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ZIOPHARM ONCOLOGY INC
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<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>7. Commitments and Contingencies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>Patent and Technology License Agreement—The University of
Texas M. D. Anderson Cancer Center and the Texas A&M University
System.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On August 24, 2004, the Company entered into a patent and
technology license agreement with The Board of Regents of the
University of Texas System, acting on behalf of The University of
Texas M. D. Anderson Cancer Center and the Texas A&M University
System (collectively, the “Licensors”). Under this
agreement, the Company was granted an exclusive, worldwide license
to rights (including rights to U.S. and foreign patent and patent
applications and related improvements and know-how) for the
manufacture and commercialization of two classes of organic
arsenicals (water- and lipid-based) for human and animal use. The
class of water-based organic arsenicals includes darinaparsin.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
As partial consideration for the license rights obtained, the
Company made an upfront payment in 2004 of $125 thousand and
granted the Licensors 250,487 shares of the Company’s common
stock. In addition, the Company issued options to purchase an
additional 50,222 shares outside the 2003 Stock Option Plan for
$0.002 per share following the successful completion of certain
clinical milestones, which vested with respect to 12,555 shares
upon the filing of an Investigation New Drug application
(“IND”) for darinaparsin in 2005 and vested with
respect to another 25,111 shares upon the completion of dosing of
the last patient for both Phase 1 clinical trials in 2007. The
Company recorded $120 thousand of stock based compensation expense
related to the vesting in 2007. The remaining 12,556 shares will
vest upon enrollment of the first patient in a multi-center pivotal
clinical trial i.e. a human clinical trial intended to provide the
substantial evidence of efficacy necessary to support the filing of
an approvable New Drug Application (“NDA”). In
addition, the Licensors are entitled to receive certain milestone
payments, including $100 thousand that was paid in 2005 upon the
commencement of Phase 1 clinical trial and $250 thousand that was
paid in 2006 upon the dosing of the first patient in the
Registrant-sponsored Phase 2 clinical trial for darinaparsin. The
Company may be required to make additional payments upon
achievement of certain other milestones in varying amounts which on
a cumulative basis could total up to an additional $4.5 million. In
addition, the Licensors are entitled to receive single-digit
percentage royalty payments on sales from a licensed product and
will also be entitled to receive a portion of any fees that the
Company may receive from a possible sublicense under certain
circumstances. In addition, the Company also paid the Licensors
$100 thousand in 2006 and 2007 to conduct scientific research with
the Company obtaining exclusive right to all resulting intellectual
property rights. The sponsored research agreements governing this
research and any related extensions expired in February 2008 with
no payments being made subsequent to that date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The license agreement also contains other provisions customary and
common in similar agreements within the industry, such as the right
to sublicense the Company rights under the agreement. However, if
the Company sublicenses its rights prior to the commencement of a
pivotal study i.e. a human clinical trial intended to provide the
substantial evidence of efficacy necessary to support the filing of
an approvable NDA, the Licensors will be entitled to receive a
share of the payments received by the Company in exchange for the
sublicense (subject to certain exceptions). The term of the license
agreement extends until the expiration of all claims under patents
and patent applications associated with the licensed technology,
subject to earlier termination in the event of defaults by the
Company or the Licensors under the license agreement, or if the
Company becomes bankrupt or insolvent. No milestones under the
license agreement were reached or expensed during the years ended
December 31, 2009, 2010, 2011 or for the three months ended March
31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 6.6pt; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>License Agreement with DEKK-Tec, Inc.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On October 15, 2004, the Company entered into a license agreement
with DEKK-Tec, Inc., pursuant to which it was granted an exclusive,
worldwide license for palifosfamide. As part of the signing of
license agreement with DEKK-Tec, the Company expensed an upfront
$50 thousand payment to DEKK-Tec in 2004.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
In consideration for the license rights, DEKK-Tec is entitled to
receive payments upon achieving certain milestones in varying
amounts which on a cumulative basis may total $4.0 million. Of the
aggregate milestone payments, most will be creditable against
future royalty payments as referenced below. The Company expensed a
$100 thousand milestone payment upon achieving Phase 2 milestones
during the year ended December 31, 2006. Additionally, in 2004 the
Company issued DEKK-Tec an option to purchase 27,616 shares of the
Company’s common stock for $0.02 per share. Upon the
execution of the license agreement, 6,904 shares vested and were
subsequently exercised in 2005 and the remaining options will vest
upon certain milestone events, culminating with final FDA approval
of the first NDA submitted by the Company (or by its sublicensee)
for palifosfamide. DEKK-Tec is entitled to receive single-digit
percentage royalty payments on the sales of palifosfamide should it
be approved for commercial sale. There were no payments made during
2009. On March 16, 2010, the Company expensed a $100 thousand
milestone payment upon receiving a United States Patent for
palifosfamide. In December 2010, the Company expensed a $300
thousand milestone payment and vested 6,904 stock options upon
achieving Phase 3 milestones. These options were subsequently
exercised in 2011. The Company’s obligation to pay royalties
