Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

v2.4.0.6
Stock-based Compensation
 9 Months Ended
Sep. 30, 2012
Stock-based Compensation [Abstract]  
Stock-based Compensation
 
9.
Stock-based Compensation

In the first nine months of 2012, the Board of Directors of the Company approved grants under the Amended and Restated 2010 Long Term Incentive Plan for an aggregate of 2,161,920 stock options and an aggregate of 1,190,323 restricted stock units ("RSUs") to certain employees and directors of the Company. The options vest monthly over four years for employees and one year for directors and the RSUs vest annually over three years in equal increments.
 
 
The Company recognizes compensation expense for all stock-based payment awards made to the Company's employees, consultants and directors based on estimated fair values. The valuation of stock option awards is determined at the date of grant using the Black-Scholes Model. This model requires inputs such as the expected term of the option, expected volatility and risk-free interest rate. To establish an estimate of expected term, the Company considers the vesting period and contractual period of the award and its historical experience of stock option exercises, post-vesting cancellations and volatility. The estimate of expected volatility is based on the Company's historical volatility. The risk-free rate is based on the yield available on U.S. Treasury zero-coupon issues. The forfeiture rate impacts the amount of aggregate compensation for both stock options and RSUs. To establish an estimate of forfeiture rate, the Company considers its historical experience of option forfeitures and terminations.

The fair value of stock-based awards was estimated based on the following weighted average assumptions for the three and nine months ended September 30, 2012 and 2011:
 
   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
   
2012
    
2011
    
2012
    
2011
  
Dividend yield
     0 %     0 %     0 %     0 %
Expected volatility
     92 %     89 %     92 %     87 %
Risk-free interest rate
     0.65 %     0.96 %     0.83 %     1.86 %
Expected term
  
5.6 years
    
5.6 years
    
5.6 years
    
5.3 years
  
 
Stock option activity for the nine months ended September 30, 2012 was as follows:
 
   
Options
    
Weighted Average
Exercise Price Per
Share
    
Weighted Average
Remaining
Contractual Life
(in years)
    
Aggregate
Intrinsic Value
(in thousands)
  
Options outstanding at December 31, 2011
     5,053,435     $ 12.55       6.89     $ -  
Granted
     2,161,920       2.57                  
Exercised
     (77,797 )     1.69                  
Forfeited, expired or cancelled
     (484,144 )     15.96                  
Options outstanding at September 30, 2012
     6,653,414     $ 9.19       7.51     $ 4,520,629  
Options exercisable at September 30, 2012
     4,003,868     $ 13.10       6.53     $ 2,106,931  
 
The valuation of RSUs is determined at the date of grant using the closing stock price. To establish an estimate of forfeiture rate, the Company considers its historical experience of forfeitures and terminations.

Unvested RSU activity for the nine months ended September 30, 2012 is summarized below:
 
         
Weighted-
  
   
Number of
    
Average Grant-
  
   
Shares
    
Date Fair Value
  
Unvested balance at December 31, 2011
     903,874     $ 1.69  
Granted
     1,190,323       2.84  
Vested
     (194,629 )     3.44  
Forfeited
     (200,261 )     1.69  
Unvested balance at September 30, 2012
     1,699,307     $ 2.29  
 
The following table shows total stock-based compensation expense included in the condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2012 and 2011 (in thousands):

   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
   
2012
    
2011
    
2012
    
2011
  
Research and development
   $ 1,304     $ 458     $ 1,984     $ 2,404  
Selling, general and administrative
     818       1,084       1,384       3,194  
Total stock-based compensation expense
   $ 2,122     $ 1,542     $ 3,368     $ 5,598