Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

7. 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 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 2012 and 2011 for stock options amounted to $426 (of which $199 relates to performance milestones) and $564 (of which $13 relates to performance milestones), respectively. For the six months ended June 2012 and 2011, compensation expense for stock options amounted to $774 (of which $345 relates to performance milestones) and $734 (of which $28 relates to performance milestones), respectively. No cash was received from options and warrants exercised under all share-based payment arrangements for the three month periods ended June 30, 2012 and 2011, respectively, and for the six month periods ended June 30, 2012 and 2011 cash received was $33 and $0, 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 Ended  June 30, 2012	For the Six Months Ended  June 30, 2011
Expected life	6.5 years	6.5 years
Expected volatility	73.55-79.68%	70.54-76.32%%
Risk-free interest rate	0.93-1.60%	2.47-3.34%
Dividend yield	0%	0%

The expected life of the options is based on the expected time to full-vesting, forfeiture and exercise. The expected volatility assumptions were 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, 2012, stock options to purchase 2,195,306 shares of common stock at exercise prices ranging from $1.00 to $11.11 per share are outstanding and exercisable at various dates through 2022.

During the three months and six months ended June 30, 2012, the weighted average fair value of options granted, estimated as of the grant date using the Black-Scholes option valuation model, was $2.71 and $2.68, respectively. For the three month and six month periods ended June 30, 2011, the weighted average fair value of options granted was $2.18 and $2.20, respectively. There were no options exercised in the three month period ended June 30, 2012. For the six months ended June 30, 2012 the total intrinsic value of options exercised was $74. For the three month and six month periods ended June 30, 2011 no options were exercised.

The status of the Company’s stock option plans at June 30, 2012 is summarized in the following:

	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Outstanding at December 31, 2011		2,057,104		$	4.35		6.6
Granted		350,563			3.93		—
Exercised		(53,123	)		—		—
Forfeited or expired		(159,238	)		6.12		—
Outstanding at June 30, 2012		2,195,306		$	4.18		7.0	$	211
Vested and exercisable at June 30, 2012		1,562,681		$	4.01		6.4	$	149

	Number Outstanding		Options  Outstanding Weighted- Average Remaining Contractual Life	Weighted Average Exercise Price		Options Exercisable
Range of Exercise Prices						Number Exercisable		Weighted- Average Exercise Price
$.01-$1.00		43,329	0.6 years	$	1.00		43,329	$	1.00
$1.01-$4.50		1,696,502	7.4 years	$	3.58		1,346,152	$	3.63
$4.51-$11.11		455,475	6.2 years	$	6.70		173,200	$	7.73
$.01-$11.11		2,195,306	7.0 years	$	4.18		1,562,681	$	4.01

As of June 30, 2012, of the total 2,195,306 options outstanding, 632,625 have not vested. Of this total unvested amount, 235,425 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, 2012, of the $986 of total unrecognized compensation cost related to unvested options to be recognized, $433 is to be recognized over a period to be determined by performance-based milestones, and $553 is to be recognized over the requisite service period through 2016.

As of June 30, 2012, there were 1,462,639 shares available for future grants under the Company’s 2005 Plan.