will terminate on a country-by-country basis upon the expiration of
all valid claims of patents in such country covering licensed
product, subject to earlier termination in the event of defaults by
the parties under the license agreement. No milestones under the
license agreement were reached or expensed for the three months
ended March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>Option Agreement with Southern Research Institute
(“SRI”)</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On December 22, 2004, the Company entered into an Option Agreement
with SRI (the “Option Agreement”), pursuant to which
the Company was granted an exclusive option to obtain an exclusive
license to SRI’s interest in certain intellectual property,
including exclusive rights related to certain isophosphoramide
mustard analogs.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Also on December 22, 2004, the Company entered into a Research
Agreement with SRI pursuant to which the Company agreed to spend a
sum not to exceed $200 thousand between the execution of the
agreement and December 21, 2006, including a $25 thousand payment
that was made simultaneously with the execution of the agreement,
to fund research and development work by SRI in the field of
isophosphoramide mustard analogs. The Option Agreement was
exercised on February 13, 2007. Under the license agreement entered
into upon exercise of the option, the Company is required to remit
minimum annual royalty payments of $25 thousand until the first
commercial sale of a licensed product. These payments were made for
the years ended December 31, 2011, 2010, 2009 and 2008. The Company
may be required to make payments upon achievement of certain
milestones in varying amounts which on a cumulative basis could
total up to $775,000. In addition, SRI will be entitled to receive
single digit percentage royalty payments on the sales of a licensed
product in any country until all licensed patents rights in that
country which are utilized in the product have expired. No
milestones under the license agreement were reached or expensed
during the years ended December 31, 2009, 2010, 2011 or for the
three months ended March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>License Agreement with Baxter Healthcare Corporation</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On November 3, 2006, the Company entered into a definitive Asset
Purchase Agreement for indibulin and a License Agreement to
proprietary nanosuspension technology with affiliates of Baxter
Healthcare S.A. The purchase included the entire indibulin
intellectual property portfolio as well as existing drug substance
and capsule inventories. The terms of the Asset Purchase Agreement
included an upfront cash payment of approximately $1.1 million and
an additional $100 thousand payment for existing inventory, both of
which were expensed in 2006. In addition to the upfront costs, the
Asset Purchase Agreement includes additional diligence and
milestone payments that could amount to approximately $8 million in
the aggregate and royalties on net sales of products covered by a
valid claim of a patent for the life of the patent on a
country-by-country basis. The Company expensed a $625 thousand
milestone payment upon the successful U.S. IND application for
indibulin in 2007. The License Agreement requires payment of a $15
thousand annual patent and license prosecution/maintenance fee
through the expiration of the last of the licensed patents which is
expected to expire in 2025, and single-digit royalties on net sales
of licensed products covered by a valid claim of a patent for the
life of the patent on a country-by-country basis. The term of the
license agreement extends until the expiration of the last to
expire of the patents covering the licensed products, subject to
earlier termination in the event of defaults by the parties under
the license agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
In October 2009, the Baxter License Agreement was amended to allow
the Company to manufacturer indibulin. No milestones under the
license agreement were reached or expensed during the years ended
December 31, 2009, 2010, 2011 or for the three months ended March
31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>Exclusive Channel Partner Agreement with Intrexon
Corporation</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On January 6, 2011, we entered into an Exclusive Channel Partner
Agreement, or the Channel Agreement, with Intrexon that governs a
“channel partnering” arrangement in which we use
Intrexon’s technology directed towards <i>in vivo</i>
expression of effectors in connection with the development of
ZIN-CTI-001 and ZIN-ATI-001 and generally to research, develop and
commercialize products, in each case in which DNA is administered
to humans for expression of anti-cancer effectors for the purpose
of treatment or prophylaxis of cancer, which we collectively refer
to as the Cancer Program. The Channel Agreement establishes
committees comprised of representatives of us and Intrexon that
govern activities related to the Cancer Program in the areas of
project establishment, chemistry, manufacturing and controls,
clinical and regulatory matters, commercialization efforts and
intellectual property.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Channel Agreement grants us a worldwide license to use patents
and other intellectual property of Intrexon in connection with the
research, development, use, importing, manufacture, sale, and offer
for sale of products involving DNA administered to humans for
expression of anti-cancer effectors for the purpose of treatment or
prophylaxis of cancer, which we collectively refer to as the
ZIOPHARM Products. Such license is exclusive with respect to any
clinical development, selling, offering for sale or other
commercialization of ZIOPHARM Products, and otherwise is
non-exclusive. Subject to limited exceptions, we may not sublicense
the rights described without Intrexon’s written consent.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Under the Channel Agreement, and subject to certain exceptions, we
are responsible for, among other things, the performance of the
Cancer Program, including development, commercialization and
certain aspects of manufacturing of ZIOPHARM Products. Intrexon is
responsible for the costs of establishing manufacturing
capabilities and facilities for the bulk manufacture of products
