Revenue	12 Months Ended
Dec. 31, 2011
Revenue	Note 7—Revenue We have received Small Business Innovative Research, or SBIR, grants from the National Institutes of Health through December 31, 2011 totaling $4.3 million. The grants support research and development of our product candidates. We recorded revenue related to these grants of $266,000, $876,000 and $432,000, for the years ended December 31, 2011, 2010 and 2009, respectively. As of December 31, 2011, $595,000 remained available under these grants. In December 2006, we entered into a funding agreement with The Stanley Medical Research Institute, or SMRI, to develop a proprietary PDE10 inhibitor product candidate for the treatment of schizophrenia. Under the agreement, we may receive grant and equity funding of up to $9.0 million upon achievement of product development milestones through Phase 1 clinical trials, subject to our mutual agreement with SMRI. We hold the exclusive rights to the technology. In consideration for SMRI’s grant funding, we will become obligated to pay SMRI royalties based on net income, as defined under the agreement, from commercial sales of a PDE10 inhibitor product, not to exceed a set multiple of total grant funding received. If a PDE10 inhibitor product candidate does not reach commercialization, we are not required to repay the grant funds. Through December 31, 2011, we have received a total of $5.7 million from SMRI in the form of grant and equity funding. As of December 31, 2011, all amounts pertaining to this agreement previously recorded as deferred revenue in the accompanying balance sheet have been recognized as revenue. In 2007 and 2009, as consideration for the equity funding noted above, we sold an aggregate of 255,103 shares of Series E convertible preferred stock to SMRI, which were subsequently converted to common stock in connection with our initial public offering. We recognized revenue under the SMRI funding agreement of $227,000, $475,000 and $548,000, for the years ending December 31, 2011, 2010, and 2009, respectively. In October 2010, we entered into a platform development funding agreement with Vulcan pursuant to which we received $20.0 million for our G protein-coupled receptor, or GPCR, program from Vulcan. Of the funds received from Vulcan, we recorded $10.8 million as a reduction of the cost of the intellectual property assets we purchased from Patobios Limited, or Patobios, $994,000 was recorded in equity for the fair value of warrants issued to Vulcan, and the remaining $8.2 million was recorded as deferred revenue. The deferred revenue balance is being recognized as revenue or as a reduction of the costs of assets purchased in direct proportion to the related GPCR expenses as they are incurred. Also in October 2010, we entered into an agreement with LSDF under which we received a $5.0 million grant award from LSDF that will be paid to us as reimbursement of expenses that we incur and for equipment purchases we make for our GPCR program. For the years ended December 31, 2011 and 2010, we have recorded reductions to the Vulcan deferred revenue balance of $2.0 million and $484,000, respectively, which includes $2.0 and $468,000 recognized as revenue and $38,000 and $16,000 recorded as cost reductions to assets, respectively. As of December 31, 2011, $5.7 million in deferred revenue pertaining to the Vulcan Agreement was recorded in the accompanying balance sheet. Under the LSDF agreement, for the years ended December 31, 2011 and 2010, respectively, we recognized revenue of $2.0 million and $212,000 and have recorded cost reductions to assets of $1.7 million and $494,000. As of December 31, 2011, we had incurred $4.4 million of expenses reimbursable by LSDF under our grant award agreement. See additional discussion of the Vulcan and LSDF agreements under Note 9.

Note 7—Revenue

We have received Small Business Innovative Research, or SBIR, grants from the National Institutes of Health through December 31, 2011 totaling $4.3 million. The grants support research and development of our product candidates. We recorded revenue related to these grants of $266,000, $876,000 and $432,000, for the years ended December 31, 2011, 2010 and 2009, respectively. As of December 31, 2011, $595,000 remained available under these grants.

In December 2006, we entered into a funding agreement with The Stanley Medical Research Institute, or SMRI, to develop a proprietary PDE10 inhibitor product candidate for the treatment of schizophrenia. Under the agreement, we may receive grant and equity funding of up to $9.0 million upon achievement of product development milestones through Phase 1 clinical trials, subject to our mutual agreement with SMRI. We hold the exclusive rights to the technology. In consideration for SMRI’s grant funding, we will become obligated to pay SMRI royalties based on net income, as defined under the agreement, from commercial sales of a PDE10 inhibitor product, not to exceed a set multiple of total grant funding received. If a PDE10 inhibitor product candidate does not reach commercialization, we are not required to repay the grant funds. Through December 31, 2011, we have received a total of $5.7 million from SMRI in the form of grant and equity funding. As of December 31, 2011, all amounts pertaining to this agreement previously recorded as deferred revenue in the accompanying balance sheet have been recognized as revenue. In 2007 and 2009, as consideration for the equity funding noted above, we sold an aggregate of 255,103 shares of Series E convertible preferred stock to SMRI, which were subsequently converted to common stock in connection with our initial public offering. We recognized revenue under the SMRI funding agreement of $227,000, $475,000 and $548,000, for the years ending December 31, 2011, 2010, and 2009, respectively.

In October 2010, we entered into a platform development funding agreement with Vulcan pursuant to which we received $20.0 million for our G protein-coupled receptor, or GPCR, program from Vulcan. Of the funds received from Vulcan, we recorded $10.8 million as a reduction of the cost of the intellectual property assets we purchased from Patobios Limited, or Patobios, $994,000 was recorded in equity for the fair value of warrants issued to Vulcan, and the remaining $8.2 million was recorded as deferred revenue. The deferred revenue balance is being recognized as revenue or as a reduction of the costs of assets purchased in direct proportion to the related GPCR expenses as they are incurred. Also in October 2010, we entered into an agreement with LSDF under which we received a $5.0 million grant award from LSDF that will be paid to us as reimbursement of expenses that we incur and for equipment purchases we make for our GPCR program. For the years ended December 31, 2011 and 2010, we have recorded reductions to the Vulcan deferred revenue balance of $2.0 million and $484,000, respectively, which includes $2.0 and $468,000 recognized as revenue and $38,000 and $16,000 recorded as cost reductions to assets, respectively. As of December 31, 2011, $5.7 million in deferred revenue pertaining to the Vulcan Agreement was recorded in the accompanying balance sheet. Under the LSDF agreement, for the years ended December 31, 2011 and 2010, respectively, we recognized revenue of $2.0 million and $212,000 and have recorded cost reductions to assets of $1.7 million and $494,000. As of December 31, 2011, we had incurred $4.4 million of expenses reimbursable by LSDF under our grant award agreement. See additional discussion of the Vulcan and LSDF agreements under Note 9.