date of issuance August 15, 2013
Fair market price of common stock	$ 4.50
Contractual term	5 years
Risk-free interest rate	1.48%
Expected volatility	106.00%

5. DERIVATIVE FINANCIAL INSTRUMENTS (Details 1) - $ / shares	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Shares
Shares Issued	135,000	953,683
Weighted Average Exercise Price
Granted	$ 6.03
Warrants
Shares
Shares Outstanding, Beginning	4,782,249
Shares Outstanding, Ending	9,463,375	4,782,249
Shares Exercisable, Ending	9,463,375	4,463,375
Warrants \| Derivative [Member]
Shares
Shares Issued		4,782,249
Shares Cancelled
Shares Exercised
Weighted Average Exercise Price
Outstanding, Beginning	$ 5.04
Granted		5.04
Cancelled
Exercised
Outstanding, Ending		5.04
Weighted Average Fair Value
Outstanding, Beginning	3.13
Granted		3.13
Cancelled
Exercised
Outstanding, Ending		$ 3.13

5. DERIVATIVE FINANCIAL INSTRUMENTS (Details 2)	12 Months Ended
5. DERIVATIVE FINANCIAL INSTRUMENTS (Details 2)	Dec. 31, 2013 $ / shares shares
3.60
Exercise Prices \| $ / shares	$ 3.60
Underlying Warrants Outstanding	1,917,792
Weighted Average Remaining Contractual Life	4 years 1 month 13 days
Underlying Warrants Exercisable	1,917,792
6.00
Exercise Prices \| $ / shares	$ 6.00
Underlying Warrants Outstanding	2,864,457
Weighted Average Remaining Contractual Life	4 years 7 months 13 days
Underlying Warrants Exercisable	2,864,457

6. FAIR VALUE MEASUREMENTS (Details) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Marketable securities, available-for-sale	$ 132,994
Derivative liability related to warrants	25,037,346
Securities sold, not yet purchased	1,457,901
Quoted prices in active markets (Level 1)
Marketable securities, available-for-sale	132,994
Derivative liability related to warrants
Securities sold, not yet purchased	1,457,901
Significant other observable inputs (Level 2)
Marketable securities, available-for-sale
Derivative liability related to warrants
Securities sold, not yet purchased
Significant unobservable inputs (Level 3)
Marketable securities, available-for-sale
Derivative liability related to warrants	25,037,346
Securities sold, not yet purchased

6. FAIR VALUE MEASUREMENTS (Details 1) - USD ($)	12 Months Ended		34 Months Ended
6. FAIR VALUE MEASUREMENTS (Details 1) - USD ($)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Fair Value Disclosures [Abstract]
Balance at Jenuary 1, 2013
Issuance of common stock warrants	5,407,372
February 14, 2013	328,561
August 14, 2013	9,201,487
August 15, 2013	14,937,420
Total value upon issuance	10,099,926
Change in fair value of common stock warrant liability	10,099,926		$ 10,099,926
Balance at June 30, 2013	$ 25,037,346		$ 25,037,346

7. INTANGIBLE ASSETS (Details) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Indefinite lived intangible assets	$ 10,560,355
Syntocinon License
Indefinite lived intangible assets	5,000,000
Carbetocin Assets
Indefinite lived intangible assets	$ 5,560,355

7. INTANGIBLE ASSETS (Details 1) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Gross Carrying Amount	$ 2,349,775	$ 2,318,093
Accumulated Amortization	(323,980)	(121,383)
Net Book Value	2,025,795	2,196,710
Ligand License
Gross Carrying Amount	2,300,000	2,300,000
Accumulated Amortization	(323,980)	(121,383)
Net Book Value	1,976,020	2,178,617
Patent Costs
Gross Carrying Amount	49,775	18,093
Accumulated Amortization
Net Book Value	$ 49,775	$ 18,093

7. INTANGIBLE ASSETS (Details 2) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
2014	$ 202,597
2015	202,597
2016	202,597
2017	202,597
2018	202,597
thereafter	1,012,810
Total	$ 2,025,795	$ 2,196,710

8. ACCRUED EXPENSES (Details) - USD ($)	12 Months Ended
8. ACCRUED EXPENSES (Details) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Payables and Accruals [Abstract]
Compensation related costs	$ 1,144,983	$ 1,022,716
Research and development	1,035,875	679,800
Business development	300,000
License fee	150,000
Accounting and legal fees	75,000	563,380
Finders’ fee		100,000
Other	73,837	11,250
Interest		90,650
Total	$ 2,779,695	$ 2,467,796

9. SELLING GENERAL AND ADMINISTRATIVE (Details) - USD ($)	12 Months Ended		34 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Selling General And Administrative
Professional fees (inclusive of share base compensation $3,218,768, $6,397,372, and $9,870,472)	$ 7,333,830	$ 9,035,702	$ 16,982,798
Other	5,029,491	725,263	5,852,152
Compensation and related costs (inclusive of share base compensation $1,165,452, $16,012,850, and $18,903,269)	4,274,743	18,133,550	24,729,314
Technology license contingent fees	250,000	1,700,000	1,950,000
Total selling, general, and administrative expenses	$ 16,888,064	$ 29,594,515	$ 49,514,264

10. RESEARCH AND DEVELOPMENT (Details) - USD ($)	12 Months Ended		34 Months Ended
10. RESEARCH AND DEVELOPMENT (Details) - USD ($)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
External service provider costs:
Sparsentan	$ 2,443,273	$ 297,833	$ 2,619,723
RE-024	1,548,957	124,635	1,673,592
Weg license in process R&D (Note 13)	1,000,000		1,000,000
Syntocinon	250,540		250,540
RE-034	230,279		230,279
General	159,080	240,034	493,569
Other product candidates	117,771		376,710
Total external service provider costs:	5,749,900	662,502	6,644,413
Internal personnel costs (inclusive of share base compensation $259,076, $0, and $259,076):	1,334,109		1,334,109
Total research and development	$ 7,084,009	$ 662,502	$ 7,978,522