developed under the Cancer Program, certain other aspects of
manufacturing and costs of discovery-stage research with respect to
platform improvements and costs of filing, prosecution and
maintenance of Intrexon’s patents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Subject to certain expense allocations and other offsets provided
in the Channel Agreement, we will pay Intrexon on a quarterly basis
50% of net profits derived in that quarter from the sale of
ZIOPHARM Products, calculated on a ZIOPHARM Product-by- ZIOPHARM
Product basis. We have likewise agreed to pay Intrexon on a
quarterly basis 50% of revenue obtained in that quarter from a
sublicensor in the event of a sublicensing arrangement. In
addition, in partial consideration for each party’s execution
and delivery of the Channel Agreement, we entered into a Stock
Purchase Agreement with Intrexon.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 6.6pt; text-align: center">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
During the first 24 months of the agreement, either we or Intrexon
may terminate the Channel Agreement in the event of a material
breach by the other and Intrexon may terminate the Channel
Agreement under certain circumstances if we assign our rights under
the Channel Agreement without Intrexon’s consent. Following
the first 24 months of the agreement, Intrexon may also terminate
the Channel Agreement if we fail to use diligent efforts to develop
and commercialize ZIOPHARM Products or if we elect not to pursue
the development of a Cancer Program identified by Intrexon that is
a “Superior Therapy” as defined in the Channel
Agreement. Also following the first 24 months of the agreement, we
may voluntarily terminate the Channel Agreement upon 90 days
written notice to Intrexon.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Upon termination of the Channel Agreement, we may continue to
develop and commercialize any ZIOPHARM Product that, at the time of
termination:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0.25in"></td>
<td style="width: 0.25in"><font style="font-family: Symbol">·</font></td>
<td>is being commercialized by us<font style="font-family: Times New Roman, Times, Serif">;</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0.25in"></td>
<td style="width: 0.25in"><font style="font-family: Symbol">·</font></td>
<td>has received regulatory approval<font style="font-family: Times New Roman, Times, Serif">;</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0.25in"></td>
<td style="width: 0.25in"><font style="font-family: Symbol">·</font></td>
<td>is a subject of an application for regulatory approval that is
pending before the applicable regulatory authority<font style="font-family: Times New Roman, Times, Serif">; or</font></td>
</tr>
</table>
<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0.25in"></td>
<td style="width: 0.25in"><font style="font-family: Symbol">·</font></td>
<td>is the subject of at least an ongoing Phase 2 clinical trial
(in the case of a termination by Intrexon due to an uncured breach
or a voluntary termination by us), or an ongoing Phase 1 clinical
trial in the field (in the case of a termination by us due to an
uncured breach or a termination by Intrexon following an
unconsented assignment by us or our election not to pursue
development of a Superior Therapy).</td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Our obligation to pay 50% of net profits or revenue described above
with respect to these “retained” products will survive
termination of the Channel Agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>Collaboration Agreement with Harmon Hill, LLC</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On April 8, 2008, the Company signed a collaboration agreement for
Harmon Hill, LLC (“Harmon Hill”) to provide consulting
and other services for the development and commercialization of
oncology therapeutics by ZIOPHARM. Under the agreement the Company
has agreed to pay Harmon Hill $20 thousand per month for the
consulting services and has further agreed to pay Harmon Hill (a)
$500 thousand upon the first patient dosing of the Specified Drug
in a pivotal trial, which trial uses a dosing Regime introduced by
Harmon Hill; and (b) provided that the Specified Drug receives
regulatory approval from the FDA, the European Medicines Agency or
another regulatory agency for the marketing of the Specified Drug,
a 1% royalty of the Company’s net sales will be awarded to
Harmon Hill. If the Specified Drug is sublicensed to a third party,
the agreement entitles Harmon Hill to 1% award of royalties or
other payments received from a sublicense. Subject to renewal or
extension by the parties, the term of the agreement was for a
one-year period that expired April 8, 2009. Following such
expiration, the parties continued to operate under the terms of the
agreement and, during 2010, the agreement was formally extended
through April 8, 2011 and again through April 8, 2012. The Company
expensed $240 thousand during the years ended December 31, 2009,
2010 and 2011 for consulting services per the aforementioned
agreement. The company expensed $60 thousand during the three
months ended March 31, 2012 for consulting services per the
aforementioned agreement. No milestones under the license agreement
were reached or expensed during the years ended December 31, 2009,
2010, 2011 or for the three months ended March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>Collaboration Agreement with Solasia Pharma K.K.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On March 7, 2011, we entered into a License and Collaboration
Agreement with Solasia Pharma K.K., (“Solasia”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Pursuant to the License and Collaboration Agreement, we granted
Solasia an exclusive license to develop and commercialize
darinaparsin in both IV and oral forms and related organic arsenic
molecules, in all indications for human use in a pan- Asian/Pacific
territory comprised of Japan, China, Hong Kong, Macau, Republic of
Korea, Taiwan, Singapore, Australia, New Zealand, Malaysia,
Indonesia, Philippines and Thailand.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 6.6pt; text-align: center">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
As consideration for the license, we received an upfront payment of
$5.0 million to be used exclusively for further clinical
development of darinaparsin outside of the pan-Asian/Pacific
