1.	With regard to the error in the Company’s accounting for the Depomed Royalty Agreement that has been disclosed in Note 1 to the Form 10-Q for the quarter ended June 30, 2014, please address the following:

•	Tell us whether there were gaps in controls, inadequately designed controls or controls not operating as designed to identify the appropriate accounting in 2013 when the agreement was entered into. To the extent that you determined there were

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•	The Chief Accounting Officer (“CAO”) examined the agreements in detail and identified each of the Company’s rights and obligations under the Depomed Transaction.

•	The CAO performed research of the Accounting Standards Codification (“ASC”) and prepared a Material Non-recurring Transaction Memo (the “Memo”) which provided a summary of the key elements of the Depomed Transaction, the accounting guidance considered, the Company’s analysis of the Depomed Transaction, and the Company’s conclusions as to the appropriate accounting for the Depomed Transaction.

•	The Memo was then provided to the Financial and Reporting Manager who performed an independent review of the transaction documents, agreed the key elements of the Depomed Transaction to the Memo, validated the ASC guidance considered, and challenged the conclusions reached by the CAO.

•	Upon completion of the review performed by the Financial and Reporting Manager, the Memo was provided to the following internal and external parties for review and comment.

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▪	CFO - The Company’s CFO examined the transaction documents, reviewed the Memo, and discussed the Depomed Transaction and conclusions reached with the CAO.

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Third party accounting consultancy group - The Company engaged a local San Francisco/Bay Area based accounting consultancy group to review the Memo and assist management with the Company’s final assessment of and conclusions reached regarding the accounting for the Depomed Transaction. The CAO discussed the comments and observations from the review with the reviewer and updated the Memo as appropriate.

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KPMG - The Company engaged KPMG to assist with the preparation of its income tax returns and annual and quarterly tax provisions prepared in accordance with GAAP, and to assist the Company with the assessment of the tax accounting for significant transactions. As part of its analysis of the Depomed Transaction, the Company engaged KPMG to assist it in assessing the income tax treatment and accounting for the Depomed Transaction.

•	Following the completion of the reviews by the CFO, KPMG and the Connor Group, the CAO updated the Memo and submitted it to the CFO for final review and approval.

•	In 2012 and 2013, the Company entered into a number of secured note arrangements under which the Company loaned money to late stage public and private healthcare companies. Each of these arrangements contained specified repayment terms and minimum rates of return to be realized by the Company and were collateralized by specified assets of the borrower. We had a robust process

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•	The Depomed Transaction was the first transaction through which the Company acquired unsecured cash flows that will only be realized through royalty rights acquired from a third party as such our internal controls had not yet operated or been evaluated as it related to these types of transactions.

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The misstatement resulted from an incorrect application of GAAP to a complex financial asset for which there is no specific accounting guidance and for which considerable judgment was required to determine the appropriate accounting for and presentation of the asset acquired, revenues earned and cash flows to be received. It was further validated through multiple searches of publically available records (i.e. EDGAR) and several consultations with our auditors and external advisors, as well as with the SEC staff, that this was a very unique transaction without clearly applicable GAAP.

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The Depomed Transaction was complex and significant judgment was required to properly account for this transaction. However, the amount involved was not subjective nor was there any complexity with respect to the purchase price associated with the asset. The complexity was the result of the unique characteristics of the asset that primarily affect financial presentation and disclosure, compounded by the fact that there was no authoritative accounting guidance that was directly applicable to this transaction. The failure of this

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•	We assessed the financial reporting elements involved and the magnitude of the potential misstatement resulting from the deficiency based on potential impacts to the balance sheet, income statement, and the statement of cash flows.

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While the Company will enter into new revenue generating transactions in future periods, these transactions are not routine in nature and we are therefore unable to estimate the volume or magnitude of potential future transactions. While we could have more of these transactions in the future, we believe the controls at December 31, 2013 were operating given our volume of these transactions such that the deficiency would not have resulted in material misstatement. As discussed later in this response, we have since remediated the deficiency.

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Restatement of previously issued financials statements was not required or deemed appropriate. Per our assessment in accordance with SAB 99 and SAB 108, we determined that the correction of the error in the second quarter of 2014 was reasonable as the error and the correction of the error was not material to any 2013 or 2014 period impacted. The SEC Division of Corporation Finance did not take exception with our conclusions regarding the materiality of this error as discussed in our letter to the SEC Division of Corporation Finance dated August 14, 2014.

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The related asset is not susceptible to loss or fraud. The related revenue and overall return on investment is not subject to manipulation as there are multiple external sources relied upon (royalty reports from Depomed licensees, for example) in the initial and periodic valuation of this asset. Further there is a third party escrow relationship that manages all the transfer of funds from Depomed to the Company.

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Only one deficiency was noted during management’s retrospective review and no significant deficiencies were identified during our annual assessment at December 31, 2013. It was further concluded that the identified deficiency does not trigger or indicate that other of the Company's controls are deficient in their design or operation nor were any other gaps in internal control over financial reporting identified.

•	The audit committee has demonstrated that it exercises its responsibilities with due professional care. This has been evidenced by their probing and appropriate questions of management, the Company’s SOX service provider and of its auditor. The audit committee is comprised of members who possess appropriate knowledge, background and expertise to execute their responsibilities.

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We have concluded it remote that the control described above would fail to prevent or detect a misstatement in other complex transactions that the Company has or may enter into. However, as we identified a significant deficiency in the Company’s control environment with respect to the accounting for the Depomed Transaction, we have implemented changes, as described below, to strengthen and remediate the control described above. We believe that such remediation will further reduce the potential for the occurrence of a similar control deficiency in future periods.

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To the extent that you identified significant deficiencies in your original assessment of internal control over financial reporting (ICFR) as of December 31, 2013, tell us the nature of each, including the impacted component(s) of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework and how you evaluated their severity individually and in the aggregate, including in aggregation with any deficiencies identified upon discovery of the above error, if applicable.

•	Tell us if you made changes in your ICFR due to the discovery of this error, and if so, tell us which component(s) of COSO the improvements in controls relate to.

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2.	Additionally, please address the above questions with regard to the reclassification of interest income recognized from financial assets from a component of “Interest income and other net” to “Interest revenue” as a component of revenue in the condensed consolidated statements.