STOCK OPTION PLANS

9 Months Ended

Sep. 30, 2013

STOCK OPTION PLANS [Abstract]

STOCK OPTION PLANS

7. STOCK OPTION PLANS

Stock-based compensation expense was based on the Black-Scholes option-pricing model assuming the following:

Period*	Risk-free interest rate			Expected life of stock option	Annual volatility
Quarter ended August 31, 2012		0.68	%	5 years		124.9	%
Quarter ended September 30, 2013		1.51	%	5 years		67.18	%
* Dividend rate is 0% for all periods presented.

If factors change and different assumptions are employed in the application of ASC 718, the compensation expense recorded in future periods may differ significantly from what was recorded in the current period.

Employee and consultant stock-based compensation expense has been included in the Condensed Consolidated Statements of Comprehensive Loss as follows:

	Three Months Ended				Nine Months Ended
(In thousands)	September 30, 2013		August 31, 2012		September 30, 2013		August 31, 2012
Research and development	$	381	$	309	$	1,123	$	819
Selling, general and administrative		1,442		984		4,297		2,823
Total	$	1,823	$	1,293	$	5,420	$	3,642

A summary of the activity in the 2010 Equity Incentive Plan, as amended  (the "Plan"),  the 2006 Equity Compensation Plan, as amended, and the Company's other stock option plans, is as follows:

(In thousands, except per share amounts)	Option shares			Weighted- average exercise price		Exercisable		Weighted- average fair value of options granted
Outstanding at December 31, 2012		7,791		$	5.79		3,494	$	3.48
Granted		130			5.39		0		3.04
Exercised		(8	)		0.85		0		0.62
Canceled		(28	)		13.94		0		4.25
Outstanding at March 31, 2013		7,885			5.76		4,031		3.47
Granted		478			6.58		0		4.01
Exercised		0			0		0		0
Canceled		(27	)		20.70		0		4.73
Outstanding at June 30, 2013		8,336			5.76		4,525		3.55
Granted		317			11.06		0		5.32
Exercised		(370	)		4.07		0		3.27
Canceled		(53	)		38.14		0		0
Outstanding at September 30, 2013		8,230			5.83		4,653		3.71

The weighted-average intrinsic values of stock options were as follows:

	Options outstanding and expected to vest for the quarter ended						Options exercisable for the quarter ended
(In thousands)	September 30, 2013			August 31, 2012			September 30, 2013			August 31, 2012
Intrinsic value		$	80,455		$	4,841		$	48,773		$	4,131
Number of options			8,230			6,125			4,653			2,995

There were approximately 4.1 million shares available for grant as of September 30, 2013 under the Plan which includes a 3.0 million share increase to the Plan that was approved at the Company's Annual Shareholders' Meeting held on July 23, 2013.  The amendments to the Plan approved at the Company's Annual Shareholders' Meeting held on March 22, 2011 allow for 50% accelerated vesting of unvested stock options upon a change of control as defined in the Plan.  The amended and restated award agreement, subject to the terms of any applicable employment agreement, extends the termination date of the awards granted under the Plan that are vested as of such termination date due to (a) an employee's or a non-employee director's retirement at age 62 or older which employee or non-employee director has at least five (5) years of continuous service with the Company prior to such retirement, (b) the termination of a non-employee director's board membership for reasons other than for cause or retirement and (c) an employee's or a non-employee director's death (during his or her continuous service with the Company or within 90 days' of such continuous service with the Company) or permanent disability, to eighteen (18) months from the date of termination of continuous service with the Company.  No further grants will be made under any previous or assumed stock option plans.

As of September 30, 2013, the options outstanding under all of the Company's stock option plans consisted of the following:

		Options outstanding						Options vested and exercisable
Range of exercise prices		Number of options outstanding and expected to vest (#, in thousands )		Weighted- average remaining contractual life (yrs.)		Weighted- average exercise price ($)		Number of options exercisable (#, in thousands)		Weighted- average exercise price ($)
$	0 to $2.00		71		5.69	$	1.78		69	$	1.77
$	2.01 to $3.00		1,229		5.23		2.67		1,090		2.63
$	3.01 to $4.00		1,685		7.14		3.51		1,466		3.52
$	4.01 to $5.00		299		8.13		4.79		127		4.73
$	5.01 to $6.00		3,979		8.48		5.29		1,762		5.26
$	6.01 to $8.00		662		9.06		6.77		101		6.64
$	8.01 to $12.00		225		9.82		10.56		0		0
$	12.01 to $15.00		42		10.00		14.54		0		0
$	15.01 to $964.24		38		2.31		230.05		38		230.05
			8,230		7.75		5.83		4,653		5.89

At September 30, 2013, the total unrecognized compensation cost was approximately $14.0 million.  The weighted-average period over which it is expected to be recognized is approximately 3 years.