territory, and will be entitled to receive additional payments of
up to $32.5 million in development-based milestones and up to $53.5
million in sales-based milestones. We will also be entitled to
receive double-digit royalty payments from Solasia based upon net
sales of licensed products in the applicable territories, once
commercialized, and a percentage of sublicense revenues generated
by Solasia.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The upfront payment for research and development funding is earned
over the period of effort. We currently estimate this period to be
75 months, which could be adjusted in the future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Under the License and Collaboration Agreement, we provide Solasia
with drug product to conduct clinical trials. These transfers are
accounted for as a reduction of research and development costs and
an increase in collaboration receivables.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The agreement provides that Solasia will be responsible for the
development and commercialization of darinaparsin in the
pan-Asian/Pacific territory.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>CRO Services Agreement with PPD Development, L.P.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Company and PPD Development, L.P. ("PPD") are parties to a
master clinical research organization services agreement dated
January 29, 2010, a related work order dated June 25, 2010 and
a related work order dated April 8, 2011 under which PPD provides
clinical research organization ("CRO") services in support of the
Company's clinical trials. PPD is entitled
to cumulative payments of up to $18.3 million under these
arrangements, which is payable by the Company in varying
amounts upon PPD achieving specified milestones. During the year
ended December 31, 2010, the Company expensed $1.8 million upon
contract execution and $1.1 million upon a clinical study
commencement of enrollment in North America. During the year ended
December 31, 2011, additional milestones related to commencing
enrollment in Europe, Latin America and Asia, along with enrollment
based milestones, were met and the Company recorded an aggregate
$4.0 million expense. During the three months ended March 31, 2012,
an enrollment related milestone was met and the Company recorded an
expense of $898 thousand.</p>
</div>
3426000
140000
-25860000
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>5. Net Loss per Share</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Basic net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding for the
period. The Company's potential dilutive shares, which include
outstanding common stock options, unvested restricted stock and
warrants, have not been included in the computation of diluted net
loss per share for any of the periods presented as the result would
be antidilutive. Such potential common shares at March 31, 2012 and
2011 consist of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 70%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="6" nowrap="nowrap" style="text-align: center">
For the Three Months</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="6" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Ended March 31,</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="width: 70%; text-align: left">Stock options</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: right">5,179,253</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: right">4,653,136</td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Unvested restricted common stock</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,061,828</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">248,752</td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="padding-bottom: 1pt">Warrants</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
11,657,741</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
15,725,379</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
17,898,822</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
20,627,267</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
</div>
42000
-5811000
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>3. Collaborations and Alliances</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On March 7, 2011, the Company entered into a License and
Collaboration Agreement with Solasia Pharma K.K.
(“Solasia”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Pursuant to the License and Collaboration Agreement (the
“Agreement”), the Company granted Solasia an exclusive
license to develop and commercialize darinaparsin (Zinapar™
or ZIO-101) in both intravenous and oral forms and related organic
arsenic molecules, in all indications for human use in a
pan-Asian/Pacific territory comprised of Japan, China, Hong Kong,
Macau, Republic of Korea, Taiwan, Singapore, Australia, New
Zealand, Malaysia, Indonesia, Philippines and Thailand.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
As consideration for the license, the Company received an upfront
payment of $5.0 million to be used exclusively for further clinical
development of darinaparsin outside of the pan-Asian/Pacific
territory, and will be entitled to receive additional payments of
up to $32.5 million in development-based milestones and up to $53.5
million in sales-based milestones. The Company will also be
entitled to receive double digit royalty payments from Solasia
based upon net sales of licensed products in the applicable
territories, once commercialized, and a percentage of sublicense
revenues generated by Solasia. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The upfront payment for research and development funding is earned
over the period of effort. The Company currently estimates this
period to be 75 months, which could be adjusted in the future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Under the Agreement, the Company provides Solasia with drug product
to conduct clinical trials. These transfers are accounted for as a
reduction of research and development costs and an increase in
collaboration receivables.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Agreement provides that Solasia will be responsible for the
development and commercialization of darinaparsin in the
pan-Asian/Pacific territory.</p>
</div>
1212000
713000
<div style="FONT: 10pt Times New Roman, Times, Serif">
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"><b>1.
