Stock-based Compensation

6 Months Ended

Jun. 30, 2011

Stock-based Compensation [Abstract]

STOCK-BASED COMPENSATION

5. STOCK-BASED COMPENSATION

The Company has one stock-based compensation plan, the 2005 Stock Incentive Plan (“2005 Plan”), under which the Board of Directors may currently grant incentives to employees, consultants, directors, officers and collaborating scientists in the form of incentive stock options, nonqualified stock options and restricted stock awards. The Company also has one other stock-based compensation plan pursuant to which stock options are outstanding but from which no new grants may be made.

Stock awards under the Company’s stock option plans have been granted at prices which are no less than the market value of the stock on the date of the grant. Options granted under the 2005 Plan are generally time-based or performance-based, and vesting varies accordingly. Options under this plan expire in up to a maximum of ten years from the date of grant.

The compensation expense recognized in the Statement of Operations in the second quarter of 2011 and 2010 for stock options amounted to $564 (of which $13 relates to performance milestones) and $184 (of which $6 relates to performance milestones), respectively. For the six months ended June 30, 2011 and 2010, compensation expense for stock options amounted to $734 (of which $28 relates to performance milestones) and $366 (of which $11 relates to performance milestones), respectively. Cash received from options and warrants exercised under all share-based payment arrangements for the three month periods ended June 30, 2011 and 2010 were $0 and $20, respectively, and for the six month periods ended June 30, 2011 and 2010 were $0 and $1,717 respectively.

The fair value of each option award granted is estimated on the date of grant using the Black-Scholes option valuation model and assumptions as noted in the following table:

	For the Six Months	For the Six Months
	Ended June 30, 2011	Ended June 30, 2010
Expected life	6.5 years	5-10 years
Expected volatility	70.54-76.32%	61%
Risk-free interest rate	2.47-3.34%	2.26-3.56%
Dividend yield	0%	0%

The expected life of the options is based upon the expected time to full-vesting and term of the options. The expected volatility assumptions are determined based upon the historical volatility of the Company’s daily closing stock price. The risk-free interest rate is based on the continuous rates provided by the U.S. Treasury with a term equal to the expected life of the option. The expected dividend yield is zero as the Company has never paid dividends and does not currently anticipate paying any in the foreseeable future.

At June 30, 2011, stock options to purchase 2,107,429 shares of common stock at exercise prices ranging from $1.00 to $11.11 per share are outstanding and exercisable at various dates through 2021.

During the three months and six months ended June 30, 2011, the weighted average fair value of options granted, estimated as of the grant date using the Black-Scholes option valuation model, was $2.18 and $2.20, respectively. For the three month and six month periods ended June 30, 2010, the weighted average fair value of options granted was $4.61 and $4.68, respectively. For the three month and six month periods ended June 30, 2011 no options were exercised and for the three months and six months ended June 30, 2010 the total intrinsic value of options exercised was $11 and $18, respectively.

The status of the Company’s stock option plans at June 30, 2011 is summarized in the following:

						Weighted
				Weighted		Average
				Average		Remaining
				Exercise		Contractual		Aggregate
	Number of			Price per		Term in		Intrinsic
	Shares			Share		Years		Value
Outstanding at December 31, 2010		2,132,879		$	5.19		5.4
Granted		439,800			3.27		9.8
Exercised		—
Forfeited or expired		(465,250	)		6.59		—
Outstanding at June 30, 2011		2,107,429		$	4.48		6.6	$	66
Vested and exercisable at June 30, 2011		850,791		$	4.53		5.6	$	66

			Options Outstanding
			Weighted-			Options Exercisable
			Average	Weighted				Weighted-
			Remaining	Average				Average
	Number		Contractual	Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life	Price		Exercisable		Price
$.01-$1.00		48,952	1.4 years	$	1.00		48,952	$	1.00
$1.01-$4.50		1,578,952	7.4 years	$	3.68		591,789	$	3.70
$4.51-$11.11		479,525	4.5 years	$	7.48		210,050	$	7.71
$.01-$11.11		2,107,429	6.6 years	$	4.48		850,791	$	4.53

As of June 30, 2011, of the total 2,107,429 options outstanding, 1,256,638 have not vested. Of this total unvested amount, 931,813 options will vest upon the attainment of certain milestones, and the balance will vest over the requisite service period. The weighted average vesting period for the non-milestone, non-vested awards not yet recognized is 1.9 years

As of June 30, 2011, of the $3,186 total unrecognized compensation cost related to unvested options, $2,708 is to be recognized over a period to be determined by performance-based milestones, and $478 is to be recognized over the requisite service period through 2015.

As of June 30 2011, there were 1,648,639 shares available for future grants under the Company’s 2005 Plan.