Share-Based Compensation

9 Months Ended

Sep. 30, 2012

Share-Based Compensation [Abstract]

SHARE-BASED COMPENSATION

8. SHARE-BASED COMPENSATION

The following table shows share-based compensation expense as included in our condensed consolidated statements of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(In Thousands)				(In Thousands)
Research and development	$	495	$	269	$	1,277	$	820
General and administrative		741		345		1,877		1,023
Total share-based compensation expense	$	1,236	$	614	$	3,154	$	1,843

There were no options granted in the three months ended September 30, 2012. For grants issued during the three months ended September 30, 2011 the risk-free interest rate used was 0.99%, the expected dividend yield was zero, the expected option term was 5.20 years and the expected volatility was 74.8%. The weighted average fair value of options issued during the three months ended September 30, 2011 was $2.62. The table below illustrates the fair value per share and Black-Scholes option pricing model with the following assumptions used for grants issued for the nine months ended September 30, 2012 and 2011:

	Nine Months Ended September 30,
	2012			2011
Weighted average fair value of options	$	7.54		$	2.15
Risk-free interest rate		0.87	%		2.07	%
Expected dividend yield		—			—
Expected option term (in years)		5.32			5.20
Expected volatility		79.3	%		75.0	%

The expected option term and expected volatility were determined by examining the expected option term and expected volatilities of similarly sized biotechnology companies as well as expected term and expected volatility of our own stock.

The following table summarizes option activity under the equity incentive plans:

	Number of Shares			Weighted Average Exercise Price per Share
Options outstanding at December 31, 2011		7,578,612		$	6.25
Granted		1,605,325		$	11.71
Cancelled		(238,318	)	$	11.27
Exercised		(1,279,343	)	$	4.02
Options outstanding at September 30, 2012		7,666,276		$	7.61
Options exercisable at September 30, 2012		5,297,324		$	7.44

We had an aggregate of $12.3 million of share-based compensation expense as of September 30, 2012 remaining to be amortized over a weighted average expected term of 2.65 years.