Business</b></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i>Overview</i></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
ZIOPHARM Oncology, Inc. (“ZIOPHARM” or the
“Company”) is a biopharmaceutical company that seeks to
acquire, develop and commercialize, on its own or with other
commercial partners, products for the treatment of important unmet
medical needs in cancer.</p>
<p style="TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company’s operations to date have consisted primarily of
raising capital and conducting research and
development.  Accordingly, the Company is considered to
be in the development stage at March 31, 2012. The Company's fiscal
year ends on December 31.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company has operated at a loss since its inception in 2003 and has
minimal revenues. The Company anticipates that losses will
continue for the foreseeable future. At March 31, 2012, the
Company’s accumulated deficit was approximately $212.1
million. The Company currently believes that it has sufficient
capital to fund development and commercialization activities into
the second half of 2013. The Company’s ability to
continue operations after its current cash resources are exhausted
depends on its ability to obtain additional financing or to achieve
profitable operations, as to which no assurances can be given. Cash
requirements may vary materially from those now planned because of
changes in the Company’s focus and direction of its research
and development programs, competitive and technical advances,
patent developments, regulatory changes or other developments.
Additional financing will be required to continue operations after
the Company exhausts its current cash resources and to continue its
long-term plans for clinical trials and new product development.
There can be no assurance that any such financing can be realized
by the Company, or if realized, what the terms thereof may be, or
that any amount that the Company is able to raise will be adequate
to support the Company’s working capital requirements until
it achieves profitable operations.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i>Basis of Presentation</i></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
accompanying unaudited interim financial statements have been
prepared in accordance with the instructions to Form 10-Q pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures required by
generally accepted accounting principles in the United States have
been condensed or omitted pursuant to such rules and
regulations.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">It is
management’s opinion that the accompanying unaudited interim
financial statements reflect all adjustments (which are normal and
recurring) that are necessary for a fair statement of the results
for the interim periods. The unaudited interim financial statements
should be read in conjunction with the audited financial statements
and the notes thereto for the year ended December 31, 2011 included
in the Company’s Form 10-K for such fiscal year.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
year-end balance sheet data was derived from the audited financial
statements but does not include all disclosures required by
generally accepted accounting principles in the United States.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
results disclosed in the Statements of Operations for the three
months ended March 31, 2012 are not necessarily indicative of the
results to be expected for the full fiscal year.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"><i>Use
of Estimates</i></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. <font style="FONT-FAMILY: Times New Roman, Times, Serif">Although the Company
regularly assesses these estimates, actual results could differ
from those estimates. Changes in estimates are recorded in the
period in which they become known.</font></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"></p>
<p style="TEXT-ALIGN: center; MARGIN: 0pt 0px 0pt 6.6pt; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<b> </b></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company’s most significant estimates and judgments used in
the preparation of our financial statements are:</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="MARGIN-TOP: 0pt; WIDTH: 100%; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 0.25in"></td>
<td style="WIDTH: 0.25in"><font style="FONT-FAMILY: Symbol">·</font></td>
<td>Clinical trial expenses;</td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="MARGIN-TOP: 0pt; WIDTH: 100%; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 0.25in"></td>
<td style="WIDTH: 0.25in"><font style="FONT-FAMILY: Symbol">·</font></td>
<td>Fair value measurements for stock based compensation and
warrants; and</td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<table style="MARGIN-TOP: 0pt; WIDTH: 100%; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 0.25in"></td>
<td style="WIDTH: 0.25in"><font style="FONT-FAMILY: Symbol">·</font></td>
<td>Income taxes.</td>
</tr>
</table>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
<i>Subsequent Events</i></p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">The
Company evaluated all events and transactions that occurred after
the balance sheet date through the date of this
filing.  Except as disclosed below, the Company did not
have any other material subsequent events that impacted its
financial statements or disclosures.</p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
 </p>
<p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif">
Subsequent to March 31, 2012, the Company signed a lease agreement
for additional space in the Boston office. In accordance with this
lease, the Company will incur an additional obligation of
approximately $493 thousand through August 2016. The Company also
signed a lease agreement for additional space in the New York
office. In accordance with this lease, the Company will incur an
additional obligation of approximately $383 thousand through
October 2018. The Company also signed a clinical research
organization agreement with Pharmaceutical Research Associates,
Inc. to conduct a Phase 3 trial in small cell lung cancer. The
agreement includes future milestone payments of $18.1 million, the
timing of which are dependent upon factors that are beyond the
Company’s control, including the ability to recruit patients,
the outcome of future clinical trials and any requirements imposed
on clinical trials by regulatory agencies.</p>
</div>
18833000
-24470000
-79000
13985000
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<font style="color: black"><b>2.</b></font> <b>Summary of
Significant Accounting Policies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Our significant accounting policies were identified in the
Company’s Form 10-K for the fiscal year ended December 31,
2011.</p>
</div>
49169000
154000
118000
-18633000
-5811000
257000
23295000
9490000
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>4. Fair Value Measurements</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Company accounts for fair value measurements of its financial
assets and liabilities and non-financial assets and non-financial
liabilities, except those that are recognized or disclosed in the
financial statements at fair value on a recurring basis. The
accounting standard defines fair value, establishes a framework for
measuring fair value under generally accepted accounting principles
and enhances disclosures about fair value measurements. Fair
value is defined as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair
value must maximize the use of observable inputs and minimize the
use of unobservable inputs.  The standard describes a
fair value hierarchy based on three levels of inputs, of which the
