HispanicBusiness

RAYOS gross sales in the fourth quarter, following its December U.S. launch, were $0.8 million and net sales were $0.4 million after deductions for discounts and allowances of $0.3 million and for co-pay assistance costs of $0.1 million. LODOTRA gross and net sales in the fourth quarter of 2012 were $0.3 million, compared to gross and net sales of $3.4 million in the fourth quarter of 2011. The Company recognizes a significant portion of its LODOTRA sales at the time of delivery to its distribution partner, Mundipharma, and those deliveries are not linear or related to end market sales in terms of timing. The $3.1 million decrease in LODOTRA gross and net sales during the fourth quarter of 2012 was primarily attributable to these timing differences of product deliveries to Mundipharma and to a reduction in deferred revenues recognized.

Research and development expenses increased $0.9 million, from $3.8 million during the three months ended December 31, 2011, to $4.7 million during the three months ended December 31, 2012. The increase in research and development expenses during the fourth quarter of 2012 was primarily associated with a $0.4 million increase in salaries and benefits expense primarily related to additional staffing of the Company's medical affairs group, along with increases in consulting fees and contract manufacturing expense.

Sales and marketing expenses increased $2.2 million, from $12.9 million during the three months ended December 31, 2011, to $15.1 million during the three months ended December 31, 2012. The increase in expense was primarily attributable to expanded sales and promotional efforts one year post DUEXIS' launch and initial launch activities for RAYOS, which contributed to a $2.6 million increase in salaries and benefits expense associated with additional staffing of the Company's sales and marketing functions, partially offset by a $1.0 million reduction in consulting expenses and outside service costs.

General and administrative expenses increased $0.6 million, from $4.4 million during the three months ended December 31, 2011, to $5.0 million during the three months ended December 31, 2012. The increase in general and administrative expenses was primarily due to a $0.3 million increase in salaries and benefits expense associated with additional finance and administrative personnel as the Company built out its corporate infrastructure and a $0.3 million increase in legal costs primarily associated with intellectual property related matters.

Interest expense net increased $2.6 million, from $0.8 million during the three months ended December 31, 2011, to $3.4 million during the three months ended December 31, 2012, primarily as a result of incremental interest expense associated with higher borrowing balances under the Company's $60.0 million senior secured loan, compared to an outstanding notes payable balance of $19.4 million in the prior year period.

During the three months ended December 31, 2011, the Company recorded an intangible impairment charge of $69.6 million to write down the value of its indefinite lived in process research and development, or IPR&D, asset to its fair value, with no corresponding IPR&D impairment charge in the three months ended December 31, 2012.

Income tax benefit decreased $13.8 million, from $14.1 million during the three months ended December 31, 2011, to $0.3 million during the three months ended December 31, 2012. The decrease in income tax benefit was primarily attributable to the Company's IPR&D asset impairment charge of $69.6 million recorded during the fourth quarter of 2011, which reduced the Company's deferred income tax liability and increased its income tax benefit.