Research and development ("R&D") expenses decreased 4% or approximately $89,000 to $2.2 million for the three month period ended June 30, 2012 as compared to $2.3 million for the same period in the prior year and decreased 3% or approximately $103,000 to $3.6 million for the six month period ended June 30, 2012 as compared to $3.7 million for the same period in the prior year. The decrease in R&D expenses for the three and six month periods ended June 30, 2012 as compared to the same periods in the prior year is primarily due to the decreased clinical development expenses related to Androxal® due to the completion of the Phase 2B study in men with secondary hypogonadism, partially offset by an increase in clinical development expenses related to Proellex® due to the commencement of the Phase 2 vaginal administration study for uterine fibroids. Payroll and benefits expenses increased for the three and six month periods ended June 30, 2012 as compared to the same periods in the prior year by $209,000 and $458,000, respectively, due to increased headcount. Additionally, operating and occupancy expenses decreased for the three month period ended June 30, 2012 by $132,000 as compared to the same period in the prior year due to a decrease in costs associated with our patent portfolio and remained constant for the six month periods ended June 30, 2012 and 2011.

General and administrative ("G&A") expenses decreased 35% or approximately $496,000 to $922,000 for the three month period ended June 30, 2012 as compared to $1.4 million for the same period in the prior year and decreased 8% or approximately $157,000 to $1.9 million for the six month period ended June 30, 2012 as compared to $2.1 million for the same period in the prior year. The decrease in G&A expenses for the three and six month periods ended June 30, 2012 as compared to the same periods in the prior year is primarily due to a decrease in non-cash stock based compensation in the amount of $675,000 and $405,000, respectively. This decrease is associated with 210,000 stock option awards issued under the 2011 Equity Incentive Plan, approved by the shareholders of the Company on June 1, 2011, which vested immediately upon approval, resulting in a non-cash charge of $759,000 in June 2011. Additionally, salaries increased for the three and six month periods ended June 30, 2012 by $70,000 and $160,000, respectively, as compared to the same periods in the prior year due to an increase in headcount and the discontinuation of the salary reduction program put in place in August 2009. G&A operating and occupancy expenses, which include expenses to operate as a public company, increased for the three and six month periods ended June 30, 2012 by approximately $107,000 and $63,000, respectively, as compared to the same periods in the prior year. The increase for the three month period ended June 30, 2012 as compared to the same period in the prior year is primarily due to an increase in professional services. The increase for the six month period ended June 30, 2012 as compared to the same period in the prior year is primarily due to an increase in professional services and travel expenses.

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