first two are considered observable and the last unobservable, that
may be used to measure fair value which are the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0.25in"></td>
<td style="width: 0.25in"><font style="font-family: Symbol">·</font></td>
<td><font style="font-size: 10pt">Level 1 - Quoted prices in active
markets for identical assets or liabilities.</font></td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.5pt">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0.25in"></td>
<td style="width: 0.25in"><font style="font-family: Symbol">·</font></td>
<td><font style="font-size: 10pt">Level 2 - Inputs other than Level
1 that are observable, either directly or indirectly, such as
quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or
can be corroborated by observable market data for substantially the
full term of the assets or liabilities.</font></td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.5pt">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
<td style="width: 0.25in"></td>
<td style="width: 0.25in"><font style="font-family: Symbol">·</font></td>
<td><font style="font-size: 10pt">Level 3 - Unobservable inputs
that are supported by little or no market activity and that are
significant to the fair value of the assets or
liabilities.</font></td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.5pt; text-indent: -0.25in">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Assets and liabilities measured at fair value on a recurring basis
as of March 31, 2012 and December 31, 2011 are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="font-style: italic">
($ in thousands)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="14" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Fair Value Measurements at Reporting Date Using</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-bottom: Black 1pt solid">
Description</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Balance as of<br />
March 31, 2012</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Quoted Prices in <br />
Active Markets for<br />
Identical<br />
Assets/Liabilities   <br />
(Level 1)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Significant Other<br />
Observable Inputs<br />
(Level 2)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Significant<br />
Unobservable Inputs<br />
(Level 3)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 48%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left; padding-bottom: 2.5pt">Cash
equivalents</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
127,685</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
127,685</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left; padding-bottom: 2.5pt">Warrant
liability</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
25,194</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
25,194</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
  </p>
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="font-style: italic">
($ in thousands)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="10" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Fair Value Measurements at Reporting Date Using</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-bottom: Black 1pt solid">
Description</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Balance as of <br />
December 31, 2011</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Quoted Prices in <br />
Active Markets for <br />
Identical <br />
Assets/Liabilities   <br />
(Level 1)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Significant Other<br />
Observable Inputs<br />
(Level 2)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">
Significant<br />
Unobservable<br />
Inputs (Level 3)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 48%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left; padding-bottom: 2.5pt">Cash
equivalents</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
103,736</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
103,736</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left; padding-bottom: 2.5pt">Warrant
liability</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
19,425</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
19,425</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
-</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The cash equivalents represent deposits in a short term U.S.
treasury money market mutual fund quoted in an active market and
classified as a Level I asset. The Company’s Level II
financial liabilities consist of long-term investor and placement
agent warrants issued in connection with the May 2005 private
placement and the December 2009 public offering. The warrants were
valued using a Binomial/Monte Carlo valuation models. See Note 8
for additional disclosures on the valuation methodology and
significant assumptions.</p>
</div>
133000
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>10. Stock-Based Compensation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Company recognized stock-based compensation expense on all
employee and non-employee awards as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 60%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center">For the three months</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
ended March 31,</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="font-style: italic">(in thousands)</td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
2012</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
2011</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-style: italic"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="width: 70%; text-align: left">Research and
development</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">516</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">110</td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">General and
administrative</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
696</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
592</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left; padding-bottom: 2.5pt">Stock-based
employee compensation expense</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
1,212</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
702</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Company granted 63,500 and 547,900 stock options during the
three months ended March 31, 2012 and 2011 that had a
weighted-average grant date fair value of $3.31 and $3.99 per
share, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
At <font style="color: black">March 31, 2012</font>, total
unrecognized compensation costs related to unvested stock options
outstanding amounted to $6.5 million. The cost is expected to be
recognized over a weighted-average period of 1.61 years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 6.6pt; text-align: center">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<font style="color: black">For the</font> three months ended March
31, 2012 and 2011<font style="color: black">, the fair value of
stock options was estimated on the date of grant using a
Black-Scholes option valuation model with the following
assumptions:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="6" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
For the three months<br />
ended March 31,</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
2012</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
2011</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td nowrap="nowrap" style="text-align: left">Risk-free interest
rate</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: center">1.11 - 1.13%</td>
<td nowrap="nowrap" style="text-align: left"></td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: center">2.21 - 2.61%</td>
