WARRANTS (Tables)

4 Months Ended

Dec. 31, 2012

Number of outstanding common stock warrants

The table reflects the number of common stock warrants outstanding as of December 31, 2012:

	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 May / June 2008		433	$	2.36		5/21/2013
Issued to placement agents in August 2009		65	$	1.50		8/21/2014
TorreyPines warrants assumed in 2009 Merger		8	$	80.86	*	6/11/2013-9/26/2015
Issued to registered direct investors in December 2009		631	$	2.45		12/22/2014
Issued to private placement investors in August 2010		3,095	$	3.075		8/12/2015
Issued to placement agent in August 2010		98	$	3.075		8/12/2015

Total warrants outstanding		4,563	$	3.03	*

*	Weighted-average exercise price

Assumptions for fair value of the warrants

A Black-Scholes option-pricing model was used to estimate the fair value of the warrants issued in the December 2009 and August 2010 equity financings using the following assumptions at December 31, 2012, August 31, 2012 and 2011:

	December 2009 equity financing									August 2010 private placement Investors and placement agent
				August 31,									August 31,
	December 31, 2012			2012			2011			December 31, 2012			2012			2011
Fair value ($ millions)	$	2.6		$	2.9		$	5.9		$	13.8		$	14.4		$	17.7
Black-Scholes inputs:
Stock price	$	5.85		$	4.97		$	4.73		$	5.85		$	4.97		$	4.73
Exercise price	$	2.45		$	2.45		$	2.45		$	3.075		$	3.075		$	3.075
Risk free interest rate		0.25	%		0.22	%		0.38	%		0.31	%		0.30	%		0.70	%
Volatility		100	%		125	%		116	%		112	%		125	%		116	%
Expected term (years)		2.00			2.25			3.25			2.50			3.00			4.00
Dividend		0			0			0			0			0			0

- 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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