Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

10. 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)	2012		2011		2012		2011
Research and development	$	363	$	264	$	1,305	$	540
General and administrative		828		322		2,177		1,360
Stock-based employee compensation expense	$	1,191	$	586	$	3,482	$	1,900

The Company granted 76,300 and 508,700 stock options during the three and nine months ended September 30, 2012 that had a weighted-average grant date fair value of $3.95 and $3.56 per share, respectively. The Company granted 509,000 and 1,600,000 stock options during the three and nine months ended September 30, 2011 that had a weighted-average grant date fair value of $3.88 and $4.18 per share, respectively.

At September 30, 2012, total unrecognized compensation costs related to unvested stock options outstanding amounted to $8.6million. The cost is expected to be recognized over a weighted-average period of 1.52 years.

During the quarter ended September 30, 2012, the Company extended the contractual life of 829,488 fully vested stock options, 200,000 unvested stock options and 147,427 unvested shares of restricted stock held by 3 employees by 12 to 18 months. As a result of those modifications, the Company recognized additional compensation expense of $216 thousand for the three months ended September 30, 2012 (also see Note 3 Restructuring).

For the three months ended September 30, 2012 and 2011, 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 three months ended September 30,
	2012		2011
Risk-free interest rate		0.79 - 1.04%		1.12 - 2.61%
Expected life in years		6		5.77 - 6
Expected volatility		83.37 - 83.51%		83.26 - 87.4%
Expected dividend yield		0		0

Stock option activity under the Company’s stock option plan for the nine months ended September 30, 2012 is 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, 2011		5,138,486		$	4.08
Granted		508,700			5.07
Exercised		(8,300	)		3.61
Cancelled		(277,399	)		5.67
Outstanding, September 30, 2012		5,361,487		$	4.09		6.88	$	8,037
Vested and unvested expected to vest at September 30, 2012		5,262,835		$	4.09		6.88	$	7,889
Options exercisable, September 30, 2012		3,301,387		$	3.50		5.23	$	6,764
Options exercisable, December 31, 2011		2,911,186		$	3.21		5.52	$	4,232
Options available for future grant		3,594,700

A summary of the status of unvested restricted stock for the nine months ended September 30, 2012 is as follows:

	Number of Shares			Weighted-Average Grant Date Fair Value
Non-vested, December 31, 2011		950,906		$	4.34
Granted		170,302			4.51
Vested		(75,000	)		5.66
Cancelled		(123,370	)		4.34
Non-vested, September 30, 2012		922,838		$	4.26

At September 30, 2012, total unrecognized compensation costs related to unvested restricted stock outstanding amounted to $5.0 million. The cost is expected to be recognized over a weighted-average period of 1.65 years.