<td nowrap="nowrap" style="text-align: left"></td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" style="width: 70%; text-align: left">Expected
life in years</td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td nowrap="nowrap" style="width: 12%; text-align: center">6</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td nowrap="nowrap" style="width: 1%"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td nowrap="nowrap" style="width: 12%; text-align: center">
5.77</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td nowrap="nowrap" style="text-align: left">Expected
volatility</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: center">83.48 - 83.53%</td>
<td nowrap="nowrap" style="text-align: left"></td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: center">86.57 - 87.29%</td>
<td nowrap="nowrap" style="text-align: left"></td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td nowrap="nowrap" style="text-align: left">Expected dividend
yield</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: center">0</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: center">0</td>
<td nowrap="nowrap" style="text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Stock option activity under the Company’s stock option plan
for the three months ended March 31, 2012 is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="font-style: italic">
(in thousands, except share and per share
data)</td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Number of <br />
Shares</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Weighted-<br />
Average Exercise <br />
Price</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Weighted-<br />
Average <br />
Contractual <br />
Term (Years)</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Aggregate<br />
Intrinsic Value</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="width: 52%">Outstanding, December 31, 2011</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">5,138,486</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">4.08</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td>Granted</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">63,500</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">4.71</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Exercised</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="padding-bottom: 1pt">Cancelled</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
(22,733</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
5.01</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt; text-align: right"> </td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt; text-align: right"> </td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="padding-bottom: 2.5pt">Outstanding, March 31, 2012</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
5,179,253</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
4.09</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
6.99</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
7,665</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left; padding-bottom: 2.5pt">Vested and
unvested expected to vest at March 31, 2012</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
5,139,034</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
4.09</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
6.99</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
7,605</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="padding-bottom: 2.5pt">Options exercisable, March 31,
2012</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
3,016,821</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
3.28</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
5.40</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
6,583</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="padding-bottom: 2.5pt">Options exercisable, December 31,
2011</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
2,911,186</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
3.21</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
5.52</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
4,232</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left; padding-bottom: 2.5pt">Options
available for future grant</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
15,756</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt; text-align: right"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt; text-align: right"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt; text-align: right"> </td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
A summary of the status of unvested restricted stock for the three
months ended March 31, 2012 is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 75%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Number of Shares</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Weighted-Average <br />
Grant Date Fair Value</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="width: 70%">Non-vested, December 31, 2011</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: right">950,906</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">4.34</td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Granted</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">145,302</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">4.51</td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td>Vested</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(25,000</td>
<td style="text-align: left">)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5.21</td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt">Cancelled</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
(9,380</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
4.41</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt">Non-vested, March 31, 2012</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
1,061,828</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
4.13</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
At March 31, 2012, total unrecognized compensation costs related to
unvested restricted stock outstanding amounted to $4.1 million. The
cost is expected to be recognized over a weighted-average period of
1.85 years.</p>
</div>
-200000
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>6. Related Party Transactions</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On January 6, 2011, the Company entered into an Exclusive Channel
Partner Agreement, or the Channel Agreement, with Intrexon
Corporation (see Note 7 for additional disclosure relating to the
Channel Agreement). During the three months ended March 31, 2012,
the Company paid Intrexon approximately $10.4 million, of which
$1.1 million was for services already incurred and the remaining
$9.3 million expected to be incurred within a year. This amount has
been included as part of prepaid expenses and other current assets
on the accompanying balance sheet as of March 31, 2012. The Company
does not owe any amounts to Intrexon that have not already been
accrued for as of March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On January 25, 2012, Intrexon purchased 1,923,075 shares of common
stock in the Company’s public offering (see Note 9).</p>
</div>
4848000
49309000
-0.32
49169000
182000
75620130
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>9. Common Stock</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
On January 20, 2012, the Company entered into an underwriting
agreement with J. P. Morgan Securities LLC, as representative of
the several underwriters named therein, relating to the issuance
and sale of 9,650,000 shares of our common stock. The price to the
public in the offering was $5.20 per share, and the underwriters
agreed to purchase the shares from the Company pursuant to the
underwriting agreement at a purchase price of $4.888 per share.