8. LICENSE AGREEMENT (Details Narrative) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
License Agreement Details Narrative
License agreement	$ 2,025,795	$ 2,196,710

9. NOTES PAYABLE (Detail Narrative) - USD ($)	12 Months Ended		34 Months Ended
9. NOTES PAYABLE (Detail Narrative) - USD ($)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Notes Payable Detail Narrative
Interest expense	$ 46,344	$ 84,087	$ 130,356

13. COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2013 USD ($)
Research and Development and other Charitable Donations
2014	$ 4,560,092
2015	2,950,294
2016
2017
2018
2019 and thereafter
Total	7,510,386
Consultant
2014	831,660
2015
2016
2017
2018
2019 and thereafter
Total	831,660
Operating Leases
2014	777,538
2015	811,149
2016	724,292
2017	12,850
2018
2019 and thereafter
Total	$ 2,325,829

14. STOCKHOLDERS DEFICIT (Details)) - USD ($)	12 Months Ended
14. STOCKHOLDERS DEFICIT (Details)) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Granted during the period, Options	135,000	953,683
Canceled during the period, Options	58,333	46,353
Granted during the period, Weighted-Average Exercise Price	$ 6.03
Stock option
Shares Outstanding, Beginning
Granted during the period, Options	1,721,000
Canceled during the period, Options
Exercised during the period, Options
Shares Outstanding, Ending	1,721,000
Shares Exercisable, Ending	172,667
Outstanding, Beginning
Granted during the period, Weighted-Average Exercise Price	7.66
Canceled during the period, Weighted-Average Exercise Price
Exercised during the period, Weighted-Average Exercise Price
Outstanding, Ending	7.66
Exercisable, Weighted-Average Exercise Price	$ 7.85
Remaining Contractual Term, Outstanding at December 31, 2013 (in years)	9 years 10 months 21 days
Remaining Contractual Term, Exercisable at December 31, 2013 (in years)	9 years 10 months 10 days
Aggregate Intrinsic Value, Outstanding at December 31, 2013	$ 172,000
Aggregate Intrinsic Value, Exercisable at December 31, 2013	$ 14,333

14. STOCKHOLDERS DEFICIT (Details Narrative)	12 Months Ended
14. STOCKHOLDERS DEFICIT (Details Narrative)	Dec. 31, 2013 USD ($) $ / shares
Equity [Abstract]
Granted \| $ / shares	$ 6.03
Closing stock price \| $ / shares	$ 7
Stock compensation expense \| $	$ 2,485,875
Unrecognized compensation cost related to non-vested stock option awards \| $	$ 9,213,338

12. INCENTIVE SHARES (Details) - $ / shares	12 Months Ended
12. INCENTIVE SHARES (Details) - $ / shares	Dec. 31, 2013	Dec. 31, 2012
Number of stock Unvested Outstanding, Beginning	267,768	1,602,390
Number of Options Granted	135,000	953,683
Stock vested	(175,793)	(2,241,952)
Number of Options Forfeited	(58,333)	(46,353)
Number of stock Unvested Outstanding, Ending	168,642	267,768
Weighted Average Fair Value Outstanding, Beginning	$ 3.2	$ 4
Weighted Average Fair Value Granted	6.24	12.89
Weighted Average Fair Value, stock vested	5.44	7.34
Weighted Average Fair Value Forfeited	4
Weighted Average Fair Value Outstanding, Ending	$ 6.44	$ 3.2
Employee
Number of stock Unvested Outstanding, Beginning	52,772	1,281,225
Number of Options Granted	135,000	866,180
Stock vested	(36,724)	(2,048,280)
Number of Options Forfeited	(20,833)	(46,353)
Number of stock Unvested Outstanding, Ending	130,215	52,772
Non Employee
Number of stock Unvested Outstanding, Beginning	214,996	321,165
Number of Options Granted		87,503
Stock vested	(139,069)	(193,672)
Number of Options Forfeited	(37,500)
Number of stock Unvested Outstanding, Ending	38,427	214,996

16. INCOME TAXES (Details) - USD ($)	12 Months Ended		34 Months Ended
16. INCOME TAXES (Details) - USD ($)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Current
Federal
State
Current Income Tax Expense (Benefit)
Deferred
Federal	(6,293)	(1,173)
State	(3,435)	(733)
Total	(9,728)	(1,906)
Change in valuation allowance Income tax (benefit)	9,804	1,906
Total	$ 75,775		$ 75,775

16. INCOME TAXES (Details 1)	12 Months Ended
16. INCOME TAXES (Details 1)	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Statutory rate - federal	(35.00%)	(35.00%)
State taxes, net of federal benefit	(6.70%)	(1.81%)
Change in FV of derivative liability (warrants)	10.46%	0.00%
Stock Based Compensation related to profits interest	2.30%	9.52%
Other	0.17%	1.62%
Partnership Losses proceeding conversion	0.00%	19.39%
Change in valuation allowance	29.00%	6.28%
Income tax provision (benefit)	0.23%	0.00%

16. INCOME TAXES (Details 2) - USD ($)	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Net operating loss and capital loss carry forward - Deferred Tax Assets	$ 11,498	$ 2,748
Intangible assets	(2,999)	(466)
Other	610	(376)
Valuation allowance	(11,710)	(1,906)
Deferred tax asset, net of valuation allowance	$ (2,601)