Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

v2.4.0.6
Stock-based Compensation
 3 Months Ended
Mar. 31, 2012
Stock-based Compensation [Abstract]  
Stock-based Compensation
 
9. 
Stock-based Compensation

In the first quarter of 2012, the Board of Directors of the Company approved grants under the Long Term Incentive Plan for an aggregate of 940,900 stock options and an aggregate of 343,115 restricted stock units ("RSUs") to certain employees of the Company. The options vest monthly over four years 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 United States 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 months ended March 31, 2011 and 2010:

   
Three Months Ended March 31,
  
   
2012
    
2011
  
Dividend yield
     0 %     0 %
Expected volatility
     92 %     86 %
Risk-free interest rate
     1.05 %     2.20 %
Expected term
  
5.6 years
  
5.6 years
 
Stock option activity for the three months ended March 31, 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
     940,900       1.45                  
Exercised
     (24,730 )     1.69                  
Forfeited, expired or cancelled
     (167,484 )     21.65                  
Options outstanding at March 31, 2012
     5,802,121     $ 10.53       7.28     $ 2,375  
Options exercisable at March 31, 2012
     3,567,292     $ 14.96       6.45     $ 867  

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 three months ended March 31, 2012 is summarized below:

         
Weighted-
  
   
Number of
    
Average Grant-
  
   
Shares
    
Date Fair Value
  
Unvested balance at December 31, 2011
     903,874     $ 1.69  
Granted
     343,115       1.29  
Vested
     -       -  
Forfeited
     (132,575 )     1.69  
Unvested balance at March 31, 2012
     1,114,414     $ 1.57  
 
The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three months ended March 31, 2012 and 2011 (in thousands):

   
Three Months Ended March 31,
  
   
2012
    
2011
  
Research and development
   $ 385     $ 1,061  
Selling, general and administrative
     289       711  
Total stock-based compensation expense
   $ 674     $ 1,772