Under the terms of the underwriting agreement, the Company also
granted the underwriters an option, exercisable for 30 days, to
purchase up to an additional 1,447,500 shares of common stock at a
purchase price of $4.888 per share.  The offering was
made pursuant to the Company’s effective registration
statement on Form S-3 (Registration Statement No. 333-177793)
previously filed with the SEC, and a prospectus supplement
thereunder.  The underwriters purchased the 9,650,000 shares
on January 25, 2012 and purchased an additional 464,401 shares on
January 31, 2012 pursuant to the partial exercise of their option
to purchase additional shares, resulting in our issuing a total of
10,114,401 shares. The net proceeds from the offering were
approximately $49.2 million after deducting underwriting discounts
and offering expenses payable by the Company.</p>
</div>
<div style="font: 10pt Times New Roman, Times, Serif">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b>8. Warrants</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Company has issued both warrants that are accounted for as
liabilities and warrants that are accounted for as equity
instruments. The number of warrants outstanding at March 31, 2012
and December 31, 2011 were as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 50%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">March
31,</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">December
31,</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1pt"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="width: 66%">Liability-classified warrants</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 14%; text-align: right">8,393,193</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 14%; text-align: right">8,424,905</td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt">Equity-classified warrants</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
3,264,548</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
4,692,359</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt">Total
warrants</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
11,657,741</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
13,117,264</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 6.6pt; text-align: center">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<i>Liability-Classified Warrants</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
In May 2005, the Company issued 419,786 warrants to placement
agents for services performed in connection with a 2005 private
placement (the “2005 Warrants”), 11,083 of which were
subsequently exercised. The remaining 408,703 warrants were
originally valued at $1.6 million. Subject to certain exceptions,
the 2005 Warrants provide for anti-dilution protection should
common stock or common stock equivalents be subsequently issued at
a price less than the exercise price of the 2005 Warrants then in
effect, which was initially $4.75 per share. This provision was
triggered when the Company sold stock in a 2006 private placement
at $4.63 per share. Accordingly, the 2005 Warrants were re-priced
at $4.69. The provision was triggered a second time upon completion
of a 2009 private placement in which the Company sold stock at
$1.825 per share and issued common stock purchase warrants with an
exercise price of $2.04, and the 2005 Warrants were re-priced at
$4.25. The provision was triggered again when the Company sold
stock in a December 2009 public offering at $3.10 per share and the
2005 Warrants were re-priced at $3.93.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
Also, in connection with its December 2009 public securities
offering, the Company issued warrants to purchase an aggregate of
8,206,520 shares of common stock (including the investor warrants
and 464,520 warrants issued to the underwriters for the offering)
(the “2009 Warrants”). The 2009 Warrants issued to
investors were exercisable immediately and the warrants issued to
underwriters became exercisable six months after the date of
issuance. The 2009 Warrants have an exercise price of $4.02 per
share and have a five-year term. The fair value of the 2009
Warrants was estimated at $22.9 million using a Black-Scholes model
with the following assumptions: expected volatility of 105%, risk
free interest rate of 2.14%, expected life of five years and no
dividends.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The Company assessed whether the 2005 Warrants and the 2009
Warrants require accounting as derivatives.  The Company
determined that these warrants were not indexed to the
Company’s own stock in accordance with accounting standards
codification Topic 815, <i>Derivatives and
Hedging</i>.  As such, the Company has concluded these
warrants did not meet the scope exception for determining whether
the instruments require accounting as derivatives and were
classified as liabilities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
The change in the fair value of the warrant liability resulted in
losses of $5.8 million and $11.1 million for the three months ended
March 31, 2012 and 2011, respectively. The change in the fair value
of the warrant liability was charged to other income (expense) in
the Statements of Operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
In December 2011, the Company changed from using a Black-Scholes
pricing model to estimate the value of the liability-classified
warrants to a Binomial/Monte Carlo pricing model. The following
assumptions were used in the Binomial valuation model at March 31,
2012 and the Black-Scholes valuation model at March 31, 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 70%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
March 31, 2012</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
March 31, 2011</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left">Risk-free interest rate</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">0.07 - 0.42%</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">0.38 - 1.61%</td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Expected life in years</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">0.17 - 2.69</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">1.17 - 3.68</td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="text-align: left">Expected volatility</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">60 - 80%</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">63 - 98%</td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 70%; text-align: left">Expected dividend
yield</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: center">0</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: center">0</td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td>Steps per year</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">12</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">N/A</td>
<td style="text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">
</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
During the first three months of 2012, warrant exercises were as
follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Common</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Liability</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Equity</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Liability</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Stock</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Reclassed</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Cash</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="font-style: italic">(in thousands,
except share data)</td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Warrants</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Warrants</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Issued</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
to Equity</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Received</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="width: 40%; text-align: left">Cash exercises</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">68,494</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">-</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">68,494</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">-</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">140</td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Cashless
exercises</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
-</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
31,712</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
8,021</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
42</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
-</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
68,494</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
31,712</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
76,515</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
42</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
140</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
During the first three months of 2011, warrant exercises were as
follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
 </p>
<table cellpadding="0" cellspacing="0" style="width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Common</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Liability</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center">
 </td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Equity</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Liability</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Stock</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Reclassed</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center">Cash</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
</tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="font-style: italic">(in thousands,
except share data)</td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Warrants</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Warrants</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Issued</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
to Equity</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
<td nowrap="nowrap" style="font-weight: bold; padding-bottom: 1pt">
 </td>
<td colspan="2" nowrap="nowrap" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">
Received</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font-weight: bold">
 </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="width: 40%; text-align: left">Cash exercises</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">67,598</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">-</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">67,598</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">-</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">186</td>
<td style="width: 1%; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Cashless
exercises</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
-</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
119,165</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
38,762</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
209</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">
 </td>
<td style="border-bottom: Black 1pt solid; text-align: right">
-</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: rgb(204,255,204)">
<td style="padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
67,598</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
119,165</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
 </td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
106,360</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
209</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">
$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right">
186</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
</tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
<b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">
During the three months ended March 31, 2012, 1,359,317 warrants
issued on February 23, 2007, exercisable at $5.75, expired
unexercised on February 23, 2012.</p>
</div>
9380
145302
11000
10114401
76515
99000
-99000
5433000
1212000
49158000
281000
-5433000
-24470000
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