CAPITAL STRUCTURE (Tables)

9 Months Ended

Sep. 30, 2013

Number of outstanding common stock warrants

The table reflects the number of common stock warrants outstanding as of September 30, 2013:

(In thousands, except per share amounts)	Number of shares exercisable		Exercise price			Expiration date
Issued in connection with Encode merger		233	$	2.87		12/13/2015
Issued to placement agents in August 2009		65	$	1.50		7/31/2014
TorreyPines warrants assumed in 2009 Merger		4	$	157.08		9/26/2015
Issued to registered direct investors in Dec. 2009		75	$	2.45		12/22/2014
Issued to private placement investors in Aug. 2010		670	$	3.075		8/12/2015
Issued to placement agent in Aug. 2010		98	$	3.075		8/12/2015

Total warrants outstanding		1,145	$	3.37	*

* Weighted-average exercise price

Assumptions for fair value of the warrants

A Black-Scholes option-pricing model was used to obtain the fair value of the warrant liabilities. These warrants were issued in the December 2009 and August 2010 equity financings using the following assumptions at September 30, 2013 and December 31, 2012:

	December 2009 equity financing Series A						August 2010 private placement investors and placement agent
	September 30, 2013			December 31, 2012			September 30, 2013			December 31, 2012
Fair value ($ millions)	$	0.9		$	2.6		$	9.4		$	13.8
Black-Scholes inputs:
Stock price	$	14.92		$	5.85		$	14.92		$	5.85
Exercise price	$	2.45		$	2.45		$	3.075		$	3.075
Risk free interest rate		0.21	%		0.25	%		0.29	%		0.31	%
Volatility		95	%		100	%		95	%		112	%
Expected term (years)		1.25			2.0			1.75			2.5
Dividend		0			0			0			0

Activity of the warrant liabilities

Below is the activity of the warrant liabilities for the nine months ended September 30, 2013 and August 31, 2012:

	For the nine months ended
(In millions)	September 30, 2013			August 31, 2012
Fair value of December 2009 direct offering warrants (including placement agent warrants) at beginning of the nine-month periods ended September 30, 2013 and August 31, 2012	$	2.6		$	6.7
December 2009 direct offering warrants exercised		(4.2	)		(4.5	)
Adjustment to mark to market common stock warrants		2.5			0.7
December 2009 direct offering common stock warrant liability at fair value at September 30, 2013 and August 31, 2012		0.9			2.9

Fair value of August 2010 private placement warrants (including broker warrants) at beginning of the nine-month periods ended September 30, 2013 and August 31, 2012		13.8			18.7
August 2010 private placement warrants exercised		(13.9	)		(2.7	)
Adjustment to mark to market common stock warrants		9.5			(1.6	)
August 2010 private placement common stock warrant liability at fair value at September 30, 2013 and August 31, 2012		9.4			14.4

Total warrant liability at September 30, 2013 and August 31, 2012, respectively	$	10.3		$	17.3

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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