Stock-Based Compensation

85 Months Ended

Sep. 30, 2010

Stock-Based Compensation

9. Stock-Based Compensation

The Company recognized stock-based compensation expense on all employee and non-employee awards as follows:

	For the three months ended September 30,				For the nine months ended September 30,
(in thousands)	2010		2009		2010		2009
Research and development, including costs of research contracts	$	199	$	140	$	613	$	295
General and administrative		824		375		2,585		969
Stock-based employee compensation expense	$	1,023	$	515	$	3,198	$	1,264

The Company granted 42 thousand and 197 thousand stock options during the three and nine months ended September 30, 2010 that had a weighted-average grant date fair value of $2.66 and $3.42 per share, respectively.  During the nine months ended September 30, 2009, the Company granted 815 thousand stock options that had a weighted-average grant date fair value of $0.53 per share.  There were no stock options granted during the three month period ended September 30, 2009.

At September 30, 2010, there is $2.5 million stock compensation expense related to outstanding unvested stock options and restricted stock that will be expensed over a weighted average 23 months.

For the nine months ended September 30, 2010 and 2009, the fair value of stock options was estimated on the date of grant using a Black-Scholes option valuation model with the following assumptions:

	For the nine months ended September 30,
	2010		2009
Risk-free interest rate		1.28-2.75%		1.31-1.44%
Expected life in years		5		5
Expected volatility		89.2-90.6%		102-103%
Expected dividend yield		0		0

Stock option transactions under the Company’s stock option plan for the nine months ended September 30, 2010 are as follows:

(in thousands, except share and per share data)	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2009		3,534,686	$	2.82
Granted		197,000		4.86
Exercised		196,167		1.19
Cancelled		6,667		5.19
Outstanding, September 30, 2010		3,528,852	$	3.02		6.88	$	4,249,255
Options exercisable, September 30, 2010		2,568,019	$	3.00		6.12	$	3,375,200
Options available for future grant		3,074,734

A summary of the status of non-vested restricted stock for the nine months ended September 30, 2010 is as follows:

	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested, December 31, 2009		1,467,167	$	2.30
Granted		115,000	$	5.15
Vested		1,052,583	$	2.11
Cancelled		11,250	$	4.34
Non-vested, September 30, 2010		518,334	$	3.29

On June 23, 2010, the date of the Company’s annual stockholders meeting, the Company’s stockholders approved an amendment to the 2003 Stock Option Plan increasing the total shares reserved by 3,000,000 shares for a total of 9,002,436.